04 November 2015 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Gold rallied a bit until 1 p.m. Hong Kong time on their Tuesday afternoon—and then selling pressure began about ninety minutes later. The low tick came on both sides of the COMEX close in New York. The price rallied a few dollars in the next hour or so, before trading flat into the 5:15 p.m. close of electronic trading.
The high and low ticks were recorded by the CME Group as $1,138.00 and $1,113.60 in the December contract.
Gold was closed in New York yesterday at $1,117.20 spot, down $16.20 from Monday’s close. Net volume was somewhat more substantial than Monday’s volume at a bit over 134,000 contracts, but still not overly heavy considering the price move.
Here’s Brad Robertson’s 5-minute gold tick chart—and you can see that even though the price was declining starting just after midnight EST—22:00 on this chart—there wasn’t much volume associated with the sell-off. The volume didn’t pick up in a meaningful way until shortly after 6:00 a.m. Denver time, which was shortly after 8 a.m. in New York—1 p.m. in London. The volume trailed off to next to nothing around 11:45 a.m. MDT on this chart, which was 1:45 p.m. in New York—and fifteen minutes after the COMEX close. The vertical gray line is midnight in New York, add two hours for EST—and don’t forget the ‘click to enlarge‘ feature.
And here’s the New York Spot Gold [Bid] chart so you can see the COMEX action in more detail.
Silver followed a similar price path, although the price action became more unsteady once the London a.m. gold fix was in, which is 5:30 a.m. EST on this chart. The down/up price spike low tick came ten minutes after the COMEX close, which is more or less what happened in the gold price action as well. The price didn’t do a lot after that.
The high and lows in this metal were reported as $15.45 and $15.20 in the December contract.
Silver finished the Tuesday trading session at $15.255 spot, down only 15 cents from Monday’s close. Net volume was nothing special at a hair under 30,500 contracts. Both Ted and I were surprised that JPMorgan et al didn’t hit silver harder than they did, considering the licking they laid on the gold price. I’ll have more about this in The Wrap.
And like silver and gold, platinum rallied until 1 p.m. Hong Kong time—and then it met the same fate as the other two precious metals, except the HFT traders and their algorithms set the platinum low at the London p.m. gold fix. It chopped higher from there, before getting turned lower during the last couple of hours of electronic trading. Platinum finished the day at $961 spot, down 15 bucks from Monday’s close.
The palladium price action was a mini version of the platinum price action—and this precious metal finished the Tuesday session at $643 spot, down 4 dollars on the day.
The dollar index closed late on Monday afternoon in New York at 96.91—and drifted lower until shortly after 3 p.m. Hong Kong time—and the low tick of the day at that point was set at 96.77. Then away it went to the upside, with the 97.48 high tick coming at the London p.m. gold fix. It sold off a bit until minutes before the COMEX close—and then chopped more or less sideways for the remainder of the day, finishing the Tuesday session at 97.18—up 27 basis points.
Here’s the 6-month U.S. dollar chart so you can keep an eye on the longer term.
The gold stocks opened down—and then chopped sideways until a rally of some substance began shortly after 2 p.m. in New York trading that took it back into positive territory, albeit briefly. The high tick came just before 3 p.m.—and it sold off a bit from there, as the HUI closed lower by 0.76 percent.
Although the silver equities started off in the red, they spent most of the day in positive territory, as Nick Laird’s Intraday Silver Sentiment Index actually closed up 0.86 percent!
For the second day in a row the precious metal share price action turned in another one of those counterintuitive trading patterns in both gold and silver. I’m of two minds as to why this is happening, but rather than jinx it, I’ll keep my thoughts to myself for the moment.
The CME Daily Delivery Report showed that zero gold and 3 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 for November increased by 11 contracts—and now sits at 293 contracts. Silver remains unchanged at 11 contracts, minus the 3 contracts mentioned in the Delivery Report paragraph above.
There was another withdrawal from GLD yesterday. This time an authorized participant removed 95,731 troy ounces. There was a smallish withdrawal from SLV as well—136,255 troy ounces which, I suspect, would represent a fee payment of some kind.
The folks over Switzerland’s Zürcher Kantonalbank updated their website with the goings-on over at their gold and silver ETF for the week ending Friday, October 30. For whatever reason, they didn’t send out a report last week, so the data here is for two full weeks since Friday, October 15. During that two week period, their gold ETF was down another 48,198 troy ounces—and their silver ETF declined by 637,528 troy ounces.
The U.S. Mint had a sales report yesterday. They sold 4,000 troy ounces of gold eagles—500 one-ounce 24K gold buffaloes—and 763,500 silver eagles. Based on the sales numbers for silver eagles, Ted figures that the mint is now off allocation, even if they never mention the fact.
There was a small amount of gold movement over at the COMEX-approved depositories on Monday. Nothing was reported received—and only 3,279 troy ounces were shipped out the door, with most of that coming of Scotiabank’s vault. I shan’t bother with the link.
It was much busier in silver, as 1,188,893 troy ounces were received—and 430,960 troy ounces were shipped out. A fair chunk of yesterday’s in/out activity was at the CNT Depository—and the link to that action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, they reported receiving 5,735 kilobars—and shipped out 3,484 of them. With the exception of one lone kilobar shipped out of Loomis International, everything else happened at Brink’s, Inc. as per usual. The link to that activity, in troy ounces, is here.
My Tuesday column had a lot of stories, but today I have only a few. I hope you find something of interest in the small selection I have below.
CRITICAL READS
This Time Is The Same——And Worse! — David Stockman
The current stock market melt-up hardly qualifies as limp. Even the robo-machines and hyper-ventilating day traders apparently recognize that their job is to tag the May 2015 highs and then get out of the way.
So when and as they complete their pointless mission, the question recurs as to why the posse of fools in the Eccles Building can’t see that they are inflating one hellacious financial bubble; and that when it blows it will deconstruct their entire 7-year project of make-pretend recovery.
In fact, if it weren’t for the monumental pain and suffering the next bubble collapse will bring to main street, you might even be tempted to urge them on toward the Wile E. Coyote moment just ahead. After all, if 84 straight months of ZIRP and $3.5 trillion of fraudulent debt monetization (QE) brings nothing more than another thundering financial collapse, it will be curtains time at the Fed.
Here’s a surprise—a rather short commentary from David Stockman. No small novel this time. It was posted on his website yesterday—and it’s definitely worth reading. I thank Roy Stephens for today’s first story.
Key Apple Supplier Halts Hiring Due To Poor iPhone Sales
Two months ago, Tim Cook reportedly wrote Jim Cramer that everything was awesome with iPhone sales in China. Days later, channel checks appeared to call Cook’s statement into question. Several day ago, one of Apple’s component makers – Dialog Semi – issued cautious guidance strongly suggesting iPhone sales momentum was weakening. Apple’s earnings produced disappointment as China sales rather notably fell (but was quickly dismissed by analysts as U.S. sales rose) and now, perhaps most worrying of all, Taiwan’s Pegatron Corp – maker of Apple’s next-gen iPhone 6S and iPad – has halted hiring in its Shanghai factory as workers note “sales of iPhone 6S have been disappointing.”
Gone are crowds waiting for job interviews or others who come to inquire about possible job openings.
The facility, which at its peak employed around 100,000 people, has temporarily suspended hiring as demand for Apple products has waned considerably.
The winding passage that leads to an interview room is all but deserted. Rather than excited faces, one can see young employees trudging out of the facility with fatigue and despair written large on their face.
This Zero Hedge article was posted on their Internet site just before midnight on Monday evening—and I thank Richard Saler for sending it along.
Sprint says aims to slash costs up to $2.5 billion, layoffs loom
Wireless carrier Sprint Corp S.N. said on Sunday it aims to slash fiscal 2016 expenses by as much as $2.5 billion, through layoffs and a wide array of cost controls, as an essential part of its ongoing turnaround efforts.
“We are leaving no stone unturned and looking at all areas,” company spokesman Dave Tovar said in an interview. He declined to predict how many employees would be laid off, saying it was too early in the budgeting process.
The estimated cost savings for Sprint, which has 31,000 employees, would be equivalent to about 10 percent of its current annual operating costs of $26 billion.
The ratio of the company’s capital expenditures to its sales is more than 20 percent, which Tovar said is higher than for other wireless carriers. “We are trying to get more in line with the industry average,” he said.
This short Reuters news item showed up on their website on Sunday evening EST—and it’s something I found in yesterday’s edition of the King Report.
Keystone XL’s builder faced darkening prospects
Faced with dimming prospects for approval, the Canadian company behind the proposed Keystone XL pipeline chose to plead with the U.S. government for a delay on its fate, signaling that prolonged uncertainty is preferable to rejection of the $8 billion project.
Monday’s appeal by Calgary-based TransCanada Corp has been widely interpreted as an attempt to avert an impending “no” from President Barack Obama to the nearly 1,200-mile (2,000-km) cross-border pipeline. Keystone XL would carry heavy crude oil from Alberta to Nebraska and on to Gulf Coast refineries, and has become the symbolic heart of a struggle between environmentalists opposed to oil sands development and defenders of fossil fuels.
The U.S. State Department said it had received a letter from TransCanada asking for the delay but a spokesperson said the review would continue for now.
TransCanada spokesman Mark Cooper said the company would not speculate on what the decision may be or when it may come.
This Reuters article, put in an appearance on their Internet site at 7:24 a.m. on Tuesday morning EST—and it’s the first contribution of the day from Patricia Caulfield.
Alberta luxury homes get less than half asking price at auction
An Alberta home with Swarovski crystal-laced faucets and mother of pearl tiles in the master bathroom has sold for nearly half its asking price.
The 9,200-square-foot house located in Priddis, 40 minutes southwest of Calgary, was listed for $3.9 million but purchased at auction for just over $1.7 million.
Another luxury property down the street had a similar fate — the $2.9-million mansion was picked up at a 62 per cent discount.
“The buyer paid $1.1 million — the price of a dumpy 1970s Vancouver special,” wrote investment adviser and former MP Garth Turner in a recent blog.
This Calgary real estate-related story appeared on the cbc.ca website on Tuesday afternoon EST—and it was subsequently picked up by the news.yahoo.com Internet site. I remember the Alberta real estate crash of 1980 to 1984 when I was just starting out as a Realtor—and it was ugly. Unless oil prices recover soon, the crash this time around will be orders of magnitude worse. I thank Roy Stephens for sliding it into my in-box very late last night MST.
Dr. Dave Janda interviews your humble scribe
The good doctor and I had a 25-minute chat on his “Operation Freedom” program on all-talk radio WAAM 1600 out of Ann Arbor, Michigan on Sunday afternoon—and if you have the time, I hope you find something of interest in it. It was posted on his website on Monday.
Global recession scare fades as stimulus revives manufacturing
The first green shoots of global manufacturing recovery are emerging as Europe, the US and Japan shake off the recession scare, and China comes back to life after a deep industrial slump.
The JP Morgan/Markit index of global factory orders rose to a seven-month high of 51.9 in October and output rose to 51.4, fuelled by a wave of monetary stimulus across the world and an end to fiscal austerity in the West.
Fears that the world’s fragile economy is being sucked into deflationary vortex appear overblown as a fresh mini-cycle gathers strength. “Global growth is holding up much better than many seem to fear,” said Andrew Kenningham from Capital Economics.
“We think this is just the beginning of a long recovery for the whole Western world after five years of post-crisis blues. We’ve turned relatively bullish,” said Charles Dumas from Lombard Street Research.
Here’s another Pollyanna bulls hit piece from Ambrose Evans-Pritchard. I don’t know who puts him up to this, or what he’s smoking when he writes it, but I can’t believe that he thought of writing this on his own. It appeared on the telegraph.co.uk Internet site on Monday evening GMT—and it’s the third offering of the day from Roy Stephens.
VW Discloses New Emissions Problem, Involving Carbon Dioxide
Volkswagen’s pollution problems took a costly new turn on Tuesday when the company said it had understated emissions of carbon dioxide, a greenhouse gas, for about 800,000 of its vehicles sold in Europe, and overstated the cars’ fuel economy.
A limited number of gasoline-powered cars are affected, said Eric Felber, a company spokesman, expanding the focus of Volkswagen’s crisis beyond its diesel engines.
It is the latest in a series of emissions revelations shaking the company, raising questions about the quality of its internal corporate controls and its reputation for engineering prowess, and undermining a carefully crafted image as a maker of efficient and environmentally friendly cars. The latest problem will force the company to incur an estimated 2 billion euros, or about $2.2 billion, in possible financial penalties, a spokesman said, because of tax breaks granted in Europe on cars with low carbon dioxide emissions.
This New York Times article showed up on their website yesterday sometime—and it’s the second offering of the day from Patricia Caulfield.
Kerry’s Debacle in Vienna — Mike Whitney
Can someone explain to me why President Obama decided to announce that he’s going to deploy U.S. Special Forces to Syria on the same day that Secretary of State John Kerry was scheduled to meet with Russian and Iranian diplomats to discuss how to end the four and a half year-long war?
What was that all about?
Did he think he was going to scare the Russians and Iranians by rattling a few sabers?
Did he think that they’d call off their military offensive and withdraw their support for Assad?
What was he thinking?
This commentary by Mike was posted on the counterpunch.org Internet site yesterday—and it’s certainly worth reading if you’re a serious student of the New Great Game. It’s another kind contribution from Patricia C.
Vatican hit by new claims of financial mismanagement and lavish spending
Ever since his election as spiritual head of the Roman Catholic church in 2013, Pope Francis has always said he wants a church for the poor.
But two controversial new books describe a Vatican awash with cash that is woefully mismanaged, where senior officials pour church funds into their already-lavish apartments, and where even the office that researches candidates for sainthood has had its bank accounts frozen out of concerns about financial impropriety.
According to Gianluigi Nuzzi’s Merchants in the Temple, due to be published on Thursday, one high-ranking Vatican official, Monsignor Giuseppe Sciacca, was so keen on improving his apartment that he took it upon himself to knock down a wall separating his flat from his elderly neighbour’s. When the elderly priest returned from hospital, where he had been very ill, he found his things had been packed in boxes.
“As soon as he opened the door he realised something was wrong: his apartment had been modified, and was missing one room, but he was too old to fight back and seek justice,” Nuzzi wrote. The priest died a short time later. Sciacca was demoted a few months into Pope Francis’s tenure, with a new position at a tribunal that handles legal and administrative cases.
No surprises here. I’ve been posting stories about the rot inside the Vatican walls for more years that I care to remember. This latest revelation appeared on theguardian.com Internet site at 6:46 p.m. GMT on their Tuesday evening, which was 1:46 p.m. in New York—EDT plus 5 hour—and it’s another contribution from Patricia C.
Russian Crude Output Hits Post-Soviet Record Defying Price Slump
Russian oil production broke a post-Soviet record in October for the fourth time this year as earlier investments boosted output and producers prove resilient to lower crude prices.
Production of crude and gas condensate, which is similar to a light oil, averaged 10.776 million barrels a day during the month, according to data from the Energy Ministry’s CDU-TEK unit. That is an increase of 1.3 percent from a year earlier and up 0.3 percent from the previous month.
“Russian oil production is still reflecting oil prices above $100 a barrel due to long lead times in the investment cycle,” Alexander Nazarov, an oil and gas analyst at Gazprombank JSC, said by e-mail from Moscow. “The reason behind growth this year dates back to 2010-2014, when a number of projects were financed.”
This oil-related story showed on the Bloomberg Internet site at 1:32 a.m. MST on Monday evening—and it’s the second article of the day that I ‘borrowed’ from yesterday’s edition of the King Report.
Turkey: journalists and political rivals arrested as Erdoğan crackdown widens
The Turkish government has resumed a crackdown on journalists and political rivals of Recep Tayyip Erdoğan just two days after a major electoral victory for his party that will see it return to single-party rule.
Police officers and bureaucrats loyal to an exiled cleric based in the U.S. are among dozens of people who have been arrested by Turkish authorities in an ongoing move against a group whose members have become bitter rivals of the president.
Two senior editors at an opposition-aligned magazine were also detained on Tuesday and accused of plotting a coup after the front cover declared in the aftermath of the election “the start of civil war in Turkey”, a reference to anger in the predominantly Kurdish east and south-east where relations with the ruling Justice and Development (AKP) party are tense.
The magazine, Nokta, said in a statement on Twitter that the editor-in-chief, Cevheri Güven, and managing editor, Murat Capan, were detained after police raids on their offices in Istanbul and charged with “attempting to overthrow the government by force”.
This is another story from The Guardian yesterday afternoon—and I thank Patricia Caulfield for this story as well.
Oil Slump Weighs on Saudi, U.A.E Businesses as PMI Drops
The slump in oil prices is sapping growth momentum of private businesses in the two biggest Arab economies, according to a key indicator released on Tuesday.
The Emirates NBD Purchasing Managers’ Index for Saudi Arabia dropped for a second month in a row to 55.7 in October, the lowest level since since the survey began in 2009, driven by weaker expansion in new business. The same measure for the United Arab Emirates fell to 54 from 56 in September, the lowest since April 2013, the Dubai-based bank said. Readings above 50 still signal expansion, while those below indicate contraction.
Oil prices have dropped more than 40 percent over the last year, prompting some governments in the six-nation Gulf Cooperation Council to plan spending cuts and curb or eliminate fuel subsidies. Non-oil economic growth in the region will slow to 3.8 percent this year from 5.5 percent in 2014, according to International Monetary Fund estimates. In Egypt, business conditions also worsened at the quickest pace since February, PMI data showed, as a shortage in power supply and foreign currency continued to undermine output.
This Bloomberg article put in an appearance on their website 1:40 a.m. Denver time on Tuesday morning—and once again I thank Patricia Caulfield for sharing it with us.
Excessive negativity about China is not supported by fact — Lawrie Williams
There is no doubt that the growth of the Chinese economy has been the driving force behind much, probably most, of global economic growth since the 2008 crash and the recent slowdown is making waves that Western politicians and economists are finding it hard to understand, or live with. However what is generally not recognised – indeed knowledge of which appears to be being deliberately suppressed, or misleadingly presented by the Western political system and mainstream media – is that the Chinese ‘slowdown’ has been a deliberate policy by the country’s government aimed at transforming its economy into an even more competitive system in the years ahead. I am indebted to Simon Hunt of Simon Hunt Strategic Services for most of the data in this ensuing article which is intended to set out the real strategy behind Chinese future economic development and its likely effects on the West moving forwards.
The following comments are taken directly from Hunt’s analysis of what is really going on in terms of Chinese economic policy to, in part, deal with counter measures put in place by the US Administration which would like to maintain its global economic dominance. Hunt has been one of the most astute of China watchers over the years and visits the country frequently in pursuit of his analytical advice – largely with respect to the country’s huge impacts on the global resource sector.
He deplores the manner in which many analysts and commentators have covered the printing presses with an aura of pessimism with regard to the Chinese economy. He feels that what is going on in China is either misunderstood, ignored or designed to encourage a massive fund outflow that could destabilise the country’s domestic economy. The latter he considers as just another tool in Washington’s geopolitical kit-bag.
This longish commentary by Lawrie was posted on his Internet site on Monday, but for space reasons I didn’t have room for it yesterday, so here it is today.
China, Taiwan and a Meeting After 66 Years
President Xi Jinping of China, and the leader of Taiwan, Ma Ying-jeou, will meet on Saturday in Singapore, the first such meeting since the Chinese Communist revolution of 1949 and the retreat of the Chinese nationalists across the Taiwan Strait.
The office in charge of Taiwan relations in Beijing said in a brief statement that the two leaders would exchange views on promoting developments during a long scheduled two-day visit of Mr. Xi to Singapore, a country that has good relations with both sides.
The director of the Taiwan Affairs Office of the State Council, Zhang Zhijun, said the meeting had been arranged “given the situation of the irresolution of cross-strait political differences.”
A spokesman for Mr. Ma, whose Kuomintang, or Nationalist Party, is floundering at the polls before elections early next year, announced the meeting late Tuesday night. Mr. Ma’s spokesman, Charles Chen, said that no agreements were envisioned. The meeting with Mr. Ma fits with the bold style of Mr. Xi, who has shown that he likes to take more risks in foreign policy than his predecessors.
This is another story from The New York Times website yesterday—and Roy Stephens beat Patricia Caulfield by less than ten minutes on this one.
Have you heard of this digital currency that’s a total scam? — Simon Black
It was back in May 2010 that the very first ‘real world’ Bitcoin transaction was conducted: 10,000 bitcoins traded for two Papa John’s pizzas.
Today that transaction would be worth nearly $4 million, probably making those the most expensive pizzas in the history of the world.
But back then it was considered revolutionary to trade a ‘digital’ currency, something that few people really understood at the time, for a real product.
People are still skeptical of digital currency. But the concept itself is not so esoteric.
This commentary by Simon was posted on the sovereignman.com Internet site yesterday—and is worth reading.
Firms vying to help Texas build gold depository
Major international players in the precious metals industry and some local upstarts — are hoping to get a piece of the Texas plan to launch an official state gold bullion depository, and the wide range of pitches they’re making suggests even basic details of the project remain up in the air.
More than a dozen companies responded to a recent request from Comptroller Glenn Hegar for input on the first-of-its-kind project. Gov. Greg Abbott signed House Bill 483 in June, directing Hegar to set up the country’s only state-run bullion depository. State Rep. Giovanni Capriglione, R-Southlake, began pushing the idea in 2013 but was only able to draw enough support from other lawmakers by requiring that the private sector run the depository and charge fees to cover its costs.
“With the passage of this bill, the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state,” Abbott said when he signed the bill.
This very interesting gold-related story showed up on the texastribune.org Internet site last Friday—and I found it embedded in a GATA release yesterday.
Why Austria is repatriating gold from London — Koos Jansen
Gold researcher and GATA consultant Koos Jansen tonight analyzes Austrian central banker Peter Mooslechner’s recent interview with the clueless Daniela Cambone of Kitco News and concludes that it was full of dissembling. Austria, Jansen writes, is not repatriating its gold from the Bank of England because of “concentration risk,” as Mooslechner maintained, but because the gold could not be reliably audited after a long period of leasing and because of “economic nationalism.”
Central banks, Jansen adds, see gold returning to the center of the world financial system and are slowly reclaiming what belongs to them, being careful not to give alarm.
Jansen’s [rather longish] commentary is headlined “Why Austria Is Repatriating Gold from London” and it was posted on the bullionstar.com Internet site yesterday sometime—and it’s worth reading as well. I found it on the gata.org Internet site—and I thank Chris Powell for writing the introductory paragraphs above.
The PHOTOS and the FUNNIES
One of my favourite birds of winter is the nuthatch—and we have them in abundance in this city, both the white and red-breasted varieties. Here are three photos of the white-breasted iteration—and this is the male of the species. I included the first shot to give you an idea of the size of its feet vs. the side of it’s body—and as you can tell, they are monsters, about a quarter of its body length. Don’t forget the ‘double click to enlarge‘ feature so you can see this bird full-screen size, as it is a tiny jewel when viewed up close.
The WRAP
In trying to come up with the most plausible explanation for the sharp decline in demand for Gold Eagles during October, I’m stuck with my big buyer premise. Sales of Gold Eagles exploded in June and remained very strong thru September, with virtually no signs of strong retail buying. Retail demand for Gold Eagles is still very soft—and only now is that reflected in reported sales from the Mint. I would contend that in the absence of strong retail demand all along, the only explanation must be that a big buyer suddenly appeared in June for Gold Eagles—and continued buying through September. In October, that big buyer stepped aside and that was reflected in sales this [past] month.
The only real question is why the big buyer stepped aside? In keeping with my observation that no buyer, large or small, buys any investment asset in the expectation that prices will fall; I can’t help but conclude that the big buyer of Gold Eagles over the prior four months (JPMorgan) stepped aside because of expectations of falling prices near term. This is the same scam that JPMorgan pulled off in Silver Eagles on previous occasions, namely, refraining from buying when the COMEX COT market structure dictated that prices would fall and when those lower prices were achieved, then buying all the Eagles available at the new lower prices. This is not the prime component of the manipulation, just another related scam by the sleazebags at JPMorgan. — Silver analyst Ted Butler: 31 October 2015
Well, the powers-that-be didn’t take any prisoners in the precious metals yesterday, although both Ted and I were surprised that they didn’t beat silver down more than they did. I’m also surprised at the lack of volume in both silver and gold as this JPMorgan-initiated engineered price decline continues. I made this comment in yesterday’s column about Monday’s volume in both metals as well.
I hate to be a doom and gloomer here, but until we see sort of massive capitulation to the downside in both price and volume terms, this decline is far from over, as the number of contracts left to liquidate, particularly in silver, is still over the moon.
Just looking at the 6-month price charts below, I see nothing to prevent ‘da boyz’ from taking prices back down to their late-July lows, as they can do pretty much what they want without fear of retribution from any of the authorities—as it’s a given that the miners of these precious metals would rather ignore the issue and go bankrupt, than lift a finger [or quivering voice] in protest.
But, having said all of the above, I look at the counterintuitive action in the precious metal shares and wonder what that’s all about.
And here are the 6-month charts for all of the Big 6 commodities once again. Gold is now well below its 50-day moving average—and silver just touched its on Tuesday, but did not close at it. Platinum was closed below its 50-day moving average yesterday and, like silver, palladium touched its 50-day moving average, but did not close at it. Only copper and crude oil bucked the trend yesterday with rallies of various sizes.
And as I write this paragraph, the London open is less than ten minutes away—and I see that gold rallied until shortly after 9 a.m. Hong Kong time on their Wednesday morning—and traded flat until 1 p.m. before the usual suspects began to turn the price lower. Gold is up a buck at the moment, but that certainly won’t last much longer. Silver hit its high at the same time as gold, but began to decline from there—and is currently down a penny or so. Platinum tried to rally, but is currently unchanged at the moment—and palladium is up 2 bucks.
Net HFT volume in gold is already very decent at just under 24,000 contracts—and silver’s net volume is sitting at 3,400 contracts. The dollar index chopped around in early Far East trading, but began to rally in earnest starting around 2:45 p.m. in Hong Kong—and is currently up 20 basis points as London opens.
Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report and companion Bank Participation Report—and based on yesterday’s price/volume action, it’s a reasonable assumption to make that all of Tuesday’s data should be in it.
The other thing hanging over the precious metal markets at the moment is the jobs report at 8:30 a.m. EST on Friday morning. As they usually do, JPMorgan et al will certainly put in an appearance—and it remains to be seen just how much damage they inflict when the numbers come out.
And as I post today’s column on the website at 4:00 a.m. EST, I see that not much has change since I reported on things an hour ago. Gold, silver and platinum are still heading lower, albeit slowly—and palladium is bucking the trend and is up 3 bucks at the moment. Gold volume is up to around 27,500 contracts, which isn’t a lot higher than it was when I first reported on it—and silver’s volume is up another 1,000 contracts. The dollar index is now up 24 basis points.
Anything can happen from a price perspective in the short term, but with the Big 6 commodities firmly in the iron fist of the powers-that-be, I just can’t see a rally of any substance developing with the COT Report configured the way it is now. Yes, there has been some decent improvement in the Commercial net short positions in the precious metals since last Tuesday’s cut-off, particularly in gold, but I just can’t see how ‘da boyz’ will allow price to rise substantially until we’re all cleaned out to the downside once again.
As always, I’d love to be proven spectacularly wrong, but I still have to use the past as prologue here, as it’s never turned out differently. Some day it will, but it obviously wasn’t yesterday.
That’s all I have for today—and I’ll see you here sometime on Thursday.
Ed
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