14 November 2015 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
It was a pretty quiet day in gold on Friday—and although it closed at a new low for this move down, there isn’t much else to talk about. The high and low ticks certainly aren’t worth the effort of looking up. Whether the absolute low is already in for this precious metal is unknown at the moment.
Gold closed in New York yesterday at $1,083.90 spot, down $1.10 from Thursday’s close. Net volume was on the lighter side at a bit over 110,000 contracts—and roll-over volume wasn’t overly heavy.
Silver chopped around the unchanged mark during the Far East trading session on their Friday—and ‘rallied’ to its ‘high tick’ of the day about 12:30 p.m. GMT in London trading. From there it was guided lower by “da boyz”—with the absolute low tick coming at the 10 a.m. EST London p.m. gold fix. It rallied about a nickel from there—and didn’t do much after that.
Silver traded within a twenty cent price range everywhere on Planet Earth yesterday, so the high and low ticks aren’t worth the effort of looking up either.
Silver finished the Friday session at $14.28 spot, down 3 cents from Thursday’s close. Net volume wasn’t overly heavy at a bit under 28,000 contracts—and roll-over activity out of the December contract was pretty decent.
Platinum wandered around five dollars either side of unchanged until “da boyz” and their algos showed up at the noon silver fix in London. The low came at 2 p.m. in electronic trading in New York—and it traded ruler flat from there into the 5:15 p.m. close of electronic trading. Platinum finished the Friday session at $858 spot, down another 18 bucks from Thursday’s close—and not only at a new low for this move down, but at a price that hasn’t been seen since December 2008.
And as I mentioned in The Wrap last night, it was palladium that really got it in the neck yesterday, as JPMorgan and their buddies nailed the price for 29 dollars by about 10:45 a.m. Hong Kong time on their Friday morning. It rallied in fits and starts from there, but as you can tell from the saw tooth price pattern, it wasn’t allowed to get too far, too fast. It was rolled over for the last time around 12:30 p.m. Zurich time and, like platinum, it got sold down until around 2 p.m. EST in New York, before trading flat for the rest of the Friday session. Palladium was closed in New York yesterday at $538 spot, down another 21 bucks—and at a new low for this move down—and close to its low of late August.
The dollar index closed at 98.56 late on Thursday afternoon in New York—and continued to rally quietly until about 12:15 p.m. EST, interrupted by a 30 plus basis point down/up move between 10 a.m. in London—and shortly after the COMEX open. The high tick was 99.21—and the index immediately began to head lower from there—and it closed yesterday at 98.84—up 28 basis points from Thursday.
And here, as always, is the 6-month U.S. dollar index chart so you can keep an eye on the longer term.
The gold stocks opened about unchanged—and after dipping to their lows of the day shortly after the London p.m. gold fix, rallied into positive territory to stay, but by the barest of margins, as the HUI finished the day up 0.93 percent.
The silver equities behaved in a similar manner—and Nick Laird’s Intraday Silver Sentiment Index closed up 1.22 percent.
For the week, the HUI closed down only 0.23 percent, which is very noteworthy—and the ISSI finished lower by 2.67 percent, also worth noting, because considering the carnage in the metals themselves, it could have been far worse. One wonders if deep pockets are bottom fishing here. And based on the price action, it’s as good a time as any.
The CME Daily Delivery Report showed that, once again, that there were no gold or silver contracts posted for delivery within the COMEX-approved depositories on Tuesday. But JPMorgan stopped another 65 copper contracts for its own account. That’s 1,635,000 pounds of physical copper that they own and will have in their physical possession on Tuesday. What is a bank doing taking physical delivery of metal of any kind—precious or otherwise?
The CME Preliminary Report for the Friday trading session showed that 7 contracts were added to November open interest, bringing the total to 220 contracts still open—and silver o.i. for November was unchanged at 31 contracts.
There were no changes in GLD yesterday—and as of 7:40 p.m. EST yesterday evening, there were no reported changes in SLV, either.
I forgot all about Joshua Gibbons‘ report about the SLV bar list in my Friday column, but he had no in/out activity to report for the week ending at the close of business on Wednesday, November 11 over at the iShares.com Internet site, so it was no loss that I forgot about it.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the changes to their gold and silver ETFs as of the close of business on Friday, November 6—and this is what they had to report. Their gold ETF fell by a hefty 71,927 troy ounces—and their silver ETF declined by a smallish 6,498 troy ounces.
There was a sales report from the U.S. Mint yesterday. They sold another 3,000 troy ounces of gold eagles—and 91,000 silver eagles.
Month-to-date the mint has sold 33,500 troy ounces of gold eagles—8,000 one-ounce 24K gold buffaloes—and 2,187,000 silver eagles.
There wasn’t much activity in gold over at the COMEX-approved depositories on their Thursday. Nothing was reported received—and 4 kilobars were shipped out of Brink’s, Inc.—and another 296 troy ounces out of Delaware.
The same applies to silver, as nothing was received—and only 13,514 troy ounces were shipped out the door.
It was a different story over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday as they received 850 kilobars—and shipped out a whopping 22,176 of them, which is certainly a new one-day record. All of the activity was at Brink’s, Inc. once again—and the link to that action, in troy ounces, is here.
Ted and I weren’t happy with the fact that there was no Commitment of Traders Report yesterday—and after a quick e-mail to the CFTC, Ted Butler found out the reason. It was delayed because of Remembrance Day. So now we have to wait until 3:30 p.m. on Monday afternoon EST before the numbers are finally posted on their Internet site.
Nick Laird passed around the latest withdrawal figures from the Shanghai Gold Exchange for Friday, November 6—and that number was 44.908 tonnes. The ‘click to enlarge’ feature works wonder on this chart.
I have a decent number of stories for a Saturday column, including a bunch that I’ve been saving for today.
CRITICAL READS
Wall Street drops, posts worst week since August
Wall Street fell sharply on Friday and capped off its worst week since the dark days of August, hurt by a sell-off in technology companies, while department stores dropped on concerns about the upcoming holiday shopping season.
After the bell, U.S. stock index futures hit session lows in light volume, with market participants citing concerns over reports of deadly attacks in Paris.
“The geopolitical aspect is always out there, and anything that brings that back into the headlines will pull the buy orders fairly quickly,” said Alan Lancz, president, Alan B. Lancz & Associates Inc, a Toledo, Ohio-based investment advisory firm.
The three major U.S. indexes ended the week down more than 3 percent, firmly putting the brakes on a fast rally that began in October.
This Reuters article put in an appearance on their Internet site at 5:53 p.m. on Friday afternoon EST—and today’s first story is courtesy of Patricia Caulfield.
Retail Stocks Are Crashing at the Fastest Pace in Over 4 Years
The S&P Retail Sector ETF is down almost 9% in the last 8 days. That is the fastest collapse in this bellwether industry since August 2011… and it may be about to get a lot worse…
Retail is back to flash crash lows…
This 3-chart Zero Hedge article appeared on their website at 9:59 a.m. EST on Friday morning—and it’s the first offering of the day from Richard Saler. The charts are certainly worth a quick look.
The Last Two Times Business Inventories Were This High Relative to Sales, The U.S. Was in a Recession
Business Inventories jumped 0.3% MoM in September (notably more than the 0.0% change expected) and the highest since June led by a surge in Retailers restocking (+0.8% despite sales being unchanged). Retailers Sales are up 1.7% YoY but Retailers’ Inventories are up 5.1% YoY.
With Sales unchanged (manufacturers -0.4%), the inventories-to-sales ratio surged to 1.38x – the highest since the financial crisis.
Like retail sales, the last 2 times inventories were this high relative to sales, The U.S. was in recession.
This is another Zero Hedge story courtesy of Richard Saler. This one showed up on their Internet site at 10:09 a.m. on Friday morning New York time.
Unregulated ‘shadow banking’ now worth £53 trillion
The value of unregulated “shadow banking” rose to $80 trillion (£53 trillion) last year, according to a report by the Financial Stability Board (FSB).
The report, issued ahead of the upcoming G20s summit in Antalya, said shadow banking transactions not subject to regulatory oversight grew by $2 trillion across 2014 on a broad measure covering 26 jurisdictions and the euro area as a whole, representing some 80pc of global GDP and 90pc of global financial system assets.
The FSB, which advises G20 countries on banking reform and was set up six years ago after the implosion of Lehman Brothers, publishes annual reports into the parallel banking system under its remit to promote internationally transparent financial stability.
Shadow banking involves transactions outside traditional banking, including hedge and investment funds.
This AFP story found a home on the telegraph.co.uk Internet site at 7:34 p.m. GMT on their Thursday evening—and it’s something I found in yesterday’s edition of the King Report.
Deep State at Home and Abroad: Mike Lofgren and David Talbot
“Behind the ostensible Government sits enthroned an invisible Government, owing no allegiance and acknowledging no responsibility to the people. To destroy this invisible Government, to dissolve the unholy alliance between corrupt business and corrupt politics, is the first task of the statesmanship of the day.”
Theodore Roosevelt, The Progressive Platform
“As societies grow decadent, the language grows decadent, too. Words are used to disguise, not to illuminate, action: you liberate a city by destroying it. Words are to confuse, so that at election time people will solemnly vote against their own interests…
Any individual who is able to raise enough money to be considered presidential is not going to be much use to the people at large. He will represent whatever moneyed entities are paying for him. Hence, the sense of despair throughout the land as incomes fall, businesses fail and there is no redress.”
Gore Vidal, The Decline and Fall of the American Empire, 1992
These two must watch video interviews appeared in an article over at the jessecrossroadscafe.blogspot.ca website on Tuesday—and for length and content reasons, had to wait for today’s column. I thank reader U.D. for passing them around.
An Oil-Soaked Globe as Production Keeps Climbing and Demand Falls
Such is the state of the oil industry these days that there is sometimes nowhere to put the oil. Off the coast of Texas, a line of roughly 40 tankers has formed, waiting to unload their crude or, in some cases, for a willing buyer to come along. Similar scenes are playing out off the coasts of Singapore and China and in the Persian Gulf.
There is little sign that the logjam will ease, as the price of oil continued its yearlong plunge this week, declining by nearly $10 a barrel.
The renewed collapse in crude prices is helping to again drive down gasoline prices for American drivers, to a national average of $2.19 a gallon for regular gasoline on Friday, according to the AAA motor club. That is 9 cents below the price a month ago and 73 cents below the price a year ago.
The slide in oil companies’ fortunes has been significant because of expanded production in Russia, Saudi Arabia and other Persian Gulf states, as well as a slowdown in demand growth in China and the expectation by commodity traders that the Iran nuclear deal will introduce large quantities of oil to the glutted market.
This story was posted on The New York Times website on Friday sometime—and it’s the second offering of the day from Patricia Caulfield.
Doug Noland: Risk Off?
The “Granddaddy of All Bubbles” thesis rests upon the view that the world is in the midst of the precarious grand finale of a multi-decade global Credit and financial Bubble. When a Bubble bursts, system reflation requires an even larger fresh new Bubble. This has repeatedly been the case going back at least to the “decade of greed” late-eighties Bubble in the U.S. These days the world confronts the terminal Bubble phase partially because of the unprecedented scope of the China and EM Bubbles. It’s simply difficult to imagine another more far-reaching Bubble.
Also critical to the finale Bubble thesis is that the “global government finance Bubble” – encompassing unprecedented excesses in sovereign debt, central bank Credit and government market manipulation – has engulfed the very foundation of contemporary “money” and Credit. It’s again quite a challenge to envisage a new financial Bubble inflation cycle following a crisis of confidence at the heart of global finance.
As I’ve posited repeatedly, the global Bubble has been pierced. Again this week, there’s more confirmation. The collapse in commodities and EM currencies along with the faltering Chinese financial Bubble mark an historic inflection point. Global policymakers have gone to incredible measures to stabilize market, financial and economic backdrops. Yet reflationary measures will continue to only further destabilize. When policy-induced “risk on” is overpowering global securities markets, fragilities remain well concealed (and my prognosis appears ridiculous). Fragilities, however, swiftly manifest when “risk off” reappears. Rather quickly securities markets demonstrate their proclivity for illiquidity and so-called “flash crashes.” So after an unsettled week in global markets, the critical issue is whether “risk on” is giving way to “risk off” dynamics.
Doug’s Credit Bubble Bulletin is another must read this week—and it appeared on his website just after midnight Denver time this morning.
The Dream Life of Driverless Cars
One of the most significant uses of 3-D scanning in the years to come will not be by humans at all but by autonomous vehicles. Cars are already learning to drive themselves, by way of scanner-assisted braking, pedestrian-detection sensors, parallel-parking support, lane-departure warnings and other complex driver-assistance systems, and full autonomy is on the horizon. Google’s self-driving cars have logged more than a million miles on public roads; Elon Musk of Tesla says he’ll probably have a driverless passenger car by 2018; and the Institute of Electrical and Electronics Engineers says autonomous vehicles ‘‘will account for up to 75 percent of cars on the road by the year 2040.’’ Driver-controlled cars remade the world in the last century, and there is good reason to expect that driverless cars will remake it again in the century to come: Gridlock could become extinct as cars steer themselves along a cooperatively evolving lacework of alternative routes, like information traversing the Internet. With competing robot cars just a smartphone tap away, the need for street parking could evaporate, freeing up as much as a third of the entire surface area of some major American cities. And as distracted drivers are replaced by unblinking machines, roads could become safer for everyone.
This very interesting essay was posted on The New York Times Internet site on Wednesday sometime—and it’s courtesy of Patricia Caulfield—and is another story that had to wait for my Saturday column.
U.K. prosecutors charge 10 with Euribor manipulation
U.K. prosecutors have charged 10 traders from Barclays and Deutsche Bank with conspiring to manipulate Euribor, the largest group of defendants to face prosecution so far in the global rate-rigging probe.
Christian Bittar, formerly of Deutsche Bank, and Philippe Moryoussef, formerly of Barclays, are among the defendants accused of fixing the euro interbank offered rate. The suspects were ordered to appear before magistrates in London in January.
“Criminal proceedings will be issued against other individuals in due course,” the Serious Fraud Office said, adding: “The investigation continues.”
The charges are the first over manipulation of Euribor, one of the strands in the rate rigging probe that started with Libor. The SFO joined the sprawling global investigation in July 2012 after Barclays became the first bank to be fined by U.S. and U.K. authorities.
One doubts that they’ll ever get around to charging JPMorgan et al with price fixing of the Big 6 commodities—silver and gold in particular. The above four paragraphs appeared on the Financial Times website yesterday sometime—and the rest is behind their subscription wall. I found it embedded in a GATA release.
Stonehenge Begins to Yield Its Secrets
Last month, in the latest excavation at a site known as Blick Mead, Mr. Jacques and his team dug a trench 40 feet long, 23 feet wide and 5 feet deep, examining this structure and its surroundings. They found a hearth with chunks of heat-cracked flint, pieces of bone, flakes of flint used for arrowheads and cutting tools, and ocher pods that may have been used as a pigment.
“There’s noise here,” Mr. Jacques said, imagining the goings-on in 4300 B.C. “There’s people here doing stuff. Just like us. Same kids and worries.”
About a mile away is Stonehenge.
For Mr. Jacques, the house is part of the story of Stonehenge, even though the occupants of the Blick Mead home never saw that assemblage of massive stones. The beginnings of Stonehenge were more than a millennium in the future.
This is another very interesting essay that showed up on The New York Times website on Monday sometime—and it’s another article that had to await today’s missive. I thank Patricia Caulfield for sharing it with us.
Russia Rising…NATO Crouching — John Batchelor Interviews Stephen F. Cohen
In this current broadcast Cohen and Batchelor continue to consider the expansion of the New Cold War from its epicentre in Ukraine to its much more active phase in Syria. The process can be summed up as consolidations of success for Moscow and more isolation of failures for Washington and for its increasingly less reliable allies. Russia is well ahead in the game. In Ukraine the Kiev government increases its estrangement with the EU by rejecting important compliance legislation involving personal rights and freedoms for Ukrainians, even as the Right Sector gains support for the coming elections. All of this is a trend to more failure for Ukraine.
Meanwhile Moscow is now beginning to recognizing an ISIS bomb as responsible for the downing of its airliner; the bombing campaign in Syria– to the amazement of Washington – is allowing the Syrian army to recover and gain back territory, and former allies, Jordan, and even Israel are increasingly supportive. Cohen considers that the longer the US retains its truculent, unsupportive role against the common terrorist threat to the world represented by ISIS, the more it will become “self isolated”. Cohen subscribes some of the problem for Washington as “Putin envy”. It is extremely worrisome that our future can turn on such shallow leanings.
But the increasing aggressive posturing of NATO exercises in the Baltic States over shadows Russian victories in the M.E. Cohen discusses in detail the dangers of these exercises, that in November of 1983, “Arch Able, one such almost caused WW3. There is much more in the broadcast as these pundits join up the dots for listeners very well.
This 40-minute audio interview is a must listen for any serious student of the New Great Game—and I thank both Ken Hurt and Larry Galearis for contributing to this story which was posted on the audioboom.com Internet site on Tuesday.
Bosnia’s bitter, flawed peace deal, 20 years on
Dayton is a midsize town in Ohio that few Americans would have occasion to visit or even find on a map. Apart from the Aviation Heritage Trail that includes the bike shop of the world’s first pilots, Orville and Wilbur Wright, there is not a great deal to see.
But for the people of Bosnia and Herzegovina, Dayton is the most famous place in the U.S., overshadowing New York, Washington or Los Angeles. Its name has come to encapsulate Bosnia’s purgatory: life in the absence of war, but never quite at peace. And a long way from happiness or normality.
It is 20 years since agreement was reached in Dayton to end the conflict that cost some 100,000 lives. As in Ukraine today, what appeared on the surface as a civil war was, in reality, driven principally by the ambitions of a more powerful neighbour. The dismemberment of Bosnia in 1992 was orchestrated from Belgrade by President Slobodan Milošević, seeking to carve out a “Greater Serbia” as the old communist Yugoslavia fell apart. He worked through Bosnian Serb proxies, fighting against a shaky alliance of Muslims (known as Bosniaks) and Croats. To add to the agony, the Croats temporarily turned on their Bosniaks in 1993, at the behest of Franjo Tudjman, the strongman in neighbouring Croatia.
This loooong essay showed up on The Guardian‘s website late on Tuesday afternoon London time—and is definitely worth reading if the history of that area is of interest. After 20 years of ‘peace’—it appears that there’s big trouble in the Balkans once again. Patricia Caulfield sent this our way—and for length and content reasons, had to wait for today’s column.
U.S. Steps Up Its Attacks on ISIS-Controlled Oil Fields in Syria
The United States and its allies have sharply increased their airstrikes against the sprawling oil fields that the Islamic State controls in eastern Syria in an effort to disrupt one of the terrorist group’s main sources of revenue, American officials said this week.
For months, the United States has been frustrated by the Islamic State’s ability to keep producing and exporting oil — what Defense Secretary Ashton B. Carter recently called “a critical pillar of the financial infrastructure” of the group — which generates about $40 million a month, or nearly $500 million a year, according to Treasury Department estimates.
While the American-led air campaign has conducted periodic airstrikes against oil refineries and other production facilities in eastern Syria that the group controls, the organization’s engineers have been able to quickly repair damage, and keep the oil flowing, American officials said. The Obama administration has also balked at attacking the Islamic State’s fleet of tanker trucks — its main distribution network — fearing civilian casualties.
But now the administration has decided to increase the attacks and focus on inflicting damage that takes longer to fix or requires specially ordered parts, American officials said.
This New York Times article, filed from Erbil in Iraq, appeared on their Internet site on Thursday sometime—and it’s another contribution from Patricia C.
Saudi Arabia’s Syrian adventures may soon be over
Reports of Saudi king’s possible visit to Russia indicate that Saudi Arabia’s adventurism in Syria is coming to a close.
According to the Russian presidential press secretary, Dmitry Peskov, the visit of Saudi King Salman bin Abdulaziz Al Saud to Russia is being worked out and agreed through diplomatic channels.
This shows Riyadh is ready to reach a ‘compromised solution’ on the Syrian crisis – a solution that may not be what the US seems to be attempting to achieve through its renewed engagement in Syria and Iraq and its (possible) policy of balkanization of Syria into different “safe zones.”
As is evident, the kingdom’s engagement in Syria and Yemen has rather grown overstretched. Military fatigue in Yemen and resource fatigue in Syria seem to be getting the better of its establishment that no longer seems ‘energetic’ enough to keep itself embroiled in the conflict, especially when no ‘rational’ and balanced solution, as far as the Saudi position is concerned, is available in the hindsight.
This very interesting news item put in an appearance on the Asia Times website on Friday sometime—and it’s certainly worth reading if you’re a serious student of the New Great Game. I thank U.K. reader Tariq Khan for sending it our way.
Russia’s intervention in Syria – a reality-based evaluation
It has been over one month since the Russians launched their military and political operation in Syria and the time for hyperbole and flag waving has clearly passed. Gone are the “most anticipated showdown in recent history” along with rumors of MiG-31s, Russian paratroopers, “thousands” of military personnel, ballistic submarines and other such nonsense. And, contrary to what some wrote, none of what happened was “coordinated with the White House”. What I propose to do today is to evaluate what has really has happened and to look at the Russian options for the future. But first, a short restatement of what really took place.
A very daring operation by a small military force
I will never repeat this enough: the Russian military forces is a small one. Yes, they are flying an impressive amount of sorties every day (anywhere between 50 to 80). But let’s compare that to the Israeli air force effort during the war against Hezbollah in 2006 when the Israelis flew 400 (four hundred) sorties every day. Add to this the massive Israeli artillery barrage and even attacks from the Israeli Navy. Finally, let’s remember that Israel was not fighting all of Hezbollah at all, but only 2nd tier Hezbollah forces south of the Litani River totaling less than 1000 fighters (Hezbollah kept all the best trained forces north of the Litani River).
This very interesting commentary showed up on thesaker.is Internet site back on Monday—and Larry Galearis sent it to me very early yesterday morning. It’s a must read for any serious student of the New Great Game.
Kurdish Fighters Retake Iraqi City of Sinjar From ISIS
Kurdish and Yazidi fighters retook the northern Iraqi city of Sinjar from Islamic State fighters on Friday morning, facing only pockets of resistance as the jihadists cleared out from a town they had brutally dominated for more than 15 months.
Passing the rubble of empty houses and abandoned shops with battered metal storefronts, Kurdistan pesh merga forces coming in from different directions linked up in the center of the devastated city. They were joined there by fighters from a rival group, the Kurdistan Workers’ Party, or P.K.K., and also by fighters from the Yazidi religious minority, whose population was almost entirely rooted in the Sinjar region before fleeing enslavement and massacre at the hands of the Islamic State.
Amid deafening bursts of celebratory gunfire, a Yazidi militia fighter with a walrus mustache, Edo Qasim Shamo, proclaimed excitedly that the moment of his people’s “liberation” was finally at hand.
But even as the American-backed offensive appeared to have secured its goals after just two days, divisive political issues came to the forefront.
As you read this new item, it’s hard not to believe that there is some sort of special madness going on over in the Middle East. You just couldn’t make this stuff up. This is story, filed from Sinjar in Iraq, is also from The New York Times website on Friday—and I thank Patricia C. for this story as well.
A-Share ETFs Fall With ADRs After China Doubles Margin Demand
U.S.-listed Chinese companies and exchange-traded funds tracking A shares fell after China moved to contain leveraged wagers on its stock market. Stock exchanges cut by half the amount of borrowed money investors can use to buy shares, as authorities seek to prevent a repeat of the excesses that led to a $5 trillion rout earlier this year.
Margin requirements will be raised to 100 percent from 50 percent starting on Nov. 23, the Shanghai and Shenzhen bourses said in separate statements after local exchanges closed on Friday. The rule change means that an investor with 1 million yuan ($156,895) in their account is limited to borrowing another 1 million yuan from a broker to buy more shares. Previously, they could borrow as much as 2 million yuan.
While it might have a negative impact in the very short run, I think ultimately it’s a very good thing in the long-run,” Brendan Ahern, managing director at Krane Fund Advisors LLC in New York said by phone on Friday. It will “certainly will help de-risk, or take down, some of the inherent volatility in the market.”
This Bloomberg news item was posted on their website at 1:39 a.m. Denver time on their Friday morning—and was updated about fourteen hours later. I thank West Virginia reader Elliot Simon for sending it along.
Raising the Bar at China’s Factory Canteens
Demands for better pay and conditions at China’s factories have become louder in recent years. Inspired by the UK’s Jamie Oliver, one man has seen an opportunity to improve the food workers eat and make some money along the way. Bloomberg‘s Rosalind Chin went to China’s Guangdong province to find out how he’s doing it.
Well, dear reader, this “one man” is none other than reader Richard Craggs who, like you, has been reading my daily column for years—and has contributed the odd story now and again. Here he is up in lights in this 2:18 minute video clip. It’s wonderful to be able to put a face to a name and an e-mail address. Congratulations on your success Richard! It was posted on the Bloomberg website at 2:53 a.m. MST on Thursday morning—and it’s worth your while.
Yuan Set to Join IMF Basket in Step Toward Currency Big Leagues
China’s yuan is poised to enter the big leagues of global currencies, according to the judgment of the International Monetary Fund.
IMF staff have recommended the yuan be included in the fund’s Special Drawing Rights reserve-currency basket, alongside the U.S. dollar, euro, pound and yen, IMF Managing Director Christine Lagarde said Friday. The staff nod makes approval by the fund’s board this month all but certain, as major IMF shareholders including the U.S. have said they will support inclusion if the yuan meets IMF criteria. It would be the first change in the SDR’s currency composition since 2001, when the euro replaced the German deutsche mark and French franc.
The Washington-based fund’s endorsement would mark a major milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. Approval probably will make more countries comfortable including the currency in their foreign-exchange holdings, while boosting President Xi Jinping’s drive to open up the world’s second-biggest economy.
This Bloomberg news item put in an appearance on their website at 3:38 p.m. Denver time yesterday afternoon—and was subsequently updated five hours later. I posted a story about this a couple of days ago, but this one is more up to date. I thank Patricia Caulfield for her final offering in today’s column.
Asia fast forward, Pentagon back to the future — Pepe Escobar
Once again, Asia has been placed at the epicenter of geopolitical tectonic plates in motion.
The latest example took place last week during a meeting between Mr. Xi and Mr. Ma [Chinese President Xi Jinping and Taiwanese President Ma Ying-jeou] – at the Shangri-La in Singapore. It was the first face-to-face between the two Chinas since the late 1940s, when they split after the civil war.
Sorry, not two Chinas; actually “One China”, two nations – or “one country, two systems”, following the concept elaborated by the ‘Little Helmsman’ Deng Xiaoping applying to Hong Kong and also, ultimately, Taiwan.
So Xi and Ma called each other a neutral “Mister”. They shook hands over a neutral background (neither red nor blue, but orange). They split the bill at the – excellent – Shang Palace restaurant. They clinched no agreements. Above all, they talked.
This excellent commentary by Pepe put in an appearance on the Russia Today website at 2:40 p.m. Moscow time on their Friday afternoon, which was 6:40 a.m. in Washington—EST plus 8 hours. It’s a must read for any serious student of the New Great Game—and I thank Tariq Khan for his second contribution to today’s column.
Russia Sees Gold Reserves as “Additional Financial Cushion” In Face of “External Uncertainties”
– Gold and FX reserves are “additional financial cushion” for state in face of “external uncertainties”
– Russia bought another 77 tonnes of gold in Q3
– Ruble volatility does not create risks for financial stability in Russia
– Russia intends building fx and gold reserves to $500 billion in coming years
– Gold is a “100% guarantee from legal and political risks”
Russian central bank governor, Elvira Nabiullina spoke about Russia’s gold and foreign currency reserves today saying Russia intended building them up to $500 billion in the coming years. More importantly, she confirmed that Russia continues to see gold reserves as an important monetary asset – in her words as a “financial cushion.”
According to Russian news agency TASS, Nabiullina said: “Regarding gold and foreign currency reserves, we have the desired benchmark of $500 billion, and not in the three-year term, it could be 5-7 years and more.”
Reuters reported that Russia does not have a target for the volume of gold in its reserves: “Nabiullina also said the regulator did not have a set target for the volume of gold in its reserves.”
Elvira has made this statement before within the last month or so, but it’s nice to see that she’s not reluctant to point it out whenever she’s given the opportunity. This commentary appeared on goldcore.com Internet site yesterday.
China gold demand already passes 2013 annual record — Lawrie Williams
With the latest week’s gold withdrawals from the Shanghai Gold Exchange (SGE) at 44.9 tonnes, the country’s annual total gold demand so far this year as expressed by this metric has already reached 2210 tonnes – a new yearly record, with a full month and a half yet to go before the year end. The SGE figures are up to week 43. The previous full year record was for withdrawals of 2181 tonnes of gold back in 2013. So far this year, withdrawals from the SGE are 366 tonnes higher than at the same time in 2013. We thus stand by our forecast that SGE withdrawals this year could hit an enormous 2,600 tonnes plus with weekly demand likely to increase as the 2016 Chinese New Year approaches.
Again, as we have pointed out beforehand there are differences of opinion as to whether SGE gold withdrawals are indeed a true measure of Chinese gold consumption with the mainstream analysts coming up with much lower figures, but much of the difference is down to the limited categories of gold demand they include as retail gold consumption. Others, like China gold watcher Koos Jansen disagree saying that SGE withdrawals are an accurate measure of the country’s continuing thirst for gold. Whatever the truth of this matter, SGE deliveries have to be a like for like indicator of overall Chinese demand – and all the analysts saw 2013 as a record year for Chinese gold consumption, so 2015 is certainly setting new records – and comfortably so. The figures also show that China is likely to account for absorbing around 80% of total global annual new mined gold supply this year.
This brief commentary by Lawrie appeared on the Sharps Pixley website early this morning GMT—and it’s certainly a must read.
The PHOTOS and the FUNNIES
The WRAP
Silver prices will rise when the commercials are the least short and the managed money traders are the least long. Same as it always has been. A little more than two weeks ago, the setup between the commercials and managed money traders was structured not for a price rise, but a price decline. Now that we are well into the grip of a price decline that has continued uninterrupted since then, where do we stand now?
Well, we know there has been considerable improvement in the market structure in both COMEX gold and silver on this price decline because, quite frankly, this is why prices declined (so that the commercials could buy at cheaper prices). Are we done with the price drop? I don’t know, but I sense we may be close (although the final price drop can be dramatic). But my main point is that whenever this price rig job to the downside is complete, I would consider the silver market to be positioned for the big move. Yes, I know I’ve felt that way before, but I feel even more so currently. — Silver analyst Ted Butler: 11 November 2015
Today’s pop ‘blast from the past’ is the 1979 Grammy-winning number from the disco era that I can’t recall how many times I’ve danced to it at a DJ-hosted wedding. It’s a got a killer dance beat that just doesn’t quit—and I hope you enjoy it. It’s hard to believe that this number is already 36 years young. The link is here. Enjoy!
Today’s classical ‘blast from the past’ is a Nikolai Rimsky-Korsakov composition from 1887. It’s his Capriccio espangol, Op. 34—a five-moment orchestral suite based on Spanish folk melodies. It’s a big orchestra showpiece—and like other works of this type, the larger the orchestra the better. Here’s the Orchestre de la Suisse Romande doing the honours—and Diego Matheuz conducts. The youtube.com video is HD quality—and the audio is first rate. So put it on full screen—and then crank it up. The link is here.
Once again the powers-that-be closed all of the Big 6 commodities at new lows for this move down—and set new intraday lows for most of them as well. Once again I was underwhelmed at the volume levels in both gold and silver yesterday—particularly silver—as I’m still expecting a big down-side spike before this is all done.
But, having said that, I would guess that with or without that last big move, the bottom of the barrel is in sight for all of them. Here are the 6-month charts so you can survey the carnage for yourself. Both silver and platinum have experienced twelve consecutive down days—and gold and palladium are hard on their heels, with only one up day in the last fourteen. And as both Ted and I have stated on a number of occasions, JPMorgan et al appear to be in some sort of hurry this time around.
But with all the important moving averages that matter to the Managed Money traders miles above their current prices, there isn’t really much they’re going to do until they’re penetrated to the upside by a rally, or with time passage as the moving averages work their way lower and bring about the same result. Right now these traders are most likely minimum long and maximum short. But because of the lack of a COT Report until Monday, plus the three more down-days since the cut-off, it’s really hard to tell where we are in Ted Butler’s “count”.
We’re still about two weeks ago from the final roll-over date out of the December contracts in both gold and silver—and it will be interesting to see if prices can be held at these levels until that contract goes off the board over at the CME. Stealing the one-sentence Ted Butler quote from yesterday’s column—“It makes me a little nervous in trying to time the bottom here.” I agree totally.
So we wait some more.
The world is such a hell of a mess now—and getting worse with each passing day. Money printing in the form of Q.E. is off the table for the world’s central banks, as its effectiveness is long past its “use before” date. As I’ve said before, the only inflationary card left is the gold/commodities card—and if they want to play it, they’ve certainly positioned the commodities market for a spectacular short covering rally in just about any commodity that you wish to name. The only two questions remaining are: 1] are they going to play it, and 2] if so, how high are they going to let prices run?
As Ted Butler has been pointing out for a decade or more, all JPMorgan et al have to do is put their hands in their pockets at this juncture—and let the markets do their thing. The short covering rally that would unfold would be minus the short sellers of last resort for the first time in two generations—and how high commodity prices might go before the short covering rally burned itself out to the upside, is beyond my comprehension.
Maybe that’s the reason why JPMorgan—and perhaps others—are buying every ounce of silver, gold and copper that isn’t nailed down, whether it be the physical metal itself, or a long paper contract—and those are the only commodities that I keep track of, as there may be more that I don’t know about.
Questions with no answers at the moment. But unless this is the game plan, the next rallies will be of the same old, same old variety—and the cycle will just keep repeating. At some point there are going to be casualties in the precious metal mining industry, where the miners are just going to have to hand the office keys over the to their bankers.
It doesn’t have to be that way of course, because if the miners would just stand up and call this precious metal price management game, it would end immediately. But taking that action would mean admitting they were wrong all these years—and they’re rather go bankrupt then stand up and do what’s necessary, or in their stockholder’s best interests.
And as I’ve said on countless occasions—“How did it come to this?”
I’m done for the day—and the week—and I’ll see you on Tuesday.
Ed
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