18 June 2016 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price began to rally the moment that trading began at 6:00 p.m. EDT on Thursday evening. It got a bit to frisky for JPMorgan et al shortly before 9 a.m. HKT—and they stepped in briefly. After that it rallied until noon over there, before selling off quietly into the London open. It began to rally again at that point—and it got real serious once the London p.m. gold fix was done. Then ‘da boyz” stepped on the gold price once more around 10:25 a.m. EDT to the tune of 12 bucks or so. Once that sell-off was over with, the price began to rally anew, before being smacked just before 4 p.m. in the thinly-trader after-hours market, or it certainly would have blown through $1,300 spot with ease. After that it traded sideways for the rest of the Friday session.
The low and high ticks were reported as $1,278.80 and $1,302.70 in the August contract.
Gold was closed in New York yesterday at $1,298.10 spot, up $20.10 from Thursday’s close, gaining back everything it ‘lost’ yesterday—and then some. Net volume was very heavy once again at around 181,000 contracts.
Here’s the 5-minute gold chart courtesy of Brad Robertson as usual. Note the pounding that ‘da boyz’ laid on the price at 9 a.m. HKT in Far East trading on their Friday, which is the volume at the 7 p.m. Denver time mark on the chart below. There was also a bit of volume around the London opening low tick as well. But the real volume started around 4:30 a.m. Denver time, which was 11:30 a.m. BST in London—and never really backed off much after that. Brad had to leave early, so the chart only goes until around 3 p.m. EDT.
The vertical gray line is midnight in New York, noon the following day in Hong Kong—and don’t forget to add two hours for EDT. The ‘click to enlarge‘ is a must here.
The silver price pattern was very similar to gold’s, so I’ll spare you the play-by-play on it. But you can tell from the saw-tooth pattern during parts of the Friday session, that it was being kept on a very short leash.
The low and high ticks in this precious metal were recorded as $17.21 and $17.53 in the July contract.
Silver finished the Friday session at $17.47 spot—and on its high tick of the day, up 32 cents from its ‘close’ on Thursday. Net volume was very chunky as well, at 46,000 contracts. Roll-over volume was a bit over 20 percent of gross volume.
Platinum followed silver and gold prices until just before 10 a.m. Zurich time, which was its high tick of the day. From there it was under pretty decent selling pressure—and that was especially true starting just before 2 p.m. Zurich time. The low tick came just after 9:30 a.m. in New York. It chopped unsteadily higher from there—and its rally attempt after the COMEX close was for naught, as the powers-that-be closed it unchanged at $968 spot.
Palladium made it up to $541 spot by around noon HKT but, like platinum, a willing seller appeared shortly before 10 a.m. Zurich time—and the $526 low tick came around the COMEX close. The rally from there wasn’t allowed back above unchanged—and that’s where it closed, at $532 spot, the same as Thursday’s close.
The chances that both platinum and palladium would close unchanged without some sort of outside interference is zero, especially considering the wild intraday price moves.
The dollar index closed late on Thursday afternoon at 94.61—and was down over 20 basis points by 9 a.m. HKT on their Friday morning, which was probably the reason why gold was so frisky and why JPMorgan et al had to step in at that time. From that point it rallied a hair before chopping more or less sideways until 9 a.m in New York. From there it headed lower with a vengeance—and had to be rescued by the usual ‘gentle hands’ around 10:25 a.m…which also took the time to smack gold and silver prices as well. The 50 basis point rally off that low began to decay starting about an hour later, with the dollar index having to be rescued a second time shortly after 2 p.m. From there it chopped sideways into the close. The dollar index finished the Friday session at 94.16—down 45 basis points from its Thursday close.
It was another day where ‘da boyz’ had to prop up the dollar index, or it would have melted down, like something out of The China Syndrome. Of course the precious metals wanted to go in the other direction even more quickly, but like I said in yesterday’s column, it wasn’t in the JPMorgan et al playbook.
And here’s the 2-year U.S. dollar index chart—and the prop job of the last seven months or so is pretty obvious.
The gold stocks opened up a couple of percent—and hung onto those gains until JPMorgan et al stepped in to save the dollar index and kill gold and silver prices starting about 10:20 a.m. EDT. Their lows of the day came shortly after 12 o’clock noon in New York—and from there they rallied until shortly before the equity markets closed. At that juncture, it was obvious that some day-trader types took profits in the last ten minutes of trading. The HUI closed higher by only 0.22 percent.
It was the same overall trading pattern in the silver equities, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.12 percent. Click to enlarge if necessary.
Here are Nick’s three charts that show the weekly, monthly and year-to-date changes in both price and percentage terms for all four precious metals, plus the HUI and the ISSI/Silver 7 Index.
The CME Daily Delivery Report showed that 15 gold and 80 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. In gold, the short/issuer was ADM out of its client account—and JPMorgan was the only long/stopper with 8 for its client account, plus the other 7 for itself. In silver, the only short/issuer was International F.C. Stone. JPMorgan took delivery of 37 contracts for its client account, with Canada’s Scotiabank picking up the balance. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Friday trading session showed that June o.i. in gold fell by 80 contracts, leaving 656 still open, minus the 15 mentioned above. Since only 4 gold contracts were posted for delivery Monday, there 80-4=76 short contract holders in June that disappeared, most likely because they didn’t have any physical metal backing their short position and weren’t able to deliver, so the long/stopper, mostly likely JPM, let them off the hook. June silver o.i. declined by 207 contracts—and those were the surprise ones issued by JPMorgan out of their own account—and of course they have the silver. There are 133 contracts remaining in the June delivery month, minus the 80 mentioned in the above Daily Delivery Report.
There was another big deposit in GLD yesterday—and a monster withdrawal from SLV. In GLD, an authorized participant, or more than one of them, added 171,895 troy ounces of gold. The monster withdrawal from SLV was an eye-watering 5,418,500 troy ounces—and it’s a very safe bet that JPMorgan was behind the move, as they probably withdrew it in order to avoid SEC reporting requirements.
Without doubt, Ted will have something to say about this in his weekly commentary later today.
There was a smallish sales report from the U.S. Mint yesterday, as they sold 2,000 troy ounces of gold eagles—plus 238,000 silver eagles.
Month-to-date the mint has sold 41,000 troy ounces of gold eagles—9,000 one-ounce 24K gold buffaloes—and 1,382,500 silver eagles. It’s more than evident that JPMorgan has now backed off buying silver eagles, as sales are down drastically from last month, but gold eagles sales and 24K gold buffalo sales still appear pretty decent.
One has to wonder why JPM has stopped buying silver eagles at this point. It may or may not be related to the fact that good delivery bars are becoming hard to come by, or the other possibility being that they are about to slam the silver price—and will buy them all later on the cheap. I await Ted’s comments on this as well, as he may have other ideas.
For the second day in a row, there was no in/out movement in gold over at the COMEX-approved depositories on Thursday. It’s been many, many years since there has been back-to-back days of no gold movement at all.
Of course there was very robust movement in silver once again, as 597,929 troy ounces were received—and all of that went into JPMorgan’s vault, plus 608,873 troy ounces were shipped out—and all of that came out of Brink’s, Inc. The link to that action is here.
While on the subject of JPMorgan’s silver depository, here’s Nick’s chart of that update with Thursday’s data—and it’s almost back to a record high amount, with much more to come from the May delivery month I suspect.
It was a zero in/zero out day over at the COMEX-approved gold kilobar depositories in Hong Kong on Thursday as well.
I was expecting an ugly Commitment of Traders Report—and I certainly got my wish. As a matter of fact, it was even worse than I feared.
In silver, the Commercial net short position blew out by 9,910 contracts, or 49.6 million troy ounces of paper silver. They arrived at this number during the reporting week by adding 10,200 contracts to their already gargantuan short position, plus the also purchased 290 long contracts as well. The difference between those two numbers is the net change for the week. The commercial net short position in silver now stands at 408.7 million troy ounces.
Ted said that the Big 4 traders increased their short positions by about 2,300 contracts, but the ‘5 through 8’ traders actually covered about 500 contracts during the reporting week. The rest of the change in the commercial’s position came via the raptors, the commercial traders other than the Big 8, as they sold approximately 8,100 long contracts. Ted pegs JPMorgan’s short position at 22,000 contracts for the week, up 2,000 from last week’s report.
Under the hood in the Disaggregated COT Report, it was entirely a Managed Money affair plus more, as they added 8,937 long contracts, plus they decreased their short position by 3,321 contacts, for a weekly net change of 12,258 contracts. It was mostly the Nonreportable/small traders making up the difference as they went in the other direction by decreasing their net long position by just under 2,700 contracts. Here’s the 3-year COT chart for silver—and the click to enlarge feature works wonders here. Click to enlarge.
And as bad as it was in silver, it was records all around in gold, as the Commercial net short position blew out by a staggering 54,385 contracts, or 5.44 million troy ounces of paper gold. The commercial traders arrived at this number by adding 54,726 short contracts that came via the Managed Money traders going long, plus they added a tiny 341 contracts to their long positions. The difference between those two numbers is the change for the reporting week. The Commercial net short position now stands at 29.81 million troy ounces, a new record.
It was “all for one, and one for all” in the commercial trader category, as the Big 4 increased their short position by about 24,900 contracts, the ‘5 through 8’ big traders added around 10,800 contracts to their short position—and Ted Butler’s raptors, the commercial traders other than the Big 8, added 18,700 contracts to their short positions.
Under the hood in the Disaggregated COT Report it was strictly a Managed Money affair as well, as they purchased 45,439 long contracts, plus they decreased their short position by 6,435 contracts—with the sum of those two number…51,874 contracts…being the change for the reporting week. Like in silver, virtually all of the difference between the Managed Money traders and the Commercial trader—in this case about 2,500 contracts—showed up in the Nonreportable/small trader category.
Here’s the 3-year COT chart for gold—and if you need it, click to enlarge.
Before setting aside the COT Report above, I made the assumption in Friday’s column that after Thursday’s big sell-off in gold and silver, the Commercial net short position actually declined on that day. Ted was adamant that I was mistaken, as the Commercial net short position in both gold and silver have risen to new all-time record highs despite what the price charts may show.
Here’s a chart that an interested reader made up a few weeks back. It’s updated with yesterday’s COT data — and after adding Friday’s dismal numbers we’re light years away from a bullish reading from a COT point of view—and much worse still since Tuesday’s cut-off. As you can see in gold, the Commercial net short position is 3,396 contracts higher now than it was back at the May 3 high. [I updated this chart on Sunday night, June 19 after Ottawa reader Lawrence Clooney pointed out a glaring error in it. All of the June 7 data was missing. – Ed]
Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading on Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 and Big 8 traders in each physically traded commodity on the COMEX. Click to enlarge.
As I say in every Saturday column—the short positions of the Big 4 and 8 traders in silver continues to redefine the meaning of the words ‘obscene’ and ‘grotesque.’ For the current reporting week, the Big 4 are short 148 days [almost 5 months] of world silver production—and the ‘5 through 8’ traders are short an additional 71 days of world silver production—for a total of 219 days, which is 7+ months of world silver production, or 503.7 million troy ounces of paper silver held short by the Big 8.
And it should be pointed out here that in the COT Report above, the Commercial net short position in silver is 408.7 million troy ounces. So the Big 8 hold a short position larger than the net position—and by a monstrous amount—just under 100 million troy ounces!!! That’s how grotesque, twisted, obscene—and dangerous—this COT situation in silver has become—and gold’s not far behind, as is platinum.
Last week’s COT Report showed platinum in #2 spot—and gold in #3 position. For the first time in many years, platinum has slid to #3—and gold is now in the #2 slot. But still towering high above everything is silver—and except for the odd week here and there, it’s been like that for more than 20 years.
And as an aside, the two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 106 days of world silver production between the two of them—and that 106 days represents around 72 percent [almost three quarters] of the length of the red bar in silver in the above chart. The other two traders in the Big 4 category are short, on average, about 21 days of world silver production apiece.
Canada’s Scotiabank is still the King Silver Short in the COMEX futures market. But after this week’s COT Report in very close second place is JPMorgan—and they’re still running the show.
When I was talking with Ted yesterday, I pointed out that the Big 8 traders in gold were short 48.5 percent of the entire COMEX futures market in gold, plus they were short 46.5 percent of the entire COMEX futures market in silver—[and these positions are held against thousands of other traders in the COMEX futures market in these two precious metals. – Ed] Ted was equally quick to point out that if you subtracted out the market-neutral spread trades in both these precious metals, the Big 8 were actually short more than 50 percent of both markets.
Riddle me this, dear reader. Who has more control over gold and silver prices: The Big 8 traders holding more than 50 percent market share and working in collusion, or the thousands of individual traders trading against them?
And while I’m asking questions, here’s one that Ted Butler asked a few months ago. What would the price of crude oil be if the Big 8 traders were short 219 days of world crude oil production. Right now the largest 8 traders are short about 3 days of world crude oil production in the above ‘Days to Cover’ chart. And as a corollary to that question, what would the the price of silver be if the Big 8 commercial traders were short only 3 days of world silver production, like they are in crude oil right now???
Just asking!
Nick passed around two excellent charts last night. They show the gold and silver deliveries from the Shanghai Gold Exchange for the last 7+ years, up to and including Thursday’s data. Nick’s included comments were as follows…”SGE is delivering approx 10 tonnes of gold per day…and silver demand has soared“. Click to enlarge for both.
I don’t have all that many stories for you today—and that suits me just fine, as it took me four hours just to write everything you’ve read so far.
CRITICAL READS
U.S. Trade Deficit Reaches Highest Level Seen in Seven Years
The trade deficit soared to the highest level seen since 2008, the height of the Great Recession, according to a preliminary report released Thursday by the Bureau of Economic Analysis.
The current account trade deficit, which is considered the most accurate measurement of the flow of investments, goods and services across America’s borders, jumped 9.9% in the first quarter due to a $9.6 billion decline in overseas investments, only partially offset by gains in the merchandise and services sectors.
According to the bureau, the trade deficit “increased to $124.7 billion (preliminary) in the first quarter of 2016 from $113.4 billion (revised) in the fourth quarter of 2015.” That was the highest deficit since the $152.5 billion shortfall in the fourth quarter of 2008.
This news item appeared on the freebeacon.com Internet site on Thursday, but I have the feeling that I posted a story about this earlier in the week. I thank Brad Robertson for pointing it out—and another link to this story is here.
The World Economy Looks a Bit Like It’s the 1930s
To understand today’s global economy, look back 80 years.
Just like in the 1930s, growth is being constrained by companies unwilling to spend, falling inflation expectations and governments backing away from fiscal stimulus.
The trigger for the current malaise was the financial crisis that left a hangover of debt and deleveraging amid tighter banking regulations that are exacerbating deflationary pressures. It’s similar to the kind of shock that preceded the 1930s slump, according to an analysis by Morgan Stanley economists led by Hong Kong-based Chetan Ahya.
“We think that the current macroeconomic environment has a number of significant similarities with the 1930s, and the experiences then are particularly relevant for today,” they wrote. “The critical similarity between the 1930s and the 2008 cycle is that the financial shock and the relatively high levels of indebtedness changed the risk attitudes of the private sector and triggered them to repair their balance sheets.”
This story was posted on the Bloomberg website at 10:01 a.m. Denver time on Thursday morning—and it’s courtesy of West Virginia reader Elliot Simon. Another link to this article is here.
Central banks ready to defeat markets if Britain chooses independence
Global central banks sounded the alarm over the risks posed by a British departure from the European Union, as polls continued to show the Leave campaign ahead with a week to go before the June 23 referendum.
It is “possible that we’ll have turbulences” in reaction to a Brexit, SNB President Thomas Jordan said in a Bloomberg Television interview in Bern. “We have a very good exchange among all major central banks so that the information is here, so that we understand the developments in the market.”
In the first instance, officials could act in global markets to prevent any “exaggerations,” Jordan said. ECB Governing Council member Ewald Nowotny said in Vienna on Thursday that swap agreements between central banks will ensure lenders have access to liquidity during any “disturbances on the market.”
“We’d expect major central banks to intervene to push back against this volatility,” Steven Barrow, a strategist at Standard Bank Group Ltd. in London, said in a note to clients. “Policy makers will feel they already have the tools in place to try to limit wider disruption.”
This Bloomberg new story showed up on their Internet site at 4:36 a.m. Denver time on Thursday morning—and was subsequently update an hour or so later. I found it embedded in a GATA release—and the actual headline reads “Global Central Banks Sound Brexit Alarm as ‘Leave’ Jitters Grow“. Another link to this news item is here.
Eastern Europe Is Both Dreading Brexit and Ready for It
In the final days of June 1914, a telegram arrives in a remote garrison town on the border of the Austro-Hungarian Empire. On it is a single sentence in capital letters: “Heir to the throne rumored assassinated in Sarajevo.”
In a moment of disbelief and anxiety, one of the officers begins speaking Hungarian to his compatriots. The others can’t understand a word, but they suspect that the Hungarian is probably not unhappy with the news that Archduke Franz Ferdinand, whom Hungarians see as partial to the empire’s Slavs, cannot now become the next emperor.
Another officer, a Slovene, who has long questioned the loyalty of Hungarians, insists that the conversation be in their common language, German. “I will say it in German,” replies the Hungarian officer. “We are in agreement, my countrymen and I: We can be glad the bastard is gone.”
The scene was fictional — depicted in Joseph Roth’s remarkable novel “The Radetzky March” — but it captures a pivotal moment in European history: the end of the Hapsburg Empire. What Roth’s scene suggests is that the end of the empire was the outcome of decades of political decay, but also a moment of paralyzing uncertainty in the wake of disruptive events. The disintegration that until that moment was unimaginable suddenly seemed inevitable.
This very interesting commentary, filed from Sofia in Bulgaria, put in an appearance on The New York Times website on Thursday—and it’s definitely worth reading. I thank Patricia Caulfield for sending it—and another link to this article is here.
Recession in Russia is more or less over, Putin says
Even though oil prices remain low compared with 2014 levels, the Russian economy has adapted and is on the path toward growth, the president said.
“We are essentially out of recession,” Russian President Vladimir Putin told delegates gathered in St. Petersburg.
For the first time in nearly a year, the Central Bank of Russia last week cut its key interest rate by a half percent to 10.5 percent per year. The bank said growth in the economy was “imminent” with inflation moving toward the target rate of 4 percent by late 2017.
In defending the rate cut, the bank said the worst of the downturn may be in the past as growth starts to take shape. Quarterly growth in gross domestic product is expected no later than the second half of the year. Growth of 1.6 percent in GDP is expected in 2017, the bank said.
This UPI story, filed from Moscow, showed up on their Internet site in updated form at 10:29 a.m. EDT on Friday morning. I thank Roy Stephens for sharing it with us—and another link to this news item is here.
NATO, the E.U. and the New Cold War: John Batchelor Interviews Stephen F. Cohen
The headlines this week are about NATO, the E.U. and escalation of the NCW—[New Cold War]. NATO Sec. Gen. Stoltenberg, is ecstatic that NATO countries are beginning to spend increases in budgets “against Russian aggression” and that new military units, air, ground, missiles and troops are to be garrisoned on a more permanent basis in the E.U. – especially the Baltic States and “in hosting countries” like Norway and Sweden. Recent military exercises are part of this and Cohen makes it clear that these events are permanent preparations for war and the Russian responses to them show the Kremlin is taking them very seriously. Also noted were Aegis planes to be sent to the M.E. to monitor the Syrian conflict and new shelling by Kiev of its breakaway provinces in the East. But most of Cohen’s worries centre around the increasing threat of NATO in the north where St Petersburg now finds itself (almost) within artillery range of these forces. In the coming July NATO summit meetings Cohen expects the permanent aspects of NATO building in Europe will be announced, plus more augmentations.
On the good news front we have a major energy corporation, Exxon Mobile making an effort to invest in Russian oil/gas developments. But the NATO provocations are decidedly destructive to all Western economies AND the U.S. That this is another example of working at cross-purposes that only makes sense in that it is the raison d’etre of the American Empire as expressed by the Wolfowitz Doctrine. With the possible devolution of the EU represented by Brexit, the later is now in question. And Batchelor notes that the anti-Brexit/anti Putin groups are using a Brexit argument that it would be good for Russia. That it is Putin’s stated government policy not to comment on other countries internal business, states Cohen, is never mentioned. It may not be a coincidence that this is obviously the very opposite to the Washington intervention policy. The recent Pew Pole, for that matter, indicates that the scare mongering is not working very well in the E.U. The failures of a policy of non-cooperation with Russia are again expanded upon.
Cohen finally concludes that the reason for this NCW is a failure of the establishment in Washington in appreciating that times have changed and that pursuit of American dominance is too unreasonable and without restraints that formerly allowed communication and safety checks now dangerously lacking. However, I think his position does not acknowledge enough the fact of growing failure of empire and that the tasks for the establishment are to hold on to power at any cost. It is unclear how much Cohen understands the instability brought about by the decline of his own country and how much the fear of this to the elites, his establishment group in the U.S., generates the conditions for war.
This interview was posted on the audioboom.com Internet site on Tuesday—and it came courtesy of Ken Hurt on Wednesday. But, as always, my biggest thanks go out to Larry Galearis for providing the terrific 3-paragraph executive summary shown above. This 40-minute interview is a must listen for any serious student of the New Great Game—and another link to this interview is here.
Yen soars and Nikkei tumbles as Bank of Japan rejects further stimulus
http://www.telegraph.co.uk/business/2016/06/16/yen-soars-and-nikkei-tumbles-as-bank-of-japan-rejects-further-st/
Tokyo’s benchmark stock index plunged more than 3pc on Thursday as the soaring yen hammered exporters after the Bank of Japan decided against boosting its stimulus.
The Nikkei 225 tumbled 3.05pc, or 485.44 points, to 15,434.14 in late afternoon trading.
Earlier the yen surged to a 21-month high against the dollar in the wake of the BoJ’s decision to leave its massive 80 trillion yen asset-buying plan unchanged, as fears over Britain’s future in the EU pummel financial markets.
Investors tend to buy the yen as a safe asset in times of turmoil, but the stronger currency is bad for Japanese stocks as it threatens the profitability of the country’s exporting giants.
“Safe asset???” The entire Japanese financial system, its stock market, bond market and currency have been shovel ready for a decade—and only massive BoJ intervention on all fronts has prevented its economy from imploding. Come to think of it, that sounds like an apt description of the entire Western world’s situation. This story is two days old already—and I found on the telegraph.co.uk Internet site last night. Another link to this news item is here.
Doug Noland: Reminiscing about 2012
It’s no coincidence that European and Japanese equities have led the developed world on the downside the past year. There’s no mystery surrounding the poor performance of global financial stocks. Bullion’s almost 2% rise this week boosted 2016 gains to 22%. The yen has gained almost 14% against the dollar so far this year. Ten-year bund yields traded with negative yields for the first time this week. U.S. 10-year Treasury yields traded to the lowest level since 2012.
Despite shoring up reflationary efforts earlier in the year, extraordinary ECB and BOJ monetary stimulus has not been successful. Underlying economic and inflation trends remain problematic in the face of major securities markets inflations. Indeed, the wide divergence between securities market prices and economic prospects ensures acute vulnerability to market risk aversion and risk-off speculative dynamics.
Despite Friday’s 4.1% surge, European banks stocks declined another 1.4% this week (down 25% y-t-d). Friday’s 6.7% rally (reminiscent of U.S. financial stocks in 2008) still left Italian bank stocks down 1.9% for the week – increasing 2016 losses to 44%. In Asian trading, Japan’s TOPIX Banks Stock Price Index sank 5.1% (down 34.3% y-t-d), trading almost back to April lows. Hong Kong’s Hang Seng Financial Index dropped 2.9% (down 15.1%).
Italian sovereign spreads (to bunds) ended the week 13 bps wider to a one-year high 149 bps. Italian spreads have now widened 28 bps in three weeks. Spain’s 10-year bond spread also widened 13 bps this week to a more than one-year high 153 bps. Portugal’s 10-year bond spreads surged 22 bps this week to an 18-week high 327 bps. Greek yields surged 60 bps. Credit spreads widened significantly throughout Europe this week, sometimes spectacularly.
Doug’s weekly Credit Bubble Bulletin is always a must read for me. This one appeared on his website around midnight Denver time last night—and another link to his commentary is here.
Brexit in the balance. Gold surges. Silver may begin to fly — Lawrie Williams
With the Fed decision not to increase interest rates at its latest meeting, in part because of uncertainties over the possible effects of a U.K. Brexit vote on the global economy, and U.K. polling seeing Brexit as a more than distinct possibility, gold surged thought the $1,300 level Wednesday and Thursday morning. At one point it reached $1,315 – its highest level for almost 2 years. And silver also has begun to move again too – some would say not before time. It reached over $17.70 and while it has already exceeded that level earlier this year it tends to be much more volatile in its price movements than gold, and a continuing gold price increase could well see silver shoot up as the Gold: Silver ratio tends to come down when gold rises. It is currently at 74.2 (still a historically high level) and a fall below 70 and a gold price at $1,310 would see silver around a dollar higher which would certainly give some heart to the long suffering silver investor.
However both gold and silver then came down with a bang, supposedly due to rumours of a postponement of the UK referendum to decide whether or not to leave the European Union following the shooting and tragic death of a very well liked (on both sides of the political spectrum) female Member of Parliament, Jo Cox. To us here in the UK the idea of a referendum postponement over such an issue is hugely unlikely.
But regardless, the big money which appears to have been trying to cap rises in the gold price took this as a major opportunity to bring down the price, with gold falling at one stage to below $1,280 and silver back to the $17.20s. However the factors which drove gold through $1,300 remain in place and we wouldn’t be surprised to see it regain this kind of level, or move higher, if polls continue to show the Brexit option in the lead.
This updated commentary by Lawrie appeared on his Internet site yesterday sometime — and I thank Patricia Caulfield for her second contribution to today’s column. It’s worth reading. Another link to this story is here.
Gold Prices Surge to Highest in Nearly Two Years on FED and Brexit Haven Demand
Gold prices surged to their highest level in nearly two years yesterday on BREXIT concerns and deepening concerns that the Federal Reserve central banks are slowly losing control of the financial and monetary system.
Gold subsequently fell quite sharply below the key $1,300 level but remains roughly 1% higher for the week in all currencies and is on track for its third week of gains.
Ultra loose monetary policies are set to get even looser as the Federal Reserve confirmed zero percent interest rate policies are set to continue and negative interest rates deepened as Germany became the latest bond market to experience negative rates.
The backdrop of the most uncertain geo-political and economic conditions in many years is also leading to safe haven demand which pushed gold to the highest level since August 2014 touching $1,315/oz.
This commentary by Mark O’Byrne showed up on the goldcore.com Internet site yesterday sometime. It, along with the embedded chart, is definitely worth your while—and another link to this article is here.
‘Cheap’ platinum is the new gold for young Indians
A cheaper platinum has made the metal more acceptable among Indian consumers in the current quarter. Platinum price, which at present is lower by RS 4,500 per 10 gm when compared with gold, has risen 15% in the current quarter while gold has stayed flat.
A price differential of Rs 4,500 with gold has prompted young Indians to pick up more platinum rings and bangles.
This short news item, filed from Kolkata, appeared on the Economic Times of India at 2:39 a.m. IST on their Thursday morning—and I thank Kathmandu reader Nitin Agrawal for bringing it to our attention. Another link to this article is here.
The PHOTOS and the FUNNIES
The first photo is a pair of lesser scaups—and as you can tell, the differences between the male and female are quite striking. If you didn’t see them swimming around together, you’d never know they were even related. There are a half-dozen pairs of these things at the old watering hole—and not a duckling of any size in sight. The second shot is of male blue-winged teal. I was out in the country checking on crop conditions earlier this week—and there it was, sitting at the edge of a slough. The only reason I got this close was because I was sitting in my car and leaning out the window. The click to enlarge feature really make as difference here.
The WRAP
Today’s pop ‘blast from the past’ is one I’ve posted before, but it was so many years ago, it’s time for a revisit. This 1959 Marty Robbins classic is one that will live forever—and although I hate to admit it, I remember it well. The link is here. Enjoy!
Today’s classical ‘blast from the past’ reflects the fact that the summer solstice in the northern hemisphere is less than three days away. Here’s the ‘Summer‘ concerto from Antoni Vivaldi’s famous “Four Seasons” that he composed c. 1723. This youtube.com video was posted without notes, so I know nothing about the soloist or the chamber orchestra that accompanies her, or even the location where it was performed—or when. But it’s wonderful nonetheless—and the link is here.
When I went to bed at 3:00 a.m. MST yesterday morning, I had no idea what to expect during the Friday trading session. But when it was all done for the day, I was still amazed. All four precious metals were still acting strongly—and ‘da boyz’ and their algorithms had to put in an appearance on more than one occasion in each of them to get them to behave.
Ted was particular impressed by their price action after the COMEX close yesterday, as normal Friday action at that time of day is pretty quiet. Not this time.
Since this is my Saturday column, I’m posting the 6-month charts for the Big 6+1 commodities, so you can see how the other three critical commodities are doing.
So where to from here?
As I pointed out in the discussion on the COT Report further up, Ted said that as bad as this report was, Thursday’s price action puts the Commercial net short position in gold up to another new high, with silver not far behind. I would suspect that yesterday’s price action added to them as well.
One way or another, this situation has to resolve itself. Ted isn’t sure if the Big 8 will get over run, or whether or not we’ll see an engineered price decline before we blast higher. But the current market structure in the COMEX futures dictates that something has to go give somewhere—and the frantic movement of precious metals into and out the COMEX depositories and the various ETFs—GLD and SLV in particular—along with the June gold deliveries to JPMorgan and friends’ accounts, indicates a denouement of some kind is coming up pretty quick.
There’s no question that something is definitely afoot, as this time it’s certainly different—but what it is, and when it will arrive, is still the $64,000 question.
There are literally flocks of black swans out there—and just the ones we can see would be reason enough for the precious metal market to blow sky high, if allowed.
Another thing that Ted was talking about—and I mentioned in yesterday’s column—was what kind of shape are the Big 8 traders in, especially the smaller ones? Either they aren’t breaking a sweat, or there’s something going on under the surface with some of these firms that just can’t be seen at this point in time. The scenario involving Bear Stearns back in 2008 comes to mind at this juncture.
So many question with no answers.
But there’s nothing we can do about it, as we are merely observers—and as I’ve said before on several occasions, one can only hope that we don’t become collateral damage as this scenario resolves itself. Financial institutions and governments can enact draconian measures if the situation becomes grave enough, even if the situation is of their own making, which this one certainly is.
But one thing is for sure—and that is that the world that emerges on the other side of whatever event[s] are coming our way, will be measurably different [and probably far worse] than what we face today, as the current economic, financial and monetary system breaths its last.
But it’s a given, considering what was stated in the Bloomberg story in The Critical Reads section, the central banks of the world won’t go down with a fight.
I’m done for the day—and the week—and I’ll see you here on Tuesday.
Ed
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