19 July 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Gold was sold lower the moment that trading began in New York at 6:00 p.m. on Sunday evening, then again about three hours later — and by 9:45 a.m. HKT/Shanghai time, the price was down 12 bucks or so. It rose and fell about five bucks until shortly before 1 p.m. in London, which was also the low tick for the day. It rallied from there until at, or just before the London p.m. gold fix — and was sold lower until minutes after 12 o’clock noon in New York. It chopped a few dollar higher from there into the 5 p.m. close — and the small spike that began shortly before 4 p.m. got capped within a few minutes.
The high and low tick were recorded by the CME Group as $1,336.00 and $1,323.50 in the August contract.
Gold closed in New York yesterday at $1,328.50 spot, down $8.60 from Friday’s close. Net volume was pretty light, relatively speaking that is, at just under 129,000 contracts. Roll-over volume out of the August contract was nothing special.
The silver price got clubbed in similar fashion to gold during the first few hour hours of trading in the Far East on their Monday morning. From there it didn’t do much until ‘da boyz’ and their algos showed up around 2:30 p.m. HKT. The low tick came at the [early?] noon silver fix in London — and the subsequent rally got capped at the afternoon gold fix. It chopped sideways from there, before catching a bit of a bid shortly after 12 o’clock noon in New York. It’s 3:30 p.m. EDT rally got capped in a similar manner to gold’s rally about that time — and that was that.
The high and low tick were reported as $20.295 and $19.77 in the September contract.
Silver finished the Monday session at $20.015 spot, down 18 cents on the day. Net volume was pretty decent at just under 45,000 contracts, as the Managed Money traders began to head for the hills as the new low intraday price was set.
The platinum price was forced to follow the same general price pattern as silver — and its low tick came at the noon silver fix in London as well. The rally that followed got cut off at the knees minutes after 11 a.m. in New York — and the price chopped quietly sideways for the remainder of the day. Platinum finished the Monday session at $1,096 spot, up 4 dollars from Friday’s close.
The price pattern in palladium was mostly similar to platinum’s, except the low came about an hour earlier that platinum. Palladium closed yesterday at $642 spot, down 5 bucks on the day.
The dollar index closed very late on Friday afternoon in New York at 96.68. It dropped about 10 basis points or so the moment that trading began in New York shortly after 2 p.m. EDT on Sunday afternoon — and then chopped sideways about ten points either side of that mark for the entire Monday session. The index closed at 96.55 — down 13 basis points from Friday.
Here’s the 3-day chart for the dollar index — and as you can tell, nothing much has happened since Friday’s ramp job ended around noon in New York.
And here’s the 6-month U.S. dollar index for entertainment purposes once again. As you can tell, it hasn’t been allowed to do much below the 96.50 — and every attempt for it to search out its intrinsic value meets with the usual ‘gentle hands’.
The gold stocks opened a hair above unchanged — and headed quietly lower, with their respective low ticks coming about one minute before noon in New York trading. They then chopped higher for the rest of the Monday session as gold rallied a bit, closing in the green — and up 0.71 percent on the day.
The silver equities opened down about half a percent — and by minutes after 11 a.m. EDT, they were back in the green. Then, like the gold shares, they headed lower, with their respective low ticks coming a noon in New York. Then, like the gold shares, they began to march quietly higher — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 0.64 percent.
The CME Daily Delivery Report showed that 10 gold and 239 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. In gold, ABN Amro issued 9 contracts out of its client account — and JPMorgan stopped 5 contracts for its client account. In silver, there were only two short/issuers — and they were ABN Amro with 120 contracts, followed by International F.C. Stone with 119 contracts, all out of their respective client accounts. On the long/stopper side, JPMorgan picked up 90 contracts for its own account — and HSBC USA stopped 83 for its own account as well. ABN Amro was in third place with 44 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 7 contracts, leaving just 69 left, minus the 10 contracts mentioned in the previous paragraph. Friday’s Daily Delivery Report showed that 18 gold contracts were posted for delivery today, so that means another 18-7=11 gold contracts were added to the July delivery month. Silver o.i. in July declined by 118 contracts, leaving 667 still around, minus the 239 mentioned above. Friday’s Daily Delivery Report showed that 49 contracts were posted for delivery today, so that means the long/stoppers let 118-49=69 July silver contracts slide, as the short/issuers obviously did not have physical metal backing their positions — and the long/stoppers did not want to force them to deliver, which they could have if they chose to do so.
Silver analyst Ted Butler had this to say about the July delivery month in silver in his weekly review on Saturday: “Where I thought JPM would look to stop 600 silver contracts for the month, I’d kick that up to 800 now. This is still far below the amounts JPMorgan had taken (all in its house account) in COMEX silver deliveries for the past year and a half and I can’t help but feel that JPM doesn’t want to push the physical silver envelope too far. The bank’s recent buying in July appears measured and designed to extract as much physical silver as possible without impacting prices; almost surgical in nature.”
I was surprised to see that there was a deposit in GLD yesterday, as an authorized participant added 76,373 troy ounces. And as of 7:55 p.m. EDT yesterday evening, there were no reported changes in SLV.
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, July 15 — and this is what they had to report. For the second week in a row there was a tiny gold withdrawal. This time it was 129 troy ounces. But there was a decent deposit into their silver ETF, as 326,395 troy ounces were added.
There was a sales report from the U.S. Mint to start the week. They sold 4,500 troy ounces of gold eagles — 2,000 one-ounce 24K gold buffalo — and 300,000 silver eagles.
There was very big movement in gold on Friday over at the COMEX-approved depositories, as 351,419 troy ounces were reported received — and 335,352 troy ounces were shipped out the door. The amount shipped out came from HSBC USA — and ended up in JPMorgan’s vault, although there was about an 8 troy ounces difference between what was reported shipped out — and what was reported received. The balance of the ‘in’ activity was 16,075.000 troy ounces/500 kilobars that was deposited at Canada’s Scotiabank. The link to all this activity is here.
In silver, there was 482,662 troy ounces received — and 475,868 shipped out. Of the ‘in’ activity, there was 482,662 troy ounces deposited in Scotiabank — and 300,012 troy ounces was shipped out of JPMorgan. The link to that activity is here.
It was another fairly busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, as 1,918 kilobars were reported received — and a fairly chunky 5,164 kilobars were shipped out the door. All the activity was at Brink’s Inc. — and the link to that, in troy ounces, is here.
Here’s a chart that Nick Laird sent around in the wee hours of Saturday morning — and because my Saturday column was stuffed full of charts already, I thought it wise to wait for today’s column. The title says it all — “Weekly Transparent Silver Holdings” as of the close last Friday. Nick had this to say in the covering e-mail — “Silver flows were very strong this week 10 million ounces worth US$204 million.“ Click to enlarge.
I have a very decent number of stories for you today — and I’ll happily leave the final edit up to you.
CRITICAL READS
No, Donald, It’s Not a ‘World War’ — David Stockman
Actually, the Nice horror was the demented suicide of a mentally impaired wretch who recently got fired, divorced and arrested for road rage, not a planned jihadi terrorist attack.
Beyond that, the real jihadi threat is rooted in blowback, and combatting it is a domestic police function. So enough militatistic bellicosity already!
The inconvenient truth is, Washington and its NATO vassals have brought bombs, drones, occupations and slaughter to towns and villages throughout the greater middle east for upwards of three decades. It is that senseless intervention and aggression that has fueled the rise of vengeful barbarians who operate under the ideological cover of a twisted Sunni jihaddism.
In fact, it was the Bush/Clinton/Obama wars which gave rise first to al-Qaeda and then to ISIS. In very substantial degree Washington trained them, armed them and then incited them to their anti-western rampages.
The Imperial City’s insidious doctrine of “regime change” also destroyed the states of Iraq, Syria, Yemen, Libya and Afghanistan, thereby giving the jihadi vast lawless territories from which to operate and to even establish a murderous medieval caliphate in the desert backwaters of western Iraq and northern Syria.
This commentary by David appeared on his website on Saturday, but the dateline was changed since it was posted. It’s certainly worth your while if you have the interest — and it’s the first of two in a row from Roy Stephens. Another link to this article is here.
This ‘Market’ Discounts Nothing Except Monetary Cocaine — David Stockman
Another one of the Hedge Fund high rollers, Marc Lasry of Avenue Capital, recently confessed on bubblevision that 2200 on the S&P 500 doesn’t make sense to him, either.
But his reasoning went right to the crux of the bubble implosion lurking just ahead. According to Lasry, the market may be discounting a “stronger-than-expected” economic rebound and thus only appears to be ahead of itself:
The U.S. stock market, making a string of recent record highs, “doesn’t make much sense,” distressed debt specialist Marc Lasry told CNBC Monday, sharing the view of fellow billionaire investment titan Larry Fink.
“Everyone is a bit surprised,” said Lasry, co-founder of Avenue Capital, which has $11.3 billion of assets under management. “But the market is telling us what’s going to happen next year [or] the next two years.”
While questioning the advance in stocks, Lasry said on “Squawk Box” the market may be signaling a stronger-than-expected U.S. economy, with a growth rate somewhere in the 2 to 3 percent range….”
Ah, the hoary myth of a market that processes information, discovers price and discounts the future. Apparently, no one told Lasry what the bereavers for free markets and honest money had long ago confessed. To wit, “Mr. Market, we hardly knew ya”.
This commentary by David put in an appearance on his website yesterday sometime — and it’s courtesy of Roy Stephens as well. Another link to it is here.
Rate-starved U.S. banks happily gobble mortgage business
Just as mortgage bankers were preparing for the end of a historic boom driven by low interest rates, borrowers have begun knocking at their doors again.
In earnings reports last week, JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc said they originated $94 billion worth of new mortgages during the second quarter in their core mortgage operations, an increase of $23 billion, or 31 percent, over the first quarter.
The reason for the sudden burst of business? Mortgage rates have dropped to lows not seen since 2013 after the U.S. Federal Reserve dashed expectations for near-term rate hikes. That has led existing borrowers to try and lock in better rates. New borrowers, meanwhile, have been enticed by low borrowing costs and low down-payment offers.
With mortgage rates near historic lows, and volumes still strong in the early days of the third quarter, banks predict the trend will continue, providing a bright spot in a low-rate environment hammering their wider results.
This Reuters story, filed from New York, was posted on their website at 7:45 a.m. EDT on Monday morning — and I thank West Virginia reader Elliot Simon for sending it our way. Another link to this article is here.
A Bank Too Big to Jail — Gretchen Morgenson
Have you ever wondered why the crippling 2008 financial crisis generated almost no criminal prosecutions of large banks and their top executives?
Then take a moment to read the congressional report issued on July 11 titled “Too Big to Jail.” Citing internal documents that the United States Treasury took three years to produce, the report shows how regulators and prosecutors turned a potential criminal prosecution of a large global bank — HSBC — into a watered-down settlement that insulated its executives and failed to take into account the full scope of the bank’s violations.
The report, prepared by the Republican staff of the House Financial Services Committee, does not examine a matter related to the mortgage crisis. Rather, it looks at the Department of Justice’s 2012 settlement with HSBC, the British banking behemoth, after accusations that it laundered nearly $900 million for drug traffickers and processed transactions on behalf of Cuba, Iran, Libya, Sudan and Myanmar, or Burma, when those countries were subject to United States sanctions.
HSBC and its American subsidiary, HSBC Bank USA, agreed to pay almost $2 billion under the settlement, striking a deferred prosecution arrangement that remains in place. Under such deals, the government agrees to delay or forgo prosecution of a company if it promises to change its behavior.
This commentary by Gretchen showed up on The New York Times website on Friday — and is definitely worth reading. Another link to this news item is here — and I thank Brad Robertson for bringing it to our attention.
Middle-Class Venezuelans Liquidate Savings to Stockpile Food
Tebie Gonzalez and Ramiro Ramirez still have their sleek apartment, a fridge covered with souvenir magnets from vacations abroad, and closets full of name brand clothes. But they feel hunger drawing close.
So when the Venezuelan government opened the long-closed border with Colombia this weekend, the couple decided to drain what remained of the savings they put away before the country spun into economic crisis and stocked up on food. They left their two young sons with relatives and joined more than 100,000 other Venezuelans trudging across what Colombian officials are calling a “humanitarian corridor” to buy as many basic goods as possible.
“This is money we had been saving for an emergency, and this is an emergency,” Ramirez said. “It’s scary to spend it, but we’re finding less food each day and we need to prepare for what’s coming.”
Gonzalez, 36, earns several times the minimum wage with her job as a sales manager for a chain of furniture stores in the western mountain town of San Cristobal. But lately, her salary is no match for Venezuela’s 700-percent inflation. Ramirez’s auto parts shop went bust after President Nicolas Maduro closed the border with Colombia a year ago, citing uncontrolled smuggling, and cut off the region’s best avenue for imported goods.
The couple stopped eating out this year, abandoned plans to buy a house and put a “for sale” sign on their second car. There is no more sugar for coffee, no more butter for bread and no more infant formula for their 1-year-old son.
This unhappy AP news item was posted on the abcnews.go.com Internet site at 7:00 p.m. on Monday evening EDT — and it comes courtesy of Elliot Simon. It’s worth reading if you have the interest — and another link to it is here.
U.K.’s Hammond to fight E.U.’s $1 trillion power grab
New Chancellor Philip Hammond has branded E.U. efforts to poach a vital $1 trillion market from the U.K. as “disgraceful,” The Sunday Telegraph can reveal, setting the scene for an almighty row between the Treasury and Brussels.
Mr Hammond was appointed to head the Treasury this week, putting him in prime position to oversee the financial industry and protect its interests in the face of E.U. hostility.
In his previous job as foreign secretary, he spoke out against a raid on the City which the U.K. successfully defeated – but which is flaring up once more as European leaders eye up valuable markets they hope to wrest from London.
Previously, The European Central Bank tried to force the flow of euro-based transactions out of London and into the eurozone, resulting in a legal challenge from the UK.
Britain won the case in 2015 after arguing for four years that, as part of the E.U.’s single market, the U.K. has to have an equal right to host clearing houses, which can process trades with a value of more than $1 trillion per day.
This interesting news item was posted on the telegraph.co.uk Internet site on Saturday evening BST — and it’s another contribution from Roy Stephens. Another link to this article is here.
Tony Blair was a sorry sight
Having watched the BBC live coverage of Tony Blair’s remarks in the aftermath of the Chilcot report one has to admit that he was indeed a sorry sight. He entered the room where reporters sat waiting and his pale emaciated look stood in stark contrast to the background of plush gold wallpaper behind him. His mouth was dry, his voice was weak and raspy, and he had the distinct look of a man who was beat, a criminal who was caught and now has to plead for his life. Two words he said in the very beginning I found to be particularly significant: “happy” and “agonizing.” He said he was happy to stay after his remarks were over as long as people wished him to, in order to answer questions and, he said the decision to go to war with Iraq was agonizing. But there was nothing happy about his look. He was clearly not happy to be there nor did he seem like he would be happy to stay. In fact, it was clear he wanted nothing of the kind. He had an agonizing look, the look of a man who had committed a terrible crime and now has to face the consequences.
He started his remarks off well, one could even say it was a promising start: “for that decision today, I accept full responsibility,” pause, “without exception and without excuse.” He was talking about the decision to go to war in Iraq in 2003. My first thought was that here is a man who played a secondary role in the crime committed against Iraq and its people, namely the 2003 attack and total destruction of Iraq, and seems prepared to take full responsibility while the man who played the key role, George W. Bush sits like an innocent fool on his ranch in Texas painting portraits and living without a worry in the world. Blair went on to express his sincere and deeply felt sorrow for those who lost loved ones, Brits, other coalition members an Iraqis. He admitted right away that, “the intelligence assessments made at the time of going to war turned out to be wrong,” and while we have heard this particular statement in the past, Blair made it with a sincerity that gave it weight. But then things began to turn.
This very interesting and right-on-the-money article appeared on the American Herald Tribune website last Wednesday — and it’s a must read for any serious student of the New Great Game. I thank ‘aurora’ for passing it around yesterday morning — and another link to this commentary is here.
Erdogan taunts Obama over coup attempt in Turkey
The Turkish President Recep Erdogan’s sensational demand on Saturday to US President Barack Obama to extradite the Islamist preacher Fetullah Gulen living in exile in Pennsylvania does not come as surprise. It had to happen sooner or later.
But then, Erdogan has chosen to speak publicly on such a highly sensitive issue instead of using the confidential channels of communication.
Any long-time observer of Erdogan and his political personality can make out that he is taunting Obama within the week of the NATO summit in Warsaw. These are excerpts from Erdogan’s public remarks in Istanbul on Saturday:
Please meet our request (on Gulen’s extradition) if we (Turkey and U.S.) are strategic partners. I asked you (Obama) previously either to deport him or surrender him to Turkey. I told you that he is considering the coup d’état, but you didn’t listen.
This commentary by M.K. Bhadrakumar, who served as a career diplomat in the Indian Foreign Service for over 29 years, falls into the must read category, even if you’re not a student of the New Great Game. It appeared on the Asia Times website on Sunday Hong Kong time — and it comes courtesy of U.K. reader Tariq Khan. Another link to his commentary is here.
Hell Hath No Fury Like a Teflon Sultan — Pepe Escobar
When Turkish President/aspiring Sultan Recep Tayyip Erdogan landed at Istanbul’s Ataturk airport early Saturday morning, he declared the attempted coup against his government a failure, and a “gift from God.”
God apparently uses Face Time. It was via that iconic iPhone footage from an undisclosed location shown live on CNN Turk by a bewildered female anchor that Erdogan managed to call his legion of followers to hit the streets, unleash People Power and defeat the military faction that had taken over state TV and proclaimed to be in charge.
So God does work in mysterious mobile ways. Erdogan’s call was heeded even by young Turks who had fiercely protested against him in Gezi Park; were tear-gassed or water-cannoned by his police; think the AKP governing party is disgusting; but would support them against a “fascist military coup.” Not to mention that virtually every mosque across Turkey relayed Erdogan’s call.
Ankara’s official version is that the coup was perpetrated by a small military faction remote-controlled by exiled-in-Pennsylvania cleric Fethullah Gulen, himself a CIA asset. As much as responsibility remains debatable, what’s clear is the coup was a Turk remix of The Three Stooges; the actual stooges in fact may have been the already detained 2nd Army Commander Gen. Adem Huduti; 3rd Army Commander Erdal Ozturk; and former Chief of Air Staff Akin Ozturk.
Another worthwhile read, this one by Pepe Escobar, put in an appearance on the sputniknews.com Internet site at 3:39 p.m. Moscow time on their Sunday afternoon, which was 7:39 a.m. in Washington — EDT plus 8 hours. I thank Larry Galearis for finding this one for us. Another link to Pepe’s commentary is here.
Behind the CIA’s Desperate Turkey Coup Attempt — F. William Engdahl
Q: How would you comment on the events of Friday to Saturday evening, when the army carried out a coup? Are these events were predictable?
WE: The coup was a reaction to the recent dramatic geopolitical shift of Erdogan. It was instigated by networks in Turkey loyal to the CIA. It clearly was a desperate move, ill-prepared.
Q: What do you think are the real reasons for such a move of the army?
WE: This was a network of officers inside the Army loyal to the Fetullah Gülen Movement. Gülen is a 100% CIA controlled asset. He even lives since years in exile in Saylorsburg, Pennsylvania having gotten safe passage and a green card by former top CIA people like Graham Fuller and the former US Ambassador to Ankara.
Gülen has been a decades-long mad project of the CIA to weaponize political Islam as an instrument of regime change. Recall that in 2013 there were mass protests against Erdogan in Istanbul and elsewhere. That was when Gülen, who previously had made a deal with Erdogan’s AK Party, broke and criticized Erdogan as a tyrant in the Gülen-controlled media such as Zaman. Since then Erdogan has been moving to root out his internal most dangerous adversary, Gülen and friends, including raids on Zaman and other Gülen-controlled media. This is not about a battle between the White Knight and Evil Knievel. It is about power pure in Turkish politics. If you are interested in the details of the Gülen CIA project I urge readers to look in my book, The Lost Hegemon (German: Amerikas Heilige Krieg).
This Q&A with Engdahl was posted on the New Eastern Outlook website on Monday sometime — and I thank ‘aurora’ for passing it around. Another link to this Q&A is here. It’s certainly worth reading if you’re a serious student of the New Great Game.
After Brexit, ordinary Britons warm to gold as safe haven
When Britain voted to leave the European Union, the thoughts of Yorkshire teacher Grace Hall immediately turned to her family’s bottom line.
Three days later, as U.K. stocks and sterling plummeted, she put those thoughts into action and deposited part of her life savings — £25,000 — into gold.
“My husband and I are both worried about bank failures and our cash getting swallowed up,” she said. “I’m also worried about our kids’ jobs and their future.”
Hall was not alone. Dealers are seeing an unprecedented amount of interest in gold, much of it from first-time buyers, to take advantage of its role as a safe haven in times of stress or unexpected “black swan” events like Brexit.
This worthwhile gold-related story, filed from London, showed up on the Reuters Internet site at 9:41 a.m. on Monday morning EDT — and I found it embedded in a GATA release. I found it embedded in a GATA release — and another link to this news item is here.
If You Can’t Touch It, You Don’t Own It — Jeff Thomas
The pending Brexit has, not surprisingly, caused a shake-up in the investment world, particularly in the U.K. Of particular note is that, recently, asset management firms in Britain began refusing their clients the right to cash out of their mutual funds. Of the £35 billion invested in such funds, just under £20 billion has been affected.
For those readers who live in the U.K., or are invested in U.K. mutual funds, this is reason to tremble at the knees.
So, why have these investors been refused the right to exit the funds? Well, it’s pretty simple. The trouble is that quite a few of them made the request at about the same time. Of course, the management firms don’t keep enough money on hand to pay them all off, so rather than spend all their money paying off as many clients as possible, then going out of business due to a lack of liquidity, they simply announce a freeze on redemptions.
Those who are outraged may read the fine print of their contracts and find that the fund managers have the right to halt redemptions should “extraordinary circumstances” occur. Who defines “extraordinary circumstances”? The fund managers.
This commentary by Jeff put in an appearance on the internationalman.com Internet site on Monday — and I consider it worth reading. Another link to this gold-related article is here.
A gold ETF that lets you redeem shares for gold
How much is fear worth? That, in a nutshell, is the difficulty in valuing gold. It’s the currency of last resort for those who are afraid that all other assets will eventually become worthless. The greater investors’ angst, the higher gold’s value. Thus it commands a “fear premium” unlike any other asset.
That anxiety can translate into a desire among certain investors to keep physical gold in vaults in their basements, or shoved under their mattresses. If the much-anticipated global financial meltdown or zombie apocalypse occurs, having a bar or two on hand could prove useful — if not to barter, then to at least bash a zombie over the head.
If you’re among the nail-biting set, this year may be the one to buy the VanEck Merk Gold Trust exchange-traded fund (ticker: OUNZ). With Brexit in the rearview mirror and a contentious presidential election on the horizon, there is no shortage of fear. VanEck Merk is up 26.7% year-to-date, a fraction higher than the largest gold ETF, the $41.7 billion SPDR Gold Trust (GLD).
Both ETFs have identical 0.4% expense ratios. But VanEck has a unique feature that gives it added appeal. Retail investors can redeem their shares in ounces of physical gold that will be delivered to them for a fee. This made the upstart ETF, which has gathered $156 million since its May 2014 launch, very interesting, even during last year’s bear market. It had a 46% growth in investor inflows in 2015, according to Morningstar, while the precious-metals sector saw minus 6.4% in outflows.
This gold-related story was posted in Barron’s on Saturday — and appears entirely in the clear in this GATA release. Another link to this news item is here.
Ted Butler: The Greatest Lie Ever Told
Granted, if you are going to label something as the greatest lie ever, it must involve something important, both in substance and in terms of who told the lie. In this case, the lie involves what’s at the heart of the silver manipulation and happens to be the issue that I consider the key factor for its price. Importantly, the lie came from the federal regulator overseeing the silver market, the CFTC. The good news is that you will be able to decide for yourself if my assertion is correct, given that the proof is nearly incontrovertible. The best news is that as the lie is more widely recognized, it should have a positive impact on the price of silver.
The key factor in silver is the concentrated short position on the COMEX, which also happens to be the current key factor in gold. Not only am I convinced that the concentrated short position in COMEX silver is the central issue, I am also convinced that wider awareness of its existence will bring about a freeing of the silver price. If the growing numbers of those who’ve discovered the importance of the COT reports and market structure to the price of gold and silver take one additional small step and incorporate the concentration data in their thinking, I believe the impact could be profound.
First, let me describe concentration as it applies to gold and silver and why it is so important and then touch on the history and status of the greatest lie ever. In review, if many different traders held very large short positions in COMEX silver and gold futures contracts, then no problem – that’s the way free markets are structured – with many different buyers and sellers. And you may not realize this, but quite literally, you wouldn’t be reading this if no short side concentration existed. That’s because I would never have started and continued to write publicly about silver if a short side concentration didn’t exist.
The problem is that there are not many traders short COMEX silver in terms of market structure. Only eight traders hold, effectively, the entire net short position in COMEX silver and those traders are mostly banks. Further, the concentrated silver short position, represents more in terms of real world production and inventories than the concentrated positions in any other commodity, with the comparisons with other commodities looking impossibly distorted. For instance, the concentrated short positions in corn and crude oil are the equivalent of a few days of world production, with silver’s concentrated short position amounting to more than two hundred days world production. Most remarkable is that so few silver miners are hedging that the entire concentrated short position is speculative on its face.
It’s almost pointless to mention the fact, but I will anyway. This commentary by Ted, which was contained in his mid-week column last Wednesday, certainly falls into the absolute must read category. It was posted on the silverseek.com Internet site yesterday morning at 11:25 a.m. Denver time — and another link to this must read essay is here.
The PHOTOS and the FUNNIES
Here are the last two photos of the young and adult coot. Next year I’ll be down at this pond much earlier in the year — and hopefully catch them when they’re very young, because when they’re really tiny, they’ve got a face only a mother could love. Come to think of it, the face they’ve got now ain’t that hot, either. Click to enlarge really helps here.
The WRAP
It was a fairly quiet day as far as volume was concerned in all four precious metals on Monday. With the exception of gold, the other three precious metals set new intraday low ticks for this move down, but recovered a lot of their losses as the trading day progressed. So far, the ‘salami slicing’ to the down side, as Ted Butler puts it, is going very slowly. Of course if JPMorgan et al really got serious about it, it could get ugly in a hurry.
Here are the 6-month charts for all four precious metals — and not much has changed, with the critical 50-day moving averages still a long way down from where they are currently.
Including today, we are only eight business days away from First Day Notice for delivery into the August gold contract — and there is still huge open interest in that month, just about 310,000 contracts, so the roll-overs are going to have to get pretty enormous on a daily basis from now on. It will be interesting to see how big the delivery month in gold is in August — and that goes for silver as well, even though it’s not a traditional delivery month.
And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price chopped around a few dollars either side of unchanged through all of the Far East trading session on their Tuesday — and it’s up a couple of bucks at the moment. Silver got sold back below the $20/ounce spot price mark almost as soon as trading began in New York at 6:00 p.m. EDT yesterday evening. The current $19.79 spot low tick was printed at 2 p.m. HKT/Shanghai time — and it’s gained about half that loss back in the last hour — and is currently down about 12 cents an ounce. Platinum followed a similar path as silver — and it’s down 6 dollars. Palladium was sold lower by a couple of bucks during the Far East session, but has rallied back to unchanged.
Net HFT gold volume is just over 31,500 contracts — and roll-over volume out of August is very light. In silver, the net HFT volume is sitting at 9,600 contracts, which is pretty healthy. The dollar index still isn’t doing anything — and is up 2 whole basis points as London opens.
I mentioned in my Saturday missive that I was impressed by how well that the gold and silver equities were holding up as the precious metal salami slicing continued. That comment still applies after Monday’s trading session. Let’s hope it lasts.
Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report and, hopefully, all of Tuesday’s trading data will make it.
And as I post today’s column on the website at 4:02 a.m. EDT, I note that gold still isn’t doing much — and is currently unchanged in price. Silver has been rolled over a bit as well — and is down 18 cents at the moment. Platinum was sold down a bit more as well when Zurich opened — and it’s down 10 the ounce currently. Palladium is down a buck.
Net HFT volume in gold is just under 36,500 contracts, with still no roll-over volume out of August worth mentioning — and that number in silver is just over 10,000 contracts, so there certainly hasn’t been much price/volume action in the first hour of London trading. The dollar index is creeping higher — and is up 11 basis points at the moment.
Place your bets for what might happen during the remainder of the Tuesday trading session, because I haven’t a clue.
That’s all I have for today, which is more than enough — and I’ll see you here tomorrow.
Ed
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