17 September 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t do much of anything in Far East trading on their Wednesday, but a few minutes before the London open the price popped for about three bucks, then popped a few more at the 10:30 a.m. BST London morning gold fix. The rally that mattered began at the COMEX open in New York—and the price topped out at 12:45 p.m. EDT. At that point the price was forcibly sold down to the $1,120 mark—and back to just below its 50-day moving average. Gold traded sideways from there will virtually no volume into the 5:15 p.m. close.
The low and high ticks were reported by the CME Group as $1,103.00 and $1,123.70 in the December contract.
Gold finished the Wednesday session in New York at $1,119.20 spot, up $14.10 from Tuesday’s close. Net volume was only 118,000 contracts, with most of the roll-over activity [5,061 contracts] coming from the October contract.
Here’s the 5-minute gold chart [Denver time] courtesy of Brad Robertson once again. Midnight EDT is the vertical gray line—and you can see the smallish jumps in the gold price just before the London open—and again at the morning gold fix—then the main rally in New York. Note the volume spike right at the 10:45 MDT high tick—and the decent volume that followed to drive the price back down to the $1,220 mark. After that, volume vanished, as the ‘traders’ stepped aside. Add two hours for EDT—and don’t forget the ‘click to enlarge‘ feature.
The silver chart is similar to the gold chart in just about every way, except the high tick in that precious metal came at precisely 1:00 p.m.—and from there the price did nothing.
The low and high ticks were recorded as $14.31 and $14.965 in the December contract.
Silver closed yesterday at $14.93 spot, up 52.5 cents from Tuesday’s close. Net volume was pretty heavy at 48,500 contracts, which not exactly what I was hoping to see.
After getting sold down a bit in morning trading in the Far East, platinum had a similar price path to gold from Zurich open onwards, complete with the 12:45 p.m. EDT high tick in New York. Platinum was closed yesterday at $970 spot, up 9 bucks from Tuesday.
The palladium price chart was almost identical to platinum’s except its high tick came at 1 p.m. in New York trading. This precious metal finished that day at $609 spot, up 6 dollars on the day.
The dollar index closed late on Tuesday afternoon in New York at 95.59—and then sold off to its 95.41 Far East low around 11:30 a.m. Hong Kong time. The subsequent rally topped out at the 95.85 mark just minutes after 1 p.m. BST in London—8:00 a.m. in New York—with the 95.16 low tick coming at 12:30 a.m. EDT. It rallied back to about 95.44 before sliding into the close. The dollar index finished the Wednesday session at 95.32—down 27 basis points from Tuesday’s close.
Here’s the 6-month dollar chart once again to keep yesterday’s move in some sort of perspective.
It’s almost superfluous to point out that the gold stocks gapped up at the open—and hit their morning highs shortly before 11:30 a.m. They faded a hair from there, but began to rally anew at the 1:30 p.m. close of COMEX trading—and the HUI finished the day virtually on its high tick, up a chunky 6.47 percent.
The same can be said of the silver equities—and their price path was a carbon copy of their golden brethren. Nick Laird’s Intraday Silver Sentiment Index finished higher by 5.94 percent.
The CME Daily Delivery Report showed that zero gold and 1 lonely silver contract was posted for delivery within the COMEX-approved depositories on Friday.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in September is now down to 91 contracts, after shedding 15 of them yesterday. In silver, September o.i. fell by 68 contracts, leaving 372 still open.
There were no reported changes in GLD yesterday—and as of 6:41 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website as of the close of business on Friday, September 11—and this is what they had to report. Both their gold and silver ETFs continued their relentless declines, as their gold ETF dropped by 11,347 troy ounces—and their silver ETF fell by another 436,537 troy ounces.
I was surprised to see that the U.S. Mint had another sales report yesterday. They sold 5,500 troy ounces of gold eagles—500 one-ounce 24K gold buffaloes and, not surprisingly, zero silver eagles. The mint is obviously at full production capacity on all three of these bullion coins—and yesterday’s sales would have been of the hand-to-mouth variety.
There wasn’t a lot of activity in gold over at the COMEX-approved depositories on their Tuesday. Nothing was reported received—and only 2,594 troy ounces were shipped out. There were a couple of tiny transfers from the Eligible category back into the Registered category—1,300 troy ounces in total. The link to that activity is here.
It was another big day over at the COMEX-approved depositories in silver, as 860,190 troy ounces were received—and 630,914 were shipped out the door. Of the amount received, 603,500 troy ounces ended up in JPMorgan’s vault. The link to that action is here.
After monster in/out days on both Friday and Monday, nothing happened over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.
There weren’t a lot of big news items yesterday—and for that reason, my list of stories is very much on the smaller side today.
CRITICAL READS
Fed tightening ‘threatens disaster for debt saturated global economy’
Decision time approaches for the US Federal Reserve. It’s been a long time coming. Yet for all the months of anticipation, and the acres of column inches the decision has already attracted, it will be no less momentous an event. If the Open Market Committee takes the plunge, it will be the first U.S. rate hike in nearly 10 years.
For much of this time, rates have remained close to zero. Admittedly, a rise of just 0.25 percentage points would, to most people, seem neither here nor there. Yet it would at least be a start, a first baby step on the long march back to interest rate normalisation – if not the relatively high real rates of interest we had before the crisis. Few think global demand will allow for this latter prospect for a long time to come.
In my view the Fed has already left it too long. True, headline inflation remains very subdued, but this gives a somewhat misleading impression. Low prices are mainly an energy and commodity-based story. Core inflation, excluding these variable items, has been hitting 1.8pc for nearly a year now.
Yet it is not just the impact on their own economy that members of the Fed’s Open Market Committee have to worry about. The dollar’s dominant reserve currency status makes this a defining moment for the global economy as a whole. If Committee members bury their heads in the sand, and treat it as solely a domestic matter, the decision may come back to haunt them.
This article put in an appearance on the telegraph.co.uk Internet site at 7:01 p.m. BST on their Tuesday evening, which was 2:01 p.m. EDT in New York on Tuesday afternoon. I thank Richard Saler for today’s first story.
Silent on Priorities, Yellen Makes Fed Choice a Cliffhanger
Janet L. Yellen, the Federal Reserve chairwoman, faces a crucial moment on Thursday when the Fed’s policy-making committee announces whether the time has come to start raising interest rates.
Liberal activists, economists and some policy makers are pressing hard for Ms. Yellen to continue the Fed’s stimulus campaign of near-zero rates because the economic recovery remains far from complete, leaving most Americans still struggling to pay their bills on stagnant incomes.
At the same time, Ms. Yellen faces growing internal pressure to start raising rates from Fed officials who are concerned about froth in financial markets and about maintaining control of inflation.
“They are paying a lot more attention to the labor market than in the past,” said William Spriggs, chief economist at the A.F.L.-C.I.O. “I know it’s in the Fed’s thinking. I know it concerns them. I just hope that it’s deep enough a part of their equation that they wait to see real progress happen.”
This news item appeared on The New York Times website on Wednesday sometime—and it’s the first contribution of the day from Patricia Caulfield.
Consumer Prices in U.S. Drop in August on Plunging Energy
Prices paid by American households declined in August as cheaper gasoline helped keep inflation below the objective of Federal Reserve policy makers.
The consumer-price index fell 0.1 percent, the first decrease since January, after a 0.1 percent gain in July, Labor Department figures showed Wednesday. The so-called core measure, which strips out often-volatile fuel and food costs, rose 0.1 percent for a second month. Goods prices declined, while services barely rose.
A 15 percent plunge in energy costs over the past 12 months and a rising dollar are acting as a brake on inflation that the Fed views as temporary. Central bankers, who conclude a two-day meeting on Thursday, will have to weigh restrained prices, uneasy financial markets and a resilient U.S. labor market as they consider raising interest rates.
“Inflation is still relatively muted,” said Gregory Daco, head of U.S. macroeconomics at Oxford Economics USA in New York, who correctly projected the drop in the CPI. “We continue to see pass-through from a strong dollar and low energy costs.”
This Bloomberg story showed up on their Internet site at 6:30 a.m. Denver time yesterday morning—and it’s the second offering in a row from Patricia Caulfield.
Global Trade Bellwether Fedex Misses, Cuts Outlook, Blames Weak Industry Demand, Higher Wages
Every quarter we pay particular interest to the results reported by Fedex not only due to its position as the leading company in worldwide logistics but due to its status as a bellwether in global trade. And not surprisingly, following a bevy of reports here and elsewhere confirming the plunge in global trade, Fedex did not disappoint, or rather it did when it reported non-GAAP EPS of $2.42 (which included one extra day att the company’s operating segments) missing already reduced consensus expectations of $2.45, but it also cut its full year 2016 EPS guidance from $10.60-$11.10 to $10.40-$10.90 (below the consensus $10.83) proving yet again that hopes for EPS growth are just as misplaced as those for multiple expansion at a time when the Fed is preparing to hike rates and as China unleashes Quantitative Tightening.
Specifically, the company announced that a boost in operating income at FedEx Express “were partially offset by higher incentive compensation accruals, higher self-insurance reserves and operating costs at FedEx Ground, and lower-than-anticipated volume at FedEx Freight. Fuel had a slightly negative net impact to operating income.”
If Express saw a rebound in profits despite a rise in revenues, the company’s Ground segment did the opposite with operating income declining 1% to $537 million “as lower fuel surcharges and unfavorable currency exchange rates more than offset improved base rates. U.S. domestic package volume grew by 1%, driven by growth in deferred box and overnight envelope. U.S. domestic revenue per package decreased 3% due to lower fuel surcharges, partially offset by strong base rates.”
But the biggest disappointment was FedEx Freight where revenue was virtually unchanged, yet where operating income tumbled 21% as Less-than-truckload (LTL) average daily shipments declined 1% with the company blaming “weak industry demand”. LTL revenue per shipment was down 1% as higher rates from yield initiatives were more than offset by lower fuel surcharges. Operating results declined primarily due to salaries and employee benefits expense outpacing lower-than-anticipated volume.
This very interesting Zero Hedge news item was posted on their website at 7:59 a.m. on Wednesday morning EDT—and it’s the second contribution of the day from Richard Saler.
Foreign Holdings of U.S. Treasury Securities Drop in July
Foreign holdings of U.S. Treasury securities fell again in July as China, the biggest foreign owner of U.S. government debt, cut back its holdings.
The Treasury Department said Wednesday in its monthly report that total holdings dropped 1.6 percent to $6.08 trillion, down from $6.18 trillion in June. The July decline marked the third drop in the past four months.
China reduced its holdings by 2.4 percent in July to $1.24 trillion. Japan, the No. 2 holder of U.S. Treasurys, boosted its holdings by .03 percent to $1.20 trillion.
Despite the recent declines, foreign demand for U.S. Treasury securities is expected to remain strong this year. They are considered one of the world’s safest investments.
This AP news item was picked up by the abcnews.go.com Internet site at 4:54 p.m. EDT yesterday—and I thank West Virginia reader Elliot Simon for finding it for us.
Jim Rogers on Timeless Investing Strategies You Can Use to Profit Today
Nick Giambruno: You’ve said that many times throughout history, conventional wisdom gets shattered. What are some widely held beliefs that will be shattered in the next 10 years?
Jim Rogers: That’s a very good question. Well, for one thing, I know bond markets are at all-time highs almost in every country in the world. Interest rates have never been so low. Everybody is convinced that bonds are a good thing to invest in. Otherwise, they wouldn’t be at all-time highs.
I’m sure that 10 years from now, we are all going to look back and say, how could people have even been investing in bonds with negative yields? How could that possibly have been happening? But at the moment, everybody assumes it’s okay, and it’s the normal and natural thing to do. Ten years from now, we’re going to look back and say, gosh, how could we ever have done something so foolish?
So one of the things I do is I look to see – when everybody’s convinced that X is correct – I look to see, well maybe X isn’t correct. So when I find unanimity of a view, I look to see, maybe it’s not right. And it usually isn’t right, by the way. I have learned that from experiences and from lots of reading.
This very worthwhile interview/infomercial appeared on the internationalman.com Internet site on Wednesday—and I thank their senior editor Nick Giambruno for bringing it to my attention—and now to yours.
Earthquake in Chile rocks capital Santiago, Pacific tsunami warning issued
A powerful earthquake has shaken Chile’s capital, causing buildings to sway, thousands to take refuge in the streets and sparking a tsunami alert across the Pacific ocean.
The U.S. Geological Survey initially reported the quake at a preliminary magnitude of 7.9 but quickly revised the reading to 8.3.
US officials said the quake struck just offshore in the Pacific at 7:54 pm (6:54 pm EDT, 1154 GMT) and was centered about 141 miles (227 km) north-west of Santiago.
Chile’s emergency office warned that a tsunami could hit the coast by 11 p.m.
This breaking news item put in an appearance on The Guardian‘s website at 2:45 a.m. BST on their Thursday morning, which was 9:45 p.m. EDT in Washington. I thank Patricia C. for sharing it with us.
Migrants Clash With Police in Hungary, as Others Enter Croatia
In one of the worst bursts of violence that this tense refugee summer has seen, Hungarian riot police responded on Wednesday to rocks, taunts and small fires set by agitated migrants at the border crossing here with water cannons, head-cracking batons and both tear gas and pepper spray.
Although the word was quickly spreading along the migrant trail that heading toward Croatia from Serbia was a better bet than trying to push through the heavily guarded border into Hungary, hundreds of straggling refugees continued to turn up at the crossing here in hopes that Hungary would change its mind and let them through.
But Hungary did not change its mind — prompting a grim demonstration of what can happen when an unstoppable force meets an immovable object.
And the demonstration is likely to continue as more migrants and refugees try to escape war and poverty in their homelands and find a new life in a continent that cannot agree on what to do with them. Already, the migrant trail was adapting, finding new ways to reach western Europe.
This news item showed up on The New York Times website yesterday—and I thank Patricia Caulfield for finding it for us.
U.S.-led coalition’s progress against Islamic State ‘very modest’: Russia
The Russian Foreign Ministry said on Wednesday that the U.S.-led coalition against the Islamic state has little to show for itself, a year after its establishment.
“A legitimate question arises – what results have we got from sending into the region military forces of those countries, which are so fond of counting foreign aircraft overflights,” the ministry said in a statement.
“Unfortunately, the achievements of the coalition in the fight against (the Islamic state) look very modest.”
This Reuters article, filed from Moscow, showed up on their Internet site at 9:28 a.m. EDT on Wednesday morning—and the above four paragraphs are all there is to it. I thank Patricia Caulfield once again.
Nuclear Feud Moves to Tehran as Hardliners Try to Sink Deal
Efforts to kill the Iran nuclear deal are fading in Washington, but in Tehran they’re just heating up.
Throwing his weight behind the push is Hossein Shariatmadari, who has run the loyalist Kayhan newspaper since Supreme Leader Ali Khamenei appointed him editor-in-chief more than two decades ago with a mission to “guide opinion, reflect the truth and defend against foreign aggression.”
Shariatmadari says he and his fellow hardliners in parliament are doing just that by opposing the July accord with the U.S. and five other world powers, a deal that promises Iran sanctions relief in exchange for curbs on its nuclear program and closer inspections of key sites. Their argument is essentially the same as the pact’s critics in the U.S. — the other side can’t be trusted. What the U.S. really wants, he says, is the Islamic Republic’s demise, whether through military conquest or corporate colonization.
That pretty much sums up the truth of the matter. This Bloomberg news story appeared on their website at 6 p.m. MDT on Tuesday evening—and was updated about fourteen hours later. It’s another offering from Patricia Caulfield as well.
China Liquidated a Record $83 Billion in Treasurys in July
According to TIC, China, between its mainland and Euroclear holdings, sold a record $83 billion in Treasurys in the month of July. It also means that China has liquidated a whopping $184 billion notional in U.S. Treasurys in 2015.
And since the current Belgian liquidation has brought Belgium’s holdings to levels pre the Chinese buying spree, it likely means that China is all out of “Euroclear” holdings, and the residual Chinese holdings are only those held by China as of this moment, which according to TIC amounted to about $1,240 billion.
Finally, and here it the punchline: the sale of approximately $83 billion took place in July. This is before China announced its devaluation on August 11 and before, as we also first reported, it sold another $100 billion in Treasurys in August.
One can see why suddenly even PBOC official Jiao Jinpu said, earlier today, that the Chinese central bank sees “challenge” from FX reserves drop.
This interesting Zero Hedge piece from Wednesday afternoon is something I found on their Internet site last night.
China market: Ponzi scheme? — Jim Rickards
West Shore Funds’ Jim Rickards on the global implications of the Chinese markets and economic slowdown.
Jim packs a lot into this 2:36 minute video interview that happened over at the foxbusiness.com Internet site yesterday—and it’s a must watch for sure. I thank Ken Hurt for sending it along yesterday evening.
S&P Downgrades Japan From AA- To A+ on Doubts Abenomics Will Work
Who would have thought that decades of ZIRP, an aborted attempt to hike rates over a decade ago, and the annual monetization of well over 10% of sovereign debt would lead to a toxic debt spiral, regardless of how many “Abenomics” arrows one throws at it? Apparently Standard and Poors just had its a-ha subprime flashbulb moment and moments ago, a little over 4 years after it downgraded the U.S. from its legendary AAA-rating which led to angry phone calls from Tim Geithner and a painful US government lawsuit, downgraded Japan from AA- to A+. The reason: rising doubt Abenomics is working.
Apparently S&P has never heard of the Magic Money Tree theory concocted by economists who have never traded an asset in their lives, in which “countries that print their own currency” have nothing to fear about a 250% debt/GDP ratio. In fact, the only fear is that it is not big enough.
Expect the market’s reaction to be that since Abenomics has not worked yet, some nearly three years after it was launched then Japan will be forced to do even more of it, simply because it has no choice – it is now all in, the problem of course being that the BOJ is simply running out of stuff to monetize as even the IMF warned two weeks ago…
This Zero Hedge story was posted on their website at 6:21 a.m. EDT on Wednesday morning—and I thank Richard Saler for sharing it with us.
Chinese retreat from Australian property as capital controls bite
Chinese purchases of Australian property have dropped significantly in the past month, according to agents, as buyers struggle to shift money out of the country following Beijing’s move to tighten capital controls.
One Chinese agent said the latest efforts by the central government to avoid large capital outflows were having a “significant impact” on his business.
“It has affected 70 to 80 per cent of current transactions and some have already been suspended,” said the agent who asked not to be named.
The tighter foreign exchange rules are also set to impact the federal government’s relaunched Significant Investor Visa (SIV), which provides fast-tracked residency for those investing at least $5 million into Australia.
This news item appeared on the afr.com Internet site on Monday “down under”—and it’s another offering from Richard Saler.
Australian credit risk near highs despite PM switch
Yesterday saw Australian Prime Minister Tony Abbott lose his job to coalition rival and former investment banker Malcom Turnbull, a move which has caused little reaction in the credit market as Australian credit risk levels remains near the recent multi-year highs.
Australians are now led by their fourth prime minister in two years after Malcom Turnbull galvanised the country’s ruling coalition against Tony Abbott, who held the job for the last two years. This move puts an end to a long running leadership saga that threatened to plunge the country into further political instability given the recent slipping popularity of Abbott among the Australian electorate.
While the former investment banker is largely viewed as a positive step by businesses, the fact remains that Australia’s export dependent economy still faces its toughest challenge in a generation. Some commentators are now speculating that the country could face its first recession in 24 years.
This uncertainty is reflected in the CDS spreads related to Australian debt, which have barely moved in the wake of Abbott’s ousting.
This news story appeared on the markit.com website on Tuesday sometime—and it’s the final contribution of the day from Richard Saler, for which I thank him.
Kyle Bass: EMs will falter, next two years will be tough
Kyle Bass, Hayman Capital Management founder and managing partner, explains his confidence in sounding the alarm over emerging markets.
This 1:28 minute CNBC video interview with Kyle on Tuesday is definitely worth your while—and it’s something I found on Tres Knippa’s website yesterday.
Global banking giants join forces to make bitcoin technology mainstream
Nine of the world’s largest investment banks including JP Morgan and Goldman Sachs have partnered with New York-based tech start up R3CEV. The firms are looking to develop common standards using the same technology behind bitcoin.
The “blockchain” technology R3CEV is working on underpins the internet-based bitcoin currency. The controversial “crypto-currency” doesn’t have a central authority – its security comes from the network of all bitcoin users who share the same protocols, which together act as a distributed ledger to keep track of every transaction. Not having a central authority means that an internet-wide catastrophe would have to occur in order to compromise the integrity of the ledger.
The banks collaborating to make use of the blockchain technology in mainstream finance are JP Morgan, Commonwealth Bank of Australia, BBVA, Barclays, Goldman Sachs, UBS, Royal Bank of Scotland, Credit Suisse and State Street. They see it as a way of instantly updating payment ledgers and transferring money without relying on the trust of a central authority.
Many of those in the partnership have independently expressed interest in studying the much-hyped distributed ledger system, but this is the first time that a concerted effort has been made to work it into an industry-wide standard.
This very interesting news item showed up on the Russia Today website at 12:43 a.m. Moscow time on their Thursday morning, which was 5:43 p.m. in New York on their Wednesday afternoon—EDT plus 7 hours. I thank ‘David in California’ for sending it our way.
Ronan Manly: Like the old one, London’s new gold fix is manipulated and secretive
Manly reports, when he asked the ICE Benchmark Administration to make available to him the “publicly available procedures” that ICE had proclaimed would be used in determining the starting price of the new gold fixing, ICE instantly removed from its Internet site the assertion that the procedures would be “publicly available.” ICE even thanked Manly for pointing out that it had promised to disclose what it now doesn’t want known.
Manly also reports that ICE refuses to identify the rotating chairmen of the auctions used in the new fixing. As far as anyone is allowed to know, the rotating chairmen of the gold auctions could include the chairman of the Federal Reserve.
So much for the integrity and transparency that were promised when the London gold fixing system was changed six months ago.
Manly’s sensational [but very long] report is headlined “Six Months on ICE — The LBMA Gold Price” and it was posted on the bullionstar.com Internet site yesterday. I thank Chris Powell for sending this out in a GATA release.
The PHOTOS and the FUNNIES
The WRAP
One thing that continues to puzzle me is that with all the attention given to the level of registered and eligible gold and silver inventories, no mention is made about the most compelling feature of the COMEX warehouse data – the unprecedented turnover or movement of metal brought into or taken out from the silver warehouses.
Why I’m so puzzled is that the daily warehouse reports are closely followed, otherwise there wouldn’t be the explosion of commentary about the level of registered metal. Since the same warehouse report shows that day’s levels and movements in incredible detail, it’s not like the data are not being looked at, as it’s virtually impossible not to see the silver physical movement. I have a hunch as to why the frantic silver turnover is not the subject of wider discussion and would be interested in any suggestions you may have.
One thing that the daily COMEX warehouse statistics point out is the remarkable growth of silver inventories in one particular warehouse – the JPMorgan COMEX warehouse. I thought we were close to finished with the deposits in this warehouse with last week’s 3 million oz increase, but so far this week close to 2 million additional silver ounces have been added thru today. While the other five COMEX silver warehouses are down from peak holdings, as are the total COMEX silver inventories, only JPMorgan’s silver warehouse is at record levels of nearly 68.5 million ounces, or 40% of total inventories of 167.5 million oz.
JPM’s silver warehouse inventories have increased by nearly 20 million oz since April, as a result of the bank taking delivery of that amount in COMEX futures contracts starting with the March delivery period and continuing through Wednesday. What’s so remarkable about this is that I asserted JPMorgan was buying massive quantities of physical silver for maybe a year or so before the bank started taking delivery of metal in its own name this year on the COMEX.
Even though 20 million oz represents only 5% of the total amount I allege the bank has accumulated over the past four and a half years, this is the most transparent of the many different acquisition methods JPMorgan has employed. The fact that it has stopped delivery on—and then physically moved to its own COMEX warehouse—20 million oz over the past several months, has got to be the clearest confirmation possible that JPMorgan is acquiring physical silver. That this became transparent well after I alleged what the bank was up to, is something for which I’m extremely grateful. Saying they were acquiring silver after the COMEX deliveries and subsequent warehouse movements became clear, would not have been much of a stretch. — Silver analyst Ted Butler: 16 September 2015
I was somewhat surprised to see yesterday’s price action when I crawled out of bed late yesterday morning MDT. I would suspect that it might have been a New York-based hedge fund or two that didn’t want to be caught on the short side in their commodities portfolio when Yellen makes her announcement at 2 p.m. EDT this afternoon. But that’s just a guess on my part, as it could have been any number of reasons.
Gold broke above—and then was closed at—its 50-day moving average. Silver broke above—and also closed a hair above its 50-day moving average. Platinum has got a ways to go to get to its 50-day—and palladium closed above its as well. Copper closed up a couple of pennies, but the real jump was in WTIC, which was up almost 5 percent—and left it’s 50-day moving average in the dust in the process. I understand that today is options expiry for oil, so this rally may not last much longer. But with the 50-day moving average now in the dust, that may change. We’ll see. Here are the 6-month charts for the Big 6 commodities, so you can see yesterday’s damage for yourself.
I must admit that I’ll be just another spectator when the smoke goes up the chimney this afternoon. There’s no way to handicap this—and if asked to bet at this juncture, my ten bucks wouldn’t leave my wallet, gun to my head or not.
But whatever is decided, it’s rapidly turning into a Rubicon-type moment in economic, financial and monetary history. And looking at the position that the world’s central banks have put us in since the last remnants of the gold standard “temporarily” vanished in 1971, that’s about where the situation stands.
And as I write this paragraph, the London open is less than ten minutes away—and I see that gold is currently up a dollar or so, but basically did nothing in Far East trading on their Thursday. The other three precious metals are comatose as well—and all three are down a hair from their respective closes in New York yesterday.
Net gold volume is a bit over 15,000 contracts, with very little roll-over/switch activity—and silver’s net volume is sitting at 3,950 contracts, with no roll-overs to speak of, either. The dollar index hit its 95.14 Far East low tick shortly after 10 a.m. in Thursday morning trading in Hong Kong. It rallied up to 95.37 about 2:15 p.m. local time—and is heading lower and is down 8 basis points at the moment. All is quiet as London opens.
Looking back at Ted’s quote in today’s column—and keeping in mind the phenomenal gold eagle sales of the last three months, it’s not hard to imagine that much higher precious metal prices are in our future. And as Ted also said in him mid-week commentary yesterday—“It’s safe to say that the buyer of the $325 million of extra Gold Eagles over the past 3.5 months expects gold prices to move higher at some future yet undetermined point.” And it’s pretty much a certainty that whoever the buyers are of all this gold and silver, they are the ultimate insiders—and are positioning themselves accordingly.
At the New Orleans gold show in October of 2014, Alan Greenspan was asked where the gold price would be in several years time—and his answer was “higher“. When pushed further with the question of “how high“—his answer of “materially” should be kept in mind at this juncture.
I don’t know how you would define the word “materially” in that context, but to me—and knowing Alan’s gift for understatement—it meant that at some point, gold will be priced far beyond the reach of all but the richest consumers—and then, as others before me have said—“silver will become the new gold.”
I would guess that JPMorgan et al know that too—and are acting accordingly.
And as I post this on the website at 4:30 a.m. EDT, there still isn’t much going on in early London trading. Gold is still up a dollar or so, silver is now up a few pennies—and platinum and palladium are still down a dollar or two.
HFT gold volume is fast approaching 20,000 contracts—and silver’s net HFT volume is just over 5,400 contracts. The dollar index is down a bit more, lower by 18 basis points. It’s still deathly quiet out there—however there’s no doubt in my mind that this situation will probably change dramatically as the Thursday session rolls along.
So we wait some more—and I’ll see you here tomorrow.
Ed
The post Like the Old One, London’s New Gold Fix is Manipulated and Secretive appeared first on Ed Steer.