05 February 2016 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price sold off a few dollars in Far East trading on their Thursday until the low tick of the day, which came shortly before 1 p.m. Hong Kong time. The price began to edge higher from there, but really became a rally worthy of the name starting during the London lunch hour, then began to run into ‘opposition’ ten minutes after the COMEX open. Once the London p.m. gold fix was in, the price got sold down five bucks or so by 10:35 a.m. EST, but chopped quietly higher from there. But once the COMEX closed, it didn’t do much.
The low and high tick were reported as $1,139.70 and $1,157.90 in the April contract.
Gold finished the Thursday session in New York at $1,155.40 spot, up $13.00 from Wednesday. Net volume, although not as high as on Wednesday, was still pretty decent at just over 153,000 contracts.
Here’s the 5-minute tick chart courtesy of Brad Robertson. There was a bit of activity starting around 9 a.m. GMT in London, but the volume didn’t begin in earnest until the ‘real’ rally got going—and that was a bit over half-way through their lunch hour, which is about 5:45 a.m. Denver time on this chart. Shortly after the COMEX close, the volume dropped back to nothing. The vertical gray line is midnight in New York—add 2 hours for EDT—and the ‘click to enlarge’ feature still isn’t working.
The silver price had a slight negative price bias until just before 11 a.m. Hong Kong time. It chopped quietly and slowly higher until 1 p.m. GMT in London. The rally that began at that point got capped thirty minutes later—and except for a down/up price move that began immediately after the London p.m. gold fix—the price really didn’t do much for the rest of the day.
The CME Group reported the low and high ticks as $14.65 and $14.93 in the March contract.
Silver was closed in New York yesterday at $14.85 spot, up 17.5 cents on the day. Net volume was pretty healthy at just over 41,000 contracts. Roll-over activity out of March represented about fifteen percent of gross volume.
Here’s the New York Spot Silver [Bid] chart—and you can see the brutal price cap right at 8:30 a.m., which was the precise moment that ‘gentle hands’ showed up to save the dollar index—and I have more on that below. It’s also visible in the New York Spot [Bid] chart as well, but I didn’t bother posting it.
Platinum rallied about six bucks by 1 p.m. Hong Kong time—and then chopped sideways until about twenty minutes before the COMEX open. The price jumped another ten bucks during the next thirty minutes or so—and then crawled quietly higher right into the close of electronic trading, which is a trading pattern I can’t recall seeing before. Platinum closed up another 30 bucks, finishing the day at $908 spot.
On the other hand, palladium’s trading pattern was rather directionless, chopping around a few dollars either side of unchanged. That lasted until about 10:30 a.m. in New York, where it finally caught a bid of sorts, making it up to the $515 spot mark by the COMEX close. Then half of that gain disappeared by the close of electronic trading. Palladium finished the Thursday session up 4 dollars at $511 spot.
The dollar index finished the Wednesday trading session at 97.39—and it crawled up to its 97.47 high tick about 3:20 p.m. Hong Kong time on their Thursday afternoon, and about forty minutes before the London open. It began to head south with much more authority just minutes before London opened—and the 96.26 low tick came right at 8:30 a.m. in New York, when the ‘gentle hands’ showed up. That got the index back up to about 96.75 just before 11 a.m. EST, but it sank bank to the 96.50 level within an hour or so—and chopped around that value until the close. The index finished the day at 96.57—down 82 basis points from Wednesday.
And as point of interest, looking at the New York Spot [Bid] charts for both gold and silver you can see where the ‘opposition’/price capping began in both these metals—and that was at exactly 8:30 a.m. in New York. So it was the same drill as Wednesday—as ‘da boyz/PPT hit the “buy the dollar index/cap precious metal prices” button.
And here’s the 6-month U.S. dollar index—and as you can see, it has been getting it comeuppance over the last few days.
The gold stocks gapped up big, hitting their respective highs at, or just after, the afternoon gold fix. Then they stayed more or less at that level until about fifteen minutes after the COMEX close—and that stage they began to sell off very quietly. The HUI closed up 5.47 percent on the day, but was up more than 7 percent a one point.
The silver equities followed more or less the same price bath as their golden brethren, except their highs came minutes after 11 a.m. EST—and then they quietly drifted lower from there. Nick Laird’s Intraday Silver Sentiment Index closed up 3.90 percent—and well off its high.
The CME Daily Delivery Report for Day 5 of the February delivery month showed that 5 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.
The CME Preliminary Report for the Thursday trading session showed that gold open interest in February continued to contract, this time it fell by 297 contracts, leaving 2,394 still open, minus the 5 posted above. And for the second day in a row, there was an increase in silver’s February o.i. This time it rose by 18 contract—and now sits at 137 contracts.
For the fourth day in a row there was a deposit in GLD. This time an authorized participant added 114,763 troy ounces, bringing the total gold deposits up to 784,222 troy ounces so far this week. And as of 8:57 p.m. EST yesterday evening, there were no reported changes in in SLV.
Not surprisingly, there was no sales report from the U.S. Mint.
There was also no in/out gold movement at the COMEX-approved depositories on Wednesday.
The same can not be said for silver, as 594,934 troy ounces were reported received—all at HSBC USA. 591,777 troy ounces were shipped out the door—and all of that came from Canada’s Scotiabank. The link to that action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, they reported receiving 1,239 of them—and shipped out only 51. All of the activity was at Brink’s, Inc. as per usual—and the link to that, in troy ounces, is here.
I have the usual number of stories for a weekday column—and I hope you can find the time to read the ones that interest you.
CRITICAL READS
Fed’s Dudley to MNI: Tightening financial conditions a concern
Financial conditions have tightened considerably in the weeks since the U.S. Federal Reserve raised interest rates and monetary policy makers will have to take that into consideration should that phenomenon persist, a top Fed official said on Wednesday.
In addition, the weakening outlook for the global economy and any further strengthening of the dollar could have “significant consequences” for the health of the U.S. economy, William Dudley, president of the Federal Reserve Bank of New York, told MNI [Market News International] in an interview.
“One thing I think we can say with more confidence is that financial conditions are considerably tighter than they were at the time of the December meeting,” said Dudley, a permanent voter on the Federal Open Market Committee, the Fed’s monetary policy arm.
“So if those financial conditions were to remain in place by the time we get to the March meeting, we would have to take that into consideration in terms of that monetary policy decision,” he said.
This Reuters article was posted on their website at 11:31 a.m. EST on Wednesday morning. I borrowed it from yesterday’s edition of the King Report—and here’s what Bill King had to say about this story—“Dudley destroyed any vestige of Fed credibility, erudition and backbone with his flip flop.” It’s definitely worth reading. Another link to this story is HERE.
Dollar tumbles as Fed rescues China in the nick of time
The U.S. dollar has suffered one of the sharpest drops in 20 years as the Federal Reserve signals a retreat from monetary tightening, igniting a powerful rally for commodities and easing a ferocious squeeze on dollar debtors in China and emerging markets.
The closely-watched dollar index (DXY) has fallen 3pc this week to 96.44 and given up all its gains since late October. This has instant effects on the world’s inter-connected financial system, today more geared to the U.S. exchange rate and Fed policy than at any time in modern history.
David Bloom, from HSBC, said the blistering dollar rally of the past three years is largely over and may go into reverse as weak economic figures in the US force the Fed to pare back four rate rises loosely planned for this year.
A more dovish Fed and a weaker dollar is a bitter-sweet turn for the Bank of Japan and the European Central Bank as they try to push down their currencies to stave off deflation. Their task has become even harder.
This absolute must read commentary by Ambrose Evans-Pritchard put in an appearance on the telegraph.co.uk Internet site at 8:35 p.m. GMT on their Thursday evening, which was 3:35 p.m. in New York—EST plus 5 hours. I thank Patricia Caulfield for sharing it with us. Another link to the full story is HERE.
U.S. Factory Orders Slide For 14 Consecutive Months as Inventory Ratio Soars to Recession Cycle Highs
With the Services economy now catching down to Manufacturing’s demise (in its lagged – not decoupled – manner), this morning’s news that U.S. Factory Orders tumbled 2.9% in December (worse than expected and the biggest MoM drop since December 2014) offers little hope for any bounce anytime soon.
This is the 14th monthly drop in YoY factory orders – something has not happened outside of a broad U.S. economic recession. Even more concerning is the surge in inventories-to-shipments to cycle highs seen in 2000 and 2008.
Still the excuses pile up…weather…foreign not domestic…services will save us (oh wait!)
This brief 2-chart Zero Hedge piece was posted on their website at 10:05 a.m. on Thursday morning EST—and it’s something I found on the Sharps Pixley website late last night. The charts are worth a quick look. Another link to the story is HERE.
Share buyback machine remains in overdrive and experts warn it will end badly
In the midst of a gloomy earnings season, the share buyback machine has remained in overdrive, and some experts are cautioning it will all end badly.
Companies, even those that are missing profit and sales estimates and cutting outlooks, or restructuring and cutting jobs, are still announcing buybacks. Coming after a long period of intensive spending on shareholder returns, the news is bad for investors hoping to see a return to growth.
“We continue to be skeptical about how companies are deploying capital, especially when it’s tied to stock-based compensation,” said Ben Silverman, vice president of research at InsiderScore, a research firm that tracks buybacks and legal insider trading for institutional clients. “We believe buybacks can be used to mask management’s inability to grow the business and be innovative thinkers.”
William Lazonick, professor of economics at University of Massachusetts Lowell and director of the Center for Industrial Competitiveness., went a step further, suggesting that buybacks have the potential to push the U.S. into recession. He argues that companies are using them to prop up share prices at the expense of reinvesting in the business and supporting job stability and long-term growth.
This story appeared on the marketwatch.com Internet site at 2:34 p.m. EST on Thursday afternoon—and I thank Scott Linn for sending it along. Another link to the full story is HERE.
Yahoo Announces Layoffs, Sales Plans
Yahoo CEO Marissa Mayer on Tuesday discussed her plans to turn around the ailing tech giant during an earnings call, which include layoffs of up to 15 percent of its staff while she considers selling the company.
Mayer has struggled to revive the once dominant tech giant since she left Google to become Yahoo’s CEO in 2012, but the company reported a loss of $4.4 billion during its fourth quarter with revenues of $1.27 billion. Yahoo reported an overall loss of $4.35 billion during the 2015 fiscal year.
Faced with pressure to cut costs, Mayer will close Yahoo’s offices in Dubai, Mexico City, Buenos Aires , Madrid, and Milan, and media sites—and lay off approximately 1,700 employees, with the aim of lowering annual operating costs by $400 million”The changes in the employee footprint have not been easy, but are necessary to position the Company for a stronger future,” Mayer said.
This news item was posted on the usnews.com Internet site late Tuesday afternoon EST—and I thank Jerome Cherry for finding it for us. Another link to the article is HERE.
Walmart Sues Puerto Rico, Claiming an Unfair and Onerous Tax Burden
The last thing Puerto Rico would seem to need is another fight about money.
But the island’s government, already facing multiple battles over billions of dollars in debt, was in yet another courtroom on Wednesday, locked in a legal dispute with its biggest sales-tax collector and its biggest private employer — the mighty retailer Walmart.
This time the dispute is not about bond payments, but taxes: the taxes that Puerto Rico is charging Walmart for the goods it brings from its distributors off the island — including in the United States — to sell in its stores in Puerto Rico.
In May, the island raised the special tax on those goods to 6.5 percent from 2 percent for the largest retailers. Walmart filed suit in December, saying the increase left it with an effective income tax of 91.5 percent.
This article showed up on The New York Times website on Wednesday sometime—and it’s the second offering of the day from Patricia Caulfield. Another link to the full story is HERE.
Inflation-wracked Venezuela orders bank notes by the planeload
Millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived here from countries around the world in recent months to service Venezuela’s crippled economy.
But instead of food and medicine, the planes carried another resource that often runs scarce here: bills of Venezuela’s currency, the bolivar.
The shipments were part of a massive import of at least five billion bank notes that President Nicolas Maduro’s administration authorized over the latter half of 2015 as the government boosts the supply of the country’s increasingly worthless currency, according to seven people familiar with the deals.
And the Venezuelan government isn’t finished. In December the central bank began secret negotiations to order 10 billion more bills, five of these people said, which would effectively double the amount of cash in circulation. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually — dollars and euros that unlike bolivars are used worldwide.
This amazing news item, filed from Caracas, showed up on the morningstar.com Internet site on Wednesday—and I found it embedded in a GATA release just before I posted today’s column on the website. The story is also linked HERE.
Draghi warns of risk of not acting on inflation
European Central Bank President Mario Draghi hit back at a warning from Germany’s Bundesbank that the ECB shouldn’t overreact to a sharp drop in oil prices, underlining his readiness to launch additional stimulus to shore up ultra-low inflation.
In a speech at the Bundesbank’s home in Frankfurt, Mr. Draghi warned that central banks “cannot be relaxed” in the face of a series of shocks to commodity prices.
“The longer inflation stays too low, the greater the risk that inflation does not return automatically to target,” Mr. Draghi said.
Cheaper oil and other “forces in the global economy” that are holding down consumer prices “should not lead to a permanently lower inflation rate,” he said. “They do not justify inaction.”
The comments come a week after Bundesbank President Jens Weidmann urged central bankers to look through an oil-price driven drop in inflation, arguing that they shouldn’t fixate on current price levels like a “rabbit staring at a snake.”
This news story, filed from Frankfurt, was posted on the marketwatch.com Internet site at 5:15 a.m. yesterday morning EST—and it’s the second contribution of the day from Scott Linn. Another link to the full story is HERE.
DAX Plunges to 1-Year Lows as Deutsche Bank CoCos Crash, Italian Bank Stocks Slide
The collapse of Deutsche Bank continues to not just accelerate but to contagiously spread…
Deutsche Bank’s CDS continues to push higher…smashing European bank risk to its highest since 2013…
And now Deutsche Bank’s Contigent Capital securities are crashing – these are among the lowest securities on DB’s capital structure and are screaming that problems loom.
This multi-chart Zero Hedge commentary revolves around a Bloomberg article from yesterday. This ZH piece appeared on their Internet site at 10:12 a.m. EST on Thursday—and I thank Richard Saler for sending it our way. Another link to the full story is HERE.
European Bank Risk Soars to 3-Year Highs, U.S. Risk Rising
We are going to need more “whatever it takes.” And with Draghi’s efforts to shove sovereign bonds down the throat of Europe’s banks, the sovereign-to-financial linkage is now systemically as worrisome as it has ever been…
Deutsche Bank’s CDS continues to push higher…smashing European bank risk to its highest since 2013…
There’s a long table of the Credit Default Swap rates for various European banks embedded in this article—and although they aren’t overly alarming at the moment, they are certainly heading in the wrong direction in a hurry. It’s a good bet that there will be many casualties before this is over.
This is another Zero Hedge piece from Richard Saler. This one put in an appearance on their website at 9:53 a.m. on Thursday afternoon EST. The link to the full article is HERE.
Disappointed With Europe, Thousands of Iraqi Migrants Return Home
Night after night, Mohammed al-Jabiry tossed and turned in his bed at a refugee center in Finland, comparing life in Europe with life in Baghdad. After many sleepless nights, he decided to come home.
“In Iraq, I can find a girl to marry,” Mr. Jabiry, 23, reasoned. “And my mom is here.”
There were little things, too, that drove him to return, like the high price of cigarettes and the chillier weather. “In Europe, I was isolated,” he said. “Life in Europe was not what we were expecting.”
Last year, beckoned by news reports of easy passage to Europe through Turkey, tens of thousands of Iraqis joined Syrians, Africans and Afghans in the great migrant wave to the Continent. Now, thousands of Iraqis are coming home.
This commentary showed up on The New York Times website yesterday—and it’s another offering from Patricia C. The link to the full article is HERE.
Syria Talks Are Suspended
The United Nations on Wednesday temporarily suspended the fledgling talks aimed at ending the war in Syria and called on the countries fueling the conflict to do more to yield results, as Syrian government forces sharply escalated an offensive on a strategic rebel-held city.
“I have concluded, frankly, that after the first week of preparatory talks there is more work to be done, not only by us but by the stakeholders,” the United Nations mediator, Staffan de Mistura, said after meeting with the opposition delegation on Wednesday evening at a Geneva hotel that serves as its headquarters.
Mr. de Mistura took pains to add that the pause did not mean “the end or the failure of the talks.” In a statement later in the evening, he suggested that the government’s failure to alleviate the humanitarian crisis in Syria by allowing food and medicine into rebel-held towns had prevented any serious discussions.
“I’m not prepared to have talks for the sake of talks,” he said, adding that they would resume no later than Feb. 25.
This is another story from The New York Times website. This one, filed from Geneva, showed up their very late on Wednesday evening EST—and I thank Patricia C. for sending it our way in the wee hours of Thursday morning. A secondary link to the full story is Here.
As Syria Talks Fizzle, ‘War Has No Meaning Anymore’
Four Syrian rebel commanders huddled in a knot, all broad shoulders and shiny gray suits, surveying the hotel lounge. Gigantic portraits of Jim Morrison and Jimi Hendrix gazed down at the carpet, a checkerboard of faux zebra-hide in squares of orange and magenta. On a low sofa, a couple snuggled to the sounds of Amy Winehouse.
The fighters decamped to a smokers’ enclosure behind a plate-glass window, its back wall a trompe-l’oeil image of electric-blue waves that made it seem as though they were submerged in a fish tank. It was an effect that fit their mood. They were in Geneva, notionally at least, for peace talks, but back in Syria, the government and its Russian allies were battering insurgents with scores of airstrikes. With their men under fire, the commanders were asking themselves how much longer they could credibly stay.
“Maybe a day,” one, Maj. Hassan Ibrahim, said on Monday night.
By Wednesday, the talks were indeed suspended, as the intense fighting on the ground proved there was as little to talk about as ever.
This is another article from The New York Times website—and the final contribution of the day from Patricia Caulfield—and I thank her on your behalf. The link to the full news item is Here.
Russia and Turkey trade accusations over Syria
Russia said on Thursday it suspected Turkey was preparing a military incursion into Syria, as a Syrian army source said Aleppo would soon be encircled by government forces with Russian air support.
Turkey in turn accused Moscow of trying to divert attention from its own “crimes” in Syria, and said Aleppo was threatened with a “siege of starvation“. It said Turkey had the right to take any measures to protect its security.
In another sign of the spreading international ramifications of the five-year-old Syrian war, Saudi Arabia said it was ready to participate in ground operations against Islamic State in Syria if the U.S.-led alliance decided to launch them.
The United Nations on Wednesday suspended the first peace talks in two years, halting an effort that seemed doomed from the start as the war raged unabated. Washington said on Thursday however it was hopeful they would resume by the end of the month, and Russia said it expected that no later than Feb. 25.
This Reuters story, co-filed from Beirut, Moscow and London, put in an appearance on their Internet site at 5:04 p.m. EST yesterday afternoon—and it’s obviously been updated at least once, as Tolling Jennings sent it to me at 9:42 a.m. EST yesterday morning. Another link to the full story is Here.
As Syria burns, Turkey’s Kurdish problem is getting worse
Not far from the Turkish border with Syria, another war is raging.
In the heart of the ancient city of Diyarbakir, behind its historic black-stone walls, security forces have been engaged for weeks in clashes with the youth wing of an outlawed Kurdish separatist group. Whole neighborhoods have been sealed off under curfew; tens of thousands of people have been forced to flee.
The mini-rebellion has been echoed elsewhere in Turkey’s restive southeast, a region that is home to a majority Kurdish population and that has been in the grips of a low-level civil war since tensions flared last summer. The violence is likely the worst seen in the past two decades.
The Turkish government claims more than 200 policemen and soldiers have been killed since July, while some estimates place the local civilian death toll around that number as well. The Turkish crackdown on the militants — fighters belonging to the banned Kurdistan Workers’ Party, or PKK — has led to more than 500 guerrilla deaths.
This news item appeared on the washingtonpost.com Internet site on Wednesday sometime—and it’s courtesy of Bill Moomau. Another link to the full article is Here.
London gold market wrestles over future: “People want the physical, not paper”
There aren’t many places in the U.K. where you can walk in off the street and buy gold as a retail customer. A new store in London’s St James’s Street, a stone’s throw from the Ritz, wants shoppers.
“There is unquestionably a physical renaissance going on,” says Ross Norman, of Sharps Pixley, flanked by cabinets showing gold roses and gold watches under a large chandelier. “People want the physical [gold], they don’t want the paper. It’s suggestive of an environment where trust is less than it used to be.”
Guests drinking champagne at the opening party last week included some of the most influential names in London’s gold market. But while retail demand for gold is surging, the market is wrestling with a bigger issue: how bankers and traders set the price they will pay.
London’s 250-year-old gold market faces a fundamental question: should the city remain a market where gold is traded between buyers and sellers directly, as it has been for decades, or move on to an electronic gold exchange. How that is resolved will ultimately affect the price for a customer when they walk in and buy a gold bar in the Sharps Pixley store.
Well, they can start by outlawing a futures market for anyone except users or producers, which was the way the futures market in precious metals was really envisioned. Reasonable and rigidly enforced position limits would be a must as well. Or they can just go to an all cash market. Then we’ll find out real quick what the free-market price of these metals should be. But there’s no chance of that. This gold-related story appeared on the Financial Times of London website yesterday—and I found it posted in the clear in its entirety on the gata.org Internet site. Another link to this article is Here.
SOFAZ refuses to transfer its gold reserves into other assets
Azerbaijan’s state oil fund SOFAZ is not planning to transfer its gold reserves into other assets.
SOFAZ buys gold not for the sake of purchase or other speculative purposes but for strategic purposes, the Fund told Report.
The investment strategy of SOFAZ presupposes that up to 5 percent of total cost of investment portfolio may be invested in gold. The amount of SOFAZ gold assets was 30,175 kg or 970,146 troy ounces by late 2015.
Investing in gold has special importance as means of insurance against economic downturn, exchange rate risks and inflation factors as well as is of great significance for diversification of investment portfolio, the Fund said.
This gold-related news item was posted on the azernews.az website at 5:32 p.m. local time on Wednesday, which was 8:32 a.m. EST in New York—EDT plus 9 hours. It’s another story that I lifted from the sharpspixley.com Internet site last night. The link to the entire article is Here.
Teenage girl to keep gold bar found in German lake
A teenage girl in Germany will be allowed to keep a bar of gold worth €16,000 ($18,000; £11,500) found in a lake after the owner could not be identified, police said.
The 16-year-old found the 500g [1.10 lb] gold bar at a depth of about 2m (6.5ft) while swimming near the shore of Bavaria’s Koenigssee lake last August. She handed it into police, who were unable to find the owner.
A six-month investigation could not identify the owner and, as a result, the teenager will be allowed to keep the gold. The girl has not been identified.
When you file the serial numbers off a gold bar, the reasons for that would never be legal, so you ain’t going to be claiming it, as there will be too many questions. “Who did you steal it from?” would be the first one. It’s nice to see there is still some justice and honour in this world. This happy news story was posted on the BBC website early Thursday evening GMT—and it’s something I found on the Sharps Pixley website last night. Another link to this article is Here.
The PHOTOS and the FUNNIES
The WRAP
Collective human instinct is magnified when it comes to industrial users facing a disruption in supplies because such a disruption could threaten an enterprise’s basic mission and continued operation. The very last thing corporate managers would tolerate is having to shut down assembly lines due to the lack of a single ingredient or component. That’s the reason, as I explained to my son 14 years ago, why the Ford Motor Company panicked and bought palladium in the late 1990’s, driving its price up tenfold. Not only is there a compelling logical explanation for what drives an industrial user to build inventory in a time of shortage, historical and contemporary real life examples abound.
It doesn’t matter whether I use products comprised of silver or a different precious metal to illustrate the likelihood of a coming user panic in the main industrial form of silver – such a panic could occur in any material or product. Any form of any product that is industrially consumed is capable of slipping into a shortage—and resultant user buying panic, as and when demand exceeds supply. By that definition it is at least possible for silver in the industry standard form of 1,000 oz bars to develop into a tight enough supply circumstance to trip off a user buying panic.
But there is so much more to it than that. The user buying panic in silver powder is not accompanied with the separate outside force of investment buying demand for silver powder. In the case of Silver Eagles, currently being rationed by the U.S. Mint, there is also not present any widespread investment demand for the coins, as JPMorgan is simply sucking up what the public isn’t buying. In sharp contrast, as and when investment demand returns to silver in general, that demand must translate into 1,000 oz bar form of silver and that investment demand will collide with an inventory buying panic. It doesn’t matter which trips off the other, either investment or industrial demand, a rush to one will result, most likely, in a rush for the other. — Silver analyst Ted Butler: 03 February 2016
It was another carefully controlled price rally in both gold and silver yesterday. There is no doubt that the powers-that-be have been all over these two precious metals all this week, especially while the U.S. dollar index has fallen flat on its face. Please re-read my comments on the U.S. dollar activity over the last two business days as they appeared in today’s column—and Thursday’s. Under normal circumstances in a free market, price rallies would be orders of magnitude higher than they have been all this week.
Silver continues to lag badly—and Ted is of the opinion [probably the correct one] that JPMorgan wants to keep a lid on the price in order to prevent a resurrection in physical demand by the buying public, as the amount of silver available for this purpose, hovers on the edge of non-existent.
It’s a certainty, as Ted also mentioned yesterday, that we’ve seen pretty massive increases in the Commercial net short positions in both metals. It was bad on Wednesday—and yesterday just added to the deterioration. And as I mentioned several times this week, the price/volume action has all the hallmarks of the ‘same old, same old’ pattern we’ve been seeing for the last fifteen or twenty years. It’s just a matter of when JPMorgan et al finally step in.
But, having said that, things might be different this time, as financial and monetary conditions in the world are now changing at warp speed. It’s still wise for us to remember what Ted had to say in yesterday’s column. That comment read “—“Knowing how crooked the COMEX game is, I will try not to be terribly surprised at whatever may unfold.”
That was sage advice yesterday—and equally sage advice today—and probably until further notice.
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 less than ten minutes away—and I see that gold and silver have been trading sideways throughout the entire Far East trading session on their Friday. Platinum is down 6 bucks—and palladium is up 2 dollars.
Net HFT gold volume is just under 15,000 contracts—and that number in silver is just under 4,000 contracts, with no roll-over volume worthy of the name. The dollar index has been creeping higher during the Far East trading session—and is currently up 12 basis points as London opens.
It’s as quiet as the proverbial church mouse at the moment.
This morning at 8:30 a.m. EST we get the job numbers—and as I mentioned in yesterday’s missive—“it will be interesting to see how gold and silver ‘react’ at that time—and then how JPMorgan et al react to them.”
So we wait.
We also get the latest Commitment of Traders Report this afternoon—and the numbers will show the situation as of the close of COMEX trading on Tuesday. The big moves on Wednesday and yesterday will be hidden from us until the COT Report next Friday—and as Ted and I discussed, the timing was most likely deliberate, as they pull that stunt when they want to hide their actions from the public for as long as possible.
In conjunction with this COT Report we also get the monthly Bank Participation Report. This is data extracted directly from the COT Report—and it shows the long and short positions in the COMEX futures market held by all the world’s banks, both U.S. and foreign. They’re normally up to quite a bit—and I’ll have all of that for you tomorrow, which is my longest column of the month.
And as I post today’s effort on the website at 4:05 a.m. EST, I note that virtually nothing has changed in the precious metal markets from when I reported on them an hour earlier.
Net HFT volume in gold is just under 20,000 contracts—and that number in silver is just under 5,000 contracts. The dollar index isn’t doing anything, either—and is up 10 basis points at the moment. It’s still deathly quiet out there.
That’s all I have for today—and with the job numbers at 8:30 a.m. EST, absolutely nothing will surprise me when I check the charts after I roll out of bed later this morning.
Have a good weekend—and I’ll see you on Saturday sometime.
Ed
The post London Gold Market Wrestles Over Future: “People Want the Physical, Not Paper” appeared first on Ed Steer.