21 July 2016 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price chopped quietly sideways until 1 p.m. Hong Kong/Shanghai time on their Wednesday afternoon — and at that juncture, JPMorgan et al began to spin their algorithms. The sell-off picked up steam once the noon silver fix was in, in London — and the intermediate low of the day came at the 9:30 a.m. open of the equity markets in New York. The smallish rally after that got rolled over shortly before noon EDT, with ‘da boyz’ setting the low tick around 4 p.m. in the thinly-traded after-hours session. It rallied a few dollars into the close from there.
The high and low ticks were recorded by the CME Group as $1,338.80 and $1,312.50 in the August contract.
Gold finished the Wednesday trading session in New York at $1,315.30 spot, down $16.40 from Tuesday’s close. Net volume was just under 172,000 contracts — and roll-over volume out of August was very decent.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. You can see when ‘da boyz’ stepped into the market at 1 p.m. HKT, which was an hour after midnight in New York…the dark gray vertical line. There was decent volume spikes after that, but the real volume kicked in shortly after the noon silver fix in London, which is 5:30 a.m. Denver time on the chart below. Volume was pretty heavy up until just about 10 a.m. MDT/noon in New York — and then it went fairly quiet until the gold price was pushed to its low tick of the day around 2 p.m. MDT/4 p.m. EDT.
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.
The sell-off in silver began about forty-five minutes after the gold price was spun lower in afternoon trading in the Far East. Its interim New York low came at the London p.m. gold fix — and after that its price pattern was identical to gold’s.
The high and low ticks in silver were reported as 20.05 and $19.385 in the September contract.
Silver finished the Wednesday session at $19.37 spot, down 50.5 cents the ounce. Net volume was pretty heavy at a hair under 54,000 contracts.
The platinum price crept lower until just before noon BST/1 p.m. Zurich time — and then the algos got spun, with the $1,062 low tick printed at 9 a.m. in New York. It rallied strongly from there until just before the COMEX close — and then chopped sideways into the 5:00 p.m. EDT close of after-hours trading. Platinum finished the day at $1,084 spot, down 7 dollars from Tuesday.
Palladium was sold quietly lower through all of Far East and most of Zurich trading, with the low coming around the COMEX open in New York. Then away it went to the upside, with the spike high tick getting capped just a few minutes before 1 p.m. EDT. The price didn’t do much from there. It closed higher once again at $670 spot, up another 15 bucks from Tuesday. Palladium has certainly been on a tear lately, but something tells me that we set an interim top yesterday.
The dollar index closed very late on Tuesday afternoon at 97.05 spot. It made it has high as 97.30 around 9 a.m. BST in London yesterday morning, but soon sank back to close to unchanged — and that’s pretty much where it traded at for the rest of the Wednesday session, closing at 97.10 — and up 5 basis points on the day.
And here’s the 6-month U.S. dollar index chart for entertainment purposes once again.
The gold stocks gapped down a bunch at the open — and after a feeble rally that ended a few minutes before 11 a.m. in New York, began to head steadily lower, finishing the day just off their respective low ticks. The HUI closed down a chunky 6.26 percent.
The silver equities got smacked for 6 percent in the first thirty minutes of trading but, like their golden brethren, they rallied until a few minutes before 11 a.m. — and then headed lower as well. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 6.56 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that 739 gold and 28 silver contracts were posted for delivery on Friday within the COMEX-approved depositories. For a change, the big short/issuer in gold was Canada’s Scotiabank with 591 contracts — and the only other short/issuer was ABN Amro with 148 contracts. The only long/stopper worthy of the name was JPMorgan with 737 contracts for its ‘client’ account. That puts the amount of gold that JPMorgan has taken for its ‘client’ account so far in July at 4,036 contracts. I would dearly love to know, as would Ted, who that ‘client’ might be. In silver, ABN Amro was the only short/issuer — and JPMorgan and HSBC USA stopped 11 and 10 contracts respectively for their own accounts. ABN Amro stopped 5 for its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in July increased again…this time by 459 contracts, leaving 803 left, minus the 739 mentioned above. Tuesday’s Daily Delivery Report showed that 269 gold contracts were posted for delivery today, so that means that an eye-watering 269+459=728 gold contracts just got added to the July delivery month! In silver, July o.i. dropped by 47 contracts, leaving 381 still open, minus the 28 mentioned in the previous paragraph. Tuesday’s Daily Delivery Report showed that 38 silver contracts were posted for delivery today, so that means that 47-38=9 contracts held by short issuers were let slide once again by the long/stoppers [JPMorgan] because they did not have physical metal backing their positions.
There were no reported changes in either GLD or SLV yesterday.
There was a smallish sales report from the U.S. Mint. They sold 2,500 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 200,000 silver eagles.
There was a bit of activity in gold over at the COMEX-approved depositories on Tuesday. They received 36,050 troy ounces — and shipped out only 1,318.150 troy ounces. Canada’s Scotiabank received 16,075.000 troy ounces/500 kilobars — and shipped out the 1,318.150 troy ounces/41 kilobars. The rest of the deposits went into Brink’s, Inc. The link to that activity is here.
In silver, there was 600,407 troy ounces shipped in — and all of that went into HSBC USA. There was 187,312 troy ounces shipped out, of which 150,004 troy ounces were shipped out of JPMorgan’s vault. The link to that activity is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they reported receiving 743 kilobars, but shipped out 6,478 of them. All of the action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
Since yesterday was the 20th of the month — and it fell on a weekday — the good folks over at The Central Bank of the Russian Federation updated their website with their June data. It showed that they added another 600,000 troy ounces of gold to their reserves. And as of the end of June they hold 1,499 tonnes of the stuff. Here’s Nick Laird’s most excellent chart showing the update. The ‘click to enlarge‘ feature works wonders here.
I don’t have all that many stories for you today and, as usual, I’ll happily leave the final edit up to you.
CRITICAL READS
Is the Saudi 9/11 Story Part of the Deception? — Paul Craig Roberts
James Jesus Angleton, head of CIA counterintelligence for three decades, long ago explained to me that intelligence services create stories inside stories, each with its carefully constructed trail of evidence, in order to create false trails as diversions. Such painstaking work can serve a variety of purposes. It can be used to embarrass or discredit an innocent person or organization that has an unhelpful position on an important issue and is in the way of an agenda. It can be used as a red herring to draw attention away from a failing explanation of an event by producing an alternative false explanation. I forget what Angleton called them, but the strategy is to have within a false story other stories that are there but withheld because of “national security” or “politically sensitive issues” or some such. Then if the official story gets into trouble, the backup story can be released in order to deflect attention into a new false story or to support the original story. Angleton said that intelligence services protect their necessary misdeeds by burying the misdeed in competing explanations.
Watching the expert craftsmanship of the “Saudis did 9/11” story, I have been wondering if the Saudi story is what Angleton described as a story within a story.
The official 9/11 story has taken too many hits to remain standing. The collapse of Building 7, which, if memory serves, was not mentioned at all in the 9/11 Commission Report, has been proven to have been a controlled demolition. Building 7 collapsed at free fall acceleration, which can only be achieved with controlled demolition.
Over 100 firemen, policemen, and building maintenance personnel who were inside the two towers prior to their collapse report hearing and experiencing multiple explosions. According to William Rodriguez, a maintenance employee in the north tower, there were explosions in the sub-basements of the tower prior to the time airplanes are said to have hit the towers.
Always controversial, but never very far off the mark, this right-on-the-money story [IMHO] put in an appearance on Paul’s website on Wednesday sometime — and it’s definitely worth reading. Today’s first news item is courtesy of Larry Galearis — and another link to it is here.
HSBC Global Head of FX Cash Trading Arrested at JFK Airport
An historic event took place moments ago when Mark Johnson, the global head of cash FX at HSBC was arrested at JFK airport for his role in a “conspiracy to rig currency benchmarks“, and specifically for front-running customer orders. He is the first person charged by the U.S. in the ongoing FX rigging probe.
As Bloomberg reports, a “senior manager at HSBC Holdings Plc was arrested in New York for his role in a conspiracy to rig currency benchmarks, according to two people familiar with the matter, becoming the first person to be charged in the Justice Department’s three-year investigation into foreign-exchange rigging at global banks.”
The DOJ adds that Mark Johnson, 50, a U.K. citizen and U.K. and U.S. resident, and Stuart Scott, 43, a U.K. citizen and resident, were charged by complaint with conspiracy to commit wire fraud. Johnson was arrested last night at JFK International Airport in Queens, New York, and will be arraigned later today before U.S. Magistrate Judge Lois Bloom of the Eastern District of New York
This very interesting Zero Hedge story showed up on their Internet site at 12:21 p.m. EDT yesterday afternoon — and I thank David Assil for pointing it out. Another link to this news item is here.
U.S. seeking bilateral trade deal with U.K. to press E.U. on TTIP
A potentially swift bilateral trade and investment deal with the UK is being suggested by American officials as a way of pressing the European Union to speed up its own stalled transatlantic trade deal, as well as cementing a commitment to the U.K./U.S. economic relationship.
The news will be welcomed by the international trade secretary, Liam Fox, who has been charged with striking British trade deals to replace the E.U.’s deals with the rest of the world. The U.K. cannot formally sign any trade deals with other countries or trading blocs until it has left the E.U., but it appears to be accepted that negotiations on the outline shape of such deals can start before that happens.
During the E.U. referendum campaign Barack Obama, the U.S. President, said the U.K. would have to go to the back of the queue for a trade deal with America if it left the E.U., but in the wake of the vote, U.S. thinking seems to be changing. Fox is due to visit the U.S. shortly.
A bilateral U.K./U.S. deal would focus on business investment more than trade tariffs
This news story was posted on theguardian.com Internet site at 6:41 p.m. BST on their Wednesday evening, which was 1:41 p.m. in Washington — EDT plus 5 hours. I thank Patricia Caulfield for sending it — and another link to this article is here.
Art Sales Tumble: Christie’s Reports 38% Plunge In First Half Sales
One month ago, Bank of America said that “We Do Not Have An Explanation” – when it observed that spending on luxury items had unexpectedly tumbled into the summer.
And while we don’t know the specific catalyst that has led to such a notable slowdown in spending by the wealthiest part of the population, we have yet another confirmation that it is continuing, nowhere more so than in the world of “luxury” art. As the WSJ reports, London-based auction house Christie’s International offered further proof of a downturn when it said it sold $3 billion in art during the first half of the year, down a third from the same period last year. Christie’s latest total included $2.5 billion in auction sales, down 37.5% from a year ago. Its $464 million total in privately brokered art sales also fell 10% from the first half of 2015. Contemporary art, long the engine of Christie’s market dominance, was hardest hit, its $788 million in auction sales down 45% from a year earlier.
As the Financial Times adds, “in the first half of the year, sales in America totalled £729.8m, down by almost half from the same period last year, Christie’s said. Sales in Europe, the Middle East, Russia and India shrank 12 per cent to £736.5m, while Hong Kong contracted 11 per cent to £256.5m.”
There’s no question that the ultra-rich have their limits as well This very interesting Zero Hedge article put in an appearance on their website at 11:28 a.m. on Wednesday morning EDT — and another link to this story is here.
France orders Microsoft to stop collecting excessive user data
The French data protection authority on Wednesday ordered Microsoft to stop collecting excessive data on users of its Windows 10 operating system and serving them personalized ads without their consent.
The French data authority, Commission Nationale de l’Informatique et des Libertés (CNIL), said the U.S. company had three months to stop tracking browsing by users so that Windows apps and third-party apps can offer them targeted advertising without their consent, failing which it could initiate a sanctions procedure.
A number of E.U. data protection authorities created a contact group to investigate Microsoft’s Windows 10 operating system following its launch in July 2015, the French privacy watchdog said.
The action against Microsoft mirrors that taken by the CNIL against Facebook, which was ordered in February to stop collecting users’ information then used for advertising without their consent.
This news item showed up on theguardian.com Internet site two minutes after midnight London time on their Thursday morning, which was 7:02 p.m. EDT on Wednesday evening. It’s courtesy of Patricia Caulfield — another link to it is here.
Is a ‘crexit’ next? Global company debt will swell to $75 trillion through 2020
As companies drink at the open spigot of cheap borrowing from global central banks, company debt the world over will likely swell to $75 trillion by 2020, up from its current $51 trillion.
That’s a top-heavy accumulation that leaves S&P Global Ratings analysts introducing a new risk with a familiar nickname — a “crexit” could rattle credit markets, they said Wednesday.
Central banks may be trying to reinflate their economies, but they’re doing so to the detriment of credit quality, the S&P Global Ratings team said in a report.
“Central banks remain in thrall to the idea that credit-fueled growth is healthy for the global economy,” S&P analysts said. “In fact, our research highlights that monetary policy easing has thus far contributed to increased financial risk, with the growth of corporate borrowing far outpacing that of the global economy.”
Even S&P has put the world’s central banks on notice. This news item was posted on the marketwatch.com Internet site at 2:50 p.m. on Wednesday afternoon EDT — and I thank Scott Linn for pointing it out. Another link to this story is here.
Central banks must realise the last thing we need is nationalisation by the back door
Would you feel comfortable lending money to the mining conglomerate Glencore, a company which only last year came perilous close to imploding? Or Telecom Italia, with its massive exposure to the weakest major economy in the world? Or to Lufthansa, a lumbering beat of an airline just waiting to be eaten alive by new and aggressive low-cost carriers?
Well, perhaps you would, and perhaps you wouldn’t. If you are part of the eurozone however, you don’t have any choice.
This week we learned that the European Central Bank (ECB) has been buying bonds in all those companies as part of its latest round of quantitative easing. It is far from alone in pumping money directly into corporations. Over the last few years, the Bank of Japan has been buying equities so furiously it is now one of the biggest stake-holders in Japan Inc. All it will take is one downturn, and it would be no surprise if the Bank of England and the Federal Reserve followed suit.
But is that really wise? Central banks, which are owned by the state, are going to end up controlling huge swathes of private industry. That is sold as a way of stimulating growth. But it could end up as nationalisation by the back door – and everything we know about economic history tells us that always ends in disaster.
This commentary was posted on the telegraph.co.uk Internet site at 9:28 p.m. BST on their Wednesday evening, which was 4:28 p.m. in New York — EDT plus 5 hours. I found it embedded in a GATA release — and it’s definitely worth reading. Another link to this news story is here.
Russia Dominates Wheat Market as Soggy Fields Push Out France
In the race to supply wheat to the world’s biggest buyer, Russia is running away with the prize.
Russia has supplanted the U.S. as the top exporter of the grain and won the lion’s share of the wheat purchased in the first two tenders this season by Egypt, which buys huge amounts of wheat to provide citizens with cheap bread. Traders haven’t even bothered offering grain from France, which is struggling with concerns over poor quality after heavy flooding this year.
While it’s normal for countries near the Black Sea, including Ukraine and Romania, to take the lead at the start of the season and French sales to pick up later, Russia has a low-price advantage that is fueling the surge in its market share. The weak ruble, prime weather conditions and more investment are accelerating a generation-long rebound of agriculture in Russia and unseating American farmers who were the world’s biggest wheat sellers for more than five decades.
“With the harvest delays in France, traders are not even willing to look at French wheat now,” said Matt Ammermann, a commodity risk manager at futures and options broker INTL FCStone Inc. in Plymouth, Minnesota. “Black Sea just has so much to sell right now and the quality too is coming out better than expected.”
Having spent a decent chunk of time in and around farms in my youth — and as they say, “you can take the boy out of the country, but you can’t take the country out of the boy” — so I just couldn’t pass on this fascinating Bloomberg story that came from Zero Hedge via Brad Robertson. It appeared on their Internet site at 5:00 p.m. Denver time on Tuesday afternoon — and was subsequently updated about 14 hours later. Another link to this very interesting story is here.
Erdogan Declares Three Month “State of Emergency”, Warns S&P “Don’t Mess With Turkey“
Having warned earlier of the possibility, Turkish President Tayyip Erdogan on Wednesday announced a three-month state of emergency, saying this would enable the authorities to take swift and effective action against those responsible for last weekend’s failed military coup. He explicitly focused on the effort across his nation to “effectively tackle the Gulen movement,” as Erdogan stated that there might be more plans to continue coup attempts.
The state of emergency, which comes into force after it is published in Turkey’s official gazette, will allow the president and cabinet to bypass parliament in passing new laws and to limit or suspend rights and freedoms as they deem necessary. The decision has immediately raised fears of more arbitrary arrests, killings and disappearances.
“The aim of the declaration of the state of emergency is to be able to take fast and effective steps against this threat against democracy, the rule of law and rights and freedoms of our citizens,” the president said.
But most amusingly, Erdogan promptly warned S&P, which earlier today downgraded Turkey to BB, “not to mess with Turkey” and that the decision to downgrade the country was political.
Finally, he lashed out at Europe, “which he said does not have the right to criticize this decision,” anticipating expressions of “concern” from the European Union, which has become increasingly critical of Turkey’s rights record and has urged restraint as Ankara purges its state institutions since the abortive coup.
This commentary appeared on the Zero Hedge website at 8:46 p.m. EDT yesterday evening — and is worth reading. I thank Richard Saler for pointing it out — and another link to this ZH piece is here.
The Coup in Turkey has Thrown a Wrench in Uncle Sam’s “Pivot” Plan — Mike Whitney
A failed coup in Turkey has changed the geopolitical landscape overnight realigning Ankara with Moscow while shattering Washington’s plan to redraw the map of the Middle East. Whether Turkish strongman Recep Tayyip Erdogan staged the coup or not is of little importance in the bigger scheme of things. The fact is, the incident has consolidated his power domestically while derailing Washington’s plan to control critical resources and pipeline corridors from Qatar to Europe. The Obama administrations disregard for the national security interests of its allies, has pushed the Turkish president into Moscow’s camp, removing the crucial land bridge between Europe and Asia that Washington needs to maintain its global hegemony into the new century. Washington’s plan to pivot to Asia, surround and break up Russia, control China’s growth and maintain its iron grip on global power is now in a shambles. The events of the last few days have changed everything.
Obama can only blame himself for the debacle that is now unfolding. Erdogan was completely clear about Turkey’s red lines, the most important of which is preventing the Kurdish militias from moving west of the Euphrates and creating a contiguous state along the Syrian side of Turkeys southern border.
Instead of addressing Erdogan’s security concerns, Obama brushed him aside in order to pursue the US goal of establishing bases and seizing territory in East Syria that will eventually be used as pipeline routes from Qatar to the EU. Naturally, Erdogan responded in kind, forming alliances with former enemies (Russia, Syria, Israel) in order to reset Turkish foreign policy and address the growing threat of an emerging Kurdish state on his southern flank. Keep in mind, Turkey believes that America’s new proxies in Syria–the Kurdish YPG– are linked to the PKK, which is listed as a terror organization by the U.S. and EU. Had Obama committed US troops to the fight, (instead of using the YPG) Erdogan would not have reacted at all. But the fact that Obama was deliberately strengthening Turkey’s traditional rivals in their westward move, was more than Erdogan could bear.
This Mike Whitney commentary appeared on the counterpunch.org Internet site on Wednesday sometime — and easily falls into the absolute must read category, even if you’re not a serious student of the New Great Game. Another link to this must read essay is here — and I thank Patricia Caulfield for her final contribution to today’s column. [Note: If you have no time to read it today, I will be reposting it in Saturday’s column. – Ed]
BoJ Should Correct ‘Big Lies’ at July Meeting, Former Executive Says
The Bank of Japan should add stimulus at its policy meeting next week and use that opportunity to correct “two big lies” about monetary policy, a former BOJ executive director said in an interview.
“It’s a major problem that the BOJ has continued with two big lies,” said Hideo Hayakawa, referring to the statements about unlimited policy space and achieving its inflation target in a time frame that has been repeatedly delayed. The BOJ should scrap its references to reaching 2 percent within about two years and also concede that it will have to start tapering bond purchases, he said.
Governor Haruhiko Kuroda said as recently as last month that having a time frame is important to show the BOJ’s strong commitment to reaching the price goal soon, while in April he restated his view that his monetary policy doesn’t face limits. The central bank declined to comment on Hayakawa’s remarks.
The BOJ has repeatedly pushed back when it forecasts inflation reaching its target and prices have been falling since March, with little sign of improvement. With the BOJ already buying the equivalent of more than 90 percent of Japan’s newly issued debt each year, many economists say there are physical limits on how many bonds it could buy.
This very interesting Bloomberg article showed up on their website at 9:01 a.m. Denver time on Tuesday morning — and was updated about 17 hours later. There’s a 2:36 minute video clip embedded as well. I found it in yesterday’s edition of the King Report. It’s worth reading — and another link to this news item is here.
Is gold hedging going mainstream again? — Lawrie Williams
Now we are beginning to see net gold hedging activity creeping back with some very big miners starting to lock in what they see as high – perhaps peak – gold prices again. Could they be as equally wrong in so doing as their predecessor managements? It does seem though that there is a second angle to this activity – that of local currency parity with the US dollar – with a dominance in new hedging in countries like Australia, South Africa and Russia where their currencies had been in sharp decline against their US counterparts and, in terms of their domestic currencies in which most of their costs are incurred, gold has been riding at or near all-time highs.
However the miners are a little wiser nowadays – or their financial advisers are – in that most of this hedging is for relatively short periods so they are not locked into these prices almost ad infinitum, which was the case back when gold hedging was at its previous peak. So, if circumstances change, and gold goes on a tear, they will probably not be in the position where enormous sums need to be spent to unwind these hedges to maintain the benefits of rising gold prices.
A case in point is big marginal gold producer, Harmony Gold (HMY), one of the best gold sector performers in terms of its stock price so far this year. All of its gold output at the moment is in South Africa where the local currency, the rand, has seen an enormous fall against the US dollar in which the gold miners receive their revenues. Harmony has a potential mega-project in the pipeline in Golpu in Papua New Guinea, in conjunction with Australian gold major, Newcrest and is thus keen to lock in profits by hedging some 20% of its gold production forward for two years at a price of Rand682,000/kg (equivalent to around a very large $1,480/ounce at current exchange rates). Harmony’s share in Golpu is expected to cost well in excess of $2 billion so perhaps the logic in the Harmony move is positive. 20% of Harmony’s gold production over the next two years will amount to around 430,000 ounces plus (over 13 tonnes) so is a considerable amount of gold. Interestingly Newcrest too has been hedging production forwards and was the biggest contributor to the global gold hedging total in Q1 this year. It too is presumably looking to build up cash reserves ahead of its share of the Golpu development.
As Ted Butler said a few weeks back…“There are no signs whatsoever, the collective stupidity of physical forward sales will return in the lifetime of anyone reading this.” This commentary by Lawrie put in an appearance on the Sharps Pixley website yesterday — and another link to this article is here. I’ll have lots more about this in The Wrap.
The PHOTOS and the FUNNIES
Here are two red-necked grebe shots for you. The first photo was taken on June 12 — and the less-than-a-week-old babies are riding around on their parent’s back. The second shot is a photo of one of those youngsters I took on Monday, July 18 — three days ago. From egg to almost adult in six weeks! By the end of August they will be indistinguishable from their parents, who have already left them to fend for themselves. They got fat in a hurry off all the minnows in the pond — and the third shot shows several hundred swimming in the shallows. From where I was standing I could see many thousands of them. The ‘click to enlarge‘ feature really helps here.
The WRAP
“If the dollar or any other currency would be universally accepted at all times, central banks would see no necessity to hold gold at all. The fact that they do so, shows that such currencies are not a universal replacement for gold.” ~ Alan Greenspan
Well, was yesterday the first day that JPMorgan et al decided to get serious about getting out of their huge short positions for fun, big profits — and price management purposes? I don’t know for sure, but if it was, they certainly have a ways to go to get the job done. Volumes were very much on the heavier side, but barely begin to scratch the surface of the monster short position held by the Big 8 commercial traders on one side — and the monster long position held by the Managed Money traders on the other.
Here are the 6-month charts for the four precious metals, so you can see where we’re at as of the close of COMEX trading yesterday. Wednesday’s low price ticks in both gold and silver don’t show up here, because they occurred in the thinly-traded after-hours market.
And as I type this paragraph, the London open is less than ten minutes away — and I note that gold was sold lower to a new low tick for this move down — and that came shortly before 9 a.m. Hong Kong/Shanghai time on their Thursday morning. The price has recovered from there — and is currently up a buck and change. ‘Da boyz’ printed a new low tick in silver shortly after 11 a.m. Shanghai time — and the price has recovered off that low and is down only 2 cents the ounce currently. Platinum was traded in a similar pattern to silver — and it’s back to unchanged. Palladium was sold down a few dollars in Far East trading as well, but it too jumped back to unchanged shortly after 1 p.m. HKT — and that’s where it sits at the moment.
Net HFT volume in gold is just over 32,000 contracts, with no roll-overs to speak of — and that number in silver is pretty heavy at just under 12,400 contracts. The dollar index topped out around the 91.17 mark at 9 a.m. Shanghai/Hong Kong time — and has been chopping quietly lower since then — and is currently down 19 basis points as London opens.
Lawrie’s piece on gold miners hedging above made me go back to my columns of July 13 and 14 where I discussed hedging at length when the Q1 hedge book numbers showed up in this Reuters story. At that time I said that “Although hedging may have increased, it ain’t the same hedging that existed twenty years ago. It’s really “hedging lite” — and I’m not nearly as concerned this time around as I was fifteen years ago when the hedge book unwind brought a lot of miners to their knees.”
I posted Ted Butler’s opinion on this in my comments on Lawrie’s piece above, but here they are again…”There are no signs whatsoever, the collective stupidity of physical forward sales will return in the lifetime of anyone reading this.”
And here’s Nick Laird’s chart based on that Reuters story that appeared in my July 13 column — and as you can tell, although gold hedging is up a bit, it will never return to its old highs…ever! Click to enlarge.
And as I post today’s column on the website at 4:03 a.m. EDT, I see that the gold price has ticked a bit higher during the first hour of London trading — and is up about 3 dollars an ounce. The same can be said of silver as it’s now back to unchanged. Platinum and palladium haven’t done a thing during the first hour of London/Zurich trading — and both are still unchanged, as they were shortly before London opened.
HFT volume in gold is just under 36,500 contracts, with very light roll-over activity — and in silver, net HFT volume is a hair over 14,000 contracts. These numbers are little changed from an hour ago — and it’s obvious that the precious metal market is barely fogging the proverbial mirror from a price or volume perspective at the moment. The dollar index hasn’t done anything either — and has chopped sideways in a very tight range since just before lunch Hong Kong/Shanghai time. It’s currently down 17 basis points — and that’s almost unchanged from an hour ago as well.
With only six trading days left [including today] before First Day Notice for delivery into the August gold contract, it’s a given that this moment of quiet is not going to last — and it remains to be seen if ‘da boyz’ show up in force today like they did yesterday. At the moment, there’s no sign of them.
That’s all I have for my Thursday column, which is more than enough — and I’ll see you here tomorrow.
Ed
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