2015-09-22

22 September 2015 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

The gold price sold off a couple of dollars or so in the first two hours of trading in New York on Sunday evening—and spent until at, or shortly after, the noon silver fix in London trading in a tight range.  Then someone peeled about six bucks off the price, with the low tick coming at exactly 1 p.m. BST, which was 8:00 a.m. in New York and twenty minutes before the COMEX open.  The subsequent rally, such as it was, came to an end at the COMEX open—and the price wasn’t allowed to do much after that.

The high and low ticks are barely worth the effort of looking up—and the CME Group reported them as $1,139.40 and $1,128.70 in the December contract.

Gold finished the Monday session in New York at $1,133.40 spot, down $6.50 from Friday’s close.  Net volume was extremely light at only 74,000 contracts, so not much should be read into yesterday’s price action except for the fact that it was down.

It was pretty quiet in silver too, but only because “da boyz” were standing by to make sure that the rally going into the London open—along with the one that began after the sell-off at the noon London silver fix—got very far.

Silver’s high and low ticks were reported as $15.245 and $15.08 in the December contract.

Silver closed in New York yesterday at $15.215 spot, up 3.5 cents from Friday’s close.  Net volume was fumes and vapours in this precious metal as well, only 20,500 contract.

Platinum got hit for ten dollars the moment that trading began in New York on Sunday evening.  It recovered almost immediately—and then, like silver, it rallied quietly until shortly after trading began in Zurich—and then got rolled over, with the low tick of the day coming shortly after the open of the equity markets in New York on their Monday morning.  It bounced off that low a few times before rallying a hair into the close.  Platinum was closed down ten dollars at $970 spot.

Palladium tried to rally in the early going on Sunday evening in New York, but that attempt ran into the same seller minutes after the Zurich/London open.  It bounced off its $600 spot low tick a few times, but managed to rally smartly, starting just after the equity markets opened in New York.   That rally got capped at $617 spot shortly after 12:30 p.m. EDT—and after trading a bit lower, jumped back to $615 spot—and that’s where it closed, up 10 bucks from Friday.

The dollar index closed late on Friday afternoon in New York at 95.15.  It developed a slightly negative bias right at the open in New York on Sunday evening—and came close to the 95.00 mark on a couple of occasions—once around 12:30 p.m. in Hong Kong on their Monday afternoon and the other around 9:15 a.m. BST in London.  Then away it went to the upside, with the 95.97 high tick coming minutes before the 11 a.m. in New York.  Then after a two hour 20+ point down/up dip, it chopped sideways, closing the Monday session at 95.93—which was up 78 basis points from Friday’s close.

Here’s the 6-month U.D. dollar chart so you can keep an eye on the medium term price moves.

The gold stocks opened down—but then struggled higher as morning trading went along in New York.  The high tick came minutes before 1 p.m. EDT—and it was all down hill from there, as the HUI finished the day almost on its low tick, down 3.21 percent.

The silver equities followed a very similar path—and came within a whisker of unchanged for a minute, but then rolled over as well, closing just off their lows.  Nick Laird’s Intraday Silver Sentiment Index closed down 2.37 percent.

The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  With only five delivery days left in September, this lack of deliveries this late in the month is something that I found rather interesting.

The CME Preliminary Report for the Monday trading session showed that September gold open interest declined by 4 contracts, leaving 84 still open.  In silver, September o.i. fell by 24 contracts, leaving 232 left for delivery.

Much to my surprise, there was a withdrawal from GLD yesterday, as an authorized participant took out 114,932 troy ounces.  I would suspect that a purchaser bought the shares and redeemed them immediately, as nothing else explains this withdrawal in the face of the fact that, because of the recent price rally in gold, the ETF is probably owed some metal.  And as of 9:48 p.m. EDT yesterday evening, there were no reported changes in SLV.

For the second business day in a row, there were was no sales report from the U.S. Mint.

There was little activity in gold over at the COMEX-approved depositories on Friday.  Nothing was reported received, one kilobar was shipped out of Manfra, Tordella & Brookes—and 6,394 troy ounces were shipped out of Canada’s Scotiabank.

It was another big day in silver again.  Only 100,119 troy ounces were reported received—but 888,138 troy ounces were shipped out the door.  There was no activity at JPMorgan’s depository.  Most of the in/out activity was at Brink’s, Inc. and CNT.  The link to that is here.

There was no activity at all over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.

While on the subject of the gold kilobar depositories in Hong Kong, here’s a chart that Nick passed around on Saturday.  His comments on it were “19.14 tonnes of gold delivered on Friday.  Annualised, this is an additional 1,000 tonnes per years heading into Asian hands.  No one is talking about it in the news.“

I don’t have all that many stories for you today, so that will make your daily editing job a lot easier.

CRITICAL READS

Riding ZIRP Into the Doom Loop—–Monetary Central Planning’s Dead End

What the Fed really decided Thursday was to ride the zero-bound right smack into the next recession. When that calamity happens not too many months from now, the 28-year experiment in monetary central planning inaugurated by a desperate Alan Greenspan after Black Monday in October 1987 will come to an abrupt and merciful halt.

Why? Because Keynesian money printing is in a doom loop. The Fed’s ZIRP policies guarantee another financial crash, which will trigger still another outbreak of panic in the C-suites of corporate America and a consequent liquidation of excess inventories and labor on main street. That’s the new channel of monetary policy transmission, and it eventually leads to recession.

This upcoming recession, in turn, will prove beyond a shadow of doubt that in today’s financialized global economy you can’t manage the GDP of a single country as if it were isolated in an economic bathtub surrounded by high walls; nor can you attain domestic macro-targets for employment and inflation through the blunderbuss instruments of pegged money market rates and wealth effects levitation of the stock market.

Instead, the Fed’s falsification of financial asset prices simply subsidizes gambling in secondary markets; enables daisy chains of collateral to be endlessly hypothecated and re-hypothecated; causes vast misallocations and malinvestments of corporate resources, especially stock buybacks and other financial engineering; and sends money managers scrambling for yield without regard to risk, such as in junk bonds and EM debt.

This commentary, although on the longish side, is pretty short coming from David Stockman.  It was posted on his website on Saturday—and has been updated since he first posted it.  It’s certainly worth reading, as he rips Yellen a new one in no uncertain terms.  I thank reader U.D. for the first offering of the day.

Yellen Pause Ups Pressure on Draghi as Global Pessimism Mounts

The global economy caused Janet Yellen to pause for thought. It could spur Mario Draghi to act.

After the Federal Reserve chair held off from a U.S. interest-rate increase amid concerns that world growth will weaken, her counterpart at the European Central Bank may give clues on the need for further stimulus for the euro area. Draghi and other Governing Council members will make public appearances this week, while data releases will show whether the currency bloc is succumbing to, or shaking off, the gloom.

Like the U.S., the euro area is stuck with stubbornly low inflation. Unlike Yellen, Draghi can’t yet rely on domestic demand to lift prices. Whether because the Fed’s delay leads to a stronger euro, or because of the drag of emerging markets, economists see it as increasingly likely that the ECB will be called on its pledge to boost its 1.1 trillion-euro ($1.3 trillion) bond-buying program if needed.

Bill King had few absolute must read comments in yesterday’s edition of the King Report that I thought worth sharing:  “Central banks and solons’ fear that QE has become ineffective is palpable.“—“We have argued for years, that no matter how many schemes or how much easy credit a central bank produces, when it doesn’t work, academics, Keynesians and monetarists will grouse, ‘it isn’t enough.’—Also, we have regularly asserted that central banks and central bankers’ careers and life work are being systemically debunked and destroyed. So, they are concocting grander schemes to salvage their reputations and positions of power. Central bankers are near panic mode as their world is being savaged.”

And lastly—“The biggest risk now is that central banks have lost their mojo—and the Austrian purge and cleansing will commence with or without them. This suggests that they will not be able to generate a recovery. It will have to be organic – the product of massive structural reforms.  The reason that Yellen and her ilk keep braying that ‘inflation is too low’ is central banks and sovereigns dread a debt deflation. Solons desperately hope that central banks can inflate away the debt burden before the weight of unserviceable debt precipitates a depression and debt deflation.”

This Bloomberg item put in an appearance on their Internet site at 5:01 p.m. Denver time on Sunday afternoon—and was updated at 1 p.m. MDT on Monday.  I thank Patricia Caulfield for this story.  The story is worth your while, but the previous two paragraphs filled to the brim with Bill King’s comments are absolute must reads.

“U.S. Profit Growth Has Never Been This Weak Outside of a Recession”

On Sunday, in addition to numerous charts we have shown previously we used the latest Ray Dalio “in defense of risk parity” letter, we showed “what does Fed know that we don’t”, which was a simple one-word answer: recession. Specifically, Dalio looked at the performance of the All Weather fund which is highly correlated with 6 month forward world growth and concluded that the recent weak performance would suggest global growth six months from now will be running nearly 2% below its already reduced potential. In other words a global economic contraction, something Citi recently made its base case for 2016.

However, while we have been chronicling the U.S. economy’s slide into contraction for the better part of the past year mostly on the back of the collapse in the U.S. energy sector, what is odd is that the Fed only now admitted that not all is well in the land of central planning

But while in our previous post on this topic we focused extensively on what the economy itself is signalling, here is another reminder that the real life blood of the U.S. economy, corporate earnings, are about as bad as they were… in 2009. In fact as SocGen confirms,  “U.S. profits growth has never been this weak outside of a recession.“

This Zero Hedge piece appeared on their website at 9:29 a.m. EDT on Monday morning—and I thank Richard Saler for sharing it with us.

U.S. existing home sales fall more than expected

U.S. home resales fell more than expected in August, a cautionary sign for the U.S. housing market which has recently looked on stronger footing.

The National Association of Realtors said on Monday existing home sales dropped 4.8 percent to an annual rate of 5.31 million units.

Economists polled by Reuters had forecast a 5.51 million-unit pace of home sales last month. Sales were up 6.2 percent from a year ago.

Nationwide, the median home price fell slightly in August to $228,700. That was still up 4.7 percent from a year earlier, but left the year-over-year rate at its lowest since August 2014. Prices in the West were up 7.1 percent from a year earlier.

This Reuters article, filed from Washington, was posted on their website at 10:29 a.m. yesterday morning EDT—and I thank Patricia Caulfield for her second contribution to today’s column.

HMRC flexes new powers on contract and freelance workers in £5.5bn raid in the U.K.

Thousands of contractors and freelancers have become ensnared in a £5.5bn tax grab – aimed initially at wealthy tax dodgers – that allows HM Revenue & Customs to demand backdated taxes to be paid, in full, within a three-month deadline.

The allegedly underpaid tax can relate to periods of employment from many years ago.

HMRC was handed the powers last year to force wealthy investors accused of using “aggressive tax avoidance” schemes to pay their potential tax liabilities up front, instead of having to chase them through the courts.

Previously, HMRC was forced to pursue its missing billions in costly court battles, prompting the Government to approve the legislation in 2014.

Millionaire businesspeople and Premier League footballers are now facing tax demands of up to £10m after pouring money into questionable, tax-driven investment schemes.

Guilty until proven innocent!  This goes to show you just how desperate governments are for money these days.  This scary news item appeared on the telegraph.co.uk Internet site at 7:15 a.m. BST on their Sunday morning—and I thank U.K. reader Tariq Khan for bringing it to our attention.

‘Made in Germany’ lies in the ‘gutter’ after Volkswagen caught cheating

Volkswagen has suffered a shocking loss of credibility after conspiring to violate U.S. pollution laws and dupe customers on a systemic scale.

The scandal has once again exposed a culture of corrupt practices at the top of German export industry.

“We are facing a blatant abuse of consumer trust and a degradation of the environment,” said Jochen Flasbarth, the German state secretary in charge of pollution enforcement.

The scandal is intrinsically worse than the explosion of BP’s Deepwater Horizon drilling rig in the Gulf of Mexico in 2010. While BP and its contractors may have been negligent, VW appears to have engaged in a cynical plan to trick regulators in a wholesale breach of the U.S. Clean Air Act.

“It is profoundly serious. The accusation is that VW deliberately set out to mislead regulators with a cleverly hidden piece of software,” said Max Warburton from AllianceBernstein.

This Ambrose Evans-Pritchard offering showed up on The Telegraph‘s website at 8:06 p.m. on Monday evening BST, which was 3:06 p.m. in New York—EDT plus 5 hours.  It’s definitely worth reading.  This story is courtesy of Patricia Caulfield as well.

VW emissions scandal could snare other firms, whistleblower claims

The emissions-fixing scandal that has engulfed Volkswagen in the U.S. could extend to other companies and countries, one of the officials involved in uncovering the alleged behaviour has told The Guardian.

Billions of pounds have been wiped off the value of global car makers amid growing concerns that emissions tests may have been rigged across the industry.

“We need to ask the question, is this happening in other countries and is this happening at other manufacturers? Some part of our reaction is not even understanding what has happened exactly,” said John German, one of the two co-leads on the US team of the International Council for Clean Transportation (ICCT), the European-based NGO that raised the alarm.

Shares in Volkswagen fell by almost a fifth after the world’s second biggest car maker issued a public apology in response to U.S. allegations that it used a defeat device to falsify emissions data.

This very interesting news item was posted on The Guardian‘s website at 10:31 p.m. London time yesterday evening, which was 5:31 p.m. EDT.  I thank Patricia Caulfield for this news item.  It’s worth reading as well.

Refugee crisis: anti-quota E.U. leaders meet amid deadlock

Central and eastern European leaders strongly opposed to attempts by Brussels and Berlin to impose refugee quotas are meeting Luxembourg’s foreign minister in Prague to discuss their reaction.

Their meeting with Jean Asselborn on Monday comes before talks between E.U. leaders on Tuesday and Wednesday to try to decide on what already looks like a vain attempt to limit the flow of refugees and migrants into Europe.

After months of being consistently behind the curve in grappling with the E.U.’s huge migration crisis, interior ministers will hold a meeting on Tuesday, focused on the highly divisive issue of mandatory refugee sharing across the union. There will then be an emergency summit of leaders on Wednesday.

Asselborn’s meeting follows a letter from the Czech government, which wrote to Brussels arguing that compulsory quotas were illegal and that it could take the issue to the European court of justice in Luxembourg.

This story, filed from Brussels, put in an appearance on theguardian.com Internet site at 1:37 p.m. BST on their Monday afternoon, which was 8:37 a.m. in New York—EDT plus 5 hours.  It’s another contribution from Patricia Caulfield.

Tsipras savours election win but dark clouds are gathering over Greece

A huge storm, violent, dark and loud, rumbled through Greece, thunder and lightning skittering through the skies. After Sunday’s general elections it was not lost on many: Athenians saw in the tempest a perfect metaphor, an omen even, that the old was finally being washed away.

“People voted for change, for what they believed would be a fresh start,” Lefteris Pavlis, who owns a chain of eateries in the city centre, said on Monday. “They voted to give Alexis Tsipras a second chance, which says a lot about the state of the opposition.”

And yet the triumphant return to power of the young leftist and his Syriza party, pledging to overturn the old order of corruption, cronyism and vested interests, was not preoccupying many. What was uppermost was the daily grind of living.

“There are problems,” sighed Vangelis Evangelides, who sells nuts in the narrow streets beneath the ancient Acropolis. “Lots of problems. Will Syriza be able to solve them?” he shrugged. “Let’s hope they can.”

This Patricia Caulfield offering is also from The Guardian.  It appeared there at 8:45 p.m. BST yesterday evening London time.

Greece: the election is over, the economic crisis is not

The ratings agency S&P is still concerned about Greece’s economic prospects, noting that it remained to be seen whether Greece could emulate Ireland, Portugal and Spain in attracting investment from abroad.

The S&P report said debt relief was one way to put the “spectre” of Greece defaulting on its debts to rest, but added that this would be a difficult and potentially politically costly decision for European governments to make.

“One thing seems certain to us. Without greater confidence in a future for Greece within a currency union, co-existing with enough pro-growth policies to support better employment opportunities, the odds of failure remain as real as the possibility of success,” said Frank Gill, Standard & Poor’s credit analyst.

The danger is that the austerity conditions remain fully in force and debt relief is much less generous than Tsipras is hoping for. It will require an improbably strong and rapid recovery for Greece to meet the optimistic growth and deficit reduction targets contained in its current bailout deal. As a result, the likelihood is that they will be missed, leading to pressure for further budget cuts.

What does that mean? It means that Greece will be back in the headlines for all the wrong reasons before too long. There will be talk of the need for a fourth bailout and of possible default if Greece doesn’t get one. The election is over; the economic crisis is not.

This commentary was posted on The Guardian‘s website at 8:18 p.m. London time on Sunday evening—and it’s the second of three contributions in a row from Patricia Caulfield.

The lenders are the real winners in Greece – Alexis Tsipras has been set up to fail

Alexis Tsipras has snatched resounding victory from the jaws of July’s humiliating surrender to the troika of Greece’s lenders. Defying opposition parties, opinion pollsters and critics within his ranks (including this writer), he held on to government with a reduced, albeit workable, majority. The question is whether he can combine remaining in office with being in power.

The greatest losers were smaller parties occupying the extremes of the debate following the referendum. Popular Unity failed stunningly to exploit the grief felt by a majority of “No” voters following Tsipras’s U-turn in favour of a deal that curtailed national sovereignty further and boosted already vicious levels of austerity. Potami, a party positioning itself as the troika’s reformist darling, also failed to rally the smaller “Yes” vote. With the all-conquering Tsipras now firmly on board with the troika’s programme, new-fangled, pro-troika parties had nothing to offer.

The greatest winner is the troika itself. During the past five years, troika-authored bills made it through parliament on ultra-slim majorities, giving their authors sleepless nights. Now, the bills necessary to prop up the third bailout will pass with comfortable majorities, as Syriza is committed to them. Almost every opposition MP (with the exception of the communists of KKE and the Nazis of Golden Dawn) is also on board.

Of course, to get to this point Greek democracy has had to be deeply wounded (1.6 million Greeks who voted in the July referendum did not bother to turn up at the polling stations on Sunday) – no great loss to bureaucrats in Brussels, Frankfurt and Washington DC for whom democracy appears, in any case, to be a nuisance.

This commentary by Greece’s former finance minister Yanis Varoufakis was posted on The Guardian‘s website at 5:26 p.m. BST on Monday afternoon, which was 12:26 p.m. in New York.  It’s courtesy of Patricia C. as well.

Israel, Russia to coordinate military action on Syria: Netanyahu

Israel and Russia agreed on Monday to coordinate military actions over Syria in order to avoid accidentally trading fire, Prime Minister Benjamin Netanyahu said during a visit to Moscow.

Recent Russian reinforcements for Syrian President Bashar al-Assad, which regional sources say include warplanes and anti-aircraft systems, worry Israel, whose jets have on occasion bombed the neighboring Arab country to foil suspected handovers of advanced arms to Assad’s Lebanese guerrilla ally Hezbollah.

Briefing Israeli reporters after he met Russian President Vladimir Putin, Netanyahu said he had come with the goal of “prevent(ing) misunderstandings between IDF (Israel Defense Force) units and Russian forces” in Syria, where Assad is fighting Islamist-dominated insurgents in a civil war.

Netanyahu added that he and Putin “agreed on a mechanism to prevent such misunderstandings.” He did not elaborate. There was no immediate comment from the Kremlin.

This Reuters piece, filed from Novo-Ogaryovo in Russia, appeared on their Internet site at 11:39 a.m. EDT on Monday morning—and It’s another kind contribution from Patricia Caulfield.

China’s “Reverse QE” Could Top $1.2 Trillion, Barclays Says

As we began to detail late last year when falling crude began to pressure the accumulated petrodollar reserves of the world’s energy exporters, and as we and finally countless others have discussed in the wake of China’s shift to a new currency regime, FX reserve draw-downs serve to tighten global liquidity and work at cross purposes with DM QE. This creates a dilemma for Fed policy as hiking rates could accelerate outflows from emerging markets thus putting further pressure on already falling USD reserves. In other words, in today’s world, a 25 bps hike by the FOMC would be amplified and transformed into something much larger once it reverberates throughout the global financial system.

Assessing how large the cumulative outflow from China may end up being is important as it proxies for the expected drain on global liquidity (or at least part of the drain on global liquidity, as we must also consider the possibility that net petrodollar exports turn deeply negative in the face “lower for longer” crude). Previously, we suggested that outflows could eventually reach $1.1 trillion. That figure was derived from a look at BofAML’s assessment of the size of the RMB carry trade, which is now unwinding.

Needless to say, rampant speculation that China is targeting a much larger devaluation than that implied by the August 11 “one and done” reset only serves to put more pressure on RMB, necessitating still more reserve drawdowns. Of course each round of intervention sucks liquidity out of the system which means Beijing must offset the tightening with RRR cuts and liquidity injections. But the very act of cutting rates and injecting cash is perceived by the market as easing, which puts more pressure on the yuan and the vicious, self-feeding loop is perpetuated.

On Monday, we get a fresh take on all of the above courtesy of Barclays who says that before it’s all said and done, China’s FX reserves could take a hit on the order of $1.2 trillion.

This longish commentary put in an appearance on the Zero Hedge website at 8:14 a.m. EDT yesterday morning—and I thank Richard Saler for his second offering in today’s column.

The Gold Chronicles: September 15, 2015 Interview with Jim Rickards

*Cyber financial warfare attacks are the Precision Guided Munitions of future warfare

*Physical gold cannot be hacked

*World monetary system is described by financial elites as ”incoherent”

*Voices joining in cautioning catastrophic collapse of international monetary system include BIS, IMF, G20

*If the Fed cheapens the dollar, it will likely raise the price of gold

Jim’s comments run to the 40:00 minute mark of this 52:15 minute audio interview—and there’s 12 minutes of Q&A after that.  It was posted on the physicalgoldfund.com Internet site yesterday sometime—and I thank Harold Jacobsen for sending it along.  It is worth your time if you have it, especially his comments on the bullet points shown above.

Yet another massive gold delivery week on the SGE — Lawrence Williams

The latest week’s figures on Shanghai Gold Exchange withdrawals see that the Chinese demand for gold remains enormous.  It may have been exaggerated a little due to the prior week being a short trading one due to the Chinese holiday which kept the Exchange closed on the Friday and Saturday, but even so the latest week’s SGE withdrawals totalling 73.7 tonnes for the week ended September 11th is one of the highest single week figures on record – and brings this year’s total to date to just short of 1829 tonnes.  This is fully 241 tonnes higher than at the same time in 2013 when the annual SGE deliveries figure was a huge new record, and 498 tonnes higher than last year – the second highest ever year for SGE withdrawals.

Surely there is some connection here between the reported rundown in COMEX Registered gold stocks and the recent backwardation in gold in London – a truly unsusual occurrence – which has been noted recently?  Physical gold is very definitely flowing east – and by the SGE figures at an increasing rate.  Once again we re-iterate that whether SGE withdrawals are an accurate representation of Chinese gold consumption as some Chinese officials tell us they are certainly a terrific indicator of the continuing Chinese thirst for the yellow metal.

This short commentary by Lawrie showed up on this Internet site on Saturday—and it’s worth reading.

Time To ‘Warm-Up’ On Gold – UBS

UBS is more constructive on gold over a medium- to long-term horizon, especially relative to the street. In a note to clients, UBS highlights some relevant factors that they think investors should start to consider today, especially in light of last week’s dovish FOMC outcome

“First, UBS models suggest that US equilibrium real rates may settle lower versus previous cycles and versus current market expectations.

Second, we think that the bulk of the adjustment to the current and expected macro environment has already taken place.

And finally, some supply and demand fundamentals suggest that the gold market is nearing equilibrium,” UBS clarifies.

This tiny story appeared on the efxnews.com Internet site at 8:21 p.m. EDT yesterday evening—and I found it on the Sharps Pixley website.

Russian Central Banker Highlights Gold Manipulation – Nathan McDonald

“The world has come to a paradoxical situation in which the creditor countries are more concerned with the fate of the dollar than U.S. authorities themselves.

Thus, the evolution of the U.S. dollar’s reserve role in recent years has given ground to some quite pessimistic forecasts, based on rational economic theory. It’s no wonder that the number of people who have held assets in dollars and now wish to diversify them partly into gold — the traditional shelter from inflation and political adversity — is steadily growing.”

No, the quote above was not made by a “crazy” gold bug, it was not made by a doom and gloom forecaster that feeds off the fears of his readers. This comment was made by none other than a Central banker.

Before you jump up and down and get too excited, take a breath and realize who made this comment. The above statement was just a snippet from a long presentation given by Oleg V. Mozhaiskov, Deputy Chairman of the Bank of Russia.

It should be pointed out, dear reader—which the author cleverly neglects to mention—that this presentation by Mozhaiskov is from 11 years ago.  The speech in question, which McDonald links in his commentary without attribution, is from the gata.org Internet site—and is a GATA dispatch from June 4, 2004.  If it’s “news to you”—then fill your boots, but for most readers, it’s “ancient history” already.  It was posted on the sprottmoney.com Internet site on Monday sometime—and if you pass on it, I’ll certainly understand.

Barrick boss flies coach as top miner staves off junk rating

In his first interview since becoming sole president last month, Dushnisky said Barrick is 90% through a $3 billion debt-reduction plan and has had an “exceedingly high” level of interest for its US assets up for sale. While eliminating dividends is unlikely, headcount will continue to shrink, he said. Senior management isn’t escaping the cost cuts with Dushnisky flying economy class from Toronto to the Denver Gold Forum on Sunday.

Barrick has reduced the number of workers in Toronto to 150 from 370 in 2013. This month, Barrick told staff at its Salt Lake City office it will be closing in November, resulting in 110 job losses.

The corporate headcount numbers now “feel about right,” although there will probably be more job cuts at mines and in mid-level positions “that come between Toronto and the mines,” Dushnisky said.

The largest producer of gold in the world has all-in sustaining costs of $840 to $880 an ounce for this year, he said. Some 70% of those are operating costs and 30% of the latter comes from labor, he said.

The Denver gold show is by “invitation only”—and it ensures that the mining companies invited, along with the press that covers them, won’t be embarrassed by having to to deal with any questions about the price management scheme.  Most participants are pretty much bought and paid for—and their jobs depend upon them not seeing it.  This Bloomberg article was posted on the mineweb.com Internet site at 3:47 a.m. London time this morning, which was 10:47 p.m. in New York on Monday night.

Sea-Change in Gold Sentiment and Misconceptions on Russia — Lawrie Williams

We have already noted here on sharpspixley.com the huge physical gold withdrawal levels out of the Shanghai Gold Exchange (SGE) so far this year and high Indian gold import levels, although to be fair the drop in gold premiums of late in the latter country to a reported discount do suggest gold consumption there may be waning a little.  But regardless – even if Indian gold consumption slips in the second half of the year the combination of Chinese demand as expressed by the SGE figures, central bank buying – notably by Russia, China (which is now reporting gold reserve increases month by month), Kazakhstan and others – and evidence of strong coin and bar purchases in the USA and Germany in particular all suggest that gold could be at a turning point in that, whatever some gold analysts will tell you, there could be something of a significant gold supply/demand squeeze ahead. The figures out of all these nations noted above, plus significant demand elsewhere, do suggest global demand strongly in excess of global new mined supply – although the mainstream analysts appear to disagree, largely due to their interpretations of Chinese demand which is by far the biggest element involved in their calculations.

On the supply side, global new mined gold output may well be up again this year, but only by a small amount, and there has been some offloading out of the gold ETFs.  But this latter has been somewhat erratic and is hugely below the levels seen in 2013 which had a big adverse impact on the gold price that year, and in any case appears to be countered by a continuing fall in supplies from the scrap market due to lower gold prices.

There are arguments that gold supply/demand fundamentals have little short term impact on the gold price which is currently largely driven by speculative activity on the COMEX gold futures market.  But eventually fundamentals have to have an impact – and with the prospect of more and more of the gold trade moving to Asia, where the primary market drivers are in physical metal rather than futures, we could be beginning to see something of a sea change.  Gold’s recent price performance at least showing some limited strength, despite virtually every bank analyst of note predicting further sharp falls, could even be beginning to suggest a change in sentiment.  In the overall commodities sector gold and silver have been performing far better than most others so far this year – even in the U.S. dollar.  They have also performed better than most major stock indices.  Their prices have indeed fallen, but only by a small percentage in U.S. dollars – and have actually risen in most producer currencies.

This commentary was posted on the Sharps Pixley website on Sunday sometime—and it’s worth reading.

Koos Jansen: Monetary gold escapes international trade reports

International trade record-keeping rules exempt the reporting of movement of monetary gold, gold held or purchased by governments and central banks, gold researcher and GATA consultant Koos Jansen reports today. As a result, Jansen writes, gold acquired by the People’s Bank of China or other proxies for the Chinese government is almost certainly not showing up in international trade statistics.

This is more evidence that gold transactions by governments are being concealed for policy purposes.

Jansen also notes that the International Monetary Fund classifies gold as the highest reserve asset of central banks, above even the IMF’s own special drawing rights, because even the IMF recognizes gold as “the only financial asset without counterparty liability.”

As your secretary/treasurer long has maintained, gold is still at the center of the international financial system, despite its constant disparagement by financial elites and mainstream financial news organizations, and the location and disposition of national gold reserves are secrets far more sensitive than the location and disposition of nuclear weapons. For while nuclear weapons can destroy the world, gold and the rigging of its market can control it.

This very long commentary by Koos was posted on the bullionstar.com Internet site yesterday—and I must admit that I haven’t read it, so I have no opinion as to its accuracy.  It was embedded in a GATA release yesterday, along with a few introductory paragraphs from Chris Powell.

The Largest Private Hoard of Silver on Earth: Part I — Ted Butler

This is Part 1 of what is supposed to be a 3-part audio interview with silver analyst Ted Butler, by Dr. Jeffrey Lewis.  This first episode appeared on this website on September 10—and because Lewis’s work is not widely followed, this interview hasn’t had the ‘views’ it deserves.

When I spoke to Ted about it yesterday, he was surprised it was there, as it really wasn’t a formal interview per se. But Jeff, although telling Ted he was recording it, didn’t mention the fact that it was going to be posted on youtube.com.  However, here it is now—and it’s a must listen in my opinion.  I have no idea whether or not the good doctor will ever get around to posting the rest, but I’ll let you know if he does.

The PHOTOS and the FUNNIES

Here are the last three heron shots I took last Wednesday.  The first is from further away than I would like, but it shows the underside of the wing quite nicely—and the second one shows the down-beat—and the top of the wing, plus the ‘carapace’ of feathers on its back, which is another view of this bird that is hardly seen.  The last one is from some distance across the pond.  Note the fall colours, which are now well advanced as of the equinox yesterday.  Our first frost of the season is in progress as I write this.  Don’t forget the ‘click/double-click to enlarge’ feature that will bring them up to full screen size.

The WRAP

This [past] week, more than 8 million ounces of silver were physically shuffled in and out of COMEX warehouses as total inventories rose 2.2 million oz to 168.6 million oz, following mostly weeks of reductions. As is almost always the case, total movement vastly overshadowed any net increase or decrease in total COMEX silver inventories. Illustrating the lopsided nature of the physical turnover in COMEX silver inventories to changes in total inventories is that more than 25 million oz of silver were moved in the last three weeks on a net reduction in inventories of 2.6 million oz.

A big part of this week’s, as well as the past three weeks’ physical turnover in the COMEX silver warehouses can be traced to JPMorgan. I thought JPMorgan was done with depositing silver in its own COMEX warehouse with last week’s 3 million oz deposit based upon my back-of-the-envelope calculation figured on its previous futures deliveries, but an additional 3 million oz came into the JPM warehouse this week. It would be an understatement to say that JPMorgan is conspicuous in its COMEX silver activities, somewhat to my surprise. These guys do what they want, obviously.

JPMorgan’s warehouse is now, by far, the largest COMEX silver warehouse with nearly 70 million oz or more than 40% of total COMEX inventories; holding twice as much as the next largest warehouse and more than ten times as much as the now smallest COMEX warehouse, run by the Bank of Nova Scotia (which is somewhat surprising seeing what a large role Scotia has in COMEX futures and delivery activities).

Most remarkable is that JPMorgan’s warehouse was only restarted 4.5 years ago (why do so many things go back to April 2011?) and it has, therefore, become the largest holder of silver in that relatively short time. This fact, of course, was one the reasons I gave for my belief that JPM was the big accumulator of physical silver starting last year and its COMEX inventories have only grown since. — Silver analyst Ted Butler: 19 September 2015

[In the quote above, note the link in the last paragraph to Ted’s December 29, 2014 commentary headlined “The Perfect Crime“.  It’s certainly worth reading, even if you’ve read it before. – Ed]

It was another ‘nothing’ sort of day in the precious metals on Monday—and with low volume, it was easy for anyone with an agenda to move prices lower when necessary—and that’s pretty much the way it turned out.

But the ‘calm’ in the COMEX futures market belies the activity in the physical markets that is going on under the surface—and one wonders how long it will take before it’s allowed to manifest itself in the paper price.  One of these days the supply/demand fundamentals will matter for something, but it obviously wasn’t on Monday.

Here are the 6-month charts for the Big 6 commodities once again.

And as I type this paragraph, the London open is less than two minutes away.  Gold has been sold down to unchanged after being up a few bucks in Far East trading—and the silver price has been comatose.  Ditto for platinum and palladium.

Net gold volume is only 8,500 contracts—and net silver volume is barely over 2,000 contracts.  There’s nothing going on out there at the moment.  The dollar index, which bottomed out at around 95.78 at 10:15 a.m. Hong Kong time on their Tuesday morning, has now rallied into positive territory—and is currently up 7 basis points.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report—and unless there’s some untoward price action during the remainder of the Tuesday session both in London and New York, all the data from today should be in that report.

And as I post today’s column on the website at 5:10 a.m. EDT, I see that the rallies in both gold and silver that began at the London open, ran into “da boyz” very shortly after.  Gold is still struggling higher, up a dollar or so, but silver got slammed back below it’s Monday closing price in New York—and is still at its low of the day at the moment.  Platinum and palladium both got hit for about six bucks apiece—and they haven’t been allowed to recover either.

Net gold volume has doubled—and is just over 16,500 contracts at this moment—and silver’s net volume is approaching 4,200 contracts, so it’s obvious that these tiny rallies in both silver and gold did not go unopposed.  It’s the same old, same old that we’ve seen countless times before.

The dollar index, which rallied above the 96.00 mark briefly in the last hour leading up to the London open, got sold down about 20 basis points by 8:30 a.m. in London trading.  Another rally was attempted at that point, but it ran into a willing seller right at the 96.00 mark at exactly 9 a.m. BST—and is currently down 11 basis points on the day.

I haven’t the foggiest notion of how today’s trading will turn out, but I’m not overjoyed at what I see so far, as the precious metals are getting hit by the HFT boyz—and someone is trying to run the dollar index up.  So nothing will surprise when I check the charts later this morning.

An update at 5:35 a.m. EDT—The HFT boyz and their algorithms showed up in force in the COMEX silver market moments after I filed at 5:08 a.m. EDT.  In just a few minutes they had the price below $15 spot—and it’s currently sitting at $14.99.  Net HFT volume has now blown out to 7,500 contracts, up more than 50 percent in the last twenty minutes or so.  Here’s the chart…

And I note that gold is now getting the same treatment.  It’s obviously going to be an interesting Tuesday in the precious metal market.

I’m off to bed—and I’ll see you here tomorrow.

Ed

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