21 August 2015 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price wasn’t allowed to do much in Far East trading on their Thursday—and both bumps to the upside got capped, with the last one coming at 2 p.m. Hong Kong time, an hour before the London open. From that high tick the gold price had a slight negative bias until 1 p.m. BST—and then a decent rally ensured that ended at the 1:30 p.m. COMEX close—and the price didn’t do a lot after that.
The low and high ticks were reported by the CME Group as $1,132.10 and $1,153.70 in the December contract.
Gold finished the day in New York at $1,153.10 spot, up $19.00 from Wednesday’s close. Net volume was pretty decent at 157,000 contracts.
Here’s the 5-minute tick chart for gold courtesy of Brad Robertson—and all the volume that mattered occurred during the COMEX trading session, which shows up at 6:20 to 11:30 a.m. MDT. Add two hours for EDT—and the ‘click to enlarge‘ feature is a must here.
The silver price rallied about a dime in morning trading in the Far East—and then mostly nothing happened until gold rallied at 1 p.m. BST—twenty minutes before the COMEX open. That weak rally lasted a whole thirty minutes before it was capped—and the price chopped sideways for the remainder of the Thursday trading session.
The low and high ticks are barely worth the effort to look up, but they were recorded as $15.255 and $15.56 in the September contract.
Silver finished the Thursday session at $15.575 spot, up 27 cents from Wednesday’s close. Net volume was decent at 37,500 contracts. Having broken its 50-day moving average to the up-side on Thursday, I’m happy to see that the volume wasn’t any more than that.
Platinum and palladium had somewhat similar chart patterns as gold, so I shall spare you the play-by-play. Platinum finished higher by 18 bucks, closing at $1,031 spot—and palladium finished the Thursday session at $622 spot, up 9 dollars on the day. Here are the charts.
The dollar index closed late on Wednesday afternoon in New York at 96.45—and then spiked down to around 96.27 right at 8:00 a.m. in Hong Kong trading on their Thursday morning. It inched higher from there—and the 96.58 high tick was printed just minutes before the London open. Then, in stair-step fashion, it declined for the remainder of the day, with the 95.71 low tick coming about 5:10 p.m. EDT. It didn’t do much after that—and finished the Thursday session at 95.77—down 68 basis points from Wednesday’s close.
Here’s the 1-year U.S. dollar index chart to give you a bit more perspective on where the U.S. dollar has been—and where it might be going.
The gold stocks gapped up almost 5 percent at the open—and then crawled higher along with the gold price until the 1:30 p.m. EDT COMEX close. After that they chopped lower, with a day trader taking profits right at the close, but the HUI closed up a very decent 5.44 percent nonetheless.
The silver equities followed a similar path until the COMEX close, but after that they had their volatility moments—and Nick Laird’s Intraday Silver Sentiment Index closed up 3.00 percent.
The CME Daily Delivery Report was a big surprise. It showed that, once again, zero gold contracts were posted for delivery within the COMEX-approved depositories on Monday. But the shocker was in silver, as a whopping 242 silver contracts were posted for delivery on the same day. Considering the fact that August open interest in silver has been 16 contracts for the last three or four trading days in a row, it’s a lead-pipe cinch that the Preliminary Report later this evening will tell all. The only short/issuer was JPMorgan out of its client account. There were only two long/stoppers—ABN Amro for 227 contracts—and Canada’s Scotiabank with 15. Why this delivery was done so quickly beats the hell out of me. I’ll be interested in Ted’s take on this when I talk to him later today—and I’ll fill you in tomorrow. The link to yesterday’s Issuers and Stoppers Report is here—and it’s worth a quick look.
The CME Preliminary Report for the Thursday trading session, which came out many hours after the Daily Delivery Report, showed that gold open interest in August dropped once again, but only by 30 contracts, leaving 1,495 still open. And as expected [and predicted] by the surprise news in the previous paragraph, silver o.i. in August increased by 251 contracts, which leaves 267 still open—minus the 242 mentioned above.
After eight days of no action, there was finally a deposit into GLD yesterday, as an authorized participant added 114,974 troy ounces. And as of 7:25 p.m. EDT yesterday evening, there were no reported changes in SLV. It will be interesting to see if physical silver is added to SLV during this rally, or will the authorized participants, principally JPMorgan, short the shares in lieu of real metal. I’ll be watching this carefully, as will Ted, I’m sure.
Since yesterday was Thursday, Joshua Gibbons, the Guru of the SLV Bar List, updated his website with the goings-on over at the iShares.com Internet site as of the close of business on Wednesday—and this is what he had to report.
“Analysis of the 19 August 2015 bar list, and comparison to the previous week’s list: 20,517,097.0 troy ounces were removed, 19,275,817.8 troy ounces were added, and no bars had serial number changes.
“It appears that 1,241,279.2oz were removed, and 19,275,817.8oz were physically moved from the Brinks London vault to the Brinks London C vault. I am not sure why the metal was moved. One possibility is that the Brinks London vault is nearing capacity, and there was extra room in the Brinks London C vault.”
“Due to the 20M oz movement, it’s difficult to tell which bars were removed this week.”
“As of the time that the bar list was produced, it was overallocated 24.0 oz. All daily changes are reflected on the bar list.”
There was a small sales report from the U.S. Mint yesterday. They sold 4,500 troy ounces of gold eagles—1,000 one-ounce 24K gold buffaloes—and zero silver eagles.
Except for 3 kilobars shipped out of the Manfra, Tordella & Brookes, Inc. depository, there no in/out activity in gold on Wednesday over at the COMEX-approved depositories.
For the second day in a row there wasn’t a lot of in/out activity in silver, as only 125,440 troy ounces were received—and 10,828 troy ounces were shipped out. The link to that activity is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, they reported receiving 2,923 kilobars—and shipped out 3,171. All of the activity was at the Brink’s, Inc. depository once again—and the link to that action, in troy ounces, is here.
Since yesterday was the 20th of the month, the good folks over at The Central Bank of the Russian Federation updated their website with their July statistics. This data showed that they had purchased 400,000 troy ounces of gold for their official reserves—just under 12.5 metric tonnes, bringing their total holdings up to 41.4 million troy ounces. Here’s Nick’s most excellent chart showing that change. The ‘click to enlarge’ feature is useful here—and for chart below this one.
Here’s another chart that Nick sent around last night. It shows the Swiss gold exports for July—and he had these comments to go with it: “Here’s a strange one. Switzerland only exported 28.6 tonnes of gold to China in July (China + HK).“
At the moment, I don’t have all that many stories for you today, but that may change as the evening progresses. I’ll happily leave the final edit in your hands as per usual.
CRITICAL READS
Marc Faber: China Will Spill Over to the U.S.
Maria Bartiromo spends 5:27 minutes talking to Marc Faber in this CNBC video clip from Wednesday—and I thank Ken Hurt for today’s first story.
S&P 500 Drops Below Trading Range as Global Sell-off Intensifies
The Standard & Poor’s 500 Index tumbled the most since February 2014, sending it below a trading range that has supported it for most of the year amid intensifying concern that global growth is slowing.
The S&P 500 slipped out of the 70-point trading range it has been stuck in since March, falling below 2,040 to as low as 2,035.73. The gauge erased its gain for the year and is now 4.5 percent below its May record. The benchmark slid through its average price for the past 200 days for the fourth time this month, failing to rise back above it by the close for the first time since July 9.
“Until today we’ve had nothing to break us out of the bottom or top end of the trading range,” Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said by phone. “The question is if this is the catalyst that will break us to the downside or if we’ll go back into the range.”
Other major indexes also tumbled. The Dow Jones Industrial Average lost 358.04 points, or 2.1 percent, to 16,990.69, the lowest level since October. The NASDAQ 100 Index retreated 2.8 percent, with only four members advancing. The Chicago Board Options Exchange Volatility Index rose for a fourth day, heading for its biggest weekly gain of 2015.
This Bloomberg Business news item put in an appearance on their Internet site at 3:52 a.m. Denver time on Thursday morning—and it was subsequently updated eleven hours later. It’s old headline read “S&P 500 Erases Gain for Year as Global Growth Concerns Intensify“—and it’s been softened somewhat by the Bloomberg thought police to read what you see above. I thank Roy Stephens for passing this along.
Oil Companies Sit on Hands at Auction for Leases
With oil prices collapsing and companies in retrenchment, a federal auction in the Gulf of Mexico on Wednesday attracted the lowest interest from producers since 1986.
It was the clearest sign yet that the fortunes of oil companies are skidding so fast that they now need to cut back on plans for production well into the future.
The auction, for drilling leases, attracted a scant $22.7 million in sales from five companies, but energy analysts said that came as no surprise on a day when the American oil benchmark price plummeted by more than 4 percent. For the first time since the recession, it is approaching the symbolic $40-a-barrel level. Last summer, it was above $100 a barrel.
A glut on American and world markets is to blame for the depressed prices, but the unusually large daily decline occurred after the Energy Department, in a report, lowered its oil price projections and showed a considerable increase in inventories.
This article, filed from Houston, appeared on The New York Times website on Wednesday—and it’s the first contribution of the day from Patricia Caulfield.
Macedonia declares state of emergency to tackle migrant crisis
Macedonia has declared a state of emergency in an attempt to stem the flow of migrants over its southern border with Greece, deploying riot police in armoured vehicles and calling out the army.
Authorities said official border crossings remained open, but that they would “reduce illegal border entry to a minimum”.
A Reuters reporter near the border town of Gevgelija said a column of riot police armed with teargas and armoured vehicles had shut off passage for several thousand people now stranded in no-man’s land. “No more Macedonia,” one officer said in English to a Syrian man requesting passage.
The flow of migrants into Gevgelija, which had hit 1,500 to 2,000 a day, has been stopped. The clampdown came after days of chaotic scenes at the local railway station as thousands of people tried to board trains to Serbia, young children being passed through open carriage windows.
This news item, with a 2:26 minute embedded video clip, put in an appearance on theguardian.com Internet site at 5:05 p.m. BST yesterday afternoon, which was 12:05 p.m. in New York—EDT plus 5 hours.
The Greek Debt Deal’s Missing Piece
At long last, European creditor nations and Greece have reached an agreement on a third bailout in five years.
The bailout, which was approved by Greece’s Parliament on Friday, included familiar details: In return for an infusion of 86 billion euros, or $95 billion, Greece has promised to increase taxes, cut spending and enact measures to make its economy function more efficiently.
But there was one glaring omission. As it stands, none of that new money flowing into Greece will come from the agency that has, until now, played a crucial role in virtually every bailout, in Greece and elsewhere around the world: the International Monetary Fund.
That is because the I.M.F. says that Greece was simply incapable of repaying its staggering debt. Yet the accord reached last week makes no effort to reduce that burden. If you agree with the I.M.F.’s reasoning, you might have to conclude that despite all of the seemingly ironclad provisions of the agreement imposed by eurozone creditors, Greece will be no more able to honor the deal or to repay its new loans than it has been in other bailouts.
This longish commentary/essay showed up on The New York Times website last Saturday—and it’s the second contribution of the day from Patricia Caulfield.
Tsipras resigns, paving way for snap Greek election
Prime Minister Alexis Tsipras resigned on Thursday, hoping to strengthen his hold on power in snap elections after seven months in office in which he fought Greece’s creditors for a better bailout deal but had to cave in.
Tsipras submitted his resignation to President Prokopis Pavlopoulos and asked for the earliest possible election date.
Government officials said the aim was to hold the election on Sept. 20, with Tsipras seeking to crush a rebellion in his leftist Syriza party and seal public support for the bailout program, Greece’s third since 2010, that he negotiated.
“I will go the president of the republic shortly to submit my resignation, as well as the resignation of my government,” Tsipras said in a televised address before he met Pavlopoulos.
This Reuters article, filed from Athens, was posted on their Internet site early Thursday morning EDT—and has been updated since, as it’s now datelined 6:26 p.m. yesterday evening. I thank Patricia Caulfield for sending it.
Kiev’s Renewed Assault on Donbass to Trigger U.S./Russian War –- Stephen Cohen
There are growing signs that Kiev may soon launch an offensive against the two breakaway republics in Donbass, professor of Russian studies at Princeton University and New York University Stephen F. Cohen emphasizes.
“I am convinced that if Kiev, semi-trained as it may be by American and other Western soldiers, launches an all-out offensive on Donbass, that the Kiev army as presently constituted… will either be dramatically defeated or destroyed. There won’t be any army anymore. It is no match for thirty thousand rebel soldiers who are defending their territory… who have at their rear their moms, their pops, their kids, their grannies. They are defending their homeland,” Professor Cohen underscored.Stephen F. Cohen emphasized that despite Western media labelling the Donbass independence supporters as Russia’s “proxies,” trying to deprive them of humanity, the people of eastern Ukraine are not attacking, but defending their homes.
This must read news item showed up on the sputniknews.com Internet site at 6:04 p.m. Moscow time on their Thursday evening, which was 11:04 a.m. in Washington—EDT plus 7 hours.
Ukraine shifts closer to open war with recent attacks
Renewed fighting in Ukraine has claimed the lives of dozens of civilians and soldiers in the past two weeks alone. Ukrainian President Petro Poroshenko and Russian President Vladimir Putin have both called emergency war councils since Aug. 4, as the ceasefire and diplomacy have further broken down. In its recent reports, the Ukrainian military has used the phrase “most shelling in six months” multiple times, and with increasing frequency.
On Aug. 10, Russian-backed fighters, whom Ukraine claims were led by Russian military units, launched a tank and artillery assault on the strategic town of Starognatovka, which lies between the capital of the Russian-backed separatists, Donetsk, and the key port city of Mariupol. The battle did not go the way the Russian-backed forces anticipated, however. The Ukrainian military units stationed in the area, which apparently included volunteer units, beat back the offensive within hours, and even counterattacked before returning to their positions. Though some facts are disputed, a few things are clear: The battle marked a significant escalation in fighting, both sides suffered higher casualties than they have in months and the bloodshed in eastern Ukraine has not ended.
On Aug. 3, the day before the Ukrainian president chaired an emergency war council, the Ukrainian military released a map that showed where the fighting was occurring across the front lines and expressed great concern that both civilian and military targets were under regular attack across the entire front line.
Here’s the main stream media’s spin on things. This article, showed up on the blogs.reuters.com Internet site on Wednesday sometime—and this story is courtesy of Roy Stephens.
Turkey on the Brink as Calls For Martial Law, Civil War Send Lira Plunging Again
For anyone who might have missed it, Turkey is quickly descending into chaos on all fronts.
The lira is putting to new lows against the dollar on a daily basis as confidence suffers from a worsening political crisis which began in June when AKP lost its parliamentary majority for the first time in over a decade throwing President Recep Tayyip Erdogan’s plan to transform the country’s political system into an executive presidency into doubt. Not one to give up easily (especially when it comes to consolidating his power), Erdogan proceeded to launch an ad hoc military offensive against the PKK in an attempt to undermine support for the pro-Kurdish HDP ahead of new elections which, thanks to the willful obstruction of the coalition formation process, are now virtually inevitable.
Turkey’s central bank hasn’t helped matters and the lira legged lower on Wednesday after it was made clear that a rate hike was not in the cards until Fed liftoff is official.
This Zero Hedge offering appeared on their website at 10:01 a.m. Thursday morning EDT—and I thank Richard Saler for sharing it with us.
OPEC unity cracks as disgruntled members call for meeting to stem oil slump
Pressure is building on Saudi Arabia from members within the Organisation of the Petroleum Exporting Countries (OPEC) to agree to an emergency meeting to arrest plummeting oil prices.
The Telegraph understands that OPEC’s secretary general, Abdulla Salem el-Badri, has spoken to Saudi officials on behalf of members within the group who are coming under extreme economic pressure from oil prices dropping towards levels of $40 per barrel.
It is also understood that Algeria has circulated a letter within OPEC, lobbying for oil ministers to discuss measures to restore prices. These could include introducing individual production quotas within the group which would prevent certain countries from over-producing.
This oil-related story showed up on The Telegraph‘s website at 5:27 p.m. yesterday afternoon BST—and I thank Patricia Caulfield for finding this item for us.
Currency Wars Continue as Kazakhstan Currency Crashes 25% After Peg Abandoned
On Tuesday we remarked on the increasingly perilous plight of yet another country whose economy has come under increased pressure from plunging oil prices and China’s move to devalue the yuan: Kazakhstan.
Just one day after allowing the tenge to fall sharply in the interbank market and no longer able to take the pain from falling crude prices, the country moved to a free float for the tenge overnight, causing the currency to plunge by a quarter.
The move is clearly a desperate attempt to preserve export competitiveness in the face of a falling rouble and a devalued yuan. This is the third time the country’s central bank has devalued the currency since 1999 – the last time was in February of 2014.
Although central bank governor Kairat Kelimbetov put on a brave face and very rationally explained that “this is not a devaluation, this is a transition to a freely floating rate when the market itself determines a balanced exchange rate on the basis of demand and offer,” it’s quite clear that the situation for the country’s exporters had become dire and bringing the tenge more inline with moves seen in the currencies of China and Russia (Kazakhstan’s top trading partners) was probably long overdue.
This currency-related news item appeared on the Zero Hedge Internet site a 7:44 a.m. EDT Thursday morning—and I thank Richard Saler for his second contribution to today’s column.
China chooses her weapons: Alasdair Macleod
The IMF’s excuse was to avoid changes at the calendar year-end and to allow users of the SDR time to “adjust to a potential changed basket composition”. It was a poor explanation that was hardly credible, given that SDR users have already had five years to prepare; but the decision confirming the delay was finally released by the IMF in a statement on Wednesday 19th.
One cannot blame China for taking the view that these are delaying tactics designed to keep the yuan out, and if so suspicion falls squarely on the U.S. as instigators. America has most to lose, because if the yuan is accepted in the SDR the dollar’s future hegemony will be compromised, and everyone knows it. The final decision as to whether the yuan will be included is not due to be taken until later this year, so China still has time to persuade, by any means at her disposal, all the IMF members to agree to include the yuan in the SDR as originally proposed, even if its inclusion is temporarily deferred.
The mini-devaluations were a signal to Washington and the rest of the world that if she so wishes China can dictate the global economic outlook through the foreign exchange markets. China believes, with good reason, that she is more politically and economically robust, and has a better grasp over the actions of her own citizens, than the welfare economies of the west in the event of an economic downturn. Therefore, she is pursuing her foreign exchange policy from a position of strength. And the increments that will now be added to gold reserves month by month are a signal that China believes she can destabilise the dollar through her control of the physical gold market, because it gently reminds us of an unanswered question always ducked by the U.S. Treasury: what evidence is there of the state of the US’s gold reserves?
This excellent commentary by Alasdair was posted on the goldmoney.com Internet site yesterday—and it’s definitely worth reading. I thank U.K. reader Robert Jonathan Lewis for bringing it to my attention—and now to yours.
Tensions rise as North and South Korea exchange fire
South Korea fired a barrage of artillery rounds into North Korea on Thursday after the North shelled across the border to protest against anti-Pyongyang propaganda broadcasts by Seoul, moves that raised tensions on the divided peninsula.
Washington urged Pyongyang to halt any “provocative” actions in the wake of the first exchange of fire between the two Koreas since last October. Both sides said there were no casualties or damage in their territory.
North Korea did not return fire but warned Seoul in a letter that it would take military action if the South did not stop the broadcasts along the border within 48 hours, the South’s Defense Ministry said.
In a separate letter, Pyongyang said it was willing to resolve the issue even though it considered the broadcasts a declaration of war, South Korea’s Unification Ministry said.
Patricia Caulfield sent me this Reuters story at 9:30 a.m. EDT yesterday morning—and it’s obviously been updated since, as it’s now datelined 7:59 p.m. EDT. It was filed from Seoul.
Gold Surges Above Key Technical Level, Silver Regains Last Week’s Losses
Gold has filled the gap from the mid-July China crash and broken above its 50-day moving average for the first time since June. Silver is surging once again this morning round-tripping to last week’s pre-flush highs…as The U.S. Dollar limps lower.
This 3-chart Zero Hedge piece from yesterday morning at 8:33 a.m. is worth a quick look—and I thank Richard Saler for his third and final offering in today’s column.
Feds to return Liberty Dollars seized in 2007
Millions of dollars’ worth of silver, gold, platinum and copper Liberty Dollar medallions and related property seized by federal authorities in 2007 will be returned to their owners, according to court documents.
The return of that property, however, is being delayed until all petitions filed seeking return of the property have been completely processed and any appeals finalized.
Despite the 2011 conviction of Liberty Dollar creator Bernard von NotHaus on charges related to the manufacture and distribution of Liberty Dollars, U.S. District Court Judge Richard L. Voorhees ruled in late 2014 that seized property not deemed as contraband should be returned pursuant to ownership claims.
Von NotHaus, who faced 22 years in prison for his 2011 conviction, was sentenced Dec. 2, 2014, by Judge Voorhees to three years of probation and six months under house arrest.
This very interesting story, which I’ve followed with great interest since it began way back when, appeared on the coinworld.com Internet site on Wednesday sometime—and I found it embedded in a GATA release on Thursday morning.
Florida treasure hunters find £3 million in rare Spanish coins
Florida treasure hunters found a trove of $4.5 million (£2.9 million) worth of Spanish gold coins 300 years to the day after a fleet of ships sunk in a hurricane while en route from Havana to Spain, the salvage owner said on Wednesday.
The 350 coins found on July 30 include nine rare pieces, known as royal eight escudos, which were being transported to the King of Spain, according to Brent Brisben. His company, 1715 Fleet – Queens Jewels, owns the rights to the wreckage.
Only 20 such coins were known to exist prior to the recovery of the nine royals, Brisben said.
“The gold looks like it fell into the water yesterday,” said William Bartlett, 51, the diver who spotted the haul.
This very interesting gold-related news item was posted on the telegraph.co.uk Internet site at 8:49 p.m. Wednesday evening London time—and I thank “Roger in La La Land” for bringing it to my attention. There was another story about this posted on the Russia Today website—and there are many more pictures with that story, so it’s definitely worth a look as well. It’s headlined “Florida divers find $4.5mn in gold coins from sunken 18th century Spanish fleet“—and I thank Roy Stephens for that one.
Ross Norman — A Short Covering Rally Does Not a Bull Market Make…but…
There are a number of reasons to be cautiously bullish … firstly COMEX traders have a record short positions for the first time since data was collated in 2006 – being short gold is looking like a very crowded trade … secondly, gold is trading at a small backwardation which suggest tightness in the market (possibly because of the red hot physical demand or possibly as a preamble to a market squeeze to the upside ???).
Backwardation is a rare and unnatural phenomenon in gold and certainly indicates something is afoot of a bullish nature – thirdly physical demand is looking good. Our parent company Degussa who are said to be the largest in Europe in retail physical copies and bars are seeing volumes in Germany and Switzerland up about 50% in H1 2015 over the corresponding period in 2014. Does the German market matter??? You betcha – its third behind China and India and roughly twice the size of the U.S. market…and fourthly, there has been good buying in the options market of the $1,200 strike calls (which clearly suggests some players see considerable upside from here )…and lastly the bullion banks seem, almost to a man, to be universally bearish – which as a contrarian tells me this must be a great time to buy.
This commentary by Ross showed up on the Sharps Pixley website yesterday. He sort of hints at the price management scheme by JPMorgan et al—but doesn’t go there. He allows other commentators to discuss it on the Sharps Pixley website, but he’ll rarely caught sullying himself with that notion. “The truth,” as Winston Churchill once said, is something “Men occasionally stumble over, but most of them pick themselves up and hurry off as if nothing ever happened.” To the detriment of shareholders worldwide, a large segment of the precious metals community is in that camp—miners and analysts alike—and most of the time, Ross would fall into that category. Too bad.
The PHOTOS and the FUNNIES
Here’s that “wascally wabbit” again. I took forty or fifty photos, as I had no idea whether such an opportunity would come again, so I made the most of it. The second photo was taken flat on my stomach at rabbit-eye level—and the last two on one knee. The third shot is right out of the camera uncropped. That’s a full-sized image—and at close range, I couldn’t get the entire animal in the photo. Look at the legs on that thing! But it’s in shots like the last three where the shallow depth-of-field at close range really comes into its own, as both the foreground and background vanish into a sort of green haze—and the subject literally jumps out of the photo. The ‘click to enlarge’ feature brings them up to full-screen size.
THE WRAP
Regular readers know that I believe JPMorgan has been responsible for buying a large number of the Silver Eagles sold by the U.S. Mint over the past four and a half years; perhaps more than 50% of the 190 million coins sold over that time. I based my premise primarily on the unusually large and unprecedented number of Silver Eagles purchased in the face of demonstrable weakness in overall retail buying over this time, including much weaker relative sales of Gold Eagles. This pattern persists to this day.
Certainly, the Mint is producing and selling Silver Eagles at a record pace, even as sales of Gold Eagles retreat from the record pace in June and July. Through yesterday (Aug 18), the Mint has sold nearly 3.3 million Silver Eagles so far in August. [Plus 85,000 more on August 19 – Ed] On a day’s production basis, that comes to over 170,000 coins per day (there were no sales on July 31), well above the 130,000 coins per day I had estimated as peak production/blank supply capacity. I can’t know if this is a new higher level of production capacity or just a short term spurt; but if it is somewhat permanent and if JPMorgan keeps buying, it wouldn’t surprising to see peak sales months of over 5 million coins.
I’m relying on the Mint’s hard data alone and continue to note that it does not appear to be plain vanilla retail buyer driving the impressive sales of Silver Eagles. By process of elimination, that leaves the hand of a big buyer at work and continue to believe that big buyer to be JPMorgan. I fully acknowledge that JPM’s buying has had a direct impact on the current scarcity and high premiums on many forms of retail silver (certainly Silver Eagles) and, in fact, hold that the bank is responsible for the tightness. — Silver analyst Ted Butler: 19 August 2015
The price action in gold on Thursday was almost a carbon copy of the gold price action on Wednesday, but the silver price action was far more subdued, even though there was very decent volume associated with it. The platinum and palladium charts look very constructive and, with the exception of palladium, all four precious metals closed decent amounts above their respective 50-day moving averages.
Here are the 6-month charts for the Big 6 commodities. Only WTIC set a new low for this move down on Thursday, but it did not close there.
Including today, there are six business days left before First Notice Day for delivery into the September silver contract. Except those standing for delivery, all the large traders have to be out of their futures contracts by the close of COMEX trading next Thursday—and the rest by the same time on Friday. As of last night’s Preliminary Report, there are still 59,603 COMEX silver contracts open in September and, except for the the few thousand contracts that will be delivered, all the remaining contracts must be gone by the end of trading on Friday, August 28. Next week will be a busy week from a roll-over perspective—and it’s already started, but still has a long way to go.
And as I write this paragraph, the London open is less than five minutes away. Gold rallied rather impressively starting around 9 a.m. Hong Kong time on their Friday morning, but got capped a bit over two hours later. Then the price got sold down a couple of bucks in the last hour before London began to trade. Silver rallied weakly before getting sold off before the London open—and is actually down a few pennies from Thursday’s close. All of platinum and palladium’s small gains have disappeared as well.
Net HFT gold volume is already over the moon at 46,000 contracts—and silver’s gross volume is 10,800 contracts, but minus the roll-overs, net HFT volume is already 8,000 contracts, which is pretty chunky for this time of day.
The fact that the dollar index is down 34 basis points at the moment certainly hasn’t stopped JPMorgan et al from leaning on the precious metals.
Today we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday. Just eye-balling the reporting week in the above 6-month charts, I’m hoping for unchanged in gold, but some deterioration wouldn’t surprise me, either. I’d guess we’ll see a decent amount of improvement in the Commercial net short position in silver. But both of my back-of-the-envelope calculations are dependent on whether all the data from Tuesday’s big down-side day is in it. That’s my ‘out’ in case I’m all totally wrong on my above guesses.
And as I put today’s column up on the website at 4:45 a.m. EDT, I note that all of the gains in the Far East have vanished—and then some. Gold is currently unchanged, silver is now down 15 cents, platinum is down 6 bucks—and “da boyz” really stuck it palladium—from up 2 dollars, to down 18 dollars.
Net HFT gold volume is now sky high at 61,000 contracts—and silver’s net volume is around 11,500 contracts. The dollar index is off its low, but still down 13 basis points at the moment.
Since today is Friday, it’s always a crap shoot as to what may happen, but looking at the current price action, it appears that JPMorgan et al don’t want the week to finish on a positive note for any of the precious metals, especially since the equity markets got killed in the Far East once again—and Europe is currently down across the board. The price action on the COMEX in New York today could be pretty ugly based on what I see at the moment.
Of course I’d always love to be spectacularly wrong, but that’s the way I see it as I post today’s column.
Have a good weekend—and I’ll see you here on Saturday.
Ed
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