21 October 2016 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price rallied a few dollars until noon Shanghai time on their Thursday — and then sold off until the 10:30 a.m. BST London a.m. gold fix. From there it rallied about five bucks or so until at, or just before the London p.m. gold fix. At that juncture it got hit for about eight dollars within the next thirty minutes of so — and then didn’t do much after that going into the 5:00 p.m. EDT close of trading.
Once again the high and low ticks aren’t worth the bother, as gold traded within a ten dollar range all of yesterday.
Gold finished the Thursday session in New York at $1,265.20 spot, down $3.70 from Wednesday’s close. Net volume was reasonably light at just over 121,000 contracts.
The silver price action was a reasonable facsimile of what happened with the gold price, with the most striking difference being the size of the sell-off at the London p.m. gold fix, as the price got clocked for about two bits. The silver price gained about a dime of that back by 1 p.m. EDT — and then, like gold, didn’t do much into the close.
The high and low tick in silver were recorded by the CME Group as $17.745 and $17.45 in the December contract.
Silver was closed yesterday at $17.495 spot, down 16.5 cents from Wednesday. Net volume was just under 40,000 contracts.
And here’s the 5-minute silver tick chart courtesy of Brad Robertson, although it barely qualifies to be here. There were a smattering of volume spikes in Far East and London trading on their Thursday but, as usual, the most volume came during the COMEX trading session in New York, which is 6:30 a.m. to 11:30 a.m. Denver time on the chart below. After the COMEX close, volume vanished to virtually nothing.
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.
Platinum was up 4 bucks by 1 p.m. China Standard Time on their Thursday afternoon — and it began to head lower from there, but really got smacked at the COMEX open. The low tick came at, or just after the Zurich close, which was 11 a.m. EDT. It rallied a small handful of dollars until the COMEX close — and then didn’t do much after that. Platinum finished the Thursday session at $933 spot, down 8 dollars from its close on Wednesday.
The palladium price pattern was very similar to platinum’s, except its low tick came shortly before 9 a.m. in New York. It rallied back a goodly amount by around the COMEX open — and chopped sideways in a fairly wide range for the rest of the day. Palladium was closed at $630 spot, down 4 dollars on the day.
The dollar index closed very late on Wednesday afternoon in New York at 97.85 — and once trading began at 6:00 p.m. EDT on Wednesday evening, there was a 10 basis point up/down move that lasted for about five hours — and ended a few minutes before 11 a.m. China Standard Time on their Thursday morning. It was ramped up to the 97.08 mark shortly after 2 p.m. over there — and then quietly chopped lower until minutes after the COMEX open. Then, after a ten minute up/down move of some size, the index blasted higher, with the 98.40 high tick coming a few minutes before 11 a.m. EDT, which was the London/Zurich close. It fell down to about the 98.15 mark by 1:30 p.m. in New York, the COMEX close — and then climbed to around 98.31 by shortly before 3 p.m. — and traded ruler flat in the close from there. The dollar index finished the Thursday session in New York at 98.33 — up 48 basis points from Wednesday’s close.
You should note that gold and silver barely reacted to the dollar index shenanigans until after the gold ‘fix’ was done for the day.
I would guess that yesterday’s moves in the dollar index between 8:30 and 11 a.m. EDT was somehow short covering related, but that’s pure speculation on my part.
Here’s the 6-month U.S. dollar chart, which now looks even more toppy that it did before.
The gold stocks opened about unchanged, but sold off a bunch once JPMorgan et al leaned on the gold price once the London p.m. gold ‘fix’ was in, which was 10 a.m. in New York. Their respective low ticks came thirty minutes later at 10:30 a.m. — and from there they rallied in fits and starts for the rest of the Thursday session. The HUI closed just below unchanged — and down 0.12 percent on the day.
It was more or less the same chart pattern for the silver equities, although because of the bigger sell-off at the afternoon gold fix, the silver shares didn’t rally as much after their 10:30 a.m. lows. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.91 percent. Click to enlarge if necessary.
The CME Daily Delivery Report showed that 618 gold and 7 silver contracts were posted for delivery on Monday. In gold, the only short/issuer of note was Macquarie Futures with 608 contracts out of its own account. International F.C. Stone issued the other 10 contracts. The largest long/stopper was Canada’s Scotiabank with 533 for their own account, plus JPMorgan picked up 83 contracts — 82 for its clients and one for its own account. All 7 silver contracts were issued by Goldman Sachs out of their client account — and the long/stoppers aren’t worth noting. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Thursday trading session showed that October gold open interest rose by a chunky 392 contracts, leaving 693 still around, minus the 618 mentioned in the previous paragraph. Wednesday’s Daily Delivery Report showed that only 10 gold contracts were actually posted for delivery today, so that means that 10+392=402 gold contracts were added to the October delivery month. October silver o.i. dropped by 72 contracts, leaving 96 still open, minus the 7 mentioned above. Wednesday’s Daily Delivery Report showed that 85 silver contracts were actually posted for delivery today, so that means that another 85-72=13 silver contracts were added to the October delivery month.
After a big deposit in SLV on Wednesday, there was a deposit in GLD on Thursday, as an authorized participant added 95,368 troy ounces. And as of 6:30 p.m. EDT yesterday evening, there were no reported changes in SLV.
There was another sales report from the U.S. Mint, as they sold 2,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and 500,000 silver eagles.
There wasn’t much activity in gold over at the COMEX-approved depositories on Wednesday. Nothing was reported received — and only 4,800 troy ounces were shipped out. Of that amount, there was 4,735 troy ounces shipped out of Canada’s Scotiabank — and 2 kilobars/64.300 troy ounces were shipped out of Manfra, Tordella and Brookes, Inc. I shan’t bother linking this activity.
There was more activity in silver, as 608,958 troy ounces were reported received, but only 61,697 troy ounces were shipped out the door for parts unknown. All of the ‘in’ activity was at CNT — and virtually all of the ‘out’ activity was at Scotiabank. The link to that action is here.
It was another very busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday. There were 5,041 received — and 6,707 kilobars shipped out. All of the action was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Since yesterday was the 20th of the month — and it fell on a weekday — the good folks over at The Central Bank of the Russian Federation updated their website with September’s data — and that included their updated gold reserves. During that month they purchased another 500,000 troy ounces/15.6 tonnes, bringing their total reserves up to 49.6 million troy ounces/1,543 tonnes. And here’s Nick Laird’s most excellent chart updated with the September data. The ‘click to enlarge‘ is very useful here.
I sent the above info to Jim Rickards — and he came back to me with this comment — “Thanks Ed. That’s a huge reserve considering the size of their economy. They’re definitely getting ready for a crisis of confidence in dollars and a surge in gold.”
Once again I don’t have all that many stories for you today — and that makes your final edit all that much easier.
CRITICAL READS
Housing starts tumble 9% as sturdy recovery remains elusive
Builders broke ground on the fewest new homes in a year and a half in September, another setback as the housing market struggles for sustainable momentum.
Housing starts ran at an annual 1.047 million pace, the Commerce Department said Wednesday. That was 9% lower than in August and 11.9% lower than a year ago. It was the slowest pace of starts since March 2015. Economists surveyed by MarketWatch had forecast a 1.18 million pace.
Trulia Chief Economist Ralph McLaughlin, who smooths out the monthly volatility in the starts data by using a 12-month rolling total, wrote in a note Wednesday morning that starts are “up year-over-year, but the rate of increase is slowing.”
Like many housing analysts, McLaughlin is concerned that housing market inventory is too tight. “While housing starts continue to inch up to their pre-recession average, they’re only about 75% back to normal. Housing completions, which represent tangible new supply for home buyers, is even lower at 67%. Though home builders continue their slow and steady charge, there is much room for growth headed into 2017.”
This story was posted on the marketwatch.com Internet site at 10:16 a.m. on Wednesday morning EDT — and it’s something I found in yesterday’s edition of the King Report. Another link to this news item is here.
U.S. Freight Volume Drops to Lowest Level since 2009, “Industrial Recession” Hits Full Stride, Overcapacity Crushes Rates
This just keeps getting worse. The Cass Freight Index, tracking U.S. shipment volumes by all modes of transportation, fell 3.1% in September from a year ago, the 19th month in a row of year-over-year declines, and the worst September since 2009!
Donald Broughton, Chief Market Strategist at Avondale Partners, wrote in the report:
After offering a glimmer of “less bad” hope in August [the index was down “only” 1.1% year-over-year], the Cass Freight Index shipments data in September disappointed, providing hindsight that August only gave us “false hope.”
September data is once again signaling that overall shipment volumes (and pricing) continued to be weak in most modes, with increased levels of volatility, as all levels of the supply chain (manufacturing, wholesale, retail) continue to try and work down inventory levels.
“Bottom line, the Industrial Recession in the U.S. that began in March of 2015 continues to weigh on overall volumes,” Broughton writes.
This worthwhile news item appeared on the wolfstreet.com Internet site on Wednesday — and comes to us courtesy of Richard Saler. Another link to it is here.
New Caterpillar CEO Faces Tough Decisions as Company Digs Out
Among Jim Umpleby’s first tasks as Caterpillar Inc.‘s chief executive will be cleaning up the fallout from his predecessor’s expansion plans.
Doug Oberhelman, who is leaving the top job at the end of this year after big money investments ran afoul of the global commodities bust, has embarked on a cost cuts aiming to pare 10,000 jobs, $1.5 billion in annual expenses, and up to 20 plants through 2018.
Mr. Umpleby will preside in his first months as CEO over a downsizing expected to last through next year.
Those cutbacks and negotiations will set the stage for decisions on how aggressively Caterpillar will chase the next boom in construction and mining, or whether it will narrow the equipment giant’s focus to less-risky projects and higher-profit business lines.
Caterpillar’s sales of bulldozers, excavators, mining shovels and huge dump trucks have declined for four consecutive years. Many analysts expect them to fall again in 2017. Caterpillar faces a tougher set of competitors in China and Japan that are ratcheting up product lines and quality in expectation of a market rebound.
This news item showed up on The Wall Street Journal website at 3:45 p.m. EDT on Wednesday afternoon — and it was posted in the clear, at least it was when I clicked on the link yesterday evening. It come to us from Brad Robertson via Zero Hedge — and another link to this article is here.
Fed risks repeating Lehman blunder as U.S. recession storm gathers — Ambrose Evans-Pritchard
The risk of a U.S. recession next year is rising fast. The Federal Reserve has no margin for error.
Liquidity is suddenly drying up. Early warning indicators from U.S. ‘flow of funds’ data point to an incipient squeeze, the long-feared capitulation after five successive quarters of declining corporate profits.
Yet the Fed is methodically draining money through ‘reverse repos’ regardless. It has set the course for a rise in interest rates in December and seems to be on automatic pilot.
“We are seeing a serious deterioration on a monthly basis,” said Michael Howell from CrossBorder Capital, specialists in global liquidity. The signals lead the economic cycle by six to nine months.
“We think the U.S. is heading for recession by the Spring of 2017. It is absolutely bonkers for the Fed to even think about raising rates right now,” he said.
This longish but very worthwhile commentary by AE-P was posted on the telegraph.co.uk Internet site at 9:15 p.m. BST on their Wednesday evening, which was 4:15 p.m. in New York — EDT plus 5 hours. It’s the second contribution of the day from Richard Saler — and another link to it is here.
Broken Indicators Mean It’s Growing Harder to Spot Troubles in the Market
It’s not hard to see the potential flash points on the horizon — the U.S. presidential election; Deutsche Bank AG’s mounting legal charges; the day central banks stop buying bonds. Yet when it comes to gauging risks in the world’s financial markets, these days investors are flying more or less blind.
That’s because the once-dependable indicators traders relied on for decades to send out warnings are no longer up to the task. The so-called yield curve isn’t the recession predictor it once was. Swap spreads are so distorted they can’t be trusted. Even the vaunted VIX — sometimes referred to as the “fear gauge,” is leading its followers astray, strategists say.
As central banks around the world pump billions of dollars into the global economy every month and policy makers pass regulations to safeguard against a relapse of the 2008 financial crisis, the market’s best and brightest say some warning signals are flashing at precisely the wrong time. Now, rules to shore up the money-market fund industry that kicked in Friday are stifling the predictive powers of yet another set of gauges. For investors, the big worry is they’ll end up being taken by surprise when the next crisis hits.
“I have a hard time believing what the actual information content of these indicators is,” said Aaron Kohli, a fixed-income strategist in New York at BMO Capital Markets, one of 23 primary dealers that trade with the Federal Reserve.
Well, dear reader, not to be forgotten is another indicator that isn’t allowed to function like it should — and that’s precious metal prices. Of course that’s not mentioned in this Bloomberg article which appeared on their Internet site at 6:00 p.m. Denver time on Tuesday evening. It was updated about ninety minutes later — and I thank Brad Robertson [via Zero Hedge] for sharing it with us. Another link to this story is here.
The Ruling Elite Has Lost the Consent of the Governed — Charles Hugh Smith
Brimming with hubris and self-importance, the ruling Elite and mainstream media cannot believe they have lost the consent of the governed.
Every ruling Elite needs the consent of the governed: even autocracies, dictatorships and corporatocracies ultimately rule with the consent, however grudging, of the governed.
The American ruling Elite has lost the consent of the governed. This reality is being masked by the mainstream media, mouthpiece of the ruling class, which is ceaselessly promoting two false narratives:
1. The “great divide” in American politics is between left and right, Democrat/Republican; 2. The ruling Elite has delivered “prosperity” not just to the privileged few but to the unprivileged many they govern.
Both of these assertions are false. The Great Divide in America is between the ruling Elite and the governed that the Elite has strip-mined. The ruling Elite is privileged and protected, the governed are unprivileged and unprotected. That’s the divide that counts and the divide that is finally becoming visible to the marginalized, unprivileged class of debt-serfs.
This must read commentary by Charles was posted on the Zero Hedge website at 1:19 p.m. EDT on Thursday afternoon — and I thank U.K. reader Tariq Khan for pointing it out. Another link to this story is here.
E.U. Leaders Spar Over Russia Sanctions as Renzi Pushes Back
The European Union said it was too soon to consider imposing sanctions on Russia for the bombing of rebel-held areas of Syria, while maintaining the threat of action if Vladimir Putin doesn’t back down.
After the first of two days of talks in Brussels, E.U. leaders said “all available options” remain on the table, without mentioning sanctions specifically, after they clashed over using more pointed language on Thursday. While the U.K., France and Germany wanted to take a harsher tone with Russia, Italy’s Matteo Renzi led those countries who opposed the move.
Russia’s aggression in Syria has brought its relationship with the west to a new low. With ties already worse than at any time since the Cold War because of Putin’s annexation of Crimea and violent interference in eastern Ukraine, the Kremlin’s support of the Syrian regime has raised tensions further and exposed divisions in the EU.
“It’s clear that Russia’s strategy is to weaken the E.U. — we have no illusions,” the bloc’s president, Donald Tusk, told reporters early Friday. “Increasing tensions with Russia is not our aim; we are simply reacting to steps taken by Russia.”
What a pile of bulls hit ‘all of the above’ is! I hope the Italians, plus the other few countries that want to continue trading with Russia finally break this sanction thingy wide open, as it’s hypocritical to say the least. This Bloomberg story appeared on their website at 7:13 p.m. MDT yesterday evening — and I thank Roy Stephens for sending it along. Another link to this news item is here.
Russia Is Deploying the Largest Naval Force Since the Cold War For Syria: NATO Diplomat
Just moments ago we reported that in the latest escalation involving Syria, the Russian aircraft carrier Kuznetsov was now sailing past Norway on its way to Syria, where it is expected to arrive in just under 2 weeks. As part of the carrier naval group, Russia also deployed an escort of seven other Russian ships, which we dubbed the “most powerful Russian naval task force to sail in northern Europe since 2014” according to Russia’s Nezavisimaya Gazeta daily reports.
It turns out it was even bigger, because according to a NATO diplomat cited by Reuters, Russia is “deploying all of the Northern fleet and much of the Baltic fleet in the largest surface deployment since the end of the Cold War,” the diplomat said on condition of anonymity.
“This is not a friendly port call. In two weeks, we will see a crescendo of air attacks on Aleppo as part of Russia’s strategy to declare victory there,” the diplomat said.
An intensified air campaign in eastern Aleppo, where 275,000 people are trapped, would further worsen ties between Moscow and the West, according to the diplomat who added that “With this assault, it should be enough to allow a Russian exit strategy if Moscow believes Assad is now stable enough to survive.”
As we reported earlier, photos of the vessels have been released by the Norwegian military. A Norwegian newspaper quoted the head of the Norwegian military intelligence service saying the ships involved “will probably play a role in the deciding battle for Aleppo” was more than this and as Reuters reported second ago, citing a NATO diplomat, Russia is in fact deploying the largest naval force since end of Cold War to reinforce its Syria campaign. From Reuters: While there is little we can add to this that we did not just say in the previous post, we want to remind readers what the east Mediterranean looked like in the summer of 2013, when the first escalation between Russia and the U.S. converted the sea off the Syrian coastline into a parking lot for warships.
This Zero Hedge story was posted on their Internet site at 6:42 p.m. EDT last night — and I thank Judy Sturgis for sending it in the wee hours of this morning — too late for the e-mail version of today’s column. The Reuters story on which this ZH piece is based is headlined “Major Russian naval deployment to intensify Aleppo assault: NATO diplomat” — and that comes courtesy of Australian reader Peter King, who sent it to me minutes after the ZH story arrive in my in-box this morning.
Syria warns it will ‘down Turkish planes next time,’ calls bombing of Kurds ‘flagrant aggression’
Damascus has reacted harshly to the bombing of Kurdish militias in northern Syria on Thursday morning by Turkey’s air force, vowing to intervene next time Ankara sends its planes over its border.
In a statement, the Syrian Defense Ministry accused Turkey of “flagrant aggression, which targeted innocent citizens,” saying that it considers it “a dangerous development that could escalate the situation.”
“Any attempt to once again breach Syrian airspace by Turkish war planes will be dealt with and they will be brought down by all means available,” warned Damascus, whose planes, which have flown in concert with a Russian expeditionary force, have been avoiding direct confrontation with unauthorized NATO jets.
This news item showed up on the Russia Today website at 11:57 p.m. Moscow time on their Thursday evening, which was 3:57 p.m. in Washington — EDT plus 8 hours. Another link to this story is here — and I thank Roy Stephens for sending it along just after midnight Denver time last night. Another link to it is here.
“America Has Lost” – Duterte Announces “Separation” From United States, Aligns With China; Seeks Alliance With Putin
After the relentless barrage of verbal abuse and negative sentiment aimed at Barack Obama and the U.S., coupled with increasingly complimentary statements toward Beijing, it was only a matter of time before Philippine President Rodrigo Duterte put an end to the speculation if and when he would officially pivot the country’s long-held diplomatic alliance away from the U.S. and toward China. He did so today when, during a visit to China’s capital, Duterte announced his “separation” from the United States, declaring he had realigned with China as the two agreed to resolve their South China Sea dispute through talks.
Duterte is currently in Beijing, where he is visiting with at least 200 business people to pave the way for what he calls a new commercial alliance as relations with longtime ally Washington deteriorate.
“In this venue, your honours, in this venue, I announce my separation from the United States,” Duterte told Chinese and Philippine business people, to applause, at a forum in the Great Hall of the People attended by Chinese Vice Premier Zhang Gaoli. “Both in military, not maybe social, but economics also. America has lost.“
Still, in keeping with the semi flip-flopping nature of his administration, a few hours after Duterte’s speech, his top economic policymakers released a statement saying that, while Asian economic integration was “long overdue“, that did not mean the Philippines was turning its back on the West.
“We will maintain relations with the West but we desire stronger integration with our neighbours,” said Finance Secretary Carlos Dominguez and Economic Planning Secretary Ernesto Pernia in a joint statement. “We share the culture and a better understanding with our region. The Philippines is integrating with ASEAN, China, Japan and South Korea.”
No surprises here — and long overdue. This story appeared on the Zero Hedge website at 3:17 p.m. Thursday afternoon EDT — and it’s the third and final offering of the day from Richard Saler — and I thank him on your behalf. Another link to this news item is here.
“Dear Janet”? – China Devalues Most Since August, Yuan Tumbles to Lowest Since Sept 2010
For the 10th day of the last 11, onshore yuan has weakened against the dollar. A 0.35% devaluation of the Yuan fix – the most since August – catching down to offshore Yuan’s weakness, suggests (for now) PBOC policy is ‘allowing’ the drop and perhaps sending yet another ‘turmoil-inducing’ message to The Fed as their hawkishness grows.
Since the start of Golden Week, yuan has plunged…plunging Yuan back near pre-peg-break levels from Sept 2010…
The charts in this 3-chart Zero Hedge news item are well worth the trip, especially the middle one. This story showed up on their website at 10:52 p.m. EDT last night — and another link to it is here.
Jan Skoyles and Mark O’Byrne: War on cash to benefit gold?
GoldCore’s Jan Skoyles and Mark O’Byrne explain comprehensively how the campaign to abolish cash and make all financial transactions electronic and recordable would expropriate liberty and move all power away from individuals to government and banks. This is, Skoyles and O’Byrne conclude, another reason why the accessibility of gold is the prerequisite of liberty.
Their commentary is headlined “Cashless Society — War on Cash to Benefit Gold?” and it was posted on the goldcore.com Internet site on Thursday.
I found this on the gata.org Internet site yesterday afternoon EDT — and another link to it is here.
The great physical gold supply-and-demand illusion — Koos Jansen
Gold researcher Koos Jansen writes that the major companies providing analysis of demand for metals underestimate demand for gold because they treat it more as a commodity than a currency.
Jansen’s very long and very convoluted commentary is headlined “The Great Physical Gold Supply-and-Demand Illusion” and it’s posted on the Singapore-based Internet site bullionstar.com. My eyes glazed over in less than five minutes — and I hit the ‘Delete’ button, but it’s your decision. I thank Patricia Caulfield for sending me the story, but I thank Chris Powell for the above paragraph of introduction.
The Gold Chronicles: October 13th, 2016 Interview with Jim Rickards and Alex Stanczyk
Topics include:
* Analysis of recent correction in gold
* Market has priced in an anticipated Fed rate hike in December
* Fed will be forced to reverse course going into 2017 and ease
* This is a short term correction and is not signalling a new bear market
* Gold performance for the year
* Physical gold flows and the gold “float”
This 53-minute audio interview was recorded last Thursday, October 13 — and posted on the physicalgoldfund.com Internet site on Wednesday. I thank Harold Jacobsen for bringing it to our attention. Another link to it is here.
SGE leading gold price recovery as positive indicators pick up — Lawrie Williams
It has been noticeable over the past few days that the relatively new Shanghai Gold Exchange (SGE) gold price benchmark has been leading the way in terms of setting the direction of the global gold price level. Since the COMEX opportunists took advantage of the week-long Chinese Golden Week holiday, when the SGE was closed, to bring the gold price down by around $60 over that week. The price has at least stabilised [since then] and in general has moved upwards a little, although London and New York trading has tended to mitigate this.
My colleague, Julian Phillips has been pointing out the trend for the SGE to be leading the way on gold pricing virtually ever since the SGE re-opened after the holiday just over a week ago. This has seen the gold price decline halted and trending slowly upwards since. This morning, for example, China set the price in the low $1,270s. London appears to be bringing it down a little, but this has been the general pattern of late with the higher SGE benchmark setting the overall trend for the day.
Phillips goes further pointing to the logic that it indeed makes sense for Shanghai to be the pre-eminent benchmark gold price setter. He notes that the Dubai gold exchange has signed a contract to use the Shanghai Fixings in place of the London Fixings. Clearly, the Shanghai physical gold market [the biggest physical market in the world] is thought to better represent physical gold prices than COMEX paper market prices. Shanghai is also negotiating with other exchanges to use Shanghai Fixings in their markets.
This very interesting commentary by Lawrie put in an appearance on the sharpspixley.com Internet site yesterday sometime — and I’m happy to see that Lawrie has recovered enough to write again. It’s certainly worth reading — and another link to it is here.
The PHOTOS and the FUNNIES
The WRAP
It was disappointing to see ‘da boyz’ take away the rally, plus all the earlier gains in gold once the afternoon London gold fix was done for the day on Thursday. But this choppy sideways pattern has been going on for a couple of weeks now — and as you can tell, this pattern has been very quietly — and very cleverly executed. There’s nothing free market about it at all. The same can be said about silver as well.
Here are the 6-month charts for all four precious metals — and as you can see at a glance, when gold was turned lower yesterday, it touched its 200-day moving average to the downside — and I’m sure that it was no accident. Ted mentioned that the last four or five days of trading looked like it was of the “scam within a scam” variety, albeit on a very small scale — and he’ll be proven right once again if we get a swift penetration of gold’s 200-day moving average to the downside in the next day or so.
And as I type this paragraph, the London open is less than ten minutes away — and I note that gold was sold down a few dollars until 11 a.m. China Standard Time on their Friday morning. Then around 1 p.m. over there it began to chop quietly higher — and is down only 2 bucks at the moment. The same with silver — and it’s down 4 cents currently. Platinum and palladium met the same fate — and the former is down 4 dollars — and the latter by 5.
Net HFT gold volume is very quiet at just under 18,500 contracts, with decent roll-over activity out of December. Net HFT volume in silver is just under 7,000 contracts — and a decent chunk of gross volume is roll-overs out of December as well. The dollar index made it up to the 98.55 mark by 10:35 a.m. in Shanghai — and has rolled over since — and is up 9 basis points as London opens.
I would suspect that the down/up dip in the precious metals in Far East trading on their Friday was pretty closely tied to the changes in the dollar index.
Today we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday — and as you know, both Ted and I are sitting this one out. What it shows, either up or down, is not really meaningful when you look at the macro picture. The mountainous short positions held by the Big 8 traders in both gold, silver — and platinum as well — still casts a very long shadow over any potential rally of size. And until that is resolved, all these short-term price squiggles on the charts don’t mean a lot, as ‘da boyz’ have prices well in hand.
I continue to be impressed with the amount of gold and silver being deposited in GLD and SLV, as it has now become routine, with another 95,400 ounces of gold added yesterday. Another 500,000 silver eagles were scooped up yesterday as well, along with the reported 500,000 troy ounces of gold that went into Russia’s reserves last month and, without doubt, Russia’s central bank is buying more in October as I write this.
And as I’ve said countless time, only the strongest of hands and deepest of pockets would be involved here — and sooner or later we’ll find out why. Although deep down we know why — and that day can’t come soon enough for us.
And as I post today’s column on the website at 4:00 a.m. EDT I see that the gold price isn’t doing much, but is down a hair from the London open. The same can be said for silver. Platinum and palladium are mostly chopping sideways. Net HFT gold volume is just under 24,000 contracts — and that number in silver is 7,000 contracts, which almost unchanged from an hour ago. The dollar index has jumped up a bit — and is currently up 19 basis points. There’s not much happening.
But as we saw yesterday, the real action was in COMEX trading in New York — and with today being Friday, I would expect that any price/volume activity worth mentioning will occur there again today.
Have a great weekend — and I’ll see you here tomorrow.
Ed
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