17 November 2015 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Not surprisingly, gold spiked up at the 6 p.m. open in New York on Sunday evening, but it was obvious from the chart pattern in Far East trading on their Monday, that the powers-that-be were laying in wait. The struggling rally got rolled over at exactly 3:00 p.m. Hong Kong time—and then got hit for the final time at exactly 1:00 p.m. GMT in London trading—twenty minutes before the COMEX open. The absolute low tick came a minute or so after 3 p.m. EST in electronic trading—and it traded sideways from there into the close. “Da boyz” even managed to close it at a new low for this move down.
The high and low ticks were reported by the CME Group as $1,097.40 and $1,080.50 in the December contract.
Gold finished the Monday session at $1,082.10 spot, down $1.80 from Friday’s close. Net gold volume at the London open was already sky-high at 44,000 contracts, so you can see how much COMEX paper they had to throw at the price to put the rally back in the box. Total net volume for the day was decent at just under 123,500 contracts. But, as just mentioned, a goodly chunk of that amount was used to put out the gold fire in Far East trading yesterday morning.
The price action in silver was very similar, including the 3:00 p.m. high in Hong Kong, along with the subsequent smash at 1:00 p.m. London time. The low tick came shortly after 11 a.m. in New York. It recovered a nickel or so from there, but some thoughtful soul came along and took even that away in the very illiquid and thinly-traded electronic market in the last hour before it closed at 5:15 p.m. EST.
The high and low in silver were recorded as $14.42 and $14.17 in the December contract.
Silver was closed in New York session at $14.25 spot, down 3 cents from Friday’s close—and another new low closing price for this move down. Net volume in silver was 8,300 contracts by the London open, which is very big—and for the entire Monday session, the net volume checked in at just under 32,000 contracts, which was nothing out of the ordinary. It would have been a very quiet trading day from a volume perspective if JPMorgan et al hadn’t had to step in when they did in the Far East market yesterday morning. Also to be noted is how similar the price action was on Friday compared to the price action yesterday—almost carbon copies of each other.
The platinum price action was similar to the gold and silver price action, so you no further explanation is necessary. Platinum finished the Monday session at $865 spot, up 7 dollars from Friday’s close.
Palladium bucked the price pattern of the other three precious metals to a certain extent—and it close in positive territory as well at $549 spot, up 11 bucks from Friday.
The dollar index closed at 98.84 late on Friday afternoon in New York—and the chart at ino.com shows that the dollar index actually traded on Sunday somewhere on Planet Earth. It made it as high as 99.22 around 5 p.m. EST on Sunday afternoon—and then didn’t do much until it began to head lower shortly after 1 p.m. Hong Kong time on their Monday afternoon. The 98.87 low tick came about ten minutes before London open—and it rallied from there to its 99.46 high tick, which came moments before 3 p.m. in New York. It backed off a bit from there, closing at 99.41—and up 57 basis points from Friday’s close. Here’s the 3-day dollar index chart so you can see the Sunday ‘action’ for yourself.
And here, as usual, is the U.S. dollar index chart for the last six months, so you can see yesterday’s new high close.
The gold stocks opened higher—and then chopped sideways for the rest of the day, as the HUI closed up 0.82 percent.
The price action in the silver equities was similar as well—and Nick Laird’s Intraday Silver Sentiment Index finished higher to the tune of 1.78 percent.
The precious metal equities continue to trade counter-intuitively to the price action—and as I said on Saturday, it’s probably the in-the-know smart money that’s buying everything in sight.
The CME Daily Delivery Report showed that, once again, there were zero silver or gold contracts posted for delivery within the COMEX-approved depositories on Wednesday. But that didn’t stop JPMorgan from picking up another 95 copper contracts for its own account for delivery on that day. That’s another 2.4 million pounds of the stuff.
The CME Preliminary Report for the Monday trading session showed that November’s gold open interested fell by 7 contracts leaving 213 left—and November silver o.i. dropped by 1 contract, leaving 30 still around.
There was no changes in GLD yesterday, but there was another huge deposit in SLV. This time an authorized participant [read JPMorgan] added 2,145,163 troy ounces. Needless to say, the only reason that this silver was added was to cover an existing short position—and because it was done on the 16th of the month, it won’t show up in the SLV short report at the end of November—and you just know that had to be a deliberate act.
It was another big sales day over at the U.S. Mint as they sold 13,000 troy ounces of gold eagles—3,500 one-ounce 24K gold buffaloes—and another 663,000 silver eagles. And it nearly goes without saying that it was Ted’s ‘big buyer’ back at the trough, as retail sales still suck.
It was another quiet day for gold over at the COMEX-approved depositories on Friday, as only 4,018 troy ounces were reported received, all of which went into Canada’s Scotiabank. Nothing was shipped out.
But it was another huge day in silver, as 520,449 troy ounces were reported received—and 940,754 troy ounces were shipped out the door for parts unknown. JPMorgan was not involved in any of it. The link to that action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, they reported receiving 2,325 kilobars—and they shipped out 501 of them. All of the activity was at Brink’s, Inc. once again—and the link to that, in troy ounces, is here.
The Remembrance Day-delayed Commitment of Traders Report for positions held at the close of COMEX trading a week ago today was very impressive, particularly in gold. Ted had a special column about it yesterday—and I’m just going to steal what I need, as we never had a chance to discuss it on the phone, as he’s on the road at the moment.
In COMEX gold futures, the net commercial short was reduced by 53,100 contracts, to 71,900 contracts – a simply massive reduction over the past two weeks of 94,000 contracts. I can’t look it up now, but that has to be a two week record. All three commercial categories did their musketeer routine as the Big 4 bought back more than 17,000 shorts, the ‘big 5 thru 8’ bought back over 13,000 and the raptors added more than 23,000 new longs. The term that comes to mind is massively collusive.
The Managed Money technical funds provided nearly all of the selling in liquidating nearly 25,000 long contracts—and adding more than 25,000 new shorts. I was shocked at the low level of remaining managed money longs – under 92,000 contracts, the lowest since 2008 (and $800 gold). The term that comes to mind is washed out, or nearly so, to the downside. Every single thing I just mentioned is powerfully bullish for gold prices.
In COMEX silver futures, the total commercial net short position was reduced by 17,000 contracts to 50,100 contracts, or just under 251 million troy ounces. By commercial categories, it was more than interesting. The Big 4 bought back 4,800 short contracts—and I think every single contract could be attributed to JPMorgan. The raptors added 13,500 long contracts and the ‘Big 5 thru 8’ actually added 1,300 new shorts. With JPM buying back nearly 5,000 short contracts and the ‘Big 5 thru 8’ adding 1,300 shorts, my double-cross dreams come to mind.
The Managed Money traders sold 22,569 silver contracts, again a truly massive amount, which included the liquidation of 5,611 longs and the addition of 16,958 new shorts. Considering the certain improvement since the Tuesday cutoff, this kid, anyway, got everything he wanted. — Silver analyst Ted Butler: 16 November 2015
Of course we’ve had four more down-days since the cut-off—and that includes the new low closing prices yesterday as well. This is all wonderful news.
But, having said that, the 250 million troy ounce short position in silver did not come close to disappearing during the last four business days—and although I’m expecting more big improvements in this Friday’s COT Report, it still my opinion that we’ve got a bit more to go to the downside. Of course—and as is always the case—I’d love to be spectacularly wrong about that.
Here’s Nick Laird’s now-famous chart showing the “Days of World Production to Cover COMEX Short Positions” of all the physically-traded commodities on the COMEX, updated with the data from this latest COT Report. The ‘click to enlarge’ feature helps here.
On a net basis, the ‘Big 8’ short holders in silver are short 48.8 percent of the total open interest, which is 396.3 million troy ounces—and the ‘Big 4’ short holders are net short 32.8 percent of total open interest, which is 266.4 million troy ounces. On the above chart, the ‘Big 4’ are short 126 days of world silver production—and the ‘Big 8’ are short 187 days of world silver production.
Based on my back-of-the envelope calculations, JPMorgan’s net short position in COMEX silver is 49 days of world silver production. That’s a decent reduction from the 61 days of world silver production they were short in the prior COT, but still outrageous nonetheless.
These short positions continue to redefine the words ‘obscene’ and ‘grotesque’. Yet the CFTC, the CME Group, The Silver Institute—and the silver miners themselves [with the exception of Keith Neumeyer over at First Majestic] say nothing—and studiously ignore, or run screaming from anyone who points out this 1,800 lb. gorilla in the middle of the COMEX living room. Gold, platinum and palladium as well.
Ted didn’t mention copper, one of the other Big 6 commodities, when commenting on the contents of the COT Report. In that metal, the Big 8 Commercial traders decreased their net short position by a chunky 13,595 contracts—and at 25,000 lbs. per contract, that’s a mountain of copper. I’ll let you do the math on that.
Under the hood in the Disaggregated Report the technical funds in the Managed Money category sold 2,790 long contracts and bought 13,699 short contracts. They’re being fleeced just as much in copper as the Managed Money traders are in the four precious metals.
On Saturday I reported on a record withdrawal from the Brink’s, Inc. gold kilobar depository in Hong Kong on their Friday—22.176 tonnes—and here’s Nick Laird’s chart showing that, and it certainly stands out.
I have the usual number of stories for you today—and you should be able to find a couple that interest you.
CRITICAL READS
Wall Street fears that Americans are dead broke
The American consumer appears to be tapped out.
Despite cheaper gas and interest-free car loans that stretch six years, auto sales in October posted a surprise decline, the Commerce Department said Friday — while retailers continued to post disappointing sales for the three months ended Oct. 31.
Wall Street, fearful that consumers are running out of cash heading into the crucial Christmas retail season, are selling off retail stocks and everything else sensitive to consumer spending.
The Dow Jones industrial average has fallen over 600 points, or 3.4 percent, over the last eight trading sessions. The S&P 500 is down 3.7 percent over the same span.
This story was posted on The New York Post website late on Friday morning EST—and it’s something I found in Monday’s edition of the King Report.
DoubleLine’s Gundlach: Fed hike ‘no-go more likely than most people think’
DoubleLine Capital co-founder Jeffrey Gundlach said on Sunday that the Federal Reserve may hesitate to raise rates given rocky economic and financial conditions, though the Paris attacks alone are unlikely to play a factor in next month’s decision.
The influential money manager, who recently warned that the U.S. Federal Reserve should not tighten monetary policy in December, said the Paris attacks could pressure stock markets around the globe, “which we know Fed officials have been watching, even if they try not to admit it.”
Gundlach said about a rate hike next month that many economists believe will occur: “Certainly No-Go more likely than most people think. These markets are falling apart.” Los Angeles-based DoubleLine oversees $80 billion in assets under management.
This business-related news item, filed from New York, put in an appearance on the Reuters website at 5:02 p.m. EST on Sunday afternoon—and it has obviously been updated since it was originally filed, as I found it on Doug Noland’s website very late on Saturday evening.
Debt Market Distortions Go Global as Nothing Makes Sense Anymore
Something very strange is happening in the world of fixed income.
Across developed markets, the conventional relationship between government debt — long considered the risk-free benchmark — and other assets has been turned upside-down.
Nowhere is that more evident than in the U.S., where lending to the government should be far safer than speculating on the direction of interest rates with Wall Street banks. But these days, it’s just the opposite as a growing number of Treasuries yield more than interest-rate swaps. The same phenomenon has emerged in the U.K., while the “swap spread” as it’s known among bond-market types, has shrunk to the smallest on record in Australia.
Part of it simply has to do with the fact that investors are pushing up yields on Treasuries — which guide rates for just about everything — as the Federal Reserve prepares to raise borrowing costs for the first time in a decade. But in many ways, it reflects the unintended consequences of post-crisis rules designed to make the financial system stronger. Those changes have made it cheaper and safer to use derivatives to hedge risk, and more onerous and expensive for bond dealers to make markets in the safest securities.
This Bloomberg article showed up on their Internet site at 10 a.m. Denver time on Sunday morning—and was updated twenty-three hours later.
Washington Refines Its False Flag Operations — Paul Craig Roberts
Washington and its French vassal have refined how they conduct their false flag operations. With the Charlie Hebdo operation, they knew to immediately set the story in stone in order to avoid any questions from the print and TV media and in order to use the set story to take the place of an investigation.
The set story made it unnecessary to explain the mysterious “suicide” of one of the main police investigators while engaged in the investigation of the event. The set story also made it unnecessary to explain why it was necessary to kill rather than capture the alleged perpetrators, or to explain how the French authorities could be so wrong about the alleged get-away-driver but not about the two gunmen. There has been no explanation why the authorities believed there was a get-away-driver, and no such driver has been captured or killed. Indeed, there are many unanswered questions of no interest to any media except the alternative Internet media.
What the U.S. and France learned from the Charlie Hebdo skepticism on the Internet is to keep the story flowing. Charlie Hebdo involved two scenes of violence, and the connection between the two acts of terrorism was vague. This time there were several scenes of violence, and they were better connected in the story.
More importantly, the story was followed quickly by more drama, such as the pursuit of a suspected perpetrator into Belgium, a French bombing attack on the Islamic State, a French aircraft carrier sent to the Middle East, a declaration of war by the French President against ISIL, and speculation that Hollande, pressured by Washington, will invoke NATO’s Article V, which will pull NATO into an invasion of the Islamic State. By superseding each event with a new one, the public’s attention is shifted away from the attack itself and the interests served by the attack. Already the attack itself is old news. The public’s attention has been led elsewhere. How soon will NATO have boots on the ground?
Always controversial, but never wide of the mark in my opinion, this commentary by Paul appeared on his website on Monday sometime—and I thank Brad Robertson for pointing it out. It’s certainly worth reading.
Passport Found Next to Paris Suicide Bomber Belongs to Syrian “Political Refugee” Who Entered Greece
Exactly two months ago we reported that as Europe’s biggest refugees crisis since World War II was getting worse with each passing day, suddenly Europe was flooded with reports of “ISIS Terrorists” posing as refugees.
What we said we disturbingly prophetic when looking at the immediate consequences of Europe’s “infiltration” by the CIA-crated fighters meant to overthrow Assad’s regime, also known as ISIS. Specifically, we said “focus on the propaganda, [which] is in full crisis mode: A recent article in the U.K. Express Daily claimed that IS “smuggled thousands of covert jihadists into Europe.” It cited a January BuzzFeed interview with an IS operative who said the militants have already sent some 4,000 fighters into Europe under guise of refugees.
This was the first of two punch lines, underlined for effect:
“These speculations have not been confirmed by Western security officials, although that’s only temporary: as the need to ratchet up the fear factor grows, expect more such reports of asylum seekers who have penetrated deep inside Europe, and whose intentions are to terrorize the public. Expect a few explosions thrown in for good effect.”
The second:
“And since everyone knows by now “not to let a crisis go to waste” the one thing Europe needs is a visceral, tangible crisis, ideally with chilling explosions and innocent casualties. We expect one will be provided on short notice.”
Overnight we got both numerous “chilling explosions” as well as “innocent casualties” on a sufficiently short notice, just as predicted.
This Zero Hedge commentary is datelined 11:28 p.m. on Saturday evening EST, but has obviously been updated since it was posted, as reader ‘David in California’ passed it around at 6:23 p.m. on Saturday evening EST. It’s worth reading too. There was a follow-up ZH piece posted on their Internet site at 10:12 p.m. EST on Sunday evening. That one is headlined “The False Flag Link: Syrian Passport “Found” Next to Suicide Bomber Was “Definitely a Forgery”“—and it’s worth reading as well. It sure is convenient how these passports get left lying around. The same thing happened at the 9/11 event, if you recall. I thank Roy Stephens for sharing this story with us.
Russia Today: The Paris Terror Wave—an Alternate View
This 10:45 minute Russia Today news interview was posted on the youtube.com Internet site on Sunday sometime—and certainly falls into the absolute must watch category for any serious student of the New Great Game. I thank U.K. reader Tariq Khan for bringing it to our attention.
Tensions in Iran After Nuclear Deal Grow in Hostility
Tensions between the Iranian president, Hassan Rouhani, and more conservative authorities over the country’s nuclear agreement and its future are turning increasingly bitter, punctuated by public exchanges and growing signs of an anti-American backlash, including arrests.
Mr. Rouhani is insisting that the nuclear deal signed in July not only will create the basis for an end to Iran’s prolonged economic isolation, but could be the start of new relations with the United States under certain conditions. Yet even his cautious statement of optimism has provoked a stormy reaction.
The tensions, which political analysts foresee lasting into next year at least, are in some ways an expected outcome of the nuclear agreement, which rolls back Iran’s atomic program in exchange for a broad lifting of sanctions. Many hard-liners opposed the accord as a submission to foreign powers, especially the United States. With the supreme leader, Ayatollah Ali Khamenei, endorsing the agreement, they turned their criticism directly on Mr. Rouhani and his aides.
The losing side’s reaction has been harsh, as seen in a series of arrests of Iranian journalists and at least one Iranian-American accused of collaborating with Western powers or worse. Even some prominent conservatives who mistrust the United States but see practical benefits in having a better relationship with it have been criticized.
This article appeared on The New York Times website on Sunday sometime—and I thank Patricia Caulfield for her first contribution to today’s column.
Saudi Arabia: a Kingdom Stumbles
For the past eight decades Saudi Arabia has been careful.
Using its vast oil wealth, it has quietly spread its ultra-conservative brand of Islam throughout the Muslim world, secretly undermined secular regimes in its region and prudently kept to the shadows, while others did the fighting and dying. It was Saudi money that fueled the Mujahedeen in Afghanistan, underwrote Saddam Hussein’s invasion of Iran, and bankrolled Islamic movements and terrorist groups from the Caucuses to Hindu Kush.
Today that circumspect diplomacy is in ruins, and the House of Saud looks more vulnerable than it has since the country was founded in 1926. Unraveling the reasons for the current train wreck is a study in how easily hubris, illusion, and old-fashioned ineptness can trump even bottomless wealth.
This story was posted on the counterpunch.org Internet site on Saturday—and it’s certainly worth reading if you have the interest. I thank Patricia C. for her second story of the day.
Japan’s Economy Contracts 0.8%, Returning to Recession
The Japanese economy deteriorated more severely than expected in the third quarter, government data released on Monday showed, extending a downturn into a second consecutive three-month period and putting the country in technical recession.
Worsening business confidence appeared to be behind the decline. Companies reduced investment in the quarter and drew down on their inventories rather than increase production, a sign that they may be bracing for tougher times ahead.
In a preliminary estimate, the Cabinet Office said gross domestic product shrank at an annualized rate of 0.8 percent. Economists surveyed by news agencies had expected a contraction of between 0.2 and 0.3 percent, on average.
A darkening outlook for global growth has put Japanese businesses on the defensive. One concern is China, where growth in Asia’s largest economy is slowing, in some sectors markedly, meaning there is less demand for industrial equipment, construction machinery and other capital goods, much of which has been supplied by producers in Japan.
This New York Times article, filed from Tokyo on Sunday evening EST, is another contribution from Patricia Caulfield. There was story about this on the bbc.com website yesterday—and it was headlined “Japan’s economy falls back into recession again“—and I thank Richard Saler for that one.
‘Abenomics’ architect predicts no more Bank of Japan easing this year
The Bank of Japan is unlikely to offer any further monetary easing this year to avoid unwelcome yen falls that would hurt low-income households, one of the architects of Prime Minister Shinzo Abe’s economic policy strategy said on Monday.
With monetary policy already ultra-loose, the government should boost fiscal spending to support private consumption through pay-outs to households, said ruling party lawmaker Kozo Yamamoto.
“If the U.S. Federal Reserve raises interest rates this year, that could accelerate yen declines. That would hurt households” by pushing up imported food costs, Yamamoto said.
Of course the real reason they’re not doing it is because it is no longer having the desired effect—and all they’re doing would be throwing more bad QE money after the bad QE money they’ve already thrown at this issue. As I’ve said on several occasions, the central banks of the world all know that this QE dog don’t hunt no more! This Reuters article, filed from Tokyo, put in an appearance on their Internet site at one minute before midnight GMT last night, which was 6:59 p.m. EST. I thank Patricia Caulfield for this story as well.
Tens of Thousands March in Seoul, Calling for Ouster of President
The police on Saturday fired water cannons and tear gas at thousands of protesters shouting for President Park Geun-hye’s resignation while marching toward her office in Seoul in the largest antigovernment demonstration here in several years.
Tens of thousands of people wearing plastic raincoats filled a City Hall plaza in downtown Seoul, brought together by a host of anti-government grievances, including Ms. Park’s recent decision to replace privately published school history textbooks with a uniform, government-issued text.
The crowd, many of whom chanted “Down with Park Geun-hye!” and “No to layoffs!” surged down a 10-lane boulevard toward Ms. Park’s presidential office, the Blue House, several blocks away. Officers blocked the marchers with barricades they built using 700 police buses linked together across the main street and
Rewriting history seems to be a growth industry in Asia these days. First the Japanese, then the Chinese—and now the Koreans. This is another article from The New York Times Internet site. This one was filed from Seoul on Saturday—and I thank Patricia Caulfield for her final offering in today’s column.
The Delirium of Milliards – How Monetary Heroin Tempts Hyperinflation
Herr Havenstein is a forgotten man today, but he should not be. What he did as President of the Reichsbank in his day should not be forgotten, as the same conditions that existed in Germany back then are just around the bend once again.
With the coming market crash (what we’ve witnessed recently is just a preview of what’s yet to come), we shall see significant deflation. The central banks, particularly the U.S. Federal Reserve, have for years promised that if deflation rears its ugly head, as it did following the 1929 crash, they will not hesitate to print money unceasingly until the problem is solved. Money creation will be possible at a rate never before seen in history. In 1922-1923 Germany, it was necessary to physically print bank notes and distribute them. Today, all that’s necessary is to type credits into a computer. Billions can be created overnight.
When this money creation first occurs, there will be prominent support from the media that the central banks are doing what’s necessary to combat deflation. Everyone will support the idea, just as they did in Germany in the 1920s. Trouble is, it won’t work.
This worthwhile commentary by Jeff Thomas appeared on the internationalman.com Internet site yesterday.
Koos Jansen: Shanghai withdrawals up to November 6 surpass all last year’s
Year-to-date withdrawals from the Shanghai Gold Exchange for the week ending November 6 have already exceeded the withdrawals for all of last year, gold researcher and GATA consultant Koos Jansen reports. Jansen adds that the World Gold Council is continuing to conceal what he calls “insatiable” Chinese demand.
Jansen’s report is headlined “SGE Withdrawals Break Yearly Record. World Gold Council Continues To Hide Insatiable Chinese Gold Demand” and it was posted on the Singapore-based website bullionstar.com yesterday. It’s worth reading. I found this gold-related news item in a GATA release.
10 years ago Peter George told you that gold would fall today
In the aftermath of the terrorist attacks in Paris news organizations were speculating that the price of gold would rise on Monday because of international tensions and turmoil. Long-time followers of GATA might have just laughed, knowing that gold would continue to perform counterintuitively on account of surreptitious crisis intervention by central banks.
Of course GATA’s intelligence is not so good that we know exactly how central banks were trading gold and other markets today. But we do know from their own admissions that they are secretly trading gold “nearly every day”—and secretly trading all major commodity futures contracts as well.
While this cannot be reported by mainstream financial news organizations, it long has been understood by anyone who wants to understand it.
That’s exactly right, dear reader. This commentary by GATA secretary/treasurer Chris Powell put in an appearance on the gata.org Internet site yesterday afternoon—and it’s worth reading as well.
World Gold Council, LBMA thought to be considering collaboration
The possibility of the London Bullion Market Association and World Gold Council collaborating more closely to promote the development of London gold trading seemed less of an alien concept this week than before, with some saying it would be in the best interests of London’s financial sector for the two to join forces.
There has been talk in the market since the launch of a World Gold Council initiative with five banks, still not announced but well known in the market, followed by the LBMA’s “request for information,” that the two may collaborate. The WGC declined to comment.
The WGC represents the miners, thus firmly on the sell side, while the LBMA represents a variety of market counterparts, mainly refiners, and acts as a proxy regulator in an age of increasing audit trails.
It’s proof positive that both of these organizations are as crooked and secretive as the proverbial dog’s leg. This story appeared on the platts.com Internet site on Friday—and it’s another item I found embedded in a GATA release.
Paulson Maintains Gold Stake as Prices Touch Five-Year Low
Billionaire hedge fund manager John Paulson stuck with his holding in the biggest exchange-traded product backed by gold, looking past slumping prices for the metal.
Paulson & Co. owned 9.23 million shares of the SPDR Gold Trust at the end of the third quarter, a government filing showed Monday. That was unchanged from the three months ended in June, when the firm cut holdings for the first time in two years.
The billionaire started his foray into gold in early 2009, betting that prices would rise amid unprecedented monetary stimulus. Bullion climbed 70 percent from December 2008 to June 2011 as the Federal Reserve bought debt and held borrowing costs near zero percent. Prices have fallen since then as inflation failed to accelerate and the U.S. labor market improved.
This Bloomberg story put in an appearance on their website at 2:19 p.m. on Monday afternoon MDT—and was updated about an hour later. It’s something I found on the Sharps Pixley website last night.
Indian gold demand hits 211.1 tonnes in third quarter
The decline in gold prices has triggered a significant jump in jewellery sales in many markets around the world, with Indians leading the charge.
Between July and September, fans of the precious metal purchased gold bracelets, earrings, necklaces and other ornaments weighing more than 631.9 tonnes, the highest third-quarter jewellery demand since 2008, according to the World Gold Council.
Jewellery demand from Indian consumers reached a total of 211.1 tonnes, which represent the biggest chunk, or 33 per cent, of the global consumption.
Chinese buyers came second, with a little over 187 tonnes of jewellery, up 4 per cent from the same period last year.
This gold-related commentary, filed from Dubai, was posted on the gulfnews.com Internet site early Monday afternoon GST [Gulf Standard Time]—and it’s another item I found on the Sharps Pixley website last night.
The PHOTOS and the FUNNIES
Here are two photos that Nick Laird sent me on Sunday. His friend Jack, who lives in Innisfail, North Queensland, caught this young male southern/double-wattled cassowary munching on his tomatoes on Sunday morning—and paid for it by having his photo taken twice. And here they are.
The WRAP
Cutting immediately to the chase, we continue to believe that the U.S. equity market is in a late-stage top formation of the third speculative bubble in 15 years. On the basis of measures best correlated with actual subsequent S&P 500 total returns across history, equity valuations remain obscene. We fully expect a loss in the S&P 500 in the range of 40-55% over the completion of this cycle; an outcome that would be wholly run-of-the-mill given present market conditions, and would not even bring reliable measures of valuation materially below their longer-term historical norms. — John P. Hussman: The Bubble Right in Front of Our Eyes — 16 November 2015
It should come as no surprise to anyone that JPMorgan et al were at battle stations right from the moment that the precious metal markets opened in New York on Sunday evening—and the same came be said for the President’s Working Group in the New York equity markets yesterday. Nothing was left to chance after the tragedy in Paris on Friday night.
With the world’s economic, financial and monetary systems on the verge of a world-wide melt-down on any bad news, the powers-that-be are ever vigilant. They know full well that the moment that they put their hands in their pockets, the world’s stock markets will be a smouldering ruin within five business days.
And despite the fact that all four precious metals were rallying [albeit under considerable selling pressure] in Far East trading on their Monday, “da boyz” and their algorithms made sure that they closed both gold and silver at new lows for this move down. They did that in copper as well. It’s obvious that JPMorgan et al are still gunning for the stops in the Managed Money traders in the technical fund category—and that’s the reason we may not have seen the lows for this move down as of yet, particularly in silver.
Here are the 6-month charts for the Big 6 commodities once again. Please note that silver has now been closed lower for thirteen consecutive trading days, which may be a record that goes back 30 or more years to the early 1980s when the CFTC et al pulled the plug on the Hunt brothers.
Returning to yesterday’s COT Report, for positions held a week ago today, Ted was very impressed with the fact that the net long position in gold in the Manged Money category was down to a number not seen since 2008, when gold was last at the $800 the ounce mark. The long position in the Managed Money category currently sits at 91,880 COMEX gold contracts.
I just want you to think about that number for a minute. Here we are at a gold price we haven’t seen in over five years—and there are still traders that are long the COMEX futures market in this metal—silver, platinum and palladium as well! In the latest COT Report, the the total open interest in gold is 436,426 contracts—and there are an equal number of long positions for every short position.
I’d like to know the name of the organizations that can afford to pay the necessary margin calls, or even the money necessary to roll their positions over all the time? We’re talking big coin here—and only the deepest of pockets have that kind of dough to lay out. And I’d dearly love to know who they are.
As I’ve also said before, we’ll find out why they’ve been sitting in the bushes all these years when prices are finally allowed to rise—and they begin to sell. And I can absolutely guarantee you dear reader, that when they’re selling, I’ll be selling right behind them, as I’d guess that they’ll be selling for a big profit—and know when the top is in—and not for price management purposes.
Anyway, back to the COT Report again. As I said in my discussion on it, as close to the bottom as we probably are in gold, we’ve still got miles to go in silver, no matter how good the numbers are in this Friday’s COT Report. But rather than speculate further, I think it’s best just to see how things unfold not only between now and First Notice Day for delivery in the December contract, but also between now and when the Fed and the interest rate thingy happens on December 16.
And as I type this paragraph, the London open is less than ten minutes away—and I see that the gold price didn’t do much until about 1:30 p.m. Hong Kong time—and then it got sold off to a new low for this move down around 3 p.m. local time. Silver’s rally attempt at the 6 p.m. open on Monday evening in New York got capped immediately—and then, like gold, didn’t do much until “da boyz” showed up shortly before 1:30 p.m. Hong Kong time—and they set a new low in this precious metal as well at precisely 3 p.m. local time. And after early rallies in Far East trading, both platinum and palladium met the same fate as gold and silver. Platinum and palladium are also trading below their Monday closes. So it’s obvious that JPMorgan et al aren’t done to the downside just yet, which is no surprise to me.
HFT volume in gold is already way up there at just over 29,000 contracts—and silver’s net HFT volume is just about 6,400 contracts. Roll-over volume in both metals is about five percent of the gross volume at the moment, which isn’t a lot.
The dollar index rallied about 20 basis point up until about lunch time in Hong Kong on their Tuesday morning—and has chopped sideways since—and is currently up 19 basis points.
Today, at the close of COMEX trading, is the cut-off from this Friday’s Commitment of Traders Report—and it should be suitable for framing as well, unless things blow sky-high today, which is highly unlikely by the way. We’ll certainly see more improvement—but how much it will be, is the $64,000 question.
So we wait.
And as I post today’s column on the website at 4:40 a.m. EST, I see that gold has rallied back to almost unchanged, silver is up four cents, platinum is up 3 dollars—and palladium is now down only a buck.
Net HFT gold volume is up to just over 34,500 contracts—and in silver, that number stands at somewhere around 7,800 contracts. The dollar index still isn’t doing much—and is up 21 basis points at the moment.
As always, I have no idea what to expect as today’s trading session unfolds. But, as usual, anything of importance will occur once the noon London silver fix is done for the day.
That’s all I have for this Tuesday, which is more than enough—and I’ll see you here on Wednesday sometime.
Ed
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