11 October 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Gold began to edge higher almost the moment that trading began at 6:00 p.m. EDT in New York on Sunday evening — and the rally began to develop some legs shortly before 9 a.m. China Standard Time on their Monday morning. That ran into ‘da boyz’ — and the price began to head lower the moment that London opened. It was back to unchanged minutes after the COMEX open — and wasn’t allowed to do a lot after that.
The high and low price ticks aren’t worth the effort to look up.
Gold finished the Monday session in New York at $1,259.40 spot, up $1.80 from Friday’s close. Net volume was nothing special at a bit over 113,000 contracts, with about 40,000 contracts of that amount coming before the London open. It was obvious that it took a decent amount of paper to make the gold price behave in the Far East trading session on their Monday morning.
It was more or less the same type of price activity in silver, so I shall spare you the play-by-play and, like gold, the high and low ticks aren’t worth looking up, as silver traded in a 25 cent price range all day.
Silver closed in New York yesterday at $17.605 spot, up 8 cents. Net volume was a bit over 53,000 contracts, which was pretty heavy — and about 19,000 contracts of that amount came before London opened for the day.
Platinum was mostly similar — and it was up a buck or so at the COMEX open, before the price pressure began — and the low tick came shortly before 4 p.m. EDT on Monday afternoon in the thinly-traded after-hours market in New York. It rallied a few bucks after that, but couldn’t get back into positive territory, as it was closed at $963 spot, down 3 bucks from Friday.
Palladium was up 7 bucks very early in the Sunday night session in New York. It more or less hung in there until minutes after 2 p.m. CST — and it was all down hill into the low tick of the day which came shortly before 9 a.m. in New York. It rallied back to unchanged by noon EDT — and didn’t do much after that. It finished the Monday session at $667 spot, down a dollar on the day.
The dollar index closed very late on Friday afternoon in New York at 96.52 — and once trading began at 2 p.m. EDT on Sunday afternoon, it rallied about 15 basis points in the next few hours. It turned lower from there — and Monday’s low tick, around 96.46, came around 9 a.m. China Standard Time. It began to chop unsteadily higher from there, with the 96.97 high tick coming around 1:50 p.m. EDT in New York yesterday afternoon. It sold off a bit from there, finishing the Monday session at 96.90 — and up 38 basis points from Friday.
Here’s the 3-day dollar index so you can put the price action on Sunday and Monday in some perspective.
And here’s the 6-month U.S. dollar index chart — and you can read into this ‘rally’ whatever you wish.
The gold stocks rallied a percent and bit when the markets opened in New York at 9:30 a.m. yesterday morning. They chopped quietly lower into negative territory, with their respective lows coming at 1 p.m. EDT right on the button. They managed to crawl back into positive territory from there — and the HUI closed up 0.51 percent on the day.
The silver equities opened up a percent — and chopped sideways for the remainder of the Monday trading session — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished up 1.07 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that 156 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. For the first time I can remember, Macquarie Futures turned short/issuer with 138 contracts out of its own account, with Morgan Stanley as ‘also ran’ with 16 contracts out of their client account. There were eight long/stoppers…Goldman Sachs and JPMorgan with 58 and 44 contracts out of their respective client accounts, with Canada’s Scotiabank in third spot with 34 contracts. The link to yesterday’s Issuers and Stoppers Report is here.
The Daily Delivery Report for the Monday trading session showed that gold open interest for October declined by 3 contracts, leaving 298 still open, minus the 156 contracts mentioned above. Friday’s Daily Delivery Report showed that exactly 3 gold contracts were posted for delivery today, so that works out perfectly for a change, as no contracts were added…and no short/issuers were let off the hook. Silver o.i. for October rose by 1 contract, leaving 112 still around. Friday’s Daily Delivery Report showed that there were no silver contracts were posted for delivery today, so that obviously means that 1 silver contract got added to the October delivery month.
It was a ‘no changes’ day in GLD — as nothing was removed and, unlike Friday, nothing was added either. But it was SLV that was the shocker yesterday — and for the same reason. Like GLD, not only have there been no withdrawals during this current engineered price decline, but an authorized participant actually added 854,247 troy ounces to SLV yesterday! I’m wondering what’s up, because I’ve never seen this sort of counterintuitive activity in these two ETFs before. Ted has an opinion on this — and you’ll find that in The Wrap.
For the first time in October, there was no sales report from the U.S. Mint.
There was decent movement in gold at the COMEX-approved depositories on Friday. There was 75,492 troy ounces deposited, all of which went into Brink’s, Inc. There was also 22,611 troy ounces withdrawn. There was 18,142 troy ounces out of HSBC USA, 1 kilobar/32.150 troy ounces out of Manfra, Tordella & Brookes, Inc. — and 138 kilobars/4,436.700 troy ounces came out of Scotiabank. The link to that activity is here.
It was another big day for silver. Only 3,016 troy ounces were received at the Delaware depository, but a chunky 1,105,869 troy ounces were shipped out — and that came from the vaults over at HSBC USA. The link to that action is here.
It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They received 2,606 of them — and shipped out another 2,015. All of the activity was at the Brink’s, Inc. — and the link to that, in troy ounces, is here.
Here are two charts that Nick passed around just after midnight on Saturday, but since my column was full-up with charts already, they had to wait for today’s column. They show the weekly changes in the transparent holdings of both physical gold and silver over the last two years. Both continue to rise despite the hammering that prices have taken during the last two weeks. Click to enlarge on both.
I have a very decent number of stories for you today — and I’ll happily leave the final edit in your hands.
CRITICAL READS
Consumer Borrowing in U.S. Rises by Most in Nearly a Year
Household borrowing increased in August at the fastest pace in almost a year, led by a jump in loans for school and automobile purchases.
The $25.9 billion increase, or an annualized 8.5 percent, followed a revised $17.8 billion gain the prior month, Federal Reserve figures showed Friday. The median projection called for a $16.5 billion advance. Non-revolving credit, which includes car and educational loans, also posted the largest advance since September of last year.
Steady hiring and income growth may be making Americans more willing to borrow, helping to sustain consumer spending and the economic expansion.
Non-revolving credit increased $20.2 billion, while revolving debt rose $5.6 billion during the month, the Fed’s report showed.
Lending by the federal government, mostly for student loans, climbed $18.7 billion in August on an unadjusted basis as students prepared to return to school for the fall semester.
The above five paragraphs are about all there is to this Bloomberg news item that showed up on their Internet site early on Friday morning — and it’s something I found in yesterday’s edition of the King Report.
Commercial Bankruptcies Soar 38 Percent as Debt Crushes Businesses
Bankruptcy filings by U.S. businesses soared 38 percent in September from a year earlier in an ominous sign of a weakening economy, says Wolf Richter, editor of the Wolf Street blog.
Last month’s bankruptcies reached 3,072 to bring the year-to-date total to 28,789 and marked the eleventh straight month of increases from 2015, according to data from the American Bankruptcy Institute.
“Rising bankruptcies are an indicator that the ‘credit cycle’ has ended,” Richter says in a commentary about the limits of the Federal Reserve’s ability to help an economic recovery. “The Fed’s policy of easy credit has encouraged businesses to borrow – those that could. But by now, this six-year debt binge has created an ominous debt overhang that is suffocating these businesses as they find themselves, against all promises, mired in an economy that’s nothing like the escape-velocity hype that had emanated from Wall Street, the Fed and the government.”
This news item put in an appearance on the newsmax.com website at 7:59 a.m. EDT on Monday morning — and it comes courtesy of West Virginia reader Elliot Simon. Another link to this story is here.
Royal Bank of Scotland’s worst-case legal bill could hit $27 billion
Royal Bank of Scotland may have to pay out as much as US$27 billion (£21.74 billion), roughly the market value of the bank, in misconduct fines and lawsuits over the next few years, lawyers and analysts said.
That bill represents the upper end of estimates to settle a range of claims related to RBS’s alleged misconduct before and during the financial crisis, including mis-selling mortgage backed securities (MBS) in the United States.
Investor concern over RBS’s outstanding legal and compliance woes increased after news last month that the DOJ is seeking up to $14 billion from Deutsche Bank for its role in the mis-selling of MBS in the run up to the financial crisis.
“The concern is that it could be another Deutsche Bank-style situation where the fines that come in are higher than the market expects,” said Laith Khalaf, an analyst at Hargreaves Lansdown, Britain’s largest retail stockbroker.
This Reuters story, filed from London, showed up on their Internet site at 3:25 a.m. BST on their Tuesday morning, which was 10:25 p.m. on Monday evening EDT — and it’s the first of two contributions in a row from Patrik Ekdahl. Another link to it is here.
Deutsche Bank CEO Hasn’t Reached Accord With U.S., Bild Reports
Deutsche Bank AG Chief Executive Officer John Cryan failed to reach an agreement with the U.S. Justice Department to resolve a years-long investigation into its mortgage-bond dealings during a meeting in Washington Friday, Germany’s Bild newspaper reported.
The meeting was meant to negotiate the multi-billion-dollar settlement the bank will have to pay to resolve alleged misconduct arising from its dealings in residential-mortgage backed securities that led to the 2008 financial crisis, according to a Bild am Sonntag report.
The German lender is still considering seeking damages against Anshu Jain and Josef Ackermann, who are both former CEOs of the bank, the newspaper reported. Bild said the bank froze part of the millions in bonus payments to Jain and other former top managers.
A Deutsche Bank spokeswoman declined to comment to Bild about the outcome of Cryan’s Friday discussion or about clawing back former executives’ compensation. Mark Abueg, a Justice Department spokesman, declined to comment.
This Bloomberg story was posted on their Internet site at 4 p.m. Denver time on Saturday afternoon — and I thank Swedish subscriber Patrik Ekdahl for sending it our way. Another link to this article is here.
Deutsche Bank says derivatives exposure fears overblown: paper
Deutsche Bank is continuing to cut back the size of its derivatives book, which is not as risky as investors may believe, Chief Risk Officer Stuart Lewis told German weekly paper Welt am Sonntag.
“The risks in our derivatives book are massively overestimated,” Lewis told the paper. He said €46 trillion in derivatives exposure at Deutsche appeared large but reflected only the notional value of the contracts, while the bank’s net exposure to derivatives was far lower, at around €41 billion.
“The €46 trillion figure sounds gigantic, but it is completely misleading. The real risk is far lower,” Lewis said, adding that the level of risk on Deutsche Bank’s books was in line with that seen at other investment banking peers.
“We are trying to make our business less complex and are paring back our derivatives book. Parts of it were transferred into a non-core unit some years ago.”
I almost believe them, dear reader. How about you? This Reuters article was posted up on their website at 8:57 a.m. EDT on Monday morning — and I thank Richard Saler for sharing it with us. Another link to this news item is here.
Banks ponder the meaning of life as Deutsche agonizes
It wasn’t just Deutsche Bank that was grappling with big questions about the future at the International Monetary Fund meetings in Washington last week.
The German bank is scrambling to overhaul its operations as it faces a multi-billion dollar fine for selling toxic mortgage-backed securities in the United States.
But many others in the banking industry are also still figuring out what they should be doing, nearly a decade after the financial crisis, as they grapple with anemic economic growth, wafer-thin returns on lending and the possibility that regulators will further hike their cost of doing business.
“This new world of low interest rates and even negative interest rates is something that is very difficult,” said Frederic Oudea, the chief executive of French bank Societe Generale.
This is the second Reuters story in a row. This one, filed from Washington, appeared on their Internet site early on Sunday morning EDT — and it’s the second offering of the day from Elliot Simon. It’s worth reading — and another link to it is here.
Italy: A Mile-High House of Cards
Italy has had virtually no productive growth since it joined the euro in 1999.
Today, the Italian economy (real GDP per person) is smaller than it was at the turn of the century.
That’s almost two decades of economic stagnation.
The economy today is 10% smaller than it was before its peak prior to the 2008 financial crisis. More than 25% of Italy’s industry has been lost since then.
Unemployment is around 12%. Youth unemployment is around 36%. And these are only the official government statistics, which almost certainly understate the true numbers.
This is the first of two in a row from International Man‘s senior editor Nick Giambruno. This one was posted on their Internet site early Saturday morning EDT — and it’s worth reading. And Doug’s audio commentary at the end is worth listening to as well. Another link to all this is here.
Italy: Here’s Where the Next Bank Deposit “Bail-In” Will Strike…
One shot from a pistol pierced the night right before Antonio Bedin collapsed, dead.
Antonio, a 67 year-old retired Italian, had just committed suicide. He was plagued by health problems and by the loss of his savings.
Last year, four small Italian banks became insolvent and immediately needed capital. They turned to a bail-in.
Antonio was one of thousands of small savers who were wiped out. Antonio lost everything. Then he shot himself.
He wasn’t alone.
This interesting and right-on-the-money commentary by senior editor Nick Giambruno was posted on the internationalman.com Internet site on Sunday — and another link to it is here.
Greece Gets Fresh Loan Payout as Euro Area Looks to Help on Debt
The euro area authorized a €1.1 billion ($1.2 billion) payment to Greece and signaled a further €1.7 billion would follow this month, saying the region’s most indebted nation has made progress in overhauling its economy.
The green light, given by euro-area finance ministers on Monday in Luxembourg, removes a hurdle on Greece’s path to debt relief on which Prime Minister Alexis Tsipras has staked part of his political future. The country had to fulfill 15 conditions on matters such as selling state assets and improving bank governance to get the first payout.
It “was unanimously decided that Greece had completed the 15 milestones, so we can proceed to the 1.1 billion disbursement,” Greek Finance Minister Euclid Tsakalotos told reporters after the meeting, saying the talks produced a “very good” outcome for his country. The delay in getting an endorsement for the remaining sum, which is tied to the clearing of arrears, is merely “technical,” he said.
Greece, in its third bailout since 2010, is struggling to right an economy that is poised to undergo its eighth annual contraction in the past nine years. A second review of the country’s rescue program will pave the way for a possible restructuring of Greece’s debt, which the International Monetary Fund says is a necessary condition for its future involvement.
This Bloomberg news item was posted on their website at 8:02 a.m. on Monday morning Denver time — and it’s another contribution from Patrik Ekdahl. I thank him for sending it our way — and another link to this story is here.
The Demise of the E.U. – Jeff Thomas
Back in the ‘90s, when the E.U. had ceased to be a mere trade agreement and had become a full-blown oligarchy that would eventually gobble up most of Western and Eastern Europe, my belief was that it had not only been a doomed concept, it had additionally been rushed into being far too quickly. Although, at that time, the governments of Europe were gleefully joining up. I said, “I give it twenty years, tops.”
It was an offhanded remark and, in truth, I was throwing a dart at a board regarding the time period, but twenty years did seem about right to me. And this shouldn’t have been a difficult prophecy. There were three major reasons for its validity.
“Good Fences Make Good Neighbors”
First off, the countries of Europe had perennially been at war with each other since long before gunpowder was invented. Europe is basically tribal and there is simply no way that the mindsets and objectives of, say, the British are going to be the same as, say, the French. If under the E.U. diktat, British fishermen were then told that they could no longer fish their own waters because Brussels had decided to give British territorial waters to the French so that they could fish, there would be greater cause for enmity between countries than ever before in history. (The quote above from Robert Frost was meant to pertain to individual property owners, but it applies equally to modern-day tribes.)
Expat Brit Jeff Thomas served up this commentary on the internationalman.com Internet site yesterday — and another link to it is here. It’s definitely worth reading.
The World Bank and the IMF won’t admit their policies are the problem
We hear you, poor people. That was the message that blared out from Washington last week. It came from Christine Lagarde of the International Monetary Fund. It came from Jim Kim of the World Bank. It came from Roberto Azevêdo of the World Trade Organisation. It came from every finance minister and central bank governor.
The people who run the global economy wanted the world to know that they understood what had caused the Brexit vote and given Donald Trump a shot at the White House. They talked a lot about the need for inclusive growth and a capitalism that worked for all. To those who have been left behind in the past three decades, they said: we get it, we feel your pain.
The recognition that there is a problem is progress. Lagarde means it when she says the growing gap between rich and poor is holding back the global economy. Kim genuinely wants to see the fruits of growth skewed towards the bottom 40% in every country. The World Bank, IMF and WTO can sense that they are sitting on the edge of a volcano that could blow at any time. They fear, rightly, that a second big crash within a decade would create a backlash leading to protectionism and the rise of dark political forces that would be difficult, if not impossible, to control.
That there are ingredients for a fresh crisis became apparent at various stages last week. According to the IMF, global debt has risen to a record level of $152tn (£122trillion) – more than double global GDP – at a time when activity is sluggish. Collapsing commodity prices and weak demand from the west has meant that growth in sub-Saharan Africa is running at half the level of population increases. Companies in the emerging world loaded up on debt during the commodity boom and are vulnerable to rising U.S. interest rates and any softening of the world economy. China is the most egregious example of debt being used to boost activity artificially.
This commentary by Larry Elliott was posted on the guardian.com Internet site at 12:22 p.m. BST on Sunday afternoon, which was 7:22 a.m. in New York. Another link to this commentary is here — and I thank Australian subscriber “J.W.” for bringing it to our attention.
Far from stepping back, top central banks are set to double down
Central banks’ repeated warnings that there are limits to what they can do to bolster the sputtering world economy could suggest they are about to pull back and pass the baton to governments.
But a steady flow of research and a new tone in the debate among policymakers and advisers points in a different direction: rather than retreat, central banks are preparing for the day they may need to do more, even at the risk of antagonizing politicians who argue they already have too much power.
The shift can be seen in the acknowledgment by Federal Reserve policymakers that their massive $4 trillion balance sheet will not shrink anytime soon, or that asset buying may become a “recurrent” tool of future monetary policy. It can be seen in the comments of Bank of England officials who talk of crisis-fighting tools as now semi-permanent fixtures, or in the Bank of Japan developing a new monetary policy framework, in this case targeting long-term market interest rates.
Driving those developments is an emerging consensus among policymakers who now acknowledge that the global financial crisis has led to a fundamental shift toward low inflation, tepid growth, lagging productivity and interest rates stuck near zero.
“We could be stuck in a new longer-run equilibrium characterized by sluggish growth and recurrent reliance on unconventional monetary policy,” Fed Vice Chair Stanley Fischer said last week.
This must read Reuters item, filed from Washington, put in an appearance on their website at 1:04 p.m. EDT on Monday afternoon — and it comes to us courtesy of Bill Christmas. Another link to it is here. There was also a CNBC news item on this as well — and it’s headlined “UBS’ Weber warns on danger of ‘massive interventions’ from central banks” — and I found this embedded in a GATA release yesterday.
Russia Becomes a Grain Superpower as Wheat Exports Explode
Almost 25 years after watching the Dawn of Communism collective farm where he grew up land in the dustbin of history, Andrey Burdin is helping turn Russia into something the communists never could: a grain-export powerhouse.
Over the last few years, Burdin has tripled the size of his farm on the steppe near the Black Sea, winning prizes from the local government for how much wheat he’s produced from the rich soil here and pumping profits back into new tractors and sprayers.
His harvest this season will be a third bigger than what it was just five years ago, helping fuel an explosion in grain exports that has allowed Russia to displace longtime global leaders like the U.S. and European Union.
Long known for its oil and gas, Russia is now moving to retake leadership in the world wheat trade it last held when the Czars ruled. In the process, it’s reshaping the market for one of the world’s most important traded food products.
“People have started to think about the future,” said Burdin, 42 years old, new tractors lined up outside the window of his office. “Before, everyone just lived day to day.”
This very interesting news story appeared on the bloomberg.com Internet site last Thursday — and I thank Doug Clark for pointing it out. It’s certainly worth reading if you have the interest — and another link to it is here.
Russia, China Quickly Forming ‘Strategy of Synergy’ in Syria
Speaking at a briefing in Beijing, Li said that “China and Russia hold the same position on the most important international and regional issues,” including the conflicts in Syria and Afghanistan.
“The two countries, being permanent members of the U.N. Security Council, continue to cooperate closely on international and regional issues,” Li added, noting that President Xi Jinping looks forward to meeting with President Vladimir Putin on the sidelines of the upcoming BRICS summit in Goa later this week to discuss the most pressing issues of regional and international politics.
Li’s words on Russian-Chinese cooperation in Syria were confirmed in practice on Saturday, when China voted in favor of a Russian draft resolution aimed at resolving the Syrian crisis at the U.N. Security Council. China justified its vote by explaining that the Russian proposal would be the surest way to ensure a cessation of hostilities, humanitarian access, and a more effective joint fight against terror. Chinese U.N. envoy Liu Jieyi expressed regret that the Russian proposal was not adopted after being blocked by the U.S. and its allies.
China earlier abstained from a French resolution, which Russia ultimately vetoed, on creating a no-fly zone over the city of Aleppo, suggesting that the draft did not “reflect the full respect for the sovereignty, independence, unification and territorial integrity of Syria.”
This story showed up on the sputniknews.com Internet site on 9:56 p.m. Moscow time on their Monday evening, which was 1:56 p.m in Washington — EDT plus 8 hours. I thank ‘aurora’ for passing it around yesterday — and another link to it is here. It’s worth reading if you’re a serious student of the New Great Game.
China Intensifies Push to Cut Debt With Multi-Agency Blitz
China released guidelines for reducing corporate debt while also saying that the government won’t bear the final responsibility for borrowing by companies, the latest sign that policy makers are stepping up their fight against excessive leverage.
The State Council, China’s cabinet, issued guidelines for reducing corporate debt and for how banks may swap bad debt to equity. At the same time, officials from the central bank and other government regulators held a briefing at which they described corporate leverage as high among major global economies.
The International Monetary Fund has flagged the potential threat China’s growing debt pile may pose to the banking system and global growth. While challenges are still manageable, “urgent action is needed to ensure that they remain so,” James Daniel, the fund’s mission chief for China, said in August.
China’s total debt grew 465 percent over the past decade, according to Bloomberg Intelligence. Total debt rose to 247 percent of gross domestic product in 2015, from 160 percent in 2005, with corporate debt jumping to 165 percent of GDP from 105 percent.
This article was posted on the Bloomberg website at 2:16 a.m. MDT on Monday morning — and was updated about three hours later. I thank Elliot Simon for sending it — and another link to this news item is here.
Home price curbs in China expected to spread
More cities may follow suit after 19, including Beijing, launched cooling measures in the past week to rein in housing price increases, said analysts.
The measures announced by the cities during the seven-day National Day holiday included higher mortgage down payments and home purchase restrictions to curb speculation.
However, “more lower-tier cities may join the move against speculative home purchase soon, particularly those that have low inventory for the next six months and fast price growth in the past six months,” said a research note by CITIC Securities.
Wu Huimin, an analyst with property services provider DTZ, said, “Cities such as Shijiazhuang and Qingdao with rapid inflow of population are very likely to introduce tightening policies against speculative buying.”
This news item appeared on the chinadaily.com.cn Internet site early Saturday morning China Standard Time — and my thanks go out to Richard Saler for finding it for us. Another link to it is here.
Why the New Silk Roads terrify Washington — Pepe Escobar
Almost six years ago, President Putin proposed to Germany ‘the creation of a harmonious economic community stretching from Lisbon to Vladivostok.‘
This idea represented an immense trade emporium uniting Russia and the EU, or, in Putin’s words, “a unified continental market with a capacity worth trillions of dollars.”
In a nutshell: Eurasia integration.
Washington panicked. The record shows how Putin’s vision – although extremely seductive to German industrialists – was eventually derailed by Washington’s controlled demolition of Ukraine.
Three years ago, in Kazakhstan and then Indonesia, President Xi Jinping expanded on Putin’s vision, proposing One Belt, One Road (OBOR), a.k.a. the New Silk Roads, enhancing the geo-economic integration of Asia-Pacific via a vast network of highways, high-speed rail, pipelines, ports and fiber-optic cables.
This longish commentary by Pepe put in an appearance on the Russia Today website last Friday morning Moscow time — and it’s certainly worth reading if you have the interest. It’s another contribution from ‘aurora’ — and another link to it is here.
Gold Rebounds From Worst Week in Years on ETF Bargain Hunting
Gold futures rebounded from the biggest weekly drop in more than three years as investors jumped into exchange-traded funds backed by the metal, lifting global holdings to the highest since 2013.
Holdings of ETFs backed by gold rose by 9.1 metric tons to 2,046.4 tons on Friday. Assets in SPDR Gold Shares, the world’s biggest gold ETF backed, surged to the highest since mid-August.
Bullion dropped 5 percent last week as signs of improving U.S. economic data boosted bets that the Federal Reserve will raise interest rates this year, reducing the metal’s competitiveness against interest-bearing assets such as bonds. Gold’s 14-day relative-strength index, a gauge of momentum, fell below the level of 30 that signals to analysts who study charts that prices may rebound.
“When you see prices get that low you’re going to have people come in and start buying gold ETFs and physical gold,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Investors are buying here at a discount thinking prices can come back.”’
Goldman Sachs Group Inc. has said that a drop in prices significantly below $1,250 would present investors with a “strategic buying opportunity,” with the metal offering protection against risks to global growth and limits to central banks’ effectiveness.
This gold-related news item appeared on the Bloomberg Internet site on Sunday evening Denver time — and I found it on the Sharps Pixley website very late last night. Another link to this story is here.
The PHOTOS and the FUNNIES
The WRAP
Except for the price/volume activity in the Far East on their Monday, now that China is back after a week off, not much happened yesterday. Or more to the point, nothing was allowed to happen. And what smallish gains there were, most of them were reversed by the COMEX open.
Here are the 6-month charts for all four precious metals — and there’s nothing much to see here, although it appears that a temporary bottom is in — and whether or not they’ll be allowed to rally — and by how much, if they are — remains to be seen.
As I made abundantly clear in my Saturday column, despite the improvements shown in Friday’s COT Report, plus the one due out this Friday, we remain in wildly bearish territory in both silver and gold in the COMEX futures market, regardless of how ‘oversold’ they appear on the above charts.
But, having said all that, the fact that there have been deposits in both GLD and SLV during the last two business days certainly makes one stand up and take notice, as this sort of thing has never happened before. And for that reason I’m more than cautious about reading anything into it at the moment, although I’m not about to disagree with what silver analyst Ted Butler had to say about it in his weekly review on Saturday — and that was…”The only plausible explanation for why we haven’t seen greater metal withdrawals from GLD and SLV is that the liquidated shares were purchased by other investors seeking to hold those shares and the metal represented. Further, it would appear reasonable to assume the new buyers were bigger players and not the broad based public.”
I’m also singularly impressed by U.S. Mint sales so far this month, especially gold — but I’ll bite my tongue on this as well until more of the month is under our belts.
And as I type this paragraph, the London open is less than ten minutes away — and I note that gold was sold down about four bucks in the early going in the Far East on their Tuesday morning, but has rallied back — and is up $1.40 currently. It was almost the same pattern in silver — and it’s up 15 cents the ounce — and appeared to gone ‘no ask’ briefly but, like gold, was capped about 15 minutes before the London open. Platinum and palladium have rallied sharply off their Far East lows as well, with the former up 3 bucks — and the latter is back to unchanged. And, like gold and silver, their budding rallied appear to have run into ‘da boyz’ as well.
Net HFT volume in gold is a bit over 25,000 contracts — and it’s a good bet that a decent chunk of that occurred during the sharp rally that began about an hour ago. Silver’s net HFT volume is 9,200 contract and climbing quickly. The dollar index began to rally sharply in early Tuesday morning trading in the Far East — and all its early attempts to break above the 97.00 mark were turned aside, with the current 97.12 high tick coming at 2 p.m. China Standard time, which was an hour before London opened.
Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and unless we get a blistering rally to the upside, all of the remaining data from last week’s engineered price declines in silver and gold will be in it — and we’ll get a good look at their remaining short positions.
And as I post today’s column on the website at 4:00 a.m. EDT, I see that ‘da boyz’ are certainly back, as the rallies in all four precious metals have been squashed. They have gold back to unchanged — and silver is still up a dime at the moment. And they have both platinum and palladium down on the day again to the tune of 2 bucks each.
Net HFT gold volume is a bit under 30,000 contracts — and that number in silver is 10,600 contracts. Those aren’t big volume increases from the London open, so it hasn’t required much from the powers-that-be to put prices back in the box after their rallies in the last hour of trading before London opened. The dollar index is now decisively above the 97.00 mark at 97.21 — and up 32 basis points from its close on Monday.
That’s all I have for today — and I’ll see you here tomorrow.
Ed
The post After a Surprise Deposit in GLD on Friday…a Surprise Deposit in SLV Yesterday appeared first on Ed Steer's Gold and Silver Digest.