02 October 2015 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
It was a very quiet day for gold yesterday—and volume was very light. The only two thing worth noting was the tiny slice taken out of the gold price, as it made a marginal new low just minutes after the London open—and the tiny rally that began either at the noon London silver fix, or the COMEX open, got capped at the London p.m. gold fix. By the COMEX close, the small gains in New York had vanished—and the price traded flat into the 5:15 p.m. close of trading.
The high and low ticks certainly aren’t worth the effort of looking up.
Gold finished the Thursday session in New York at $1,113.50 spot, down another $1.80 on the day. Net volume was very light at only 74,000 contracts.
Silver had a smallish rally that started as soon as trading began in New York on Wednesday evening—and that lasted until just before 2 p.m. Hong Kong time. It was down hill from there into the low tick of the day, which came at 8:30 a.m. in New York. The subsequent ‘rally’ got capped at 10:30 a.m. and, like gold, all the gains were gone by the COMEX close.
Silver ended the day at $14.525 spot, up a half a cent. Net volume was pretty quiet at 26,500 contracts.
The low and high ticks in this precious metal were recorded by the CME Group as $14.43 and $14.67 in the December contract.
Platinum rallied in fits and starts until precisely 10 a.m. Zurich time and, like gold and silver, was sold down to its low tick, which also came at 8:30 a.m. in New York. And also like silver, the subsequent rally got capped at 10:30 a.m. EDT—and all the tiny gains were gone, plus a bit more, by the end of COMEX trading. Platinum finished the Thursday session at $904 spot, down 2 bucks from Wednesday.
Palladium was up a few bucks in Far East trading—and a few more after Zurich opened. But those gains disappeared between 1 p.m. Zurich time and 8:30 a.m. in New York. From that point, the price took off to the upside—and then went “no ask” once the London p.m. gold fix was in. A few seconds after that, “da boyz” showed up to provide the necessary “liquidity” to cap the price—and that was it for the day. Palladium finished the Thursday session at $675 spot, up 24 dollars from Wednesday’s close—and heaven only knows what price it would have closed if JPMorgan et al hadn’t appeared when they did.
The dollar index closed late on Wednesday afternoon in New York at 96.28—and began to rally shortly before 9 a.m. Hong Kong time on their Thursday morning. The rally topped out at 96.47 at 2 p.m. local time—and then began to head lower exactly an hour later, which was the 8:00 a.m. open of trading in London. The 95.97 low tick came at precisely 11:00 a.m. in New York—and at that point it was obvious that ‘gentle hands’ showed up, as the dollar index looked like it was about to crash. And not only at 11 a.m., but also at the 10 a.m. EDT London p.m. gold fix—and again at noon EDT, if you check the chart below. After it got ‘saved’—the dollar index headed shakily higher—and finished the day around 96.10—down 18 basis points from Wednesday’s close.
And here’s the 6-month U.S. dollar index—and the only reason that the chart looks this great, is because of the ever-present ‘gentle hands’.
The gold stocks started off in positive territory, but were under selling pressure almost immediately. They stopped falling at the 1:30 p.m. COMEX close—and traded flat for the remainder of the day. The HUI finished the day down 2.34 percent.
It was the same trading pattern for the silver equities—and Nick Laird’s Intraday Silver Sentiment Index closed lower by 2.94 percent—giving back all of Wednesday’s gains, plus a bit more.
The CME Daily Delivery Report showed that for Day 3 of the October delivery month there were zero gold and 7 silver contracts posted for delivery within the COMEX-approved depositories on Monday.
The CME Preliminary Report for the Thursday trading session showed that September gold open interest took a big hit yesterday, as 955 contracts disappeared into thin air, leaving 1,876 still open. Silver o.i. fell by 2 contracts, leaving 45 still around, of which 7 contracts will be delivered on Monday—as per the previous paragraph.
Much to my surprise, there was another very decent deposit into GLD yesterday, as an authorized participant added 162,803 troy ounces of the stuff. And as of 7:26 p.m. EDT, there were no reported changes in SLV.
Since yesterday was Thursday, Joshua Gibbons, the Guru of the SLV Bar List, updated his website with the goings-on over at the iShares.com Internet site as of the close of business on Wednesday—and this is what he had to report.
“Analysis of the 30 September 2015 bar list, and comparison to the previous week’s list: 3,530,185.1 troy ounces were removed (all from Brinks London), no bars were added or had a serial number change.”
“The bars removed were from: Henan Yuguang (1.3M oz), Shui Kou Shan (0.5M oz), Jiangxi Copper (0.5M oz), Inner Mongolia Qiankun (0.5M oz), and 19 others.”
“As of the time that the bar list was produced, it was overallocated 370.6 oz. All daily changes are reflected on the bar list, except a 1,144,809.6 oz deposit on Wednesday.”
There was no sales report from the U.S. Mint—and no updates to the September sales figures, so the September sales numbers that were posted in yesterday’s column still stand.
The U.S. Mint sold 14.26 million ounces of American Eagle silver coins in the third quarter, the highest on record going back to 1986. There’s an absolute must read story about this in the Critical Reads section of today’s column headlined “Mints struggle to keep up with silver coin demand“—and if you just can’t wait, the link is here.
Here are two more charts that Nick Laird sent our way on Wednesday evening, but because I already had so many in yesterday’s column, these ones here had to wait until today. The first one shows the U.S. Mint’s monthly gold coins sales in troy ounces [eagles and buffaloes combined]—and the second one is monthly sales for silver eagles. And as I mentioned in yesterday’s column, despite the fact that the mint is producing at maximum capacity, that ‘capacity’ has declined rather sharply over the last couple of months—and both Ted Butler and I are wondering why that’s the case.
The last chart shows the dollar value amount of gold coin sales vs. silver coin sales at the U.S. Mint for each month going back five years.
It was another very quiet day for gold over at the COMEX-approved depositories on Wednesday. They only reported receiving 300 troy ounces—and shipped out 2,199 troy ounces.
It was another huge day for silver moments over at the COMEX-approved depositories once again, as 290,297 troy ounces were reported received—and 1,051,571 troy ounces were shipped out the door. There was also another transfer from the Registered category to the Eligible category. It was at the CNT Depository once again—and the amount involved was 795,524 troy ounces. JPMorgan was not involved in any of yesterday’s movements. The link to that action was here.
There was very little in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday and, for a change, it didn’t involve Brink’s, Inc. There were 3 kilobars shipped out of Loomis International—and that was it.
Once again I don’t have all that many stories for you today and, as usual, that suits me just fine.
CRITICAL READS
Atlanta Fed Slashes Q3 GDP Estimate By 50% to Just 0.9%
Yesterday, when the Atlanta Fed boosted its Q3 GDP tracker from 1.4% to 1.8%, the perma-bulls were crowing how the global recession has been called off. We are confident they will be mysteriously mute, however, following today’s dramatic revision lower which cut the number for the current quarter by half to just 0.9% as a result of the previously reported tumble in the advance report on U.S. international trade which slashed the Atlanta Fed’s model contribution of net exports to third-quarter real GDP growth by 0.7 percentage points to 0.9%.
This 1-paragraph, 1-chart Zero Hedge piece showed up on their Internet site at 12:03 p.m. EDT on Thursday morning–and today’s first story is courtesy of Richard Saler.
The Real Estate Crisis in North Dakota’s Man Camps
Chain saws and staple guns echo across a $40 million residential complex under construction in Williston, North Dakota, a few miles from almost-empty camps once filled with oil workers.
After struggling to house thousands of migrant roughnecks during the boom, the state faces a new real-estate crisis: The frenzied drilling that made it No. 1 in personal-income growth and job creation for five consecutive years hasn’t lasted long enough to support the oil-fueled building explosion.
Civic leaders and developers say many new units were already in the pipeline, and they anticipate another influx of workers when oil prices rise again. But for now, hundreds of dwellings approved during the heady days are rising, skeletons of wood and cement surrounded by rolling grasslands, with too few residents who can afford them.
“We are overbuilt,” said Dan Kalil, a commissioner in Williams County in the heart of the Bakken, a 360-million-year-old shale bed, during a break from cutting flax on his farm. “I am concerned about having hundreds of $200-a-month apartments in the future.”
This very interesting Bloomberg article put in an appearance on their Internet site at 3:01 a.m. Denver time on Tuesday–and I thank Roy Stephens for finding this one.
The world economy: Dominant and dangerous
As America’s economic supremacy fades, the primacy of the dollar looks unsustainable.
IF HEGEMONS are good for anything, it is for conferring stability on the systems they dominate. For 70 years the dollar has been the superpower of the financial and monetary system. Despite talk of the yuan’s rise, the primacy of the greenback is unchallenged. As a means of payment, a store of value and a reserve asset, nothing can touch it. Yet the dollar’s rule has brittle foundations, and the system it underpins is unstable. Worse, the alternative reserve currencies are flawed. A transition to a more secure order will be devilishly hard.
For decades, America’s economic might legitimised the dollar’s claims to reign supreme. But, as our special report this week explains, a fault line has opened between America’s economic clout and its financial muscle. The United States accounts for 23% of global GDP and 12% of merchandise trade. Yet about 60% of the world’s output, and a similar share of the planet’s people, lie within a de facto dollar zone, in which currencies are pegged to the dollar or move in some sympathy with it. American firms’ share of the stock of international corporate investment has fallen from 39% in 1999 to 24% today. But Wall Street sets the rhythm of markets globally more than it ever did. American fund managers run 55% of the world’s assets under management, up from 44% a decade ago.
The widening gap between America’s economic and financial power creates problems for other countries, in the dollar zone and beyond. That is because the costs of dollar dominance are starting to outweigh the benefits.
This commentary from The Economist website is datelined October 3—and it’s the first of many offerings from Patricia Caulfield.
From heroes to bystanders? Central banks’ growth challenge
Central bankers who led the charge to pull the global economy from a cliff during the financial crisis now risk becoming bit players, ill-equipped to snap the world out of sluggish growth and its addiction to cheap credit.
Despite near-zero rates and $7 trillion of monetary stimulus unleashed by central banks in major industrial economies, investment and growth is stuck below pre-crisis levels and tepid demand is hurting developing economies by depressing prices of their commodity exports.
“Memo to the human race: you tried all this monetary policy stuff… and at the end of the day it did not succeed in getting you back where you need to be,” Paul Sheard, chief global economist for Standard & Poor’s, told Reuters. Sheard suggested it might be time for central banks to admit their interest rates are stuck at zero, and for other policymakers to step up.
Essentially central bankers face a dilemma – either lean more on politicians to do more to boost growth or embark on a new round of experimentation—but both come with risks and uncertain payoffs.
This Reuters article, co-filed from Washington and Frankfurt, appeared on their website at 1:24 a.m. EDT on Thursday morning—and it’s the second offering of the day from Patricia Caulfield. It’s worth reading.
The Other Victims of the Volkswagen Scandal: Dealers
The recent Volkswagen scandal has not only angered many of its customers, it is also threatening the prospects of hundreds of dealerships around the country that are anxious to learn how to fix diesel cars that intentionally thwart emissions tests.
And it is happening at a delicate time for Volkswagen and its 650 dealers in the United States, where sales have slumped in recent years while the domestic car market rebounded.
For several years, American dealers complained to Volkswagen that it was offering the wrong cars for the domestic market and that its prices were too high compared with its rivals.
But the appointment last year of a new German top executive in the United States, along with a major commitment to build a new sport utility vehicle for the American market by next year, had raised hope among dealers that they could turn their fortunes around.
This New York Times article appeared on their Internet site sometime on Wednesday—and I thank Patricia Caulfield for this story as well.
VW Workforce Starts to Feel Pinch From Diesel-Emissions Scandal
Volkswagen AG’s 600,000-person workforce is starting to feel the impact of the diesel-emissions scandal as the carmaker cuts spending in anticipation of fines, recalls and a drop in U.S. sales.
Volkswagen slowed production at one of its biggest engine factories and froze hiring in Germany at its unit that makes car loans, the Wolfsburg, Germany-based company said Thursday. More measures to rein in spending are expected as Volkswagen seeks to weather the crisis by giving its efficiency program a “turbo” boost in the billions of euros without cutting jobs, Bernd Osterloh, VW’s labor chief, told workers in a letter on Sept. 24.
The automaker is facing a significant financial impact, including at least 6.5 billion euros ($7.25 billion) it already set aside for repairs and recalls and a U.S. fine that may reach $7.4 billion, according to analysts from Sanford C. Bernstein Ltd. How the company will react was among the topics on the table when the board’s leadership panel met late into the night on Wednesday with Chief Executive Officer Matthias Mueller.
“Volkswagen has a broad range of options should they need to boost liquidity,” said Frank Biller, a Stuttgart, Germany-based analyst with LBBW. The company could try to step up the VW brand’s existing cost-savings program, which had originally aimed to boost earnings by 5 billion euros by 2017, he said. “Then there’s a catalog of measures that could follow.”
This short Bloomberg news item was posted on their Internet site at 3:46 a.m. MDT on Thursday morning—and once again I thank Patricia C. for sending it along.
U.S. Can’t Find 9 CIA Trained Rebels in Syria, but McCain Claims Russia Did
One of the Syrian rebel groups backed by the U.S., the so-called Free Syrian Army, said their commander was killed by a Russian bomb in the province of Hom. U.S. Senator John McCain was quick to pop out and accuse Russia of killing CIA-trained rebels.
During another Russian attack, a rebel commander of the Liwa Suqour al-Jabal group, trained by the CIA, said their entire training camp was hit by over 20 Russian missiles in the Idlib province, the Guardian reported.
It seems real scary, eh? Those “bad” Russians are doing no good in Syria, harming “good” Syrian militants trained by the CIA. Except a few weeks ago the U.S. Department of Defense (DoD) announced that they had no idea where “their” rebels were.
This rather amusing story falls into the you-can’t-make-this-stuff-up category. Syria has become a grotesque Monty Python skit gone bad. It was posted on the sputniknews.com Internet site at 9:45 p.m. Moscow time on their Thursday evening, which was 2:45 p.m. in Washington—EDT plus 7 hours. It’s certainly worth reading—and I thank U.K. reader Tariq Khan for sharing it with us.
Russian Airstrikes in Syria Targeted ‘NATO–Created Mercenaries’
Soon after the first Russian strikes in Syria some media outlets were quick to come up with reports claiming that the Moscow-led campaign already resulted in civilian deaths.
Meanwhile, the Kremlin refuted the rumors of Russian airstrikes hitting non-terrorist infrastructure in Syria as groundless, emphasizing that there has been no verified information of such activity.
Defense Ministry spokesman Igor Konoshenkov told reporters on Wednesday that Moscow had carried out 20 airstrikes solely against the Islamic State on the first day of its air campaign. He also underlined that the Russian jets did not hit any civilian infrastructure or areas nearby – as was alleged earlier by some media.
Professor Michel Chossudovsky, director of the Canadian Centre for Research on Globalization, spoke to Sputnik in an exclusive interview about how Russia is helping Syria in the fight against the US-supported terror groups in Syria.
“First of all it is important to underline the fact that all these terrorist organizations are supported by US intelligence. In fact the mainstream media now has acknowledged that these rebels are supported by the CIA. The Wall Street Journal says Russian airstrikes in Syria targeted CIA-backed rebels.”
“These rebels are terrorists including the al-Nusra Front. What I think is at stake here is that the Russian air force is now waging targeted attacks directed against al-Nusra in coordination with the Syrian government and what the US is saying is that in a way Russia is going after America’s good-guy terrorists rather than the bad-guy terrorist. They are making a distinction between ISIL and other terrorist organizations, all of which are covertly supported by the US,” Chossudovsky told Sputnik.
This is another one of those stories from the top drawer of the ‘You-can’t-make-this-stuff-Up’ filing cabinet. It’s also another story from the sputniknews.com Internet site yesterday evening Moscow time—and the second offering in a row from U.K. reader Tariq Khan. It’s worth reading as well.
A Taliban Prize, Won in a Few Hours After Years of Strategy
The Taliban’s largest strategic victory of its long insurgency seemed to unfold in a matter of hours: At dawn a few hundred insurgent fighters entered the northern provincial capital of Kunduz from three sides, and by afternoon they ruled it.
But even though it was a shocking victory, it hardly happened overnight. Signs of a determined and innovative Taliban campaign in the north, and Kunduz in particular, could be seen some two years ago.
Timed to the American withdrawal, a steady influx of insurgent fighters, a series of probing and patient territory grabs, and a hearts-and-minds campaign that took advantage of resentment of the government eventually delivered the Taliban’s biggest prize of the war.
This article appeared on The New York Times website on Wednesday sometime—and the stories from Patricia Caulfield just keep on coming.
Afghan Forces Rally in Kunduz, but Fight Is Far From Decided
Afghan government forces on Thursday rallied for the first time to try to retake the city of Kunduz from Taliban fighters, engaging in heavy fighting near the city center, residents and government officials said.
After nightfall, however, witnesses said the battle for the city was still undecided. People caught in the city described cowering in their homes as shrapnel flew, and the occasional mortar shell or rocket crashed down.
Despite the long-awaited response by government forces in Kunduz, it was not enough to reassure civilians in neighboring provinces, as the outlines of a Taliban offensive across northern Afghanistan became clearer.
Some in the nearby provincial capitals — Pul-i-Kumri, in Baghlan Province south of Kunduz, and Taliqan in Takhar Province, to the east — said they were preparing to leave rather than risk being trapped in a Taliban assault.
This New York Times article from yesterday was filed from Kabul—and it’s also courtesy of Patricia C. The original headline read “Afghan Forces Rally in Fight to Retake Kunduz From Taliban“. She also sent along a Reuters piece on this subject—and it’s headlined “Afghan forces push into Taliban-held Kunduz city amid fierce clashes“—and the link to that one is here.
Yen Gains on Report That Central Bank Will Refrain From Stimulus
The yen erased losses against the dollar after Bloomberg reported that Bank of Japan officials see little need for adding to its already unprecedented monetary stimulus at its policy meeting this month.
Board members who gather Oct. 6-7 want the opportunity to observe further economic data and developments in financial markets at home and abroad, according to people familiar with the matter. In September, BOJ Governor Haruhiko Kuroda kept his pledge to expand the monetary base at an annual pace of 80 trillion yen ($666 billion). Kuroda said inflation trends are rising and the economy will gradually recover, adding that the central bank won’t hesitate to ease policy, if necessary.
“We’re seeing a reaction in dollar-yen,” said Eimear Daly, a currency strategist at Standard Chartered Plc in London. “We definitely have had these comments before coming from the Bank of Japan. There’s this lingering perception or expectation in the market that they will do more, and I think that’s one of the reasons that dollar-yen has held up so well.”
As central banks have discovered the world over at this point, money printing has its limits—and they’ve reached them. If you need a refresher on that, please go back and read the Reuters article posted further up in today’s Critical Reads that’s headlined “From heroes to bystanders? Central banks’ growth challenge“. The above three paragraphs are about all there is to this tiny story that showed up on the Bloomberg Internet site at 6:05 a.m. Denver time on Thursday morning—and it’s the second offering of the day from Richard Saler.
How Glencore’s Crazy Month Makes Greek Banks Look Tame
Which was a bigger trauma for European stock investors: this summer’s pummeling of Greek banks, or the last month in Glencore Plc? Based on value lost, it’s the latter by far.
As much as $14.4 billion was erased from the mining company’s shares in September — about $4.4 billion more than was wiped out in a Greek bank index in August. Glencore’s unprecedented volatility in the past 10 days is almost double that of the Greek lenders.
After going from a record 29 percent drop on Monday to a record 17 percent gain the next day, the miner yesterday pared its monthly slump to 38 percent. It closed 0.6 percent lower, after jumping as much as 8.2 percent and falling 6 percent.
Glencore stock moved an average of 7.4 percent a day in September. The FTSE/Athex Banks Index, which includes companies such as National Bank of Greece SA and Piraeus Bank SA, rose or fell 6.5 percent daily on average during this year’s tumultuous months.
This Bloomberg article was posted on their website at 5:00 p.m. MDT on Wednesday afternoon, but was updated at 10:15 a.m. Thursday morning. My thanks go out to Patricia Caulfield for her final contribution to today’s column—and I thank her on your behalf.
Jim Rickards — Gold: And How Inflation Could Be Caused in 15 Minutes
A central bank’s worst nightmare is when they want inflation and can’t get it. The Fed’s tricks have all failed. Is there another rabbit in the hat?
Actually, yes. The Fed can cause massive inflation in 15 minutes. They can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce.
The Fed can make that new price stick by using the Treasury’s gold in Fort Knox and the major U.S. bank gold dealers to conduct “open market operations” in gold. They will be a buyer if the price hits $4,950 per ounce or less and a seller if the price hits $5,050 per ounce or higher.
They will print money when they buy and reduce the money supply when they sell via the banks. This is exactly what the Fed does today in the bond market when they pursue QE. The Fed would simply substitute gold for bonds in their dealings. The Fed would target the gold price rather than interest rates.
Of course, the point of $5,000 gold is not to reward gold investors. The point is to cause a generalized increase in the price level. A rise in the price of gold from $1,000 per ounce to $5,000 per ounce is really an 80% devaluation of the dollar when measured in the quantity of gold that one dollar can buy.
Well, dear reader, I’ve been saying this exact same thing for years—and Jim has mentioned it on several occasions as well, including in at least one of his books. Needless to say this commentary falls into the absolute must read category—and it was posted on the dailyreckoning.com Internet site yesterday sometime—and my thanks go out to Ken Hurt for bringing it to my attention, and now to yours.
Mints struggle to keep up with silver coin demand
Government mints around the world are struggling to keep up with unprecedented demand for silver coins, spurred by a drop in silver prices to six-year lows.
The mints in Canada, Austria and Australia have told Reuters they are rationing sales of silver bullion coins.
Following are updates from mints on their production and sales quotas:
ROYAL CANADIAN MINT:
The mint has been rationing sales of its silver Maple Leaf coins since July after record monthly sales, an official said. Sales have hit records in August and September.
Demand has been very strong in North America, Europe and Asia, with the U.S. market being the strongest, said Chris Carkner, executive managing director, sales, numismatics, bullion and refinery at the Canadian Mint.
This must read Reuters article from Wednesday was picked up by the dailymail.co.uk Internet site just before midnight BST on Wednesday evening. It’s something I found on the Sharps Pixley website yesterday.
Silver-coin shortage shows bright side of precious metal collapse
The global silver-coin market is in the grips of an unprecedented supply squeeze, forcing some mints to ration sales and step up overtime while sending U.S. buyers racing abroad to fulfill a sudden surge in demand.
The U.S. Mint began setting weekly sales quotas for its flagship American Eagle silver coins in July because it can’t meet demand, and the Canadian mint followed suit after record monthly sales in July. In Australia, the Perth Mint sold a record of more than 2.5 million ounces of silver this month, nearly four times more than in August, and has begun rationing supply of a new line of coins this month, a mint official said.
“Silver [coin] demand is absolutely through the roof,” said Neil Vance, wholesale manager at the Perth Mint. “There seems to be a bit of frenzy as people think there is a shortage of silver. But in fact it is a (crunch in) manufacturing capacity.”
Here’s another Reuters story about silver coin sales. This one was co-filed from New York, London and Singapore at 5:50 a.m. EDT on Thursday morning—and I found it embedded in a GATA release. It’s worth reading as well.
Perth Mint’s silver coin sales hit record high in September
The Perth Mint sold a record amount of silver coins in September, while gold sales rose to a one-year high, as lower metal prices attracted retail buyers globally.
The Perth Mint has said that most of the demand last month came from the United States and Europe although buying from Asia, particularly Hong Kong, was also good.
Perth Mint began rationing silver coins last month as it was unable to keep up with the strong demand spurred by low silver prices, which have dropped for four months starting June and hit a six-year low of $13.93 an ounce in August.
The mint sold more than 3.53 million ounces of silver coins in September, it said in an e-mailed statement on Thursday, or about five times higher than the mint’s August sales.
This Reuters article, filed from Singapore, put in an appearance on the au.investing.com Internet site yesterday—and it’s worth reading too.
Royal Gold announces terms of streaming deal with Barrick Gold
On September 29, 2015, Royal Gold, Inc. (the “Company”) announced that its wholly owned subsidiary, RGLD Gold AG (“Royal Gold”), closed its previously announced Precious Metals Purchase and Sale Agreement with a wholly owned subsidiary of Barrick Gold Corporation, BGC Holdings Ltd. (“Barrick”), to purchase a quantity of gold and silver referenced to production from Barrick’s 60% interest in the Pueblo Viejo mine located in the Dominican Republic (“Pueblo Viejo”).
A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. Royal Gold made a single $610 million advance payment to Barrick as part of the closing.
The transaction is effective July 1, 2015 for the gold stream and January 1, 2016 for the silver stream. Under the terms of the Purchase and Sale Agreement, Barrick will deliver to Royal Gold, on a quarterly basis, an amount of gold equal to 7.50% of Barrick’s interest in the gold produced at Pueblo Viejo until 990,000 ounces of gold have been delivered, and 3.75% thereafter; and an amount of silver equal to 75% of Barrick’s interest in the silver produced at Pueblo Viejo (with silver deliveries based on a fixed 70% recovery rate) until 50.00 million ounces have been delivered, and 37.50% thereafter.
Royal Gold will pay Barrick 30% of the spot price per ounce of gold until 550,000 ounces of gold have been delivered, and 60% of the spot price per ounce thereafter; and 30% of the spot price per ounce of silver until 23.10 million ounces of silver have been delivered, and 60% of the spot price per ounce thereafter.
The above three paragraphs is all there is to this news item that put in an appearance on the mineweb.com Internet site at 12:47 p.m. BST on Wednesday.
Mexico’s July Silver output rises 9.9% year-over-year; Gold up 15.4%
Mexico’s silver production advanced by 9.9% from a year earlier to 424,236 kilograms in July, according to latest data from the National Statistics Institute (INEGI).
The country’s Silver output was stood at 386,086 kilograms in July last year.
Production of gold also grew during the month to 9458 kilograms, up 15.4% as against the production of 8,193 kilograms a year earlier, according to INEGI data.
The Latin American country’s total mining production rose 2.6% in July from the same month of 2014, the INEGI said in its monthly report.
The above four paragraphs are all there is to this brief news item. It appeared on the bullionstreet.com Internet site at 1:33 p.m. EST on their Thursday afternoon—and it’s another item I found on the Sharps Pixley website last night.
Chinese and Russian Central Bank Continue to Add Gold to Official Reserves: 16 and 31 Tonnes in August
The People’s Bank Of China (PBOC) has added 16 tonnes of gold to its official reserves now totalling 1,694 tonnes in August 2015. The gain in August is the third monthly increment in a row after a period of silence by the PBOC since 2009. The change in reporting, the amounts reported and the fact the gold is mark-to-market is a clear sign of a strategy not merely aimed at SDR acceptance. More so to prepare for a post-dollar international monetary system.
China is joining Russia in increasing its official gold reserves on a monthly basis. Russia added a whopping 31 tonnes in August, the highest since March and the fourth highest in recent history. These two countries are by far the largest official gold buyers globally, which can only be seen in the greater scheme of things. China and Russia both form a threat to U.S. dominance by the size of their economies (Russia is tenth largest economy, China is the second largest economy), the multilateral collaborations organized around the Eurasian continent, bold statements about the necessity of gobal de-dollarization and gold accumulation in anticipation of a new international monetary order.
The threat to the US dollar hegemony is underlined by adjustments in purchases of U.S. government bonds (US Treasury’s – USTs) by China and Russia. U.S. bonds have been the central pillar of the international monetary system for decades, but are not able to serve this purpose indefinitely. Issuance of USTs, to supply international reserve assets, gives the U.S. an exorbitant privilege in funding to the detriment of all other nations. Furthermore, massive global demand for USTs lowers its coupon interest rate, feeding into to bubbles that eventually contaminate the world economy.
The change in the reserve numbers is not new news, but there’s more to the story than the headline—and if you have the time this commentary by Koos Jansen is worth your while. It was posted on the bullionstar.com Internet site yesterday. I found in on the gata.org Internet site in the wee hours of this morning—and stuck in today’s column about ten minutes after I posted in on the website.
The PHOTOS and the FUNNIES
The WRAP
The main theme in silver has been and continues to be JPMorgan. It started when the bank took over Bear Stearns’ massively concentrated short positions in COMEX silver and gold futures and continued on the short side until April 2011, when JPMorgan stared into the abyss as a wholesale silver shortage began to develop. It was at that point when JPMorgan decided to continue to use its price control on the COMEX, not just to continue to profit from paper dealings, but to use its price control to acquire as much physical silver on the cheap that it could.
Now that JPMorgan holds close to 400 million oz of physical silver by my estimates, the stage is set for prices to reverse upward (whenever JPM decides) for the simple reason that will benefit JPMorgan the most at some point. That’s the whole point of the unarguable monopoly that JPMorgan has established in silver. Had you told me any of this seven years ago, when I first discovered that JPMorgan was the big silver crook, I would not have believed you. I would never have anticipated that JPMorgan would or could arrange to continue the silver manipulation for seven years longer and end up accumulating the largest privately-owned holding of physical silver in history. But having observed these market criminals do just that on a day-by-day basis over the years, I don’t believe my eyes are deceiving me. – Silver analyst Ted Butler: 30 September 2015
It was a very quiet trading day yesterday. Gold and silver didn’t do much—and their new respective low ticks were so tiny they probably didn’t change things much between the Commercial and Managed Money traders. The only standout in the four precious metals yesterday was the palladium price action—and as I’ve already pointed out, the market went “no ask” for a few seconds—and look what happened. The palladium futures market is extremely tiny and illiquid at the best of times, so when real supply/demand fundamentals appear, it’s all the “da boyz” and their algorithms can do to prevent a market-clearing event in that precious metal.
Copper broke above its 50-day moving average, but was hammered back below it before the trading day was over—and the break-out in WTIC came close to suffering the same fate.
Here are the 6-month price charts for the three of the Big 6 commodities I was just discussing.
In the place of the other three commodity charts, I’m posting the charts of the sales from The Perth Mint which was featured prominently in all three stories about silver coin sales. I thank Nick Laird for passing them around on Wednesday, but I was already full up with charts in my Thursday column, so they had to wait until today.
These are the same charts that I posted for the U.S. Mint further up—-except this is Perth Mint sales. The first two charts are in troy ounces for gold and silver—and the third chart is the dollar amounts for each month in both. Nick’s charts only go back four years, but that’s plenty. The September silver coin sales stand out like the proverbial sore thumb that they are.
One has to wonder who cleaned out The Perth Mint last month? The buying had nothing to do with John Q. Public, because I know for a fact that retail sales in North America are currently so-so at best. My bullion dealer here in Edmonton has lots of inventory—and sales are pretty slow. He’s the biggest bullion dealer in Edmonton—and has been for years.
I would guess that Ted Butler’s ‘big buyer[s]’ have been forced to look outside North America, as there is no production capacity left in either the U.S. or Canada.
And as I write this paragraph, the London open is less than ten minutes away. The gold price had a slight negative bias through most of Far East trading on their Friday—and then at 2:00 p.m. Hong Kong time [for the third day in a row] a kind soul showed up and peeled a few more dollars off the price, as gold is currently lower by 4 bucks—and at a new low for this move down. Both silver and platinum caught the same 2:00 a.m. disease, but palladium is bucking the trend and is currently trading unchanged.
Net gold volume is a hair over 11,200 contracts—and silver’s net volume is fumes and vapours at 1,570 contracts. Based on these numbers, not much should be read into the current price action, except for the fact that in gold, the Managed Money traders will be selling long positions and going short—and JPMorgan et al will be lapping up the other sides of those trades.
After hitting its 96.06 low tick minutes after 10 a.m. Hong Kong time, the dollar index began to rally—and is currently up 11 basis points as London opens.
We get the job numbers at 8:30 a.m. EDT this morning—and as I said earlier this week, “da boyz” and their algorithms are always lurking about at that time, so nothing will surprise me when I crawl out of bed later this a.m.
We also get the new Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday—and just eye-balling the charts I’ll guess that we’ll see some deterioration in gold, but some improvement in silver.
And as I put today’s missive up on the website at 4:10 a.m. EDT, I note that gold is still down 4 dollars, silver is trending lower and down 6 cents the ounce. Platinum carved out a new low for itself for this move down—and is 8 dollars lower than its Thursday close in New York. Palladium is blasting higher—and is up 16 bucks at the moment.
Net gold volume is 14,700 contracts—and silver’s net volume is barely fogging the mirror at 2,600 contracts. The dollar index continues to crawl higher—and is currently up 19 basis points.
That’s all I have for today—and I should have lots to talk about in my Saturday column. Enjoy your weekend—and I’ll see you here tomorrow.
Ed
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