10 September 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
[Note: The log on issue that you experienced yesterday has now been fixed—and I apologize for any inconvenience it may have caused. My webmaster had updated the WordPress website—the program that generates this column—and the new version rejected the log in widget that he was using—and he had find and install another one that worked with the new update. – Ed]
After a smallish rally that ended shortly before 11 a.m. Hong Kong time on their Wednesday morning, the price began a quiet straight-line decline—and by the time the COMEX opened in New York yesterday, the gold price was down about $1.50. Then the HFT traders spun their algorithms—and they set the low tick of the day around 12:45 p.m. EDT. A buyer showed up at that point for a few hours, but the gold price began heading lower into the 5:15 p.m. close of electronic trading, starting around 3:35 p.m.
The high and low tick were reported by the CME Group as $1,124.70 and $1,100.10 in the December contract.
Gold finished the Wednesday session in New York at $1,105.80 spot, down $15.60 from Tuesday’s close. Gross volume was very heavy at just over 205,000 contracts—and it still netted out to a chunky 152,000 contracts.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson—and as you can tell, all the volume that mattered occurred between 8:45 a.m. and 2 p.m. EDT yesterday, which is between 6:45 a.m. and noon on this chart because it’s scaled for Mountain Daylight Time—the time zone that both Brad and I live in. The dark gray line is midnight EDT—add two hours for EDT—and don’t forget the ‘click to enlarge‘ feature.
The rally in silver in morning trading in the Far East was somewhat more lively, but it too suffered the same fate as gold minutes before 11 a.m. Hong Kong time. The sell-off to its 11:45 a.m. low tick of the day wasn’t quite as dramatic as in gold, but it was obvious from the chart pattern that “da boyz” were lurking about there as well. After that, the price traded flat in a very tight range for the remainder of the day.
The high and low ticks in the precious metal were reported as $14.93 and $14.56 in the December contract.
Silver finished the Wednesday trading session at $14.61 spot, down 19 cents from Wednesday’s close. Net volume was 32,500 contracts, a hair more than Tuesday’s volume.
After rallying five bucks or so in early Far East trading, the platinum price was back to almost unchanged by noon in Zurich yesterday. Then, like in silver, this precious metal also experience an almost straight-line decline to its low tick of the day, which came shortly before 1 p.m. in New York—and the price didn’t do much after that. It finished the day at $980 spot, down 23 dollars from Tuesday’s close.
Palladium suffered the same fate, except its straight-line sell-off began at, or shortly before, Zurich opened on their Wednesday morning—and the low tick was in just before lunch in New York. It rallied a few dollars from there, but was closed almost on its low tick. Palladium finished the Wednesday session at $577 spot, down 12 bucks from Tuesday.
The dollar index closed at 95.86 late on Tuesday afternoon in New York. It’s 95.81 Far East low tick came very early in the trading day in Hong Kong—and it rallied smartly until minutes before the London open. It then sagged back below the 96.00 mark. But at that point it appeared that ‘gentle hands’ showed up—and the 96.41 high tick came minutes before 9 a.m. in New York. It was mostly down hill from there—falling back below the 96.00 mark at 95.95—up 9 basis points on the day.
And as you can tell from the ino.com chart below, it mattered not what the currencies were doing, because once you know that the HFT boyz and their algos are out and about, the Big 6 commodities will perform on their command. This should be clear to you by now.
Here’s the 6-month U.S. dollar index so you can put yesterday’s trading action into some sort of perspective.
The gold stock gapped down about two percent at the open, but made it back to almost unchanged in very short order. But as JPMorgan et al continued to lean on the price after the London p.m. fix, the stocks soon followed. The low tick came at 2:45 p.m.—and they rallied a bit into the close. The HUI closed down 2.98 percent.
It was more or less the same for the silver equities, except for the fact that they actually made it into positive territory for a few minutes at, or just before the London p.m. gold fix. But other than that, the silver chart looked like the gold chart when all was said and done by the close of trading yesterday. Nick Laird’s Intraday Silver Sentiment Index closed down a chunky 4.05 percent.
The CME Daily Delivery Report showed that 1 gold and 136 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. The two largest short/issuers in silver were HSBC USA out of its in-house trading account—and JPMorgan out of its client account—with 93 and 41 contracts respectively. And for the third day in a row, it was “all the usual suspects” as long/stoppers. Canada’s Scotiabank with 65—JPMorgan for its in-house trading account with 37—and the Japanese bank Mizuho with 22 contracts in its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest for December dropped by 51 contracts, leaving 160 still open—and in silver, the o.i. in that precious metal declined by 17 contracts, leaving 686 still open, minus the 136 contracts posted for delivery tomorrow.
There were withdrawals from both GLD and SLV yesterday. Authorized participants [but they could have easily been the same entity] took out 134,106 troy ounces of gold—and 1,336,003 troy ounces. Just looking at the charts for both precious metals, this seems like an excessive amount of gold considering the price action of the last few days—and it makes no sense at all in silver, as the price has been almost unchanged for days on end.
The folks over at Switzerland’s Zürcher Kantonalbank updated their data for both their gold and silver ETFs as of the close of business on Friday, September 4. They reported that, as usual, both ETFs showed withdrawals. Their gold ETF declined by 11,944 troy ounces—and their silver ETF fell by 50,947 troy ounces.
Another day—and another sales report from the U.S. Mint. They sold 6,000 troy ounces of gold eagles—1,000 one-ounce 24K gold buffaloes—and zero silver eagles.
After a busy day on Friday, there was almost no gold movement at all over at the COMEX-approved depositories on Tuesday. Nothing was reported received—and only 229 troy ounces were shipped out. There was a smallish 16,644 troy ounces switched from the Registered to Eligible category over at Canada’s Scotiabank as well.
It was a monstrous day for silver movement yesterday, as 1,197,145 troy ounces were reported received—and 1,843,791 were shipped out. The entire ‘in’ activity was deposited in JPMorgan’s warehouse—and certainly represents part of the 2.5 million-odd ounces that Ted says that JPMorgan is owed from the July delivery month. Whoever the short/issuer was, they certainly took their sweet time in coughing it up—and one has to wonder whether the silver had to be dug out of the ground first—and then refined—before delivery could be made. The link to yesterday’s action is here.
It was another very busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They reported receiving 5,146 kilobars—and shipped out 5,589. That’s a lot of gold. All of the activity was at the Brink’s, Inc. depository once again—and the link to that, in troy ounces, is here.
I received an e-mail from subscriber Lawrence Clooney yesterday—and here was his question: “Ed – Does your, or Ted’s, U.S. mint contacts support the backlog observations in silver? Does this apply to the Canadian mint as well?”
I can’t speak for Ted, although he has commented on this issue many times in his daily quotes in my column, but here was my reply based on what I know from my sources at the moment….
“It’s pretty quiet in the retail precious metal markets in Canada—and I have excellent sources, because I use to work in the retail end of it up until the end of June—and I’m still in constant contact with my former employer.
“I would guess that the Royal Canadian Mint is running at full capacity on silver maple leafs, 10 oz bars and 100 oz bars. Those are the only silver bullion products they make, although they just started making the 1/2 ounce round. But they’re not all being consumed locally in Canada, as retail business is horrid. All this product is going south of the border—and it may be one big buyer picking it all up—especially silver maple leafs—-just like they are at the U.S. Mint with silver eagles.”
“Like silver eagles demand, Maple leaf demand has been sky-high for years as the ‘big buyer’ is purchasing everything. The sudden surge in retail demand in the U.S. in the last several months has only exacerbated the supply situation, as the Sunshine Mint hasn’t delivered any retail product to wholesalers since June, as it’s going full blast on producing gold and silver blanks for the U.S. Mint. At that time, they said they wouldn’t have any of their own product available until sometime in October. Sunshine sells all their retail product through A-Mark—and they just advised the retail stores that they’ll be taking order for Sunshine 1 oz rounds and 10 oz bars for delivery on December 3.”
“95 percent of all retail silver bullion products sold in Canada are made in the USA—and delivery times from our wholesalers are 6-10 weeks on everything—except for silver maple leafs, 100 oz bars and 1,000 ounce bars. Delivery on these three items is only 2 weeks.”
“Premiums are higher here as well, but only because the wholesalers in the U.S. have jacked up their prices, which dealers here in Canada have to pay regardless of the fact that local retail demand sucks.” — Ed
Despite my best editing efforts, I have a quite a few stories today—and I hope you’ll find some in here that will interest you.
CRITICAL READS
Social Security Disability Fund Will Be Broke Next Year
The 2015 annual report from the Social Security Board of Trustees shows that the program’s disability component is in immediate trouble. Data from the latest report show that the disability fund will be depleted as soon as next year and unable to pay full benefits to beneficiaries.
This week’s first chart uses that data to show total income, expenditures, and assets in the Social Security Disability Insurance (DI) trust fund going back to 1980. The chart shows that the trust fund has been operating under deficits since 2009, as shown by the decline in the trust fund (green bars) and ever-growing gap between the payments (red line) and receipts (blue line).
Those deficits have been financed by redeeming non-marketable government securities that were accumulated over the years when the program was bringing in more revenue than was being paid out. The government spent the surpluses on other government programs and credited the fund with the securities. But because the securities are non-marketable, the government had to use general federal revenues to “redeem” them once the DI fund started to run deficits in order to cover the difference. With the illusion of the DI trust fund about to disappear, policymakers have no choice but to finally confront the financial imbalance that actually began years ago.
This short article was ‘borrowed’ from the Mercatus Center website. It contains two excellent charts—and all of this appeared on David Stockman‘s website on Tuesday. It’s worth a minute of your time, if the subject interests you, that is. I thank Roy Stephens for today’s first story.
Puerto Rico to Run Out of Cash By Year End, Faces $13 Billion Shortfall
Remember when two months ago Schauble jokingly offered Jack Lew to “trade” Greece for Puerto Rico? Something tells us in the interim period the German finmin changed his mind because while the Greek can has been kicked again, if only for the time being until bailout #4, the full severity of the Puerto Rican insolvency was laid out for all to see moments ago when top officials and outside advisors to the commonwealth released a highly-anticipated report showing that even after implementing proposed economic reforms and budget cuts, the island’s whopping funding gap of $28 billion will at best be reduced to “only” $13 billion over the next several years.
Even worse, as the Financial Times reports according to the report of the so-called Working Group, the Treasury’s single cash account and Government Development Bank would exhaust available liquidity before the end of the year, creating a cash shortfall in late November or early December. In other words, Puerto Rico is Greece, and unlike the German colony, Puerto Rico does not have any negotiating leverage to threaten a departure from the dollar zone, or threaten to print its own currency.
FT adds that “while the government will be able to manage around those year-end issues, the cash crunch will come to a head in June, when officials on the Working Group conceded it would be nearly impossible to tap financial markets. The plan, which will be closely scrutinised by investors who have just agreed a restructuring with Puerto Rico’s electric power authority, included proposals to consolidate the commonwealth’s education department, reorganise the Department of Economic Development and create a fiscal oversight board.”
This Zero Hedge article put in an appearance on their Internet site at 9:50 a.m. EDT on Wednesday morning—and I thank Richard Saler for finding it for us.
Top New York officials visit Puerto Rico to tackle crisis
New York Gov. Andrew Cuomo and a delegation of top state officials met with Puerto Rico’s governor on Tuesday to develop what Cuomo called a historic partnership with the U.S. territory to help it emerge from a deepening economic crisis.
Cuomo pledged that New York officials will share their expertise in economic development and health care and other areas, and step up political pressure as the island seeks more equal treatment from the U.S. government to emerge from a nine-year economic slump.
“We believe that the federal treatment of Puerto Rico when it comes to Medicaid, when it comes to bankruptcy protection, when it comes to tax treatment is unfair and abusive,” Cuomo said. “We’re going to do everything we can to remedy the situation because we think it’s wrong, and that’s why we’re here today.”
This news item appeared on the aljazeera.com Internet site at 1:55 a.m. EDT yesterday morning—and it’s the first contribution of the day from Patricia Caulfield.
Puerto Rico Unveils Fiscal Reform Plan, Braces for Cuts
Puerto Rico is bracing for widespread spending cuts after the government released a long-awaited fiscal reform plan on Wednesday that would reduce much of the island’s $72 billion public debt and calls for restructuring the remainder at the expense of bondholders.
The five-year plan proposes that the government cut subsidies to municipalities and the University of Puerto Rico, offer early retirement and reorganize or merge state agencies. It also calls on the government to extend until 2021 legislation that would freeze new hires, salary increases and collective bargaining agreements.
Gov. Alejandro Garcia Padilla acknowledged in a televised address that Puerto Ricans already have had to endure new taxes, an increase in utility bills and layoffs during a nearly decade-long economic stagnation.
“Our island faces an unprecedented fiscal and economic crisis,” he said. “We have asked our people for many sacrifices.”
This AP story, filed form San Juan, was picked up by the abcnews.go.com website at 7:20 p.m. EDT yesterday evening—and I thank West Virginia reader Elliot Simon for sharing it with us.
Federal Reserve rate rise would cause panic and turmoil, warns World Bank
Kaushik Basu said emerging economies would be hit hardest if the U.S. central bank decided to raise rates from their record low of between 0pc and 0.25pc for the first time in nine years.
“I don’t think the Fed lift-off itself is going to create a major crisis but it will cause some immediate turbulence,” Mr Basu told the Financial Times.
“It is the compounding effect of the last two weeks of bad news with that [China devaluation] . . . In the middle of this it is going to cause some panic and turmoil.
“The world economy is looking so troubled that if the U.S. goes in for a very quick move in the middle of this I feel it is going to affect countries quite badly.”
This Ambrose Evans-Pritchard commentary was posted on the telegraph.co.uk Internet site just after midnight London time on Wednesday morning, which was 7:18 p.m. EDT in New York on Tuesday evening. I found this in yesterday’s edition of the King Report.
Citigroup Sees 55% Risk of a Global Recession Made in China
Citigroup Inc. is sounding the alarm bells for the world economy.
In an analysis published late on Tuesday, the New York-based bank’s chief economist, Willem Buiter, said there is a 55 percent chance of some form of global recession in the next couple of years, most likely one of moderate depth and length.
Unlike the U.S.-driven international slumps of the past two decades, this one will be generated by sliding demand from emerging markets, especially China, which has surged in size to become the world’s No. 2 economy.
“The world appears to be at material and rising risk of entering a recession, led by EMs and in particular by China,” wrote Buiter, a former U.K. policy maker.
This Bloomberg article was posted on their Internet site at 3:10 a.m. Denver time on Wednesday morning—and it’s the second offering of the day from Patricia Caulfield.
Eric Sprott: “The Powers-That-Be Don’t Want to Admit There’s a Problem”
The market is out of step with reality, Eric Sprott tells Tekoa Da Silva in his recent interview.
“We had no growth in the economy to speak of. Yet these stocks were trading at record-high prices,” he says of the overall market.
He also believes the banking system is over-exposed to assets which stand to depreciate in value.
The strength of bonds and stocks so far has masked these weaknesses in banks’ balance sheets, says Eric, but that could change if markets came under more strain. “When you have people starting to take money out of the banking system,” he warns, “that’s when we all find out what the assets (of the banks) are worth.”
Especially worrying for investors in stocks should be the massive build-up in debt and unfunded obligations in developed countries, says Eric. This is leading towards a big breakdown in world bond and stock markets, he believes.
This 27:31 minute video interview with Eric by Tekoa Da Silva, appeared on the sprottglobal.com Internet site yesterday—and there’s a transcript as well.
Europe faces political war on two fronts as backlash builds
The European Union is fracturing along multiple lines of cleavage, torn by an emerging Kulturkampf over migrant flows before it has overcome the bitter conflict at the heart of monetary union.
“The bell tolls, the time has come,” said Jean-Claude Juncker, the head of the European Commission, in his State of the Union speech.
“We have to look at the huge issues with which the European Union is now confronted. Our Union is not in a good situation,” he said.
Perhaps it would be churlish to point out that the cause of this near existential breakdown is a series of moves that have his fingerprints all over them.
This commentary by Ambrose Evans-Pritchard showed up on The Telegraph‘s website at 9:47 p.m. BST on their Wednesday evening, which was 4:47 p.m. EDT in New York. It’s another article that’s courtesy of Patricia Caulfield. It’s certainly worth reading.
Turkish nationalists attack pro-Kurdish party HQ
An angry crowd has attacked the Ankara headquarters of Turkey’s main pro-Kurdish party, in a night of nationalist violence across the country.
The demonstrations on Tuesday came after several deadly attacks – attributed to the Kurdish armed group PKK – against Turkish soldiers and police officers.
Dozens of nationalist protesters marched on the headquarters of the pro-Kurdish Peoples’ Democratic Party (HDP) in Ankara on Tuesday evening, throwing stones and ripping down the sign outside, witnesses said.
“Our headquarters in under attack but the police is not performing its duties,” the party said on its official Twitter feed.
This AFP story found a home on the aljazeera.com Internet site just after midnight BST on their Wednesday morning, which was 7:28 p.m. EDT on Tuesday evening in Washington. It’s from Patricia Caulfield as well.
Russia Defends Its Military Advisers in Syria
The Foreign Ministry confirmed on Wednesday that Russian military advisers were in Syria, but it said that their presence was part of a longstanding agreement to provide military aid to the country.
Russian military aid to Syria has become a new source of tension between Washington and Moscow over the past few days, with the United States accusing Russia of escalating the conflict.
“Russian military specialists help Syrians master Russian hardware, and we can’t understand the anti-Russian hysteria about this,” said Maria V. Zakharova, a spokeswoman for the Foreign Ministry, adding that Russia had never made a secret of its cooperation with Syria over military technology.
“We have been supplying Syria with arms and military equipment for a long time,” she said. “We are doing this in accordance with existing contracts and in full accordance with international law.”
This news item, filed from Moscow, put in an appearance on The New York Times website yesterday—and it’s courtesy of Patricia C. The headline used to read “Russia Confirms It Has Military Advisers in Syria“.
Germany warns Russia against military engagement in Syria
Germany’s foreign minister warned Russia on Wednesday against increased military intervention in Syria, saying the Iran nuclear deal and new U.N. initiatives offered a starting point for a political solution to the Syrian conflict.
Frank-Walter Steinmeier made his comments after Russia, which along with Iran supports Syrian President Bashar al-Assad, said earlier on Wednesday it had military experts in Syria. Assad is opposed by most Western countries.
Germany is keen to negotiate an end to the more than four-year civil war in Syria, but France is considering launching air strikes against Islamic State militants there and Britain is ready carry out more.
“It can’t be the case that important partners, who we need now, back the military option,” Steinmeier told German lawmakers.
This Reuters article, filed from Berlin, showed up on their website at 12:17 p.m on Wednesday afternoon EDT—and the stories from Patricia just keep on coming.
Russia complains of ‘strange hysteria’ over its presence in Syria
Russia’s foreign ministry has complained of a “strange hysteria” over Moscow’s actions in Syria, as western countries expressed concerns over apparent preparations for military intervention.
Foreign ministry spokeswoman Maria Zakharova said that “Russia has never made a secret of its military-technical cooperation with Syria” and confirmed that “Russian military specialists are in Syria to help them master the weapons being supplied”. She said there was nothing out of the ordinary about their presence.
However, there have been a number of signs of more intensive Russian activity in Syria in recent weeks, including reported sightings of Russian jets and combat vehicles, claims of increased weapons deliveries, and even reports that prefabricated housing was being erected to pave the way for a major military presence.
President Bashar al-Assad did not comment on questions when they were raised by Russian journalists who interviewed him in Damascus on Sunday. But on the diplomatic front, western officials in fact say they detect signs of greater readiness by Moscow to push for a negotiated solution to the Syrian crisis – in part because of its growing concerns about the threat from Islamic State.
This news/propaganda piece appeared on theguardian.com Internet site at 5:27 p.m. BST yesterday afternoon, which was 12:27 p.m. in Washington—EDT plus 5 hours.
Plan B: Iran Opens Airspace to Russian Aid Flights to Syria
Iran has opened its airspace to Russian aircraft delivering humanitarian aid to Syria, the Russian Embassy in Tehran told RIA Novosti.
Iran has satisfied all of Russia’s requests and opened the country’s airspace for the delivery of humanitarian supplies to Syria, the Russian Embassy in the Islamic Republic told RIA Novosti.
“Several requests have been sent [to allow Russian aid flights to Syria via Iran’s airspace] and the Iranian side approved all of them,” the embassy’s press attaché Maksim Suslov said.
He emphasized that it “concerns only the delivery of humanitarian aid.”
This news item appeared on the sputniknews.com website at 3:04 p.m. Moscow time on their Wednesday afternoon, which was 8:04 a.m. in Washington. I thank Brad Robertson for this story.
Khamenei says Iran will not negotiate with U.S. beyond nuclear talks
Iran’s Supreme Leader has said Tehran will not negotiate with the United States on any issue after the landmark nuclear deal with world powers in July, according to his official website on Wednesday.
The comments appeared to contradict more moderate president Hassan Rouhani, who said on Tuesday the Islamic Republic was ready to hold talks with the United States on ways to resolve Syria’s civil war.
“We negotiated with the U.S. on the nuclear issue for specific reasons. (The Americans) behaved well in the talks, but we didn’t and we won’t allow negotiation with the Americans on other issues,” Ayatollah Khamenei was quoted as saying.
“The Americans are not hiding their animosity towards Iran… Americans in the Congress are plotting and passing bills against us… Negotiations are a tool for them to influence Iran and to impose their will,” Ayatollah Khamenei said to hundreds of visitors to his offices.
This Reuters news item, filed from Dubai, appeared on their website at 6:41 a.m. EDT on Wednesday morning—and it’s courtesy of Patricia Caulfield as well.
Prada tries to renegotiate Hong Kong shop rents amid China slowdown
Italian fashion house Prada is trying to negotiate lower shop rents in Hong Kong and Macau to reflect weak sales and the dwindling flow of wealthy tourists from mainland China, its chairman said on Thursday.
However, the Hong Kong-listed group does not plan to shut stores in China, which accounts for more than a fifth of its global sales and has been hit by a rout in stock markets and last month’s surprise devaluation of the yuan.
China’s economic slowdown is hurting the two shopping hubs, forcing several luxury brands to close shops or at least attempt to lower sky-high rents – with little luck so far.
“Like our competitors we’ve started re-negotiating rents for shops in weak spots such as Hong Kong and Macau but landlords are not being very receptive, they’re rather rigid,” Prada Chairman Carlo Mazzi told Reuters in an interview in Milan.
This very interesting Reuters article, filed from Milan, put in an appearance on their website last Thursday—and I thank ‘David in California’ for bringing it to our attention.
Chinese Premier Li Keqiang Says China Doesn’t Want a Currency War
Chinese Premier Li Keqiang said he wants to avoid a currency war as he sought to soothe global concern about the nation’s devaluation of the yuan and its slowing economy, which he said is operating in a reasonable range even as it faces “downward pressure.”
China has been “wrongly criticized” for its management of the currency and doesn’t want to use depreciation to boost exports, Li said Wednesday at the World Economic Forum’s “Summer Davos” meeting in Dalian, China. He said the currency, also known as the renminbi, will be kept at a reasonable level.
“There’s no basis for persistent depreciation of the renminbi,” Li told a group of about 200 entrepreneurs including Alibaba Group Holding Ltd. founder Jack Ma. “We will not want to stimulate exports through depreciation. China will not want to see any currency wars. Currency wars would only hurt China.”
Growth is stabilizing and employment data show that the world’s second-largest economy is operating in a reasonable range, Li said. As long as there’s sufficient employment, incomes expanding in tandem with economic output and an improving environment, China can accept such growth as it had in the first half, he said. The remarks echo People’s Bank of China Governor Zhou Xiaochuan, who said over the weekend that the rout in Chinese equities is close to ending and that state intervention stopped a free-fall.
More happy talk/whistling past the graveyard. This Bloomberg article appeared on their Internet site at 3:44 a.m. Denver time on Wednesday morning—and was updated about 11 hours later. It’s the last story of the day from Patricia Caulfield—and I thank her on your behalf.
Why Did China Invite Blackrock’s Larry Fink For Advice How to Manipulate Its Stock Market?
While it is already common knowledge that China has thrown virtually everything at the market in order to halt the ongoing market crash, including arresting “malicious sellers”, journalists, and suspicious hedge fund managers, blaming HFTs for daring to sell in addition to buy, and even making trading index futures practically impossible, perhaps the most interesting revelation showcasing China’s desperation came from CNBC today which reported that the government recently invited none other than Mr. ETF himself, BlackRock CEO Larry Fink to “discuss the market situation there“, or said otherwise: how to manipulate the market more effectively.
CNBC adds that, as expected, Fink “accepted the offer and traveled to China in the last part of August to meet with officials” and conveniently, if redundantly, reminds us that “the request for Fink’s expertise comes amid a prolonged slide in the Chinese stock market that has sent shivers through the U.S. and Europe as well. Many of the Chinese government’s efforts to prop up the falling market have been seen as ineffective.”
What is not said in the above, but what is abundantly clear, now that the cat of Chinese market manipulation is out of the bag, is that with every other attempt to manipulate the market higher, China felt it incumbent to invite Larry Fink for his expertise.
What exactly did Larry Fink tell China is the best way to manipulate its stock market higher, and the immediate follow up to that: how much of whatever it is that Larry told China to do, is BlackRock already doing in the U.S.?
We ask because BlackRock’s Rick Rieder, the company’s Chief Investment Officer and Co-Head of Americas Fixed Income, just happens to be a member of the New York Fed’s Investor Advisory Committee on Financial Markets, also known as the advisers to the New York Fed’s Plunge Protection Team.
This worthwhile read appeared on the Zero Hedge website at 2:29 p.m. EDT on Wednesday afternoon—and I thank reader U.D. for passing it around.
Japan Economy Flashes Warning as Inventory Gain Holds Up GDP
Japan’s economy contracted last quarter less than initially estimated, thanks to a buildup in inventories that risks damping a rebound.
Gross domestic product shrank at an annualized 1.2 percent pace in the three months through June from the first quarter, less than the 1.6 percent drop reported last month, the Cabinet Office said on Tuesday in Tokyo. Economists had estimated a 1.8 percent contraction.
Businesses reduced investment more than first estimated, in a rebuff to Prime Minister Shinzo Abe’s call for Japanese companies to deploy their record cash holdings and a surge in profits into capital spending. Also dragging on the economy was consumption — even after an advance in wages. Overseas, Japan is facing growing risks from a slowdown in China, its biggest trading partner.
“Companies are still struggling to reduce stockpiles in the face of weak demand at home and abroad,” said Junichi Makino, an economist at SMBC Nikko Securities Inc. “The government will probably compile about 2.5 trillion yen worth of stimulus in an economic package around October,” he predicted. That’s $21 billion.
This Bloomberg story was posted on their Internet site on Monday evening MDT—and it’s another article I found in yesterday’s edition of the King Report.
Mining exec Hambro tells Bloomberg that ‘paper gold’ isn’t real metal
Mining entrepreneur Peter Hambro, founder and chairman of the Russian mining firm Petropavlovsk, today explained to a couple of Bloomberg Television journalists the difference between “paper gold” and real metal in hand. The former, Hambro noted, carries serious counterparty risk. Hambro also noted that central banking has turned into the propaganda business, the business of “managing expectations.”
Some snippets from the video: “Paper gold is other peoples’ promises. Physical gold is no one’s promise…China encouraged their people to buy gold, then devalued their currency, it’s fantastic!…There’s not enough physical gold. It’s impossible to get physical gold in London now, to ship to those countries. We get permanent requests in Russia now, please sell your gold to India and China; but there’s not enough…Endless promises…And I really worry that market, the paper market, could be stamped on and people will say: Sorry, we’re going to have a financial closeout and it’s all over…If you want to be in the gold business, you ought to be in the physical business.”
This must watch interview with Hambro is a little less than 5 minutes long and and appeared on the Bloomberg website at 3:49 a.m. MDT yesterday morning—and I thank GATA‘s Chris Powell for wordsmithing “all of the above”—but the first reader through the door with this gold-related news item was Bill Houseman. [Note: I could not get this video to play on my computer, so I hope you have more luck. In case the video doesn’t work for you, I thank Bill for the “snippets” posted above, as Peter bares his soul here—and tells it like it really is.] By the way, the two ‘journalists’ that interview Peter aren’t exactly the sharpest knives in the drawer.
Indian government approves scheme for paperizing gold
India moved a step closer to selling gold-backed bonds and allowing banks to tap idle jewelry and bars held by households and temples to cut reliance on imports.
Prime Minister Narendra Modi’s cabinet today approved the gold monetization plan and sale of sovereign bonds by the Reserve Bank of India, the government said in a statement. The plans were announced by Finance Minister Arun Jaitley in February as measures to woo Indians away from physical gold. …
The monetization plan will allow Indians to deposit their jewelry or bars with banks and earn interest, while the banks will be free to sell the gold to jewelers, thereby boosting supply. The deposits can be for a period of one year to 15 years with the interest on short-term commitments to be decided by the banks and those on long-term deposits by the government in consultation with the central bank. …
The plan may fail to draw people in large numbers because of Indians’ inherent love for holding physical gold and low interest rates likely to be offered by the banks.
Without doubt this scheme will meet the same fate as other paper gold schemes in India. No Indian gold consumer in their right mind would touch this scheme with the proverbial 10-foot cattle prod—and rightly so. This Bloomberg article found a home on their website at 4:45 a.m. Denver time on Wednesday morning—and I found it embedded in a GATA release.
South Africa’s gold mines are in big trouble
South Africa’s gold mines, the deepest and among the oldest in the world, are in big trouble.
The four largest producers in the country are losing money on about 35 percent of production at current prices, according to company data compiled by Bloomberg. At the same time, higher costs are cutting into profits as electricity bills climb to a record. Workers are also pushing for wage increases, with some threatening to strike if salaries aren’t doubled.
The nation, whose Witwatersrand Basin has supplied about a third of all gold ever mined, dropped from the top producer to sixth-biggest in just eight years. Now that miners who still crawl through tunnels using hand drills and dynamite have extracted much of the easy-to-dig metal, companies use modern technology to go deeper. That’s another expense, especially when bullion prices are near a five-year low.
“What you’re seeing in South Africa is a major margin squeeze,” Srinivasan Venkatakrishnan, chief executive officer of AngloGold Ashanti Ltd., the country’s biggest gold miner by market value, said in an interview. “If you do nothing, the future of South African gold mining always heads towards a declining trend.”
This very interesting Bloomberg story found a home over at the mineweb.com Internet site yesterday morning BST—and it’s definitely worth reading. In a similar vein is this Reuters story, also from the mineweb.com Internet site. It’s headlined “South Africa’s Zuma says urgent intervention needed to save gold miners“.
Is Comex gold really being critically drained?
Zero Hedge reports tonight that the gold ready for delivery from Comex warehouses against Comex gold futures contracts has fallen to the lowest amount on record, leaving 207 ounces in paper gold claims for every ounce of real metal ready for delivery.
Your secretary/treasurer would like to believe that this signifies that the gold available to the paperhanging market riggers is nearly exhausted and that the exchange will resort to cash settlement within days. But to believe that you would have to believe that Comex data is accurate and not contrived to give false impressions; that the U.S. government won’t keep advancing official-sector gold through its agent bullion banks as necessary; and 3) that this isn’t easily done by, among other mechanisms, borrowing custodial gold from the vault of the Federal Reserve Bank of New York and moving it across the street (or, rather, under the street) to the vault of JPMorganChase & Co., the U.S. government’s agent in all sorts of surreptitious market interventions.
Yes, if, as many of us suspect, the paper gold game has been terribly overplayed and will implode eventually, as the London Gold Pool imploded on March 15, 1968, then the Comex will declare force majeure and that will be the end of gold futures in the United States—and gold price suppression by the government will either cease or, more likely, come out into the open, through an upward revaluation of gold by international agreement or confiscation of gold by the most threatened governments.
With infinite time, other things may happen as well: Christ may come back, the Dodgers may return to Brooklyn, and the mainstream financial news media may investigate government intervention in the gold and commodity markets.
This interesting commentary by GATA’s secretary/treasurer Chris Powell showed up on the gata.org Internet site just after midnight EDT this morning—and it’s certainly worth reading.
The PHOTOS and the FUNNIES
These three elk photos were taken on the return trip through Jasper National Park on the way back to Edmonton—and it’s a much younger and smaller elk than the one whose photo appeared in my Tuesday column. It was a regular “gong” show around this animal, as cars were stopped everywhere in both directions—and the ipads and cellphones were out in force, as you could walk right up to this thing, as it was only standing a meter or so off the highway—and most of the time it wouldn’t even raise its head. Once again I had the big 400mm strapped onto the camera—and it was way too much lens. I needed a wide angle. I had to stand waaaay back to get these shots—and even then I couldn’t get a full body shot. The first photo I cropped at the very bottom just to get rid of the asphalt on the highway. The other two are uncropped—and the only saving grace of a big lens in this situation was that I could cut out the tourists milling around. The last shot is where the big lens shone, as the distant background melts away to a blur—and the elk become the sole center of attention, almost to a fault. Don’t forget the ‘click/double-click to enlarge’ feature to bring these photos up to full screen size.
The WRAP
How about if just 1% of all the gold in the world was sold and the proceeds were used to buy silver? Let’s do the math – 1% of $6,000 billion is $60 billion. Now try to imagine what a price mess would be caused by trying to put $60 billion into a market worth less than $20 billion – without using the “10 pounds of flour into the one pound bag” analogy.
The truth is that selling all the silver in the world and putting the proceeds into gold would barely bump the price of gold. Putting just 1% of the world’s gold into silver would cause a silver price explosion exceeding any way-out prediction you have ever heard. Simply stated, the silver market couldn’t handle even one-tenth of one percent of the world’s gold being switched into silver because $6 billion would equal 400 million oz of silver and it took four and a half years and much higher prices for JPMorgan to buy the 400 million oz of silver I claim the bank has accumulated.
In fact the strongest argument for why gold should be switched into silver is the lopsided proof provided by the law of numbers, namely, it can’t be done on a large scale. But that doesn’t mean any individual investor can’t do it—and that’s where the opportunity exists. — Silver analyst Ted Butler: 05 September 2015
As I stated in the last paragraph in The Wrap section in Wednesday’s column—“As for the precious metals today, it’s up to JPMorgan et al—and nothing will surprise me when I check the charts later this morning.“ We certainly found out what they were up to—and as Ted has said on many occasions, as have I, these guys can do whatever they want, because there’s nobody to stop them. Also some of the straight-line declines in most of the precious metals yesterday indicated to me that there was an algorithm running in the background in all the metals at various times of day, as price charts that look like this are not natural.
All of yesterday’s price action occurred on a Wednesday, so none of what happened will be in tomorrow’s Commitment of Traders Report, as it was the day after the cut-off. As you already know, this is a trick that they’ve used countless times when they’re trying to keep their actions away from the prying eyes of the public for as long as possible.
But, having said ‘all of the above’, the letter from First Majestic Silver’s CEO Keith Neumeyer to the CFTC may have fallen on deliberately non-responsive ears at that organization, it has certainly reverberated inside the mining industry, although it took a while before others stepped up and said more or less the same thing. First it was Glasenberg at Glencore last month talking about the COMEX futures market and its effect on copper prices. Then it was Paul Wilson, the CEO of the World Platinum Investment Council saying the same thing about that metal in a Mineweb story in my Tuesday column. Now, after a long chat with GATA’s Chris Powell way back when—and then sitting on his hands for the following 15 years—Peter Hambro spelled it out chapter and verse in the Bloomberg interview posted above. I was shocked at how candid he was.
I was also shocked at how old he’d gotten in the last 15 years. I guess that age finally does that to everyone after a while—and he probably figured that he had nothing to lose by telling all at this stage of his life. Better to be hung as a sheep than a lamb, one would think.
And as as an add-on to a story about South Africa’s gold mines being in big trouble further up, I included a link to another Mineweb story, this one headlined “South Africa’s Zuma says urgent intervention needed to save gold miners“.
Nobody is more perfectly positioned than this gentleman to bring this Anglo/American precious metal price management scheme to an end. Unless he’s a bought and paid for whore of the western central banks, which is always a strong possibility, one press conference ought to do it. With his back to the wall—and with the precious metal miners about to go bust all around him, he might—but I’m not staying up waiting for the story to break.
And as I write this paragraph, the London open is less than five minutes away. Gold is unchanged, silver is up the magnificent sum of 7 cents the ounce, platinum is up 4 bucks—and palladium up 6 dollars. Net HFT volume in gold is just under 20,000 contracts—and net HFT volume in silver is 2,900 contracts. The dollar index, which was down about 20 basis points early in Far East trading on their Thursday morning, is now flat on the day as London opens.
With today being Thursday, the countdown is now underway for what may or may not happen at the Fed meeting next week. One way or another, it has all the hallmarks of a major market-moving event in the precious metals—and it appears that JPMorgan et al are already beginning to set the mood by painting the precious metal charts with the price pattern they want. I’m not going to make any attempt to forecast which way this interest rate thingy is going to turn out, as one could make a solid case for either of the two possible scenarios.
And as I post today’s column on the website at 5:00 a.m. EDT, I see that gold is up a dollar, silver is now up 14 cents—platinum is higher by 7 dollars and a palladium is still up 6 bucks—and dollar index is up 13 basis points Net HFT gold volume is fast approaching 27,000 contracts—and silver’s net volume is now up to 4,900 contracts.
That’s all I have for today, which is more than enough—and I’ll see you here tomorrow.
Ed
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