05 July 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was sold off a couple of dollars the moment that trading began in New York at 6:00 p.m. EDT on Sunday evening — and from there it didn’t do much, but was back to unchanged by 9:00 a.m. HKT. Then away it went to the upside. Once the price had risen 15 bucks or so — and showed every sign of going vertical — the powers-that-be stepped in. By 11 a.m., most of the spike rally’s gains were gone. However, it did chop slightly higher into the London open — and traded mostly sideways from there until the GLOBEX trading system closed at 6:00 p.m. BST in London on their Monday evening, which was 1:00 p.m. EDT.
The low and high ticks were reported as $1,339.00 and $1,353.50 in the August contract.
Gold finished the Independence Day-shortened trading session at $1,350.50 — up $8.60 from its Friday close. Net volume, even with the COMEX closed for the day, was pretty healthy at just under 137,000 contracts.
Of course all eyes were on silver, as what appeared to the beginning of a short squeeze for the ages was underway. But that got capped and sold down the moment the price blew through $21 the ounce. Once ‘da boyz’ were done with the sell-off around 11 a.m. HKT, the silver price chopped sideways in a huge 50 cent-plus price range for the rest of the Monday session.
The CME Group recorded the low and high tick in silver at $21.225 and $19.76 spot in the September contract.
Silver was closed at $20.31 the ounce yesterday — up 55.5 cents from Friday’s close, and nowhere near its high tick. It would have easily closed up $55.50 the ounce if allowed to trade freely, which it obviously wasn’t.
The platinum price chopped sideways in a rather large 15 dollar price range until 11 a.m. in Zurich. At that point it began to chop very quietly higher, ending the day on its high tick. Platinum finished the Monday session in Zurich at $1,068 spot, up 11 dollars from its Friday close in New York.
Palladium suffered the same fate — and at the same time — as silver and gold in Far East trading yesterday morning. Then, like platinum, it began to rally at 11 a.m. Zurich time, closing a dollar off its high tick at $614 spot — and up an even 10 bucks on the day.
The dollar index closed very late on Friday afternoon in New York at 95.63 — and chopped sideways in a tight range from the time that it opened on Sunday afternoon in New York. A rally of sorts began just before 2:30 p.m. HKT on their Monday afternoon — and the 95.90 high tick [according to ino.com] — came just after 9:30 a.m. in London. From that point it began a long, slow decline to its 95.43 low tick which came shortly after 4 p.m. EDT. It has been rallying quietly since then —and closed at 95.51 — down 12 basis points from its Friday close.
Here’s the 3-day U.S. dollar index chart so you can put all of Sunday and Monday’s action in perspective.
With the U.S. closed tight for the Independence Day holiday, there were no reports of any kind from the CME, GLD, SLV, or the U.S. Mint.
But the folks over at Switzerland’ Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Thursday, June 30 — and this is what they had to report. Their gold ETF added 11,032 troy ounces — and their silver ETF rose by 285,177 troy ounces.
Nick Laird passed around a few charts on the weekend — and the first two show gold and silver bullion coin sales from the U.S. Mint going back five years — and updated with June’s sales data. Nick said that during that month, the mint sold 88,000 troy ounces of gold bullion coins [eagles and buffaloes], along with 3.009 million silver eagles, plus other silver bullion coins. Click to enlarge if necessary.
And here’s another very interesting chart from Nick — and I must admit that it’s the first time I’ve laid eye on it. It shows the 6-month changes/improvements in just about everything gold or silver related for the first half of the year. The chart title really doesn’t to it justice. The ‘Click to Enlarge‘ feature is a must, as there’s lots to see — and it’s worth your while.
I have a decent number of stories today — and I hope you can find the time to read the ones that interest you.
CRITICAL READS
Humpty-Dumpty: Teetering On The Eccles Building Wall — David Stockman
The Eccles Building trotted out Vice-Chairman Stanley Fischer this morning. Apparently his task was to explain to any headline reading algos still tracking bubblevision that things are looking up for the U.S. economy again and that Brexit won’t hurt much on the domestic front. As he told his fawning CNBC hostess:
“First of all, the U.S. economy since the very bad data we got in May on employment has done pretty well. Most of the incoming data looked good,” Fischer said. “Now, you can’t make a whole story out of a month and a half of data, but this is looking better than a tad before.”
You might expect something that risible from Janet Yellen——she’s just plain lost in her 50-year old Keynesian time warp. But Stanley Fischer presumably knows better, and that’s the real reason to get out of the casino.
What is happening is that after dithering for 90 months on the zero bound the Fed has run out the clock. The current business cycle expansion—as tepid as is was— is now clearly rolling over. So the Fed has no option except to sit with its eyes wide shut while desperately trying to talk-up the stock market.
And that means happy talk about the U.S. economy, no matter how implausible or incompatible with the facts on the ground. No stock market correction or sell-off of even 5% can be tolerated at this fraught juncture.
This commentary by David put in an appearance on his Internet site on Saturday sometime — and today’s first item is courtesy of Roy Stephens. Another link to this commentary is here.
All paper currencies are doomed, Marc Faber says
All paper currencies are “doomed” thanks to central bank policies around the world, said Marc Faber, editor of the Gloom, Boom & Doom Report.
“They are going to become worthless because of money printing. In other words, the purchasing power is going to continue to diminish as it has diminished for the last hundred years,” Faber, known as Dr. Doom, said in an interview with CNBC‘s “Power Lunch” Friday.
And the Brexit vote last week means even more money printing in the U.K., Japan and the United States, he said.
Therefore, he expects the dollar to go down against gold, silver and platinum — which he believes are going to “vastly” outperform the U.S. stock market.
No surprises here. This 6:12 minute video interview [plus partial transcript] was posted on the cnbc.com Internet site at 4:03 p.m. on Friday afternoon EDT — and it’s courtesy of Ken Hurt. Another link to this Faber interview is here.
Doug Noland: Greenspan on Bubbles
Bank stocks again badly lagged during this week’s global rally. Deutsche Bank (the IMF’s “most important net contributor to systemic risks”) dropped another 7% this week (to a 30-year low), increasing 2016 losses to almost 44%. Italian bank stocks sank another 5.4% (down 54% y-t-d), as talk turned to contentious issues such as rescue packages and measures to avert bank runs. While European equities indices rallied, Europe’s STOXX Bank index declined 2.4% (down 31% y-t-d). And despite Japan’s Nikkei 225 equities index rallying 4.9%, the TOPIX Banks Index slipped 0.4% (down 37% y-t-d). The S&P500 jumped 3.2% this week approaching record highs, while the banks (BKX) rallied only 1.1% and the broker/dealers (XBD) ended the week little changed.
Central banks lined up this week to offer support for vulnerable financial markets. Post-Brexit mayhem created a critical juncture, and policymakers got the market bounce they desperately needed. Clearly, central bankers retain the capacity to incite powerful short squeezes. There was considerable hedging going into the UK referendum, and the unwind of derivative trades and short positions provided fuel for this week’s recovery.
But it’s one things inciting higher prices in an over-liquefied Financial Sphere and quite another stimulating sustainable activity in the maladjusted Real Economy Sphere. Indeed, I’ve argued that a fundamental risk associated with inflationist monetary policies is the widening divergence between inflated securities markets and deflating economic prospects. This schism widened meaningfully this week.
I forgot about Doug’s weekly Credit Bubble Bulletin in my Saturday column, so here it is now — and it’s definitely worth reading. Another link to his commentary is here.
Nigel Farage Steps Down As UKIP Leader, Adding To Post-Brexit Political Turmoil
Nigel Farage, UKIP leader and passionate advocate for the U.K. to leave the European Union, announced unexpectedly today that he is stepping down as party leader, just days after he led a successful, and historic, campaign to Leave the European Union. Speaking in Westminster, Farage said the Brexit referendum was about Britons taking their country back, and having succeeded at that, Farage now “wants his life back.” His resignation completes the recent chaos in UK politics which has seen both the Conservative and Labour parties scramble to find new leadership in the aftermath of the Brexit vote.
Farage has resigned before, in May 2015, following the U.K. general election. On that occasion he returned a few days later when the party rejected his resignation. This time however, he said, “I won’t be changing my mind again, I can promise you.” Farage said his reason for getting into politics was to get Britain out of the European Union, and with that achieved, “I feel I’ve done my bit.”
He said UKIP had “clearly established ourselves as the third political force in this country,” and should the Brexit exit negotiations not prove satisfactory “then in 2020 watch this space.”
Wow! I must admit that this came out of left field, as this was about the last thing I was expecting. This news item showed up on the Zero Hedge website at 3:13 p.m. on Monday afternoon EDT. I thank Jim Gullo for sending it along — and another link to this story is here.
After Brexit, Can Germany Lead Europe Alone?
Whether Britain’s decision to leave the European Union turns out to be a disaster or just a bump in the road for Europe on its path to unification, one consequence is already abundantly, disturbingly clear: Brexit will cement Germany’s role as the Continent’s leader — a role that neither Germany nor anybody else is entirely comfortable with.
It has rarely felt this lonely at the center of Europe. With Britain leaving, Germany is losing an important partner within the European Union, as well as on foreign policy beyond it.
That is not to say that Britain was an easy partner in recent years. The mind reels at what Chancellor Angela Merkel of Germany, known for her cautious, step-by-step policies, must have thought of Prime Minister David Cameron tossing his country’s membership onto the gambling table in a bid to blackmail the European Union. Ms. Merkel is a committed Europeanist; Mr. Cameron called the union “too big, too bossy, too interfering.”
This commentary, filed from Berlin, showed up on ‘The Opinion Pages‘ of The New York Times yesterday — and I thank Patricia Caulfield for sending it along. Another link to this opinion piece is here.
Deutsche Bank’s 90% Stock Collapse and the ECB’s Attempted Rescue in One Chart
Deutsche Bank, the European Union’s largest bank, has suffered a 90% stock price decline since its peak on May 11, 2007. The European Central Bank (ECB) rode to the rescue like John Wayne in a John Ford US Cavalry flick.
This chart allows you to see the attempt of the ECB to stimulate growth in the European economy and save the banks. After Deutsche Bank’s stock price peaked in May 2007, it began to nosedive. The financial crisis set it and the ECB reacted with lowering rates and performing asset purchases (like the Federal Reserve). While the ECB began to trim their asset purchases in 2013, they had to start up asset purchases again and cut the main refinancing rate once again in late 2014.
Deutsche Banks remains stranded on the rocks after the EU’s economic and financial Jutland (the largest naval battle of World War I, damaging both the British and German naval fleets).
Deutsche Bank has a tier 1 capital ratio of about 14%, down from about 17% in 2013.
This chart-filled commentary, none of which ‘click to enlarge’, appeared on the anthonybsanders.com website on Sunday — and the charts are worth a quick look. I thank reader U.D. for passing it around — and another link to this article is here.
Turkey on the ropes — The Saker
This has been an amazing week which saw the first clear sign of the collapse of the E.U. and Turkish President Erdogan presenting his excuses to Russia for the downing of a Russian SU-24 over Syria seven month ago. While the latter event was largely eclipsed by the former, it might be the sign of something even more dramatic taking place: the collapse of Turkey.
Does that seem like hyperbole?
Let’s look again.
The Presidency of Erdogan has been nothing short of cataclysmic for Turkey which resulted in a perfect storm of crises, each of the very serious.
The first thing which should be said about this is that Erdogan took a major political risk: after spending months chest-thumping and declaring uri et orbi that Turkey will never, ever, apologize if only because Turkey was in the right, this sudden “zag!” puts Erdogan is a very difficult position. Hence the initial rumors that the letter said that he was “sorry” but not “apologizing” or, second variant, that the apology was only to the family of the murdered Russian pilot, but not to Russia. This did not last too long and pretty soon the bewildered Turks gave up trying to give this apology a face-lift. It was exactly what everybody understood it to be: a real full and humiliating apology.
This commentary, which I was saving for Saturday, is certainly a must read for any serious student of the New Great Game. It was posted on thesaker.is Internet site on Saturday — and I thank Larry Galearis for pointing it out. Another link to this very worthwhile read is here.
Suicide Bombings Hit 3 Cities in Saudi Arabia, One Near a Holy Site
Bombings rocked three cities across Saudi Arabia on Monday, including near the Prophet’s Mosque in the holy city of Medina, raising the specter of increasingly coordinated attacks by militants seeking to destabilize the monarchy.
A suicide bomber struck near the United States Consulate in the coastal city of Jidda in the morning, wounding two security officers. Then, near dusk, when Muslims were ending their daily Ramadan fasts, other blasts struck near a Shiite mosque in the country’s east and at a security post in Medina, killing four guards, according to the Saudi-owned Al Arabiya television network.
The blasts in Saudi Arabia followed a bloody week in which terrorist attacks caused mass casualties in the largest cities of three predominantly Muslim countries: Turkey, Bangladesh and Iraq.
The Islamic State, also known as ISIS or ISIL, has claimed responsibility for the attacks in Dhaka, Bangladesh, and in Baghdad, and it is suspected of carrying out the one in Istanbul.
How long will it take the house of Saud to fall, I wonder? This news item appeared, filed from Beirut, appeared on The New York Times website yesterday sometime — and it’s the second contribution of the day from Patricia Caulfield. Another link to this story is here.
China buyers drive silver prices higher
The price of silver surged to a two-year high on Monday as buyers in China made bold bets in the futures market and scooped up vast volumes of physical metal.
Spot silver, the price paid for immediate delivery, rose as much as 6.9 percent to an intraday peak of $21.132 a troy ounce, its highest value since July 2014, as the Shanghai-traded benchmark futures and physical silver contracts reached their limit.
On the Shanghai Futures Exchange, the most actively traded silver futures contract jumped for a fourth straight session on Monday, hitting its 6-percent daily maximum at opening to reach 4,419 yuan ($663) a kilogram.
Monday’s moves were buoyed by investors seeking haven assets and speculation about further monetary easing worldwide.
Of course I’m waiting for the follow-on story today with the headline that reads “JPMorgan et al take all of China’s silver and gold gains back, plus more” — but it ain’t going to happen. The above three paragraphs are part of this Wall Street Journal story that was posted in the clear in a GATA release from yesterday.
Gold to hit record in 18 months as bond yields crash, Swiss Asia Capital’s Kiener says
Gold prices may hit all-time highs in the next 18 months amid low to negative global bond yields, said a fund manager on Monday, joining a chorus of bullish calls on the safe haven commodity.
Despite being a non-interest bearing asset with holding costs, gold was attractive in the current climate where there was little trust in the establishment and its policies as demonstrated by the June 23 referendum in the U.K. when voters chose to leave the European Union, said Swiss Asia Capital’s Singapore managing director and chief investment officer, Juerg Kiener.
The continued cratering of bond yields has also blunted the advantage fixed income instruments held over their shiny counterpart.
“This fall-off in trust is resulting in people looking at different ways to invest, particularly in an environment when the government controls the whole fixed-income market, which is negative. At least (in gold), you don’t have negative yields, there is no new supply … and falling production,” he told CNBC‘s “Squawk Box.”
This 2:53 minute video clip, plus a transcript of sorts, showed up on the CNBC website on Monday evening EDT — and it’s something I found on the gata.org Internet site. Another link to this interview/transcript is here.
The 500 Tonnes of Gold That Show Global Rise in Investor Angst
Global gold holdings have expanded by more than 500 metric tons since bottoming in January in a signal of investors’ rising concern about slowing growth, a Federal Reserve that’s probably on hold and the ructions caused by Britain’s vote to quit the European Union.
Assets in bullion-backed exchange-traded funds rose 6.6 tons to 1,959.1 tons on Friday, up from 1,458.1 tons on Jan. 6, according to data compiled by Bloomberg. Holdings increased 37 tons last week as investors reacted to the U.K.’s vote, and swelled in five months out of six in the first half.
Bullion prices climbed to the highest level in more than two years in June as investors absorbed the implications of the U.K. result, adding to a rally that’s been driven by the Fed’s hesitation in raising borrowing costs and the spread of negative rates in Europe and Japan. Banks including Goldman Sachs Group Inc. raised their outlooks for gold after the vote, while yields on 10- and 30-year U.S. Treasuries have touched record lows.
This gold-related Bloomberg news item put in an appearance on their website at 7:48 p.m. Denver time on Sunday evening. I don’t know who this Looney Tunes character [James Bevan] is that they’re interviewing, but he’s a real piece of work. Even the anchor conducting the interview can hardly believe this guy. But it’s anti-gold, so that’s why they’ve got him on. I’m sure glad that he’s not managing my stock portfolio. However, the story line is unrelated to the interview — and it’s certainly worth skimming. It’s another story I found in a GATA release — and another link to it is here.
Bullion coin sales boost revenues of world’s largest Mints
The world’s major precious metals mints are currently riding high on the back of extremely strong global bullion coin demand and relatively buoyant gold and silver prices. These mints are predominantly run as commercial enterprises. The sheer scale of revenues that the U.S. Mint, Royal Canadian Mint (RCM), Perth Mint and Austrian Mint have been generating over the last number of years is eye-opening. Not surprisingly, due to their high value nature, revenues from bullion coin sales account for the lion’s share of total revenues for each institution and have been a core driver of their overall profitability.
Official Bullion Coin Programs
Each of these four mints has an official bullion coin program. The US Mint’s program consists of the production and sales of American Eagle Silver bullion coins, American Eagle gold bullion coins, American Buffalo gold bullion coins, America the Beautiful silver coins, and American Eagle Platinum coins. RCM’s bullion coin program comprises gold, silver, platinum and palladium Maple Leaf bullion coins, as well as the recently added MapleGrams.
The Perth Mint bullion program is slightly more extensive and briefly consists of the following: Australian Kangaroo gold and silver coin series, Australian Kookaburra silver coin series, Australian Koala silver coin series, Australian Platypus platinum coin series, Australian Lunar gold and Australian Lunar silver coin series. The flagship of the Austrian Mint’s bullion program is the Vienna Philharmonic gold bullion coin series, but the mint also produces the Vienna Philharmonic as a silver and platinum bullion coin, as well as historical re-strikes of original Austrian circulation gold ducats, gold guilders and gold crowns.
This very interesting story about the mints was posted on the bullionstar.com Internet site yesterday — and it’s another item I found on the gata.org Internet site. Another link to this article is here.
GoldSeek.com interview with GATA secretary Chris Powell covers gold suppression comprehensively
GoldSeek Radio and its host, Chris Waltzek, have given Chris an opportunity to explain gold price suppression in a comprehensive interview.
Among Chris Powell’s observations:
Central banks obscure their gold transactions to facilitate their currency market interventions.
U.S. government policy long has been to push gold out of the international monetary system to protect the dollar’s status as the world reserve currency.
Central banks are secretly trading gold derivatives, to use the words of a French central banker, “nearly on a daily basis.”
The West’s market economy is an illusion.
The interview is 40 minutes long and the link to the audio interview, along with the rest of Powell’s comments, is embedded in this GATA release from yesterday. Another link to it is here.
The PHOTOS and the FUNNIES
I was out at the pond yesterday — and the red-necked grebe babies that were riding on mom and dad’s back just a month ago, are teenagers already. This young ‘un has that red spot/gland in front of its eye — and I have no idea of its purpose. From the side, this one looks cute, but head on, it’s more than bizarre looking. The CLICK to ENGLARGE is a must here.
The WRAP
It was obvious that a major rally, short-covering or otherwise, in both gold and silver was underway in Shanghai trading on their Monday morning — and just as obvious that the not-for-profit sellers, whoever they were, were prepared for just such an eventuality. They made short work of it — and after that, the precious metals didn’t do much for the rest of the day.
When Far East trading began on their Tuesday morning, there was more follow-up from the HFT boyz and their algorithms — and as of this writing at 1:41 a.m. EDT, they have gold down 10 bucks and heading lower — and silver is back below $20 the ounce.
The precious metals want to fly, but it’s equally as obvious that JPMorgan et al weren’t going to allow a runaway market to the upside. I suppose an engineered price decline is still on the table, but in this financial and monetary environment, it seems that it would be increasingly difficult to pull off.
And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price hasn’t done much since the HFT boyz put the boots to in Shanghai trading on their Tuesday morning. At the moment it’s down about 7 bucks an ounce — and off its earlier low. The same can be said of silver, as it’s currently crawling along just under the $20 spot mark at $19.95 the ounce, down 36 cents from its Monday close. It’s the same situation in platinum, but it’s down a chunky 15 bucks, but well off its HFT low tick in early morning trading in Shanghai. Ditto for palladium — and it’s currently down 16 dollars an ounce.
Net HFT volume in gold [minus Monday’s net volume] sits at a very chunky 50,500 contracts, if my math can be believed — and that number in silver is M.IA., as I forgot to note silver’s volume at the close on Monday. The dollar index rallied to just above the 95.65 mark in early trading in the Far East — and has been chopping around 5 basis points below that high during the rest of their Tuesday trading session. It’s currently up 8 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 also the companion Bank Participation Report. It can only be hoped that all of today’s trading action will be in it — and I’ll be rather surprised if we have a quiet trading session in New York today, but you just never know.
And as I post today’s column on the website at 4:05 a.m. EDT, I note that gold has rallied a few dollars during the first hour of London trading — and is currently down 5 bucks. Silver is down a bit more since the open — and 43 cents below its Monday close — and within a dime or so of its Friday close in New York. Platinum has bounced a bit — and is ‘only’ down 12 dollars. Ditto for palladium, which is down 13 bucks.
Net HFT gold volume is up to 56,000 contracts, net of Monday’s volume, so there hasn’t been much volume in the last hour. The dollar index got sold off a decent amount just minutes after the London open — and is down 6 basis points from Monday’s close.
The grotesque short positions in gold, silver and platinum haven’t changed much — and are still at extreme record levels. We either blast off from here as the shorts get over run, which was a ‘no-no’ for the powers that be on Monday morning HKT — and still is at this moment as far as I can tell; or we get the sell-off before we blast higher. Until this situation is resolved one way or the other, all we can do is watch and wait.
That’s all I have for today — and I’ll see you here tomorrow.
Ed
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