29 September 2015 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price traded sideways in a very tight range up until shortly after 2 p.m. Hong Kong time on their Monday afternoon—and at that point JPMorgan, along with the rest of “da boyz” and their algorithms showed up. The low of the day came shortly before 9 a.m. in COMEX trading in New York. The subsequent rally got capped shortly before London closed—and the price chopped quietly lower for the remainder of the day.
The high and low ticks were reported by the CME Group as $1,147.80 and $1,127.30 in the December contract.
Gold closed in New York yesterday afternoon at $1,132.10 spot, down $14.20 from Friday’s close. Despite the $20 move to the downside, net volume was just below 126,000 contracts. But gold’s 50-day moving average is still intact—and certainly volume will increase dramatically if/when it is broken to the downside.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson—and the sell-off that began at 2 p.m. Hong Kong time is oh-so obvious on this chart—and the decent volume continued right up until the 1:30 p.m. EDT COMEX close, which is 11:30 Denver time on this chart. Add two hours for New York time, the vertical gray line is midnight EDT—and don’t forget the ‘click to enlarge’ feature.
Of course it was silver that JPMorgan et al were really after—and they got it pretty good. “Da boyz” showed up in that precious metal at, or shortly after 2 p.m. Hong Kong time as well, but the low tick came with a spike down at 11:15 a.m. EDT. The price recovered about a nickel or so from there before trading almost ruler flat into the 5:15 p.m. close.
The high and low tick in that precious metal was recorded as $15.11 and $14.47 in the December contract, which was an intraday move of 64 cents, more than 4 percent—and on no news, as Ted Butler pointed out.
Silver finished the Monday session at $14.595 spot, down 53 cents from Friday. Net volume was very decent at 53,000 contracts.
The boyz and their algorithms showed up at 2 p.m. Hong Kong time as well, with the low of the day coming minutes before 4 p.m. in electronic trading, as they continue to pound platinum to new lows in the COMEX paper market. Platinum was closed at $917 spot, down a chunky $28 from Friday.
Palladium rallied right at the open of trading at 6 p.m. on Sunday evening in New York, but that wasn’t allowed to last for more than a few hours. Then at 2 p.m. Hong Kong time, just like the other three precious metals, JPMorgan and their algorithms showed up, with most of the price damage in that metal coming by about 12:30 p.m. in Zurich. The price recovered off its lows by a little, before trading sideways as well. Palladium was closed at $647 spot, down $15 from Friday.
The dollar index closed late on Friday afternoon in New York at 96.23—and when it opened on Monday morning in the Far East, it chopped around in a fairly tight range. The Far East low was around 96.11 shortly after the open—and the ‘high’ of the day—96.49—came a minute or so after 9 a.m. in New York. By 11:30 it was down to 95.93. It struggled higher from there for most of the remainder of the Monday session—and manged to close back above the 96.00 spot mark, but only barely at 96.01. The index closed down by 22 basis points. And as you’ve already figured out for yourself, the antics in the dollar index had zero impact on what was happening in the COMEX paper market as far as the precious metal prices were concerned.
And here’s the 6-month U.S. dollar index so you can keep up with the changes.
The HUI gapped down three percent at the open—and the tiny rally into the London p.m. gold fix hardly mattered, as the stocks headed lower from there until about 2:15 p.m. in New York trading. They rallied a hair, but rolled over in the last twenty-five minutes and came close to closing on their low ticks, as the HUI closed down a chunky 5.47 percent.
The silver equities follows a somewhat similar pattern—and Nick Laird’s Intraday Silver Sentiment Index closed lower by 5.48 percent.
The CME Daily Delivery Report showed that 3 gold and 93 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. The two short/issuers that mattered were the Japanese bank Mizuho with 61 contracts out of its client account—and JPMorgan with 21 contracts out of its client account as well. There were six different long/stoppers, but it should be noted that JPMorgan stopped 14 contracts for its own account. The link to yesterday’s Issuers and Stoppers Report is here—and you can check out the rest of the action there.
The CME Preliminary Report for the Monday trading session showed that gold open interest in the September delivery month declined by 3 contracts, leaving 3 left—and those are posted for delivery tomorrow, so gold deliveries are done for the month. Silver o.i. for September declined by 8 contracts, leaving 93 left—and those are out for delivery tomorrow as well.
There was another big addition to GLD on Monday, as an authorized participant added 124,506 troy ounces. Without doubt there will be some equally large movements out of this ETF after the price declines of the last couple of days. I’d guess that it’s just a matter of how much—and when.
But on the other hand, there was decent withdrawal from SLV, as an a.p. took out 858,665 troy ounces. Just as a matter of interest, there have been no deposits in SLV in September so far—only withdrawals. Seven in total—and the troy ounces involved are 8.54 million. Here’s another juicy real-world data point for the nut-ball lunatic fringe to go after—but, alas!
There was a decent sales day over at the U.S. Mint as 6,500 troy ounces of gold eagles were sold—1,000 one-ounce 24K gold buffaloes—along with 693,000 silver eagles.
There was almost no in/out activity in gold over at the COMEX-approved depositories on Friday. Nothing, once again, was reported received—and 31 kilobars [996.650 troy ounces] were shipped out of the Canada’s Scotiabank.
Of course, it was another barn-burner in silver, as 644,520 troy ounces were reported received—and 1,783,933 troy ounces were shipped out, including another 690,859 troy ounces from the quickly-vanishing stockpiles at the Scotiabank depository. JPMorgan was not involved in any of the in/out activity. The link to all that action is here.
And I was surprised to see that there was no in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.
Before hitting the stories today, the second quarter derivatives report from the Office of the Comptroller of the Currency [OCC] came out yesterday—and in Table 9 it showed that Citigroup’s outlandish derivatives position in silver has reverted back to what it normally was.
Q1 showed 53.0 billion worth of ‘white metal’ derivatives for Citi, along with $13.4 billion for JPMorgan. I’m sure that HSBC USA holds the remaining $9.3 billion worth, but because they’re no longer in the top five banks by total derivatives, their ‘white metal’ derivatives don’t show up on this table any more—but it’s a given that they hold the balance. Don’t forget that in the Bank Participation Report, there are ‘3 or less’ U.S. banks holding COMEX contracts in silver—and the same applies in the OTC derivatives market. It’s these three banks, end of story.
Ted Butler said that the huge increase in Citi’s ‘white metal’ derivatives position in Q1 was most likely a simple accounting error—a decimal point was probably put in the wrong place. But the nut-ball lunatic fringe went apoplectic over it.
Table 9 in the Q2 OCC report showed that Citi’s ‘white metal’ derivatives position is back to $5.1 billion dollars, but JPMorgan’s is now up to $20.4 billion. HSBC holds the remaining $9.8 billion worth.
As Ted said, there’s no way of telling whether these derivative positions are long or short positions, but he was quick to point out that, along with the rest of the data in the silver market, JPMorgan is the tallest hog at the silver derivatives trough as well.
The vast majority of the derivatives in the ‘white metals’ are silver related—and until JPM releases their iron grip on the silver market, prices are going to be solely dictated by them and the other three traders in the Big 4 category.
The link to the Q1 OCC Report is here—and Table 9 is on page 34. The link to the Q2 OCC Report is here—and Table 9 is on page 36.
I have a decent number of stories for you today—and I hope that you’ll find a few in here that are of interest.
CRITICAL READS
‘Danger Ahead’: Icahn Warns of Potential Looming Catastrophe in New Video
Billionaire financier and activist Carl Icahn warns that the financial markets are on a brink of yet another catastrophe.
Icahn is planning to release a video on Tuesday called “Danger Ahead” on his website, warning that gridlock in Washington, Federal Reserve monetary policy and irresponsible CEOs are creating a recipe for trouble.
“I’ve been worried for the last five, six months about the market and the economy and the dangerous spot that we’re in,” Icahn said.
“I did speak four or five times warning about the problems we have. I want to speak out now because — I know this may sound corny, I grew in the streets of Queens — I love this country and I feel strongly about the dysfunction going on in both Washington and the boardrooms of corporate America,” he said.
This news item put in an appearance on the newsmax.com Internet site at 10:14 a.m. on Monday morning EDT—and I thank Brad Robertson for today’s first story.
Caterpillar credit widens; U.S. High Yield bonds shunned
Slowing global demand for commodities hits Caterpillar’s operations, increasing credit risk. Deteriorating credit fundamentals in the HY space is turning ETF investors away.
* Caterpillar’s 5-yr CDS spread widens 23% as it announces impact of China slowdown
* U.S. high yield bond ETFs experience their biggest one day outflow since “black Monday”
* Tesco’s CDS spread is at a new five year high with other U.K. grocers following suit
This article was posted on the markit.com Internet site on Friday sometime—and I thank Richard Saler for sending it along.
Doug Noland: New World Disorder
The Federal Reserve is flailing and global currency markets are in disarray. Notably, the Brazilian real dropped more than 10% in five sessions, before Thursday’s sharp recovery reversed much of the week’s loss. This week the Colombian peso dropped 3.0%, and the Chilean peso fell 3.1%. The Mexican peso dropped 1.9%. The Malaysian ringgit sank 4.5% for the week, with the South Korean won down 2.7% and the Indonesia rupiah losing 2.2%. The Singapore dollar fell 1.8%. The South African rand sank 4.4% and the Turkish lira fell 1.4%. Notably, market dislocation was not limited to EM. The Norwegian krone was hit for 4.4%, and the Swedish krona lost 2.0%. The British pound declined 2.3%. The Australian dollar also lost 2.3%.
Apparently alarmed by the market’s poor reaction to last week’s no hike decision, the Ultra-Dovish Fed this week attempted to slip on a little hawk attire. It’s looking really awkward. On Thursday evening, chair Yellen did her best to backtrack from last week’s FOMC statement with its focus on global issues. The markets are doing their best not to panic.
Doug Friday evening commentary didn’t show up on his website until Saturday morning. I stuck it in my Saturday column around noon EDT, but in case you missed it, here it is again. It’s always a must read for me—and the above two paragraphs pretty much sum it all up.
Calgary’s Cenovus Energy says more layoffs coming in the next few weeks
Cenovus Energy is cutting 540 jobs over the next few weeks, and that includes some jobs that were supposed to be chopped in 2016.
Employees at pipeline builder TransCanada were informed this week that more job cuts are coming.
Calgary-based PHX Energy Services said earlier in September it’s releasing nearly half of its workforce, amounting to more than 500 employees.
Penn West announced last week that it let go 400 full-time employees and contractors — most of them working at company headquarters in Calgary.
ConocoPhillips Canada also reduced its workforce by about 15 per cent, or 400 employees and 100 contractors.
Nexen announced layoffs earlier this year, as did Talisman Energy.
And I’m sure the list is longer than that. This news item showed up on the cbc.ca Internet site last Friday evening MDT—and I thank Ottawa reader Lawrence Clooney for sending it to me late Saturday morning.
As Volkswagen Pushed to Be No. 1, Ambitions Fueled a Scandal
Martin Winterkorn, Volkswagen’s chief executive, took the stage four years ago at the automaker’s new plant in Chattanooga, Tenn., and outlined a bold strategy. The company, he said, was in the midst of a plan to more than triple its sales in the United States in just a decade — setting it on a course to sweep by Toyota to become the world’s largest automaker.
“By 2018, we want to take our group to the very top of the global car industry,” he told the two United States senators, the governor of Tennessee and the other dignitaries gathered for the opening of Volkswagen’s first American factory in decades.
One way Volkswagen aimed to achieve its lofty goal was by betting on diesel-powered cars — instead of hybrid-electric vehicles like the Toyota Prius — promising high mileage and low emissions without sacrificing performance. Ray LaHood, the transportation secretary, endorsed the company’s commitment to diesel that day, calling it an “ingredient in the recipe for our long-term energy security.”
Volkswagen’s unbridled ambition is suddenly central to what is shaping up as one of the great corporate scandals of the age. On Tuesday, Volkswagen said it had installed software in 11 million diesel cars that cheated on emissions tests, allowing the vehicles to spew far more deadly pollutants than regulations allowed. About 500,000 of the cars were sold in the United States, including Passats that rolled off the assembly lines in Chattanooga.
This news item appeared on The New York Times website on Saturday sometime—and I thank Patricia Caulfield for her first offering in today’s column.
Victorious Catalan separatists claim mandate to break with Spain
Separatists on Sunday won a clear majority of seats in Catalonia’s parliament in an election that sets the region on a collision course with Spain’s central government over independence.
“Catalans have voted yes to independence,” acting regional government head Artur Mas told supporters, with secessionist parties securing 72 out of 135 seats in the powerful region of 7.5 million people that includes Barcelona.
The strong pro-independence showing dealt a blow to Spanish Prime Minister Mariano Rajoy, three months before a national election. His center-right government, which has opposed attempts to hold a referendum on secession, has called the separatist plan “a nonsense” and vowed to block it in court.
This Reuters article, filed from Barcelona, showed up on their Internet site at 11:39 a.m. EDT on Monday. Patricia sent it to me at 6:16 p.m. EDT on Sunday evening, so it’s obviously been updated since it arrived in my in-box.
What CBS Edited out of Putin’s Interview
Putin: There is only one regular legitimate army over there, it is the army of the president of Syria, Assad. And, according to some of our international partners, he is facing opposition, but in reality, in life, Assad’s army is fighting terrorist organizations. You know better than me about the hearings that just took place in the Senate, where the military, Pentagon representatives reported before the senators about what was done by the US for the preparation of the battle group of opposition forces.
First they wanted to prepare 5-6 thousand fighters, then – 12 thousand. At the end it turned out that they prepared just 60. Only 4 or 5 are fighting with arms, and the rest fled to ISIS with American weapons.
This is first. Second, in my opinion military aid to illegitimate structures is not in accordance with the principles of international law and the statute of the United Nations. We support only legitimate government structures.
In this regard we offer cooperation to other countries of the region. We are trying to built a coordination structure. I have personally informed president of Turkey, the King of Jordan, Saudi Arabia. We informed the US. Mister Kerry, whom you mentioned, had a detailed conversation with our minister of foreign affairs Sergey Lavrov, and our military is in touch discussing this issue. We will be happy if we find a common platform for joint actions against the terrorists.
This very interesting, but not surprising news item was posted on the russia-insider.com Internet site early in the afternoon Moscow time on their Monday—and I thank reader ‘aurora’ for sharing it with us.
Obama and Putin present opposing views on Syria and Isis in blunt U.N. speeches
Vladimir Putin emerged from a rare face-to-face meeting with Barack Obama on Monday night, saying Russia and the US could find a way to work together on Syria, despite deep differences over the country’s leadership.
The US-Russian summit lasted 94 minutes, more than half an hour longer than planned, on the sidelines of the United Nations general assembly where the two leaders had traded barbs only hours before, particularly over the future of the Syrian leader, Bashar al-Assad.
Speaking to Russian journalists after the meeting, Putin said the two had found at least some common ground on the four-year conflict.
The Russian leader described the conversation with Obama as “very constructive, businesslike and very frank”. This story showed up on theguardian.com Internet site at 10:30 p.m. BST last night, which was 5:30 p.m. EDT in Washington. I thank Patricia Caulfield for this news item. The headline now reads “Putin says he can work with Obama despite trading barbs on Syria and Isis“.
Syria Crisis: Russia puts troops on the ground in the fight against ISIS
Uniformed Russian soldiers are now guarding checkpoints on roads around three military bases on the Syrian Mediterranean coast as Moscow plans its first attacks on the enemies of President Bashar al-Assad.
Russian drones – more than half flown by Russian ground controllers inside Syria – are now flying regularly over Palmyra, which may be the first Islamist target to be attacked, according to Syrian military sources. The Syrian army is reporting a vastly improved intelligence capability around the old Roman city, captured by Isis in May and used as an execution yard for civilians and captured government soldiers. Drones are being flown at night over the Isis-controlled deserts of eastern Syria.
Syrian troops are planning to recapture Palmyra if Russian aircraft can do sufficient damage to Isis around the city – perhaps within the next three weeks – but Syrian diplomats have been told by the Russians that Moscow’s actions depend on reaction to the speech which President Vladimir Putin makes at the United Nations on 28 September . Mr Putin is expected to present himself as the leader most capable of destroying Isis after the failure of the US and other western nations.
Five large Russian transport aircraft delivered further supplies to the military base adjoining Latakia airport on Saturday afternoon and civilians in the Mediterranean port say that at night the sky is alive with jet aircraft. The Russians have brought so much equipment into Syria – mostly for Syrian army use – that another base near Tartous has been turned into a military helicopter park, the third now being used by the Russian military.
This story appeared on the independent.co.uk Internet site at 8:55 p.m. BST on their Sunday evening, which was 3:55 p.m. in Washington—EDT plus 5 hours. I thank Patricia Caulfield for her second contribution to today’s column.
Saudi royal calls for regime change in Riyadh
A senior Saudi prince has launched an unprecedented call for change in the country’s leadership, as it faces its biggest challenge in years in the form of war, plummeting oil prices and criticism of its management of Mecca, scene of last week’s hajj tragedy.
The prince, one of the grandsons of the state’s founder, Abdulaziz Ibn Saud, has told The Guardian that there is disquiet among the royal family – and among the wider public – at the leadership of King Salman, who acceded the throne in January.
The prince, who is not named for security reasons, wrote two letters earlier this month calling for the king to be removed.
“The king is not in a stable condition and in reality the son of the king [Mohammed bin Salman] is ruling the kingdom,” the prince said. “So four or possibly five of my uncles will meet soon to discuss the letters. They are making a plan with a lot of nephews and that will open the door. A lot of the second generation is very anxious.”
This rather amazing news item, filed from Cairo, showed up on The Guardian‘s website at 4:14 p.m. BST on their Monday afternoon—and it’s courtesy of Patricia C. as well.
Asset managers slap health warnings on China funds in risk rethink
Fund managers are adding new warnings to China investment products in a bid to reduce their legal liability if regulators repeat the heavy-handed intervention in financial markets that rattled investors globally.
Hedge funds, asset managers and exchange traded fund (ETF) providers are scrambling to add the new disclosures to legal fund documents following watershed government actions in recent months that are now forcing managers to rethink China investment risk.
The legal measures illustrate the degree to which China’s market intervention is set to have a tangible long-term impact on investor confidence. Rather than shrugging off the actions of the government, fund managers see the intervention as a material risk going forward, lawyers and fund managers said.
“The government’s actions have shown their lack of confidence in the market mechanism and its ability to achieve stable levels reasonably swiftly,” said Sanjiv Shah, chief investment officer at London-based Sun Global Investments, which manages money for high net worth clients.
If that isn’t the pot calling the kettle black, I don’t know what is! The Plunge Protection Team rigging the U.S. stock, bond and currentcy markets—and the CME Group and JPMorgan et al rigging commodities and the precious metals. As Chris Powell said back in April 2008—“There are no markets anymore, only interventions.” This Reuters article put in an appearance on their website at 5:23 p.m. EDT on Sunday afternoon—and I thank Patricia Caulfield for this story as well.
The “Hard-Landing” Has Arrived: Chinese Coal Company Fires 100,000
The global commodity collapse is finally starting to take its toll on what China truly cares about: the employment of the tens of millions of currently employed and soon to be unemployed workers.
On Friday, in a move that would make even Hewlett-Packard’s Meg Whitman blush, Harbin-based Heilongjiang Longmay Mining Holding Group, or Longmay Group, the biggest met coal miner in northeast China which has been struggling to reduce massive losses in recent months as a result of the commodity collapse, just confirmed China’s “hard-landing” has arrived when it announced on its website it would cut 100,000 jobs or 40% of its entire 240,000-strong labor force.
Impacted by the slump in coal prices, the group saw its loss over January-August surged more than 1.1 billion yuan ($17.2 million) from the year before. In the first half of 2015, the group closed eight coking coal mines most of which had approached the end of their mining lives, due to poor production margins amid bleak sales.
Chaiman of the group Wang Zhikui said the job losses were a way of helping the company “stop bleeding.” The heavily-indebted company also plans to sell its non-coal related businesses to help pay off its debts, said Wang. The State-owned mining group has subsidiaries in Jixi, Hegang, Shuangyashan and Qitaihe in Heilongjiang province, which account for about half the region’s coal production.
This Zero Hedge news item showed up on their Internet site at 10:43 p.m. EDT on Sunday evening—and I thank Brad Robertson for this story.
Asia shares skid to three-week lows on China concerns, Wall Street drop
Asian shares skidded to three-week lows and the dollar sagged on Tuesday, after weak Chinese data rekindled worries about its fragile economy and led to sharp losses on Wall Street.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.7 percent in early trading, touching its lowest levels since Sept. 8.
Japan’s Nikkei stock index tumbled 2.4 percent.
Chinese industrial companies’ profits fell at their fastest rate in four years, official data showed on Monday, sparking fresh fears about the strength of that country’s economy ahead the final reading of China’s Caixin Purchasing Managers’ Index on Thursday.
This Reuters news item, filed from Tokyo, was posted on their Internet site at 8:57 p.m. EDT last night as the Far East opened on their Tuesday morning—and I thank Patricia C. for this one.
Confusing Inevitable with Imminent — Jeff Thomas
In the early 2000s, I began to advise friends and associates that much of the world would likely be entering a depression before the decade was out. In my belief, it would happen in stages, first with an initial mini-crash and recovery, but that, at some point, several years later, the recovery would prove to be a false one. The economy would remain in the doldrums. Then, a far bigger crash would take place and the world would be in a full-blown depression. As a hedge, I recommended that they buy gold, as gold would survive and retain value, as stocks, bonds, and even currencies went south.
I turned out to be correct on the timing of the initial crashes, but entirely incorrect on the timing of the second, greater crash.
I considered it possible that the major events could begin as early as 2010, but would more likely occur from 2012 on. That date has passed, and, although governments have consistently damaged their economies ever further, the house of cards, however shaky, is still standing.
Thankfully, I’m not alone in my inexact timing. Those investors and economists who have had decades-long records for accuracy in their prognostication have all been early in their predictions with regard to the major events that surround the coming crashes.
This must read commentary/infomercial appeared on the internationalman.com Internet site yesterday around noon EDT—and I thank Nick Giambruno for bringing it to my attention—and now to yours.
Switzerland probes banks over precious metals price fixing
Swiss competition authorities are investigating HSBC, Barclays, Deutsche Bank and four other banks on suspicion of price fixing in the precious metals market.
The Swiss Competition Commission (COMCO) “has today opened an investigation against two Swiss banks, UBS and Julius Baer, as well as against the foreign financial institutions Deutsche Bank, HSBC, Barclays, Morgan Stanley and Mitsui,” it said in a statement.
The probe follows investigations by the British and U.S. authorities into the metals markets and their benchmarks, and effectively brings the Swiss authorities into line with the European Commission’s competition investigation on the same topic.
COMCO said it had indications that the banks had “possibly concluded illegal competition defying deals” in the trade of precious metals like gold, silver, platinum and palladium.
As Ted said on the phone yesterday, unless the investigation includes the COMEX, the CME Group—and JPMorgan, this one will turn out to be a total waste of time just like the rest of them. This news item was posted on the telegraph.co.uk Internet site at 3:32 p.m. BST on their Monday afternoon, which was 10:23 a.m. EDT in New York. The first reader through the door with this story was Bill Houseman. Of course Zero Hedge took a crack at leading the parade on this story, as they had a piece headlined “UBS is About to Blow the Cover on a Massive Gold-Rigging Scandal” posted on their website at 3:22 p.m. EDT on Monday afternoon—and I thank Richard Saler for this one.
Glencore Implodes: Stock Plunges Most Ever, CDS Blow Out to Record Up on Equity Wipe-out Fears
As we added on Thursday, “what a junking of Glencore would do, is start a collateral demand waterfall cascade that the cash-strapped company simply would not be able to sustain.” So having laid out the straw man, Goldman next, very conveniently, explains just what would take for the Investment Grade trap to slam shut: “it would only take a c.5% fall in spot commodities prices for concerns about its credit rating to resurface.”
Of course, Glencore’s leverage to commodity prices was first explained in our March 2014 post, in which we said buying Glencore CDS is the best and easiest way to bet on a Chinese credit and commodity crunch.
Fast forward to Monday morning when those who bought into Glencore’s equity offering at 125p less than two weeks ago on September 16, are already down a whopping 43% (we won’t even bother calculating the loss since the company’s 2011 IPO), following the biggest daily drop in Glencore history, with the stock mauled some 27% at last check, on the heels of a note from Investec which said nothing Zero Hedge readers did not already know, but which is spooking everyone else into realizing that the commodity trading Titanic may well be sinking.
In the note Investec notes that “using a PE-based approach to evaluate equity value going forward, in proportion to debt, we note that the heavily indebted companies could see almost all equity value eliminated under spot conditions, leaving nothing for shareholders.
This Zero Hedge piece showed up on their website at 12:20 p.m. EDT on Monday afternoon—and it has obviously been updated since it was first posted, as Richard Saler sent it to me at 10:03 a.m. EDT yesterday morning. There was also a story about this on The Telegraph‘s website at 2:25 p.m. BST yesterday afternoon, which was 9:25 a.m. EDT. It’s headlined “Glencore shares obliterated after analysts warn they could be worthless“—and that story is courtesy of Richard Saler as well. Ted Butler says this is starting to smell like another Enron or AIG—and let’s not forget about LTCM while we’re dropping names here.
Chris Martenson fully endorses the gold manipulation story
With his latest commentary, “Buy Gold While You Still Can,” market analyst Chris Martenson fully endorses the market manipulation account of the gold market, citing documents and developments GATA has been citing for years — and does so without, of course, a single reference to GATA.
As Plato said — or maybe it was Yogi Berra — “First they ignore you, then they laugh at you, then they fight you, and then they go back to ignoring you, claiming that everybody knew all along what you were trying to tell them.”
Well, we long have understood that gratitude is not only rarer than gold but rarer than hair on GATA Chairman Bill Murphy’s head—and real teeth in your secretary/treasurer’s mouth, and GATA hasn’t been pounding away at this issue for 16 years in the hope of gratitude but rather for spite. We haven’t wanted the bastards to think that nobody was on to them.
But Martenson gets a “you’re welcome” anyway if he has helped even one more person understand the totalitarianism behind the world’s supposed markets. Part One of his commentary is posted at his Internet site, peakprosperity.com—but you have to sign up to read the second part. I found this gold-related news story in a GATA release yesterday, along with the above Chris Powell preamble. [The theft of intellectual property with no attribution is a wide-spread and incurable disease in the precious metals ‘fraternity’. Fortunately, I do not suffer from it—nor will I ever, as I’m happy to pass out acknowledgements to all contributors. I do not have a corner on wisdom as other precious metal ‘analyst’ purport to do. – Ed]
Bank of England investigated for rigging markets, covering up for banks
The Serious Fraud Office is investigating whether Bank of England officials told lenders to bid at a particular rate to minimise questions about the health of their balance sheets, thereby rigging emergency auctions at the onset of the financial crisis.
It is investigating whether banks and building societies were instructed to offer roughly the same amount of collateral so no lender would be singled out for overbidding, insiders said.
Over-pledging by an individual lender at the time of the auctions could have been seen as a sign of desperation, adding more turbulence to already volatile financial markets.
The central bank introduced the auctions in late 2007 after money markets had frozen, allowing lenders to swap a wider range of assets for funding and gain access to emergency liquidity.
The SFO, which launched the probe this year, is deciding whether it is in the public interest to pursue the case. The central bank action has been characterised as an attempt to spare the financial system more stress when it was on the brink of meltdown. A decision whether to proceed with charges is expected before the end of the year.
But, as Chris Powell said at the top of this story—“That’s only what central banks were created to do.” The above five paragraphs of this Financial Times story from yesterday was posted in the clear in this GATA release. The rest of the news item is for subscribers only.
Indian government may not ask questions about gold submitted for paperizing
In a bid to make the much-awaited gold monetisation scheme more attractive, the government may do away with the requirement of receipt of purchase for ancestral gold. The same rule may also apply to temple and trust gold, which is estimated to be in huge quantity.
The Union Cabinet had earlier this month approved the scheme. The idea behind mobilising gold held by households and institutions in the country is to put the precious metal into productive use.
The long-term objective is to reduce the country’s reliance on the import of gold to meet domestic demand.
According to the original draft scheme required a depositor to show the purchase receipt of gold besides filling up a KYC form before giving away their gold for melting. But tonnes of gold lying with Indian households has been passed on from generation to generation which does not have any proof of ownership.
This gold-related news item, filed from New Delhi, put in an appearance on the deccanherald.com Internet site yesterday sometime. This is another item I found over at the gata.org Internet site yesterday.
Latest SGE gold deliveries suggest enormous 2015 total of over 2650 tonnes! — Lawrence Williams
The huge level of weekly Shanghai Gold Exchange delivery numbers is becoming something of a repetitive news item and is perhaps losing its impact, but it shouldn’t. Week 37 (ending September 18) saw another 63 tonnes delivered out of the Exchange, which makes the year to date total 1,892 tonnes – 281 tonnes more than at end week 37 in the massive 2013 record year for Chinese gold consumption. If we extrapolate from the year to date figure this would suggest total SGE gold withdrawals for the year would come to an enormous 2,650 tonnes or higher – equivalent to over 80% of total global supply of new mined gold. With SGE deliveries usually rising late in the year in the long build-up to the Chinese New Year, which falls on February 8 next year, we certainly shouldn’t discount the likelihood of this level being achieved, or even bettered. There seems to be no slowdown happening as yet.
Overall, SGE deliveries started to pick up in early July (normally one of the weakest months of the year) and have averaged 62 tonnes a week since then. The figure for the week ended September 11 was the third highest weekly total ever.
These figures fly in the face of the same mainstream analysts’ estimates of Chinese demand this year, which they say is slipping, along with the nation’s declining GDP growth rate – although this is still currently estimated at over 6% . The disparity between the SGE figures and the analysts’ assessments of Chinese consumption is ever growing – and this year looks as though the difference by the year end may be as much as 1,500 tonnes or more.
Lawrie also takes Jeff Christian to task as well—and so he should. This commentary appeared on the sharpspixley.com website on Sunday—and it’s certainly worth reading. This story showed up in a GATA release as well.
What is China’s real gold demand? — Lawrie Williams
There is a huge disparity between what the Chinese Central Bank apparently sees as gold demand and that estimated/calculated by the global analytical community. The figures seem to be continually diverging and here we utilise known official data to draw our own conclusions as to what the real figures might be.
As a base we are assuming that supply to the market is roughly balanced by demand. There is an element of well substantiated data from Chinese and non-Chinese sources available which may give us a fairly good idea of the minimum supply levels potentially available to Chinese consumers. But given China’s non-reporting of direct gold imports this certainly does not present anything like a full picture.
First we have China’s domestic gold output which this year is estimated to reach perhaps 480 tonnes. Secondly we have net gold imports via Hong Kong. The Hong Kong Statistical office reports these on a monthly basis in a throwback to the Special Administrative Region’s former British-based bureaucracy, and net exports from this source to the Chinese mainland by the end of August totalled 485 tonnes, and given the tail end of the year usually produces some strong figures, a conservative estimate for this year’s total net gold imports from Hong Kong would be around 650 tonnes.
But there’s more. Switzerland exports gold both to Hong Kong and directly to mainland China, as does the UK. Recent changes in China’s permitted import routes for gold also mean that nowadays an important part of the gold exports from these countries does go directly to the Chinese mainland, bypassing Hong Kong altogether. For example, the U.K. started exporting gold directly to mainland China from April last year and through to the year end sent a little over 110 tonnes by this route. This year, after zero exports in January and February, it has exported around another 110 tonnes in the following four months to end June so it would not be unreasonable to assume that around 250 tonnes, perhaps more, will flow by this route into mainland China over the full year.
This is another very interesting gold-related story from Lawrie. This one showed up on his own personal website—lawrieongold.com on Monday sometime—and it’s very much worth reading as well. It’s courtesy of Patricia Caulfield—and it’s her final contribution to today’s column as well. I thank her on your behalf.
The PHOTOS and the FUNNIES
Here’s a photo of Sunday evening’s “super moon” total eclipse. The photo is courtesy of spaceweather.com—and the story surrounding it is linked here.
I was out with my camera west of Edmonton in the foothills of the Rocky Mountains on Sunday—and I saw two different groups of female mule deer. There was four in the first group below, but I cropped one out because it was well into the trees on the right. This year’s fawn looks slightly ridiculous with ears that appear too large for its body, but he’ll grow into them, I’m sure. Of course I had the wrong lens with me, so the quality of these photos suffered accordingly. The ‘click to enlarge’ feature is helpful here.
The WRAP
As I have mentioned every week for the past four and a half years, the turnover or physical movement of metal being brought into or taken out from the six COMEX-approved silver warehouses continued this week, as more than 6 million oz were so moved. That’s the equivalent of ten full container truckloads of silver being moved this week. And while sometimes a shipment of silver is physically transferred from one COMEX warehouse to another that is not usually the case, as most often there is no simple warehouse transfer involved; the silver comes in from sources outside the COMEX warehouse system and departs the warehouses for parts unknown. Annualized, the movement this week amounts to more than 300 million oz, or more than 35% of world mine production. Total COMEX silver inventories fell by 1.1 million oz to 167.5 million oz.
Once again, there was an increase in the silver inventories in the JPMorgan COMEX warehouse of more than 600,000 oz, which put those inventories beyond the 70 million oz mark, or almost 42% of total COMEX silver inventories. This delivery month JPMorgan has stopped (taken) 356 silver deliveries or nearly a quarter of the 1462 total silver contracts issued. Since March, JPMorgan has taken delivery of more than 3,800 COMEX silver contracts or more than 19 million oz in its own name and has moved all of that metal into its own warehouse (in the eligible, or cheaper to hold category).
Since the JPMorgan COMEX warehouse held no silver four and a half years ago, it is reasonable to assert that JPMorgan has acquired 70 million oz of silver over this time. Throw in the 100 million oz of Silver Eagles I claim JPMorgan bought from the US Mint over that time, as well as the 30 million in Canadian Maple Leafs I allege, and we are half way to the 400 million oz I claim JPM has accumulated without considering conversions from SLV shares to metal and skimming from the COMEX inventory movements which were the bank’s prime mechanisms for acquiring metal these past four and a half years. — Silver analyst Ted Butler: 26 September 2015
Without question it was a full frontal assault against all four precious metals yesterday, with “da boyz” and their algorithms showing up in Hong Kong trading an hour before London opened—and they weren’t taking any prisoners.
It should be pointed out that yesterday was the day that the large traders had to be out of the October futures contract, except those standing for delivery. The rest of the October futures contract holders have to sell, roll, or stand for delivery by the close of COMEX trading today. And as a matter of interest, as of this morning’s Preliminary Report, there are still 4,380 gold contracts open in October.
Even with the engineered price declines in gold on Friday and again yesterday, the gold price is still sitting above its 50-day moving average—and is a juicy target for JPMorgan et al. As far as I’m concerned it’s not a matter of ‘if’ they’ll take it out to the downside, but a matter of ‘when’ and by how much.
Silver was smashed far below its 50-day moving average—and was closed there was well, which was one of the reasons that volume in that precious metal was as high as it was. The Managed Money traders [plus traders in the other categories] were pitching longs and putting on short positions as fast as they could, as the Commercial traders, led by JPMorgan et al, were happy to accommodate them on the other side of the trade.
Platinum was closed at a new 6-year low, as ‘da boyz’ were out to get everyone yesterday—and it certainly looks like palladium’s rally has come to an end. Copper was manhandled as well, setting a new low for this move down—and coming close to its late August low tick. WTIC was closed back below its 50-day moving average, but not by a lot.
Here are the 6-month charts for the Big 6 commodities—and you can assess the damage for yourself.
So how long can this go on, you ask? Since there’s nobody to stop them, JPMorgan et al will continue to do as they please in the commodities market. As I’ve said before, the CFTC the CME Group are all complicit in this—and the miners aren’t going to do anything except quietly go bankrupt.
It’s obvious that the powers-that-be don’t want anyone rushing out of the paper side of the market—and are crushing Planet Earth’s producing class to keep the stock and currency markets from imploding.
How long this will continue is anyone’s guess, but the anecdotal evidence from the gold imports of China, India and Russia—combined with the relentless build-up of JPMorgan’s silver inventories and the manic turnover in that metal at the COMEX-approved depositories, along with the shenanigans in SLV, means that the current price management scheme only has finite distance to run until supply constraints finally overwhelm the market.
As I said on Saturday, there is an end game, but we just aren’t privy to it—and that will only come to pass when JPMorgan and the other big traders are instructed to stand back.
And as I type this paragraph, the London open is less than ten minutes away—and all four precious metals came under more paper selling pressure starting around noon Hong Kong time on their Tuesday morning. With the exception of platinum, the current lows in the other three precious metals came at precisely 2 p.m.
Gold volume at the moment is just over 19,000 contracts—and net volume in silver is just under 5,000 contracts. These are pretty decent volumes for this time of day, especially when you consider the fact of how thinly-traded and illiquid the market during this period. The dollar index has been chopping lower ever since trading began in New York at 6 p.m. on Monday evening—and is currently down 25 basis points.
Today, at the 1:30 p.m. EDT close of COMEX trading is the cut-off for this Friday’s Commitment of Traders Report—and I’m certainly hoping that all of the reporting week’s volume will be in it—including today’s. If there was any spill-over from last Tuesday’s down day that didn’t make it into last Friday’s report, it will certainly be in the new one coming out.
I’m off to bed a little earlier than normal, as I have a busy day ahead. And as I post today’s column on the website at 3:55 a.m. EDT, I see that not much is happening since the earlier sell-off—and all four precious metals are still down a bit on the day.
Net gold volume is just over 23,000 contracts—and in silver its right at 6,000 contracts. The dollar index began to rally shortly after London opened—and is currently down only 9 basis points.
After yesterday’s poundings in the precious metals, I wouldn’t be surprised if we had a repeat performance today, but there’s certainly no guarantee of that, as anything can happen. But with JPMorgan still in firm control, I’m afraid that ‘down’ is probably the safe bet here, although I’d love to spectacularly wrong.
I’m done for the day—and I’ll see you here tomorrow.
Ed
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