07 October 2015 — Wednesday
YESTERDAY in GOLD,SILVER, PLATINUM and PALLADIUM
The gold price did nothing until shortly before 2 p.m. Hong Kong on their Tuesday afternoon—and at that point it developed a positive bias that lasted until ten minutes after the COMEX open in New York. At that point a short covering rally of some size began—and that got capped shortly after the London close. From there it got sold down until fifteen minutes before the 1:30 p.m. EDT COMEX close—and it chopped sideways until electronic trading ended in New York at 5:15 p.m.
The CME Group recorded the low and high ticks as $1,134.50 and $1,151.00 in the December contract.
Gold finished the Tuesday session in New York at $1,147.60 spot, up $11.70 from Monday’s close. Net volume was a bit over 112,000 contracts, which wasn’t overly heavy.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. You can see the initial volume spike just minutes after the short covering rally began at 6:30 a.m. Denver time on this chart—and once the COMEX close was in at 11:30 MDT, volume fell off to nothing for the remainder of the day. Midnight EDT is the vertical gray line, add two hours for EDT—and the ‘click to enlarge‘ feature works wonders here.
As is almost always the case, the silver price behaved in a very similar fashion to the gold price. After its 11:30 a.m. EDT high tick above the $16 spot price mark, it was sold down to about $15.80 by shortly after 2 p.m. before chopping sideways into the close.
The low and high ticks in that precious metal were reported as $15.57 and $16.09 in the December contract.
Silver finished the day at $15.885 spot, up 22 cents on the day—and well of its high. Net volume was way up there once again at just over 55,000 contracts. I look forward to this Friday’s Commitment of Traders Report with great fear and trepidation.
It was mostly the same with the other two white metals, as their respective rallies got capped at, or just after the London p.m. gold fix as well. Platinum closed on Tuesday at $935 spot, up 23 dollars from Monday’s close—and palladium finished the day at $705 spot, up 15 bucks on the day. Here are the charts.
Like most rallies during the COMEX trading sessions in New York, their prices get capped at the London p.m. gold fix—and Tuesday’s trading action was no exception. It was obvious once again that they would have all closed materially higher if allowed to do so.
The dollar index closed late on Monday afternoon in New York at 96.08—and chopped sideways in a very tight range just above the 96.00 level until the 8:00 a.m. BST London open. Within a few minutes, the 96.00 mark was left in the dust, and the index continued to edge lower from there. Then there was a 35 basis point downdraft between the London p.m. gold fix and the London close—10 and 11 a.m. EDT—with the 95.40 low tick coming a few minutes before 4 p.m. in New York. From that point, the index rallied a few basis points into the close. The dollar index finished the Tuesday trading session at 95.46—down 62 basis points on the day.
Both the 50 and 200-day moving averages were taken out, but with the dollar index being just as managed as the precious metal markets, I wouldn’t read much into it—except for the fact that the brain deal technical funds eat this stuff up—and trade based on them, just like the Managed Money traders do in the gold and silver markets.
Here’s the 6-month U.S. dollar index chart so you can see the medium-term action. It will be interesting to see if the index is allowed to fall further, or will there be ‘gentle hands’ there to prevent it, just like their has been on several occasions so far this year.
And as I said in yesterday’s missive “If left to its own devices, there would be a great smoking crater in the spot where the dollar index currently resides.“
The gold stocks gapped up at the open again—and hit their high ticks minutes before 11:30 a.m. in New York trading. From there they chopped lower until 2 p.m.—and then rallied into the close. The HUI finished up another 4.30 percent. I was impressed.
The trading action in the silver equities was virtually identical—and Nick Laird’s Intraday Silver Sentiment Index closed higher by 3.97 percent.
The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.
The CME Preliminary Report for the Tuesday session showed that gold open interest for October actually rose 94 contracts, leaving 1,571 still open. Silver o.i. rose as well—up 5 contracts to 41 still open. I’m surprised that we’re this far into the October delivery month and there are still this many gold contracts open, as there’s no benefit to the short/issuers of holding out on deliveries.
There were no reported changes in GLD yesterday, but after the last three rally days, there’s an excellent chance that this ETF is owed a lot of gold—and it should start pouring in starting almost right away. As usual, there was a counterintuitive change in SLV, as an authorized participant withdrew 1,526,291 troy ounces.
Since September 1, there have been 9.05 million troy ounces withdrawn from SLV—and it’s a safe bet that no silver will be deposited on the back of this current rally in silver, either—as the physical silver just doesn’t exist. JPMorgan, the custodian and an authorized participant, will do what they always do—short the shares in lieu of depositing real metal as required by the prospectus.
The good folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on with their gold and silver ETFs as of the close of business on Friday, October 2—and this is what they had to report. Their gold ETF declined by 9,362 troy ounces—and their silver ETF dropped by 180,524 troy ounces.
There was no sales report from the U.S. Mint yesterday.
Another quiet day in gold over at the COMEX-approved depositories on Monday. Nothing was reported received—and only 4,441 troy ounces were shipped out. This activity isn’t worth linking.
But, as always, the manic in/out action in silver warehouse stocks more than made up for it, as 689,385 troy ounces were reported received—and 1,122,420 troy ounces were reported shipped out. There was a smallish 4,714 troy ounces transferred from the Eligible category, back in to Registered—and that happened at the Delaware depository. There was no activity at the JPMorgan depository once again. The link to Monday’s action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, they reported receiving 4,341 kilobars—and shipped out 154 of them. The link to that activity, in troy ounces, is here.
I have the usual number of stories for a weekday column—and I’ll happily leave the final edit up to you.
CRITICAL READS
Momo Massacre: Biotechs Are Crashing, Turn Red For 2015
On Sunday, after the latest New York Times piece by Andrew Pollack focusing on the “astronomical” prices increases by Valeant we made a simple observation: “More Pain For Biotechs Ahead: Valeant’s “Astronomical” Price Increases Take Center Stage; Pfizer Gets Dragged In.” Sure enough, on Monday Valeant promptly crashed over 10% as the second round of concerns about price caps emerged.
Then, this morning, the attack against biotech price gouging became two-pronged when this time The Wall Street Journal joined in with the NYT with an article overnight “For Prescription Drug Makers, Price Increases Drive Revenue” in which the topic was familiar to those following the interplay between “astronomical” biotech prices and the imminent congressional crackdown on said prices:
For those wondering, the tone’s article was not conducive to further upside in the sector. And, as we warned earlier today, it was just a matter of time before the market realized that the happy days for biotechs are now over. Sure enough, a quick glance at the NASDAQ Biotech Index reveals that after a modest drop on Monday when mostly Valeant was punished, the weakness today is widespread and is hitting the entire biotech sector which moments ago was down a whopping 6.4%, and just over 3,000, the biotech sector is once again not only red for the year, but in danger of taking out the 2015 lows hit in the last days of September.
This 4-chart Zero Hedge piece was posted on their Internet site at 12:01 p.m. EDT yesterday—and the charts are certainly worth a quick look. I thank Richard Saler for today’s first news item.
Q3 GDP to Slide After 16% Surge in August Trade Deficit; Imports Jump as Exports Drop
As was previewed last week in the advance release of international trade data which showed a big drop in the US deficit, moments ago the BEA confirms as much, when it reported that in August the US trade deficit blew out from $41.8 billion to a whopping $48.3 billion, an increase of 15.6%, as a result of a $3.7 billion drop in exports, offset by a $2.8 billion increase in imports. The August deficit, driven in major part by the surge in the US deficit with China which shot out to a whopping $32.9 billion, was the worst monthly print since March, and the second worst trade data read going back to early 2012.
This 3-chart commentary put in an appearance on the Zero Hedge website at 8:46 a.m. EDT on Tuesday morning—and it’s the second offering in a row from Richard Saler.
Marc Faber: We Have Colossal Asset Inflation
Gloom, Boom & Doom Report Editor Marc Faber discusses how low interest rates have helped to raise asset prices with Bloomberg’s Scarlet Fu, Joe Weisenthal and Alix Steel on “What’d You Miss?”
This 7:40 minute video interview with the good doctor showed up on the bloomberg.com Internet site at 3:26 p.m. MDT on Monday afternoon—and I thank Ken Hurt for digging it up for us.
U.S. Allies See Trans-Pacific Partnership as a Check on China
The Trans-Pacific Partnership trade deal was welcomed on Tuesday as a win for the United States in its contest with China for clout in Asia, as America’s allies expressed optimism about the impact of the 12-nation accord on a region worried about its dependence on the slowing Chinese economy.
The pact still must win approval in Congress, and analysts said the economic effects may be less sweeping than Washington predicts. But the mere fact that President Obama delivered on his pledge to close the deal came as a relief to allies in Asia. It was seen as a counterweight to China’s efforts to expand its influence not just in trade but in other areas, including its island-building in the disputed South China Sea and the establishment of a new regional development bank to compete with Western-led institutions.
The victory for the United States comes as China’s position in Asia has been thrown off balance by questions about the condition of its economy, which is expanding at its slowest pace in a quarter century and has sent tremors across the region. Even with the slowdown, though, the Chinese economy is growing faster than those of most industrial nations, and China enjoys deepening economic ties with almost all countries in the region.
The trade agreement is unlikely to change that, but it is an important symbol of America’s staying power in Asia, some experts said. “It does at least temporarily halt the seemingly inexorable waning of U.S. influence and the corresponding rise of Chinese influence in the Asian region,” said Eswar S. Prasad, a professor of international economics at Cornell University and former head of the China division at the International Monetary Fund.
This longish article, filed from Beijing, appeared on The New York Times website yesterday sometime—and I thank Patricia Caulfield for sharing it with us.
‘Free’ Trade as Outright War — Pepe Escobar
TPP is a geostrategic deal between the U.S. and Japan to contain China, attempting to shape an Asia-Pacific economic zone that might at least balance the second-largest economy on the planet.
Everything you need to know about the incessantly ballyhooed Trans-Pacific Partnership (TPP) deal comes directly from the lion’s mouth.
Here’s U.S. President Barack Obama: “When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products.”
For starters, TPP — as Obama himself bragged — is a sort of Pacific NATO on trade; the economic/commercial arm of the “pivoting” to Asia, part of the overall containment of China strategy. Needless to add, Beijing is not part of TPP.
This very interesting commentary by Pepe was posted on the sputniknews.com Internet site at 7:17 p.m. Moscow time on their Tuesday evening, which was 12:33 p.m. in Washington—EDT plus 7 hours. I thank U.K. reader Tariq Khan for sending it our way.
Norway Seen Tapping Its Wealth Fund to Ward Off Oil Risks
For Norway, the future may already be here.
The nation could as soon as next year start making withdrawals from its massive $830 billion sovereign wealth fund, which it has built over the past two decades as a nest egg for “future generations.” The minority government will reveal its budget plans on Wednesday and has flagged new spending measures and tax cuts.
Prime Minister Erna Solberg is trying to avoid a recession as a slump in the nation’s key commodity takes its toll on the $500 billion oil-reliant economy. Norway has already spent recent years using a growing chunk of its oil revenue to plug deficits while at the same time building the wealth fund. Now, with tax revenue from petroleum extraction down 42 percent on last year, budget spending in 2016 will probably outstrip income.
“We have reached a point where we will from now on see that the oil-corrected balance will be above the cash flow — that’s based on oil prices increasing slowly in the future,” said Kyrre Aamdal, senior economist at DNB ASA in Oslo. Tapping the fund’s returns marks a turning point that wasn’t expected to come for “several more years,” he said.
This Bloomberg article, via Zero Hedge, was posted on their Internet site at 7:51 a.m. Denver time on Monday morning—and I thank Richard Saler for his third offering in today’s column.
Air France protest scenes unacceptable, says Hollande
A violent Air France protest in which striking workers stormed a board meeting and ripped the shirts from executives’ backs has been denounced by François Hollande as unacceptable and bad for France’s image.
After pictures of bare-chested executives fleeing over a fence with their clothes torn to shreds made front pages across the world, the French president said: “Social dialogue matters, and when it’s interrupted by violence and disputes take on an unacceptable form, it can have consequences for the image and attractiveness [of the country].”
Hollande called for responsible talks between management and union leaders and compromise and negotiation at France’s loss-making carrier.
The troubled airline, which employs 52,000 people, is struggling to compete with its global rivals and is finalising a controversial restructuring plan involving 2,900 redundancies – 1,700 ground staff, 900 cabin crew and 300 pilots – between now and 2017. It’s courtesy of Patricia C. as well.
This news story, filed from Paris, showed up on theguardian.com website at 12:20 p.m. BST yesterday afternoon, which was 7:20 a.m. in New York—EDT plus 5 hours.
German Factory Orders Unexpectedly Fall Amid Economic Risks
German factory orders unexpectedly fell in August in a sign that Europe’s largest economy is vulnerable to weaker growth in China and other emerging markets.
Orders, adjusted for seasonal swings and inflation, dropped 1.8 percent after decreasing a revised 2.2 percent in July, data from the Economy Ministry in Berlin showed on Tuesday. The typically volatile number compares with a median estimate of a 0.5 percent increase in a Bloomberg survey. Orders rose 1.9 percent from a year earlier.
A China-led slowdown in emerging markets that threatens Germany’s export-oriented economy is exacerbated by an emissions scandal at Volkswagen AG that could affect as many as 11 million cars globally. Still, business confidence unexpectedly increased in September as the economy benefited from strengthening domestic demand on the back of record employment, rising wages and low inflation.
“While order data in August were overall disappointing, it’s too early to fall into a panic about the economy because orders from within the country and the currency union amid all the volatility still point upward,” said Stefan Kipar, an economist at Bayerische Landesbank in Munich. “However, high uncertainty about China and the cooling of the Chinese economy has left its mark.”
This is another Bloomberg story. This one appeared on their website at midnight MDT on Monday—and was updated three hours later. This is the fourth and final contribution of the day from Richard Saler—and I thank him on your behalf.
Europe-U.S. data transfer deal used by thousands of firms is ruled invalid
The E.U.’s highest court struck down a deal that allows thousands of companies to easily transfer personal data from Europe to the United States, in a landmark ruling on Tuesday that follows revelations of mass U.S. government snooping.
Many companies, both U.S. and European, use the Safe Harbour system to help them get round cumbersome checks to transfer data between offices on both sides of the Atlantic. That includes payroll and human resources information as well as lucrative data used for online advertising, which is of particular importance to tech companies.
But the decision by the Court of Justice of the European Union (ECJ) sounds the death knell for the system, set up by the European Commission 15 years ago. It is used by over 4,000 firms including IBM, Google and Ericsson.
The court said Safe Harbour did not sufficiently protect E.U. citizens’ personal data since the requirements of American national security, public interest and law enforcement trumped the privacy safeguards contained in the framework.
This Reuters article, filed from Brussels, showed up on their Internet site at 2:12 p.m. EDT on Tuesday afternoon—and I thank Patricia Caulfield for her second contribution to today’s column.
Russia Shuns No-Fly Zone for Syria as Clerics Urge Reprisals
Russia rebuffed calls for a no-fly zone over Syria as Saudi clerics and Islamist rebels urged for retaliation against its extended bombing campaign that has targeted militant groups in the Arab country.
Officials from Moscow ruled out sending troops to take part in ground operations in Syria, a day after the head of the Russian parliament’s defense committee said volunteers could go to fight, including some who took part in the conflict in Ukraine. NATO meanwhile said Russian incursions into Turkish airspace in recent days looked deliberate.
A no-fly zone would breach Syrian sovereignty and “isn’t based on the U.N. Charter and international law,” Deputy Foreign Minister Mikhail Bogdanov, who is Russia’s special presidential envoy to the Middle East, said in an interview published Tuesday by the Interfax news service. “Of course, we are against this. You need to respect the sovereignty of countries.”
Russia began its air campaign last week to bomb Islamic State and other jihadist groups in Syria, its first foray outside the former Soviet Union in more than three decades. Syria’s opposition groups, including Islamist rebels, and anti-Russia fighters with Islamic State have criticized the move, with many likening its intervention in Syria to the Soviet Union’s involvement in Afghanistan that began in 1979.
This Bloomberg article put in an appearance on their Internet site at 1:39 a.m. MDT on Tuesday morning—and was subsequently updated about four and a half hours later. It’s another contribution from Patricia C.
Stung by U.S. criticism on Syria, Russia reminds Washington of 9/11 support
Russia strongly rebuffed U.S. criticism of its air strikes in Syria on Tuesday, reminding Washington how it had supported the United States in the aftermath of the 9/11 attacks on New York in 2001.
Moscow has become increasingly critical of what it says is a Western propaganda campaign aimed at distorting the aims of its Syria intervention. The Kremlin says its primary goal is to help President Bashar al-Assad fight Islamic State militants. But the United States and others have accused it of acting to try to prop up Assad and of targeting other rebel groups instead.
In comments likely to draw a reaction in Washington, Russian Foreign Ministry spokeswoman Maria Zakharova on Tuesday evoked the Kremlin’s reaction to 9/11 when rejecting the U.S. stance on Russia’s Syria operation.
“I want to remind you … after the September 11th attacks, we shared the U.S. pain as if it were our own, understanding what terrorism is,” Zakharova told a news conference.
This Reuters news item, filed from Moscow, appeared on their website at 8:26 a.m. EDT yesterday morning—and my thanks go out to Patricia C. once again.
U.S. should attempt to disarm Russians in Syria: Brzezinski
Brzezinski, the national security adviser for former President Jimmy Carter, advised President Barack Obama to attempt to disarm the Russians if they keep attacking the CIA-trained militants in Syria.
“The Russian naval and air presences in Syria are vulnerable, isolated geographically from their homeland,” Brzezinski wrote in an article published by the Financial Times on Sunday. “They could be ‘disarmed’ if they persist in provoking the US.”
“But, better still, Russia might be persuaded to act with the U.S. in seeking a wider accommodation to a regional problem that transcends the interests of a single state,” he added.
Moscow’s apparent decision to strike CIA’s militants “at best” reflects “Russian military incompetence,” and worst, “evidence of a dangerous desire to highlight American political impotence,” wrote Brzezinski.
Where did they dig up this old fossil—and why is anyone still taking him seriously now that they have? But I did like his book “The Grand Chessboard: American Primacy and Its Geostrategic Imperitives“. This news item appeared on the presstv.ir Internet site on Tuesday afternoon—and it’s certainly worth reading for any serious student of the New Great Game.
CNN and the NYT Are Deliberately Obscuring Who Perpetrated the Afghan Hospital Attack — Glenn Greenwald
Much of the world spent the last 48 hours expressing revulsion at the U.S. airstrike on a hospital in Kunduz, Afghanistan. It was quite clear early on that the perpetrator of the attack was the U.S., and many media outlets and other organizations around the world have been stating this without any difficulties.
“U.S. Airstrike Kills 19 at Doctors Without Borders Hospital in Afghanistan,” states the straightforward Wall Street Journal headline, under which appears this equally clear lede: “A U.S. airstrike in the Afghan city of Kunduz killed at least 19 people at a hospital run by international medical-aid organization Doctors Without Borders early Saturday, prompting condemnation from humanitarian groups and the United Nations.”
But not CNN and the New York Times. For the last 36 hours, and up through this moment, this is the extraordinary opening paragraph in the featured article on the attack from the cable news network:
We’re bravely here to report that these two incidents perhaps coincidentally occurred at “about” the same time: There was a hospital that blew up, and then there was this other event where the U.S. carried out an airstrike. As the blogger Billmon wrote: “London 1940: Civilians throughout the city were killed at about the same time as a German air strike, CNN reports.”
This commentary by Glenn was posted on theintercept.com Internet site at 5:41 a.m. EDT on Monday morning—and the stories from Patricia just keep on coming.
General Is Said to Think Afghan Hospital Airstrike Broke U.S. Rules
The American commander in Afghanistan now believes that United States troops probably did not follow their own rules in calling in the airstrike that decimated a Doctors Without Borders hospital when no American and Afghan troops were in extreme danger, according to officials with direct knowledge of the general’s thinking.
Under the rules, airstrikes are authorized to kill terrorists, protect American troops and help Afghans who request support in battles — like those in Kunduz, recently taken over by the Taliban — that can change the military landscape. The idea is to give troops leeway but keep Americans out of daily, open-ended combat.
The Special Operations Forces most likely did not meet any of the criteria, the commander, Gen. John F. Campbell, has said in private discussions, according to the officials, who spoke on the condition of anonymity because they were not authorized to discuss the matter.
This news item showed up on The New York Times website yesterday sometime—and the headline used to read “General Takes Responsibility for Afghan Hospital Airstrike“. I thank Patricia Caulfield for sending it our way.
Obama considering plan to leave significant force in Afghanistan
President Obama is seriously weighing a proposal to keep as many as 5,000 U.S. troops in Afghanistan beyond 2016, according to senior U.S. officials, a move that would end his plans to bring U.S. troops home before he leaves office.
The proposal presented in August by Army Gen. Martin E. Dempsey, then-chairman of the Joint Chiefs of Staff, would focus the remaining American force primarily on counter-terrorism operations against the Islamic State, al-Qaeda and other direct threats to the United States.
Obama has made no final decision on the plan, which was developed before the Taliban captured Kunduz in September; it was the first major city to fall to the Taliban since the war began in 2001.
Afghan security forces, supported by American planes and combat advisers, have since been able to retake most, if not all, of the city. But the initial collapse of the Afghan forces in Kunduz has fed long-standing worries that Afghan forces lack the necessary air support, logistics and intelligence capabilities to survive on their own after the U.S. military leaves the country.
This rather longish article appeared on the washingtonpost.com Internet site on Monday sometime—and it’s the final offering of the day from Patricia Caulfield—and I thank her on your behalf.
U.S. Mint Silver Eagle Allocation Rises to 1.075 Million
For a second week in a row, the United States Mint increased its weekly allocation of American Eagle silver bullion coins. The agency has limited sales of the coins since their return after temporarily selling out in July.
This week’s allocation climbed 7.5% to 1,075,000 coins. Last week’s amount jumped 33.3% to 1 million coins from the prior week’s supply of 750,000 coins. The next weekly allocation will be announced by Oct. 13.
Silver Eagle inventories tend to get claimed quickly. For four straight weeks, authorized distributors for the U.S. Mint ordered all available coins within two days.
Sales of the 1-ounce, 0.999 fine silver coins at 36,753,500 are on track for an annual record. Last year when sales ended at a record totaling 44,006,000, the coins through Oct. 5, 2014 posted sales of 33,901,000. That’s 7.8% less than the amount claimed this year through October 5th.
This short story appeared on the coinnews.net website on Monday sometime—and I thank Brian Geisler for bringing it to our attention.
Number of gold savers doubles in Turkey
The number of people in Turkey opting to save in gold has doubled over the last three years to around 25 percent of the population, although 42 percent of Turkish citizens still do not save at all, according to a new survey.
While the rate of Turks who choose gold for saving was 11.8 percent in 2012, this rose to 24.9 percent in 2015, according to the Financial Literacy Survey, conducted by the Capital Markets Board of Turkey (SPK), Borsa Istanbul, the Turkish Capital Markets Association, Takasbank, the Central Registration Unit, and the Capital Markets Licensing Registration and Training Unit.
There was also an increase in the number of people who save in foreign currencies. While the rate of Turks who save in foreign currencies was 4.3 percent in 2012, the figure rose to 10.5 percent in 2015, according to the survey. There was also a rise in the number of people who have enrolled in a personal pension system, rising from 2.2 percent in 2012 to 5.4 percent in 2015.
This story, filed from Istanbul, was posted on the hurriyetdailynews.com Internet site on Tuesday sometime—and it’s something I found on the Sharps Pixley website just before midnight Denver time.
Is sentiment picking up at last for gold as price hits $1150? — Lawrie Williams
Over the past few trading days something positive has been seen in the gold investment sector. The gold price has seen signs of just a little strength – even in the absence of Chinese physical demand with the markets closed there for the 7-day Autumn Golden Week holiday. While Chinese gold trade will not quite have been zero (there is ongoing retail demand over the period), there will have been no Shanghai Gold Exchange deliveries and imports will also have been negligible and gold price premiums have been falling as a result.
But despite this reduction in physical gold movement into the country, the gold price has been strong (relatively in relation to recent months) driven mostly be at least signs of a minor change in sentiment towards the yellow metal in the West. This is making short speculators nervous and retail demand in the West has been seeing signs of a change – in part triggered over the past few days by the very disappointing non-farm US payroll figures coming in well below expectations and suggesting to the markets that any Fed interest raising programme may have been yet further delayed.
In truth, the recognition is coming about that the supposed U.S. economic recovery is not all it is purported to be. Some indicators show positive signs, but others not so and there is a worry out there that the next set of corporate earnings figures will emphasise the negative and put a heavy dent in stock market valuations. Some safe haven buying is thus returning to gold.
This commentary by Lawrie put in an appearance on the Sharps Pixley website yesterday—and it’s certainly worth reading.
World’s Biggest Counterfeit Operation – Mike Maloney and Rick Rule
This 2:03 minute bit of satirical nonsense between my friend Mike Maloney and Rick Rule was posted on the youtube.com Internet site on Monday—and it’s worth watching.
The PHOTOS and the FUNNIES
We’re deep into the fall season here in Edmonton—and just about the only waterfowl left are Canada geese and the odd mallard duck. I was out at the usual watering hole last Friday. It was a beautiful fall day—and it was wall-to-wall geese. I’m sick of taking pictures of these birds, but rather than come back with nothing, I took a bunch—and saved these two. The first is from about 40 meters away—and the second from over 100 meters. Depth of field is an issue in both shots—and it’s both a blessing and a curse. The ‘click/double-click to enlarge‘ feature brings them up to full screen size—and they’re worth the effort.
The WRAP
There’s no doubt in my mind that JPMorgan’s persistent and consistent buying of Silver Eagles over the past four and a half years is what set off the current retail silver shortage and not broad-based retail demand. Once retail supply lines are depleted, as they are in silver, it doesn’t take much additional demand to make the shortage more extreme.
A case in point is the sudden surge in demand for retail silver coins from the Perth Mint. The Mint reported [last] week that it sold more than 3.3 million oz of silver coins in September, up nearly five-fold from the average monthly demand (there was a much smaller percentage increase in sales of gold coins). Up until now, surging silver coin sales were a phenomenon for the U.S. and Royal Canadian Mints. But with both Mint’s production/supply capacity maxed out, silver demand seems to be spreading beyond North America.
I attribute the five-fold surge in sales of silver coins from the Perth Mint in September to JPMorgan; either directly, or as a result of JPM having depleted retail silver supply lines over the past 4.5 years. That’s the thing with shortages; unless you address the prime cause of the shortage (in silver’s case an artificially depressed wholesale price), there is no reason to expect the shortage to disappear without sharply higher prices. No one can foretell the day to day developments, but considering how dry the retail silver supply lines are in North America (thanks to JPM), it shouldn’t be surprising it appears to have spread elsewhere. — Silver analyst Ted Butler: 03 October 2015
It was another decent day for the precious metals yesterday. But like every other day of this rally that started at the release of the job numbers last Friday morning, this is all COMEX paper being traded, as the technical funds in the Managed Money traders cover shorts and go long—and JPMorgan et al provide all the necessary “liquidity” to prevent price from blowing sky high, which is what they would do if “da boyz” weren’t vigilant.
Gold still has a ways to go to get to its 200-day moving average if, in fact, it’s allowed to get that far. Silver actually broke through its 200-day m.a., but got sold down after that—and closed right on it. The volumes in silver have been over the moon in comparison to gold, as gold volumes have been pretty light—and neither Ted nor I are looking forward to Friday’s Commitment of Traders Report, because we already have a pretty good idea as to what it will show. And as said in yesterday’s column, the numbers will be pretty ugly—and adding in yesterday’s volume [if all of it makes into Friday’s report] just makes matters worse.
Palladium is closing in on its 200-day moving average as well, but platinum has barely made it above its 50-day moving average.
Here are the 6-month charts for the Big 6 commodities—and as you can tell, WTIC really broke out yesterday once its 50-day m.a. got broken to the upside over the prior few trading days. But, like gold and silver, it’s the Managed Money vs. JPMorgan et al in this commodity as well—and that rally will continue, along with the precious metals, as long as it’s allowed to.
And as I write this paragraph, the London open is about ten minutes away. The gold price inched higher in Far East trading, before rallying with a bit more conviction starting around 1:30 p.m. Hong Kong time. Currently it’s up about three bucks. Silver is up a nickel or so, platinum 9 bucks and palladium 6.
Net gold volume is just over 13,500 contracts—and in silver it’s just over 3,400 contracts. The dollar index dropped down to just above the 95.30 mark around noon Hong Kong time, but is now trading at 95.47—basically unchanged from its Tuesday close in New York. Overall, there’s not much going on at the moment.
Along with Friday’s COT Report, we get the latest Bank Participation Report for positions held at the close of COMEX trading on Tuesday. And as I keep repeating every month at this time, for that one day a month we get to see what the banks of the world are up to in the COMEX futures market and, as you already know dear reader, they’re normally up to quite a bit, especially the U.S. banks. I’ll have all of that in my Saturday column.
In my daily telephone conversation with Ted, he was of the opinion that these rallies have all the hallmarks of the “same old, same old“—especially in silver—and I agreed. Of course this could also be he start of a major rally in the precious metals, with some backing and filling along the way, so neither one of us want to write these rallies off too soon. It’s just a matter of waiting it out, because if the supply/demand fundamentals do finally reassert themselves, it really won’t matter what “da boyz” do. But, for the moment, they’re still in charge—and they’ll be the sole determinant of how high we go, and how fast we get there.
And as I post today’s effort on the website at 5:15 a.m. EDT, I note that the tiny rallies in all four precious metals didn’t even make it as far as the London open—and all are back to basically unchanged from Tuesday’s close in New York. Net gold volume is sitting right at 23,000 contracts—and silver’s net volume is a hair over 6,800 contracts. The dollar index has been crawling higher since its noon low in Hong Kong trading—and is currently up 7 basis points. Nothing much is happening or, more correctly, being allowed to happen.
It can only be assumed, like most days—with Tuesday’s price action being a case in point—any activity worthy of the name will occur after the noon London silver fix, or once trading on the COMEX starts at 8:20 a.m. EDT.
That’s all I have for today, which is more than enough—and I’ll see you here tomorrow.
Ed
The post Is Sentiment Picking Up At Last For gold As Price Hits $1,150? — Lawrie Williams appeared first on Ed Steer.