03 December 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t do much in Far East and early London trading on their respective Wednesdays, although it did have a slight negative bias throughout. The HFT boyz showed up at 1 p.m. London time, which was twenty minutes before the COMEX open—and the low tick price spike came minutes after 12:30 p.m. in New York. It was allowed to rally a bit until minutes after 2 p.m.—and then got sold down into the 5:15 p.m. close of electronic trading.
The high and low ticks were reported as $1,071.00 and $1,052.70 in the new front month, which is February.
Gold was closed in New York on Wednesday at $1,053.20 spot, down $15.60 from Tuesday’s close—and a new low close for this move down. Net volume was not overly heavy at a hair over 118,000 contracts.
Here’s the New York Spot Gold [Bid] chart so you can see yesterday’s price action from the start of the engineered price decline at 8 a.m. EST.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson—and as you can tell, there was no meaningful volume anywhere in Far East or early London trading. But that changed with the first five-minute tick after 6:00 a.m. Denver time on this chart—and from there the volume picked up a bit—and it really didn’t die off into insignificance until the tiny sell-off after 2 p.m. in New York, which is 12 o’clock noon on this chart.
Also to be noted is the huge volume spike that came shortly after the 12:30 p.m. spike low price. I don’t know for sure, but it had all the hallmarks of someone putting on a decent sized short position. Midnight in New York is the vertical gray line, add two hours for EST—and the ‘click to enlarge‘ feature works wonders here.
The silver price pattern was the same, except for one major difference—and that was that “da boyz” and their algorithms ‘rested’ between the first hit at 8 a.m. EST—and the second one that began shortly before noon in New York. The low price spike in silver came a few minutes before the low price tick in gold—and silver was closed at a new low for this move down as well.
The high and low ticks were reported by the CME Group as $14.21 and $13.90 in the new front month for silver, which is March.
Silver finished the Wednesday session at $13.97 spot, down 19.5 cents from Wednesday’s close. Net volume was slightly elevated at just under 33,000 contracts.
And here is the New York Spot Silver [Bid] so you can see the handiwork of JPMorgan et al in more detail.
Platinum had an interesting trading session on Wednesday. It started out like the other precious metals—doing nothing from a price perspective. But that all ended once the morning gold fix was put to bed in London. From there it took only an hour for it to rally ten bucks to its $850 high tick of the day. Then the HFT boyz and their algorithms put in an appearance. The $827 spot low tick came shortly after 12:30 p.m. in New York trading–and it chopped sideways into the close from there. Platinum finished the Wednesday session at $829 spot, down 8 dollars on the day—and 21 dollars off its high tick. Nothing free market about this.
Palladium had a similar price path to gold and silver, with JPMorgan et al appearing shortly after 8 a.m. EST. The low tick came around 1 p.m. in COMEX trading in New York. From there it chopped sideways into the close. Palladium finished the day at $525 spot—and down 12 bucks from Tuesday—and a new low close for this move down as well.
The dollar index hit its 99.72 low at 5 p.m. EST on Tuesday afternoon—and was in ‘rally’ mode as the Managed Money traders piled in on the long side. The 100.51 high tick [according to ino.com] came minutes before 12:30 p.m. in New York and, with the exception of palladium, that’s when the low ticks of the day for the precious metals were set. The index began to head south with a vengeance at that point, but what appeared to be the usual ‘gentle hands’ were there the moment that it hit the 100.00 mark. The index got down to around 99.93 around 3:20 p.m. in New York—and has been quietly rallying since—and back above the 100 mark once again.
The dollar index closed in New York late on Tuesday afternoon at 99.84—and it was closed in New York late on Wednesday afternoon at 100.04—up 20 basis points on the day. And because the dollar index has been so volatile lately, I’m using the 3-day dollar chart once again to give the daily price move some context.
It should be noted of course that almost the entire seven and a half hour dollar index rally from 10 a.m. in London until 12:30 p.m. in New York, had vanished by 3:20 p.m. EST—less than three hours later. But despite that, it wasn’t allowed to influence the precious metal prices, as all rally attempts during that three hour period were capped in the usual way.
And here, for a change, is the 2-year dollar chart so you can put the current shenanigans in some sort of long-term context.
The gold stocks opened down a bit and, not surprisingly, hit their collective lows at minutes before 12:30 p.m. in New York when JPMorgan et al set the low price tick in gold. From that point they rallied strongly until the gold price got turned over by ‘da boyz’ minutes after 2 p.m. EST. The HUI closed lower by 2.30 percent, but came nowhere near giving back all of its Tuesday gains. That’s should be viewed as a huge positive.
The silver equities followed a similar path, although they did flirt briefly with the unchanged mark around 10:30 a.m. in New York. But from that high, they sold off with a vengeance—and mirrored the price action of the gold stocks after that. Nick Laird’s Intraday Silver Sentiment Index closed down 3.15 percent—and almost all of Tuesday’s gains disappeared at the same time. Still, it could have been worse.
The CME Daily Delivery Report for Day 4 of the December delivery month showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday. I found this to be rather amazing, especially in gold.
The CME Preliminary Report for the Wednesday session showed that gold open interest in December fell by a smallish 87 contracts, leaving 3,798 still open for delivery—and I’m wondering out loud, like I was in this space in yesterday’s column, as to why the short/issuers are being so shy about delivering the physical metal to the long/stoppers. Because, as Ted Butler has said on countless occasions, there’s no real benefit to the issuers by holding back on deliveries.
There was a huge withdrawal from GLD yesterday, but it was posted so late in the day that I almost missed it—and I only saw it when I was checking SLV at 2:20 a.m. EST this morning. This time an authorized participant withdrew 507,209 troy ounces—and as of 6:36 p.m. EST yesterday evening, there were no reported changes in SLV. However, as I discovered when I re-checked GLD in the wee hours of this morning, I noted that there was a small withdrawal from SLV—133,118 troy ounces. Without doubt, that represented a fee payment of some kind.
There was no sales report from the U.S. Mint yesterday—and the fact that there wasn’t, just confirms to me that the 183,500 silver eagles reported sold on December 1 were sales from November placed there so as to not show November as a sales month with over 5 million silver eagles sold.
There wasn’t a lot of activity in gold over at the COMEX-approved depositories on Tuesday. Nothing was reported received—and 3 kilobars were shipped out of Manfra, Tordella & Brookes, Inc. Another 9,689 troy ounces was shipped out of Canada’s Scotiabank. The link to that activity is here.
In silver, there was 612,448 troy ounces shipped out—and nothing reported received. Of the amount shipped out, there was another 592,058 troy ounces shipped out of the Eligible category of JPMorgan’s vault. That’s the third truckload of silver out of their vault in the last week or so. The link to that activity is here.
It was another very busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They reported receiving 5,414 of them—and shipped out 6,369. All of the activity was out of the Brink’s, Inc. depository once again—and the link to that, in troy ounces, is here.
Before heading into the stories today, here are three more charts courtesy of Nick Laird. They show monthly silver and gold coin sales from The Perth Mint going back only four years, as that’s all they have records for that they’re prepared to put in the public domain. And as you can tell, sales/production have been rather uneven from month to month. The third chart shows the Australian dollar value of the Mint’s sales—gold vs. silver. Looking at this chart, it’s easy to tell that silver coin sales vs. gold coin sales aren’t anywhere near the 75 to 1 ratio that they’re respective spot prices indicate they should be. Of course it’s the same at every mint on Planet Earth. Sooner or later, something has got to give here—and it’s going to be their respective prices, as the gold/silver ratio will be materially smaller that the current 75 to 1.
I don’t have all that many stories for you today—and I hope you’ll find a few out of the list below that you consider worth reading.
CRITICAL READS
Credit Card Data Reveals First Holiday Spending Decline Since the Recession
According to BofA, in order to keep tabs of Thanksgiving holiday spending, it is particularly useful to track BAC aggregated credit and debit card spending during the period from Black Friday to Cyber Monday to get an early read on consumer behavior.
However, it adds that simply examining sales during the Black Friday weekend is an incomplete way to gauge holiday traffic given the earlier start to promotions and the ease of shopping online.
The bank has therefore redefined its early holiday sales proxy from the BAC aggregated card data to “core control” (retail sales ex-food services, autos, gasoline stations and building materials) for the three weeks ending on Black Friday. Based on this definition, the bank finds that early holiday sales were down 1.2% from last year, the first decline since the recession.
Even Bank of America is at a loss how to sugarcoat this result: “while this is clearly a disappointing result, we suggest some caution. Most importantly, the BAC proxy of early holiday sales is not a perfect gauge. In particular, last year, the early BAC data showed an increase of only 1.4% yoy, while actual holiday sales were up 3.8% due to a big push right before the holidays.”
This Zero Hedge news item appeared on their website at 3:29 p.m. on Wednesday afternoon EST—and it’s something I found in this morning’s edition of the King Report.
NYSE Margin Debt Rose in October
The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959. Let’s examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.
The first chart shows the two series in real terms — adjusted for inflation to today’s dollar using the Consumer Price Index as the deflator. At the 1995 start date, we were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July 2007, three months before the market peak.
Debt hit a trough in February 2009, a month before the March market bottom. It then began another major cycle of increase.
The NYSE margin debt data is a few weeks old when it is published. The latest debt level is up 4.0% month-over-month but 7.1% off its real (inflation-adjusted) record high set in April.
This chart-filled commentary put in an appearance on the advisorperspective.com Internet site on Monday—and I thank reader U.D. for passing it around. The first few charts are certainly worth a look.
America’s biggest gas field finally succumbs to downturn
The drilling rigs are gone from the hills surrounding this Pennsylvania town of 30,000. The hotels and bars are quieter too, no longer packed with the workers who flocked in their thousands to America’s newest and biggest gas field.
The drilling boom of the past seven years is over, even though thousands of existing wells in the Marcellus region still produce a fifth of U.S. natural gas supply. Now, exclusive data made available to Reuters points to a slump in drilling that could hit production next year, defying government and industry expectations of a further rise in output.
Preliminary figures provided by DrillingInfo.com, which monitors rig activity, showed drilling permits issued for the 90,000-square mile (233,100 sq km) reservoir beneath Pennsylvania, Ohio, and West Virginia, slumped to 68 in October from 76 in September. There were still 160 permits issued in June and over 600 a month at the peak in 2010.
“The fact that it is slowing and the speed at which it is slowing” sums up the state of U.S. shale gas industry, Allen Gilmer, chief executive officer of DrillingInfo.com, told Reuters.
Recent months are subject to revisions, DrillingInfo.com said, but a retreat of such magnitude, combined with falling output from older wells, would mark a turning point for the Marcellus – and the whole U.S. gas market.
This Reuters story, filed from Williamsport, Pennsylvania at 10:26 a.m. on Wednesday morning EST is definitely worth reading if you have the interest—and it’s courtesy of Brad Robertson via Zero Hedge.
Draghi Das Dummkopf: Here Comes More Beggar-Thy-Neighbor — David Stockman
The world’s most dangerous central banker is scheduled to unleash more financial mayhem tomorrow [which is now today – Ed]. But there is only one possible result from Mario Draghi’s plan to drive the ECB deposit rate deeper into ZIRP-land from an already absurd level of -0.2%.
Namely, it will cause a whoosh of short-term flows out of the euro, thereby driving the EUR exchange rate downward against the dollar and other major currencies. That used to be called beggar-thy-neighbor. And it still is.
Just take the word of a leading European bond manager for the truth that Draghi will never utter:
“One of the reasons why the ECB is so keen on cutting the deposit rate is it is such a very effective tool for weakening the currency,” said Jack Kelly, head of government bond funds at Standard Life Investments, which oversees £250 billion in assets. “Probably more so than the asset purchase program.”
This commentary by David appeared on his website yesterday sometime—and I thank Roy Stephens for sharing it with us. There was also a story about this in The Telegraph yesterday. It was headlined “Near zero eurozone inflation hands ECB ‘green light’ for fresh stimulus boost“—and I thank Roy Stephens for that one.
Montenegro’s invitation to join NATO triggers Russian response
NATO invited the west Balkans nation of Montenegro to join the organization Tuesday, prompting a threat of retaliation from Russia.
It is NATO’s first expansion since Albania and Croatia, each of which border Montenegro, were added in 2009. During the Kosovo war of the early 1990s, when Montenegro was still a part of Yugoslavia, it was bombed by NATO planes.
Russia has objected to NATO’s increasing involvement in the Balkans and expansion eastward. While Montenegro, a country of about 650,000 people and about 2,000 active soldiers, offers little in the way of adding to member countries’ security, the invitation sends a message to Russia that it cannot stop NATO expansion.
It could take two years before Montenegro is formally admitted to NATO.
Push, push, push—and when will push become shove? The New World Order crowd never stops. This UPI article, filed from Brussels, showed up on their Internet site at 7:36 a.m. EST on Wednesday morning—and it’s the second offering of the day from Roy Stephens.
Coalition or Cold War with Russia? — Stephen F. Cohen/Katrina vanden Heuvel
The 130 people murdered in Paris on November 13 and the 224 Russians aboard a jetliner on October 31 confront America’s current and would-be policy-makers, Democratic and Republicans alike, with a fateful decision: whether to join Moscow in a military, political, diplomatic, and economic coalition against the Islamic State and other terrorist movements, especially in and around Syria, or to persist in treating “Putin’s Russia” as an enemy and unworthy partner.
If the goal is defending U.S. and international security, and human life, there is no alternative to such a coalition. The Islamic State (ISIS, ISIL, or Daesh) and its only “moderately” less extremist fellow jihadists are the most dangerous and malignant threat in the world today, having slaughtered or enslaved an ever-growing number of innocents from the Middle East and Africa to Europe, Russia, and the United States (is Boston forgotten?) and now declared war on the entire West.
Today’s international terrorists are no longer mere “nonstate actors.” ISIS alone is an emerging state controlling large territories, formidable fighting forces, an ample budget, and with an organizing ideology, dedicated envoys of terror in more countries than are known, and a demonstrated capacity to recruit new citizens from others. Nor is the immediate threat limited to certain regions of the world. The refugee crisis in Europe, to take a looming example, is eroding the foundations of the European Union and thus of NATO, as is the fear generated by Paris since November 13.
This spreading threat cannot be contained, diminished, or, still less, eradicated without Russia. Its long experience as a significantly Muslim country, its advanced military capabilities, its special intelligence and political ties in the Middle East, and its general resources are essential. Having lost more lives to terrorism than any other Western nation in recent years, Russia demands—and it deserves—a leading role in the necessary coalition. If denied that role, Moscow, with its alliance with Iran and China and growing political support elsewhere in the world, will assert it, as demonstrated by Russia’s mounting air war in Syria, whose advanced technology and efficacy against terrorist forces are being under-reported in the U.S. media.
This commentary was posted on thenation.com Internet site on Monday—and firmly falls into the absolute must read category for any serious student of the New Great Game. I thank Larry Galearis for bringing this article to our attention.
Saudi Arabia Will Have a LOT on Its Mind at Friday’s OPEC Meeting
Two days from today, OPEC’s leaders will meet in Vienna for its semi-annual meeting. The de facto leader of the 12-member group, Saudi Arabia, has a lot on its mind right now. While it goes without saying that the global oil market will be the theme of the discussions, geopolitics will inevitably weigh heavily as well.
Whereas the Saudi-centric narrative this year and late 2014 was the effort to curb US oil production in order to gain market share- an objective that’s arguably been partially achieved- we see this December’s meeting as also fueled by geopolitical undercurrents that are amplifying the antagonism between Saudi and some of its chief rivals- most notably, Iran and Russia. We argue that Saudi’s posture- its attitude, if you will- on Friday will be meaningfully impacted by both the oil market actions (and intentions) and geopolitical machinations of these players.
At the outset, we concur that it is highly likely that OPEC will maintain its current production ceiling of 30 M/bpd as it continues to defend its market share from rival producers. Why? There are signs of victory: US oil production is slowing and is projected to decline next year. Why else? Other competition: Russia’s output remains at post-Soviet record highs. Add to this that Saudi’s OPEC peers Iraq and Iran are both expected to boost output in coming months.
In short, it would be against Saudi’s self-interest to lead the group to cut its production- why would it deliberately produce less of the commodity from which the bulk of its funds are derived? And unlike some of its OPEC peers, Saudi can withstand lower oil prices for a longer period of time. This doesn’t mitigate the financial stress the Royal Kingdom is experiencing as a result of low prices. Domestic priorities are indeed being realigned, Saudi’s credit rating has been downgraded (as has that of some of its major banks), and the economy is being impacted. But in the short-term, Saudi needs to maintain and strengthen its oil clout—not only to fund its current domestic programs, but to finance its military ventures and to reassert its regional gravitas.
This news item was posted on the oilpro.com Internet site on Wednesday sometime—and it’s the second story of the day that I ‘borrowed’ from yesterday’s edition of the King Report.
Oil speculators risk ‘short squeeze’ if impulsive Saudi Prince throws OPEC surprise
Hedge funds have taken their bets. The market is convinced that Saudi Arabia will ignore the revolt within OPEC at a potentially explosive meeting on Friday, continuing to flood the global markets with excess oil.
Short positions on US crude and Brent have reached 294m barrels, the sort of clustering effect that can go wildly wrong if events throw a sudden surprise.
The world is undoubtedly awash with oil and the last storage sites are filling relentlessly, but speculators need to be careful.
They are at the mercy of opaque palace politics in Riyadh that few understand. Helima Croft, a former analyst for the US Central Intelligence Agency and now at RBC Capital Markets, says the only man who now matters is the deputy crown prince, Mohammed bin Salman.
This Ambrose Evans-Pritchard commentary showed up on the telegraph.co.uk Internet site at 9:33 p.m. GMT on their Wednesday evening, which was 4:33 p.m. in New York—EDT plus 5 hours. Roy Stephens slid it into my in-box shortly before midnight Denver time last night.
Fitch Warns Emerging Markets of Brazil-Like Mess on Debt
As if political turmoil, commodity-price meltdown and growth hiccups aren’t enough, emerging markets face a threat to their creditworthiness from an entirely different area — the burgeoning debt of households and companies.
Private-sector borrowing as a proportion of gross domestic product will reach 77 percent by the end of this year in seven large developing nations, Fitch Ratings said in a report Wednesday. Such liabilities have exceeded government debt levels, exposing their economies and financial systems to “downside risks,” London-based analysts Ed Parker and James McCormack said.
The countries — Brazil, Russia, India, Indonesia, South Africa, Turkey and Mexico — are seeing an increase in their private-debt burden in 2015 because of currency depreciation, according to the report. That may weigh on their governments’ credit ratings through weaker GDP growth, worsening budget deficits, pressure on foreign-currency reserves or further exchange-rate fluctuations, Fitch said.
“Private-sector debt has often migrated to sovereign balance sheets in past financial crises,” the analysts wrote. “A stress situation could feed through to pressure on sovereign creditworthiness.”
This Bloomberg article showed up on their Internet site at 9:40 a.m. Denver time on their Wednesday morning—and story is courtesy of Richard Saler.
Mike Maloney, Jeff Christian and Grant Williams – ‘Currency Wars’ Panel Highlights Silver Summit 2015
My good friend Dan Rubock, Mike Maloney’s right-hand guy—and cameraman extraordinaire, sent me this 17:31 minute video clip that he recorded at the Silver Summit last week—and the thinly-disguised contempt that Grant and Mike hold Jeff in, is almost palpable here.
The comment section of this youtube.com video clip has many regarding Mr. Christian—and I will cherry pick them for you—“Jeff, Jeff, Jeff…the Marxist Summit is in the room on the left.“—“Why is there a trained weasel sitting between Mike and Grant?“—and my favourite—“Jeff Christian, that detestable catamite for the criminal elite, I hope justice finds him one day.”
Jeff also sat in on the presentation that Bill Murphy and I gave at the Silver Summit—and for the life of me, I couldn’t figure out what he was doing there, or on this panel discussion above. It’s definitely worth your time if you have it. Once you’ve listen to Jeff Christian perform, you’ll understand totally why I don’t believe a word about silver or gold that comes out of the CPM Group, of which he his president. This guy is one scary dude—and he certainly lived up to his advanced billing!
Would You Rather Own Facebook, or All the Precious Metal Companies in the World?
Last week we compared the five largest companies on the NASDAQ to the publicly listed metals & mining universe. This week we refined the universe a bit more and compared the tech behemoth Facebook to the precious metal players.
Facebook (FB), which boasts a market cap of $150 billion, is nearly equal to the entire publicly listed precious metals universe, which has a market cap of just $170 billion!
That begs the question: Would you rather own Facebook or every single publicly listed precious metals company in the world?
With Goldcorp (GG), Newmont Mining (NEM), and Barrick (ABX) declining on average 80%, it is hard to conceive a much lower valuation for the sector.
And the miners only have to look in the mirror to see who is responsible for their current plight. This tiny 1-chart article was posted on the kitco.com Internet site on Tuesday afternoon—and I thank Brian Geisler for sending it along.
Hedge funds have never bet this much on a falling gold price
According to the CFTC’s weekly Commitment of Traders data speculators cut back long positions – bets that prices will rise – and added to their short positions. That raised bets that gold will be cheaper in future to nearly 11 million ounces.
At 1.4 million ounces the market is now in its biggest net short position ever, surpassing bearish positions entered into in July and early August. That was the first time hedge funds were net negative since at least 2006, when the Commodity Futures Trading Commission first began tracking the data.
It’s not just gold that is being swamped by negative sentiment. According to the CFTC, 15 of the 24 commodities tracked turned more bearish last week.
Those include the major commodities like crude oil, copper, soybeans, cotton, corn and wheat where speculators are betting that these commodities will be cheaper in future. Like gold U.S. benchmark oil West Texas Intermediate and North Sea Brent Crude were pushed to the most bearish positioning on record.
It’s not just the Big 6 commodities with monster short positions now, it has extended across the entire commodities sector, as the Managed Money traders run rampant on the short side—led around by the nose by JPMorgan et al. This news item put in an appearance on the mining.com Internet site on Tuesday—and it’s definitely worth reading. I thank Richard Saler for bringing this article to our attention.
Hedge fund short positions and oil prices in 2015: Kemp
The fall in WTIC prices to $40 is almost exactly what would be expected based on the reported accumulation of hedge fund short positions (see Chart 1).
What happens next? The short position accumulated by the hedge funds so far in the current cycle is close to the maximum short position reached in both the last two cycles.
If this turns out again to be the maximum position, past experience suggests hedge funds will soon enter the liquidation phase of the cycle, try to reduce their total short position, and prices will begin to rise
It is important to stress that this is not supposed to be a model of WTIC price determination because it lacks a causal mechanism and it focuses on only one of the many factors which may influence oil prices.
But it does suggest there has been an important link between oil prices and hedge fund trading this year that is worth further investigation and that should be factored into any discussion of what happens to prices next.
This very interesting and must read story appeared on the Thomson/Reuters-owned website zawya.com back on November 24—and it’s something that silver analyst Ted Butler mentioned in his mid-week review yesterday. It dovetails perfectly with the mineweb.com story that precedes it.
India Imports 528 Tonnes of Gold—April Through September
India imported over 528 tonnes of gold, worth Rs 1.12 lakh crore, between April-September this year, Minister of State for Finance Jayant Sinha has said.
In a written reply to a question in the Rajya Sabha, Sinha said in 2014-15 fiscal 915 tonnes of gold was imported which was worth Rs 2.10 lakh crore.
The highest volume of gold import was in 2012-13 when it was 1,013 tonnes, while it was brought down to 661 tonnes in 2013-14.
This PTI gold-related story was picked up by The Economic Times of India website on Wednesday at 9:36 p.m. IST—and it’s something I found on the Sharp Pixley website.
The PHOTOS and the FUNNIES
Here are two more photos I took on Fisherman’s Wharf in San Francisco when I was at the Silver Summit last week. Of course everyone who goes there has to come away with a photo of the sign—and I was no exception. The second photo is of the familiar rock pigeon/rock dove. With my ‘walk around’ lens on my camera set to a high f-stop, I wasn’t thinking about depth-of-field issues while I was on my 1-day exploration trip around San Francisco, as I just wanted the shot. The Pier 39 Christmas lights in the background were a ‘bonus’—and a little incongruous as well. The ‘double-click to enlarge‘ feature works well with these two photos.
The WRAP
Let’s face it, managed money technical fund positioning has grown massive to the point where analysts like John Kemp and many others have focused on it. No one, other than me, has called it the most important market issue of our age, but give it time. Yet, not one word from the CFTC or CME has been uttered on this issue. That should give you a sense of how corrupt the regulators are – refusing to wade in on what is their single most important mission, preventing artificial pricing and manipulation.
Something will come along to kill the absurdity of the increasingly massive technical fund positioning and the commercials’ ability to extract untold profits from these funds. This is so crazy, it can’t last for long. My best guess is that the CFTC will come to enact collective position limits after some type of a market event; an event that to me must include something dramatic in silver. And if my hunch that JPMorgan may refrain from adding new short positions on the next silver rally proves true, that will provide the drama.
Another day, another sell-off. It has now been more than a month of almost continuously lower gold and silver prices, as the managed money traders continue to plow onto the short side of gold, silver and other commodities led by their price-nose by the commercials. We witnessed new price lows in gold today, both on the COMEX and in GLD, but so far not quite in COMEX silver (although we finally got a new low in SLV). Thus the salami price slicing has continued. — Silver analyst Ted Butler: 02 December 2015
It’s certainly obvious from yesterday’s price action that JPMorgan et al are still hunting for Managed Money traders that are prepared to go even more short than they already were—and they found some. However, net volumes in both metals weren’t particularly heavy, especially in silver, so “da boyz” are undoubtedly back to the picking-up-nickels-in-front-of-steamrollers stage of these engineered price declines.
With the exception of platinum, all four precious metals closed at new lows for this move down—and copper and WTIC had their lights punched as well. If you read Ted Butler’s quote, plus the two stories in the Critical Reads section about hedge funds going short almost every COMEX-traded commodity in sight, you’ll know that it’s now more than the Big 6 commodities that the hedgies/Managed Money traders are going ‘all in’ on the short side.
Here are the 6-month charts for the Big 6 commodities once again—and the handiwork of the HFT boyz and their algorithms is obvious in all of them.
Along with Draghi today, and the job numbers on Friday, we also have the OPEC meeting to muddy the waters on Friday as well. I wouldn’t be the slightest bit surprised to see the powers-that-be use those events to once again lean on the Big 6 commodities in particular—and the commodities complex in general. But as Ted Butler has mentioned many times before, there are limits to how low prices can be engineered. That will occur when JPMorgan et al, despite their HFT pounding and spoofing, can no longer entice traders to either sell a long contract or go short. At that point, the bottom will be in—because the very act of doing either of those two things by the technical funds/small traders, is what causes prices to decline. Once that point is reached, prices can go no lower no matter how much “da boyz” huff and puff from there—and we’re obviously very close to that point now.
The only possible fly in the ointment is the non-technical fund longs, who have been adding to their long positions all the way down, may panic and sell at some point. But they’ve never done that in the past—and Ted is sure that they won’t be doing it now.
And as I type this paragraph, the London open is less than ten minutes away—and as you are already more than aware, the HFT traders and their algos showed up early in the thinly-traded Far East market on their Thursday morning and did the dirty once again. All four precious metals have hit new intraday lows for this move down—and that now includes platinum.
Gold and silver have recovered most of their losses since then, but are down a hair at the moment. Platinum and palladium have recovered as well. Platinum is currently up a buck—and palladium is back to unchanged.
HFT gold volume is sky high—and with the exception of a few hundred or so roll-overs, the 32,000 plus net volume is all in the current front month. Net HFT volume in silver is around the 6,800 contract mark. The dollar index has been crawling quietly higher since its 3:20 p.m. low in New York yesterday afternoon—and is currently up 17 basis points.
It’s my opinion that the ‘rise’ in the dollar index from 10 a.m. GMT in London until 12:30 p.m. EST in New York, was used as cover to smash the crap out of the Big 6 commodities once again. However, you should carefully note that the HFT traders and their algorithms didn’t show up until shortly before the COMEX open yesterday—and by that time a decent chunk of the gains in the dollar index were already baked in the cake. Prior to that, there was almost no indication in precious metal prices—particularly platinum, which was rallying at the time—that a big dollar index move to the upside was in progress.
As Jim Rickards has said on several occasions, this price management scheme is now so obvious that the participants, JPMorgan et al, should be embarrassed about it. But it’s equally as obvious that they’re not.
And as I post today’s column on the website at 5:00 a.m. EST, I see that after rallying back to more or less unchanged after their earlier sell-off to new lows—gold, silver and palladium were turned lower starting at precisely 9 a.m. GMT in London trading—and only palladium is flat on the day.
HFT volume in gold is now north of 41,000 contracts—and silver’s net HFT volume is up to 8,600 contracts. These are big numbers for this time of day, so ‘da boyz’ are obviously at battle stations on the Draghi news which should be out shortly. The dollar index, which had been rallying quietly for all of the Far East session on their Thursday, began to head north rather quickly starting just minutes before the London open—and is now up 33 basis points from Wednesday’s close.
If you’re looking for some idea as to what may or may not happen in the precious metals for the next thirty-six or so hours, you’re asking the wrong guy. All bets are off—and nothing, absolutely nothing will surprise me between now and the COMEX close at 1:30 p.m. EST on Friday afternoon.
I think I’ll take one blue pill every eight hours until this is all over.
See you on Friday.
Ed
The post India Imports 528 Tonnes of Gold—April Through September appeared first on Ed Steer.