11 August 2015 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Gold got sold down a few dollars in early Far East trading on their Monday morning, with the low tick of the day coming around 8:30 a.m. Hong Kong time. It rallied a bit until just before 9 a.m. in London trading before getting sold down to unchanged—and it traded there until shortly after the London p.m. gold fix was in. The subsequent rally got capped around 11:40 a.m. EDT—and it got sold down a few dollars into the close of COMEX trading—and didn’t do a lot after that.
The low and high tick were reported by the CME Group as $1,089.00 and $1,108.50 in the December contract.
Gold closed in New York yesterday at $1,104.10 spot, up $10.30 from Friday’s close, but well off its high. Net volume was more than I wanted to see at 131,000 contracts.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. It only goes as far as 3:30 p.m. EDT, which is 1:30 p.m. MDT on this chart. You’ll note that the only volume that mattered began shortly after the London p.m. gold fix as the rally began—and was pretty much done for the day by the 1:30 p.m. EDT COMEX close. Midnight EDT is the vertical gray line on this chart. Add two hours for EDT—and the ‘click to enlarge‘ feature is useful.
The silver chart was similar to the gold chart in almost every respect, although it did appear that the rally in silver began at 9:45 a.m. vs. 10:20 a.m. for gold. The not-for-profit sellers also appeared in this precious metal at 11:40 a.m. EDT as well—and the silver price got sold down about fifteen cents off its high tick.
The low and highs were recorded as $14.705 and $15.375 in the September contract.
Silver finished the Monday session at $15.225 spot, up 41.5 cents from Friday. Net volume was, unhappily, also very decent at 47,500 contracts.
The platinum and palladium charts were mostly the same as silver and gold, with JPMorgan et al arriving on the scene at 11:40 a.m. EDT in these two precious metals as well. Platinum finished the day at $984 spot, up 23 bucks—and palladium was higher by 9 bucks. It was a “no ask” market in palladium when “da boyz” showed up at 11:40 a.m. EDT to cap the price. Here are the charts.
The dollar index closed late on Friday afternoon in New York at 97.59—and traded mostly flat until a rally of sorts began around 8:30 a.m. BST in London on their Monday morning, which was the time that all four precious metals got turned over from their tiny rallies that began earlier in the day in Hong Kong trading. The 97.91 high tick came right at noon in London—7 a.m. EDT in New York—and it was all down hill until shortly before the 1:30 p.m. EDT COMEX close. It did nothing after that. The index finished the Monday session at 97.19—down 40 basis points on the day.
And here’s the 6-month U.S. dollar chart so you can see the medium and short-term trends at a glance.
The gold stocks opened up about a percent, dipped briefly into negative territory for a few minutes after that—and then were off to the races. Most of the gains were in by the time that JPMorgan et al stepped on the price at 11:40 a.m. EDT, but after chopping mostly sideways for a while after that, they continued to rally into the close, as the HUI closed on its absolute high tick, up 7.04 percent.
The silver equities behaved in a very similar manner, closing on their highs of the day as well. Nick Laird’s Intraday Silver Sentiment Index closed up 10.22 percent, the biggest one-day gain I can ever remember seeing. Now all we need is about three weeks of gains like that and we’d be all set!
The CME Daily Delivery Report showed that 172 gold and 1 lonely silver contract were posted for delivery within the COMEX-approved depositories on Wednesday. In gold, the only short/issuer was JPMorgan out of its client account. The long/stoppers were Goldman Sachs, HSBC USA—and JPMorgan out of its client account, with 72, 38 and 48 contracts respectively. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest fell by 394 contracts, leaving 3,249 still open—minus the 172 posted above. Silver’s o.i. fell by 1 contract, leaving 30 still around.
There were no reported changes in GLD yesterday—and as of 8:17 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
With Joshua Gibbons, the Guru of the SLV Bar List back at his post on Saturday, he updated his website with the goings-on over at the iShares.com Internet site as of the close of business last Wednesday [August 5] and here’s what he had to say.
“Analysis of the 05 August 2015 bar list, and comparison to the previous week’s list. 619,989.6 troy ounces were removed (all from Brinks, London), no bars were added or had serial number changes.”
“The bars removed were from: Shui Kou Shan (0.2M oz), Yunnan Copper (0.1M oz), and 5 others.”
“As of the time that the bar list was produced, it was overallocated 234.8 oz. All daily changes are reflected on the bar list.”
I was expecting the new short position report from GLD and SLV yesterday, but there was nothing on the shortsqueeze.com Internet site as of 3:18 a.m. EDT this morning. Maybe this evening.
The U.S. Mint had another sales report yesterday. They sold 2,500 troy ounces of gold eagles—500 one-ounce 24K gold buffaloes—and 718,500 silver eagles. Ted said on the phone yesterday that this still looks like hand-to-mouth sales numbers to him—and I’m not prepared to argue the point. We’ll see how things develop as the rest of the month progresses.
There was 418 troy ounces of gold reported received at the COMEX-approved depositories on Friday—and 32,452 troy ounces shipped out the door. Of the amount shipped out, 32,150.000 troy ounces came from Canada’s Scotiabank vault—and that works out to exactly 1,000 kilobars. The link to that activity is here.
In silver, there was 653,505 troy ounces shipped in—and 276,514 troy ounces shipped out the door for parts unknown. The link to that action is here.
More frantic in/out action over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They reported receiving 1,945 of them—and shipped out 3,338. All of the activity was at Brink’s, Inc. as usual—and the link to it, in troy ounces, is here.
I don’t have all that many stories for you today—and I’m perfectly happy with that. I hope you are too, because it makes your editing job easier.
CRITICAL READS
This Wasn’t Supposed to Happen: Household Spending Expectations Crash
One of the biggest drivers of the so-called recovery (in addition to the Fed’s $4.5 trillion balance sheet levitating te S&P500 and the offshore bank accounts of 1% of the US population) has been the US consumer: that tireless spending horse who through thick, thin, recession and depression is expected to take his entire paycheck, and then some tacking on a few extra dollars of debt, and spend it on worthless trinkets.
Sure enough, for the past 8 years, said consumer has done just that and with the help of the endless hopium and Kool-Aid dispensed by the administration, and by the political and financial propaganda media, spent, spent and then spent some more hoping that “this time it will be different.”
This all came to a screeching halt earlier today when courtesy of the latest New York Fed Survey of Consumer Expectations, we learned that the US consumer has finally tapped out. Households reported that they expected to increase their spending by just 3.5% in the next year, a major drop from the 4.3% the month before. This was the lowest reading in series history.
Worse, when adjusting for household inflation expectations, which have been relatively flat if modestly declining around 3%, real spending intentions, when adjusted for inflation, just crashed to a barely positive 0.5%, down over 60% from the prior month. This too was the lowest print in series history.
This Zero Hedge article put in an appearance on their website at 4:27 p.m. EDT on Monday afternoon—and the charts are definitely worth trip. I thank reader M.A. for today’s first story.
The U.S. Economy Continues Its Collapse — Paul Craig Roberts
Do you remember when real reporters existed? Those were the days before the Clinton regime concentrated the media into a few hands and turned the media into a Ministry of Propaganda, a tool of Big Brother. The false reality in which Americans live extends into economic life. Last Friday’s employment report was a continuation of a long string of bad news spun into good news. The media repeats two numbers as if they mean something—the monthly payroll jobs gains and the unemployment rate—and ignores the numbers that show the continuing multi-year decline in employment opportunities while the economy is allegedly recovering.
The so-called recovery is based on the U.3 measure of the unemployment rate. This measure does not include any unemployed person who has become discouraged from the inability to find a job and has not looked for a job in four weeks. The U.3 measure of unemployment only includes the still hopeful who think they will find a job.
The government has a second official measure of unemployment, U.6. This measure, seldom reported, includes among the unemployed those who have been discouraged for less than one year. This official measure is double the 5.3% U.3 measure. What does it mean that the unemployment rate is over 10% after six years of alleged economic recovery?
This commentary by Paul showed up on his website yesterday sometime—and it’s certainly worth reading. I thank Roy Stephens for sending it along.
Greenspan: Be Afraid of Pending Bubble in Bond Market
Former Federal Reserve Chairman Alan Greenspan discusses the U.S. economy, bond market and Fed policy. He speaks with Bloomberg‘s Tom Keene.
This 1:32 minute Bloomberg video clip appeared on their website at 8:44 a.m. EDT yesterday—and when ‘Big Al’ says you have a bond bobble that’s about to pop, it’s time to ‘listen up!’ I thank Howard Wiener for sharing it with us.
International Man: Escaping Serfdom
The concept of government is that the people grant to a small group of individuals the ability to establish and maintain controls over them. The inherent flaw in such a concept is that any government will invariably and continually expand upon its controls, resulting in the ever-diminishing freedom of those who granted them the power.
When I was a schoolboy, I was taught that the feudal system of the Middle Ages consisted of serfs tilling small plots of land that belonged to a king or lord. The serfs lived a meagre life of bare subsistence and were subject to the tyranny of the king or lord whose men would ride into their village periodically and take most of the few coins the serfs had earned by their toil.
The lesson I was meant to learn from this was that I should be grateful that, in the modern world, I live in a state of freedom from tyranny, and as an adult, I would pay only that level of tax that could be described as “fair”.
This short, but very interesting essay by Jeff Thomas was posted on the internationalman.com Internet site on Monday sometime—and it’s worth reading if you have the time.
Getting to Yes on the Trans-Pacific Partnership: Bloomberg Editorial
The recent meeting in Hawaii of the U.S. and its 11 negotiating partners dashed hopes that the plan was about to be wrapped up. The session made progress but ended with troublesome issues still unresolved. TPP’s opponents would be glad to leave it at that and let the whole thing fizzle out. To stop that from happening, governments need to do a better job of explaining why the skeptics are wrong.
All manner of objections have been lodged against the deal, but two are mainly to blame for the lack of popular support. The first is the claim that expanded trade would hurt more people than it would help. The second is the idea that trade is already more or less free, so what’s the big deal, anyway? TPP, it’s argued, is really about protecting the profits of U.S. pharmaceutical companies — and they’re doing fine already.
Governments have challenged these myths too feebly. Yes, expanded trade hurts some workers — just like competition and technological progress hurt some workers. Yet who doubts that competition and technology raise living standards? The parallel is exact. Expanded trade lowers prices and raises productivity. It drives greater prosperity. Its benefits greatly outweigh its costs.
This short and worthwhile read appeared on the Bloomberg Internet site at 8:00 a.m. yesterday morning Denver time—and it’s the first offering of the day from Patricia Caulfield.
Rising number of wealthy French fleeing abroad
New figures published this week suggest that an increasing number of France’s top earners are leaving the country, with some observers blaming high taxes for the rising “wealth drain”.
A total of 3,744 people who earned 100,000 euros per year or more left France in 2013, a 40 percent increase compared to 2012, French financial newspaper Les Echos revealed citing figures from the national tax-collecting office.
Furthermore, 659 people who earned 300,000 euros or more annually said ‘au revoir’ in 2013, a 46 percent rise on the previous year. By comparison, the overall French migration rate in 2013 increased by only 6 percent.
The well-respected French newspaper highlighted that the figures were incomplete due to various bureaucratic issues, and warned that it would be dangerous to use it to draw any conclusions. However, the article coincided with the recent publication of a report from the New World Wealth consulting group that listed France third on a list of countries with the biggest outflow of millionaires. Around 42,000 millionaires left France between 2000 and 2014, according to the report.
This interesting story was posted on the france24.com Internet site on Saturday—and it’s the second contribution of the day from Roy Stephens.
Norwegian Media Calls Russian Arctic Bid Fair, Praises Moscow’s Cooperation
Russia has re-submitted its petition to the United Nations claiming an Arctic sea shelf which extends northwards from the continental part of the country.
The event should be regarded as a positive move and evidence that Russia continues to act according to UN policies, Norway’s largest newspaper Aftenposten reported.
The shelf is also being disputed by Denmark and Canada; both countries are expected to submit their applications in the near future.
“Although the claims of all three nations will overlap, the countries have come to an agreement that they won’t block each other’s land claims… If the U.N. Commission concludes that their claims overlap, then their boundary will be determined using diplomatic channels,” the Norwegian newspaper said.
This interesting article showed up on the sputniknews.com Internet site at 8:12 p.m. Moscow time on their Saturday evening, which was 1:12 p.m. EDT in Washington. Roy Stephens sent this our way on the weekend.
Russian GDP Plunges 4.6%
Russia’s economy shrank the most since 2009 after a currency crisis jolted consumer demand, while a selloff in oil threatens to drag the country into a deeper recession.
Gross domestic product contracted 4.6 percent in the second quarter from a year earlier after a 2.2 percent decline in the previous three months, the Federal Statistics Service in Moscow said on Monday, citing preliminary data. That was worse than the median forecast for a 4.5 percent slump in a Bloomberg survey of 18 analysts. The Economy Ministry had projected that output shrank 4.4 percent in the period, calling it “the lowest point” for Russia.
The rout on commodities markets has overshadowed the first signs of stabilization in Russia by hammering the ruble and shaking a country that relies on oil and gas for about half of its budget revenue. The nation is enduring its first recession in six years after last year’s currency crisis and a surge in inflation eroded consumer buying power as sanctions over Ukraine choked access to capital markets.
This news item put in an appearance on the Bloomberg website at 8:00 a.m. EDT on Monday morning—and was updated a bit over three hours later. I thank Patricia Caulfield for sending it along.
Russia’s Gazprom posts quarterly gain
A backlash from European leaders, low oil prices and increased sanctions pressure did little to damage Russia’s Gazprom, which posted huge profit gains Monday.
Gazprom, Russia’s largest natural gas producer, reported a 71 percent increase in net profits to $5.9 billion for the period ending March 31. Total sales from the company increased 6 percent.
“The increase in sales is mainly driven by the increase in gas sales to Europe and other countries and Former Soviet Union countries,” the company said in its quarterly statement.
This UPI story, filed from Moscow yesterday, appeared on their Internet site at 9:15 a.m. EDT—and it’s another contribution from Roy Stephens.
Germans and Slovaks stand ready to scupper Greek deal as Athens insists agreement is near
Eurozone creditor governments raised fresh concerns about the viability of a new Greek rescue package on Monday despite hopes from Athens that an agreement to unlock vital rescue funds was inching ever closer.
Greece and its creditor partners reportedly agreed on fiscal targets the country will need to hit over the next two years, on Monday evening. They would amount to a baseline of 0pc in 2015, followed by a primary surplus of 0.5pc the following year, and 1pc in 2017, according to an official quoted by Reuters.
Creditors projections assume Greece will contract by another 0.5 pc in 2016, before returning to a 2.3 percent growth in 2017, the official added.
However, in a sign of continued dissent among the ranks of Europe’s creditor nations, both Germany and Slovakia stood firm on the tough conditions Athens must accept as its price to stay in the eurozone.
This story was posted on the telegraph.co.uk Internet site at 11:30 p.m. BST on their Monday evening, which was 6:30 p.m. EDT in Washington.
Gunmen target Istanbul police station and U.S. consulate
Istanbul woke up to violence on Monday as a bomb attack on a police station was later followed by an attack at the US consulate.
An explosion at the police station in Istanbul’s Sultanbeyli neighbourhood killed at least three people, according to the Dogan news agency. Istanbul’s police headquarters in a statement confirmed that three officers and seven civilians had been injured in the blast, but gave no death toll.
Two suspected militants linked to the police station attack were killed in clashes with police, media reports said.
A few hours later Turkish media reported that two assailants, a man and a woman, opened fire on the U.S. consulate, sparking a gun battle with local police. No one was hurt in the incident outside the diplomatic mission, with a spokesman for the U.S. embassy in Ankara telling AFP: “We’re still working to find out what’s going on.”
This AFP article was picked up by the france24.com Internet site yesterday—and it’s another offering from Roy Stephens.
Inside Syria: Kurds Roll Back ISIS, but Alliances Are Strained
Green drapes were drawn against the sun, cloaking the room where members of a Syrian Kurdish militia huddled around walkie-talkies, assiduously taking down GPS coordinates.
Talal Raman, a 36-year-old Kurdish fighter, worked on a Samsung tablet, annotating a Google Earth map marked with the positions of the deserted apartment buildings and crumbling villas from where his colleagues were battling Islamic State fighters south of this northern Syrian town. He pinpointed in yellow the positions where his men were hunkered behind a wall, and highlighted in red the coordinates of a building next to a mosque where Islamic State fighters had taken cover.
“Our comrades can see the enemy moving at the GPS address I just sent you,” he wrote in Arabic to a handler hundreds of miles away in a United States military operations room. Then he waited for the American warplanes to scream in.
This article, filed from Hasaka, Syria, appeared on The New York Times website on Monday sometime— and my thanks go out to Roy Stephens once again.
Al-Qaida affiliate ceases fighting ISIS in parts of Syria
A Syrian al-Qaida affiliate has ordered its fighters to disengage from battles against Islamic State (Isis) in parts of the country where Turkey intends to create a “safe zone”.
The directive, which was published online on Monday, said the Nusra Front would refrain from fighting Isis in a swath of northern Syria in order to avoid indirectly aiding the US-led campaign against the terror group.
Last month, the US-led coalition was given permission to use Turkish territory to strike Isis, and on Sunday six F-16 fighter jets and 300 personnel arrived at the Incirlik air base.
The Nusra Front also urged other rebel groups not to cooperate with the coalition, to take a broader strategic view of the battlefield and to rank their enemies.
This is a very interesting story when you consider the contents of the NYT piece that preceded it. This one was posted on theguardian.com Internet site on Monday as well—and I thank Patricia Caulfield for this one.
Egypt revives Suez dream amid global trade slump and escalating insurgency
Egypt has revived the Suez Canal on a grand scale with a flourish of patriotic fervour, vowing to reignite world trade almost a century and a half after the legendary waterway first opened.
The $8.2bn construction blitz adds a second shipping lane along a 45-mile stretch, allowing traffic to move in both directions. It shaves 11 hours off the journey and increases capacity by a quarter to 99 vessels a day.
The project was rushed through in less than a year – a third of the original estimate – in an engineering coup that enlisted three-quarters of all dredgers in existence to scoop out a new passage through the Great Bitter Lake.
President Abdel Fattah al-Sisi called the enlarged canal a “gift to the world” at an opening event with global leaders in the port of Ismailia, protected by a massive security blanket to fend off possible terrorist attacks from ISIS forces in the Sinai.
This commentary by Ambrose Evans-Pritchard showed up on the telegraph.co.uk Internet site last Thursday evening—and I thank Roy Stephens for sending it our way late Saturday evening MDT.
Japanese Dump Most U.S. Treasuries in Two Years as Fed Liftoff Looms
Japanese dumped the most U.S. Treasuries in two years in June, as the Federal Reserve prepares to raise interest rates as soon as next month.
Investors also sold German bunds for a fourth month, and offloaded the most French sovereign debt on record in data going back to 2005, as low yields globally this year offered the smallest premium over Japanese government bonds since at least 1993. Swaps traders see 54 percent odds that the Fed will increase borrowing costs in September for the first time since 2006.
“Most Japanese are not bullish on the U.S. Treasury market, especially the short end,” which is more sensitive to monetary policy expectations, said Kazuyuki Takigawa, who manages about $6 billion of bonds as the chief fund investor for foreign fixed income at Resona Bank Ltd. in Tokyo. “German bunds are not attractive enough to lure investors from Japan because of the very low level of yields there.”
This Bloomberg story put in an appearance on their website at 10:09 p.m. MDT on Sunday evening—and it’s the final contribution of the day from Patricia Caulfield, for which I thank her.
EPA’s gold mine toxic waste spill might be a lot worse than anyone thought
Anger was mounting Monday at the federal Environmental Protection Agency over the massive spill of millions of gallons of toxic sludge from a Colorado gold mine that has already fouled three major waterways and may be three times bigger than originally reported.
An 80-mile length of mustard-colored water — laden with arsenic, lead, copper, aluminum and cadmium — is working its way south toward New Mexico and Utah, following Wednesday’s accidental release from the Gold King Mine, near Durango, when an EPA cleanup crew destabilized a dam of loose rock lodged in the mine. The crew was supposed to pump out and decontaminate the sludge, but instead released it into tiny Cement Creek. From there, it flowed into the Animas River and made its way into larger tributaries, including the San Juan and Colorado rivers.
“They are not going to get away with this,” said Russell Begaye, president of the Navajo Nation, which intends to sue the EPA.
Visible from the air, the toxic slick prompted EPA Region 8 administrator Shaun McGrath to acknowledge the possibility of long-term damage from toxic metals.
This Fox News story from yesterday was picked up by The New York Post at 2:10 p.m. EDT—and is worth reading. I thank São Paulo reader John Sanders for bringing it to our attention. But if you don’t want to read the story, you should at least look at the picture.
Bundesbank hasn’t secured Germany’s gold, repatriation campaign leader says
On behalf of Matterhorn Asset Management, freelance journalist Lars Schall interviews the leader of Germany’s gold reserves repatriation campaign, Peter Boehringer, about gold’s role in the international financial system and the failure of Germany’s central bank, the Bundesbank, to secure and account for the nation’s gold reserves.
The interview is 14 minutes long—and was posted at Matterhorn Asset Management’s Internet site, goldswitzerland.com on Sunday. I found all of this in a GATA release on Sunday evening.
Banks obstruct supply as gold demand soars in Nepal
With bullion prices sliding to record lows, customers have been queuing up in front of dealers to buy gold to make jewellery. Traders said that although banks had started issuing gold from the last few days, demand outstrips supply. Falling prices and the onset of the festive season has fuelled the rush, said traders.
“Demand has soared three to four times compared to last month as prices have dropped significantly, but banks have not been issuing as much gold as is required,” said Nirmal Krishna Shrestha, proprietor of Gems Ornament Emporium at Bishal Bazaar, New Road. Only banks are authorized to import gold with the quota fixed at 15 kilograms daily.
This gold-related story, filed from Kathmandu, showed up on the ekantipur.com Internet site on Sunday sometime—and it’s another offering from the gata.org Internet site.
SGE gold withdrawals an enormous 1,464 tonnes so far this year — Lawrence Williams
While physical gold withdrawals from the Shanghai Gold Exchange (SGE) in the latest reported week were lower than the massive 72 tonnes a week earlier at 53 tonnes it remains high for the time of year. But the key to what has been happening with Chinese demand as represented by SGE withdrawals is where the total for the year to end-July stands compared with previous years.
Looking at this metric we can see from the chart below that SGE withdrawals this year so far have totalled a massive 1,464 tonnes – which is running around 116 tonnes ahead of the huge record 2013 year at the same time and an enormous 370 tonnes ahead of the 2014 figure at the end of July when the annual total came to 2,136 tonnes. If the average monthly withdrawal level (49 tonnes a month so far) for the current year keeps up we will be looking at annual withdrawals totalling more than 2,500 tonnes for the full year – and with Chinese demand tending to be strongest in the last four months and the first two months of the year this level could indeed be a possibility.
If we compare this potential level of annual demand with the likely total of new mined gold this year, China would account for around 75% of the yearly total on its own!
This short commentary by Lawrie appeared on his website on Saturday—and it’s worth reading.
Gold Soars After Chinese Currency Devaluation
To be sure, while it will take the Chinese mainland a few more hours to realize just what happened, and that once you unleash the devaluation genie in a global currency war you can’t simply put it back in, which means over one billion Chinese will soon be scrambling to preserve their purchasing power (but not in the stock market which particular bubble burst just last month and taught millions a very harsh lesson in get rich quick schemes), some fast thinkers realized that not only will capital outflows explode in the coming weeks and months, but that holding one’s savings in Yuan will be, well, foolish.
As a result, after initially tumbling for some inexplicable reason after the PBOC announcement, gold is now soaring back to levels from mid-July and going higher.
Here we eagerly await as the BIS’ Benoit Gilson sells a few billion in paper gold just to reset the price of gold lower as a surge in gold, and a loss of faith in paper money, at this juncture in just broken out global currency wars, is the last thing the central banks’ central bank can afford.
But wait, there’s more: because any day now the PBOC will update its revised foreign reserve and gold holdings. And so the next big leg up in gold will take place when it is revealed that the PBOC had only exposed a portion of its “new” total gold inventory, and that with every passing month it will simply reveal more and more as central-planning conditions demand it.
This Zero Hedge piece appeared on their website at 4:32 a.m. EDT this morning—and I thank “Rocky R” for sliding it into my in-box just before I put this up on the website.
The PHOTOS and the FUNNIES
I was out with the camera on Sunday—and this double-crested cormorant was the ‘catch of the day’ so to speak. I’ve posted photos of these birds before—last year some time—but this is the first time I’ve been able to photograph one in the water, as the other photos have been of the birds on dry land. Here are the three shots I kept—and when you look at the last photo, it certainly not the friendliest looking thing in the world, is it? By the way, the ‘click to enlarge‘ feature brings them up to full screen size.
THE WRAP
The circumstances surrounding the delivery process in the ongoing August COMEX gold contract continue to be of interest. On Wednesday, I reported that JPMorgan delivered a sizable 2,750 contracts and later that day the COMEX reported the gold involved could be traced to a transfer of 275,000 oz from JPM’s eligible holdings to the registered category, a fairly simple and common transaction. What makes this delivery process interesting is that there still remains 3600 contracts still open in the August contract and it appears at this point that the long holders of those contracts are more interested in physical delivery and not in rolling over futures positions to another month.
This is not a shockingly large amount of contracts open, but it does suggest a higher than normal demand for physical gold as does the spread differentials between August and other trading months. There is no doubt that this appears to be a “big boys” affair based upon the names of those delivering and accepting gold deliveries so far, including Goldman Sachs which hasn’t previously made or taken any COMEX gold deliveries this year. So far, all the big transactions have been in the propriety trading accounts of large banks, aka, the big boys and I would suspect the rest of the delivery month would play out the same way.
I’m not suggesting in any way that this implies any type of delivery default on the COMEX as the big players involved stand to lose the most should that occur. Instead, I’m suggesting that there appears to be stronger than usual demand for physical gold and that demand is not retail oriented, but of the large buyer variety. Likewise, I’m still of the opinion that the highly visible demand for Silver Eagles and other bullion coins, including Gold Eagles, is of the big buyer variety and not of broad retail demand. — Silver analyst Ted Butler: 08 August 2015
I was happy to see the rallies in all four precious metal, which was probably short covering by the technical funds in the Managed Money category, but I certainly wasn’t happy to see the rallies get capped as quickly as they did—nor was I overly amused by the amount of volume involved. It’s obvious from yesterday’s price action that JPMorgan et al are still there—and still very much in charge.
Here are the 6-month charts for all of the Big 6 commodities—and today I have the 13 and 50-day moving averages just for the four precious metals, so you can see where these rallies stand vis-à-vis them. I shan’t bother with the 200-day moving averages, because they’re in the stratosphere. Copper and WTIC have the usual 50 and 200-day moving averages.
And as I type this paragraph, the London open is less than ten minutes away. “Da boyz” showed up shortly after 9 a.m. Hong Kong time on their Tuesday morning—and now have all four precious metals down on the day from Monday’s New York close. Gold is now back below the $1,100 spot mark—and palladium is back at the $600 spot mark once again. They’re obviously trying to get silver back below $15—and it remains to be seen whether they succeed or not.
Net volume in gold, mostly of the HFT variety, is already monstrous at 65,000 contracts—and silver’s net volume is way up there as well at over 13,000 contracts.
The dollar rallied about 40 basis points starting around 9 a.m. Hong Kong time—and is still up 31 basis points as of this writing.
As I said in Saturday’s missive about Friday’s action, those rallies already had the hallmarks of the “same old, same old“—and nothing I see here at 3 a.m. EDT this morning has changed my mind, as the sellers of last resort and their algorithms are hard at it again.
And as I put today’s column up on the website at 5:20 a.m. EDT, I note that all four precious metals took off higher the moment that London open and, with the exception of palladium, all have since been capped at 9 a.m. BST, although silver is struggling higher by a few cents as I write this.
Net HFT gold volume is now is now a stunning 90,000 contracts—and silver’s net volume is over the moon as well at 19,500 contracts.
The dollar index, which made it up as high as 97.59—collapsed all the way down to 97.02 starting at the 8:00 a.m. London open—but ‘gentle hands’ showed up around 9:15 a.m. BST to rescue it from falling further. It’s currently down 4 basis points.
I have no idea where prices will go from here. They should rally considerably further—and that may still be in the cards, but JPMorgan et al are throwing everything at them to make them go away—and it’s already an excellent bet that Friday’s Commitment of Traders Report will be butt-ass ugly.
As far as the price action in New York is concerned, if you think I know what to expect, you’re talking to the wrong guy. And, once again, absolutely nothing will surprise when I check the charts when I roll out of bed later this morning.
That’s all I have for today—and I’ll see you here tomorrow.
Ed
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