Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1152.60 up $0.50 (comex closing time)
Silver: $15.48 down 1 cent (comex closing time)
In the access market 5:15 pm
Gold $1158.00
Silver: $15.64
Gold/silver trading: see kitco charts on the right side of the commentary.
Following is a brief outline on gold and silver comex figures for today:
The gold comex today had a poor delivery day, registering 0 notices served for nil oz. Silver comex registered 35 notices for 175,000 oz .
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 251.28 tonnes for a loss of 51.5 tonnes over that period. Lately the removals have been rising!
In silver, the open interest rose by another astonishing 2,745 contracts even though yesterday’s silver price was up by only 8 cents. The total silver OI continues to remain relatively high with today’s reading at 174,702 contracts. The front month of March rose by 4 contracts. We are now within a whisker of multi year high in the OI with a record low price. This dichotomy has been happening now for quite a while and defies logic.
We had 35 notices served upon for 175,000 oz.
In gold we had an absolutely astonishing rise in OI with gold down by $1.40 yesterday. The total comex gold OI rests tonight at 424,435 for a gain of 6799 contracts. Today, surprisingly we again had only 0 notices served upon for nil oz.
Today, we had a small withdrawal of .28 tones of gold at the GLD/probably to pay for fees/Inventory rests at 750.67 tonnes
In silver, /SLV we had no change in inventory at the SLV/Inventory, remaining at 327.332 million oz
We have a few important stories to bring to your attention today…
1, Strange data at the comex tonight: huge OI increases in both gold and silver despite lower prices/silver OI near multi year highs and yet silver is extremely low in price. At the gold comex, we are witnessing massive amounts of gold leaving the vaults. (harvey)
2, The Euro plummets and it is now below the resistance level of 1.05.
(zero hedge)
3. The ECB increases the ELA to Greece by 600 million euros as they must have run dry of money. The EU tells Greece that they can stop paying workers and pensioners for 2 months to raise enough money to repay the IMF. Greece is angry.
4.Russia lowers its interest rate by 1% to 14%
5. The USA admonishes the UK, its close friend for its “constant accommodation to China” . Something is up here!!
6. In the Oil sector, WTI closed at $45.08. The USA announced more rigs being shut down, yet production keeps rising. The big Italian oil company ENI announced reduced CAPEX and the stoppage of all share buy backs. The globe is producing in excess 2 million barrels per day and this oil has to be stored somewhere. There will be no more storage space by June.
7. NASA scientist warns California has about 1 year of water left:
we have these and other stories for you tonight.
Let us now head over to the comex and assess trading over there today.
Here are today’s comex results:
The total gold comex open interest rose by a wide margin of 6,799 contracts today from 417,636 up to 424,435 even though gold was down by $1.40 yesterday (at the comex close). We are now in the contract month of March which saw it’s OI remain constant at 130. We had 0 notices filed on yesterday so we neither gained nor lost any additional gold oz standing for delivery in this delivery month of March. The next big active delivery month is April and here the OI rose by 253 contracts up to 217,548. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 68,064. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 199,009 contracts. Today, I wonder what happened to our HFT boys…probably scared off with the lawsuit filed. Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI rose by an extremely high 2,745 contracts from 171,957 up to 174,702 despite the fact that silver was up by only 8 cents with respect to yesterday’s trading. We are now in the active contract month of March and here the OI rose by 4 contracts up to 844. We had 3 contracts served upon yesterday. Thus we gained 7 contracts or an additional 35,000 oz will stand in this March delivery month. The estimated volume today was simply awful at 9,351 contracts (just comex sales during regular business hours. Something scared our HFT boys today. The confirmed volume on yesterday (regular plus access market) came in at 36,526 contracts which is fair in volume. We had 35 notices filed for 175,000 oz today.
March initial standings
March 13.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
68,035.745 oz (Scotia)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
0 contracts (nil oz)
No of oz to be served (notices)
130 contracts (13,000 oz)
Total monthly oz gold served (contracts) so far this month
5 contracts(500 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
114,790.651 oz
Total accumulative withdrawal of gold from the Customer inventory this month
8,466,322.8 oz
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposit
total dealer deposit: nil oz
we had 1 customer withdrawals (and the farce continues)
i) Out of Scotia: 68,035.745 oz
total customer withdrawal: 68,035.745 oz
we had 0 customer deposits:
total customer deposits; nil oz
We had 0 adjustments
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 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 March contract month, we take the total number of notices filed so far for the month (5) x 100 oz or 500 oz , to which we add the difference between the open interest for the front month of March (130) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the March contract month:
No of notices served so far (5) x 100 oz or ounces + {OI for the front month (130) – the number of notices served upon today (0) x 100 oz} = 13,500 oz or .4199 tonnes
we neither gained nor lost any gold ounces standing in this delivery month.
Total dealer inventory: 656,644.474 oz or 20.424 tonnes
Total gold inventory (dealer and customer) = 8.078 million oz. (251. 28) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 51.5 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real. I cannot see continual additions of strictly kilobars.
end
And now for silver
March silver initial standings
March 13 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil oz
Withdrawals from Customer Inventory
1,438,058.71 oz (Brinks,Scotia,Delaware,HSBC)
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory
602,112.838 oz (CNT,Delaware)
No of oz served (contracts)
35 contracts (175,000 oz)
No of oz to be served (notices)
809 contracts (4,045,000)
Total monthly oz silver served (contracts)
1770 contracts (8,850,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal of silver from the Customer inventory this month
3,671,537.0 oz
Today, we had 0 deposit into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 2 customer deposits:
i) Into CNT; 600,277.738 oz
ii) Into Delaware: 1935.100 oz
total customer deposit: 602,112.828 oz
We had 4 customer withdrawals:
i) Out of Brinks: 271,038.23 oz
ii) Out of Scotia: 660,653.04 oz
iii) Out of Delaware: 12,651.59 oz
iv) Out of HSBC: 493,715.85 oz
total withdrawals; 1,438,058.71 oz
we had 1 adjustment
i) out of Delaware: 30,153.31 oz was adjusted out of the customer and this landed into the dealer account of Delaware;
Total dealer inventory: 68.859 million oz
Total of all silver inventory (dealer and customer) 176.346 million oz
.
The total number of notices filed today is represented by 35 contracts for 175,000 oz. To calculate the number of silver ounces that will stand for delivery in March, we take the total number of notices filed for the month so far at (1770) x 5,000 oz = 8,850,000 oz to which we add the difference between the open interest for the front month of March (844) and the number of notices served upon today (35) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the March contract month:
1770 (notices served so far) + { OI for front month of March( 844) -number of notices served upon today (35} x 5000 oz = 12,895,000 oz standing for the March contract month.
we gained 7 contracts or an additional 35,000 oz will stand for delivery in March.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.com orhttp://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:
March 13/ we had a small change in gold inventory at the GLD (small withdrawal/probably to pay for fees)/Inventory at 750.67 tonnes
March 12.we had a withdrawal of 2.09 tonnes of gold at the GLD/Inventory at 750.95 tonnes
March 11.2015: no changes in gold inventory at the GLD/Inventory at 753.04 tonnes
March 10 no report on the GLD tonight/computer down/inventory remains 753.04 tonnes
March 9/ we had another huge withdrawal of 3.38 tonnes of gold from the GLD, no doubt heading for Shanghai/Inventory 753.04 tonnes
March 6/we had a huge withdrawal of 4.48 tonnes of gold from the GLD/inventory rests tonight at 756.32/Also HSBC is getting out of the gold business in London and is giving up all of its 7 vaults.
March 5 no change in gold inventory at the GLD/760.80 tonnnes
March 4/ no change/inventory 760.80 tonnes
March 3 we had another 2.69 tonnes of gold withdrawn from the GLD. Inventory is now 760.80 tonnes.
March 2 we had 7.76 tonnes of withdrawal from the GLD today and this physical gold landed in Shanghai/Inventory 763.49 tonnes
March 13/2015 / the GLD had a small withdrawal of .28 tonnes/Inventory at 750.67 tonnes
inventory: 750.67 tonnes.
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).
GLD : 750.67 tonnes.
end
And now for silver (SLV):
March 13.2015: no change in silver inventory/327.332 million oz
March 12: no changes in silver inventory/327.332 million oz
March 11/no changes in silver inventory/327.332 million oz
March 10/ no change in silver inventory/327.332 million oz
March 9/ no change in silver inventory at the SLV/327.332 million oz
March 6: huge addition of 1.34 million oz of silver into the SLV/Inventory 727.332 million oz
March 5 no change in inventory/725.992 million oz
March 4 a slight reduction of 126,000 oz of silver/SLV inventory at 725.992 (probably to pay for fees)
March 3 a small deposit of 328,000 oz of silver into the SLV/Inventory at 726.118 million oz.
March 2/ no change in silver inventory tonight; 725.734 million oz
Feb 27.2015 no change in silver inventory tonight: 725.734 million oz
Feb 26. no change in silver inventory at the SLV/Inventory at 725.734 million oz
Feb 25. no changes in silver inventory/SLV inventory at 725.734 million oz
March 13/2015 no change in silver inventory at the SLV/ SLV inventory rests tonight at 327.332 million oz
end
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now for the first time into the negative to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
Not available tonight
1. Central Fund of Canada: traded at Negative 7.9% percent to NAV in usa funds and Negative 8.2% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.8%
Percentage of fund in silver:37.8%
cash .4%
( March 13/2015)
Sprott gold fund finally rising in NAV
2. Sprott silver fund (PSLV): Premium to NAV falls to + 1.26%!!!!! NAV (March 13/2015)
3. Sprott gold fund (PHYS): premium to NAV falls to -.30% to NAV(March 13 /2015)
Note: Sprott silver trust back into positive territory at +1.26%.
Sprott physical gold trust is back into negative territory at -.30%
Central fund of Canada’s is still in jail.
end
At 3:30 pm we get the COT report which gives position levels of our major players. (from Tuesday to this past Tuesday)
Gold COT Report – Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
171,821
89,929
43,257
154,578
243,920
369,656
377,106
Change from Prior Reporting Period
-8,740
25,188
-901
14,498
-19,547
4,857
4,740
Traders
141
91
82
53
50
231
192
Small Speculators
Long
Short
Open Interest
41,262
33,812
410,918
937
1,054
5,794
non reportable positions
Change from the previous reporting period
COT Gold Report – Positions as of
WOW!!!!
Our large specs:
Those large specs that have been long in gold pitched a gigantic 8,740 contracts from their long side
Those large specs that have been short in gold ADDED A HUMONGOUS
25,188 contracts to their short side ??????
Our commercials:
Those commercials that have been long in gold added 14,498 contracts to their long side
Those commercials that have been short in gold covered a monstrous 19,547 contracts from their short side.
Our small specs;
Those small specs that have been long in gold added a tiny 937 contracts to their long side
Those small specs that have been short in gold added a tiny 1054 contracts to their short side.
Conclusion: fraud?
And let us head over to the silver COT:
Silver COT Report: Futures
Large Speculators
Commercial
Long
Short
Spreading
Long
Short
57,966
31,994
23,489
65,853
99,116
1,624
6,859
880
2,400
-4,049
Traders
80
50
44
41
43
Small Speculators
Open Interest
Total
Long
Short
169,125
Long
Short
21,817
14,526
147,308
154,599
203
1,417
5,107
4,904
3,690
non reportable positions
Positions as of:
142
120
Tuesday, March 10, 2015
©
Our Large specs:
Those large specs that have been long in silver added 1624 contracts to their long side.
Those large specs that have been short in silver added a huge 6859 contracts to their short side
Our commercials;
Those commercials that have been long in silver added 2400 contracts to their long side
Those commercials that have been short in silver covered 4049 contracts from their short side.
Our small specs:
Those small specs that have been long in silver added a tiny 203 contracts to their long side
Those small specs that have been short in silver added 1417 contracts to their short side.
Conclusion: same as gold’s.
And now for your more important physical gold/silver stories:
Gold and silver trading early this morning
(courtesy Mark O’Byrne)
Gold Up 11% Euro This Year As Currency Wars Intensify
By Mark O’Byrne March 13, 2015 0 Comments
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Gold has risen 11% versus the euro in 2015
Builds on 12% gains against the euro in 2014
Sentiment poor despite reasonable performance
Gold performing well considering significant gains in stocks and dollar
Dollar centric view misleading
Currency wars intensifying
Complacency and hubris rife
Gold rose 12% against the euro in 2014 and so far in 2015, gold has risen a further 11% versus the euro. The euro has fallen 23% against gold since January 2014. Gold has risen from EUR 880 per ounce in January 2014 to EUR 1,090 per ounce today.
The dollar-centric nature of most financial media and the tendency to focus on gold solely in dollars would give one the impression that gold has been devastated this year.
In dollar terms gold has not fared terribly well, it’s true, but that is more a function of the surge in the dollar than of weakness in gold. Gold’s performance has been quite good considering the significant strength in the dollar and the gains seen in stock markets.
Gold has an inverse correlation with the dollar and stocks over the long term.
How much longer the stock and dollar boom can continue in the face of deteriorating macro-economic data – the worst since the 2008 crisis – is anyone’s guess. The Federal Reserve, like its other central bank counterparts, has done an incredible job in levitating markets and risk assets thus far.
The dollar has soared against most of the currencies in the world but has only eked out very small gains versus gold. Gold has fallen just 2.7% in dollar terms.
When measured against other currencies, gold has risen versus many major currencies. In fact, it has only suffered modest declines in a few currencies this year. Despite all the negative gold sentiment against the backdrop of central banks globally racing to debase their currencies.
Priced in euros, gold opened the year at EUR 980.52. It quickly spiked to EUR 1,154.94 before what appears to be a 50% retrenchment. It then picked up again and at the time of writing, it is priced around the EUR 1,092 mark. So in Euro terms gold is actually up around 11% this year.
In GBP gold followed roughly the same pattern but did not rebound so well due to recent sterling strength and is currently trading slightly above its price at the start of the year.
We expect qold to be supported in the near term and to rise in the longer term as the ECB lurches into its QE program. The expectation that the ECB will inject massive liquidity into the financial system by buying up bonds en masse has been met with unquestioning enthusiasm.
We do not share this enthusiasm. The anticipation of this monetary experiment has already caused the euro to plunge. This should aid exporters in the coming months. But in the longer term it will lead to inflation as importers have to pay more for their raw materials and the public have to pay higher prices for imported goods.
Also of vital importance is that most central banks are involved in competitive currency devaluations.
Therefore, in the medium and long term, currency devaluations will be of little benefit to exporters as most central banks are engaged in the same ‘beggar thy neighbour’ trade and currency wars. So far this year twenty four central banks globally have lowered interest rates in a bid to weaken their currencies to aid their export sectors and create jobs and economic growth.
The haphazard manner in which this QE experiment is being executed in the EU is also concerning. In the absence of a truly centralised central bank it has fallen to national central banks to purchase the bonds that will create a sustainable recovery. The lack of oversight is ripe for abuse of the system.
The experiment has only been in operation for four days and already there are serious questions over whether it can be actually implemented as planned. Due to arcane accountancy rules governing the quality of bonds which may be purchased it appears that there simply may not be enough bonds to meet demand.
Given that the ECB flagged its intention to engage in QE long in advance, the bond markets have already factored in anticipated massive central bank purchases. If it turns out that the central banks cannot buy their expected allocation of bonds it will likely cause chaos in the bond markets.
The uncertainty now hanging over the European bond markets cannot have been alleviated by reports that Greek Finance Minister Varoufakis said on Tuesday that “Greece would never pay back its debts,” which was followed by Prime Minister Tsipras confirming that “Greece cannot pretend its debt burden is sustainable.”
Greece’s future in the Eurozone is still questionable. The BBC is now warning that Greece may be pivoting towards Russia. They report that a “drove of Greek cabinet members will be heading to Moscow” in May, a month before the current bail-out arrangement expires.
Anticipation of ECB QE has also caused European stock markets to rise considerably. These price rises have not been matched by a rise in earnings or dividends indicating a liquidity driven bubble in some European and other indices.
By some measures, US stock markets are more overvalued than they were in 2008.
The subprime bubble and meltdown of 2007 has now been surpassed by large bubbles in auto loans, student loans, many tech and biotech stocks, junk bonds and other sections of the bond market.
Compounding the risks is the fact that there is now $8 trillion more in public and private debt in just the United States alone.
The imbalances, distortions and malinvestment that caused the 2008 meltdown are much worse today than they were in 2008. As is the complacency and hubris.
And many of the same people who got us into this mess remain at the helm and are pursuing the same ultra loose monetary policies that got us into the debacle.
Given the risks of today – the euro and other currency QE experiments, competitive currency devaluations, currency wars, bail-ins, stock and bond market bubbles – gold will continue to protect and grow wealth over the long term.
Download Insight: Currency Wars: Bye Bye Petrodollar – Buy, Buy Gold
MARKET UPDATE
Today’s AM fix was USD 1,156.50, EUR 1,091.24 and GBP 779.58 per ounce.
Yesterday’s AM fix was USD 1,161.25, EUR 1,094.90 and GBP 774.48 per ounce.
Gold fell 0.06% percent or $0.70 and closed at $1,153.30 an ounce yesterday, while silver climbed 0.45% or $0.07 to $15.57 an ounce.
In Singapore, bullion for immediate delivery inched up 0.5 percent to $1,159.30 an ounce near the end of day trading. The yellow metal has seen nine straight sessions of losses which equates to its longest losing streak since August 1973, when it fell for ten consecutive days.
In London, spot gold is trading at $1,156.88 or up 0.24 percent. Silver is down 0.49 percent at $15.56 and platinum is up 0.45 percent at $1,123.42.
Gold Sentiment Very Poor As Speculators Sell Yet Bullion Demand Robust
Gold looks to be headed for its sixth weekly drop in seven weeks. Sentiment towards gold is quite negative after the recent price falls.
Gold has been pressurised by liquidations from the more speculative side of the market – with ETFs and in the futures market. Holdings in the SPDR Gold Trust, the world’s largest gold exchange-traded fund, fell 0.28 per cent to 750.95 tonnes on Thursday – the lowest since late January.
Unusually, the fund hasn’t seen any inflows since February 20 – see chart on flows into the ETF, and how it’s been tracking gold prices, although gold has fallen by much more than the ETF holdings.
Gold is weaker and yet, there has been very little liquidations of physical coins and bars and bullion demand in China and India remained robust in recent weeks and actually picked up this week.
Premiums in India remain close to $2 and in China they remain over $5 per ounce.
Reuters report that traders in Asia spoke of robust demand this week. “Demand has increased a little bit because of the drop in prices but there is no big rush,” said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation.
Asian buyers again are using weakness in gold and silver prices to accumulate bullion.
U.S. Mint figures show demand has been robust in March. Sales of gold American Eagle coins by the U.S. Mint have been strong, already almost matching last March’s total (at 20,500 oz so far this month, vs 21,000 oz last year) and outstripping February’s (18,500 oz).
Silver American Eagle sales aren’t doing so well, however. Sales total 1.3735 million so far this month, compared to 3.022 million oz in February and 5.354 million oz in March 2014.
Interestingly, according to Amanda Cooper of Thomson Reuters posting in the Global Gold Forum:
“Until yesterday, gold had fallen for 8 days in a row, which is pretty steep going even for the gold market when it gets gloomy. The last time gold fell that many days in a row was March 2009.
A closer look at the chart reveals that gold has only ever fallen by that many days in a row three times since the gold standard was abolished in the 1970s. Since Reuters gold data began in 1968, gold has only fallen for 9 days once, back in August 1973.”
It is worth noting that in the months following the 8 days of falls in 2009, gold prices surged.Gold rose from $892 per ounce in March 2009 to over $1,200 per ounce just 8 months later in November 2009. This was a rise of nearly 35%. A similar rise today would see gold rise from $1,155 per ounce today to over $1,550 per ounce.
Caveat emptor and past performance is no guarantee of future returns.
It takes a brave or foolish investor to buy after such price falls and we always caution never to “catch a falling knife.”
However, an attractive buying opportunity looks set to soon present itself.
Dollar, pound and euro cost averaging into a physical position remains prudent.
end
The following is long but certainly well worth your time in understanding the mechanics of the Chinese gold market
(courtesy Koos Jansen)
Koos Jansen: The mechanics of the Chinese gold market
Submitted by cpowell on Fri, 2015-03-13 03:08. Section: Daily Dispatches
10:10a ICT Friday, March 13, 2015
Dear Friend of GATA and Gold:
Bullion Star market analyst and GATA consultant Koos Jansen, who alone in the world has made documented sense of the Chinese gold market — thanks in part to the Chinese sources he has cultivated and the Chinese friends who have kindly translated for him — yesterday published a comprehensive summary of the mechanics of that market, which seems likely soon to become the world’s primary gold market. Jansen’s report is headlined “The Mechanics of the Chinese Gold Market” and it’s posted at Bullion Star here:
https://www.bullionstar.com/blogs/koos-jansen/the-mechanics-of-the-chine…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
The following was presented to you on March 6.2015.
On March 20 (next Friday(, the new gold fix will now replace the old fix and end years of manipulation. I am repeating Alasdair’s commentary today, just in case some of you may have missed this important article
(courtesy Alasdair Macleod/Goldmoney.com)
The New London Gold Fix And China’s Gold Strategy
Submitted by Alasdair Macleod via GoldMoney.com,
This month the physical gold market will undergo radical change when the four London fixing banks hand over the twice-daily fix to the International Commodity Exchange’s trading platform on 20th March.
From 1st April the Financial Conduct Authority will extend its powers from regulating the participants to regulating the fix as well. This will transfer price control away from the bullion banks allowing direct access to the fixing process for all direct participants and sponsored clients.
From this flow two important consequences. Firstly, the London market is changing from an unregulated to a partially regulated market, reducing room for price manipulation. And secondly, the major Chinese state-owned banks, assuming they register as direct participants, have the opportunity to dominate the London physical market without having to deal through one of the current fixing banks. No announcement has been made yet as to who the direct participants will be, but it is a racing certainty China will be represented.
Implications of becoming a regulated market
Under the current regime a buyer or seller on the fix has to deal through one of the four fixing bullion banks. The information gained by them from seeing this business is crucial, giving them a quasi-monopolistic trading advantage over all the other dealers. Instead, buyers and sellers will be anonymous during the auction process.
The new platform should, therefore, ensure equal opportunity, eliminating the advantage enjoyed by the fixing banks. Crucially, it will change market domination from the privileged fixing members in favour of the deepest pockets. These are almost certain to be China’s through the state-owned banks which already control the largest physical market in Asia, the Shanghai Gold Exchange (SGE).
China’s gold strategy
China actually took its first deliberate step towards eventual domination of the gold market as long ago as June 1983, when regulations on the control of gold and silver were passed by the State Council. The following Articles extracted from the English translation set out the objectives very clearly:
Article 1. These Regulations are formulated to strengthen control over gold and silver, to guarantee the State’s gold and silver requirements for its economic development and to outlaw gold and silver smuggling and speculation and profiteering activities.
Article 3. The State shall pursue a policy of unified control, monopoly purchase and distribution of gold and silver. The total income and expenditure of gold and silver of State organs, the armed forces, organizations, schools, State enterprises, institutions and collective urban and rural economic organizations (hereinafter referred to as domestic units) shall be incorporated into the State plan for the receipt and expenditure of gold and silver.
Article 4. The People’s Bank of China shall be the State organ responsible for the control of gold and silver in the People’s Republic of China.
Article 5. All gold and silver held by domestic units, with the exception of raw materials, equipment, household utensils and mementos which the People’s Bank of China has permitted to be kept, must be sold to the People’s Bank of China. No gold and silver may be personally disposed of or kept without authorisation.
Article 6. All gold and silver legally gained by individuals shall come under the protection of the State.
Article 8. All gold and silver purchases shall be transacted through the People’s Bank of China. No unit or individual shall purchase gold and silver unless authorised or entrusted to do so by the People’s Bank of China.
Article 12. All gold and silver sold by individuals must be sold to the People’s Bank of China.
Article 25. No restriction shall be imposed on the amount of gold and silver brought into the People’s Republic of China, but declaration and registration must be made to the Customs authorities of the People’s Republic of China upon entry.
Article 26. Inspection and clearance by the People’s Republic of China Customs of gold and silver taken or retaken abroad shall be made in accordance with the amount shown on the certificate issued by the People’s Bank of China or the original declaration and registration form made on entry. All gold and silver without a covering certificate or in excess of the amount declared and registered upon entry shall not be allowed to be taken out of the country.
Additionally, China has deliberately developed her gold production regardless of cost so that she is now the largest producer by far in the world today. State-owned refineries process this gold along with doré imported from elsewhere. None of this gold leaves China.
The regulations quoted above formalise the State’s monopoly over all gold and silver which is exercised through the People’s Bank, and they allow the free importation of gold and silver but keep exports under very tight control. On the basis of these regulations and as subsequently amended the People’s Bank established the SGE, which remains under its total control. The intent behind the regulations is not to establish or permit the free trade of gold and silver, but to control these commodities in the interest of the state.
This being the case, the growth of Chinese gold imports recorded as deliveries to the public since 2002 is only the most recent evidence of a deliberate act of policy embarked upon thirty-two years ago. China had been accumulating gold for nineteen years before she allowed her own nationals to buy any when private ownership was finally permitted. Furthermore, the bullion was freely available, because in seventeen of those years gold was in a severe bear market fuelled by a combination of supply from central bank disposals, leasing, scrap, rapidly-increasing mine production and investor selling, all of which I estimate totalled about 76,000 tonnes in all. The two largest buyers for all this gold for much of the time were the Middle East and China. The breakdown from these sources and the likely demand are identified in the table below taken from my article for GoldMoney on the subject published last October, where a more detailed discussion of global bullion distribution during those years can be found.
Put in another context the cost of China’s 25,000 tonnes of gold equates to roughly 10% of her exports over the period, and the eighties and early nineties in particular, also saw huge capital inflows when multinational corporations were building factories in China. However, the figure for China’s gold accumulation is at best informed speculation, but given the determination expressed in the 1983 regulations and subsequent events it is clear she had deliberately accumulated a significant undeclared stockpile by 2002.
So far China’s long-term plans for the acquisition of gold appear to have achieved some important objectives. Deliveries to the public through the SGE since only 2008 totalled 8,459 tonnes, gross of returned scrap, probably more than 9,500 tonnes since 2002 given estimated domestic mine production of 1,352 tonnes between2002-2007.
With such a large commitment to this market, we must now anticipate the next stage for China’s gold policy, which is why the changes in London may be important.
China now has the opportunity to take a dominant role in London, without having to direct its order flows through the fixing banks. Therefore, it is no exaggeration to say that from 20th March, China will be able to control the global physical gold market, which will permit her to manage the price. She has the deepest pockets, backed by the largest single stockpile.
China’s motives
China’s motives for taking control of the gold bullion market have almost certainly evolved. The regulations of 1983 make sense as part of a forward-looking plan to ensure that some of the benefits of industrialisation would be accumulated as a counterparty risk free national asset. This reasoning is similar to that of the Arab nations capitalising on the oil-price bonanza only ten years earlier, which led them to accumulate their hoard for the benefit of future generations. However, as time passed the world has changed both economically and politically.
2002 was a significant year for China, when geopolitical considerations entered the picture. Not only did the People’s Bank establish the SGE to facilitate deliveries to private investors, but this was the year the Shanghai Cooperation Organisation (SCO) formally adopted its charter. This merger of security and economic interests with Russia has bound Russia and China together with a number of resource-rich Asian states into an economic bloc. When India, Iran, Mongolia, Afghanistan and Pakistan join (as they are committed to do), the SCO will cover more than half the world’s population. And inevitably the SCO’s members are looking for an alternative trade settlement system to using the US dollar.
At some stage China with her SCO partner, Russia, will force the price of gold higher as part of their currency strategy. You can argue this from an economic point of view on the basis that possession of properly priced gold will give her a financial dominance over global trade at a time when we are trashing our fiat currencies, or more simply that there’s no point in owning an asset and suppressing its value for ever. From 2002 there evolved a geopolitical argument: both China and Russia having initially wanted to embrace American and Western European capitalism no longer sought to do so, seeing us as soft enemies instead. The Chinese public were then encouraged even by public service advertising to buy gold, helping to denude the west of her remaining bullion stocks and to provide market liquidity in China.
What is truly amazing is the western economic and political establishment have dismissed the importance of gold and ignored all the warning signals. They do not seem to realise the power they have given China and Russia to create financial chaos by simply hiking the gold price. If they do, which seems to be only a matter of time, then London’s fractional reserve system of unallocated gold accounts would simply collapse, leaving Shanghai as the only major physical market.
Therefore the failure of the London bullion market to see strategically beyond its short-term interests has opened the door to China’s powerful state-owned banking monopoly to control the gold bullion market. This is probably the final link in China’s long-standing gold strategy, and through it a planned domination of the global economy in partnership with Russia and the other SCO nations.
end
(courtesy Chris Powell)
Gold market sentiment matters no more than technical analysis does
Submitted by cpowell on Fri, 2015-03-13 06:55. Section: Daily Dispatches
2:05p ICT Friday, March 13, 2015
Dear Friend of GATA and Gold:
Some gold market analysts are noting that sentiment in the sector has probably never been worse. They construe this as an indicator of a bottom in the metal’s price and the price of gold mining shares. But in a market as manipulated as the gold market, sentiment has no more meaning than technical analysis does.
Really, who cares about what is being thought by ordinary investors, who may be able to deploy a few billion dollars in the gold market, when central banks haveinfinite money to deploy and acknowledge that they are trading the gold market nearly every day? And central banks are not trading just the metal itself but also futures, options, and derivatives, by which they can leverage their trading to infinity.
For documentation of this, see:
http://www.gata.org/node/12717
http://www.gata.org/node/11012
http://www.gata.org/node/13373
http://www.gata.org/node/14716
http://www.gata.org/node/12016
http://www.gata.org/node/14385
http://www.gata.org/node/14411
http://www.gata.org/node/14818
In the face of the infinite money deployed against them, the sentiment of gold market investors could be entirely positive or negative and it wouldn’t mean anything. In the gold market right now the only sentiment that matters is that of the biggest traders, central banks.
These days no gold market analysis is worth anything unless it starts with questions like the following or is underlain by premises arising from these questions:
— Are central banks active in the gold market or not?
— If central banks are active in the gold market, is it just for fun — say, to run contests among their foreign exchange desks to see which one can cheat the most ordinary investors — or is it for policy objectives?
— If central banks are active in the gold market for policy objectives, are these objectives those that have been documented in government archives for decades — to limit the price of the monetary metal and to push it out of the international financial system so that central banks may accrue more power? Or are there other objectives as well, like the objective suggested by the economists and fund managers Paul Brodsky, Lee Quaintance, and James Rickards, who argue more or less that gold price suppression by central banks lately is meant to redistribute gold away from Western central banks and investors to Eastern central banks needing to hedge their grotesque U.S. dollar-based foreign exchange surpluses against devaluation of the dollar?
In these circumstances, if central banks are determined enough they could use their infinite leverage to drive the price of gold on the futures markets down to zero. Their intervention is limited only by the metal they are prepared to lose, just as their intervention during the operation of the London Gold Pool was limited only by the draining of central bank gold reserves to critical levels in March 1968.
Recent attempts by some central banks to repatriate their gold from the Federal Reserve Bank of New York support suspicion that the price-suppression scheme, engineered largely the U.S. government, has begun expropriating foreign custodial gold for suppression purposes, buying the scheme a lot more time than some gold market analysts thought it ever could have.
And if, as seems generally agreed, any default on the gold contract at the New York Commodities Exchange can be resolved with cash settlement at the price prevailing before no gold was offered for sale and the price skyrocketed, should the price-suppressing central banks care much about a default? For the risk of default in Comex gold would be not really the risk of losing metal but rather the risk of losing the primary mechanism of price suppression, the exchange itself, which might be replaced by confiscation or the outlawing of private possession of gold.
While it may be hard to imagine, the U.S. government claims to be fully authorized by law not just to rig the gold market and all markets in secret —
http://www.treasury.gov/resource-center/international/ESF/Pages/esf-inde…
— but also to strip anyone of any asset, not just assets in the monetary metals, upon a presidential proclamation of emergency:
http://www.gata.org/node/5606
That is, the outcome of the current round of gold price suppression may not be anything like the outcome of the collapse of the London Gold Pool, an advance toward freer markets, but rather more of what even some central bankers call “financial repression.”
But at least then gold price suppression would be undertaken so openly that even mainstream financial news organizations would have to mention it — that is, if news organizations were allowed to continue operating at all.
That’s why the only gold market analysis that may be worth anything anymore is analysis of the struggle between totalitarianism and liberty. No Internet site of financial data offers a chart for that.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
And now for the important paper stories for today:
Early Friday morning trading from Europe/Asia
1. Stocks generally higher on major Chinese bourses (India and Australia lower)/yen falls to 121.51
1b Chinese yuan vs USA dollar/yuan strengthens to 6.2592
2 Nikkei up 263.14 or 1.39%
3. Europe stocks bleeding red/USA dollar index down to 99.69/Euro falls to 1.0571
3b Japane 10 year bond yield .41% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 121.51/
3c Nikkei still above 19,000
3d USA/Yen rate now above 121 barrier this morning
3e WTI 46.15 Brent 56.43
3f Gold up/Yen slightly down
3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil down for both WTI and Brent this morning.
3i European bond buying continues to push yields lower on all fronts in the EMU
Except Greece which sees its 2 year rate rise to 19.05%/Greek stocks down again by 1.09% today/expect continual bank runs on Greek banks.
3j Greek 10 year bond yield: 10.83% (down slightly by 5 basis points in yield)
3k Gold at 1160.00 dollars/silver $15.66
3l USA vs Russian rouble; (Russian rouble par rouble/dollar in value) 60.60
3m oil into the 46 dollar handle for WTI and 56 handle for Brent
3n Higher foreign deposits out of China sees hugh risk of outflows and a currency depreciation. This scan spell financial disaster for the rest of the world/China may be forced to do QE!!
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