01 January 2016 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price did nothing of consequence on the day before New Years. The low tick came an hour after the noon London silver fix—and after that, the price didn’t do anything.
The high and lows are worth looking up.
Gold finished the Thursday session in New York [which, surprisingly, didn’t close early] at $1,061.60 spot, up the magnificent sum of one thin dime from Wednesday’s close. Net volume was extremely light at just under 47,000 contracts.
I forgot to update the Kitco charts before heading out yesterday afternoon, so they’ve already been overwritten by the January 1 trace. The blue trace after 18:00—and the red trace after 00:00 [midnight in New York] represent the Thursday price action everywhere on Planet Earth.
There was a little price activity in silver in early Far East trading on their Thursday [the blue trace after 18:00 on the Kitco chart below]—but the vertical price spike around 11:30 a.m. Hong Kong time on this chart was its last gasp to the upside. The low tick was in about fifteen minutes before the COMEX open—and the price wasn’t allowed to do much after that.
The high and low tick in this precious metal were reported by the CME Group as $13.96 and $13.765 in the March contract.
Silver finished the day at $13.825 spot, down a nickel from Wednesday. Net volume was fumes and vapours at just over 15,000 contracts.
The platinum price didn’t do much of anything until 1 p.m. Zurich time on their Thursday afternoon, which was twenty minutes before the COMEX open in New York. It rallied up to its high tick at 1 p.m. EST—and traded flat after that. Platinum close in New York on Thursday at $890 spot, up an even 20 bucks from Wednesday’s close.
Palladium rallied for the first six hours of trading on Thursday morning in the Far East. But once Zurich opened the price got sold back to almost unchanged by the COMEX open. Then it began to rally anew—and by 1 p.m., just like in platinum, it was at its high of the day—and traded flat from there. Palladium finished the Thursday session at $560 spot, up 18 dollars on the day.
The dollar index closed late on Wednesday afternoon in New York at 98.26–and didn’t do a lot until London opened at 8 a.m. GMT on their Thursday morning. It began to chop higher from there, with most of the gains coming by 10:55 a.m. EST in New York. The price then chopped more or less sideways in lacklustre trading from there, as the index finished the Thursday session at 98.70—up 44 basis points from its close in New York on Wednesday.
And here’s the 6-month chart so you can keep track of the longer term.
The gold stocks spent most of the day in slightly negative territory, but rallied in the last hour of trading, to finish in the green, as the HUI closed up 0.42 percent.
The silver equities chart for Thursday has already been overwritten by January 1—and I didn’t think of saving it yesterday evening before I headed out the door, so that’s why there isn’t one today—but Nick Laird’s Intraday Silver Sentiment Index did close higher by 1.11 percent.
For the week, the HUI closed down 2.31 percent. For the month of December it was down 0.57 percent—and for the year it was down 27.57 percent.
For the week, the ISSI closed lower by 2.59 percent, for December it was down 6.55 percent—and for the year as a whole, it was down 30.45 percent.
And not that I want to make you feel worse than you already do, but both the HUI and the ISSI are down 80 percent apiece over the last five year period. And the precious metal companies you own shares in have just sat there and let it happen.
The CME Daily Delivery Report showed that zero gold and 12 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. In silver, the only short/issuer was ADM out of its client account—and Canada’s Scotiabank was the lone long/stopper. The link to Thursday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Thursday trading session showed that gold open interest in the January contract dropped by 3 contracts, leaving 288 still open. In silver, January o.i. was unchanged at 370 contracts—minus the 12 mentioned in the previous paragraph.
There were withdrawals from both GLD and SLV on the last business day of the year. Authorized participants removed 38,268 troy ounces of gold from GLD—and 952,782 troy ounces of silver from SLV.
There was no in/out activity in gold over at the COMEX-approved depositories on Wednesday.
But it was a pretty busy day in silver, as 1,214,618 troy ounces were reported received—and 343,325 troy ounces were shipped out. None of this activity involved JPMorgan—and the link to all of this is here.
For a change, it was a nothing day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday. Nothing was reported received—and only 13 kilobars were shipped out, all from Brink’s, Inc. I shan’t bother with the link to that.
Because of New Years Day, there was no COT Report on Friday—and that will be posted on the CFTC’s website on Monday afternoon.
Nick sent around the weekly gold withdrawal from the Shanghai Gold Exchange last evening—and for the week ending Friday, December 25—they withdrew 52.827 tonnes. And here’s Nick Laird’s most excellent chart—and the ‘click to enlarge’ feature works wonders here.
Once again I’ve cut the number of stories down to the bare minimum, not that there’s that much doing on this time of year. The final edit, as always, is yours.
CRITICAL READS
Jim Rickards: Why 2016 Will Be the Year of Fed Boomerang
Strategic Intelligence Editor Jim Rickards discusses Fed policy. He speaks on “Bloomberg ‹GO›.”
This 3:14 minute video clip appeared on the Bloomberg website at 7:53 a.m. Denver time on their Wednesday morning—and I thank Harold Jacobsen for sending it our way. There’s another Bloomberg video clip from Jim from the same program. It’s headlined “Why Risk Isn’t Producing Rewards in the Markets“—and it runs for 5:40 minutes. Harold sent this one our way as well.
The Next Big Short: Jeff Bezos’ Brobdingnagian Bubble — David Stockman
If you have forgotten your Gulliver’s Travels, recall that Jonathan Swift described the people of Brobdingnag as being as tall as church steeples and having a ten foot stride. Everything else was in proportion——with rats the size of mastiffs and the latter the size of four elephants, while flies were “as big as a Dunstable lark” and wasps were the size of partridges.
Hence the word for this fictional land has come to mean colossal, enormous, gigantic, huge, immense or, as the urban dictionary puts it, “really f*cking big”.
That would also describe the $325 billion bubble which comprises Amazon’s market cap. It is at once brobdingnagian and preposterous——a trick on the casino signifying that the crowd has once again gone stark raving mad.
When you have arrived at a condition of extreme “irrational exuberance” there is probably no insult to ordinary valuation metrics that can shock. But for want of doubt consider that AMZN earned the grand sum of $79 million last quarter and $328 million for the LTM period ending in September.
That’s right. Its conventional PE multiple is 985X!
This commentary by David put in an appearance on this website on Thursday sometime—and it’s courtesy of Richard Saler.
Half a Million Bank Jobs Have Vanished Since 2008 Crisis: Chart
Staff reductions at some of the world’s biggest banks are far from over. Deutsche Bank AG, which has held employment close to its 2010 peak, plans to slash 26,000 positions by 2018, following a trend that began with the financial crisis.
Announced cuts in the fourth quarter total at least 47,000, following 52,000 lost jobs in the first nine months of 2015. That would bring the aggregate figure since 2008 to about 600,000. UniCredit SpA says it will eliminate about 18,200 positions. Citigroup Inc., which has reduced its workforce by more than a third, plans to eliminate at least 2,000 more jobs next year.
This brief Bloomberg item, along with an excellent chart, appeared on their website at 3:00 a.m. MST on Thursday morning—and I thank West Virginia reader Elliot Simon for sharing it with us.
The Plutocrats Are Winning. Don’t Let Them! — Bill Moyers
The vast inequality they are creating is a death sentence for government by consent of the people. This is the fight of our lives and how it ends is up to us.
Dear Readers:
In the fall of 2001, in the aftermath of 9/11, as families grieved and the nation mourned, Washington swarmed with locusts of the human kind: wartime opportunists, lobbyists, lawyers, ex-members of Congress, bagmen for big donors: all of them determined to grab what they could for their corporate clients and rich donors while no one was looking.
Across the land, the faces of Americans of every stripe were stained with tears. Here in New York, we still were attending memorial services for our firemen and police. But in the nation’s capital, within sight of a smoldering Pentagon that had been struck by one of the hijacked planes, the predator class was hard at work pursuing private plunder at public expense, gold-diggers in the ashes of tragedy exploiting our fear, sorrow, and loss.
What did they want? The usual: tax cuts for the wealthy and big breaks for corporations. They even made an effort to repeal the alternative minimum tax that for fifteen years had prevented companies from taking so many credits and deductions that they owed little if any taxes. And it wasn’t only repeal the mercenaries sought; they wanted those corporations to get back all the minimum tax they had ever been assessed.
This must read commentary by Bill Moyers showed up on his Internet site on December 22—and I thank reader ‘Zoey’ for sharing it with us.
Turkey’s Campaign Against Kurdish Militants Takes Toll on Civilians
A major Turkish military operation to eradicate Kurdish militants in Turkey’s restive southeast has turned dozens of urban districts into bloody battlefields, displacing hundreds of thousands of civilians and shattering hopes of reviving peace as an old war reaches its deadliest level in two decades.
Over the past week, Turkish tanks and artillery have pounded Kurdish targets across several southeast cities, killing at least 200 militants and more than 150 civilians, according to human rights groups and local officials.
Their descriptions of the fighting and mass destruction in populated areas, which are off-limits to journalists, depict war zones not unlike the scenes in neighboring Syria to the south.
The Kurds are a geographically dispersed minority whose aspirations for autonomy date back decades. The flaring of their conflict with Turkey represents a dangerous complication in a region already convulsed by the upheavals in Syria, Iraq and Yemen. About half of all Kurds live in Turkey, a NATO member and American ally.
This news item, filed from Istanbul, showed up on The New York Times website on Wednesday sometime—and it’s the first contribution of the day from Roy Stephens.
Empire of Chaos Preparing For More Fireworks in 2016 — Pepe Escobar
In his seminal ‘Fall of Rome: And the End of Civilization,’ Bryan Ward-Perkins writes, “Romans before the fall were as certain as we are today that their world would continue forever… They were wrong. We would be wise not to repeat their complacency.”
The Empire of Chaos, today, is not about complacency. It’s about hubris – and fear. Ever since the start of the Cold War the crucial question has been who would control the great trading networks of Eurasia – or the “heartland”, according to Sir Halford John Mackinder (1861–1947), the father of geopolitics.
We could say that for the Empire of Chaos, the game really started with the CIA-backed coup in Iran in 1953, when the US finally encountered, face to face, that famed Eurasia crisscrossed for centuries by the Silk Road(s), and set out to conquer them all.
Only six decades later, it’s clear there won’t be an American Silk Road in the 21st century, but rather, just like its ancient predecessor, a Chinese one. Beijing’s push for what it calls “One Belt, One Road” is inbuilt in the 21st century conflict between the declining empire and Eurasia integration. Key subplots include perennial NATO expansion and the empire’s obsession in creating a war zone out of the South China Sea.
As the Beijing-Moscow strategic partnership analyses it, the oligarchic elites who really run the Empire of Chaos are bent on the encirclement of Eurasia – considering they may be largely excluded from an integration process based on trade, commerce and advanced communication links.
This commentary by Pepe appeared on the informationclearinghouse.com Internet site on Christmas Day—and they in turn borrowed it from the Russia Today website. It’s a must read for any serious student of the New Great Game—and I thank Patricia Caulfield for finding it for us.
China Fires a Warning Shot at Yuan Speculators With Bank Bans
China has a message for currency speculators: the free lunch is over.
The People’s Bank of China has suspended at least two foreign banks from conducting some cross-border yuan business until late March, according to people with direct knowledge of the matter. The clampdown comes as the growing offshore-onshore spread makes it profitable for those who skirt capital controls to buy the currency at a discount in Hong Kong and sell it in Shanghai.
By closing loopholes in its regulations, China is trying to stabilize the yuan after a surprising revamp of its currency-valuation system in August led to capital outflows and prompted policy makers to tap $213 billion of foreign reserves to support the yuan. The risk is that discouraging arbitrage will cause the exchange rates to diverge further, undermining the goal of unifying the two markets.
“The market should see this as a warning shot across the bow,” said Douglas Borthwick, the New York-based head of currencies at Chapdelaine & Co., a unit of the British inter-dealer brokerage Tullet Prebon Plc. Chinese regulators don’t want onshore trades to be speculative in nature and “in the short term this will likely lead to further widening of the spread,” he said.
This Bloomberg article, with a 3:27 minute embedded video clip, appeared on their Internet site on Wednesday afternoon Denver time—and I thank Elliot Simon for his second offering in today’s column.
Archaeologists discover gold coins excavating royal Chinese tombs
Archaeologists digging in the royal Haihunhou cemetery in Nanchang City in eastern China are reported to have unearthed considerable numbers of gold coins, gold sheets, gold ingots, and other relics from the Han Dynasty.
On December 24, the head of the archaeological experts panel, Xin Lixiang, is reported in media interviews to have indicated the latest finds include an extensive discovery of gold coins.
The December 24 excavation that included the discovery of 96 gold coins brought the total number of ancient gold coins unearthed at the cemetery to 285. That total number jumped to 378 when additional coins were discovered December 25.
In addition to the gold coins found during the excavation, hoof-shaped gold ingots, jade pendants and 2,000-year-old goose-shaped bronze lamps are also reported. The December 24 and 25 finds include 20 thin gold sheets measuring 22 centimeters by 10 centimeters by 0.3 centimeters.
This very interesting gold-related news item put in an appearance on the coinworld.com Internet site on Wednesday—and the 4-photo slide show is definitely worth your time. I thank Tolling Jennings for bringing it to my attention—and now to yours.
GATA’s Ed Steer to speak at Vancouver Resource Investment Conference
GATA Board of Directors member Ed Steer, editor of Ed Steer’s Gold and Silver Digest financial letter will speak at the Vancouver Resource Investment Conference, to be held Sunday and Monday, January 24 and 25, 2016, at the Vancouver Convention Centre West in Vancouver, British Columbia, Canada.
Among the other speakers will be Frank Holmes of U.S. Global Investors, Rick Rule of Sprott U.S. Holdings, Marin Katusa of Katusa Research, Ross Beaty of Pan American Silver, Keith Neumeyer of First Majestic Silver, newsletter editor Mickey Fulp, David Morgan of Silver-Investor.com, Peter Spina of GoldSeek.com, newsletter writer Jay Taylor, and gold forecasting newsletter writer Bo Polny.
Dozens of resource companies will be exhibiting, and the conference has made lodging arrangements for conference participants with two hotels adjacent to the convention center, the Fairmont Waterfront and Marriott Pinnacle.
Admission will be free for those who register in advance. At the door admission will cost C$20. You can find out more about the conference by clicking here.
This item was posted on the gata.org Internet site back on December 23—and was another commentary that fell through the cracks over the holiday season.
Chinese 2015 gold demand equates to around 80% of total global gold output — Lawrie Williams
The latest gold withdrawals figure out of the Shanghai Gold Exchange of 52.83 tonnes for the trading week ended 25 December brings total withdrawals year to that date of 2,555 tonnes, with four trading days to go until the year end. Given that this tends to be a strong time of gold demand in China in the run-up to the Chinese New Year, which this year falls on February 8, and if we assume similar delivery levels over the final few days of 2015, total gold withdrawals out of the SGE for the full year should end at between around 2,590 – 2,610 tonnes. While some analysts reckon that SGE withdrawal figures do not represent actual Chinese demand (mainly due to interpretations of what actually constitutes demand), others disagree. And the Peoples Bank of China, in its own statistics, does indeed seem to equate SGE withdrawals with national consumption.
We were predicting a full year SGE withdrawals total of around 2,650 tonnes back in September. In the event the figure is not going to be quite this high as withdrawals from the Exchange have slowed a little over the final quarter of the year – although have still remained very strong, but not as high as the exceptional figures being reported in Q3. Nevertheless, as we have been reporting all along, the full year total is going to be a massive new record – over 400 tonnes higher than in 2013, previously the highest year ever for SGE gold withdrawals. This annual figure also equates to around 80% of global new mined gold output.
This commentary by Lawrie appeared on the sharpspixley.com Internet site earlier today—and it’s worth reading.
The PHOTOS and the FUNNIES
The WRAP
The worst 3 years of price performance in the history of gold and silver came against a macro-economic backdrop that featured the most expansive monetary push by the world’s central banks ever; and one in which the prices of almost all assets, including, stocks, bonds, real estate, art and collectibles basically surged to new all-time highs. In addition, the growing circumstance of wealth inequality, in which most of the investible wealth is falling into fewer hands has also driven the climb in investment assets of all types. The middle class and the poor have suffered, not so with the well-to-do.
Standing out, like a sore thumb, were gold and silver. Sure, most other commodities were lower in price over this time, but other commodities are not the prime investment assets that gold and silver are. In any case, a zero interest rate environment cannot be considered a headwind for gold and silver prices, with investors on a mad scramble to seek alternatives.
So if an expansive monetary backdrop cannot be used to explain the historic negative price performance for gold and silver for the past few years; then what was the cause? The cause was the same cause I have intoned weekly for years – COMEX futures positioning, led by JPMorgan. In fact, one of the biggest developments of 2015 has been the near-universal recognition by those who focus on gold and silver of the price effect of the COMEX market structure, as portrayed in the COT report. That there are still some who refuse to acknowledge that the verifiable documentation of COMEX positioning proves price manipulation, even after discovering and embracing COT analysis, is something that can’t last. If you truly understand the COT report, it’s impossible not to see the manipulation.
The only thing different about 2015 from the two prior years is that the issue of COMEX positioning became more pronounced. For some reason, the positions of the managed money technical funds and their counterparty price puppet masters, the commercials, grew larger and more dominant than ever before. This resulted in the clearest proof to date of the effect of COMEX futures positioning in manipulating silver and gold prices and was largely responsible for the growing acceptance of the COT analysis. There are not many observers left who don’t understand that prices are likely to rise when the technical funds are mega-short and that prices will fall when the technical funds have already purchased massive amounts of COMEX gold and silver contracts. — Silver analyst Ted Butler: 30 December 2015
Today’s pop ‘blast from the past’ is one I was listening to while blasting down the highway in western Saskatchewan on Wednesday afternoon on the drive back to Edmonton—and it’s by a Canadian rock band called Loverboy. They had many hits, but this 1980 classic was by far their biggest one—and the link is here. This is the ‘extended’ version—and my favourite. Crank it up as loud as you can stand—and enjoy! And just as a note of interest, here’s the bass cover to this piece—and it’s awesome as well. The link to that is here.
Today’s classical’ blast from the past’ is by English composer Sir Edward Elgar—and was written when Britain was at its so-called “Great” stage, before being deliberately knocked off that perch by an ascendent United States. His “Pomp and Circumstance” march No. 1 is the most well known of the six. Here’s March #1 in D major, Op. 39 “Land of Hope and Glory” as performed at The Proms in 2012. The crowd is in an emotional frenzy, as they should be.
A youtube.com video is no match for the emotional experience of a live concert performance where the orchestra, the audience—and the music—become as one, as all in attendance are swept away in the emotion of the moment. The link is here.
In many ways it’s emotionally similar to the Jean Sibelius composition “Finlandia“—as it’s chock full of proud nationalism through and through—as is the choral version of Tchaikovsky’s “Overture: 1812“. The links are live, if you want to have a listen.
So here we sit at the beginning of 2016—and no one has a clue to how the new year will turn out for the precious metal complex. Of course the Commitment of Traders Report shows both gold and silver at wildly bullish extremes but, as is always the case, it all depends on what the big Commercial Traders do as the inevitable rallies progress. Will they go short and cap these rallies again—or not?
As Ted has been saying for years—and I’ve been happy to echo—NOTHING ELSE MATTERS!!!
And I do draw some comfort from the fact that large swaths of the so-called precious metal ‘analysts’ out there are now beginning to grasp this fact—and at an ever-increasing rate.
Here are the 6-month price charts [courtesy of stockcharts.com] for the Big 6+1 commodities, complete with the respective 20 and 50-day moving averages, which now includes the last trading day of 2015.
I’ve suspected for some time that the precious metals, along with the rest of the commodities complex, may become poker chips in an even bigger game—the New Great Game. It’s a card that Russia and China can play against the West at any time of their choosing, as they’ve been wise to this price management scheme for at least a decade now.
As Pepe Escobar, David Stockman, Paul Craig Roberts and others have been screaming at the top of their lungs about for years now, the U.S. government has mutated into some grotesque and even more malevolent form of J.R. Tolkien’s Necromancer—“Sauron“.
I’m sure that even the foresighted President Dwight Eisenhower could never have envisioned how twisted and evil the “military/industrial complex” he warned us about, would become. They and their sycophants are now a pariah over the entire planet.
Ever since Britain had the reins of world power taken from them by the U.S. after the end of WWI—the “war to end all wars” that my grandfather fought in, in Belgium and France—they have dominated the world in one form or another ever since—and Bretton Woods gave them even more control.
With Reagan’s “Star Wars” economic policy, in which the U.S.S.R. could not compete because of CIA rigged oil and gold prices, the Berlin Wall fell—and the Soviet Union followed it soon after. The U.S. had the opportunity at that juncture to dissolve NATO and disarm, having ‘won’ the Cold War. But they and their sycophants did not—and are now hell-bent on taking over the world themselves. An ascendant China was not part of the Wolfowitz Doctrine—and neither was a joining of hands between a newly-recovered Russia—and China, both of whom could see what was coming if they, and what was left of their allies, didn’t stand up to them.
Iran, Yugoslavia, Iraq, Libya, Somalia, the South China Sea etc.—and now the Ukraine and Syria—have become pawns in this New Great Game for total world domination. The U.S. strong dollar policy, along with their price control of the Big 6 commodities, is determining the fate of the Emerging Market nations, plus all commodity producing countries on Planet Earth. It’s Imperialism via the U.S. dollar, Wall Street, the COMEX futures market—and now the IMF and World Bank, both of which are also controlled by the U.S.
Gold—along with its junior partner, silver—are the closely-guarded secret weapons of the financial universe—and the Achilles heel of the Western financial system in general—their Central Banks in particular, especially the New York Fed—secrets guarded more closely, as GATA’s Chris Powell says, than those of the nuclear weapons industry.
So, along with Ted, I watch what’s going on in the COMEX futures market with great interest and anticipation, but I also view it with the template of “all of the above” placed over it. As much as JPMorgan et al are making oodles of money off the hapless “Managed Money” traders, which may or may not be as hapless as they seem, I’m very much aware that JPMorgan, Citigroup, HSBC USA—and Canada’s Scotiabank are at Ground Zero of U.S. financial and monetary Imperialism. And when that imperialism ends, either by choice or by circumstance, we will all have our moment in the sun.
But if you’ve been reading my column carefully enough over the years, your biggest hope should be that what’s left of the world will be a fit place to live in when the powers-that-be, both at home and abroad, are done with us.
So we should be careful what we wish for.
Happy New Year.
Ed
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