21 June 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
[NOTE: Now that subscription renewal has started, I’ve discovered that the auto-renew feature isn’t working at all. If you wish to renew, just go to the home page on my website and click on the “Sign Up” button. The system should remember all your pertinent details…and once they’re filled in, just click on the Paypal button and pay with the credit card of your choice. You will NOT be double billed — and if you are, you can be assured that you will receive a prompt refund. Sorry for the inconvenience. – Ed]
The powers-that-be hammered the gold price for a quick 15 buck loss the moment that trading began at 6:00 p.m. EDT on Sunday evening in New York — making sure it was nowhere near the $1,300 spot mark when the Far East opened on their Tuesday morning. The low tick of the day came just under 12 noon BST in London, which may or may not have been associated with the noon silver fix. From there it chopped quietly higher for the remainder of the Monday trading session.
The high and low tick were recorded by the CME Group as $1,296.80 and $1,280.80 in the August contract.
Gold closed in New York yesterday at $1,290.00 spot, down $8.10 from Friday’s close. Net volume was pretty heavy in Far East and early London trading on Monday — and netted out at around 169,000 contracts by the time the day was done.
And here’s the 5-minute gold chart courtesy of Brad Robertson as always. The stand-out feature is the gap-down open at 6 p.m. on Sunday night when JPMorgan et al — plus their HFT buddies and their algorithms — put the boots to the gold price. There was also a bit of a spike around 8:50 a.m. Denver time on the chart below, which was shortly before noon in London, when the gold price began to rally off its Monday low tick. Other than that, there’s not much to see.
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.
Silver got the same pounding as gold at the open in New York on Sunday evening. The big feature was the big price spike during the first hour of trading in London — and it took ‘da boyz’ until the noon silver fix to get the price down to its low tick of the day. Then, like gold it rallied a bit until minutes before 11 a.m. — and wasn’t allowed over $17.50 the ounce after that.
The high and low ticks were reported as $17.66 and $17.30 in the July contract.
Silver was closed on Monday at $17.47 spot, unchanged from Friday — and you just have to know that there was nothing free market about that. Net volume was around 41,500 contracts.
And here’s the New York Spot Silver [Bid] chart on its own, so you can see the short price leash that JPMorgan et al had silver on from 10:40 a.m. EDT onward.
Platinum was sold off about 5 dollars at the Sunday open, but quickly recovered to just above unchanged, before chopping more or less sideways until a rally began starting at 8:00 a.m. EDT. Like the silver price, that was capped shortly before 11 a.m. EDT — and from there it was forced to trade flat for the rest of the day. Platinum was closed at $985 spot, up 22 bucks from Friday’s close. But it’s obvious from the price chart below that if left to its own devices, it would have closed considerably higher.
The palladium price followed a similar price path to platinum — and also traded sideways from 11 a.m. EDT onward. Palladium finished the Monday session at $946 spot, up 13 bucks on the day but, like platinum and the other three precious metals, would have closed measurably higher if allowed to.
The dollar index closed late on Friday afternoon in New York at 94.16 — and headed sharply lower the moment that trading began at 2 p.m. EDT on Sunday afternoon. The 93.45 low tick came minutes before noon HKT on their Monday morning. By the London open some of the loses had been recovered, but it chopped sideways in a fairly tight range for the rest of the Monday session. The index closed yesterday at 93.65 — down 51 basis points from its Friday close.
Here’s the 3-day dollar index so you can see Friday’s price action, plus Sunday’s and Monday’s as well.
And here’s the 6-month U.S. dollar index chart — and the gap down yesterday doesn’t inspire confidence.
The gold stocks opened down about 3 percent, but struggled higher as the Monday trading session progressed. They made it into positive territory, albeit briefly, around 2:30 p.m. ED, but sagged back into the red by a bit by the close. The HUI finished the day down 0.24 percent.
Although the silver equities opened down about 2 percent, they were in the black to stay by 10:45 a.m. EDT, which was about the time that the silver price was capped in New York and forced to trade sideways for the rest of the day. Like the gold shares, they closed just off their highs, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 2.36 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that 64 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. Canada’s Scotiabank was the only short/issuer of note, with 60 contracts out of its in-house [proprietary] trading account. JPMorgan picked up 34 contracts for its clients, plus another 29 contracts for its own account. 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 in June dropped by 50 contracts. Since Friday’s Daily Delivery Report only showed that 15 gold contracts were posted for delivery today, the long/stoppers [most likely JPMorgan] let 50-15=35 short/issuers in the June contract off the delivery hook. Silver o.i. in June fell by 77 contracts. There were 80 posted for delivery, so another 80-77=3 silver contracts were added to the June delivery month in this report. There are 56 silver contracts yet to be delivered in June.
There was another deposit in GLD yesterday, as an authorized participant added 28,649 troy ounces. And I was amazed to see that there was another monstrous withdrawal from SLV on Monday, as an a.p. — mostly likely JPMorgan — took out 2,851,788 troy ounces. That makes 8.27 million troy ounces withdrawn in the last two business days — which is pretty close to four days of world silver production.
Ted says that it’s JPMorgan filling its face with SLV shares that it bought in the open market — and then redeemed them for physical metal in order not to exceed SEC reporting limits. That’s what he said about the 5.4 million troy ounces withdrawn last Friday, so I expect that he would say the same thing about yesterday’s withdrawal as well.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, June 17 — and here’s what they had to report. Their gold ETF added a very decent 45,254 troy ounces, but they only added 1,897 troy ounces of silver.
There was no sales report from the U.S. Mint. JPMorgan has definitely backed off buying silver eagles, at least for the moment.
There wasn’t much activity in gold over at the COMEX-approved depositories on Friday, as only 16,075.000 troy ounces/500 kilobars were reported received at Canada’s Scotiabank — and only 557 troy ounce in total were shipped out. The link to that activity is here.
As has been the case lately, it was another big day in silver, as 1,204,496 troy ounces were received — and 186,226 troy ounces were shipped out the door for parts unknown. Of the amount received, another 604,630 troy ounces ended up in JPMorgan’s vault, which now sits at 74.06 million troy ounces, a new record high. And as Ted pointed out in his weekly review on Saturday, JPM owns 49 percent of all the silver held in the COMEX-approved depositories. The link to Friday’s action is here.
It was reasonably active over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, as they reported receiving 3,215 — and shipped out 2,860 of them. All of that activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
Here are some charts that Nick Laird passed around early yesterday evening. The first shows India’s gold imports for the current month for which they have data, which is March. They imported 24 tonnes that month. Click to enlarge.
And here’s the May numbers from The Central Bank of the Russia Federation for May. They only added 100,000 troy ounces to their reserves that month. Click to Enlarge.
Now that India has updated its reserves for March, Nick was able to calculate the “Silk Road Gold Demand” for that month — and that chart is below. The ‘click to enlarge‘ feature works wonders here as well.
Note on the lower of the two above charts that, on average over the last three years, these four countries are consuming 100 percent of all the new gold being mined in the world each year. Throw in the rest of the world demand, plus the phenomenal GLD and other gold ETF demand so far in 2016 — and the question becomes “Where is all this gold coming from?”
Here’s one more chart for you today. There was a glaring error in the version that was posted in my Saturday column, which has now been fixed. The entire June 7 line item was missing — and here’s the corrected table of numbers. I thank Ottawa reader George Clooney for pointing it out.
It shows Ted Butler’s ‘THE COUNT’ — how far away are we, in COMEX contracts, from a bullish Commitment of Traders Report configuration. As you can tell from the “TARGET” line at the bottom — a very long way, especially considering the fact that the report for the today’s Tuesday cut-off in gold is already at a new record high, with silver close to it.
I have an average number of stories for you today and, as always, the final edit is yours.
CRITICAL READS
A Palace For Fannie (Mae): Why The Imperial City Must Be Sacked — David Stockman
To hear the establishment media tell it, you would think that Attila the Hun was fixing to sack the Imperial City. Would that Donald Trump were that bold or dangerous.
Then again, he is a showman of no mean talents. So if there is a maquette of Fannie Mae’s planned new $770 million headquarters somewhere around Washington DC, he could start the sacking right there. Hopefully, he would not hesitate to shatter it with a fusillade of tweets—-or even take a jackhammer to it while wearing a Trump hard hat.
Fannie Mae is surely a monument to crony capitalist corruption, and living proof that massive state intervention in credit markets is a recipe for disaster. But rather than shut it down after it helped bring the nation’s financial system to the edge of ruin, the beltway pols have come up with an altogether different idea.
To wit, they plan to move Fannie from her already luxurious NW Washington headquarters to this hideous new glass palace to be built in the heart of Washington DC. Could there be a bigger insult to the 15 million families who lost their homes to foreclosure owing to the crash of the giant housing bubble that Fannie Mae and the crony capitalist crooks who ran it helped perpetuate?
This commentary by David put in an appearance on his Internet site on Saturday sometime — and the first reader through the door with it was Roy Stephens. Another link to this article is here.
Venezuelans Ransack Stores as Hunger Grips the Nation
With delivery trucks under constant attack, the nation’s food is now transported under armed guard. Soldiers stand watch over bakeries. The police fire rubber bullets at desperate mobs storming grocery stores, pharmacies and butcher shops. A 4-year-old girl was shot to death as street gangs fought over food.
Venezuela is convulsing from hunger.
Hundreds of people here in the city of Cumaná, home to one of the region’s independence heroes, marched on a supermarket in recent days, screaming for food. They forced open a large metal gate and poured inside. They snatched water, flour, cornmeal, salt, sugar, potatoes, anything they could find, leaving behind only broken freezers and overturned shelves.
And they showed that even in a country with the largest oil reserves in the world, it is possible for people to riot because there is not enough food.
This news item, filed from Cumaná in Venezuela, was posted on The New York Times Internet site on Sunday — and it’s courtesy of Patricia Caulfield. Another link to this article is here.
Financial calamity declared in Rio weeks before Olympics, but Games will go on
Just weeks before it stages the 2016 Olympic Games, the state government of Rio de Janeiro has declared a “state of public calamity in financial administration” and warned that the situation is so dire it impedes the locale’s ability to meet Games commitments.
The Olympics start Aug. 5 with Brazil already facing an impeachment trial of suspended President Dilma Rousseff, a public health crisis over the Zika epidemic and a deepening recession.
In an official decree published Friday afternoon by acting governor Francisco Dornelles, the state government said the crisis could cause a “total collapse in public security, health, education, transport and environmental management.”
Coming less than two months before the city hosts its first Olympic Games, the move stunned many in the Olympic city.
This story, filed from Rio de Janeiro, showed up on their website last Friday — and it’s the second contribution in a row from Patricia Caulfield. Another link to this news item is here.
Britain’s Elites Can’t Ignore the Masses
This past weekend, I found myself in the British borough of Luton, pondering a British exit from the European Union. “How did you find yourself in Luton?” you will ask, and I will reply, “That is a long story, and alas, a very dull one, so let’s just proceed upon the assumption that I was indeed in Luton for good and sufficient reasons.” And why was I pondering Brexit? Because the penultimate chapter of this dull story involved many hours spent in a horrible third-tier European airport with middle-class Britons heading home from their holidays.
The airport was short on seats and power outlets even before flight-delayed travelers were stacked eight-deep along the floors. Perhaps a dozen of us middle-aged folk had wrested a single power outlet from the teenagers who had tethered themselves to all the other sources of battery-life-giving energy in the vicinity. We huddled around this small electric flame in the manner of travelers everywhere, taking what sustenance we could, drinking wine and swapping stories of our homelands. I was asked to explain Donald Trump. And by way of getting my own back, I naturally asked about the referendum on Brexit, which is now just days away.
The folks I talked to were from all over Britain, but they had middle age in common as well as, mostly, membership in the petit bourgeoisie. What did they think about leaving the E.U.?
“I still don’t know how I’m going to vote,” said an adult-education teacher from the Midlands, who then proceeded to deliver a long and earnest speech about the cost of providing social services to immigrants, which suggested that she wasn’t really so unsure. Her sentiments were echoed by other people I talked to during that endless layover.
This very interesting commentary appeared on the Bloomberg website at 2:30 a.m. EDT on Friday morning — and it’s something I found in the Monday edition of the King Report. Another link to this news item is here.
Isolating Russia isn’t working. The west needs a new approach
Nothing will hit Russia like the ban on its athletes taking part in the Rio Olympics – not the U.S. and E.U. sanctions over Ukraine, not losing the Eurovision song contest, not even their dismissal from the G8. A chorus of voices from outside Russia will respond to this: a jolly good thing, too. If it takes a sports ban to bring home to Russians that their country is falling shamefully short of international standards and must learn how to “behave”, then so much the better. The pressure on Vladimir Putin, from his courtiers to the grassroots, will surely force change.
The trouble is that this is not how it looks from Russia, nor is a national drive to “shape up” likely to be the result. Of course, their country is no longer the sporting superpower it was when it used to compete as part of the Soviet Union. But Russia is as sports-mad as any country, and a ban on its athletes going to Rio will be treated as a throwback to the still-resented western boycott of the Moscow Olympics in 1980.
The reason for the boycott back then was the Soviet intervention in Afghanistan the previous year, which drew ferocious condemnation from the west, still in the grip of the cold war. The double irony, of course, is that within a decade, the Afghan war had become a liability to Moscow to the point where it contributed to the collapse of the Soviet Union, and within a little more than two decades it was the western powers that were so embroiled. Piling irony upon irony is the fact that the Lord Coe – who signed off on the IAAF ban on Russia last week – is the same Seb Coe who won gold in Moscow after defying the U.K. boycott.
This interesting commentary was posted on theguardian.com Internet site at 7:24 p.m. BST on Sunday evening — and is the first of two contributions from Australian reader J.W. Another link to this worthwhile read is here.
IMF calls on Japan to ‘reload’ Abenomics
Japan needs bolder income policies such as penalizing profitable companies that do not increase wages, the International Monetary Fund said on Monday after concluding its annual economic assessment of the country.
Despite initial success, progress under Abenomics, Prime Minister Shinzo Abe’s trademark economic policies, has stalled in recent months. The inflation rate has dropped to negative territory again, while economic growth has remained anemic.The IMF now expects Japan’s economy to grow by about 0.5 percent in 2016, before slowing to 0.3 percent in 2017, with potential growth sliding to close to zero by 2030, due to the declining demographic.
“Abenomics needs to be reloaded,” the IMF said in its report and argued that income policies combined with labor market reforms should “move to the forefront” of the country’s fight against lagging growth.
“The government can introduce a ‘comply or explain’ mechanism for profitable companies to ensure that they raise base wages by at least 3% and back this up by stronger tax incentives or — as a last resort — penalties,” the IMF wrote. Promoting intermediate contracts that balance job security and wage increases will “reinforce income policies,” it added.
Something tells me we ain’t in Kansas anymore, Toto! This incredible news item, filed from Tokyo, was posted on the asia.nikkei.com Internet site at 3:00 p.m. JST on their Monday afternoon — and it’s a story from Brad Robertson via Zero Hedge. Another link to this story is here.
At Okinawa Protest, Thousands Call for Removal of U.S. Bases
Tens of thousands of people on the Japanese island of Okinawa gathered on Sunday to demand the removal of American military bases in what organizers said was the largest demonstration against the United States presence there in two decades.
The protest, in Naha, the capital of Okinawa Prefecture, was billed as a memorial for a 20-year-old woman who was found dead last month. A United States Marine veteran who was working as a civilian contractor on the island has been arrested in connection with the killing, prompting a public outcry.
Organizers said 65,000 people had attended the protest. That would make it the largest demonstration since 1995, when two American Marines and a Navy sailor were arrested over the rape of a 12-year-old girl, an episode that shook the tight military alliance between the United States and Japan and is still bitterly remembered by many Okinawans.
This story, filed from Tokyo, put in an appearance on The New York Times Internet site on Sunday sometime — and it’s the second offering of the day from Roy Stephens. Another link to this news item is here.
National Australia Bank [NAB] using Veda to track disloyal business customers going to rival banks
Big-four bank NAB is being tipped off each time a business banking customer goes to a rival for a loan, sparking fears about privacy breaches and unfair competition.
For years Sarah did her personal and business banking with NAB. But, in April, dissatisfied with the bank, she applied for a car loan with ANZ, which offered better rates.
She was shocked when NAB emailed her saying its “smarter” systems alerted it to the fact she was “seeking or inquiring for finance elsewhere” and it could whip up “multiple quotes”.
“I felt violated,” she said. “I felt there was an invasion of my privacy because they accessed information I’ve never given them permission to access. I have a right to get second opinions and compare lenders but they put me in a very awkward position.”
This very surprising news item showed up on Monday “down under” at The Sydney Morning Herald. I thank Australian reader J.W. for his second contribution to today’s column. Another link to this article is here.
INTL FCStone hikes gold, silver margins on Brexit nerves
INTL FCStone Inc has hiked the amount of cash customers have to deposit with them to trade gold, silver and sterling futures, a relatively rare step that shows financial firms are bracing for volatile trading ahead of Britain’s vote on Europe.
In a letter to customers seen by Reuters, the U.S. based mid-sized commodities and forex brokerage said it will charge customers 200 percent of the minimum margin set by CME Group Inc for cleared futures for gold, silver, the British pound and euro currency. It was effective on June 16.
Worries about volatile currency markets have become more common since the dramatic moves in the Swiss franc in January 2015, which led to conflicts between banks and their clients due to the absence of market prices for several minutes.
“Increased volatility requires us to take prudent action to protect our clients from increased market fluctuations,” said Group Treasurer Bruce Fields.
And not to mention protecting the company too! I ran this Reuters story past Ted Butler yesterday — and he said that it was a “prudent move by the broker…and even factoring in the double margin the broker is requiring, gold margins are under 8% and silver around 12% of full contract value.” It was posted on their Internet site last Friday evening — and I thank Brian Geisler for sharing it with us. Another link to this news item is here.
To Swiss, cash is privacy, freedom
Denmark and Sweden may be leading the charge towards a cashless society, but Switzerland, that bastion of international banking, doesn’t see it that way.
Not only are the Swiss sold on the idea they want to retain their coins and bank notes, but a new series of bank notes slated to be released shortly will once more include the 1,000-franc (about $1,040 U.S.) denomination despite an outcry from law enforcement regarding the high value note.
The European Union surrounds land-locked Switzerland. The highest denomination bank note in use in the E.U. is the €500, equal to about $567 U.S. Officials there are seriously considering withdrawing that bank note because it is popular with criminals and those trying to avoid detection when making large transactions. Pressure has been put on Switzerland to follow; however, according to information provided on April 4 by the Bloomberg news service, Switzerland has no plans to reconsider its new notes, that will be in denominations of 10, 20, 50, 100, 200 and 1,000 francs. The highest denomination coin in circulation in Switzerland is the 5 franc, which is also one of the highest value circulating coins anywhere.
This very interesting news item appeared on the numismaticnews.net Internet site back on June 9 — and my thanks go out to Tolling Jennings for pointing it out. Another link to this story is here.
Hugo Salinas Price: A silver ruble coin for Russia
Russia can defend its sovereignty, enrich itself, and impress the world by restoring silver to circulation as money, Mexican Civic Association for Silver President Hugo Salinas Price told a conference in St. Petersburg last week. His presentation is headlined “A Silver Ruble Coin for Russia“.
This very long, but must read commentary by Hugo put in an appearance on the plata.com.mx Internet site yesterday — and I found it on the gata.org Internet site.
Jim Rickards and Ross Norman Discuss Gold Price Drivers
This 8:42 minute video clip showed up on the youtube.com Internet site yesterday — and it’s something I found on the Sharps Pixley website yesterday. I must admit that I haven’t had the time to listen to it, so you’re on your own with this one.
Jim Rickards: Gold is going to explode once China has enough
China wants to do what the U.S. has done, which is to remain on a paper currency standard but make that currency important enough in world finance and trade to give China leverage over the behavior of other countries.
The best way to do that is to increase its voting power at the IMF and have the yuan included in the IMF basket for determining the value of the special drawing right. Getting those two things requires the approval of the United States because the U.S. has veto power over important changes at the IMF. The U.S. can stand in the way of Chinese ambitions.
China accomplishedthat last November when the IMF agreed to include the yuan in its basket of currencies.
The rules of the gamealsosay you need a lot of gold to play, but you don’t recognize the gold or discuss it publicly. Above all, you do not treat gold as money, even though gold has always been money.
This worthwhile commentary by Jim first appeared on The Daily Reckoning website, but it in turn was posted on the businessinsider.com Internet site late on Sunday evening EDT. I found this on the Sharps Pixley website last night — and another link to this gold-related story is here.
The PHOTOS and the FUNNIES
No critter photos today, as I just haven’t had the time. This is a photo of noctilucent clouds that I took last Tuesday around 3:15 a.m. MST. They’re only visible in the summer when the sun is below the horizon shining up on them — and the surrounding sky is dark. They’re very tenuous and are about 80 kilometers high — and at the very edges of outer space. Even with a 14mm super-wide angle lens, I couldn’t get the entire spectacle in one shot. The ‘click to enlarge’ feature is very helpful here.
The WRAP
It certainly appears that the powers-that-be have drawn a line in the sand at $1,300 gold for the moment — and that number in silver appears to $18 the ounce, or maybe only $17.50.
As the central banks of the world stated in news stories that appeared in this column on both Friday and Saturday, they are going to be at battle stations as the Brexit vote nears — and that’s only a couple of days away now.
They were certainly out in force in gold and silver yesterday, even though the dollar index was in the toilet for most of the Monday session. And as you’ve already noticed from the Kitco charts at the top of this column, they only let platinum and palladium rally until around 11 a.m. EDT, just like they did silver. They’re obviously leaving nothing to chance.
Here are the 6-month charts for all four precious metals — and as you can see in the gold and silver charts, they’ve kept them on a pretty short leash for the last week.
And as I type this paragraph, the London open is less than ten minutes away — and I note that except for a tiny rally around 8 a.m. HKT on their Tuesday morning, the gold price has been edging lower throughout the Far East trading session — and is down about 7 bucks at the moment. It was more or less the same price action in silver — and it’s down 5 cents the ounce. Platinum and palladium had similar tiny rallies at 8 a.m. HKT, with the former being up 2 dollars — and the later 3 bucks.
Net HFT gold volume is already pretty chunky at a bit over 35,000 contracts — and that number in silver is right at 6,000 contracts, with pretty decent roll-over action out of the upcoming July delivery month. The dollar index hasn’t been doing much, but is off its lows of mid-morning in Hong Kong–and down 13 basis points as London opens.
Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and unless there’s some major price moves to the downside in both gold and silver during the Tuesday trading session, Ted says that the deterioration in both these metals in Friday’s report will be another one for the record books in gold — with silver not far behind. Platinum too.
And as I post today’s column on the website at 4:00 a.m. EDT, I see that gold was sold down a hair in the last hour, but nothing worth mentioning. Silver is down another nickel in the last few minutes–and platinum and palladium are now back at unchanged.
Net HFT gold volume is just under 41,000 contracts–and that number in silver is just under 7,500 contracts. The dollar index is now down 16 basis points. There’s not much going on right now, but the trends in all four precious metals is definitely down, at least for the time being.
In closing, I’ve stolen a couple of sentences from Ted’s weekly review on Saturday — and can’t agree more with what he has to say here…”Simply put, the changes in the COT market structure over the past three weeks and over the year to date are nothing short of astounding. Not only have the changes been historic, they promise to be of the earth-shaking variety in the immediate future (which I would define as days, weeks and months – not years).”
So we wait some more.
See you tomorrow.
Ed
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