12 November 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price jumped up a couple of bucks in early Far East trading on their Wednesday morning—and then chopped sideways until ‘da boyz’ and their algorithms showed up about 3:30 p.m. Hong Kong time. The absolute low tick was set at precisely 3:00 p.m. in electronic trading in New York—and it recovered a few dollars from there into the close. Gold finished at a new low for this move down once again.
The high and low ticks are barely worth looking up for the third day in row, but here they are anyway. They were recorded by the CME Group as $1,093.50 and $1,083.20 in the December contract.
The gold price finished the New York session at $1,086.20 spot, down $3.00 from Tuesday’s close. Net volume was pretty light once again at just under 101,000 contracts, but roll-over activity was heavy.
And here’s the New York Spot Gold [Bid] chart so you can see the precise timing of the low tick of the day.
Silver also rallied a bit in the first few hours of Far East trading—and then didn’t do a thing until it got sold back to unchanged about the same time that the gold price got rolled over. Silver traded flat from there until the COMEX open—and then the HFT boyz and their algorithms showed up, with the low tick in this precious metal coming shortly after 1 p.m. in New York. It rallied a bit into the COMEX close, before chopping more or less sideways for the remainder of the Wednesday trading session.
The high and low ticks in silver are barely worth looking up, but they were reported as $14.49 and $14.23 in the December contract.
Silver finished the Wednesday session at $14.345 spot, down 8.5 cents from Tuesday—and at a new low for this engineered price decline. Net volume was average at only 30,000 contracts—and roll-overs out of December were heavy in this precious metal as well.
The trading pattern in platinum on Wednesday was almost identical to its price patterns on both Monday and Tuesday—and you just have to instinctively know from looking at the Kitco chart below, that this is not normal—and has zero to do with supply and demand. JPMorgan et al closed platinum at $880 spot, down another 18 bucks—and at price not seen, according to Nick Laird, since very late December 2008.
The palladium price chopped sideways for all of Far East and most of Zurich trading on Wednesday, with each and every attempt to rally above the $600 spot mark met by a not-for-profit seller. ‘Da boyz’ spun their algorithms at 8:00 a.m. EST, twenty minutes before the COMEX open, with the low coming around 12:15 p.m. in New York. It spent the rest of the day bouncing off that low—and was closed at $574 spot, down a huge 22 dollars on the day.
The dollar index closed late on Tuesday afternoon in New York at 99.21—and fell all the way down to 98.78 shortly before noon Hong Kong time on their Thursday morning. According to ino.com the subsequent rally topped out at 99.24 just minutes after 8 a.m. in New York—and from there chopped lower into the close, as the dollar index finished the day at 98.85—down 36 basis points from it’s close on Tuesday.
And as you can tell, what was going on in the currency markets had no impact on what was happening in the precious metal market.
And here’s the 6-month U.S. dollar chart once again—and as I mentioned in yesterday’s column, it’s starting to look a little toppy to me.
The gold stocks opened unchanged—and manged to stay in positive territory for most of the day, as the HUI closed up 0.98 percent.
Not so the silver equities. Although they opened unchanged, they quickly sold off into negative territory—and remained there for the rest of the day. Nick Laird’s Intraday Silver Sentiment Index closed down 0.59 percent.
The CME Daily Delivery Report showed that, once again, there were no gold or silver contracts posted for delivery within the COMEX-approved depositories on Friday.
The CME Preliminary Report for the Wednesday trading session showed that, for the second day in a row, gold open interest in November remained unchanged at 214 contracts. Silver’s November o.i. increased by 9 contracts, leaving 15 left to deliver.
There were no reported changes in GLD yesterday—and as of 7:58 p.m. EST there were no reported changes in SLV, either. I would guess that the reason that there was no activity in either ETF was the fact that both organizations were closed for Remembrance Day.
There was no sales report from the U.S. Mint—and probably for the same reason.
There wasn’t much movement in gold once again over at the COMEX-approved depositories on Tuesday. Only 4,018 troy ounces were received—and nothing was shipped out.
It was much busier in silver, as 1,158,050 troy ounces were reported received, but only 16,265 troy ounces were shipped out the door. All of the ‘in’ activity was at Canada’s Scotiabank—and the link to all the action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they reported receiving 2,985 kilobars—and shipped out 1,459 of them. With the exception of 19 kilobars shipped out of Loomis International, all of the rest of the activity was at Brink’s, Inc. The link to that activity, in troy ounces, is here.
I have a reasonable number of stories for you today—and I hope you’ll find a few in my selection that will interest you.
CRITICAL READS
Macy’s Blames “Tepid Spending” on Revenue Miss: Same Store Sales Tumble; Slashes Guidance
The “unexpected” weakness among U.S. consumption, that segment accountable for 70% of U.S. GDP, continues this morning when moments ago Macy’s reported a trifecta of weak data, reporting a miss on Q3 sales which came at $5.87 billion below the $6.1 billion expected, and down from the $6.2 billion a year ago, but also a plunge in comparable store sales which tumbled by 3.9%, far worse than the expected drop of -0.4%, and nearly three times as bad as the 1.4% drop a year ago.
Cash flow plunged: cash provided by operating activities was $278 million in the first three quarters of 2015, compared with $841 million in the first three quarters of 2014.
Finally, M also slashed its full year same store guidance down from flat to -1.8% to -2.2% with sales projected to drop -2.7% to -3.1%, compared to a previous guidance of -1%, as contrary to the propaganda, the discretionary spending of the US consumer is bad and getting worse by the day.
This business-related news item put in an appearance on the Zero Hedge website at 8:23 a.m. on Wednesday morning EST—and I thank Richard Saler for today’s first story.
Macy’s Massacre – 3 Years of Wasted Buybacks Ends Financial Engineering Dreams
Macy’s is down over 13% today, pushing towards a sub-$40 handle – the lowest since February 2013 – after lowering guidance and disappointing a market full of hope (and hype) that retail is back (remember, all the retail hiring last Friday). However, that is not the most prescient issue as 3 years of buying back billions of dollars of Macy’s stocks – to financially-engineer earnings to ensure executive compensation is satisfactory – have been completely wasted. And worst still, the additional debt added to fund the total failure in timing of buybacks has now sent Macy’s credit spiking to multi-year highs (as the stock tumbles).
“No Brainer” – Macy’s actually increased their buyback pace last quarter alone – spending $900 million on stock at an average price of $53.89, a loss of $230 million of that “investment”.
As Bloomberg concludes, the bigger question is simply this: Why is management at so many companies bereft of better ideas and more productive uses for corporate cash?
Maybe it’s because so much of the proceeds of buybacks end up in their own pockets.
This is the second story in a row involving Macy’s—and it’s the Zero Hedge spin on a Bloomberg story that came out yesterday. This iteration showed up on their Internet site at 1:55 p.m. EST yesterday afternoon—and it’s also courtesy of Richard Saler.
New York Sun: Silent Cal speaks
Call him Calvin Coolidge Cruz. Suddenly Senator Cruz, citing the president who delivered the full-employment economic boom known as the Roaring Twenties, is emerging as a man to watch in the Republican race. Two debates in a row, the senator from Texas declared for the gold standard and sound money, which are associated with high economic growth and low unemployment. He got in ahead of Rand Paul and any of the rest of the pack.
Two debates don’t make a campaign, of course, but the monetary issue is potentially the most transformative question in the race. It’s not just Mr. Cruz, either. Senator Paul, Governors Christie and Huckabee, and Senator Santorum all emerged on this issue last night, each adding enough savvy and subtlety to the question that it is clear the issue is starting to percolate on the hustings. No doubt this is in part because of what happened at the debate in Boulder, when CNBC’s Rick Santelli turned to the Texan and asked him to “focus on our central bank, the Federal Reserve.”
This editorial showed up on The New York Sun‘s website yesterday—and I found it embedded in a GATA release—and it’s definitely worth reading.
Is It Time to Renounce U.S. Citizenship While You Still Can?
The number of people abandoning the “greatest country in the world” just hit a record high…
The U.S. government recently reported that 1,426 people renounced their U.S. citizenship in the third quarter. That’s a record quarterly high. Like all government statistics, I view this one skeptically. Many observers think the actual number is much higher.
Still, with another quarter left in 2015, the number of Americans who renounce U.S. citizenship this year could easily top the previous annual record set last year.
I recently spoke with a consultant who gave up his U.S. citizenship. He’s now a citizen of Dominica, a small Caribbean country, and splits his time between Asia and South America.
This commentary by International Man senior editor Nick Giambruno appeared on their Internet site yesterday—and it’s certainly worth reading if you’re a U.S. citizen with thoughts of taking flight.
Four U.S. Energy Firms With $4.8 Billion In Debt Warned This Week They May Default Any Minute
The last 3 days have seen the biggest surge in US energy credit risk since December 2014, blasting back above 1000bps. This should not be a total surprise since underlying oil prices continue to languish in “not cash-flow positive” territory for many shale producers, but, as Bloomberg reports, the industry is bracing for a wave of failures as investors that were stung by bets on an improving market earlier this year try to stay away from the sector. “It’s been eerily silent,” in energy credit markets, warns one bond manager, “no one is putting up new capital here.”
The market is starting to reprice dramatically for a surge in defaults…
Four firms owing a combined $4.8 billion warned this week that they may be at the brink, with Penn Virginia Corp., Paragon Offshore Plc, Magnum Hunter Resources Corp. and Emerald Oil Inc. saying their auditors have expressed doubts that they can continue as going concerns. Falling oil prices are squeezing access to credit, they said. And everyone from Morgan Stanley to Goldman Sachs Group Inc. is predicting that energy prices won’t rebound anytime soon.
This is another Zero Hedge story courtesy of Richard Saler—and this one showed up there at 2:35 p.m. yesterday afternoon EST.
EIA: Alberta oil will move by rail
Crude oil deliveries from Alberta, Canada, will rely on rail in the wake of the permit refusal for the Keystone XL pipeline, the U.S. Energy Information Administration said.
Mark Cooper, a TransCanada spokesman, said saying no to Keystone XL means more of Canada’s crude oil would be sent to the U.S. market by rail, which the company said is more risky than pipeline systems.
The State Department’s record of decision on Keystone XL said there’s about 775,000 barrels per day of rail capacity in place. Under current conditions, the review found existing pipelines and rail capacity would be able to accommodate any new production from Canada.
This UPI story, filed from Washington, appeared on their Internet site at 8:06 a.m. yesterday morning EST—and I thank Roy Stephens for sending it.
Empty Floors, Shadow Vacancies New Norm for Calgary Tower Owners
Office-tower owners in Canada’s energy hub are about to feel the full force of the oil-price crash.
Vacancy is already at a five-year high in Calgary and rents are the lowest since 2006 after thousands of office jobs were cut. Energy company tenants have now begun to ask for rental relief and are offering subleases for as little as half the going rate, according to real estate brokers including Jones Lang LaSalle Inc. and Avison Young Canada Inc.
That’s before five new office towers with about 3.8 million square feet (353,031 square meters) of space hits the market in the next three years.
“It is a bloodbath,” said Alexi Olcheski, an office-leasing principal at Avison Young from his office in downtown Calgary. “We’re at the highest point of fear and uncertainty now.”
This Bloomberg article showed up on their website at 12:11 p.m. Denver time on their Tuesday afternoon—and I thank reader U.D. for passing it around yesterday.
ECB mulls buying debt of cities and regions
The European Central Bank is examining whether to buy municipal bonds of cities such as Paris or regions like Bavaria, according to people with knowledge of a possible extension of its one-trillion-euro-plus money printing scheme.
This regional bond buying could be one in a series of measures to be rolled out in the coming months, although one of the sources said time was short for a full launch in December and that this would likely come by March next year.
The ECB declined to comment.
Despite the ECB’s scheme of quantitative easing (QE) to buy chiefly state bonds, the euro zone’s economy is growing only modestly.
This Reuters article, filed from Frankfurt, was posted on their website at 11:02 a.m. EST on Wednesday morning—and it’s something I found in this morning’s edition of the King Report.
End QE now or risk a new financial crisis, warn Germany’s ‘Wise Men”
Berlin’s Council of Economic Experts – known as the country’s five “wise men” – said the ECB must consider tapering its bond-buying measures early to avoid dangerous imbalances from building up in the bloc.
The Council’s annual report delivered a scathing verdict on the ECB’s recent measures, warning of the perils of record low interest rates.
“Monetary policy is leading to a build-up of risks to financial stability which could pave the way for a new financial crisis,” they said.
“Persistently low interest rates erode the earnings of banks and life insurance companies, and raise the appetite for taking risks. It is important to avoid delaying an exit from the low interest rate environment for too long.”
This story put in an appearance on the telegraph.co.uk Internet site at 4:00 p.m. GMT on their Wednesday afternoon, which was 11:00 a.m. in New York—EST plus five hours. It’s the second item in a row that I lifted from today’s edition of the King Report.
Portugal Bonds Hurt by Politics May Face QE Eligibility Headwind
Portugal’s government bonds, the worst performers in the euro zone over the past month, face another hurdle with a potential credit-rating downgrade that may see them excluded from the European Central Bank’s asset-buying program.
For Portugal’s bonds to be eligible for purchase, the nation must be rated investment grade by at least one major ratings company. It has already been junked by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.
But the country still holds that crucial investment-grade status by DBRS Ltd. The Toronto-based company is scheduled to review its position on Friday, raising the possibility Portugal could lose a crucial source of support.
“The fear is that if DBRS downgraded them, it would trigger Portugal falling out of the eligibility,” said David Schnautz, a London-based interest-rates strategist at Commerzbank AG. “It’s obviously something that investors have to brace for. It’s a low-probability but high-impact event.”
This Bloomberg article appeared on their website at 3:39 a.m. MST on Wednesday morning—and it’s yet another contribution from Richard Saler.
Obama Turns to Diplomacy and Military in Syria, and Is Met With Doubts
For the first time in the four-year Syrian civil war, President Obama is beginning to execute a combined diplomatic and military approach to force President Bashar al-Assad to leave office and end the carnage.
As 50 Special Operations troops arrive in Syria to bolster the most effective opposition groups, the administration is gambling that Secretary of State John Kerry will have more leverage to push Russia, Iran and other players toward two objectives: a cease-fire to limit the cycle of killing and the establishment of a timeline for a transition of power.
But the task is enormous, given the number of nations and rebel groups operating at cross-purposes and the tiny size of the American force. Even senior members of the administration express doubts in private about whether the effort is sufficient.
But after years in which the Obama administration has been accused of largely sitting on the sidelines while a quarter-million Syrians died and millions more were displaced, Mr. Kerry seems buoyed by being at the center of the only diplomatic effort underway.
This story, filed from Washington, showed up on The New York Times website on Tuesday sometime—and my thanks go out to Patricia Caulfield for bringing it to our attention.
Saudi Arabia risks destroying OPEC and feeding the Isil monster
The rumblings of revolt against Saudi Arabia and the OPEC Gulf states are growing louder as half a trillion dollars goes up in smoke, and each month that goes by fails to bring about the long-awaited killer blow against the U.S. shale industry.
Algeria’s former energy minister, Nordine Aït-Laoussine, says the time has come to consider suspending his country’s OPEC membership if the cartel is unwilling to defend oil prices and merely serves as the tool of a Saudi regime pursuing its own self-interest. “Why remain in an organisation that no longer serves any purpose?” he asked.
Saudi Arabia can, of course, do whatever it wants at the OPEC summit in Vienna on December 4. As the cartel hegemon, it can continue to flood the global the market with crude oil and hold prices below $50.
It can ignore desperate pleas from Venezuela, Ecuador and Algeria, among others, for concerted cuts in output in order to soak the world glut of 2m barrels a day, and lift prices to around $75. But to do so is to violate the OPEC charter safeguarding the welfare of all member states.
This longish, but must read commentary by Ambrose Evans-Pritchard was posted on The Telegraph‘s website at 9:25 p.m. GMT on Wednesday evening, which was 4:25 p.m. EST. I thank Roy Stephens for sliding it into my in-box just before midnight Denver time last night.
India Is Caught in a Climate Change Quandary
India is home to 30 percent of the world’s poorest, those living on less than $1.90 a day. Of the 1.3 billion Indians, 304 million do not have access to electricity; 92 million have no access to safe drinking water.
And India is going to be hammered by climate change.
The livelihoods of 600 million Indians are threatened by the expected disruption of the southwest monsoon from July to September, which accounts for 70 percent of India’s rainfall. India’s rivers depend on the health of thousands of Himalayan glaciers at risk of melting because of a warming climate, while 150 million people are at risk from storm surges associated with rising sea levels.
A lot of damage is already inevitable, a consequence of the emissions of heat-trapping greenhouse gases by richer countries. So, many Indians ask, Why must we pay more? On what grounds can India be asked to temper its use of energy to limit its emissions of greenhouse gases like carbon dioxide?
This very interesting commentary showed up on The New York Times website on Tuesday sometime—and I thank Patricia Caulfield for sharing it with us.
China’s Latest Default Foretold in Creditors Calling CFO Nonstop
The buzzing mobile phone foretold trouble.
During an interview last month at the posh Shangri-La Hotel in Hong Kong, Henry Li stepped aside four times in an hour to take calls. Creditors were frantically trying to connect with the chief financial officer of China Shanshui Cement Group Ltd., and they wanted to know one thing: Was his company about to default?
“Honestly speaking, banks are very worried about us, as you can tell from the fact that I’ve received many calls,” said Li, sitting alongside Shanshui Chairman Zhang Bin as they discussed the firm’s predicament with Bloomberg on Oct. 14.
On Wednesday, the creditors got their answer. Shanshui, reeling from China’s economic slowdown and a shareholder campaign to oust Zhang, said it will fail to pay 2 billion yuan ($314 million) of bonds due on Nov. 12, making it at least the sixth Chinese company to default in the local note market this year. Analysts predict it won’t be the last as President Xi Jinping’s government shows an increased willingness to allow corporate failures amid a drive to reduce overcapacity in industries including raw-materials and real estate.
This Bloomberg news item put in an appearance on their website at 6:06 p.m. Denver time on Tuesday evening—and was updated twelve hours later. I thank Richard Saler for his final contribution to today’s column.
Chow Tai Fook Sees 40-50% Profit Decline: Selling Too Much Gold
The world’s largest jewelry retailer Hong Kong-based Chow Tai Fook issued a profit warning this morning, now expecting net profit for the half-year ended September to fall by 40-50% from a year ago.
This is a further deterioration from the 27% earnings decline in the half-year ended March. Before today’s profit warning, analysts were expecting only 5% decline in the full-year earnings. Chow Tai Fook slumped 6.5% this morning.
Chow Tai Fook blamed the profit slide on weak consumer sentiments in Hong Kong and Macau, reduced gross profit margin, and unrealized hedging loss on gold loans.
Selling gold products gives Chow Tai Fook only 10-15% gross margin, a third of gem-sets. “With the gold mix up by 5pp in the period, this implies 1-2pp GP margin pressure,” noted Goldman Sachs, adding “we view this as a key difference between jewelers and cosmetics retailers, where GP margin weakness for jewelers is driven by mix, whilst cosmetics’ GP margins are more on a structural down-trend on customers trading down.”
This gold-related news item showed up on the barrons.com Internet site at 10:17 p.m. EST on Tuesday evening—and it’s something I found on the Sharps Pixley website last night.
Indian gold initiatives to have little effect on imports — Lawrie Williams
As readers will no doubt know, the Indian government has announced two initiatives which it hopes will reduce the high level of gold imports and thus help alleviate the country’s big Current Account Deficit, gold making up such a large proportion of the nation’s imports. There are two main schemes being implemented – The Gold Monetization Scheme (GMS), and the Gold Sovereign Bond Scheme (GSB), both of which were unveiled last week. India is also to produce an official gold coin and gold bar.
In a new analysis of the schemes, London-based gold consultancy, Metals Focus reckons that the schemes are unlikely to have an immediate impact, although in the longer term it is possible that they could build up to perhaps meet the government’s target saving of 100 tonnes of gold imports, but that this could take a few years. It would also have to overcome a natural reluctance of the Indian gold holders to part with their bullion which they see as protection against economic mismanagement and long term inflation.
The new schemes are aimed at monetizing some of the huge amounts of gold believed to be in private hands in India – in particular some of the religious temples have huge hoards of gold which have been built up over the years. The idea is to give gold holders a way of generating income from their bullion holdings, although the general distrust of the economic system which prompts Indians to hold gold in the first place will indeed likely have a limiting impact on the take-up.
Lawrie filed this story from Goa yesterday—and I found it on the Sharps Pixley website late last night MST. It’s worth reading.
‘Blue Moon’ diamond sold for $48.5 million, setting new record
Sotheby’s says a rare blue diamond has sold for a record 48.6 million Swiss francs ($64 million CAD) at a Geneva auction, including fees.
The 12.03-carat ‘Blue Moon’ Diamond is said to be among the largest known fancy vivid blue diamonds and was the showpiece gem at Wednesday’s auction. The price fell within the pre-auction estimate of $35-$55 million. Excluding fees, it sold for 43.2 million Swiss francs.
The Blue Moon — whose name plays off the expression “once in a blue moon” – topped the previous record price of $46.2 million set five years ago by The Graff Pink.
The polished blue gem was cut from a 29.6-carat diamond discovered last year in South Africa’s Cullinan mine, which also yielded the Star of Africa blue diamond in the British crown jewels.
This AP story found a home on the globalnews.ca website yesterday—and the above four paragraphs are all there is to the story. The embedded photo is worth the trip.
Sentiment means nothing in the gold ‘market,’ but GATA’s is to press on
Sentiment couldn’t be worse in the monetary metals sector right now. The good news and the bad news are that sentiment doesn’t matter.
Of course Mark Hulbert at MarketWatch thinks it matters, as he makes a business out of gauging the sentiment of financial letter writers, and he even calculates that sentiment for gold is good among those writers and constitutes a contrarian indicator, signifying that the metals will continue to fall, though of course those writers themselves are trying to be contrarian to market sentiment.
And an anonymous blogger who says he attended GATA’s presentation at the New Orleans Investment conference last month writes that GATA Chairman Bill Murphy and your secretary/treasurer “both came across to me as defeated” and “have mentally lost the righteous battle they have been fighting for 15-plus years,” which he construes as another “bottom indicator” for gold.
The guy is entitled to his impressions, and Murphy and your secretary/treasurer did argue in New Orleans that central banks are rigging markets, including the monetary metals markets, more ferociously and obviously than ever. But “defeated“? Murphy and your secretary/treasurer would not have bothered going to New Orleans if we thought that. We still have enough to eat and drink at home. Nor would your secretary/treasurer, considering GATA defeated, be tapping this out on the keyboard so late at night when he could be watching old episodes of “Hill Street Blues” on TV.
This commentary by Chris was posted on the gata.org Internet site late last night and is definitely worth reading.
The PHOTOS and the FUNNIES
As I walked from my car into the backyard on Monday afternoon—this fellow flew up from one of our flower beds and into my neighbour’s tree. I was praying that he would still be sitting there when I got back with my camera and 400mm telephoto lens—and he was.
Because of its small size, I first thought was it might be a juvenile prairie falcon. But on sober second thought—and with the photos on the screen—a quick Internet search led to the discovery that it is most likely a juvenile sharp-shinned hawk. The ‘double-click to enlarge’ feature will bring these photos up to full-screen size.
The WRAP
It would be an understatement to simply observe that the price of gold and silver (and other commodities) have followed the rigid script dictated by the market structure on the COMEX. Not only are more becoming aware that COMEX futures market positioning is what drives gold and silver prices; the script has become so reliable and repetitive, that I don’t believe that I can recall more commentators interpreting correctly the recent COT setup. Hopefully, no one reading this should be in the dark as to why gold and silver prices have declined. (You may be disappointed or angry, but you shouldn’t be confused about what caused recent price action).
First, a brief recap. From the intraday price highs of October 28, just 10 trading days ago, the price of gold has fallen close to $100 and silver by $2 on a nearly uninterrupted stair step decline of new price lows daily. I do believe this has been the most pronounced price salami slicing I’ve ever witnessed in COMEX gold and silver. When successive new price lows (or highs) are created by the commercials, there can be no doubt that it is designed to induce the managed money technical funds to sell (or buy). That is the essential rhyme and rhythm behind gold and silver price movement.
Because the managed money technical funds held record net long positions in COMEX silver and hefty net long positions in COMEX gold at the October 28 price peaks, the skids were greased for the commercials to rig (slice) prices lower in order to lure the managed money traders to the sell side. And slice is the right word to describe what the commercials did since then. Through [Wednesday], my back-of-the-envelope calculations indicate that the commercials achieved a net monetary gain (by taking profits and favorable contract repositioning) of close to $1 billion over the past ten trading days in COMEX gold and silver. — Silver analyst Ted Butler: 11 November 2015
JPMorgan et al celebrated Remembrance Day with new low closes for this move down in all but one of the Big 6 commodities—and it followed the script precisely as outlined in Ted’s quote above. That’s all there is, there ain’t no more. Any so-called ‘analyst’ offering another reason why all four precious metal prices have been heading lower for the last two weeks, is very wide of the mark.
The only outlier was copper. It closed unchanged on the day, but did set a new intraday low on Wednesday, so the effect on the Managed Money traders in that metal would have been the same—dump longs and go short, with JPMorgan et al taking the opposite side of the trade for fun, profit and price management purposes.
Here are the 6-month charts for the Big 6 commodities—and you can see the boot prints of “da boyz” and their algorithms all over these prices.
And as I type this paragraph, the London open is about ten minutes away—and I see that all four precious metals are up small amounts from Wednesday’s close in New York. But I take small comfort from that fact, because they were up about these amounts yesterday morning—and look what happened later.
Net HFT gold volume is a bit over 18,000 contracts—and silver’s volume is 5,200 contracts, with not a lot of roll-over activity in either precious metal at the moment.
The dollar index hit its current 98.70 low tick at 9:30 a.m. Hong Kong time on their Thursday morning—and has been in rally mode ever since, and is currently up 9 basis points as London opens.
Tomorrow we get the new Commitment of Traders Report—and it should be a dandy, because as I said yesterday, all of the reporting week’s data should be in it, including all the volume data from the Tuesday cut-off date as well. In his mid-week column to his paying subscribers yesterday, Ted said that it “may be the most important in history“—and since he’s been face down in the silver and gold futures market for the last thirty years, I’m not about to argue. In fact I told him that I hoped it was even better than he said it was going to be.
Of course just looking at the above charts, one gets the impression that the end is in sight, but as both Ted and I have pointed out on several occasions, we doubt very much that the absolute lows have been seen in any of the Big 6 commodities.
There’s a couple of reason for that line of thinking, the first is that despite how good the COT Report is, I don’t think that we’re all the way back to the July lows based on what the Managed Money traders have done to date—and the second reason has to do with volume levels. This engineered price decline in both gold and silver has happened on less than stellar volume, something I’ve been going on about since the declines began.
Although I’d love to be proven spectacularly wrong, my guess is that we’ll see one more engineered blast to the downside in the next couple of weeks before the salami slicing is all done. I’ll also speculate that it will happen, or at least begin, in the thinly-traded Far East market when North America—and most of Europe—is still asleep.
So we wait some more.
And as I post today’s column on the website at 4:20 a.m. EST this morning, I note that even through the dollar index is screaming higher while I write this, all four precious metals are still pretty much holding their own from an hour or so ago, although platinum is down two dollars the ounce. Net HFT gold volume is just over 22,000 contracts—and silver’s net volume is just north of 6,500 contracts. Roll-overs out of the December contract have also picked up quite a bit. And as I was just saying, the dollar index is up a whole bunch—33 basis points at the moment—but off its high of about ten minutes ago.
That’s all I have for today, which is more than enough—and I’ll see you here tomorrow.
Ed
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