28 January 2016 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price chopped more or less sideways until about 3 p.m. Hong Kong time on their Wednesday afternoon. At that point it developed a slight negative bias—and by 2 p.m. EST it was down five bucks or so. There was a $10+ jump on the Fed news—and it got sold off a couple of dollars after that, before trading sideways for the rest of the day.
The low and high tick were reported by the CME Group as $1,114.90 and $1,128.00 in the February contract.
The gold price closed in New York yesterday at $1,124.70 spot, up an even 5 dollars from Tuesday’s close. Gross volume was over the moon at 309,860 contracts, but it all netted out to just over 29,000 contracts. Ted says that the net volume was actually higher than that because of the price rally, but the data got lost in the roll-over volume yesterday, as it was probably all in the new front month, which is April.
Here’s the 5-minute gold chart courtesy of Brad Robertson once again—and as you can see, net volume was very quiet, except for the [short covering?] rally on the Fed news, which is 12:00 p.m. Denver time on the chart below. About ninety minutes after that, volume had dropped off to almost nothing. The vertical gray line is midnight in New York—add two hours for EST—and the ‘click to enlarge’ feature still isn’t working.
The silver price action on Wednesday was somewhat similar to gold’s, except choppier—and the sell-off after the 2 p.m. EST spike took silver back into negative territory by a few pennies.
The low and high ticks are barely worth my effort to look—and the CME recorded them as $14.36 and $14.585 in the March contract.
Silver finished the Wednesday session at $14.48 spot, down 1.5 cents from Tuesday’s close. Net volume was a bit over 32,000 contracts, which is about average. About thirteen percent of gross volume was roll-over activity out of March and into the four remaining delivery months of 2016. There’s been a lot of that activity so far this month—and I’m not sure what to make of it, or if anything should.
Platinum’s price path was a mini version of gold’s—complete with a tiny tick up at 2 p.m. EST. Platinum finished the day at $880 spot, up 7 dollars.
Once again the palladium price chopped around a dollar or so either side of unchanged until the London p.m. gold fix was done—and then it tried to rally through the $500 spot price. But, once again, a willing seller appeared—and it was for naught. Palladium closed in New York yesterday at $497 spot, up 7 bucks from Tuesday’s close.
The dollar index closed late on Tuesday afternoon in New York at 99.01—and when it opened in Far East trading on their Wednesday, it continued lower from its Tuesday high tick that came just before noon in London trading. It fell off the proverbial cliff just after 11:30 a.m. in London trading on their Wednesday morning—and at the 98.69 low tick at the COMEX open, ‘gentle hands’ rescued it. By the 10 a.m. EST London p.m. gold fix, the index had rallied by 40+ basis points, but began to chop lower after 2 p.m.—and finished the Wednesday trading session at 98.92—down 9 basis points from Tuesday’s close.
Not that I want to put too fine a point on this, but the dollar index looks all set to crash if it were allowed to.
And here’s the 6-month U.S. dollar index chart–and we’ve had three down days in a row, but it’s far too soon to read anything into that, but it certainly bears watching—as do a lot of things going on out there at the moment.
The gold stock opened down, but rallied into positive territory in short order, but struggled until shortly before the 2 p.m. Fed news. At that point, a rally of some substance developed—and the gold stocks rallied into the close, as the HUI finished the day up 2.64 percent.
The silver equities opened on the weaker side as well, but rallied into positive territory to stay shortly before 10:30 a.m. in New York trading—and by 11:45 a.m. they were at their highs. They chopped sideways for the remainder of the Wednesday session—and Nick Laird’s Intraday Silver Sentiment Index closed up 2.78 percent.
The CME Daily Delivery Report showed that 5 gold and 16 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. All of the silver contracts were issued by JPMorgan out of its own in-house trading 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 fell by 148 contracts, leaving 5 left. But 4 of those contracts were obviously added at the last minute yesterday. Those five contracts in total are out for delivery on Friday. There were still 23 silver contracts open for delivery—and that number was unchanged for the second day in a row. With 16 out for delivery, there are still 7 contracts left, so they’ll have to be dealt with by this time tomorrow.
There were no reported changes in GLD yesterday—and as of 8:38 p.m. EST yesterday evening, there were no reported changes in SLV, either.
There was another sales report from the U.S. Mint yesterday. They reported selling 12,000 troy ounces of gold eagles—2,500 one-ounce 24K gold buffaloes—and 199,500 silver eagles.
Month-to-date the mint has sold 124,000 troy ounces of gold eagles—32,500 one-ounce 24K gold buffaloes—and 5,926,500 silver eagles.
It was Ted’s opinion that the mint was probably producing gold eagles at their maximum monthly rate—and that JPMorgan was taking just about everything that the mint wasn’t selling to the retail public, but just short of putting the mint on rationing for gold eagles. It’s a given that it’s the same situation in silver eagles—and it will be interesting to see if we get another sales report this week that will put silver eagle sales over the 6 million mark.
There wasn’t a lot of activity in gold over a the COMEX-approved depositories on Tuesday. 6,751.500 troy ounces were reported received—and 4,822.500 troy ounces were shipped out. That equates to precisely 210 kilobars shipped in—and 150 kilobars shipped out. All of the activity was at Canada’s Scotiabank—and the link to that is here.
It was much busier in silver, as 592,633 troy ounces were received—and 133,181 troy ounces were shipped out the door for parts unknown. Once again, none of the activity involved JPMorgan. The link to that activity is here.
After two days of no activity over at the COMEX-approved gold kilobar depositories in Hong Kong, they had a very big in/out day on Tuesday, as a whopping 24,483 kilobars were reported received—and 17,453 kilobars were shipped out the door. That’s certainly the biggest 1-day in/out activity they’ve had since these warehouses were COMEX certified last March. And, with the exception of 48 kilobars received over at Loomis International, all of the activity was at Brink’s, Inc. once again. The link to that, in troy ounces, is here.
I don’t have all that many stories for you today—and that makes your editing job so much easier.
CRITICAL READS
Fed signals diminished appetite to lift interest rates
The Federal Reserve on Wednesday expressed less eagerness to hike interest rates, as the central bank showed concern over both the economy and the faltering stock market.
In a dovish statement after a two-day meeting, Fed officials said inflation is expected to remain “low in the near term” and the economy has “slowed.”
Confidence that inflation would move up to the central bank’s 2% target was a central condition the Fed had set out for more rate hikes
As expected, officials kept the Fed funds target range unchanged at between 0.25% and 0.5%. In December, the Fed increased its benchmark interest rate for the first time in nine years and signaled it planned to raise it by one percentage point in 2016.
This marketwatch.com story appeared on their website at 4:19 p.m. EST yesterday afternoon—and today’s first news item is courtesy of Scott Linn.
Earnings take a dark turn as profit warnings, sales misses mount
Earnings season took a dark turn on Wednesday, when the majority of companies reporting numbers for the December quarter missed on sales and lowered their outlook for the rest of the year.
Coming after Apple Inc.’s revenue miss from late Tuesday, the news was a grim reminder that corporate America is struggling to generate growth after years in which massive sums were spent on share buybacks instead of investing for growth.
This weakness in overall corporate earnings growth could bode badly for the broader stock market, as it represents the actual impact of geopolitical concerns, the slowdown in China, the weakness in oil prices and productivity, said Karyn Cavanaugh, senior market strategiest at Voya Investment Management.
“Earnings discount all the noise,” said Cavanaugh said. “It’s the best unbiased view of what’s going on in the global economy.”
This is another news item from the marketwatch.com Internet site yesterday. This one was posted there at 12:59 p.m. EST—and it’s also courtesy of Scott Linn.
Another Corporate Giant is Leaving the U.S. – What This Means for You
Try getting in shape for a marathon on an all-McDonald’s diet…
You wouldn’t be surprised to come in dead last. After all, you didn’t put in much effort. Actually, you went out of your way to make yourself less competitive. So you would expect to lose.
It’s just common sense.
But this is exactly what U.S. politicians have been doing for years: passing tax laws that sabotage the country’s global economic competitiveness.
This worthwhile read put in an appearance on the internationalman.com Internet site yesterday.
Ka-boom Goes the Bottom of the U.S. Bond Market
The toxic pile of distressed corporate debt in the US grew to $285 billion in January, up 22% from a month ago and up 162% from a year ago, according to S&P Capital IQ. The number of distressed issuers ballooned to 324 US corporations, up 20% from a month ago and up 84% from a year ago.
The last time the total amounts of distressed debt and the number of distressed issuers had shot up to these levels was in October 2008, just after Lehman Brothers had filed for bankruptcy.
That’s how bad it is now in the US. It’s the essential consequence of years of artificially easy credit, the Fed-inspired blind confidence of yield-desperate investors, ludicrous corporate risk-taking to take advantage of those blind investors, private-equity asset stripping and buyouts, and among other things, the collapse of commodity prices that resulted from overproduction.
During the Financial Crisis, the total amount of distressed US corporate debt maxed out at $398 billion in December 2008 and then began to drop as the Fed was dousing the land with QE and started manually bailing out corporations and banks with emergency loans. Today, there are no bailouts in sight, and no one is talking about an emergency. So the distressed debt of $285 billion today is just the beginning.
This very worthwhile read showed up on the wolfstreet.com Internet site yesterday sometime—and I thank Roy Stephens for his first contribution to today’s column.
Five of Six Brokers in Libor Trial Are Acquitted by London Jury
Five ex-brokers accused of helping convicted trader Tom Hayes rig Libor were acquitted Wednesday by a London jury, in a setback to U.K. fraud prosecutors.
Noel Cryan, 50, who worked at Tullett Prebon Plc in London, Colin Goodman, 54, and Danny Wilkinson, 49, formerly of ICAP Plc, and RP Martin Holdings Ltd.’s Terry Farr, 44, and James Gilmour, 50, were found not guilty and released. The jury couldn’t reach a unanimous verdict on a sixth man, ICAP’s Darrell Read, 50, and was sent home to come back Thursday to discuss the remaining charge. After a four-month trial, the jury took about a day to find the others not guilty.
The verdicts will be seen as a blow to the Serious Fraud Office, which appeared to have turned its fortunes around in the last 12 months. A dozen banks have been fined about $9 billion by global authorities over the last four years in relation to the manipulation of Libor, the benchmark interest rate used in trillions of dollars of derivatives and loans. More than 30 individuals have been charged, and Hayes was convicted last year.
“It’s always been a surprise and disappointment that these people were seen as front and center when they weren’t even bankers,” Matthew Frankland, a lawyer for Wilkinson, said by phone. “If what the SFO says is true, it’s rather shocking that more senior people aren’t being prosecuted.”
This Bloomberg article was posted on their website at 8:11 a.m. MST on Wednesday morning—and it’s something I found on the gata.org Internet site.
Sweden to expel up to 80,000 rejected asylum seekers
Sweden intends to expel up to 80,000 asylum seekers who arrived in 2015 and whose applications had been rejected, interior minister Anders Ygeman said on Wednesday.
“We are talking about 60,000 people but the number could climb to 80,000,” the minister was quoted as saying by Swedish media, adding that the government had asked the police and authorities in charge of migrants to organise their expulsion.
Ygeman said the expulsions, normally carried out using commercial flights, would have to be done using specially chartered aircraft, given the large numbers, staggered over several years.
The proposed measure was announced as Europe struggles to deal with a crisis that has seen tens of thousands of refugees arrive on Greek beaches, with the passengers – mostly fleeing conflict in Syria, Iraq and Afghanistan – undeterred by cold, wintry conditions.
This story appeared on theguardian.com Internet site at 12:43 a.m. GMT on their Thursday morning in London, which was 7:43 p.m. in Washington on Wednesday evening—EDT plus 5 hours. It’s the second contribution of the day from Roy Stephens.
E.U. migration crisis: Stop illegal wars, don’t blame the victims
Europe is on a dangerous, slippery slope of increasing xenophobia and racism engendered by the influx of refugees. Denmark’s new confiscation law is a sign of the brooding, baleful climate.
But the real answer to the problem is dealing with Europe’s support for Washington’s criminal wars. In other words, citizens of Europe should be addressing the root cause of the problem, not reacting to the symptoms. We should be shaming the villains, not blaming the victims.
We should be demanding legal sanctions and prosecution of government leaders over what are gross violations of international law.
European governments stand accused of war crimes, yet we allow them to get away with mass murder. Then when we incur secondary problems such as the massive displacement of refugees from wars and conflicts – that our governments have fomented – we illogically and cravenly focus on blaming the victims of our governments’ criminality.
This op-edge piece by columnist Finian Cunningham was posted on the Russia Today website at 3:27 p.m. Moscow time on their Wednesday afternoon, which was 7:27 a.m. in Washington—EDT plus 8 hours. It’s worth reading.
Italy, E.U. strike deal to help banks deal with bad loans
The Italian government outlined a deal it struck with the European Commission to help Italian banks manage their portfolios of bad loans, but doubts about its effectiveness pushed shares in some lenders sharply lower.
Under the agreement, the government will help banks to bundle bad loans into bonds by selling guarantees to lenders that will make some portions of the bad debt less risky. The bonds could be sold or used as collateral for loans from the European Central Bank.
The guarantee would enable the banks to sell the debt at higher prices than they otherwise could get, reducing the losses they would record on the sales. Much of the debt is valued at higher prices on the banks’ books than the market has been willing to pay.
But analysts warned that the plan — which is less aggressive than setting up a so-called bad bank to deal with the loans, as countries such as Spain did during the financial crisis — will only partially address the problem.
This news item showed up on the marketwatch.com website at 7:08 p.m. EST yesterday evening—and it’s the third and final contribution of the day from Scott Linn, for which I thank him.
Red Ponzi Ticking — David Stockman
There is something rotten in the state of Denmark. And we are not talking just about the hapless socialist utopia on the Jutland Peninsula——even if it does strip assets from homeless refugees, charge savers 75 basis points for the deposit privilege and allocate nearly 60% of its GDP to the Welfare State and its untoward ministrations.
In fact, the rot is planetary. There is unaccountable, implausible, whacko-world stuff going on everywhere, but the frightful part is that most of it goes unremarked or is viewed as par for the course by the mainstream narrative.
The topic at hand is the looming implosion of China’s Red Ponzi; and, more specifically, the preposterous Wall Street/Washington assumption that it’s just another really big economy that overdid the “growth” thing and is now looking to Beijing’s firm hand to effect a smooth transition. That is, an orderly migration from a manufacturing, export and fixed investment boom-land to a pleasant new regime of shopping, motoring, and mass consumption.
Would that it could. But China is not a $10 trillion growth miracle with transition challenges; it is a quasi-totalitarian nation gone mad digging, building, borrowing, spending and speculating in a magnitude that has no historical parallel.
So doing, It has fashioned itself into an incendiary volcano of unpayable debt and wasteful, crazy-ass over-investment in everything. It cannot be slowed, stabilized or transitioned by edicts and new plans from the comrades in Beijing. It is the greatest economic train wreck in human history barreling toward a bridgeless chasm.
Well, dear reader, one of these days David Stockman will tell us what he really thinks! This longish commentary appeared on his Internet site yesterday—and it’s courtesy of Roy Stephens. It’s an absolute must read.
Hysteria over China has become ridiculous — Ambrose Evans-Pritchard
Hysteria over China has reached the point of collective madness.
Forecaster Nouriel Roubini said in Davos that markets have swung from fawning adulation of the Chinese policy elites to near revulsion within a space of 12 months, and they have done so based on scant knowledge and a string of misunderstandings.
The Chinese themselves are being swept up by the swirling emotions. State media has accused hedge fund veteran George Soros in front page editorials of attempting to smash China’s currency regime by “reckless speculation and vicious shorting”.
“Soros’s war on the renminbi cannot possibly succeed – about this there can be no doubt,” warned the People’s Daily.
This longish commentary by Ambrose appeared on the telegraph.co.uk Internet site at 9:00 p.m. GMT yesterday evening, which was 4:00 p.m. in New York. It will be interesting to see whose taken on China is correct—Stockman or A E-S. If you read the Stockman piece, it might be a good idea to read this article as well. It’s the final offering of the day from Roy Stephens, for which I thank him.
Inquiry in China Adds to Doubt Over Reliability of Its Economic Data
The veracity of China’s economic data has been increasingly questioned as the slowing pace of the country’s growth has startled the world. And a new investigation into the official who oversees the numbers is unlikely to inspire confidence.
The Communist Party’s anti-corruption commission announced late Tuesday that it was looking into the head of the country’s statistics agency over what it called “serious violations.”
It is unclear whether the investigation into the agency’s head, Wang Baoan, who became the director of the National Bureau of Statistics of China last April, is related to his current role or to his previous one as vice minister of finance. The commission did not release any further details about the inquiry.
China’s shrinking manufacturing sector and falling stock market have unnerved global investors. Any further doubt about its economic figures could paint an even darker picture of the health of the economy, adding to the pain in the markets. Stocks in Shanghai, which closed before the announcement, were off 6.4 percent on Tuesday.
This article appeared on The New York Times website on Tuesday—and it’s a story I found in yesterday’s edition of the King Report.
Update on Bundesbank Gold Repatriation 2015
Deutsche Bundesbank has just released a progress report on its gold bar repatriation programme for 2015 – “Frankfurt becomes Bundesbank’s largest gold storage location“.
During the calendar year to December 2015, the Bundesbank claims to have transported 210 tonnes of gold back to Frankfurt, moving circa 110 tonnes from Paris to Frankfurt, and just under 100 tonnes from New York to Frankfurt.
As a reminder, the Bundesbank is engaged in an unusual multi-year repatriation programme to transport 300 tonnes of gold back to Frankfurt from the vaults of the Federal Reserve Bank of New York (FRBNY), and simultaneously to bring 374 tonnes of gold back to Frankfurt from the vaults of the Banque de France in Paris. This programme began in 2013 and is scheduled to complete by 2020. I use the word ‘unusual’ because the Bundesbank could technically transport all 674 tonnes of this gold back to Frankfurt in a few weeks or less if it really wanted to, so there are undoubtedly some unpublished limitations as to why the German central bank has not yet done so.
This long commentary by Ronan Manly put in an appearance on the bullionstar.com Internet site on Wednesday sometime—and the first person through the door with it was Richard Saler.
OMG: Scotiabank sought China gold demand presentation by Koos Jansen
Gold researcher and GATA consultant Koos Jansen reports that he made a presentation about Chinese gold demand to a Scotiabank commodities conference in Toronto this month, and he goes on to detail what he told the conference, apparently without realizing how extraordinary it was in the first place that the bullion bank would want to hear from someone so politically incorrect.
Of course Jansen is the foremost authority on the Chinese gold market. But he has repeatedly shown how the establishment’s respectable analysts of that market have been mistaken and even have been providing disinformation. Has Jansen’s evidence become so overwhelming as to make him respectable too?
What’s next — an invitation to GATA Chairman Bill Murphy to address traders at JPMorganChase and the Federal Reserve Bank of New York about gold market manipulation?
Scotiabank’s invitation to Jansen may not herald the End of Days but maybe it is a hint about the end of the current round of government-sponsored gold price suppression and the start of another round at a higher and more sustainable level.
Jansen’s report, headlined “Presentation by Koos Jansen at Scotiabank,”was posted on the bullionstar.com Internet site yesterday—and I thank Chris Powell for providing ‘all of the above’ as an introduction in his GATA release from yesterday.
Mint gold sales in Austria up 45 percent year-on-year in 2015
Gold demand in Austria has seen a strong increase in 2015, with Austrian Mint sales of 1.32 million ounces, a 45 percent increase over the previous year.
CEO Gerhard Starsich told Die Presse newspaper in an interview that while the 910,000 ounces sold in 2014 represented the lowest amount since the financial crisis, the 2015 sales were the fifth-highest in its history.
Sales in the months of July and December were particularly high. The mint sold over 200,000 ounces of the precious metal in both months.
Its Vienna Philharmonic one ounce coins were most in demand for the year, with sales increasing by 60 percent over 2014.
This gold-related news item showed up on the globaltimes.cn website on Wednesday morning in Beijing. I found it on the Sharps Pixley website.
The PHOTOS and the FUNNIES
The WRAP
There was one thing I learned from the movie [The Big Short] that I hadn’t realized before, that also bears a striking similarity to a major development in silver. Towards the movie’s climax, the hedge fund mortgage shorts suffered intense financial pressure and margin calls due to the value of the swaps they were short, rising in value instead of falling, despite an onslaught of negative news that should have resulted in lower values and profits to the “good guy” speculators. If there was a touch-and-go dramatic stress point in the movie, that was it.
As it turned out, the price of the securities in question rose instead of fell because the banks had discovered the folly of being on the wrong side of the transactions in question—and manipulated prices higher temporarily so that they could also load up on the short side. Once the banks were fully positioned on the short side, the price of the securities was allowed to plummet, rewarding both the good and bad short speculators; a happy ending for all, except the millions of innocent and not-so-innocent housing victims.
The analogy in silver should be clear. After manipulating silver prices to the downside for years, JPMorgan also came to discover the merits of silver as an investment and used its ability to manipulate prices to accumulate the largest privately owned stockpile of metal in history. The Big Silver Short, just like in the movie, saw the error of its way and flipped to buying as much as it could. Don’t you love happy endings? — Silver analyst Ted Butler: 27 January 2016
With Wednesday being the last day for the big traders to exit the February delivery month, not much should be read into yesterday’s price action in any of the precious metals.
There wasn’t much reaction in the gold price to what Yellen had to say—and it remains to be seen how events unfold going forward—and I doubt that Japan’s central bank meeting today and tomorrow will result in anything of earthshaking importance, either.
I was happy to see that the precious metal equities turn in a decent performance yesterday—and one can only hope that this will continue as time goes on, as the precious metals are the only game left in town now.
Here are the 6-month charts for the Big 6+1 commodities, complete with their respective 50 and 200-day moving averages.
And as I type this paragraph, the London open is just minutes away—and I note that the gold price is now down 7 bucks the ounce, silver is down 8 cents, platinum is down a couple of dollars—and palladium is unchanged. Nothing much should be read into this price activity.
Net gold volume is just under 17,000 contracts—and almost all of that is in the new front month, which is April. Net silver volume is 4,100 contracts, with very little roll-over activity. The dollar index has been crawling quietly higher in Far East trading on their Thursday—and is back above the 99.00 level, albeit barely. It’s up 12 basis points as London opens.
Unless they’re standing for delivery tomorrow, today is the last day for the remainder of COMEX traders to roll or sell their February contacts—and I’ll be more than interested in the First Day Notice numbers when they’re posted on the CME’s website this evening.
I continue to watch the world’s economic, financial and monetary system unravel. It is like I said from the podium at the Vancouver Resource Conference on Sunday—“All the King’s horses—and all the King’s men—aren’t going to put this back together again.” And as Marc Faber said in his CNBC interview posted in yesterday’s column—“I won’t live long enough to see another bull market in equities.” That goes for all of us, as the greatest financial high-wire act in history comes crashing to earth.
And as I post today’s column on the website at 4:05 a.m. EST, I see that the gold price has leveled off a bit—and is currently down 5 dollars an ounce. Silver is only down a nickel at present. Both platinum and palladium have rallied. Platinum is up 2 bucks—and palladium is above the $500 spot mark at the moment—and up 5 dollars. Let’s see if that lasts the New York trading session.
Net gold volume is something over 22,000 contracts, all of which is in the new front months, April and June. Net HFT silver volume is around 4,800 contracts, with no roll-over activity worthy of the name. The dollar index, which was up 12 basis points at the London open, has rolled over—and is now down 1 basis point on the day—and back below the 99.00 level once again.
With February going off the board at the close of COMEX trading this afternoon, I must admit that I have no idea how the precious metals will trade today, so nothing will surprise me when I check the charts later this morning.
I’m off to bed—and I’ll see you here tomorrow.
Ed
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