30 July 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
It was another ‘nothing’ sort of day in gold yesterday, which is pretty much what I expected with the large traders exiting the August contract. The low tick came at the London p.m. fix—and signs of perkiness after that, including the spike above $1,100 spot at the 2 p.m. EDT Fed news spike, were dealt with in the usual manner.
Once again, the high and low ticks aren’t worth looking up.
Gold was closed in New York yesterday at $1,096.70 spot, up $1.20 from Tuesday’s close. Gross volume was sky high at 279,000 contracts, but it netted out to an exceedingly light 29,000 contracts.
I’m including Brad Robertson’s 5-minute tick chart for gold only to show the massive volume surrounding the 2 p.m. EDT spike, as “da boyz” did what it took to put the gold price back in the box. It was obviously a short covering rally on the Fed news, such as it was, but they didn’t leave anything to chance in case things really got out of hand once it broke through the $1,100 spot price with any authority, which it certainly would have. Use the ‘click to enlarge’ feature—and add two hours for New York time.
The silver price didn’t do a lot during Far East trading, but the selling pressure began the moment that London opened, with the low tick coming at the noon London silver fix. From there the price chopped higher until 11:30 a.m. EDT—and then shot higher. The not-for-profit sellers showed up fifteen minutes later as the price headed for $15 the ounce, with the high tick coming minutes after 12 o’clock noon in New York.—and from about 12:20 onwards, silver traded more or less sideways into the close of electronic trading at 5:15 p.m. EDT.
The low and high ticks were recorded by the CME Group as $14.57 and $14.90 in the September contract.
Silver closed on Wednesday at $14.81 spot, up 12.5 cents on the day. Net volume was 31,000 contracts, which was higher than I would like to have seen, so JPMorgan et al had to throw some decent paper at the silver price in order to make it behave.
Platinum traded a few dollars higher in the early going in Far East trading, but was back to unchanged by 9:30 a.m. EDT—and the low tick came thirty minutes later at the London afternoon gold fix. It rallied from there a bit—and closed up two bucks at $985 spot.
Palladium traded a few dollar higher until 9 a.m. in New York before selling commenced—and the low price tick in that metal came at the COMEX close. It rallied from there, closing at $617 spot, down a dollar on the day.
The dollar index closed in New York late on Tuesday afternoon at 96.65. It dipped down to the 96.50 mark for a couple of hours in late Wednesday morning trading in Hong Kong, before chopping quietly higher in the lead-up to the Fed news. Then away it went to the up side to its 97.25 high around 3:15 p.m. It chopped sideways into the close, finishing the day at 97.17—up 51 basis points on the day.
Here’s the 6-month U.S. dollar index chart for reference purposes.
The gold stocks opened about unchanged—and headed higher to stay starting around 10:30 a.m. in New York trading. When all was said and done, the HUI closed up 2.50 percent.
It was more or less the same activity in the silver equities, except the rally in those shares wasn’t nearly as enthusiastic as it was for their golden brethren, as Nick Laird’s Intraday Silver Sentiment Index only close up 0.91 percent.
The CME Daily Delivery Report showed that zero gold and 44 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. The only short/issuer worth noting was Canada’s Scotiabank with 40 contracts. ABN Amro and the CME Group picked up 28 and 10 contracts respectively as the two largest long/stoppers. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest only dropped by 3 contracts yesterday, so there’s still one to go—and that should be in the report that comes out this evening. In silver, the o.i. there plunged by 114 contracts, leaving 44 left—and those are up for delivery on Friday, as per the previous paragraph.
There were no reported changes in GLD yesterday—and as of 7:04 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
In an e-mail from Switzerland’s Zürcher Kantonalbank at 3:23 a.m. this morning—9:23 a.m. CET in Zurich—the folks updated their website with the changes in their gold and silver ETFs as of the close of business on Friday, July 24—and this is what they had to report. The seemingly relentless declines in both ETFs continue, as their gold ETF dropped by 8,810 troy ounces—and their silver ETF by a further 224,474 troy ounces.
Another day—and another sales report from the U.S. Mint. They sold 3,000 troy ounces of gold eagles—a chunky 4,500 one-ounce 24K gold buffaloes—and 775,000 silver eagles.
Month-to-date the mint has sold 5,331,500 silver eagles, a hair lower than January’s total of 5,530,000. With two sales day left in July, it will be interesting to see if they allow that number to be beaten.
There was no in/out gold movement at all over at the COMEX-approved depositories on Tuesday.
It was another big day in silver—and although nothing was was reported received, 830,403 troy ounces were shipped out the door. None of the activity involved the JPMorgan depository. The link to that action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they reported receiving 7,298 kilobars—and shipped out 3,115 kilobars. The link to that activity is here.
I have the usual number of stories for a weekday column—and I hope there are a few in the list below that interest you.
CRITICAL READS
Fed says economy improving; September rate hike in view
The U.S. economy and job market continue to strengthen, the Federal Reserve said on Wednesday, leaving the door open for a possible interest rate hike when central bank policymakers next meet in September.
Following their latest two-day policy meeting, Fed officials said they felt the economy had overcome a first-quarter slowdown and was “expanding moderately” despite a downturn in the energy sector and headwinds from overseas.
They nodded in particular to the “solid job gains” seen in recent months.
“On balance, a range of labor market indicators suggest that underutilization of labor resources has diminished since early this year,” the Fed said in a policy statement that kept rates unchanged.
I’ll believe it when it happens. This Reuters article, filed from Washington, appeared on their Internet site at 5:27 p.m. EDT Wednesday afternoon—and today’s first story is courtesy of Patricia Caulfield.
Bill Gross Explains (In 90 Seconds) How It’s All a Big Shell Game
Zero Hedge calls attention to comments made on CNBC today by former PIMCO bond buyer Bill Gross, now working for Janus Capital, who says all markets now are artificial, the products of central bank manipulation, and that real market prices cannot be discovered.
By “all” markets, one might assume Gross meant to include the market that in mainstream financial journalism must never be associated by manipulation, the gold market. But somehow Gross wasn’t wearing a tin-foil hat. Zero Hedge‘s posting, which includes the CNBC video excerpt, appeared on their Internet site at 7:23 p.m. EDT on Wednesday evening—and I thank Chris Powell for the headline and the introductory paragraphs which I found in a GATA release.
Here’s How Much the Strong Dollar Hurts American Companies
American companies had a rough start to 2015 as they watched profits from overseas subsidiaries slide. Exactly how much blame should we assign to the currency markets? Two economists at the Federal Reserve have an idea.
U.S. corporate profits fell about 1.4 percent in the fourth quarter last year before plummeting 5.2 percent in the first quarter this year, partly driven by a plunge in the amount American companies’ foreign affiliates earned. Of the decline in overseas subsidiary profits caused by the appreciating currency and cheaper oil imports, about a third probably came specifically from the greenback, Carol Bertaut and Nitish Sinha wrote in a post this month.
Fed policy makers have voiced concern about the strong dollar’s drag on exports, both in Federal Open Market Committee minutes and in speeches (the FOMC will release a new policy statement at 2 p.m. on Wednesday). It’s a major point of concern for monetary policy-watchers as Fed officials debate when to go ahead with the first interest rate increase since 2006.
The dollar has appreciated by about 9.6 percent against the euro and 3.4 percent against the yen this year. A stronger currency hurts company earnings because U.S. exports become less competitive with goods produced abroad, and if corporations haven’t hedged overseas profits, they translate into fewer dollars.
This Bloomberg news item appeared on their website at 9:15 a.m. Denver time on their Wednesday morning—and it’s the second contribution of the day from Patricia Caulfield.
S&P 500 Earnings Show Weakest First Half Since 2009
Profit growth for the S&P 500 companies is at its weakest point since 2009. That’s because, in fact, there isn’t any profit growth.
S&P 500 earnings for the first half of the year are expected to show a 0.7% contraction compared to a year ago, according to numbers from FactSet research. Growth in the first quarter was a meager 1.1%, but the second quarter is more than offsetting that, expected to contract at a 2.2% rate, FactSet estimates. The last time the S&P 500 saw a year-over-year decline for the first half of a year was 2009, when earnings positively cratered at the depths of the global recession, down 30.9%.
This earnings season has seen a string of high-profile disappointments: Apple Inc., even with its nearly $11 billion profits, American Express Co., Caterpillar Inc. and others. The irony was that a big name company with one of the lowest expectations, Amazon.com Inc., was the biggest upside surprise.
Profit growth is not keeping up with trends, and sales growth certainly isn’t either. Companies have been able to mask top-line weakness through buybacks and cost-cutting measures. If bottom-line growth rate starts to resemble top-line rate, that’s a problem for the stock market as the Fed gets closer to raising rates.
This item was posted on The Wall Street Journal website early Tuesday afternoon—and it’s something I found in yesterday’s edition of the King Report.
The Layoffs Return: Energy Giants Chevron, Saipem to Fire Over 10,000 Workers
In the beginning of 2015 the biggest threat to the economy as a result of the collapse in oil prices, both in the US and worldwide, was the surge in layoffs among highly-paid energy sector job. This was confirmed in April when we showed the Challenger layoffs data for the energy-heavy state of Texas, and the energy sector in general where the 37,811 job cuts in Q1 were some 3,900% higher than a year earlier.
Then in Q2, after the price of oil staged a substantial rebound of about 50% from the year to date lows in the $40’s, energy-related layoffs trickled to a halt as corporations hoped the worst is behind them, and as a result would merely bide their time before redeploying their workforce toward exploration and production.
Alas, this was not meant to be, and as the events of the last month have shown, oil has resumed its downward slide. And, as expected, so have layoffs.
Overnight, U.S. energy major Chevron announced it will cut 1,500 jobs globally “as the company aims to reduce internal costs in multiple operating units and the corporate center.” According to Rigzone, “the San Ramon, Calif.-based energy company will cut 950 positions in Houston, 500 positions in San Ramon and 50 positions internationally.”
This is another Zero Hedge story from yesterday. This one put in an appearance on their website at 9:06 a.m. EDT yesterday morning—and I thank reader M.A. for sending it along.
U.S. Junk-Bond Buyers Left in Dark as Private Deals Become Norm
The riskiest corporate borrowers are selling more debt than ever in the darkest corner of the bond market.
For the first time, a majority of U.S. speculative-grade debt issued this year was done through private offerings, accounting for a record 60 percent of all sales in 2015, up from 40 percent last year, according to Xtract Research LLC. The sales exempt borrowers from U.S. securities laws requiring minimum financial disclosure and investor protections. Such debt allowed Murray Energy Corp. to raise $1.3 billion to become the third-largest coal producer in America and gave Citgo Petroleum Corp. $1.5 billion to fund a dividend to its Venezuelan parent.
The deals are drawing concern from credit analysts who say investors are sacrificing safeguards in the pursuit of higher-yielding debt as the Federal Reserve suppresses interest rates for a seventh year. While purchases are limited to institutions that are expected to be able to fend for themselves, the transactions are raising the risk that they would be blindsided in a downturn.
“Investors are making decisions based on short-term goals,” said Evan Friedman an analyst at Moody’s Investors Service. “But down the road when the atmosphere changes they are taking a chance.” The risk, he said, is that “an investor may be underinformed and may learn of something material too late to react.”
This Bloomberg article showed up on their website at 6:45 p.m. MDT on Tuesday, but was updated yesterday at 8:24 a.m. MDT. I thank West Virginia reader Elliot Simon for sending it along late last night MDT. It’s worth skimming.
Rope-a-Doping the Global Elites: Jim Rickards
The global monetary elites — central bankers, the IMF, finance ministers and professors — keep predicting higher growth, and they keep printing money to get it. They continually expect better growth in the next quarter, the next half or the next year.
They act like the opponents of Ali and believe that deflation and weak growth are ‘on the ropes’. They think one more dose of QE or one more interest rate cut will be all it takes to knock out deflation and win the fight.
But every time the monetary elites are ready to declare victory, deflation bounces off the ropes, charges to the centre of the ring and hits their policies with vicious GDP punches.
What is amazing about this pattern is not that it has happened at all, but that it keeps happening.
This commentary by Jim was posted on the dailyreckoing.com Internet site yesterday—and is worth reading, but be prepared for the infomercial in the last paragraph. I thank Harold Jacobsen for bringing it to our attention.
‘Where to Invade Next': Michael Moore Unveils Film on U.S.’ Infinite War
Award-winning filmmaker Michael Moore has been secretly working on a new documentary titled “Where to Invade Next.” Washington’s endless engagement in a perpetual war cycle and pathological “need to have an enemy” are at the heart of Moore’s latest project.
“I’ve been very quiet about the making of this film. You probably haven’t seen much of me…. We’ve been very diligent about keeping this under cover,” Moore said during a short Q&A, saying the film is “of epic nature.”
In an age when almost any information leaks to social media in the blink of an eye, keeping a major project focusing on the U.S. military under wraps is an achievement in itself.
Michael understand the warfare nation that the U.S. has become, exactly. This absolute must read news item appeared on the sputniknews.com Internet site at 3:37 p.m. Moscow time [EDT+7 hours] yesterday afternoon, which was 8:37 a.m. in Washington.
Operation Stack is not enough. The U.K. must act now on the migrant crisis in Calais
Judging from blogs and social media, most of Kent would like to be cut adrift from the rest of the UK and floated off to the Western Isles. Or maybe somewhere warmer. Anywhere, at least, that was not 21 miles from the continent. A referendum on staying in Europe held today in Kent would produce a resounding no.
The clinical-sounding Operation Stack is the term for police traffic control that is turning much of the M20 into a lorry park for up to 5,000 lorries delayed by strikes and migrant activity on the French side. In the whole of the 11 years from its invention in 1996 until 2007 it was used 145 times. That’s not much more than 10 days a year, and it was never closed for more than a day or two at a time. But this year, residents complain, it feels as if the Garden of England has become the nation’s truck park, with the coast-bound road closed for 24 out of 40 days.
And of course, as July becomes August, it’s not just the people of Kent and the freight companies who are – to put it mildly – inconvenienced. It’s thousands of carloads of overexcited kids and exhausted parents off on holiday too.
This very interesting news item was posted on theguardian.com Internet site at 12:12 p.m. BST yesterday afternoon [EDT+5 hours]—which was 7:12 a.m. in New York. I thank Patricia Caulfield for sending it our way.
U.K. Home Secretary Theresa May announces work on plans to stop Channel tunnel migrants
Urgent work to accelerate the introduction of extra security measures to stop migrants attempting to enter Britain illegally through the Channel tunnel has been agreed, the home secretary, Theresa May has announced.
Speaking after a meeting of the government’s emergency Cobra committee, called in the wake of this week’s renewed mass attempts by migrants to cross from Calais and the death of a Sudanese man in his 20s, the home secretary said: “What we are seeing at the railhead at Coquelles is, as we are putting extra security fencing in, there have been migrants particularly trying to get into the Eurotunnel and on to the trains before that security fencing is going up.
“One of the outcomes of the meeting today was some more urgent work with government departments but also with Eurotunnel on further measures that can taken at Coquelles to prevent people getting into the tunnel.”
Pressure is being brought to bear on Eurotunnel to ensure it rapidly installs the new fencing Britain has agreed to pay for.
Ministers have been alarmed at the nightly scenes of repeated mass attempts – 2,000 were reported to have been made on Monday and 1,500 on Tuesday – by several hundred migrants trying to cross illicitly from Calais to Dover.
This is another story on this subject from The Guardian. This one showed up there at 3:34 p.m. BST yesterday afternoon—and I thank Patricia Caulfield for this one as well.
Calais crisis: medics struggle to cope with number of injured migrants
Medical staff in Calais say they are struggling to cope with the number of seriously injured migrants, who are taking ever greater risks attempting to get to the UK.
As French police confirmed the death of another migrant attempting to cross the Channel, Médecins du Monde, which has a semi-permanent base in “the jungle” migrant camp in Calais, said that the number of people needing urgent help had rocketed in recent days.
Migrants are making thousands of attempts to enter the Eurotunnel site on a near nightly basis. Eurotunnel said on Wednesday that it had blocked 37,000 attempted incursions.
As many as nine migrants have died since the beginning of June. The latest migrant to die is thought to have been a Sudanese man.
This is the third story in a row from The Guardian dealing with the Eurotunnel debacle—and it’s also courtesy of Patricia Caulfield. It was posted on their website at 2:38 p.m. BST [EDT+5 hours] on their Wednesday afternoon.
The Grecian Kabuki Theatre: 6 Stories
1. How the Greek Deal Could Destroy the Euro — Op-Ed: The New York Times 2. Pressed by left, Greece’s Tsipras vows ‘thus far and no further’: Reuters 3. Yanis Varoufakis is being pilloried for doing what had to be done: The Guardian 4. Total Collapse: Greece Reverts To Barter Economy For First Time Since Nazi Occupation: Zero Hedge 5. Refugees in Greece — A choppy route to freedom: The Economist 6. European ‘alliance of national liberation fronts’ emerges to avenge Greek defeat: The Telegraph
The first three stories—and the last—are courtesy of Patricia Caulfield, for which I thank her—and the fourth one was sent to us by reader ‘David in California’. I found #5 in yesterday’s edition of the King Report. Story #6 by Ambrose Evans-Pritchard certainly falls into the must read category.
Italian lawmakers announce plans for Crimea visit in October
A group of Italian MPs have decided to follow the example of their French colleagues to pay a personal visit to the Crimean Republic in order to get firsthand information on people’s lives and the political situation on the ground.
The organizer of the visit, MP Manlio Di Stefano, told Russian business daily Kommersant that the delegation would include between eight and 10 parliamentarians from the Five Star Movement, known for its Euroskeptic and anti-establishment stance.
Di Stefano also said that the delegation would be headed by a member of the parliamentary Committee for Foreign Relations, Alessandro di Batista, and that they had received an invitation from Russian MP Andrey Klimov, a member of the Foreign Relations Committee of the State Duma.
This article appeared on the Russia Today website at 10:37 a.m. Moscow time on their Wednesday morning—and I thank Roy Stephens for his first contribution to today’s column.
Friends Only: West Denies Crimea’s Right to Self-Determination
The stories of Crimea and Kosovo fuel concerns that only friends of Western countries, and not their opponents, are allowed to exercise the right to decide their own destiny, the NRC Handelsblad newspaper says.
“If the ‘autonomous region of Kosovo’ has a right to choose its future, then there can be no legal grounds to strip the ‘autonomous republic of Crimea’ of this right,” the daily noted, accusing the West and the Dutch media of double standards.
In March 2014, more than 96 percent of Crimeans voted in favor of splitting with Ukraine and joining Russia.
This news item appeared on the sputniknews.com website at 1:31 p.m. Moscow time yesterday afternoon—and once again I thank Roy Stephens for sending it our way.
Russian ruble strengthens as Central Bank stops currency purchases
The Russian ruble has come back to below 60 against the U.S. dollar in early trading on the Moscow Exchange Wednesday. The Central Bank of Russia (CBR) said it stopped buying foreign currency, as the ruble hit 4-month lows.
The ruble revalued on the news, standing at 59.4 to the dollar and 65.7 to the euro at 13: MSK.
“On 28 July 2015, the Bank of Russia suspended operations to replenish international reserves due to increased volatility in the domestic FX market,” CBR said in a statement issued Wednesday.
Last week the bank reduced foreign currency purchases to $160 million from $200 million a day as the ruble’s decline intensified.
This story, filed from Moscow, appeared on the Russia Today website at 10:21 a.m. local time [EDT+7 hours] on their Wednesday morning, which was 3:21 a.m. EDT. I thank Roy Stephens for sharing it with us.
Turkey launches heaviest air strikes yet on Kurdish group
Turkish jets launched their heaviest assault on Kurdish militants in northern Iraq overnight since air strikes began last week, hours after President Tayyip Erdogan said a peace process had become impossible.
The strikes hit Kurdistan Workers Party (PKK) targets including shelters, depots and caves in six areas, a statement from Prime Minister Ahmet Davutoglu’s office said. A senior official told Reuters it was the biggest assault since the campaign started.
Iraq condemned the air strikes as a “dangerous escalation and an assault on Iraqi sovereignty”, saying it was committed to ensuring militant attacks on Turkey were not carried out from within its territory.
This Reuters story, filed from Istanbul, put in an appearance on their Internet site at 7:56 p.m. EDT on Wednesday evening—and I thank Patricia Caulfield for finding it for us.
Philippines reinforces its claim to South China Sea outpost
The Philippine navy is quietly reinforcing the hull and deck of a rusting ship it ran aground on a disputed South China Sea reef in 1999 to stop it breaking apart, determined to hold the shoal as Beijing creates a string of man-made islands nearby.
Using wooden fishing boats and other small craft, the navy has run the gauntlet of the Chinese coastguard to move cement, steel, cabling and welding equipment to the BRP Sierra Madre since late last year, two navy officers who have been inside the vessel told Reuters in recent interviews.
The 100 metre-long (330-foot) tank landing ship was built for the U.S. Navy during World War Two. It was eventually transferred to the Philippine navy, which deliberately grounded it on Second Thomas Shoal to mark Manila’s claim to the reef in the Spratly archipelago of the South China Sea. A small contingent of Philippine soldiers are stationed onboard.Manila regards Second Thomas Shoal, which lies 105 nautical miles (195 km) southwest of the Philippine region of Palawan, as being within its 200-nautical mile exclusive economic zone. China, which claims virtually all the South China Sea, says the reef is part of its territory.
“We know China has been waiting for the ship to disintegrate but we are doing everything to hold it together,” said one of the officers, adding that while the work was progressing slowly, it should be finished by the year-end.
I posted a story about this a year or more ago—and this update on the situation is courtesy of The Guardian. It appeared there back on July 14—and Patricia Caulfield sent it our way.
Dear Bloomberg News: Central banks manipulate gold prices too
Dear Mark (if I may):
While your commentary today, “True Gold Bugs Care about Value, Not Price” — was excellent for noting that central bank interventions increasingly are determining asset prices, you were in error when you asserted that gold’s value “appears to move freely depending on the whims of its buyers and sellers, rather than on the interventions of policy makers.”
In fact, central bank manipulations encompass gold as well, probably more so than the prices of other assets.
For 15 years my organization, the Gold Anti-Trust Action Committee, has been documenting the surreptitious intervention in the gold market by Western central banks. By their own admissions, the central banks are surreptitiously intervening in the gold market every day, or nearly so, to control the gold price to prevent it from becoming an accurate measure of other currency values.
This commentary by Chris Powell, along with the link to the offending Bloomberg article, was posted on the gata.org Internet site yesterday.
GFMS curate’s egg report — Lawrence Williams
Major London precious metals consultancy GFMS has come up with a very detailed post-Q2 gold report, but we would argue some points with it.
It is perhaps unfair to sit on the sidelines and quibble about aspects of the latest GFMS Gold Survey findings given that the consultancy has a good-sized team of specialist analysts and contacts working on its figures in the UK and around the world. Indeed, probably one has to bow to the overall finding that global gold demand may well be, as the report suggests, at its weakest since 2009. However, there are some findings that don’t seem to add up to this outsider – especially in respect to China.
If one looks at the GFMS data, in terms of Chinese gold imports it still seems to draw heavily on the Hong Kong net exports to mainland China. But the report seemingly totally ignores the now indisputable fact, borne out by official Swiss and U.S. gold export data, that a substantial amount of China’s gold imports are bypassing Hong Kong altogether. Switzerland is probably the biggest single exporter of gold to China and in 2014 some 37% was sent directly to the Chinese mainland. If anything, this proportion has further increased this year. The latest figure from the Swiss Customs & Excise Department is that for gold export figures for June this year, 44% of exports to China + Hong Kong, went directly to the mainland without first being landed in Hong Kong. Go back a couple of years and virtually all Swiss gold exports to China were via Hong Kong. The GFMS section on Chinese imports and demand does not seem to take account of this at all, only drawing comparisons on a yearly basis for the Hong Kong net export figure. True, Hong Kong exports to the mainland may well be down 15% on the year as the GFMS analysis suggests, but some of this fall will be due to a significant, and seemingly growing, volume of this gold flowing directly into the Chinese mainland as the Swiss figures show.
Lawrie is such an English gentleman, but he still manages to rip GFMS a new one in his usual genteel fashion. Let’s call a spade a shovel here, dear reader, the GFMS reports aren’t worth the paper they’re printed on, a fact that I and others have been stating for more than a decade now—and I mentioned at least once in yesterday’s column. This commentary appeared on the mineweb.com Internet site at 11:09 p.m. last night BST—and it’s worth reading.
Perth Mint surprised gold still in high demand despite price drop
The Perth Mint says despite the gold price dropping almost 50 per cent from the highs of the mining boom, demand for gold has not waned.
As well as being a museum and local tourist attraction, the Mint is also the second largest refiner of gold in the world and saw huge spike for their precious product during the peak of the mining boom, with prices reaching $US1,928 per ounce in 2009.
The gold price has now fallen to $US1,094 but director of Perth Mint Depository, Nigel Moffat, said the lower prices has stimulated buying.
“What tends to happen is that the lower the price goes, the lower demand is too. This has not happened though on this occasion,” Mr Moffat told 720 ABC Perth. “Since the gold price fell below $US1,100 we have seen considerable demand come in from around the world.
No surprises here—and that’s echoed in sales from the U.S. Mint in the last two months. The Royal Canadian Mint hasn’t come out with their second quarter report yet, but I’d be prepared to bet a considerable sum that they will report record sales again, especially in silver maple leafs. This gold-related news item appeared on the abc.net.au website on their Friday sometime—and I found it on the Sharps Pixley website. It’s definitely worth reading.
The PHOTOS and the FUNNIES
THE WRAP
As expected, the US Mint announced sales of Silver Eagles this week after a three week suspension of sales due the sellout announced on July 7. On Monday, the Mint announced it had sold a little over 1.3 million Silver Eagles which was half the amount I had privately expected, using what I had estimated to be the Mint’s daily production capacity of 130,000 coins per day (7 day week). To say I was disappointed with Monday’s report would be an understatement. Fortunately, yesterday’s update from the Mint eliminated any disappointment as it indicated another 1.2 million coins sold, with the two day total darn close to the 2.6 million coins I expected (20 days X 130,000 coins).—[Plus the 775,000 silver eagles sold on Wednesday – Ed]
Previously, I speculated that the intent behind the Mint’s suspension of sales for 3 weeks, instead of selling coins daily as they were produced, was to cool off demand and allow the Mint to get ahead of the curve and get off the rationing mode. If my speculation is close to the mark, then it would appear the Mint has been unsuccessful to date in cooling off demand. What I can’t tell at this time is JPMorgan’s role, aside from the bank cleaning out the Mint in June and early July and kicking off the surge in retail demand that resulted from the Mint’s sellout on July 7.
Reports from the retail front indicate demand for silver has remained strong and I’m inclined to believe that this week’s sale of Silver Eagles may have been pure retail. There has also been remarkable increase in demand for Gold Eagles, but I don’t have a strong handle on where that demand is coming from. It may be a plain vanilla surge in retail demand, but that argument is undercut somewhat by the lack of demand for shares of GLD or in similar gold investment vehicles. In any event, I’m not ready to abandon just yet my premise that a big buyer may have emerged for Gold Eagles, similar to the big buyer I have sensed in Silver Eagles over the past few years. — Silver analyst Ted Butler: 29 July 2015
It was another day where nothing much should be read into the gold price action, although the fact that the spikes in both gold and silver, which got hammered flat, are duly noted. However, both happened at different times, noon for silver and 2 p.m. EDT for gold—and I’m not sure what should be made of that fact, if anything.
With the big traders now rolled out of the August gold contract, the remainder of the traders have to be out by the end of COMEX trading this afternoon. First Day Notice numbers for delivery into the August gold contract should be posted on the CME’s website late this evening—and I’ll have all those details in tomorrow’s column.
Here are the 6-month charts for the Big 6 commodities once again—and in the grand scheme of things, it was just “another day off the calendar” as Ted Butler is wont to say from time to time, as no key moving averages were violated once again.
And as I write this paragraph, the London open is about ten minutes away. The gold price got sold down about four bucks starting just before 10 a.m. Hong Kong time on their Thursday morning—and the HFT boyz spun their algorithms at precisely 2 p.m. Hong Kong time—and dropped gold another ten dollars, but it has recovered a few dollars in the last fifteen minutes of trading. The ‘trading’ pattern in the other three precious metals was about the same, with platinum now back to unchanged—and palladium is now down 3 bucks.
Net gold volume is around 26,000 contracts, which is pretty hefty, with the lion’s share of that now in the new front month which is December. Net HFT volume in silver is pretty decent at just under 5,000 contracts. There were a decent number of roll-overs from September silver into December and March 2016—which I found rather surprising.
The dollar index, which hadn’t been doing much of anything in early trading in the Far East, blasted higher starting around 1:45 p.m. Hong Kong time—and is currently up 24 basis points.
The dichotomy between high physical demand for both gold and silver—and the paper price on the COMEX is getting more pronounced with each passing day. As to when this might be resolved, it’s certainly not going to be free market forces of supply and demand that determine that, because it will happen when the power-that-be decide—and not a moment before. But as I’ve said countless times—what day that might occur is anyone’s guess. Meanwhile, the tirade against gold in the main stream media [and GFMS] continues unabated.
And as I put today’s column up on the website at 5:50 a.m. EDT, I note that the HFT boyz had their way with precious metal prices until the London/Zurich open—-and all have rebounded a hair off those lows. Gold is currently down about 11 bucks—and silver is down 15 cents. Platinum and palladium are back to unchanged.
Net gold volume is way up there at 38,000 contracts—and silver’s net volume is around 7,100 contracts. The dollar index is almost back to unchanged—and is currently up 4 basis points.
As to what may happen in New York today, I haven’t a clue, although I was more than underwhelmed that the HFT boyz and their algos showed up in the thinly-traded Far East market on their Thursday afternoon.
The Big 6 commodities seem to be in some sort of holding pattern, but I don’t know for what reason. We’re still miles below any moving averages that would make the technical funds in the Managed Money category run for cover—and until prices are allowed to rise to penetrate these moving averages and/or the moving averages continue to fall, which accomplishes the same thing—or a combination of the two—nothing will change. We’re currently in “no-man’s land” from a technical analyst’s perspective.
That’s all I have for today—and I’ll see you here again tomorrow.
Ed
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