23 September 2016 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
After getting sold down a few dollar right at the start of trading in New York at 6:00 p.m. on Wednesday evening, the gold price didn’t do a lot until 11 a.m. BST in London on their Thursday morning. It developed a positive bias at that juncture — and then jumped up a bit more at the COMEX open. It ‘rallied’ under the watchful eyes of ‘da boyz’ until minutes after 12 o’clock noon in New York — and it was turned lower at that point. The sell-off lasted until shortly before 2:30 p.m. EDT — and then traded sideways from there into the 5:00 p.m. close.
The low and high ticks certainly aren’t worth looking up.
Gold was closed in New York on Thursday at $1,336.70 spot, up $1.80 on the day. Net volume was decent at just over 140,000 contracts. I was expecting more, since gold penetrated and closed above it’s 50-day moving average yesterday.
It was almost exactly the same price pattern in silver, but once it broke above the $20 spot price mark minutes after 12 o’clock noon in New York, it was obviously capped there. It bounced along just under that price before getting turned lower when the COMEX closed at 1:30 p.m. EDT.
The low and high ticks were recorded by the CME Group as $19.785 and $20.145 in the December contract.
Silver finished the Thursday session at $19.84 spot, up 2.5 cents from Wednesday’s close. Net volume was way up there at just over 66,000 contracts.
Here’s the 5-minute tick silver chart courtesy of Brad Robertson as usual. Volume began to pick as soon as the rally began in London at 11 a.m. BST, which is 04:00 a.m. Denver time on the chart below — and never really fell back to background levels even after the COMEX close, as there were some fairly large volume spikes in the after-hours market around 2 p.m. MDT, which was 4 p.m. in New York.
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.
The platinum price chopped around a few dollars either side of unchanged until the COMEX open and, like silver and gold, had a tiny rally that was stepped on almost immediately. From there it crawled higher into the London p.m. gold fix — and from that point it was sold down until shortly after 2 p.m. EDT — and traded flat for the rest of the Thursday session. Platinum was closed at $1,053 spot, up 3 bucks on the day. It was up $14 at the fix.
Palladium’s rally in morning trading in the Far East wasn’t allowed to get far — and was sold down to a dollar or so above unchanged by the London/Zurich open. It began to rally just before 10 a.m. Europe time and, like the other three precious metals, headed sharply higher once trading began on the COMEX. As you can tell from the chart below, that rally ran into the short buyers/long sellers of last resort at several points after that — and it wasn’t turned lower for good until just before the COMEX close. The sell-off ended just like it did for both silver and gold…shortly after 2 p.m. in the thinly-traded after-hours market. Palladium was closed at $693 spot, up 10 bucks on the day, but was up 15 at its high — and would have obviously closed considerably higher if allowed to do so.
The dollar index closed very late on Wednesday afternoon in New York at 95.48 — and didn’t do much until it began to roll over at 11 a.m. China Standard Time on their Thursday morning. The 95.05 low tick was set at, or just before, the London p.m. gold fix — and it rallied from there until 2:35 p.m. EDT. It crawled lower from there into the close, as the index finished the Thursday session at 95.38 — and down 10 basis points on the day.
And here’s the 6-month U.S. dollar index for entertainment purposes as usual.
The gold stocks rallied a couple of percent right at the open — and that was their high ticks of the day. They fell back to unchanged just before the London close, which came at 11 a.m. in New York. They chopped sideways until shortly before 2 p.m. — and then sank into the red for the rest of the day, although they did rally off their 2:50 p.m. EDT low ticks by a bit. The HUI closed down 1.01 percent.
The silver equities traded in similar fashion, so I’ll spare you the play-by-play — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.44 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that 48 gold and 50 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. In gold, the only two short issuers were Canada’s Scotiabank with 29 contracts out of its own account [it doesn’t have a client account], plus 19 from Morgan Stanley’s client account. And for the second day in a row, the only long/stopper was Goldman Sachs — as they took all 48 contracts for their client account. In silver, the three short/issuers were ED&F Mann Capital Markets, ABN Amro and ADM with 19, 18 and 13 contracts out of their respective client accounts. There were seven long/stoppers in total. The two largest were Scotiabank with 19 contracts — and Goldman Sachs with 12 contracts for its client account. JPMorgan also picked up another 5 contracts for its own account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Thursday trading session showed that gold open interest in September fell by 46 contracts, leaving 195 still around, minus the 48 mentioned in the previous paragraph. Wednesday’s Daily Delivery Report showed that 66 gold contracts were actually posted for delivery today, so that means that 66-46=20 more gold contracts were added to the September delivery month yesterday. In silver, September o.i. fell by 21 contracts, leaving 562 still around, minus the 50 contracts mentioned above. Wednesday’s Daily Delivery Report showed that 27 silver contracts were posted for delivery on Monday, so that meant that another 27-21=6 silver contracts were added to the September delivery month.
October open interest in gold declined by 1,630 contracts, leaving 25,619 still around. Including today, there are only 5 more trading days for those holding October gold contracts to sell or roll their positions into a future month.
There was another deposit in GLD yesterday, this time one or more authorized participants added 209,878 troy ounces. And as of 7:55 p.m. EDT yesterday evening, there were no reported changes in SLV.
It’s reasonable to assume that SLV is owed some silver after the price action of the last two days — and it remains to be seen if it ever arrives, because if it doesn’t, then it will be obvious once again that the authorized participants [principally JPMorgan] will be shorting the shares in lieu of depositing real metal. And if they are, it won’t show up in the next report from the folks over at the shortsqueeze.com Internet site, because the cut-off for their next report was on September 15.
There was no sales report from the U.S. Mint.
There was big movement in gold over at the COMEX-approved depositories on Wednesday. There was 5,500 troy ounces reported received at Brink’s, Inc. — and 144,941 troy ounces were shipped out the door. Of that amount, there was 96,450.000 troy ounces/3,000 kilobars [U.K./U.S. kilobar weight] shipped out of Canada’s Scotiabank —and the rest…48,491 troy ounces…came out of JPMorgan. The link to that action is here.
There was a decent amount of activity in silver as well. There was 578,634 troy ounces received — and another 260,462 troy ounces was shipped out the door for parts unknown. All of the ‘in’ activity was at HSBC USA — and of the ‘out’ activity, there was 200,033 troy ounces shipped out of Brink’s, Inc. The rest came out of Canada’s Scotiabank. The link to that activity is here.
It wasn’t overly busy at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday. They received only 622 kilobars — and they shipped out 828 of them. All of this 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 you today — and I hope you can find the time to read all the ones that interest you.
CRITICAL READS
Duck And Run: The Robot Doth Blather — David Stockman
Listening to Janet Yellen splitting hairs and blathering in circles about the state of the economy yesterday was enough to put you in mind of a paint-by-the-numbers robot built in the labs at MIT and programed by its Keynesian economics department. After all, the latter has also inflicted on the world Paul Samuelson, Stanley Fischer, and his infamous student, Ben Bernanke.
So why not a four-fer?
There is only one question that Yellen needs to answer and then all else is readily explained. To wit, does she actually believe that the money market rate——as formerly measured by Fed funds before Bernanke nationalized the interbank market in September 2008——is a wholly owned property of the FOMC?
Or does the overnight rate possibly have some measure of significance as a “price” in the financial system? And one that, in fact, is linked to the rest of the so-called yield curve, and from there to converts, equities, options/derivatives and the whole of the price discovery process in the money and capital markets.
David’s up on his soapbox again — and his commentary from yesterday is worth your while if you have the interest. Another link to this article is here — and I thank Roy Stephens for sending it along.
U.S. Average 30-Year Mortgage Rate Declines to 3.48 Percent
Mortgage giant Freddie Mac said Thursday the average for the 30-year fixed-rate mortgage declined to 3.48 percent from 3.50 percent last week. The benchmark rate is down from 3.86 percent a year ago, and is close to its all-time low of 3.31 percent in November 2012.
The 15-year fixed mortgage rate eased to 2.76 percent from 2.77 percent.
Prices of long-term U.S. Treasury bonds rose, pushing their yields lower, as investors awaited the decision of the Federal Reserve Wednesday on interest rates. The Fed kept its key interest rate unchanged but signaled that it likely will raise rates before year’s end. Long-term mortgage rates tend to track the yield on 10-year Treasury notes.
The yield on the 10-year notes fell to 1.66 percent Wednesday from 1.70 percent a week earlier. It declined further to 1.63 percent Thursday morning.
This AP story was picked up by the abcnews.go.com Internet site at 11:59 a.m. EDT on Thursday morning. But by the way it’s written it’s obvious that the story was around even before the Fed announcement on Wednesday. I thank West Virginia reader Elliot Simon for sharing it with us — and another link to this news item is here.
U.S. Home Sales Fell in August as Inventories Plummet
Americans retreated from home-buying in August, as a worsening inventory shortage appears to be hurting sales and pushing prices higher.
Housing has been a bright spot amid weak economic growth for much of this year. Sales totals continue to recover from the Great Recession. Buyers increasingly have pristine credit. But the primary weakness in housing has been a lack of properties for sale, a reflection of the lingering damage caused by the housing bubble that began to burst nearly a decade ago.
Sales of existing homes slipped 0.9 percent last month to a seasonally adjusted annual rate of 5.33 million, the second straight monthly decline, the National Association of Realtors said Thursday. The monthly setbacks happened after a period of steady gains that have lifted home sales up 3 percent so far this year. Historically low mortgage rates have combined with an improved job market to bolster demand from possible buyers.
But drastically fewer sellers are coming into the market. The number of properties for sale is dwindling despite buyer enthusiasm, as inventories have collapsed 10.1 percent from a year ago, to 2.04 million homes.
This is another AP/ABC News story. It showed up on the abcnews.go.com Internet site at 12:31 p.m. EDT yesterday afternoon — and it’s the second offering in a row from Elliot Simon. Another link to this article is here.
Pension Funds Face Day of Reckoning as Investment Returns Lag
The $1.9 trillion shortfall in U.S. state and local pension funds is poised to grow as near record-low bond yields and global stock-market turmoil reduce investment gains, increasing pressure on governments to put more money into the retirement systems.
With the Federal Reserve holding interest rates steady at its meeting Wednesday, the funds will continue to be squeezed by rock-bottom payouts on fixed-income securities just as stocks fall overseas and post only modest U.S. gains. As a result, pensions in Illinois, Missouri and Hawai’i this year have moved to roll back the assumed rate of return on their investments, joining the dozens that have taken that step over the past two years.
“There’s little light at the end of the tunnel as far as pension funding is concerned,” said Vikram Rai, head of municipal-bond strategy at Citigroup Inc. in New York. “I expect funded ratios will drop further. It’ll require increased pension contributions on the part of the states and local government, but most state and local governments don’t have the ability to do so.”
Pensions count on annual investment gains of more than 7 percent to cover much of the benefits that come due as workers retire. But public plans had a median increase of 1 percent for the year ended June 30, the smallest advance since 2009, when they lost 16.2 percent, according to the Wiltshire Trust Universe Comparison Service.
No surprises here. This article appeared on the newsmax.com Internet site at 4:21 p.m. EDT on Wednesday afternoon — and that makes it three in a row from Elliot. Another link to this news item is here.
Does Congress Have the Courage to Break up the Banks? — Dennis Miller
It’s time to go back to the trust-busting days of yesteryear and break up the big banks. Does congress represent the people or special interests?
Consumers lost when the Glass-Steagall act was repealed in 1999. It created banks, “Too Big to Fail”, with billions in taxpayer bailouts and mind-boggling fraudulent activity.
Joseph Stiglitz, Nobel Prize winner in economics sums it up well: “Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities)….
Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively. (That’s why) … the government agrees to pick up the tab should they fail.”
This commentary by Dennis was posted on his website milleronthemoney.com Internet site on Wednesday — and another link to it is here.
Puerto Rico Blackout Enters Second Day – Entire Island of 3.5 Million People Without Power
The 3.5 million people of Puerto Rico are entering their second day with no power after a substation fire knocked out service to the entire island. The power outage has left schools scrambling to cancel classes and public hospitals forced to cancel surgeries.
Perhaps even worse, the outage caused numerous fires across the island as a result of malfunctioning generators, including at the upscale Vanderbilt hotel in the popular tourist area of Condado and at the mayor’s office in the northern coastal town of Catano.
While Puerto Rico’s Governor Padilla and the utility’s CEO, Javier Quintana, have said they expect service to be restored by this morning, many Puerto Ricans are dubious saying that the economic slump has affected the government’s ability to maintain basic infrastructure. According to The Wall Street Journal, hundreds of people took to social media to criticize the Electric Power Authority, noting they already pay bills on average twice that of the U.S. mainland.
The fire apparently started at this sub-station in Central Aguirre, Puerto Rico.
This story put in an appearance on the Zero Hedge website at 10:29 a.m. on Thursday morning EDT — and I found it all by myself. Another link to this news item is here.
U.N. fears third leg of the global financial crisis – with prospect of epic debt defaults
The third leg of the world’s intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.
It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.
“Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out,” said the annual report of the UN Conference on Trade and Development (UNCTAD).
We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare. What is less understood is just how destructive this has been.
This must read Ambrose Evans-Pritchard offering was posted on the telegraph.co.uk Internet site at 7:22 a.m. BST on their Thursday morning — and it’s something I found in yesterday’s edition of the King Report. Another link to this story is here.
Secret report reveals Ericsson is ending all manufacturing in Sweden and cutting 3,000 jobs
Svenska Dagbladet has become privy to an internal report belonging to the telecommunications provider Ericsson. The report details the company’s plan to end all manufacturing in Sweden and estimates 2,850 jobs will be affected.
Ericsson has previously announced it would be increasing savings in response to decreasing demand from developed markets, writes Forbes. The report implies savings twice those of the previous year, which came with some 1,500 lost job opportunities.
The coming layoffs primarily concern manufacturing in Borås and Kumla, where 1,200 are employed in production. But the cuts will also affect service jobs and research and development, so that the total job opportunities lost will amount to approximately 2,850, according to Svenska Dagbladet.
When the plan comes into effect it will be the first time since Ericsson was founded in 1876 that the company will no longer have any manufacturing in Sweden. Ericsson’s management points out, in the secret report, that it is the end of an era.
This very interesting news item put in an appearance on the nordic.businessinsider.com Internet site yesterday afternoon Europe time — and I thank Swedish subscriber Patrik Ekdahl for bringing it to our attention. Another link to this article is here.
Regulators expect Monte dei Paschi bank to ask Italy for help – sources
European regulators expect Italian bank Monte dei Paschi di Siena will have to turn to the government for support, three euro zone officials with knowledge of the matter said, although Rome would strongly resist such a move if bondholders suffered losses.
Less than two months after the Tuscan lender announced an emergency plan to raise €5 billion of fresh capital, having come last in a health check of 51 European banks, there is growing concern among European regulators that the cash bid will fall short.
While the bank is determined to see through the capital raising, if it were to disappoint, it would be left with a capital hole. Now euro zone authorities are considering whether state support would have to be tapped after what bankers have described as slack interest in the bank’s share offer.
“There is clearly an execution risk to the capital raising,” said one official with knowledge of the rescue attempt, adding that the bank’s value, about one ninth the size of the planned €5 billion cash call, would be a turn-off for investors.
This Reuters article, filed from London, was picked up by the yahoo.com Internet site yesterday morning sometime — and it’s something I borrowed from the Zero Hedge website. Another link to this news item is here.
Biden warns Ukraine on reforms, says E.U. sanctions on Russia at risk
U.S. Vice President Joe Biden on Wednesday warned Ukraine needs to live up to its promised econmic and political reforms, or risk seeing the European Union walk away from its sanctions on Russia.
“We know that if they give an excuse to the E.U., there are at least five countries right now that want to say ‘We want out’” of sanctions against Moscow, Biden said, speaking to the Council on Foreign Relations in New York.
Europe imposed sanctions after Russia annexed Ukraine’s Crimea peninsula in 2014. Fighting has continued in the east of the country, despite the so-called Minsk ceasefire agreement, and Western powers fear peace efforts could unravel.
In exchange for financial support from the United States and other Western allies, Ukraine promised reforms, but progress has been mixed.
There they go using the word ‘annexed‘ again, when it was anything but. This Reuters story appeared on their Internet site at 10:10 p.m. EDT on Wednesday evening — and another link to this news item is here. It comes to us via Brad Robertson and Zero Hedge. It’s certainly worth reading if you’re a serious student of the New Great Game.
Finally The Russians Have Caught on That Negotiation With Washington is Pointless
Russian Foreign Minister, Sergei Lavrov made history today at the U.N.’s meeting of the Security Council, declaring that future unilateral pauses couched as ‘ceasefire agreements’ are off the table. He has skillfully referred to the mounting factual evidence of the U.S.’s continued flagrant violations on any number of points of agreement over the course of this conflict.
These include primarily the violations of the ceasefire itself, in conjunction with officially leaked elements of the ‘secret text’ of the recent ceasefire which evidence that the U.S. has been unable to reign in a number of groups signing onto previous ceasefires, let alone those groups the U.S. claims to be moderates but did not sign onto the ceasefire, both of which continue to work closely with either ISIS or Jabat Al-Nusra. Russia has no doubt pointed out successfully that several of these groups are fictional entities, and are but operational synonyms of Al-Nusra (formerly called Al-Qaeda of the Levant), itself.
The impossible to ignore context here naturally is the ceasefire ending U.S. joint attack alongside ISIS upon the Syrian Arab Army position at Deir ez-Zor which was sustained and lasted over an hour, despite calls from the Russian coordinating hotline which existed pursuant to standing agreements on deconfliction.
The above headline is courtesy of Paul Craig Roberts — and the original headline reads “Lavrov makes history: ‘Ceasefires’ were bogus, nixes future ‘unilateral measures’” A 30-second Russia Today video clip is embedded at the end of the article — and it’s worth watching. It was posted on the fort-russ.com Internet site yesterday — and it comes courtesy of Larry Galearis. Another link to it is here.
No-fly zone would “require war with Syria and Russia” – top U.S. general
Speaking to the U.S. Senate, the Pentagon’s leaders blamed Russia for the Aleppo aid convoy attack, but admitted they “had no facts.” Only U.S. coalition planes should be allowed over Syria, they said, though that would require war against both Syria and Russia.
Defense Secretary Ash Carter and General Joseph Dunford, Chairman of the Joint Chiefs of Staff, faced the Senate Armed Services Committee on Thursday to report on the ongoing military operations and “national security challenges” faced by the US. They also asked the senators for more reliable funding, saying the uncertainty was hurting the defense industry.
“Not only our people – our defense industry partners, too, need stability and longer-term plans to be as efficient and cutting-edge as we need them to be,” Carter told the senators.
The lawmakers were far less interested in the war against Islamic State (IS, formerly ISIS/ISIL) than about the future of the Syrian government, Iran’s “malign influence,” and “aggression” by China and Russia – all ranked far ahead of terrorism on Carter and Dunford’s list of security challenges.
It’s obvious, dear reader, that U.S. foreign policy is now being run by the psychopaths in the Pentagon and the CIA. This is a very dangerous time — and magnitudes worse than even the Cuban missile crisis. This news item appeared on the Russia Today website at 8:34 p.m. Moscow time on their Thursday evening, which was 12:34 p.m. in Washington — EDT plus 8 hours. I thank Roy Stephens for sharing it with us — and another link to it is here.
The Third World War Has Never Been So Close: “U.S. Preparing to Wage War on Russia” — a Russian viewpoint
Two days ago, on Saturday, September 17th, the likelihood of this war was breathtakingly high. As we know, American troops, who no one ever invited to Syria, bombed the positions of the Syrian army at Deir ez-Zor. As a result of the bombing, 60 Syrian soldiers were killed.
This strike was extremely important for ISIS militants, whom the US is informally advising and arming while supposedly fighting them. This crossed the line. Bombing Syrian soldiers is one thing, but this means declaring war not only against Syria, but also Russia, which is fighting in Syria on Assad’s side. And this means that we have reached a climax.
Sure, the U.S. leadership immediately reported that the airstrike was a mistake and warned the Russian leadership not to express any emotions. But Americans can only be lying, as modern technology allows satellite objects to be seen from a desktop. Theoretically, American bombers could not have simply confused such a strike. And what’s most important: if they had told you that they were preparing to bomb you, and you said nothing, then does that mean you agree?
It is completely obvious that the U.S. is preparing to start a war against Russia. Border incidents represent reconnaissance operations. But how will Moscow, Putin, and the Kremlin react? The point of no return has not yet been crossed, but did Moscow’s reaction not show just how many Russians are ready for a direct, frontal confrontation with the US and NATO? This was why the airstrike was launched against Syrian army positions.
The globalist U.S. leadership obviously cannot rule the whole world and, what’s more, the threat posed by Trump puts their control over America itself into question. Now, while the puppet Barack Obama is still in office and the globalist candidate Hillary Clinton is falling apart in front of American voters’ very eyes, is the last chance to start a war. This would allow them to postpone elections or force Trump, if he were to win, to begin his presidency in catastrophic conditions. Thus, the U.S. neoconservatives and globalists need war. And fast, before it’s too late. If Trump gets into the White House when there will be peace, then there will be no such war, at least for the foreseeable future. And this would spell the end of the omnipotence of the maniacal globalist elites.
This 7:46 minute video opinion piece, complete with transcript, was posted on the globalresearch.com Internet site on Wednesday. It falls into the absolute must watch or must read category — and I thank Roy Stephens for his final contribution to today’s column. Another link to that is here.
China supervisory body approves launch of credit default swaps soon
One of China’s interbank market supervisory bodies has approved the launch of credit default swaps, two sources with direct knowledge of the matter told Reuters on Thursday, signifying another step forward towards helping firms hedge rising risks in the country’s corporate bond market.
The National Association of Financial Market Institutional Investors (NAFMII), which supervises issuance of commercial paper and some other types of debt in China’s interbank bond market, has already notified relevant institutions to prepare, and will soon release guidelines for trading, the sources said.
Credit default swaps are a type of derivative providing insurance against third party defaults, and were widely used in the lead-up to the financial crisis in the United States.
Bond defaults have risen quickly in the past year and a half in China following many years when most debt was assumed to enjoy an implicit government guarantee. Market participants still have few formal hedging tools to protect against such risk, however, which has added urgency to efforts to introduce default swaps in China.
Credit default swaps, collateralized debt obligations, mortgaged backed securities…all of these led to the 2007 U.S. financial crisis. It will be the Chinese version of “The Big Short” when it all comes unglued. This is another story from Brad Robertson via Zero Hedge. It’s a Reuters piece, filed from Hong Kong, which was picked up by the dailymail.co.uk Internet site yesterday — and another link to it is here.
Russia banks aim to sell gold to China as VTB, Sberbank expand
Russia’s gold sales in China are set to expand as VTB Capital boosts sales and Sberbank PJSC prepares to enter the market, chasing demand in the world’s biggest consumer of bullion.
Sberbank CIB plans to register on the Shanghai Gold Exchange and eventually to sell up to 100 tons (3.2 million ounces) a year, according to an e-mail from the investment arm of Russia’s largest bank. VTB Capital, a unit of the second-biggest lender, is targeting sales of as much as 20 metric tons of gold in China in 2017, Sergey Nenashev, the bank’s head of precious metals, said by e-mail. Sales may reach a rate of 100 tons a year near the end of 2018, he said.
Russian banks, which act as intermediaries between the country’s gold producers and the market, aim to tap into Asian growth. Rising incomes and few investment options in China are driving demand for gold jewelry, bars, and coins in China. In July, Shanghai Gold Exchange volumes almost doubled from a year earlier to 1.7 trillion yuan ($255 billion), figures compiled by the bourse show.
I posted a tiny 2-paragraph story on this subject last week, but this Bloomberg article is far more comprehensive — and certainly worth reading. I found it in a GATA release yesterday — and another link to it is here.
The PHOTOS and the FUNNIES
I only have one photo for you today — and that’s of a variety of sedum that my wife and I found growing on a old lava flow in central British Columbia about 20 years ago — and it grows like a weed in the garden — and everyone in the neighbourhood now owns a chunk of it. The flowers are about 6mm/one-quarter inch across. The ‘click to enlarge‘ feature should help here.
The WRAP
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” — Ernest Hemingway: “Notes on the Next War,” Esquire, September 1935
Gold closed above it 50-day moving average yesterday — and silver closed above its for the second day in a row. Considering that fact, I was certainly surprised that the volume in gold wasn’t higher than it was, but silver more than made up for it, as it’s volume was frightening considering the price action.
Here are the 6-month charts for all four precious metals. You’ll notice that palladium closed above its 50-day moving average for the first time as well.
It’s a fairly comfortable bet that JPMorgan et al were out there as short buyers and long sellers of last resort like they always are. And it’s also an easy bet that we’re back at new record highs in the Commercial net short positions for both silver and gold as of the close of trading yesterday.
I didn’t have the opportunity to talk to Ted on Thursday, but one of the things we would certainly have talked about is whether the Managed Money traders were being set up by ‘da boyz’ for another of Ted’s “scam within a scam” scenarios — scalping them for another $100 million or so. Ted said that the last time they pulled that little stunt was in the first two weeks of September — and you can easily see that on the gold and silver charts above. The set-up is similar at the moment, so we’ll just have to wait and see.
Of course we could also rally to new highs for this move up as well, so anything is possible I suppose. But with the September delivery month winding down in silver — and the October delivery month on deck for gold — and options and futures expiry next week, it’s not a bet I would want to make.
And not to be forgotten is the official adoption of the yuan as one of the currencies used to calculate the value of the Special Drawing Rights. That occurs a week today — September 30. It’s a point that officially marks the end of the U.S. dollar as the world’s reserve currency [at least on paper] and the introduction of the SDR to takes its place. Jim Rickards has been talking about this for over a year now, as have I and others.
Of course gold is not being actively discussed as being in the SDR basket — and if I were the powers-that-be, I wouldn’t want a hint of that to leak out if that was going to be the case. So it remains to be see if they add it now…or later. But at some point they will have no choice in the matter, because the financial and monetary system as we know it today is breathing its last — and another fiat currency such as the SDR may not have the necessary credibility without it.
The thought has crossed my mind on several occasions that the reason they’re holding precious metal prices in check is in preparation for that very event. But that’s wild-ass speculation on my part.
So we wait some more.
And as I type this paragraph, the London open is less than ten minutes away — and I note that gold began to quietly crawl lower starting at 8 a.m. China Standard Time on their Friday morning — and is down $1.70 at the moment. It was almost the same price pattern in silver, except it has rallied back to within 3 pennies of unchanged. Platinum is up 4 dollars — and palladium is down 2 bucks.
Net HFT gold volume is barely fogging the mirror at a hair under 17,500 contracts — and that number in silver is a bit over 10,000 contracts, which is very chunky considering the lack of price action. That was the same situation [except much higher volume] this time on Thursday morning. The dollar index rallied a large handful of basis points until about noon in Shanghai — and has rolled over a bit since — but is still up 4 basis points as London opens.
Today is Friday — and absolutely nothing will surprise me when I check the charts after I roll out of bed later this morning.
And as I post today’s column on the website at 4:00 a.m. EDT, I note that gold has done precisely nothing in the one hour that London has been open — and it’s currently down $1.70 the ounce, the same amount it was down an hour ago. Silver is now down 7 cents. And now that Zurich has been open an hour as well, platinum is up 3 — and palladium is down 3.
Net HFT gold volume is just over 20,000 contracts, which is still very light relatively speaking — and that number in silver is just under 11,400 contracts. Silver’s volume number hasn’t increased much from where it was an hour ago, nor has gold’s. The dollar index is up 7 basis points. Not much to see here.
Enjoy your weekend — and I’ll see you on Saturday.
Ed
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