06 August 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
There wasn’t much price movement allowed in gold once again during the Wednesday trading session—and the only ‘rally’ worth noting was the two hours going into the COMEX open. It was capped at that point—and then all the day’s gains, plus a few dollars more, were taken back by the HFT boyz at the London p.m. gold fix. After that, the price didn’t do a thing for the remainder of the day.
The gold price was forced to trade in a ten dollar range all day long yesterday, so I shall dispense with the low and high ticks once again.
Gold closed in New York yesterday at $1,084.50 spot, down $3.00 from Tuesday’s close. Net volume was a hair under 100,000 contracts.
The price pattern in silver was, once again, very similar to gold’s, so I shall dispense with the rest of the words—and you can check the chart below for yourself. The silver price traded in about a 25 cent range for the entire Wednesday session, so I won’t bother with the low and high in this precious metal, either.
Silver closed yesterday in New York at $14.59 spot, up 1.5 cents on the day. Net volume was pretty light at precisely 25,000 contracts. There was a decent amount of roll-over activity out of the September delivery month.
Platinum and palladium both traded in a very tiny price range yesterday. Platinum closed down 4 bucks at $948 spot—and palladium finished the Wednesday session at $592 spot, down 6 dollars from Tuesday’s close. Here are the charts.
The dollar index closed late on Tuesday afternoon in New York at 97.94—and rallied up to the 98.20 mark by 10:10 a.m. Hong Kong time on their Wednesday morning. It hung onto most of those gains until precisely 11 a.m. BST in London—and then had a five hour 50-basis point down/up move that ended back at 98.15 at 10:15 a.m. EDT—exactly where the sell-off started. From there it chopped sideways until 1 p.m.—and then headed lower once again—and closed at 97.90—down 4 basis points on the day. And just as a point of interest, the 97.64 low tick came shortly before 9 a.m. in New York.
Here’s the 6-month U.S. dollar chart so you can keep up with the bigger picture.
It was another ugly day for the gold stocks. Although they started in positive territory, they fell into negative territory to stay around 11:30 a.m. EDT. The HUI closed down another 2.29 percent—and just off its low tick.
It was even worse for the silver equities. Despite the fact that silver closed up a few pennies, Nick Laird’s Intraday Silver Sentiment Index got hammered for another 4.24 percent.
Although I’m not at all happy with the performance of the precious metal equities, I’m even more intrigued by who the buyers might be.
After Tuesday’s huge delivery report, the CME Daily Delivery Report on Wednesday showed that only 8 gold and 27 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. This activity level isn’t worth linking.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in August dropped by a chunky 2,718 contracts—and those are the ones posted for delivery on the CME Group’s website on Tuesday evening—and that are being delivered today. Open interest in August is now down to 3,875 contracts remaining. For the second day in a row the silver o.i. for August was unchanged at 60 contracts—minus the 27 posted for delivery in the previous paragraph.
There was another withdrawal from GLD yesterday. This time an authorized participant took out 153,322 troy ounces. And as of 7:32 p.m. EDT yesterday evening, there were no reported changes in SLV.
It was a bit of a surprise, but for the first time in a long while, there was no sales report from the U.S. Mint in either gold or silver. It’s a pretty reasonable assumption that the big buyers in gold and silver eagles have taken a break, as I’m sure they’ve cleaned the mint out of both those items—and maybe gold buffaloes as well.
As I mentioned in yesterday’s column, the mint had sold 1,057,000 silver eagles in only three business days which, combined with the 5.3 million silver eagles they sold in July, is their production capacity pushed to the outer limits.
There was no gold reported received at the COMEX-approved depositories on Tuesday—and only 2,286 troy ounces were shipped out the door.
But the really big changes were internally at JPMorgan’s vault, as 276,049 troy ounces were transferred from the Eligible category to the Registered category as JPMorgan prepares to deliver [today] the 2,750 gold contracts it issued on Tuesday. A smaller amount—5,021 troy ounces—was shifted from Eligible to Registered at Canada’s Scotiabank as well. The link to all the activity is here—and it’s worth a look.
The nut-ball lunatic fringe, including so-called ‘analysts’ that should know better, were having a field day yesterday saying that the COMEX was heading for default for the umpteenth time in the last ten years because Registered gold stocks were being depleted. Please, please, please, dear reader—be careful of what you absorb on the Internet when it come to precious metals commentary, especially when its free. The old saying “you get what you pay for” should be top of mind when you’re reading almost all gold and silver commentary. We apply that rule to all the garbage that the main stream media prints about them, but the same standard of care is never applied to what you read elsewhere on the Internet. So do yourself a favour and start doing that.
One should be mindful of the Mark Twain quote that states: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” That goes for writers of precious metal-related stories, as well as those that read them.
There was decent movement in silver on Tuesday, as 85,813 troy ounces were shipped in—and 630,098 troy ounces were shipped out. Once again JPMorgan wasn’t involved in any of it. The link to that action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they reported receiving 699 kilobars—and shipped out 5,131 kilobars. The link to that activity, in troy ounces, is here.
I’m happy to report that I don’t have all that many stories today—and I hope you’ll find some that interest you.
CRITICAL READS
Scotiabank Warns “The Fed Is Cornered And There Are Visible Market Stresses Everywhere“
When the Fed begins to normalize rates, trillions in carry trades will likely begin to unwind. The similarity to 2008 is glaring, except that banks no longer own SIVs. Regulations have chased the ‘carry trades’ from the banking system into the shadow banking system where officials can’t see or measure the risk. The banking system today is, no doubt, far less exposed, but too many sellers could overwhelm the depth of the market, leading to asset price contagion that filters into the real economy.
The FOMC is probably fearful of such an outcome, and its unknown impact on the broader economy, which could explain why it has delayed ‘lift-off’. It may also be the reason why the Fed emphasizes that the pace of rate normalization will be “gradual”, and will remain “overly-accommodative”. Unfortunately, the Fed recognizes that speculators do not wait to retreat in an orderly manner. They are also fully aware that regulations have impaired market liquidity; figuratively shrinking the exit doors. This is where ‘macro-prudential’ comes in.
Experimental monetary policy over the past seven years should reveal that attempts at artificial monetary inflation are ineffective. Yet, they give no hints of discarding this failed ideology. Unless this ideology changes, ever-greater quantities of printing just to repair the inevitable bust will be required as the chosen response.
There are warning signs and visible market stresses beyond those mentioned yesterday. To list them all is beyond the scope of this note.
This slightly longish, but worth reading commentary, put in an appearance on the Zero Hedge website at 5:45 p.m. Wednesday afternoon EDT—and I thank ‘David in California’ for passing it around.
JPMorgan Reclaims Place Among U.S.’s Top 10 Biggest Stocks
Don’t look now, but mega-cap financial companies are creeping back onto the list of the biggest U.S. companies.
With $253 billion in market capitalization, New York-based JPMorgan Chase & Co. just surpassed Procter & Gamble Co. and Wal-Mart Stores Inc. to join the top 10 ranking after a five-year hiatus. With Berkshire Hathaway Inc. fourth and Wells Fargo & Co. sixth, financial stocks now hold three spots, the most since 2006, data compiled by Bloomberg show.
The ascent highlights Wall Street’s recovery from a crisis that crippled the economy and ejected virtually every lending institution from the ranking six years ago. While the group’s weighting in the Standard & Poor’s 500 Index is still far from the glory days, mega-banks are back, driven by earnings growing five times faster than the market.
“This odyssey represents a degree of normalization that has returned to the financial sector,” Jeff Korzenik, the Chicago-based chief investment strategist at Fifth Third Bancorp., said by phone. The firm oversees $27 billion. “It also represents to some degree the faith that investors have that banks are an attractive investment going forward.”
This Bloomberg article was posted on their Internet site at 10:00 p.m. Denver time on Tuesday evening—and my thanks go out to Roy Stephens for his first contribution of the day.
SEC Backs Rule Forcing Companies to Compare CEO and Worker Pay
The U.S. Securities and Exchange Commission approved a rule Wednesday requiring companies to reveal the pay gap between the chief executive officer and their typical worker, handing a new weapon to groups protesting rising income inequality.
The commission voted 3 to 2 to mandate the disclosure. The agency had delayed progress on the rule for years, with SEC Chair Mary Jo White facing attacks from unions and Democratic lawmakers in recent months for failing to get it done.
The disclosure is required under the 2010 Dodd-Frank Act, which hasn’t stopped it from splintering the five-member commission. Republican commissioners and business groups argue it’s meant to embarrass CEOs and won’t be useful to investors.
This Bloomberg article appeared on their website at 10:08 a.m. MDT on Wednesday morning—and it’s another offering from Roy Stephens.
U.S. June Trade Deficit Surges 7% To $43.8 Billion as Strong Dollar Slams Exports, Imports Rise
Dear Fed: behold another example of why your ludicrous rate hike ideas will crush the economy. Moments ago the BEA reported that the June international trade deficit spiked by 7.1% from $40.9 billion in May (revised) to $43.8 billion in June, as exports decreased and imports increased.
The previously published May deficit was $41.9 billion. The goods deficit increased $2.9 billion from May to $63.5 billion in June. The services surplus decreased less than $0.1 billion from May to $19.7 billion in June.
When stripping out oil, the U.S. trade deficit is once again en route to surpassing its all time highs. Or rather lows.
This 2-chart Zero Hedge story showed up on their website at 8:40 a.m. EDT yesterday morning—and if you don’t want to read the article, you should at least take a peek at the charts.
ADP Employment Tumbles Near 2015 Lows, Below Lowest Estimate and Down 20% on the Year
Following June’s small-business-driven better-than-expected rise in ADP employment, July printed a stunningly weak 185k against expectations of 215k – the biggest miss since March. This is around the lowest level of the year and lowest since Q1 2014. It is also 20% lower than the 232K ADP print a year ago, and the weakest July print since 2013: all signs screaming QE4 a rate hike is imminent.
Sure enough small business exuberance in June turned to pessimism in July as gains rose at half the pace for firms less than 50 people. Manufacturing jobs were also weak (8k goods producing vs 178k services). The question now is what will The Fed need as an excuse to raise rates given that employment is no longer their crutch, printing below economists’ lowest estimate.
This longish multi-chart Zero Hedge piece showed up on their website at 8:20 a.m. EDT on Wednesday morning—and the first two charts are worth a look. I thank reader M.A. for sending it.
The Odds of a September Rate Hike Have Surged in the Last Two Days
Traders have never been more convinced of a September rate hike by the Federal Reserve.
The chances of an interest-rate increase next month reached 52 percent Wednesday, up from just 38 percent just two days earlier. What’s fueled the change of heart? Hawkish comments from Fed Bank of Atlanta President Dennis Lockhart on Tuesday, and a surprisingly strong report on U.S. service-sector growth Wednesday morning.
“I’m more convinced that they’re going to raise in September,” said Christopher Sullivan, who oversees $2.4 billion as chief investment officer at United Nations Federal Credit Union in New York. “The market has come around to that view, by a slim majority.”
That’s helped drive bond yields higher before the week’s main event, Friday’s monthly report on unemployment and wages from the Labor Department. Fed officials have said that they will need signs of some further improvement in the jobs market before they raise rates.
Well, dear reader, with this story in mind, the job numbers on Friday will be massaged to perfection to show whatever is necessary. This is another Bloomberg article—and this one showed up on their Internet site at 10:20 a.m. Denver time yesterday morning.
Weary Hungarians polarized by tide of refugees
Every day, some 1,500 mostly Afghan and Syrian refugees stream through the woods from Serbia into Hungary.
Detained by police for registration, then set free and told to report to asylum centers, most make a beeline for the West instead, adding to the European Union’s growing migrant crisis.
The vulnerability of a border-free Europe is exposed at external frontiers like this dense forest where thousands of Middle Eastern migrants, often fleeing violence at home, cross into the E.U.’s Schengen zone of passport-free travel.
While Hungary is a transit route rather than a destination for most, the growing influx is wearying and polarizing the central European country and fuelling racism. Conflicts have begun to appear as the government takes an ever harder line.
This longish, but interesting Reuters essay, filed from Szeged, Hungary, was posted on their website at 2:47 a.m. yesterday morning EDT—and I thank Patricia Caulfield for her first contribution to today’s column.
Greek Bank Stocks Are Getting Crushed for the Third Straight Day
Greek banks extended a rout that has wiped out more than half their value this week, sending the nation’s stocks lower for a third day.
Piraeus Bank SA and Alpha Bank AE plunged at least 29 percent, while Eurobank Ergasias SA plummeted 15 percent. National Bank of Greece SA climbed 2.3 percent, rebounding after a 50 percent tumble in two days. While about half of the 60 stocks listed on the benchmark ASE Index climbed, the lenders’ losses dragged the gauge lower.
The ASE fell 1.4 percent to 651.02 at 10:43 a.m. in Athens, after closing at its lowest level since September 2012 on Tuesday. The index tumbled the most since at least 1987 on Monday, when the exchange reopened after a five-week shutdown. An index of Greek banks has fallen to its lowest level since at least 1995.
Trades have been hampered because of emergency curbs put in place amid capital controls. A stock’s trading will be halted if it rises or falls by as much as 7 percent in 10 minutes, while daily moves are limited to 30 percent. Would-be buyers have to raise money from places other than their bank accounts.
This Bloomberg story put in an appearance on their Internet site at 1:45 a.m. MDT yesterday morning—and it’s the second offering in a row from Patricia Caulfield.
Special Report: Ukraine struggles to control maverick battalions
From a basement billiard club in central Kiev, Dmytro Korchynsky commands a volunteer battalion helping Ukraine’s government fight rebels in the east. A burly man with a long, Cossack-style moustache, Korchynsky has several hundred armed men at his disposal. The exact number, he said, is “classified.”
In the eyes of many Ukrainians, he and other volunteer fighters are heroes for helping the weak regular army resist pro-Russian separatists. In the view of the government, however, some of the volunteers have become a problem, even a law unto themselves.
Dressed in a colorful peasant-style shirt, Korchynsky told Reuters that he follows orders from the Interior Ministry, and that his battalion would stop fighting if commanded to do so. Yet he added: “We would proceed with our own methods of action independently from state structures.”
Korchynsky, a former leader of an ultra-nationalist party and a devout Orthodox Christian, wants to create a Christian “Taliban” to reclaim eastern Ukraine as well as Crimea, which was annexed by Russia in 2014. He isn’t going to give up his quest lightly.
This is another very interesting, but longish Reuters article. It was filed from Kiev a week ago yesterday on July 29—and it’s worth reading if you have the interest. It’s another contribution from Patricia Caulfield.
U.S. drone hits Syria in first lethal strike launched from Turkey
The United States has conducted its first drone strike into northern Syria from a base in Turkey, the Pentagon said on Wednesday, ahead of what Ankara said would soon be a “comprehensive battle” against Islamic State militants there.
A spokesman in Washington said the raid by an unmanned drone was launched on Monday from the Incirlik air base near the southern city of Adana in Turkey, a U.S. ally with the second largest armed forces in NATO. Preparations were underway for strikes inside Syria by manned U.S. warplanes.
Until recently, only reconnaissance drones flew missions from Incirlik.
But Turkey formally agreed to open its air bases to U.S. and coalition strike aircraft last month, a major policy change after years of reluctance to take a frontline role against the Islamist fighters pressing on its borders.
This Reuters article, co-filed from Washington and Ankara, appeared on their Internet site in the wee hours of Wednesday morning EDT—and I thank Patricia Caulfield for sharing it with us.
Turkey’s Demirtas: ‘Erdogan Is Capable of Setting Country on Fire’
Demirtas, 42, co-chairman of the HDP, is widely regarded as the winner of the election in early June. His charismatic demeanor was mainly due to the fact that his People’s Democratic Party (HDP) received 13 percent of the popular vote, becoming the first Kurdish party to win a mandate in Turkey’s parliament and deny the governing Justice and Development Party (AKP) an absolute majority. For an interview, Demirtas received SPIEGEL in his parliamentary party’s new offices in Ankara. The room is large and bright and his desk is flanked by both the Turkish flag and that of his party.
SPIEGEL: Mr. Demirtas, your success two months ago gave hope to many people in- and outside of Turkey, who hailed it as a milestone for democracy. But today, the country threatens to return to civil war-like conditions. How could it come to this?
Demirtas: The AKP, the party of President Recep Tayyip Erdogan, has brought about this situation deliberately. Until the elections in June, they had ruled Turkey unilaterally for more than a decade. But they weren’t able to block our ascent to power any longer, so they opted to foment chaos in the country instead. This is the only possible explanation for their war against the Kurdistan Workers’ Party (PKK).
SPIEGEL: You go so far as to claim that the attack by the terrorist militia Islamic State in Suruc, in which 32 people were killed, was instigated by the government as a pretext for armed conflict. Do you have any proof?
A false flag beyond a doubt, as it looks textbook perfect to me. This interview was posted on the German website spiegel.de last Friday evening Europe time—and I thank Patricia Caulfield for digging it up for us. The headline used to read a benign “Kurdish Leader Demirtas Calls For Ceasefire with Turkey“—but was changed to the more incendiary one you see above by the spiegel.de ‘thought police’.
Saudi Arabia may go broke before the U.S. oil industry buckles
If the oil futures market is correct, Saudi Arabia will start running into trouble within two years. It will be in existential crisis by the end of the decade.
The contract price of U.S. crude oil for delivery in December 2020 is currently $62.05, implying a drastic change in the economic landscape for the Middle East and the petro-rentier states.
The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market and drive out rivals, boosting their own output to 10.6m barrels a day (b/d) into the teeth of the downturn.
Bank of America says OPEC is now “effectively dissolved”. The cartel might as well shut down its offices in Vienna to save money.
This absolute must read commentary by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 9:59 p.m. GMT on Wednesday evening, which was 5:59 p.m. EDT in Washington…EDT+5 hours.
Civilian casualties rise as Afghan war intensifies in 2015
The war in Afghanistan claimed almost 5,000 civilian casualties in the first half of 2015, the United Nations said on Wednesday, a one percent increase on last year as fighting intensified following the withdrawal of most foreign troops in 2014.
Of the total, 1,592 were killed and 3,329 wounded, according to the U.N.
“This destruction and damage to Afghan lives must be met by a new commitment, by all parties to the conflict, to protect civilians from harm,” said the director of the U.N. human rights unit in Afghanistan, Danielle Bell.
The Islamist militant Taliban were ousted from power by a U.S.-led coalition in 2001, but have been able to regroup and challenge Afghan forces with limited external support.
Last year was the most violent since the U.N. began keeping records in 2009.
This short Reuters article, filed from Kabul, was posted on their website at 11:34 a.m. EDT yesterday morning—and it’s courtesy of Patricia Caulfield.
Kyrgyzstan becomes 5th member of Russia-led Eurasian Economic Union
Kazakhstan was the last member of the Eurasian Economic Union (EEU) to adopt the accession of Kyrgyzstan to the bloc. Kazakhstan’s President Nursultan Nazarbayev signed a corresponding law on Tuesday.
Before that, the document was ratified by the EEU members Armenia, Belarus and Russia. Kyrgyz President Almazbek Atambayev signed a bill on his country’s accession to the EEU on May 21.
Atambayev told TASS last week that Kyrgyzstan would open its customs borders to other EEU member states soon. According to Kyrgyz Minister of Economy Oleg Pankratov, Kazakhstan decided to abolish sanitary and quarantine control on the state border with Kyrgyzstan. Kazakhstan is the only EEU bloc country to have a border with Kyrgyzstan.
The Eurasian Economic Union was started in 2015 based on the Customs Union of Russia, Kazakhstan and Belarus. Armenia soon joined the union. The bloc was launched to ensure the free movement of goods, services, capital and workforce within its borders.
This short article, filed from Moscow, was posted on the Russia Today website at 11:35 a.m. Moscow time on their Wednesday morning, which was 4:35 a.m. EDT in Washington…EDT+7 hours. It’s the final offering of the day from Roy Stephens, for which I thank him.
Pakistan’s secret military courts given Supreme Court blessing
Pakistan’s Supreme Court ruled on Wednesday that secret military courts were legal and could pass death sentences on civilians, a judgment that critics said further strengthened the military’s grip on power at the expense of civilian authorities.
Military courts were empowered to try suspected militants after Taliban gunmen massacred 134 children at an army-run school in December. The government argued civilians were too scared to convict militants.
Several lawyers challenged the constitutionality of the military courts in the Supreme Court. But on Wednesday, Chief Justice Nasir ul Mulk, announced all “petitions have been dismissed”.
Pakistan, a nuclear-armed nation of 190 million, is plagued by a Taliban insurgency, sectarian violence and militancy.
This is another Reuters article, this one filed from Islamabad—and it appeared on their Internet site at 3:08 a.m. EDT yesterday morning.
China says has stopped reclamation work in South China Sea
Chinese Foreign Minister Wang Yi said on Wednesday that Beijing had halted land reclamation in the South China Sea, and called on countries in the region to speed up talks on how claimant states should conduct themselves in the disputed waters.
In June, China said it would soon complete some of its reclamation in the Spratly archipelago of the South China Sea, while adding it would continue to build facilities on the man-made islands.
Wang’s remarks at a regional meeting in Kuala Lumpur appeared designed to defuse tensions with other countries that lay claim to parts of the sea, through which $5 trillion in ship-borne trade passes every year.
Beijing claims most of the waters, while the Philippines, Vietnam, Malaysia, Taiwan and Brunei have overlapping claims.
This Reuters story, filed from Kuala Lumpur, appeared on their website at 9:19 a.m. EDT yesterday morning—and it’s the final contribution of the day from Patricia Caulfield, for which I thank her.
1933 gold double eagle case continues as court vacates earlier ruling that awarded coins to family
Uncertainty continues to surround the fate of the Langbord family’s 10 1933 Saint-Gaudens double eagles that were allegedly found more than a decade ago in a safe deposit box. The Federal Third Circuit Court of Appeals vacated an April 17 ruling that reversed a jury’s 2011 decision awarding the coins to the government. The result of the court’s most recent voiding of the prior decision is that both the government and the Langbord family will likely face off again.
The July 28 filing directed a rehearing en banc at the convenience of the court, where the court will hear arguments from the Langbord family. The Langbords contend that the coins could have been acquired legally, while the government contends that the family should not receive the ill-gotten gains from a theft at the Philadelphia Mint decades ago. Then, when the court schedules a disposition date, the panel will determine whether there will be oral argument and if so, the amount of time allocated for each side.
Just when I thought this case over and done with, here come the U.S. government again. This very interesting article was posted on the coinworld.com Internet site on Monday—and I thank Tolling Jennings for bringing it to my attention, and now to yours.
A big fall in gold output will come from mine closures — Lawrence Williams
In contrast with the South African situation, Australia which accounts for 18% of the unprofitable mine production may be more likely to see closures and cutbacks implemented where political interference with such decisions may be less likely. Even so, the consultancy notes, the actuality of closing an operating mine may still only be the last choice as companies seek other ways of cutting costs. But with the easy cuts already made, this becomes a harder and harder task.
There has also been some mitigation due to falling resource country currencies against the U.S. dollar. We have pointed out here before that so far this year the gold price is actually higher now than it was at the start of the year in terms of key mining nation currencies like the Australian and Canadian dollars which can have a significant effect on profitability levels given the output is sold in dollars, while much of the costs will be in local currencies.
Even so, the consultancy concludes, for some of those at the top end of the cost curve, the future looks bleak, and closures now seem inevitable. Over the next 12 months, they expect a decline in output of around 75 tonnes. But then to put this into perspective, in terms of gold flows, just over 73 tonnes of gold moved through the Shanghai Gold Exchange in the last reported week! So will a 75 tonne cut in production have any real impact on the market anyway? We somehow doubt it.
This commentary by Lawrie,filed from London, put in an appearance on the mineweb.com Internet site at 12:29 p.m. BST yesterday afternoon, which was 7:29 a.m. EDT. It’s worth reading.
Royal Bafokeng Platinum: Something has to give or else we will perish
CEO Steve Phiri was probably right when he said these were the toughest (interim) results the company had presented to the market since Royal Bafokeng Platinum (RB Plat) listed on the JSE in 2010.
Of course the company felt the brutal effects of the downturn in commodity markets, with the platinum price 30% lower in U.S. Dollar terms during the period ending June, and 18% lower in Rand terms when compared to the prior corresponding period.
But what was particularly galling was the company’s safety performance, which saw two contractors killed in accidents during the reporting period, with another one dying shortly after the reporting period. “We are concerned and frustrated at the progress we are making to ensure zero harm,” said Phiri, and said the Safety 54 stoppages imposed by the Department of Mineral Resources were fully justified. While other safety indicators did improve, these were undoubtedly pyrrhic victories.
Of course Mr. Phiri would rather see his company fail than go after the root cause of the price problem—and that’s the engineered price declines by JPMorgan et al in all four precious metals. This is another item I found on the mineweb.com Internet site very late last night—and it was posted on their website very late on Tuesday evening BST.
India’s 2015-16 gold imports seen at 900-1000 tonnes – refiner
India is likely to import between 900 and 1,000 tonnes of gold in financial year 2015-16 that began in April, the head of gold refiner MMTC-PAMP said on Wednesday.
India’s July imports are expected to be between 70-75 tonnes, and its August imports more than 75 tonnes, said Rajesh Khosla, managing director of MMTC-PAMP.
MMTC-PAMP is a joint venture between the Indian government and a Swiss metals refiner.
The above three paragraphs are all there is to this Reuters story. It appeared on their Internet site at 1:36 p.m. IST on their Wednesday afternoon—and the embedded photo is worth the trip. I found this gold-related story on the Sharps Pixley website.
The PHOTOS and the FUNNIES
Here are two more photos I took on Sunday. The first is a female mallard accompanied by her almost full-grown brood of four ‘ducklings’ that obviously hatched early in the spring. They look almost fully fledged.
Contrast them with this photo that I took less than thirty minutes later. This female lesser scaup, in ‘eclipse’ plummage like the female above, is squiring around her brood of ten young ‘uns—and they’re still sporting a lot of downy feathers, so these ducklings are less than a month old—and have a lot of growing to do before they’re ready to head south for the winter. I don’t like their chances.
Because of depth-of-field issues with a 400mm telephoto lens, along with the proximity of the subject matter, even at a high ‘f’ number, not all the birds are in sharp focus. It’s one of the only down-side issues with lenses of this focal length, or longer. Don’t forget the ‘click to enlarge‘ feature which brings the photos up to full-screen size.
THE WRAP
The price decline over the past 11 weeks has now resulted in a “snugging” of a number of moving averages in gold and silver to the extent that it wouldn’t take much of a price rise to set off a large move to the upside. While it’s true that the key 50-day and 200-day moving averages in gold ($1,160 and $1,194) and in silver ($15.69 and $16.33) are still a decent, but hardly unachievable distance above current prices, those aren’t the only moving averages that will cause the technical funds to buy due to upward price penetration. These funds react, in varying degrees, to other moving averages such as the 10, 13, 20, 30 and 40-day moving averages; maybe not with the same number of contracts that might be deployed on a 50 or 200-day moving average penetration, but with some number of contracts.
While the 50 and 200-day moving averages are still above current gold and silver prices (although not by much on an historical basis), the shorter moving averages have really snugged down to current prices. For example, the 13 day and 20 day moving averages in gold ($1,105 and $1,124) and in silver ($14.75 and $14.97) are much closer, particularly in silver since the weekly close was right on the 13-day moving average.
My point is that strictly based upon existing positioning and how the technical funds are programmed to respond, even the slightest rise in price from here is bound to trip off some technical fund buying. As and when that occurs, unless the commercials plan on never allowing gold and silver prices to move even slightly higher, the buying at the more “minor” moving averages is likely to lead to still higher prices. This could and should result quickly in the major moving averages being penetrated and the full force of managed money buying being unleashed. [It has] nothing to do with China, Greece, the Fed, other central banks, the dollar or any plan by the world powers-that-be to enslave us all – just plain vanilla technical buying. Same as the maaged money selling that brought prices lower – no more no less. — Silver analyst Ted Butler: 01 August 2015
But, as Ted has been pointing out for years now—and in the above quote, how high prices will be allowed to rise once these moving averages are pierced and the technical funds in the Managed Money category begin to cover, is still the $64,000 question. And as he and I have also been doing on about for the same length of time—NOTHING ELSE MATTERS—and it doesn’t.
Wednesday was just another day when the four precious metals weren’t allowed to go anywhere—and of the Big 6, only WTIC set a new intraday low, but did not close there.
Here are the 6-month charts for the Big 6—with yesterday’s data included.
And as I write this paragraph, the London open is about ten minutes away. There isn’t much going on—and all four precious metals are currently up from their Wednesday closes in New York. Not by much in both gold and silver, but by a decent number of dollars in platinum and palladium.
HFT volume in gold is a bit under 14,000 contracts—and in silver it’s only 2,330 contracts, with only 14 roll-overs out of the September contract. It’s deadly quiet at the moment. The dollar index has been inching quietly lower through all of Far East trading on their Thurday—and is currently down 12 basis points.
We appear to be bouncing along the bottom in all four precious metals at the moment—and in order for “da boyz” to drive prices lower, they have to find more willing traders that are prepared to go even further into record short territory than they already are. A tall order for sure, but with the severity of this current engineered price decline, it’s probably wise to not make the assumption that it can’t happen. But it’s been “nickels in front of the proverbial steamroller” for JPMorgan et al for a week or so now.
There will certainly be some improvement in the Commercial net short positions in all four precious metals in Friday’s Commitment of Traders Report, but it won’t be a lot in any of them.
And as I post today’s column on the website at 4:20 a.m. EDT, not much has changed since I reported on the precious metals ten minutes before the London open, which was ninety minutes ago. Net HFT gold volume is at 17,000 contracts—and in silver that number is 3,400 contracts, with roll-overs now sitting at 34 contracts. Based on these volumes, not much should be read into the price activity except for the fact that JPMorgan et al still have an iron grip on precious metal prices—and it should be more than obvious that they are micromanaging them. The dollar index hit its 97.71 low tick at exactly 2 p.m. Hong Kong time—and is now up 10 basis points—and back above the 98.00 mark.
Based on the current precious metal price action—and what’s going on in the dollar index at the moment—it could end up being another tough day for gold and silver during the New York trading session, although I’d be quite happy to be proven spectacularly wrong.
And on that cheery note, I’ll see you here tomorrow.
Ed
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