12 July 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was up more than ten bucks in the first hour of trading on Monday morning in the Far East, but the not-for-profit sellers put an end to it just before 9 a.m. HKT. That was pretty much it for the day, as it was sold lower from there, with the Monday low tick coming at 9:15 a.m. in New York. The subsequent rally made it just past the London p.m. gold fix — and was capped at that juncture, before getting sold lower starting at 1:00 p.m. EDT. That sell-off lasted until shortly after 3 p.m. in the thinly-traded after-hours market, but it did rally a bit after that.
The high and low tick were reported as $1,376.50 and $1,351.80 in the August contract.
Gold was closed in New York yesterday at $1,354.60 spot, down $10.80 from Friday’s close. Net volume was way up there at just under 175,000 contracts — and there was fairly heavy roll-over activity out of the August delivery month.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson — and as you can tell, there was pretty decent volume throughout most of the Monday trading session, although COMEX trading volume dominated once the New York bullion banks showed up. Volume really didn’t fall off to what could be considered ‘background’ levels until after 12:00 o’clock noon Denver time on this chart, which was 2:00 p.m. in New York.
The vertical gray line is midnight in New York, noon the following day in Hong Kong and Shanghai—and don’t forget to add two hours for EDT. The ‘click to enlarge‘ is a must here.
Silver was up 40 cents by 10:30 a.m. HKT, but that rally was obviously being vigorously opposed throughout. From there it was guided in the same manner as the gold price, so I shall spare you the play-by-play.
The high and low tick were recorded by the CME Group as $20.76 and $20.17 in the September contract.
Silver was closed on Monday at $20.26 spot, up one whole penny from Friday, so it obviously took a lot of spoofing and other illegal paper shenanigans by JPMorgan and their HFT buddies, to take back all of yesterday’s gains by the close. Net silver volume on Monday was very heavy at just over 68,500 contracts — and as Ted said on the phone yesterday, it appears that these new heavy volume numbers in both silver and gold appear to be the “new normals“.
The price action in platinum was a similar version to what happened in gold and silver, with its low tick coming at, or just after 9 a.m. in New York yesterday. But it should be noted that every attempt for it to rally above $1,100 spot was met by a wiling seller. Platinum was closed at $1,099 spot, up 4 dollars on the day.
Palladium spent most of the Far East session in positive territory, but was sold down to about unchanged by shortly before 2 p.m. HKT. It started to rally a bit around 11 a.m. Zurich time, but once it got up around the $625 spot mark, it was allowed to do much after that. Palladium closed on Monday at $624 spot, up 8 dollars on the day.
The dollar index closed very late on Friday afternoon at 96.29 — and rallied up to about the 96.45 mark by mid Monday morning HKT. An hour or so later it was back to unchanged, but it appeared that ‘gentle hands’ showed up at noon HKT. The 96.79 high tick was printed just after 10 a.m. in London — and its 96.41 New York low was printed just before 9:15 a.m. EDT. The index rallied back to around the 96.69 level about 11:45 a.m. — and then chopped quietly lower until 2:30 p.m. At that point it chopped sideways into the close. The dollar index finished the Monday session at 96.55 — and up 26 basis points from Friday’s close.
Here’s the 3-day dollar index chart so you can see all of the Sunday action in New York as well.
And, for entertainment purposes only, here’s the 6-month U.S. dollar index chart.
The gold stock opened down a percent and a bit at the open on Monday, with their low ticks coming minutes later. They rallied strongly into positive territory, with their respective high ticks coming a minute or so after 11 a.m. EDT. They headed lower from there until shortly after the 1:30 p.m. COMEX close — and then rallied a bit before vaulting to a positive close just before the bell. The HUI finished the Monday session up 0.26 percent, which was certainly better than the alternative, especially considering the closing price for gold.
It was the same price pattern for the silver equities, as they also rallied until a minute or so after 11 a.m. in New York. But from there, they chopped mostly sideways with a slight negative bias until they too caught a bid going into the close. For all intents and purposes they finished the Monday session on their respective highs. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 2.21 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that zero gold and 216 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. The two short/issuers of note were International F.C. Stone and ABN Amro, with 165 and 35 contracts out of their respective client accounts. The biggest long/stoppers were HSBC USA and JPMorgan, with 82 and 75 contracts for their own accounts — and in third place was ABN Amro with 57 contracts for its client account. A 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 July dropped by 19 contracts, leaving 1,190 still open. Friday’s Daily Delivery Report showed that 18 gold contracts were posted for delivery today, so the numbers come within one contract of matching, so this difference is not worth commenting on. Silver o.i. for July dropped by 27 contracts, leaving 1,281 still open. Since 55 silver contracts were posted for delivery today, that means that 55-27=28 contracts were added to the July delivery month.
There were no reported changes in GLD yesterday — and as of 7:26 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
I was expecting the folks over at the shortsqueeze.com Internet site to update their short interest number for both GLD and SLV yesterday — as of the close of trading on June 30. But as of 2:06 a.m. EDT this morning, they hadn’t done so. Maybe they will today sometime.
There was a smallish sales report from the U.S. Mint yesterday. They sold 4,000 troy ounces of gold eagles, plus another 175,000 silver eagles. This has to be the worst start to a sales month in many, many years.
For a change, there was no in/out gold movement at all over at the COMEX-approved depositories on Friday.
It was a bit busier in silver, as 423,390 troy ounces were reported received, all at Brink’s, Inc. — and 61,315 troy ounces were shipped out the door, with most of that coming out of Canada’s Scotiabank. The link to that activity is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, they reported receiving only 416 kilobars, but shipped out a chunky 4,165 of them. All of the action was at Brink’s, Inc. as per usual — and the link that, in troy ounces, is here.
Here’s another chart that Nick Laird passed around on Sunday. This one shows the Weekly Transparent Gold Holdings of all the repositories, mutual funds and ETFs, in ounces. His remarks in the accompanying e-mail read: “Second largest week ever for physical gold holdings — 2.5 million ounces worth US$3.4 billion. The highest ever was 4 million ounces back in early 2009.“
Despite my best hacking and slashing attempts at editing, I still have a lot of stuff today, so you pick through what I’ve chosen.
CRITICAL READS
Bernanke’s Black Helicopters Of Money — David Stockman
Ben Bernanke is one of the most dangerous men walking the planet. In this age of central bank domination of economic life he is surely the pied piper of monetary ruin.
At least since 2002 he has been talking about “helicopter money” as if a notion which is pure economic quackery actually had some legitimate basis. But strip away the pseudo scientific jargon, and it amounts to monetization of the public debt—–the very oldest form of something for nothing economics.
Back then, of course, Ben’s jabbering about helicopter money was taken to be some sort of theoretical metaphor about the ultimate powers of central bankers, and especially their ability to forestall the boogey-man of “deflation”.
Indeed, Bernanke was held to be a leading economic scholar of the Great Depression and a disciple of Milton Friedman’s claim that Fed stringency during 1930-1932 had caused it. This is complete poppycock, as I demonstrated in The Great Deformation, but it did give an air of plausibility and even conservative pedigree to a truly stupid and dangerous idea.
This commentary by David put in an appearance on his website on Monday sometime — and today’s first article is courtesy of Roy Stephens. Another link to it is here.
Bye-Bye, Bonus: Brexit Seen Biting Profit for Years at U.S. Banks
When U.S. banks post second-quarter results in days, it’ll boil down to this: Bonus cuts are coming for just about everyone this year, says Wall Street recruiter Richard Lipstein. “If you are break-even, it’s an achievement.”
That’s the picture taking shape as analysts trim estimates for the quarter and overhaul long-term projections for banks’ main businesses after the U.K.’s vote to leave the European Union. Starting this week, JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Group Inc. probably will say they saw a quick bump in trading after the June 23 referendum, but that deals are stalling and years of pain lie ahead.
Combined net income at the six biggest U.S. banks is estimated to fall 18 percent in the second quarter from a year earlier, according to analysts surveyed by Bloomberg. Fred Cannon, global research director at Keefe, Bruyette & Woods, said many analysts are just starting to rework projections for future periods to account for Brexit’s fallout, such as the prolonging of low interest rates.
“We went from lower for longer into what seems like lower forever,” he said.
Trying to pin all this bad news for Wall Street on Brexit is a real red herring, according to West Virginia reader Elliot Simon, who sent me this story. I couldn’t agree more. The fact is that the economies of the world suck big time — and there just aren’t that many deals around. And in a world of “you eat what you kill” — that spells the end to bonuses, fat or otherwise. This 3:19 minute video clip, along with a transcript of sorts, showed up on the Bloomberg website at 3:00 a.m. Denver time on Monday morning — and another link to it is here.
David Cameron says there will be a new Prime Minister by Wednesday evening
David Cameron has said Theresa May will be the new Prime Minister by Wednesday evening, adding he was “delighted” that the Home Secretary would succeed him.
Mr Cameron will chair his last Cabinet meeting tomorrow before attending Prime Minister’s Questions on Wednesday. He will then go to Buckingham Palace and offer his resignation to the Queen.
Speaking outside Downing Street Mr Cameron said: “I am delighted we’re not going to have a prolonged Conservative leadership election campaign.”
“I think Andrea Leadsom made absolutely the right decision to stand aside and it’s clear Theresa May has the overwhelming support of the Conservative parliamentary party.”
This 1:08 minute video clip, along with a complete transcript, was posted the independent.co.uk Internet site around 9:30 a.m. EDT — and I thank Brad Robertson for pointing it out. Another link to this article/video is here.
Assassination threats forced UKIP boss Nigel Farage to resign – reports
Brexiteer Nigel Farage stood down as UKIP leader because he feared for his life, it has emerged. Threats were also allegedly made against his family during the E.U. referendum campaign.
Last Monday, the Leave campaigner and MEP announced his resignation, saying Britain’s vote to leave the E.U. on June 23 meant his “political ambition has been achieved.”
However, it has been claimed Farage’s reasons for resigning may run somewhat deeper.
According to the Daily Express, Farage has been disturbed by a surge in daily threats that have worsened dramatically since the vote for a Brexit.
The newspaper claims he gave a police statement about threats made to his family. It is understood those threats were made against his daughters, aged 11 and 16.
This news item appeared on the Russia Today website at 12:44 p.m. Moscow time on their Monday afternoon, which was 4:44 a.m. in Washington — EDT plus 8 hours. I thank ‘aurora’ for passing it around — and another link to this news item is here.
70% of German Bonds Are No Longer Eligible For ECB Purchases
Back in April of 2015, we warned that the biggest risk facing the ECB is running out of eligible securities which the central bank can monetize. Draghi’s recent launch of the CSPP, in which the ECB has been buying not only investment grade but also junk bonds, is an indirect confirmation of that. A direct one comes courtesy of a Bloomberg calculation according to which following a seventh straight week of gains in German bunds, the yields on securities of all maturities has plunged to unprecedented lows, which has left about $801 billion of debt out of the statutory reach of the European Central Bank.
As noted earlier, there is now $13 trillion of global negative-yielding debt. That compares with $11 trillion before the Brexit vote. The surge in sovereign debt since Britain’s vote to exit the European Union last month has pushed yields on about 70% of the securities in the $1.1-trillion Bloomberg Germany Sovereign Bond Index below the ECB’s -0.4% deposit rate, making them ineligible for the institution’s quantitative-easing program. For the euro area as a whole, the total rises to almost $2 trillion.
Or rather, they are ineligible for the time being.
A Reuters report refuted this news the day after, but the trial balloon for the market response was already in place. We expect that during the next ECB meeting Draghi will announce changes to existing ECB policy and do away with the deposit rate floor entirely, or in combination with the elimination of the ECB’s capital key.
After all, the ECB will not rest before it is the proud owner of all European sovereign and corporate debt.
This story showed up on the Zero Hedge website at 2:58 a.m. on Monday morning EDT — and it comes courtesy of Richard Saler. Another link to this news item is here.
IMF warns Italy of two-decade-long recession
The fragile state of Italian banks in the fraught post-Brexit financial climate has been highlighted by the International Monetary Fund, in a stark warning that the eurozone’s third biggest economy will have suffered for almost two decades before it starts to recover the ground lost since the 2008 financial crash.
Italian banks suffered fresh heavy losses on Monday as the European Union insisted that Matteo Renzi’s centre-left government abide by state-aid rules that limit Rome’s scope to provide help to banks burdened by the non-performing loans (NPLs) caused by economic stagnation.
The IMF said Italy was “recovering gradually from a deep and protracted recession”, but said the healing process was likely to be “prolonged and subject to risks”. It used its article IV consultation – an annual economic and financial health check – to stress that Italy was vulnerable to a cocktail of threats that could have knock-on effects for the rest of Europe and the world.
The IMF’s forecast says it will be the mid-2020s before Italy’s economy returns to its pre-2007 levels. During this period of slow recuperation, the country would grow relatively poorer compared with other eurozone countries, while its banks would continue to be heavily exposed to economic shocks.
This news items put in an appearance on theguardian.com Internet site at 11:00 p.m. BST on their Monday evening, 6 p.m. in New York — and I thank Patricia Caulfield for bringing it to our attention. Another link to this article is here.
The Bail-in Strategy and Europe’s Crisis — George Friedman
The current Italian banking crisis carries with it the possibility of bank failures. The consequences of these failures pyramid the crisis because of European Union regulations. Essentially, the position of the European Union is that the European Central Bank (ECB) and the central banks of member countries cannot bail out failing banks by recapitalizing them — in other words, injecting money to keep them solvent. E.U. regulations go so far as to prohibit Italy from using its state funds to shield investors and shareholders of banks from losses, unless there is risk of “very extraordinary” systemic stress. Rather, the European Union has adopted a bail-in strategy.
The bail-in strategy is in theory a mechanism for ensuring fair competition and stability in the financial sector across the eurozone. It protects countries, like Germany, from spending their money on bank failures in other countries, and keeps the ECB from printing extra money and exposing Europe to inflation that would reduce the position of creditors. The fear of inflation is remote at this moment but it still is an institutional principle of the ECB. And controlling national expenditures on banks imposes fiscal discipline on countries that seek to bail out not just banks, but the equity holdings of investors, who will lose their investment when the bank fails.
The issue is this: who is considered an investor? In the view of the E.U., depositors are, in cases of a bank resolution, investors in the bank. The bail-in process can potentially apply to any liabilities of the institution not backed by assets or collateral. There is some insurance available, and there are E.U. regulations on deposit insurance, but there is no E.U.-wide system of deposit insurance. This is because creditor nations do not want to share the liability for bank failures in other nations. This means that while the first €100,000 ($111,000) in deposits are protected, in the sense that they cannot be seized, any money above that amount can be.
On the surface, €100,000 is a substantial amount of savings. But if you consider the position of a professional who has saved all his life for retirement, he may have substantially more. And at interest rates available today, even a bank account with a million euros would not generate enough income through interest to sustain a planned retirement. The principal would have to be used, and in a bail-in, both the planned income and principal (above €100,000) would be dissolved. As for businesses, particularly small and medium-sized enterprises (SMEs), the bail-in could evaporate payroll accounts and other working capital.
This commentary by George was posted on the geopoliticalfutures.com Internet site yesterday sometime. George had a must read article in my Saturday column — and this one easily falls into that category as well. Another link to this short essay is here. I thank Scott Otey for finding it for us.
Funds bet that emergency global stimulus will trump Brexit worries — Ambrose Evans-Pritchard
Elite funds and banks are quietly amassing global equities and emerging market assets, betting that precautionary stimulus around the world will overwhelm any local damage in Britain and drive one last leg of this ageing financial cycle.
It is a risky strategy at a time when the world economy is so precariously balanced, with almost $12 trillion (£9.26 trillion) of debt trading at negative yields and the international system disturbingly out of kilter.
The hypothesis is that the authorities have overreacted from an inchoate fear of contagion from Brexit, without knowing quite what the risk is.
There is a loose parallel to the Asian financial crisis in 1998 and the putative Millennium Bug in 2000, which both triggered a release of liquidity from the U.S. Federal Reserve and set off the final phases of the dotcom bubble.
This AE-P article showed up on the telegraph.co.uk Internet site at 1 minute after midnight on Tuesday morning BST, which was 7:01 p.m. in New York — EDT plus 5 hours. Another link to this commentary is here — and I thank Roy Stephens for his second contribution to today’s column.
Warsaw Summit: Western Leaders Ignore Reality — The Saker
So the much advertised NATO summit in Warsaw finally took place. It was a total success, at least if the criterion is that the outcome matched the expectations:
• Poroshenko and Nadezhda Savchenko were invited and treated like a respected guest
• Russia was condemned for her “aggressions” in Georgia, Crimea and the Ukraine
• The Poles plastered Warsaw with posters saying “ACHTUNG RUϟϟIA”
• The Baltics each got one NATO battalion to deter the Russian Bear
• Russia was condemned for not abiding by the Minsk2 Agreement
• Enough hot air was released to worsen global warming by at least 10 degrees
Frankly, I don’t feel like commenting on all this idiocy. Besides, all these pseudo-decisions never were the true purpose of this summit. This summit had a totally different objective and that objective too was fully achieved.
The real purpose of the summit was to force each western political leader to chose between reality and ideology. And they all made the correct choice, of course. They categorically rejected reality — and enthusiastically embraced ideology.
This commentary certainly falls into the must read category, even if you’re not a student of the New Great Game. I thank Larry Galearis for sharing it with us — and another link to this story is here.
Chilcot Report: U.K. Oil Interests Were Lead Motive For Iraq War
The long-awaited report of John Chilcot, a senior U.K. civil servant, on the Iraqi War and the events that led to it has revealed that the U.K. energy business had a pretty solid vested interest in the conflict.
Documents revealed as part of the huge, 12-volume report, show that British government officials involved in the events that led up to the war, the war itself and the following restoration period pursued as a main objective the corporate interests of energy giants BP and Shell. This was not, however, mentioned in the 150-page summary of the impressively extensive report: 2.6 million words in all.
Secret meetings between government officials and BP and Shell to discuss how they would proceed once Saddam was been toppled are revealed in the document. Iraq, the minutes of one such a meeting read, is “special for the oil companies” and “BP are desperate to get in there.”
In other words, what Chilcot’s report has revealed, albeit reluctantly and seemingly unwillingly, is that energy, not weapons for mass destruction (non-existent as it turned out) was the main motive for the Iraq invasion and the bloody conflict that ensued.
This short news item put in an appearance on the oilprice.com Internet site last Thursday — and Brad Robertson sent it our way on Monday morning MDT. Another link to this story is here.
“CRAZY!” — Grant Williams
Grant Williams, the author of the widely-read financial publication “Things That Make You Go Hmmm” and co-founder of Real Vision Television, says we’re experiencing something “truly historic” in the global economy.
In a new 40-minute video presentation called “Crazy,” Williams highlights the extraordinary levels of global debt and unprecedented monetary policy we’ve seen since the 2008 financial crisis.
“The investment landscape today is unlike anything we’ve seen in our lifetime,” he says.
“Once you’ve gone down this road, it’s very hard to go back without an extreme event that forces you to go back… No matter what the Fed says about the unwind, they can’t do it. More extreme actions are needed on their part or an extreme event exogenous to central banks like a market crash or a loss of confidence.”
For now, while the “central bankers rule the world,” Williams recommends gold as an investment.
This 39:13 minute video presentation is a variation on his presentation at the Silver Summit last fall in San Francisco. It’s first rate/top drawer from one end to the other — and it’s very much worth your while. So if you can find the time, watch it. It was posted on the finance.yahoo.com Internet site on Sunday — and I thank Jim Gullo for sending it our way. Another link to this interview is here.
Citigroup Backs Commodities for ‘17 in ‘Especially Bullish’ Call
Forget Brexit, go for raw materials. Citigroup Inc. says that it’s bullish on commodities including oil in 2017 as the impact of the U.K.’s vote to quit the European Union fades away, global growth chugs along and with markets rebalancing investors plow more cash into funds.
“Citi is especially bullish commodities for 2017,” analysts led by Ed Morse wrote in an note received on Monday, two months after the New York-based bank said that raw materials’ markets had turned the corner. “The oil market is treading water for now, but the oil price overshot to the downside earlier this year and this is clearly setting the stage for a bullish end to the decade.”
Returns from commodities trounced those from other assets in the first half as the oil market showed signs of rebalancing, spurring a rally. The half ended with the U.K.’s vote to quit the E.U., boosting concern about the outlook for growth. Global raw material demand still continues to grow, helped by the U.S. and China, while supply cuts are showing in petroleum and North American natural gas, some base metals and farm products, Citigroup said.
“Unlike last year, when commodity markets rallied through the second quarter only to fall sharply come the third as oversupply persisted, this rally looks more sustainable as physical markets have tightened considerably,” the analysts wrote. “Global demand continues to grow at a moderate rate while the pullback in capital spending is reducing not just supply growth but total supplies across nearly all extractive industries.”
I guess that someone has finally figured out that some of this rampant increase in the money supply will ultimately spill over into commodity prices other than the monetary metals. This article appeared on the bloomberg.com Internet site at 8:25 p.m. MDT on Sunday evening — and was subsequently updated at 4:04 a.m. MDT/Denver time on Monday morning. I thank Elliot Simon for bringing it to our attention — and another link to this article is here.
SPDR Gold Trust gold bars at the Bank of England vaults — Ronan Manly
One of the most notable developments accompanying the gold price rally of 2016 has been the very large additions to the gold bar holdings of the major physically backed gold Exchange Traded Funds (ETFs). This is especially true of the SPDR Gold Trust (ticker GLD).
The gold bar holdings of the SPDR Gold Trust peaked at 1,353 tonnes on 7 December 2012 before experiencing a precipitous fall in 2013, and additional and continued shrinkage throughout 2014 and 2015. On 17 December 2015, the gold holdings of the SPDR Gold Trust hit a multi-year low of 630 tonnes, a holdings level that had not been seen since September 2008.
By 31 December 2015, GLD ‘only’ held 642 tonnes of gold bars. See above chart. Then as the New Year kicked off in January 2016, something dramatic happened. The SPDR Gold Trust began expanding its gold holdings again, and noticeably so. By 31 March 2016, the Trust held 819 tonnes of gold bars, and by 30 June 2016, it held 950 tonnes of gold bars. The latest figure at time of writing is 981 tonnes of gold bars as of 8 July 2016.
This is a year-to-date net change of 338.89 extra tonnes of gold bars being held within the SPDR Gold Trust. See chart below. That’s a 52.8% increase compared to the quantity of gold bars the Trust held at the end of 2015, and a phenomenal amount of gold by any means, since it’s over 10% of annual new mine supply, and also a larger quantity of gold than all but the world’s largest central banks hold in their official gold reserves. Where is all of this gold being sourced from? That is the billion dollar question.
This commentary by Ronan is very long — and somewhat convoluted — as most of his commentaries tend to be. But his concluding remarks are not to be missed, even if your eyes start to glaze over part way through this epistle. It was posted on the bullionstar.com Internet site yesterday — and I thank Ted Butler for pointing it out. Another link to this article is here.
Gold fraud: $550m tax scam hits gold industry
Nobody had dealt with the two mysterious men before, and they didn’t like answering questions about their business.
But they bought a lot of gold. And they paid in cash.
The duo would fly around the eastern states and buy bars and coins by the kilogram, sometimes spending more than $100,000 at a time.
They’d move from dealer to dealer in a capital city, eventually collecting enough bullion to fill a carry-on suitcase. With dozens of gold traders in Melbourne, Brisbane and Sydney, there were plenty to choose from.
I’ve posted a story about this before — and it’s certainly an issue that doesn’t exist in Canada at all, as I’ve seen no sign of it. This story appeared on The Sydney Morning Herald website on their Sunday, which was Saturday here in North America. The first person through the door with it was Australian subscriber “J.W.” — and another link to it is here.
Beware of scary Brexit headlines pushing you to buy gold
If you thought the Brexit vote was scary, check out the full page newspaper ad that recently appeared in The New York Times recounting all the horrors in the present tense, as if they were still unfolding: The vote “topples” the British government, “crushes” the pound and “wipes away” billions in stock market wealth.
Then came the purpose behind all the panicky prose.
“Buy Gold Now!”
Investors have done just that, pushing up the price of the metal to a two-year high. But before joining the rush, experts warn, beware that assets marketed as conservative and safe bought in a panic can sometimes wallop investors with losses they were trying to avoid.
The ad was from a company selling gold coins that is run by is Philip Diehl, a coin expert with an impressive pedigree. He was the staff director of the Senate Finance committee, chief of staff at the Treasury Department, then head of the U.S. Mint, the government agency that stamps out dimes and quarters and other coins.
This longish anti-gold AP story, filed from New York, appeared on The Washington Post‘s website at 11:22 a.m. EDT yesterday — and it’s the third and final offering of the day from Elliot Simon. Another link to this article is here.
First Majestic Silver: Industry Running Short of Quality Silver Assets
In anticipation of the Sprott Vancouver Natural Resource Symposium from July 26th-29th, Sprott’s Thoughts is proud to present another exclusive interview with one of the conference’s Platinum Sponsors: First Majestic Silver founder, Keith Neumeyer.
Interviewed by Sprott Global Resource Investment’s Kenton Ralph Toews, Mr. Neumeyer discussed highlights of his career, as well as observed changes in the silver mining industry.
While many resource & mining entrepreneurs have a geology or mining engineering background, Mr. Neumeyer started in financial services, initially as a trader on the Vancouver stock exchange. Later he worked at various banks and brokerage houses, including Dominion, Scotiabank and Merrill Lynch.
This financial background gives Mr. Neumeyer a view of what “works” from an investor’s standpoint. “I learned there are a lot of bad investors in the space,” he noted, “[And] I’ve been successful in really surrounding myself with good people and that has been one of my primary talents.”
This longish, but very worthwhile audio interview, appeared on the sprottglobal.com Internet site on Saturday — and Keith doesn’t hold much back, as he includes his views on the future of the silver price and the potential crushing of manipulation in the paper markets . Another link to this article/interview is here. There was another audio interview with Keith posted on the youtube.com Internet site on Sunday. It’s headlined “Wall Street Knows: Silver is Exceedingly Rare ‘Strategic Metal’” This one runs a bit over 32 minutes — and covers similar ground as the first one, but goes beyond that in some respects — and the link to that is here. Jim Gullo was the first reader through the door with that one.
“The World is Walking From Crisis to Crisis” – Why BofA Sees $1,500 Gold and $30 Silver
With both stocks and U.S. Treasury prices at all time highs the market is sensing that something has to give, and that something may just be more QE, which likely explains the move higher in gold to coincide with both risk and risk-haven assets. As of moments ago, gold rose above $1,370, and was back to levels not seen since 2014. Curiously, the move higher is taking place after Friday’s “stellar” jobs report, suggesting that someone does not believe the seasonally-adjusted numbers goalseeked by the BLS.
And while we reported last week that one way investors are rushing into the anti-QE safety of gold is by buying paper gold derivatves such as ETFs, which rose above 2,000 tons for the first time since 2013, many others have bypassed paper claims on gold such as GLD entirely, and are rushing into physical.
Case in point, Japanese savers who, fearing domestic confiscation, have been accumulating gold in Switzerland. It’s not just the Japanese: as Nick Laird shows, the past week saw the second largest ever increase in physical gold holdings, as the total published holdings of physical funds rose by 2.5 million ounces to 85.8 million, second only to the 4 million ounce increase in early 2009.
Finally, with even the sell-side starting to turn, there may be more upside as the slow money starts to move in. In a whimsical note released on Friday, Bank of America’s metals team writes “Gold: always believe in your soul. Glad you are bound to return. You’re indestructible.”
Yes, we were surprised too, but it’s true.
This gold-related news item put in an appearance on the Zero Hedge website at 9:08 p.m. EDT on Sunday evening — and I found it on the Sharps Pixley website just before midnight Denver time last night. Another link to this story is here — and it’s worth skimming.
The PHOTOS and the FUNNIES
I was able to get out for an hour or so early Sunday evening — and I got a few photos. Here’s the first one. These Canada geese are the adults, plus the crop of ‘youngsters’ from this year — and it’s impossible to tell the juveniles from the adults now. This shot was taken across the pond from at least 200 meters away — and the 400mm lens compressed the distance by quite a bit. The ‘click to enlarge‘ feature really helps here.
The WRAP
It was obvious on Sunday evening that the powers-that-be weren’t going to allow the gains in both silver and gold that occurred in morning trading in the Far East on their Monday to last the whole day, even though both would have continued to rally if allowed to do so. Looking at the 6-month gold and silver charts below, it appears that an interim top is being painted — and it remains to be seen if their attempts to stampede the Managed Money traders will succeed this time, as the attempt on Friday certainly blew up in their faces.
Of course the other reason for ‘da boyz’ to keep silver and gold prices in line has to do with the “scorecard of the money game” as Ted Butler called it in his Saturday column. With a basically flat finish to silver yesterday, along with a ten dollar loss in gold, the Big 8 were able to cut their short position losses by about $340 million because, as Ted said “Every $10 move in gold higher adds $340 in additional losses and every dollar in silver higher adds $350 million (removing JPM’s 150 million oz short position).” So one can assume that with a $10 decline, they would cut their losses by that amount.
And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price did very little in Far East trading on their Tuesday — and is unchanged at the moment. And except for a smallish dip in early morning Far East trading, the silver price has been hanging around a bit above unchanged — and is currently up about 8 cents the ounce. Platinum got sold down 10 dollars in the early going, but has cut that loss in half as the Zurich open approaches — and the same can be said about palladium, as it’s early 8 dollar loss is down to 4 bucks.
Net HFT gold volume is just under 31,000 contracts — and that number in silver is already very chunky at a hair over 10,500 contracts. The dollar index rallied a bit in the early going in Far East trading, but then took a 30 basis points 1-hour long header starting just before 9:30 a.m. HKT — and even though it has rallied a bit since, it’s still down 15 basis points as London opens.
In the overall scheme of things, nothing has changed. The grotesque short positions in both gold and silver by the Big 8, although a little less grotesque than they were on Friday, have yet to be resolved. The question still remains as to whether they get over run, or if they will prevail in an engineered price decline once again — and if so, by how much — and over what period of time. If Friday’s action is any indication, it won’t be very deep, or for very long.
Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and it can only be hoped that today’s price action, whatever it ends up being, will be reported in a timely manner.
And as I post today’s efforts on the website, I see that gold is inching higher — and currently up 2 bucks. Silver is doing much better than that — and is up 22 cents the ounce at the moment. Platinum has rocketed higher — and is above $1,100 spot at $1,104. Palladium is now back to unchanged.
Net HFT gold volume is now a bit over 39,000 contracts — and that number in silver is pretty heavy at just over 13,000 contracts.
The reason for all this excitement is what’s happening with the dollar index, as it has really fallen out of bed — and is down 36 basis points at the moment, but off its low by a bit.
With the world’s financial and monetary systems floating further off the rails with each passing day, absolutely nothing will surprise me when I check the charts later this morning.
That it for another day — and I’ll see you here tomorrow.
Ed
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