14 October 2015 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was under selling pressure of various intensities until around 10:30 a.m. Hong Kong time on their Tuesday morning—and it began to rally a bit staring shortly before noon over there. That lasted until 9 a.m. BST in London trading—and from there it headed lower until its spike low tick at the noon silver fix. Then it was rally time once again until the afternoon gold fix—and it traded more or less sideways from there before rallying a bit starting at 3 p.m. and into the 5:15 p.m. EDT close.
The low and high ticks were reported by the CME Group as $1,151.30 and $1,168.60 in the December contract.
Gold finished the Tuesday session in New York at $1,168.90 spot, up an even five bucks from Monday’s close. Net volume was decent at around 119,500 contracts.
Here’s the 5-minute gold chart courtesy of Brad Robertson once again. Midnight in New York is the vertical gray line at the 22:00 MDT point—and you can see the price/volume activity that occurred prior to that in morning trading in the Far East on their Tuesday. But, as is usually the case, all the big volume came from the COMEX open until the COMEX close, which is 6:20 to 11:30 a.m. on this chart. There was also a volume spike on the rally around 2 p.m. Denver time—4 p.m. EDT. Don’t forget the ‘click to enlarge‘ feature—and add two hours for EDT.
It was more or less the same chart pattern in silver, but “da boyz” were there for the third day in a row to ensure that silver wasn’t allowed to break above the $16 spot price mark. Once the rally between the London silver fix and the London p.m. gold fix were done, the silver price trade sideways until shortly before 1 p.m.—and then it got sold off into the COMEX close, before chopping sideways for the rest of the day.
The low and high tick in this precious metal were recorded as $15.615 and $15.985 in the December contract.
Silver was closed yesterday at $15.905 spot, up 9 whole cents. Net volume was nothing special at a bit over 33,000 contracts.
Here’s the New York Spot Silver [Bid] chart on its own—and you can tell from the sawtooth price pattern in morning trading that every time that the silver price hinted that it wanted it break to the upside, the sellers of last resort were there instantly to provide the necessary liquidity to prevent that from happening.
The platinum price followed a similar path to both gold and silver in most respects, except it got sold off very hard in early Far East trading, but began to recover around noon Hong Kong time. The high in Europe trading came shortly after trading began in Zurich, with the low of the day coming at noon in Zurich right on the button. The subsequent rally ended the same time as silver’s—shortly before 1 p.m. as the not-for-profit seller showed up the moment it broke above Monday’s closing price and threatened the $1,000/ounce price mark again. Once the COMEX closed forty minutes later, it traded sideways until 5:15 p.m. Platinum finished the day at $988 spot, down 8 dollars on the day.
Palladium followed a mini version of platinum’s trading day, complete with the not-for-profit seller showing up both times it broke above Monday’s closing price—and for the third day in a row it got slammed in New York trading. This time it was when silver and platinum got hit, just before 1 p.m. EDT. The selling was over by 2 p.m. —and it traded ruler flat in the close of electronic trading. Palladium finished the Tuesday session at $680 spot, down another 11 bucks. In the last three days it has been hammered by JPMorgan et al to the tune of 42 dollars the ounce.
The dollar index closed late on Monday afternoon in New York at 94.88—and rallied a bit in morning trading in the Far East, with the index topping out at the 94.97 level at 9 a.m. Hong Kong time. From there it began to head south with a vengeance, with the 94.54 low tick coming about 8:50 a.m. in London trading. At that point ‘gentle hands’ appeared, with the 94.93 high tick coming at 10:30 a.m. in New York. Within thirty minutes or so it was back down to the 94.75 level—and traded five basis points either side of it into the close. The index finished the Tuesday session at 94.76—down 12 basis points on the day.
And here, once again, is the 6-month dollar index chart so you can keep an eye on the mid-term dollar index action.
The silver equities started off in the red, but didn’t stay there for long—and were up about 2 percent or so by the time the London p.m. gold fix came and went. From that point the gold stocks chopped more or less sideways until, once again, sellers appeared for no reason that I could see, shortly after the COMEX close—and by 3:40 p.m. EDT were back to unchanged. A smallish rally into the close of trading saved the day, as the HUI close up a meager 0.39 percent.
It was almost an identical chart pattern in the silver stocks, except once the not-for-profit seller appeared shortly after the COMEX close, they were sold down into negative territory—and didn’t quite make it back into the black by the end of trading, as Nick Laird’s Intraday Silver Sentiment Index closed down 0.13 percent, which was basically unchanged.
Once again, dear reader—and for the second day in a row, it’s my opinion that someone was dicking with the precious metal equities.
The CME Daily Delivery Report showed that zero gold and 1 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.
The CME Preliminary Report for the Tuesday trading session showed that gold open interest in October declined by another 126 contracts, leaving 1,142 still open—and in silver the October o.i. increased by 2 contracts, leaving 14 still around.
Once again there were no reported changes in GLD—and as of 8:40 a.m. EDT yesterday evening, there were no reported changes in SLV, either. Where or where is all the gold and silver that’s definitely owed these ETFs?
Over at Switzerland’s Zürcher Kantonalbank, they updated their gold and silver ETFs for the week ending on Friday, October 9th—and this is what they had to report. Their gold ETF added 4,168 troy ounces, but their silver ETF dropped by 218,316 troy ounces.
There was a very decent sales report from the U.S. Mint yesterday. They sold 5,500 troy ounces of gold eagles—1,000 one-ounce 24K gold buffaloes—and another 845,500 silver eagles.
Although silver eagles sales are still on a tear, both Ted and I are getting the feeling that gold eagle/buffalo sales have backed off a bit this month. But there’s still a lot of month left to go where we could both be proven wrong. My bullion dealer had a good day yesterday, but said it was dead all last week.
It was another very quiet day in gold over at the COMEX-approved depositories on Monday. Once again they received nothing, but there was one kilobar shipped out of Manfra, Tordella & Brookes, Inc. depository. There was 4,001 troy ounces shipped out of Canada’s Scotiabank.
For a change, it was an exceptionally quiet day in silver, as nothing was reported received—and only 99,917 troy ounces were shipped out the door. Ninety-five percent of that amount came from Canada’s Scotiabank as well.
But it was very busy for the second day in a row over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, as they reported receiving 3,739 of them—and shipped out 11,107. All of the activity, once again, was at the Brink’s, Inc. depository—and the link to that action, in troy ounces, is here.
I have a very decent number of stories again today, so you’ll have to work a bit of overtime with our editing skills.
CRITICAL READS
Wall St. declines on China fears, weak profit expectations
U.S. stocks fell on Tuesday, with the Dow snapping a seven-day winning streak, on renewed fears of slowing growth in China and another bout of selling in biotech shares.
Biotechs led the S&P 500 and NASDAQ lower and the S&P health care index down 1.2 percent, had the biggest losses among S&P sectors, followed by industrials down 1.1 percent. The NASDAQ Biotech Index was down 3.2 percent, extending recent declines.
Worries about third-quarter earnings reports continued to weigh on sentiment. Earnings for S&P 500 companies are expected to have dropped nearly 5 percent year over year, which would be the worst quarter for earnings in six years, according to Thomson Reuters data.
“There’s a little nervousness about earnings reports that we’ll be seeing over the next couple or three weeks,” said John Carey, portfolio manager at Pioneer Investment Management in Boston.
This Reuters story, was posted on their Internet site at 5:31 p.m. EDT yesterday afternoon, but Patricia Caulfield sent it to me at 10:00 a.m. EDT yesterday morning, so it’s been updated at least once during the Tuesday trading session. It’s original headline read “Wall Street opens lower after weak China trade data“.
Weak trading hits JPMorgan, profit falls in three core businesses
JPMorgan Chase & Co, the biggest U.S. bank by assets, reported a 6.4 percent decline in revenue and profit declines in three of its four main businesses, underscoring how weak trading markets and low interest rates have hurt banks in recent months.
Like other banks, JPMorgan has been struggling to increase revenue in the face of weak demand for loans and low interest rates, which have been stuck near zero for overnight funds since December 2008.
Chief Financial Officer Marianne Lake offered little hope that conditions would improve anytime soon, saying on a conference call that analyst estimates for the current quarter appeared to be too high in light of slow market trading.
The lender, kicking off third-quarter results for big U.S. banks, managed a 22 percent rise in net income but this was mainly due to a tax benefit and lower spending on employee pay.
This Reuters article was picked up by the news.yahoo.com Internet site early on Tuesday evening—and I thank Jerome Cherry for sending it our way last night.
Mind The Bond Market Fractures — Credit Downgrades Highest Since 2009
Falling profits and increased borrowing at U.S. companies are rattling debt markets, a sign the six-year-long economic recovery could be under threat.
Credit-rating firms are downgrading more U.S. companies than at any other time since the financial crisis, and measures of debt relative to cash flow are rising. Analysts expect profits at large companies to decline for a second straight quarter for the first time since 2009.
The market for riskier debt has become snarled, raising fears that companies could have trouble repaying their obligations following several years of record debt issuance, low corporate defaults and persistently low interest rates. Reflecting those concerns, investors are now demanding more yield to own corporate bonds relative to benchmark U.S. Treasury securities.
This Wall Street Journal story put in an appearance on the Zero Hedge website on Monday sometime—and I thank Richard Saler for sharing it with us.
“There’s No More Fat to Be Cut:” Desperate Oil Producers Cut Salaries to Save Mission Critical Jobs
As layoffs become the energy industry’s main response to low oil prices, a handful of producers are aiming to trim personnel costs without pink slips by spreading the pain among their employees.
Companies including Occidental Petroleum Corp. and Canadian Natural Resources Ltd.are employing hiring freezes, caps on bonuses, and even across-the-board wage cuts to preserve jobs. They and others that already have reduced payrolls—including many drilling and well servicing firms—are reluctant to slash further, say energy-industry experts.
In part, they’re trying to avoid the type of skilled worker shortages that followed mass job cuts in prior downturns. But it’s also because their businesses can’t succeed without sufficient staff, especially if the downturn in oil prices reverses course.
“There’s no more fat to be cut,” said Deborah Byers, a partner at consultants Ernst & Young in charge of its U.S. oil and gas practice.
This Zero Hedge spin on a Wall Street Journal story appeared on their website at 12:35 p.m. Tuesday afternoon EDT—and it’s the second offering in a row from Richard Saler.
Oil Sands Boom Dries Up in Alberta, Taking Thousands of Jobs With it
At a camp for oil workers here, a collection of 16 three-story buildings that once housed 2,000 workers sits empty. A parking lot at a neighboring camp is now dotted with abandoned cars. With oil prices falling precipitously, capital-intensive projects rooted in the heavy crude mined from Alberta’s oil sands are losing money, contributing to the loss of about 35,000 energy industry jobs across the province.
Yet Alberta Highway 63, the major artery connecting Northern Alberta’s oil sands with the rest of the country, still buzzes with traffic. Tractor-trailers hauling loads that resemble rolling petrochemical plants parade past fleets of buses used to shuttle workers. Most vehicles carry “buggy whips” — bright orange pennants attached to tall spring-loaded wands — to help prevent them from being run over by the 1.6-million-pound dump trucks used in the oil sands mines.
Despite a severe economic downturn in a region whose growth once seemed limitless, many energy companies have too much invested in the oil sands to slow down or turn off the taps. In addition to the continued operation of existing plants, construction persists on projects that began before the price fell, largely because billions of dollars have already been spent on them. Oil sands projects are based on 40-year investment time frames, so their owners are being forced to wait out slumps.
This very interesting essay, filed from Fort McMurray here in Alberta, showed up on The New York Times website on Monday sometime—and I thank Patricia Caulfield for sending it our way.
Britain’s Inflation Rate Unexpectedly Drops Back Below Zero
Britain’s inflation rate turned negative for only the second time since 1960 in September, reflecting weak price pressures that the Bank of England has warned will persist into 2016.
Consumer prices fell an annual 0.1 percent after stagnating in August, the Office for National Statistics said in London Tuesday. Economists had forecast stagnation. Prices last declined in April.
The biggest downward impact on the annual inflation rate was from clothing and footwear, as well as gasoline.
The figures will reinforce the view that the BOE is at least months away from raising its benchmark interest rate from a record-low 0.5 percent. The BOE said last week that its near-term outlook for inflation had weakened since August and that price growth will probably stay below 1 percent until spring 2016, well below its 2 percent target.
This Bloomberg story was posted on their website at 2:30 a.m. Denver time on their Tuesday morning—and was updated about seven hours later. It’s another contribution from Patricia Caulfield.
European financials shrug off recent bad news
European financials’ credit risk has continued to fall in recent days despite a spate of write-downs and layoffs.
The challenges faced by European banks were highlighted last week when Deutsche Bank, Credit Suisse and Standard Chartered all announced large write-downs, job cuts and strategic realignments. These efforts to adapt to lift profits and increase competitiveness in the current global, highly regulated business environment come in the wake of years of volatility which saw all three firms come under new management.
The news of the write-downs was relatively well received by the equity market as Standard Chartered and Deutsche Bank all saw their shares trade higher in the wake of the developments.
This is particularly interesting for the later as the German bank announced that suspending its dividend was an option going forward. Positive investor sentiment was also reflected in the credit markets, where Deutsche Bank, which also announced that it was forecasting a €6.2bn third quarter loss, saw its 5 year CDS spread fall by a tenth from the level seen at the start of October.
If it’s really bad news, it must be good news—right??? Nothing to see here folks, please buy everything sight unseen without thinking—and then move along. This news item appeared on the markit.com Internet site on Monday—and it’s another contribution from Richard Saler.
Switzerland Said to Impose 5% Leverage Ratio on Big Banks
Switzerland’s finance ministry is asking the country’s biggest banks to comply with a too-big-to-fail rule modeled on U.S. standards after rejecting requests from UBS Group AG and Credit Suisse Group AG for easier terms, according to people briefed on the deliberations. The shares fell.
The ministry will demand that lenders have capital equal to about 5 percent of total assets, in line with the U.S. leverage ratio for its biggest banks and above the 3 percent minimum set in a global agreement by the Basel Committee on Banking Supervision, according to the people, who asked not to be identified because the talks aren’t public. The Swiss government will also align its calculation of the ratio with the method employed in the U.S., resulting in fewer types of debt counting toward capital, one of the people said.
The leverage ratio has gained importance as a measure of financial strength since the 2008 crisis. UBS and Credit Suisse had argued that the Swiss financial system isn’t comparable with the U.S., where lenders benefit from deeper capital markets. To meet the new targets the banks will need to add billions of equity to their buffers or shrink their activities.
This Bloomberg news item put in an appearance on their Internet site at 1:57 a.m. MDT on Tuesday morning—and was updated/corrected about two and a half hours later. I thank Patricia Caulfield for digging it up for us.
Dutch MH17 Commission Presents Crash Report
The board said that flight MH17 crashed as a result of a warhead which detonated as a result of a 9M38-series missile, which is in concurrence with the Almaz-Antey findings. According to the findings, this could mean that the warhead was launched from both the 9M18 and the 9M38M1 missile.
The board chairman Tjibbe Joustra added that Ukrainian authorities failed to close airspace despite armed conflict in the Donbass area.
The board added that despite Ukraine being aware of a threat to aviation in the region, it did not close the airspace.
The board concluded that the 9N314M warhead caused bowtie-shaped marks on the plane’s body, leading to the breakup of the plane in midair.
This news item was posted on the sputniknews.com Internet site at 2:03 p.m. Moscow time on their Tuesday afternoon, which was 7:03 a.m. in Washington—EDT plus 7 hours. I thank U.K. reader Tariq Khan for bringing it to our attention. Reader P.K. Holland sent us the New York Times version of this story—and it’s headlined “Malaysia Airlines Flight 17 Most Likely Hit by Russian-Made Missile, Inquiry Says“—and needless to say, the spin on borders on anti-Russian propaganda.
Putin Needles IMF as Russia Prepares Plan for Ukraine Default
President Vladimir Putin called on the International Monetary Fund to help Ukraine repay a $3 billion bond due December, as Russia said it was weighing plans for a possible default on the debt.
The Washington-based fund is preparing to allow countries supported by a loan program to default on debt to official creditors, Finance Minister Anton Siluanov said at a government meeting with Putin on Tuesday. Current policy only allows member states to miss payments to private investors, meaning Ukraine would risk a $17.5 billion loan from the IMF by not fulfilling obligations on the note.
“Seems to me it’s easier to go this way, add these $3 billion, so that they can pay and everybody’s fine,” Putin said at the meeting. Russia has so far waived its right to call early repayment of the bond to avoid putting Ukraine in a difficult position, he said.
The bond, which Russia bought from former President Viktor Yanukovych in 2013, remains a wildcard in Ukraine’s debt overhaul, needed to keep an IMF-led bailout on track and help lift the country from recession. The Finance Ministry has invited investors holding $18 billion in bonds, including Russia, to vote by tomorrow on restructuring terms agreed on with a group of creditors led by Franklin Templeton.
This Bloomberg offering was posted on their Internet site at 10:23 a.m. Denver time on Tuesday morning—and the stories from Patricia C. just keep on coming.
Turkey warns U.S., Russia against backing Kurdish militia in Syria
Turkey has warned the United States and Russia it will not tolerate Kurdish territorial gains by Kurdish militia close to its frontiers in north-western Syria, two senior officials said.
“This is clear cut for us and there is no joking about it,” one official said of the possibility of Syrian Kurdish militia crossing the Euphrates to extend control along Turkish borders from Iraq’s Kurdistan region towards the Mediterranean coast.
Turkey fears advances by Kurdish YPG militia, backed by its PYD political wing, on the Syrian side of its 900 km (560-mile) border will fuel separatist ambitions among Kurds in its own southeastern territories. But Washington has supported YPG fighters as an effective force in combating Islamic State.
“The PYD has been getting closer with both the United States and Russia of late. We view the PYD as a terrorist group and we want all countries to consider the consequences of their cooperation,” one of the Turkish officials said.
This Reuters news item, filed from Ankara, showed up on their Internet site at 7:47 a.m. EDT yesterday morning—and it’s courtesy of Patricia C. once again.
Say hello to my cruise missiles: Pepe Escobar
The New Great Game in Eurasia advanced in leaps and bounds last week after Russia fired 26 cruise missiles from the Caspian Sea against 11 ISIS/ISIL/Daesh targets across Syria, destroying all of them. These naval strikes were the first known operational use of state-of-the-art SSN-30A Kalibr cruise missiles.
All it took for the Pentagon was a backward look over the shoulder at the flight path of those Kalibr missiles – capable of striking targets 1,500 km away. Talk about a crisp, clear, succinct message from Moscow to the Pentagon and NATO. Wanna mess with us, boy? With your big, bulging aircraft carriers, maybe?
Moreover, on top of the creation of what is a de facto no-fly zone over Syria and southern Turkey, the Russian Navy cruiser Moskva, carrying 64 S-300 ship-to-air missiles is now docked in Latakia.
The proverbial anonymous U.S. sources could not but go on overdrive, spinning the Russians had four wayward missiles that landed in Iran. The Russian High Command ridiculed them; all missiles landed within eight feet of their targets.
This commentary by Pepe put in an appearance on the Asia Times website on Monday sometime—and I thank Tariq Khan for his second contribution to today’s column. It’s certainly required reading for any serious student of the New Great Game.
Syrian war’s al-Qaida affiliate calls for terror attacks in Russia
The Syrian war’s al-Qaida affiliate, Jabhat al-Nusra, has called for terror attacks in Russia, while also urging strikes on Alawite villages and placing bounties on the heads of Bashar al-Assad and the Hezbollah leader, Hassan Nasrallah.
The threats from the group’s leader, Abu Mohammed al-Jolani, were made on Tuesday in a taped call to arms that condemned the Russian intervention in the conflict, which began a fortnight ago. Jolani’s comments signal another escalation in the four-year war, in which his forces have become increasingly prominent.
“There is no choice but to escalate the battle and to target Alawite towns and villages in Latakia,” he said. “And I call on all factions to hit their villages daily with hundreds of missiles as they do to Sunni towns and villages.”
Jolani’s comments came as rebel groups aligned to the Free Syria Army (FSA) said they were now receiving more anti-tank missiles than at any time in the last two years, with supplies from Saudi Arabia and the Gulf states, which are facilitated by the US, ramping up since the Russian entry into the war.
This news item, posted in The Guardian, was filed from Beirut at 8:56 p.m. British Summer Time yesterday evening, which was 1:56 p.m. in New York—EDT plus 5 hours. I thank Patricia Caulfield for this article as well.
U.S. ammunition airdrop in Syria raises concerns amid reduced vetting of rebels
After scrapping its vetting program to aid Syrian rebels against the Islamic State, the U.S. military has airdropped tons of ammunition to a new band of fighters while softening its opposition to using its materiel to attack the Syrian leader, Bashar al-Assad.
A spokesman for the U.S. military task force said on Tuesday that discussion of lifted restrictions on targeting was a “moot point” since the 50 tons of ammunition airdropped to the Syrian Arab Coalition was not in an area where regime forces fight or Russian pilots overfly.
While the U.S. military previously vetted each Syrian militant receiving U.S. sponsorship, now the program vets only the leadership of rebel groups, raising the prospect that U.S. weaponry could migrate to the broader Syrian civil war. This was the main rationale once used by Barack Obama to limit the U.S. commitment in Syria, before indefinitely “pausing” the effort to build a Syrian anti-Isis force.
Guns for anyone—and everyone. This is the second story in a row from theguardian.com Internet site. This one, filed from New York, appeared there at at 8:25 p.m. BST on Monday evening, which was 3:25 p.m. EDT. I thank Patricia once again for this news item.
Vladimir Putin condemns U.S. for refusing to share Syria terror targets
Russian leader Vladimir Putin has issued a caustic defence of his country’s bombing raids in Syria, accusing the West of stonewalling requests for help on terrorist targets and failing to grasp the basic facts on the ground.
“We asked them to give us the information on the targets that they believe to be 100 percent terrorists and they refused to do that,” he said.
“We then asked to please tell us which targets are not terrorists, and there was no answer, so what are we supposed to do. I am not making this up,” he told a VTB Capital forum of bankers and investors in Moscow.
“Where is the free Syrian army,” he asked mockingly, alleging that munitions drops from the sky were falling into the hands of Isil, whatever the original intentions.
“I think some of our partners simply have mush for brains. They do not have a clear understanding of what is really happening in the country and what goals they are seeking to achieve,” he said.
This commentary by Ambrose Evans-Pritchard put in an appearance on the telegraph.co.uk Internet site at 9:18 p.m. BST on their Tuesday evening, which was 4:18 p.m. in Washington. I thank Roy Stephens for sending that story our way just before midnight Denver time last night.
Is the Pentagon Telling the Truth About Afghanistan? — Editorial Board, The New York Times
New data from the United Nations on the military advances by a resurgent Taliban is alarming for what it says about the deteriorating security situation in Afghanistan — and what it suggests about the American military’s honesty about what is happening there.
The fall of Kunduz two weeks ago was a startling sign of how the Taliban has reasserted itself, wresting a northern city from the control of the NATO-trained Afghan Security Forces, who are not doing a great job of showing they are up to defending their country. The United Nations data, reported by The Times on Monday and backed up by interviews with local officials, paint an even bleaker picture of an expanding insurgency that has spread through more of Afghanistan than at any point since the Taliban government was deposed at the end of 2001.
Compiled in early September before the latest uptick in violence, the data shows that United Nations officials have rated the threat level as high or extreme in about half of the country’s administrative districts. Contrast that with the assessment offered by Gen. John Campbell, the American commander in Afghanistan, when he testified before the Senate Armed Services Committee last week. “The Afghan security forces have displayed courage and resilience,” he said. “They’re still holding. The Afghan government retains control of Kabul, of Highway One, its provincial capitals and nearly all of the district centers.”
This NYT editorial, which was posted on their website yesterday, is a must read and, like it says, it’s starting to smell like the propaganda surrounding South Vietnam before it fell to the North, after the withdrawal of American troops—and I’m certainly old enough to remember that all too well. This is courtesy of Patricia C. as well.
Global economy loses steam as Chinese, European factories falter
World economic growth lost momentum in September, with China’s factory output shrinking again, euro zone manufacturing growth slowing, and U.S. activity steady.
The latest business surveys across Asia, Europe and the Americas paint a gloomier picture and are likely to prompt more calls for central banks to loosen monetary policy even further.
“The data probably increases the case for more stimulus in certain parts of the world, especially from the People’s Bank of China and the European Central Bank,” said Philip Shaw, economist at Investec in London.
“Those economies that are at less advanced paths of the recovery cycle — the key example is the euro zone, where we’re looking at more disinflation — may well find more stimulus is in order.”
This Reuters piece, co-filed from Bengaluru and London, put in an appearance on their Internet site at 11:20 a.m. EDT back on October 1, but I decided to post it anyway. It’s also courtesy of Patricia Caulfield, for which I thank her.
China poised to issue sovereign debt in renminbi in London
China is set to issue government debt in renminbi in London, picking the city as the first overseas financial centre in which to open a sovereign debt market as it ramps up efforts to popularise its currency, officials familiar with the issue said.
The plan is to issue Chinese Treasury bonds in renminbi in London after laying the foundations with launches of short-term debt by the People’s Bank of China, the central bank, the officials said.
The scheme is likely to be a key announcement in the visit of Xi Jinping, the president, to the U.K. next week, they added. It will be hailed as a breakthrough by Mr Xi’s British hosts, who are preparing to give the communist party leader a five-star welcome in an effort to gain an edge over the European rivals in attracting Chinese investment.
“London has been chosen ahead of other financial centres in Europe and the U.S.,” said one official familiar with Mr Xis visit. “This shows that Beijing has decided that London is the preferred location in which to build an offshore centre for renminbi exchange and investment in a non-Chinese timezone.”
The above four paragraphs are all that is posted in the clear of this story that appeared on the Financial Times website yesterday—and I found it embedded in a GATA release.
China may now be close to new gold benchmark pricing system — Lawrie Williams
Reports out of China suggest that the currently chairmanless Shanghai Gold Exchange (SGE) is on the verge of announcing a new chief executive in Jiao Jinpu, a senior official from the Chinese Central Bank – the Peoples Bank of China. (The SGE is an arm of the PBoC). The likely appointment of Jiao is seen as the definitive indicator that the SGE is now very close to setting up its much-heralded Yuan gold price benchmarking system to rival that in London and give China more control over gold prices in the future. Whether this will still happen this year, though, is rather less certain despite earlier suggestions that it would. Jiao will have to work fast to achieve this, but undoubtedly the groundwork is already well under way.
But the Chinese have also shown that they don’t hang around in implementing key new economically-oriented entities once the go-ahead decision has been taken and, according to a Reuters report Jiao is seen as a mover and shaker who should be able to move things forward rapidly assuming that the benchmark system process would be high on the agenda.
The SGE has been without a Chairman since the previous incumbent, Xu Luode, was promoted to Executive Vice President of the PBoC – which itself is an indicator of the importance of gold in the central bank’s policies. The Chinese view gold as a vital element in the global economic system and in its generally accepted push to position the Yuan as one of the world’s accepted reserve currencies, and while not necessarily to replace the US dollar as top dog yet it probably does have this longer term ambition and with far faster domestic growth still than is being seen in the Western economies. It would seem to be well on its way to achieving this.
This commentary by Lawrie showed up on the Sharps Pixley website yesterday—and it’s worth reading. I thank Patricia Caulfield for her final contribution to today’s column.
CME permanently bans 3 traders for spoofing, other violations
CME Group Inc. has permanently banned three traders who admitted to violations including the manipulative strategy known as spoofing, according to disciplinary notices issued on Monday.
A permanent ban is a severe punishment that CME, which owns the New York Mercantile Exchange, Comex, and other markets, does not often impose on traders who break the rules. The exchange operator more commonly uses fines and trading suspensions to discipline rule breakers.
On multiple occasions from February to April 2013, a trader named Nitin Gupta repeatedly entered large orders for crude oil, gold, silver, and copper futures contracts without the intent to trade, according to CME.
Nitin entered the orders to encourage others to trade opposite smaller orders that he had resting in the markets, the company said. After receiving a fill on his smaller orders, Nitin would then cancel the large orders, CME said.
This Reuters article, filed from Chicago on Monday afternoon, was something that was posted in yesterday’s edition of the King Report—and Bill King made the comment that “Guppies Get Punished, Whales Skate.” I found it on the gata.org Internet site yesterday—and it’s a must read.
Gold’s “Bigger Question” is Where to Store It – Marc Faber
Marc Faber has again encouraged individuals to own physical gold, be wary of possible government confiscation and said that the big question is where to store your gold.
“Because I think if we think it through, the failure of monetary policies will not be admitted by the professors that are at central banks.
They will then go and blame someone else for it and then an easy target would be to blame it on people that own physical gold because they can argue, well these are the ones that do take money out of circulation and then the velocity of money goes down…we have to take it away from them.”
That has happened in 1933 in the U.S…
This gold-related story was posted on the goldcore.com Internet site yesterday—and embedded in it is a 58-minute video interview with the good doctor. I haven’t watched a minute of it, so it’s up to you whether you want to spend the time or not.
Tocqueville Gold Strategy: Third Quarter 2015 Investor Letter — John Hathaway
Financial market turmoil has been what was needed to rekindle investment interest in gold, as we have argued in our investor letters this year. The onset of a bear market is what we envisioned in making this statement. A preliminary glimpse of what is what is needed to turn the tide for the gold market occurred in the 3rd quarter with a sharp decline in all global equity markets. On a year to date basis, most of the leading stock market averages are now in the red. The Dow Jones Industrial average has now declined for three consecutive quarters, only the third such string of losses in 40 years.
While the investment consensus appears to have shifted very slightly from complacent to wary, more damage to confidence must occur in our opinion for precious metals to shift into high gear. On a year to date basis through September 30th, gold bullion declined 5.9% and our benchmark, the XAU Index, fell 32.2%. During the third quarter, gold showed signs of stabilizing, however, having recovered from its low of $1085/oz. in late July to $1115/oz. as of September 30th, resulting in a decline of 4.9% for the quarter.
Our thinking is that unprecedented and radical monetary policy will end badly. On this point, we are in agreement with many financial luminaries who we have cited in past letters. They include Seth Klarman of Baupost Group, Stan Druckenmiller of Duquesne Capital Management, and Paul Singer of Elliott Capital Management. The effect (and possibly the design) of zero interest rates and quantitative easing has been to force investor savings into risky assets such as overvalued NASDAQ stocks, junk bonds, and emerging markets. The most obvious way for monetary policy to end badly is for investors of all stripes to suffer a prolonged bout of financial market adversity. Losses in risky assets will dissipate investor confidence, undermine economic activity, and leave the Fed with little choice other than to step on the accelerator for more easy money. It is in the midst of this sequence that we expect investors to rediscover gold in a big way.
The flywheel that has driven the price of gold downward over the past four years is the same one that will in our opinion propel the gold price to new highs. That flywheel, for lack of a better term, is synthetic or paper gold. Paper gold consists of futures contracts, options, and derivatives traded on the COMEX—and more opaquely over the counter in N.Y. and London. The predominant players in synthetic gold are high frequency traders whose computer models are agnostic and impervious to the considerations of fundamental analysis.
John’s quarterly gold commentary appeared on the tocqueville.com Internet site sometime yesterday—and I was on his e-mail distribution list for it—and here it. It’s a must read for sure.
The PHOTOS and the FUNNIES
The WRAP
Price action in the two week reporting period featured a temporary upside penetrating of the 50-day moving averages in both SLV and GLD and a rally of close to 80 cents in silver and $40 in gold and undoubtedly that motivated momentum type traders to buy, although trading volumes were not particularly impressive. Therefore, the increases in the short positions were somewhat shocking to me. The most plausible explanation for the large increases in the short positions in SLV and GLD is that the shares were shorted because there was not sufficient available physical silver and gold to deposit without driving both metals’ prices much higher.
This is pretty much standard in SLV, since silver has been tighter more often than gold in the past and along with COMEX artificial pricing is another dirty trick of the manipulation. Not enough metal to deposit because of net new share buying as is required by the prospectus? No worries, Mate, just short sell the shares. This way, no one’s the wiser and the buying of physical metal is avoided, along with the higher prices that buying would cause. Regular readers know this has long been a signature issue of mine. What’s different this time is that gold appears to be in the same boat as silver when it comes to physical tightness.
The quantities in both SLV and GLD are significant. In a moment, I’ll be discussing even bigger quantities of equivalent metal when I discuss the COT report, but the big difference is that the short sales in SLV and GLD are more “real” and physical than COMEX contracts. The 8 million oz of actual silver and 500,000 oz of actual gold that should have been deposited during the two weeks ending on September 30, would have had a much bigger impact on price had the actual metal been purchased and deposited than by some slick operator shorting what he didn’t own instead. — Silver analyst Ted Butler: 10 October 2015
Tuesday was just another day where the paper market set the price of the Big 6 commodities. This is especially true in the precious metals, silver in particular—as the “Do not pass $16 the ounce” sign was enforced with vigour once again. However, platinum and palladium, along with copper and WTIC, suffered the same fate as well. It was also another day where a mystery seller appeared in the precious metal equity markets—and the gains that were obviously going to take place, vanished before the end of the trading session.
As John Hathaway so eloquently put it in his quarterly commentary above—“The flywheel that has driven the price of gold downward over the past four years is the same one that will in our opinion propel the gold price to new highs. That flywheel, for lack of a better term, is synthetic or paper gold. Paper gold consists of futures contracts, options, and derivatives traded on the COMEX—and more opaquely over the counter in N.Y. and London. The predominant players in synthetic gold are high frequency traders whose computer models are agnostic and impervious to the considerations of fundamental analysis.”
Amen to that! But it also includes the other three precious metals, plus copper and crude oil.
Here are the 6-month charts for the Big 6 commodities once again, so you can see how they fared against the antics of JPMorgan et al, their HFT boyz and their spoofing on Tuesday.
Referring back to John’s quote, it’s becoming more obvious with each passing week that the miners, whether they be silver, gold, zinc or copper—are now expressing openly that their efforts are not priced based on the fundamentals of supply and demand. What they’re not saying, at least in the public press yet, is that they all know perfectly well that they’re dealing with a rigged market—and at Ground Zero is JPMorgan et al—and the CME Group.
It will be interesting to see how soon one of them, other than Keith Neumeyer over at First Majestic Silver, has the gonads to stand up in the main stream media and call their game. I’d bet serious money that these tiny hints from some of the big miners we’ve been seeing in the public press recently, is only the tip of the iceberg—and underneath they know the story cold, but just aren’t prepared to stick their necks out at this juncture. So one has to wonder who will be the big boy that finally bells this cat in prime time.
So we wait some more.
And as I type this paragraph, the London open is less than ten minutes away. Gold opened quietly in Far East trading on their Wednesday morning—and then shortly after 9 a.m. Hong Kong time, it jumped up five or six bucks—and has chopped sideways since. It was similar in the other three precious metals as well—and they’re all up on the day from Tuesday’s close in New York. However, it should be noted that silver isn’t being allowed to stray more than a couple of pennies above the $16 spot mark—and that keeps its 200-day moving average intact, which is the whole idea I’m sure.
Not surprisingly, gold volume is sky high at something north of 31,700 contracts—and in silver, the net volume there is just over 6,000 contracts. So it should be clear to all and sundry that these rallies are being met head on by “all the usual suspects” in the not-for-profit seller entourage—and that would be JPMorgan et al.
The dollar index has been chopping quietly lower since trading began in the Far East—and as London opens, it’s down 14 basis points.
Yesterday at the close of COMEX trading was the cut-off for this Friday’s COT Report—and I would expect that most of yesterday’s data should be in it. Just eye-balling the above charts, I’d guess that we’ll see some deterioration in gold—and maybe some improvement in silver. However, I wouldn’t bet the ranch on that.
And as I post today’s missive on the website at 4:30 a.m. EDT, I see that gold, silver and platinum continue to inch higher, but are obviously still running into HFT resistance. Palladium is chopping sideways. Net HFT gold volume is just north of 40,000 contracts now—and in silver it’s around 8,600 contracts. The dollar index continues to head lower, but is off its current 8:35 a.m. BST low tick—and down 27 basis points as of this writing.
As I said on Saturday, it’s really a mug’s game trying to call this market, but it should never be forgotten that “da boyz” are ever present to prevent the Big 6 commodities from blowing sky-high, which is what they want to do and, in turn, that would take the entire commodities complex with it.
At the moment, JPMorgan et al are still running this show—and will be until either something goes sideways on them, or they’re told to stand back.
I’m off to bed—and I’ll see you here tomorrow.
Ed
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