26 August 2015 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t do much of anything through most of the Far East trading session until the moment that the HFT boyz and their algorithms showed up about 2:15 p.m. Hong Kong time on their Tuesday afternoon. After dropping the price by 6 dollars or so in just minutes, the gold price crawled higher until about fifteen minutes after the COMEX open in New York—and it was all rather rapidly down hill until the low tick of the day, which came minutes before 10:30 a.m. EDT. The gold price went back to crawling higher until the 1:30 p.m. COMEX close—and didn’t do much after that.
The high and low tick were recorded by the CME Group as $1,157.60 and $1,140.90 in the December contract.
Gold closed in New York yesterday afternoon at $1,140.40 spot, down another $14.50 from Monday. Net volume was huge once again at 183,000 contracts. I sure don’t like to see this.
Here’s the 5-minute tick chart for gold. There was decent volume at the 2:15 p.m. Hong Kong time down tick, which is just after midnight MDT on this chart. There were a couple of volume spikes in London trading as well, but the real action came with the engineered price decline that began shortly after the COMEX open—and after 9:30 a.m. Denver time on this chart, there wasn’t much volume. Add two hours for EDT—and the ‘click to enlarge‘ feature works wonders.
Silver’s price action was a mini version of gold’s—and a new low tick for this move down was printed which, like gold, came a minute or so before 10:30 a.m. in New York. The price rallied a bit off its low, but really didn’t do much after about 11:15 a.m. EDT.
The high and low ticks were recorded as $14.93 and $14.52 in the September contract.
Silver finished the Tuesday session at $14.695 spot, down 9.5 cents from Monday’s close. Gross volume was pretty heavy at just over 111,000 contracts, but once the roll-overs were netted out, there was only 24,500 contracts traded.
Platinum had a wild trading day, but it also ran into “da boyz” and their algorithms shortly after 2 p.m. Hong Kong time—and the subsequent rally was, like gold and silver, beaten down once COMEX trading began. Platinum finished the day at $975 spot, down 15 bucks from Tuesday’s close.
Palladium got pounded down 44 dollars by about fifteen minutes before the Zurich open. The subsequent rally also met the same fate in New York. Palladium finished the Tuesday session at $536 spot, down a whopping 37 dollars from Monday’s close. That’s the biggest 1-day engineered price decline I’ve ever seen in that metal.
The dollar index closed in New York late on Monday afternoon at 93.42—and began to chop higher from there. It’s Tuesday high tick of 94.69 came minutes before noon in New York. It began to drift quietly lower at that point, but began to head south with a vengeance starting around 2:20 p.m. EDT. The dollar appeared to have been rescued at the 93.90 level—after a 60 basis points face plant in a little over an hour. It chopped sideways into the close, finishing the day at 93.96—up 54 basis points.
Like on Monday, there was nothing in Tuesday’s price action in any of the precious metals to suggest that they were remotely connected to what the currencies, specifically the U.S. dollar, were doing. I hope the belief in this relationship goes the way of the Tooth Fairy and the Easter Bunny for anyone over ten years old.
And here, once again, is the 6-month U.S. dollar chart with yesterday’s change added. It certainly isn’t behaving much like the world’s reserve currency—and that statement can be applied to any of them at the moment.
The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday. I wasn’t expecting that at all.
The CME Preliminary Report for the Tuesday trading session showed that gold open interest in August fell by 106 contracts, leaving 1,345 still to deliver—and that will most likely happen on Friday, which means it will show up in tonight’s Daily Delivery Report—or on Monday, but there’s only a slim chance of that being the delivery day of record. I’m more intrigued than ever as to who the short/issuer is on these contracts—and why they waited until the very last day. But whoever it is, all will be revealed in tomorrow’s column.
There were no reported changes in GLD yesterday—and as of 7:54 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
The good people over at the shortsqueeze.com Internet site update the short positions for both SLV and GLD as of August 15—and this is what they had to report. For SLV, the short position declined by only 8 percent, from 14.72 million shares/troy ounces, down to 13.54 million shares/troy ounces. In GLD, the short position actually rose by 6 percent, from 1.13 million troy ounces, up to 1.21 million troy ounces. I’ll be interested in Ted’s take on this later today.
The folks over at Switzerland’s Zürcher Kantonalbank have obviously been on holidays for the last month—and sent the changes for each individual week while they were out of town. That e-mail arrived long after I’d posted yesterday’s column. I shall dispense with posting each week—and just give you the net over that time period. Since their Friday, July 24 report, up to and including their Friday, August 21 report, their gold ETF has declined by 45,601 troy ounces—and their silver ETF has dropped by 985,576 troy ounces.
Well, the U.S. Mint had a sales report yesterday—and I must admit that I wasn’t prepared for the numbers that they posted. But unless they revise them, these numbers are certified correct. Since their last sales report on Thursday, August 20, they sold an additional 38,000 troy ounces of gold eagles—10,000 one-ounce 24K gold buffaloes—and another 812,500 silver eagles.
Up until the close of business on Monday of this week, the August totals in all three of the above categories were: 30,500 troy ounces of gold eagles—5,500 one-ounce 24K gold buffaloes—and 3,367,500 silver eagles.
These monthly totals are now as follows: 68,500 troy ounces of gold eagles—15,500 one-ounce 24K gold buffaloes—and 4,180,000 silver eagles.
In just three business days they upped their monthly gold eagle sales by over 100 percent—and almost 200 percent in gold buffaloes. Unless they’ve been underreporting their sales, or a big buyer showed up and bought their entire unsold inventory in one fell swoop, it’s hard to imagine how this is possible.
I’ll happily wait to see what Ted Butler has to say about this in his mid-week commentary later today—and I’ll steal what I can for Thursday’s column.
Over at the COMEX-approved depositories on Monday, there was a little more activity in gold. Although nothing was reported received, there was 14,680 troy ounces shipped out of Scotiabank. The link to that activity is here.
It was another decent day in silver, as 891,995 troy ounces were received—and only 21,323 troy ounces were shipped out the door. Of that amount received, 592,058 disappeared into JPMorgan’s vault. Ted figures that JPMorgan is owed a lot more than this from the July delivery month—around 3 million ounces more—and I’m sure he’ll be commenting on that in his mid-week review as well. The link to that action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, they reported receiving 2,450 of them—and shipped out 1,346. All of the activity was at Brink’s, Inc.—and the link to that, in troy ounces, is here.
I’ve took the meat cleaver to the list of stories today—and that will, hopefully, make your editing job much easier.
CRITICAL READS
Stock Market Rebound Falls Apart as Indexes Reverse Early Gains
A sudden reversal in United States stock prices late in trading on Tuesday produced a sixth consecutive session of losses and heightened uncertainty about the challenges facing global markets.
The wild swings in prices over the last two days have been the most extreme since the financial crisis. The benchmark Standard & Poor’s 500-stock index surged as much as 2.9 percent on Tuesday, but ended down 1.4 percent.
The resurgence of volatility has overturned a sense of comfort among many investors who had grown accustomed to calm markets and steadily rising stock prices in recent years.
This New York Times article is datelined Monday, but was obviously updated after the markets closed yesterday. I thank Roy Stephens for today’s first story.
Panic selling returns to fragile markets as investors fret China’s rate cut won’t revive global fortunes
Panic selling returned to stock markets on Tuesday night after a thumping US relief rally fizzled out, leaving fragile investors still reeling from the after-effects of “Black Monday”.
A volatile day of trading saw US markets witness a remarkable reversal in fortunes, wiping away their daily gains in a dramatic bout of late selling to finish in the red for the sixth consecutive day.
The S&P 500 – which has officially entered correction territory for the first time in three years – closed down 1.35pc, wiping out an earlier intraday high of 3pc. A 440 point gain for the Dow Jones Industrial Average also evaporated, with the index closing down by 1.26pc.
This market commentary was posted on the telegraph.co.uk Internet site at 10:00 p.m. BST on their Tuesday evening, which was 5 p.m. in New York—EDT plus 5 hours.
U.S. stock market gains wiped out to close second volatile day on Wall Street
U.S. stock markets continued to seesaw on Tuesday following a day of global sell-offs sparked by fears that China’s economic boom is slowing.
The Dow Jones industrial average initially appeared to be bouncing back from “Black Monday” – a day when it crashed more than 1,000 points before ending the day down 586 points.
By noon the Dow was up over 300 points as European markets closed up and investors reacted positively to China’s decision to cut interest rates. But the Dow closed 205 points down, or 1.29%. The S&P 500 ended the day down 25 points, 1.34%, and the NASDAQ closed 0.39% down.
The second day of drama came after investors continued to sell in China. The benchmark Shanghai composite index closed 7.6% lower on Tuesday following an 8.5% drop on Monday. Over three days the index has fallen 22%.
This news item put in an appearance on The Guardian‘s website at 9:03 p.m. BST yesterday evening—and my thanks go out to Patricia Caulfield for her first contribution of the day.
U.S. stock futures resume descent on Wednesday morning, not much cheer from China rate cut
U.S. stock futures resumed descent in early Asian trade and Asian shares were seen on the defensive on Wednesday as monetary easing by China’s central bank had limited success in cheering up nervous investors.
U.S. S&P 500 mini futures ESc1 fell 0.7 percent to 1,858.75, edging closer to Monday’s 10-month low of 1,831.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 percent while Japan’s Nikkei was flat in early trade, with the focus on Chinese share markets’ reaction to the latest stimulus.
The People’s Bank of China cut interest rates and lowered the amount of reserves banks must hold for the second time in two months on Tuesday, ratcheting up support for a stumbling economy and a plunging stock market
This Reuters article, filed from Tokyo early Wednesday morning JST, appeared on their website at 8:42 p.m. EDT on Tuesday evening—and it’s courtesy of Patricia Caulfield as well.
U.S. Services Economy “Momentum Shifts Down A Gear”, Slides Back Towards 2015 Lows
August’s preliminary Services PMI was slightly better than expected but dipped from 55.7 to 55.2 – back towards the lowest levels of 2015. Under the surface things do not look great with New Business Volumes at their weakest since January and Prices Charged tumbling to the lowest level since June 2013.
As Markit notes, “underlying momentum within the U.S. economy had shifted down a gear even before the recent global market turmoil and escalating worries about China’s growth outlook gathered on the horizon.”
This brief 1-chart Zero Hedge story appeared on their Internet site at 9:56 a.m. EDT on Tuesday morning—and it’s courtesy of reader M.A.
Richmond Fed Manufacturing Collapses to 2015 Lows, Drops Most in 9 Years
The 3-month bounce in the Richmond Fed Manufacturing survey… is dead. From 13 in July, August saw it collapse to 0 (massively missing expectations of a 10 print). This is the biggest absolute drop in the index since May 2006.
Across the board, underlying factors crashed with Shipments plunging, New Orders cliff-diving, order backlogs disappearing and Capacity Utilization plunging. This is exactly what we would expect after a massive inventory build up that was not accompanied by a surge in sales… but the pundits still proclaim “no signs of an imminent U.S. recession.”
This 2-chart Zero Hedge article showed up on their website at 10:20 a.m. EDT yesterday morning—and it’s the second offering in a row from reader M.A.—and the charts are definitely worth a quick look.
Student loan debt: America’s next big crisis
The Federal Reserve Bank of New York released its latest Report on Household Debt and Credit Developments, and the news isn’t good for student-borrowers.
As of the second calendar quarter ending June 30, seriously delinquent student loans (which the FRBNY describes as those whose payments are 90 or more days past due), increased to 11.5% of the $1.19 trillion dollars’ worth of education loans, versus 11.1% in the first quarter.
Before you dismiss four-tenths of one percent as decimal dust, consider this: Although student loans make up only 10% of all consumer debt, the amount of seriously past due student loan payments total nearly one-third of all seriously past-due debt payments. What’s more, of the total $1.19 trillion in outstanding education-related loans, only about half that amount is actually in repayment at this time (the balance is deferred because the borrowers are still in school).
So instead of 11.5% being seriously delinquent, it’s actually twice that amount: 23%.
This story showed up on the usatoday.com website Sunday morning EDT—and I thank Ken Hurt for sharing it with us.
Forget Rate Hikes: Bridgewater Says QE4 is Next; Warns World is Approaching End of Debt Supercycle
In a just released letter to clients, the head of the world’s largest hedge fund delivers one of his usual sermons about the economy as a perpetual motion machine, affected by central banks, and where interest rates are supposed to boost asset returns by being below “the rates of return of longer-term assets.”
None of that is terribly exciting and it is in fitting with what Bridgewater has said for a long time (incidentally, it is curious that just over the weekend, the Financial Times released a piece in which a “U.S. asset manager warns over risk parity” which is what Bridgewater’s bread and butter is all about).
What is exciting is the following part:
That’s where we find ourselves now—i.e., interest rates around the world are at or near 0%, spreads are relatively narrow (because asset prices have been pushed up) and debt levels are high. As a result, the ability of central banks to ease is limited, at a time when the risks are more on the downside than the upside and most people have a dangerous long bias. Said differently, the risks of the world being at or near the end of its long-term debt cycle are significant.
That is what we are most focused on. We believe that is more important than the cyclical influences that the Fed is apparently paying more attention to.
I’ll leave it up to you dear reader to decide if the spin that Zero Hedge is putting on this story is the right one or not. It may be a case that they’re putting words in Bridgewater’s mouth—and/or jumping to conclusions. This commentary was posted on their website at 3:18 p.m. EDT on Monday afternoon—and it’s courtesy of Brad Robertson.
British banks have biggest exposure to Chinese market instability
Disclosures from two of Asia’s largest lenders showed that British banks are among of the most vulnerable to the current market troubles in China.
In its latest report, HSBC said outstanding loans to China grew 12 percent in the past year to $36.2 billion. Standard Chartered also revealed its overall exposure to Chinese customers rose by 30 percent during the same period.
The rapid growth of the Chinese economy has seen a rise in the numbers of British banks acting as foreign lenders, resulting in a record total of $221.2 billion outstanding loans to China, more than twice the total of U.S. banks, with $86.5 billion outstanding loans.
U.K. banks were also the largest source of new loans to China during the year ending March 31, topping the list of 25 countries whose banks report their lending data. The revelations come as the pound suffered its worst day of trading against the Euro in six years.
This news item appeared on the Russia Today Internet site at 1:47 p.m. Moscow time on their Tuesday afternoon, which was 6:47 a.m. in Washington—EDT plus 7 hours.
U.S. sends F-22 fighter jets to Europe as part of Ukraine response
The U.S. is to deploy F-22 fighter jets to Europe as part of efforts to support eastern European members of the NATO alliance unnerved by Russia’s intervention in Ukraine.
“Russia’s military activity in the Ukraine continues to be of great concern to us and to our European allies,” the air force secretary, Deborah James, told a news conference at the Pentagon. “For the air force an F-22 deployment is certainly on the strong side of the coin.”
James did not give details about the specific number of planes, date or location of the deployment but said it was in line with defence secretary Ash Carter’s recent call for a strong and balanced approach to Russia.
The first deployment of the Lockheed Martin Corp F-22 to Europe outside air shows is seen as a move to address growing concerns among NATO allies about Russian military aggression. The air force has also been using radar-evading F-22 fighter jets to carry out some its attacks against Islamic State, the first real combat air strikes by the jets.
This Reuters war propaganda piece was picked up by theguardian.com Internet site in the wee hours of Tuesday morning BST—and I thank Patricia Caulfield for sending it along.
The Myth of a Russian “Threat” — Pepe Escobar
Chairman of the Joint Chiefs of Staff Martin Dempsey entered certified Donald “known unknown” Rumsfeld territory when he recently tried to conceptualize the “threat”; “Threats are the combination, or the aggregate, of capabilities and intentions. Let me set aside for the moment, intentions, because I don’t know what Russia intends.”
So Dempsey admits he does not know what he’s talking about. What he seems to know is that Russia is a “threat” anyway — in space, cyber space, ground-based cruise missiles, submarines.
And most of all, a threat to NATO; “One of the things that Russia does seem to do is either discredit, or even more ominously, create the conditions for the failure of NATO.”
So Russia “does seem” to discredit an already self-discredited NATO. That’s not much of a “threat”.
This commentary by Pepe certainly falls into the absolute must read category for any serious student of the New Great Game—and I thank U.K. reader Tariq Khan for bringing it to our attention.
‘The wave has reached us:’ E.U. gropes for answers to migrant surge
A surge in migrants, many of them refugees from Syria, hit Hungary’s southern border on Tuesday, passing through gaps in an unfinished barrier to a Europe groping for answers to its worst refugee crisis since World War Two.
Nearing the end of a flight from war and poverty, they walked around or over coils of barbed wire strung out along Hungary’s 175-km (109-mile) frontier with Serbia, children hoisted on shoulders, bags in hand.
“The wave has definitely reached us now,” said Mark Kekesi, head of a migration NGO called MigSzol Szeged. “There have never been this many of them, and we expect this to continue for a while.”
The Balkans is in the grips of an unprecedented surge in migration fueled by war in Syria and instability across the Middle East.
This news story, filed from Roszke, Hungary, put in an appearance on the Reuters website at 2:39 p.m. EDT on Tuesday afternoon—and once again my thanks go out to Patricia Caulfield for finding it for us.
Turkey’s uncertainty worries investors
The political uncertainty gripping Turkey spooked investors, with the country’s CDS spreads and bonds all seeing increased bearish sentiment since the inconclusive June election.
Turkey’s CDS spread at a new 12 month high of 283bps
Turkish 10 year government bonds have widened by over 220bps year to date
Dollar denominated Turkish corporate bond spreads have widened to 15 month highs
The above is all here is to this tiny article that put in an appearance on the markit.com Internet site on Monday sometime—and I thank Richard Saler for pointing it out.
European companies beat U.S. to Iran business after nuclear deal reached
The ink was barely dry on the agreement with Iran to limit its nuclear programme before a German government plane packed with the nation’s economic elite touched down in Tehran.The trip was the first in a rush of European ministers and business people flocking to a market poised to reopen after years of grinding sanctions. Upscale Tehran hotels are packed and tables at trendy restaurants are scarce as foreigners jostle for bargains, even amid uncertainty over whether President Obama can overcome U.S. congressional opposition to the deal.
The stream of visitors to Tehran is the latest sign of the Atlantic-wide divide between the U.S. and Europe, where there is scant opposition to the pact that aims to crimp Iran’s nuclear ambitions. Barack Obama and secretary of state John Kerry have warned detractors that they would be unable to reimpose a multinational trade embargo if congress rejects the plans. The other five countries that helped broker the deal have also told congress they will not return to the negotiating table. The trips show that U.S. leaders can’t keep Europeans from flying to Tehran ahead of the congressional vote, which must take place by 17 September.
This very interesting and worthwhile news item showed up on theguardian.com Internet site at 1:03 p.m. London time on Tuesday afternoon, which was 8:03 a.m. in Washington—EDT plus 5 hours. It’s definitely worth reading.
For Saudi Arabia, The Music Just Stopped: Scramble to Slash Spending Begins as Oil Math Reveals Dire Picture
Saudi Arabia is seeking to cut billions of dollars from next year’s budget because of the slump in crude prices, according to two people familiar with the matter.
The government is working with advisers on a review of capital spending plans and may delay or shrink some infrastructure projects to save money, the people said, asking not to be identified as the information is private. The government is in the early stages of the review and could look at cutting investment spending, estimated to be about 382 billion riyals ($102 billion) this year, by about 10 percent or more, the people said. Current spending on areas such as public sector salaries wouldn’t be affected, the people said.
The Arab world’s largest economy is expected to post a budget deficit of almost 20 percent of gross domestic product this year, according to the International Monetary Fund. With income from oil accounting for about 90 percent of revenue, a more than 50 percent drop in prices in the past 12 months has put pressure on the nation’s finances. The country has raised at least 35 billion riyals from local bond markets this year, the first time it has issued securities with a maturity of over 12 months since 2007.
Capital investment accounts for less than half the government’s outgoings, with current spending estimated at 854 billion riyals, according to a report issued by Samba Financial Group on Aug. 18. Saudi Arabia needs “comprehensive energy price reforms, firm control of the public sector wage bill, greater efficiency in public sector investment,” the IMF said this month. “The sharp drop in oil revenues and continued expenditure growth would result in a very large fiscal deficit this year and over the medium term, eroding the fiscal buffers built up over the past decade.”
This Zero Hedge spin on a Bloomberg news item, appeared on their Internet site at 5:20 p.m. EDT on Tuesday afternoon—and it’s definitely worth reading as well, if you have an interest in oil, that is. It’s the third offering of the day from reader M.A.
As China Disappoints All Eyes Are Turning to Riyadh
The worldwide stock market crash on August 24 – dubbed “Meltdown Monday” – was the worst sell off for many indices in years. The turmoil was led by China, whose Shanghai Composite sank 8.5 percent on August 24, followed by an additional 7.6 percent loss the next day. Stock markets across Asia, Europe, and the United States were thrown into a panic on Monday, before stabilizing somewhat on Tuesday.
We have spent quite a bit of time talking about China’s fragile economy this summer, ever since the stock market started crashing in June. After a few weeks of relative calm, the currency devaluation earlier this month set off a new round of trouble. China’s problems are far from over.
The meltdown could not come at a worse time for the oil markets. Already suffering from too much supply, Chinese demand is no longer a given. Demand had already been slowing, but it could slow even further now that the economy is showing some serious cracks. And if that causes contagion in other countries, oil prices could stay low for a much longer period of time than many anticipated.
Low oil prices have the world turning their eyes once again towards Riyadh. Saudi Arabia holds the only keys to higher oil prices, if it chooses to cut back on production. But it has shown a dogged determination to continue to pursue market share. However, Saudi Arabia is suffering just like everyone else. The Saudi government is reportedly conferring with advisers on how to make deeper cuts to government spending in order to stop the hemorrhaging. Saudi Arabia’s budget deficit is expected to balloon to 20 percent of GDP this year. According to Bloomberg, Saudi Arabia may shave off 10 percent of the $102 billion it had planned on spending on infrastructure and other investments.
This very interesting commentary showed up on the oilprice.com Internet site yesterday evening—and I thank F. Bellis Jacobs for bringing it to our attention. It’s also worth the read if you have the interest.
Out in the Real World, Oil Market is Much Better Than it Looks
The global oil market is healthier than it looks, signaling that crude’s plunge to six-year lows has probably gone too far.
While futures tumbled below $45 a barrel in London for the first time since 2009, Morgan Stanley and Standard Chartered Plc say other measures suggest physical markets for crude have stabilized or even strengthened in recent weeks. China, the world’s second-biggest oil consumer, will keep buying extra barrels to fill its strategic reserve this year, according to Goldman Sachs Group Inc.
“While oil fundamentals aren’t strong, physical markets do not corroborate the substantial weakness in flat price,” New York-based Morgan Stanley analyst Adam Longson said in a report Monday. The “latest oil pricing pressure appears more financial than physical.”
A measure of returns from commodities sank to its lowest since 1999 Monday on concern that a slowing economy in China, the world’s largest consumer of energy and raw materials, will exacerbate supply gluts. Brent crude, the international benchmark, has dropped more than 30 percent since May on the ICE Futures Europe exchange in London. Prices rebounded 1.8 percent to $43.44 a barrel at 5:03 p.m. in London.
This Bloomberg story, with an embedded 3:43 minute video clip, showed up on their website at 5:01 p.m. Denver time on Monday afternoon—and was updated five hours later. It’s courtesy of Roy Stephens.
Devaluation Stunner: China Has Dumped $100 Billion in Treasurys in the Past Two Weeks
As part of China’s devaluation and subsequent attempts to contain said devaluation, it has been purging foreign reserves at an epic pace. Said otherwise, China has sold an epic amount of Treasurys in the past two weeks.
How epic? We turn it over to SocGen once again:
The PBoC cut the RRR for all banks by 50bp and offered additional reductions for leasing companies (300bp) and rural banks (50bp). All these will take effect as of 6 September, and the total amount of liquidity injected will be close to CNY700bn, or $106bn based on today’s onshore exchange rate. In perspective, the PBoC may have sold more official FX reserves than this amount since the currency regime change on 11 August.
There you have it: in the past two weeks alone China has sold a gargantuan $106 (or more) billion in US paper just as a result of the change in the currency regime!
But wait, there’s more: recall that one months ago we posted that “China’s Record Dumping Of U.S. Treasuries Leaves Goldman Speechless” in which we reported that China has sold some $107 billion in Treasurys since the start of 2015.
When we did that article, we too were quite shocked at that number. However, we – just like Goldman – are absolutely speechless to find out that China has sold as much in Treasurys in the past 2 weeks, over $100 billion, as it has sold in the entire first half of the year!
This breathless news item appeared on the Zero Hedge website at 8:16 p.m. EDT yesterday evening—and I thank Richard Saler for his second offering in today’s column.
Precious metals trading is probed by E.U. after U.S. inquiry
European Union antitrust regulators are probing precious-metals trading following a U.S. investigation that embroiled some of the world’s biggest banks.
The European Commission disclosed the probe after HSBC Holdings said in a filing this month that it had received a request for information from the E.U. in April.
“The commission is currently investigating alleged anti-competitive behavior in precious metals spot trading” in Europe, Ricardo Cardoso, a spokesman for the regulator, said in an e-mail on Tuesday.
U.S. prosecutors have been examining whether at least 10 banks, including Barclays, JPMorgan Chase & Co., and Deutsche Bank, manipulated prices of precious metals such as silver and gold. The scrutiny follows international probes into the rigging of financial benchmarks for rates and currencies, which have yielded billions of dollars in fines.
This Bloomberg article showed up on their website at 9:35 a.m. Mountain Daylight Time on Tuesday morning—and I found it embedded in a GATA release. There was a similar but more comprehensive article on this posted on the Russia Today website at 5:05 p.m. Moscow time on their Monday afternoon, which was 10:05 a.m. in New York. it’s headlined “Top international banks face U.S. probe for alleged precious metals market fix“—and I thank ‘Robert in Denver’ for bringing that one to our attention. I have some idea what’s going on behind the scenes in this case—and I based on what I know, I’ll be very surprised if it gets anywhere.
China’s July gold imports [through Hong Kong] rise on stock turmoil, price decline
China’s net gold imports from Hong Kong rose in July as a decline in prices and a stock market rout spurred some investment demand.
Net inbound shipments rose to 40.7 metric tonnes last month from 22.1 tonnes in June and 21.1 tonnes a year earlier, according to data compiled by Bloomberg from the Hong Kong Census and Statistics Department Tuesday.
Mainland buyers purchased 63.8 tonnes, including scrap, compared with 47.9 tonnes a month earlier. Exports to Hong Kong fell to 23.1 tonnes from 25.8 tonnes. Mainland China doesn’t publish such data.
“Stock market turmoil has reminded some investors of systemic risks and the need to diversify into gold,” Long Ling, analyst at Industrial Futures Co., said by phone from Shanghai before the data release.
Normally this data gets officially released about ten days later, but both Bloomberg and Reuters obviously have an inside ‘source’ that feeds them this data early. This tiny story comes from Bloomberg—and I found it on the mineweb.com Internet site. It was posted there at 11:45 a.m. BST yesterday morning.
Doha bank in Qatar expects record gold sales on falling stock markets
Doha Bank QSC expects to sell a record 200 million riyals ($55 million) of gold this year as consumers take advantage of lower prices and investors seek a haven from falling equities and weakening currencies.
The bank, the first lender authorized to import and sell gold in Qatar, took in 23,818 ounces in the first seven months of 2015 compared with 15,830 ounces in the same period last year, Samuel K.V., head of treasury trading and product management, said in a phone interview from Doha Sunday. Sales were worth 110 million riyals in the 2015 period, he said.
China’s stocks tumbled as much as 9 percent on Monday and Qatar’s QE Index of shares slumped 1.9 percent at the opening. Brent oil below $45 for the first time since March 2009 raised concern about growth prospects in the Middle East. There is speculation the Federal Reserve will start to raise U.S. interest rates in December instead of next month, reviving demand for gold because the delay makes the metal more competitive with assets that pay dividends or yields.
“Gold remains a solid bet for the future,” K.V. said. Demand is expected to rise due to the “big volatility in the Chinese stock market and currency” and the possibility of a delayed interest rate increase by the Fed.
This is another Bloomberg article I found on the mineweb.com Internet site in the wee hours of this morning. This one appeared there at 9:18 a.m. BST on Monday morning.
The PHOTOS and the FUNNIES
These two photos, the first of a lesser scaup, the second one of a mallard, were ones I took on Sunday. It was late in the afternoon—and with the northern hemisphere now two months past the summer solstice, the sun was pretty low in the sky, so the colours on these two rather drab looking ducks [still in their eclipse plumage] I thought rather fetching. The water texture and colour adds something to these shots as well. You can view them full-screen size by using the ‘click to enlarge‘ feature.
THE WRAP
Turnover or the physical movement of metal being brought into and taken out from the six COMEX-approved silver warehouses cooled, but only slightly [last] week, as 3.7 million oz were so moved and total inventories fell 2.2 million oz to 170.4 million oz. Over the past two months, total silver inventories in the COMEX warehouses have declined by more than 13 million oz and now are at the lowest level in a year and a half. Over these same eight weeks, total silver movement in and out has been over 30 million oz (200 million oz annualized) and that remains the sore thumb that few mention, same as it has been for the past four and half years.
Let me take another shot at trying to explain why the COMEX silver warehouse movement is so unique and crying out for attention. As you know, I believe JPMorgan has acquired a massive amount of physical silver over the past four and a half years, including, but not limited to the nearly 63 million oz it holds in its own COMEX silver warehouse. If you subtract this from total COMEX silver stocks (since JPM seems to have a death grip on this silver in that there is rarely metal taken out from this warehouse), there are less than 110 million oz in total.
I’m not suggesting all that remaining 110 million oz of silver is available for sale anywhere near current prices because in reality only a very small percentage may be available, perhaps 5% or 10% or so. Only some small amount of the COMEX total inventories, even if you adjust upward by much bigger percentages, is available for movement in and out, with the bulk of the silver being stored by investors and not available for movement. If the true “working” inventory of silver on the COMEX is in the 20 to 30 million oz range that means the actual turnover (200 million oz annually) suggests a complete turnover of working inventory every two months. In any business, a 100% turnover of available working inventory every two months implies a demand that is white hot. By this measure, wholesale demand for physical silver is white hot. — Silver analyst Ted Butler: 22 August 2015
Gold broke through, but did not close below its 50-day moving average. But it’s only a matter of time before “da boyz” pull the pin and make it happen. Ted figures that they could smack gold for at least another $75 to $100 if they push it which, knowing them, I’m sure they will—given the opportunity. However, we could also bounce off this moving average and head higher, but that’s not how I think it’s going to unfold. We’ll find out soon enough.
Silver made a new intraday low for this move down yesterday, so they took another slice out of the silver salami then—along with the new low tick that came just before the London open this morning. It remains to be seen if “da boyz” take out the lows of late July and early August on this move down, but from where the price is sitting currently, it isn’t much more than a chip shot away.
Platinum set a new low for this move down yesterday as well—and palladium got absolutely crucified for the second day in a row.
None of these price moves yesterday had a thing to do with either supply, demand, or the currency markets. It’s just JPMorgan et al spinning their algorithms for fun, profit and price management.
Here are the 6-month charts for the Big 6 commodities—and you can see the precious metal carnage for yourself.
With the London open a bit under ten minutes away, gold has been trading five dollars either side of unchanged throughout the Wednesday trading session in Hong Kong—and is currently down three bucks. Silver is down 15 cents—and it set a new low tick for this move down in the process as well, which was another salami slice from JPMorgan et al. Platinum is up 4 dollars—and palladium up 8.
HFT gold volume is way up there at 35,000 contracts, so “da boyz” are obviously keeping close watch on the price. Volume in the September silver contract is 6,640 at the moment, but 3,000 of that is roll-overs into future months, so net volume is pretty light. The dollar index is back above the 94.00 mark at 94.20—up 25 basis points from Tuesday’s close.
Yesterday was the cut-off for Friday’s Commitment of Traders Report—and it should be an education. I’m sure that all of Monday’s volume data will be in it, but as to how much of yesterday’s data is there, remains to be seen. But it’s already a given that the numbers for both gold a silver will be shockers, with gold bearish and silver bullish. As to how bearish or bullish it is, will be answered then.
All the large traders have to be out of the September silver contract by the close of COMEX trading tomorrow—and the rest have to be out by the same time on Friday—and as was evident yesterday, volumes will be heavy. It will be very interesting to see how many contracts will be posted for delivery in the September delivery month when they go up on the CME’s website Friday night. I’ll have all of that for you on Saturday.
And as I post today’s column on the website at 5:05 a.m. EDT, I note that the gold price has traded more or less sideways since I last reported—and is currently down a couple of bucks. The same with silver—and it’s still down 15 cents. Palladium is up 7 bucks—and palladium is now up only 2 dollars after revisiting its Tuesday low tick in New York yesterday.
HFT volume in gold is now around 42,000 contracts—and silver’s September volume is up to 9,650 contracts with about 4,500 contracts of that amount being roll-overs into future months, mostly December and March. The dollar index dipped down to 94.02 minutes before the London open—and has since been ‘rescued’—and is currently up 22 basis points.
As for what may happen during the New York trading session today, my ten dollar bet is still in my wallet. It’s obvious that, as I’ve said before, commodity prices [especially the precious metals] are not going to be allowed to rise—and how long this will continue is anyone’s guess. The New York bullion banks are in charge—and until that changes, nothing changes.
I’m done for the day—and I’ll see you here tomorrow.
Ed
The post China’s Net Gold Imports From Hong Kong Were 40.7 Tonnes in July appeared first on Ed Steer.