20 August 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t do much during most of the Wednesday session in the Far East on their Wednesday, but began to rally early in the afternoon Hong Kong time. That rally got capped shortly before, or shortly after the London open—and it didn’t do a lot until 9 a.m. in New York. From there it began to chop higher, but began to run into some resistance starting at the London p.m. gold fix. The rally ended in electronic trading minutes after 4 p.m. EDT. From there it traded ruler flat into the close.
The low and high ticks were reported by the CME Group as $1,115.50 and $1,134.30 in the December contract.
Gold finished the Wednesday session at $1,134.10 spot, up $16.60 from Tuesday’s close. Net volume was only 131,000 contracts. Higher than I’d like to see? Yes, but it could have been much worse for a dollar move of this size.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. Most of the volume that mattered came between 8:30 and 11 a.m. EDT, which is 6:30 and 9 a.m. MDT on this chart. The subsequent gold rally after that really didn’t involve all that much volume. The vertical gray line is midnight in New York, noon in Hong Kong, add 2 hours for EDT—and don’t forget the ‘click to enlarge‘ feature.
Up until 9 a.m. in New York on Wednesday morning, the silver price pattern was very similar to gold’s. But one the 9 a.m. rally began in this metal, it really sailed before getting capped hard at the London p.m. gold fix. After that it managed to rally a few cents, but was obviously being kept on a very short leash.
The low and high ticks in silver were recorded as $14.795 and $15.32 in the September contract.
Silver closed yesterday in New York at $15.305 spot, up 43.5 cents—and right on its 50-day moving average. Net volume was pretty hefty for the second day in a row at 45,500 contracts.
The platinum and palladium charts are mostly copies of the gold chart. Platinum finished the day at $1,013 spot, up an even 20 bucks from Tuesday’s close. Palladium closed on Wednesday at $613 spot, up 16 dollars, gaining back every dollar that it ‘lost’ on Tuesday. Here are the charts.
The dollar index closed late in New York on Tuesday afternoon at 97.00 right on the button. It sold off to the 96.68 mark by shortly after the London open on their Wednesday morning. From there it got rescued—and several more attempts were made to break above the 97.00 level. They got as far as the multiple attempts on Tuesday—and from there the dollar sank to around the 96.80 mark by 1:30 p.m. I guess the July Fed minutes were released at that point, because after a quick spike up, the index plunged to its 96.34 low by 3:25 p.m. EDT—and after that it struggle higher by a handful of basis points into the close. The dollar index finished the Wednesday session at 96.45—down 55 basis points on the day.
If you check any of the precious metal charts around 1:30 p.m. EDT, you won’t see any hint that anything had happened to the dollar index at all at that time. So this belief that the precious metal prices react to the what the dollar index is doing is pure b.s.—but nobody was mentioning it yesterday.
Here’s the 6-month U.S. dollar index chart to put yesterday’s move in some perspective.
The gold stocks headed higher right at the 9:30 a.m. EDT open of the equity markets, but got sold off the moment that the price got capped at the London p.m. gold fix. After that the shares had a roller coaster ride for the remainder of the day—and the HUI closed just off its high, up 3.48 percent.
The silver equities also rallied into the London p.m. fix—and then chopped lower and back to unchanged by around 1:45 p.m. when the Fed minutes were announced early. The shares rallied once again—as Nick Laird’s Intraday Silver Sentiment Index closed up only 2.05 percent. I was totally underwhelmed.
The CME Daily Delivery Report showed that, once again, there were zero gold and zero silver contracts posted for delivery within the COMEX-approved depositories on Friday. I must admit that I don’t know what to make of this lack of deliveries, as only 2 gold contracts have been delivered during the last six business days.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in August continued to decline, but this time it only fell by 73 contracts, which leaves 1,575 still open. Silver o.I. continues to show unchanged at 16 contracts.
There were no reported changes in GLD yesterday—and as of 9:40 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
The U.S. Mint had a small sales report yesterday. They didn’t sell any gold, but did sell another 85,000 silver eagles.
There was very little activity in gold over at the COMEX-approved depositories on Tuesday. Nothing was reported received—and 6 kilobars were shipped out of the Manfra, Tordella & Brookes, Inc. depository.
There wasn’t a lot of activity in silver for a change, as only 1,999 troy ounces were received—and 124,485 troy ounces were reported shipped out. The link to that activity is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, there were 2,753 kilobars shipped in—and 8,614 were shipped out the door. Once again, all the action was at the Brink’s, Inc. depository—and the link to that, in troy ounces, is here.
I have the usual number of stories for a weekday column—and I hope you find a few that interest you.
CRITICAL READS
Stocks Soar Into the Green as Question Emerges: “Rate Hike or QE4 First?”
It appears that the Fed’s cunning plan to hike rates so it can cut rates was just foiled once again.
Moments ago stocks have soared into the green for the day in an epic algo stop run as ‘traders’ weigh the words amid the FOMC Minutes. The crucial sentence is “The risks to the forecast for real GDP and inflation were seen as tilted to the downside, reflecting the staff’s as-sessment that neither monetary nor fiscal policy was well positioned to help the economy withstand substantial adverse shocks.” This suggests the possibility of a monetary reaction (QE4) if external shocks occur even before they have had a chance to raise rates.
Here is a sample of the litany of FOMC notices that suggest that far from a rate hike, the US economy is more likely to see QE4 first!
This article put in an appearance on the Zero Hedge website on Wednesday afternoon at 2:21 p.m. EDT—and it’s worth skimming.
Marc Faber: Beware the ‘stealth bear market’
Famed contrarian Marc Faber has been steadily predicting a stock market crash for the past couple years. Needless to say, that hasn’t quite happened. But the publisher of the Gloom, Boom & Doom Report now says that U.S. stocks have entered a “stealth bear market.”
“Indices are close to a high, but if you look at the 12-month new highs and the 12-month new lows, even in the last two days when the market rallied, there are far more 12-month new lows than new highs,” Faber said Monday on CNBC‘s “Trading Nation.”
In the S&P 500, 37 companies hit a 52-week high in the past week, compared to 34 companies that hit a 52-week low in the same time frame, according to FactSet.
“This weakness in the overall market … will strike. Eventually we will end the year substantially lower,” he said.
It appears that this 3-segment CNBC interview from Monday run consecutively, with the usual commercial inbetween. The first segment runs for 3:15 minutes—and I thank Ken Hurt for passing it along.
JPMorgan, Goldman Sachs, Morgan Stanley to form data company: WSJ
JPMorgan Chase & Co, Goldman Sachs Group Inc and Morgan Stanley are working to create a company that will pull together and clean reams of data used to determine pricing and transaction costs, The Wall Street Journal reported.
The initiative is currently dubbed “SPReD”, which stands for Securities Product Reference Data, and is likely to be launched in the next six to 12 months, the Journal said, citing people familiar with the matter.
Each founding bank is investing “seven figures” in the company, the people said.
The banks did not immediately respond to a request from Reuters for comment or were not immediately available for comment.
Maybe it’s just me, but why does this story make me feel like these companies are up to no good? The above four paragraphs are all there is to this Reuters article that appeared on their website at 2:41 p.m. EDT yesterday afternoon. It’s the first contribution of the day from Roy Stephens.
Venezuela’s currency is now so worthless that people are using it as napkins
An image is going round that sums up just how ridiculous Venezuela’s economy has become.
A Reddit user uploaded a picture on Monday of a man using a 2 bolivar note to hold an empanada.
According to Venezuela’s official bolivar-dollar exchange rate, the man using his money as a napkin is wasting about $0.31 (£0.20).
But on the black market, the reality is completely different. You can get 676.88 bolivars to the dollar, according to dolartoday.com. That means holding food with a 2 bolivar note costs the holder less than a third of one US cent.
This news item showed up on the businessinsider.com Internet site at 3:15 a.m. EDT on Tuesday morning—and I thank Brad Robertson for sending it along.
Europe’s sick farmer: France’s agricultural model is in trouble
The sight of French farmers blocking roads, torching tires and dumping their produce in the streets is a staple of French life — on par with the Tour de France and jet flyovers during the Bastille Day military parade.
But the displays of outrage this summer point to more than just bad humor among farmers. Insiders warn that a support system made up of price controls, European Union subsidies and state aid, which has kept swathes of French agriculture in business for decades, is unraveling.
Unless France reforms agriculture in depth, farmers, meat purchasers and analysts say that some sectors — notably breeders — are set to go the way of coal mining, and disappear.
“The entire breeding sector, from pork to beef to milk producers, faces a huge competitiveness challenge,” Pascal Viné, the general delegate of the Co-op de France group of agricultural firms, told POLITICO. “We’ve reached a point where we can no longer play for time and hope that prices will pick up.”
This longish, but interesting article appeared on the politico.eu website at 1:09 p.m. Central Europe Time [CET] on their Wednesday afternoon, which was 7:09 a.m. in New York—EDT plus 6 hours. It’s the second contribution of the day from Roy Stephens.
East Ukraine’s Donetsk Republic Will Hold Referendum To Join Russia
Following the 2014 Crimean referendum which saw the Black Sea peninsula join Russia shortly after the Ukraine presidential coup and ensuing territorial conflict between pro-Kiev and pro-Moscow regions, many speculated it is only a matter of time before the Donetsk region, subsequently elevated into People’s Republic status, which has been engaged in constant warfare with the Kiev army (which is in such bad shape it recently drafted a disabled man without arms) would follow suit.
We now have the answer.
Having waited for over a year for the Ukraine civil war/conflict to be relegated to back page status, if that, Putin has finally given the green light, and as Xinhua reports, leaders of the self-proclaimed “Donetsk People’s Republic” are planning to hold a referendum on seceding from Ukraine and joining Russia, the Donetsk-based Ostrov news agency reported Wednesday.
The referendum is scheduled to take place some in early to mid November, or specifically two to four weeks after the Oct. 18 local elections, said the news agency.
The ballot papers for the referendum designed in the colors of the Russian flag have already been printed, it said.
This very interesting and provocative news item was posted on the Zero Hedge website at 3:29 p.m. Wednesday afternoon EDT—and it’s worth reading. I thank reader M.A. for bringing it to our attention.
Eight soldiers killed, Istanbul palace attacked as Turkish unrest mounts
Gunmen fired on police outside an Istanbul palace and a bomb killed eight soldiers in the southeast on Wednesday, heightening a sense of crisis as Turkey’s leaders struggled to form a new government.
The Istanbul governor’s office said two members of a “terrorist group” armed with hand grenades and an automatic rifle were caught after attacking the Dolmabahce palace, popular with tourists and home to the prime minister’s Istanbul offices.
One police officer was slightly wounded in the attack, state-run Anadolu news agency reported.
Militants from the Kurdistan Workers Party (PKK) meanwhile killed eight soldiers with a roadside bomb in the southeastern province of Siirt, the military said, intensifying a conflict there after the breakdown of a two-year ceasefire last month.
This Reuters story, co-filed from Istanbul and Diyarbakir in Turkey, put in an appearance on their Internet site at 5:46 p.m. EDT yesterday afternoon—and it’s another offering from Roy Stephens.
Turkey Turmoiling: Lira Plunges To Record Low On Financial, Political, Terrorism Fears
Turkey’s lira is once again in free fall, after testing all-time lows against the dollar during multiple sessions of late as political turmoil and civil war wreak havoc on the currency.
On Tuesday, the central bank failed to hike rates and delivered what was generally said to be a confused set of guidelines for navigating the normalization of monetary policy in developed markets. On Wednesday, news that the timing of a rate hike will now depend on the Fed looks to have put pressure on TRY.
In short, a perfect storm of political upheaval, indeterminate monetary policy, and growing violence between Ankara and the country’s Kurdish population have conspired to send the lira on a terrifying ride and as you’ll note from the headline roundup presented below, it looks as though things are going to get a whole lot worse before they get better.
This Zero Hedge news item showed up on their website at 9:08 a.m. EDT on Wednesday morning—and I thank Richard Saler for finding it for us.
High-level Iranian and Saudi visits to Moscow raise speculation
Recent visits to Moscow by the Iranian and Saudi foreign ministers, alongside talks with representatives of the Syrian opposition,have raised speculation that Russia could be acting as a mediator between Iran and Saudi Arabia as the lifting of sanctions on Tehran leave the situation in the Middle East in a state of flux.
Russian Foreign Minister Sergei Lavrov and his Iranian counterpart Javad Zarif recently met in Moscow to discuss the development of relations between the two countries in the new international environment, following the signing of an agreement between Iran and the P5+1 major world powers.
On the eve of this visit to the Russian capital, the Foreign Minister of Saudi Arabia, and representatives of the Syrian opposition also came to Moscow for meetings. However, opinion is divided on whether Moscow is acting as an unofficial mediator between Iran and Saudi Arabia.
This news item appeared on the rbth.com Internet site yesterday sometime—and once again my thanks go out to Roy Stephens for sharing it with us.
Russia & Iran reach agreement on S-300 air defense systems delivery – deputy foreign minister
Moscow and Tehran have reached an agreement over delivery of the S-300 long range surface-to-air missile systems. It’s a done deal, with some technical issues only left to be clarified, deputy foreign minister Mikhail Bogdanov told RIA Novosti.
“As things stand now, this topic is closed. We have reached full understanding on the matter together with our Iranian partners. The question has been fundamentally solved. The rest is just technical details,” Bogdanov, who is also a special presidential representative for the Middle East and Africa, stated on Wednesday.
Russia will supply Iran with the S-300 system later this year. A high-ranking source in the Russian Foreign Ministry told RIA Novosti that the exact number of missile systems has been written down in an already agreed contract.
“There will be as many as mentioned in the contract,” he added, responding to the question whether Russia will really supply Iran with four S-300 divisions instead of three, as the Sputnik agency previously reported, citing a source in the Iranian Ministry of Defense.
This story appeared on the Russia Today website at 10:08 a.m. Moscow time on their Wednesday afternoon, which was 3:08 a.m. in Washington—EDT plus 7 hours. There was an update to it about two hours after it was filed—and it’s another contribution from Roy Stephens.
The Need for Restraint in Kashmir: Editorial
More than 50 years after India and Pakistan were created in the partition of the British colonial empire, the disputed region of Kashmir remains a dangerous flash point. Cross-border violence has surged in recent months, raising new fears that the attacks could spiral out of control and set off another war between the two nuclear-armed adversaries.
In the last week alone, India and Pakistan have traded heavy gunfire and mortars almost daily across the Line of Control, which divides Kashmir into regions controlled by each side. Many civilians have been killed or wounded in the violence, including eight killed and 14 wounded on Sunday, according to officials.
Each side blames the other. Experts say Pakistan has been testing Prime Minister Narendra Modi, who, in a break with his predecessor, has vowed not to ignore attacks by Pakistan-backed militants on Indian targets. On July 27, gunmen dressed in military fatigues attacked an Indian police station near the border with Pakistan and at least nine people were killed.
The incident came after Mr. Modi met Pakistan’s prime minister, Nawaz Sharif, during a regional meeting in Russia. Pakistan’s army, which draws its power from a constant state of tension with India, has often interfered when political leaders have tried to improve relations between the two countries.
This short commentary by The Editorial Board of The New York Times, put in an appearance on their Internet site yesterday sometime—and it’s definitely worth reading if you have the interest. I thank Patricia Caulfield for sharing it with us.
China Rushes to Inject Hundreds of Billions in Liquidity to Offset Yuan Intervention
Now that the PBoC has created a situation where it’s forced to prop up the yuan via open FX ops just about as often as it’s forced to prop up the SHCOMP via China Securities Finance, concerns are growing about liquidity and a severe tightening of money markets.
With each successive intervention, China is draining liquidity from the market, a decisively unwelcome outcome as it effectively works at cross purposes with the multiple policy rate cuts the PBoC has resorted to this year in a desperate attempt to buoy the flagging economy.
In short, RRR cuts were meant to free up cash for lending and speed up economic activity. Unfortunately, demand for credit is weak (unless one counts “demand” from the plunge protection team) and ultimately, rate cuts have proven ineffective.
As such, China resorted to devaluation (just as we said they would) but because the market expects the yuan to ultimately weaken by around 10% (which would presumably give exports a boost of around 10 percentage points with a three-month delay), the PBoC has been forced manage expectations by supporting the yuan and that, in turn, offsets the effect of the RRR cuts.
Cue the frantic liquidity injections.
This news item showed up on the Zero Hedge website at 10:20 a.m. EDT yesterday morning—and it’s the second contribution of the day from Richard Saler, for which I thank him.
Blind Faith in China’s Stock Market
In late June, as the Chinese stock market was in a tailspin, a joke began making the rounds.
“We played the market when we thought stocks had hit rock bottom,” one investor says to another, “only to find there was a basement below. We played the market when prices were in the basement, only to find there was a cellar underneath that, and when we kept playing in the cellar, we found that below that there was hell. Then we took our lives in our hands and kept playing when stocks were in hell — only to discover it’s true what they say: There are 18 levels of hell!”
For the officials of China’s Securities Regulatory Commission, July 4 must have seemed like hell on earth: They were as frantic as ants on a hot wok. That morning, the heads of 21 top brokerages met with the regulatory commission, and, according to media reports, agreed to supply some 120 billion renminbi, or $19.4 billion, to a market rescue fund.
The plan was in clear violation of the Securities Law. Brokers need approval from their shareholders to give up so much money. But with the regulatory agency desperate for a cash infusion, the brokers were in no mood to follow the law. We Chinese are used to this kind of thing: In China, law and the rule of law are a world apart.
This very interesting opinion piece was posted on The New York Times Internet site on Wednesday sometime—and it’s definitely worth reading. It’s the final offering of the day from Patricia Caulfield.
China’s Richest Traders Flee Stocks as the Masses Pile In
Two months into China’s stock rout, the dynamics of the declines are becoming clearer: The wealthiest investors have been the quickest to bail out of the market.
The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency. While some of the drop is explained by falling market values, CLSA Ltd. says China’s rich have taken advantage of state buying to cash out after the nation’s record-long bull market peaked in June.
Investors with the most at stake are finding fewer reasons to own Chinese shares amid weak corporate earnings and some of the world’s highest valuations. With this month’s tumble in the yuan adding to outflow pressures, bulls have started to question whether there’s enough buying power to prop up prices once the government pares back its unprecedented rescue effort — a concern that contributed to the Shanghai Composite Index’s 6 percent plunge on Tuesday.
This Bloomberg piece showed up on their Internet site at 6:37 a.m. MDT on Tuesday morning, but it was updated at 2:49 a.m. MDT on Wednesday morning. It’s something I found in yesterday’s edition of the King Report.
Glencore CEO: China Is a Lot Weaker Than Anyone Expected
Glencore Plc Chief Executive Officer Ivan Glasenberg said no one can read the Chinese commodity market.
It’s getting harder to predict metals consumption in China, the world’s biggest user of raw materials, the billionaire CEO said in a phone interview in London. Glencore reported a 56 percent plunge in first-half profit on Wednesday and cut the earnings forecast for its trading division.
“At the moment none of us can read China,” said the 58-year-old South African who’s the second-largest shareholder in the company. “None of us know what is going on there and I’m yet to find the guy who can predict China correctly. China in the first half was a lot weaker than anyone expected.”
Glasenberg, who ran a large part of Glencore’s business with China from Hong Kong in the 1990s, is steering the company through the strongest headwinds since the Swiss commodity trader’s $10 billion initial public offering four years ago. Glencore outlined further reductions in capital spending in its earnings report, and is reducing debt in an effort to maintain dividends while preserving an investment-grade credit rating.
This Bloomberg news item appeared on their website at 10:44 a.m. Denver time on Wednesday morning—and it’s the final contribution of the day from Roy Stephens.
China’s August scare is a false alarm as fiscal crunch fades
The recession in China has been and gone. The housing market is picking up as stimulus revives, putting off the day reckoning again.
The situation in China is desperate but not serious, to borrow an old Viennese saying.
Countries with a tight exchange controls and state banking systems may come to grief in the long-run, but they do not face the sort of financial collapse seen in the US and Europe in 1931 or 2008.
China’s central bank (PBOC) has already warned that it will deploy the coercive might of the Communist regime to stop anybody smuggling money abroad under false pretexts, invoking laws covering “money laundering and terrorist financing.”
I must admit that I have no idea what to make of this Ambrose Evans-Pritchard offering from The Telegraph on Tuesday evening BST, as it’s one hundred and eighty degrees opposite to any of the other stories on China that are posted in today’s column, or on any other blog that I’ve seen for that matter. Maybe he’s got a supply of Longbottom Leaf? You’re on your own with this one. I thank Patricia Caulfield for her final offering in today’s column.
No SDR For You: IMF Tells China to Wait at Least One Year Until Reserve Basket Inclusion
If there was any confusion as to whether the recently devalued Chinese yuan would be landing in the IMF SDR basket on January 1, the Fund just cleared it up.
As Bloomberg reports, a recommended extension of the current basket to September 30, 2016 was approved by the board on August 11:
IMF executive board extends current composition of its Special Drawing Rights for nine months until Sept. 30, 2016.
IMF staff had recommended extending the current basket, which was due to expire Dec. 31, to minimize disruption if yuan added.
Board decision gives SDR users “sufficient lead time to adjust in the event that a decision were to be taken to add a new currency to the SDR basket”
I found this Zero Hedge story on their website just after midnight MDT this morning—and it’s worth reading. Lawrence Williams also a had something to say about this as well—and his comments are headlined “Official: IMF extends composition of current SDR basket for 9 months“.
Gold dealer Degussa says German buyers boosted gold purchases
Gold sales in Germany increased 50 percent to about 700 million euros ($777 million) during the first six months of the year, according to Chief Executive Officer Wolfgang Wrzesniok- Rossbach. The trend continued in July, with sales for the month reaching the second-highest on record.
A declining currency made buying gold profitable for European investors. Gold valued in euros rose 2.7 percent this year. In dollar terms, prices have dropped on signs that Federal Reserve is preparing to raise interest rates and metal demand is slowing in major markets like China and India. The metal trades at $1,115.08 an ounce in London.
“We are seeing constant buying,” Wrzesniok-Rossbac said by phone on Wednesday. “Greece has certainly been a driver, as well as the weak euro.”
This Bloomberg article found a home over at the mineweb.com Internet site last Friday—and I don’t know how I missed it, but here it is now.
China devaluation sparks gold buying everywhere – except China
After last week’s surprise yuan devaluation investors everywhere were eager to buy gold as a haven. Everywhere, that is, except in China.
Huaan Yifu Gold ETF, the bullion exchange-traded product with the biggest volume in China over the past month, posted a third straight weekly outflow as of Aug. 14. The withdrawal came even as global ETPs posted the first increase of assets since late June. Holdings in the Chinese fund are heading for the first monthly loss since April.
“With expectations of growth to remain on track and positive market sentiments, the need to buy gold as a safe haven should slowly ebb” in China, Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore, said in an e-mail. Gan was the most accurate forecaster for precious metals last quarter based on rankings compiled by Bloomberg.
Newly restored optimism threatens to exacerbate a slowdown in Chinese demand, which had already cut the nation’s gold shipments from Hong Kong in June to the lowest in almost a year. Adding to the woes for bullion bulls, the yuan drop will also mean that the metal, priced in dollars, will become more expensive for the nation to import. China rivals India as the world’s biggest consumer.
“Far from expecting gold demand to be bolstered in China, the yuan devaluation might actually work against gold consumption,” Howie Lee, an investment analyst at Phillip Futures Pte in Singapore, said in an e-mail. “It looks set to be another sorry chapter for gold demand in China — a story that we are seemingly getting too accustomed to.”
It’s hard to know whether one should laugh or cry when one sees such biased reporting. It’s barely worth reading—and I’d take it with a big grain of salt if you do. This Bloomberg story showed up on the mineweb.com Internet site at 4:56 a.m. BST on Wednesday morning.
Has a lost Nazi ghost train carrying gold finally been found? Two treasure hunters think so
The tale of a legendary Nazi ghost train carrying gold which allegedly disappeared without trace in the dying days of the Second World War has taken a new twist.
Two men have filed a “finder’s claim” with a district council in Poland for an “armoured train” carrying precious metals, fuelling speculation the mysterious train has been located.
The claim was filed in the south-west Polish town of Walbrzych and could put an end to 70 years of rumour, myth and fruitless treasure hunts for the ghost train.
According to local media reports, two claimants – a Pole and a German – say they have found a 500-foot long “armoured train” with gun platforms and a cargo of “precious metals”.
This very interesting gold-related news item put in an appearance on the telegraph.co.uk Internet site at 6:35 p.m. BST yesterday evening—and I thank “Roger in La La Land” for sliding it into my in-box just after I posted today’s column, so I thought I’d stick it in here, rather than wait for Friday’s missive.
The PHOTOS and the FUNNIES
This jackrabbit was munching away on clover on the side of a hill in the shade of a big apartment building when I was out with the camera on Sunday. The first shot was taken from about twenty-five meters away, as I wasn’t sure how close it was going to let me get. But that fear vanished, as I was allowed to get close enough where depth-of-field become a problem, so I had to back off a bit. And since this was the first real opportunity to photograph this animal, I took full advantage of it. The next three columns, including this one, will feature this critter in various poses. Don’t forget the ‘click to enlarge’ feature if you wish to view the photos full size.
THE WRAP
I did write about some type of unholy alliance between the U.S. Mint and JPMorgan, in that JPM appeared to be abusing the intent of the law that required the Mint to produce sufficient Silver Eagles to meet demand. This law was clearly intended that the Mint not deprive ordinary coin buyers from access to collecting coins due to the Mint’s inability to produce a sufficient amount. The law was never intended to allow a single large buyer to game the system and accumulate massive quantities of Silver Eagles at a price manipulated lower by that large buyer in COMEX dealings, as JPMorgan has done since acquiring Bear Stearns in 2008. Whether the Mint knew that the intent of the law was being distorted or not, at the very least, the U.S. Mint had to be aware of the identity of its largest Silver Eagle buyer whether that buyer was an authorized dealer or not. Now there are suggestions the Mint may be going out of its way to shield the identity of the big buyer of Silver Eagles.
One of the commentators who initially rejected my premise about JPMorgan buying Silver Eagles wrote to me saying he had reconsidered. It seems for a different matter completely, he wrote to the Mint to request an updated list of its authorized dealers for Silver and Gold Eagle coins, since the list was last updated in 2010. The Mint refused and to cut to the chase, he concluded that it’s entirely possible that JPMorgan had become an authorized dealer itself and could buy Silver Eagles directly from the Mint, without going through a middleman. Much to his credit, he acknowledged it could be JPMorgan as the big buyer of Silver Eagles. [His commentary, headlined “Who Are The U.S. Mint’s Authorized Purchasers of American Gold and Silver Eagle Coins?” is an absolute must read. – Ed]
Let me be clear – my premise that JPMorgan has been the big buyer of Silver Eagles is not dependent on whether they are an authorized dealer; but if they are such a dealer and it turns out that the bank has been the big buyer, there could be no clearer confirmation of my premise. Of more concern is why the Mint will no longer publish a list of authorized dealers when it has done so regularly in the past? The sudden lack of transparency is more than troublesome – it smacks of the Mint hiding something. —Silver analyst Ted Butler: 19 August 2015
I was happy to see the rallies yesterday morning when I powered up my computer, but it was obvious that “da boyz” stepped on the prices once the London gold fix was done for the day. And as I pointed out earlier, the big dollar index face plant around 1:30 p.m. in New York trading, barely made a ripple in the price of any of the precious metals. So much for the fairy tale about the dollar index dictating precious metal prices. One can only image what the down-side price action would have been like if the dollar index had risen that amount.
The volumes were fairly decent, especially in silver, but as Ted Butler said in his mid-week column to his paying subscribers yesterday—“The only good thing was that the volume appeared to be higher on the silver sell-off [on Tuesday] than on Wednesday’s snap back, meaning there was likely more managed money selling Tuesday than there was buying Wednesday.”
Here are the 6-month charts for the ‘Big 6′ commodities. As you can see, silver is right back at its 50-day moving average after yesterday’s rally, gold and palladium are getting close to theirs—and both copper and crude oil hit new low price ticks for this move down, plus they both closed at new lows as well.
And as I write this paragraph, the London open is less than five minutes away. All four precious metals are up on the day in Far East trading on their Thursday, but it’s obvious from the chart patterns in all, that any rally, no matter how tiny, is being dealt with immediately. It’s also obvious that the powers-that-be don’t want prices to get out of hand to the upside, which is precisely what they would do if JPMorgan et al just stood by and did nothing.
Net gold volume is already pretty chunky—and approaching 31,000 contracts. In silver the net volume is 5,100 contracts, but there are a decent number of roll-overs as well. The dollar index, which hit its 96.28 Far East low about 8:25 this morning local time, has rallied a bit and is currently up 2 whole basis points.
As I said in The Wrap yesterday, I’m just sitting here waiting to see how these rallies turn out. It’s obvious that precious metal prices are not being allowed to run away to the upside, so it appears that they are another “same old, same old” types of rallies, as it’s only a matter of time before the Managed Money traders dump all their short positions and start buying longs—with JPMorgan et al taking the other side of the trade for “liquidity” and price management purposes.
But we’ve still got the 50 and 200-day moving averages to contend with to the upside—and it will be interesting to see how far these rallies are allowed to run this time around once we get to the closest one. Will we have another ‘failure’ at gold’s 50-day moving average?
So we wait some more.
And as I put up today’s column on the website at 5:25 a.m. EDT, I see that the four precious metals haven’t done much since they were capped around 2 p.m. Hong Kong time on their Thursday afternoon. All four are still up on the day, but not by as much as they were earlier. Net gold volume is approaching 41,000 contracts, a big number—and silver’s net volume is right at the 7,000 contract mark, with a decent amount of roll-over activity as I reported a bit more than two hours ago. The dollar index is now down 2 basis points.
It’s just another day when I have no idea what might happen during the New York trading session. JPMorgan et al are still in the driver’s seat—and where we go price-wise from here is entirely up to them. As GATA’s Chris Powell said back in April 2008—“There are no markets anymore, only interventions.”
I’m off to bed—and I’ll see you here tomorrow.
Ed
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