15 December 2015 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price wandered around the $1,075 spot price mark until the not-for-profit sellers put in an appearance just before 2 p.m. Hong Kong time on their Monday afternoon. That sell-off ended shortly before 9 a.m. in London trading—and then it rallied in fits and starts until about 8:45 a.m. in New York. Then, also it fits and starts, the price got sold lower from there, with a final kick in the pants about thirty minutes before the close of electronic trading at 5:15 p.m. EST.
The high and low ticks were recorded by the CME Group as $1,077.30 and $1,058.10 in the February contract. All the gains from the Friday, December 4 rally have now disappeared, plus a bit more.
Gold was closed in New York yesterday at $1,060.10 spot, down $14.10 from Friday’s close. Net gold volume was nothing special at just under 111,500 contracts.
The silver price didn’t do a lot in the first half of the Monday session in the Far East on their Monday but, like gold, began to head lower in the early afternoon session. The low tick—and new low tick for this move down—was set by JPMorgan et al a minute or so after 1 p.m. GMT in London, which was less than twenty minutes before the COMEX open in New York. It rallied from there into the open of the equity markets at 9:30 a.m. EST—and then the HFT boyz and their algorithms/spoofing reappeared—and silver was closed almost on its low tick.
The high and low in this precious metal was reported as $13.965 and $13.62 in the March contract.
Silver finished the Monday session at $13.65 spot, down 24 cents on the day. Net volume was was up there at just over 38,500 contacts, so it’s a given that the Managed Money traders were, once again, tricked into adding to their already gargantuan short position as the salami slicing in silver continued. It’s also a given that JPMorgan et al were on the other side of the trade.
The platinum price chart has most of the characteristics of the gold chart. There was a bit of a rally in Far East trading, but the price ran into the not-for-profit sellers just before 2 p.m. Hong Kong time—and then got sold down to its low tick minutes before 9 a.m. GMT London time—just like for gold. The rally off the low tick wasn’t allowed to get far until what looked like a short-covering rally began a few minutes after 1 p.m. in London—and less than twenty minutes before the COMEX open. That rally got capped at the open of the New York equity markets—and after the London p.m. gold fix was in, it got quietly sold down into the close of electronic trading. Platinum finished the Monday session at $846 spot, up 8 dollars from Friday’s close.
The palladium price rallied about five bucks by shortly after 11 a.m. Hong Kong time—and then chopped sideways in a fairly tight range for the remainder of the day. The scale of the Kitco chart below makes it look worse than it actually was. Palladium closed yesterday in New York at $544 spot, up 5 bucks on the day.
The dollar index closed late on Friday afternoon in New York at 97.58—and then began to chop higher once trading began at 1 p.m. EST on Sunday afternoon. The 97.93 high tick came about 8:40 a.m. GMT in London on their Monday morning—and the 97.28 low came somewhere between 11 a.m. and noon in New York. The rally from there topped out at 97.70—and it sold off a bit from there. The index finished the Monday session in New York at 97.58—which the folks over at ino.com said was down 23 basis points on the day. But since it closed on Friday at 97.58 as per the data in the first sentence, one wonders how that is possible—and it’s certainly not evident on the 3-day chart below.
And here’s the 6-month U.S. dollar index chart for reference purposes once again.
The gold stocks opened down—and with barely a backward glance finished on their absolute low ticks, down a whopping 6.43 percent.
The lows in the silver equities came shortly after 12 o’clock noon in New York—and they chopped sideways from there. Nick Laird’s Intraday Silver Sentiment Index closed down 5.20 percent.
The CME Daily Delivery Report showed that 186 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Wednesday. In gold, Canada’s Scotiabank was the largest short/issuer with 185 contracts—and JPMorgan stopped 184 of them for its own account—plus it stopped the one lone silver contract for its own account as well. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that December gold open interest declined by 65 contracts, leaving 1,768 still open—also minus the 186 contracts mentioned in the preceding paragraph. Silver o.i. for December fell by 51 contracts, leaving 331 still around.
There were no reported changes in GLD yesterday—and as of 6:49 p.m. EST yesterday evening, there were no reported changes in SLV, either.
There was a sales report from the U.S. Mint yesterday. They sold zero troy ounces of gold eagles—1,000 one-ounce 24K gold buffaloes—and 853,000 silver eagles.
There was no in/out movement reported in gold over at the COMEX-approved depositories on Friday.
It was a different matter in silver, as 309,352 troy ounces were reported received—and 960,748 troy ounces were shipped out the door. Of the amount shipped out, 302,572 troy ounces departed JPMorgan’s vault. The link to yesterday’s action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, they reported receiving a very chunky 14,749 kilobars—and shipped out 2,812 of them. All of the activity was at the Brink’s, Inc. vault—and the link to that, in troy ounces, is here.
Here are a couple of charts that Nick Laird passed around on Saturday afternoon. They show the intraday gold and silver price movements for the month of November. It’s an average of every 2-minute tick at the same time each day in both metals.
What that does is smooth out the ‘noise’—and what’s left are the underlying forces that are driving the silver and gold markets. In their case, it’s JPMorgan et al. As you can see, the high tick of the day for gold, on average, is at 3 a.m. Hong Kong time—and an hour before the London open. There’s a bit of a zoom down [in gold only] at the London a.m. gold fix—and the gentle sell-off continues from there into the COMEX open, with the low of the day in both metals coming, for the most part, at the COMEX close.
And the smallish rallies going into the 9:30 a.m. EST open of the equity markets in New York is a feature on both these charts—and it’s a permanent feature on the 10 and 15-year charts as well. Nothing free-market about any of this. The ‘click to enlarge’ feature helps on both these charts.
I have an average number of stories for a Tuesday column—and there should be a few in here that you’ll find interesting enough to spend some time on.
CRITICAL READS
Another High Yield Domino Falls As $900 Million Lucidus Capital Liquidates
Last week, the world began to wake up to the fact that all of the “Chicken Littles” screaming that the sky is falling in high yield were right.
There was Third Avenue which announced it would gate investors in a $788 million mutual fund on the way to liquidating over the next several months (as though liquidity is set to return any day now in HY) and then in short order, the “venerable” Stone Lion Capital (founded by none other than Alan Jay Mintz and Gregory Augustine Hanley, both veterans of Bear Stearns distressed debt and HY trading desk) suspended redemptions after receiving “substantial requests.”
Yes, “substantial requests” or, in more colloquial terms, “rats from a sinking HY ship” and as we noted just moments after we confirmed the Third Avenue gate news, “investors in all other junk bond-focused hedge funds, dreading that they too will be gated, will rush to pull what funds they can and submit redemption requests, in the process potentially unleashing a liquidity – and liquidation – scramble within the hedge fund community, which will first impact bonds and then, if the liquidity demands continue, equities as well.”
It’s probably more appropriate to call that a foregone conclusion than “prescient.” That is, if one depositor loses access to his demand deposits and tells a friend about it, it won’t be long before the bank run is on. Same principle here.
Sure enough, just moments ago a third domino fell as Lucidus Capital Partners, a high-yield credit fund founded in 2009 by former employees of Bruce Kovner’s Caxton Associates, has liquidated its entire portfolio and plans to return its $900 million in AUM.
This Zero Hedge article put in an appearance on their Internet site at 8:04 a.m. on Monday morning EST—and I thank Richard Saler for today’s first story.
Junk Contagion Spreads: Investment Grade Bonds Plunge to 2-Year Lows, Treasury Liquidity Collapses, CLOs Next
Just as we warned, the collapse of the high-yield market has spread contagiously to the investment grade market as selling begets selling and redemptions need to be met from what you can sell, not what you need to sell (but can’t). LQD (the investment-grade bond ETF) is getting hammered today, breaking to its lowest in almost 2 years.
As Europe closed, HYG managed to stabilize but the selling accelerated in LQD (the investment-grade ETF)…cracking LQD below recent lows to 2-year lows…
This is the second Zero Hedge article from Richard Saler. It’s a 5-chart commentary that appeared on their website at 2:29 p.m. EST yesterday. It’s certainly worth a minute or so of your time.
Danger Ahead: A message From Carl Icahn
This 14:45 minute video clip was posted on Carl’s website on Friday sometime—and it’s something I found in yesterday’s edition of the King Report. It’s definitely worth watching!
Never Mind $35, The World’s Cheapest Oil Is Already Close to $20
As oil crashed through $35 a barrel in New York, some producers were already living with the reality of much lower prices.
A mix of Mexican crudes is already valued at less than $28, an 11-year low, according to data compiled by Bloomberg. Iraq is offering its heaviest variety of oil to buyers in Asia for about $25. In western Canada, some producers are selling for less than $22 a barrel.
“More than one-third of the global oil production is not economical at these prices,” Ehsan Ul-Haq, senior consultant at KBC Advanced Technologies Plc, said by e-mail. “Canadian oil producers could have difficulty in covering their operational costs.”
A blend of Mexican crude has plunged 73 percent in 18 months to $27.74 on Dec. 11, its lowest level since 2004, according to data compiled by Bloomberg. Venezuela is experiencing similar lows. Western Canada Select, which is heavy and sulfurous, has slumped 75 percent to $21.37, the least in almost eight years. Other varieties including Ecuador’s Oriente, Saudi Arabia’s Arab Heavy and Iraq’s Basrah Heavy were selling below $30, the data show.
This Bloomberg news item showed up on their website at 7:11 a.m. Denver time on Monday morning—and was updated about ten hours later. I thank Howard Wiener for sending it our way.
Emergency OPEC meeting aired as Russia braces for sub-$30 oil
Oil markets are becoming dangerous with no grown-up in charge. Spare capacity is wafer-thin, despite the glut, and any upset could trigger an oil shock.
OPEC will be forced to call an emergency meeting within weeks to stabilize the market if crude prices fail to rebound after crashing to seven-year lows of $35 a barrel, two of the oil cartel’s member states have warned.
Emmanuel Kachikwu, Nigeria’s oil minister and OPEC president until last week, said the group is still hoping that the market will recover by February as low prices squeeze out excess production from US shale, Russia and the North Sea, but nerves are beginning to fray.
“If it [the oil price] doesn’t [recover], then obviously we’re in for a very urgent meeting,” he said. Indonesia has issued similar warnings over recent days, suggesting that the OPEC majority may try to force a meeting if Saudi Arabia’s strategy of flooding the market pushes everybody into deeper crisis.
This Ambrose Evans-Pritchard commentary was posted on The Telegraph‘s website at 8:45 p.m. GMT on Monday evening in London, which was 3:45 p.m. on Monday afternoon in New York—EDT plus 5 hours. I thank Roy Stephens for sending it to me in the wee hours of Tuesday morning EST.
Bank of Canada Crushes Loonie, Creates Mother of All Shorts
The Canadian dollar swooned 1% against the U.S. dollar on Friday, to US$0.7270, after having gotten hammered for the past six of seven trading days. It’s down 5% in December so far, 15.5% year-to-date, and 31% from its post-Financial Crisis peak of $1.06 in April 2011. It hit the lowest level since June 2004.
It got clobbered by the commodities rout, given their importance to the Canadian economy, the multi-year decline in the prices of metals, minerals, and natural gas, and then starting in mid-2014, the devastating plunge of the price of oil.
Those factors would have been enough to knock down the loonie. But it wasn’t enough, not for the ambitious Bank of Canada Governor Stephen Poloz. The man’s got a plan.
This commentary showed up on the wolfstreet.com Internet site on Saturday—and I thank Brad Robertson for sharing it with us.
Fed, ECB “Monetary Insanity” is “Frightening” – GoldCore on Keiser Report
Max Keiser interviewed GoldCore.com Research Director, Mark O’Byrne last week and the video was released on Saturday.
Key points and topics covered:
– “Monetary insanity” of ECB and Fed is “frightening”
– “Absolutely nothing has been learned” since financial crisis
– “Financial hypocrisy on a grand scale”
– Ireland was vassal of Bank of England and now ECB
– Ireland needs to get “financial and monetary independence”
– Huge demand for gold and yet prices manipulated lower
– Real unemployment is U.S. probably 15-20%
– Dollar may rally in short term but vulnerable in long term
– Russia, China may monetise gold as geopolitical weapon
– Gold and silver are “hedges for you in local currency terms”
The interview with Mark begins at the 12:25 minute mark—and runs for about thirteen minutes. ‘All of the above’ was posted on the goldcore.com Internet site on Monday sometime.
World Leaders Just Agreed to an “Historic” Climate Accord… Which is Non-Binding and Has No Enforcement Language
Great news! The “greatest threat to future generations of the world” has apparently been solved. World leaders Saturday adopted an historic international climate accord in Paris, the first-ever agreement to commit almost every country to fight climate change. However, as we knew all along and just got confirmation, the 31-page pact does not have binding language or a mechanism to force countries to live up to the promises to cut greenhouse gases emissions or provide money for developing and poor nations to cope with the effects of global warming.
Basically, COP21 was a massive taxpayer-funded boondoggle, in which “leaders” enjoyed all the perks of Paris for two weeks, burned through hundreds of millions in public funding, and created millions of tons in greenhouse gases (what do you think to private jets and government 747s use to fly?) that has achieved absolutely nothing.
Nonetheless, leaders and the environmental community hailed the United Nations agreement has a historic turning point that has the potential to stave off the worst expected effects of global warming.
And the U.N. reports a large round of mutual masturbation…
This Zero Hedge spin on the climate accord in Paris appeared on their Internet site at 2:58 p.m. on Monday afternoon EST—and I thank ‘Aurora’ for this news item.
Russian warship fires warning shots at Turkish vessel amid Syria tensions
Russia said on Sunday that one of its warships had fired warning shots at a Turkish vessel in the Aegean Sea to avoid a collision, and that it had summoned Turkey’s military attache in Moscow over the incident.
The defence ministry said in a statement that the Turkish fishing vessel had failed to respond to earlier warnings on Sunday morning, but changed course after shots were fired from the destroyer Smitlivy. The ships were some 500 yards apart at the time.
“Despite numerous attempts by the crew of the Smetlivy, the crew of the Turkish fishing boat did not make radio contact and did not respond to visual signals by semaphore or warning flares,” the ministry said, adding that small arms had been used to fire the warning shots “from a range that is not lethal“.
This news story put in an appearance on the telegraph.co.uk Internet site at 2:26 p.m. GMT in London on their Sunday afternoon, which was 9:26 a.m. in Washington—EDT plus 5 hours. I thank Roy Stephens for finding it for us.
Week Ten of the Russian Intervention in Syria: the “Assad must go” policy leads to war with Russia, Iran and Hezbollah
The “news” that Israel and Turkey are systematically violating international law is hardly news at all. After all, we all know that Turkey has been regularly bombing the Kurds in Iraq and Syria, that Turkey still illegally occupies northern Cyprus just like the Israelis have been bombing Syria and Lebanon for decades and that they are still illegally occupying Palestine. The interesting development this week is that France, the U.K. and Germany have all officially decided to join these rogue states and act just like the Turks and Israelis by illegally intervening in Syria – in direct violation of international law – supposedly to fight Daesh. And even though Daesh is the official enemy, it “just so happens” that Syrian army positions were bombed by the USAF while the Israelis bombed Hezbollah missile depots. Apparently, the “Assad must go” policy is still the order of the day. In a way, one could argue that the West has now (re-)affirmed the principle that “might makes right” and that threats and violence are still the only “policy” of of the Empire in lieu of a legal, negotiated, policy. The problem with that is that the “other side” strongly feels that surrendering to the Empire’s demands is simply not an option.
The Russian warning:
In reality this has been going on for years. From the decision to bomb Serbia to the recent decision by the IMF to bail out the Ukraine in direct violation of IMF rules (which, apparently, shall now be re-written), the AngloZionist Empire has now been violating its own so-called “rules” and “principles” for decades against the background of a quasi-general indifference to the end of the international world order agreed upon after WWII. The big difference today is that the Empire’s reckless arrogance has now brought it in direct contact with the Russian Armed Forces which, apparently, are not willing to accept that kind of thuggery and who will fight back if attacked: in his annual address to expanded meeting of the Russian Federation Defense Ministry Board Putin has clearly indicated that the fact that Russia chose not to strike back at Turkey was a one time exception.
This must read commentary appeared on thesaker.com Internet site on Saturday—and I thank ‘Aurora’ for their second offering in today’s column.
The Imperial Collapse Playbook
[This is a repost, which seems timely given the recent American efforts to poison relations between Turkey and Russia. The shoot-down of the Russian jet was clearly a well-poisoning exercise either directly ordered or, at the very least, approved by the Pentagon. In a future blog post, I will explain why this same old strategy isn’t going to produce the same old results the Americans have come to expect.]
Some people enjoy having the Big Picture laid out in front of them—the biggest possible—on what is happening in the world at large, and I am happy to oblige. The largest development of 2014 is, very broadly, this: the Anglo-imperialists are finally being forced out of Eurasia. How can we tell? Well, here is the Big Picture—the biggest I could find. I found it thanks to Nikolai Starikov and a recent article of his.
Now, let’s first define our terms. By Anglo-imperialists I mean the combination of Britain and the United States. The latter took over for the former as it failed, turning it into a protectorate. Now the latter is failing too, and there are no new up-and-coming Anglo-imperialists to take over for it. But throughout this process their common playbook had remained the same: pseudoliberal pseudocapitalism for the insiders and military domination and economic exploitation for everyone else. Much more specifically, their playbook always called for a certain stratagem to be executed whenever their plans to dominate and exploit any given country finally fail. On their way out, they do what they can to compromise and weaken the entity they leave behind, by inflicting a permanently oozing and festering political wound. “Poison all the wells” is the last thing on their pre-departure checklist.
As the opening introductory paragraph states, this is a repost—but it’s still as applicable now as it was when this piece was written a year ago. Although a little on the longish side, it’s a must read, even if you’re not a serious student of the New Great Game—and I thank Larry Galearis for bringing it to our attention. It was posted on the cluborlov.blogspot.ca website a week ago today.
Neoconservatives’ Hegemonic Goal of Making Sovereign Countries Extinct is Bringing Instead Extinction of Planet Earth — Paul Craig Roberts
My warning that the neoconservatives have resurrected the threat of nuclear Armageddon, which was removed by Reagan and Gorbachev, is also being given by Noam Chomsky, former U.S. Secretary of Defense William Perry, and other sentient observers of the neoconservatives’ aggressive policies toward Russia and China.
Daily we observe additional aggressive actions taken by Washington and its vassals against Russia and China. For example, Washington is pressuring Kiev not to implement the Minsk agreements designed to end the conflict between the puppet government in Kiev and the break-away Russian republics. Washington refuses to cooperate with Russia in the war against ISIS. Washington continues to blame Russia for the destruction of MH-17, while preventing an honest investigation of the attack on the Malaysian airliner. Washington continues to force its European vassals to impose sanctions on Russia based on the false claim that the conflict in Ukraine was caused by a Russian invasion of Ukraine, not by Washington’s coup in overthrowing a democratically elected government and installing a puppet answering to Washington.
The list is long. Even the International Monetary Fund (IMF), allegedly a neutral, non-political world organization, has been suborned into the fight against Russia. Under Washington’s pressure, the IMF has abandoned its policy of refusing to lend to debtors who are in arrears in their loan payments to creditors. In the case of Ukraine’s debt to Russia, this decision removes the enforcement mechanism that prevents countries (such as Greece) from defaulting on their debts. The IMF has announced that it will lend to Ukraine in order to pay the Ukraine’s Western creditors despite the fact that Ukraine has renounced repayment of loans from Russia.
Always controversial, but never far off the mark, this Paul Craig Roberts piece found a home over at the strategic-culture.org Internet site on Saturday—and I thank ‘Aurora’ for their final contribution to today’s column. It’s certainly worth reading as well.
Austria celebrates gold repatriation but really isn’t coming clean
Reporting that Austria’s central bank has produced an explanatory video celebrating its repatriation last week of 15 more tonnes of gold from the Bank of England, Zero Hedge contrasts this openness with the secrecy the United States continues to weave around its gold reserves.
But don’t cheer the Oesterreichische Nationalbank too much. For at the London Bullion Market Association conference in Vienna in October, the bank’s executive director, Peter Mooslechner, volunteered to a uncurious reporter that the bank is aware of surreptitious interventions in the gold market by other central banks and then shut himself up in his office, or was shut up there by his superiors, when another financial journalist sought elaboration.
Zero Hedge writes that in repatriating more of its gold Austria “was implicitly confirming that trust is now very publicly fraying at the highest levels of the international monetary system.” But that’s not how Austria’s central bank puts it.
No, like other central banks, Austria’s believes that matters determining the valuation of all capital, labor, goods, services, and currencies in the world are really none of the world’s business.
This GATA release from yesterday has three embedded links which are certainly worth your time.
Out of Rand crisis, opportunity for world’s costliest gold mines
South African President Jacob Zuma is causing turmoil in financial markets and accidentally throwing a lifeline to his country’s struggling gold industry.
Zuma’s decision to fire respected Finance Minister Nhlanhla Nene drove the rand to a record low, instantly reducing labor and other costs in the local currency for mining companies, relative to the U.S. dollars they earn by selling gold.
Shares of Harmony Gold Mining Ltd., the highest-cost major miner of the metal, are up 25 percent since Zuma’s decision Dec. 9th. AngloGold Ashanti Ltd. gained 12 percent and Gold Fields Ltd. 11 percent. A weak rand offers relief to an industry plagued by labor unrest, aging mines, and power shortages. Companies as recently as six months ago were saying they needed to cut costs to survive as they lost money on 35 percent of local production.
This Bloomberg story was posted on their Internet site at 6:42 a.m. MST on Monday morning—and I found it on the gata.org website.
Bullion dealers, Bombay Stock Exchange agree on India’s first physical gold exchange
A bullion association and premier bourse BSE (Bombay Stock Exchange) on Friday signed an agreement to set up the country’s first physical gold exchange, providing a platform for transparency in trading of the precious metal in the world’s top consumer.
A separate special purpose vehicle will be formed to establish the exchange, where India Bullion Jewellers Association and its constituents will hold a 70 percent share and BSE the remaining 30 percent, IBJA President Mohit Kamboj said in a release here.
BSE and IBJA have already approached Finance Ministry for necessary approvals.
There will be complete transparency if all trades of bankers, bullion merchants, and jewellers and buying and selling of gold are routed through this exchange, Kamboj said.
This is another gold-related news item that found a home on the gata.org Internet site yesterday.
Should You Think Like an Indian? — Jeff Thomas
For centuries, East Indians have regarded gold as the primary source of wealth. All Indians own gold if they can afford to. They keep it as close as possible, sometimes in coin form, but often as jewellery, since “wearing wealth” means that it can be kept very close. They’re often especially reluctant to trust banks to hold their gold.
Hindus make up 80% of India’s population and, to Hindus, gold is sacred – a symbol of purity, prosperity, and good fortune. It plays an important part in all Hindu ceremonial occasions and Hindus donate large amounts of gold to the temples. The temples are also distrustful of bank storage, although some do store gold in banks.
For decades, the Indian government has tried to find a way to separate the Indian people from their gold, with very little success. In recent years, they’ve tried to limit the importation of gold. They’ve also tried to tax the gold held by the temples, but it’s been difficult to do, as the gold was actually given by devotees to deities. The temple only “holds” the gold for the deities. Of course, taxing deities is a bit of a stretch, even for rapacious governments and the Indian government has been less than successful in this pursuit.
This commentary/infomercial by Jeff showed up on the internationalman.com Internet site on Monday—and it’s worth reading.
Gold would be a great gift this festive season: Lawrie Williams
Having been brought up in the Christian tradition one learns that the gifts brought to the infant Jesus were gold, frankincense and myrrh. But of the three one suspects that gold has held its value rather better over the years. Being Christmas frankincense and myrrh are available online at a number of spiritual outlets but one suspects that in modern times gold might well be the preferred gift – and, if things go as many believe, at this year’s price of around $1,070 an ounce at the time of writing, it might truly be a gift which should appreciate, perhaps substantially, in value over time.
Yes, it might still lose a little of its value when the U.S. Fed eventually makes up its mind to start raising interest rates – most believe this will happen this week. But unless there is then a continuation of the interest raising program in the months ahead, which could cause insuperable problems for the global economy which is still struggling along the bottom—and could come back to bite America in the backside, there’s a good chance that supply/demand fundamentals could see gold breaking its three year losing streak in 2016, and power ahead beyond that as sentiment moves in its favour away from general equities.
It is not just in the Christian religion that gold plays an important role. In almost any religion you care to name, gold has an important place and, as such, it is hard wired into the psyche of the people of many, perhaps most, nations around the world – indeed it even has a place in the hearts of those who profess agnosticism. In the world’s two biggest consuming nations, China and India, gold plays a hugely important part in festival gift giving, but these countries tend to stand out because of their enormous populations which means that even a tiny per capita consumption adds up to a massive national total. And with their economies still growing at a high rate in comparison with the West, the disposable wealth is rising too as more and more of their populations are dragged into what is termed the ‘middle classes’ and are encompassing the Western virtues, or perhaps vices, of overt consumer spending.
This gold-related commentary by Lawrie appeared on the sharpspixley.com Internet site on Monday sometime—and it’s certainly worth reading as well.
Ted Butler: An Unprecedented Circumstance
Today, I will speak of a completely unprecedented situation that has evolved over the past seven years. I define “unprecedented” as something that was never done or known before. The unprecedented circumstance is my seven year documented history of labeling the giant financial institution, JPMorgan Chase, as being engaged in an illegal price manipulation of the silver market. To my knowledge, never has it occurred that open allegations of serious criminal wrongdoing have ever been made about any financial institution with those allegations going unchallenged. No one would dare label any large financial institution of being crooked and expect that institution to turn the other cheek.
Yet JPMorgan has remained silent in the face of what most would consider to be statements damaging to its reputation. It’s one thing to label a government agency or congress as being a bunch of crooks; in fact, it’s common practice by many. But calling a publicly owned bank crooked is very different. The government turns its back on critics but call a big bank crooked and expect to get your heart ripped out. Therein lies the mystery.
Why would JPMorgan allow allegations of serious wrongdoing to go unchallenged? It can’t be that the allegations aren’t serious enough, as price manipulation is the most serious market crime possible, damaging just about everyone, including the market itself. It can’t be because my allegations aren’t specific enough, as I’ve detailed what the bank has done in silver twice a week for seven years; down to the number of short COMEX silver contracts JPMorgan has held weekly. It can’t be because I am relying on false data to back up my allegations because I rely exclusively on government and exchange statistics. It can’t be that my market structure analysis is wrong, because it has now come to be more copied than any other approach. Then what the heck is preventing JPMorgan from denying that it is the crook I allege it to be?
This must read commentary by Ted was part of his weekly commentary that was posted on his website on Saturday afternoon—and is now posted in the public domain. It appeared on the silverseek.com website at 8:11 a.m. Denver time yesterday.
The PHOTOS and the FUNNIES
The WRAP
When you drill down to current specifics in silver and gold, all the evidence points to tight physical conditions and the expectation of higher prices. The turnover or physical movement of metal brought into or taken out from the COMEX-approved silver warehouses surged late in the week after two days of little movement. Total movement was nearly 4.8 million oz [last] week, the highest turnover in 5 weeks, as total inventories rose 1.2 million oz to 159.1 million oz.
The standout in COMEX silver inventories [last] week was that the JPMorgan warehouse was at the center of attention as it accounted for half of the total turnover—and saw a net inflow of nearly 2 million oz. This is not surprising since JPMorgan has stopped (accepted) more than 6 million oz in silver deliveries in the active December contract so far this month—and as it has done previously this year, it has physically moved all the silver it has taken in COMEX deliveries (25+ million oz) into its own COMEX warehouse. All this strictly for the bank’s own personal trading account. So far this month JPMorgan has taken delivery on 1,272 silver contracts, inching ever closer to the 1,500 contract delivery limit. With more than 350 contracts still remaining open for delivery and JPM owning the lion’s share of those remaining contracts, the silver delivery process still looks tight. If the pattern of this year plays out, it should be expected that another 4 million oz of silver should be brought into the JPM COMEX silver warehouse.
The December COMEX gold delivery still looks tight as well, based upon the small number of total deliveries issued so far—and a still large 1,800 contracts remaining open. Another tip off to JPMorgan’s dominance, is that of the 310 total gold deliveries issued so far this month, JPM has taken 278 or nearly 90% of total gold deliveries, all in its personal trading account. [Plus the 184 additional contracts they’re taking delivery of tomorrow – Ed] I have the distinct impression that JPM has been liquidating its open December contracts because it knows that demanding delivery for as many as it held at the beginning of the month, would stress gold issuers. It doesn’t get much tighter than that. — Silver analyst Ted Butler: 12 December 2015
Well, it should be more than obvious to all but the willfully blind that JPMorgan et al took another slice out of the silver salami yesterday—and they also took a tiny slice out of gold as well. All things being equal, yesterday’s trading data should be in Friday’s Commitment of Traders Report.
Here are the 6-month charts for all of the Big 6 commodities, complete with their respective 50 and 200-day moving averages.
Of the Big 6 commodities, only silver and gold were at center stage yesterday. And as Ted has been pointing out for more years than I care to think about, silver is still the bête noire for JPMorgan, as it tries to rid itself of as many of the inherited short positions as it can from its forced takeover over Bear Stearns back in 2008.
One wonders how many more of their short positions they covered on yesterday’s engineered price decline that they or their proxies certainly had a hand in?
Today is the start of the ‘all-important’ Fed meeting—and by the time this column gets posted on the Internet on Tuesday morning, the decision about rates will be about thirty-six hours away.
I’m not entirely sure what Yellen will say when she opens her mouth tomorrow at 2 p.m. EST—and there’s still some debate as to whether she will, or won’t, raise rates. If forced to bet the proverbial ten dollars at this juncture, I’d say we’re going to get a rate increase of some kind, as I can’t see the Fed backing down now. No increase at this juncture would destroy what little is left of their credibility. And if the truth be known, I don’t think that the rate increase will help their credibility, either. They’re damned if the do—and damned if they don’t.
I’m not sure how the precious metals will be allowed to react at that juncture. It could be that ‘da boyz’ kick the living snot out of the prices one more time in a last-ditch effort to cover as many short positions as they can—or will they let the free markets take over as of 2:00 p.m. EST? Once again if forced to bet ten bucks, I’d bet on the former, followed soon after by the latter.
So we wait some more.
And as I write this paragraph, the London open is less than ten minutes away—and I note that the gold price rallied a few dollars in the first couple of hours of trading in the Far East on their Tuesday morning—and has been chopping quietly sideways ever since. It was more or less the same in silver until the HFT boyz and their algorithms/spoofing showed up around 3:30 p.m. Hong Kong time—and set a new intraday low for this move down once again, so it’s obvious that JPMorgan et al are still pounding away, despite the fact that the dollar index got hit about the same time. Platinum was up 5 bucks at one point, but is now back to unchanged—and palladium is up 5 dollars.
Net HFT gold volume is just north of 19,000 contracts—and that number in silver is just under 5,500 contracts. And as London opens, the dollar index has been chopping lower all through Far East trading—and then took a real header starting about thirty-five minutes before the London open—and is down 37 basis points.
Today is the cut-off for this Friday’s Commitment of Traders Report—and unless we have a wild and woolly day either up or down, most of today’s trading volume and price action should be included as well. Will the powers-that-be go after silver and gold to the downside again today? It wouldn’t surprise me, as they can do whatever they want, as there’s nobody to stop them.
Ted mentioned on the phone yesterday that he couldn’t understand why the precious metal miners just stood there like dorks and let themselves get kicked in the gonads for the last four years, when it was so obvious as to what was going on. I mentioned that it was the World Gold Council’s job—along with their companion organization, The Silver Institute, to ensure that no complaint was ever raised about this.
And that certainly applies to The Silver Institute, as the CME Group is a paid-up member—and they’re one of the enablers of this entire silver price management scam. The fox watching the chicken coop is a perfect analogy—and why the chickens don’t vote him out of there is beyond me. I guess it would be similar to the whores in a brothel trying to vote the madam out of a job.
You have to wonder how many of the large silver producers in The Silver Institute are actually aiding and abetting this scam. I think that the number would be distressingly high. They may not be actively complicit, but it’s certainly a conspiracy of silence, as they all know perfectly well what’s going on.
And as I post today’s column on the Internet site at 4:40 a.m. EST, I see that gold hasn’t done much during the last ninety or so minutes of trading. Silver is now off its low tick of earlier—and up a few pennies on the day, but I doubt very much that this situation will last once New York opens. Platinum is still unchanged—and palladium is now up 7 dollars.
HFT gold volume is now up to the 24,000 contract mark—and silver’s net HFT volume is up to 7,600 contracts. The dollar index is off its earlier low that came just before London opened—and is now only down 15 basis points.
As for what might happen during the remainder of the Tuesday trading session, I would venture a guess that both gold and silver will continue to come under selling pressure from the HFT boyz and their algorithms but, as usual, I’d love to be spectacularly wrong about that. However, I doubt very much that JPMorgan et al will loosen their grip on the precious metals until after the Fed ‘news’ tomorrow, if then.
That’s all I have for today—and I’ll see you here on Wednesday sometime.
Ed
The post Ted Butler: An Unprecedented Circumstance appeared first on Ed Steer.