01 September 2015 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
[NOTE: I was on the road yesterday—and will be again today. For these reasons, this column and tomorrow’s, are going to be as short as I can make them. – Ed]
After selling off four bucks or so in the first three hours of trading in the Far East on their Monday morning, the gold price rallied back to almost unchanged in an hour, starting at 9 a.m. Hong Kong time. Then starting around 2 p.m. local time the price began to develop a negative bias. The sell-off became much more pronounced starting at 1 p.m. BST in London—and the low tick came about an hour later—and a few minutes after 9 a.m. in New York. It was allowed to rally back to unchanged by noon EDT—and wasn’t allowed to do much after that.
The low and high ticks were recorded by the CME Group as $1,125.00 and $1,136.30 in the December contract.
Gold finished the Monday trading session at $1,134.40 spot, up a whole 60 cents from Friday’s close. Net volume was pretty light at just over 89,000 contracts.
Silver’s price path was, tick for tick, almost identical to gold’s, except that the low tick came at precisely 10 a.m. in New York—the London p.m. gold fix—and after the 12 noon capping by “da boyz”—it was obvious that the price wanted to move higher, but JPMorgan et al were there to ensure that it didn’t happen.
The low and high ticks in this precious metal were reported as $14.39 and $14.67 in the new front month which is December.
Silver closed in New York yesterday at $14.63 spot, up 3.5 cents from Friday. Net volume wasn’t overly heavy at 27,500 contracts.
Platinum was under intermittent selling pressure right from the open of trading in New York on Sunday evening, with the low tick coming at the afternoon gold fix in London. Then, like gold and silver, it was allowed to rally until noon EDT, before getting sold down a bit more going into the 5:15 p.m. New York close. Platinum finished the Monday session at $1,007 spot, down 9 dollars on the day.
The palladium price got sold down seven bucks by 10 a.m. in Hong Kong on their Monday morning–and then traded pretty flat until shortly before 2 p.m. From there it began to chop higher—and really began to rally once the p.m. gold fix was put to bed in London. That rally was only allowed to last until noon EDT as well—and then got sold down a few dollars from there. Palladium closed yesterday at $600 spot—up $14 from Friday’s close.
The dollar index closed in New York late on Friday afternoon at 96.08—and began to chop lower from there, hitting its 95.63 low tick around 12:40 p.m. Hong Kong time on their Monday afternoon. It rallied up to 96.06 by 10:20 a.m. in London before fading a bit into the London p.m. gold fix. It blasted higher from there, hitting its 96.24 high about 10:45 a.m. EDT before chopping lower and closing at 95.93—down 15 basis points from Friday’s close.
And here’s the 6-month U.S. dollar chart to give you the medium-term picture…
The gold stocks gapped down a bit at the open, hit their lows at the London p.m. gold fix—and then rallied until the gold price got capped at noon in New York. From there they quietly sold off until the last thirty minutes of trading, when they rallied into the close. The HUI closed down 0.94 percent—and I thank Nick for the chart.
It was the same pattern for the silver equities—and Nick Laird’s Intraday Silver Sentiment Index closed lower by 0.98 percent.
The CME Daily Delivery Report showed that 1 gold and 46 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. There were no notable issuers or stoppers. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest in September fell by 51 contracts, leaving 221 still open. In silver, September o.i. dropped by a very chunky 519 contracts, leaving 1,679 still open.
There were no reported changes in GLD yesterday—and as of 8:16 p.m. EDT yesterday evening, there were no report changes in SLV, either.
It was another big sales day over at the U.S. Mint. They sold 14,500 troy ounces of gold eagles—2,500 one-ounce 24K gold buffaloes—and 755,000 silver eagles.
For the month of August, provided there are no changes to these numbers in tomorrow’s sales report from the U.S. Mint, they sold 101,500 troy ounces of gold eagles—20,000 one-ounce 24K gold buffaloes—and 4,935,000 silver eagles.
Over at the COMEX-approved depositories on Friday, there wasn’t much activity in gold, as only 1,060 troy ounces were received—and 145 were shipped out.
But it was a different story in silver, as 1,004,145 troy ounces were shipped in—and 1,603,353 troy ounces were shipped out the door. There was no activity at JPMorgan—and because I’m on the road, I don’t the links to this action on my laptop.
It was a big day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, as they reported receiving 9,975 kilobars—and shipped out 3,863 of them. I don’t have the link to this either.
Because I’m on the road, I’ve cut the stories down to the bare minimum.
CRITICAL READS
Inflation Expectations Add to Fed Rate Hike Dilemma
James Rickards, portfolio manager at West Shore Group, discusses the Federal Reserve’s inability to spark inflation and the cross-influence of markets and the Fed. He speaks on “Bloomberg Markets.”
This 5:15 minute video clip put in an appearance on the Bloomberg website last Friday—and it’s courtesy of Harold Jacobsen.
NYSE Margin Debt: Down 3.5% from the Previous Month
The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959. Let’s examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.
The first chart shows the two series in real terms — adjusted for inflation to today’s dollar using the Consumer Price Index as the deflator. At the 1995 start date, we were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July 2007, three months before the market peak.
Debt hit a trough in February 2009, a month before the March market bottom. It then began another major cycle of increase.
The NYSE margin debt data is about a month old when it is published. The latest debt level is down 3.5% month-over-month and 4.7% off its real (inflation-adjusted) record high in April.
This commentary, with several excellent charts, was posted on the advisorsperspectives.com Internet site on Friday—and is definitely worth a few minutes of your time. It’s courtesy of reader U.D.
Preparing for a Potential Economic Collapse in October — Jeff Thomas
There’s no question that the world economy has been shaky at best since the crash of 2008.
Yet, politicians, central banks, et al., have, since then, regularly announced that “things are picking up.” One year, we hear an announcement of “green shoots.” The next year, we hear an announcement of “shovel-ready jobs.”
And yet, year after year, we witness the continued economic slump. Few dare call it a depression, but, if a depression can be defined as “a period of time in which most people’s standard of living drops significantly,” a depression it is.
Many people are surprised that no amount of stimulus and low interest rates have resulted in creating more jobs or more productivity. Were they a bit more cognizant of the simple, understandable principles of classical economics (as opposed to the complex theoretical principles of Keynesian invention), they’d recognise that, when debt reaches the level that it cannot be repaid, a major re-set of some sort must take place.
This commentary by Jeff appeared on the internationalman.com Internet site yesterday—and it’s worth reading. I thank Brad Robertson for sharing it with us.
It Gets Even Uglier In Canada
The Province of Alberta, the epicenter of the Canadian oil bust, may be sliding into something much worse than a plain-vanilla recession. And it’s not exactly perking up the rest of Canada.
Layoffs are already cascading through the oil patch, as companies are retrenching and adjusting to the new reality. New vehicle sales are plummeting. And home sales are taking a broadside.
In August so far, total home sales in Calgary plunged 28% from a year ago, on flat prices. Condo sales collapsed 39%, with the median price down 8%, according to the Calgary Real Estate Board. Year-to-date, total home sales in Calgary are down 25%; condo sales 30%. And those condos that did sell spent 30% longer on the market than condos did a year ago, as sellers hang on by their fingernails to the illusion of wealth, and sales are stalling.
And the Business Barometer Index for all of Canada, which measures the optimism among small businesses, dropped again in August for the third month in a row. An index level between 65 and 70 indicates that the economy is growing at its potential. But now it hit 56.7, the lowest level since April 2009.
This Wolf Richter article showed up on the Zero Hedge website late Sunday evening EDT—and my thanks go out to reader M.A. for finding it for us.
Refugee crisis suddenly Merkel’s biggest challenge
Returning from her summer break in mid-August, German Chancellor Angela Merkel raised some eyebrows by describing Europe’s refugee problem as a bigger challenge than the Greece crisis, which had overshadowed all else in the first half of 2015.
No one in Germany is questioning her assessment any longer.
In the past two weeks, the country has been shaken by a perfect storm of headlines that have elevated the refugee issue, long seen in Germany as primarily a southern European problem, to the very top of the public and political agenda.
First, Merkel’s interior minister announced that he expected 800,000 people to seek asylum in Germany this year, nearly double the amount that had been forecast only a few months before and almost four times last year’s total.
Next came the far-right protests against refugees in the eastern town of Heidenau that left over 30 police injured and revived the specter of racist violence that Germany experienced in the early 1990s, the last time asylum numbers surged.
This Reuters article, filed from Berlin, was posted on their Internet site in the wee hours of Monday morning EDT—and I thank Patricia Caulfield for sending it.
Iran nuclear deal now backed by 31 senators
U.S. Senator Jeff Merkley, a Democrat from Oregon, said on Sunday he would support the nuclear deal with Iran, moving President Barack Obama a step closer to having sufficient backing to ensure the deal stands.
“I believe the agreement, titled the Joint Comprehensive Plan of Action (JCPOA), is the best available strategy to block Iran from acquiring a nuclear weapon,” Merkley wrote in a statement published on Medium.com.
Obama is trying to muster 34 votes in the Senate to ensure lawmakers cannot kill the deal. Thirty-one senators, all Democrats and independents who vote with Democrats, have now said they will support it.
Congress must vote on the deal by Sept. 17.
This Reuters news item, filed from Washington, appeared on their website just after 1 p.m. on Sunday afternoon EDT—and it’s the second story is a row from Patricia Caulfield.
China Dramatically Intervenes to Boost Stocks Despite Reports it Won’t; U.S. Futures Slump On Jackson Hole
Yesterday, the Financial Times triumphantly proclaimed: “Beijing abandons large-scale share purchases“, and that instead of manipulating stocks directly as China did last week on Thursday and Friday, China would instead focus on punishing sellers, shorters, and various other entities. We snickered, especially after the Shanghai Composite opened down 2% and dropped as low as 4% overnight.
Less than five hours after this tweet, we found out that our cynical skepticism was again spot on: the moment the afternoon trading session opened, the “National Team’s” favorite plunge protection trade, the SSE 50 index of biggest companies, went super-bid and ramped from a low of 2,071 to close 140 points higher, ending trading with a last minute government-facilitated surge, and pushing the Composite just 0.8% lower after trading down as much as -4.0%.
This Zero Hedge commentary showed up on their Internet site at 6:49 a.m. EDT on Monday morning—and I thank Brad Robertson for this one.
Mass Protests Sweep Malaysian Capital As Anger At Goldman-Backed Slush Fund Boils Over
If we told you that thousands of protesters donning bright yellow shirts had taken to the streets to call for the ouster of a leader in an important emerging market, you’d be forgiven for thinking we were talking about Brazil, where President Dilma Rousseff is facing calls for impeachment amid allegations of fiscal book cooking and government corruption.
But on this particular weekend, you’d be wrong.
We’re actually talking about Malaysia, where tens of thousands of demonstrators poured into the streets of Kuala Lumpur on Saturday to call for the resignation of Prime Minister Najib Razak whose government has been accused of obstructing an investigation into how some $700 million from 1Malaysia Development Berhad mysteriously ended up in Najib’s personal bank account.
This Zero Hedge article put in an appearance on their Internet site on Sunday afternoon—and I thank reader ‘David in California’ for passing it around.
Collapse of Abenomics Threatens Global Stability
Japan reported this week that gross domestic product (GDP) contracted by 0.4%, or 1.6% on an annualized basis, during the second quarter.
Meanwhile, Japan is carrying out the most aggressive money printing program in the world right now, and its budget deficit is also the largest among the world’s rich countries. Oh, and its public debt is also the world’s highest in terms of GDP.
All of which suggests that something is seriously wrong in the Land of the Rising Sun. Indeed, it’s Japan’s – and not China’s – economic policies that are most likely to collapse in ruin.
This article by Martin Hutchinson appeared on the wallstreetdaily.com website yesterday sometime—and I thank Kathmandu reader Nitin Agrawal for sharing it with us.
Japan plans largest ever defence budget to counter China’s reach
Japan’s defence ministry has requested its biggest ever budget to bolster its ability to protect outlying islands in response to China’s growing military reach in the region.
The ministry has asked for 5.09 trillion yen (£27bn) for the financial year starting in April 2016, amid concern over Beijing’s construction of artificial bases in the South China Sea and its claims to the disputed Senkaku/Diaoyu island chain in the East China Sea.
If approved, the defence budget would be Japan’s biggest ever, after the fourth increase in as many years. The budget will be drafted into a bill in December and submitted to parliament for approval.
Japan had been making annual cuts to its defence budget for a decade up to 2013. The increases since then reflect its growing anxiety about China’s expanding naval reach. The rise is also in line with Japan’s more assertive defence policy under the conservative prime minister, Shinzo Abe, as he seeks to check Chinese influence and expand the scope of his country’s military.
This story was posted on theguardian.com Internet site at 12:39 p.m. BST on their Monday afternoon—and it’s another contribution from Patricia Caulfield.
Unusually Massive Protests Erupt in Japan Against Forthcoming “War Legislation”
In case you aren’t up to speed on your Japanese history, the nation’s post WWII Constitution prohibits military action unless it’s in self-defense. Clearly a sensible approach, which is why the current Japanese government, led by the demonstrably insane and incompetent Prime Minister Shinzo Abe, wants to get rid of it.
This story is very important. Not only will this action increase the likelihood of World War III in the Far East, but it’s another important example of a government acting against the will of the people.
Polling has indicated the Japanese public is against a pivot toward militarization and war, but Prime Minister Shinzo Abe is pushing forward nonetheless. In fact, the current legislation to allow overseas military intervention has already passed the lower house of government. This prompted many Japanese to emerge from their decades long political apathy and get out into the streets. It’s estimated these protests were the largest in recent memory.
This Mike Krieger commentary was posted on the Zero Hedge website at 7:50 p.m. yesterday evening EDT—and it’s another offering from reader M.A.
South Africa to promote platinum as central bank reserve asset
South Africa’s mining industry, unions, and the government have committed to a broad plan to stem job losses, including boosting platinum by promoting the metal as a central bank reserve asset, according to a draft agreement seen by Reuters on Wednesday.
The parties also said they would strive to delay layoffs, sell distressed mining assets instead of closing them, and look at ways of streamlining the legal process employers must follow to cut jobs.
The mining industry, which contributes around 7 percent to Africa’s most developed economy, is struggling with sinking commodity prices, rising costs, and labor unrest, forcing a number of companies into mine closures and layoffs.
The agreement is expected to be signed on Monday next week after its details were hammered out on Tuesday.
This Reuters story, filed from Johannesburg, showed up on their Internet site at last Wednesday—and I found it in a GATA release on the weekend.
ISIS advertises its new gold coins but still pays its gunmen in U.S. dollars
ISIS have released a new hour-long video, showing off their latest propaganda tool — their very own coin currency.
The video, which includes a dreary and distorted history of world economics, shows the smelting of gold, silver, and copper coins.
Dramatised by clips from Hollywood war films, the film accuses the United States of “confiscating Americans’ real wealth through an executive decree” with the introduction of the Gold Reserve Act in 1934.
Yet despite their glorification of their new currency, ISIS have no other means to pay their band of jihadis except through the use of U.S. dollars.
This very interesting gold-related news item was posted on the dailymail.co.uk Internet site on Sunday—and it’s the second story in a row from the gata.org Internet site.
Polish Government Confirms Discovery of Nazi “Gold Train”, Warns it May Be Booby-Trapped
Last weekend we reported that in the past month two men, a Pole and German, claimed to have discovered the legendary Nazi “gold train” – a 150 meter long German train alleged to be full of gold, gems and weapons, which disappeared just before the end of World War II – in the proximity of the Polish town of Walbrzych, close to where the Nazi are said to have loaded up the train with valuables for its final voyage in the town of Wroclaw, just as the Soviet forces approached in 1945.
As we detailed, the train is said to have been entombed in the vast tunnel labyrinth located close to Ksiaz castle, which served as Nazi headquarters during World War II—and specifically, was said to be located at the foot of the Sowa mountain, in the woods three miles outside the town of Walbrych.
While many were skeptical that the mystical Nazi treasure train had been finally discovered after many years of searching, an official update last Friday by the Polish government suggested that that may indeed be the case. As the Mail reported on Friday, a representative of the Polish culture ministry, Poland’s National Heritage and Conservation Officer Piotr Zuchowski, said to that the man who helped hide the train had revealed its location shortly before he died, and that proof of the train has been observed on radar.
Zuchowski added that “Information about where this train is and what its contents are were revealed on the deathbed of a person who had knowledge of the secret of this train.’ He added that Polish authorities had now seen evidence of the train’s existence in a picture taken using a ground-penetrating radar. He said the image – albeit blurred – showed the shape of a train platform and cannons.
Well, dear reader, having been born in Missouri in another life, I’ll believe it when they start unloading the gold. This Zero Hedge piece appeared on their website early Sunday evening EDT—and it’s the final offering of the day from reader M.A.
Zero Hedge: More foreign gold withdrawn from New York Fed in July
First it was Germany who redeemed 120 tons of physical gold in 2014; then it was the Netherlands who “secretly” redomiciled 122 tons of gold; then this past May, we learned that Austria would be the third “core” European nation to repatriate most of its offshore gold, held primarily in the Bank of England, redepositing it in Vienna and Switzerland.
In short, beginning in 2014 and continuing through today, the gold “bleeding “from the vault located 90 feet below street level at 33 Liberty Street (and which may or may not be connected by a tunnel to the JPM gold vault located just across the street at 1 Chase Manhattan Plaza) has continued. As the chart below shows, while central banks assure the population that there is nothing to worry about when it comes to paper money, and in fact it is the evil ISIS terrorists who plot and scheme to crush the benevolent Fed with their terroristy “gold dinars” and if not that then their made in Hollywood propaganda movies, they have been quietly pulling gold from the biggest centralized depository of global gold in the world: the New York Federal Reserve.
According to the latest just released monthly update of foreign official assets held in custody at the NY Fed, in July the total holdings of foreign earmarked, i.e., physical, gold declined to just over $8 billion when evaluated at the legacy “price” of $42.22 per ounce. In ton terms, this means that after declining below 6000 tons in January, for the first time since FDR’s infamous gold confiscation spree, the total physical gold held at the NY Fed dropped another 9.6 tons in July, down to 5,950 tons.
This news item showed up on the Zero Hedge website on Sunday afternoon EDT—and this is another story that I found on the GATA website.
Dubai gold retailer defaults on $136 million with 15 banks
A Dubai-based gold and jewellery retailer has defaulted on loans worth about 500 million dirhams ($136.2 million), with banks considering options including legal action to retrieve the money, four banking and trade sources told Reuters.
The non-payment by Atlas Jewellery, which has more than 50 branches across the Gulf and in India, affects at least 15 banks, the sources said on condition of anonymity because the information isn’t public.
It was not clear why Atlas Jewellery had failed to honor its debts. Company officials declined to comment and Reuters was unable to contact the company’s owner, M.M. Ramachandran.
This interesting Reuters story, co-filed from Abu Dhabi and Dubai, showed up on their Internet site at 7:32 a.m. on Monday morning EDT—and it’s another article I found on the gata.org web site.
Latest SGE deliveries enormous: Physical gold may be nearing crunch point — Lawrence Williams
What’s happening with the Shanghai Gold Exchange (SGE) and Chinese gold demand as expressed by the weekly physical gold withdrawals from the Exchange – a strong indicator at the very least of Chinese physical gold consumption taking all forms of demand into account? August is usually a weak time of year for such gold movements, yet the latest week’s figures are for withdrawals of 73 tonnes – the fourth highest demand week ever! And this follows on from deliveries during the month out of the Exchange of 65 tonnes the previous week and 56 tonnes for the first week of August, making a 3 week total of 194 tonnes of gold. If this kind of demand level continues for the final week of the month – figures should be released next Friday – August will be a remarkable month for SGE gold deliveries at 250 tonnes or more – around 90% of global newly mined gold output for the month. And remember this is physical gold, not paper gold!
We also note that July gold imports into mainland China from Hong Kong recovered sharply, which also suggests surging demand for physical gold on the Chinese mainland. And to this has to be added the unreported gold imports direct to the mainland from other nations, plus China’s own gold output all of which stays in the country. China is the world’s largest gold producer with output of 460 tonnes last year and believed to be running a few percent higher still this, but it is still hard to see where all this physical gold being delivered out of the SGE is coming from. There may be an element going through the International section of the Exchange, SGEI, which is not reported separately and relates to gold traded through the SGE which may not actually be landed in China, but this has generally been at an extremely low level to date by all accounts.
What is perhaps most significant is that we are now heading into ‘Gold Season’ in the world’s two largest gold markets – China and India. In China gold flows tend to build strongly towards the end of the year ahead of the Chinese New Year, while in India they rise following the monsoon and harvest, and the start of the ‘festival’ and wedding seasons with demand tending to increase sharply from September onwards.
I posted the charts on this in my Saturday column. This commentary by Lawrie appeared on the sharpspixley.com Internet site on Saturday—and it’s definitely worth reading.
Why gold mine output is not yet falling — Lawrence Williams
The fall in the gold price over the past few years has generated numerous predictions that this would lead to a big drop in global gold production. Mining companies ought to close unprofitable mines, halt expansion plans, and put new projects on hold. But this has not been the case. Global gold production has continued to rise and is predicted by mainstream gold analysts Metals Focus, GFMS, and the CPM Group, to continue to do so this year. Heading into 2016, it should stabilise before beginning to fall in 2017, failing a gold price recovery.
There are a number of reasons why the originally anticipated reductions in output have not yet taken place. The industry has become bloated during the years of rising gold prices, leaving scope for cost-cutting at all levels, thus enabling the companies to bring mines back into profit despite lower gold prices.
One aspect of cost reduction has been to mine to higher grades, but maintaining tonnages through the mill and thus reducing unit costs. This leads to higher gold output. This is one of the big anomalies in falling prices – they can stimulate production increases.
Closing a mine down is not quite as simple nowadays and no longer just a case of cutting off the power supply and sending the workforce home. There are all kinds of social, logistical, and environmental costs, that often make shutting a mine down a more expensive option than keeping it open, which instead forces management to cut costs to the bare minimum and hope for a gold price turnaround. Extraneous factors can change a mine’s economics and recently we have seen both a huge drop in oil prices, which represent a substantial cost element to many operations, and a sharp rise in the value of the dollar against local currencies. This has made the fall in gold prices in local currencies not nearly as severe as in US dollar terms, granting miners some flexibility to managing their cost base.
This commentary by Lawrie appeared on the mineweb.com Internet site at 8:42 a.m. BST yesterday morning, which was 3:42 a.m. in New York—EDT plus 5 hours. It’s worth reading as well. I thank Brad Robertson for this one.
Australian gold output on the rise — Lawrence Williams
The world’s second largest gold mining nation, Australia, saw gold output rise in the June quarter according to a survey by Melbourne-based consultancy, Surbiton Associates. Gold production for the period totalled some 72 tonnes (2.31 million ounces), an increase of almost three tonnes or four per cent over the March 2015 quarter. With most Australian miners having June year-ends, Surbiton puts the fiscal year total (to end-June) at 285 tonnes.
In Mineweb’s analysis of global gold output in calendar 2014, derived from figures from London-based consultancy Metals Focus, China was the world’s leading producer that year with annual output of 462 tonnes with Australia second, just ahead of Russia, with a little over 272 tonnes. So the latest Surbiton figures suggest Australian gold output could well be heading strongly higher in calendar 2015. (See: Gold’s top 20 – mines, miners and countries). China is also believed to be producing more gold this year than last. This bears out the view that lower gold prices are not yet having a diminishing effect on total world gold output, which is seen as continuing to rise in 2015, perhaps plateauing next year. However such rises are perhaps more than being balanced out by a continuing fall in production from scrap.
Surbiton Director, Dr Sandra Close, puts the increase down primarily to some of Australia’s biggest miners processing more on-surface stockpiles and thus producing more gold. The Kalgoorlie Super Pit (operated by Newmont and Barrick Gold and is Australia’s second biggest gold mining operation) raised gold output by 44,000 ounces in the quarter. Australia’s biggest mine, Boddington, lifted output by 17,000 ounces, as did Tanami. (Both these operations are managed by Newmont Mining of the U.S.)
This is another very interesting gold-related story from Lawrie—and it’s another posting from the mineweb.com website. This one appeared there at 10:42 a.m. BST yesterday morning. If you have the interest, it’s certainly worth your while.
Gold standard isn’t as crazy as today‘s central banking
“We dare to talk about the gold standard and its relative merits, knowing that the merest whisper of a gold standard is enough to elicit the guffaws of the central bankers down the road. Because they say ‘that’s just crazy.’ And I think, really? Crazier than negative interest rates? Crazier than paying banks to keep loanable funds in sterile depository accounts at the Fed? Crazier than having the Fed buy up trillions in government debt, remit the interest payments back to treasury, and then count that as revenue to the federal budget?
“Is it crazier than having hordes of financial market analysts parsing every word uttered by a monetary official, obsessing over the minutes of the latest Fed meeting trying to glean clues about what might happen next? It’s almost as if we’ve forgotten how to engage in free enterprise, because we’re waiting for marching orders from a central planning agency. I think we’re the rational ones. They like to brand us as ideologues, but in truth we’re the realists. And that sobering fact is becoming clearer every day as reality continues to whipsaw global markets.”
Those are the words with which the economist Judy Shelton wrapped up her remarks at Jackson Hole, and let us just say, Patsy Cline herself couldn’t have put it better. Ms. Shelton’s remarks were, our sources report, one, if only one, highlight of the counter-conference that the American Principles Project convened to put into sharp relief the question of whether the Federal Reserve and America’s regime of fiat money are the cause of our national travail during what has come to be called the Great Recession.
This amazing editorial showed up on The New York Sun website on Monday—and it’s an absolute must read. I thank Chris Powell for posting this on the gata.org Internet site.
The PHOTOS and the FUNNIES
THE WRAP
There are other factors on the COMEX to talk about, but it still amazes me how so few acknowledge the unprecedented physical movement of silver in the COMEX warehouses, as this movement stands out like a sore thumb as an indicator of wholesale tightness. Delivery intentions for first notice day on the September silver contract were announced and indicate a light number of 167 deliveries being issued and close to 2,000 contracts or so still open.
While that number of contracts still open is not large by historical standards, it was hard to ignore the pronounced tightening in the spread differentials between the now spot month of September and the now lead trading month of December in COMEX silver. Over the last three days, the September to December spread differential tightened by 2.7 cents to end at only 1.5 cents at yesterday’s settlement. To my mind, this is one of the tightest spreads I can remember on a first notice day.
I don’t want to confuse anyone with esoteric details which matter little in the end. While this may be a fleeting indicator, what can be said about the tightening is that there was pronounced aggression on the part of those wishing to buy the September contract on a spread basis with December. Since this has occurred as September has become active for actual delivery of silver, it can be concluded that more were either interested in taking delivery of silver or not having to make physical delivery. In either case, it’s considered a sign of potential physical tightness. By itself, it may not matter much, but taken with all the other signs of tightness in silver, it makes this old spread trader sit up and take notice. — Silver analyst Ted Butler: 29 August 2015
JPMorgan dug price holes for all four precious metals yesterday. The bottom came for silver at 9 a.m. EDT—and the other three at the 10 a.m. EDT gold fix. They then spent until noon EDT or thereabout, digging themselves out—and at that point they all got capped. The same old, same old. Volume wasn’t overly heavy, so “day boyz” and their algorithms had a relatively easy time of it.
Here are the 6-month charts for the Big 6 commodities—and you’ll note that short-covering rally in WTIC is really going to town.
And as I put today’s column up on the website at 2:50 a.m. EDT, the London open is about ten minutes away. Gold is currently up 7 bucks—and silver is down 2 cents. Both have been under heavy pressure since they began to rally sharply in Far East trading. Kitco has been up and down all night, so I go these numbers off the goldseek.com Internet site. Net gold volume is something north of 22,000 contracts—and silver’s net volume checks in at around 4,300 contracts. The dollar index has been selling off all night—and is currently down 47 basis points.
As to what is in the cards for the remainder of the Tuesday session, I don’t have a clue, but with the dollar down big once again, it’s obvious that “da boyz” aren’t letting the precious metals reflect that. Will that continue in New York trading? Beats me—and I’ll find out when I check the charts when I get up later this morning.
Ed
The post Gold Standard Isn’t as Crazy as Today’s Central Banking appeared first on Ed Steer.