Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1107.60 up $3.40 (comex closing time)
Silver $15.29 unchanged.
In the access market 5:15 pm
Gold $1109.00
Silver: $15.37
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a good delivery day, registering 172 notices for 17,200 ounces Silver saw 1 notice for 5,000 oz
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 232.10 tonnes for a loss of 71 tonnes over that period.
In silver, the open interest rose by 1,247 contracts as silver was up 47 cents in price yesterday. The total silver OI continues to remain extremely high, with today’s reading at 180,433 contracts In ounces, the OI is represented by .902 billion oz or 128% of annual global silver production (ex Russia ex China). This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end as they continue to raid as basically they have no other alternative.
In silver we had 1 notice served upon for 5,000 oz.
In gold, the total comex gold OI rests tonight at 431,323. We had 172 notices filed for 17,200 oz today.
We had no change in gold leaving the GLD today / thus the inventory rests tonight at 667.93 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I thought that 700 tonnes is the rock bottom inventory in GLD gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold. In silver, we had no changes in silver inventory at the SLV, / Inventory rests at 326.209 million oz.
We have a few important stories to bring to your attention today…
1. Today, we had the open interest in silver rose by 1247 contracts up to 180,433 as silver was up 47 cents in price yesterday’s trading. The OI for gold rose by 5,227 contracts to 431,323 contracts as gold was up by $10.10 in yesterday’s trading. We still have a little over 20 tonnes of gold standing with only 15.206 tonnes of registered gold in the dealer vaults ready to satisfy that which stands.
(report Harvey)
2.Gold trading overnight, Goldcore
(/Mark OByrne)
3.One stories today on Greece
(zero hedge)
4.The big story of the day/China devalues
(4 huge commentaries/zero hedge/Bill Holter/Reuters/bloomberg)
5 Trading of equities/ New York
(zero hedge)
6. Two oil related stories
(zero hedge)
7. Has Brazil hit rock bottom?
(zero hedge)
8. USA commentary:
i) Wholesaler inventories rise yet sales falter suggesting a huge red flag/USA facing a huge recession/depression
ii) The “Death cross” has just happened: the 50 day moving average surpasses the 200 day moving average. When this happens a huge downfall in the Dow is imminent
(zero hedge)
8. Physical commentaries:
i) Bill Holter/two commentaries tonight
a) Open letter to mining company executives
b) an explanation of today’s huge news concerning China’s devaluation
ii) Hugo Salinas Price: will China finally show its gold card?
iii Lawrence Williams of Mineweb where the author describes gold now trading differently as it defies gravity.
The total gold comex open interest rose from 426,096 to 431,323 for a gain of 5227 contracts as gold was up $10.10 on yesterday. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest: 1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month, and today the latter continued with its decline after a two day hiatus. What is also interesting is that the LBMA gold is continually witnessing a 7.00 plus premium spot/next nearby month as gold is now in backwardation over there. We are now in the contract month of August and here the OI fell by 394 contracts falling to 3249 contracts. We had 18 notices filed upon yesterday and thus we lost 376 contracts or 37600 additional ounces will not stand for delivery. We must have had some cash settlements today. The next delivery month is September and here the OI fell by 34 contracts down to 2258. The next active delivery month if October and here the OI rose by 1451 contracts up to 27,279. The estimated volume on today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was excellent at 278,912. The confirmed volume on yesterday (which includes the volume during regular business hours + access market sales the previous day was fair at 161,194 contracts. Today we had 172 notices filed for 17,200 oz.
And now for the wild silver comex results. Silver OI rose by 1247 contracts from 179,186 down to 180,433 as silver was up in price by 47 cents yesterday . We continue to have some short covering as our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver arena. We are in the delivery month of August and here the OI fell by 1 contract falling to 30. We had 0 delivery notice filed yesterday and thus we lost 1 contract or an additional 5,000 ounces will not stand for delivery in this non active August contract month. The next major active delivery month is September and here the OI fell by 3,757 contracts to 97,758. The estimated volume today was huge at 73,405 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 66,388 contracts which is excellent in volume. We had 1 notice filed for 5,000 oz.
August contract month: initial standing
August 11.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
11,450.444. oz (Scotia,Delaware)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
172 contracts (17,200 oz)
No of oz to be served (notices)
3077 contracts (307,700 oz)
Total monthly oz gold served (contracts) so far this month
3373 contracts(337,300 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
nil
Total accumulative withdrawal of gold from the Customer inventory this month
408,907.4 oz
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: zero
we had 2 customer withdrawals
i) Out of Scotia: 11,050.344 oz
ii) Out Delaware: 400.10 oz
total customer withdrawal: 11,450.444 oz
We had 0 customer deposits:
Total customer deposit: nil oz
We had 0 adjustments
JPMorgan has 7.1966 tonnes left in its registered or dealer inventory.
(231,469.56 oz)
.
Today, 0 notices was issued from JPMorgan dealer account and 172 notices were issued from their client or customer account. The total of all issuance by all participants equates to 172 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the August contract month, we take the total number of notices filed so far for the month (3373) x 100 oz or 337,300 oz , to which we add the difference between the open interest for the front month of August (3249) and the number of notices served upon today (172) x 100 oz equals the number of ounces standing
Thus the initial standings for gold for the August contract month:
No of notices served so far (3373) x 100 oz or ounces + {OI for the front month (3249) – the number of notices served upon today (172) x 100 oz which equals 645,000 oz standing so far in this month of August (20.26 tonnes of gold).
We lost 376 contracts or an additional 37,600 ounces will not stand for delivery.
Thus we have 20.26 tonnes of gold standing and only 15.206 tonnes of registered or dealer gold to service it.
Total dealer inventory 489,964.93 or 15.239 tonnes
Total gold inventory (dealer and customer) = 7,462,089.143 (232.10 tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 232.10 tonnes for a loss of 71 tonnes over that period. The gold comex is bleeding gold.
end
And now for silver
August silver initial standings
August 11 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
1,402,338.735 oz (CNT, Brinks Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
443,807.379 oz (Delaware)
No of oz served (contracts)
1 contract (5,000 oz)
No of oz to be served (notices)
29 contracts (145,000 oz)
Total monthly oz silver served (contracts)
46 contracts (230,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
85,818.47 oz
Total accumulative withdrawal of silver from the Customer inventory this month
6,402,576.0 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 1 customer deposits:
i) Into Delaware: 443,807.379 oz
total customer deposits: 443,807.379 oz
We had 3 customer withdrawals:
i) Out of Brinks: 26,065.12 oz
ii) Out of Scotia: 91,700.33 oz
iii) Out of CNT: 1,284,573.285 oz
total withdrawals from customer: 1,402,338.735 oz
we had 0 adjustments
Total dealer inventory: 55.839 million oz
Total of all silver inventory (dealer and customer) 171.518 million oz
The comex has been bleeding both gold and silver.
The total number of notices filed today for the August contract month is represented by 1 contracts for 5,000 oz. To calculate the number of silver ounces that will stand for delivery in August, we take the total number of notices filed for the month so far at (46) x 5,000 oz = 230,000 oz to which we add the difference between the open interest for the front month of August (30) and the number of notices served upon today (1) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the August contract month:
46 (notices served so far)x 5000 oz + { OI for front month of August (30) -number of notices served upon today (1} x 5000 oz ,= 375,000 oz of silver standing for the August contract month.
we lost 1 contract or an additional 5,000 ounces will not stand in this non active delivery month of August.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.comorhttp://www.harveyorganblog.com
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
August 11.2015: no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes
August 10/no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes
August 7./no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes
August 6/no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes
August 5.we had a huge withdrawal of 4.77 tonnes from the GLD tonight/Inventory rests at 667.93 tonnes
August 4.2015: no change in inventory/rests tonight at 672.70 tonnes
August 3.2015: no change in inventory at the GLD./Inventory remains at 672.70 tonnes
July 29/no change in inventory/rests tonight at 680.13 tonnes
July 28/no change in inventory/rests tonight at 680.13 tonnes
July 27/no change in inventory/rests tonight at 680.13 tonnes
July 24.2015/we had another massive withdrawal of 4.48 tonnes of gold form the GLD/Inventory rests at 680.13 tonnes.
July 23.2015: we had another withdrawal of 2.68 tonnes of gold from the GLD/Inventory rests at 684.63 tonnes
july 22/another withdrawal of 2.38 tonnes of gold from the GLD/Inventory rests at 687.31
July 21.2015: a massive withdrawal of 6.56 tonnes of gold from the GLD.
Inventory rests at 689.69 tonnes. China and Russia need their physical gold badly and they are drawing their physical from this facility.
August 11 GLD : 667.93 tonnes
end
And now SLV:
August 11./ no changes in SLV inventory/rests tonight at 326.209 million oz.
August 10: no changes in SLV inventory/rests tonight at 326.209 million oz.
August 7.no changes in SLV/Inventory rests this weekend at 326.209 million oz
August 6/no changes in SLV/inventory rests at 326.209 million oz
August 5/ a small withdrawal of 142,000 oz of inventory leaves the SLV/Inventory rests tonight at 326.209 million oz
August 4.2015: a small withdrawal of 476,000 oz of inventory at the SLV/Inventory rests at 326.351 million oz
August 3.2015; no change in inventory at the SLV/inventory remains at 326.829 million oz
July 29/no change in silver inventory/326.829 million oz
July 28/we had a huge withdrawal of 2.005 million oz from the SLV/Inventory rests at 326.829 oz
July 27/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 24/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 23.2015; no change in silver inventory/rests tonight at 328.834 million oz
july 22/no change in silver inventory/inventory rests at 328.834 million oz.
July 21.we had a massive addition of 1.241 million oz into the SLV/Inventory rests tonight at 328.834 million oz.
August 11/2015: tonight inventory rests at 326.209 million oz
end
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 11.5 percent to NAV usa funds and Negative 11.9% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.3%
Percentage of fund in silver:38.4%
cash .3%
( August 11/2015)
2. Sprott silver fund (PSLV): Premium to NAV rises to -0.56%!!!! NAV (August 11/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV rises to – .71% to NAV(July August10/2015)
Note: Sprott silver trust back into negative territory at- 0.56%
Sprott physical gold trust is back into negative territory at -.71%
Central fund of Canada’s is still in jail.
Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:
SII.CN Sprott formally launches previously announced offers to CentralGoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *
>end
And now for your overnight trading in gold and silver plus stories
on gold and silver issues:
(courtesy/Mark O’Byrne/Goldcore)
Gold Bullion Holds Its Own As Media Stocks Collapse
By Mark O’ByrneAugust 11, 20150 Comments
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Daily Prices
Today’s Gold prices were USD 1,113.25, EUR 1008.97 and GBP 713.74 per ounce.
Yesterday’s Gold prices were USD 1,094.80, EUR 998.50 and GBP 707.74 per ounce.
[LBMA AM prices]
Gold in USD – 1 Week
Gold and silver rose on the COMEX yesterday – up 1% to $1,103.30 and silver surged 3% to $15.24 per ounce. Both metals saw similar gains in euro, sterling and other currencies.
This morning, gold is 0.8% higher to $1,114 per ounce. Silver is up 0.82% to $15.46 per ounce.
Platinum and palladium are 1.1% and 1.8% higher to $999 and $624 per ounce respectively.
Gold Holds Its Own As Media Stocks Collapse
That hasn’t stopped many gold bears from using this as an opportunity to disparage the yellow metal
A recent Bloomberg article points out that the gold rout has cost China and Russia $5.4 billion
An amount that would sound colossal were it not for the fact that U.S. media companies such as Disney and Viacom collectively lost over $60 billion for shareholders in as little as two days last week
Above are the weekly losses for just a handful of those companies. Compared to many other asset classes, gold has held up well, even after factoring in its price decline
Read more on ‘Gold Holds Its Own As Media Stocks Collapse
end
The big announcement of the day:
(courtesy Reuters/GATA)
China’s devaluation raises currency war fear as Greece strikes deal
Submitted by cpowell on Tue, 2015-08-11 11:58. Section: Daily Dispatches
By Nigel Stephenson
Reuters
Tuesday, August 11, 2015
LONDON — China’s shock 2 percent devaluation of the yuan on Tuesday pushed the dollar higher and raised the prospect of a new round of currency wars, just as Greece reached a new deal to contain its debt crisis.
Stocks fell in Asia and Europe as investors worried about the implications of a move designed to support China’s slowing economy and exports.
The stronger dollar hit commodity prices, driving crude oil down after Monday’s hefty gains.
Weaker stocks lifted top-rated bonds, with yields on euro-zone debt also falling on the Greek deal, struck nine days before Athens is due to repay 3.2 billion euros to the European Central Bank.
China’s move, which the central bank described as a “one-off depreciation” based on a new way of managing the exchange rate that better reflected market forces, triggered the yuan’s biggest fall since 1994, pushing it to its lowest level against the dollar in almost three years. …
… For the remainder of the report:
http://www.reuters.com/article/2015/08/11/us-markets-global-idUSKCN0QG00.
end
Gold soars today after China devalues its currency setting up a currency war:
(courtesy zero hedge)
Gold Soars After Chinese Currency Devaluation
Yesterday, immediately in the aftermath of the PBOC’s dramatic devaluation announcement, we remarked the following:
To be sure, while it will take the Chinese mainland a few more hours to realize just what happened, and that once you unleash the devaluation genie in a global currency war you can’t simply put it back in, which means over one billion Chinese will soon be scrambling to preserve their purchasing power (but not in the stock market which particular bubble burst just last month and taught millions a very harsh lesson in get rich quick schemes), some fast thinkers realized that not only will capital outflows explode in the coming weeks and months, but that holding one’s savings in Yuan will be, well, foolish.
As a result, after initially tumbling for some inexplicable reason after the PBOC announcement, gold is now soaring back to levels from mid-July and going higher.
Here we eagerly await as the BIS’ Benoit Gilson sells a few billion in paper gold just to reset the price of gold lower as a surge in gold, and a loss of faith in paper money, at this juncture in just broken out global currency wars, is the last thing the central banks’ central bank can afford.
But wait, there’s more: because any day now the PBOC will update its revised foreign reserve and gold holdings. And so the next big leg up in gold will take place when it is revealed that the PBOC had only exposed a portion of its “new” total gold inventory, and that with every passing month it will simply reveal more and more as central-planning conditions demand it.
end
(courtesy Hugo Salinas Price
Will China Play The ‘Gold Card’?
Alasdair Macleod has posted an article atwww.goldmoney.com which I think is important.
The thrust of the article is that China, at some point, will have to revalue gold in China; which means, in other words, that China will decide to devalue the Yuan against gold.
Since “mainstream economics” holds that gold is no longer important in world business, such a measure might be regarded as just an idiosyncrasy of Chinese thinking, and not politically significant, as would be a devaluation against the dollar, which is a no-no amongst the Central Bank community of the world.
However, as I understand the measure, it would be indeed world-shaking.
Here’s how I see it:
Currently, the price of an ounce of gold in Shanghai is roughly 6.20 Yuan x $1084 Dollars = 6,721 Yuan.
Now suppose that China decides to revalue gold in China to 9408 Yuan per ounce: a devaluation of the Yuan of 40%, from 6721 to 9408 Yuan.
What would have to happen?
Importers around the world would immediately purchasephysical gold at $1,084 Dollars an ounce, and ship it to Shanghai, where they would sell it for 9408 Yuan, where the price was formerly 6,721 Yuan.
The Chinese economy operates in Yuan and prices there would not be affected – at least not immediately – by the devaluation of the Yuan against gold.
Importers of Chinese goods would then be able to purchase 40% more goods for the same amount of Dollars they were paying before the devaluation of the Yuan against gold. What importer of Chinese goods could resist the temptation to purchase goods now so much cheaper? China would then consolidate its position as a great manufacturing power. Its languishing economy would recuperate spectacularly.
The purchase of physical gold would take off, no longer the activity of detested “gold-bugs”, but an activity linked to making money, albeit fiat money.Inevitably, the price of physical gold in Dollars would separate from the price of the “paper gold” traded on Comex and go higher, leaving paper gold way behind in price.
If the US were to provide the market with physical gold in the quantities being purchased for trade with China, it might be able to prevent the rise in the price of gold in Dollars; however, we know that Comex has only one ounce of physical gold for every 124 owners of paper gold, so that action would be impossible. China would be sucking up the world’s gold at a huge rate, if the price of gold in Dollars were to remain where it is at present.
The only way that the US might counter the Chinese move, would be to revalue gold in Dollars; which is to say, the US would have to effect a corresponding devaluation of the Dollar against gold, to nullify the effect of the Chinese devaluation of the Yuan against gold.
At a Dollar price of gold of $1,517 Dollars per ounce, the Chinese devaluation would be left without effect: the present Yuan/Dollar exchange rate would then remain at 6.20 Yuan per Dollar: 9,408 Yuan/6.20 exchange rate = $1,517 Dollars per ounce.
This is the old policy of the 1930’s, commonly known as “beggar thy neighbor”, where countries carried out competitive devaluations against gold in order to preserve their manufactures and continue exporting. The response of importing nations was to raise tariffs on imported goods. (Say good-bye to an integrated world economy.)
Will China decide to “beggar its neighbors”, the US and Europe? I think that the huge problem of keeping the Chinese economy on its feet and avoiding the political instability which would rage through China by not doing so – with a population in excess of 1.3 billion human beings – will be so compelling that China will practically inevitably resort to raising the price of gold in China.
When might this happen?
The world economy is going from bad to worse by the day. The Chinese may opt for this measure out of sheer desperation, and it may be a reality soon. I have the sensation that things are falling apart around the world at an increasing rate of speed. Perhaps China will move this Fall?
Devaluing the Dollar on the part of the US would upset the apple-cart of Dollar hegemony in the world. But not to devalue would price US goods out of world markets, along with European goods. “Damned if you do, damned if you don’t.”
Dollar devaluation would force a Euro devaluation and all Hell would break loose, as all countries would belatedly realize the importance of having gold reserves, and one country after another would devalue their currencies against gold. Import tariffs and restrictions on imports would once again prevail. The dream of “Globalization based on the fiat dollar” would evaporate in the orgy of currency devaluations against gold.
The era of the Dollar as reserve currency of the world, would have ended.
When the dust shall have settled on this giant crisis, the powers of this world will have recognized, once again, that gold is money; what would remain would be the work of establishing the gold standard de jure, by international accords, in order to abolish tariffs and import restrictions and renew the free international flow of goods.
However, another horrible scenario is possible: the US, run by those who insist on maintaining the plan for world domination through endless war, may decide to go to war with China and with Russia, too, for good measure.Let us hope that reason prevails and that the Dollar loses its status as world reserve currency in a peaceful manner.
end
(courtesy Lawrence Williams/Mineweb)
Lawrence Williams
Gold defying gravity as it bounces back above $1,100/oz
Despite the 1.9% Chinese yuan devaluation, the gold price has risen sharply today. Is this the start of a new bull market or just another dead cat bounce?
Lawrie Williams | 11 August 2015 12:10
LONDON – We have seldom seen so many negative price forecasts for gold coming out of the bank analysts as we have over the past week or so. The latest from UBS anticipates a 13% drop in its one-month forecast. This followed close on some very negative forecasts from numerous other bank analysts showing undoubtedly something of a herd instinct as they try to outdo each other in pessimistic predictions for the yellow metal. Does this represent the turning point so beloved of contrarians?
Certainly the gold price seems to have received something of a shot in the arm over the past couple of days regardless of analyst predictions. Some of these had been calling for $1,050/oz or lower – in some cases much lower! Thus, ever since the onset of all this negative analysis, gold has done something strange. Firstly it steadied and now has risen quite sharply, moving back above the key $1,100/oz level, although whether this can be maintained remains to be seen.
Those responsible for the big gold bear raids that knocked the price down hard a couple of weeks ago might be stimulated into action again. There has been a massive increase in short positions being taken on COMEX, and there is now something of a rush to cover these and go long which could drive the price far higher still.
The lower prices have already seen huge demand for physical gold from around the world. According to http://www.zerohedge.com, COMEX registered physical gold inventories hit such a low that they had to be ‘rescued’ from potential default by JP Morgan which reclassified a big tranche (276,000 ounces – or around 8.6 tonnes) of its gold holdings from the Eligible into the Registered category, which makes it readily available for good delivery on the Exchange. (Eligible stocks are stocks which have met COMEX quality checking procedures, but may be being held on behalf of clients, or are just being vaulted securely and may never actually become Registered as available for delivery against COMEX futures contracts.)
Today, China devalued the yuan against the dollar by 1.9% that should have been negative for gold. But after an initial dip back below $1,100/oz level after the London market opened, gold started to strengthen again, and at the time of writing had breached the technically significant $1,115/oz level.
Even so, gold bulls are suddenly tasting blood after a very depressing few weeks, and the bears may be in retreat – but for how long? Whether this signals the long-awaited start of a gold price recovery or is yet another proverbial dead cat bounce is far too soon to tell, but has already regenerated talk of substantial rises ahead.
Elliott Wave analyst Peter Goodburn, who last year predicted a gold price fall to around the $1,100/oz level (see: Gold to fall to $1,100 then skyrocket – silver, platinum in behind) followed by a very strong recovery, will be hoping gold’s latest move vindicates his technical analysis, although if it is indeed happening it’s taking place around a year behind his original forecast.
But gold is also the price driver for the other precious metals and a sharp increase in the gold price could lead to an even sharper potential rise in the platinum group metals (PGM’s). PGM’s have been even more depressed than gold despite decent fundamentals, and particularly so in silver which can be much more volatile than its yellow sibling.
end
The following is a must read…
It should give you a clear picture as to why China devalued today and how this devaluation will effect us:
(courtesy Bill Holter/Holter-Sinclair collaboration)
For those with ears to listen..
The shot just heard ’round he world (for those with ears to listen) was a surprise 2% devaluation by the Chinese of their currency the yuan. I have spoken to many whom I respect to hear their opinions and theories. This is a very important move by China and one which will affect the entire financial world. Getting this “completely right” may be quite tough, but getting it mostly right is imperative.
Let’s begin by making a comparison. I have in the past compared today’s China and the U.S. to the last great global bubble and deflation centered around the U.S. and Great Britain. China is today’s up and coming financial and productive economy while the U.S. has lived off the fat as the reserve currency and entered decline as Britain did 80+ years ago. In the early 1930’s, “competitive devaluations” were used to beggar thy neighbor and steal market share of trade. This, along with tariffs (Smoot-Hawley for example) were put into place. International trade collapsed just as it is beginning to again today with clear evidence. The global economy lives on trade and will also die by it (or lack of!).
So why the devaluation? First, it needs to be said China does not think like the West does. They are not full blown capitalists and any edict from Beijing, right, wrong or indifferent will be followed almost blindly. To a large extent they are still a “command” economy but have moved toward allowing capital to find its highest and best use. This also comes with the baggage of speculation which often times produces bubbles. No doubt malinvestment has occurred in stocks, real estate, commodities, production and yes, DEBT. The picture is not very different from that of the U.S. back in the second half of 1929 (with the exception of a few short seller “executions”).
The Chinese move certainly argues against any rate hike in the U.S.. In fact, the yuan has risen over the last 5+ years, this has been desired by the U.S.. I can only assume a devaluation is not desired. Any further devaluations can be viewed as against U.S. desires and a direct shot back at the “IMF and friends”. Though the devaluation is much smaller than the Swiss earlier in the year, losses into a very levered and illiquid global market will need to be absorbed. How this is done will be interesting as China just issued margins calls on many markets. China also has made capital flight more difficult recently, some of the world’s hot real estate markets will (already are”) feel the pinch. Again, remember the backdrop is a very illiquid world right now!
China has lowered rates and eased monetary policy several times recently. They have outlawed short selling and done whatever they could to stem the meltdown in their markets to no avail. Devaluing is the next logical choice but already we see the bandwagon of reaction where Russia, India and Thailand are all considering devaluations of their own, the currency war is going into overdrive. This is not so much about currencies as it is about market share of trade. The problem is this, the global “pie” of GDP and thus trade is beginning to shrink. Liquidity (remember the IMF recently warned of this) is tightening everywhere which means cash flows are shrinking. The ability to meet debt service requirements are becoming more difficult in a world saturated in debt.
In essence, China’s debt bubble is popping and along with it comes deflation. This devaluation, though small (for now) aims to “export” some of the deflation to their trading partners. The current move should not be seen as a one off move, it will not be and further devaluations can be expected. China is simply doing and will do what “is good for China”.
I believe China asked for inclusion in the SDR basket while believing it would not happen. They have already set up trade banks, credit facilities, currency swaps and even clearing systems not to mention wooing new trade partners. Their rebuke however should not be taken lightly. Even if China did not expect to be included, their public rebuke now gives them a public reason to do what is good for China. China can no longer be blamed for anything they do in their own self interest. This would include moving away from trade in dollars and also changing partners. It would also include the massive sale of U.S. Treasuries and dollars themselves. I would not be shocked to hear of oil, China, Saudi Arabia and “renminbi settlement” all in the same sentence shortly!
If I am correct and this is not a one off devaluation, much of the world’s population will shortly sniff out some of the ramifications. Remember, China invented paper currency and are professionals at blowing them up, their people are students of history and know this. A full out stampede into gold (and silver) before their currency gets devalued again and again may very well start. The Western banks are short paper gold, owing gold contractually, China knows this and knows it is THE Achilles Heel to the dollar. If the Asian population were to go on the rampage buying physical metal and created a vacuum of availability, the West will be shown to be naked. Could Washington accuse China of “busting” the exchanges? Is the very stubbornly high open interest in silver of Chinese origin? I believe we will find out that yes, it is and has been for well over a year. (My “Kill Switch” theory now might make batter sense but a topic for another day).
Please understand this, China fully understands consumers in the West are tapped out. They can see through the bogus numbers Washington produces and the wonks on Wall St. continually tout. They understand the Western system is built entirely on debt as in I OWE YOU! And they understand the system was set up originally as an “IOU nothing” system! They understand “it’s over”.
I do believe China wants to assume “a” if not THE reserve currency status in the future. They know they possess more gold than the U.S.. Would it not make sense to devalue your currency and even make it undervalued for the start of a new system for competitive reasons? Yes I know, they do not have enough gold to back the yuan currently …at current price. Will they pull a page out of FDR’s playbook and revalue gold higher since they are the largest hoarder in the world? Could they confiscate from their loyal citizens to leapfrog their holdings even further? Remember, the tried and true way(s) out of deflation are to print, devalue (versus neighbors AND gold) and of course go to war. Whether you want to believe it or not, we are now at war both financially and technologically. Unfortunately, financial and trade wars often times turn into hot wars. China just fired a shot heard ’round the world for those listening and it was not a celebratory shot by any means!
To finish, could it be China knows this will end in a complete collapse of the financial markets AND real economies of the world, in particular of the West? They already have the largest productive capacity in the world. Are they going to devalue their currency so it is “competitive” when the reset occurs? Have they stripped the West of their gold reserves leaving China with the greatest “monetary” hoard on the planet? Could there be a better position to be in than having the most “money” and greatest productive capacity …with a middle/lower class of your society numbering in the hundreds of millions needing “stuff” to truly enter the 21st century?
I will leave you with this graphic from Visual Capitalist:
In a world levered to the gills and no ability to grow out from under, which is better to have? Assets or liabilities? Lot’s of questions with answers soon to be revealed I believe!
Standing watch,
Bill Holter
Holter-Sinclair collaboration
and a second commentary from Bill as again he is annoyed at mining company executives who do nothing as the know that gold/silver are manipulated:
(courtesy Bill Holter/Holter/ Sinclair collaboration)
Open letter to the mining industry.
Last year at this time, I wrote and asked readers who owned shares in gold and silver producers to send their companies a letter. I ask that you do this once again. Please don’t believe I am under any delusions whatsoever because herding cats is a near impossibility. Almost no one dislikes gold and misunderstands their own product more than the current management in the mining industry. However, doing nothing will certainly accomplish nothing, doing something at least has a “chance” albeit slim. Below is a letter I plan to send to each producing mining company and precious metals mutual fund that I own personally. Gold and silver prices have been diluted by paper contracts to the point where no money can be made producing gold, and an industry wide loss producing silver. Years ago, Rob McEwen of Goldcorp decided to withhold the sale of gold production to be held in their treasury until prices were higher. THIS is exactly what needs to be done now as a counterbalance to the unbacked paper contracts being sold to dilute and depress prices. The COMEX and naked shorts need to be starved for metal, the strong physical demand is doing this slowly while the mining industry could do this very quickly.
Please, copy and paste the below and sign with your name to any producing mining companies you have investments in. Also, do the same for any gold mutual funds you may own and ask the money manager to contact their holdings with this same letter. Government has an incentive to keep metals prices down and the lapdog regulators are allowing it to happen. Price manipulation is illegal, if the authorities will not fix it, hopefully the industry itself has sense enough to finally do something! I’m not holding my breath on this one.
Standing watch,
Bill Holter
Holter-Sinclair collaboration
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Dear Sirs, I am a believer in hard money and as such am an investor in mining shares, your company being one of them. As you well know, hard times have hit the producers of both gold and silver. Gold and silver prices have been forced down, capital, either debt or equity is very scarce for our industry and share prices are back to the levels they traded at when gold was under $400 more than 10 years ago.
Much evidence has been uncovered by GATA (Gold Anti Trust Action committee) over the last 15 years showing how gold and silver prices have been suppressed and continually manipulated yet we’ve heard not a sound from the industry itself. Many mining concerns pay dues each year to the World Gold Council which at the very best seems to be an antagonist to gold and silver, at worst a Trojan horse. I know of no other industry which does not promote their own product nor protect it from outside malicious pricing practices. This needs to change and the most logical catalyst is from within the mining industry itself.
It makes no sense at all to expend labor and capital to lose money, especially when your product is a finite resource and will not ever replenish. If working harder and digging more ore was an answer then I would be cheerleading the machines. The fact is, the more that gets dug up in the current environment the more money is lost and precious ore forever wasted. As a shareholder I ask that any product over and above expenses be withheld from sale until free and fair prices are present.
The facts are well documented, global demand is and has outstripped supply of gold and silver for many years …yet the prices are dropping. Your “product” is being diluted by paper sales of “representative metal” while the board of directors do nothing at all. Actually, the mining industry itself is aiding the suppression scheme by delivering metal. This can only start one company at a time, why not our company? Why do we deplete our ore reserves and not receive fair value for our capital and labor? Whether this proposed action is taken or not remains to be seen. Shortages of metal will occur sooner or later as physical demand and backwardation will eventually take the metals higher in price by multiples. Hopefully our company still has reserves left to be sold at fair profit margins. Many companies will not be in existence within a couple of years unless those with the fiduciary responsibility to protect our companies and shareholders …also protect our product from fraudulent dilution. Best regards, _________.
end
And now your overnight Tuesday morning trading in bourses, currencies, and interest rates from Europe and Asia:
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