20 September 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price chopped a bit higher in the Far East and during the first hour of trading in London on their Monday mornings, with the high tick set shortly after 9 a.m. BST. It was sold down until shortly after the COMEX open in New York — and didn’t do a lot/wasn’t allowed to do much after that.
The high and low ticks certainly aren’t worth looking up.
Gold finished the Monday session in New York at $1,312.80 spot, up $2.80 from Friday’s close. Net volume was very light at just over 92,000 contracts, so not too much should be read into Monday’s price action except for the fact that even the smallest rally attempt ran into “all the usual suspects” before it could hatch into anything, including the one at the COMEX open.
Silver was in positive territory right from the start of trading in New York on Sunday evening — and really began to fly staring at 9 a.m. China Standard time on their Monday morning. The rally got capped just before 11 a.m. over there — and then flat-lined until the COMEX open. The market appeared to go ‘no ask’ at that juncture, but within seconds a short buyer/long seller was there to cap — and then smash that price spike — all within the space of ten minutes. The silver price rallied weakly from there until shortly after 12:30 p.m. EDT — and then was sold down right into the close of after-hours trading.
The low and high ticks were recorded by the CME Group as $19.38 and $18.84 in the December contract.
Silver was closed in New York yesterday at $19.12 spot, up 36 cents on the day, but was up over 50 cents the ounce at its high tick. Net volume was decent at just 48,000 contracts.
Here’s the 5-minute silver tick chart courtesy of Brad Robertson. The rally in morning trading in the Far East didn’t occur on much volume, so capping and containing the price was not an arduous task for anyone with an agenda. The stand-out feature after that was the 3,000+ contract volume spike at the COMEX open, which is 6:20 a.m. Denver time on the chart below. There was decent volume after that — and it really didn’t die off to background until about 12:30 p.m. MDT, which was 2:30 p.m. EDT.
The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon China Standard Time [CST] the following day in Shanghai—and don’t forget to add two hours for EDT. The ‘click to enlarge‘ is a must here.
Like silver, platinum’s parabolic price rise in mid-morning trading in the Far East met with the same short buyer/long seller just before 11 a.m. CST. After getting capped and sold off a few dollars, it too chopped sideways until around 1:30 p.m. Zurich time. From that point it got sold off about ten bucks going into the London p.m. golf fix — and then rallied until shortly before noon in New York. By 1 p.m. EDT half of the post-p.m. gold fix gains had vanished — and it traded sideways for the rest of the day. Platinum closed at $1,020 spot, up 4 dollars from Friday’s close. Like silver, the sky would have been the limit for a closing price if the powers-that-be hadn’t appeared when they did. But that’s what they’re there for, isn’t it?
Palladium rallied quietly between 9 and 11 a.m. in Shanghai trading. It traded flat from there into the Zurich open — and by the noon silver fix in London was back to about unchanged on the day. Once COMEX trading began, it started to edge higher — and at 10 a.m. in New York, the price went ‘no ask’ as well, until the ‘da boyz’ showed up in a heartbeat. It wasn’t allowed to get above $691 spot — and it made the attempt quite a number of times during the hour that followed. It was finally sold down a bunch of dollars until 1 p.m. — and then was comatose into the close. It finished the Monday session at $683 spot, up 11 bucks on the day and, like silver and platinum, would have closed at heaven only knows what price if allowed to trade freely.
The dollar index closed very late on Friday afternoon in New York at 96.02 — and didn’t do much once trading began at 2 p.m. EDT on Sunday afternoon. It began to slide in early morning trading in the Far East — and that sell-off lasted until around 11 a.m. China Standard Time. From there it chopped more or less sideways until around 12:45 p.m. BST in London. It began to chop lower with a vengeance at that point, with the 95.65 low tick coming around 10:40 a.m. in New York. It was obvious that ‘gentle hands’ showed up at that juncture — and by shortly before 5 p.m. EDT yesterday afternoon, most of the losses in the previous choppy sell-off had been negated. It slid a bit from there — and finished the Monday session at 95.87 — down 15 basis points from Friday’s close.
Here’s the 3-day U.S. dollar index chart so you can see all of Sunday and Monday’s activity vs. what happened on Friday.
And here’s the 6-month U.S. dollar index for entertainment purposes as per usual.
The gold stocks gapped up a percent and change at the open — and chopped mostly sideways to lower for the balance of the Monday trading session. The HUI closed up only 0.71 percent.
The silver equities traded in an equally unimpressive fashion. They gapped up a percent at the open, then added another percent by 10:25 a.m. — and then quietly chopped lower for the rest of the day. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.63 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that zero gold and 105 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. Like on Friday, the only two short/issuers were International F.C. Stone and ABN Amro with 102 and 3 contracts out of their respective client accounts. There were nine long/stoppers in total. The three largest were Scotiabank, Goldman Sachs — and JPMorgan, with 40, 22 and 11 contracts respectively. The ones for JPMorgan were for its in-house [proprietary] trading account as per usual. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that September open interest in gold rose 20 contracts, leaving 157 still around. Friday’s Daily Delivery Report showed that zero gold contracts were posted for delivery today, so it’s obvious that 20 gold contracts got added to the September delivery month yesterday. Silver o.i. in September dropped by 17 contracts, leaving 694 still open, minus the 105 mentioned in the previous paragraph. Friday’s Daily Delivery Report showed that 27 silver contracts were actually posted for delivery today, so that means that another 27-17=10 silver contracts were added to the September delivery month.
October open interest in gold rose by 5 contracts, leaving 37,544 still open.
There were no reported changes in GLD yesterday but, much to my surprise, there was another deposit in SLV, as an authorized participant added 1,044,386 troy ounces. I must admit that I’m not sure if that was added to cover an existing short position, or by a value investor taking a position in SLV as Ted Butler suggests it could be — and this silver was deposited to cover that. And since it was deposited after the 15th of the month, it won’t appear in the next report from the folks over at shortsqueeze.com.
There was no sales report from the U.S. Mint.
There was activity in gold over at the COMEX-approved depositories on Friday. The 63,437 troy ounces that were shipped out of JPMorgan’s vault on Thursday, ended up in Scotiabank’s vault on Friday. And 100 troy ounces was shipped out of Scotiabank as well. The link to that action is here.
It was a blockbuster day in silver, as it was one of the busiest in/out days that I can remember. There was 2,477,518 troy ounces reported received — and another 1,323,951 troy ounces were shipped out the door for parts unknown. I shan’t bother listing all the depositories involved, but if you want to know, you can click here. By the way, none of the activity involved JPMorgan.
There wasn’t big activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, as only 177 were received — and 1,042 were shipped out. All of the activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
I have an average number of stories for you today — and I hope you’ll find a couple in the list below that you’ll find of interest.
CRITICAL READS
A Messaging Tip For The Donald: It’s the Fed, Stupid! — David Stockman
http://davidstockmanscontracorner.com/a-messaging-tip-for-the-donald-its-the-fed-stupid/
The Fed’s core policies of 2% inflation and 0% interest rates are kicking the economic stuffing out of Flyover America. They are based on the specious academic theory that financial gambling fuels economic growth and that all economic classes prosper from inflation and march in lockstep together as prices and wages ascend on the Fed’s appointed path.
Au contraire! Those propositions are the most economically destructive and wantonly unjust notions ever embraced by an agency of the state. They clobber the middle- and lower-end of the income ladder while showering the top tier of financial asset owners with stupendous windfalls of unearned gain.
So the nation’s rogue central bank is essentially a reverse Robin Hood on steroids. If Donald Trump wants to hit the ball out of the park next Monday evening, therefore, he needs to quickly skip over his dog-eared income tax cut plan and put the wood good and hard to the Fed, Janet Yellen, and our unelected financial rulers.
They are killing wages, off-shoring jobs, trashing savers, subsidizing the banks, gifting Wall Street speculators with endless financial bubbles and rigging the markets to insure that the Democrats win.
This commentary by David appeared on his Internet site yesterday sometime — and it comes to us courtesy of Roy Stephens. Another link to this article is here.
Two of Fed’s Own Primary Dealers Warn Shock Hike Awaits Markets
There’s uncommon dissent in the ranks of the Federal Reserve’s primary dealers over the central bank’s interest-rate decision this week.
Two of the Fed’s 23 preferred bond-trading partners — Barclays Plc and BNP Paribas SA — are betting against their peers and the bond market by forecasting officials will raise rates Wednesday. It’s the first time more than one dealer has gone against the consensus during the week of a policy meeting since last September, data compiled by Bloomberg show. Economists at both banks say traders have too steeply discounted officials’ intent to hike after the Fed has remained on hold for longer than expected.
“There is no perfect time — there will always be some uncertainties in the data,” said Laura Rosner, senior U.S. economist in New York at BNP. “Despite a multitude of shocks through the last nine months, which have delayed the Fed, hiring has continued to be robust. There is a window of opportunity for the Fed to continue normalizing, and we think it’ll take it.”
The bond market and Fed are locked in a battle of wills over the direction of interest rates more than seven years after the end of the recession. The central bank’s credibility is at stake after policy makers began the year projecting four rate increases, after liftoff from near zero in December, yet remained on hold time and again because of economic circumstances in the U.S. and abroad. Even last month, Fed Chair Janet Yellen and Vice Chairman Stanley Fischer hinted that the bank could still raise rates twice this year.
This Bloomberg story put in an appearance on their Internet site at 5:00 p.m. Denver time on Monday afternoon — and was subsequently updated about five and a half hours later. I thank Swedish reader Patrik Ekdahl for sliding it into my inbox at 1:30 a.m. EDT this morning — and another link to this news item is here.
Bank of America: New-Business Numbers Collapse, Holding Back Job Growth
The 2008 financial crisis apparently knocked U.S. entrepreneurship to the ground, and it’s having a hard time returning to its feet, one expert has warned.
Michelle Meyer, US economist at Bank of America Merrill Lynch, recently said that the formation of new corporate firms (for example, McDonald’s as a whole) and individual establishments (an individual McDonald’s restaurant), has plunged since the financial crisis and remained low, Business Insider reports.
New businesses typically hire faster and produce higher levels of productivity than firms that have been around for a while. Such a decline in business formation can explain some of the labor market’s recent problems, and is at least part of the reason for the steep drop in productivity, BI explained.
“A recent paper from the Federal Reserve Board (and referenced by Vice Chair Fischer in his Jackson Hole speech) estimates that there is a persistent increase in both GDP and productivity as a result of changes in the number of start-ups. Specifically, they found that a one-standard deviation shock to the number of start-ups led to an increase of real GDP culminating to 1-1.5% and lasting 10 years or longer. This suggests a notable and lasting impact on the economy from weak rate of business entry over the past decade,” Meyer said.
No, really? I’m sure glad he’s here to tell us these things, as we’d never have figured it out on our own. This ‘story’ was posted on the newsmax.com Internet site on Saturday afternoon EDT — and I thank West Virginia reader Elliot Simon for sharing it with us. Another link to this article is here.
This chart shows how painful things still are for U.S oil producers
Crude oil prices may have rallied from their recent lows, but it’s still a painful environment for producers.
Since bottoming near $26 per barrel in February, West Texas Intermediate crude oil, the US benchmark, has gained nearly 70%.
However, prices are still below what’s needed for many oil producers to breakeven.
The chart below via Citi, published in a note last week, shows the weighted averages of breakeven costs for production across major shale-oil plays.
On Monday, WTI futures traded near $44 per barrel. And so, with the exception of the Wolfcamp formation, these players are still losing money by pumping oil.
This short 1-chart news item showed up on the nordic.businessinsider.com Internet site early yesterday morning Europe time — and I thank Swedish subscriber Patrik Ekdahl for sending it along. Another link to it is here.
What Is the FBI Hiding? — Andrew Napolitano
Earlier this week, Republican leaders in both houses of Congress took the FBI to task for its failure to be transparent. In the House, it was apparently necessary to serve a subpoena on an FBI agent to obtain what members of Congress want to see; and in the Senate, the chairman of the Judiciary Committee accused the FBI itself of lawbreaking.
Here is the back story.
Ever since FBI Director James Comey announced on July 5 he was recommending that the Department of Justice not seek charges against former Secretary of State Hillary Clinton as a result of her failure to safeguard state secrets during her time in office, many in Congress have had a nagging feeling that this was a political, not a legal, decision. The publicly known evidence of Clinton’s recklessness and willful failure to safeguard secrets was overwhelming. The evidence of her lying under oath about whether she returned all her work-related emails that she had taken from the State Department was profound and incontrovertible.
And then we learned that people who worked for Clinton were instructed to destroy several of her mobile devices and to remove permanently the stored emails on one of her servers. All this was done after these items had been subpoenaed by two committees of the House of Representatives.
Yet the FBI — which knew of the post-subpoena destruction of evidence and which acknowledged that Clinton failed to return thousands of her work-related emails as she had been ordered by a federal judge to do, notwithstanding at least three of her assertions to the contrary while under oath — chose to overlook the evidence of not only espionage but also obstruction of justice, tampering with evidence, perjury and misleading Congress.
This commentary, which is certainly worth reading if you have the interest, put in an appearance on the unz.com Internet site last Thursday — and I thank ‘aurora’ for pointing it out. Another link to it is here.
‘Hypocrisy Beyond Classical‘: U.S.-led Bombing of Syrian Army Wasn’t a ‘Mistake’
While the Pentagon claimed that U.S. coalition’s strikes on the Syrian Army in Deir ez-Zor was unintentional, Moscow and Damascus said that the attack has led to Daesh’s advance in the region. Sputnik spoke to political analyst and commentator on Middle Eastern affairs, Hafsa Kara-Mustapha.
“This is not a mistake and it can’t be, primarily because there cannot be a military exercise during an agreed ceasefire period. The American airplane had nothing to do flying over there at that time period when a ceasefire was agreed and officially announced,” Kara-Mustapha said.
She added that the action was a violation of the agreed ceasefire, she also added that the U.S. military is equipped with the best military hardware that can actually determine who is who and where. “It was abundantly clear that the targets were the official Syrian military. The idea of dismissing it as a mere mistake is ridiculous.”
Yep, it was deliberate and premeditated, no two ways about it dear reader. This must read news item was posted on the sputniknews.com Internet site at 7:12 p.m. Moscow time on their Sunday evening, which was 11:12 a.m. EDT in Washington on their Sunday morning. I thank Larry Galearis for pointing it out — and another link to it is here. There was a follow-on story in Russia Today yesterday headlined “British and Danish air force admits involvement in airstrikes which hit Syrian government troops“. I thank Roy Stephens for this one — and the link to that is here.
Risky Consequences of Coalition’s ‘Mistaken’ Airstrike on Syrian Army
Bombing of Syrian forces by a U.S.-led coalition could be a “costly mistake” for Washington, an article in The American Conservative read.
The Pentagon said the airstrike was a result of an “intelligence failure.” Assuming that, this airstrike is a “damaging and embarrassing error,” the article read.
In addition, it proves how dangerous a bombing campaign could be amid a multilateral civil war, like now in Syria.
The situation gets even more embarrassing because the airstrike was made against the Syrian Army which is fighting Daesh terrorists. In fact, Washington’s mistake benefited Daesh.
This follow-up news item also appeared on the sputniknews.com Internet site. It was posted there at 5:43 p.m. Moscow time on their Monday afternoon, which was 9:43 a.m. in Washington — EDT plus 8 hours. This also comes from Larry Galearis — and another link to it is here. It’s certainly a must read as well for any serious student of the New Great Game.
Russia Has No Partners In the West — Paul Craig Roberts
The Russian government is doing the same thing over and over again and expecting different results. The Russian government keeps making agreements with Washington, and Washington keeps breaking them.
This latest exercise in what Einstein defined as insanity is the latest Syrian cease fire agreement. Washington broke the agreement by sending the US Air Force to bomb Syrian troop positions, killing 62 Syrian soldiers and wounding 100, thus clearing the way for ISIS to renew the attack.
Russia caught Washington off guard in September 2015 when the Russian Air Force was sent to bomb ISIS positions in Syria, thus enabling the Syrian Army to regain the initiative. Russia had the war against ISIS won, but pulled out unexpectedly before the job was done. This allowed the U.S. or its agents to resupply ISIS, which renewed the attack.
This rather brief commentary by Paul showed up on the unz.com Internet site on Saturday — and I thank ‘aurora’ for his second contribution to today’s column. It too is certainly worth reading for any serious student of the New Great Game. Another link to it is here.
Will Russia Surrender? — Paul Craig Roberts
The Russian government’s sincere and diligent effort to prevent chaos in Syria and additional massive refugee flow into Europe, all the while avoiding conflict with Washington and its vassals, has been brought to an end by Washington’s intentional attack on a known Syrian army position, thus wrecking the cease fire agreement that Russia sacrificed so much to achieve.
The response to this fact by the Obama regime’s ambassador to the U.N., Samantha Power, reveals that Washington will lie to the hilt in order to achieve its agenda of reducing Syria to the same chaos as Washington has reduced Iraq and Libya. Washington, and Washington alone, is responsible for the war in Syria. When the British Parliament and the Russian government blocked Obama’s intended U.S. invasion of Syria, the Obama regime armed and financed jihadist mercenaries to invade Syria, pretending that the jihadists were Syrian rebels fighting for democracy in Syria. Samantha Power turned history upside down and blames the war on Russia’s intervention at the request of the Syrian government against the ISIL jihadists that Washington sent to destabilize Syria. What Samantha means is that if Russia had not come to the aid of Syria, Washington and ISIL would already have destroyed Syria, and there would be no war.
Ambassador Vitaly Churkin, Russia’s ambassador to the U.N., said that in his 40 years of diplomacy he had never seen such a high-handed and demagogic performance as Samantha’s. Churkin seemed to imply that such an unrealistic and twisted response to known facts as Samantha delivered leaves him without hope of any successful diplomatic outcome.
If the Russian government has finally arrived at the conclusion that Washington is determined to destroy political stability in Syria and to replace it with chaos, it has taken a long time.
This absolute must read commentary by Paul showed up on his website yesterday — and it matters not if you’re a student of the New Great Game. I thank Roy Stephens for pointing it out — and another link to it is here.
Take the Red Pill or Fight World War 3 – Interview With the Saker
Only those with their head in the sand are not aware that NATO, the western allies and the Wall Street bankers are determined to follow a course that will lead to World War 3. With Russia in particular and any other country that stands in their way. In a recent interview Vladimir Putin chided western journalists for the false narratives that are being published in the Main Stream Media press. He said:
“We know year by year what’s going to happen, and they know that we know. It’s only you that they tell tall tales to, and you buy it, and spread it to the citizens of your countries. You people in turn do not feel a sense of the impending danger – this is what worries me. How do you not understand that the world is being pulled in an irreversible direction? While they pretend that nothing is going on. I don’t know how to get through to you anymore.”
More recently the highly respected film director Oliver Stone said:
“We’re going to war — either hybrid in nature to break the Russian state back to its 1990s subordination, or a hot war (which will destroy our country). Our citizens should know this, but they don’t because our media is dumbed down in its “Pravda”-like support for our “respectable,” highly aggressive government.”
This very long, but absolute must read interview was posted on thesaker.is Internet site on Sunday — and although longish for a weekday column, it’s so important that it just couldn’t wait until Saturday. But it will be in that edition as well if you don’t have the time just now. I thank ‘aurora’ for his third and final contribution to today’s column — and another link to it is here.
BIS Flashes Red Alert For a Banking Crisis in China — Ambrose Evans-Pritchard
China has failed to curb excesses in its credit system and faces mounting risks of a full-blown banking crisis, according to early warning indicators released by the world’s top financial watchdog.
A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late.
The Bank for International Settlements warned in its quarterly report that China’s “credit to GDP gap” has reached 30.1, the highest to date and in a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asia’s speculative boom on 1997 or in the U.S. subprime bubble before the Lehman crisis.
Studies of earlier banking crises around the world over the last sixty years suggest that any score above ten requires careful monitoring. The credit to GDP gap measures deviations from normal patterns within any one country and therefore strips out cultural differences.
It is based on work the U.S. economist Hyman Minsky and has proved to be the best single gauge of banking risk, although the final denouement can often take longer than assumed. Indicators for what would happen to debt service costs if interest rates rose 250 basis points are also well over the safety line.
This must read AE-P commentary put in an appearance on the telegraph.co.uk Internet site at 7:07 a.m. BST on their Monday morning, which was 2:07 a.m. in New York — EDT plus 5 hours. It has had a headlined change since it was first posted. It now reads “China facing full-blown banking crisis, world’s top financial watchdog warns” — and regardless of what the headline says, it’s still a must read for sure. I found it embedded in a GATA release — and another link to this article is here. Another version of this story was posted on the bbc.com Internet site on Sunday — and it’s headlined “Global banking watchdog warns over Chinese banks” — and I thank Patrik Ekdahl for finding it for us.
Central banks boost gold reserves as low interest rates bite
Central banks have boosted their gold stocks by almost 10% since the financial crash, reflecting its renewed attractiveness as a safe haven in an environment of uncertainty and low or negative interest rates.
China and Russia have led the switch to gold away from foreign currencies, especially the U.S. dollar, to shore up their reserves. Western nations, including the U.K., have halted several decades of mass sell-offs.
According to the Official Monetary and Financial Institutions Forum (OMFIF), central banks have swooped on the gold markets every year since 2008 to become net bullion buyers, adding more than 2,800 tonnes, or 9.4%, to reserves.
Britain has one of the smallest holdings of gold in the G-7 at 0.9% in 2016 while the U.S. has the largest after increasing its share from 24.5% to 24.8% between 2000 and 2016. In 1980, the U.S. had 44.1% of all gold stocks and 75.7% in 1940.
This gold-related news item showed up on theguardian.com Internet site at 2:29 p.m. BST on their Monday afternoon — and I thank U.K. reader ‘Theresa’ for bringing it to our attention. Another link to it is here.
Gold miners stick close to home in hunt for more metal
The world’s biggest gold miners are taking a cautious approach in their hunt for bullion, spending more money to explore around existing mines rather than new territory in a strategy that may have short-term gains but risks future production growth.
Top producers are relying more than ever on small companies to do the heavy lifting of searching for new deposits and increasingly taking 10 to 20 percent equity stakes in the junior miners.
Exploring close to home is more cost efficient and improves the odds of discoveries. But the chances of making major new finds are limited, diminishing global gold output, which is expected to decline by nearly 9 percent in the next three years.
This Reuters article, co-filed from Toronto and Denver, was posted on their Internet site at 9:58 a.m. EDT yesterday morning — and this is another news item I found on the gata.org Internet site. Another link to it is here.
GoldMoney’s Turk discusses gold price suppression on ‘Keiser Report‘
Financial journalist and provocateur Max Keiser and GoldMoney founder and GATA consultant James Turk discussed gold price suppression and cited GATA’s work on this week’s edition of “The Keiser Report” on the Russia Today television network.
Turk’s segment is 13 minutes long and begins at the 15:07 mark. This is another news item that I plucked from a GATA release on Saturday.
India Plans a Major Tax Increase on Gold and Other Precious Metals
The Indian government plans a proposal that includes a major increase in the tax on gold and other precious metals so as to give the GST (Goods and Services Tax) Council leeway to keep the proposed nationwide tax below 20%, reports The Hindu as quoted by Gem Konnect.
The proposal is based on the recommendations of last year’s panel headed by Chief Economic Advisor Arvind Subramanian. The panel had suggested taxing gold and other precious metals at rates ranging between 2%-6%.
Precious metals are currently taxed at between 1%-1.6%. Meanwhile, about 70% of goods and services get taxed at an average rate of 27% by state governments. To protect their revenues, states have sought that the proposed standard GST rate be fixed at 20%.
The above three paragraphs are all there is to this tiny story the showed up on the israeldiamond.co.il Internet site on Sunday sometime — and it’s the first of two in a row that I picked up off the Sharps Pixley website last evening Denver time.
Will the war on cash morph into a war on gold and diamonds? — Lawrie Williams
Withdrawing high denomination banknotes like the €500 note and the CHF1,000 note, as is being proposed, would just make it more difficult for the save to compensate by storing large amounts of cash rather than see their money held in the banking system eroded by NIRP. Indeed the €500 note is already being withdrawn with no new ones being printed, although, for the moment, existing notes will remain legal tender.
Of course controlling citizens’ ease in hoarding large sums of cash is not the official reasoning behind such a policy. Government will tell you it’s a weapon to clamp down on money laundering and cross-border money smuggling by terrorists, drug dealers, tax evaders, illegal arms dealers and all sorts of other criminals wishing to stash their ill-gotten gains in less invasive and less-unfriendly governmental and banking environments. Even the US$100 bill might be in danger if this idea is to gain traction globally. Ultimately the central banker theorists would like to turn us into a cashless society where all money is stored electronically and thus open to government theft – ‘for the overall good of the economy’. of course.
If we carry this logic to its conclusion though, there are other small high value options for moving and storing wealth. Two which have been mentioned are gold bullion (coins, bars etc.) and diamonds. There is a logic for high wealth individuals, if they feel that their cash holdings are under threat, for transferring this wealth into gold and diamonds – the former being more easily negotiable, but could this be equally vulnerable? There is obviously precedent here with the U.S.’s gold confiscation by Presidential decree back in April 1933 and subsequent gold revaluation. Could this happen again? The answer is probably yes, although would be a much more complicated exercise this time around. Gold held in ETFs would be an easy target, but gold held in home safes, safety deposit boxes and squirreled away into various accounts specifically designed to avoid confiscation could be more of a problem, although perhaps not an insurmountable one if individuals were to be threatened with draconian punishment levels were they to avoid handing their gold over.
This worthwhile commentary by Lawrie was posted on the Sharps Pixley website on Monday sometime — and another link to it is here.
The PHOTOS and the FUNNIES
I was photographing this flower, which is about a centimeter across, a bit more than a third of an inch, when this fly showed up. Because I was working close in with a 12 millimeter/0.5 inch extension tube, depth of field was in short supply. When I zeroed in on the fly, the focus on the flower had to be sacrificed, so I’m including both shots. Because I cropped these in the ‘Portrait’ mode, the ‘Click to Enlarge’ doesn’t help on either of them.
The WRAP
It’s hard to tell whether yesterday’s rallies in the precious metals were new longs being placed, or if there was short covering going on. There could have been a bit of both. But as I said about gold, volume was pretty light, so although there was certainly some deterioration in the commercial net short position, it wouldn’t have been much, although certainly more in silver.
Of course we won’t get any indication of that until Friday’s Commitment of Traders Report shows up — and what happened yesterday may get lost in the price/volume activity of the three reporting days we had last week, plus whatever activity is added today. Because the cut-off for Friday’s report is at the close of COMEX trading this afternoon.
Here are the 6-month charts for all four precious metals — and it’s certainly way too soon to know if we’re going to get a sustained rally going forward. If we do get them, it will be interesting to see how high they are allowed to go.
There should be no doubt in anyone’s mind that push has just become shove in Syria — as the U.S. is just itching to get into some sort of military conflict with Russia. The U.S. really stepped over the line on the weekend — but Putin is way too smart to fall for that. But it should be obvious that the U.S. is now thumbing its nose at any kind of international law — and really has gone rogue. This will not end well — and the only thing we don’t know is how it will end. This is something that we should keep a very close eye on — and was the reason I had so many stories about it in today’s column.
I would suspect that at some point this incident, if it continues to deteriorate, should have a material impact on the precious metal prices.
And as I type this paragraph, the London open is less than ten minutes away — and I note that gold rallied a few dollars starting at 9 a.m. China Standard time — and that ended around 11 a.m., the same time the rallies got capped on Friday. It hasn’t done much since then — and is currently up $3.60 the ounce. Silver rallied in a similar fashion until around 8:30 a.m. in Shanghai — and has been chopping sideways since — and is currently up 8 cents. Platinum rallied in a similar manner to silver — and is up 7 bucks. Palladium has chopping around a few dollars either side of unchanged during the Far East trading session — and is up 3 dollars at the moment.
Net HFT gold volume is just over 15,500 contracts, which is very light — and that number in silver is 5,800 contracts. The dollar index topped our around the 95.92 mark in mid-morning trading in the Far East — and is down 3 whole basis points as London opens.
Today is the start of the FOMC meeting — and the smoke goes up the chimney on Wednesday afternoon at 2 p.m. EDT. I will be amazed if they raise rates, but with Jamie Dimon publicly calling for a rate increase, you just never know — and two of the Fed’s primary dealers think it’s coming as per the Bloomberg story in the Critical Reads above. If it were to happen, the damage to the equity and bond markets would be widespread and ugly — and I doubt that the Plunge Protection Team, even with the co-operation of the world’s central banks, would be able to stop the deluge.
We’ll find out soon enough.
And as I post today’s column on the website at 4:05 a.m. EDT, I see that the gold price hasn’t changed too much and is currently up $3.10 an ounce — and silver is only up 6 cents. But both are down a bit since the open. Platinum went ‘no ask’ at the Zurich open — and is currently being capped at $1,030 an ounce — and it’s up 10 bucks at the moment. Palladium is up 4 dollars.
Net HFT gold volume is now up to 20,500 contracts — and that number in silver is 7,300 contracts. The dollar index took a real nose dive going into the London open — and the usual ‘gentle hands’ showed up right at the open — and it’s current low tick is at the 95.65 mark — and down 16 basis points currently.
That’s all I have for today — and I’ll see you here tomorrow.
Ed
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