18 September 2015 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was comatose in Far East trading on their Thursday, then starting at 9 a.m. BST in London, it developed a negative price bias—and that lasted until the noon silver fix. Then it went back to its comatose status until Yellen spoke. The subsequent rally definitely ran into resistance from JPMorgan et al—and within fifteen minutes or so the excitement was pretty much done with, with the high tick price spike coming at 4 p.m. EDT. After that it traded flat into the 5:15 p.m. close of electronic trading.
The low and high ticks were reported by the CME Group as $1,114.70 and $1,136.00 in the December contract.
Gold finished the Thursday session in New York at $1,131.00 spot, up $11.80 from Wednesday’s close. Net volume was 132,000 contracts. which is certainly higher than I was hoping to see. Almost half the roll-overs were out of October into future months. Although October is no longer a traditional delivery month for gold, there’s enough open interest left to suggest that we’ll some decent deliveries when First Day Notice arrives ten days from now.
Here, courtesy of Brad Robertson once again, is the 5-minute gold tick chart. The COMEX open is 6:20 a.m. on this graph, as the ‘x’ axis is Denver time. There’s a decent amount of background volume leading up to the point where Yellen spoke—and once she did, the volume that really mattered occurred between noon and 1 p.m. EDT, which is between 10 and 11 a.m. on this chart. After that, the price/volume activity vanished. The vertical gray line is midnight EDT, add two hours for New York time—and don’t forget the ‘click to enlarge‘ feature.
The silver price action was a touch more interesting. Nothing much really happened until shortly after 9 a.m. in London—and then the price also developed a negative bias, with a rally beginning at 1 p.m. BST, which was twenty minutes before the COMEX open. From there it chopped unsteadily higher. The rally at 2 p.m. EDT was far more subdued, but it was just as obvious that “da boyz” showed up in this precious metal as well. The high tick came at precisely 3 p.m. in electronic trading—and then it got sold down until 4 p.m.—and at that point traded flat into the close.
The low and high ticks in silver were recorded as $14.77 and $15.275 in the December contract.
Silver closed yesterday at $15.14 spot, up only 21 cents on the day. Net volume was a hair under 41,000 contracts, which was far higher than I wanted to see considering the size of the rally.
The platinum price traded pretty flat in the Far East on their Thursday—and began to turn lower starting around the Zurich open. Like silver and gold, the price began to rally about twenty minutes before the COMEX open—and the 2 p.m. EDT rally got capped an hour later—and was sold off a bit from there. Platinum finished the Thursday session at $982 spot, up 12 bucks on the day.
Palladium edged lower through all of Far East and Zurich trading yesterday—and then met with selling at the COMEX open. The subsequent rally began shortly before 11:30 a.m. in New York—and the follow-on rally at 2 p.m. got capped at 3 p.m., just like platinum did. From there it got sold down for a one dollar loss on the day at $608 spot.
The dollar index closed late on Wednesday afternoon in New York at 95.32—and then chopped sideways in a very tiny range until it began to head south an hour before Yellen opened her yap. The decline continued at that point—and the 94.38 low tick was set minutes before 4 p.m. in New York. It chopped a bit higher going into the close, as the index finished the day at 94.54—down a very healthy 78 basis points.
Here’s the 6-month U.S. dollar index chart so you can put yesterday’s decline in some perspective.
The gold stocks opened lower—and after a brief up/down spike, chopped sideways into the Fed news. They rallied back into positive territory at that point—and then chopped sideways in a fairly wide range for the remainder of the New York trading session. The HUI closed up 2.50 percent.
The trading action in the silver equities was almost identical, as Nick Laird’s Intraday Silver Sentiment Index closed higher to the tune of 2.50 percent.
The CME Daily Delivery Report showed that zero gold and 112 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. I note that JPMorgan is screwing over its own clients once again, as all 112 contracts were issued out of their client account—and JPM were stoppers of 32 of those contracts in their in-house trading account. The other stoppers were the same old, same old—Canada’s Scotiabank with 57 in its in-house account—and Japanese bank Mizhuo with 16 contracts in its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Thursday trading session showed that gold open interest for September was unchanged at 91 contracts—and silver’s September o.i. was down only 3 contracts, leaving 369 still open, minus the 112 mentioned in the previous paragraph.
There were no reported changes in GLD yesterday—and as of 7:47 p.m. EDT yesterday evening, there were no reported changes in SLV, either. After three days of gains in both gold and silver, it should be expected that physical metal should be arriving to cover the shares purchased. I’m not overly concerned about the gold situation at the moment, but I will be interested in whether there is any silver deposited, or will the authorized participants, principally JPMorgan, short the shares in lieu of depositing the real deal.
Since yesterday was Thursday, Joshua Gibbons, the Guru of the SLV Bar List, updated his website with the goings-on over at the iShares.com Internet site as of the close of business on Wednesday—and this is what he had to report.
“Analysis of the 16 September 2015 bar list—and comparison to the previous week’s list: 2,481,172.1 troy ounces were removed (all from Brinks London)—and no bars were added or had a serial number change.”
“The bars removed were from: Russian State Refineries (1.2M oz), Jiangxi Copper (0.4M oz), Yunnan Copper (0.4M oz), and 6 others.”
“As of the time that the bar list was produced, it was overallocated 370.1 oz. All daily changes are reflected on the bar list.”
The U.S. Mint had a small sales report yesterday. They sold 2,500 troy ounces of gold eagles—500 one-ounce 24K gold buffaloes and, for the second day in a row, no silver eagles.
I just talked to Michael, over at mrcscanada.com here in Edmonton—and he had some news. Several weeks ago Sunshine Mint advised him that they were taking orders for December 3 delivery—and I mentioned that in my column. Now they’re back to not taking orders for anything. Over at A-Mark, 100 oz. bars are November 9—1 oz. rounds are November 17—and 10 oz. bars are December 3. Michael can get 100 oz. bars from his Vancouver supplier for two week delivery—and silver maple leafs are two weeks as well, at least for the moment.
Michael says that business at the store is mostly slow to very slow, interspersed with some busy days—and some very decent order sizes, mostly silver.
I’d dearly love to know what’s going on behind the scenes in the silver world. Despite the U.S. Mint having production capacity problems, with the lack of silver blanks being one of the issues, the big rush for retail silver has certainly backed off everywhere that I’ve seen. And based on that, you have to wonder what buying is going on behind the scenes at the corporate level that we’re not privy to, as delivery times are as stretched out as far as I can ever remember—and that was when the store was wall-to-wall buyers. I get the sense that the world is being sucked dry of physical silver in every form imaginable. Who else besides JPMorgan has got their snouts in the physical silver trough I wonder?
There wasn’t a lot of gold activity once again over at the COMEX-approved depositories on Wednesday. Nothing was reported received—and only 12,404 troy ounces were reported shipped out, with the lion’s share of that amount coming out of Canada’s Scotiabank. The link to that activity is here.
It was another big day in silver, as 601,107 troy ounces were received—and all of that went into JPMorgan’s vault once again. They’re currently sitting on 69.1 million troy ounces of the stuff. Of the 606,161 troy ounces shipped out, with the exception of 20,000 troy ounces, all of it came out of the CNT depository. There was also a big move from the Registered category back into the Eligible category at CNT as well—921,269 troy ounces. The link to that action is here.
And for the second day in a row, not a single gold kilobar was received or shipped out over at the COMEX-approved depositories in Hong Kong on their Wednesday.
Here’s a chart that Nick Laird passed around last night. It shows gold withdrawals from the Shanghai Gold Exchange vs. physical deliveries on the COMEX going back to and including 2008. The 2015 numbers are year-to-date figures. And if the CME withdrawals are to be believed, then the differences between the two exchanges is awesome to behold.
I have very few stories today—and I hope you’re as happy about that as I am.
CRITICAL READS
Federal Reserve declines to raise interest rates from record low
The Federal Reserve declined to raise interest rates from their record low of near-zero on Thursday, citing concerns that the still fragile world economy may “restrain economic activity” and further drag down already low inflation.
While some economists had expected a rate rise – the first since 2006 – recent stock market turmoil in China and fears that a slowdown in the world’s second largest economy could dampen the global economy appear to have put off the decision for now.
Janet Yellen, the Fed chair, said the central bank had maintained the federal funds rate at 0-0.25% – where it has been since the 2008 financial crisis – because of “heightened concerns” about a sharp slowdown in China and lower-than-desired inflation.
This story put in an appearance on theguardian.com Internet site at 8:24 p.m. BST on their Thursday evening, which was 3:24 p.m. in New York—EDT plus 5 hours. I thank Patricia Caulfield for today’s first story.
Fed Leaves Interest Rates Unchanged
The Fed’s decision, widely expected by investors, showed that Ms. Yellen and her colleagues still lack confidence in the strength of the domestic economy even as the central bank has entered its eighth year of strong efforts to stimulate growth.
Ms. Yellen said China’s economic troubles, and slower growth in other foreign economies, “bears close watching” and was a crucial reason the Fed chose to delay raising rates. But she added that the Fed’s concern should not be overstated. So far, she said, foreign developments had not altered significantly the Fed’s expectations for domestic growth.
“At times when domestic economic signals are finely balanced, global factors are likely to have more of an impact on U.S. monetary policy,” Eswar Prasad, a professor of economics at Cornell University, said in an email. Mr. Prasad described the decision as a “mixed blessing” for the global economy, preserving low rates but extending uncertainty.
The Fed decision to wait on a rate increase will probably be received with a measure of relief in Europe.
The above four paragraphs are from well into this New York Times story, as the story starts out suggesting that the decision was based almost entirely with what was happening inside the U.S. economy. But once you get into the story, the real reasons start to surface. I thank Roy Stephens for this news item.
In Thrall to the Federal Reserve
Perhaps no economic pronouncement in history has been anticipated, discussed, predicted, dissected, and reported like the Federal Reserve’s momentous decision today not to raise interest rates.
The outpouring of relief witnessed today by the financial press is nothing short of cathartic. Fear and anxiety, built up over months, is replaced by relief, even euphoria.
This is not to say the hype is unwarranted. On the contrary, the decision to raise interest rates even just 25 basis points would have represented nothing less than the end of an era, as one Bank of American analyst described (courtesy of Zero Hedge):
On Wall Street only 2 things matter: interest rates and earnings. Everything else is noise unless it impacts rates and earnings. No one impacts interest rates more than the Fed. So the … rate hike decision is a big deal.
Should the Fed decide to raise interest rates, it will be the first Fed hike since June 29th 2006. In the 110 months that have since past, global central banks have cut interest rates 697 times, central banks have bought $15 trillion of financial assets, zero interest rate policies have been adopted in the US, Europe & Japan. And, following the Great Financial Crisis of 2008, both stocks and corporate bonds have soared to all-time highs thanks in great part to this extraordinary monetary regime.
As noted above, a rate hike with a stroke ends this era.
This short commentary put in an appearance on the mises.org Internet site yesterday—and I thank P.T. Holland for sharing it with us.
Primary dealers rigged Treasury auctions, investor lawsuit says
The same analytical technique that uncovered cheating in currency markets and the Libor rates benchmark — resulting in about $20 billion of fines — suggests the dealers who control the U.S. Treasury market rigged bond auctions for years, according to a lawsuit.
The analysis was part of a 115-page lawsuit filed in Manhattan federal court on Aug. 26 by Quinn Emmanuel Urquhart & Sullivan LLP and other law firms. The plaintiffs built their case against the 22 primary dealers who serve as the backbone of Treasury trading — including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley — using data from Rosa Abrantes-Metz, an adjunct associate professor at New York University who has provided expert testimony in rigging cases.
Her conclusion: More than two-thirds of a certain type of Treasury auction appear to have been rigged. She found issues with other auctions, too.
“The only plausible explanation is that Defendants coordinated artificially to influence the results of the auctions in the primary market,” according to the complaint filed by the Cleveland Bakers and Teamsters Pension Fund and other investors.
This Bloomberg news item appeared on their Internet site at 3:00 a.m. Denver time on their Thursday morning—and I found it embedded in a GATA release.
David Stockman Video On The Global Financial System——It’s Booby-Trapped With Debt Bombs
David Stockman, former White House Budget Director, paints a grim picture of what is coming in the global financial markets. Stockman contends, “What happens when the financial breakdown comes is there is a great margin call. Everybody says ‘I want my money back and I’ll take your collateral if I don’t get it back. If I do take your collateral, I will sell it for whatever price I can get and cut my losses.’ So, this is truly a house of cards.
The whole pyramid of debt and what we call hypothecation and rehypothecation of financial assets, that is the real bubble. That’s what people don’t focus on enough. Sure, you can think of stocks that are a bubble, like Tesla and its current price of around $250, or the biotech index which is trading at hundreds of times earnings is crazy. What’s really crazy is all of this debt that has been created has been turned into collateral and borrowed against at a very high rate. The whole thing is very unstable and tottering as we speak. . . . Much of this collateralized credit that has been created is a confidence game. It is a daisy chain, and when the confidence breaks and they start to unwind the chain, the amount of debt outstanding will shrink. That will create tremendous broken furniture in the financial system.”
This 22:24 minute video interview with David Stockman is hosted by Greg Hunter—and it was posted on the David’s website on Wednesday. The first reader through the door with it was Roy Stephens.
How Underfunded Are U.S. Corporate Pension Plans?
To be sure, we’ve written quite a bit about both public and private pension plans this year. Most notably, we’ve chronicled the deplorable state of the pension system in Illinois, where a State Supreme Court ruling in May set a de facto precedent for pension reform bids across the country.
But while the focus – here and elsewhere thanks to America’s growing state and local government fiscal crisis – has been on the public sector, seven years of ZIRP has taken its toll on private sector pension plans.
We touched on this briefly in March when we noted that ECB QE could end up widening pension deficits dramatically and as Financial Times reported last month, “U.K. companies are paying less towards meeting their pension shortfalls than at any point since 2009, even as aggregate pension deficits reach their highest level in five years.”
For those wondering about the extent to which falling discount rates have served to create a giant, multi-hundred billion dollar underfunded liability for S&P companies, look no further than the following graphic from Citi’s Matt King which should come with a caption that reads: “You’re welcome pensioners — The Fed.”
This brief Zero Hedge piece from 6 p.m. on Wednesday evening is courtesy of Richard Saler—and the chart is worth the trip.
The typical U.S. household makes less than it did before the recession
The typical American household, six years after the Great Recession, is still worse off, according to a report released Wednesday.
The Census Bureau reported that median household income was $53,657 in 2014. That’s less than the 2013 median of $54,462, but not statistically different. What is of significance is that, when adjusted for inflation, the median household generated 6.5% less than they did in 2007, the year before the recession.
The declining living standards of the average American goes some way to explain why outsiders like Donald Trump and Ben Carson on the right, and Sen. Bernie Sanders on the left, are shooting up the polls for the presidential nomination.
The Census Bureau report also says that households with lower levels of education were more likely to remain in or move into a lower quintile than households with higher levels of education.
This article was posted on the marketwatch.com website at noon on Wednesday EDT—and I thank Ottawa reader Lawrence Clooney for sending it our way.
As cargo shrinks, Union Pacific layoffs underway in Omaha
Union Pacific on Wednesday began laying off employees in Omaha after the company in August announced that staff cuts would be coming.
The company is confronting a sharp slump in cargo volume.
Union Pacific in August said it would eliminate “several hundred” management jobs in Omaha and elsewhere through “terminations and attrition.”
At the time, U.P. said the staff cuts take “the necessary steps to align resources with current business requirements.”
This news story from Buffett’s home town showed up on the Omaha World-Herald website yesterday—and it’s the second contribution in a row from Lawrence Clooney.
Finger-Pointing, but Few Answers, After a Syria Solution Fails
By any measure, President Obama’s effort to train a Syrian opposition army to fight the Islamic State on the ground has been an abysmal failure. The military acknowledged this week that just four or five American-trained fighters are actually fighting.
But the White House says it is not to blame. The finger, it says, should be pointed not at Mr. Obama but at those who pressed him to attempt training Syrian rebels in the first place — a group that, in addition to congressional Republicans, happened to include former Secretary of State Hillary Rodham Clinton.
At briefings this week after the disclosure of the paltry results, Josh Earnest, the White House press secretary, repeatedly noted that Mr. Obama always had been a skeptic of training Syrian rebels. The military was correct in concluding that “this was a more difficult endeavor than we assumed and that we need to make some changes to that program,” Mr. Earnest said. “But I think it’s also time for our critics to ‘fess up in this regard as well. They were wrong.”
it underscores White House sensitivities about the widening Syrian catastrophe. With more than 200,000 killed in the civil war, a wave of refugees flooding into Europe, and Russia now flying in arms and troops, the president finds himself with a geopolitical and humanitarian mess that will most likely not be settled before he leaves office in 16 months.
This New York Times story from yesterday certainly falls into the absolute must read category, especially for any serious student of the New Great Game—and I thank Patricia Caulfield for sliding it into my in-box in the wee hours of this morning.
China Outflows Said to Surpass a Staggering $300 Billion in Under Three Months
Today, we get a fresh look at the numbers courtesy of SAFE which shows that on net, banks sold $128 billion in FX to Chinese non-banks in August. Nothing too surprising there, given that we already knew positioning for FX purchases for the banking sector as a whole dropped by $115 billion for the month.
As Goldman notes however, when you include banks’ forward books the picture worsens materially:
An alternative gauge that we believe is a closer reflection of the underlying trend of currency demand shows a significantly larger outflow of $178bn.
Today’s data at US$178bn on our preferred gauge of underlying currency demand (i.e., outright spot plus freshly-entered forward contracts) is significantly higher than any of [the previous] releases.
This means, as Goldman goes on to point out, that outflows are actually far worse than what’s indicated by simply looking at China’s reserve drawdown, as banks look to be shouldering some of the burden themselves:
We think this suggests that banks used their own FX position (i.e., without resorting to PBOC’s FX reserves) to absorb part of the outflow pressure.
So between July and August (inclusive of freshly entered forwards), outflows total around $261 billion.
But that’s not all.
This very interesting Zero Hedge article appeared on their Internet site at 10:17 a.m. Thursday morning EDT—and it’s another offering from Richard Saler.
Weekly allocation of American Eagle silver bullion coins lowered
The United States Mint lowered its weekly allocation Sept. 14 of American Eagle silver bullion coins to authorized purchasers to 809,500 coins. That’s a 19 percent decrease from the previous week’s allocation of 1 million coins, all of which were sold.
The authorized purchasers placed orders Sept. 14 for 573,000 of the 809,500 available coins, with the remainder recorded sold Sept. 15. The next weekly allocation will be announced Sept. 21.
The Sept. 14 and 15 sales brought September’s monthly sales total to 2,054,500 coins. Calendar-year 2015 sales reached 34,304,500 coins.
The West Point Mint is striking the American Eagle silver bullion coins as quickly as the U.S. Mint can secure sufficient planchets.
This silver eagle-related news item appeared on the coinworld.com Internet site on Tuesday—and I thank Tolling Jennings for bringing this article to our attention.
Marc Faber: Gold, Precious Metals Are Best Bet for Investors Amid Market Turmoil
Marc Faber, Editor and Publisher of the Gloom, Boom, and Doom Report, suspects that markets “may be at the end of a colossal asset inflation.”
He recommends gold and precious metals as “the least-bad asset class for investors to consider.”
This writer is convinced that the Fed would not sit by in such a circumstance and agrees with Peter Schiff that it will expand intervention.
Those three paragraphs posted above are all there is that’s gold-related in this news item that was posted on the newsmax.com Internet site at 6:22 a.m. on Thursday morning, but the embedded photo is definitely worth looking at. The ‘columnist’ who wrote this news item certainly has a high opinion of himself—and what he has to say. I thank West Virginia reader Elliot Simon for sending it along.
Platinum producer Atlatsa to shut two shafts in South Africa
Platinum producer Atlatsa said on Wednesday it aimed to close two high-cost shafts at its Bokoni mine in South Africa and had started talks with unions about potential lay-offs, the latest such moves in an industry hit by low prices.
Mining job cuts are politically a sensitive issue in South Africa ahead of local elections next year. The government and unions agreed a broad but non-binding 10-point pact in August aimed at stemming mounting lay-offs in the face of falling prices and soaring costs.
Bokoni is a joint venture between Atlatsa and Anglo American Platinum, which last week sealed a deal to sell its costly and labour-intensive Rustenburg operations west of Johannesburg to Sibanye Gold.
They could shut the entire mine down and it wouldn’t make a dollar’s worth of difference to the price, as supply and demand have zero to do with it. These guys are as dumb as the rocks they mine. This mineweb.com story appeared on their Internet site at 11:30 p.m. London time last night, which was 6:30 p.m. in New York.
Gold is so cheap, it’s being given away
It is a sign of the beleaguered state of the gold sector that people are effectively giving the stuff away for nothing.
Consider Randgold’s agreement to form a 50/50 joint venture with AngloGold Ashanti, aimed at redeveloping the Obuasi mine in Ghana, which AngloGold largely closed last year. Details weren’t disclosed, but it doesn’t appear Randgold is paying anything upfront for the mine, which offers 5.3 million ounces of reserves. Instead, the pair will share development costs and rehabilitation liabilities.
Mark Bristow, chief executive of Randgold, seems to have parlayed his reputation as the best operator in the business into a cut-price option on a sizable gold mine. AngloGold has already laid off thousands of workers at the loss-making mine. Near-term, Randgold need only shell out a few million to study if the mine can be overhauled and mechanized.
The above three paragraphs are all there is available to read in the clear in this story. The rest is behind a subscription wall over at The Wall Street Journal. It was posted there yesterday—and I found it on the gata.org Internet site.
Alasdair Macleod: Gold remains money
The welfare states’ denial of this simple fact, and their insistence that their own inflating currencies are superior, is leading them towards economic disaster. They have committed themselves to the destruction of a basic human value, which they will never suppress. Asian governments, many of which would undoubtedly like to take this route, are forced by their people to be more realistic. Even government officials privately acknowledge the superiority of gold, and in the case of China they have actually encouraged their population to accumulate it.
This matters to us all, because the process of wealth creation is declining in the west, and accelerating in Asia. Furthermore, there are four billion Asians, the majority of which are either directly or indirectly involved in the economic union of the Shanghai Cooperation Organisation, and who have overwhelmingly become the world’s savers and wealth creators.
Government currencies come and go while human values endure. The adaptability of the human race will allow it to continue to use whatever is most convenient for day-to-day transactions. But the days of ordinary people in the welfare states blindly accepting fiat currencies as valid for storing the product of their labour, however temporary, are probably drawing to a close. The impossibility of our debt obligations, including the net present value of future welfare commitments, is catching up with us, and the requirement to debase these obligations is becoming paramount.
When this becomes obvious to growing numbers of the public in the welfare states, as it is bound to do, they will switch from no opinion on gold to having one. The derisory term for gold-bugs will disappear as their prescience emerges, and the price of physical metal measured in government currencies will reflect more properly its unique monetary quality.
When Alasdair’s hot—he’s hot! This well written article appeared on the goldmoney.com Internet site yesterday sometime—and it’s something else I found on the GATA website. It’s worth reading.
The PHOTOS and the FUNNIES
Here’s a photo that subscriber Veronica Shelford sent my way earlier this week. It’s a picture of one of her hummingbird feeders at her and her husband’s bed and breakfast on the island of Thetis, which is one of the gulf islands between Vancouver and Vancouver Island. These are all Rufous hummingbirds—and here’s what she had to say about them—“we get hundreds if not thousands of hummers coming through between March and June. At the height of the season they are going through up to 14 litres of sugar water a day (you can get a tad tired of it by June…) At dusk it’s just a scrum – they forget about protecting “their” feeder and you can get three or more of them sharing a single hole. It’s like walking through a [bee] hive, out on the deck. Just had to set the camera on a tripod, focus it, and keep pumping the shutter bulb until the best one came along. We’ve used this shot for a postcard to have in our B&B.“
The WRAP
The statistics from the U.S. Mint through [Tuesday] continue to indicate surging sales of Silver and Gold Eagles, to the point of taxing Mint production capacity to its limit. Sales of Silver Eagles have been close to production/blank supply capacity for 4.5 years, I believe because of the buying by JPMorgan, to the tune of 100 million coins. But it is the surge in sales of Gold Eagles that interests me today—Wednesday.
For the 24 months (2 years) starting in June 2013 and ending in May 2015, the U.S. Mint sold roughly 40,000 oz of Gold Eagles each month. Starting in June of this year, sales of Gold Eagles exploded by a factor of three. In the past 3.5 months (thru Tuesday), the U.S. Mint has sold Gold Eagles at the rate of more than 120,000 oz per month. Another way of expressing this is to say that the U.S. Mint has sold 280,000 more ounces of gold in the form of Gold Eagles over the past three and a half months than it sold on average for the twenty four previous months.
While there have been continuous reports of extreme tightness and actual shortages in many forms of retail silver, there have been no reports (that I am aware of) of surging retail demand for gold. Certainly I am aware of no big increase in premiums on gold coins or increases in delivery delays as are apparent in silver. Yet there is no doubt that the U.S. Mint sold the amount of Gold Eagles it reported. So, how can this be? How can there be no apparent rush on Gold Eagles by the retail investment public, yet there be a documented “extra” 280,000 oz of Gold Eagles sold in just 3.5 months?
The answer is simple – the Gold Eagles are being sold alright, just not to the retail public. And if the gold has not been sold to the public, then it was sold to someone big. It was this same reasoning, no strong retail buying demand over most of the past 4.5 years that led to my conclusion that JPMorgan was buying the snot out of Silver Eagles. Was it JPMorgan buying the extra 280,000 oz of Gold Eagles over the past 3.5 months? I think that is the high probability bet, but it could just have easily been some other entity, like Goldman Sachs. The exact who is less important than someone big bought the extra Gold Eagles. — Silver analyst Ted Butler: 16 September 2015
Well, the Fed news came and went with hardly a whimper, but it was obvious that the precious metal weren’t allow to get far in the aftermath of that event. It’s far too soon to judge the future in the precious metal markets based on yesterday’s price action alone—and we’ll have to wait until next Friday’s Commitment of Traders Report to see how bad the damage was. However, with the cut-off for that report being Tuesday at the COMEX close, we’ve still got almost three full trading days left between now and then—and anything can happen.
Here are the 6-month charts in the Big 6 commodities once again. The 50-day moving averages have been broken to the upside in gold, silver, palladium, copper and crude oil—and we’ll have to await developments as the days progress. It’s a certainty that the Managed Money traders are covering shorts and going long at this juncture—and JPMorgan et al are doing the opposite, as they game them for profit and price management purposes—mostly the latter.
And as I type this paragraph, London has been open about five minutes—and I note that all four precious metals are down on the day from Thursday’s close in New York, with platinum and palladium down the most. Net HFT gold volume is 21,000 contracts—and in silver it’s 4,610 contracts. The dollar index hasn’t been doing much—and is currently up 3 basis points as of this writing.
Today we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday—and as I mentioned in my Wednesday column, I am expecting some improvement in the Commercial net short positions in both gold and silver. But based on the big rallies on equally big volume both on Wednesday and Thursday, today’s report is already “yesterday’s news”. But I will go through the motions in my column tomorrow, even though it means nothing.
As more and more silver pours into JPMorgan’s vaults—and as the silver and gold eagles and maple leafs continue to get snapped up at the source—and with the private mints’ delivery times now measured in months, one is left to wonder how soon this will all be manifested in the price. Like Ted, I’m watching this all unfold with a morbid sense of fascination. But as he’s stated on many occasions, the latest being his column on Wednesday, these price management schemes always end suddenly. I wholeheartedly agreed with that opinion—and when the blessed event does finally occur, you’ll either be all the way in, or all the way out.
And as I post today’s column on the website at 4:25 a.m. EDT, I see that the gold price has crept back to unchanged in the ninety minutes that London has been open. Silver and platinum are still down—and palladium is creeping back towards the unchanged mark as well. Net HFT gold volume is now at 26,500 contracts—and silver’s net volume is up to 6,100 contracts. The dollar index rolled over just before noon Hong Kong time on their Friday morning—and is currently down 25 basis points.
That’s all I have for today. As for the remainder of the Friday session, I haven’t a clue. But as is usually the case, all the price/volume action that matters will occur during the COMEX trading session in New York.
Have a great weekend. I’m off to bed—and I’ll see you here on Saturday.
Ed
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