25 February 2016 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The rally in gold that began at 6:00 p.m. EST on Tuesday evening wasn’t allow to last long—less than an hour. From there, the price headed mostly lower, with the low tick of the Wednesday session coming just a few minutes before the 8:00 a.m. GMT London open. From that point it rallied until at, or just after, the morning gold fix—and then did nothing until the COMEX open. The rally that began at that point obviously ran into resistance—and was finally capped by JPMorgan et al around 10:25 a.m. in New York. From there, the HFT boyz and their algorithms worked there magic, taking back almost all of the morning gains by 2:45 p.m. EST. The gold price traded flat from there into the 5:00 p.m. close.
The low and high tick were reported as $1,222.40 and $1,254.30 in the April contract.
Gold finished the Wednesday session in New York at $1,228.40 spot, up an even 3 bucks on the day, but was up about 28 dollars at its high tick. Net volume was a mind-blowing 245,000 contracts—and even I was taken aback by the amount of paper gold it took for JPMorgan et al to get the gold price to behave yesterday.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. Volume was basically background until a tiny, but vicious, sell-off occurred shortly after 3 p.m. Hong Kong time on their Wednesday afternoon—which was shortly after midnight Denver time on this chart, and shortly after 7:00 a.m. in London. It stands out like the proverbial sore thumb that it is. Of course volume was much more substantial during the COMEX session—and it never really returned to background levels until after 2 p.m. MST, which is the last volume tick at the very right-hand side of this chart. The vertical gray line is midnight in New York—add two hours for EST—and there’s still no ‘click to enlarge’ feature.
The price path for silver was a carbon copy of what happened in gold. You don’t need me to paint you a picture of silver’s price action, as ‘da boyz’ painted a similar portrait for silver as they did gold.
The low and high in silver was recorded by the CME Group as $15.185 and $15.595 in the March contract.
Silver was closed in New York yesterday at $15.205 spot, down 5.5 cents from Tuesday’s close. JPMorgan and ‘da boyz’ didn’t certainly didn’t want any excitement in silver that would increase buying pressure in all silver ETFs in general, but SLV in particular. I’ll have more on this in The Wrap. Gross volume was absolute enormous at 133,854 contracts—but it all netted out to only 29,500 contracts once the roll-overs from March were subtracted out.
It was virtually the same for platinum, except its high tick came at 10:00 a.m. EST right on the button. Then the powers-that-be put the algos to that precious metal as well, closing it down 6 dollars on the day at $937 spot. At one point it was up 12 bucks the ounce.
The palladium price chopped mostly sideways through all of Far East and London trading. But just after 9 a.m. in New York, the ‘usual suspects’ appeared—and took the price down to its $482 low tick by minutes after 1 p.m. EST. It recovered 3 bucks almost immediately, before trading flat for the remainder of the Wednesday session. ‘Da boyz’ closed platinum at $485 spot, down 13 dollars on the day.
The dollar index closed late on Tuesday afternoon in New York at 97.44—and several attempts were made by ‘eager buyers’ to break out to the upside—and they finally succeeded starting around 8:30 a.m. in London. The 97.92 high tick came minutes before noon GMT—and began to head lower with a vengeance about thirty-five minutes later. The 97.23 low tick came about 11:15 a.m. in New York, but ‘gentle hands’ appeared at that point—and took the index back up to the 97.56 mark by 4:45 p.m. EST—and it headed lower for the remainder of the Wednesday session. The dollar index closed the day at 97.44—exactly unchanged from Tuesday’s close—but after a wild 70 basis point up/70 basis point down intraday ride.
As I said yesterday—and on several other occasions last week—the dollar index, like the U.S. stock markets, just wants to curl up its toes and die. However, the President’s Working Group is always at the ready to make sure that it doesn’t happen, at least not yet.
And here’s the 6-month U.S. dollar index chart so you can see how the current ‘jam job’ is going—and it ain’t looking that hot. Maybe they’ll have more luck today.
The gold stocks gapped up about 3 percent at the open—and were up a bit more than 5 percent before ‘da boyz’—along with their algorithms and spoofing—showed up around 10:20 a.m. in New York trading. The stocks began chopping lower from that point, dipping into negative territory and hitting their lows of the day about 2:55 p.m. EST. They rallied back into positive territory from there—and managed to finish up 1.07 percent on the day. The chart is courtesy of Nick Laird.
The silver stock rallied 3.5 percent in the first five minutes of the Wednesday trading session—and that was their respective highs of the day. Their low tick, also in negative territory, came at 3 p.m. EST—and they too rallied back into positive territory. Nick Laird’s Intraday Silver Sentiment Index closed higher by 1.01 percent.
The CME Daily Delivery Report showed that 54 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday. The two largest short/issuers were Canada’s Scotiabank and Citigroup, with 40 and 11 contracts respectively. The largest long/stopper was HSBC USA with 50 contracts. 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 for February declined by 69 contracts, leaving 68 still around, minus the 54 mentioned above. As I said yesterday, silver o.i. for February is zero, but it should be noted that there are still 91 contracts open in the COMEX mini silver futures contract–and whatever’s left of that amount will have to be dealt with by the close of business on Monday, so there’s a bit more action in the February delivery month for silver yet to go.
There was another very decent deposit in GLD yesterday. This time an authorized participant added another 258,161 troy ounces. And as of 7:13 p.m. EST yesterday evening, there were no reported changes in SLV—and JPMorgan is praying that it stays that way.
So far this year there has been 3,792,375 troy ounces of gold added to GLD—and during that same period, there has been 6,316,396 troy ounces withdrawn from SLV.
The folks over at the shortsqueeze.com Internet site updated the short positions in both GLD and SLV as of the close of business on February 15—and as Ted said in his mid-week commentary yesterday—“I would not be surprised by an increase in the short selling of SLV and, particularly GLD, in line with my comments above about delayed deposits in GLD.”
He was certainly right on the money in that call, as the short position in SLV increased from 10.02 million shares/troy ounces, up to 13.53 million shares/troy ounces—an increase of 35.0 percent. It was even worse in GLD, as the short position in that ETF jumped from 914,456 troy ounces, up to 1,289,590 troy ounces, an increase of 41.0 percent.
Since the cut-off on February 15, there has been net withdrawals of 471,335 troy ounces from SLV, but 1,587,260 troy ounces of gold have been added to GLD. So it’s obvious that the authorized participants, read JPMorgan, have been shorting SLV shares in lieu of depositing physical silver. But there’s been more than enough gold deposited in GLD since the cut-off to cover the current short position in GLD, unless more physical gold was required to be deposited than actually was. We won’t have an indication of that until the next report about March 10th. That report will cover the period from February 15, up until the close of trading on February 29.
Not surprisingly, there was no sales report from the U.S. Mint.
There was very decent ‘in’ activity in gold at the COMEX-approved depositories on Tuesday, as 96,482.150 troy ounces were reported received. That works out to precisely 3,001 kilobars. One kilobar was deposited at Brink’s, Inc.—and the rest, three metric tonnes, was deposited at Canada’s Scotiabank. Only 257.200 troy ounces were shipped out—8 kilobars—and that was removed from the Manfra, Tordella & Brookes, Inc. depository. The link to all that activity is here.
Is it just me, or are gold 100 and 400 troy ounce good delivery bars now on the ‘endangered species’ list? Three or four years ago, there was none showing up in the COMEX. Now they’re everywhere.
And as busy as it was in gold, that activity paled in comparison to what happened inside the silver depositories on Tuesday. There was 1,014,251 troy ounces reported received—and another 1,251,806 troy ounces were shipped out the door. Of the amount shipped in, there was 614,200 troy ounces deposited in JPMorgan’s vault. But they also shipped out precisely 600,000 troy ounces at the same time—and that’s the second precise 600,000 troy ounce withdrawal from their depository in the last five business days—and right to the decimal point as well. They made the first withdrawal of that precise amount on Wednesday, February 17. Does it mean anything, you ask? Beats the hell out of me, but the odds of them being random events are off the chart.
The other thing I’ll mention in silver was the fact that 3,609,489 troy ounces of silver were shifted from the registered to the eligible category. Of that amount 1.74 million troy ounces were transferred at JPMorgan’s vault—and a further 1.49 million got the same treatment at Delaware, with the other 0.38 million being transferred at CNT. The reason that I brought up that matter is that I expect that the usual ‘analysts’ will have a field day with this, but ignore the manic in/out activity itself. Yesterday’s in/out action represented one full day of world silver production. The link to yesterday’s silver action is here—and it’s certainly worth a look.
It was another monster day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. The reported receiving 9,478 kilobars—and shipped out 5,182 of them. That’s a lot! All of the action was at the Brink’s, Inc. depository—and the link to that, in troy ounces, is here.
Here’s an interesting table of numbers that reader U.D. passed around last night, showing the bond yields of most European countries, plus Japan and the U.S. Only through the magic of money printing and bond purchases by the ECB can a bankrupt country like Italy sport a 1-year bond with a negative yield.
If this chart doesn’t make you want to run screaming—and buy as much physical gold and silver as you can—I don’t know what will!
I have a decent number of stories for you today—and I hope you can find the time to read the ones that interest you the most.
CRITICAL READS
IMF report urges G20 to prepare global economic stimulus plan
The Group of 20 nations must plan now for a coordinated stimulus program to keep a slowing global economy from stalling, International Monetary Fund staff said in a report on Wednesday.
The report was prepared for senior G20 officials who are meeting in Shanghai later this week amid falling equity markets, volatile currencies and signs of economic weakness throughout the world.
“The G20 must plan now for coordinated demand support using available fiscal space to boost public investment,” IMF staff said in the report.
U.S. Treasury Secretary Jack Lew downplayed expectations of a G20 emergency plan this week, telling Bloomberg Television that some world economies were doing better than thought—and that investors should not “expect a crisis response in a non-crisis environment.”
Excuse me, Mr. Lew, but…..! This Reuters article, filed from Washington, put in an appearance on their Internet site at 2:34 p.m. EST on Wednesday afternoon—and today’s first story is courtesy of Scott Linn. Another link to this news item is here.
Sales of Existing U.S. Homes Rise to Second-Highest Since 2007
Sales of previously owned U.S. homes unexpectedly rose in January to the second-highest pace since early 2007, indicating the industry will keep prospering.
Closings, which usually take place a month or two after a contract is signed, advanced 0.4 percent to a 5.47 million annual rate, the National Association of Realtors reported Tuesday in Washington. Prices climbed from January 2015 as the number of dwellings on the market fell.
Near record-low mortgage rates, steady job gains and better wage growth are helping encourage prospective buyers, including first-time purchasers. Further strengthening in residential real estate will support the economy and make up for weakness in manufacturing tied to weaker global growth.
“Consumers are pretty keen to purchase a home,” said Gennadiy Goldberg, an economist at TD Securities in New York. “Slow and steady growth is what we want. It’s really positive for the U.S. economy in general.”
This Bloomberg news item was posted on their Internet site at 8:00 a.m. Denver time on Tuesday morning—and it’s the first of two articles that I ‘borrowed’ from yesterday’s edition of the King Report. Another link to this real estate-related story is here.
Signs of life, including first-timers, in grim new-home sales report
Sales of new homes sank in January and the median price ticked down, leading some analysts to question whether demand is as sturdy as previously thought.
But some details in the Commerce Department’s data pointed to underlying strength, and some healthy shifts in the market, that were masked by the weak headline.
The share of homes purchased, but not yet started, is near a 10-year high, noted Ralph McLaughlin, chief economist for Trulia, in a research note.
“Why? The inventory of existing homes continues to fall,” McLaughlin wrote. “Low existing inventory likely pushes prospective buyers away from existing homes towards new homes, and as new home sales rise, this allows builders to sell more new homes off plan.”
This news item showed up on the marketwatch.com Internet site at 11:59 a.m. on Wednesday morning EST—and it’s the second contribution in a row from Scott Linn. The MarketWatch thought police have been at it again, as the original headline read “New home sales sink 9.2% to 494,000 annual rate“. Another link to this article is here.
More Subprime Borrowers Are Falling Behind on Their Auto Loans
More borrowers with spotty credit are failing to make monthly car payments on time, a troubling sign for investors who have snapped up billions of dollars of securities backed by risky auto debt.
Delinquencies on subprime auto loans packaged into bonds rose in January to 4.7 percent, a level not seen since 2010, according to data from Wells Fargo & Co.
Rising delinquencies come as a warning sign that more loans may end up in default down the road, said John McElravey, an analyst at the bank. What may be most troubling, however, is that the default rate is already climbing, up to 12.3 percent in January from 11.3 the prior month. That is the highest rate since 2010, the data show.
Securities backed by auto loans are structured to absorb a portion of anticipated defaults, but concerns have mounted over the last year that cumulative losses on auto loan securitizations may end up exceeding initial estimates, thanks to declining underwriting standards.
Where have we seen this before, dear reader? This short Bloomberg article was something I found in yesterday’s edition of the King Report—and it was posted on their website at 4:40 a.m. Denver time on Tuesday morning. It’s worth reading—and another link to this story is here.
Fischer says no Fed plan to move to negative interest rates
Federal Reserve Vice Chairman Stanley Fischer said there is no plan to use negative rates in the United States, though the matter is under study.
“We are some ways away from that,” Fischer said at an energy conference in Houston. He said the use of negative rates in countries like Denmark “has been better than people expected,” particularly in discouraging rapid inflows of capital.
The above two paragraphs are all there is to this tiny news story that was posted on the Reuters website at 10:35 p.m. EST on Tuesday evening—and I thank Brad Robertson for this article which arrived via Zero Hedge.
Brazil Cut to Junk By All Three Ratings Agencies After Moody’s Joins the Fray
Back in December we warned that Brazil faced a “disastrous downgrade debacle” that would eventually see the beleaguered South American nation cut to junk by all three major ratings agencies.
S&P had already thrown the country into the junk bin and just six days after our warning, Fitch followed suit.
Between the country’s seemingly intractable political crisis and worsening public finances, the outlook is exceptionally dire and just moments ago, Moody’s cut Brazil to junk as well.
This Zero Hedge article showed up on their Internet site at 7:15 a.m. EST on Wednesday morning—and I thank Richard Saler for finding it for us. Another link to this story is here.
The Evil Empire Has the World in a Death Grip — Paul Craig Roberts
In my archives there is a column or two that introduces the reader to John Perkins’ important book, Confessions of an Economic Hit Man. An EHM is an operative who sells the leadership of a developing country on an economic plan or massive development project. The Hit Man convinces a country’s government that borrowing large sums of money from U.S. financial institutions in order to finance the project will raise the country’s living standards. The borrower is assured that the project will increase Gross Domestic Product and tax revenues and that these increases will allow the loan to be repaid.
However, the plan is designed to over-estimate the benefits so that the indebted country cannot pay the principal and interest. As Perkins’ puts it, the plans are based on “distorted financial analyses, inflated projections, and rigged accounting,” and if the deception doesn’t work, “threats and bribes” are used to close the deal.
The next step in the deception is the appearance of the International Monetary Fund. The IMF tells the indebted country that the IMF will save its credit rating by lending the money with which to repay the country’s creditors. The IMF loan is not a form of aid. It merely replaces the country’s indebtedness to banks with indebtedness to the IMF.
To repay the IMF, the country has to accept an austerity plan and agree to sell national assets to private investors. Austerity means cuts in social pensions, social services, employment and wages, and the budget savings are used to repay the IMF. Privatization means selling oil, mineral and public infrastructure in order to repay the IMF. The deal usually imposes an agreement to vote with the U.S. in the U.N. and to accept U.S. military bases.
Several readers sent me this Paul Craig Roberts piece on Tuesday when it was first posted, but I passed on it, as I’ve discussed John Perkins’ book on many occasions. But an impassioned plea from U.K. reader Tariq Khan changed my mind—and here it is—and it’s definitely worth reading if the subject material is new to you. Another link to this commentary is here.
Revealed: The Hidden Agenda of Davos 2016
“It’s a big club and you ain’t in it!”
I’m often reminded of these words, spoken by the great comedian George Carlin, when I read about the annual World Economic Forum meeting in Davos, Switzerland.
That’s where the global power elite gather to discuss the big issues of the day. The most important world leaders attend. As do the CEOs of the largest companies, leaders in the mainstream media and top academics. Central bankers attend, too, along with a wide assortment of celebrities.
Three types of meetings happen in Davos, according to the BBC:
Public meetings, which anyone can attend.
Closed meetings, which you can only attend by invitation.
Secret meetings, which are unannounced. The public doesn’t know the agenda or who attends.
This must read commentary by senior editor Nick Giambruno appeared on the internationalman.com Internet site yesterday. Another link to this article is here.
Pound plunges to a 7-year low as ‘Brexit’ fears bite
The British pound sank to a seven-year low Wednesday, as the prospect of the U.K. leaving the European Union continued to drag down the currency.
Sterling fell 0.8% against the dollar to $1.3892, a level not seen since early 2009. The pound hasn’t spent a sustained period below $1.40 since the mid-1980s.
The decline came amid fresh predictions of a plunge for the U.K. currency if British voters opt to quit the E.U. in a referendum in June. In a note published Wednesday, analysts at HSBC said a vote for “Brexit” would push the pound a further 15%-20% lower against the dollar. The bank attaches a probability of around one-third to this outcome.
“Following a vote to leave, we think uncertainty could grip the U.K. economy, triggering a potential slowdown in growth and a collapse in sterling,” HSBC said.
The fear mongering has started already. This brief news item, filed from London, put in an appearance on the marketwatch.com Internet site at 6:17 a.m. Wednesday morning EST—and it’s the third offering of the day from Scott Linn—and another link to this short article is here.
Why U.S. investors should fear a ‘Brexit’
U.S. companies could see their bottom lines slashed if the U.K. votes to leave the European Union in a so-called Brexit referendum this summer, according to Bank of America.
Fears that the Brits will choose to exit the bloc it’s been a member of for more than 40 years have already sparked turmoil in pound trade and European stock markets But U.S. investors should brace for the vote too, said Joseph Quinlan, head of market & thematic strategy Bank of America Global Wealth & Investment Management.
“Given the prominence of the U.K. in driving U.S. global profits, any talk or action that leads to the severing of U.K.-E.U. ties carries significant risks to the bottom line of corporate America,” he said in a report out late Tuesday.
“A Brexit would squeeze the affiliate earnings of numerous U.S. multinationals strategically ensconced in the United Kingdom, and force many companies to rethink their overall E.U. strategies,” he said.
As I said in my comments in the previous paragraph—more fear mongering. Absolutely nothing will happen except Britain will retain its sovereignty as a nation—and slip out of the grasp of the New World Order crowd. This is the second story in a row from the marketwatch.com Internet site—and the final offering of the day from Scott Linn, for which I thank him on your behalf. Another link to this article is here.
The Ukraine/Syria Imbroglio: John Batchelor Interviews Stephen F. Cohen
This weeks saw the world settling back into yet another “intermission” of tensions in the New Cold War (NCW), and the two pundits discuss the political efforts and successes both in the Syrian and Ukrainian conflicts. In Syria we have a ceasefire set to commence on Saturday, February 27th, and in Ukraine one that continues to be broken for a year and counting. As one would expect the politics for both these crisis areas are extraordinarily complicated, and even more so in that some of the parties are playing double games with their true motives opposite to those publicly presented. Putin, Assad and their fighting allies are, however, uniformly consistent in policy and about their stated means to carrying out their policies; everyone else from Washington, the E.U., NATO, Kiev, Turkey, and the Saudis seemingly represent vacillation, deceit and misrepresentation.
In the Syrian debacle Cohen gives the chances for success of a ceasefire at 15% to 20%. He discusses in detail how successful this will be – given, for example, there are not even any monitors on the ground to observe compliance yet. But the main question is how stalwart will be the leadership of Obama to support a ceasefire, to resist his neo-con opposition in Washington and to back Kerry’s efforts for it. In Ukraine everyone is playing a double game. Cohen describes how a visit by the French Foreign Minister, Jean-Marc Ayrault, and German Foreign Minister, Frank-Walter Steinmeier to meet Prime Minister, Poroshenko in Kiev was prone to frustration. The E.U. needs the Minsk2 Accord to proceed in order to remove its sanctions on Russia. President Poroshenko cannot do so without risking a coup, nor can he even remove his Prime Minister, Yatsenyuk who is Washington’s man. Washington, of course, does not want Minsk2 to succeed (even as publicly it supports it), and hence we still see artillery and mortar attacks continuing against the Donbass rebels. But it also wants to stabilize the Kiev government. The mix of efforts based on different agendas is a veritable soup of chaos.
About Ukraine, however, Washington neo-cons are united in view. Moscow must step down on the world stage. And Cohen is sure a new president elect will not change this mindset. In Washington there are still two camps. Kerry is the moderate whose (stated) position is that the Syrian debacle cannot be solved without Russia. But he does not have the complete backing of the president. Cohen doesn’t think things look good. Basically he thinks that the hatred of Putin is pathological and colours all perceptions. But perceptions do change. Cohen points out that Obama was claiming Russia to be a “second rate regional power”, but is now all but “begging Putin’s Russia for solutions in Syria”.
I am not sure I agree with Cohen’s last point. I think the ultimate game for Washington is a partitioned Syria with Assad gone. Kerry has already alluded to this possibility. To be sure both Turkey and the Saudis would be quietly cheering for this end.
This 40-minute audio interview was posted on the audioboom.com Internet site on Tuesday. Normally I save this for Saturday’s column—and I will certainly be posting it there as well—but with events unfolding as fast as they are, I thought it wise to present it here and now—and let you decide. I thank Ken Hurt for sending me the link, but the big thanks is reserved for the executive summary above courtesy of Larry Galearis. Another link to this audio interview is here.
John Kerry says partition of Syria could be part of ‘plan B’ if peace talks fail
John Kerry, the U.S. secretary of state, has said he will move towards a plan B that could involve a partition of Syria if a planned ceasefire due to start in the next few days does not materialise, or if a genuine shift to a transitional government does not take place in the coming months.
“It may be too late to keep it as a whole Syria if we wait much longer,” he told the U.S. Senate foreign relations committee on Tuesday.
Kerry did not advocate partition as a solution and refused to specify details of a plan B, such as increased military involvement, beyond insisting it would be wrong to assume that Barack Obama would not countenance further action.
He also admitted it was possible Russian-backed forces could capture Aleppo, but pointed out that it has been very hard to retain territory in the five-year civil war.
Larry Galearis, who sent me this piece, had this to say—“As if Putin, Assad or the Syrian people have a choice in what the West chooses for their country. Turkey and the Saudis are obviously pushing this, and Kerry may be preparing for the failure of the truce. We should not be optimistic nor should we think this partition falls within the goals of Assad or Putin. The gall of Washington would seem to be limitless.” This semi-propaganda piece was posted on theguardian.com Internet site at 6:39 p.m. GMT on Wednesday evening—and because of it’s nature, I’ll leave it up to you to decide whether you should read it or not. Another link to this ‘news’ item is here.
Week twenty of the Russian military intervention in Syria: a ceasefire and yet another huge victory for Russia
The recent agreement between the USA and Russia really solves nothing, it does not even end the war, and both sides are expressing a great deal of caution about its future implementation. And yet, this is a huge victory for Russia. While it is too early to say that “the Russian won in Syria”, I think that it is now fair to say that the Russian position on Syria has won. Here is why:
First: nobody is suggesting anymore that Assad will be ousted or Damascus taken. That, in turn, means that everybody has now recognized that Syrian Arab Republic, backed by Russia, has successfully repelled the aggression of the huge coalition the Anglo/Zionists built to overthrow Assad.
Second: Russia has forced the UNSC and the USA to admit that the vast majority of those who fight Assad today are terrorist. Of course, this is not how this was declared, but if you look at the organizations which the UNSC has already declared as ‘terrorists’ then you already have an absolute majority of the anti-Assad forces. This means that the moral and legal legitimacy of the anti-Assad forces is lies in tatters.
Third: regardless of what Erdogan does actually try to do next, there are now clear signs that neither NATO, nor the EU nor even the Turkish high military command want a war with Russia. And that means that Erdogan’s gamble has not paid off and that his entire Syria policy is now comprehensively dead. Keep in mind that following the treacherous attack on the Russian Su-24 the Kremlin made it a policy goal to “Saakashvilize” Erdogan. This goal is now almost reached and Erdogan’s future looks very, very bleak: everybody (except maybe the Saudis) is sick and tired of this maniac. The best thing which could happen to Turkey now would for the military to get rid of Erdogan and to replace him with somebody willing to repair all the damage he did.
This commentary appeared on thesaker.is Internet site yesterday—and is certainly worth reading if you have the interest. I thank ‘aurora’ for sending it our way—and another link to this article is here.
The Gold Chronicles: 18 February 2016 Interview with Jim Rickards
This 43:40 minute monthly audio interview with Jim was posted on the physicalgoldfund.com Internet site on Tuesday. Three issues covered are, 1] Negative Interest Rates leading to a fresh round of currency wars. 2] Inconsistency in policy is causing a loss of confidence in the Fed. 3] Gold is currently acting like money, similar to the USD, Yen and Euro.
I thank Harold Jacobsen for sending it our way—and he mentioned that fact that there are some “audio issues with the live broadcast“—so just be forewarned if you’re going to listen to it. Another link to this audio interview is here.
Koos Jansen: Dutch central bank thinks about coming clean on gold reserves
The central bank of the Netherlands, gold researcher and GATA consultant Koos Jansen reports, is considering finding a more secure and convenient vault for the country’s gold reserves, now kept at the bank’s headquarters. Jansen also reports that the bank is considering his request for it to publish a list of the gold bars that constitute its reserves — the bars’ minters, serial numbers, and date of minting.
Since such transparency might impair a primary objective of modern central banking — that is, exaggeration of gold reserves and supplies through swaps, leases, and other legerdemain — De Nederlandsche Bank may need a few more centuries to devise an explanation for rejecting Jansen’s request. In the meantime, he reports, his request purportedly remains under consideration.
Jansen’s report is headlined “Dutch Central Bank Considers Relocating Gold Vault and Publishing Gold Bar List” and it was posted on the bullionstar.com Internet site yesterday sometime—and I found it embedded in a GATA release. It’s certainly worth reading. Another link to this gold-related story is here.
Kazakhstan, Russia Add to Gold Reserves as Central Banks Buy
Kazakhstan expanded its gold reserves for a 40th straight month in January as Russia added and Canada cut holdings, according to figures from the International Monetary Fund.
Kazakhstan raised its stash to 7.2 million ounces from 7.1 million ounces in December and 6.2 million a year earlier, data on the website showed. Russia’s gold reserves climbed to 46.2 million ounces from 45.5 million in December. Canada cut its holdings to 20,000 ounces from 50,000 ounces.
Central banks added to their hoard with “renewed vigor” in the second half of 2015, accelerating purchase programs as diversification of foreign reserves remained a top priority, the World Gold Council said. Gold has risen 16 percent in 2016 as financial market turmoil and a weakening Chinese currency pushed investors to bullion-backed exchange-traded funds.
“The Russian central bank is similar in some sense to the Chinese central bank,” Jeffrey Nichols, a New York-based senior economic adviser to Rosland Capital LLC, said by phone Wednesday. “They’re acquiring gold for strategic and political gain, with the hopes that their currencies will look more attractive if they have larger gold reserves.”
This Bloomberg story put in an appearance on their Internet site at 1:25 p.m. MST on Tuesday afternoon—and was subsequently updated about ten hours later. It’s a gold-related story that I found on the Sharps Pixley website. Another link to this news item is here.
‘Gold’ En Pennant In Play For Bulls
For any long-suffering Chicago Cubs fans who may have forgotten, a ‘pennant’ is the triangular flag given to the winner of either the American or National League champion in Major League Baseball (MLB). However, the term ‘pennant’ has a slightly different, but related, connotation in technical analysis.
When talking about price charts, a pennant refers to a pattern formed by a two converging lines or boundaries at the top or bottom of a trend. In the case of an bullish pennant, the pattern looks like a triangular flag (pennant) on top of a pole (the previous uptrend). Generally, a pennant is seen as a continuation pattern, meaning that a pennant that forms at the top of an upswing is more likely to break out to the topside and herald another leg higher.
As it turns out, that’s the exact pattern we see on gold’s 4hr chart. Since peaking near 1,260 last week, gold has put in a series of higher lows and lower highs, forming a picture-perfect bullish pennant pattern centered around 1,220. Now all bulls need to see is a breakout above the top of the pattern near 1,225. Of course, it’s always worth keeping the longer-term perspective in mind; specifically, Gold is testing the top of a nearly 2-year bearish channel in the mid-1,200s, so even if we do see a breakout from the near-term pennant pattern, bulls may want to tap the brakes as long as we’re below 1,250.
Alternatively, a break below the pennant pattern (and especially the near-term bullish trend line near 1,185) would suggest that the longer-term bearish channel is taking precedence and could herald a return back to the mid- or lower-1,100s heading into March. Regardless of how the near-term technical situation plays out, traders will have a much better idea of what to expect moving forward by the end of the week.
This very interesting story, with an even more interesting chart, showed up on the actionforex.com Internet site yesterday morning at 2:37 a.m. GMT. Without doubt, JPMorgan et al will do everything in their power to break this pennant formation to the downside. I’ve seen them do it before—and there’s no reason to think that they’ll pass up on this chart pattern that they themselves painted. Another link to this story is here—and it’s also courtesy of the Sharps Pixley website.
The PHOTOS and the FUNNIES
The first photo is of a golden takin—and the second is of a jumping spider.
The WRAP
There is no question that the frantic COMEX physical silver inventory turnover exists and has existed for the past five years. Given the lack of investment demand in SLV and in continuing reports from the silver retail dealer front, it appears certain the turnover is driven by those using silver in their manufacturing and fabrication businesses. But the COMEX physical inventory turnover is so large relative to the total amount of silver produced in the world daily that there can be little doubt there’s not much, if any room to accommodate silver investment buyers whenever they appear.
As and when silver investment demand returns in earnest, does anyone realistically expect the industrial users and fabricators to politely step aside and refrain from using silver in their operations to make it easier for investors to acquire metal without driving prices higher? Or instead, isn’t it almost certain that the silver users will react by building their own inventories the minute they experience any investment-induced delivery delays?
What’s new here is my realization that the frantic COMEX inventory turnover likely indicates no slack whatsoever in how tight wholesale physical silver conditions have become—and that the next surge of investment demand will upset the physical applecart. Come to think of it, this has likely been the case over the past five years, namely, that no real silver investment surge (away from Silver Eagles) has been allowed to unfold. This enabled JPMorgan to both control prices and continue to hog available silver supplies for itself, without having to contend with competing investment demand. This explains the obvious relative silver underperformance to gold – JPMorgan knows that the next broad silver investment surge will be the one that finally ends the continued price suppression. — Silver analyst Ted Butler: 23 February 2016
There should be absolutely no doubt left in anyone’s mind that yesterday’s reversal of the big intraday gains in gold, silver and platinum smacked of desperation by the powers that be. And as Ted mentioned in his mid-week commentary yesterday—“I have detected a bit of a struggle in getting all the gold deposited into GLD“—-and as I’ve said on a few occasions in the last few weeks—this new ETF gold demand is placing a severe strain on available supplies.
As I said in yesterday’s column—“At some point in the future, all this new demand will certainly have an effect on the price. It may be doing so at this very moment, but the powers-that-be are keeping a lid on it as best the can.” Yesterday’s price action was all the proof one needed.
What I found alarming was the volume. As I said, I was totally taken aback by the 240,000+ contract net volume amount. Without doubt, JPMorgan et al did “whatever it took” to get the gold price back to about unchanged on the day—and the COMEX paper firepower necessary to pull that off was shocking.
Yesterday’s price/volume action will not be in tomorrow’s Commitment of Traders Report, because it occurred that day after the cut-off. But rest assured that the Commercial net short positions in both gold and silver most likely increased by an alarming amount. Unfortunately, we won’t know for sure until Friday, March 5—and that’s a lifetime away in the current financial environment.
Here are the 6-month charts for the Big 6+1 commodities—and the gravestone dojis that JPMorgan et al painted in all four precious metals is a powerful signal to those who are still foolish enough to use technical analysis as a guide in a managed market. In case you missed it, please read the story ‘Gold’ En Pennant In Play For Bulls posted in the Critical Reads section above.
So what are the powers-that-be going to do for their next trick in an attempt to save what obviously can’t be saved? The financial system is done for—and their worst nightmares that a small sliver of all the money looking for a home is landing in the precious metal market in general, but the gold market in particular—are coming to pass. And as desperate as JPMorgan is to keep everyone from investing in SLV by keeping silver prices in check, they appear to have created a similar situation for themselves in gold.
Even with an engineered price decline at this point, all they do is create a buying opportunity for any new money waiting for a pullback of any size. All ‘da boyz’ can do now is delay the inevitable in gold, just like they’ve done in silver. Because as Ted Butler said in his quote today—-“ JPMorgan knows that the next broad silver investment surge will be the one that finally ends the continued price suppression.” It’s only a matter of time before this situation manifests itself in the physical gold market as well.
Not only was the Plunge Protection Team busy in the precious metals, but they saved the Dow as well—and the BKX index, which was also headed for a new low for this move down until the powers-that-be rescued it.
And as I type this paragraph, the London open is less than five minutes away—and I see that gold got sold down about 6 bucks in the first thirty minutes of trading when New York open yesterday evening. But by 9 a.m. Hong Kong time on their Thursday morning, it was back in positive territory. It traded sideways from there until around 1:30 p.m. local time—and has been in rally mode ever since—and is currently up 12 bucks the ounce. Silver followed a similar, but more muted price pattern than gold—and that precious metal is only up a nickel, as JPMorgan continues to keep the silver price on a very tight leash. Platinum and palladium followed somewhat similar price patterns—and both are currently up 5 dollars the ounce at the moment.
Net HFT gold volume is just under 40,000 contracts—and that number in silver is only 2,600 contracts but, as can be imagined, roll-over volume is enormous, with most of the contracts landing in the new front month for silver, which is May. The dollar index didn’t do much in Far East trading yesterday—and is currently up 4 basis points now that London has been open for three minutes.
Today, at the close of COMEX trading, all the large traders have to be out of their March COMEX futures contracts—and the rest of the traders that aren’t standing for delivery, have to roll or sell by the close of COMEX trading on Friday. Monday is first notice day—and as I said in my Tuesday column, the data for the March delivery month in silver will be posted on the CME’s website on Friday night sometime—and I’ll have all that for you on Saturday.
And as I post today’s column on the website at 4:15 a.m. EST, I see that gold hasn’t done much since the London open—and is now up only 10 bucks the ounce. But much to my amazement, silver is now up 8 whole cents! Platinum is still up the same 5 bucks, but palladium is now up 6 dollars.
Net HFT volume in gold is now up to just under 46,000 contracts, so that’s not a lot of change from an hour ago. The net number in silver is a hair over 3,100 contracts—and that’s up only 500 contracts since I last reported. It’s obvious that trading activity has really backed off since the London open. The dollar index is still up the same 4 basis points it was an hour earlier. Nothing to see here.
But I doubt very much that this calm patch will last the whole day—and after yesterday’s wild price action, along with the obvious interference by JPMorgan et al, there’s just no way of telling what the remainder of the Thursday session will bring. So blow the froth off a cold one and enjoy the show as we watch the powers-that-be thrash about.
I’m done for the day—and I’ll see you here tomorrow.
Ed
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