24 March 2016 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
After trading flat for the first three hours of the morning session in the Far East on their Wednesday, the gold price was turned lower staring around 9 a.m. HKT. The HFT boyz and their algos sliced another 10 bucks off the price starting around noon—and then it traded more or less flat until the noon London silver fix, which came minutes before 8 a.m. EDT in New York. JPMorgan et al took another 17 dollar slice out of the gold price starting at that point—and ending at the London p.m. gold fix. The price rallied quietly until the 1:30 p.m. EDT COMEX close—and then slid a bit into the 5:00 p.m. session close.
The high and low ticks in gold were recorded as $1,249.80 and $1,215.40 in the April contract.
Gold was closed in New York on Wednesday at $1,219.60 spot, down $28.20 from Tuesday’s close. Net volume was a hair under 160,000 contracts—and roll-over activity was heavy for the second day in a row.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. You can see the volume associated with the first spike down around 9 a.m. HKT—and then the bigger one at midnight EDT, which happens to be noon in Hong Kong the following day. Then the big volume picked up again at the silver fix, which came about ten minutes before noon in London, 6 a.m. Denver time on this chart—and 8 a.m. in New York. Volume really didn’t die off until after the COMEX close, which is 11:30 a.m. MDT on the chart below.
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 this chart full-screen size.
With some minor variations, the chart pattern in silver was very similar to gold’s. The main difference was that the price kept on declining right through the London p.m. gold fix, with the low tick of the day coming around 12:40 p.m. in New York. After that, the price didn’t do much.
The high and low ticks in this precious metal were reported as $15.935 and $15.235 in the May contract.
Silver finished the Wednesday session at $15.21 spot, down 65 cents on the day—and virtually on its low tick. Net volume was very heavy at a bit under 69,000 contracts.
Platinum dipped a bit in the first hour of trading when New York opened on Tuesday evening, but two hours later it was up to $1,000 the ounce—and that’s when the not-for-profit sellers showed up. They had it down over 10 bucks the ounce by 1 p.m HKT—and then it traded flat until the boyz and their algorithms appeared at the noon silver fix in London. The low tick came shortly before 4 p.m. in after-hours trading in New York—and it recovered a dollar or so into the close. Platinum was closed lower by 37 bucks at $957 spot.
With some minor variations, the same price scenario played itself out in palladium as well. The 12:30 p.m. New York low was $575 spot—and it’s subsequent rally wasn’t allowed to last—as palladium was closed at $580 spot, down 23 dollars on the day.
The dollar index closed late on Tuesday afternoon in New York at 95.67—and began to head higher shortly before 9 a.m. Tokyo time—8 a.m. in Hong Kong—on their respective Wednesday mornings. It chopped higher until its 96.23 high tick, which came at 12:30 p.m. EDT in New York. It sold down to just about the 96.00 mark before ‘gentle hands’ appeared—and the index traded flat from there into the close. The dollar index finished the Wednesday session in New York at 96.04—up 37 basis points.
And here’s the 6-month U.S. dollar chart so you can see how this manufactured rally is progressing. Don’t forget—as Chris Powell of GATA so eloquently stated—“The are no markets anymore, only interventions.“
Not surprisingly, the gold stocks gapped down a bunch at the open, but then began to rally around 10:30 a.m. EDT. That rally lasted until precisely noon in New York—and at that point it appeared that some sort of not-for-profit seller/short seller appeared, as no ‘for profit’ seller would ever sell that hard into a market that it would allow its activities to negatively affect the overall price of not only the stock they were selling, but the entire index as well. The HUI closed on its absolute low tick, down 7.36 percent.
The silver equities followed a very similar path, except their low ticks came shortly after 10 a.m. in New York—and the very robust rally that followed also got smashed by the same not-for-profit/short sellers that appeared in gold at precisely noon EDT. Nick’s Intraday Silver Sentiment Index closed down 6.30 percent.
The CME Daily Delivery Report showed that 12 gold and 70 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. There was nothing out of the ordinary in gold on either the issuer or stopper side. The same can’t be said for silver however, as the two largest short/issuers were Scotiabank and ABN Amro with 35 and 32 contracts respectively. And it should come as no great surprise to anyone that JPMorgan stopped all 70 contracts for its own in-house [proprietary] trading account once again. 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 in March fell by 26 contracts, leaving 52 still open. In silver, March o.i. dropped by 102 contracts—and that leaves just 187 left. The numbers show that another 15 March contract holders were let off the hook by JPMorgan.
I said in this space yesterday that Ted would have the answer as to why 500 gold contracts that were issued in Friday’s Preliminary Report—was promptly reversed on Monday, without the physical off-take showing up in the Daily Delivery Report. Here is his answer….
“The 500 contracts of gold bought so close to the end of the delivery period was notable in that it likely involved an immediate demand for metal. Therefore, I was interested in what the delivery and open interest statistics the next day would indicate. The next day, the 500 contracts disappeared from open interest but didn’t show up in the delivery data, creating a bit of a puzzle. Then it dawned on me that there was likely an EFP (exchange for physical) transaction and, sure enough, 500 March contracts were recorded as an EFP transaction. Simply put, an EFP is an alternative delivery option, but one which is involves a voluntary agreement.”
“It is possible to enact an exchange for physical delivery transaction in any physically delivered commodity. The most important feature of an EFP is that it is a voluntary and mutually agreed upon transaction by both the seller and, particularly, the buyer. No one can force an EFP on a buyer. If a buyer of a gold or silver futures contract insists on delivery according to contract specifications (as do 99% of actual deliveries) and the buyer has fulfilled his obligations (coming up with the money), the physical delivery must occur. Otherwise, there would be a delivery default and there would be hell to pay—no ifs, ands or buts.”
“Therefore, there is no such thing as a forced cash settlement on a COMEX silver or gold contract that you read so much about. The next forced cash settlement on a COMEX contract would also be the first and last such settlement because should it occur, the exchange would cease to exist. That’s why these instruments are called contracts – they involve contractual obligations and responsibilities. An EFP is not a default because the buyer (and by extension, the seller) must voluntarily agree to take something other than metal in a licensed COMEX warehouse as the futures contract stipulates. If the buyer so agrees, no problem; if not, no EFP.” — Silver analyst Ted Butler: 23 March 2016 [All emphasis is mine. – Ed]
There were no reported changes in GLD yesterday—and as of 7:29 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on in their gold and silver ETFs for the week ending on Friday, March 18—and this is what they had to report. Their gold ETF added 31,727 troy ounces—and their silver ETF increased by 114,489 troy ounces.
There was no sales report from the U.S. Mint.
There was no in/out activity in gold over at the COMEX-approved depositories on Tuesday.
It was certainly busier in silver, as 601,244 troy ounces were received—and 106,295 troy ounces were shipped out the door for parts unknown. Virtually all of the activity, both in and out, was at the CNT depository—and the link to that is here.
There was also decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. The received 3,646 of them—but shipped out only 285. All of the action was at Brink’s, Inc.—and the link to that, in troy ounces, is here.
Once again I don’t have all that many stories today—and I hope there are at least two or three from the list below that you consider worth your while.
CRITICAL READS
Marc Faber: How terror impacts markets
Marc Faber, The Gloom, Boom, & Doom Report, provides perspective to how terror impacts markets and says in the long run the U.S. dollar will be weak.
The above headline and lead paragraph is something that the folks over at CNBC concocted. The ‘talking head’ tried to direct Marc’s answers, but he’s not having any of it. He says that gold stocks and some emerging markets are what’s worth investing in now.
This 5:31 minute video interview, which is worth you while, showed up on the cnbc.com Internet site late Tuesday afternoon EDT—and I thank Ken Hurt for finding it for us. Another link to this interview is here.
Robbing the Federal Reserve…and Getting Away With It
It’s rare that any country’s central bank is robbed. When it does happen, it’s a huge story. It’s not like knocking off the local liquor store or retail bank. Central banks are big game.
Last month, an international group of hackers robbed Bangladesh’s account at the Federal Reserve, the central bank of the U.S.
First, the hackers used a computer virus to break into the security system of Bangladesh’s central bank. Then they stole the user names and passwords the bank uses for payment transfers. The hackers used this information to wire over $100 million from Bangladesh’s Federal Reserve account to the Philippines and Sri Lanka. From there, they funneled it to casinos and withdrew it as cash.
The hackers cleverly executed the heist on a Friday. You see, Friday and Saturday are weekend days in Bangladesh. But Friday is a work day in the U.S. So, they were able to execute the bogus transfers without Bangladeshi government employees noticing for days.
This commentary by International Man senior editor Nick Giambruno put in an appearance on their Internet site yesterday morning EDT—and the first person through the door with it was John Johnson. Another link to this news item is here.
Helicopter Money Takes Flight as Latest Drastic Monetary Idea
After more than 600 interest-rate cuts and $12 trillion of asset purchases failed to move the inflation needle enough, central banks may need to head even deeper into uncharted territory.
The way to get the world out of its disinflationary rut could lie in them directly financing government stimulus — a strategy known as deploying “helicopter money” after a 1969 proposal from Nobel laureate Milton Friedman.
Economists at Citigroup Inc., HSBC Holdings Plc and Commerzbank AG all published reports to investors on the topic in the past two weeks, while hedge fund titan Ray Dalio sees potential in the idea. European Central Bank officials are already squabbling about what President Mario Draghi calls a “very interesting concept.”
“We don’t know for certain that ‘helicopter money’ will be the next attempted silver bullet, however the topic is receiving considerably more attention,” said Gabriel Stein, an economist at Oxford Economics Ltd. in London. “The likelihood is reasonably high of some form being implemented somewhere.”
This news item was posted on the Bloomberg website at 4:38 a.m. Denver time on their Wednesday morning—and I thank Doug Clark for his first of two contributions in today’s column. It’s worth reading—and another link to this article is here.
Trump is Right: Dump NATO Now — David Stockman
If you want to know why we have a $19 trillion national debt and a fiscal structure that will take that already staggering figure to $35 trillion and 140% of GDP within a decade, just consider the latest campaign fracas. That is, the shrieks of disbelief in response to Donald Trump’s sensible suggestion that the Europeans pay for their own defense.
The fact is, NATO has been an obsolete waste for 25 years. Yet the denizens of the Imperial City cannot even seem to grasp that the 4 million Red Army is no more; and that the Soviet Empire, which enslaved 410 million souls to its economic and military service, vanished from the pages of history in December 1991.
The plain fact is Russia is an economic and military weakling and is not the slightest threat to the security of the United States. None. Nichts. Nada. Nope.
Its entire expenditure for national defense amounts to just $50 billion, but during the current year only $35 billion of that will actually go to the Russian Armed Forces. On an apples-to-apples basis, that’s about three weeks of Pentagon spending!
I took great umbrage with how Stockman describes the Russian people, their leader—and their country—but the rest of this rant by David is right on the money. I thank Roy Stephens for sending it to me just before midnight Denver time last night. Another link to this commentary is here.
British judge approves extradition of ‘flash crash’ trader to U.S.
A British judge approved on Wednesday a U.S. request for the extradition of a London-based trader accused of contributing to the 2010 Wall Street “flash crash” by placing bogus orders to spoof the market.
Navinder Sarao, 37, who traded on the Chicago Mercantile Exchange (CME) from his parents’ home near London’s Heathrow Airport, is wanted in the United States to face trial on 22 criminal counts of wire fraud, commodities fraud and market manipulation. He denies any wrongdoing.
“We are very disappointed,” Sarao’s lawyer Richard Egan told reporters after the ruling at Westminster Magistrates’ Court. “We think we have still got a strong argument and we will be appealing this decision.“
The real crooks, the banking system and Wall Street itself, will never face prosecution for their crimes. This poor schmuck, guilty thought he may be, is the sacrificial lamb, as someone has to be blamed. This Reuters article, filed from London, was picked up by the news.yahoo.com Internet site very late yesterday morning EDT—and I thank Jerome Cherry for sending it along. Another link to this story is here.
Credit Suisse, the Jailed Banker and an Oligarch’s Millions
For years, he was a member of the elite of Swiss bankers. Now, the former Credit Suisse wealth manager is in a prison hospital in Geneva, charged with fraud, misappropriation, and criminal mismanagement, facing as many as 10 years behind bars.
The case reaches beyond the executive, who under Swiss law can’t be identified in public. Credit Suisse now faces criminal accusations from three clients, alleging it played a role in the fraud.
The timing is terrible for Switzerland’s No. 2 bank. Its new CEO, Tidjane Thiam, is betting its future on managing money for the rich. Wednesday, he announced plans for more cuts at its investment bank. He also told Bloomberg Television he was blindsided by risky debt and illiquid positions taken at the trading unit that he expects to contribute to a loss for the bank in the first quarter.
At least one client involved in the Geneva case — one of Credit Suisse’s largest — is pulling his accounts from the bank. In criminal complaints with prosecutors, his lawyers accuse the bank of money laundering and “churning” his accounts to boost its revenue with unnecessary trades. Wealthy men from the former Soviet Union, the clients said their losses reach into the hundreds of millions of dollars.
This Bloomberg article put in an appearance on their website at 3:20 a.m. MDT on Wednesday morning—and was updated about four hours later. It’s the second offering of the day from Doug Clark—and link to this story is here.
China’s vice finance minister denies any secret U.S.-China exchange rate deal
China’s vice finance minister said on Tuesday there was no secret agreement between the United States and China regarding adjustments to exchange rates.
The comment by Zhu Guangyao at a forum follows speculation in foreign exchange markets that finance ministers at the recent G20 summit in Shanghai may have reached a tacit understanding in which the United States agreed to allow the dollar to depreciate, relieving pressure on other currencies.
The dollar fell to a five-month low against major currencies last week after the U.S. central bank indicated it would likely take longer to raise interest rates than some had thought.
This Reuters story is from very late Monday night EDT—and the dollar index has been in rally mode since its low last Friday morning in Hong Kong trading. This article is a day late and a dollar or two short, as the dollar index is now up over 150 basis points from that low. I found this news item in a GATA release yesterday—and another link to this article is here.
Jim Rickards: How to prepare and profit from the Japanese doomsday detonation
Last night, we were plagued by technical difficulties. And as a result, we weren’t able to bring you the LIVE event as we had intended. I am truly sorry for that. Your time is valuable, and you deserve better.
That’s why I’m sending you this email…
Since we signed off last night, our production team has worked tirelessly to put together a completely seamless rebroadcast of last night’s event. They’ve taken out all of the extraneous material and left you with Jim’s most crucial talking points. Sincerely, Peter Coyne, Producer, Fallout 2016
Apparently this video is only going to be available for 24 hours. But 24 hours from when is the question. So if you click on the link—and it’s dead, you’ll know why. There’s no time track on the video, so I can’t even tell you how long it is. But it’s probably worth watching—and I’m sure there’s a sales pitch in it somewhere. Another link to this video conference is here.
World’s richest Hindu temple wants gold back rather than cash
The world’s richest Hindu temple is asking to be repaid in gold for longer-term deposits it makes under the Indian government’s monetization scheme in order to make the plan more attractive to the temples that are sitting on thousands of tonnes of the metal.
The Sri Venkateswara Swamy Temple, popularly known as the Tirupati, has requested repayment in metal rather than cash for their deposits of longer than three years under the Gold Monetisation Scheme, D. Sambasiva Rao, the executive director of the temple operator Tirumala Tirupati Devasthanam (TTD), told Reuters today.
TTD’s participation in the gold scheme is crucial to its success since the temple in the Southern Andhra Pradesh state holds 7 tonnes of the metal, equivalent to about $277 million at current prices. However, Tirupati and other temples around India are reluctant to part with the gold forever because of its religious and emotional significance.
This Reuters story, co-filed from New Delhi and Mumbai, appeared on their Internet site at 5:29 a.m. on Wednesday morning EDT—and I found it on the gata.org website. Another link to this gold-related article is here.
China taking in more Swiss gold than Hong Kong for second successive month — Lawrence Williams
Time was when Hong Kong gold exports to the mainland were an excellent proxy for total Chinese gold imports. The semi-autonomous Chinese region, whose statistics are treated differently than those for the rest of China – in other words effectively as those of a separate country – was the conduit for the great majority of mainland China gold imports, so fluctuations up and down in the Hong Kong figures used to be an excellent guide to total Chinese gold non-domestic uptake. While the Chinese mainland does not issue gold import data, Hong Kong, in a throwback to its old British colonial days, continues to issue monthly reports on its imports and exports, and thus was treated by the media and most gold analysts as the principal guide to the Middle Kingdom’s gold imports.
But this is no longer the case. Two years ago, China eased restrictions on direct imports of gold from other nations than Hong Kong, and since then the proportions of gold imported directly, rather than via Hong Kong, appears to have risen dramatically. Hong Kong gold exports to the mainland are thus no longer even a sensible guide to the total Chinese figure.
This is borne out dramatically by this year’s gold export statistics to China and Hong Kong from Switzerland. The Swiss figures are particularly important as the Swiss gold refineries have been dominant in the global gold trade in re-refining gold delivered there from around the world into the small bar and wafer sizes mostly in demand from the key gold buying nations, China and India.
This commentary by Lawrie was posted on the Sharps Pixley website yesterday sometime—and another link to this article is here.
The PHOTOS and the FUNNIES
The first photo is of a muskox, an animal found in the high arctic of Canada, Russia—and other countries with artic climates. I’ve seen lots of these in the wild back in the early 1970s. They’re short, stalky creatures—and a lot of their bulk is various layers of fur. I would think that the photographer that took this photo was too close for his own good. The second photo is a malachite kingfisher, a common bird found around water in all of Africa south of the Sahara Desert.
The WRAP
Gold and silver prices are sharply lower on Wednesday (for no apparent fundamental reason), so the question is if this is the start of the sell-off suggested by the extremely negative COT market structure on the COMEX. It could be, but we’ll only know in the fullness of time. COMEX positioning has been the only negative possibility pointing to lower prices, so I am hard-pressed to see any other reason behind Wednesday’s decline. Just because the probabilities have pointed to the likelihood that the commercials would be successful in rigging prices lower to induce technical fund selling, does it mean that outcome is guaranteed. Then again, it has been unwise to bet against the crooked COMEX commercials.
It is more important that silver investors be prepared for whatever occurs in the short term than in trying to predict or play the short term movements. For long term investors, which is the best approach, it is mostly a matter of gritting one’s teeth until the negative market structure improves. For the more adventurous, planning to load up as and when the market structure improves might be in order. It all depends on one’s mental and emotional makeup. While there is always uncertainty about the short term direction of price, thanks to JPMorgan and the real facts surrounding silver, the long term level of prices looks sharply higher. — Silver analyst Ted Butler: 23 March 2016
As Ted said in the above quote, these price declines in all four precious metals, plus the other three commodities that make up the ‘Big 6+1’—copper, natural gas—and WTIC, all got sold off in what has all the hallmarks of an across-the-board engineered price decline. Where it will stop—and how long it will take to get there in these particular commodities and precious metals, is unknown. But with an over-the-moon butt-ass ugly Commitment of Traders Report in gold and silver, it could be pretty terrible.
But as I’ve mentioned on numerous occasions, as has Ted, the critical 50-day moving averages are moving ever higher with each passing day—and this is particularly true in silver. However, despite Wednesday’s price declines, gold could still get nailed for $100+ and silver for more than a buck.
Here are the 6-month charts for all of the Big 6+1 commodities, so you can see this for yourself.
The fact that these engineered price declines began the day after the cut-off for this Friday’s COT Report is no accident, I’m sure—and whatever the Commercial traders/banks are up to, won’t be known until the COT Report that comes out on April 1.
All we can do is wait this out, or take whatever defensive measures we deem appropriate, which is precisely what Ted pointed out in the second paragraph in the above quote.
And as I type this, it’s 3:50 a.m. EDT—and the London open is ten minutes away. I note that ‘da boyz’ set new low ticks in all four precious metals at various times in Far East trading on their Thursday. Gold is currently down 5 dollars an ounce, silver is down a nickel, platinum and palladium are down 5 and 4 bucks respectively.
Net HFT gold volume is just over 28,000 contracts—and roll-over activity out of April is already very decent. In silver the net HFT volume is just under 7,900 contracts. The dollar index has been rallying in fits and starts ever since it began to trade in New York yesterday evening—and is currently up 24 basis points as London opens.
And as I post today’s column on the website at 4:13 a.m. EDT, I see that nothing much is happening now that London has been open ten minutes or so. But as I said yesterday at this time, the day was still young—and that turned out to be prophetic in the extreme. Will it happen again today? Who knows.
If these engineered price declines are for real, we should see more down-side price pressure as the Thursday trading day progresses—and certainly tomorrow as well, since it’s Friday. I’m not overly happy if things turns out the way that both Ted and I expected they would, but the criminals running this COMEX price fixing scheme are in total control of day-to-pricing—until they aren’t.
See you here tomorrow.
Ed
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