Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1205.10 up $7.80 (comex closing time)
Silver: $17.12 up 14 cents (comex closing time)
In the access market 5:15 pm
Gold $1203.55
Silver: $17.08
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 1 notice served for 100 oz. Silver comex registered 129 notices for 645,000 oz .
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 248.27 tonnes for a loss of 55 tonnes over that period. Lately the removals have been rising!
In silver, the open interest fell by 589 contracts, due to short covering, as Wednesday’s silver price was up by 1 cent. The total silver OI continues to remain extremely high with today’s reading at 172,070 contracts. The front month of March fell by 171 contracts to 312 contracts. We are still close to multi year high in the total OI complex despite a record low price. 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.
We had 129 notices served upon for 645,000 oz.
In gold we again have a total collapse of OI as we enter the next active delivery month of April . The total comex gold OI rests tonight at 416,312 for a whopping loss 17,455 contracts. With June gold almost equal to April gold in price, it just does not make sense why so many would liquidate their positions.Today is options expiry. Surprisingly we had 1 notice served upon for 100 oz.
Today, we had a huge withdrawal of 5.97 tonnes at the GLD/ Gold Inventory rests at 737.24 tonnes
In silver, /SLV we had no changes in silver inventory at the SLV/Inventory, at 325.323 million oz
We have a few important stories to bring to your attention today…
1, Today we again had some short covering in the silver comex with the silver OI falling by 589 contracts. Gold OI fell by a whopping 17,455 contracts. Both gold and silver rose nicely again today. 1,028.80 oz of . (report Harvey)
2. Yemen rebels heading straight for the strategic city of Aden, on the southern tip of the Red Sea. Saudi Arabia and 10 nations join force to oust these rebels in what is becoming another proxy war with Sunnis on one side (Saudi Arabia, Egypt, Kuwait etc and Iran on the other side. The big question of course is where does China and Russia sit with this.
(zero hedge/IRD/Dave Kranzler)
3.The ECB is quietly asking its banks how much exposure they have to the big Austrian Hypo bank failure. Bail ins will commence in about one month . (zero hedge)
4. Russia refuses to take a haircut on the 3 billion usa dollar loan given to the Ukraine. The IMF is requesting everybody take a haircut on its debt for the new loan from the iMF to commence. Russia can call this note early setting off a disorderly default. (zero hedge)
5. Has the USA blundered with respect to the latest Chinese initiative infrastructure bank
(Ambrose Evans Pritchard/UKTelegraph/Bill Holter/Miles Franklin)
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 fell by a whopping 17,455 contracts from 433,767 down to 416,312 as gold was up by $5.60 yesterday (at the comex close). As I mentioned above, the complete collapse of OI as we enter an active delivery month makes no sense.The fact that we have a middle eastern war, troubles in Ukraine and in Greece and then to have a complete collapse in OI is beyond comprehension. We are now in the contract month of March which saw it’s OI fall to 92 for a loss of 389 contracts. We had 0 notices filed upon on Tuesday so we lost 389 gold contracts or an additional 38,900 ounces will not stand for delivery in this delivery month of March. The next big active delivery month is April and here the OI fell by 43,312 contracts down to 111,698. We have 5 days before first day notice for the April gold contract month, on Tuesday, March 31.2015. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 203,523. (Where on earth are the high frequency boys?). The confirmed volume on yesterday ( which includes the volume during regular business hours + access market sales the previous day) was fair at 290,533 contracts. Today we had 1 notice filed for 100 oz.
And now for the wild silver comex results. Silver OI fell by 589 contracts from 172,659 down to 172,070 despite the fact that silver was up 1 cent, with respect to Wednesday’s trading . We therefore again had some more short covering by our bankers. We are now in the active contract month of March and here the OI fell by 134 contracts falling to 212. We had 154 contracts served upon yesterday. Thus we gained 20 contracts or an additional 100,000 oz will stand in this March delivery month. The estimated volume today was fair at 27,073 contracts (just comex sales during regular business hours. The confirmed volume on Wednesday (regular plus access market) came in at 33,300 contracts which is also fair in volume. We had 129 notices filed for 645,000 oz today.
March initial standings
March 26.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
3552.160 oz (Manfra,Brinks, Delaware, Scotia, HSBC)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
97,738.120 oz (Delaware, HSBC, Scotia)
No of oz served (contracts) today
1 contracts (100 oz)
No of oz to be served (notices)
108 contracts (10,800 oz)
Total monthly oz gold served (contracts) so far this month
9 contracts(900 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
656,689.9 oz
Today, we had 0 dealer transaction
total Dealer withdrawals: nil oz
we had 0 dealer deposit
total dealer deposit: nil
we had 5 customer withdrawals
i) Out of Manfra: 64.3 oz (2 kilobars)
ii) Out of Scotia: 2989.95oz (93 kilobars)
iii)Out of Delaware: 204.64 oz (real bars)
iv) Out of Brinks: 96.45 (3 kilobars)
v)Out of HSBC 196.82 oz (real bars)
total customer withdrawal: 3,552.16
we had 3 customer deposits:
i) Into Delaware: 888.415 oz
ii) Into HSBC: 202.886 oz
iii) Into Scotia: 96,450.000 oz
total customer deposit: 97,738.12 oz
We had 2 adjustments
Out of Brinks; 96.45 oz was adjusted out of the customer and this landed into the dealer account at Brinks
Out of Delaware; 199.74 oz was adjusted out of the customer and this landed into the dealer account at Delaware.
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 1 contract 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 (9) x 100 oz or 900 oz , to which we add the difference between the open interest for the front month of March (92) and the number of notices served upon today (1) 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 (9) x 100 oz or ounces + {OI for the front month (92) – the number of notices served upon today (1) x 100 oz} = 10,000 oz or .3110 tonnes
we lost a huge 389 contracts or 38,900 oz will not stand for delivery.
Total dealer inventory: 658,833.604 oz or 20.49 tonnes
Total gold inventory (dealer and customer) = 7,981,965.774 oz. (248.27) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 55.0 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 26 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil oz
Withdrawals from Customer Inventory
401,239.24 oz (Delaware, HSBC)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
234,806.700 oz (Scotia)
No of oz served (contracts)
129 contracts (645,000 oz)
No of oz to be served (notices)
83 contracts (415,000)
Total monthly oz silver served (contracts)
2432 contracts (12,160,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal of silver from the Customer inventory this month
7,416,837.6 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 Scotia: 234.806.700 oz
total customer deposit: 234,806.700 oz
We had 2 customer withdrawals:
i) Out of HSBC: 400,248.09 oz
ii) Out of Delaware; 991.15 oz
total withdrawals; 401,239.24 oz
we had 0 adjustments:
Total dealer inventory: 70.569 million oz
Total of all silver inventory (dealer and customer) 175.180 million oz
.
The total number of notices filed today is represented by 129 contracts for 645,000 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 (2432) x 5,000 oz = 12,160,000 oz to which we add the difference between the open interest for the front month of March (212) and the number of notices served upon today (129) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the March contract month:
2432 (notices served so far) + { OI for front month of March(212) -number of notices served upon today (129} x 5000 oz = 12,575,000 oz standing for the March contract month.
we gained 100,000 oz of additional silver standing in this March delivery month.
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 26 we had another huge withdrawal of 5.97 tonnes of gold. This gold is heading straight to the vaults of Shanghai, China/GLD inventory 737.24 tonnes
March 25.2015 we had a withdrawal of 1.19 tonnes of gold from the GLD/Inventory at 743.21 tonnes
March 24/ no changes in gold inventory at the GLD/Inventory 744.40 tonnes
March 23/we had a huge withdrawal of 5.37 tonnes of gold from the GLD vaults/Inventory 744.40 tonnes
march 20/we had no changes in inventory at the GLD/Inventory at 749.77 tonnes
March 19/we had no changes in inventory at the GLD/Inventory 749.77 tonnes
March 18/ we had a withdrawal of .9 tonnes of gold from the GLD/Inventory at 749.77 tonnes
March 17.2015: no change in gold inventory at the GLD/Inventory 750.67 tonnes
March 16/no change in gold inventory at the GLD/Inventory 750.67 tonnes
March 26/2015 / we had a withdrawal of 5.97 tonnes of gold/Inventory at 737.24 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 : 737.24 tonnes.
end
And now for silver (SLV):
March 26.2015; no change in silver inventory/SLV inventory 325.323 million oz
March 25.2015:no change in silver inventory/SLV inventory 325.323 million oz
March 24.2015/ we had another withdrawal of 835,000 oz of silver from the SLV/Inventory rests tonight at 325.323 million oz
March 23./we had a huge withdrawal of 1.174 million oz of silver from the SLV vaults/Inventory 326.158 million oz
March 20/ no changes in silver inventory/327.332 million oz
March 19/ no change in silver inventory/327.332 million oz
March 18/ no change in silver inventory/327.332 million oz
March 17/ no change in silver inventory/327.332 million oz
March 16/no change in silver inventory/327.332 million oz
March 26/2015 we had no changes in inventory/SLV inventory at 325.323 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)
1. Central Fund of Canada: traded at Negative 8.8% percent to NAV in usa funds and Negative 8.6% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.5%
Percentage of fund in silver:39.1%
cash .4%
( March 26/2015)
Sprott gold fund finally rising in NAV
2. Sprott silver fund (PSLV): Premium to NAV falls to + 1.22%!!!!! NAV (March 26/2015)
3. Sprott gold fund (PHYS): premium to NAV falls -.45% to NAV(March 26 /2015)
Note: Sprott silver trust back into positive territory at +1.22%.
Sprott physical gold trust is back into negative territory at -.45%
Central fund of Canada’s is still in jail.
end
And now for your more important physical gold/silver stories:
Gold and silver trading early this morning
(courtesy Goldcore/Mark O’Byrne)
Oil Surges, Gold and Silver Spike as Saudi Arabia Bombs Yemen
By Mark O’Byrne March 26, 2015 0 Comments
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- Geopolitical tensions in Middle East escalate dramatically as Saudi Arabia bombs Yemen
- Yemen’s government seized power in coup – Regarded as hostile to Saudi and ally of Iran
- Saudi attack is an escalation of Middle Eastern proxy war between Gulf States and Iran
- Action has broader geopolitical implications in deepening cold war between the West and East
- Oil surged 6% and gold 2% on the the news
- Should oil prices return to new record highs will impact struggling global economy
Geopolitical tensions escalated dramatically over night as Saudi Arabia launched military operations including air strikes in Yemen. The Saudis claim the action is to counter Iran-allied forces besieging the southern city of Aden where the U.S. backed Yemeni president had taken refuge.
Oil surged and gold rose nearly 2% following a sharp drop in stocks on Wall Street globally in response to the bombing in Yemen.
Gulf broadcaster al-Arabiya TV reported that the kingdom was contributing as many as 150,000 troops and 100 war planes to the operations. Egypt, Jordan, Sudan and Pakistan were ready to take part in a ground offensive in Yemen, the broadcaster said.
The Saudi’s seem determined to pull geopolitically strategic Yemen back into its orbit following the coup d’etat in February.
The Syrian state news agency said the Saudi-led military operation is an act of “blatant aggression”.
“Gulf war planes led by the regime of the Saudi family launch a blatant aggression on Yemen,” read their headline. The Syrian government led by President Bashar al Assad is an ally of Iran, which is in turn allied with the Yemeni Houthi rebels who are fighting to oust the country’s U.S. backed president.
Saudi Arabia and other Gulf states have been important sponsors of the insurgency against Assad.
Traditionally Saudi Arabia has kept Yemen under its control through patronage of various tribal factions. This system was disrupted in 2011 when internal social pressures forced the incumbent President Saleh to step down.
In September, the Houthis – a Shia group seen as allied to Iran – seized control of Yemen’s capital Sana’a. Shia’s make up up to 45% of Yemen’s population. In February, the Houthis declared themselves the new government of Yemen filling the vacuum caused by the resignation of the previous government amid a political impasse.
Saudi’s actions in Yemen is a dramatic escalation in the proxy war between the Gulf states and Iran now raging in Iraq and Syria. The tensions arise out of competition over who has access to the lucrative, oil-hungry, European markets.
That a country would choose to directly intervene militarily in the affairs of another country is a dangerous precedent and could lead to a wider conflagration in the region – especially if Syria or Iran decide to retaliate against Saudi Arabia.
Iran now may claim to have justification to involve itself directly into the affairs of neighbouring countries and the potential for direct conflict and a full scale regional war has just increased.
It may also lead to heightened tensions in the simmering Cold War between the West and the East. Russian diplomacy disrupted moves by the West and western-backed Gulf states to remove yet another secular leader, one of the few remaining secular leaders, in the Islamic world – Assad in Syria.
Iran and Syria have close diplomatic and business ties with Russia. The White House has already made its support for Saudi actions clear and it is likely that Russia will support Iran in any response it may deliver.
Given the strategically vital nature of the whole region it is unlikely that either the U.S. or Russia will allow events to be determined by local players and this has serious implications in the new Cold War.
Oil surged over 6% on the news. A full-on conflict between Iran and the Gulf states would likely shut off the Straits of Hormuz, dramatically reducing the supply of oil coming out of the Gulf and a spike in oil prices.
This would benefit both Russia’s struggling economy and the U.S. energy sector but impact struggling consumers in the U.S. and internationally. Indeed, Europeans are particularly vulnerable to a sharp rise in oil prices now after the significant fall in the euro in recent months.
Gold’s rise is indicative of its function as a hedge against economic and geopolitical uncertainty. A supply crunch in oil in the middle of a slump driven by lack of demand would put even more pressure on industries struggling to sell product to heavily indebted western consumers.
While oil prices remain very depressed, surging oil prices could again be the ‘straw that breaks the global economies back’.
“A must read for family offices seeking wealth preservation”
Essential Family Office Guide to Investing In Gold
MARKET UPDATE
Today’s AM fix was USD 1,209.40, EUR 1,097.26 and GBP 809.23 per ounce.
Yesterday’s AM fix was USD 1,192.55, EUR 1,088.89 and GBP 801.18 per ounce.
Gold rose 0.16 percent or $1.90 and closed at $1,195.60 an ounce yesterday, while silver slipped 0.18 percent or $0.03 at $16.97 an ounce.
Gold has been bid higher due to the escalation of geopolitical risk in the Middle East and technical buying after gold rose above the $1,200/oz level.
Gold climbed more than 1.4% to a three and a half week high and silver soared almost 3 percent as air strikes in Yemen had a ripple effect on markets.
Saudi Arabia and its Arab allies launched air strikes in Yemen against allies of Iran in the southern city of Aden. The return of ‘risk off’ sentiment for the first time in many weeks, boosted gold, silver and German bunds while equities and the U.S. dollar fell.
The question is whether this is a flash in the pan for gold or the start of a more meaningful rally in prices. Gold appears overbought in the very short term. The last winning streak for 7 days in a row for the yellow metal was in August 2012.
In the end of day trading in Singapore, gold prices rose 0.8 percent to $1,204.20 an ounce, but earlier reached $1,204.60, its highest since March 5th. In London, Spot gold hit a peak of $1,219.40 an ounce and climbed 1.2 percent at $1,210.30 in morning trading. Comex U.S. gold futures for April delivery were up $12.70 an ounce at $1,209.70.
On the Shanghai Gold Exchange (SGE), premiums pulled back to about $2-$3 an ounce, compared with $6-$7 last week.
Silver prices jumped to a three month high at $17.38 per ounce. Platinum was $1,153.25 per ounce up 0.6 percent, while palladium was $770.39 an ounce or up 1 percent.
end
(courtesy Chris Powell/GATA)
Gold market manipulation is ‘too inflammatory’ to be debated at Hong Kong conference
Submitted by cpowell on Thu, 2015-03-26 10:35. Section: Daily Dispatches
6:51p HKT Thursday, March 26, 2015
Dear Friend of GATA and Gold:
Yesterday’s concentration on gold at the spectacular Mines and Money Hong Kong conference may have inadvertently proved GATA’s longstanding contention that gold market manipulation simply can’t be discussed in polite company almost anywhere in the world.
For at the outset of a panel discussion described as a debate about the direction of the gold price, its moderator, Rod Whyte, a longtime gold advocate and member of the Board of Directors of Australia-based business information provider Aspermont Ltd., announced that the panelists had agreed that gold market manipulation would not be discussed because the topic is “too inflammatory.”
Since Whyte has expressed support for GATA at other venues, the calculated avoidance of the manipulation issue would seem to have been someone else’s idea. In any case the panel included two members who could not have been expected to want to discuss the issue: Philip Klapwijk, formerly an analyst for Gold Fields Mineral Services, now managing director of Precious Metals Insights Ltd. in Hong Kong, and Albert Cheng, Far East managing director for the World Gold Council.
While Klapwijk predicted that the price of gold will fall substantially, predictions for the gold price are of no particular concern to GATA. We recognize that as long as the futures markets are operating, central banks can drive the price down to zero or up to infinity.But your secretary/treasurer was in the audience and would have liked to ask Klapwijk and Cheng a few questions.
For example:
— Was the Banque de France’s director of market operations, Alexandre Gautier, telling the truth when he told the London Bullion Market Association meeting in Rome in September 2013, that the bank is secretly trading gold for its own account and the accounts of other central banks “nearly on a daily basis”? (See:http://www.gata.org/node/13373.)
— Is the Bank for International Settlements telling the truth when it maintains in its annual report that it does the same sort of secret trading on behalf of its member central banks, trading not only gold itself but also gold futures, options, and other derivatives? (See: http://www.gata.org/node/12717.)
— Is the BIS sincere when it advertises that it undertakes secret interventions in the gold market for its members? (See http://www.gata.org/node/11012.)
— If these central banks are indeed doing so much secret trading in the gold market, what are their objectives and might this secret trading manipulate the market and thereby deceive and cheat investors?
— And for the World Gold Council’s Cheng in particular: In its various analyses of the gold market, does the World Gold Council ever consider this secret trading by central banks, and does the council have any opinion about it?
Unfortunately the program did not permit questions.
An hour later your secretary/treasurer began his own presentation by noting the gold debate panel’s determination that discussion of market manipulation is “too inflammatory” to be discussed and reminding the audience that they had been warned and might want to leave so as to avoid the ensuing unpleasantness. It was gratifying that no one walked out, though of course Klapwijk and Cheng had not stuck around.
Your secretary/treasurer said that GATA has spent 15 years collecting the documentation of largely surreptitious manipulation of the gold market by central banks and clamoring and litigating against it —
http://www.gata.org/taxonomy/term/21
— and that the presentation of this documentation had served mainly to get GATA disparaged as “conspiracy theorists.”
But your secretary/treasurer added that there is such a thing as conspiracy fact — as when the European Central Bank gathers its members secretly every few years to determine their policy in the gold market and then announces that this policy indeed has been determined in secret and that it will continue to be determined in secret and executed in secret as well:
http://www.ecb.europa.eu/press/pr/date/2014/html/pr140519.en.html
It is also conspiracy fact when the G-10 Gold and Foreign Exchange Committee, representing the treasury departments and central banks of the industrial world, undertakes the same sort of secret meetings for policy formation and execution —
http://www.gata.org/node/9623
— just as it is conspiracy fact when the U.S. Federal Reserve secretly undertakes and executes gold swap arrangements with foreign banks —
http://www.gata.org/node/7819
— and when members of the International Monetary Fund swap and lease gold in secret to facilitate their secret interventions in the gold and currency markets:
http://www.gata.org/node/12016
Indeed, insofar as it operates largely in secret much of the time, government itself is by definition one big conspiracy.
Any serious analysis of the gold market, your secretary/treasurer said, must begin with these questions:
— Are central banks in the gold market largely surreptitiously or not?
— If central banks are in the gold market largely surreptitiously, is it just for fun — for example, to see which central bank’s trading desk can make the most money by cheating the most investors — or is it for policy purposes?
— If central banks are in the gold market for policy purposes, are these the traditional purposes of defeating a potentially competitive world reserve currency (see http://www.gata.org/node/13310) or might there be other purposes as well (see http://www.gata.org/node/14994)?
Then your secretary/treasurer presented as many documents as the remainder of his 20 minutes allowed. Fortunately this allowed citation of the U.S. Commodity Futures Trading Commission and U.S. Securities and Exchange Commission documents indicating that central banks are secretly trading all major U.S. futures markets and contracts:
http://www.gata.org/node/14385
http://www.gata.org/node/14411
http://www.gata.org/node/14818
Grateful as he was to be allowed to participate again at the Hong Kong conference, your secretary/treasurer would be even more grateful to participate in any forum at which anyone of any standing in the gold market who dismisses complaints of gold market manipulation as “conspiracy theory” would be prepared to address the questions and documents cited here.
Of course it would be ideal if anyone in authority in government anywhere would attend a forum for addressing these questions and documents.
Yes, these questions and documents may be considered inflammatory, but only insofar as the world’s financial system has become a cosmic fraud that deserves to go up in flames.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
(courtesy Koos Jansen)
Posted on 26 Mar 2015 by Koos Jansen
Euronews: If China Joins The New Gold Fix, There’ll Be Less Manipulation
On March 24, 2015, Euronews broadcasted Business Middle East, in which Nour Al Hammoury from ADS securities, stated that if Chinese banks would join the new gold fix it would be less sensitive for manipulation. Having Chinese banks participate in the fix, would indeed be very welcome.
If you like to read more about if Chinese banks will participate in the new fix read Chinese Banks as direct participants in the new LBMA Gold and Silver Price auctions? Not so fast!
Global gold price setting arrives in the 21st century
…Better late than never, the gold market has entered the digital era, joining other precious metals in the 21st century. Criticism of an archaic global price fixing system intensified with some claiming it lacked credibility. Following numerous fines on international banks due to scandals of price manipulation, gold traders may now have more peace of mind with a new electronic system to manage price setting.
…Since 1919, the gold price setting process was limited to four international banks “Barclays, HSBC, Société Générale and Scotiabank”. In the original process, inter-bank representatives would set up a secure conference call each day in order to determine the price. UBS Swiss and Goldman Sachs have now joined this list of bank representatives. The new digital system follows the same process:
Each round is 45 seconds long. Bids and offers are displayed and updated in real-time. The difference is automatically calculated and if it stays within 20,000 troy ounces, the price is fixed. In this new system, orders are separated between clients and the banks’ trading desks.
Daleen Hassan
“Is the new electronic system able to make the daily price benchmark less vulnerable to manipulation?”
Nour Al Hammoury
“We hope. Major global banks have faced many scandals related to commodities and not only gold. The banks who were predicting the price of gold to reach above 2,000 USD/oz are the same banks who are predicting now that the price will fall below 1,000 USD/oz. Despite that, the major banks remain the biggest gold buyers, according to the latest report from the world gold council. In the meantime, the new pricing might give the market some confidence, especially if its transparent and this is what we will be watching out for the coming period.”
Daleen Hassan
“According to projections, China could play a key role in the new pricing system. How so?”
Nour Al Hammoury
“From the start of the financial crisis until today, China has been buying a huge amount of gold, making it one of the biggest consumer and buyers of gold in the past few months. Indeed, if China joins the new pricing plan, there’ll be less manipulation; the more they increase the participants the less chance of manipulation as we’ve seen before, when price setting was done by a few banks.”
Koos Jansen
E-mail Koos Jansen on: koos.jansen@bullionstar.com
end
Bill Holter pounds the table on what the AIIB initiate will mean.
Bill’s commentary is also reinforced by Ambrose Evans Pritchard
(below)
(courtesy Bill Holter/Miles Franklin)
Dropping an F-bomb at a Sunday afternoon social?
Many people believe the Chinese are on the cusp of replacing the U.S. in many fashions, I believe this myself. There are others out there who believe the Chinese economy and financial markets will crash and burn with all the rest when the derivatives chain finally breaks, I don’t disagree with this either. Let’s look at what the Chinese have done, what they are doing and where they may end up. The spoiler is this, I believe you can equate the Chinese to where the United States stood in the late 1920’s and early 1930’s.
China has done many things over the past years. They have built their manufacturing base and infrastructure faster and on a far larger scale than America did in the early years of the 20th century. They have financed the U.S. budget deficits and “played the game” just as the U.S. did with Britain. It seems as if everything they do is geared toward one goal, that being economic and financial supremacy.
The list of what they have done over just the last few years is very long. China has set up global currency hubs in a dozen or more places all over the world. They have done trade deals all over the world and in various businesses and deals in various raw materials. The recent formation of the AIIB bank is a perfect example of how wide their sight is.
Do you notice anything strange about this map? All of the names from Asia you would expect to see are on the list, but there are others that are (were) shockers. Two weeks ago we heard Britain had applied for charter member status. This was followed by president Obama’s very harsh words the next day …which was then followed by Germany, France and Italy making their application. This is all old news, I know. Let me ask you again, is there something else quite strange about this map?
Until I saw this, I did not know that Qatar, Jordan, Oman, our old Gulf War friends Kuwait AND the biggie, Saudi Arabia have all applied for membership. Our allies in Europe was bad enough and certainly a slap on Uncle Sam’s kisser, but Saudi Arabia? This is like dropping an F-bomb at a Sunday afternoon social! Aren’t they the absolute cornerstone of the “petrodollar”? Where has this news been in our mainstream media? Is it important news? Just a little, or just irrelevant?
Think about this and the ramifications for a moment. The AIIB will be a bank which does not use dollars and will be a direct competitor to the World Bank. Over the last 25 years, rulers have been deposed and countries invaded and bombed for less, just ask Saddam Hussein or Mr. Qaddafi. All they had to do was mention they would accept euros for oil and their lifespans became shortened significantly. If Saudi Arabia is straying off the reservation and no longer using dollars “EXCUSIVELY”, what does this mean for the future of the dollar?
There is one more area where insult was added to injury. Last week
http://www.bloomberg.com/news/articles/2015-03-22/china-s-zhou-switches-topics-on-lagarde-to-put-his-case-for-yuan the IMF’s Christine Lagarde and Chinese central bank governor Zhou Xiaochuan were to give a speech about monetary policy in the “new normal”, the topic turned 180 degrees. Rather than talk about monetary policy, Zhou talked about the merits of including the Chinese yuan in the IMF’s SDR basket!
Do you see where this is all going? China is the United States of 1929. Will their financial system crash and burn with the West’s? In my opinion, yes most probably. Do they care? Probably yes but it is unavoidable. However, China has built out new infrastructure that will serve them well for the next 50-100 years. It is REAL stuff, paid for with credit which will evaporate in the coming collapse. (As an interesting side note, China used more concrete in 3 years than the U.S. did throughout ALL of the 20th century).
China is moving to not only be a “part of the competition”, they will lead the “rest of the world”. They want to be included in the SDR basket of which the U.S. dollar is the lions share. Think about this for a moment, the IMF supposedly has over 3,000 tons of gold and the U.S. over 8,000 tons. Gold “was” deemed to be important when the SDR was formed (and will again). What if it turns out the U.S. doesn’t have the gold? …And China does? Could the yuan just substitute for the dollar in a reengineered SDR? It pains me to say this but it is what it is, the U.S. has bullied, cheated and lied its way into what looks like an isolated corner while China politely slides into Uncle Sam’s emptied chair. American leadership has no one to blame other than themselves. The options remaining to the U.S. are now few. Unfortunately, kicking the table over and shooting all the players is at the top of the list. Regards, Bill Holter
And now for the important paper stories for today:
Early Thursday morning trading from Europe/Asia
1. Stocks generally lower on major Chinese bourses (only Shanghai higher)/yen rises to 118.70
1b Chinese yuan vs USA dollar/yuan slightly weakens to 6.2124
2 Nikkei down by 275.08 or 1.39%
3. Europe stocks all in the red/USA dollar index down to 96.51/Euro rises to 1.1003
3b Japan 10 year bond yield .33% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 118.70/
3c Nikkei still above 19,000
3d USA/Yen rate now below the 119 barrier this morning
3e WTI 51.23 Brent 58.73
3f Gold up/Yen up
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 up for WTI and up for Brent this morning as a proxy civil war breaks out in Yemen (see below zero hedge commentary)
3i European bond buying continues to push yields lower on all fronts in the EMU
Except Greece which sees its 2 year rate slightly rises to 19.89%/Greek stocks down by a huge 2.54%today/ still expect continual bank runs on Greek banks.
3j Greek 10 year bond yield: 10.94% (up by 15 basis point in yield)
3k Gold at 1208.00 dollars/silver $17.16
3l USA vs Russian rouble; (Russian rouble up 1/2 rouble/dollar in value) 56.45 rising with the higher brent oil price
3m oil into the 51 dollar handle for WTI and 58 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!!
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF
3p Britain’s serious fraud squad investigating the Bank of England/ the British pound is suffering
3r the 7 year German bund still is in negative territory/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure.
3s Eurogroup reject Greece’s bid for the return of previous 1.2 billion euros of bailout funds. The ECB increases ELA by 1.5 billion euros up to 71.3 billion euros. This money is used to replace fleeing depositors.
3t Bloomberg calculates Greece’s shortfall in March at 3.5 billion euros.
4. USA 10 year treasury bond at 1.91% early this morning. Thirty year rate well below 3% at 2.50%/yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy zero hedge/Jim Reid Deutsche bank)
Futures Tumble As Yemen War Starts; Oil, Gold Surges
In a somewhat surprising turn of events, this morning’s futures reaction to last night’s shocking start of a completely unexpected Yemen proxy war, which has seen an alliance of Gulf State launch an air, and soon land, war against Yemen’s Houthi rebels, is what one would expect: down, and down big.
This is surprising, because on previous occasions one would expect the NY Fed, or its pet hedge fund, Citadel, or the BOJ or ECB (via the CME’s “Central Bank Incentive Program“) to aggressively buy ES to prevent a slide, something has changed, and for the BTFDers, that something may be very fatal with the e-Mini rapidly approaching a 1-handle yet again.
The offset to tumbling stocks, as previously observed, is oil, with WTI soaring over 6% in a delayed algo response to the Qatar headlines.
WTI rose as high as mid-$52 before retreating modestly:
“Rising prices could become a self-fulfilling prophecy if market participants see this as the beginning of a rally and start buying,” says Global Risk Management oil risk manager Michael Poulsen. “We are already seeing some reaction, as buyers start looking for protection from more costly oil.”
It wasn’t just oil: gold also soared briefly after European traders arrived in the office, but since then the BIS gold trading desk headed by Benoit Gilson has managed to get things mostly back in order.
Why is tiny Yemen, which produced just about 133,000 barrels a day of oil in 2013, making it the 39th biggest producer, according to the U.S. Energy Information Administration, roiling the market? Bloomberg has a quick explainer:
While Yemen contributes less than 0.2 percent of global oil output, its location puts it near the center of world energy trade. The nation shares a border with Saudi Arabia, the world’s biggest crude exporter, and sits on one side of a shipping chokepoint used by crude tankers heading West from the Persian Gulf. Global oil prices jumped more than 5 percent on Thursday after regional powers began bombing rebel targets in the country that produced less than Denmark in 2013.
“While thousands of barrels of oil from Yemen will not be noticed, millions from Saudi Arabia will matter,” said John Vautrain, who has more than 30 years’ experience in the energy industry and is the head of Vautrain & Co., a consultant in Singapore. “Saudi Arabia has been concerned about unrest spreading from Yemen.”
Shipping Chokepoint
Brent, the benchmark grade for more than half the world’s crude, gained as much as $3.30, or 5.8 percent, to $59.78 a barrel in electronic trading on the London-based ICE Futures Europe exchange on Thursday. West Texas Intermediate futures, the U.S. marker, jumped as much as 6.6 percent to $52.48 on the New York Mercantile Exchange.
“Yemen is not an oil producer of great significance but it is located geographically and politically in a very important part of the Middle East,” said Ric Spooner, a chief strategist at CMC Markets in Sydney.
The Bab el-Mandeb strait is the fourth-biggest shipping chokepoint in the world by volume, and is 18 miles wide at its narrowest point, according to the EIA. It’s located between Yemen, Djibouti, and Eritrea, and connects the Red Sea with the Gulf of Aden and the Arabian Sea.
Transport Threat
In 2013, 3.8 million barrels a day of oil and petroleum products flowed through Bab el-Mandeb, EIA data shows. More than half of the shipments moved to the Suez Canal and SUMED Pipeline, which serve as the link between Egypt’s ports of Ain Sukhna on the Red Sea and Sidi Kerir on the Mediterranean.
Closure of the waterway may keep tankers from the Persian Gulf from reaching the Suez Canal and the SUMED Pipeline, diverting them around the southern tip of Africa, adding to transit time and cost, according to the EIA. Ships carrying oil from Europe and North Africa won’t be able to take the most direct route to Asian markets if Bab el-Mandeb is shut, the EIA said on its website.
“As the situation in Yemen has dramatically escalated, it’s seen primarily as a threat to international shipping and oil transport,” Theodore Karasik, an independent geopolitical analyst, said from Dubai. “There’s concern that the more ungovernable Yemen becomes, the more it could become a base for piracy in the Red Sea area.”
Saudi Arabia, the United Arab Emirates, Bahrain, Qatar and Kuwait responded to a request from Yemen’s President Abdurabuh Mansur Hadi, according to a statement carried by the official Saudi Press Agency.
Proxy War
Saudi Arabia led OPEC’s decision in November to resist calls to reduce its output target of 30 million barrels a day, a resolution that Iranian Oil Minister Bijan Namdar Zanganeh said was “not in line with what we wanted.”
OPEC’s decision and an expanding U.S. supply glut have driven global benchmark oil prices to a six-year low.
“In the longer term, Iran will be happy to disrupt oil supplies,” Vautrain said. “They literally want to control Saudi Arabia and Iraq. They would love that. They’re fighting a proxy war and they will continue to fight a proxy war.” The Houthis, who follow the Zaydi branch of Shiite Islam, say they operate independently of Iran and represent only their group’s interests.
* * *
For now surging oil appears to be dragging the tightly correlated EURUSD by the bootstraps, and as a result the US Dollar despite it traditionally being a flight to safety during global proxy wars such as this one.
Looking at equities, overnight developments in Yemen have also been the key focus in early European trade after Saudi Arabia and a coalition of regional allies launched a military operation in Yemen against the Iranian-backed Houthi rebels, who deposed the US-backed Yemeni president last month. WTI crude futures rallied overnight, heading for its biggest 5 day gain since 2011 after Saudi Arabia and its allies confirmed that they had started military operations. Although Yemen is not a large oil-exporter, markets have become concerned by the situation in Yemen, largely because of the involvement OPEC nations in a Middle-Eastern conflict and because in a worst case scenario this conflict between Sunni and Shia Muslims could be used as a proxy for a larger conflict between Saudi and Iran. Alongside geopolitical concerns, European stocks are also being weighed upon by heavy selling in Asia, particularly in tech names, and with window dressing ahead of quarter-end.
Another slide in the USD led to moves across the FX space and a break above post-FOMC highs in EUR/USD and trades sources note large size (~EUR 1bln) bought on a break of 1.1000 in the pair. GBP sees some outperformance in early trade, gilts are underperforming and the short sterling strip lower following overnight comments from BoE’s Miles (soft dove) who said he believes the next move by the BoE will be a hike. This followed comments made yesterday by BoE Deputy Governor Shafik (Soft Dove) who said that the next move in rates is likely to be higher and BoE’s Forbes who said that low inflation would be temporary.
Asian stocks mostly fell overnight in a continuation of similar moves seen yesterday in European and US equity markets, which saw the S&P 500 erase all of its gains for the year to close below its 50 DMA. Consequently, both the Nikkei 225 (-1.6%) and ASX 200 (-1.6%) finished in the red, the latter recording its steepest drop in more than 2-weeks. Elsewhere, the Hang Seng (+0.2%) and Shanghai Comp (+1%) bucked the negative trend, led by financials and energy names ahead of earnings from PetroChina and ICBC.
Bund have been supported this morning with flows seen out of equities and into core fixed income, alongside little supply this week and prelim month-end extensions fairly average. Concerns over the situation in Greece also continue to linger and have supported this morning’s bid in bund futures.
Barclays Prelim Pan Euro Agg month-end extensions +0.07yrs (Prev. +0.07yrs, Avg. Of last 12 months +0.08yrs) Barclays Prelim month-end extensions for US Treasury +0.09yrs (Prev. +0.13yrs, Average of last 12 months +0.10yrs).
WTI crude futures rallied overnight, heading for its biggest 5 day gain since 2011 after Saudi Arabia and its allies confirmed that they had started military operations. In early trade WTI broke above its 50DMA and both WTI and Brent are trading with gains of over USD 2.00 ahead of the US open. Concerns have not only led to a bit in crude and equity markets in Europe falling over 1%, but has also led to a bid in gold which earlier broke above USD 1,200/oz and its 100DMA.
In summary: European shares fall with the tech and financial services sectors underperforming and oil & gas, basic resources outperforming. Stoxx 600 trades near session low; European energy stocks outperform as Saudi Arabia directs bombing sorties at Shiite Houthi rebels in Yemen. Brent, WTI crude futures both gain. U.K. retail sales rise more than forecast. The German and Swedish markets are the worst-performing larger bourses, the U.K. the best. The euro is stronger against the dollar. German 10yr bond yields fall; U.S. yields decline. Commodities gain, with soybeans, corn underperforming and WTI crude outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, Kansas City Fed index, Markit U.S. composite PMI, Markit U.S. services PMI due later.
Market Wrap
S&P 500 futures down 0.9% to 2034.7
Stoxx 600 down 1.7% to 391.1
US 10Yr yield down 3bps to 1.89%
German 10Yr yield down 2bps to 0.21%
MSCI Asia Pacific down 0.8% to 148
Gold spot up 1.4% to $1212/oz
Eurostoxx 50 -1.8%, FTSE 100 -1.4%, CAC 40 -1.6%, DAX -2%, IBEX -1.4%, FTSEMIB -1.9%, SMI -1.8%
Asian stocks fall with the Shanghai Composite outperforming and the Sensex underperforming.
MSCI Asia Pacific down 0.8% to 148; Nikkei 225 down 1.4%, Hang Seng down 0.1%, Kospi down 1%, Shanghai Composite up 0.6%, ASX down 1.6%, Sensex down 1.7%
Euro up 0.55% to $1.103
Dollar Index down 0.7% to 96.3
Italian 10Yr yield up 1bps to 1.35%
Spanish 10Yr yield little changed at 1.29%
French 10Yr yield down 1bps to 0.49%
S&P GSCI Index up 2.4% to 414.6
Brent Futures up 4% to $58.7/bbl, WTI Futures up 4.3% to $51.4/bbl
LME 3m Copper up 1.8% to $6237.5/MT
LME 3m Nickel up 0.9% to $13805/MT
Wheat futures up 1.2% to 525.3 USd/bu
Bulletin Headline Summary from Bloomberg and RanSquawk
Developments in Yemen overnight unsettle markets as Saudi intervene, leading to significant gains in oil overnight and European equities falling over 1%
WTI crude futures trade higher by over USD 2.00 after rallying overnight and this morning, and heads for its biggest 5 day gain since 2011
Treasuries rally overnight as Saudi Arabia l