26 July 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
After not doing much of anything for the first two hours of trading after the New York open on Sunday evening, some kind soul peeled about ten bucks off the price by 9 a.m. Hong Kong/Shanghai time on their Monday morning. It chopped sideways from there — and was sold down to its low tick of the day shortly after 9:30 a.m. EDT. It rallied sharply in late morning trading, but wasn’t allowed to get back above its Friday closing price. Then, starting at 2:30 p.m. in the thinly-traded after-hours session, the price got sold back down again, before rallying back a hair in the last hour of trading.
The high and low tick were recorded by the CME Group as $1,323.40 and $1,311.10 spot.
Gold finished the Monday session at $1,315.30 spot, down $6.80 from Friday’s close. Both gross and roll-over volume were monstrous yesterday, but net volume was only 104,000 contracts.
The price chart for silver was mostly the same as gold, except for the fact that the low tick of the day came at 10:45 a.m. EDT — and the subsequent rally really sailed until the not-for-profit sellers appeared. The high tick, which was a few pennies above the unchanged mark, came at 12:15 p.m. in New York. Then, like gold, it was sold down until 4 p.m. in after-hours trading, before rallying a bit into the close.
The low and high ticks in silver were recorded as $19.355 and $19.76 in the September contract.
The silver price closed in New York yesterday at $19.505 spot, down only 8.5 cents on the day. Net volume was a bit over 40,000 contracts.
Platinum got the same treatment as gold did in Far East trading on their Monday — and the rally off the New York low looked an awful lot like the rally off silver’s low tick yesterday. The platinum price got capped at noon in New York at the $1,006 mark — and dropped a few dollars from there, before trading sideways into the 5:00 p.m. EDT close. Platinum finished the Monday session at $1,082 spot, which was exactly unchanged from its close on Friday.
The palladium price action was mostly a hybrid of what happened in the other three precious metals. It’s $687 high tick came shortly after 2 p.m. in the thinly-traded after-hours market. It was also sold off a few dollars from there, closing at $684 spot — and up 2 bucks from Friday’s close.
The dollar index closed very late on Friday afternoon in New York at 97.34 — and didn’t do much once trading began at 2 p.m. EDT on Sunday afternoon. Then, in morning trading in the Far East, the index made it up to around the 97.58 level — and from that point it began to chop lower in a fairly wide range, finishing the New York trading session at 97.26 — down a whole 8 basis points from its Friday close. Here’s the 3-day dollar index chart so you can see all of the Sunday and Monday action compared to what happened on Friday.
And here’s the 6-month U.S. dollar index for entertainment purposes.
The gold stocks gapped down about 2 percent at the open, hitting their respective low ticks shortly before 11 a.m. EDT in New York yesterday morning. They rallied for about an hour, but once the gold price was turned lower, the gold share quickly followed — and once COMEX trading was done at 1:30 p.m., the stocks chopped sideways for the rest of the day. The HUI closed down a very chunky 3.91 percent.
The silver equities followed a very similar pattern, but once the rally topped out around 11:45 a.m. when the price got capped, the silver stocks didn’t do much after that. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 3.80 percent. Click to enlarge if necessary.
I was not happy to see the precious metal shares perform so poorly — and I’m not sure what it portends, if anything.
The CME Daily Delivery Report showed that 435 gold and 71 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. In gold, Canada’s Scotiabank was the biggest short/issuer with 398 contracts — and Goldman Sachs provided the other 37 out of its client account. The only long/stopper was JPMorgan for its ‘client[s]’. In silver, the only short/issuer worth mentioning was ABN Amro with 68 contracts out of its client account. The three long/stoppers worth mentioning were JPMorgan, HSBC USA and Canada’s Scotiabank, with 28, 26 and 12 contracts respectively — and all for their own accounts. Not a client in sight. A link to yesterday’s Issuers and Stoppers Report is here.
So far this month, JPMorgan has stopped 4,845 gold contracts for its ‘client[s]’ account. And July is not a traditional delivery month in gold, so that make this month an even bigger standout. But August is — and I await Friday’s First Day Notice numbers with some interest.
Silver analyst Ted Butler had this to say about this issue in his weekly commentary on Saturday –“The word “extraordinary” does not adequately describe these levels of COMEX gold deliveries. In fact, about the only thing not extraordinary about the massive size of the gold deliveries is JPMorgan’s involvement. This involvement should help remove any doubt that JPMorgan is numero uno in the world of gold and silver. So much for all the talk about getting banks out of the commodity trading business. Instead, even the supposed hard position limit of 3,000 contracts in the spot month has become a standing joke as it has been exceeded so often recently.”
The CME Preliminary Report for the Monday trading session showed that gold open interest in July rose a surprising 347 contracts, leaving 447 still open. Since Friday’s Daily Delivery Report showed that only 54 gold contracts were posted for delivery today, that means that another 54+347=401 gold contracts were added to the July delivery month in this preliminary report. July o.i. in silver fell by 46 contracts, leaving 201 left to be delivered by week’s end. Since 20 silver contracts were actually posted for delivery today in Friday’s Daily Delivery Report, that means that another 46-20=26 short contract holders in the July delivery month in silver, were let off the hook by the long stoppers because they had no silver backing their positions — and the long stoppers/JPMorgan did not want to push for delivery, which they had every right to do if they wished to.
There as another decent withdrawal from GLD yesterday, as an authorized participant removed 143,188 troy ounces. And as of 9:17 p.m. EDT yesterday evening, there were no reported changes in SLV.
There was a sales report from the U.S. Mint yesterday. They sold 4,500 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 120,500 silver eagles. And it should also be mentioned that the mint has sold 17,100 one-ounce platinum eagles during the past week.
There wasn’t a lot of activity in gold over at the COMEX-approved depositories on Friday — and what there was, occurred over at Canada’s Scotiabank. They reported receiving 16,075.000 troy ounces/500 kilobars — and also shipped out 22,505.000 troy ounces/700 kilobars. The link to that activity is here.
It was busier in silver, as 299,327 troy ounces were received — and 826,241 troy ounces were shipped out. Of the amount shipped out, there was 200,005 troy ounces that came out of JPMorgan’s vault. The link to that activity is here.
It was another all-Brink’s, Inc. affair over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They reported receiving 6,955 kilobars, plus they shipped off 5,140 kilobars to parts unknown. The link to that action, in troy ounces, is here.
I have a very decent number of stories for you today — and I hope there are a few in here that you’ll find worth your while.
CRITICAL READS
Hillary Clinton: Class President of a Failed Generation
Hillary Clinton has always been at the head of her class. That includes being among the leading edge of the 80-million strong baby boom generation that first started arriving in 1946-1947.
She did everything they did: Got out for Barry Goldwater in high school; got upwardly mobile to Wellesley and social liberation during college; got “Clean for Gene” and manned the anti-war barricades in the late 1960s; got to Washington to uplift the world in the 1970s; got down to the pursuit of power and position in the 1980s; joined the ruling class in the 1990’s; and has helped make a stupendous mess of things ever since.
The baby boom generation which started with so much promise when it came of age in the 1960s has ended up a colossal failure. It has turned America into a bloody imperial hegemon aboard and a bankrupt Spy State at home where financialization and the 1% thrive, half the population lives off the state and real main street prosperity has virtually disappeared from the land.
Quite a deplorable legacy, that. And all the while Hillary has been our class president. God help the world if she becomes our nation’s President. She has betrayed all that was right about the baby boomers in the 1960s; and has embraced all the wrong they did during their subsequent years in power.
This commentary by David, which is actually part of his new book, put in an appearance on his website yesterday — and today’s first ‘story’ is courtesy of Roy Stephens — and it’s worth reading. Another link to it is here.
Subprime Snaps: Largest U.S. Subprime Auto Lender Delays Earnings Due to “Accounting Matters“
We first introduced readers to Skopos Financial, a company which we dubbed “The new king of deep subprime” which we have long expected to become ground zero for the upcoming subprime auto crisis, and which is run by Santander Consumer USA veterans, last April.
This is what we said about the company that has become increasingly more prominent: “Skopos Financial, a four-year-old auto finance company based in Irving, Tex., sold a $149 million bond deal consisting of car loans made to borrowers considered so subprime you might call them—we dunno—sub-subprime?”
Why did the stock crash?
The reason is that earlier today, SC announced that the company will delay its Q2 results due to discuss with its current and previous accounting “certain accounting matters primarily related to the Company’s discount accretion and credit loss allowance methodologies.”
For those who were in middle school when the last subprime bubble, back then mostly in housing, burst in early 2007, these were precisely the telltale signs that the party was over.
This long news item showed up on the Zero Hedge website at 1:40 p.m. on Monday afternoon EDT — and it’s courtesy of Richard Saler. Another link to this news item is here.
Goldman: The Last Two Times P/E Multiples Expanded This Much, The Result Was an Historic Crash
It’s not just former Fed economists who are getting worried. So is Goldman.
As we wrote last weekend, “With “Stock Valuations At Extremes” Goldman’s Clients Are Asking Just One Question“, namely how much longer can the rally continue. This followed another Goldman warning from two weeks ago, where as we noted before, “Goldman Warns of a Sharp Plunge in Stocks in “Next Few Months.”
Who knows: maybe Goldman will be right and the market will plunge – it certainly isn’t trading at all time highs and 25x GAAP multiples on fundamentals. But for now those who heeded Goldman’s warning and traded ahead of a 10% “pullback” have gotten crushed.
This Zero Hedge piece from Saturday is on the longish side, but worth your while if you have the time or the interest. It’s something I found in yesterday’s edition of the King Report. Another link to this news item is here.
Yellen Still Waiting for Overwhelming Evidence to Warrant Hike
For Federal Reserve officials, getting better never seems to rise to good enough.
Since the policy-setting Federal Open Market Committee last gathered six weeks ago, economic reports have shown one example of U.S. resilience after another following a slow first quarter. When the monetary policy panel meets on Tuesday and Wednesday, a majority of investors expect them to do what they have done at every meeting this year: nothing.
Indicators such as the June employment report, retail sales, housing starts, capacity utilization, and a gauge of service industries have all beat economists’ expectations. Still, 2016 has defined Chair Janet Yellen’s approach to policy, which might be summed up as a doctrine of waiting for overwhelming evidence.
The strategy is aimed at nursing the economy through the uncertainties of various global shocks while puzzling over head-scratchers that include low productivity and how much support is Fed policy really providing to growth. At the same time, it can seem a highly discretionary, less systematic approach that puts a lot of weight on possible risks that are hard to define or just fade away.
“Upside surprises affect the committee less than downside surprises,” says former Fed governor Laurence Meyer, who now runs a Washington policy analysis firm that bears his name. “There is not a chance that they are going to go at this meeting.”
This Bloomberg story appeared on their Internet site at 10:00 p.m. Denver time on Sunday evening — and I thank West Virginia reader Elliot Simon for finding it for us. Another link to this article is here.
The helicopters fly on for now, but one day they will crash
We are sailing through uncharted waters. Interest rates have been close to zero for seven years across the developed world. Investors are paying for the privilege of lending money to their governments. Stock and bond markets, which usually move in different directions, are simultaneously hitting record highs in the face of a corporate earnings retreat and Brexit threatening the UK and Europe with recession. These are not normal times.
If you think all of this is odd, prepare yourself for things to get a whole lot stranger. That whirring in the background is the sound of helicopters preparing to drop trillions of yen on the streets of Tokyo. The Bank of Japan meets next week to decide whether to lead the world ever deeper into an Alice in Wonderland world of experimental monetary policy.
Central banks are the hottest story in financial markets at the moment; even when they end up doing nothing it’s news. Mark Carney at the Bank of England recently toyed with cutting rates even closer to zero but stepped away from the abyss, conscious of the fact that he is fast running out of bullets. The ECB’s Mario Draghi also erred on the side of caution last week, aware that he will pretty soon have acquired all the government bonds in Europe that he can sensibly buy.
But it’s in Japan that the real drama is playing out. There, a recent visit by former Federal Reserve chair Ben Bernanke to the Bank of Japan has brought expectations to fever pitch that Tokyo is preparing to head deeper into the unknown in its long-running battle to dig Japan out of a 20-year deflationary slump.
This commentary was posted on the telegraph.co.uk Internet site on Saturday afternoon BST — and it comes courtesy of Richard Saler. It’s worth reading as well — and another link to it is here.
IMF chief Lagarde to stand trial over state payout to French tycoon Tapie
France’s highest appeals court ruled on Friday that International Monetary Fund (IMF) chief Christine Lagarde must stand trial for her role in a 400-million-euros payout in 2008 to businessman Bernard Tapie.
Lagarde, who has been at the helm of the IMF since 2011, was France’s finance minister at the time of the controversial payout.
The unusually generous 2008 arbitration deal, paid from public funds, prompted years of legal disputes that remain unresolved.
A special court ruled in December that Lagarde should stand trial, but she appealed. France’s Court of Cassation on Friday rejected the appeal.
Her lawyer Patrick Maisonneuve expressed regret over the decision, but said he was “convinced” the trial would prove his client was innocent in the affair.
This article was posted on the france24.com Internet site last Friday — and I thank Roy Stephens for his second contribution to today’s column. Another link to this story is here.
First Italy, Now Portuguese Banks “Unexpectedly” Need a Taxpayer Bailout
The sale of Novo Banco is among critical decisions that will shortly determine the future shape of Portugal’s banking industry, which the International Monetary Fund has linked with the problems facing Italian lenders as among potential risks to global growth.
It’s not just the tragic ghost of Nova Banco that is haunting Portugal, and the rest of Europe. Lisbon and E.U. authorities are locked in tough negotiations over plans to recapitalise state-owned Caixa Geral de Depósitos, Portugal’s largest bank, with conflicting estimates of its capital needs ranging from about €2bn to €5bn. The Bank of Portugal and Lisbon’s eight-month-old “anti-austerity” government are also calling for a “systemic solution” to deal with more than €30bn in bad debts and problem assets, adding to other calls for public bailouts of troubled E.U. banks.
But wait, there’s more.
In a recent report, Barclays estimated that Portuguese lenders could need up to €7.5bn to resolve a “systemic banking crisis” that was bringing the country under “close market scrutiny”. In other words just like Italy “unexpectedly needs a €50 billion (to start) bailout, “suddenly” Portugal also seems to need a €7.5 billion (to start) bailout.
This Zero Hedge story put in an appearance on their website at 2:57 a.m. EDT on the Monday morning — and I thank Richard Saler for his second offering in today’s column. Another link to this news item is here.
Deutsche Bank Set for Investor Scrutiny as Short Sellers Circle
Deutsche Bank AG’s John Cryan will try to convince investors this week that his efforts to turn around Europe’s biggest securities firm will succeed. It’s a narrative that’s becoming harder to sell.
The quarterly update on Wednesday comes nine months after Cryan announced plans to cut thousands of jobs and shrink risky assets to boost profitability and capital levels. The chief executive officer has since had to put the sale of German consumer lender Deutsche Postbank AG on hold, scrap the development of a “digital bank” and contend with the departure of several senior bankers.
The stock has lost more than half its value over the past year, and hedge funds including Marshall Wace LLP have bet that the shares will fall further. Analysts have signaled concerns about the capital strength of a company that has some of the biggest holdings of complex assets and derivatives among European banks.
No! Really? Who would have thunk it? This Bloomberg story was posted on their Internet site at 4:00 p.m. MDT on Sunday afternoon — and it’s worth reading. I thank Elliot Simon for sharing it with us — and another link to this news item is here.
Turkey extends police powers, shuts down schools
Turkey pushed on Saturday with a sweeping crackdown against suspected plotters of its failed coup, defiantly telling EU critics it had no choice but to root out hidden enemies.
Using new emergency powers, President Recep Tayyip Erdogan’s cabinet decreed that police could now hold suspects for one month without charge, and announced it would shut down over 1,000 private schools it deems subversive.
A week after renegade soldiers tried to oust him with guns, tanks and F16s, Erdogan’s government has detained over 13,000 people it suspects are state enemies, mainly soldiers but also police, judges, teachers and civil servants.
And after rounding up nearly 300 officers of the presidential guard over suspected links to the coup, Prime Minister Binali Yildirim announced that Turkey planned to disband the 2,500-strong unit, saying there was “no need” for the elite regiment.
This is the second story in today’s column from the france24.com Internet site. This one was last updated on Sunday sometime — and it’s comes courtesy of Roy Stephens. Another link to this news item is here.
End of an Era: The Rise and Fall of the Petrodollar System — Claudio Grass
The intricate relationship between energy markets and our global financial system, can be traced back to the emergence of the petrodollar system in the 1970s, which was mainly driven by the rise of the United States as an economic and political superpower.
For almost twenty years, the U.S. was the world’s only exporter of petroleum. Its relative energy independence helped support its economy and its currency. Until around 1970, the U.S. enjoyed a positive trade balance.
Oil expert and author of the book “The Trace of Oil”, Bertram Brökelmann, explains a dramatic change took place in the U.S. economy, as it experienced several transitions: First, it transitioned from being an oil exporter to an oil importer, then a goods importer and finally a money importer. This disastrous downward spiral began gradually, but it ultimately affected the global economy.
A petrodollar is defined as a U.S. dollar that is received by an oil producing country in exchange for selling oil. As is shown in the chart below, the gap between US oil consumption and production began to expand in the late 1960s, making the U.S. dependent on oil imports.
And while it led to the U.S. Dollar being established as the world’s premier reserve currency, it also contributed to the country’s increase in debt. The oil embargo of 1973-74 was a major hit that exposed the vulnerability of the U.S. economy.
This long, but must read essay showed up on the actingman.com Internet site a week ago yesterday — and the first reader through the door with it on the weekend was Roy Stephens — and I thank him on your behalf. Another link to this long commentary is here.
Get On the “Gold Wagon” to $10,000 — Egon von Greyerz
Between 1999, when gold bottomed at $250, and the 2011 peak at $1,920 there was only one major correction lasting 8 months in 2008. The ensuing correction from the 2011 top at $1,920 of almost $900 seemed to take an eternity until it finally finished in December 2015. During those four years it was always clear to me that the uptrend in the precious metals was still intact although I must admit that I did not expect a correction of that duration.
But after a long life in markets, patience becomes a virtue that is absolutely essential. If your investment decisions are based on sound principles at the outset, there is no reason to change your opinion because the market takes longer to accomplish what it must do.
We bought gold for our own account and for our clients back in 2002 at $300. At that time gold was unloved and undervalued. That is of course the best time to get into a long term strategic investment. But it was never our intention to buy gold as an investment. No, we bought gold because we had evaluated economic and financial risk in the world economy and come to the conclusion that it was unlikely that the system would survive without major defaults, both sovereign and in the banking system.
And as we know, the financial system almost went under in 2007-9. With $25 trillion of printed money, credit and guarantees the system was given a temporary stay of execution. But these $25 trillion was just the initial package. Since 2006 global debt has increased by $90 trillion plus unfunded liabilities and derivatives of several hundred trillion dollars. This explosion of debt has confirmed the risks that we saw already back in 2002.
Now in July of 2016, I am absolutely certain that the financial system cannot survive intact. Global debt has gone from $20 trillion to $230 trillion, a more than 10 times increase in the last 25 years and none of this debt can be repaid with real money. Governments and central banks have totally run out of ammunition. In their desperate attempts to save the financial system, they have manipulated every single market and financial instrument. They print money, they set false interest rates (now negative), they buy their own debt, they support stock markets and they also sell gold in the paper market.
This commentary by Egon is certainly worth reading, but somewhere in the back of my mind I get the feeling that I’ve posted this before, as it sounds so familiar. But I couldn’t find it on my site, or on the GATA website. This iteration showed up on the dailyreckoning.com Internet site on the July 21 — and I thank Bill Christmas for pointing it out. Another link to this gold-related news item is here.
‘Gloom, Boom & Doom’ economist Marc Faber pushes for gold
Marc Faber is like the horror movie star of investing.
He sees the threat of money oozing out of 401(k)s, IRAs, savings accounts and pensions — a result of villains bludgeoning unsuspecting investors. His villains to fear are central bankers like Ben Bernanke, Janet Yellen and Alan Greenspan — mild-mannered, brainy people who he suggests have ended up being ax murderers to money in the past and will be again.
Every year, Faber is brought on stage by an organization of elite investors, the CFA Institute, during a seminar in Chicago for highly trained investment professionals from throughout the world. And he was there Thursday.
Faber told the investment professionals gathered in Chicago that they shouldn’t be prejudiced against gold. Although the typical investment pro keeps less than 1 percent of his or her portfolio in gold, Faber suggests 25 percent. He sees it as protection from a dangerous combination of tremendous government debt and massive bond-buying by central banks globally trying to fight off recession with near-zero interest rates. Besides gold, Faber has invested in Asian real estate and some stocks and bonds.
This article appeared on the chicagotribune.com Internet site late on Friday afternoon Central Daylight Time — and my thanks go out to Ken Hurt for passing it along. Another link to this commentary is here.
In Bankrate survey, 1 in 6 choose gold for 10-year investment — Mike Kosares
One in six investors chose gold as the best place to park money they wouldn’t need for more than 10 years — the same number that chose stocks, according to a recent Bankrate survey. Another 6 percent chose bonds, while 25 percent chose real estate and 23 percent said they would simply bank the money.
To the typical Wall Streeter, these results represent a world turned upside down. CNBC’s Jim Cramer took one look at the results and lamented, “As someone who has lived and breathed stocks for most of my life, this is a horrendous finding. But it’s not surprising.”
This commentary by Mike appeared on the usagold.com Internet site yesterday or Sunday — and I borrowed the headline from Chris Powell’s GATA release of this story. Another link to it is here.
June Swiss gold statistics highlight continuing reverse gold flows — Lawrie Williams
With the latest stats now available from the Swiss Customs Administration, the hugely anomalous pattern of gold flows in and out of the nation we have noted before are continuing. Normal gold exporters have become importers, and vice versa – a pattern which we have put down to the combination of the big rise in the gold price this year (around US$250), coupled with a significant fall-off in Asian demand.
Switzerland, which hosts some of the world’s largest, and busiest, gold refineries, is major conduit for gold coming from producing nations and from those which vault much of the world’s gold for re-refining and export to the world’s major consumers, with its refineries specialising in refining and re-refining gold into the sizes most in demand in the gold consuming world. So, the gold movements in and out of this small Alpine nation are hugely significant in terms of monitoring global gold flows.
Lawrie comments on the Swiss import/export numbers for June. I posted those charts in my column on Saturday — and this discussion about them is definitely worth reading. It was posted on the Sharps Pixley website yesterday — and I found on the gata.org Internet site. Another link to it is here.
Rising prices fail to induce Indians to sell their gold
The rising price of gold since the beginning of 2016 has not enthused Indians to liquidate their household gold to create liquidity. Indians have reduced gold offerings to temples as well.
Gold has appreciated 25 percent from the beginning of this year on the back of geopolitical tensions, Britain’s decision to leave the European Union, and the growing expectations that interest rates, which are arguably the primary counterweight to gold, are set to stay lower for longer and could even fall further.
“Despite prices surging ahead and a liquidity crisis being reported, we have not seen Indians selling household gold. Last year, when it touched Rs 29,000, we had seen people offloading old gold. But this year we are not seeing that trend though price is around Rs 31,500-31,800,” said Jitendra Jain of Mumbai-based scrap dealing firm Jugrag Kantilal.
This gold related news item, filed from Kolkata, appeared on the Economic Times of India website on their Monday — and it’s certainly worth skimming. It’s another news item I found on the gata.org Internet site — and another link to it is here.
The PHOTOS and the FUNNIES
I had a big flock of white pelicans fly between me and the sun while I was out driving in the country on Sunday. I didn’t see them, but with the second largest wingspan of all North American birds, when you fly through the shadows cast by more than 20 of them, it really gets your attention. They were out soaring thermals, just like the hawks and eagles do. But when you see a flock this size, of birds this size doing the same thing — well, that’s something else again. Here are two photos now — and I’ll have two more tomorrow. There were more birds in each shot than shown here, but for display purposes, I had to crop some of them out. The ‘Click to Enlarge’ feature is an absolute must, but only on the first photo.
The WRAP
“The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. The sooner the better.” — Ron Paul — 2006
Except for the run-ups in gold and silver prices in mid-morning trading in New York, there wasn’t much in the way of price action yesterday. But as I mentioned before, I was less than impressed with how well the precious metal equities performed on Monday. One would think that they would have caught some sort of bid on those rallies, but it just didn’t happen. And as I mentioned in my comments further up, “I don’t know what that portends, if anything.”
But since we are in the final days of the roll-over out of the August contract, it would be unwise to read much into it, at least for the moment. First Day Notice is Friday — and all the large traders have to be out by the COMEX close on Wednesday, with all the rest by the COMEX close on Thursday.
As I pointed out at the top of today’s column on the discussion on gold, the roll-over volume was very heavy yesterday — and it will be for the rest of the week as well.
Here are the 6-month charts for all four precious metals — and there isn’t anything worth noting, as no new intraday or new low closes were set in any of them on Monday.
Today is the start of the 2-day FOMC meeting, something that I’d forgotten totally about until Brad Robertson pointed it out yesterday. I’m not expecting a thing to happen, because as I and many others have already pointed out, the world’s central banks have reached the end of the line, unless they want to hyperinflate their currencies, which is a scenario I really wouldn’t put past them now that the world’s financial and monetary policies are in ruins.
And as I type this paragraph, the London open is less than ten minutes away — and I note that gold has been chopping around in a 6 dollar price range, with most it occurring above its Monday close. And except for a spike down between 9 and 10 a.m. HKT on their Tuesday morning, silver has been trading a bit higher as well and, like gold the price has been very erratic. Platinum has been chopping around a few bucks either side of unchanged — and that’s where it sits at the moment, unchanged. Palladium has been trading mostly lower — and it’s currently down a dollar.
Net HFT gold volume is around 27,500 contracts — and roll-over volume is already very decent. That number in silver is around 8,600 contracts. The dollar index had been chopping quietly lower until a few minute after 12 o’clock noon Hong Kong/Shanghai time — and then it really took a header. It’s off its current low by a bit, but still down 24 basis points as London opens.
As Ted Butler pointed out in the quote I ‘borrowed’ from his Saturday column, the gold deliveries in July are “extraordinary” in the extreme — as were the ones in June. So nothing should surprise us when the August delivery month in gold rolls around. Using past as prologue here, it could be another month for the record books for JPMorgan and their ‘client’.
And as I post today’s column on the website at 4:20 a.m. EDT, I note that gold has rallied a bit since London opened — and is currently up 6 bucks. Silver is up 15 cents at the moment, but off its high tick, as ‘da boyz’ obviously showed up at 9 a.m. BST in London. Platinum is now higher by 4 dollars — and palladium is still down a buck.
Net HFT gold volume is now up to 38,500 contracts — and roll-over volume is pretty heavy already. In silver, volume there is approaching 10,500 contracts, which is very decent, but not surprising considering the price action. The dollar index has been chopping around for the last hour — and is still down 26 basis points at the moment — and right at the 97.000 mark. It was obviously saved by the usual ‘gentle hands’ during afternoon trading in the Far East on their Tuesday afternoon.
Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and volume will be super heavy again. Hopefully it will all be in that report, but I wouldn’t bet the ranch on it.
That’s all I have for today — and it’s a given that the rest of the trading week will prove interesting.
See you tomorrow.
Ed
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