2016-01-12

12 January 2016 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

The gold price spiked up a few dollars at the open of trading in New York on Sunday evening.  It’s high tick of the day came about an hour later—and it began to chop lower from there, sliding through the $1,100 spot price mark for the final time just shortly before noon in New York.  It finished the trading session in New York almost on its low of the day.

The high and low ticks were recorded by the CME Group as $1,108.30 and $1,093.10 in the February contract.

Gold finished the Monday session at $1,094.20 spot, down $10.40 from Friday’s close.  Net volume was decent at 131,500 contracts, with 30,000+ of that amount coming before the London open.  Roll over activity was pretty heavy as well, as the February delivery month is now approaching.

Here’s the 5-minute tick chart courtesy of Brad Robertson once again.  There was a decent amount of volume during the London trading session, starting long before New York opened.  Most of the big volume was in COMEX trading as per usual—and volume died away to next to nothing shortly after the COMEX close, which is 11:30 a.m. Denver time on this chart.  The vertical gray line is midnight in New York—add hours for EST—and I don’t think that the folks at the wordpress.com Internet site have fixed the ‘click to enlarge‘ feature as of yet.

The silver price also spiked up a bit at the open on Sunday evening—and the high tick in that metal came about two hours later.  After that, it traded a nickel or so either side of the $14 per ounce mark—and it slid below the $14 spot price to stay around 10:20 a.m. in New York.  Then minutes before 1 p.m. EST, a not-for-profit seller appeared—and by 2 p.m. it had the silver price below the $13.85 spot mark—and it traded flat for the rest of the Monday session.

The high and low tick in this precious metal was reported as $14.075 and $13.825 in the March contract.

Silver was closed in New York yesterday at $13.85 spot, down 7.5 cents from Friday’s close.  Net volume was pretty decent as well at a hair over 33,000 contracts—and there was a fair amount of roll-over activity in that precious metal as well.

Platinum got sold off about 8 or 9 dollars an ounce in the early going in Far East trading on their Monday morning—and then didn’t do much until shortly before 2 p.m Zurich time.  Then the HFT boyz and their algorithms put in an appearance—and the $842 low tick came at 1 p.m. in COMEX trading in New York.  It traded flat from there into the close.  Platinum finished the Monday session in New York at $842 spot, down a whopping 35 dollars from its Friday close.

“Da boyz” put the boots to palladium again as well.  At one point it was down $21 bucks an ounce, but closed down ‘only’ $15 bucks the ounce at $476 spot.

With the exception of gold, the other three precious metals are now back below their respective 20-day moving averages—and in some cases, well below that mark.

The dollar index closed late on Friday afternoon in New York at 98.46.  It opened at noon on Sunday in New York—and dipped as low as 98.07 around 5 p.m. EST, before ‘gentle hands’ appeared—and it chopped higher for the rest of Sunday and Monday in all markets, closing in New York yesterday afternoon at  98.82—up 36 basis points from Friday’s close.  Here’s the 3-day chart.

And here’s the 6-month U.S. dollar chart so you can keep an eye on the “best house in a bad neighbourhood” as John Hathaway said in commentary that will be posted on the tocqueville.com website sometime today.

The gold stocks opened in positive territory—and began to sell off immediately.  Their low ticks came at 1:29 p.m. EST yesterday afternoon, which was one minute before the COMEX close. They struggled higher from there for the remainder of the Monday session, but the HUI still got smoked to the tune of 4.00 percent.

And as bad as it was in the gold stocks, the silver stock got hammered even worse—and they followed an identical price to their golden brethren.  Nick Laird’s Intraday Silver Sentiment Index closed down a very chunky 5.01 percent.

All of the HUI’s gains for 2016 have vanished—and I’d estimate that Nick’s Silver Sentiment Index is down 6 percent year-to-date already.

The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

The CME Preliminary Report for the Monday trading session showed that January gold open interested dropped by 4 contracts, leaving 253 still left—and in silver, January o.i. was up 1 contract to 82 still open.

There was another deposit in GLD yesterday, as an authorized participant added 66,961 troy ounces.  A hair under 300,000 troy ounces of gold has been added to GLD so far this year.  As of 6:54 p.m. EST yesterday evening, there were no reported changes in SLV.  Since the year began, there has been 1,429,047 troy ounces of silver withdrawn from SLV.

The U.S. Mint posted their first sales numbers for the 2016 calendar year yesterday.  They sold 60,000 troy ounces of gold eagles—21,000 troy ounces of 24K gold buffaloes—and 2,756,500 silver eagles.  I expect much more to come as the month goes along.  There’s a Zero Hedge story about this in the Critical Reads section—and if you just can’t wait, the link is here.

There was no gold deposited over at the COMEX-approved depositories on Friday, but 16,075.000 troy ounces were shipped out the door.  That works out to be exactly 500 kilobars of the stuff—and all the activity was at Canada’s Scotiabank.  The link to that is here.

It was a huge day in silver, as 1,660,823 troy ounces were reported received—and 438,850 troy ounces were shipped out the door for parts unknown.  JPMorgan wasn’t involved in any of the activity, either in or out.

But those weren’t the only things going on with the silver depositories yesterday.  There were two new depositories added.  The first was the “International Depository Services of Delaware“—and I would suspect that this is a sub-vaulting service of the current Delaware depository.  I didn’t have the chance to talk to Ted about this yesterday, so if there are any changes, I’ll let you know as soon as I know.  They show 274,584 troy ounces in their care.

The other ‘happening’ was a totally new depository—at least to the U.S.A.  This one is the “Malca-Amit USA, LLC” depository.  They have a COMEX-approved gold kilobar depository in Hong Kong as well, but have only 1,148 kilobars in it.  It remains to be seen how active their U.S. vault is for silver.  Right now it shows zero ounces.

The link to all that silver activity/action is here—and it’s certainly worth a look if you have the interest.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, it was another pretty quiet day.  They received 2,183 kilobars—and shipped out 417 of them.  All of that activity was at the Brink’s, Inc. depository as usual—and the link to that, in troy ounces, is here.

I have a very decent number of stories for a weekday column—and I’ll happily leave the final edit up to you.

CRITICAL READS

RBS [Royal Bank of Scotland] cries ‘sell everything’ as deflationary crisis nears

RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.

The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note.

Andrew Roberts, the bank’s credit chief, said that global trade and loans are contracting, a nasty cocktail for corporate balance sheets and equity earnings. This is particularly ominous given that global debt ratios have reached record highs.

“China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the ‘Goldilocks love-in’ of the last two years,” he said.

This must read commentary put in an appearance on the telegraph.co.uk Internet site at 7:54 p.m. GMT yesterday evening, which was 2:54 p.m. in New York—EST plus 5 hours.  I thank reader U.D. for passing this one around.

Worried about U.S. recession? It’s already here: Pro

China’s market turmoil and an extended downturn in oil wreaked havoc on stocks this week, with the S&P 500 Index and the Dow Jones Industrial Average off to their worst start of a year.

The sell-off has some questioning the strength of the U.S. economy, but few think the world’s largest growth center is at risk for a contraction. However, one widely regarded investor says there’s little debate: the U.S. is likely already in a recession—and he claims to have hard numbers to bolster his case.

Looking at International Monetary Fund data, “the year-over-year change in global exports is at the second lowest level since 1958,” Raoul Pal, Publisher of the Global Macro Investor told CNBC‘s “Fast Money“ this week.

Basically, it means economies around the world are shipping their goods at near historically low levels. “Something massive is going on in the global economy and people are missing it,” Pal added.

This worthwhile article was posted on the msn.com Internet site on Saturday sometime—and it’s worth skimming.  It’s something I found in yesterday’s edition of the King Report.

Morgan Stanley, Goldman Sachs Fall Below Tangible Book Value

Morgan Stanley and Goldman Sachs Group Inc. are trading below their tangible book value for the first time in more than two years.

The two largest equity-trading banks, which report fourth-quarter earnings this month, dropped more than 3 percent Thursday to fall below tangible book value, a measure of what the companies would theoretically be worth if liquidated. Goldman Sachs fell 0.4 percent to close at $163.94 Friday in New York, while Morgan Stanley slid an additional 2.1 percent to $28.38.

Bank stocks have plunged amid a sell-off that has erased $4 trillion from global equities this year as Chinese authorities set a higher yuan reference rate and intervened in its equities markets. The recent volatility threatens to halt the flow of mergers that boosted both firms’ investment-banking revenue in 2015 and further delay the increase in trading activity that executives have been awaiting for several years.

The price to tangible book value ratio is closely watched by bank investors and analysts. From Goldman Sachs’s initial public offering in 1999 to the 2008 financial crisis, neither firm’s ratio fell below 1, and both traded at more than twice tangible book in 2007.

This Bloomberg news item appeared on their Internet site on Friday morning Denver time—and it’s the second offering of the day from reader U.D.  I received it from him on Saturday.

Bank of America: Rail Traffic Is Saying Something Worrying About the U.S. Economy

It’s not the jobs report or the latest housing data but railway cargo that has analysts at Bank of America concerned.

Railroad cargo in the U.S. dropped the most in six years in 2015, and things aren’t looking good for the new year.

“We believe rail data may be signaling a warning for the broader economy,” the recent note from Bank of America says. “Carloads have declined more than 5 percent in each of the past 11 weeks on a year-over-year basis. While one-off volume declines occur occasionally, they are generally followed by a recovery shortly thereafter. The current period of substantial and sustained weakness, including last week’s -10.1 percent decline, has not occurred since 2009.”

BofA analysts led by Ken Hoexter look at the past 30 years to see what this type of steep decline usually means for the U.S. economy. What they found wasn’t particularly encouraging: All such drops in rail carloads preceded, or were accompanied by, an economic slowdown (Note: They excluded 1996 due to an extremely harsh winter).

This Bloomberg news item was posted on their website at 8:21 a.m. MST on Monday morning—and it’s the third offering of the day from reader U.D.

Fed hands record $117 billion in ‘earnings’ to Treasury

The Federal Reserve announced on Monday it transferred a record $117 billion in earnings to the U.S. Treasury during 2015.

The transfer is nearly 21% more than the prior record of $96.9 billion, set in 2014.

The transfer includes $97.7 billion in remittances, a side benefit of the U.S. central bank’s earnings from its massive bond-buying purchases. The Fed’s balance sheet now totals $4.5 trillion.

In addition, the Fed transferred $19.3 billion to Treasury as required by the transportation spending measure signed into law late last year. That legislation mandated that the Fed’s capital surplus not exceed $10 billion.

That works out to a whisker under a 3 percent ‘return’.  This marketwatch.com story, filed from Washington, showed up on their website at 1:55 p.m. yesterday afternoon EST—and I thank Richard Saler for this one.

Bernanke avoids exchange about the dollar’s decisive advantage

Yesterday [Thursday] the Brookings Institution in Washington, where former Federal Reserve Chairman Ben Bernanke is a “distinguished fellow in residence,” posted his essay about what sustains the U.S. dollar as the primary world reserve currency. Bernanke’s commentary was headlined “The Dollar’s International Role: An ‘Exorbitant Privilege’?”

Bernanke’s commentary offered four explanations for the dollar’s primacy as the world reserve currency: the dollar’s stable value, the liquidity of U.S. financial markets and the market for U.S. Treasury securities, the safety of dollar assets and particularly the safety of U.S. Treasury securities, and the Federal Reserve’s functioning as the lender of last resort.

But might there be another factor — specifically, largely surreptitious manipulation of markets by the U.S. government and intermediary agents?

Bernanke’s page at the Brookings Institution’s Internet site provides for the posting of reply comments, so your secretary/treasurer submitted some comments at the bottom of his essay.

The Brookings Institution’s reply mechanism captured GATA’s secretary/treasurer’s name and e-mail address and acknowledged receipt of the reply. But 24 hours later the reply has not been appended to Bernanke’s essay.

At the bottom of Bernanke’s essay the Brookings Institution says: “Comments are welcome, but because of the volume, we only post selected comments.”  As of 12:41 p.m. Eastern time today [Friday], the “volume” of posted comments is … zero.

This very interesting commentary was posted on the gata.org website on Friday—and is definitely worth your while, as it the follow-up story below.

Brookings Institution posts GATA secretary’s questions to Bernanke

After Chris Powell complained late yesterday [Friday] to the press office of the Brookings Institution, his reply was finally appended to former Federal Reserve Chairman Ben Bernanke’s Thursday essay on the causes of the U.S. dollar’s ascension as the primary world reserve currency. But as of this hour [8:10 p.m. EST Friday evening] Bernanke has not responded to the several questions your secretary/treasurer posed in that reply about surreptitious market intervention by U.S. government agencies. Bernanke’s essay is posted at the Brookings Institution’s Internet site here.

As I said in my comments on the previous story, this GATA release is worth a quick look as well.  It will be interesting to see what, if any, comments Ben comes up with.  But if there are some, I’ll make sure they show up here.

The Proof Is In: The U.S. Government is The Most Complete Criminal Organization in Human History — Paul Craig Roberts

Unique among the countries on earth, the U.S. government insists that its laws and dictates take precedence over the sovereignty of nations. Washington asserts the power of U.S. courts over foreign nationals and claims extra-territorial jurisdiction of U.S. courts over foreign activities of which Washington or American interest groups disapprove. Perhaps the worst results of Washington’s disregard for the sovereignty of countries is the power Washington has exercised over foreign nationals solely on the basis of terrorism charges devoid of any evidence.

Try to imagine a world in which every country asserted the extra-territoriality of its law. The planet would be in permanent chaos with world GDP expended in legal and military battles.

Neoconned Washington claims that as History chose America to exercise its hegemony over the world, no other law is relevant. Only Washington’s will counts. Law itself is not even needed as Washington often substitutes orders for laws as when Richard Armitage, Deputy Secretary of State (an unelected position) told the President of Pakistan to do as he is told or “we will bomb you into the stone age.”

Try to imagine the Presidents of Russia or China giving such an order to a sovereign nation.

This must read commentary appeared on Paul’s website on Saturday—and it’s courtesy of U.K. subscriber Tariq Khan.

How a freak blizzard wrecked Texas’s dairy industry

Dairy farmers in Texas and New Mexico say consumers can expect a milk shortage, after winter storm Goliath killed more than 30,000 dairy cows last week.

Goliath ripped through the Midwest and Northeast from Dec. 24 to Dec. 29, bringing snow, ice, and wind gusts as high as 80 miles per hour. Heavy winds buried the animals in snow drifts measuring up to 14 feet high, where they suffocated.

“We can’t really put into words what it’s like, other than we’re just doing everything we can to get through it,” New Mexican farmer Cliff Pirtle told KOAT7 Albuquerque. “When the meteorologists first started talking about a blizzard on the eastern plains of New Mexico, I was like, ‘No, this is a desert. That’s not going to happen.’”

But its clear the desert areas of eastern New Mexico and western Texas are not immune to dangerous winter storms.

This interesting, but tragic story was posted on The Christian Science Monitor website—and was subsequently picked up by the cnbc.com Internet site back on January 3.  I thank Brad Robertson for sending it along.

Scrap Bank of England’s powers after century of boom and bust, says think-tank

The Bank of England should abolish the Monetary Policy Committee and dump its inflation target because the regime has been responsible for creating a century of boom and bust, a think-tank has claimed.

The Adam Smith Institute (ASI), a free market think-tank, has said in a report that the central bank’s monetary interventions have made the UK more prone to banking crises, and have caused the wider economy to become less stable.

At present, the nine-strong Monetary Policy Committee (MPC) decides on U.K. monetary policy. Eamonn Butler, the ASI’s director, said this group of experts had “done a very poor job of managing our money”.

He added: “They have created artificial booms, followed by genuinely painful busts, through decades of following their unreliable discretion.”

I would suspect that this committee is the British equivalent of the FOMC—and they should both do the world a favour by resigning at once.  This news item was posted on The Telegraph‘s website at 5:00 a.m. GMT yesterday morning, which was midnight in New York.  I found it on the gata.org Internet site.

The E.U. Bail-In Directive: Dark Clouds Are Gathering/Portugal’s Rickety Banking System

After the unseemly bankruptcy of the Espirito Santo Group and the associated bank, then Portugal’s second biggest (likely a result of not praying enough, Portugal’s state-run deposit insurance fund basically ran out of money.

It turns out that Europe’s new Bank Recovery and Resolution Directive (BRRD for short) came just in time for Portugal. At the end of 2015, another Portuguese bank bit the dust, the country’s seventh largest lender by assets, Banif. Portugal’s government once again decided to bail the bank out, but with strings attached. Subordinated bondholders and shareholders were essentially wiped out, which is as it should be.

Senior bondholders and depositors were spared however, with Portugal’s overburdened taxpayers once again footing the bill.

This longish commentary by Peter Tenebrarum ended up on the Zero Hedge Internet site on Sunday evening EST—and it’s the second offering of the day from Tariq Khan.

The Hedge Fund Known as the Swiss National Bank Posts a Record $23 Billion Loss, Down 4%, On EUR, AAPL, VRX

To some it is the independent and impartial Swiss National Bank; to others it is the world’s biggest hedge fund with $584 billion in assets or about the same as the Swiss GDP, whose former chief suddenly resigned in 2012 following a family FX trading scandal.

Whatever it is, the SNB had an abysmal year: first and foremost it was its terrible bet on maintaining a EUR/CHF floor which imploded almost exactly a year ago, when the bank was forced to scrap its attempts to keep the Swiss Franc weak, in the process suffering tens of billions in losses.

Then it was its unprecedented buying spree of U.S. stocks, which in the first quarter of 2015 saw the SNB become one of the world’s biggest buyers, and holders, of AAPL. Since then the stock price entered a bear market, having tumbled to levels not seen since late 2014.

Among its other holdings, the SNB also had substantial exposure not only to the crushed US shale and energy sector, but to the recent bête noire of the U.S. pharmaceutical industry, the company everyone now loves to hate, after loving to love for years, leveraged roll-up expert, Valeant.

This very interesting news item appeared on the Zero Hedge website on Friday afternoon in New York—and it’s another offering from Brad Robertson.

Western Media Starves Truth in Syria

The Western news media are at it again – telling barefaced lies and half-truths about starving towns in Syria being liberated from sieges. Fake images of emaciated children are also being published to shore up their fraudulent narrative.

Take the image of the malnourished little girl whom the BBC and the British Independent newspaper claimed was from the Syrian town of Madaya. Turns out the girl is from south Lebanon. Her name is Marianna Mazeh. The photo published widely this week by Western media is from three years ago, yet the same media are claiming that she is one of the residents of the Syrian town of Madaya, which the Western media also say is being blockaded by the governments forces of President Bashar al-Assad.

Turns out too that Marianna’s family are infuriated that her forlorn image is being circulated for propaganda purposes. “I live in Tayr Filsey [south Lebanon], not Madaya, and I am fine,” the little girl told Al Manar news agency. She is now aged seven and apparently has made a full recovery from her earlier emaciated condition. The reason for her previous illness is not clear.

But what is clear is that Western media have been caught — once again — falsifying reality about the siege towns in Syria now being liberated.

This commentary put in an appearance on the sputniknews.com Internet site at 9:03 p.m. Moscow time on their Monday evening, which was 1:03 p.m. in Washington—EDT plus 8 hours.  I thank Patricia Caulfield for this piece.

Mohammad Javad Zarif: Saudi Arabia’s Reckless Extremism

The world will soon celebrate the implementation of the landmark agreement that resolves the unnecessary, albeit dangerous, crisis over Iran’s nuclear program. All parties hoped, and continue to believe, that the resolution of the nuclear issue would enable us to focus on the serious challenge of extremism that is ravaging our region — and the world.

President Rouhani has repeatedly declared that Iran’s top foreign policy priority is friendship with our neighbors, peace and stability in the region and global cooperation, especially in the fight against extremism. In September 2013, a month after taking office, he introduced an initiative called World Against Violence and Extremism (WAVE). It was approved by consensus by the United Nations General Assembly, giving hope for a farsighted global campaign against terrorism.

Unfortunately, some countries stand in the way of constructive engagement.

Following the signing of the interim nuclear deal in November 2013, Saudi Arabia began devoting its resources to defeating the deal, driven by fear that its contrived Iranophobia was crumbling. Today, some in Riyadh not only continue to impede normalization but are determined to drag the entire region into confrontation.

Mohammad Javad Zarif is the foreign minister of the Islamic Republic of Iran—and that certainly puts it into the must read category for any serious student of the New Great Game.  It was posted on The New York Times website on Sunday—and I thank Roy Stephens for pointing it out.

Saudis told to prop up currency amid global devaluation war fears

Saudi Arabia should use its massive foreign exchange reserves to defend the riyal amid fears the world is descending into a new phase of global currency wars, the World Bank has said.

The kingdom’s shaky currency peg with the dollar has come under record pressure this week as the price of oil has plummeted to near 12-year lows at $32-a-barrel.

With the global stock markets in turmoil, analysts fear a Saudi devaluation could spark a new wave of deflation and competitive “beggar-thy-neighbour” policies in a fragile global economy.

But the world’s largest producer of Brent crude should continue to defend its exchange rate by drawing down on its war chest of reserves, according to Franziksa Ohnsorge, lead economist at the World Bank.

If I was running the show in Saudi Arabia, I’d tell the folks over at the World Bank/U.S. Fed to take a long walk off a short pier—and do like the Swiss did, devalue without warning.  Maybe it will come to that at some point.  This news story showed up on the telegraph.co.uk Internet site on Saturday evening—and it’s the second story in today’s column that came courtesy of the Monday edition of the King Report.

Iran, India to settle outstanding crude oil dues in rupees

Ditching the dollar, Iran and India have agreed to settle all outstanding crude oil dues in rupees in preparation to future trade in their national currencies. The dollar dues — $6.5 billion equaling 55 per cent of oil payment — would be deposited in National Iranian Oil Co account with Indian banks.

Sources said work was underway to amend the agreement with Iran to allow entire crude oil payment to be made in rupees. “Finance Ministry is moving a Cabinet note on withholding tax exemption on oil payments,” they said.

Since 2013, Indian refiners have been depositing 45 per cent of their oil payments to Iran in rupees with UCO Bank and withholding the remainder after a payment route through Turkey’s Halkbank was stopped under US and European sanctions.

The payment agreement needs amendment as tax exemption is contingent on the pact notified by the Centre in January 2012 which allows only 45 percent of oil payments in rupees. Budget 2012-13 exempted Indian refiners from withholding 40 per cent tax while paying NIOC.

This news item was posted on the indianexpress.com Internet site a week ago today—and I thank Brad Robertson for this third and final offering in today’s column.

This Is the $3.5 Trillion “Neutron Bomb” That Keeps Kyle Bass Up at Night

Earlier today [Friday], CNBC invited Kyle Bass, the man who correctly predicted and profited from the subprime collapse, to discuss what he thought was the biggest threat to the global financial system.

Here is the highlight of what he said:

What I think the narrative will swing to by the end of this year if not sooner, is the real issue in China is not simply that profits have peaked. The real issue is the size of their banking system. Do you remember the reason the European countries ended up falling like dominoes during the European crisis was their banking systems became many multiples of their GDP and therefore many, many multiples of their central government revenue. In China, in dollar terms their banking system is almost $35 trillion against a GDP of $10 and their banking system has grown 400% in 8 years with non-performing loans being nonexistent. So what we are going to see next is a credit cycle, and in a credit cycle you see some losses, but if China’s banking system loses 10%, you are going to see them lose $3.5 trillion.

This long commentary was posted on the Zero Hedge website very late on Friday evening EST, which is one of the reasons that it didn’t make it into my Saturday missive, so here it is now.  I thank Brad Robertson for sharing it with us.

Glencore CDS Soar to 6-Year High After Bankruptcy of U.S. Subsidiary, Ongoing Copper Carnage

While the biggest bankruptcy story of the day is this morning’s Chapter 11 filing by Arch Coal, one which would trim $4.5 billion in debt from its balance sheet while handing over the bulk of the post-reorg company to its first-lien holders as part of the proposed debt-for-equity exchange, the reality is that the Arch default was widely anticipated by the market.

However, another far less noted and perhaps far more significant bankruptcy filing was that of Sherwin Alumina Co., a U.S. unit of commodity trading giant Glencore PLC, whose troubles have been extensively detailed on these pages. The stated reason for this far more troubling Chapter 11 was “challenging market conditions” which is one way to describe an industry in which just one remaining U.S. smelter will be left in operation after Alcoa shut down its Warrick Country smelting ops last week.

A spokesman for Glencore, which owns the entire business, said the commodities producer and trader is “supportive of the restructuring process undertaken by Sherwin and is hopeful of an outcome that will allow for the continued operation of the Sherwin facility.”

Sherwin said it will continue to operate while in bankruptcy and that Corpus Christi Alumina, another unit of Glencore, has offered to purchase almost all of Sherwin’s assets for an undisclosed sum.

This very interesting Zero Hedge article appeared on their Internet site at 2:34 p.m. EST on Monday afternoon—and I thank Richard Saler for finding it for us.

Oil and copper plunge to new depths as anxiety over China mounts

The great commodity slump has entered a new and dangerous stage, with two of the globe’s most important raw materials diving to fresh depths on growing fears of a Chinese slowdown.

Oil plunged to its lowest point since 2003 on Monday, as West Texas intermediate (WTI), the North American benchmark, declined to $31.12 (U.S.) a barrel. It has lost 15 per cent of its value in the first few days of 2016.

Copper, meanwhile, tumbled to a six-year low of $1.97 a pound. The metal, used for a wide variety of industrial and construction applications, is down more than 9 per cent in January.

Mounting anxiety over China is to blame for much of the recent havoc in commodity prices. The Asian giant’s frenetic growth propelled the world’s booming demand for raw materials over the past decade and its deceleration has already inflicted major damage on commodity prices.

This news item is one I found on theglobeandmail.com Internet site yesterday afternoon EST—and these price declines are more of the same—paper positioning on the COMEX between the Commercial traders and the Managed Money traders.  Nothing more, nothing less.

NATO overthrew Libyan dictator to prevent gold-backed African currency

The New Year’s Eve release of over 3,000 new Hillary Clinton emails from the State Department has CNN abuzz over gossipy text messages, the “who gets to ride with Hillary” selection process set up by her staff, and how a “cute” Hillary photo fared on Facebook.

But historians of the 2011 NATO war in Libya will be sure to notice a few of the truly explosive confirmations contained in the new emails: admissions of rebel war crimes, special ops trainers inside Libya from nearly the start of protests, Al Qaeda embedded in the U.S. backed opposition, Western nations jockeying for access to Libyan oil, the nefarious origins of the absurd Viagra mass rape claim, and concern over Muammar Gaddafi’s gold and silver reserves threatening European currency. …

Though the French-proposed U.N. Security Council Resolution 1973 claimed the no-fly zone implemented over Libya was to protect civilians, an April 2011 email sent to Hillary with the subject line “France’s client and Qaddafis gold” tells of less noble ambitions.

Most astounding is the lengthy section delineating the huge threat that Gaddafi’s gold and silver reserves, estimated at “143 tons of gold, and a similar amount in silver,” posed to the French franc (CFA) circulating as a prime African currency. In place of the noble sounding “Responsibility to Protect” (R2P) doctrine fed to the public, there is this “confidential” explanation of what was really driving the war:

“This gold was accumulated prior to the current rebellion and was intended to be used to establish a pan-African currency based on the Libyan golden dinar. This plan was designed to provide the Francophone African Countries with an alternative to the French franc (CFA).”

In some ways, this story is ‘yesterday’s news’, as it was suspected all along that the golden dinar was the root cause of the Libyan invasion.  But the fact that confirmation has now appeared amongst Hillary’s e-mails is quite amazing.  I had several readers send me this story on the weekend—and I panned it at the time.  That was an error on my part.  I found this version in a GATA release on Saturday.  It’s certainly worth reading.

“Unprecedented Demand” – U.S. Mint Sells Nearly as Much Gold on First Day of 2016 as All of January 2015

While Chinese residents were lining up in front of banks and currency exchange kiosks, desperate to convert as many of their Yuan into dollars as the government will permit, Americans were likewise busy exchanging their own paper currency, so greatly in demand in China, into gold and silver.

As Reuters reports, American Eagle silver coin sales jumped on Monday after the U.S. Mint said it set the first weekly allocation of 2016 at 4 million ounces, roughly four times the amount rationed in the last five months of 2015, after a surge in demand. It will not be enough.

According to the Mint, more than half of the week’s allocation of silver sold on Monday, the first day of 2016 sales, a sign that demand entering 2016 is literally off the charts.

Putting the silver demand in context, the 2.76 million ounces of silver bullion coins sold today is exactly half of the 5.53 million ounces that sold in all of January 2015.

This Zero Hedge spin on a Reuters article appeared on their Internet site at 9:35 p.m. EST last night—and I thank Richard Saler for passing it along.  It’s definitely worth reading.

The PHOTOS and the FUNNIES

The WRAP

The turnover or weekly physical movement of metal brought into or taken out from the six COMEX-approved silver warehouses remained close to the average weekly levels of past months, as just over 3 million oz were moved and total COMEX inventories increased by 0.7 million oz to 161.4 million oz.

I continue to maintain, as I have for going on 5 years, that this previously unprecedented frantic turnover in COMEX silver inventories was one of the most unusual developments I’ve run across over the past three decades. I also continue to believe that this physical silver movement reflects a tightness in the wholesale market. Finally, I continue to be amazed about how little attention the COMEX silver warehouse turnover has garnered, even though the data is available daily and is widely followed.

This [past] week I was amazed anew about a report highlighting a recent 3.5 million oz switch in COMEX silver inventories from the registered to eligible category. Such a switch, while somewhat unusual, did not involve any physical movement in any way and there was no indication of any change in ownership – all that was known was the change in category; not one ounce was physically moved. Yet the report suggested all sorts of big doings because the category switch.

What amazes me the most is that the daily report from the CME that provided the data on the category switch is the same report which has indicated that much more than 3.5 million oz of silver have been physically moved on average each week for the past nearly 5 years.  Yet the author (nor hardly any other) saw fit to reference the incredible weekly physical movement over the past 5 years and chose instead to focus on a paper work (if that) reclassification of metal that was not physically moved in any way.

Somewhere around a billion ounces of actual silver have been physically moved in and out the COMEX warehouses cumulatively over the past five years with hardly any mention, despite no similar movement occurring in the inventory of any other commodity, with virtually no mention. Yet a one-time non-movement category classification change attracts attention. What am I missing? — Silver analyst Ted Butler: 09 January 2016

It was Day 2 of the engineered price decline in both gold and silver, but those declines in platinum and palladium are already well along, as palladium is down almost 90 bucks an ounce since the first of the year—and in platinum that number is close to fifty dollars.  They never participated at all in the smallish rallies that silver and gold had up until the end of trading last Thursday.

Just eye-balling the gold and silver charts below, I’d guess that JPMorgan et al would have little trouble peeling another forty dollars off the gold price—and maybe 40 cents off the silver price.  Those kind of down-side price moves would enable ‘da boyz’ to drive the Managed Money traders fully back onto the short side with record short positions once again—if that’s their plan.

But considering how they’ve beaten platinum and palladium below their respective 20-day moving averages, I suppose anything’s possible to the downside—within reason, of course.

Outside the precious metals, the Managed Money traders were also tricked into going further onto the short side in both copper and crude oil, both of which made new multi-year lows for this move down yesterday.  Natural gas wasn’t spared, either.

Here are the 6-month charts for the Big 6+1 commodities—and these charts come complete with their respective 20 and 50-day moving averages in place.

As I type this paragraph, the London open is less than ten minutes away—and I see that gold rose and fell a couple of dollars during the Far East trading session on their Thursday—and is back to about unchanged.  Silver got sold down a nickel to a new low for this move down, but is back at unchanged as well—at least for the moment.  The long knives are still out for platinum and palladium, as the former is down 13 dollars—and the latter has been hammered for another 26 bucks!!!  Nothing free-market about this price activity.

Net HFT gold volume is around 21,500 contracts—and in silver, that number is just under 5,500 contracts.  The dollar index, which peaked around the 98.93 mark in early trading in the Far East, is now down 21 basis points as London opens.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report—and I’m hoping that all of Tuesday’s trading data is in it.  I have no idea what to expect in the precious metals today, but it’s a near certainty that JPMorgan et al aren’t done to the downside in gold and silver just yet.  But, as always, I’d love to proven spectacularly wrong.

And as I post today’s column on the website at 4:10 a.m. EST, I note that gold is now up 3 bucks—and silver is up a couple of pennies.  Platinum and palladium are now rallying from their low ticks at the Zurich open.  Platinum is now down only 6 dollars—and palladium is ‘only’ down 15 bucks.  And I also note that WTIC is down another 54 cents a barrel.

Gold volume is just under 27,500 contracts, which is a lot—and that HFT number in silver is now up to 7,350 contracts.  The dollar index is chopping around a bit—and is down only 14 basis points at the moment.

I’ll see you here tomorrow.

Ed

The post The U.S. Mint Starts the 2016 Year With Big Sales appeared first on Ed Steer.

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