08 October 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
There wasn’t a lot price movement in gold yesterday, but it should be noted that the tiny rally going into the London open got sold back to unchanged by the London a.m. gold fix—and the rally from there got capped ten minutes after the COMEX open—and then was blasted to its low of the day starting shortly after 9 a.m. in New York. The subsequent rally got capped at 2 p.m. EDT—and from there got sold down for a loss.
The high and low ticks, such as they were, were recorded by the CME Group as $1,141.30 and $1,153.60 in the December contract.
Gold was closed in New York yesterday at $1,145.80 spot, down $1.80 from Tuesday. Net volume was pretty light at just over 104,000 contracts.
The silver price also rallied a bit going into the London open, but began to sell off just before it did. The low of the day [more or less] came at 9 a.m. BST—and after trading flat for a bit more than two hours, began to rally in a rather unspectacular manner. It flat-lined at the $16 spot mark from 8:30 a.m. until 1:05 p.m. during the COMEX trading session in New York. Then, in the last twenty-five minutes of trading, the price began to rally a bit more substantially—and was in danger of going ‘no ask’ until “da boyz” showed up with the necessary liquidity just before the COMEX close—and the price didn’t do much after that.
The low and high tick in this precious metal were reported as $15.92 and $16.11 in the December contract.
Silver finished the Tuesday session in New York at $16.05 spot—up 16.5 cents on the day. Net volume was very decent at just over 39,000 contracts. Once again, one can only imagine what the silver price would have done if the sellers of last resort hadn’t shown up when they did. But that’s what they’re there for, isn’t it?
Here’s the New York Spot Silver [Bid] chart on its own, so you can see the COMEX price action in more detail.
Platinum’s rally at the Zurich open—and the one at the COMEX open, ran into “da boyz” as well—and that, as they say, was that, although it did rally a bit during the New York lunch hour. Platinum closed yesterday at $945 spot, up 10 bucks from Tuesday and, like silver, would have closed materially higher if allowed to do so.
Palladium’s rally attempt above the $710 spot mark in Far East trading ran into the same not-for-profit seller as the other three precious metals minutes before the Zurich open. The $690 spot low tick came at, or just after, the London p.m. gold fix—and the palladium price never got a sniff of the $700 price mark after that. This precious metal finished the day in New York at $696 spot, down nine bucks from Tuesday’s close.
The dollar index closed late on Tuesday afternoon in New York at 95.46—and spent all of Tuesday chopping quietly higher 15 basis points or so either side of unchanged—and finished that day at 95.57—up only 11 basis points. Nothing to see here.
And here’s the 6-month U.S. dollar chart, so you can see where we’re at longer term.
The gold stocks chopped and flopped around the unchanged mark all day long yesterday, managing to close in the plus column, as the HUI finished the Tuesday session up 0.32 percent.
Ditto for the silver stocks, as Nick Laird’s Intraday Silver Sentiment Index closed higher to the tune of 0.81 percent.
For the second day in a row the CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday. Very strange.
The CME Preliminary Report for the Wednesday trading session showed that October gold open interest fell by 25 contracts, leaving 1,546 still around. October silver o.i. remained unchanged at 41 contracts.
I’ve commented on the remaining October gold open interest on several occasions already this month—and Ted had some things to say about it in his mid-week review to his paying subscribers yesterday.
“I continue to detect signs of physical tightness in COMEX deliveries. October used to a traditional month in COMEX gold and still retains some measure of being traditional, but reduced in the size of dealings. With more than a week gone in the October gold delivery process, only 126 contracts have been issued (of which JPMorgan stopped 43 in its proprietary trading account) and 1,500 open contracts remain.”
“I remember commenting on how tight the August gold delivery turned out, with Goldman Sachs having to wait until the very end of the month to get full delivery of the 2,500 contracts (250,000 oz) it stopped (also in its house account – what happened to banks getting out of commodities?). It is still my belief that gold is tight enough that anyone trying to take another 2,500 COMEX gold contracts for delivery would impact prices higher. Nothing about the October gold delivery process negates my belief.” — Silver analyst Ted Butler: 07 October 2015
Much to my absolute amazement, there were withdrawals from both GLD and SLV yesterday. In GLD, an authorized participant removed 57,457 troy ounces—and in SLV an a.p. took a whopping 1,717,060 troy ounces. Just when you think that both gold and silver should be pouring into these ETFs, the opposite is happening.
In the last two business days there has been 3.24 million troy ounces removed from SLV—and since September 1, that number is 10.8 million troy ounces. The so-called silver “analysts” of the world should be screaming their lungs out about this from the rooftops, but with the exception of Ted Butler and myself—not a peep. Why?
There was a very decent sales report from the U.S. Mint yesterday. They sold 11,000 troy ounces of gold eagles—4,000 one-ounce 24K gold buffaloes—and another 296,500 silver eagles. The mint has sold a hair under a million silver eagles during the first seven days of October.
Once again there was very little activity in gold over at the COMEX-approved depositories on Tuesday. Nothing was reported received—and only 1,799 troy ounces were shipped out, all from Canada’s Scotiabank.
Once again it was a busy day in silver, as 579,641 troy ounces were received—all at Canada’s Scotiabank—and 671,535 troy ounces were shipped out the door for parts unknown. Most of that came out of the CNT Depository—and the link to that action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they reported receiving 853 kilobars—and shipped out 143 of them. All of the activity, as usual, was at Brink’s, Inc.—and the link to that, in troy ounces, is here.
Nick Laird sent around a couple of charts yesterday afternoon that are definitely worth sharing. The first shows the now-official gold imports to China through Hong Kong for August—and that number was 59.319 tonnes.
And now that India’s official statistics for gold imports in August are available, Nick has updated his “Silk Road” gold chart—and as he carefully points out—“they swallowed 410.7 tonnes of gold in August.” Twelve times 410.7 considerably exceeds [by a very wide margin] the world’s yearly gold production, plus scrap. Note the lower of the two bar charts below to get some idea of these four country’s gold demand. Where oh where is the gold coming from to supply the demand for the rest of the world? A question with no answer at the moment.
I have more stories than I would like for a mid-week column—and I’ll leave it up to your editing skills to do the rest.
CRITICAL READS
U.S. Consumer Borrowing Climbs to New Record in August
U.S. consumer borrowing advanced at a solid pace in August, as Americans took out more auto and student loans.
The Federal Reserve said Wednesday that consumer borrowing rose by $16 billion in August, pushing the total to a fresh record of $3.47 trillion.
The August advance was slightly below the July gain of $18.9 billion. In June, credit had soared by $27.2 billion, the largest increase since November 2001.
Borrowing for car and student loans expanded by $12 billion in August. Borrowing in the category that covers credit cards rose by $4 billion.
This AP news item, filed from Washington, put in an appearance on the abcnews.go.com Internet site at 3:10 p.m. Wednesday afternoon EDT—and I thank West Virginia reader Elliot Simon for today’s first story.
NYSE Short Interest Surges to Record, Pre-Lehman Level
There are two ways of looking at the NYSE short interest, which as of September 15 surged by 1.4 billion to 18.4 billion shares or just shy of the level hit on July 31, 2008:
Either a central bank intervenes, or a massive forced buying event occurs, and unleashes the mother of all short squeezes, sending the S&P500 to new all time highs, or
Just as the record short interest in July 2008 correctly predicted the biggest financial crisis in history and all those shorts covered at a huge profit, so another historic market collapse is just around the corner.
The correct answer will be revealed in the coming weeks or months.
This tiny 1-chart item was posted on the Zero Hedge website at 7:28 p.m. EDT on Tuesday evening—and my thanks go out to Richard Saler for his first offering of the day. The embedded chart is definitely worth a look.
Credit risk returns to fixed income market
Both CDS and bond indices indicate that US fixed income risk has picked up to multi-year highs, though Monday saw that trend retreat.
The credit spreads in both high yield credit and investment grade corporate bonds jumped 80% from last year’s lows
Both HY and IG CDX indices registered multi-year highs last week
Yesterday’s bond rally saw credit risk retreat from recent highs
Credit risk has returned in earnest to the US bond market in the last 12 months. The market has been coming to terms with the reality that the tap of cheap credit unleashed by the last seven years of zero interest rates is coming to an end. Investors are now taking a more sceptical view of the growing debt pile sitting on company balance sheets. Idiosyncratic risk, stemming from China and the commodities slump, has also picked up markedly as the receding tide forces firms to address investor questions over their ability to repay debts taken on in rosier times.
This excellent article showed up on the markit.com Internet site on Tuesday sometime—and the embedded chart is definitely a ‘must see’. I thank Richard Saler for his second contribution in a row.
Washington’s Free Ride is Ending—-Foreign Central Banks Dump $123 Billion of U.S. Treasuries in Last Year
Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis.
Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt.
Few analysts expect much higher yields in the Treasury market as a result. Foreign private purchases of U.S. debt have increased amid pessimism about the world economic outlook. U.S. firms and financial institutions continue to buy Treasurys, as do some foreign central banks.
Still, many investors say the reversal in central-bank Treasury purchases stands to increase price swings. It could also pave the way for higher yields when the global economy is on firmer footing, they say.
This longish Wall Street Journal story found a home over at David Stockman’s website yesterday—and the chart alone is worth the trip. I thank reader U.D. for passing this item around early Wednesday evening EDT. The above headline is courtesy of David Stockman, but the WSJ headline actually read “Once the Biggest Buyer, China Starts Dumping U.S. Government Debt“.
Bill Gross: Capitalism ‘can’t survive‘ at 0% rates
Many people think the time has come for the Federal Reserve to wean the U.S. economy off easy money.
They point to improvements in the jobs market, the bull market in stocks and auto sales that have rocketed higher.
But Bill Gross, the dethroned “king” of the bond markets, is taking it a step further. He argues the very existence of capitalism is threatened by the Fed’s extremely low interest rates.
“Zero percent interest rates is destructive to the real economy because capitalism can’t survive at zero percent. It wasn’t meant to be that way,” Gross, a prominent bond fund manager at Janus Capital, told Bloomberg Radio on Monday.
This news item appeared on the money.cnn.com Internet site at 10:47 a.m. EDT on Tuesday morning—and it’s something I found in yesterday’s edition of the King Report.
Banking Crisis: Bernanke Bust is Here – Mike Maloney
This 8:12 minute video presentation from my good friend Mike Maloney was posted on the youtube.com Internet site—and it’s certainly worth watching if you have the time. I’m not sure what to make of it, but the FRED charts do nothing to sooth my soul. I thank Richard Saler for sharing this one with us as well.
Large pension fund files plan to cut retiree benefits under new law
Nearly 300,000 former truckers and their families would suffer significant losses under a proposal that uses a controversial new law to cut once sacrosanct pension benefits.
The huge Central States Pension Fund, which administers retirement benefits for some former and current Teamster truckers, said the reductions are the only way to save the plan from insolvency.
“A realistic rescue plan is needed now,” said Thomas C. Nyhan, executive director of the Central States Pension Fund. “The longer we wait to act, the larger the benefit reductions will have to be.”
Under the proposal, pensions for Central States’ 407,000 participants would be cut by an average of nearly 23 percent. But the pain would be distributed unevenly. Some participants, including the disabled, would not be subject to reductions. Older retirees would generally receive smaller cuts, while those who worked for defunct companies that did not keep pace with their pension funding obligations would face steeper reductions.
This news item showed up on The Washington Post website on Tuesday sometime—and I thank Brad Robertson for sharing it with us.
Brazil’s September Inflation Accelerates More Than Forecast
Brazil’s consumer prices in September rose more than economists forecast, as traders wager the central bank won’t be able to avoid raising borrowing costs again to tame above-target inflation.
Monthly inflation as measured by the benchmark IPCA index accelerated to 0.54 percent from 0.22 percent in August, the national statistics agency said in Rio de Janeiro. That was faster than the median 0.52 percent estimate from 40 economists surveyed by Bloomberg. Inflation in the 12 months through September slowed to 9.49 percent from 9.53 percent a month earlier.
Brazil’s annual inflation is running at more than double the official target, fanned by the biggest currency depreciation in emerging markets tracked by Bloomberg. Price indexes will face renewed pressure after state-run oil company Petrobras increased prices of gasoline and diesel. The central bank has repeatedly signaled that it has raised rates enough to slow price increases, while investors remain unconvinced, with swaps markets pricing in more tightening.
This Bloomberg news item appeared on their Internet site at 6:17 a.m. Denver time on Wednesday morning—and was updated about forty-five minutes later. It’s another offering from Richard Saler.
In North America’s Costliest City–Vancouver–Rich Chinese Take the Blame
James Hankle, a 50-something software engineer sporting blue jeans and a Green Party T-shirt, is explaining his fix for Vancouver’s runaway property prices when he’s interrupted by an eavesdropping passerby: “Stop allowing people from China to buy our houses and leave them vacant,” she says and walks away.
Despite British Columbia’s aversion to pipelines and affection for pot, housing affordability has pushed both aside as the number one issue raised by area residents in the run-up to Canada’s election this month. It’s not completely surprising given that Vancouver has become North America’s most expensive city.
Surging purchase prices have triggered protest movements like #donthave1million, started by a group of young professionals frustrated at being shut out of home ownership. They complain of having to delay starting families as they remain bunked in with roommates, often into their 30s and beyond.
The affordability issue speaks to broader campaign themes: the difficulty young people face getting established in the labor market, the economic anxieties of the middle class, growing concerns about income inequality, support for families with children. Residents also increasingly point fingers at wealthy Chinese immigrants and investors whose lavish embrace of the Pacific metropolis of 2.5 million has inspired reality TV shows with such gaudy names as “Ultra Rich Asian Girls in Vancouver.”
This is another Bloomberg article. It put in an appearance on their website at 4:00 p.m. MDT on Tuesday afternoon—and was updated 14 hours later. I thank reader U.D. for passing this one around yesterday.
$3 trillion corporate credit crunch looms as debtors face day of reckoning, says IMF
Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world.
Emerging market companies have “over-borrowed” by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF’s Global Financial Stability Report.
This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF’s twice yearly report.
The Fund warned there was no margin for error for policymakers navigating these hazardous risks.
This news story was posted on the telegraph.co.uk Internet site at 4:00 p.m. BST on their Wednesday afternoon, which was 11 a.m. in New York—EDT plus 5 hours. It’s another contribution from Richard Saler. There was also a Bloomberg story about this courtesy of Patricia Caulfield—and it’s headlined “The Case for the World Economy’s Defense as Recession Fears Rise“.
Ash Carter: ‘Don’t listen to Russia, U.S. has not agreed to cooperate in Syria’
The U.S. defense secretary made it clear on Wednesday that America has not agreed to, and will not, cooperate with Russia on military action in Syria unless Moscow dramatically changes its ‘flawed strategy’. Carter, speaking during a trip to Rome, said the U.S. will keep lines of communication open but will not work alongside Russia under current conditions.
This 42 second video clip appeared on The Guardian‘s website at 4:50 p.m. BST yesterday afternoon, which was 11:50 a.m. EDT in Washington. I thank Patricia Caulfield for sending it along late last night.
Russia Demolishes ISIL Targets, Slams Washington for Missing Their Mark
As the United States and its allies continue to accuse Russia of targeting militants not affiliated with the self-proclaimed Islamic State terrorist group, Moscow has pointed out the hypocritical nature of Washington’s claims, while continuing to devastate insurgent targets.
Despite the fact that Russia’s Air Force has destroyed dozens of IS installations in Syria, Western military officials – and Western media – continue to claim that the Kremlin is primarily targeting the Syrian opposition.
“I’m also concerned that Russia is not targeting ISIL, but instead attacking the Syrian opposition and civilians,” NATO Secretary General Jens Stoltenberg said during a news conference on Tuesday.
On Wednesday, the Russian Defense Ministry responded to these criticisms, pointing out that the US-led coalition is the one which has had difficulties with accuracy.
This very interesting news item showed up on the sputniknews.com Internet site at 10:08 p.m. Moscow time on their Wednesday evening, which was 3:08 p.m. in Washington—EDT plus 7 hours. I thank U.K. reader Tariq Khan for digging it up for us—and it’s worth reading.
Russia outflanks Turkey in Syria
Turkey has voiced strong opposition to the Russian military intervention in Syria. How far will Turkey take this campaign?
President Recep Erdogan has criticized the Russian move on successive days before leaving on a visit to Brussels and Paris Monday. He carried with him a 3-point agenda to rev up the ‘train-equip’ program for Syrian rebels, declaration of ‘terror-free zones’ in Syria and the establishment of a ‘no-fly zone’ in Syrian airspace.
Erdogan is upset that during his recent visit to Moscow, he was not taken into confidence regarding the imminent launch of Russian air strikes in Syria. Clearly, Russia outflanked Turkey. This puts Turkey in a fix.
On the diplomatic plane, Turkey faces virtual isolation. First and foremost, Erdogan’s standing in the West leaves much to be desired. His abrasive behavior has alienated the West. Erdogan is making an effort belatedly to mend fences with Europe, but it is too little, too late.
This commentary by career diplomat M.K. Bhadrakumar put in an appearance on the Asia Times website on Tuesday—and it’s the second offering in a row from Tariq Khan. It’s an absolute must read for any serious student of the New Great Game.
The Bombing of ‘Doctors Without Borders’ Hospital in Afghanistan — 5 Stories
1. Kunduz Will be Forgotten, Just Like All the Others – Pakistani Ambassador: Sputnik News 2. Doctors Without Borders airstrike–U.S. alters story for fourth time in four days: The Guardian 3. The Fall of Kunduz — John Lee Anderson: The New Yorker 4. Obama Issues U.S. Apology Over Bombing of Doctors Without Borders Hospital in Afghanistan: New York Times 5. Why Is the U.S. Refusing an Independent Investigation If Its Hospital Airstrike Was an “Accident”?: The Intercept
The above stories are courtesy of Tariq Khan and Patricia Caulfield—and I thank them on your behalf.
Yuan Gains as China Foreign Reserves Decline Less Than Forecast
The offshore yuan rose toward a two-month high after China reported a smaller-than-estimated decline in its foreign-exchange reserves, a sign that capital outflow pressures are easing.
The stockpile shrank $43.3 billion in September, less than the $57 billion drop predicted in a Bloomberg survey of economists. The hoard, still the world’s largest at $3.51 trillion, fell by a record $93.9 billion in August after a shock yuan devaluation spurred unprecedented outflows and prompted the central bank to sell dollars to prop up its exchange rate.
“Today’s data suggest concerns about capital outflows are overdone,” said Larry Hu, Hong Kong-based head of China economics at Macquarie Securities Ltd. “With stabilized expectations on the renminbi and more companies getting their positions hedged, the pace of decline in the reserves should slow.”
This Bloomberg article appeared on their website at 8:31 p.m. Denver time on Tuesday evening—and was revised about five hours later. I thank Richard Saler for his final contribution to today’s column.
Yen Advances as Bank of Japan Refrains From Adding to Stimulus
The yen rose for a second day against the dollar after the Bank of Japan refrained from adding to its already unprecedented monetary stimulus at the end of a two-day policy meeting.
Japan’s currency also gained for the first time in five days versus the euro after BOJ Governor Haruhiko Kuroda kept his pledge to expand the monetary base at an annual pace of 80 trillion yen ($666 billion). All but two of 36 economists surveyed by Bloomberg earlier this week forecast the policy would be unchanged, while 15 predicted the central bank would expand stimulus at its meeting on Oct. 30. At a briefing in Tokyo after Wednesday’s decision, Kuroda said the BOJ will keep easing until inflation is stable.
“Today’s meeting showed the BOJ will not be swayed into action easily,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Co. in Tokyo. “Receding expectations for BOJ action will gradually weigh on the dollar.”
This Bloomberg article, via Zero Hedge, showed up on their Internet site at 9:06 p.m. MDT on Tuesday evening—and it’s courtesy of Brad Robertson.
The Corporate-Friendly World of the Trans-Pacific Partnership
If the negotiations over the Trans-Pacific Partnership, the big trade accord covering twelve countries, which was finalized over the weekend, make anything clear, it’s that trade deals these days have much less to do with the classic ideas of free trade—lowering tariffs and quotas—than with things like intellectual-property rules, regulatory standards, and investor protection. The deal, which now goes to Congress for consideration, does apparently dismantle thousands of tariffs that U.S. goods face in many Asian countries, as well as some of our own trade barriers. But since the U.S. already has very low tariffs, the benefits that their removal will bring to American consumers (and foreign producers) will be small. Even the gains in export sales for American companies, which will find it easier to sell their products abroad, are likely to be modest. Instead, the real impact of this deal is going to be in the regulatory changes it imposes, and in the way it creates a more corporate-friendly environment.
Some of those regulatory changes are potentially good. The deal requires all twelve signatory countries, which circle the Pacific and include not only the United States and Canada but states as diverse as Peru, Vietnam, New Zealand, and Brunei, to follow the labor standards set by the International Labor Organization. Those include prohibitions against child labor, minimum-wage and maximum-hour rules, and workplace-safety regulations. The obvious question, of course, is whether certain of those countries will actually enforce these rules, but in theory this is a move away from a “race to the bottom” approach to globalization. And the deal limits countries’ ability to restrict the flow of information on the Internet. Even better is the way the agreement deals with conservation and wildlife trafficking. It would eliminate subsidies that contribute to overfishing. And it requires countries to enforce rules against the kind of illegal wildlife smuggling that has helped to devastate populations of endangered species.
These things all sound great, which is why they’re prominently featured on the White House’s “What’s In It” page about the T.P.P., and on its deal fact sheet. What those pages don’t highlight, though, are other parts of the agreement—the provisions that will toughen intellectual-property rules, for example, and provide more protection for pricey medicines derived from living organisms, known as “biologics.” The deal also establishes rules that will make it easier for companies to sue to block regulations that they believe endanger their profits. These are the parts of the deal that aren’t likely to do anything to “benefit the middle class,” at home or abroad.
This short commentary was posted on The New Yorker website on Tuesday sometime—and I thank Patricia C. for pointing it out.
The Trans-Pacific Partnership: Permanently Locking In the Obama Agenda For 40% of the Global Economy
We have just witnessed one of the most significant steps toward a one world economic system that we have ever seen. Negotiations for the Trans-Pacific Partnership have been completed, and if approved it will create the largest trading bloc on the planet. But this is not just a trade agreement. In this treaty, Barack Obama has thrown in all sorts of things that he never would have been able to get through Congress otherwise. And once this treaty is approved, it will be exceedingly difficult to ever make changes to it. So essentially what is happening is that the Obama agenda is being permanently locked in for 40 percent of the global economy.
The United States, Canada, Japan, Mexico, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam all intend to sign on to this insidious plan. Collectively, these nations have a total population of about 800 million people and a combined GDP of approximately 28 trillion dollars.
Sadly, just like with every other “free trade” agreement that the U.S. has entered into since World War II, the exact opposite is what will actually happen. Our trade deficit will get even larger, and we will see even more jobs and even more businesses go overseas.
This commentary by Mike Snyder showed up on the Zero Hedge website at 6:29 p.m. EDT on Tuesday evening—and I thank Scott Otey for sending it our way.
Bundesbank’s gold bar list isn’t all that it’s made out to be
Lots of publicity about the German Bundesbank’s publication of a list of the bars in Germany’s gold reserves in an effort to dispel suspicions that the metal is impaired in some way.
The definitive report is, not surprisingly, that of gold researcher and GATA consultant Koos Jansen, who details the history of the German gold controversy and notes that the Bundesbank’s list omits crucial information and so really doesn’t settle the issue at all.
I thank Chris Powell for wordsmithing ‘all of the above’ in his GATA release yesterday. Jansen’s commentary was posted on the bullionstar.com Internet site yesterday—and it’s definitely worth reading. There was also a Bloomberg story about this early yesterday morning MDT—and it’s headlined “Bundesbank to Doubters: Here Is Our Gold. Every. Single. Bit of It“—and I thank Patricia Caulfield for her final contribution to today’s column.
List of ‘Sold Out’ products grows at The Perth Mint
Subscriber Jeremy Williams lives in the same city that The Perth Mint is located—and this is the e-mail I got from him yesterday morning—“I always enjoy reading your news letter. I live in Perth, Australia—and so I have the Perth mint close by. Today I noticed that for the first time ever that I have been watching (the last few years) that many products are unavailable. Best Regards, Jeremy”
Well, it’s certainly true—and the perthmint.com link is worth thirty seconds of your time.
Market analyst in India cites GATA in criticism of Reserve Bank of India governor
Writing for the Indian Internet news site FirstPost, Shanmuganathan Nagasundaram, founding director of Benchmark Advisory Services in Mumbai, criticizes the governor of the Reserve Bank of India, Raghuram Rajan, for failing to recognize the debt bubble destroying world currencies, and, in doing so, Nagasundaram quotes GATA secretary/treasurer’s remark from years ago about rigged markets.
Nagasundaram’s commentary is headlined “Why Raghuram Rajan Is Now a Party to Inflating the Asset Price Bubble“—and it appeared at the firstpost.com Internet site at 5:26 p.m. IST on their Wednesday afternoon. I found ‘all of the above’ in a GATA release yesterday.
Chinese Gold Reserves Up Another 15 tonnes as Forex Reserves Tumble $43 Billion
Latest gold reserve figures from the Chinese central bank show that the country added another 15.01 tonnes in September. At September’s average gold price that will have equated to around a little under US$600 million in value. But total Chinese forex reserves dived by a massive $43.3 billion to their lowest level in over two years, so the official gold purchase figure – if it is to be believed – forms only a very small part of this.
Some see the additional gold taken into the bank’s coffers as yet another indication of China’s intent to diversify its forex reserves out of the dollar, but the amounts are tiny relative to the size of the country’s overall forex reserves which still sit at a massive $3.5 trillion! The big September fall (1.2%) in the latter either suggests a huge programme of mostly dollar denominated sales in order to maintain the country’s current currency relationship with the greenback and to help prop up the domestic economy, or perhaps some other unknown transactions involved – or a combination of both.
We can speculate that one such other transaction could be that China is buying much more gold than it is saying and holding it in other accounts which it doesn’t feel the need to report to the IMF as part of its official gold reserves. It has done this in the past – for example claiming that its gold reserve total was unchanged from April 2009 to June this year and then suddenly announcing it had miraculously risen from 1,054 tonnes to 1,658 tonnes at the end of that month. A rough calculation suggests that it had thus been buying an average of 8 tonnes a month over that six-year period – a figure which few analysts consider credible in that even some of the more conservative ones feel the country’s actual purchases have been perhaps more than 30 tonnes a month over that period of time.
This commentary by Lawrie was posted on the Sharps Pixley website on Wednesday sometime—and it’s worth reading.
Turkey’s Gold imports fall 88.45% Y/Y in September
Turkey’s Gold imports in September declined to 1.45 tonnes, down 88.45% as compared to 12.59 tonnes in the same month last year, according to latest data released by Borsa Istanbul, the exchange operator in Turkey.
Gold imports also recorded a 87.54% decline in September when compared to the import of 11.67 tonnes a month earlier.
The country’s year to date gold imports totalled 39.69 tonnes, declined 39.46% from the import of 65.57 tonnes recorded in January- September period last year.
But silver imports were huge—and I’ll have the charts for both in tomorrow’s column. The above three paragraphs are all there is to this tiny gold-related story, filed from Ankara yesterday. It was posted on the bullionstreet.com Internet site at 2:39 p.m. India Standard Time [IST] on their Wednesday afternoon. It’s an item I found on the Sharps Pixley website last night.
The PHOTOS and the FUNNIES
After two months or so in its ultra-drab ‘eclipse’ plumage phase, here’s a drake mallard duck resplendent in its new fall/winter/spring outfit. It swam by quite close to the shore—less than 10 meters away, so you’ll notice some out-of-focus plants in the foreground. His ‘significant other’ was 30-odd meters away in slightly rougher waters—and her new outfit is something less than spectacular. I had to crop that photo a bit. The red in each shot is the reflection of a building in the far-distant background. The ‘click/double-click to enlarge‘ feature really helps out here—as the intricacy of the new feather patterns in both birds is on full display.
The WRAP
Most notably, there is continued physical turnover (and now reductions) in the COMEX silver warehouses. I know I beat this to death, but it is so unusual and has persisted for so long (that same 4.5 years), that it deserves to be beaten to death. What puzzles me most is that almost no one else raises the issue, even though it is unique to COMEX silver. At a bare bones minimum, some explanation is in order for a phenomenon that is unprecedented, easily documentable—and is occurring in the second largest public stockpile of silver in the world. My bottom line conclusion is that this frantic inventory turnover is indicative of such strong physical demand that it can morph into an outright wholesale silver shortage at any moment. Once again, a genuine wholesale physical silver shortage will trump any and all paper maneuvering on the COMEX.
After three days of the heaviest trading volume and price appreciation seen in months in the big silver ETF, SLV, it was reported [on Tuesday] that silver holdings fell by 1.5 million oz. [Plus another 1.7 million after Ted filed his Wednesday column – Ed] This continues a recent (also near 4.5 years old) counterintuitive pattern unique to SLV. Normally, price appreciation and heavy trading volume in SLV would be thought to result in metal deposits, not withdrawals, because that’s when net new buying is most likely to occur. In fact, based upon the trading volume in SLV from Friday through Tuesday, my back-of-the-envelope calculation was that the trust was “owed” as much as five million oz, with no withdrawals expected.
The most plausible explanation for [these withdrawals] is that a large player (JPM) was a purchaser of shares in SLV and quickly converted the shares into metal to hide ownership. If there are no deposits over the next few days (if prices hold up), it will also be likely that there was an increase in shares of SLV shorted, although that data won’t be included in the new short report due this week. The actual withdrawal of metal from SLV and lack of deposits suggest tightness in the physical wholesale market, as does the COMEX silver warehouse turnover. – Silver analyst Ted Butler: 07 October 2015
Just eye-balling the four precious metal charts at the top of the page, it appeared like not much happened in any of them yesterday. But when you drill down a bit, nothing could be further from the truth, as JPMorgan et al were there when they had to be, or wanted to be—and there was nothing free-market about any of yesterday’s price action.
Here are the 6-month charts for the Big 6 commodities. Silver closed a bit above its 200-day moving average—and palladium is starting to look toppy from a brain-dead T.A. perspective. Copper added a penny to its gains, as it continues to inch along just above its 50-day morning average—and WTIC couldn’t add to Tuesday rally and got sold off a bit yesterday.
And as I type this paragraph, the London open is less than two minutes away. In gold, the selling pressure has been quiet, but continuous right from the 6 p.m. EDT open in New York on Wednesday evening. The same can be said for silver until 9 a.m. Hong Kong time on their Thursday morning—and at that point “da boyz” and their algorithms set a new price for silver—and that was just under the $15.60 mark an hour later—a drop of a bit over 45 cents. Nothing free market about that. Platinum and palladium certainly weren’t spared, as platinum is down 11 bucks at the moment—and palladium is down 8 dollars the ounce.
Net gold volume is just north of 20,000 contracts, which is pretty decent for this time of day—and silver’s net volume is a whopping 16,000+ contracts, as once the new low price was set by JPMorgan et al, the technical funds began to sell longs by the boat load, with all the Commercial traders feasting at the trough for profit and price management purposes.
The dollar index has been sliding quietly lower through all of Far East trading—and is down 13 basis points now that London has been open seven minutes.
Well, I’m certainly not happy to see the powers-that-be show up at such an early stage in these rallies, especially in silver. But with a guaranteed sky high Commercial net short position in that precious metal, it nearly goes without saying that “da boyz” would be looking to engineer a price decline for fun, profit and price management purposes at some point—and it may or may not have started at 9 a.m. Hong Kong time.
It’s really too soon to tell, but I’ve seen this movie before on too many occasions, as has Ted—and it always starts the way it did last night. I would expect that we’ll know more by the London p.m. gold fix, or maybe at the COMEX close later today. So we wait.
And as I put today’s missive up on the website at 4:40 a.m. EDT, I note that despite the fact that dollar index took a 35+ basis point header starting about thirty minutes before the London open, all the precious metals are still down on the day—gold by a dollar or so, silver by about 40 cents, platinum by 9 bucks—and palladium by 4 dollars.
Net HFT gold volume is around 24,500 contracts—and silver’s net volume is just over 18,000 contracts. The dollar index is down 33 basis points as of this writing. One would think that with the dollar index under such pressure, that the precious metals would be rising. But as you already know from long experience, dear reader, it matters not what’s going on in the currency markets, as all the matters is what JPMorgan et al are doing in the COMEX futures market.
I have no idea what to expect during the rest of the Thursday trading session, but based on what I see at the moment, I’m not expecting good things—and absolutely nothing will shock me when I check the Kitco charts when I roll out of bed later this morning.
See you tomorrow.
Ed
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