25 November 2016 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
With New York closed, the only price activity in gold worth mentioning was the new low intraday price tick that was set very shortly after trading began in London on their Thursday morning. Then the moment it rallied back above unchanged at 10 a.m. GMT, it was guided quietly lower for the rest of the day. The GLOBEX trading system closed at 1 p.m. EST.
Gold traded within a ten dollar price range all day long on Thursday, so the high and low ticks aren’t worth looking up. But, having said that, the low price tick took out the $1,180 mark by about a dollar.
Gold finished the Thursday trading session at $1,183.90 spot, down an even $4.00 from Wednesday’s close. Net volume was very quiet at just under 73,000 contracts. Roll-over/switch volume out of December was relatively decent.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson — and I’m only including it because I want to show the price and volume surrounding Thursday’s new intraday low price move. All the volume that mattered occurred between 12:40 a.m. and 03:00 a.m. Denver time on the chart below, which was 7:40 and 10:00 a.m. in London — from the start of gold’s decline to its new intraday low — and until the subsequent rally got capped.
The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST. The ‘click to enlarge‘ is a must for this chart.
The silver price didn’t do much, or maybe I should say…wasn’t allowed to do much. The low tick came around 9:20 a.m. China Standard Time on their Thursday morning. It rallied back to unchanged around 1 p.m. CST — and then traded a nickel either side of that mark for the rest of the day.
Needless to say, the high and low ticks aren’t worth my while to look up, either.
Silver closed yesterday at $16.305 spot, down 3.5 cents. Net volume was a hair over 18,000 contracts — and roll-over volume was impressive.
Platinum opened unchanged — and traded flat for the first hour after New York opened at 6:00 p.m. on Wednesday evening. But by noon in Shanghai, it had been sold down 12 bucks the ounce. It chopped sideways from there until shortly after both Zurich and London closed — and with no markets open at all, the price was dropped down to its $910 spot low tick, but rallied a dollar off that low by the 1:00 p.m. EST GLOBEX close. Platinum was nailed for $18 dollars, closing at $911 spot.
The palladium price wandered around about 5 bucks either side of unchanged during the Thursday session — and closed at $731 spot, down 2 bucks from Wednesday. Nothing much to see here.
The dollar index closed very late on Wednesday afternoon in New York at 101.68 — and rallied quietly higher in a fairly wide range until around 3:25 p.m. Shanghai Standard Time on their Thursday afternoon, which was thirty-five minutes before the London open. It took off higher at that point — and it’s 102.05 high tick came just minutes after the London open. From there it fell all the way down to its 101.43 low, which came around 11:25 a.m. GMT. It crept higher from there until 12 o’clock noon EST — and traded flat from there into the close. The dollar index finished the Thursday session at 101.70 — up 2 whole basis points.
It’s obvious that the dollar index shenanigans an hour or so either side of the London open had something to do with yesterday’s low price tick in gold. But it’s my opinion that it was just a fig leaf for ‘da boyz’ to hide behind while they did the dirty. That’s been the case throughout this entire current dollar ‘rally’ that we’re living through at the moment.
And here’s the 6-month U.S. dollar index chart courtesy of stockcharts.com as always. It’s Wednesday’s chart for the second day in a row, as it was not updated with Thursday’s data because of the U.S. holiday. But with almost no change to report, the chart wouldn’t look much different even if the Thursday doji was included.
With the U.S. shut tight for Thanksgiving, there’s no HUI, Silver 7, GLD or SLV statistics, U.S. Mint sales, or any reports from the CME Group.
Nick sent around three charts on Wednesday evening — and I didn’t have the room for in Thursday’s column, so here they are now. They’re Switzerland’s gold imports and exports updated with October’s data — and the ‘Click to Enlarge‘ feature is very useful. I have a story about Switzerland’s gold imports and exports in the Critical Reads section.
I don’t have all that many stories for you again today — and I’m quite happy about that.
CRITICAL READS
Venezuela’s Currency Just Had the Biggest Monthly Collapse Ever
Venezuela’s currency – the so-called “strong bolivar” – is weakening beyond levels that analysts had forecast just a few weeks ago as an expanding money supply chases a limited amount of U.S. dollars.
The currency has lost 45 percent of its value so far this month to trade at 2,753 bolivars per U.S. dollar on Thursday, according to dollartoday.com, a widely-watched website that tracks the exchange rate in Caracas. That’s the biggest monthly decline ever, according to data compiled by Bloomberg.
“The government has started injecting bolivars into the financial system in an accelerated manner again, and it’s set off repressed demand,” Asdrubal Oliveros, director of Caracas-based economic consultancy Ecoanalitica, said in a telephone interview. “There are too many bolivars in the street. People have the option of either buying goods or dollars, and they’re buying dollars.”
Inflation in the country will likely rise to 400 percent in 2016, according to the median estimate of 13 analysts who responded to a Bloomberg survey. Individual responses ranged from 257 percent to 1,500 percent.
Venezuela’s money supply has risen 127 percent over the past year, according to the latest data available from the Central Bank in Caracas and compiled by Bloomberg.
This story was posted on the Bloomberg website at 11:02 a.m. Denver time on Thursday morning — and it comes to us courtesy of Roy Stephens. Another link to it is here.
ECB Says It Can Shield Euro Area From Global Finance Instability
The European Central Bank is confident it will be able to continue shielding the euro area from the risk of a sudden correction in asset prices, after political events such as the election of Donald Trump threaten to increase volatility in coming months.
“We are certainly seeing a correction coming from the U.S.,” ECB Vice President Vitor Constancio said on Thursday in an interview with Bloomberg TV’s Matt Miller. “The ECB will continue to exert its stabilizing role, so I don’t think there will be significant contagion to Europe.” Constancio spoke on the occasion of the publication of the ECB’s twice-yearly Financial Stability Review.
The report warns that the risk of an abrupt global market correction has intensified on the back of widespread political uncertainty, posing a threat to banks, stability and economic growth. While the policies of incoming President Trump may lead to higher spending and faster inflation in the U.S., their effect on the euro area is difficult to gauge given the possibility of protectionist tit-for-tats and higher chances of populist victories in votes across the continent.
The ECB is either whistling past the proverbial graveyard, or they’re planning on massive market interventions when the time comes…you choose! This Bloomberg news item appeared on their Internet site at 2:04 a.m. MST on Thursday morning — and I thank Swedish reader Patrik Ekdahl for sharing it with us. Another link to it is here.
Major Foreign Policy Shift: Turkey Abandoning E.U. for SCO
Turkish President Tayyip Erdogan said on November 20 that Turkey did not need to join the European Union «at all costs». Instead, it could become part of the Shanghai Cooperation Organization (SCO), or Shanghai Pact. The Turkish leader said he had already discussed the idea with Russian President Vladimir Putin and his Kazakh counterpart Nursultan Nazarbayev.
The SCO is a Eurasian political, economic, and military organization founded in 2001 in Shanghai. Its members are Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Kazakhstan, Kyrgyzstan and Uzbekistan speak Turkic languages.
India and Pakistan are to become full-fledged members by the next meeting at Astana in 2017. Mongolia, India, Iran, Pakistan and Afghanistan are SCO observers. In 2013, Turkey got the status of SCO’s «dialogue partner». The other country with the same status is Belarus. Dialogue partners are entitled to take part in ministerial-level and some other meetings of the SCO, but do not have voting rights.
Of course the SCO is just as wary of Turkish President Tayyip Erdogan as is the E.U. and the U.S. — and for very good reason. The guy is a mad man. I posted a story about this in my Tuesday column, but this one, posted on the strategic-culture.org Internet site on Tuesday, is a bit more extensive — and is certainly worth reading if you’re a serious student of the New Great Game. I thank Larry Galearis for pointing it out — and another link to this article is here.
Europe Votes to Suspend Turkey E.U. Accession Talks, Sending Lira Crashing to Record Low Despite Unexpected Rate Hike
It was another painful day for Turkish Lira longs.
Earlier today, in response to the broader USD strength overnight, the Turkish currency dropped to new record lows, sliding to 3.4214 and losing 10% of its value since the central bank’s last meeting in October, before the Turkey’s central bank unexpectedly raised its one-week repurchase and overnight lending rates for the first time in almost three years, prompted by the crashing lira’s impact on inflation, overriding Erdogan’s recurring demands for lower borrowing costs.
The bank raised the one-week repo and overnight lending rates by 50 and 25 basis points to 8% and 8.5% respectively while keeping the overnight borrowing rate at 7.25%, it said in a statement on Thursday. The move came as a surprise as only seven of 24 economists polled by Bloomberg predicted an increase of 25bps to the repo rate, while the majority said rates would be unchanged.
However, the market barely had time to respond to the surprising announcement, when an even more unexpected development took place in Europe, where the European Parliament voted overwhelmingly, 479 to 37 with 107 abstentions, to temporarily freeze talks on Turkey’s bid to join the European Union, citing deteriorating human rights and democratic standards under President Recep Tayyip Erdogan’s rule.
In the statement issued by the E.P., it said that “MEPs want a temporary freeze on E.U. accession talks with Turkey. In a resolution voted on Thursday, they say Turkey should nonetheless remain “anchored” to the E.U. They also pledge to review their position when the “disproportionate repressive measures” under the state of emergency in Turkey are lifted.”
Another ZH headline that doesn’t quite live up to its advanced billing, as they neglected to include the word “Temporarily” in front of the word “Suspend” in their headline. This Zero Hedge article was posted on their website at 9:11 a.m. EST on Thursday morning — and another link to it is here.
The economic consequences of India’s Mr. Modi — Alasdair Macleod
GoldMoney research director Alasdair Macleod writes that India’s repudiation of most of its outstanding paper currency will deepen distrust of that currency as well as of government generally and increase confidence in gold.
Macleod’s commentary is headlined “The Economic Consequences of Mr. Modi” — and it was posted on the goldmoney.com Internet site yesterday. I found it embedded in a GATA release — and another link to it is here.
Indian Currency Crashes to Record Low as Cash Exchange of Old Notes Suspended
It appears the social unrest, economic collapse, and currency crisis sparked by Indian PM Modi’s decision to demonetize “corrupt” high-denomination bank-notes was not enough.
As the Rupee crashed to a record low overnight, officials announced a suspension of the exchange of ‘old notes’ as of tomorrow to, in their words, “encourage people to deposit old notes in their bank accounts.” With as much 60% of banknotes still un-exchanged, we suspect chaos will be the operative word for the immediate future.
Those with old notes will still be allowed to deposit them into their bank accounts until Dec. 31, but not permitted to do outright exchanges.
We suspect the sudden urge to force citizens to deposit/exchange their old banknotes is due to the increasing prevalance of “illegal workarounds” across the nation. Meanwhile capital flight is very evident…
“Continued outflows along with dollar strength have undermined the rupee,” said Gao Qi, a Singapore-based foreign-exchange strategist at Scotiabank. “The rupee may outperform some regional currencies such as the Malaysian ringgit and Indonesian rupiah on account of the central bank’s intervention and low foreign position in Indian financial assets.” Bloomberg reports that the central bank will take appropriate action to deal with the currency’s decline, a government official said earlier Thursday, asking not to be identified, citing rules. State-run lenders sold dollars, probably on behalf of the central bank, as the rupee approached its record low, three Mumbai-based traders said, asking not to be named. The RBI has maintained that it doesn’t target a specific rupee level and intervenes only to curb undue volatility in the currency market.
This longish Zero Hedge news item showed up on their Internet site at 1:35 p.m. on Thursday afternoon EST — and another link to it is here.
Asia’s shipbuilders flounder in a glutted market
Asian shipbuilders are struggling to stay afloat as orders decline to the lowest level in two decades. Analysts see no end to the pain in sight.
New orders received by builders in Japan declined almost 90% in the first 10 months of 2016 from a year earlier, according to data from BIMCO, a global shipping industry data provider. South Korean competitors similarly saw an 84.2% drop in orders by compensated gross tonnage, an industry measure of shipbuilding output that takes into account ship size and work difficulty. Their Chinese rivals counted a 58.5% decline.
Peter Sand, BIMCO’s chief shipping analyst, said that 2017 could be even worse. “There is a declining trend for Japan, China and South Korea and with such low levels of new building contracts being placed, this will look even more severe next year,” he said.
Some shipbuilders have already collapsed, including South Korea’s STX Offshore & Shipbuilding, which has been under court protection since May. Others are going through tough restructuring, cutting staff and selling key assets.
This short, but very interesting story, filed from Seoul, showed up on the asia.nikkei.com Internet site at 12:00 p.m. Japan Standard Time on their Thursday — and I thank Roy Stephens for finding it for us. Another link to it is here — and it’s worth reading.
All Aboard the Post-TPP World — Pepe Escobar
A half-hearted near handshake between U.S. President Barack Obama and Russian President Vladimir Putin before and after they spoke for about four minutes, standing up, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Lima, Peru, captured to perfection the melancholic dwindling of the Obama era.
A whirlwind flashback of the fractious relationship between Obama and ‘existential threats’ Russia and China would include everything from the Washington-sponsored Maidan in Kiev to Obama’s ‘Assad must go’ in Syria, with special mentions to the oil price war, sanctions, the raid on the ruble, extreme demonization of Putin and all things Russian, provocations in the South China Sea – all down to a finishing flourish; the death of the much vaunted Trans-Pacific Partnership (TPP) treaty, which was reconfirmed at APEC right after the election of Donald Trump.
It was almost too painful to watch Obama defending his not exactly spectacular legacy at his final international press conference – with, ironically, the backdrop of the South American Pacific coast – just as Chinese President Xi Jinping all but basked in his reiterated geopolitical glow, which he already shares with Putin. As for Trump, though invisible in Lima, he was everywhere.
The ritual burial, in Peru’s Pacific waters, of the ‘NATO on trade’ arm of the pivot to Asia (first announced in October 2011 by Hillary Clinton) thus offered Xi the perfect platform to plug the merits of the Regional Comprehensive Economic Partnership (RCEP), amply supported by China.
This opinion piece by Pepe appeared on the strategic-culture.org Internet site yesterday sometime — and it’s definitely worth reading. It’s another offering from Roy Stephens — and another link to it is here. I can’t shake the feeling that I’ve posted this before from another website several days ago — and the one linked here is a repost — but just don’t have time to check that out.
No More Pay to Play? Australia Halts All Clinton Foundation Funds
Following Hillary Clinton’s U.S. presidential election defeat, it has been announced that Australia has cut all official ties with the Clinton Foundation.
On Tuesday, Foreign Minister Julie Bishop announced to the joint party room that agreements with the Foundation previously set up by the Rudd-Gillard government had not been renewed.
“[Former Prime Minister Julia] Gillard also donated $300 million of our money to the Clinton-affiliated Global Partnership for Education,” Australian newspaper the Herald Sun wrote in an October article titled, “Why have we donated to Clinton’s foundation?”
The Foundation, set up by the former first family of the United States, has received large amounts in donations from foreign governments, leading many to question whether it was part of a pay-to-play scheme during the former first lady’s tenure as U.S. Secretary of State.
Disparities in the amount of funds given to the Foundation by the Australian government have raised eyebrows.
Only “raised eyebrows” you say? Why heads don’t roll over this is the real question, but none will. This news item put in an appearance on the sputniknews.com Internet site at 3:02 a.m. Moscow time on their Thursday morning, which was 6:02 p.m. in Washington on Wednesday evening — EST plus 9 hours. It’s the second story of the day from Larry Galearis — and another link to it is here.
New Zealand Earthquake: Stranded Cows Rescued
New Zealand’s south island was rocked by a monster magnitude 7.8 earthquake just minutes after midnight on November 14 — and with obvious devastating consequences. This is one of the more interesting stories/video clips that came out of what is a tragedy of Biblical proportions. Click on the above headline to view it.
This next youtube.com video is the same-day 5:30 p.m. news on a local television station in New Zealand’s capital, Wellington, which was damaged in the earthquake as well. The embedded video clips are amazing — and it’s yet to be determined as of today if State Highway One [plus the rail line beside it] north of Kaikoura, which suffered major damage, will ever be reopened. That’s how catastrophic the land movement was.
I was heavily involved in seismology when I was in Canada’s High Arctic back in the late 1960s — and the earth sciences are still near and dear to my heart.
One thing I’d hear rumours about for decades, but that had never seen photos of, was earthquake ‘light’. Well, it exists — and the video clip of that starts at the 7:21 mark. I could hardly believe my eyes. The link to this news program is here. [When they speak of ‘CBD’s…it’s N.Z. shorthand for ‘Central Business District’]
Two superb short videos of the raised coastline along the Papatea fault are here — and here. It took just 34 seconds for about 150 kilometers of fault lines to rip open. Those ruptures are what caused this earthquake. There were actually two earth quakes, each occurred on different fault lines about 14 seconds apart. The video of that is fascinating — and it’s linked here. It’s the second of the two ‘movies’ — and runs for 34 seconds. It’s the second earthquake that caused all the uplift in the above Papaptea fault videos.
Swiss gold exports up 10% on month to 163 tonnes in October on higher India flows
Gold exports from Switzerland totaled 163 mt [metric tonnes] in October, 10% higher then the 147 mt in September, Swiss federal customs data showed Thursday.
The figure is 19% lower than just over 200 mt reported a year earlier, with higher exports to India and Hong Kong offsetting a fall in flows to the U.K. and U.S.
The world’s largest refiner and exporter of gold, total exports from Switzerland now stand at 1,510 mt for the year to date, up just 0.5% from 1,502 mt in the same period of 2015.
Exports to India were up 49% on the month at 40.2 mt, the highest since January, but down 46% from 75 mt a year earlier.
This gold-related news item, filed from London, showed up on the platts.com Internet site at 2:09 p.m. GMT on Thursday afternoon, which was 9:09 a.m. in New York — and it’s a story that I found on the Sharps Pixley website late last night. Another link to it is here.
The Gold Chronicles: November 22nd, 2016 Interview with Jim Rickards and Alex Stanczyk
This 56:31 minute audio interview was conducted on Tuesday — and was posted on the physicalgoldfund.com Internet site on Thursday.
The executive summary shows that they cover a lot of territory — and I thank Harold Jacobsen for bringing it to my attention — and now to yours.
The PHOTOS and the FUNNIES
Here are two more entries in the 2016 Comedy Wildlife Photo Contest. ‘Click to Enlarge‘.
The WRAP
Even with New York closed on Thursday, the proxies for JPMorgan et al were busy, as they set a new intraday low in gold, plus a new low close in platinum. And as I stated in The Wrap section in yesterday’s column, it’s painfully obvious that the low ticks for this move down in all precious metals have not yet been set, even though I was hoping that Wednesday would be the end of it.
Since New York was closed yesterday, there are no updated 6-month charts for you to look at.
And as I type this paragraph, the London open is less than ten minutes away — and JPMorgan et al are back on the job after a day of eating turkey and ham in The Hamptons.
The gold price rallied a bit in the first hour of trading when New York opened at 6:00 p.m. EST yesterday evening. That all ended an hour later — and an hour after that, ‘da boyz’ spun their algos — and took gold down to a new low. It began to crawl higher from there — and really began to sail starting just before 3 p.m. China Standard Time on their Friday afternoon. That was met by “all the usual suspects” about fifteen minutes later — and gold is only up 30 cents the ounce currently. It was exactly the same pattern in silver, except the low tick wasn’t a new low for this move down — and it was up 15 cents by shortly after 3 p.m. CST when JPMorgan et al put in an appearance. It’s now up only 7 cents. The price patterns in platinum and palladium were similar — and both made it into positive territory by a bit as well, before being tapped lower. Platinum is now down a buck — and palladium is down 4.
Net HFT gold volume is just under 47,000 contracts already — and that’s net of Thursday’s volume. Roll over activity is pretty heavy. Silver’s net HFT volume is just under 10,000 contracts — and that’s net of Thursday’s volume as well. Roll-over/switch volume is very decent in this precious metal as well.
The dollar index rallied immediately at the New York open yesterday evening — and it was up about 20 basis points by a minute or so after 9 a.m. China Standard Time — and began to head lower from that point. It was down 10 basis points on the day by noon Shanghai time. It then chopped sideways a bit from there, but really began to head south starting around 2:35 p.m. CST — and is off its 3:35 p.m. CST low at the moment — and down 25 basis points as London opens.
Despite the swoon in the dollar index, it’s obvious that ‘da boyz’ are hard at work ensuring that this fact isn’t reflected in the current price of any of the precious metals.
Although I must admit disappointment that the lows aren’t in for the precious metals yet, I’m surprised that despite their successes in gold during the last two morning trading sessions in the Far East, their attempts to drive silver lower appear more than anemic. Of course now that I’ve written these words, I’ll probably get up to find that ‘da boyz’ have laid the lumber to silver as well, so I should be careful what I say.
But, having said that, I would suspect that lower silver prices are in our future, considering the fact that ‘da boyz’ don’t appear to be done with gold yet.
And as I post today’s column on the website at 4:03 a.m. EST, I see that the gold price is in rally mode, as are two of the other three precious metals. However, they are running into the usual opposition, as these rallies certainly aren’t going unopposed. Gold is currently up $6.10 an ounce, silver is up 11 cent, platinum is up 5 bucks, but palladium is down 2 dollars.
Net HFT gold volume, net of Thursday’s, is now sitting at 58,000 contracts — and that number in silver is up to 11,800 contracts, net of Thursday as well. Roll-over/switch volume in both metals is very impressive. All the large traders have to either roll or sell their December contracts by the end of COMEX trading on Monday, unless they’re standing for delivery of course, so volumes will be heavy both today and on Monday.
The dollar index is now down 39 basis points.
Since today is Friday…and ‘Black Friday’ to boot…I’ll be ready for any eventuality when I check the charts after I roll out of bed later this morning.
Enjoy your weekend — and I’ll see you here tomorrow.
Ed
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