23 August 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price got hit for 5 bucks within the first ten minutes after trading began at 6:00 p.m. EDT on Sunday evening. The low tick of the day came shortly before 11 a.m. Hong Kong/Shanghai time on their Monday morning — and it traded pretty flat until just before 10 a.m. BST in London. From that point it crawled higher until about 12:40 p.m. before crawling lower into the 5 p.m. close.
The high and low ticks were reported as $1,345.70 and $1,335.40 in the December contract.
Gold finished the Monday session at $1,338.60 spot, down $2.50 from Friday’s close. Net volume was moderate at just under 152,500 contracts — and that number includes October’s volume as well as December’s.
JPMogan et al pulled their bids and spun their algos the moment that trading began at 6:00 p.m. on Sunday evening — and silver was down more than 40 cents the ounce in just a few minutes. After that, every attempt to regain the $19 spot mark was turned aside.
The high and low tick in this precious metal was recorded as $19.25 and $18.71 in the September contract.
Silver was closed on Monday at $18.875 spot, down 38 cents on the day. Gross volume was very heavy at 129,700 contracts, but once the September roll-overs were netted out [about 35 percent of gross volume], the net volume was still very decent at just over 53,500 contracts.
Platinum got smacked for about ten bucks at the Sunday evening open in New York — and from there the price chopped and flopped around the $1,105 spot mark for the next thirteen hours or so. Then it had the audacity to rally a bit staring shortly after 1 p.m. Zurich time. But once it poked its nose above unchanged in COMEX trading, that was it — and it had its lights punched out starting shortly after 9 a.m. in New York. The spike low below 1,100 spot came shortly before 12 o’clock noon EDT, but it rebounded swiftly back above that price mark, closing the day at $1,103 spot — and down an even 10 dollars on the day.
Palladium met a similar fate — and it was down 8 bucks by 10 a.m. Hong Kong/Shanghai time on their Monday morning. But within an hour it was trading in a tight range either side of $705 spot. It rallied a hair at the COMEX open, but that got capped the moment it hit its Friday closing price — and around 11:40 a.m. EDT, it got hammered just like platinum had earlier in the morning. It’s $689 spot low tick came shortly before 1 p.m. in New York –and it rallied a small handful of dollars into close, finishing the Monday session at $692 spot, down 17 bucks from Friday.
The dollar index closed very late on Friday afternoon in New York at 94.48 — and began to head higher the moment that trading began in New York around 2 p.m. EDT on Sunday afternoon. The 94.96 high tick came shortly before 2 p.m. Hong Kong/Shanghai time on their Monday afternoon. It began to chop lower from there with some authority — and the 94.44 lot tick came a minute or so before 11 a.m. in New York. It rallied for about forty minutes, before quietly crawling lower into the close. The index finished the Monday session at 94.54 — up a whole 6 basis points from its close on Friday.
Here’s the 3-day U.S. dollar index, as it captures the entire Friday/Sunday/Monday sequence.
For fun, here’s the 3-year dollar index chart so you can see the longer term vs. what’s going on currently. And as I’ve said before, the bottom for the dollar index is a very long way down from its current level.
The gold stocks gapped down about 2.5 percent at the open –and chopped more or less sideways for the rest of the Monday session, as the HUI closed down 2.23 percent.
The silver equities gapped down 4 percent at the open, but rallied sharply until around 10:20 a.m. in New York trading. They revisited their opening lows shortly before noon EDT — and chopped quietly higher from there. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down only 2.40 percent — and as you can imagine it could have been much worse. I get the impression that there were strong buyers with deep pockets doing some serious bottom fishing yesterday — and whether or not they were being premature in their purchases, remains to be seen. Click to enlarge if necessary.
The CME Daily Delivery Report showed that 261 gold and 9 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. In gold, the largest short/issuer was Canada’s Scotiabank with 107 contracts out of its own account. Goldman Sachs, Merrill and Morgan Stanley were short/issuers on 150 contracts between them out of their respective client accounts. In the long/stopper category it was the usual two suspects, as JPMorgan picked up another 191 contracts for its ‘client’ account — and MacQuarie Futures added 56 contracts to their own account. In silver, the 9 contracts were issued by ADM, with 5 going to Scotiabank and 4 going to Morgan Stanley. The 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 August fell by 46 contracts, leaving 627 still open, minus the 261 mentioned in the previous paragraph. Friday’s Daily Delivery Report showed that 46 gold contracts were posted for delivery today, so that means that everything matches perfectly, and nobody was let off the delivery hook — and no new contracts were added to the August delivery month. Silver o.i. in August fell by 1 contract, leaving 15 still around, minus the 9 mentioned above. No silver contracts were posted for delivery today.
Gold open interest in September continues to decline, as open interest dropped by 189 contracts, leaving 4,219 still around. But contracts continue to get added to October, as gold o.i. in that month climbed by 102 contracts to 47,777 still open. Checking Friday’s column, I see that gold open interest in October ended the week at 48,168 contracts — and how it could end Monday trading at the 47,777 number with 102 contracts added is something I’ll have to ask Ted about.
I must admit that I was amazed to see deposits in both GLD and SLV yesterday. In GLD, an authorized participant added 76,344 troy ounces — and in SLV an a.p. deposited an amazing 3,324,370 troy ounces.
Since the last price peak in silver on August 2, when silver was about $1.50 an ounce higher than it is now, there has been 7.98 million troy ounces of silver added to SLV in four different deposits since that date. I made the assumption that the deposits of late July/early August were for short-cover purposes — and they may have well been. But the three in the last week totalling 5.51 million troy ounces were something else. Ted said this about it in his Saturday column: “The most plausible explanations were due to a “value” (as opposed to a technical type trader) investor, or the metal was deposited to extinguish a short position.”
And since the last three big deposits were made after the 15th of the month, they won’t show up in the next report from the folks over at shortsqueeze.com, which is due out tomorrow according to Ted. But whatever those numbers show, they’ll be in my Thursday column for sure.
There was a smallish sales report from the U.S. Mint yesterday. They sold 3,000 troy ounces of gold eagles — and 185,000 silver eagles.
There was a decent amount of gold moved around at the COMEX-approved depositories on Friday, as 65,702.000 troy ounces were received — and 76,106 troy ounces were shipped out. There 140 ten-ounce gold bars received at Brink’s, Inc. — and 64,302.000 troy ounces/2,000 kilobars [SGE kilobar weight] received at HSBC USA. There was 1,607.500 troy ounces/50 kilobars [U.S./U.K. kilobar weight] shipped out of Canada’s Scotiabank. The remaining 74,499 troy ounces shipped out, came from Brink’s, Inc. The link to all that action is here.
There was big movement in silver once again, as 299,0457 ounces were received — and 1,125,195 troy ounces were shipped out the door for parts unknown. Except for 30,302 troy ounces shipped out of Brink’s, Inc. — all the rest of the in/out activity was at the CNT Depository, Inc. The link to all this activity is here.
It was pretty busy at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, as they reported receiving 7,751 of them, plus they shipped out a rather smallish 61 kilobars. All of the activity was at Brink’s, Inc. as per usual — and the link to that in troy ounces, is here.
I have the usual number of stories for a weekday column — and I’ll happily leave the final edit up to you.
CRITICAL READS
Bubbles In Bond Land: A Central Bank Made Mania, Part 1 — David Stockman
…..Sometimes an apt juxtaposition is worth a thousand words, and here’s one that surely fits the bill.
Last year Japan lost another 272,000 of its population as it marched resolutely toward its destiny as the world’s first bankrupt old age colony. At the same time, the return on Japan’s 40-year bond during the first six months of 2016 has been an astonishing 48%.
That’s right!
We aren’t talking Tesla, the biotech index or Facebook. To the contrary, like the rest of the Japanese yield curve, this bond has no yield and no prospect of repayment.
But that doesn’t matter because it’s not really a sovereign bond anymore. These Japanese government’s bonds (JGBs) have actually morphed into risk free gambling chips.
This excerpt from David’s book put in an appearance on his Internet site yesterday — and it’s certainly worth reading. I thank Roy Stephens for sending it our way — and another link to this story is here.
Busting the Banksters—-The Case For Super Glass-Steagall, Part 2 — David Stockman
………Most importantly, Super Glass-Steagall would also hog-tie the Fed by ending discretionary interest rate pegging and the entire gamut of FOMC market interventions and securities price falsification.
The latter point, in fact, is the sine qua non of true banking reform. As we demonstrated in Chapter 4, our debt saturated economy, with $64 trillion of credit market debt outstanding representing an unsustainable leverage ratio of 3.5X national income, does not require artificially priced credit to rejuvenate growth and prosperity.
Nor is there any point whatsoever in perpetuating ZIRP and the Fed’s long-standing and destructive regime of financial repression. The major consequence of 90 months on the zero bound has been a massive transfer of income—upwards of $250 billion per year—-to the banking system from the hides of savers and depositors.
The relevance here is that BAC and most of the other giant financial conglomerates would be insolvent without these arbitrary transfers.
Given BAC’s $1.2 trillion deposit base, in fact, the Fed’s financial repression probably reduced its funding costs by at least $30 billion last year compared to a free market pricing environment.
Another excerpt from David’s book. This one appeared on his website last Friday — and it comes courtesy of Roy Stephens who sent it to me on Saturday morning. I would suggest it’s worth reading — and another link to this article is here.
U.S. banks want to cut branches, but customers keep coming
Despite banks’ nudging toward online tools, many U.S. customers are not ready to give up regular visits to their nearest branch, complicating the industry’s efforts to slim down.
U.S. banks have trimmed the number of branches by 6 percent since it peaked in 2009, according to Federal Deposit Insurance Corp data. The 93,283 branches open at the end of last year was the lowest level in a decade.
Yet analysts who have examined the data say banks should have done more to offset the pressure on revenue from low interest rates and regulatory demands.
Bank executives argue, however, that branches remain crucial for acquiring new customers and doing more business with existing ones. Closures, they say, would hurt revenue more than help reduce costs.
“Our customers still want to visit us,” Jonathan Velline, Wells Fargo’s head of ATM and store strategy, told Reuters in an interview. “They’re still coming to our stores and our ATMs at pretty consistent rates.”
No surprises here, as most people, especially of my generation, want to deal with a real person when it comes to their banking needs — and I hold myself out a prime example. This Reuters story, filed from New York, was posted on their Internet site at 5:50 p.m. on Monday afternoon EDT — and it’s another Brad Robertson offering via Zero Hedge. Another link to this news item is here.
Jeff Gundlach Explains Why He Is Now “100% Net Short”
In his latest interview on RealVision conducted last Friday, Doubleline’s Jeff Gundlach recapped the major points of his relatively bearish worldview, which are increasingly prioritizing political risk, with the ‘T-word’ now a factor for stocks, as the election gets closer and the potential for a President Trump.
Gundlach has been calling a Trump victory since the start and he outlines the likely market impact, as well as an economic bounce from the fiscal stimulus and the bond market shenanigans that might follow. With a long term need for l governments to really tackle the global debt problem against the backdrop of entitlement, the only play for serious investors here is defensive and Gundlach is more focused on where he can make money and for that he has the gold miners in his sights.
Finally, butting it all together, this is how Gundlach is currently positioned in his master fund:
“I’ve been net short all year. The U.S. stock market bid my macro fund and I’m doing great. I’m not having trouble at all making money on the short side. In fact, my longs are probably bringing the performance down. Because I’m net short 100% , but I have some longs against some shorts, and the shorts have just been fantastic. And I’m basically looking at these things that are viewed to be safe and they’re not safe at all. I think the best way to play the short side is to buy stocks that are believed to be safe, but are very recession exposed.“
This longish but worthwhile commentary/interview showed up on the Zero Hedge website via Grant Williams’ RealVision website last Friday — and I thank Ken Hurt for sharing it with us. Another link to it is here.
Jim Grant: “This Will Turn Out to Be Very Bad For Many People“
Jim, for more than three decades Grant’s has been observing interest rates. Is there anything left to be observed with rates this low?
Interest rates may be almost invisible but there is still plenty to observe. I observe that they are shrinking and that the shrinkage is causing a lot of turmoil because people in need of income are in full hot pursuit of what little of yields remains.
What are the consequences of that?
It reminds me of the great Victorian English journalist Walter Bagehot. He once said that John Law can stand anything but he can’t stand 2%, meaning that very low interest rates induced speculation and reckless investing and misallocation of capital. So I think Bagehot’s epigraph is very timely today.
John Law was mainly responsible for the great Mississippi bubble which caused a chaotic economic collapse in France in the early 18th century. How is the story going to end this time?
It will turn out to be very bad for many people. If Swiss insurance and reinsurance executives are reading this right now they might be rolling their eyes and they might be frustrated to hear an American scolding from a distance of 3,000 miles about the risk of chasing yield. After all, if you’re in the business of matching long term liabilities with long term assets you have little choice but to wish for a better, more sensible world. But you have to take the world as it is and today’s world is barren of interest income. The fact is, that these are very risk fraught times.
This longish interview with Jim was posted on the Zero Hedge website at 4:44 p.m. on Monday morning EDT — and it’s certainly worth reading, especially his comments about gold at the end. I thank Ken Hurt for this second contribution in a row to today’s column — and another link to this interview is here.
The Fed Launches a Facebook Page…and the Result Is Not What It Had Expected
While it is not exactly clear what public relations goals the privately-owned Fed (recall Bernanke’s Former Advisor: “People Would Be Stunned to Know The Extent to Which the Fed is Privately Owned“) hoped to achieve by launching its first Facebook page last Thursday, the resultant outpouring of less than euphoric public reactions suggest this latest PR effort may have been waster at best, and at worst backfired at a magnitude that matches JPM’s infamous #AskJPM twitter gaffe.
Here are some examples of the public responses to the Fed’s original posting: they all share a certain uniformity…
The first response reads: “Quick question! I’m a newbie at this, but I’m trying to take over a country through monetary enslavement and currency destruction….any pointers?”
The list of comments is a hoot to read — and if you have a minute or so and need a good laugh, look no further than this Zero Hedge post that appeared on their Internet site at 9:04 p.m. EDT on Sunday evening. I thank reader David Assil for pointing it out — and another link to this article is here.
Brexit Armageddon was a terrifying vision – but it simply hasn’t happened
Project Fear predicted economic meltdown if Britain voted leave, so where are the devastated high streets, job losses and crashing markets?
Unemployment would rocket. Tumbleweed would billow through deserted high streets. Share prices would crash. The government would struggle to find buyers for U.K. bonds. Financial markets would be in meltdown. Britain would be plunged instantly into another deep recession.
Remember all that? It was hard to avoid the doom and gloom, not just in the weeks leading up to the referendum, but in those immediately after it. Many of those who voted remain comforted themselves with the certain knowledge that those who had voted for Brexit would suffer a bad case of buyer’s remorse.
It hasn’t worked out that way. The 1.4% jump in retail sales in July showed that consumers have not stopped spending, and seem to be more influenced by the weather than they are by fear of the consequences of what happened on 23 June. Retailers are licking their lips in anticipation of an Olympics feelgood factor.
It’s obvious that the sky has not fallen in as a result of the referendum, and those who said it would look a bit silly. By now, Britain was supposed to be reeling from the emergency budget George Osborne said would be necessary to fill a £30bn black hole in the public finances caused by a plunging economy. The emergency budget is history, as is Osborne.
This very interesting and worthwhile opinion piece appeared on theguardian.com Internet site at 06:00 BST on Saturday morning — and I thank Roy Stephens for his first offering of the day. Another link to this commentary is here.
Picking Up the U.K. Tab — Jeff Thomas
Back in the late ‘90s, I began saying, “I’ll give the E.U. twenty years.” At that point, the E.U. seemed to be going great guns, but I believed that it was an ill-conceived concept that wouldn’t stand the test of time.
There were several reasons for my view. First, I didn’t believe that those countries that were entitlement-focused, such as the Greeks, would ever be as fiscally responsible as, say, the Germans, so the Germans (and other countries where there was a responsible work ethic) would end up subsidizing the Greeks (and to a lesser extent, Spain, Portugal, etc.)
In recent years, we’ve watched the E.U. stumble repeatedly. Invariably, Brussels has arrogantly assumed that it can dictate to all E.U. members, and offers few apologies for doing so. The individual countries’ leaders then do their best to explain to their own voters why Brussels should be able to behave like an oligarchy, and the voters understandably have become increasingly angry.
Eventually, the wheels were sure to come off the trolley and, with the UK Brexit vote, we’ve witnessed the first major blow to the survival of the E.U.
This is another very worthwhile commentary that’s worth reading if you have the time and the interest. It’s a Jeff Thomas offering from the internationalman.com Internet site — and it was posted there yesterday. Another link to this article is here.
Sweden Warns U.K. Against Aggressive Tax Cuts Amid Brexit Talks
The U.K. should avoid any drastic steps to cut corporate taxes, or similar measures, as it prepares to start talks on leaving the European Union, Swedish Prime Minister Stefan Loefven said.
The premier of the largest Nordic economy also said the U.K.’s exit from the 28-nation bloc “shouldn’t take longer than necessary.”
“But if the U.K. wants some time to think about the situation, this will also give E.U. countries some time,” Loefven told Bloomberg after giving a speech in Stockholm on Sunday. “On the other hand, you hear about plans in the U.K. to, for example, lower corporate taxes considerably. If they, during this time, begin that kind of race, that will of course make discussions more difficult.”
U.K. policy makers are now dealing with the fallout of the June vote backing a Brexit and are looking at the first part of next year to start formal talks. Prime Minister Theresa May has delayed starting Britain’s exit as she puts together a team and prepares for what will inevitably be tough negotiations.
This news item showed up on the Bloomberg website at 9:47 a.m. Denver time on their Sunday morning — and was subsequently updated about 19 hours later. This story comes courtesy of Brad Robertson via Zero Hedge — and another link to this article is here.
Show of European unity: Merkel, Hollande, Renzi meet to discuss game plan
The leaders of Germany, France and Italy will meet on Monday to discuss how to keep the European project together in the second set of talks between the premiers of the euro zone’s three largest economies since Britain’s shock vote to leave the bloc.
Italian Prime Minister Matteo Renzi hosts German Chancellor Angela Merkel and French President Francois Hollande on an island off the coast of Naples ahead of September’s E.U. summit called to discuss reverberations from the Brexit vote.
“They will be coming to discuss how to relaunch Europe from the bottom up, there’s a big need,” Renzi said on Sunday.
“Relaunching Europe is a totally open game but it needs to be played,” he said.
Officials in Brussels and Berlin fear the June 23 vote could lead to a referendum in the Netherlands – a founding member of the union – on whether to also leave the bloc.
Yeah — and the list is a pretty long one after that, including France. This story, filed from Naples, put in an appearance on their Internet site at 3:31 p.m. on Sunday afternoon EDT — and I thank West Virginia reader Elliot Simon for this one. Another link to this news item is here.
German Government Urges Citizens to Stockpile Food, Water “In Case of Attack or Catastrophe“
For the first time since the end of the Cold War, the German government plans to tell citizens to stockpile food and water in case of an attack or catastrophe, the Frankfurter Allgemeine Sonntagszeitung newspaper reported on Sunday.
Germany is currently on high alert after two Islamist attacks and a shooting rampage by a mentally unstable teenager last month. Berlin announced measures earlier this month to spend considerably more on its police and security forces and to create a special unit to counter cyber crime and terrorism.
“The population will be obliged to hold an individual supply of food for ten days,” the newspaper quoted the government’s “Concept for Civil Defence” – which has been prepared by the Interior Ministry – as saying.
The paper said a parliamentary committee had originally commissioned the civil defense strategy in 2012.
A spokesman for the Interior Ministry said the plan would be discussed by the cabinet on Wednesday and presented by the minister that afternoon. He declined to give any details on the content.
This Reuters story appeared on their website at 11:43 a.m. on Sunday morning EDT — and it was embedded in a Zero Hedge piece that reader ‘David’ sent our way. Another link to this article is here.
Cathay Pacific Crushed as Chinese Corporate Travel Collapses
Cathay Pacific announced earnings earlier this week which paint a fairly ominous picture for China. The airline posted a 9.3% YoY drop in revenue and an 82% decline in net profit which they attributed to, among other things, “weak passenger demand, particularly in the premium class“. Comments from the Cathay’s press release clearly indicate weak corporate travel with the company pointing out that corporate enplanements in Hong Kong declined for the first time since 2009:
The slowdown in the Mainland China economy and economic fragility elsewhere caused restrictions to be placed on corporate travel. This adversely affected premium class demand, particularly on long-haul routes.
Yield was further affected by strong competition, adverse currency movements and a significant reduction in premium corporate travel.
Demand for travel originating from Hong Kong was strong in the first two months of the year, but weakened thereafter.
Corporate travel originating in Hong Kong was well below expectations, particularly to London and New York. Numbers traveling declined for the first time since 2009, when business was affected by the financial crisis.
Tourism from Mainland China to Hong Kong is weak.
This news story appeared on the Zero Hedge website late last Friday evening — and it’s the third and final offering of the day from reader ‘David’, who pass it around on Saturday. Another link to this article is here.
Japan sinking deeper into de-facto helicopter money
The Bank of Japan says there is no possibility of helicopter money, and by a strict definition they are correct. But as the government plans to issue more 40-year bonds, it is looking more and more like some monetization of debt is underway.
The BOJ says as long as it buys Japanese government bonds (JGB) from the market, it is not directly underwriting bonds to fund government spending.
However, that distinction has become blurred as investors buy bonds only to take profits by selling them immediately to the bank – a transaction coined the “BOJ trade.”
“The BOJ is now buying the entire 30 trillion yen ($299.1 billion) in bonds newly issued by the government annually. In a sense, it has the same effect of helicopter money,” said Etsuro Honda, a former special adviser to the cabinet and a close associate to Prime Minister Shinzo Abe.
This Reuters news item, filed from Tokyo, was posted on their Internet site at 1:17 a.m. EDT last Friday — and it’s something I found in yesterday’s edition of the King Report. Another link to this story is here.
World’s Biggest Bond Traders Undeterred by Negative Yields
It might be considered absurd, if not for the unprecedented contortions in global financial markets.
Pacific Investment Management Co.’s largest international bond fund and China are piling into negative-yielding Japanese debt, buying securities that pay out less than the purchase price. And there’s a way to turn a tidy profit off the trade.
At the heart of the strategy is the world’s insatiable appetite for dollar assets, which is presenting an opportunity for investors with greenbacks to spare: the chance to pick up extra yield, a luxury in an era of record-low interest rates. For dollar lenders, even three-month Japanese bills, trading at a rate of negative 0.24 percent, offer juicy returns through a swap transaction that locks in exchange rates.
Pimco, which manages $1.51 trillion, is one dollar-rich investor looking to tap into the phenomenon. Its Foreign Bond Fund, which protects against currency swings, added short-dated Japanese government debt in the first quarter, data compiled by Bloomberg show. China’s been another big buyer, accumulating a record amount of bills last quarter, Japanese Ministry of Finance data show.
“We can in some markets buy even negative-yielding assets and hedge them into U.S. dollars to create attractive positive yields,” said Sachin Gupta, who helps manage the $7.8 billion Pimco fund from Newport Beach, California. Short-dated Japanese debt “is as close to a risk-free instrument as is possible” in the country, and, when held to maturity, the profit is locked in from the start, he said.
This is madness on steroids. Pass the blue pills, please! This Bloomberg article showed up on their website at 4:00 p.m. Denver time on Sunday afternoon was updated about 19 hours later. I found it embedded in a GATA release — and another link to it is here.
The PHOTOS and the FUNNIES
Saturday was another bust at the pond — and after scanning it through the 400mm telephoto lens, I didn’t bother to get out of the car. So off into the country I went to check out the current crop conditions, as the harvest season is close at hand. What I came up with was this young bull moose. It was just him and me for twenty minutes — and I made the most if it. I took about forty photos — and kept seven, so this moose encounter is on the menu for the rest of this week.
The first shot is of him coming out of a field of ripening canola — and the average height of this stuff is about 1.5 meters, or just under 5 feet. Besides a moose, the only other creature with either four [or two] legs that could possibly penetrate this interlocking sea of plant life, would be a mouse. He’s heading down into a drainage creek of some size, which is almost impossible to detect in this shot, as the big telephoto really compresses distance — and the topography hides it well. Its size and depth is readily apparent in the second shot. The ‘click to enlarge’ feature is very useful here.
The WRAP
I’m very bullish on gold — and I’m very bullish on gold mining shares. That’s because I think that the world will lose faith in the PhD standard in monetary management. Gold is by no means the best investment. Gold is money and money is sterile, as Aristotle would remind us. It does not pay dividends or earn income. So keep in mind that gold is not a conventional investment. That’s why I don’t want to suggest that it is the one and only thing that people should have their money in. But to me, gold is a very timely way to invest in monetary disorder. — James Grant: 22 August 2016
I was somewhat surprised that JPMorgan et al didn’t add to their Far East engineered price declines during the London and COMEX trading session in New York. Yes, they took slices of out of the gold and silver salamis on Monday, but their attempts certainly lacked any kind of conviction as the trading session progressed. And as Ted pointed out on the phone yesterday, the 50-day moving average in gold hasn’t even been touched yet. They’re acting like they have all the time in the world.
We’ve been through this before, dear reader — and it still remains to be seen if this is the beginning of the long-awaited engineered sell-off or not. Time, as they always say, will tell.
Here are the 6-month charts for all four precious metals. And as prices are sold down, the 50-day moving averages continue to climb. Silver was closed well below its yesterday.
And as I type this paragraph, the London open is less than ten minutes away — and I see that gold was sold down just a few dollars in morning trading in the Far East on their Tuesday. The current low tick, such as it is, came minutes after 12 o’clock noon Hong Kong/Shanghai time — and has rallied back to just about unchanged. Silver was mostly higher in Far East trading — and stuck its nose above the $19 spot mark about twenty minutes before the London open — and it’s currently sitting right at the $19 spot price, up 13 cents the ounce. Platinum followed a similar price path to gold and silver, but is up 2 bucks — and palladium had a down/up move of some size shortly after 10 a.m. HKT/Shanghai time. It has rallied back to down only 2 dollars the ounce.
Net HFT volume in gold is just under 28,000 contracts — and that amount includes October as well as December. In silver, that number is a hair over 7,500 contracts with decent roll-overs out of September already. The dollar index continues to chop quietly lower from its high tick early Monday afternoon in New York — and is currently down 15 basis points as London opens.
Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and the jury is still out on whether ‘da boyz’ have another big down day planned for the precious metals before trading is done at 1:30 p.m. in New York. So far there’s been no price action worthy of the name.
And as I post today’s column on the website at 4:05 a.m. EDT, I note that gold spiked up a few bucks at the London open — and that got stepped on almost immediately. Gold is up 2 dollars the ounce at the moment. Silver spiked a bit as well, but it’s back down to $19.01 the ounce — and still up 13 cents. It was the same in platinum and palladium, with the former up 5 bucks — and the latter up a dollar.
Net HFT gold volume is just under 37,000 contracts — including both October and December volume — and that number in silver is just over 10,500 contracts. The dollar index continues its choppy decent — and is down 25 basis points currently, but off its post-London open low by a small handful of basis points.
It’s obvious that ‘da boyz’ are still around riding shotgun over the precious metal prices, but they really haven’t laid a lickin’ on them like I thought they might. But the trading day is still young — and the COMEX open lies ahead.
That’s all I have for today — and I’ll see you here tomorrow.
Ed
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