26 April 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t do much in Far East trading on their Monday. It was sold down to its low tick around the London morning gold fix [10:30 a.m. BST]—and began to rally from there. That rally was capped shortly before 10:20 a.m. in New York. From that point, the price didn’t do much until around fifteen minutes before the COMEX close—and then it got sold down around 4 bucks by 2:30 p.m. in after-hours trading—and it chopped sideways for the remainder of the day.
The low and high tick were reported by the CME Group as $1,231.30 and $1,243.80 in the June contract.
Gold finished the Monday trading session in New York at $1,237.90 spot, up $5.70 from Friday’s close. Net volume was very much on the lighter side for a change at just under 108,000 contracts.
Silver didn’t do much in morning trading in the Far East. There was a bit of a rally in early afternoon trading in Hong Kong, but that was allowed to get too much over $17 spot before the not-for-profit sellers showed up. By shortly after 10 a.m. BST in London, the low price tick was in, which got retested an hour later. The subsequent rally ran into ‘da boyz’ shortly before 10:20 a.m. EDT, just like in gold—and after that, the silver price was forced to follow the same price as gold—and they closed silver back below $17 spot once again.
The low and high ticks in this precious metal were recorded as $16.81 and $17.14 in the May contract.
Silver was closed in New York yesterday at $16.99 spot, up 3.5 cents from Friday’s close. Net HFT gold volume was pretty light at just over 25,500 contracts and, of course, roll-over action was very heavy. For the fifth straight trading session, silver has been closed just pennies below the $17 spot price mark—and there’s no way that it’s accidental.
Platinum got sold down a quick 7 or 8 bucks at the start of trading in New York on Sunday evening. It made it back to a buck above unchanged just before the London/Zurich open. From there it was sold down to its $999 low tick at noon Zurich time—and that low was retested about two hours later. The rally that began at that point met the same fate as gold and silver—and also at the same precise time. After that it chopped sideways for the rest of the New York trading session, closing up 7 dollars at $1,016 spot.
Palladium’s price path on Monday was a mini version of what happened in platinum. The only difference being that the high tick in palladium came at 9 a.m. EDT in COMEX trading. From that point it quietly sold off and closed unchanged from Friday at $603 spot.
The dollar index closed late on Friday afternoon in New York at 95.12—and when it opened for trading at 2:00 p.m. EDT on Sunday afternoon, it didn’t do much for the first couple of hours, but then began to chop lower, with the 94.68 low tick coming sometime after 11 a.m. in New York on their Monday morning. It chopped rather aimlessly higher from there, finishing the Monday trading session at 94.77—down 35 basis points from its Friday close. Here’s the 3-day U.S. dollar chart so you can see all of the activity over the weekend, plus what happened on Friday as well.
Here’s the 6-month U.S. dollar index—and it’s impossible to read anything into yesterday’s price action based on this chart. The jury is still out on whether we go higher or lower from there.
The gold stocks opened unchanged, then dipped into negative territory briefly, before blasting into the green. But once JPMorgan et al capped the price around 10:20 a.m. EDT, the stocks chopped lower and back into the red in a fairly broad range, but did rally a bit in the last hour of trading, finishing off their respective lows by a bit. The HUI finished the Monday session down 0.40 percent—and I must admit that I was underwhelmed.
The silver equities turned in a near identical performance, so I shall dispense with the play-by-play, as Nick Laird’s Intraday Silver Sentiment Index closed lower by 0.66 percent.
The CME Daily Delivery Report showed that 202 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. The only two short/issuers worth mentioning were HSBC USA with 126 contracts—and International F.C. Stone with 75. Like the issuers, the stoppers were “all the usual suspects”. The largest, of course, was JPMorgan with 91 contracts for its own account—and 30 contracts for its clients. Canada’s Scotiabank took 59 contracts—and International F.C. Stone received 18. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest dropped a chunky 1,079 contracts, leaving 305 still left. Friday’s Daily Delivery Report showed that 973 gold contracts were posted for delivery today, so JPMorgan let another 1,079-973=106 May contract holders in gold off the hook. Silver o.i. declined by 2 contracts, leaving 4 left.
There was a withdrawal from GLD on Monday, as an authorized participant took out 76,441 troy ounces—and as of 7:08 p.m. EDT yesterday evening, there were no reported changes in SLV.
It’s Ted Butler’s opinion that SLV is owed between 5 and 10 million troy ounces of silver—and it will be interesting to see if the authorized participants add the physical metal as the prospectus requires, or will they kill the price so they can cover the SLV shares that they shorted in lieu of depositing real metal? My money is on the latter.
The U.S. Mint had a sales report yesterday. They sold 9,500 troy ounces of gold eagles—4,000 one-ounce 24K gold buffaloes—and 801,000 silver eagles. Without doubt, whatever the public wasn’t buying, went to JPMorgan.
There wasn’t a lot of activity in gold over at the COMEX-approved depositories on Friday. Nothing was reported received—and only 16,075.000 troy ounces/500 kilobars were shipped out the door. The link to that activity is here.
It was a pretty busy day in silver, as 702,729 troy ounces were received—and 924,866 troy ounces were sent off to parts unknown. Of the amount shipped out, another 300,003 troy ounces came out of JPMorgan’s vault. The link to that action is here.
It was pretty quiet at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, as only 263 kilobars were received—and only 481 were shipped out. All of the activity was at Brink’s, Inc. as per usual—and the link to that activity, in troy ounces, is here.
Here are three charts that Nick sent around late last Friday evening—and since I was already full up with charts in my Saturday column as it was, these had to wait for today. They show Swiss gold imports and exports for the month of March—and the titles of each graph tells you all you need to know, with no further embellishments required from me.
I don’t have all that many stories for you today, so I hope you can find the odd one that interests you.
CRITICAL READS
The Lemmings of Wall Street — David Stockman
I mistakenly took Squawk Box off mute this morning. It was just in time to hear one of the regular anchors—–the one who makes Joe Kernen sound slightly insightful by comparison——forecast a pick-up in global growth on the grounds that “China is recovering”.
Yes, the credit intoxicated land of the Red Ponzi just tied one on for the record books. During Q1 it generated new debt at a madcap annual rate of $4 trillion or nearly 40% of GDP.
And that incendiary deposit of more unpayable debt, which came on top of the $30 trillion already smothering history’s greatest construction site and open air gambling den, did indeed goose China’s real estate prices, state company CapEx, infrastructure building and steel production. Call it fiat growth because even pyramid building adds to stated GDP, at first.
Even then, the overwhelming share of this explosion of new credit went to pay interest on the existing mountain of IOUs. Charles Ponzi could never have imagined a scam so audacious.
No he couldn’t—and the fact that everybody can see what’s going on—and are still participating in it regardless, is testament to “the madness of crowds“. This must read commentary by David put in an appearance on his Internet site on Saturday sometime—and I thank Len Bridger for pointing it out. Another link to this article is here.
Another Gary Cooper Rebound: It Isn’t on the Level
Gary Cooper famously told a Congressional committee investigating communist infiltration of Hollywood in the 1950s that “from what I have heard about it, it isn’t on the level.”
I was put in mind of that observation this morning. First, I heard Jim Cramer saying that the bottom is in for Caterpillar and then I read that Goldman Sachs had upgraded its rating on CAT and Joy Global on the grounds that,
“…the signs of a China recovery now appear to be broadening.”
By the lights of Wall Street and its media megaphones, therefore, global demand for commodities and oil is purportedly rebounding and a reflationary cycle of growth is again underway. Apparently, its time to buy the dip again because the world economy has gotten back into its growth groove.
No it hasn’t. What we have here is a Gary Cooper rebound. That is, another unsustainable upward blip of the fundamentally false global credit bubble. But the latter is no more on the level than was Joseph Stalin’s new Soviet paradise.
This longish Zero Hedge commentary showed up on David Stockman’s website yesterday—and it’s certainly worth reading as well. Another link to this worthwhile article is here.
New York Times plans to cut hundreds of jobs later this year
The New York Times Co. is preparing to lay off a few hundred staffers in the second half of the year, The Post has learned.
Chairman and Publisher Arthur “Pinch” Sulzberger Jr.’s management team has been talking with some of the Times’ unions to come to a deal to provide reduced severance to those affected, sources told The Post.
“There’s a goal of a couple of hundred people,” said a source familiar with talks. “They don’t want to pay out big packages, and they’re having negotiations with the unions.”
The layoffs would likely occur between the Aug. 21 end of the summer Olympics in Brazil and Election Day on Nov. 8, sources said.
This story was posted on the nypost.com Internet site at 9 p.m. EDT on Sunday evening—and it’s courtesy of Brad Robertson via Zero Hedge. Another link to this news item is here.
New Homes Sales in U.S. Suffer Third Monthly Drop — Worst Streak Since July 2011
The cracks are starting to show in the housing ‘recovery’. With Starts and Permits already rolling over, New Home Sales printed a disappointing 511k (vs 520k expectations), dropping 1.5% MoM. This is the 3rd monthly decline in a row – the longest such streak since July 2011. While positive for affordability, the decline MoM and YoY in median home prices (-$9,400 and -$5,400 respectively) will do nothing for The Fed’s wealth-creation mandate. The West saw New Home Sales plunge 23.6% MoM, while The Midwest surged 18.5%.
Housing is certainly not booming,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, said before the report. “Some people may be shut out of the market because lending standards are still tight. There may still be some reluctance to buy versus rent.”
This 3-chart Zero Hedge news item appeared on their Internet site at 10:09 a.m. on Monday morning EDT—and it’s worth a quick look if you have the interest. I found it all by myself! Another link to this story is here.
Valued at $16M, it Sold for $68 Million “In 7,200 Seconds” – The Inside Story of Vancouver’s Wildest Property Deal
For the past four months we have been closely following the sheer bubble panic, if not outright insanity, that has gripped the Vancouver housing market which has been over the past year, converted into the personal offshore piggy bank of wealthy Chinese oligarchs seeking to park laundered money outside of their home nation. On the way, the story took an odd detour into the outright bizarre when we reported the curious story of the Chinese tycoon found “chopped up into 100 pieces” in a Vancouver mansion.
But nothing compares to this fascinating story reported first by the South China Morning Post, in which the paper’s investigation revealed the obscure transactions behind a commercial real estate frenzy, including a two-hour stampede by investors desperate to pay C$60m for a site valued at C$16m. Then, a month after taking ownership, they resold it for C$68m.
Presenting, the inside story of Vancouver’s wildest property deal, gone in 7,200 seconds
I have no comment, other that to say what I’ve said before regarding stories like this—that David Stockman’s ‘Red Ponzi’ scheme has infected Vancouver with a real estate market gone stark raving mad. This was posted on the Zero Hedge website just before midnight on Friday evening in New York—and I thank I thank Angus MacLean for pointing it out. Another link to this story is here.
11,000 jobs at risk as Britain’s BHS teeters on the brink
The high street is braced for up to 11,000 job losses as BHS approaches collapse.
Administrators are expected to be appointed to the beleaguered department store chain this week, bringing to an end its 88 years of trading.
The demise of BHS would be the worst retail failure since Woolworths, which went bust at the height of the financial crisis in 2008 with the loss of 30,000 jobs.
A last-ditch attempt at a rescue by Sports Direct, the retail chain owned by the Newcastle United football club owner Mike Ashley, stalled yesterday.
The above four paragraphs are all that’s posted in the clear in this news item that showed up on thetimes.co.uk Internet site at 1:01 a.m. BST on their Sunday morning, which was 8:01 p.m. Sunday evening in New York—EDT plus 5 hours. Brad Robertson sent it our way via Zero Hedge. Another link to this story is here.
The ECB’s Visible Hand: Unilever Issues Debt With 0% Coupon, 0.06% Yield
On Friday we wrote our latest take on how the ECB’s CSPP, or corporate bond buying program, in which we explained how this ECB’s latest market manipulating adventure is about to crush the fundamentals of the European (and soon, courtesy of the ECB’s “SPV” loophole, global) bond market. We showed how the ECB, in its latest attempt to become an even more market-moving hedge fund, is set to buy billions in corporate bonds and not just European but also international, as long as they have a European-domiciled (read Ireland or Netherland) SPV holdco.
And while we speculated how long until we get a U.S. shale company “incorporating” an SPV in Europe to take advantage of the ECB’s backstop generosity, we didn’t have long to wait until we found the first aberration of how Mario Draghi is making a mockery of price discovery.
As Dow Jones writes, moments ago Unilever NV was set to raise money in bond markets Monday that will cost the consumer-goods giant almost nothing, in the latest sign of how the European Central Bank’s stimulus measures are slashing funding costs across the continent.
Well, the so-called ‘bond vigilantes’ that used to exist a generation or so ago are obviously drinking the same Kool-Aid as those that are rushing to buying into the world’s equity markets. This Zero Hedge article, which is certainly worth your while, was posted on their website at 9:40 a.m. on Monday morning EDT—and I thank Richard Saler for sending it. Another link to this news item is here.
Bank of Japan Owns More Than Half of Nation’s ETFs: Chart
The Bank of Japan may become an even bigger shareholder of the nation’s equities if policy makers decide to boost stimulus this week. The central bank’s holdings have been rising since it began buying Japanese exchange traded funds at the start of the decade, and now account for more than half of those ETFs.
This tiny 1-chart Bloomberg article is certainly worth a quick look. It appeared on their Internet site at 6:45 p.m. Denver time on their Sunday evening—and I thank Roy Stephens for digging it up. Zero Hedge goes the ‘full monty’ on it with a headline reading “In Shocking Finding, the Bank of Japan is Now a Top 10 Holder in 90% Of Japanese Stocks“—and I thank Richard Saler for his second contribution to today’s column—and it’s worth reading as well. But be warned in advance that this ZH piece is very much on the longish side.
Defending Democracy to the Last Drop of Oil — Eric Margolis
Poor President Barack Obama flew to Saudi Arabia this past week but its ruler, King Salman, was too busy to greet him at Riyadh’s airport.
This snub was seen across the Arab world as a huge insult and violation of traditional desert hospitality. Obama should have refused to deplane and flown home.
Alas, he did not. Obama went to kow-tow to the new Saudi monarch and his hot-headed son, Crown Prince Muhammed bin Nayef. They are furious that Obama has refused to attack Iran, Hezbollah in Lebanon, and Syria’s Assad regime.
They are also angry as hornets that the U.S. may allow relatives of 9/11 victims to sue the Saudi royal family, which is widely suspected of being involved in the attack.
Interestingly, survivors of the 34 American sailors killed aboard the USS Liberty when it was attacked by Israeli warplanes in 1967, have been denied any legal recourse.
Dick Cheney knows all, so just ask him. This Margolis commentary was posted on the informationclearinghouse.com Internet site on Saturday—and certainly falls into the must read category, even if you’re not a serious student of the New Great Game. I thank Larry Galearis for bringing it to our attention. Another link to this short essay is here.
Saudi prince vows Thatcherite revolution and escape from oil — Ambrose Evans-Pritchard
Saudi Arabia has launched a radical ‘Thatcherite’ shake-up to an avert economic crisis and prepare the kingdom for the post-carbon world, stunning analysts with claims that it could break reliance on oil within just four years.
Prince Mohammad bin Salman, the country’s de facto ruler, vowed to build a $3 trillion wealth fund and break onto the world stage as an investment superpower, the spearhead of an historic package of measures intended to bring the deformed economy kicking and screaming into the 21st Century.
“We have an addiction to oil. This is dangerous. I think that by 2020 we can live without it,” he told Al Arabiya television.
It is an extraordinary claim for a government that has historically relied on oil exports for 90pc of its income and has yet to achieve much success in building alternative industries. Gulf veterans say his words should be understood as poetic licence.
This very interesting AE-P offering put in an appearance on the telegraph.co.uk Internet site at 8:26 p.m. London time on Monday evening, which was 3:26 p.m. in New York—EDT plus 5 hours. It’s certainly worth reading if you have the interest—and I thank Roy Stephens for sharing it with us. Another link to this worthwhile article is here.
CFTC didn’t know of Deutsche’s market-rigging settlement until asked by GATA
While it may be hard to believe, it seems that the U.S. Commodity Futures Trading Commission was unaware of Deutsche Bank’s agreement to settle a class-action lawsuit accusing it of manipulating the gold and silver markets until GATA repeatedly sought to bring the matter to the commission’s attention over the last week.
The news of the settlement agreement broke with Reuters and Bloomberg News reports on Wednesday and Thursday, April 13 and 14.
The reports said that Deutsche Bank had agreed in principle not only to pay financial damages to the plaintiffs but also to provide evidence against the other defendants in the suit.
Since the CFTC has jurisdiction over the U.S. commodity futures markets and since the commission purported to have undertaken a five-year investigation of the silver market, closing it in September 2013 upon concluding that there was no cause for action, it was natural to seek comment from the commission about the Deutsche Bank news.
This commentary by GATA secretary/treasurer Chris Powell showed up on their Internet site on Saturday. There are lots of embedded links as well—and it’s worth your while if you have the time. Another link to this article is here.
Federal court upholds gold clause for determining commercial building’s rent
A downtown office building is worth its weight in gold, according to a federal judge who upheld a nearly century-old lease that tied rent to the current price of the metal.
Last month’s ruling means rent paid by the company leasing the Commerce Building from a group of five property owners could jump from $6,000 annually to more than $300,000.
At issue is a so-called “gold clause” included in the original 1919 lease. The provision, common at the time, linked rent to the price of gold to account for inflation, similar to todays consumer price index.
“This really is a vindication of property rights,” said Washington, D.C.-based attorney Peter Patterson, who represents the five owners.
This AP news story, filed from Columbus, Ohio, showed up on The Washington Post‘s website on Saturday—and it’s an article that I found on the gata.org Internet site. Another link to this article is here.
Hong Kong’s gold exchange to work with ICBC in launch of Shenzhen services
The Hong Kong gold exchange has teamed up with Industrial and Commercial Bank of China (ICBC) to launch gold trading services in the Qianhai free trade zone in September, providing custodial and physical settlement service targeted at commercial users and precious metals traders, according to the exchange head.
Haywood Cheung Tak-hay, the honorary permanent president of the 105-year-old Chinese Gold and Silver Exchange Society, said the exchange has teamed up with ICBC to use its gold vault in Qianhai as a temporary bonded warehouse for Hong Kong traders and manufacturers to store their gold. The service is considered useful for companies using gold to fashion decorative items, as the yellow metal can be stored before being fashioned into jewellery and other gold products at factories in Shenzhen.
The local gold bourse plans to build a HK$1 billion permanent gold vault facility, including a bonded warehouse, trading floor, and related offices areas in Qianhai, however the project will take two years before completion, according to Cheung.
“ICBC is the largest of 15 gold importers authorised in mainland China. It is the largest bank in the mainland and has an international branch network which could provide bank clearing and settlement services,” Cheung said.
This gold related news item found a home on the South China Morning Post website on Sunday local time—and it’s another story that I found embedded in a GATA release. Another link to this article is here. The Zero Hedge spin on this is headlined ”Hong Kong is Building the Biggest Gold Vault and Trading Hub in the World“.
London: The city with $248 billion beneath its pavement
Under London’s streets lies a hidden gold mine.
It stretches across more than 300,000 square feet under the City, the finance quarter in the heart of Britain’s capital. There, beneath the pavement and commuters of Threadneedle Street, lies a maze of eight Bank of England gold vaults – each stacked with gold bars worth a total sum of around £141 billion ($200 billion).
The bars sit on rows of blue numbered shelves. Every bar weighs precisely 400 troy ounces (about 12kg), making each currently worth some £350,000 ($500,000), comfortably more than the average price of a house in the UK. Each bar looks subtly different depending on where it was refined. Some bars have sloping edges to make them easier to pick up; others look more like a loaf of bread.
This longish photo-filled essay on gold was posted on the bbc.com Internet site a week ago today—and I’m surprised it hasn’t made the rounds sooner. I found this very interesting news item posted on Mark O’Byrne’s website goldcore.com yesterday—and it’s definitely worth your while. Another link to this gold-related news item is here.
The PHOTOS and the FUNNIES
Here’s two more cases of photos taken of birds in flight without having the camera set up for it. The first is a drake mallard with flaps and gear down, locked—and fully committed to landing. It was coming straight at me, so how could I resist—and this is the one shot I got. Although it’s partly out of focus for depth-of-field reasons—and the 1/2,500 of a second shutter speed wasn’t up to the task of stopping the wings—it’s still a dramatic looking photo—and I’ll keep it until I can replace it with something better. The female mallard in the second shot was much easier as far as locking focus but, once again, the shutter speed wasn’t up to the task of stopping the primary wing feathers.
The WRAP
It was a nothing sort of day in the precious metals yesterday—and even though gold price traded higher during the New York session—and closed up on the day, the action in their respective equities didn’t exactly warm the cockles of my heart.
I’m trying to make some sense of why silver is being closed below $17 spot every day for the last week. The price pattern is visible in the 6-month silver chart below, but that’s the May contract, not the spot market.
Just for fun, I looked up the closing spot price of silver for the last five consecutive trading days—and this is what the spot closes were from Tuesday last week, until the close of COMEX trading yesterday: $16.93—$16.94—$16.97—$16.955 and $16.99 spot. It didn’t matter how high far above $17 spot that the silver rose during the intraday session, it was closed below $17 spot regardless. That’s how tight the iron fist JPMorgan et al have on the precious metals in general, but the silver price in particular.
Here are the 6-month charts for all four precious metals—and not much has changed since last Friday.
Tomorrow, at the COMEX close, is the final day for the large traders to roll or sell their May contracts in silver, unless they’re standing for delivery, of course. Monday was a big volume day for that very reason—and the same will apply today—and especially Wednesday. The remainder of the May contract holders have to be out by the COMEX close on Thursday. The CME Group will have first day notice numbers up on their website around 10 p.m. EDT on Thursday evening—and I’ll have them in Friday’s column.
And as I type this paragraph, the London open is less than ten minutes away—and I see that all four precious metals rallied a bit in Far East trading on their Tuesday morning, but all four ran into selling pressure shortly after the rallies began—and again in mid-afternoon trading as well. At the moment, gold is down about 4 bucks—and silver is down a dime. Platinum and palladium are down 6 and 5 dollars respectively.
Net HFT gold volume is a hair over 23,000 contracts—and that number in silver is 7,600 contracts. A third of gross silver volume is roll-overs out of the May contract—and that percentage will only grow as the Tuesday session moves along. The dollar index slid below the 94.70 mark a couple of times in Far East trading—but is only down 5 basis points as London opens.
Also today we get the start of the FOMC meeting—and the smoke goes up the chimney at the Eccles building tomorrow at 2 p.m. EDT. The BoJ starts their meeting on their Wednesday—and it ends on their Thursday, which is the very wee hours of Thursday morning in Washington. I will be very interested in how the precious metals react, or are allowed to react, as the week progresses.
And as I post today’s column on the website at 4:03 a.m. EDT, I see that all four precious metals rallied a bit once London and Zurich opened for the day—and it will be interesting to see how long this state of affairs is allowed to last. Gold is down two dollars and change, silver is now only down 3 cents the ounce. Platinum and palladium are now down 2 dollars an ounce apiece.
Net HFT gold volume is a bit over 30,000 contracts, which is quite high—and that number in silver is a bit over 9,000 contracts, which is also pretty chunky. Roll-over volume out of May is still about a third of gross volume. The dollar index down 11 basis points at the moment.
As the Fed and the BoJ dither, with their impotence on full display, the count-down to the May delivery month in silver continues unabated—and I have no idea how this is all going to shake out by the close of trading on Friday. Because, like you, I’m just a spectator in all this—and at times such as these, it’s worth keeping both your eyes and your mind open—and ready for any eventuality.
As Ted said in his weekend review—“A dangerous market structure [such as this one] suggests we could go either way—and do so violently.”
See you tomorrow.
Ed
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