24 December 2015 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was up a dollar or so in Far East trading, but the selling pressure began almost the moment that trading began in London on their Wednesday. It got sold down about five bucks or so, with the low tick, such as it was, coming more or less at the London p.m. gold fix. It didn’t do much after that, although it did rally a couple of dollars into the close of electronic trading.
Once again the high and low ticks aren’t worth the effort to look up.
Gold closed in New York yesterday at $1,0720.20 spot, down $2.10 from Tuesday’s close. Not surprisingly, net volume was extremely light at just under 58,500 contracts, so it was fairly easy for anyone with an agenda to move the price in whatever direction they wished.
Silver traded a dime either side of unchanged yesterday—and the high and low aren’t worth my effort, either. But, to be fair, the tiny rally off the the low tick, which came about 9:45 a.m. in New York, got capped an hour later—and half of those gains had vanished by the London close. After that, the price traded flat.
Silver finished the Wednesday session at $14.31 spot, up 6 cents from Tuesday’s close. Net volume was also very light at a hair under 21,000 contracts.
Platinum didn’t do much, although it was up about 4 bucks the ounce until noon in London—and then it was sold down to its low tick by the London p.m. gold fix. It gained back about 5 dollars of that sell-off during the next hour of trading—and then didn’t do a lot after that. Platinum closed in New York yesterday at $867 spot, down 3 dollars from Tuesday’s close.
The palladium price chart was a reasonable facsimile of the platinum chart, except the high tick in this precious metal came in the first hour of Zurich trading on their Wednesday morning. Palladium was closed down 3 bucks the ounce as well, at $550 spot.
The dollar index closed late on Tuesday afternoon in New York at 98.22—and then spent most of the day chopping higher, hitting its 98.59 high tick at, or just after 12 o’clock noon in New York. It fell back to almost unchanged by minutes before 4 p.m. EST, but rallied a bit into the close. It finished the Wednesday session at 98.40—up 18 basis points on the day.
And here’s the 6-month U.S. dollar chart for reference purposes.
The gold stocks gapped up about 2 percent at the open—and then chopped sideways until around 12:45 p.m. EST. At that point a rally of some substance and duration developed—and the HUI closed almost on its high tick, up 2.28 percent.
The silver equities couldn’t decide what to do—and although they finished in positive territory, they closed well off their high tick, as Nick Laird’s Intraday Silver Sentiment Index closed up only 1.11 percent.
The CME Daily Delivery Report showed that 72 gold and 53 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. In gold, the largest short/issuer was Canada’s Scotiabank with 71 contracts—and JPMorgan stopped all 72 contracts for its own in-house trading account as per usual. Scotiabank was the biggest short/issuer in silver as well with 49 contracts. JPMorgan stopped 22 for its own account—and ABN Amro stopped 19 for its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in December fell by 137 contracts, leaving 766 left—and 72 contracts of that number is posted for delivery on Monday as per the preceding paragraph. December o.i. in silver declined by 19 contracts, leaving 176 still around, minus the 53 mentioned in the above paragraph.
There were no reported changes in GLD yesterday, but for the second day in a row, an authorized participant removed silver from SLV. This time it was 809,964 troy ounces.
Since December 11, there has been 3.2 million troy ounces of silver withdrawn from SLV—and during roughly the same time period there has been 364,000 troy ounces of gold added to GLD. The dichotomy continues and, except for Ted Butler, not a word about it from the other so-called precious metal ‘analysts’ out there.
Over at the COMEX-approved depositories on Tuesday, it was another day for 10 ounce gold bars at Brink’s, Inc.—as they accepted delivery of another 400 of them, for a total of 4,000.000 troy ounces. That was all the movement there was, except for a small transfer from the Eligible to the Registered category over at HSBC USA which, of course, means nothing—but I thought I’d mention it in passing. The link to that activity is here.
The activity in silver was a bit heavier, as 114,923 troy ounces were reported received—and 251,627 troy ounces were shipped out the door. None of the in/out activity involved JPMorgan—and the link to this activity is here.
It was another busy day in the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They reported receiving 15,209 of them—and shipped out 7,141. With the exception of 4 kilobars shipped out of Loomis International, the balance of the action was at Brink’s, Inc. as per usual—and the link to that, in troy ounces, is here.
Since I’m still not sure whether I’m going to have a Saturday column or not at this point in time, I’ve decided to empty my in-box of stories in today’s column. That should give you lots of time to read the ones that interest you over the Christmas weekend.
CRITICAL READS
Buyback Bloodbath & Beyond: How BBBY Lost $1.7 Billion Buying Back Its Own Stock
We have been following the slow at first, and now very fast-moving disaster that is Bed Bath And Beyond with close interest for years, at first with detached amusement (Bed, Bath & Beyond Buybacks Authorizes Another $2 Billion In Stock Repurchases) and increasingly with amazement, as the company launched an unprecedented stock buyback spree to mask the relentless deterioration in its underlying business.
Last September when looking at the chart showing BBBY’s buybacks vs. its capex expenditures, shortly after Q1 BBBY issued $1.5 billion in senior unsecured Notes promptly using $1 billion of this to buyback its own shares, we presented the following three questions:
WTF
Is the entire management team about to quit, but not before cashing out of their equity-linked securities first?
See 1.
Reading between the lines, what we asked was “what glaring business weakness is the management team covering up so earnestly with this constant stream of buybacks?”
This slightly longish, but very interesting 3-chart story put in an appearance on the Zero Hedge website at 3:04 p.m. EST on their Wednesday afternoon—and I thank Richard Saler for today’s first news item.
The Trade Wars Begin: U.S. Imposes 256% Tariff on Chinese Steel Imports
According to a report released Tuesday by the US Department Of Commerce, corrosion-resistant steel imports from China were sold at unfairly low prices and will be taxed at 256 percent.
The measure is clearly aimed exclusively at China’s dumping of steel on the U.S. market, and its relentess exports of deflation.
According to Bloomberg, imports from India, South Korea and Italy will be taxed at lower rates. Imports from Taiwan and Italy’s Marcegaglia SpA will not face anti-dumping tariffs. The government found dumping margins of 3.25 percent for most South Korean steel imports, with Hyundai Steel Co.’s shipments subject to duties of 3.5 percent. Imports from Italian companies excluding Marcegaglia will be taxed at 3.1 percent. Indian imports are subject to duties from 6.6 percent to 6.9 percent.
Which means that the biggest “beneficiary” of this dramatic import price surge will be none other than Beijing.
“We’re concerned that the dumping that’s occurring is at higher levels than these determinations reflect,” Tim Brightbill, a partner at Wiley Rein LLP, a law firm representing U.S. steelmaker Nucor Corp., said Tuesday in an interview. “We have serious concerns that these preliminary duties are not enough at a time when unfairly priced imports continue to surge into the U.S. market at unprecedented rates.”
This longish Zero Hedge article appeared on their website at 6:45 p.m. New York time on Wednesday evening—and it’s the second contribution in a row from Richard Saler.
Inside the Billion-Dollar Battle for Puerto Rico’s Future
The money poured in by the millions, then by the hundreds of millions, and finally by the billions. Over weak coffee in a conference room in Midtown Manhattan last year, a half-dozen Puerto Rican officials exhaled: Their cash-starved island had persuaded some of the country’s biggest hedge funds to lend them more than $3 billion to keep the government afloat.
There were plenty of reasons for the hedge funds to like the deal: They would be earning, in effect, a 20 percent return. And under the island’s Constitution, Puerto Rico was required to pay back its debt before almost any other bills, whether for retirees’ health care or teachers’ salaries.
But within months, Puerto Rico was saying it had run out of money, and the relationship between the impoverished United States territory and its unlikely saviors fell apart, setting up an extraordinary political and financial fight over Puerto Rico’s future.
On the surface, it is a battle over whether Puerto Rico should be granted bankruptcy protections, putting at risk tens of billions of dollars from investors around the country. But it is also testing the power of an ascendant class of ultra-rich Americans to steer the fate of a territory that is home to more than three million fellow citizens.
This very long feature essay was posted on The New York Times website last Saturday—and for obvious reasons had to wait for today’s column. I thank Patricia Caulfield for her first offering of the day.
The Oil Price Crash is Taking a Heavy Toll on Canada. And the Worst is Yet to Come
Crime is rising, home prices are falling and food banks are overwhelmed in Calgary as job losses spread. And the worst isn’t yet over in the heart of Canada’s oil patch.
Some of the city’s largest employers are poised to cut more jobs in 2016 as they reduce spending for a second straight year, adding to an estimated 40,000 oil and natural gas positions lost across the nation since the crude price rout began 18 months ago.
“We all know someone who has lost a job,” Naheed Nenshi, the city’s mayor, said in a speech this month, lamenting the “funeral”-like atmosphere in the business community.
Calgary, which boasted one of the lowest jobless rates in the nation as crude prices rose over $100 a barrel, is reeling after a global glut pushed prices down by two-thirds. Shares of energy producers have slumped along with oil. While Alberta’s biggest city is benefiting from gains in tourism and transportation, its economy is still 30 percent dependent on oil and gas, according to the mayor.
This news item showed up on the Bloomberg website on Tuesday evening Denver time—and was updated at 10 a.m. MST on Wednesday morning. I thank Patricia Caulfield for her second article in a row.
This Time It’s Not Putin: Ukraine Flirts With Political Suicide
Who needs Vladimir Putin to knock Ukraine off its post-revolutionary path? The nation’s current rulers are managing by themselves.
While the Russian president’s new focus on Syria has helped soothe the conflict in eastern Ukraine, offering a window for reform and recovery from a recession, the administration in Kiev is being overrun by internal squabbles. This month’s fist fight in parliament and an expletive-filled clash between a minister and a regional governor underline discord that’s threatening to sink the government and derail a $17.5 billion International Monetary Fund rescue. The next flash point will be a vote on the 2016 budget.
With memories of the failed Orange Revolution still fresh, Ukraine risks letting internal disputes hijack the second attempt in a decade to break free from its communist past. Reformers are clashing with the vested interests that control swaths of the economy, a target of the protesters who dislodged the country’s pro-Russian leader in 2014 demanding European-style transparency. Dangers to the IMF bailout and billions more in aid from ally nations are reflected in surging bond yields.
This story on Ukraine’s woes showed up on the Bloomberg Internet site at 3:01 p.m. MST on Tuesday afternoon—and was subsequently updated eighteen hours later. It’s only worth reading in order to prepare you for the next story about the Ukraine that falls into the must read category. I think Patricia C. for this article as well.
The Ukraine: On the 19th Day of Christmas… — Dmitry Orlov
With all the action in Syria, the Ukraine is no longer a subject for discussion in the West. In Russia, where the Ukraine is still a major problem looming on the horizon, and where some 1.5 million Ukrainian refugees are settling in, with no intentions of going back to what’s left of the Ukraine, it is still actively discussed. But for the U.S., and for the E.U., it is now yet another major foreign policy embarrassment, and the less said about it the better.
In the meantime, the Ukraine is in full-blown collapse—all five glorious stages of it—setting the stage for a Ukrainian Nightmare Before Christmas, or shortly after.
Phase 1. Financially, the Ukrainian government is in sovereign default as of a couple of days ago. The IMF was forced to break its own rules in order to keep it on life support even though it is clearly a deadbeat. In the process, the IMF stiffed Russia, which happens to be one of its major shareholders; what gives?
Phase 2. Industry and commerce are approaching a standstill and the country is rapidly deindustrializing. Formerly, most of the trade was with Russia; this is now over. The Ukraine does not make anything that the EU might want, except maybe prostitutes. Recently, the Ukraine has been selling off its dirt. This is illegal, but, given what’s been happening there, the term “illegal” has become the stuff of comedy.
Phase 3. Politically, the Ukrainian government is a total farce. Much of it has been turned over to fly-by-night foreigners, such as the former Georgian president Saakashvili, who is a wanted criminal in his own country, which has recently stripped him of his citizenship. The parliament is stocked with criminals who bought their seat to gain immunity from prosecution, and who spend their time brawling with each other. Prime Minister Yatsenyuk was recently hauled off the podium by his crotch; how dignified is that? He seemed unfazed. Where are his testicles? Perhaps Victoria Nuland over at the U.S. State Dept. is keeping them in a jar. This sort of action may be fun to watch on Youtube.com, but the reality is quite sad: those who “run” the Ukraine (if the term still applies) are only interested in one thing: stealing whatever is left.
This amazing commentary appeared on the informationclearninghouse.info Internet site on Tuesday, but for length and content reasons, had to wait for a spot in today’s column. It falls into the absolute must read category, even if you’re’ not a student of the New Great Game. It’s another contribution from Patricia Caulfield, for which I thank her.
Russia issues 100 ruble Crimea banknote
The Central Bank of Russia is issuing a commemorative 100 ruble banknote dedicated to Sevastopol and Crimea.
The front of the note features a Crimean landmark called the Swallow’s Nest Castle. The back of the note is devoted to the Russian federal city of Sevastopol and features the Sunken Ships Monument in Sevastopol Bay and a patch of Ivan Aivazovsky’s painting ‘The Russian Squadron on the Sebastopol Roads’.
The banknote incorporates a QR code that leads to the Bank of Russia website containing historical background. Twenty million banknotes will be printed.
In October last year, the Bank of Russia minted 10 ruble coins dedicated to the Crimean reunification with Russia. In March 2014, Crimea’s mostly ethnic Russian population voted to secede from Ukraine.
This very interesting news item appeared on the Russia Today website at 9:18 a.m. Moscow time on their Wednesday morning, which is 1:18 a.m. in Washington—EDT plus 8 hours. I thank Tolling Jennings for digging this up for us.
Renowned American Military Expert Explains How Turkey Ambushed Russia’s Su-24
On November 24, a Turkish F-16 fighter jet shot down a Russian Su-24 bomber near the border of Turkey and Syria. In the immediate aftermath, officials from the two countries offered contradictory versions of what transpired: Russian president Vladimir Putin claimed that the plane was flying over Syrian territory when it was downed; Turkish president Recep Tayyip Erdogan countered that it was inside Turkey’s border and had been warned ten times to alter its course. Hours later, President Obama threw his support behind Erdogan. “Turkey,” he said, “has a right to defend its territory and its airspace.”
I asked Pierre Sprey, a longtime defense analyst and member of the team that developed the F-16, to examine what we know about the downing and determine what actually occurred that morning.
The Russians have claimed the November 24 downing of their bomber was a deliberate pre-planned ambush by the Turks. Is there any merit in that argument?
Looking at the detailed Russian timeline of what happened—as well as the much less detailed Turkish radar maps—I’d say the evidence looks pretty strong that the Turks were setting up an ambush. They certainly weren’t doing anything that would point to a routine air patrol along the border. Their actions in no way represented a routine, all day long type of patrol.
This amazing news item, which is no surprise to me, as Ankara was ‘outed’ within 24 hours on this, appeared in Harper’s Magazine of all places. It showed up there on December 4—and I thank Larry Galearis for sending it along. It’s definitely worth reading if you have the interest. He sent it to me a week ago, but it got ‘lost’ in my in-box until yesterday—so here it is now.
Putin’s Progress in Syria Sends Kerry Scampering to the United Nations
Imagine if the American people elected a president who was much worse than George W. Bush or Barack Obama. A real tyrant. Would that be sufficient justification for someone like Vladimir Putin to arm and train Mexican and Canadian mercenaries to invade America, kill US civilians, destroy cities and critical infrastructure, seize vital oil refineries and pipeline corridors, behead government officials and prisoners they’d captured, declare their own independent state, and do everything in their power to overthrow the elected-government in Washington?
Of course not. The question is ridiculous. It wouldn’t matter if the U.S. president was a tyrant or not, that doesn’t justify an invasion by armed proxies from another country. And yet, this is precisely the policy that U.S. Secretary of State John Kerry defended at the United Nations [last] Friday. Behind all the political blabber about a “road map to peace”, Kerry was tacitly defending a policy which has led to the deaths of 250,000 Syrians and the destruction of the country.
And, keep in mind, Kerry didn’t drag his case before the U.N. Security Council because he’s serious about a negotiated settlement or peace. That’s baloney. What Kerry wants is a resolution that will protect the groups of U.S.-backed jihadis on the ground from the Russian-led offensive. That’s what’s really going on. The Obama administration sees the handwriting on the wall. They know that Russia is going to win the war, so they’ve settled on a plan for protecting their agents in the field. That’s why the emphasis is on a ceasefire; it’s because Kerry wants a “Timeout” so his Sunni militants can either regroup or retreat.
This longish commentary by Mike Whitney was picked up from the couterpunch.org Internet site yesterday—and this copy of it was posted on the informationclearinghouse.info website. It’s a must read for any serious student of the New Great Game. I thank P.T. Holland for pointing it out.
OPEC faces a mortal threat from electric cars
OPEC remains defiant. Global reliance on oil and gas will continue unchanged for another quarter century. Fossil fuels will make up 78pc of the world’s energy in 2040, barely less than today.
There will be no meaningful advances in technology. Rivals will sputter and mostly waste money. The old energy order is preserved in aspic.
Emissions of CO2 will carry on rising as if nothing significant had been agreed in a solemn and binding accord by 190 countries at the Paris climate summit.
OPEC’s World Oil Outlook released today is a remarkable document, the apologia of a pre-modern vested interest that refuses to see the writing on the wall.
This very interesting commentary by Ambrose Evans-Pritchard showed up on the telegraph.co.uk Internet site at 6:03 p.m. GMT on their Friday evening, which was 1:03 p.m. in Washington—EDT plus 5 hours. It’s courtesy of Patricia Caulfield.
Zimbabwe’s curious plan to adopt China’s currency
Want evidence that China is still making inroads in sub-Saharan Africa? Look no further than Zimbabwe, where the finance minister just announced a plan to begin using the Chinese yuan as an official currency within the southern African nation — part of a deal in which Beijing will also cancel about $40 million in debt.
“There cannot be a better time to do this,” Zimbabwean Finance Minister Patrick Chinamasa explained in a statement.
The news is just the latest wild twist for the Zimbabwean currency. Six months ago, Zimbabwe’s central bank announced that it was finally phasing out the local currency, the Zimbabwean dollar, after years of hyperinflation had left the currency virtually worthless. Zimbabweans were told that they would be able to exchange bank account balances of up to 175,000,000,000,000,000 Zimbabwean dollars for just 5 U.S. dollars – a heartbreaking sum, given that it was many people’s life savings.
In practice, the Zimbabwean dollar (and the $100 trillion notes that it eventually required) had already become little more than a kitsch souvenir. By 2008, foreign currencies such as the U.S. dollar and the South African rand had become de facto currencies thanks to a booming black market. The following year, the government announced that it would officially allow businesses to use these currencies, effectively abandoning the Zimbabwean dollar.
This news item put in an appearance on the washingtonpost.com Internet site at noon EST on Friday—and I thank Patricia C. for this article as well. There was also a story in The Guardian on this subject. It’s headlined “Zimbabwe to make Chinese yuan legal currency after Beijing cancels debts“—and I thank P.T. Holland for that one.
China: And the impossible Trinity — Jim Rickards
This short video commentary by Jim appears at the 20:50 minute mark of this Russia Today ‘Boom Bust‘ program that was posted on the youtube.com Internet site on Monday. It’s certainly worth your while—and I thank Harold Jacobsen for sharing it with us.
Noble Group’s Farm Unit Sale Counters Junk Threat as Shares Jump
Noble Group Ltd. shares jumped after it agreed to sell the rest of its agriculture unit to China’s Cofco Corp. for at least $750 million in cash, allowing the embattled commodities trader to pare debt and counter the threat of losing its investment grade rating.
“It helps Noble to raise the cash it needed to avert being downgraded to junk status, and also to get rid of liabilities,” Bernard Aw, a strategist at IG Asia Pte, said by e-mail. “It’s critical for Noble to convince investors that it can transform the ailing company.”
Asia’s largest commodities trader is seeking to bolster liquidity through asset sales amid threats to its investment-grade credit rating and reverse a share-price slump that’s made it this year’s worst performer on the MSCI Asia Pacific Index. While the proceeds would improve its financial leverage and liquidity, the full sale of the unit could weaken Noble’s business position, including its business diversity and long-term competitiveness, Standard & Poor’s said in a statement Wednesday.
This article put in an appearance on the bloomberg.com Internet site at 11 a.m. Denver time on their Tuesday morning. Clive Sutherland, the subscriber that sent me this story, had this to say about it: “Another example of the sinking ship. Cofco is a government-owned company, so [there’s] endless cash I would assume. We deal with them in our cherry business. I have been to their office in Beijing. Back in the days before the clamp down on government spending, they would give away a whole container of 3,500 x 5kg boxes of Chilean cherries to the people working in the office for their New Years.”
Russia Gold “Buying Spree” Continues – Buy 22 Tonnes in November
The share of gold in Russian foreign exchange reserves is much lower than in many other countries such as the U.S., Italy and France. Russian diversification into gold is likely to continue and could intensify if relations with the U.S. and NATO powers further deteriorate.
Russia still have less than a fifth of the gold reserves of the U.S. which are believed to be over 8,400 metric tonnes of gold. However, the U.S. has no foreign exchange reserves and is the largest debtor in the world – indeed it is one of the largest debtors the world has ever seen.
Russia now has the sixth highest gold reserves in the world – behind the U.S., Germany, Italy, France and China.
In 2014, Russia bought more gold in than in any year since the break-up of the Soviet Union. The country acquired over 173 metric tonnes according to World Gold Council figures. Reserve diversification intensified after April — averaging about 20 tonnes per month.
The statistics in this Mark O’Byrne article are ancient history, as they first appeared in my Saturday column. But Mark has some interesting analysis and data that’s more in-depth than mine, so that makes his Tuesday commentary posted on the goldcore.com Internet site worth your while if you have the time.
Why gold is losing its sheen among Chinese jewellery buyers
As Chinese consumers cut back on gold purchases for a second year in a row, nowhere is the slowdown being felt more than in the country’s once-bustling jewellery manufacturing and retail hub of Shuibei.
Gold demand has taken a hit from a slowing economy and Beijing’s anti-corruption drive, which has cut demand for luxury products, but there are fears of a more protracted loss of confidence among buyers in the world’s top consumer of the precious metal.
With buying in No.2 consumer India also soft, another year of weak Chinese demand would help pile more pressure on global gold prices languishing near six-year lows.
The hundreds of jewellery stores in Shuibei, a district of Shenzhen only a short hop over the border from Hong Kong, have seen business take a downturn since a buying boom peaked in 2013 as once-voracious Chinese consumers turn cautious.
This bulls hit Reuters article was picked up by the financialexpress.com Internet site yesterday—and it’s something I found on the Sharps Pixley website.
India’s gold imports set to touch 1,000 tonnes this year
Buoyed by sharp fall in gold prices globally, India is likely to see a jump of 11 per cent in imports of the metal to 1,000 tonnes this year, says a trade body.
According to the All India Gems and Jewellery Trade Federation, the world’s second-biggest gold consumer imported around 900 tonnes in 2014.
“Gold import is estimated at around 1,000 tonnes in 2015 calendar year, compared to around 900 tonnes last year. Imports are likely to increase because of low global prices,” All India Gems and Jewellery Trade Federation Chairman GV Sreedhar said at an event here. He said imports through smuggling were estimated to be around 100 tonnes this year.
According to the federation, India has already imported 850 tonnes of gold from January to September 2015 as against 650 tonnes in the first nine months of last year. Gold imports are expected to be 150-200 tonnes in the last quarter, as against 300 tonnes in the year-ago period.
This gold-related article put in an appearance on thehindu.com Internet site at 5:36 p.m. IST on their Wednesday afternoon—and it’s the second article in a row that I lifted from the Sharps Pixley website.
Archaeologists believe Thames gold hoard may have come from Tudor hat
A gust of wind blowing up the Thames half a millennium ago may have been responsible for the creation of a small hoard of gold that has been dug out of the muddy banks of the river.
Archaeologists believe that the cache – made up of tiny fragments of Tudor gold – may have come from a single piece of extravagant headwear that was blown off the head of a high-status passenger on a Thames barge some 500 years ago.
Eight different treasure hunters have recovered 12 individual pieces of the 16th century jewellery from the surface of the Thames foreshore, and the pieces are so similar that experts say that they are likely to have come from the same source.
This very interesting gold-related story, along with an equally interesting embedded video clip, appeared on the telegraph.co.uk Internet site at 4:37 p.m. London time on their Wednesday afternoon, which was 11:37 a.m. EST in New York. I thank Chris Powell for bringing this news item to our attention.
The PHOTOS and the FUNNIES
The WRAP
The whole issue is very much black and white. If JPMorgan and the other big COMEX commercials add notably and measurably to existing silver short positions, the coming rally will most likely be of the type of the increasingly disappointing rallies of the past two years – $1 to $2 or so ($100+ in gold). I suppose such a rally will be greeted in some circles as an achievement of some note; but you’ll forgive me if I don’t high-five in advance. Moreover, if the next rally does involve heavy new short selling by JPMorgan and other big commercial shorts, most likely it won’t be long before we must confront the next manipulative sell-off.
But if JPMorgan doesn’t add aggressively to short positions in COMEX silver on the coming certain price rally, then that rally will likely be one for the ages. Every manipulation needs a manipulator-in-charge to maintain the fraudulent price scheme and every manipulation in history ends when the chief manipulator pulls back from rigging prices. Therefore, should JPMorgan and other big COMEX commercials refrain from adding new short positions on the coming rally, the extent of the price rally will shock many. Just to throw out numbers, if JPMorgan doesn’t squash the next rally like it has squashed every silver rally over the past seven years, we could be over $20 or $30 in a relative flash and onward and upward to much higher silver prices.
Admittedly, JPMorgan has added to its short position on every silver rally over the past seven years, so why would I expect it not to do so once again? A good number of things have changed over that time period, not the least of which has been the success of the bank in accumulating a truly massive amount of actual silver over the past 4 years, some 400 million oz. Therefore, JPMorgan has never been in a better position to let silver prices explode than currently. And even if it is short a relatively small 12,000 to 13,000 contracts now, that’s a 60 to 65 million oz paper short position against a 400 million oz physical long position meaning a net long position of 340 million oz. — Silver analyst Ted Butler: 23 December 2015
There’s nothing to talk about at this juncture now that ‘the West’ has all but shut down for the Christmas/New Years break. With no exception there’s been no price activity worthy of the name [except new lows] set between Christmas and New Years for as long as I can remember—and I’m sure that all the world is expecting the same this year as well.
That may be the way it turns out this year as well, but with the Commitment of Traders Report all set up for a monster rally, if the powers-that-be wish it, the last week of trading in the precious metal market could be one for the history books.
But, as Ted correctly pointed out, it will only happen if JPMorgan et al stand aside, or are instructed to stand aside.
And so we wait.
Here are the 6-month charts for the Big 6+1commodities—all complete with their respective 20-and 50-day moving averages, updated with their closing data from yesterday.
And as I write this paragraph the London open is about five minutes away—and I see that gold rallied four bucks by 11 a.m. Hong Kong time on their Thursday morning—and has traded sideways since. Silver made several rally attempts during the Far East session, but ran into a not-for-profit seller at every attempt—and the price is currently down a penny. Platinum and palladium’s rally attempts have been more successful. The former is currently up 6 dollars—and the latter is up 7 bucks.
HFT Gold volume is just under 11,000 contracts—and in silver that number is 3,400 contracts. Both are pretty decent volume numbers considering that this is the day before Christmas. The dollar index has been chopping lower ever since trading began at around 6 p.m. on Wednesday evening in New York—and it’s down 32 basis points as London opens.
As I said in my yesterday’s column, I may or may not have something on Saturday—and if I do, it won’t show up on the website until very late on Saturday evening EST, because I’ll be on the road that day—and whatever I do write, will be mercifully short.
And as I post today’s column on the website at 4:50 a.m. EST, I note that the gold price is still trading pretty flat, silver is up a few pennies, platinum is now up 7 dollars—and palladium is now up only up 4 bucks.
Net HFT gold volume is sitting right at 13,000 contracts—and that number in silver is 4,050 contracts. The dollar index is now down 43 basis points—and back below the 98.00 level, at least for the moment. Will ‘gentle hands’ show up again today?
I expect that trading volume will drop off rather dramatically as the Thursday trading session wears on—and I would guess that the markets will close early in New York this afternoon.
Before heading off to bed, I thought I’d leave you with this very traditional 16th century English Christmas carol. Here’s the Lithuanian male vocal group “Quorum” singing the ” Coventry Carol” a cappella style, which is the way it was originally performed. The link is here—and you’ll never hear a better recording of it than this. Enjoy!
Season’s greetings—and Merry Christmas to you and yours.
Ed
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