03 November 2015 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price started the Sunday evening off with a spike down at the open—and by late afternoon trading in the Far East, it was back to unchanged. Then London began to trade—and ‘da boyz’ and their algos set the low tick of the day about twenty minutes after the London p.m gold fix. The subsequent rally, such as it was, ended at or shortly after the 1:30 p.m. EST COMEX close. From there it got sold down a bit into the 5:15 p.m. close of electronic trading.
The high and low tick were reported by the CME Group as $1,142.70 and $1,132.50 in the December contract.
Gold finished the Monday session in New York at $1,133.40 spot, down $8.30 from Friday’s close. Net volume was rather subdued at just over 89,000 contracts, despite the fact that gold broke through, and close well below, its 50-day moving average.
Here’s the 5-minute gold tick chart courtesy of Nick Laird. There was decent volume on the engineered down/up spike when trading began in New York on Sunday evening—and that slightly elevated volume continued for the next hour or so. Volume began to pick up again shortly after the noon silver fix in London, which is 5:00 a.m. Denver time on this chart—and once COMEX trading was done at 11:30 MST on the graph below, volume fell away to almost nothing. Midnight Sunday night is the vertical gray line closest to the middle of this chart, add two hours for EST—and don’t forget the ‘click to enlarge‘ feature.
Silver was under a bit of choppy selling pressure up until shortly after 2:30 p.m. Hong Kong time—and then began to head lower. This decline was interrupted by a 2-hour rally that began at or shortly after the London a.m. gold fix—but shortly before 1 p.m. GMT, the price was under pressure again, with the spike low coming minutes after 10 a.m. EST. Silver began to rally the same time as gold, about 10:20 a.m.—and that lasted until just before 2 p.m. in electronic trading, and didn’t do much after that.
The high and low tick in this precious metal were reported as $15.55 and $15.25 in the December contract.
Silver closed yesterday in New York at $15.405 spot, down 13 cents from Friday. Net volume was slightly elevated at just under 36,000 contracts. Silver is about two bits above its 50-day moving average, so it’s only a matter of time before JPMorgan et al do the dirty here as well.
Platinum was under selling pressure of one form or another on Monday as well—and it’s low tick came at the 9:30 a.m. open of the equity markets in New York. Then, like silver and gold, it was allowed to rally until shortly after the COMEX close—and from there got sold down a few dollars. Platinum finished the Monday session at $976 spot, down 8 dollars from its Friday close. It was down double that amount at its low tick.
It was similar in palladium, but the long knives really came out at 2 p.m. Zurich time—and by noon in New York, it was down an even 30 dollars from its close on Friday. But, like the other three precious metals, it rallied back until shortly after the COMEX close—and got sold down a bit after that as well. Palladium finished the day at $647 spot, down 27 bucks from Friday.
The dollar index closed late on Friday afternoon in New York at 96.93—and chopped lower in a 25 basis point range until its 96.64 low tick was set a minute or so before 9 a.m. EST on Friday morning. From there it rallied back to 96.95 shortly before 3:30 p.m.—and faded a hair into the close, finishing the Monday session at 96.91—basically unchanged on the day.
And, for information purposes, here’s the 6-month U.S. dollar chart so you can see the medium term trend at a glance.
The gold stocks opened down a bit, hitting their lows the same time as the physical metal, which was about 10:20 a.m. in New York trading. From there they rallied quietly higher, with the absolute high tick coming at 2:30 p.m. EST—and from there they got sold down a bit into the close. The HUI finished higher to the tune of 1.03 percent.
The trading pattern was very similar for the silver equities—and Nick Laird’s Intraday Silver Sentiment Index closed up 0.63 percent.
I was certainly happy to see the precious metal shares close in positive territory yesterday, but it was also very counterintuitive—and this time to the upside.
The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.
The CME Preliminary Report for the Monday trading session showed that November gold open interest declined by 11 contracts, leaving 282 contracts still open. Silver o.i. for November remained unchanged at 11 contracts.
There were withdrawals from both GLD and SLV yesterday. In GLD, an authorized participant took out a chunky 95,733 troy ounces—and in SLV there was 715,215 troy ounces removed.
There was no sales report from the U.S. Mint yesterday.
Nick sent around a couple of charts on Saturday showing the dollar amount of gold and silver coin sales at the U.S. Mint for October. The first chart shows gold coins sales—gold eagles and buffaloes combined. The second one is for silver eagle sales.
The gold chart shows the obvious—that Ted Butler’s ‘big buyer’ has stepped aside in October, as sales are down substantially from sales in Q3/2015.
It was all zeros in gold over at the COMEX-approved depositories on Friday, as nothing was received or shipped out.
It was much busier in silver, as 1,082,711 troy ounces were reported received—and all of that went into Canada’s Scotiabank. There was 360,783 troy ounces taken out—and it all came out of Brink’s, Inc.
And, not that it matters, but there was 88,521 troy ounces transferred from the ‘Registered’ category and back into the ‘Eligible’ category. I’m relieved to see that the nut-ball lunatic fringe is no longer making a big deal out of this Registered/Eligible thingy anymore, as it was all so meaningless. All it did was confuse people into thinking that it really mattered, when it didn’t. The link to all that action is here.
Over at the COMEX-approved gold kilobar depositories on their Friday, they reported receiving 1,110 kilobars—and shipped out 1,125 of them. All of the activity, as per usual, was at the Brink’s, Inc. depository—and the link to that, in troy ounces, is here.
Here is another chart from Nick. This one shows that 19.9 metric tonnes of gold were shipped out of the New York Fed’s “Earmarked Gold Holdings” in September—and I have a Zero Hedge story about this in the Critical Reads section.
And lastly, Nick also included this chart showing the gold imports/purchases by the “Silk Road” countries updated with September’s data, which was 327.59 tonnes. And as you can tell from the lower chart, these four countries [when you average out the months] have comfortably consumed all the mined gold in the world [and then some] for about the last three calendar years in a row. By the way, Mike Maloney has an absolute must watch video on this—and it’s linked here. It’s also posted in the Critical Reads section as well. The ‘click to enlarge‘ feature really helps with this graph.
I have a decent number of stories for a Tuesday column—and I hope you’ll find a few that interest you.
CRITICAL READS
Buyback index signaled the 2000 and 2007 crashes—and it’s falling again
Stocks with big buyback programs are struggling this year, and according to one technician, a similar lag has previously preceded two market crashes.
Out of the nine S&P 500 companies with the biggest buyback programs, four are down in stock price over the last year. Exxon Mobil, IBM, 21st Century Fox and Merck are all negative for the year, and Oracle and Intel are fighting to hold onto incremental gains.
According to Oppenhemier’s S&P buyback index, stocks with the highest buyback ratios have been falling behind the broader market. Underperformance of this index coincided with a market top in 2000 and again in 2007, technician Ari Wald of Oppenheimer said Wednesday on CNBC‘s “Trading Nation.”
This 2:53 minute video clip, is worth watching. There’s also a transcript with several embedded charts—and the story is definitely worth the trip. It was posted on the CNBC‘s website very early Friday morning EDT—and it’s something I found in yesterday’s edition of the King Report.
Money Flooding Out of Canada at Fastest Pace in Developed World
Money is flooding out of Canada at the fastest pace in the developed world as the nation’s decade-long oil boom comes to an end and little else looks ready to take the industry’s place as an economic driver.
Canada’s basic balance — a measure of national accounts that spans everything from trade to financial-market flows — swung from a surplus of 4.2 percent of gross domestic product to a deficit of 7.9 percent in the 12 months ending in June, according to analysis from Kamal Sharma, a foreign-exchange strategist at Bank of America Merrill Lynch. That’s the fastest one-year deterioration among 10 major developed nations.
More recent data on where companies and mutual-fund investors are putting their money show the trend extended into the second half of the year, suggesting demand for the Canadian dollar and the country’s assets is still ebbing. The currency is already down 11 percent this year, after touching an 11-year low against the U.S. dollar in September.
This Bloomberg article put in an appearance on their Internet site at 10:01 p.m. MST on Sunday evening, but was subsequently updated about nine hours later. I thank Ottawa reader Lawrence Clooney for sending it our way.
$20 Trillion In Government Bonds Yield Under 1%: The Stunning Facts How We Got There
Last week we wrote that in the latest bout of European NIRP panic, “Over Half Of European 2-Year Bonds Trade At Record Negative Yields“ with Italy now paid to issue debt, with a follow-up in which even very serious banks are now looking at the Eurozone’s record €2.6 trillion in negative-yielding debt, and finding that the lower yields drop, the greater the savings rates across the continent suggesting a “policy failure” as even more cash ends up inert on bank balance sheets instead of being spent on either the economy or asset price inflation.
And while the €2.6 trillion number noted above is massive, and as we showed last week is a record for the amount of debt trading under negative rates in Europe, here are some shocking statistics on how we got there, and which we all take for granted.
This Zero Hedge commentary appeared on their website at 3:34 p.m. EST on Sunday afternoon—and I thank reader U.D. for passing it around.
ECB officials met bankers just before key policy decisions
Some of the European Central Bank’s top decision-makers met banks and asset managers days before major policy decisions, and on one occasion just hours before, copies of their diaries reveal.
The diaries, which cover meetings of the six members of the ECB’s executive board between August 2014 and August 2015, were given to the Financial Times under freedom-of-information rules and reveal engagements with the private sector, officials, and the media.
The disclosure of the meetings comes at a time of heightened scrutiny of the contacts between central bankers and the financial services industry. Earlier this year, the ECB launched its own review of the issue, setting out new principles for how its officials should interact with the private sector.
The meetings offer a sharp contrast with the Bank of England, which prohibits members of its rate-setting committee from talking to media and “other outside interests” on monetary policy matters in the week before a policy decision.
The above four paragraphs from a Financial Times story from Monday are all that’s posted in the clear in this GATA release.
Europe banks get face-lift, but are far from pretty
Major lenders in Europe appear to be finally getting their books in order after a financial crisis that ripped up the rule books on the sector.
Nonetheless, analysts and economists remain unconvinced that banks are truly out of the woods and point to tight regulations, ongoing litigation costs and ultra-low interest rates as key challenges.
“Definitely the banking sector has been adjusting, has been addressing the weaknesses coming from the crisis. It has been deleveraging, it has been difficult, there are still dealing with a number of challenges and regulatory changes,” Thanos Vamvakidis, head of European G10 FX strategy at BofA Merrill Lynch Global Research, told CNBC this week.
These guys are being kind, as most of Europe’s banks are insolvent. Whistling past the proverbial graveyard the day before Hallowe’en, as that’s when this CNBC story was filed on the Internet. It’s another offering I found in yesterday’s edition of the King Report.
Greek Banks Face $15.9 Billion Bill After Economic Debacle
Greece’s four main banks must raise 14.4 billion euros ($15.9 billion) in fresh capital, the European Central Bank said, as investors and taxpayers face the cost of repairing the damage from six months of wrangling between the nation’s government and its creditors.
An asset-quality review carried out by the ECB resulted in valuation adjustments of 9.2 billion euros for the National Bank of Greece SA, Piraeus Bank SA, Eurobank Ergasias SA and Alpha Bank AE, the Frankfurt-based supervisor said Saturday in a statement. The banks’ capital gap amounted to 14.4 billion euros under a simulated stress test scenario, and 4.4 billion euros under baseline macroeconomic assumptions. The four banks will have to submit recapitalization plans to the ECB’s supervisory arm by Nov. 6.
“Covering the shortfalls by raising capital would then result in the creation of prudential buffers in the four Greek banks, which will facilitate their capacity to address potential adverse macroeconomic shocks,” the ECB said in the statement, adding that a minimum of 4.4 billion euros, corresponding to the AQR and baseline shortfall, is expected to be covered by private means.
This Bloomberg article is one I found in yesterday’s edition of the King Report. It was posted on the Bloomberg website at 3:57 a.m. MST on Saturday.
Recession Time — Jim Rickards
It’s always important to keep an eye on the central banks.
Yet, we are picking up signals from a source even more powerful than central banks. This source is the specter of global recession.
It’s one thing for central banks to fight currency wars while the world is growing. That’s just a matter of stealing growth from your trading partners. When the pie is not growing fast enough, you can grab a bigger slice from the person sitting next to you with a cheap currency.
What happens when the whole pie is shrinking?
This commentary/infomercial from Jim put in an appearance on the dailyreckoning.com Internet site yesterday sometime—and I thank Ken Kurt for sharing it with us.
Record Migrant Numbers Crossed Mediterranean in October, U.N. Says
A record 218,394 migrants fled across the Mediterranean Sea in October, more than in all of last year, the United Nations refugee agency said.
The figure was up from 172,843 the previous month, and from 23,050 in October 2014, according to Federico Fossi, a spokesman for the UNHCR in Rome. The number of sea arrivals for October compares with 216,054 for the whole of 2014.
To date this year, there have been 744,175 arrivals by sea, with Greece and Italy as the main gateways into the European Union. Of those, the majority — 53 percent — came from war-torn Syria, followed by 18 percent from Afghanistan and 6 percent from Iraq. Another 3,440 people died or went missing during the crossings, many of which are made on unseaworthy vessels, according to the UNHCR.
This Bloomberg news item, showed up on their Internet site at 4:34 a.m. Monday morning MST—and I thank Patricia Caulfield for her first contribution of the day.
Turkey election: Erdoğan and AKP return to power with outright majority
Turkey’s strongman president, Recep Tayyip Erdoğan, has tightened his grip on power decisively after his ruling Justice and Development party (AKP) swept back to single-party government with an unexpectedly convincing win in national elections.
The high-stakes vote, Turkey’s second in five months, took place in a climate of mounting tension and violence following an inconclusive June poll in which the conservative, Islamic-leaning AKP failed to secure an outright majority for the first time since coming to power in 2002.
The result could exacerbate divisions in a country deeply polarised along both ethnic and sectarian lines; Erdoğan is adored by supporters who hail him as a transformative figure who has modernised the country, but loathed by critics who see see him as an increasingly autocratic, even despotic leader.
This news story was posted on theguardian.com Internet site at 7:30 a.m. GMT on their Monday morning, which was 2:30 a.m. in Washington—EST plus 5 hours. I thank Patricia Caulfield for sending it our way.
Russian plane crash: Final moments of doomed airliner revealed in flight data as it emerges crew went unpaid for two months
Suspicions that foul play or terrorism caused the passenger jet crash in Egypt were growing on Monday as the Russian airline’s owners said the plane could only have been brought down by “external factors”.
“We rule out a technical fault of the plane or a pilot error,” Alexander Smirnov, deputy general director of Metrojet, told a news conference in Moscow.
The claim, which appears to support the theory that the Airbus was destroyed by terrorists, was immediately rebuffed by Egyptian investigators as “speculation” and came as fresh allegations of mismanagement drew the company’s safety record into question.
This longish summary of Monday’s events appeared on the telegraph.co.uk Internet site at 8:07 p.m. GMT yesterday evening, which was 3:07 p.m. EST. I thank Roy Stephens for sharing it with us.
Ripples of the Iran Deal — Roger Cohen
There was never any chance the Iran nuclear deal would be hermetic. One of its merits is to condemn the United States and Iran to a relationship, however hostile, over the next decade and a half at least. Now, within months, it has led to Iran’s presence at peace negotiations on Syria. That’s a good thing.
It’s a good thing because no end to the Syrian civil war is possible without the involvement of all the actors. Iran is one, directly and through its surrogate Hezbollah. It’s a good thing because it demonstrates, once again, that defiant Iranian rhetoric is often a distraction from Iranian actions, which may be more pragmatic.
Ayatollah Ali Khamenei, Iran’s supreme leader, had ruled out cooperation beyond the nuclear deal. The fact is neither Khamenei, a hard-liner, nor the reformists led by President Hassan Rouhani can ignore the other. Their respective power is in delicate equilibrium, an unusual situation in the 36-year history of the Islamic Republic and one the West must continue to probe.
This very interesting opinion piece showed up on The New York Times website last Thursday—and I thank Patricia C. for this story as well.
Week Four of the Russian Intervention in Syria: Assessing the Vienna Declaration — The Saker
I would argue that, at least so far, Russia has achieved many important goal in her intervention in Syria. Most importantly, the Russian intervention in Syria forced the USA to agree to a conference in which all the regional actors, including Iran, would be invited. At the end of its proceedings the conference adopted a joint statement which I have fully reposted.
I believe that this statement represents a major diplomatic defeat for the USA and yet another Russian diplomatic victory. Here some points which have been agreed upon (with relevant section of the declaration indicated in brackets)—
This commentary was picked up by the unz.com Internet site yesterday sometime—and falls into the absolute must read category for any serious student of the New Great Game. I thank Larry Galearis for sending it along.
Kerry’s Bleeding Heart – Give Us a Break!
America’s top diplomat John Kerry appears to have developed a bleeding heart of emotional concern for Syria. So too have his British and French counterparts.
After nearly five years of relentless killing, destruction and suffering in Syria, the Western leaders are saying it’s now time for peace – and hence the talks in Vienna, convened primarily at the behest of Kerry’s shuttle diplomacy last week.
“It’s time to stop the bleeding and to start the building,” said the U.S. Secretary of State in the Austrian capital. Russia’s Foreign Minister Sergei Lavrov featured prominently at the summit, which was also attended by arch-rivals Saudi Arabia and Iran. Delegates are to meet in the next two weeks to pursue, allegedly, a political resolution of the Syrian conflict.
Anyone with an informed understanding of the war in Syria will not buy Kerry’s “bleeding heart” for peace. Nor that of Washington’s lackeys, including Britain, France, Turkey, or the Gulf Arab monarchies Saudi Arabia and Qatar.
This interesting story showed up on the sputniknews.com Internet site at 12:58 p.m. Moscow time on their Monday afternoon—and it’s the first of two offerings from U.K. reader Tariq Khan.
Iran says may quit Syria talks, in worsening spat with Saudi rival
Iran said on Monday it would quit Syria peace talks if it found them unconstructive, citing the “negative role” of Saudi Arabia, in the latest twist in a spat between the regional rivals that bodes ill for efforts to ease turmoil across the Middle East.
Increasingly bad-tempered exchanges between the conservative Sunni-ruled kingdom and the revolutionary Shi’ite theocracy have dampened hopes of improved ties after the adversaries sat down for their first meeting to discuss the Syria war last week.
“In the first round of talks, some countries, especially Saudi Arabia, played a negative and unconstructive role … Iran will not participate if the talks are not fruitful,” ISNA cited deputy Foreign Minister Hossein Amir Abdollahian as saying.
Delivering unusually personal criticism, Iranian President Hassan Rouhani appeared to reprimand Saudi Foreign Minister Adel al-Jubeir, who, on Saturday, lashed out at Tehran for what he termed its interference in regional countries.
This Reuters article, filed from Dubai, was posted on their website at 9:41 a.m. EST yesterday morning—and It’s another offering from Patricia C.
U.S. Special Forces deployed as ‘human shields’ to salvage terror assets in Syria
Obama’s decision to send Special Forces into Syria is being widely viewed as a U.S. military escalation in the country. The troop dispatch also signals that the U.S. trying to forestall Russian successes in wiping out Washington’s regime-change assets in Syria.
In short, the U.S. Special Forces are being used as “human shields” to curb Russian air strikes against anti-government mercenaries, many of whom are instrumental in Washington’s regime-change objective in Syria.
First of all, we need to view a host of developments, including the hastily convened “peace talks” in Vienna, as a response by the U.S. and its allies to the game-changing military intervention by Russia. That intervention, beginning on September 30, has not only dealt massive blows to militants, it has completely changed the balance of forces to give the Assad government the upper hand in the war against foreign-backed extremists. That, in turn, has sent the U.S.-led powers trying to topple Damascus into disarray.
This longish ‘Op Edge’ article showed up on the Russia Today website at 4:23 a.m. Moscow time on their Sunday morning, which was 8:23 p.m. in Washington—EST plus 8 hours. I thank U.K. reader Tariq Khan for bringing it to our attention—and it’s certainly is a must read for any serious student of the New Great Game.
Hidili Says Not in Position to Pay Bonds as China Defaults Mount
China faces another test in its credit markets this week after a coal firm signaled it may default on its dollar debt.
Hidili Industry International Development Ltd. is not in a position to repay $190.6 million of principal and interest due Nov. 4. on its 8.625 percent notes, it said in a statement Friday. The mining company based in the southwest province of Sichuan has defaulted on some of its 6 billion yuan ($947 million) of loans, it said. Hidili has hired UBS Group AG to advise on bond restructuring, according to the filing.
Defaults at China’s companies, the world’s biggest corporate borrowers, have spread this year amid the weakest economic growth in a quarter century that’s hurt commodities and manufacturing. Coal trader Winsway Enterprises Holdings Ltd. failed to pay interest on dollar bonds for a second time this year in October. Defaults are also rising onshore, where manufacturing firms accounted for four of the five major bond failures this year.
“Given the poor macro backdrop, we are seeing more distress with companies in overcapacity industries,” said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shenzhen. “Defaults, especially in the private sector, will only become more common.”
This news item put in an appearance on the Bloomberg Internet site at 8:16 p.m. Denver time on their Sunday evening—and I thank Richard Saler for sending it along.
China Refuses to Participate in Hearings on South China Sea Dispute in Hague
China will not participate in the Philippines-initiated hearings on the South China Sea dispute in the Permanent Court of Arbitration and will not recognize the ruling of the Hague-based court, Chinese Deputy Foreign Minister Liu Zhenmin said Friday.
On Thursday, the court decided to hear the Philippines’ claims to waters in the South China Sea where China has been constructing artificial islands and claiming sovereignty over the land and a 12 nautical mile zone surrounding it. The disputed territories potentially hold large reserves of oil and gas.
“We will not take part in it [the hearings], and we will never accept it,” the diplomat said at a press briefing.
He added that the court’s decision to rule on the case “was made without taking into account the rights of China” and is “erroneous.”
This news item, filed from Beijing, appeared on the sputniknews.com website last Friday afternoon Moscow time—and I found it all by myself!
White House advisor says U.S. activity in South China Sea will continue
U.S. Deputy National Security Advisor Ben Rhodes said on Monday that there would be more demonstrations of the United States’ commitment to the freedom of navigation in the disputed South China Sea.
“That’s our interest there… It’s to demonstrate that we will uphold the principle of freedom of navigation,” Rhodes said while speaking at event in Washington.
Rhodes’ comments come after a U.S. guided-missile destroyer sailed close to one of Beijing’s man-made islands in the South China Sea last week.
This Reuters article, filed from Washington, was posted on their Internet site at 1:38 p.m. EST on Monday afternoon—and I thank Patricia Caulfield for bringing it to my attention, and now to yours.
Sprott Money’s “Ask the Expert” interviews John Hathaway
John Hathaway is a Senior Portfolio Manager, and currently co-manages the Tocqueville Gold Fund. Beyond expertise as an investment advisor and portfolio manager, John is one of the most popular writers and speakers in the investment world, particularly in the precious metals market. His insights on gold have been published in numerous online and printed publications and he makes regular appearances as an expert in the financial media.
This 27:20 minute audio interview was posted on the sprottmoney.com Internet site yesterday—and host Geoff Rutherford does the honours. I must admit that I haven’t had the time to listen to it yet, so I offer it with no comment.
Withdrawals of Gold From N.Y. Fed Jump to 20 Tonnes in September, Total 276 Tonnes Since 2014
First it was Germany who redeemed 120 tons of physical gold in 2014; then it was the Netherlands who “secretly” re-domiciled 122 tons of gold; then this past May, we learned that Austria would be the third “core” European nation to repatriate most of its offshore gold, held primarily in the Bank of England, redepositing it in Vienna and Switzerland.
Thanks to the latest N.Y. Fed data released yesterday, we now know that beginning in 2014 and continuing through yesterday, the gold “bleeding” from the vault located 90 feet below street level at 33 Liberty Street (and which may or may not be connected by a tunnel to the JPM gold vault located just across the street at 1 Chase Manhattan Plaza) is not only continuing but accelerating.
As the chart below shows, while central banks assure the population that there is nothing to worry about when it comes to paper money, and in fact it is the evil ISIS terrorists who plot and scheme to crush the benevolent Fed with their terroristy “gold dinars” and if not that then their made in Hollywood propaganda movies, they have been quietly pulling gold from the biggest centralized depository of global gold in the world: the New York Federal Reserve.
This commentary showed up on the Zero Hedge Internet site late Saturday morning EDT—and it’s a story I found posted on the Sharps Pixley website yesterday afternoon.
U.K.’s Tilney Bestinvest adds Physical Gold exposure in Multi-Asset Portfolio fund range
Investment management group Tilney Bestinvest has added an exposure to physical gold across its flagship Multi-Asset Portfolio (MAP) fund range which holds over £1 billion of assets for both clients of intermediaries and direct investors.
Gareth Lewis, Chief Investment Officer and manager of the funds, commented: “We have been keen observers of the growing market distortions created by global monetary policy. With Central banks losing control of the macroeconomic environment we believe policies such as QE will become discredited.”
This press release appeared in a pdf file on the bestinvest.co.uk Internet site last Thursday—and I thank Richard Saler for pointing it out.
India gold demand improves ahead of Diwali
Indian physical demand for gold was higher Monday, ahead of the Hindu festival of Diwali and to the relief of local dealers and physical traders who have struggled with poor seasonal demand up till now, local sources said.
The differential to the London gold spot price paid for physical gold in the country has been in discount throughout October, traditionally seen as a key buying period at the start of the Indian festival season.
The discount was as high as $10/oz Wednesday, but has come down to $2-2.50/oz Monday on renewed buying.
“Demand has very much returned and buying has firmed,” said one dealer in Ahmedabad who has seen sales return to levels more familiar for this period.
This gold-related platts.com article was filed from London yesterday at 1:20 p.m. GMT, which was 8:20 a.m. EST—and it’s something I found on the Sharps Pixley website last night.
Huge YTD 2015 Chinese SGE gold demand will pass full year record in 2 weeks — Lawrie Williams
Full month figures for October aren’t yet available, but announced gold withdrawals out of the Shanghai Gold Exchange (SGE) up to October 23 have already exceeded last year’s full year total – and last year was the second highest full year ever for SGE gold deliveries. The record year of 2013 is now in the sights and will almost certainly be surpassed within the next two weeks. As I have predicted before, a full year total of around an absolutely massive 2,600 tonnes of gold – over 400 tonnes higher than the previous annual record figure (and amounting to some 80% of total global new mined gold output) will pass through the SGE this year. And this is all physical gold – not paper!
Together with Indian demand running at a relatively high level this year, all this supports continuing gold flows from West to East, but although this is pretty obvious to external observers it is still so far having little effect in driving prices upwards as many would suggest it would. At the moment prices still seem to be being very much set by the Comex futures markets as they have been mostly for the past several years. But sooner or later the level of gold flows draining western inventories must have an impact – but [just] not yet.
It is as Lawrie says—as long as the paper tail wags the physical dog, nothing will happen from a price perspective. Which means, as Ted Butler says, that until JPMorgan et al put their hands in their pockets, or are told to stand aside, the forces of supply and demand mean nothing. That’s all there is, there ain’t no more. This commentary by Lawrie appeared on the Sharps Pixley website on Sunday—and it’s definitely worth reading. I thank Patricia Caulfield for her final contribution to today’s column.
Why is the USA’s Gold Flowing East? — Mike Maloney
This 5:54 minute video interview with Mike was posted on the youtube.com Internet site yesterday—and falls into the absolute must watch category. For the first two and a half minutes Mike discusses the “Silk Road” chart that’s posted in the first part of today’s column.
Like most precious metal analysts, Mike is on Nick Laird’s chart distribution list, just as I am. Once he’s through talking about the chart, he discusses a businessinsider.com article that I hadn’t seen. However, I did find a June 2015 Sputnik News article headlined “Russia to Increase Its Gold Reserves – Central Bank Head“—and you can read all about it here. It’s worth your while.
The PHOTOS and the FUNNIES
Saturday’s column featured two photos of a male downy woodpecker that I took last Thursday—and I was fortunate to get some photos of the female version at the same time. She’s identical to the male in every respect, except for the fact that she doesn’t have a red crest like the male does. The first photo is a pretty close crop, as I didn’t want the suet cage that appears in photo two, to be in frame. The second photo shows her hammering away at the suet ball, using her tail as a brace, which is a character trait that I knew these birds had, but had never seen used before. Don’t forget the ‘double click to enlarge‘ feature to bring the photos up to full-screen size.
The WRAP
The physical turnover or movement of metal brought into or removed from the COMEX-approved silver warehouses increased by one million oz this [past] week from [the prior] week’s low levels, to 2.75 million oz, but that’s still down from the recent stretch of 8 million oz turnover weeks. Still, that’s close to 150 million oz on an annualized basis and far from chump change. Total inventories dropped 0.2 million oz to 162.1 million ounces, another new two year low.
Total COMEX silver inventories are now down more than 20 million oz from peak levels several months ago. As a reminder, COMEX silver inventories are the second largest in the world. In addition, there have been some smaller reductions in the holdings of the largest visible silver stockpile in the world, the ETF SLV, although they are more flat than anything else over the past five years. Still, looking at the grand total of all visible silver (1,000 oz bars) in the world, total silver visible inventories have more or less flat lined for the past five years and currently sit at 833 million oz.
Since I believe the world has produced close to 400 million oz more silver than it has consumed in total fabrication demand over the past 5 years, I would have expected an increase in total visible silver inventories over this time, not a flat line. Among the possible explanations for no increase in visible inventories would be silver being accumulated on an unreported basis (say by a big U.S. bank which has happened to have paid more fines and settlements for doing sleazy things than any other bank). I suppose it is also possible that maybe the world didn’t produce as much silver over total fabrication demand as I’ve believed, but that explanation is far too bullish, even for me. — Silver analyst Ted Butler: 31 October 2015
Another day—and more slices in all four precious metal, with the one in palladium being pretty chunky. And as I mentioned at the top of this column, despite the fact that gold was closed a decent amount below its 50-day moving average on Monday, there was very little volume associated with it—and even the volume in silver, although slightly elevated, wasn’t much to look at.
This means, as Ted was careful to point out on the phone yesterday, that there is still miles of liquidation still to go in the Managed Money category—and that’s just long-side liquidation. Yet to be factored in is the possibility that JPMorgan et al will entice them to load the boat on the short side as well.
If that’s the case, the 50-day moving averages is but “jacks for openers” to the downside as far as an engineered price decline is concerned, as it could get real ugly before a bottom is in. But it’s way too soon to predict that as the outcome, but the potential for just such a move is there.
As to what time frame this may occur over, we have the December delivery month coming up at the end of this month—and it’s entirely possible that “da boyz” could take the rest of this month slicing the salami to the downside going into options and futures expiry, which is three and a half weeks away.
Of course the possibility exists that they could stretch it out to the end of the year—and as you are more than aware, it wouldn’t be the first time that the powers-that-be have set a new low tick between Christmas and New Years. The last time was Christmas of 2013.
So we wait.
Here are the 6-month chart for the Big 6 commodities once again—and with the exception of WTIC, all were closed lower on the day.
And as I write this paragraph, the London open is less than five minutes away—and I note that gold, silver and platinum all rallied a bit until early afternoon in Far East trading on their Tuesday, but in the last hour or so, all have been turned lower. Silver is now down a few pennies from Monday’s New York close, but the other three precious metals are still up a dollar or so for the moment.
Net HFT volume in gold is just under 15,500 contracts—and silver’s net volume is sitting right at the 3,000 contract mark. The dollar index drifted lower in Far East trading—and is a bit off its current low—and is down 9 basis points.
I don’t have much to add to what I’ve already said today, except to note that today is the cut-off for this Friday’s Commitment of Traders Report, along with the monthly companion Bank Participation Report and, hopefully, all of today’s trading volume will be in them.
And as I post today’s commentary on the website at 4:37 a.m. EST, I see that gold is now down a dollar or so, silver is down a dime, platinum is now down 5 bucks—and palladium is down 3 dollar from Monday’s close.
Net HFT gold volume is around 19,500 contracts—and silver’s net volume is up to 4,200 contracts. These volume numbers are very much on the lighter side at the moment. And after hitting its 96.78 low about forty-five minutes before the London open, the dollar index is now up 22 basis points.
It appears that someone hit the “buy currencies/sell precious metals” button once again—and it certainly doesn’t bode well for the remainder of the Tuesday trading session, although in all fairness, it’s too soon to tell. But if I had to bet the usual ten spot, it would be a continuation of the engineered price decline that began at 2 p.m. last Wednesday.
That’s all I have for today, which is more than enough—and I’ll see you here tomorrow.
Ed
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