01 October 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price wandered quietly lower through all of Far East and early London trading on their Wednesday—and with the exception of a quick down/up dip at the noon London silver fix, not much happened until 1 p.m. BST. The HFT boyz and their algorithms appeared—and the low tick of the day came at 10:30 p.m. in New York, thirty minutes after the London p.m. gold fix was done for the day. From its low, the price began to chop quietly higher until a few minutes after the COMEX close—and from there it was sold down quietly until trading ended at 5:15 p.m. EDT.
The high and low ticks were reported by the CME Group as $1,127.70 and $1,110.80 in the December contract.
Gold finished the Wednesday session in New York at $1,115.30 spot, down another $12.40 from Tuesday. With the 50-day moving average being broken to the down-side, net volume was pretty chunky at a bit over 152,000 contracts.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson—and you can see the big jump in volume starting about twenty minutes before the COMEX open, which is 05:00 on this chart. From that point on, there was decent volume right up until minutes after the 1:30 p.m. EDT COMEX close. The vertical gray line is midnight in New York, add two hours for EDT—and the ‘click to enlarge‘ feature is more than useful here.
The silver price traded strangely in New York yesterday morning—and if you’re looking for an answer as to why, the only possibility is that it had something to with book-squaring at the end of the third quarter. Anyway, the price traded in a very tight one percent range everywhere on Planet Earth right up until the time it got smacked in a down/up move that came just minutes after 9 a.m. in New York. Then it had an equally strange up/down move that began at precisely 10 a.m. EDT—and was all over and done with by 10:30 a.m. From there, the price traded pretty flat for the remainder of the Wednesday session.
The low and high ticks, which came within 70 minutes of each other, were recorded as $14.435 and $14.725 in the December contract.
Silver closed on Wednesday afternoon at $14.515 spot, down another 12.5 cents on the day. Net volume was decent at a hair under 34,000 contracts.
Here’s the New York Spot Silver [Bid] chart so you can see the COMEX price action in more detail.
After trading pretty flat until the Zurich open, the platinum price rallied to its high tick by 11 a.m. Europe time. Then about half an hour before the COMEX open, a wiling seller showed up—and the low of the day was in by minutes after 9 a.m. in New York. The subsequent rally got dealt with by the COMEX close—and that was pretty much it for the day. Platinum finished the Wednesday session at $906 spot, down an even 10 bucks from Tuesday.
After chopping sideways until shortly after 12 o’clock noon Hong Kong time, palladium made several rally attempts that all got dealt with in the usual fashion. Then starting at 1 p.m. Zurich time, sellers appeared, with low tick coming at 1 p.m. in COMEX trading. The price rallied a dollar or two from there, but wasn’t allow to go further—and it basically traded sideways for the remainder of the day. Palladium closed at $651 spot, down 5 dollars.
The dollar index closed late on Tuesday afternoon in New York at 95.90—and traded sideways until about 12:45 p.m. Hong Kong time on their Wednesday afternoon. Then away it went to the upside, with the 96.41 high tick coming at 11:30 a.m. EDT in New York. It chopped quietly lower for the remainder of the day, finishing the Wednesday session at 96.28—up 38 basis points from Tuesday’s close.
Here’s the 6-month U.S. dollar index so you can follow the mid-term pricing patterns more closely.
The gold stocks opened down a percent or so—and then began to rally unsteadily, hitting their morning highs around 11:15 a.m. in New York trading. They got sold back down into negative territory shortly before 1 p.m.—but once the COMEX close was in at 1:30 p.m., the stock rallied anew, and closed on their absolute high ticks of the day. The HUI finished the day up a very decent 3.05 percent.
The trading pattern for the silver equities was very similar, except that they didn’t fall back into negative territory after their 11:15 a.m. highs. They began to rally anew starting just before the COMEX close—and Nick Laird’s Intraday Silver Sentiment Index closed higher by 2.58 percent.
When I see counterintuitive moves in the precious metal equities like this, I’m never quite sure if it’s in-the-know traders buying them because they are aware that the metals are about to put in a big rally—or if it’s “da boyz” loading the boat in preparation to blast both metals, along with their respective shares, in a major down-side blow out. Or maybe it’s just my overactive imagination working overtime once again. We’ll find out soon enough I would think.
The CME Daily Delivery Report for Day 2 of the October gold deliveries showed that 5 gold and 9 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in October dropped by 261 contracts, leaving 2,831 still open—minus the 5 mentioned in the previous paragraph. Silver’s October o.i. fell by 11 contracts, leaving 47 still to go—and minus the 9 contracts indicated above.
There were no changes in GLD yesterday—and as of 7:08 p.m. EDT yesterday evening, there were no reported changes in SLV, either. But when I checked the iShares.com Internet site at 1:35 a.m. EDT this morning, I saw that—much to my surprise—an authorized participant had added 1,144,809 troy ounces.
The U.S. Mint had a tiny sales report yesterday. They sold 3,000 troy ounces of gold eagles—1,000 one-ounce 24K gold buffaloes—and zero silver eagles.
Unless September’s sales are updated one last time today, the mint sold 125,500 troy ounces of gold eagles—22,000 one-ounce 24K gold buffaloes—and 3,804,500 silver eagles in the month just past.
Silver eagles sales for September were down a million or more from the sales levels of June, July and August—and if they’re producing at maximum capacity, that capacity ain’t what it used to be—or they can’t get enough planchets from their blank suppliers, such as the Sunshine Mint. Ted had been commenting on the slow pace of silver eagles production for the last week or so—and I’m sure he’ll have more to say about it in his weekly review on Saturday.
I was at the coin store yesterday and the proprietor, Michael Riedel, said he’d received a call from A-Mark saying that the silver that he’d ordered from them would be delayed because the new mint that was providing A-Mark’s stock for his order, Republic Metals Corporation, was unable to deliver it on time. It must have been painful for A-Mark—one of the largest, if not the largest, bullion distributor in the U.S.—to have to declare force majeure on delivery, even if only temporarily.
There was no in/out gold movement at all over at the COMEX-approved depositories on Tuesday.
Of course it was different for silver, as usual. Only one good delivery bar was reported received, weighing in at 1,001 troy ounces, but 1,239,823 troy ounces were shipped out the door for parts unknown. And with the exception of about 37,000 troy ounces, all of of it came out of the CNT Depository. There was also another big transfer from the Registered category to the Eligible category, but this time the transfer was at Brink’s, Inc.—with a little from CNT. In total, there was 728,812 troy ounces switched. The link to yesterday’s action is here—and it’s worth a quick look.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they reported receiving 151 kilobars—and shipped out 6,028 of them. The link to that activity, in troy ounces, is here.
Nick Laird over at sharelynx.com sent around a couple of charts that are certain to be of interest. The first shows India’s official monthly gold imports—and the second chart is India’s official monthly silver imports. This is what Nick had to say about them in his covering e-mail to me yesterday evening—“Indian gold imports for July were 81.042 tonnes. Silver imports were 551.11 tonnes.“
Nick also sent around one more important graph. Now that he has the official gold import data from India for July, he was able to update the “Silver Road Gold Demand” chart—and his comments say it all—“Silk Road demand soars to 410.46 tonnes in July.”
Nick’s current Silk Road chart is comprised of only four countries at the moment—China, India, Russia and Turkey. Based on July consumption/imports/purchases, on an annualized basis, these four countries alone account for 4,925 tonnes of gold. That’s about 50 percent more gold than is dug out of the ground every year.
And from the lower chart in the graph below, you can see that even without July’s extraordinary gold numbers, these four countries are already importing/purchasing at least 100 percent of all the gold mined on Planet Earth every year.
I have about the usual number of stories for a weekday column—and the final edit, as always, is up to you.
CRITICAL READS
Chicago PMI “Bounce” is Dead – PMI Plunges Back to Recessionary Levels
The brief dead cat inventory-stacking bounce in Chicago PMI is over. With a print of 48.7, back below 50, (against hope-strewn expectations of 52.9) this was below the lowest economist estimate and the lowest since May.
Aside from employment (which somehow rose), the components were ugly with New Orders and Prices Paid all tumbling, while Production was the lowest since 2009 at 43.6.
Chicago confirms Richmond, New York, Philly, Chicago, and even Kansas City regional surveys all flashing recessionary warnings.
Welcome back into contractionary sub-50 levels—and welcome back to the recession.
This 2-chart news item put in an appearance on the Zero Hedge website at 9:51 a.m. on Wednesday morning EDT—and I thank Richard Saler for today’s first story.
Rosengren Paper Finds FOMC Acts Like It has a Third Mandate
Federal Reserve officials often behave as if they have a mandate to take financial stability into account when they make interest-rate decisions, according to a research paper co-authored by Boston Fed President Eric Rosengren.
“Frequent mentions of financial instability terms at the FOMC, particularly during bust periods, result in a statistically significant reduction in the funds rate,” the paper said. “When it comes to financial instability concerns, not only do FOMC meeting participants talk the talk, but they also walk the walk,” it added, referring to the policy-setting Federal Open Market Committee.
Rosengren, along with co-authors Joe Peek and Geoffrey Tootell, economists at the Boston Fed, are scheduled to present the paper, titled “Should U.S. Monetary Policy Have a Ternary Mandate?,” Friday at the start of a two-day conference hosted by the bank on macro-prudential monetary policy. Fed Vice Chairman Stanley Fischer will speak on the same topic at lunchtime Friday.
No! Really? What was their first clue? These guys have a keen grasp of the obvious as they’re up to their necks in it themselves. This Bloomberg item appeared on their Internet site at 9:38 a.m. Denver time yesterday morning—and it was updated about two hours after that. I found this brief news story embedded in yesterday’s edition of the King Report.
German Unemployment Unexpectedly Rises in Sign of Economic Risks
German unemployment unexpectedly rose in September in a sign that Europe’s largest economy is not immune to risks from slowing growth in emerging markets.
Joblessness increased a seasonally adjusted 2,000 to 2.795 million, the Federal Labor Agency in Nuremberg said on Wednesday. Economists had predicted a drop of 5,000. The unemployment rate remained unchanged at 6.4 percent, the lowest level since German reunification.
China shook financial markets last month when it devalued its currency to shore up weaker growth. The slowdown there and in other emerging nations is a challenge for Germany’s trade-focused business model that helped propel the rate of economic expansion to the fastest since 2011.
The number of people without work rose by about 4,000 in western Germany and fell by about 2,000 in the eastern part of the country, the data show.
This Bloomberg story was posted on their website at 1:55 a.m. MDT yesterday morning—and I thank Patricia Caulfield for sending it along.
The Volkswagen scandal: A mucky business
HERBIE, a Volkswagen Beetle with a mind of its own in a series of Disney films launched in the 1960s, had its share of misadventures. But things had a way of ending up happily for both the car and its passengers. The German carmaker’s more recent attempts to give its cars the gift of thought have things headed in an altogether grimmer direction. Its use of hidden software to deceive American regulators measuring emissions from diesel-engined cars has plunged VW into crisis. And as the scandal provokes further investigations it seems likely to throw into question a wider range of claims about emissions and fuel efficiency. It could thus be a blow to much of the industry—one that might be large enough to reshape it.
The damage to VW, the world’s biggest carmaker, is cataclysmic. The company’s shares have collapsed by a third since its chicanery surfaced. It faces billions of dollars in fines and other financial penalties. Lawsuits will be flying their way to its headquarters in Wolfsburg. Its strategy for the crucial American market is ruined; its reputation is in tatters. Its boss, Martin Winterkorn—who in 2009, when the misleading “defeat” software made its first appearance, was also directly responsible for the company’s R&D—resigned on September 23rd.
The company’s home country is in shock. Germany’s environment minister, Barbara Hendricks, spoke for many when she declared herself “more than astonished”—though the Greens, an opposition party, say that in its response to a parliamentary question earlier this year the government admitted that it knew manipulating emissions data was technically possible. Mixed in with this is some embarrassment that, as with the scandals over FIFA and the World Cup, it is falling to America to enforce rules that Europeans have been breaking.
This very excellent commentary showed up on the economist.com website last Saturday. It’s a tad longer than I like articles to be in my mid-week columns, but I thought I’d include it anyhow, rather than save it for the weekend. It’s definitely worth reading—and it’s the second contribution in a row from Patricia Caulfield.
Stole Obama’s Thunder, Showed Who’s in Charge – West About Putin’s Speech
The Western media has assessed President Putin’s speech at the U.N. General Assembly, mostly comparing it to that of President Obama; the comparisons turned out not in favor of the American head of state. Here are just some of the evaluations.
“Vladimir Putin is back — and stealing Barack Obama’s thunder on the world’s stage,” read the article on CNN‘s politics website.
“Putin’s message at the U.N. podium Monday was a simple one: U.S. interventions and unilateralism have backfired in the Middle East, and it is time to try something new,” the website added.
Another American news outlet, The New York Post, praised the Russian president, calling him “the world’s most powerful leader”, sadly adding that it was their own president who had turned him into as such.
“The baton was officially transferred Monday to the world’s new sole superpower — and Vladimir Putin willingly picked it up,” reads one of its articles.
This article appeared on the sputniknews.com Internet site at 3:31 p.m. on Tuesday afternoon in Moscow, which was 8:31 a.m. in Washington—EDT plus 7 hours. It’s courtesy of “aurora”.
Pepe Escobar: Checkmate
Russian President Vladimir Putin’s message at the U.N. General Assembly was stark; either sovereign states get together in a broad coalition against all forms of terror, and the principle of statehood is respected as enshrined in the U.N. charter – or there will be chaos.
This U.N. General Assembly revealed that the Obama administration’s perpetual newspeak does not cut it anymore. A review of U.N. speeches by both Putin and Obama is almost painful to watch. Putin acted like a serious global statesman. Obama acted like a poseur flunking a screen test.
Putin’s key talking points could not but be easily accessible to the Global South — his prime audience, much more than the industrialized West.
This commentary by Pepe put in an appearance on the sputniknews.com Internet site at 6:42 p.m. Moscow time on their Tuesday afternoon—and I thank U.K. reader Tariq Khan for bringing it to our attention. It’s a must read, especially if you’re a serious student of the New Great Game.
Syrian Conflict: Russia’s Diplomatic Master Class
Where the U.S.-led coalition against ISIL has been acting illegally and has been a total failure, the Russian-led coalition that is now forming is acting legally, with a real prospect of success, since it is working with the Syrian army and government.
Russia’s government is giving the world a master class in diplomacy.
For four years the U.S. has plotted the overthrow of the Syrian government.
In 2011 it declared President Assad “illegitimate” – though it has no right under international law to do so.
It has supported a violent insurrection to overthrow the Syrian government, even though doing so qualifies as aggression under international law.
This opinion piece was posted on the sputniknews.com Internet site at 2:39 p.m. Moscow time on their Wednesday afternoon, which was 7:39 a.m. in Washington—EDT plus 7 hours. It’s the second offering of the day from U.K. reader Tariq Khan. It’s certainly worth reading.
The collapse of Saudi Arabia is inevitable
On Tuesday 22 September, Middle East Eye broke the story of a senior member of the Saudi royal family calling for a “change” in leadership to fend off the kingdom’s collapse.
In a letter circulated among Saudi princes, its author, a grandson of the late King Abdulaziz Ibn Saud, blamed incumbent King Salman for creating unprecedented problems that endangered the monarchy’s continued survival.
“We will not be able to stop the draining of money, the political adolescence, and the military risks unless we change the methods of decision making, even if that implied changing the king himself,” warned the letter.
Whether or not an internal royal coup is round the corner – and informed observers think such a prospect “fanciful” – the letter’s analysis of Saudi Arabia’s dire predicament is startlingly accurate. Like many countries in the region before it, Saudi Arabia is on the brink of a perfect storm of interconnected challenges that, if history is anything to judge by, will be the monarchy’s undoing well within the next decade.
This must read news item showed up on the middleeasteye.net website on Monday—and I thank Roy Stephens for sharing it with us.
Taliban widen offensive as NATO special forces join fight for Kunduz
Nato special forces have joined Afghan troops in the increasingly desperate battle for Kunduz, as one of the last two government outposts in the strategic northern city surrendered to the Taliban.
The heavily besieged airport, which sits on a hilltop a few miles outside Kunduz, is now the only place held by the Afghan army. The nearby Bala Hisar fort fell when soldiers there ran out of ammunition, deputy provincial governor Hamdullah Daneshi said.
While government forces are struggling to contain the Taliban inside the city, let alone recapture ground, the militants have fanned out. According to several security sources in and outside the government, the Taliban has managed to seize two surrounding districts: Imam Sahib, one of the richest districts in the country, and Qala-i Zal, from where the local commander, a notorious strongman named Nabi Gechi, seems to have fled.
The insurgents now hold five of Kunduz province’s seven district centres. A Western security adviser said that, despite vastly outnumbering the Taliban, government forces seemed to disintegrate and scatter as the militants advanced.
This story, co-filed from Kabul and London, was posted on theguardian.com Internet site at 8:26 a.m. BST on their Wednesday morning, which was 3:26 a.m. EDT in Washington. This item is courtesy of Patricia Caulfield as well.
Shaken by Taliban Victory in Kunduz, Afghans Flee Another Provincial Capital
The test facing the Afghan government now is not just whether it can quickly mount a counterattack and retake all of Kunduz, the northern city that fell to the Taliban on Monday, but whether it can prevent a nearby provincial capital from falling as well.
Accounts from the neighboring province of Baghlan on Wednesday showed that the collapse of government forces in Kunduz against less numerous Taliban forces was prompting a crisis of confidence in the province, where wealthier citizens and those with government connections have been leaving for the relative safety of their hometowns.
In the midst of one of the gravest moments for the American-backed government in Kabul, military leaders spoke Wednesday about launching a decisive counterattack against the Taliban in Kunduz. But it was becoming clear that most of the reinforcements for such an attack had been waylaid in Baghlan.
This news item, filed from Kabul, put in an appearance on The New York Times website yesterday sometime—and it’s the second offering in a row from Patricia C.
U.S. Base Seen as Monument to Futility as Afghans Watch Kunduz Fall
The base was not much to behold when the American soldiers arrived in Kunduz in 2010. Nestled atop a vast plateau, it was little more than a collection of stucco buildings with chipping paint, a small airstrip on one side, a graveyard of rusting Soviet vehicles on the other. And everywhere was the Afghan dust, so fine it would puff like dry mountain snow with every step.
In the months to follow, the Americans greatly expanded the base. Seabees, members of the Navy’s construction unit, used heavy equipment to build walls from containers of dirt that encircled an area large enough to hold a second airstrip.
Today, the airstrip has become a refuge for hundreds of Afghan soldiers and civilians besieged by the Taliban forces that now control the city of Kunduz.
Looking back at photos of the base, it is hard not to think of it as anything but a monument to futility.
This very interesting commentary is also from The New York Times yesterday—and it’s the third offering in a row from Patricia C. It’s worth reading.
What Happens Next to Glencore Will Depend on Copper Prices
Looking beyond this week’s whipsaw swings in Glencore Plc’s share price, the outlook for the embattled miner-cum-commodity trader will largely depend on the copper market.
The Swiss company is the world’s biggest copper supplier, and got about 28 percent of its earnings from mining the metal in the first half. That makes it susceptible to moves in the commodity, and if this year’s downward slide continues, banks including Macquarie Group Ltd. and JPMorgan Chase & Co. say the company may need a more aggressive plan to reduce debt.
Prices of the metal, used in everything from plumbing to power grids, have dropped as the economy slows in China, the world’s biggest consumer. Copper has fallen 18 percent on the London Metal Exchange this year to about $5,100 a metric ton and is set for a fifth straight monthly decline. In 2011, the year of Glencore’s initial public offering, prices were as high as at $10,190.
Glencore’s share price, which despite a two-day rally is still down 70 percent this year, has tracked the copper market.
This Bloomberg news item showed up on their Internet site at 6:03 a.m. Denver time yesterday morning—and the contributions from Patricia Caulfield just keep on coming.
Glencore’s next step seen as selling future gold, silver output
As Glencore Plc seeks to the stave off criticism over its debt pile that sent the shares plunging earlier this week, the company’s next step may be to raise money by selling future production of gold and silver.
The company is seeking more than $1 billion in a so-called precious metals streaming deal linked to some of its mines in South America, according to two people familiar with the situation, who asked to not be identified because the talks with potential buyers are private. The transaction is part of Glencore’s broader restructuring to reduce its $30 billion debt pile by about a third and bolster its finances to withstand a continuing slide in commodities.
“They do have a lot of options that could be of interest to people,” Edward Sterck, an analyst with BMO Capital Markets, said by phone from London. Possible deals could include selling silver output from its Collahuasi or Antamina operations in South America, he said.
This very interesting Bloomberg story found a home over at the mineweb.com Internet site at 12:40 p.m. BST yesterday afternoon—and it’s definitely worth reading. I thank Patricia Caulfield for this news item as well.
China Bought Gold With Proceeds From Record Sale of U.S. Treasurys
Two months ago, when China stunned the world in announcing it had officially “bought” 604 tons of gold for the first time since 2009 (this was untrue: China merely admitted to the world what we had reported for years, namely that it had been patiently accumulating gold via untraceable accounts and only now decided to reveal a fraction of its total holdings), we said that, contrary to the wrong “one-and-done” pundit assessment, China would continue “adding” to its gold holdings. To wit:
… now that the seal has been finally broken after so many years, and since today’s update indicates that Chinese gold numbers are clearly goal-seeked with a specific policy purpose – to boost confidence – we await for the PBOC to start leaking incremental gold holding data every month (and especially in months when the market crashes) which will bring us ever closer to what China’s true gold holdings are.
One month ago, we were proven correct when China indeed announced it had “added” another 19.3 tons of gold in July – even as it was dumping record amounts of Treasurys at the time as we previously reported.
Then, overnight, we got a second confirmation when the PBOC announced that China’s official gold holdings had risen again in August, increasing by 520,000 troy ounces, or 16.2 tons (which is more than 3 times the entire registered gold inventory in the Comex vault system), and bringing the new total to 54.5 million ounces, or 1,694 tons of gold. In dollar terms, Chinese gold holdings rose from $59.2 billion at the end of July to $61.8 billion.
This gold-related news item appeared on the Zero Hedge website at 9:59 a.m. EDT yesterday morning. I thank Richard Saler for sending this along. There was a Bloomberg story about this as well. It was headlined—“China Boosts Gold Reserves 1% in August, Diversifying Assets“—and I found that one in a GATA release.
16 tonnes and what do you get? – More gold in Chinese reserves
The Chinese central bank – the People’s Bank of China – is continuing with its new policy of reporting increases in the country’s gold reserves on a monthly basis. The latest figure announced is a gold reserve increase in August taking the announced total gold holding to 54.45 million ounces (1,693.6 tonnes), up from 53.93 million ounces (1,677.41 tonnes) in July – an increase of around 16.2 tonnes. Although this serves to confirm China’s position as the world’s fifth largest national holder of gold it remains hugely behind the USA with a reported holding of 8,133.5 tonnes and still also well below the top European national holdings by Germany (3,381.0 tonnes), Italy (2,451.8 tonnes) and France (2,435.4 tonnes). Russia, which expanded its gold holdings by 31.1 tonnes in August to reach 1,318.8 tonnes, is the world’s sixth largest gold holder.
Interestingly media headlines for the latest Chinese purchase suggested that the Chinese gold increases have been in order to diversify its vast forex reserves away from the dollar, although it appears to be only doing this in a relatively gradual manner given it only holds under 2% of its forex reserves in gold compared with the USA’s 74% and the German, Italian and French holdings in the upper 60%s according to IMF data. Russia’s holding is around 13%.
But most analysts disbelieve the Chinese total gold holding statistics anyway, reckoning they are almost certainly far higher with large amounts of gold held in non-reported accounts which it may move into its forex holdings, and report, when it is considered politically expedient to do so. Consequently there are also openly expressed doubts about the now monthly reported additions to the Chinese reserves. These seem to be smaller than might appear likely given the various officials’ and academics’ professed opinions on the importance of gold as a reserve asset in any global monetary re-alignment and the small proportion of the country’s forex reserves which gold represents. China may reckon on only announcing small gold reserve increases so as not to unduly influence the metal price, but one suspects that the market could absorb higher Chinese gold purchases than are being announced at present.
This commentary by Lawrie was posted on his own website, lawrieongold.com, around 9 a.m. BST this morning—and I inserted it in today’s column about 4:15 a.m. EDT—about ten minutes after I posted it on my website.
China Jewellery sales rise 17.4% year-over-year in August
China’s retail jewellery sales advanced in August this year, according to latest government data.
Retail sales of gold, silver and jewellery in China during August totalled RMB25 billion (about $3.9 billion), rose 17.4% from a year earlier, JNA reported citing data from the National Bureau of Statistics of China.
For July, sales were recorded at RMB21.4 billion (about $3.36 billion), government data revealed. From January to August period, China’s retail jewellery sales grew to RMB201.4 billion (about $31.68 billion), an increase of 7.5% from a year earlier.
This brief news item, filed from Beijing, was posted on the bullionstreet.com website at 4:28 a.m. IST on their Wednesday morning—and I found this gold-related news item on the Sharps Pixley website.
Shanghai Gold Withdrawals at Record on Signs of More Demand
Investors have withdrawn a record amount of gold from the Shanghai Gold Exchange this year, adding to signs that demand in China is recovering after a stock market rout and a shock devaluation of the yuan.
Withdrawals jumped 37 percent to 1,891.9 metric tons through Sept. 18 from 1,380.9 tons a year earlier, according to data on the bourse website. Trading increased 150 percent in the first eight months, said Liu Liang, a spokesman for the exchange, the world’s largest spot bullion market.
Global gold prices have slumped about 40 percent from a record in 2011 to the lowest levels in more than five years, spurring an increase in demand from China to India, the world’s top consumers. Purchases in India may jump as much as 15 percent in the final quarter to the highest since 2012. China’s net imports from Hong Kong more than doubled in August from a year earlier and Swiss exports to mainland China rose 49 percent from the previous month.
The increase in withdrawals and trading “reflects a steady increase in Chinese gold demand,” Liu said by phone from Shanghai. The start of operations in the Free Trade Zone and a new wholesale trading platform also boosted liquidity, he said.
There’s nothing really new in this story, because I had Nick’s chart of SGE withdrawals in my Saturday column—and Lawrie Williams had a big article about it in my Tuesday column. The reason I’m posting it at all, is because this story showed up on the Bloomberg Internet site yesterday. My how things have changed!
Indian gold imports on track for 900 tonnes this year — Lawrie Williams
While in recent articles I have been focusing on Chinese gold demand and SGE deliveries, I have been ignoring Indian demand, which together with that of China, absorbs most of the world’s new mined gold production.
India is heading into its seasonal peak demand period which started with Ganesh Chaturthi on 17th September (officially the start of the long festive season) and the start of the wedding season in October, so much has been made in some quarters that at the moment Indian prices are trading at around a $7 discount to the London gold price when normally the market trades at a premium. An HSBC analysis published on Monday, for example, is seeing this as a warning sign for global gold prices – but perhaps it’s too early to tell yet and demand may well pick up as the wedding season gets into full swing.
To what is the current Indian weakness attributed? There are worries about this year’s lighter than usual monsoon rains affecting agricultural production and earnings in the months ahead. The rural sector, which accounts for around half of India’s population, is traditionally the strongest contributor to gold purchases and a crop deficiency could suggest a significant drop in demand here.
The Indian government is still desperately trying to control gold imports to help it balance its books with gold imports accounting for such a significant portion of the country’s Current Account Deficit. But the jury is still out on whether its proposals to persuade gold holders to trade in their bullion for interest bearing securities will be heeded – and anyway this is probably a more long term potential solution, even if it works, and may not have any significant short term impact.
This must read commentary by Lawrie showed up on the Sharps Pixley website yesterday.
Rights group: Filipino child miners risk lives in gold mines
The Philippine government has failed to protect thousands of children, some as young as 9 years old, who risk their lives by working in illegal, small-scale gold mines under terrifying conditions, a human rights group said Wednesday.
Human Rights Watch’s report said the children work in unstable 25-meter (80-foot) deep pits or underwater along coastal shores or rivers, processing gold with mercury, a toxic metal that can cause irreversible health damage. Those who dive for gold stay underwater for several hours at a time in 10-meter- (30-foot-) deep shafts, receiving air through a tube attached to an air compressor.
The New York-based group says it interviewed 135 people, including 65 child miners from 9 to 17 years of age, in eastern Camarines Norte and Masbate provinces in 2014 and 2015.
Labor Secretary Rosalinda Baldoz told the Associated Press that the government is addressing the problem by prosecuting those forcing the children to work, and by providing the children with health, education and livelihood programs.
This AP story, filed from Manila on Tuesday, was picked up MSNBC—and I found it posted on the gata.org Internet site yesterday.
The PHOTOS and the FUNNIES
The WRAP
JPMorgan holds nearly 60% of the total $35 billion worth of OTC silver derivatives held by all U.S. banks. There is no instance, as far as I know, where a 60% market share would not be considered to be in violation of U.S. antitrust policy (except for an excluded and permitted monopoly – like a power company). To say that JPMorgan does not monopolize OTC derivatives contracts involving silver would be wrong according to the OCC report.
But it is not only that JPMorgan has a monopoly in OTC silver derivatives, the bank has a monopoly in everything related to silver. JPM holds the lion’s share (more than 40%) of total COMEX silver warehouse inventories, the second largest stockpile of silver in the world, after starting with zero in early 2011. JPMorgan has taken more deliveries on COMEX silver futures than any other entity this year (20 million oz). JPMorgan has purchased more than 100 million oz of Silver Eagles and 30 million Maple Leafs over the past 4.5 years, singlehandedly accounting for the current retail shortage. As custodian of the SLV, the largest visible silver stockpile on earth, JPMorgan had an inside advantage in converting shares of the ETF into non-disclosed metal over the past 4.5 years and must be considered the prime agent behind the counterintuitive deposits and withdrawals of metal from the fund as I’ve been reporting for years. And it’s well established that JPMorgan first came onto the short side of COMEX silver in 2008 and held as much as 40% of the entire market.
On every measure possible, from government documented COMEX and OCC reports, to exchange issued warehouse reports, to sales from the U.S. and Canadian Mints and to ETF public disclosure, JPMorgan dominates silver. I would ask you – how crazy is this? Was not the thrust of regulatory reform, specifically Dodd/Frank and the Volcker Rule, intended to prevent exactly what JPMorgan has established in silver? — Silver analyst Ted Butler: 30 September 2015
Well, JPMorgan et al wasted no time in taking gold below its 50-day moving average—and the only surprise was that it was very orderly. I was expecting another brutal spike down, but that didn’t happen. Maybe such a move lies in our future but, as usual, only time will tell. They also set a new low tick in silver yesterday as well.
In both cases, the Managed Money traders were selling longs and going short—and the Commercial traders were buying the longs being sold—and snapping up the long sides of all the short trades.
Here are the 6-month charts for the Big 6 commodities once again. I see that copper had a big move yesterday, up 8 cents—and closing right at its 50-day moving average. WTIC has been sitting on its 50-day moving average for quite some time now.
As Lawrie Williams mentioned in his article in the Critical Reads section above, China is on an extended holiday for a week, staring today—and it will be interesting to see what the bullion banks and their HFT buddies do in light of that fact.
And as I write this paragraph, the London open is less than ten minutes away—and I note that after doing nothing in most of the Far East trading session, the gold price began to develop a negative bias staring at 2 p.m. Hong Kong time on their Thursday afternoon—and is currently down about 3 bucks. Silver, which had been up over a dime at one point, is up only 4 cents at the moment. But both platinum and palladium are managing to hold onto their slim gains.
Gold’s net volume is microscopic at just under 10,000 contracts—and silver’s net volume is barely 1,950 contracts. The effects of the week-long holiday in China are already obvious, so anyone with an agenda can pretty much do whatever they want with precious metal prices if they so choose.
The dollar index began to rally shortly before 9 a.m. Hong Kong time—and is currently up 13 basis points.
I have no idea what the Thursday session will bring during the balance of the Thursday trading session in London, or what may or may not transpire in New York, but if “da boyz” really want to lay the lumber on precious metal prices there won’t be anyone to stand in their way.
Of course I’d love be wrong, but I must admit that I’m expecting more downside pain before we see the bottom of this engineered price decline. It’s just too bad that yesterday’s volume data won’t be in tomorrow’s Commitment of Traders Report.
And as I post today’s effort on the website at 4:10 a.m. EDT, I note that gold set a new low for this move down minutes after the London open—and is off that low by a bit. The other three precious metals are rallying somewhat since I wrote about them an hour ago. Silver is up 8 cents, platinum is up 10 bucks—and palladium up 8 dollars.
Gold volume is a bit over 13,000 contracts—and silver’s net volume is now up to 2,740 contracts. The dollar index is up 10 basis points.
It will be interesting to see how long these tiny rallies are allowed to last—and of course the price trends that really matter will be set in COMEX trading later today.
I’m off to bed—and I’ll see you here tomorrow.
Ed
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