17 March 2016 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price wandered around a few dollars either side of unchanged during most of Wednesday, with the low tick coming at the 9:30 a.m. EDT open of the equity markets in New York. It traded pretty flat from there into the Fed news at 2 p.m.—and then launched skywards. It appeared that the sellers of last resort showed up shortly before 3 p.m. in the after-hours market—and the rally became far less vigorous after that.
The low and high tick were reported by the CME Group as $1,227.00 and $1,264.80 in the April contract.
The gold price closed in New York yesterday at $1,262.10 spot, up $30.30 from Tuesday’s close. Net volume was pretty heavy at a hair over 169,000 contracts, so it’s obvious that although the price was allowed to run a bit, JPMorgan et al were going short against all comers again yesterday.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson once again. There was some fairly decent ‘above background level’ trading volumes in late Far East and early London trading, but that is masked by the scale of the chart, as the big 16,000+ contract volume spike in the first five minutes after the Fed news, really compressed the scale. Volume picks up noticeably when the COMEX opened, which is 6:20 a.m. MDT on this chart—8:40 a.m. EDT. Of course there was big volume after 12:00 o’clock noon Denver time—2 p.m. in New York—and it never did die off to background levels after that.
The vertical gray line is midnight in New York—add two hours for EDT—and although the ‘click to enlarge‘ feature doesn’t work with Internet Explorer, a right mouse click with Google Chrome or the Firefox browser should allow you to view it full-screen size.
The price pattern in silver was somewhat similar, except the low tick of the day came shortly before the COMEX close—and the rally obviously got capped [like in gold] by ‘da boyz’ minutes before 3 p.m. EDT. The silver price traded flat after that.
The low and high ticks in that precious metal was reported as $15.21 and $15.675 in the May contract. It was the second day in a row where the spike low in silver only occurred in the spot month.
Silver finished the Wednesday session at $15.595 spot, up only 34.5 cents on the day. Net volume was very decent at just over 41,500 contracts.
And here’s the New York Spot Silver [Bid] chart so you can see the COMEX price action on its own—and it’s more than obvious from the chart pattern after 2 p.m. EDT that the HFT traders were all over this silver rally almost right from the start.
Platinum began to rally about two hours after trading began in the Far East on their Wednesday morning—and it chopped higher until shortly after 11 a.m. Zurich time. It was up 14 bucks at that point, but once the HFT traders spun their algorithms, the price was back in the red by shortly before 1 p.m. in New York. By 2 p.m. EDT it was back to unchanged—and it’s price spike at that point was also capped minutes before 3 p.m. as well. Platinum finished the Wednesday session at $976 spot, up an even 20 dollars.
Palladium chopped sideways in a fairly tight range, with the low tick coming shortly after 9 a.m. in Zurich. The price began to rally unsteadily from there—and it was capped at $583 spot shortly after 3 p.m. EDT. It got sold down a bit into the 5 p.m. close, as this precious metal finished the day at $580 spot, up 13 bucks from Tuesday.
The dollar index closed late on Tuesday afternoon at 96.62—and began to rally quietly as soon as trading began at 6 p.m. EDT on Tuesday evening in New York. It was up to 96.80 by the COMEX open on Wednesday morning—and then popped another 25 basis points from there, with the 97.06 high tick coming about 9:10 a.m. EDT. It began to develop a negative bias at that point—and almost all of its post-COMEX opening gains were gone by 2 p.m.—and it was then that the trap door opened. The 96.54 low tick came at 4:00 p.m. EDT when the usual ‘gentle hands’ showed up—and it rallied a bunch from there, as the dollar index finished the Wednesday session at 95.75—down 87 basis points from Tuesday’s close.
Here’s the 6-month U.S. dollar chart showing that this particular fiat currency moved just a little closer to its intrinsic value yesterday.
The gold stocks opened down a bit in New York when trading began yesterday morning—and although they poked their respective noses above unchanged for a couple of brief moments before the p.m. gold fix, the trend was clearly down, with their collective lows coming about one minute before 12 o’clock noon EDT. From there they didn’t do much until about twenty minutes before the Fed ‘news’—and they rallied a percent or so before blasting higher starting a minute or so before 2 p.m. I would guess that the insiders were front-running this rally.
The HUI closed up a chunky 6.62 percent—and at a high not seen since mid-May of last year.
The rally in the silver equities was almost identical—and Nick Laird’s Intraday Silver Sentiment Index closed higher by 6.23 percent.
The CME Daily Delivery Report showed that zero gold and 4 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. JPMorgan stopped all four contracts for its in-house [proprietary] trading account.
The CME Preliminary Report for the Wednesday trading session showed that another 14 gold contracts were added to March open interest yesterday, bringing the total up to 149 still open. Silver o.i. dropped by 231 contracts—and since there were 230 contracts issued for delivery today in Tuesday’s preliminary report, it’s obvious that JPMorgan didn’t let any of the remaining short/issuers off the hook for the March delivery month in yesterday’s report.
There was another deposit in GLD yesterday, as an authorized participant added 95,594 troy ounces—and it’s a safe bet that that all the gold ETFs on Planet Earth are owed a fair chunk of metal after yesterday’s big run-up in price. And as of 6:18 p.m. EDT yesterday evening, there were no reported changes in SLV. However, like their golden brethren, it’s a given that this ETF, along with the other silver ETFs of the world, are owed a decent amount of metal after yesterday’s price action.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on in both their gold and silver ETFs as of the close of business on Friday, March 11—and this is what they had to report. Their gold ETF added 39,242 troy ounces—and their silver ETF increased by 149,404 troy ounces.
Todd Anthony, the down-to-earth and sharp-as-a-tack VP of Investor Relations at First Majestic Silver sent me a chart and a comment yesterday afternoon. The comment read “Looks like someone bought $99.5 million dollars worth (~850k shares) of GLD a mere 20 minutes before today’s FED announcement – leaked??” He states the obvious, of course—and here’s the chart.
And if you look at the volume spikes at the bottom of this chart carefully, you can see other smaller, but equally significant purchases of GLD in the last hour before Yellen spoke.
There was another sales report from the U.S. Mint. They sold 1,000 troy ounces of gold eagles—and another 404,000 silver eagles.
Silver eagles sales are now at 13,000,000 for the year—and up an even 1,000,000 troy ounces from last week—and an even 2,000,000 troy ounces from the previous week, so it’s obvious that the mint is producing its maximum one million silver coins per week like it said it was going to, as it’s impossible for round numbers like these to be random week after week.
Ted mentioned in his mid-week commentary that it’s also obvious from gold eagles sales that the ‘big buyer’ has stepped away from the table for the moment.
The only gold movement at the COMEX-approved depositories on Tuesday was 2 kilobars out of Manfra, Tordella & Brookes, Inc.—and another 500 kilobars out of Canada’s Scotiabank. The link to that activity, in troy ounces, is here.
It was reasonably quiet in silver, as only 3,121 troy ounces were received—and 119,851 troy ounces were reported shipped out. The link to that activity is here.
There was little activity over at the COMEX-approved gold kilobar depository in Hong Kong, as only 210 were reported received—and 180 were shipped out. All of the activity was at Brink’s, Inc.—and the link to that, in troy ounces, is here.
I have the usual number of stories for a weekday—and I hope there are a couple in here that you like.
CRITICAL READS
Impaled on Its Own Petard: The Fed’s Folly Festers Further — David Stockman
Listening to even a small portion of Simple Janet’s incoherent babble makes very clear that the nation’s central bank is well and truly impaled on its own petard. According to the dictionary, the latter term refers to…..
…….. a small bomb used for blowing up gates and walls when breaching fortifications. It is of French origin and dates back to the 16th century. A typical petard was a conical or rectangular metal device containing 2–3 kg (5 or 6 pounds) of gunpowder, with a slow match for a fuse.
Maybe that’s what they have been doing all along—–that is, waiting for their slow match monetary fuse to finally ignite the next financial conflagration.
After all, the Fed is now 87 months into its grand experiment with the lunacy of zero interest rates. If our monetary central planners still can’t see their way clear to more than 38 bps of normalization, then, apparently, they intend to keep the casino gamblers in free carry trade money until they finally blow themselves up——just like they have already done twice this century.
I don’t know about you, dear reader, but I love it when he’s angry! This short [for David] tirade put in an appearance on his Internet site on Wednesday afternoon sometime—and I thank Roy Stephens for today’s first story. It’s a must read—and another link to this commentary is here.
U.S. retail sales dip in February: Barclays slashes GDP view
U.S. retail sales fell less than expected in February, but a sharp downward revision to January’s sales could reignite concerns about the economy’s growth prospects.
The Commerce Department said on Tuesday retail sales dipped 0.1 percent last month as automobile purchases slowed and cheaper gasoline undercut receipts at service stations.
January’s sales were revised to show a 0.4 percent decline instead of the previously reported 0.2 percent increase. Economists polled by Reuters had forecast retail sales slipping 0.2 percent in February.
Following the data release, Barclays cut its U.S. GDP forecast to 1.9 percent from 2.4 percent.
This Reuters article from 9:30 a.m. EDT Monday morning, with a 3:48 minute video clip embedded, was picked up by the cnbc.com Internet site—and it’s something I found in yesterday’s edition of the King Report. Another link to this news item is here.
U.S. inflation rears its ugly head as global cycle nears danger zone
The trigger for the next global recession is at last coming into view after a series of loud distractions and false alarms.
The Atlanta Federal Reserve’s gauge of “sticky-price” inflation in the U.S. soared to a post-Lehman peak of 3pc in February. This index is a ‘pure’ measure of core inflation – the underlying story once the noise is stripped out.
The Cleveland’s Fed’s ‘median consumer price index’ jumped to 2.9pc, with big rises are in medical services, housing rents, car insurance, restaurants, hotels, women’s clothing, jewelry, and car hire. This is the long-feared inflexion point we all forgot about in those halcyon days of deflation, now just a fond memory.
Expansions rarely die of old age. They are killed.
The Fed’s veteran vice-chairman Stanley Fischer is itching to tighten. “We may well at present be seeing the first stirrings of an increase in the inflation rate,” he said in a portentous speech last week.
Ambrose Evans-Pritchard posted this on The Telegraph‘s website at 9:20 p.m. GMT on Tuesday evening, which was 5:20 p.m. in New York—EDT plus 4 hours. I don’t know what kind of pipe weed he was smoking at the time, or if he was just doing his master’s bidding when he wrote it, but it makes absolutely no sense—which is the reason why I didn’t post it in my Wednesday column. But now that the Fed has spoken—and the retail numbers are out—I’ll let you pass judgement on it. I found it in a GATA release. Another link to this commentary is here.
Subprime Auto Bond Delinquencies Highest in 20 Years, Says Fitch
Delinquencies on subprime auto debt packaged into securities reached a high not seen since October 1996, as late payments continued to worsen in February, according to Fitch Ratings.
The number of car borrowers who were more than 60 days late on their bills in February rose 11.6 percent from the same period a year ago, bringing the delinquency rate to 5.16 percent, Fitch wrote Monday in a report. During the financial crisis delinquencies peaked at 5.04 percent, Fitch wrote.
“This isn’t an issue of whether the bonds will be repaid in full,” Kevin Duignan, global head of Fitch’s securitization group, said in an interview. Rather, it’s a question of whether investors will be faced with uncertainty that is inconsistent with high investment-grade ratings, he said.
This short Bloomberg article showed up on their Internet site at 2:21 p.m. Denver time on Monday—and it’s another story that I found in Wednesday’s edition of the King Report. Another link to this story is here.
Investors embrace High Yield ETFs as sentiment turns
High yield bonds have enjoyed a sustained rally led by Oil & Gas and Basic Materials, while the improved macroeconomic backdrop has seen investors use ETFs to express their views.
High yield bond ETFs have seen five consecutive weeks of positive inflows
The number of shares outstanding in $HYG has hit a new record high, illustrating demand
Oil & Gas, Basic Materials, Utilities and Financials have all seen HY recovery
The recent rally in risky assets has seen investors continue to embrace high yield (HY) exchange traded funds (ETFs), with positive inflows into the funds now entering their fifth consecutive week.
A rebound in commodity prices from February’s lows and stimulatory action from major central banks has improved global macroeconomic sentiment. As a result HY bond risk has fallen across the board, led by Basic Materials, Oil & Gas and Financials sectors.
I doubt this rebound will last long, but it falls into the category that “there’s a sucker born every minute”. This item showed up on the markit.com Internet site on Tuesday—and I thank Richard Saler for sending it our way. Another link to this article is here.
Largest U.S. Coal Producer Skips Interest Payment, Warns of Bankruptcy; Stock Crashes
One of the more impressive short squeezes in recent history took place in the first two weeks of March, when the stock of distressed Peabody Energy, the largest U.S. coal producer which employs 8,300 workers, exploded higher from just $2.50 per share at the start of the month to a whopping $6.50 just last week.
Many scratched their heads at this move as nothing fundamental had changed in the company’s deteriorating operations, and its bonds are among the most distressed issues trading currently.
Alas Peabody missed its narrow window to sell stock, and things were promptly normalized this morning, when the stock crashed back to earth plunging by nearly 40% back to $2.50 in the pre-market, wiping out all recent gains, after Peabody announced in its just filed 10-K, reported that it may have to join its peers Arch Coal and Alpha Natural in Chapter 11 bankruptcy protection, after it delayed $71 million in interest payment due on March 15.
I doubt that the high-yield bonds of this company are doing well at the moment. This news item appeared on the Zero Hedge Internet site at 8:54 a.m. on Wednesday morning EDT—and it’s the second contribution in a row from Richard Saler. Another link to this story is here.
Venezuela to Shut Down for a Week to Cope With Electricity Crisis
Venezuela is shutting down for a week as the government struggles with a deepening electricity crisis.
President Nicolas Maduro gave everyone an extra three days off work next week, extending the two-day Easter holiday, according to a statement in the Official Gazette published late Tuesday. Maduro had originally said over the weekend that the extended holiday would apply only to state employees.
The government has rationed electricity and water supplies across the country for months and urged citizens to avoid waste as Venezuela endures a prolonged drought that has slashed output at hydroelectric dams. The ruling socialists have blamed the shortage on the El Nino weather phenomena and “sabotage” by their political foes, while critics cite a lack of maintenance and poor planning.
“We’re hoping, God willing, rains will come,” Maduro said in a national address Saturday. “Look, the saving is more than 40 percent when these measures are taken. We’re reaching a difficult place that we’re trying to manage.”
Venezuela isn’t the only place having unusually warm and dry weather. Here in Edmonton it’s been unseasonably warm—and there isn’t a speck of snow in sight in most places in Western Canada, which is unheard of at this time of year—and at this latitude. This Bloomberg article, appeared on their website at 3:08 p.m. MDT yesterday afternoon—and I found it embedded in a GATA release. Another link to this news item is here.
The Next Disaster: Islamic State Expands as Libya Descends into Chaos
With two separate governments waging war against each other, Libya is crumbling. Islamic State is taking advantage of the turmoil to put down roots in the country. The U.S. is weighing intervention.
The terror has begun spilling over into neighboring countries. Last week, a shock troop that appeared to be Islamist conducted an attack in Tunisia. U.S. aircraft have bombed IS positions in Libya and the Americans and other Western countries are considering the possible need for a broader intervention. Moreover, the country is dependent on oil, but the wells, pipelines and terminals are extremely vulnerable. Taken together, these are the perfect ingredients for Libya to become the Arab world’s next drama.
When rebels toppled Muammar Gadhafi in the fall of 2011 after 42 years as the country’s dictator, Libya held elections, passed an interim constitution and quickly ramped oil production back up to prewar levels. But then old differences bubbled up again. Islamist parties fared poorly in elections held in the summer of 2014 and, in response, the government declared the results invalid. Newly elected members of parliament fled to the eastern part of the country to the cities of Baida and Tobruk, where they established the internationally recognized parliament.
Since then, the country has had two governments and, more crucially, two militia coalitions that have several times engaged in combat against each other. Fighting in Benghazi only ended two weeks ago after the most powerful general aligned with the eastern government, Khalifa Haftar, drove out militias backed by Tripoli.
This semi-longish news item appeared on the German website spiegel.de at 12:02 p.m. Europe time on their Wednesday afternoon, which was 7:02 a.m. in Washington—EDT plus 5 hours. It’s definitely worth reading if you have the interest—and especially if you intend to read the must read commentary that appears next. I thank Roy Stephens for this story—and another link to it is here.
Exposing the Libyan Agenda: A Closer Look at Hillary’s E-mails
Critics have long questioned why violent intervention was necessary in Libya. Hillary Clinton’s recently published emails confirm that it was less about protecting the people from a dictator than about money, banking, and preventing African economic sovereignty.
Before 2011, Libya had achieved economic independence, with its own water, its own food, its own oil, its own money, and its own state-owned bank. It had arisen under Qaddafi from one of the poorest of countries to the richest in Africa. Education and medical treatment were free; having a home was considered a human right; and Libyans participated in an original system of local democracy. The country boasted the world’s largest irrigation system, the Great Man-made River project, which brought water from the desert to the cities and coastal areas; and Qaddafi was embarking on a program to spread this model throughout Africa.
But that was before U.S.-NATO forces bombed the irrigation system and wreaked havoc on the country. Today the situation is so dire that President Obama has asked his advisors to draw up options including a new military front in Libya, and the Defense Department is reportedly standing ready with “the full spectrum of military operations required.”
Of the 3,000 e-mails released from Hillary Clinton’s private email server in late December 2015, about a third were from her close confidante Sidney Blumenthal, the attorney who defended her husband in the Monica Lewinsky case. One of these e-mails, dated April 2, 2011, reads in part: “Qaddafi’s government holds 143 tonnes of gold, and a similar amount in silver . . . . This gold was accumulated prior to the current rebellion and was intended to be used to establish a pan-African currency based on the Libyan golden Dinar. This plan was designed to provide the Francophone African Countries with an alternative to the French franc (CFA).”
I was saving this story for Saturday, but because I posted the spiegel.de story on Libya above, this piece dovetailed perfectly with it—and that’s why it’s here now. It’s a must read as well—and I thank Tom Attig for finally shaming me into posting it. It showed up on the informationclearinghouse.com Internet site on Monday—and another link to this commentary is here.
China Seeks to Avoid Mass Layoffs While Cutting Production
China must avoid mass unemployment from failing mines and factories even as it cuts back on its vast production of unwanted coal and steel, Premier Li Keqiang said Wednesday.
His remarks, at the end of a legislative meeting that focused on revitalizing China’s economy, reflected the difficult — some say unsustainable — policy combination that Mr. Li and China’s top leader, President Xi Jinping, hope to achieve. They want to drastically reduce the surplus industrial capacity that is sapping China’s growth, while avoiding economic disruption and widespread layoffs that could lead to unrest.
“We’ve already chosen steel and coal as the two sectors for achieving initial breakthroughs in reducing production capacity,” Mr. Li said at the end of the annual full meeting of the National People’s Congress, the Communist Party-controlled legislature.
“At the same time, we must avoid a wave of mass layoffs,” Mr. Li continued. Using a well-known Chinese metaphor for a secure livelihood, he said, “We must proceed with reducing industrial capacity, but the great numbers of employees cannot lose their rice bowls, and we must strive to find them new rice bowls.”
Good luck with that, guys! This story, filed from Beijing, was posted on The New York Times website on Wednesday sometime—and I thank Patrica Caulfield for bringing it to our attention. Another link to this article is here.
Japan’s big firms offer small 2016 pay hikes, dealing blow to Abenomics
Japanese blue-chip firms on Wednesday announced wage hikes far below last year’s increases, a blow to “Abenomics” stimulus policy at a time fears of a deepening global slowdown and jittery markets are denting business sentiment.
Bellwether Toyota Motor Corp and some other leading manufacturers agreed to raise base pay for a third year in a row, under public pressure from Prime Minister Shinzo Abe.
But analysts found the increments disappointing.
“This won’t boost the economy,” said Hisashi Yamada, chief economist at Japan Research Institute.
This Reuters article, filed from Tokyo, appeared on their Internet site at 5:37 a.m. EDT yesterday morning—and it’s courtesy of Brad Robertson via Zero Hedge. Another link to this story is here.
Japan to throw away kitchen scales in overhaul of consumption data
Japan’s sickly economic numbers are set for a boost, with bureaucrats planning to modernize the way they measure household spending and scrap an antiquated survey that relies on elderly shoppers to weigh their groceries with kitchen scales.
Household spending accounts for 57 percent of the world’s third-largest economy and has been in a funk for two years — or so it seems, according to monthly surveys which ask people to answer over 20 questions by hand and weigh groceries on state-provided scales before officials come to collect the forms.
Completing the survey is a time-consuming task that lends itself to retirees, who are among the most frugal consumers and are now so over-represented in spending data as to understate the overall outcome, economists say.
Respondents must log everything from the type of alcohol they buy to whether they pay by cash, credit card or voucher, and they must write exactly what they eat at restaurants.
What? You couldn’t make this stuff up! This amazing Reuters article, filed from Tokyo, put in an appearance on their website at 2:32 a.m. EDT on Wednesday morning—and it’s another offering from Brad Robertson via Zero Hedge. Another link to this story is here.
Kuroda Says Minus 0.5% Rate Is Theoretically Possible for Japan
The Bank of Japan has quite a lot of room to cut its key interest rate further and theoretically it could go to minus 0.5 percent, Governor Haruhiko Kuroda said in parliament Wednesday.
While the BoJ kept policy unchanged on Tuesday, Kuroda underscored in a press conference a readiness to move on any of three fronts: a reduction in the present minus 0.1 percent rate, an acceleration in boosting the monetary base or an expansion in purchases of riskier assets.
Questioned by a lawmaker in parliament Wednesday, he agreed that it would be theoretically possible to lower the rate to minus 0.5 percent.
With the BoJ far from its 2 percent inflation goal and economic growth stalling, most analysts have seen additional stimulus as just a matter of time. The stakes are rising for Kuroda, with household and corporate sentiment waning and investors questioning whether monetary policy is reaching its limits.
This Bloomberg article, probably filed from Tokyo, was posted on their website at 7:10 p.m. MDT on Tuesday evening—and it’s the third and final news item that I found in yesterday’s edition of the King Report. Another link to this story is here.
Munich Re stashes gold and cash to counter negative rates
German reinsurer Munich Re is boosting its gold and cash reserves in the face of the punishing negative interest rates from the European Central Bank, it said today.
The world’s largest reinsurer is far from alone in seeking alternative investment strategies to counter the near-zero or negative interest rates that reduce the income insurers require to pay out on policies.
Munich Re has held gold in its coffers for some time and recently added a cash sum in in the two-digit million euros, Chief Executive Nikolaus von Bomhard told a news conference.
This Reuters article, flied from Munich, showed up on their Internet site at 8:22 a.m. EDT on Wednesday morning—and it’s another story that I found on the gata.org Internet site. Another link to it is here. Richard Saler sent the Zero Hedge spin on this. It’s headlined “World’s Second Largest Reinsurer Buys Gold, Hoards Cash To Counter Negative Interest Rates“.
Venezuela’s gold keeps moving to Switzerland — Ronan Manly
Following on from last month in which BullionStar’s Koos Jansen broke the news that Venezuela had sent almost 36 tonnes of its gold reserves to Switzerland at the beginning of the year, “Venezuela Exported 36t of Its Official Gold Reserves to Switzerland in January“, there have now been further interesting developments in this ongoing saga.
It has now come to light that on Tuesday 8 March, the Banco Central de Venezuela (BCV) sent another 12.5 tonnes of gold by air freight to Switzerland (via Paris), and fascinatingly in this instance, the exact details of the transfer are already available, including the cargo manifest, courtesy of Venezuelan newspaper El Cooperante which broke the news on 11 March.
As per the January gold exports to Switzerland, which most likely were part of a gold swap to generate much-needed financing for the crisis-ridden Venezuelan economy, this latest shipment appears likewise.
This interesting gold-related story appeared on the bullionstar.com Internet site yesterday sometime—and it’s another article I found in a GATA release. Another link to this article is here.
Kazakhstan and China Join Forces in the Gold Market
The other day I bumped into a small but potentially important news item on the website of the Shanghai Gold Exchange. The article was published in Mandarin, of course, as the Chinese (authorities) hardly ever publish valuable information in English – most articles published in English have been intentionally written to communicate what the State Council wants the West to hear. In the article it’s described a financial delegation from Kazakhstan visited the Shanghai Gold Exchange (SGE) to discuss cooperation in gold trading along One Belt One Road (OBOR), also referred to as the new Silk Road, that reaches over the whole Eurasian continent. From the SGE (exclusively translated by BullionStar):
A group led by Kairat Kelimbetov, the Chairman of the Board of Directors of the Kazakhstan International Financial Center, visited the Exchange
At noon on 26 February 2016 a group led by Kairat Kelimbetov, President of the Astana International Financial Center and former President of the National Bank of Kazakhstan, visited the Shanghai Gold Exchange and held talks with President Jiao Jinpu. Both parties reached consensus on strengthening cooperation and seeking development in the gold market under the “One Belt One Road” project. Zuo Qihan, Kazakhstan consulate general in Shanghai, Shen Gang, Vice General Manager of the Exchange and Zhuang Xiao, CTO, attended the meeting.
Although the article lacks any detail, we can discover its potential impact if we study the financial and political backdrop.
This is another very interesting gold-related story that appeared on the bullionstar.com Internet site yesterday—and another article I found on the gata.org Internet site. Another link to this story is here.
The PHOTOS and the FUNNIES
The first photo is of the unmistakeable scarlet ibis—and the second is one of many types of passion fruit flower.
The WRAP
Despite the late surge [on Wednesday afternoon], gold and silver prices are still within the broad trading range of the past five weeks or so. Gold and silver can certainly make new highs for the move, although I have difficulty in seeing prices advance strongly from here for the same reason we rose so strongly into mid-February, namely, massive technical fund buying in COMEX futures.
It’s also important to remember that the COMEX commercials do not appear to be under any financial stress yet due to higher gold and silver prices. Contrary to popular belief, the commercials made out like bandits on the big surge in gold prices this year in selling out long positions (by the raptors) while the technical funds got hammered in buying back short positions at big losses. The technical funds are now firmly entrenched on the long side with the commercials big net short, but my guess is that the technical funds have gotten big net long in gold at an average price of around $1,230 in gold and $15.40 or so in silver. It would take big price advances from here ($100+ in gold and several dollars in silver) to put the commercials under pressure, or even to erase the gains they made this year. That is certainly within the realm of possibilities of course, but not yet within the likely probabilities. — Silver analyst Ted Butler: 16 March 2016
I must admit that I was happy to see that the precious metals were allowed to rally somewhat after the Fed news—and my worst fears never materialized.
But make no mistake, JPMorgan et al were at battle stations at 2 p.m. EDT providing whatever short-side “liquidity” necessary to prevent precious metal prices from closing at prices that would take your breath away. At the same time it would have devalued paper money into the dirt—and brought an end to central banking. Maybe some day.
Here are the 6-month charts for all four precious metals—and they don’t show much, except yesterday’s low ticks, because all the price action that really mattered to the upside occurred after the 1:30 p.m. COMEX close—and that’s the end-of-day cut-off time for these charts. The spike will appear once stockcharts.com updates their data at the close of COMEX trading today.
I was intrigued by the GLD chart that First Majestic Silver’s Todd Anthony sent our way yesterday, because it’s obvious that more than one buyer was picking up GLD shares in size during the last hour of trading before the Fed news—and if you check the HUI and ISSI, you’ll see that there was a pick-up in their respective stocks starting around 1:40 p.m. EDT. Even the U.S. dollar index began to crash a minute or so before the Fed news was released, so it’s obvious that some insiders were front-running it.
By the way, the story about JPMorgan and aluminum on the LME did not elicit a response from Ted in his mid-week commentary yesterday. His comment on the phone was a mental shrug of the shoulders that sort of fell into the category of “It’s JPMorgan, so why should anyone be surprised?”
And as I type this paragraph, the London open is less than ten minutes away—and with North America now on Daylight Savings Time, the London open is now 4 a.m. EDT until the U.K. goes on British Summer Time on Sunday, March 27. I see that gold was sold lower until 11 a.m HKT on their Thursday morning—and has been quietly rallying since—and is currently back at unchanged. The same happened in silver, except its low tick came shortly before 1 p.m HKT—and has rallied back to unchanged as well. Platinum rallied in mid-morning trading in the Far East, but those gains were rolled back within an hour, but it began to rally anew around 1 p.m. HKT—and it’s currently up five dollars. About the same happened with palladium—and it’s back to unchanged too.
Net HFT gold volume is just over 34,500 contracts—and roll-overs out of April are already a bit more than twenty-five percent of gross volume. In silver the HFT volume is around 8,800 contracts. The dollar index crawled lower through all of Far East trading, but began to head south with a vengeance starting about twenty minutes before the London open—and is currently down 35 basis points as I post today’s column on the website.
Although the internal set-up in the Commitment of Traders could hardly be worse, it’s a given that conditions in the physical metal market remain tight as a drum—and yesterday’s big rallies will certainly put a strain on what’s left in both silver and gold. Of course the custodians of GLD and SLV—HSBC USA and JPMorgan—may short the shares of these ETFs in lieu of depositing real metal, but they aren’t the only ETFs in the world—and those will certainly be looking for the real deal.
It remains to be seen if/when JPMorgan et al can engineer a price decline from these new price levels—and for you and I, it’s just more waiting.
That’s all I have for today—and I’ll see you here on Thursday sometime.
Ed
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