23 June 2016 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
[LAST 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 rest assured that you will receive a prompt refund. Sorry for the inconvenience. – Ed]
Except for the new low tick for this move down that was set by the HFT boyz shortly before 2 p.m. HKT on their Wednesday afternoon, it was a very quiet day for gold everywhere on Planet Earth. Nothing to see here — and the high and low ticks definitely aren’t worth my while to look up.
Gold closed in New York yesterday afternoon at $1,265.90 spot, down $1.80 from Tuesday’s close. Compared to what we’ve seen on other days, the net volume was relatively quiet at just over 126,000 contracts.
The price action in silver was a virtual carbon copy of what happened in gold — and the high and low ticks aren’t worth looking up, either.
Silver finished the Wednesday session at $17.225 spot, down 2.5 cents from Wednesday. Net volume was very quiet at just under 27,500 contracts — but roll-over volume out of July was heavy, a third of gross volume.
The platinum price action was a little more exciting, with the price trending a bit higher once Zurich opened. The $986 spot high tick came around 12:30 p.m. EDT, but ‘da boyz’ were having none of that — and by 2p.m. the price was back in negative territory to stay. From there it moved sideways until the 5:00 p.m. close of after-hours trading. Platinum was closed down 4 bucks on the day at $974 spot.
Palladium traded ruler flat until the Zurich open. It rallied in fits and starts from there with its high tick also coming at 12:30 p.m. EDT. The HFT boyz sold it down from there, but this precious metal managed to close up 10 dollars on the day at $559 spot.
The dollar index closed late on Tuesday afternoon in New York at 94.07 — and when trading began at 6:00 p.m. yesterday evening it traded mostly flat until around 9:35 a.m. HKT on their Wednesday morning. At that point it began to head south with some authority. It’s first spike low tick came at precisely 10:00 a.m. EDT, the London p.m. gold fix. By 11:45 a.m. it had ‘rallied’ about 50 basis points, but began to chop quietly lower from there. The roof caved in once again minutes before 5 p.m. EDT — with ‘gentle hands’ showing up at the 93.42 mark, the low tick of the day. The index ‘rallied’ anew from there by a bit, closing the Wednesday session at 93.57…down exactly 50 basis points from Tuesday’s close.
Only these ‘gentle hands’ — and at times, ‘not-so-gentle hands’ — are preventing the U.S. dollar index from doing what it wants to do — and that’s crash and burn.
And here’s what the 6-month U.S. dollar chart shows. It’s a chart painted by those ‘gentle hands’ — and in every way that matters is a proxy for the ‘Made by JPMorgan et al‘ precious metal charts.
The gold stocks opened barely in positive territory — and sank to their respective low ticks shortly before 11 a.m. in New York. They began to rally from there — and were back in positive territory to stay around 11:30 a.m. They crawled higher until thirty minutes before they equity markets closed — and at that juncture, the shares jumped another percent and change into the close. For all intents and purposes, the HUI closed on its high tick of the day, up 3.15 percent. I was impressed.
The silver equities followed a very similar chart pattern, except the sell-off to their low ticks just before 11 a.m. EDT, was far more pronounced — and they barely made it back into positive territory to stay in the last hour of trading. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished higher by 0.47 percent. Click to enlarge.
The CME Daily Delivery Report showed that 21 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. Canada’s Scotiabank issued 15 gold contracts–and the long/stopper on all 21 gold contracts was JPMorgan, with 12 contracts for its client account, and the other 9 for itself. Scotiabank also stopped the only 2 silver contracts issued. The Issuers and Stoppers Report isn’t worth linking today.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in June declined by 193 contracts. Tuesday’s Daily Delivery Report showed that 175 gold contracts were actually posted for delivery today, so the short/issuers let another 193-175=18 short/issuers in the June delivery month off the hook, mostly likely because they didn’t have the physical gold backing their short positions and weren’t able to deliver. Silver o.i. for June remained unchanged at 96 contracts still open — and no silver contracts were posted for delivery today.
And as a point of interest, July open interest in gold rose by 182 contracts yesterday. The number of contracts in the non-traditional July delivery month is now up to 5,095. I know that Ted is watching the July delivery month closely–and for good reason. Without doubt he’ll have something to say about it in his weekly review on Saturday.
Another day — and another deposit in GLD. This time an authorized participant added 114,591 troy ounces. And as of 7:32 p.m. EDT yesterday evening, there were no reported changes in SLV.
There has been 1,518,699 troy ounces of gold added to GLD since June 1 — with no withdrawals except for 9,352 troy ounces that were removed on 06 June for a fee payment of some kind. During the same time period, the amount of silver in SLV has declined by 2,669,594 troy ounces. During the reporting month so far, there have been four consecutive deposits into SLV totalling 7,026,528 troy ounces, followed by three consecutive withdrawals totalling 9,696,122 troy ounces.
What does it mean, you ask? I’m not sure except to say that they’re unprecedented — and it’s Ted Butler’s opinion that whatever is going on, we won’t have to wait much longer before we find out what it is.
The U.S. Mint finally had a sales report. They sold 11,000 troy ounces of gold eagles — 2,000 one-ounce 24K gold buffaloes — plus another 371,000 silver eagles.
There was very little activity in gold over at the COMEX-approved depositories on Wednesday. There was 7,000.000 troy ounces/700 ten-ounce bars deposited at Brink’s, Inc. — and 128.600 troy ounces/4 kilobars shipped out of Manfra, Tordella & Brookes, Inc. I shan’t bother linking this activity.
It was much busier in silver, as 602,334 troy ounces were received, with all of that amount going into JPMorgan’s vault. JPMorgan now holds a hair over 50 percent of all the silver in the COMEX warehouse system. There was also 666,334 troy ounces shipped out, with more than 90 percent of that amount coming from CNT. The rest came from Canada’s Scotiabank. The link to that action is here.
And here’s Nick’s chart showing JPMorgan’s current inventory level in silver which sits at 75,275,174 troy ounces, with still more to come from the silver they stopped in the May delivery month . Total COMEX silver inventories are reported as 149,388,278 troy ounces. Click to enlarge.
It was pretty busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They reported receiving 6,213 kilobars, plus they shipped 509 out the door for parts unknown. All of the activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
I don’t have all that many stories for you today — and I hope you’ll find a few in the list below worth your while.
CRITICAL READS
Janet Yellen Hints That Fed May Hold Back on Raising Interest Rates
Weak economic growth in the United States could force the Federal Reserve to hold off on any imminent interest rate increases, the Federal Reserve chairwoman, Janet L. Yellen, told Congress on Tuesday.
While Ms. Yellen said that the American economy’s long-term prospects remain favorable, she signaled that headwinds, including slower employment gains in recent months, weak productivity growth and the persistence of a sluggish pace of inflation have prompted the Fed to adopt a more cautious stance.
“The latest readings on the labor market and the weak pace of investment illustrate one downside — that domestic demand might falter,” Ms. Yellen said in testimony before the Senate Banking Committee.
Ms. Yellen’s overall message on Capitol Hill echoed her comments at a news conference last week after the Fed’s decision to hold rates steady. But her tenor suggested that there was little chance of an increase in the benchmark federal funds rate at the central bank’s next meeting, in July, and that a move when policy makers meet again in September is hardly guaranteed.
This news item put in an appearance on The New York Times website on Tuesday sometime — and it comes courtesy of Patricia Caulfield. Another link to this story is here.
The Secret Meeting That Accelerated the War on Cash
I’m looking at one of your articles in Casey Research’s International Man and I like the title: “Revealed: The Hidden Agenda of Davos 2016.”
Can you tell us about it?
Nick Giambruno: Yes. There’s an annual World Economic Forum meeting in Davos, Switzerland. Leaders in business, government, media, and even some celebrities go to these events to discuss the big issues of the day. This conference happens every year in the open. But this year, I think a secret meeting took place during the conference behind the scenes, with huge historical significance…
Immediately after the conference, there was a big acceleration to eliminate paper cash, or at least high-denomination currency notes. A flood of articles from The New York Times, The Economist, Zero Hedge, and other publications picked up on this.
This interview was posted on the internationalman.com Internet site yesterday — and another link to it is here.
MintChip launch Tuesday brings Canadian-made digital cash to consumers
MintChip was founded in 2012 by the Royal Canadian Mint as a secure way to send and spend money.
Like cryptocurrencies such as bitcoin, it is an encrypted system that processes payments instantaneously, therefore removing the need for a third party to process or settle the transaction.
This results in lower fees for merchants.
Unlike bitcoin, however — whose value tends to fluctuate wildly because it is not tied to any underlying economy — MintChip uses digital cash that is linked to a country’s currency.
This interesting article showed up on the cbc.ca Internet site at 11:18 a.m. EDT on Tuesday morning — and my thank go out to David Caron for passing it around yesterday. Another link to this commentary is here.
Nigel Farage last speech before the Brexit Referendum
This 13:27 minute youtube.com video clip was posted on that website yesterday sometime. Nigel’s speech starts at the 2:00 minute mark. I must admit that I haven’t listened to the whole thing. I thank Jim Gullo for sending it our way.
U.K. and Europe face Mutual Assured Destruction if they botch Brexit
Whatever the result of Britain’s referendum on the E.U. we can be sure of one thing: there will not be a global financial crisis the next day.
Nothing dreadful will suddenly happen. The U.S. Federal Reserve, the European Central Bank, the Bank of Japan, and the Olympian fraternity of money printers will stand with the Bank of England, ready to flood the international system with liquidity.
The central banks have had months to prepare, and they have prepared. Currency swap facilities are in place to cover the dollar funding needs of U.K.-based banks, and many of these are well-insulated branches of American, European, Asian, and Mid-East banks in any case.
The circumstances are nothing like the collapse of Lehman Brothers in September 2008, a Black Swan event that caught the world off guard and metastasized only because the U.S. authorities unwisely choose to make an example of the hapless bank and let the debacle occur. Nobody will fret piously about moral hazard this time.
Central banks have learned the lessons of Lehman and of Europe’s debt crisis: that events can spin out of control if they fail to an act as a lender-of-last resort in moments of extreme stress.
In other words, dear reader, the banks will be there to thwart the free market reaction to whatever happens. This offering by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 8:13 p.m. BST on their Wednesday evening, which was 3:13 p.m. in New York — EDT plus 5 hours. Another link to this article is here. I thank reader ‘h c’ for sharing it with us.
REVEALED: Banks’ secret Brexit fallback dossier
Britain’s biggest banks have drawn up a secret list of demands for politicians if the U.K. chooses to leave the European Union today, calling for a bonfire of red tape, open borders and a publicity drive to bolster the U.K.’s status as a financial centre outside the E.U.
Business group TheCityUK – which opposes a Brexit – has warned that leaving would damage financial services, drive jobs to the Continent, and harm the economy.
But confidential documents, which have been seen by The Daily Telegraph, show the group has a plan to mitigate that damage, and even believes it would be possible to publicise a “relatively better long-term economic outlook for the U.K.” which would “promote financial stability” outside the E.U.
This interesting news item was posted on The Telegraph‘s website at 8:46 p.m. BST last night — and is the second contribution in a row from reader ‘h c’. Another link to this story is here.
The ECB Could Soon Run Out of Bunds to Buy
The European Central Bank’s haul of bonds passed a trillion euros this month. A second trillion may be harder to come by.
The ECB could run out of German government bonds to buy as soon as October, according to Citigroup Inc.’s Harvinder Sian. That’s a problem because the bonds of eurozone governments form the largest component of the asset purchase plan it’s designed to stimulate lending and boost inflation — and bunds in turn make up the largest share of those sovereign debt purchases. The program is set to run until at least March 2017 at a pace of about €80 billion ($90 billion) per month.
The ECB’s own policies may be making its job harder. Both its asset purchases and its negative interest rates have sparked a decline in bond yields, complicating the bank’s ability to meet its asset-purchase targets. Decreasing yields push a larger proportion of bonds below the -0.4 percent deposit rate that’s been set as a floor for the program, making them ineligible for purchase.
To address this, Sian says the ECB will need to make changes that could include increasing the share of bonds it can buy from a single debt issue (it has already increased that ceiling to 33 percent, from 25 percent). Another option could be to loosen up the application of the ECB’s so-called ‘capital key,’ which stipulates that the quantity of purchases should be roughly proportionate to the size of each nation’s economy — a system that favors the bonds of Germany, whose notes tend to yield the lowest.
This Bloomberg article appeared on their Internet site at 9:32 a.m. Denver time on Wednesday morning — and I thank Roy Stephens for finding it for us. Another link to this news item is here.
German court capitulates to imperial ECJ in landmark ruling — Ambrose Evans-Pritchard
Germany’s top judges have warned in a landmark case that they will not tolerate any measure or legal finding from the European Union that clashes with the higher principles of the German Basic Law, but have retreated on a crucial point, implicitly bowing to E.U. primacy.
The ruling by the German constitutional court in Karlsruhe reiterates a long-standing position that Germany does not accept claims of judicial supremacy by the European Court of Justice (ECJ). But the wording is weaker than its explosive ruling on Lisbon Treaty in 2009 and marks a climb-down.
“The court has asserted its residual right to review E.U. law but in practice it has submitted,” said Gunnar Beck, a constitutional lawyer at the University of London, SOAS.
The decision offers little succour to eurosceptics or to the U.K. Supreme Court as it builds up its own sovereignty doctrine based on the Bill of Rights, the Magna Carta, and the historical acts that make up Britain’s inherited constitution.
This news item by Ambrose was posted on the telegraph.co.uk Internet site at 4:14 p.m. BST on their Tuesday afternoon, which was 11:14 a.m. in Washington. I found it in yesterday’s edition of the King Report — and another link to this news item is here.
Turkish-E.U. ties in throes of a slow death
Ankara’s bid for European Union membership used to underlie Turkey’s appeal for many of the Middle East’s progressive elements in the past. The Arab Spring enhanced Turkey’s importance as a “model country” for other Islamic countries. With the Arab Spring gone sour and the E.U. battling its own crises, while Turkey becomes more authoritarian under President Recep Tayyip Erdogan, these hopes have all but faded.
It is clear that Turks will not gain the right of free travel in Europe by the end of June. That has been already deferred to October and many doubt it will happen then.
At issue is Turkey’s refusal to fulfill a specific E.U. demand, even though Ankara has met most of the 72 criteria required. Turkey is being called on to change its anti-terrorism law so that journalists, academics, activists and ordinary citizens are not charged under it for merely expressing their views — something that is happening with increasing frequency.
This story was posted on the al-monitor.com Internet site on Tuesday sometime — and it’s the second offering of the day from Roy Stephens. Another link to this article is here.
Forget Brexit: According to Albert Edwards, There is a Far Bigger Risk to the Global Economy
While SocGen’s Albert Edwards has opined previously on the topic of Brexit (with an apparent interest in a “leave” outcome), overnight he once again revisits the only thing that matters to markets over the next 24 hours, and looks at the possible outcome of a second “Black Wednesday”, an event that could send the sterling plunging, from the prism of George Soros’ recent op-ed predicting doom and gloom should the British currency rapidly devalue, and concluding that he disagrees:
“thinking about this from the point of view of my Ice Age thesis, where interest rates cannot be normalised because of economic weakness and deflation pressures persisting throughout this recovery, I would have thought a 20% sterling devaluation is exactly the antidote needed in the current circumstances.“
We will have more to say on Edwards’ comparison of Brexit to Black Wednesday and how the potential outcome, like back in 1992, may actually end up being a blessing in disguise for the U.K. economy, should Leave end up winning. Ultimate outcome for the U.K. aside, however – and Edwards believes that the pound will “fall with or without Brexit” – In this we will focus on what according to the SocGen strategist is a far bigger risk to the global economy – the same risk that defined risk for the entire second half of 2016: China’s devaluation, which has returned, only this time it is far more stealthy which may explain why the market has largely ignored it for now.
This 1-chart Zero Hedge news item showed up on their Internet site at 9:33 a.m. on Wednesday morning EDT — and it’s certainly worth skimming. I thank Richard Saler for pointing it out — and another link to this story is here.
More anomalous gold data in latest Swiss import/export figures — Lawrie Williams
The latest gold import and export data from Switzerland, one of the few countries to report these flows in detail, as usual open up some interesting insights into global supply and demand. Overall Swiss gold exports rose by around 20% month on month to 177.3 tonnes making the country a net exporter in May. Generally Swiss gold imports and exports are pretty much in balance given that it mostly imports gold for re-refining and re-export.
While gold exports from Switzerland to China and Hong Kong both picked up in May, its principal country of imports was again the United Arab Emirates normally a recipient of Swiss gold, not a provider. Indeed in another reversal of normal gold flows, the U.K. was again the biggest importer of Swiss gold in May, necessary, we feel, to meet the big demand in London from the principal gold ETFs which vault their gold there. Exports to the U.S. were also unusually high. Again any gold flows to and from the U.S are normally in the eastward direction. We have surmised before that available supplies of physical gold in London are currently tight and this only serves to add weight to that premise and could also suggest that a similar position is arriving in the U.S. too given recent strong investor demand for bullion.
This very interesting and worthwhile gold-related news item put in an appearance on Lawrie’s website yesterday sometime — and it’s the second contribution of the day from Patricia Caulfield. Another link to this story is here.
GoldCore’s O’Byrne: Bullion banks panicking amid shortage of metal
GoldCore’s Mark O’Byrne, citing confidential “senior sources at the highest level of the gold bullion industry,” writes today that “illiquidity” and “supply issues” have caused “panic” in the institutional gold market, with some bullion banks cautioning that they may have to suspend trading of physical gold.
We believe the price falls are due to hedge funds and banks liquidating positions and shorting the market. As ever, there is the risk that algo and high frequency trading (HFT) may be manipulating prices lower despite very robust physical demand and increasing liquidity issues in the interbank gold market.
The market is subject to absolutely “unprecedented conditions” and a degree of illiquidity and “supply issues” not seen even in the immediate aftermath of September 11th, Lehman Brothers and the height of the Eurozone crisis.
This must read commentary by Mark appeared on the goldcore.com Internet site yesterday, but for some strange reason it’s datelined June 24. I found this in a GATA release yesterday — and another link to this gold-related news item is here.
The PHOTOS and the FUNNIES
Here are two bird photos courtesy of Toronto subscriber Michael Bero. The first is a Baltimore oriole — and the second is an American goldfinch. We have these birds around Edmonton as well, but they are not common. Michael took these shots during spring migration — and with fewer leaves on the trees, they’re easier to photograph in the clear. Click to enlarge.
The WRAP
Quite counterintuitively, this past week also featured JPMorgan reclassifying one million ounces of its eligible category silver to registered and delivering that silver the very next day. After being nearly the exclusive stopper (acceptor) of COMEX silver deliveries, this was tantamount to a ‘Man Bites Dog’ headline. In most of the silver deliveries on the COMEX for more than a year, JPM has struggled to take the maximum 1,500 contracts allowed (7.5 million oz), often falling short by a bit. Then, it suddenly turns around and lets go of 200 contracts like nothing. My only conclusion is that things are so tight in the physical market that JPM had to sacrifice some of its silver to prevent signs of tightness from becoming apparent. — Silver analyst Ted Butler: 18 June 2016
JPMorgan et al took two tiny slices out of both gold and silver yesterday, as they set a new low close in gold, plus a new intraday low in silver. But with low volumes and little price action during the Wednesday trading session, not much should be read into this unless we see further new lows in the days and weeks ahead.
Here are the 6-month charts for all four precious metals — and there’s not much to see at the moment, as none of the major moving averages have been broken as of yet.
Of course all eyes will be on the Brexit vote in Britain today — and the polls don’t close until 10:00 p.m. BST tonight, which is 5 p.m. EDT. I would suspect that the final results won’t be known until sometime on Friday morning over there, but there may be some indication from exit polls, because there certainly will be quite a few of them that will attempt to glean the outcome in advance.
I’m of the opinion…and this is certainly speculation on my part…that if that if the ‘Stay’ side wins, we’ll see some sort of sell-off in the precious metals, as the powers-that-be will use that as an excuse to take the perceived ‘risk premium’ out of the market. But as to how severe it might be is anyone’s guess. If the ‘Leave’ side wins, then all bets are off, as it will be a whole new ball game.
So we wait some more.
And as I type this paragraph, the London open is less than ten minutes away–and I see that gold traded a few dollars lower during most of the Far East trading session on their Thursday, but began to rally starting shortly after 1 p.m. HKT. At the moment it’s up 2 bucks and change. Silver traded a bit higher in Far East trading — and began to rally the same time as gold. It’s currently up 6 cents the ounce. Platinum traded a few dollars either side of unchanged — and that’s where it’s sitting at the moment…unchanged. It was mostly the same in palladium — and it’s down a dollar currently.
Net HFT gold volume is sitting right at 28,000 contracts — and that number in silver is about 5,800 contracts, with decent roll-over activity out of July and into the new front month which will be September. The dollar index has been been trading on the softer side during Far East trading — and is currently down 8 basis points as London opens.
And as I post today’s column on the website at 4:05 a.m. EDT, I see that gold has done very little since I reported on it an hour ago. After a down/up move of a few dollars it’s right back to where it was at the London open…up 2 bucks and change. The price action in silver has certainly been more robust — and it’s up 16 cents an ounce now. Platinum is now up 2 dollars — and palladium has finally made it back to unchanged.
Net HFT gold volume is up to 35,500 contracts — and that number in silver is around 9,200 contracts. The dollar index has rallied a hair — and is currently down only 2 basis points.
That’s all I have for today — and I would expect that the next 24-hour trading period to be rather interesting.
See you tomorrow.
Ed
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