07 August 2015 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t do much of anything in the Far East and the first half of the trading day in London on their Thursday. The real action began at the COMEX open, as the gold price began to rally—and it really got serious about 12:20 p.m. EDT as the market went “no ask”. It was at that point that the rally got capped—and some of those gains were negated in the last thirty minutes of COMEX trading. After that it drifted a bit lower into the 5:15 p.m. electronic close.
The low and high ticks were reported as $1,082.70 and $1,093.30 in the December contract.
Gold finished the Thursday trading session at $1,089.50 spot, up an even 5 bucks from Wednesday’s close. Net volume was very light at only 84,000 contracts.
Brad Robertson was kind enough to send us the 5-minute tick chart for gold—and as you can tell, there wasn’t much volume involved in the rally that began at the COMEX open—and the volume spike around 10:20 a.m. MDT [12:20 EDT] shows where “da boyz” stepped into the market. After that, volume fell off to virtually nothing. The dark vertical gray line is midnight EDT—and don’t forget to add two hours for EDT—and the ‘click to enlarge‘ feature really helps here.
The silver chart was about the same as the gold chart, but the price capping at 12:20 p.m. EDT was even more obvious in this precious metal than it was in gold. A lot of silver’s earlier gains vanished after that.
The low and high ticks were recorded by the CME Group as $14.49 and $14.735 in the September contract.
Silver closed in New York yesterday at $14.655 spot, up 6.5 cents on the day. Net volume was very light as well at only 23,500 contracts.
After doing nothing in Far East and Zurich trading yesterday, platinum got sold down six dollars at the COMEX open—and then rallied ten bucks, getting capped shortly before the COMEX close. From there it got sold down to almost unchanged, finishing the Thursday session at $949 spot, up a dollar from Wednesday.
Palladium rallied six bucks in Far East trading—and then tried to break above the $600 spot mark in New York, but as you can tell from the chart below, that wasn’t allow to happen, except for a few minutes. Palladium ended the day up five dollars at $597 spot.
The dollar index closed late on Wednesday afternoon in New York at 97.90—and it began chopping lower right from the open of Far East trading on their Thursday morning, hitting it 97.64 low tick at precisely 2 p.m. Hong Kong time. It should be obvious that there was someone standing by to rescue the index at that point. It rallied to its 98.11 high by the COMEX open—and hung in there until shortly after 9 a.m. EDT. It chopped lower until 3:30 p.m. and didn’t do much after that. The index finished the Thursday session at 97.78—down 12 basis points from Wednesday’s close.
And here’s the 6-month U.S. dollar chart for longer-term reference purposes.
The gold stocks opened up a bit—and then worked their way higher until “da boyz” showed up at 12:20 p.m.—and that was pretty much it for the day, as the HUI gave up over half its gains by the close, finishing the Thursday session up only 2.47 percent.
But you can tell by looking at this chart that the shares were about to head uptown big time, as the gold price began to soar.
The silver equities started off weaker—and their rally into the 12:20 p.m. price capping was heading north at a pretty good clip—but they got sold down after that as well. Nick Laird’s Intraday Silver Sentiment Index closed up 1.14 percent.
The CME Daily Delivery Report showed that 4 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday. Nothing to see here.
The CME Preliminary Report for the Thursday trading session showed that gold open interest in August fell by only 37 contracts, leaving a very chunky 3,838 still open. The short/issuer on these contracts has zero to gain by holding out on delivering them—and I’m wondering whey they’re not. Silver’s August o.i. dropped by the 27 contracts posted for delivery in yesterday’s report—and those will be delivered today. This leaves 33 silver contracts still open.
There were no reported changes in GLD yesterday—and as of 10:23 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
Joshua Gibbons, the Guru of the SLV Bar List is out of town this week—and he’s advised me that he won’t have an updated bar list until Saturday, so the changes as of the close of trading over at the iShares.com Internet site on Wednesday, won’t be available until my Tuesday column.
And, for the second day in a row, there was no sales report from the U.S. Mint. They either have no product to sell, or the big buyers have backed away from the table for the moment. I don’t expect that situation to last long—and I’ll certainly be more than interested in what the next set of sales numbers show, as will Ted.
Over at the COMEX-approved depositories on Wednesday, there was 18,043 troy ounces of gold reported received—and 16,916 troy ounces shipped out the door. I also noticed that 10,754 troy ounces were transferred from the Registered category—and into Eligible over at Canada’s Scotiabank. Just a few keystrokes on the computer took care of that. The link to all that activity is here.
It was another huge day in silver, as nothing was reported received, but a very chunky 1,028,623 troy ounces were shipped out the door for parts unknown. Almost all of the activity was at the CNT Depository. The link to that action is here.
It was also a busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, as 3,192 kilobars were received—and 5,953 kilobars were shipped out the door. As per usual, all of the activity was at the Brink’s, Inc. depository—and the link to that activity, in troy ounces, is here.
I have the usual number of stories for a weekday column—and I’ll happily leave the final edit up to you.
CRITICAL READS
Job Cuts Soar To Highest Since September 2011 After Mass Army Terminations, Highest YTD Layoffs Since 2009
http://www.zerohedge.com/news/2015-08-06/job-cuts-soar-highest-september-2011-after-mass-army-terminations-highest-ytd-layoff
While we await for the BLS to report another seasonally adjusted Initial Claims report which will be near multi-decade lows, a far more disturbing report was released moments ago by outplacement consultancy Challenger Gray, which has done a far better job of compiling true layoff data, and which reported that in July there was a whopping 105,696, up 136% from the 44,842 job cuts in June, and the highest in nearly four years, or since September 2011, which the last time there were more than more than 100,000 layoffs.
Worse, the July surge brings the year-to-date job cut total to 393,368, which is 34 percent higher than the 292,921 cuts announced in the first seven months of 2014. This represents the highest seven-month total since 2009, when 978,048 job cuts were announced amid the worst recession since the Great Depression.
According to Challenger, more than half of the July job cuts were the result of massive troop and civilian workforce reductions announced by the United States Army. The cutbacks will eliminate 57,000 from government payrolls over the next two years.
This Zero Hedge news item appeared on their Internet site at 8:08 a.m. EDT on Thursday morning—and today’s first story is courtesy of reader M.A.
Biggest “Plunge Protection” Buy/Sell Imbalance For 2015 Halts Market Slide
Despite the ubiquitous pre-open ramp in stocks, it appears ‘investors’ want out in a hurry. With The Dow having fallen 150 points from its overnight highs – testing towards multi-month lows, Nanex points out that suddenly a bid arrived… the biggest buy imbalance of 2015 so far exploded into e-mini S&P futures and managed to save stocks from falling (for now).
Plunge Protection Team? or dry powder dip-buyers manically trying to catch a falling knife on no news?
You decide…
This must view 3-chart Zero Hedge article put in an appearance on their website at 10:58 a.m. EDT yesterday morning—and it’s the second offering in a row from reader M.A.
This is what the strong dollar is doing to the U.S. economy
This week we got two economic data points that tell an important story about the U.S. economy. On Monday, the ISM Manufacturing report dipped from 53.5 to 52.7, a number which came in below expectations. Then on Wednesday we got a blistering ISM Non-Manufacturing report (i.e. services). The index surged from 56.0 to 60.3, which is the highest level in a decade. The divergence highlights an important theme in the U.S. economy. Manufacturing companies have been hurt by the strong dollar, which makes their wares relatively less competitive. Services are less export driven, and therefore less affected by the strong dollar. So there should be no surprise that given the huge rally we’ve seen in USD, the services sector is crushing manufacturers.
The above paragraph is all there is to this report from Joe Weisenthal over at Bloomberg at noon EDT on Thursday. There’s also a 1:17 minute video clip embedded as well. It’s the first of many offerings from Patricia Caulfield.
NASA signing $490M contract with Russia
NASA informed lawmakers on Wednesday that because Congress has failed to fully fund its Commercial Crew Program for the last five years, it is signing a $490 million contract extension with Russia to send Americans to space.
The new contract, running through 2019, means that NASA will continue to depend on Russia to get its astronauts to space even as tensions between Washington and Moscow escalate.
It will put money in Russia’s pockets even as U.S. economic sanctions seek to put pressure on Russian President Vladimir Putin’s government over the conflict in Ukraine.
It will also make the U.S. susceptible to threats from Russia, which in the past has suggested it could stop taking U.S. astronauts to the International Space Station. The U.S. has relied on Russia since retiring its space shuttle program.
This news item appeared on thehill.com Internet site early Wednesday afternoon EDT—and it’s the third offering of the day from reader M.A.
Goldman Sees Oil Staying Lower for Longer to End Supply Glut
Goldman Sachs Group Inc. says crude prices need to remain lower for a longer time to allow the oil market to find equilibrium amid a supply glut.
Storage may be filled by the fall with global crude oversupply running at 2 million barrels a day and low-cost producers continuing to boost output, Goldman analysts including Jeffrey Currie said in a report on Thursday. Low prices are needed to offset productivity gains and keep investment to a minimum, the report said.
Oil last month slumped the most since 2008 on signs the global surplus is persisting. Royal Dutch Shell Plc said in July it is braced for a prolonged downturn as the U.S. is producing near the fastest rate in three decades and OPEC’s largest members pump record volumes.
“The rebalancing of supply and demand will likely prove to be far more difficult than what was previously priced into the market,” Goldman said. “The risks remain substantially skewed to the downside.”
Well, dear reader, we’d find out the actual free-market price for WTIC the moment that JPMorgan et al take their feet off the price in the COMEX futures market. This story appeared on the Bloomberg website at 4:44 a.m. Denver time Thursday morning—and it’s another contribution from Patricia Caulfield.
Explorers In Need of Cash Are Selling Oil Fields as Last Resort
Energy explorers reeling from the rout in oil prices are looking for liquidity in an obvious place: their rocks.
Having exhausted other ways to raise cash as a glut of global supply depresses prices, a slew of producers from Anadarko Petroleum Corp. to Comstock Resources Inc. announced more than $2.4 billion in asset sales last month, according to data compiled by Bloomberg. Selling oil and gas fields to pay off lenders and fund new drilling — often a wildcatter’s option of last resort — is surging after a six-month lull.
There’s more to come — by one estimate, another $20 billion this year — as executives at Occidental Petroleum Corp., Whiting Petroleum Corp., Penn Virginia Corp., Exco Resources Inc., Chesapeake Energy Corp. and Ultra Petroleum Corp. have all said in recent weeks that they are selling assets or exploring sales.
The surge shows how the industry’s two-pronged strategy for staying financially healthy since oil prices started tanking — raising capital while tightening belts — may not be enough, particularly for companies with a lot of outstanding debt. Bank regulators are getting nervous about the industry’s exposure to drillers, creating another incentive to sell assets.
This is another Bloomberg article, this one was posted on their Internet site at one minute before midnight on Wednesday evening MDT—and it’s also courtesy of Patricia Caulfield.
Free Puerto Rico, America’s Colony
PUERTO RICO has begun to default on its bond payments, for the first time since it became part of the United States, 117 years ago. If it fails to make interest payments on its $72 billion public debt, pension funds across the United States may be unable to meet their payment obligations. But if it were allowed to file for Chapter 9 bankruptcy protection, as cities and counties have done, every state will want that right.
For this reason, the Puerto Rico crisis is a national financial crisis, one that neither President Obama nor Congress has taken steps to resolve. Even a simple debt restructuring — in the unlikely event bondholders agreed to it — would not solve the mess. With a population of 3.6 million, every person on the island would need to pay $1,400 a year — 9 percent of Puerto Rico’s per-capita income — just to cover this year’s $5 billion principal and interest payments on the debt.
The problem is not Puerto Rico, or even the vulture funds that have refused to renegotiate the island’s debts: It’s the rigged capitalism the United States has forced on its Caribbean colony.
This right-on-the-money must read opinion piece showed up on The New York Times website on Thursday sometime—and I thank Patricia Caulfield for sending this one as well.
Why Canada May Become a Problem for Janet Yellen
Federal Reserve Chair Janet Yellen said less than a month ago that she expected the dollar’s drag on the American economy to dissipate. She may not have foreseen that the greenback would surge to an 11-year high against the currency of the U.S.’s biggest trading partner.
As the greenback’s advance against the euro and the yen subsided, its 5 percent rally against the Canadian dollar this quarter may prove to be more detrimental to the world’s biggest economy. The U.S.’s northern neighbor buys about 17 percent of America’s products, more than any other nation, data compiled by Bloomberg show. And shipments already have declined after reaching a record last year.
A firm dollar makes American goods relatively more expensive abroad, presenting a hurdle for Fed officials as they prepare to raise interest rates for the first time since 2006.
This brief Bloomberg story contains an excellent must view chart. All of this showed up on their website at 6:34 a.m. Denver time yesterday morning—and it’s another contribution from Patricia Caulfield. The ‘thought police’ at Bloomberg have been busy, as the original headline read “Yellen Can Blame Canada as Exports to North Hit Dollar Wall“—which was much more benign than the new one.
Channel Tunnel could be closed at night if Calais crisis worsens
The Channel Tunnel will be closed at night if the Calais crisis worsens under plans being considered by ministers, The Telegraph has learned as it emerged that an African migrant walked almost its entire length.
Ministers have sought legal advice on what was described by Whitehall sources as the “nuclear option” of closing the tunnel to freight and passenger trains overnight.
The proposal, which has been discussed at meetings of the government’s emergency Cobra committee, follows concerns that the number of services at night is increasing the risk of migrants making it through the tunnel.
A government spokesman said: “We have and continue to consider all potential courses of action to improve security at the Channel Tunnel in Coquelles and to prevent any loss of life. A number of new security measures have been introduced and Ministers both here and in France keep the situation under constant review.”
This very interesting story was posted on The Telegraph‘s website at 10:00 p.m. BST yesterday evening, which was 5:00 p.m. in New York—EDT+5 hours.
Greece’s tax revenues collapse as debt crisis continues
Fresh evidence of the dramatic impact of the Greek debt crisis on the health of the country’s finances has emerged, with official figures showing tax revenues collapsing.
As talks continued over a proposed €86bn third bailout of the stricken state, the Greek treasury said tax revenues were 8.5% lower in the first six months of 2015 than the same period a year earlier. The bank shutdown that brought much economic activity to a halt began on 28 June.
Public spending fell even more dramatically, by 12.3%, even before the new austerity measures the prime minister Alexis Tsipras has been forced to pass to win the support of his creditors for talks on a new bailout.
Greece is due to make a €3.2bn repayment to the European Central Bank on 20 August.
This article showed up on theguardian.com Internet site at 6:09 p.m. BST on Thursday evening—and it’s also courtesy of Patricia Caulfield.
Growing Default Risk Shown in Worst Ukraine Bond Rout Since June
Ukraine’s Eurobonds slid the most in two months as renewed signs of discord between the nation and a Franklin Templeton-led creditor group increased the likelihood of default.
The sovereign’s $2.6 billion of debt due July 2017 fell 1.31 cents to 55.44 cents on the dollar at 5:28 p.m. in Kiev, the biggest drop since details emerged on June 11 that Ukraine was asking for a 40 percent write-down on principal. Progress made in direct negotiations that started last month stalled this week as a high-level meeting proposed by the government was turned down by creditors seeking more time to review Ukraine’s latest offer.
The war-ravaged country has threatened to freeze debt payments if it doesn’t make progress in its $19 billion bond restructuring, and may go down that route before a $500 million bond comes due on Sept. 23. Failure to reach an agreement early next week will force Ukraine to implement “alternative options” to meet debt-sustainability targets, the Finance Ministry said on Wednesday.
“This option is the introduction of a moratorium on servicing any government Eurobond,” Alexander Paraschiy, an analyst at Concorde Capital in Kiev, said in a research note on Thursday. “We do not expect the creditors’ proposal will significantly improve.”
This is another Bloomberg news item courtesy of Patricia Caulfield. This one was posted on their Internet site at 5:13 a.m. MDT yesterday morning—and updated a bit more than three hours later.
Obama Takes On Opponents of the Iran Deal — Editorial
President Obama on Wednesday made a powerful case for the strong and effective nuclear agreement with Iran. In a speech at American University, he directly rebutted critics like Prime Minister Benjamin Netanyahu of Israel and rightly warned of the damage to global security if the Republican-led Congress rejects the agreement.
“If Congress kills this deal, we will lose more than just constraints on Iran’s nuclear deal or the sanctions we have painstakingly built,” he said. “We will have lost something more precious — America’s credibility as a leader of diplomacy. America’s credibility is the anchor of the international system.”
He debunked the notion that there was a better deal to be had if American negotiators and the allies — France, Britain, Germany, Russia and China — had demanded that Iran capitulate and completely dismantle all of its nuclear facilities. That was not going to happen. The truth is, if Congress rejects the deal when it votes in September, the robust web of multinational sanctions the administration persuaded other countries to impose on Iran will crumble and the only way to keep Iran from gaining a nuclear weapon will be war, he said.
This commentary by The Editorial Board of The New York Times, put in an appearance on their Internet site on Wednesday sometime—and it’s worth reading. I thank Patricia Caulfield for digging this item up for us as well.
China CSF Said to Seek $322 Billion More Funding to Boost Stocks
China Securities Finance Corp., the government agency mandated to buy stocks to stem a market rout, is seeking access to an additional 2 trillion yuan ($322 billion), said people with knowledge of the matter.
The extra funding would add to the 3 trillion yuan already made available by the government, according to the people, who asked not to be identified because the target hasn’t been made public. The 5 trillion yuan total may change depending on market conditions, they said.
China is stepping up efforts to support the stock market after the benchmark Shanghai Composite Index’s 29 percent plunge from the June peak erased $3.4 trillion in market value. The CSF has been buying stocks with money borrowed from the central bank and state-owned commercial lenders.
This brief Bloomberg article showed up on their website at 3:47 a.m. MDT on Thursday morning—and it’s again courtesy of Patricia Caulfield.
Lost Decade in Emerging Markets: Investors Already Halfway There
Just 14 years ago Wall Street fell in love with the BRICs, the tidy acronym for four major emerging economies that, to many, looked like sure winners.
Today, after heady runs and abrupt reversals, most of the BRICs — in fact, most developing nations — look like big-time losers.
The history of emerging markets is a history of booms and busts, but the immediate future may hold something more prosaic: malaise. Investors today confront what could turn out to be a lost decade of returns, with four or five more meager years ahead.
“These are very much the lean years after the bonanza decade,” said Harvard Kennedy School economist Carmen Reinhart, one of the world’s top experts on financial crises and developing economies.
This is another Bloomberg story from Patricia. This one put in an appearance on their Internet site at 3:10 p.m. Wednesday afternoon Denver time.
Gold, metals enjoy mini rally as stocks sell off
Gold prices bounced higher Thursday ahead of a key employment report that is expected to set the tone for the battered precious metal.
The yellow metal gained ground as U.S. stocks registered sharp falls. Stocks tumbled as shares of Walt Disney Co. and Viacom Inc. led a media sell-off amid fears of an exodus of pay-TV subscribers.
The selling delivered a fillip to gold futures for December delivery which were up as high as $7.70, or 0.7%, to 1,093.30 an ounce, until ultimately settling up $4.50, or 0.4%, at $1,090.10 an ounce.
The move in gold prices proved a respite ahead of a jobs report, which could be a critical tipping point. Some gold watchers contend that a strong non-farm payrolls report could send the commodity lurching into bear-market territory. The data-dependent Federal Reserve has said that they will look at key economic reports, notably the jobs report, to determine the timing and pace of the first rate hike in more than nine years.
This is the kind of bulls hit main stream media gold story you get when you get a 30-something year old cub reporter to write it. This piece was posted on the marketwatch.com Internet site at 3:02 p.m. Thursday afternoon EDT—and it isn’t worth reading—but the picture is certainly worth the trip. I thank Richard Saler for sending it our way.
Gold Bullion Demand In ‘Chindia’ Heading Over 2,000 Tonnes Again
The recent lower prices in gold have not deterred investors internationally from buying gold coins and bars in large volumes again. Indeed the Perth Mint and the U.S. Mint are struggling to fulfill demand for gold coins and bars.
This is particularly the case in the eastern hemisphere – especially in India and China – where demand has again increased significantly on price weakness.
Between them, these two countries are on-track to import 2,000 tonnes of gold this year – that is more than two thirds of the total annual global gold mine production, which is set to be about 2,800 tonnes this year.
The Shanghai Gold Exchange, which deals exclusively in physical bullion, saw buyers take delivery of over 73 tonnes of gold last week, the third largest withdrawal on record. This follows two weeks of steadily increasing demand as investors pull or attempt to pull money out of the Chinese stock market.
There’s nothing really new here, as the first two charts that Mark O’Byrne posts in this commentary showed up in my Saturday and Tuesday columns respectively. But Mark is mistaken about Chindia’s gold imports, as the total imports into these two countries this year are going to be in the 3,200 to 3,300 tonne range—and not the 2,000 tonnes that Mark states here. Maybe he’ll post a corrected number at a later date. This showed up on the goldcore.com Internet site yesterday—and I thank Roy Stephens for pointing it out.
Gold sales up 50 percent in Malaysia due to ringgit’s devaluation
Gold-buying spree broke out in Malaysia in July due to ringgit’s devaluation, resulting in a some fifty percent rise in gold sales.
The gold resurgent came after a big dip from April to June, influenced by the implementation of consumption tax.
Currently, gold bar price stays at around 35,994 U.S. dollars per kilo in Malaysia, similar to international price, said Datuk Ng Yih Pyng, adviser of Federation of Goldsmiths and Jewellers Association of Malaysia.
“From the perspective of business, it’s a good time to invest in gold now; ringgit is weak at present while gold may retain the value of assets.” Datuk Ng Yih Pyng added.
This gold-related story, filed from Beijing, appeared on the xinhuanet.com Internet site at 9:20 a.m. local time on their Friday morning—and I found it on the Sharps Pixley website just before I filed today’s column.
Bank of England study: Gold is best money but buying it risks offending U.S.
A Bank of England policy study written in 1988 describes gold as “the ultimate store of value and medium of exchange” because it carries no counterparty risk but cautions against increasing the United Kingdom’s gold reserves because doing so might be construed as a negative comment on the U.S. dollar and thus would risk giving “great offense to the United States.”
The study, written by Bank of England staff members, was located recently by gold researcher and GATA consultant Ronan Manly.
The study concludes that the British government should seek ways of earning a return on the country’s gold reserves. The United Kingdom’s leasing of gold may have been encouraged by the paper — and certainly would have pleased the United States by helping to suppress the gold price and strengthen the dollar — though the bank told GATA in 2011 that the U.K. had stopped leasing gold in 2007.
The links to this study, which is certainly worth reading, are embedded in this GATA release from yesterday.
Jim Sinclair: For China, Treasuries and gold are powerful weapons
Mining entrepreneur and market analyst Jim Sinclair writes last night that China will not take kindly to the International Monetary Fund’s postponement of the inclusion of the yuan in the agency’s Special Drawing Rights currency.
China, Sinclair says, may retaliate by dumping U.S. Treasuries and blowing interest rates upward or forcing the Federal Reserve to monetize billions of bonds. China also may retaliate, he adds, by pulling the veil off the central bank gold market-rigging operation.
My thoughts exactly, dear reader—and I couldn’t have said it better myself! Sinclair’s commentary is headlined “The Rumblings of War” and it’s posted at the JSMineset.com Internet site. This falls into the absolute must read category for sure. I found this posted in a GATA release in the wee hours of this morning Denver time—and I thank Chris Powell for wordsmithing “all of the above”.
The PHOTOS and the FUNNIES
I only have two more of my photos to share. The first is another mallard duck—and in its “eclipse plumage” it ain’t much to look at. But I thought the concentric rings that it was generating by paddling in place made for an excellent frame for the shot. So I cropped it accordingly—and here it is. Don’t forget the ‘click to enlarge‘ feature to view it full-screen size.
This butterfly is only partly in focus because I was at the minimum focusing distance at the focal length [270mm] that I was using. I had little depth of field, not helped by the fact that I was shooting at an aperture of f5.6, when I should have been shooting at f11 or higher. That would have solved the depth of field issue nicely. I didn’t notice this oversight until late in the day. One of the good things about using telephoto lenses for close up work like this is that it makes the background vegetation vanish into a green fog, leaving the subject the sole center of attention. This fellow goes by the name “Great Spangled Fritillary“. Who would make up a name like that?
THE WRAP
I can’t help but think that the close proximity of the minor moving averages to current prices [in silver and gold] as being akin to lighting a string of firecrackers and having one set off the rest until all the stored energy is expended. One moving average penetration leads to the next penetration until managed money buying is exhausted. This is the way it always has been—and is built into the current market structure. As such, eventual technical fund buying is a certainty—and only a matter of time. In that sense, it is not a variable. The only variable is how aggressive the commercials will be in selling into that certain managed money buying to come. I believe I’ve mentioned that in the past to the point of – enough already.
The commercials are in a unique position (by their historically low total net short positions) to really put it to the managed money (and other speculative) shorts—and all they have to do is, well, literally nothing. If the commercials don’t rush to sell aggressively into the certain managed money buying ahead, the price of gold and silver will jump dramatically. Not selling is doing nothing. Let the commercials do nothing and dancing days will be here again. — Silver analyst Ted Butler: 01 August 2015
Well, “da boyz” were there to make sure that none of these “minor moving averages” that Ted spoke of in the above quote, were broken to the upside for very long—and with volume as light as it was in both gold and silver, it was a pretty easy task. Proof of that lies in the 5-minute gold chart posted at the top of today’s column.
But, having said that, you could tell by the way that gold and silver were accelerating to the upside in late-morning New York trading, that the technical funds that sell at these moving averages were doing exactly that—and at 12:20 p.m. EDT, JPMorgan et al put a stop to it—and closed both metals below their respective 10-day moving averages, which is the first minor moving averages that Ted mentioned in the quote in Thursday’s column.
And as I mentioned earlier, the gold and silver equities were heading higher with a vengeance as well, especially the stocks shown in the HUI chart.
Here are the 6-month charts for the Big 6 commodities—and only WTIC hit a new low for this move down yesterday. Please note the gold and silver charts, as I’ve modified them to show the 10 and 13-day moving averages, rather than the 50 and 200-day moving averages that come standard with these charts from the good folks over at stockcharts.com. The “nesting” of these moving averages that Ted spoke of in yesterday’s column [and in today’s quote] is very obvious—and when one falls, the rest would fall in rapid succession.
All we’re waiting for, as Ted says, is the first firecracker to be lit, because once the first one goes off, they all go off in rapid succession. But will “da boyz” show up again, like they did yesterday?” We’ll see.
[6-month gold, silver, etc.]
And as I type this paragraph, the London open is less than ten minutes away. After selling off a dollar or two in Far East trading on their Friday, the gold price took off with a vengeance starting at 2 p.m. Hong Kong time. For the most part, silver traded a few pennies higher in Hong Kong, but it too is accelerating to the upside. Ditto for platinum, but palladium is lagging—and is only up two bucks.
Gold volume is around 13,500 contracts, but with a twenty minute delay in reporting from the CME Group, I’d guess that the current volume is much higher than that. In silver, the net volume is around 3,300 contracts, with only 35 roll-overs out of the September contract. Once again, because of the reporting delay, I suspect that current volume is much higher than that as well. The dollar index has been chopping quietly higher throughout all of Far East trading—and as London opens at 8:00 a.m. BST, it’s currently up 8 basis points.
It will be interesting to see how long these rallies are allowed to run to the upside before JPMorgan et al cap them.
Today at 8:30 a.m. EDT we get the job numbers and, as I mentioned earlier this week, I expect there will be movement in the precious metals once again, as JPMorgan et al, with their HFT buddies and their algorithms in tow, will be there for sure.
Today we also get the new Commitment of Traders Report, plus the companion Bank Participation Report—and whatever the numbers show, I’ll have them all for you in Saturday’s column.
And as I post today’s column on the website at 4:55 a.m. EDT, I see that JPMorgan et al wasted no time once London had opened to cap, and then squash in some cases, the rallies in all four precious metals. Gold volume has exploded to 27,000 net contracts—and silver’s net HFT volume is now a bit over 6,000 contracts. It’s obvious that they’re not going to let precious metal prices rise, at least for moment. The dollar index had a down/up move around the London open–and is now only up 2 basis points.
Absolutely nothing will shock me when I check the charts after I roll out of bed later this morning.
Enjoy your weekend—and I’ll see you here tomorrow.
Ed
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