Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1203.10 down $7.50 (comex closing time)
Silver: $16.44 down 38 cents (comex closing time)
In the access market 5:15 pm
Gold $1202.50
Silver: $16.52
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:
At the gold comex today, we surprisingly had a poor delivery day, registering 0 notices served for nil oz. Silver comex surprised with 200 notices for 1,000,000 oz .
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 244.16 tonnes for a loss of 59 tonnes over that period. Lately the removals have been rising!
end
In silver, the open interest fell by a tiny 526 contracts, as Tuesday’s silver price was down by 27 cents. The total silver OI continues to remain extremely high with today’s reading at 169,700 contracts. The front April month has an OI of 385 contracts for a gain of 200 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 200 notices served upon for 1,000,000 oz.
In gold the collapse of OI stops. The total comex gold OI rests tonight at 390,571 for a gain of 621 contracts as gold was down $8.00 on Tuesday. We had 0 notices served upon for nil oz.
Today, we had no changes in gold inventory at the GLD/ Gold Inventory rests at 733.06 tonnes
In silver, / the SLV/Inventory /we have no changes and thus the inventory tonight is 321.839 million oz
We have a few important stories to bring to your attention today…
1. Today we had the open interest in silver fall by a tiny 526 contracts with the 27 cent fall in price on Tuesday. The OI for gold rose by 621 contracts as the price of gold fell on Tuesday to the tune of $8.00.
(report Harvey/)
2.Greek’s Prime Minister Tsipras meets Russia’s Putin
(zero hedge)
3. Late in the session Greece states that much of its debt acquired during the 2012 bailout is odious and they will “write it off” and put the burden onto the previous administration
(zero hedge)
4. Iranian warships heading to the Gulf of Aden
(zero hedge)
5.Investigations are now ongoing with respect to banks in 4 countries:
Portugal, Spain, Greece and Italy. The banks use an asset such as deferred tax assets as a tier one asset, upon which the sovereign then guarantees these dubious entries. The competition bureau of Europe is basically stating that this is giving them unfair advantage and they are investigating.
(Wolf Richter/WolfStreet)
6. Oil inventories rise again with today’s DOE report. Cushing Oklahoma up to 90% of capacity.
(zero hedge)
7. Swiss government issues first Swiss bond with a 10 year span with a negative interest rates.
(zero hedge)
8. German factory orders decline despite the lower euro
(zero hedge)
9. Great commentaries tonight from Bill Holter and Koos Jansen
(Bill Holter and Koos Jansen)
10. Beige book confusion this afternoon:
zero hedge)
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 621 contracts from 389,950 up to 390,571 as gold was down by $8.00 on Tuesday (at the comex close). We are now in the active delivery month of April and here the OI fell by 183 contracts down to 2,807. We had 2 contracts filed upon on Tuesday so we lost another 181 contracts or 18,100 oz will not stand for delivery in April. The next non active delivery month is May and here the OI fell by 183 contracts down to 461. The next big active delivery contract month is June and here the OI rose by 412 contracts up to 264,589. June is the second biggest delivery month on the comex gold calendar. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 46,992 (Where on earth are the high frequency boys?). The confirmed volume on Tuesday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 91,471 contracts. Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI fell by 526 contracts from 170,226 down to 169,700 as silver was down by 27 cents, with respect to Tuesday’s trading . We are now in the non active delivery month of April and here the OI rose to 385 for a gain of 200 contracts. We had 0 notices filed on Monday so we gained 200 silver contracts or an additional 1,000,000 ounces will stand for delivery in April. The next big active delivery month is May and here the OI fell by 2,682 contracts down to 91,846. The estimated volume today was poor at 20,022 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 39,301 contracts which is good in volume. We had 209 notices filed for 200,000 oz today. Today somebody was in urgent need of some silver.
April initial standings
April 8.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
192.90 oz (6 kilobars)HSBC,Manfra
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)
2807 contracts(280,700) oz
Total monthly oz gold served (contracts) so far this month
676 contracts(67,600 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
oz
Total accumulative withdrawal of gold from the Customer inventory this month
163,772.1 oz
Today, we had 0 dealer transaction
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: nil oz
we had 2 customer withdrawals
i) Out of HSBC: 128.600 oz (4 kilobars)
ii) Out of Manfra: 64.30 oz (2 kilobars)
total customer withdrawal: 192.90 oz (6 kilobars)
we had 0 customer deposit:
total customer deposit: nil oz
We had 1 adjustments
i Out of the Scotia vault:
We had 15,282.836 withdrawn from the dealer account at Scotia to the customer account at Scotia.
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 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 (676) x 100 oz or 67,600 oz , to which we add the difference between the open interest for the front month of April (2807) 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 April contract month:
No of notices served so far (676) x 100 oz or ounces + {OI for the front month (2807) – the number of notices served upon today (0) x 100 oz which equals 348,300 oz or 10.83 tonnes of gold.
we lost 181 contracts or 18,100 oz of gold that will not stand for delivery in April
Total dealer inventory: 631,988.064 or 19.65 tonnes
Total gold inventory (dealer and customer) = 7,849,613.194 oz. (244.155) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 59.0 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
April silver initial standings
April 8 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
486,241.321 oz (Scotia)
Withdrawals from Customer Inventory
1,422,905.46 oz (Delaware,Brinks,CNT,Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
1,460,252.961 oz (JPM,CNT)
No of oz served (contracts)
200 contracts (1,000,000 oz)
No of oz to be served (notices)
185 contracts(925,000 oz)
Total monthly oz silver served (contracts)
201 contracts (1,005,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month486,241.321 oz
Total accumulative withdrawal of silver from the Customer inventory this month
2,845,810.8 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 1 dealer withdrawal:
i) Out of the Scotia vault: 486,241.321 oz
total dealer withdrawal: 486,241.321 oz
We had 2 customer deposits:
i) Into CNT: 350,015.110 oz
ii) Into JPMorgan: 1,110,237.851 oz
total customer deposits: 1,460,252.961 oz
We had 4 customer withdrawals:
i) Out of Delaware: 982.80 oz
ii) Out of Brinks: 25,002.32 oz
iii) Out of CNT: 1,336,610.070 oz
iv) Out of Scotia: 60,305.27
total withdrawals; 1,422,905.46 oz
we had 0 adjustments:
Total dealer inventory: 62.705 million oz
Total of all silver inventory (dealer and customer) 176.238 million oz
.
The total number of notices filed today is represented by 200 contracts for 1,000,000 oz. To calculate the number of silver ounces that will stand for delivery in April, we take the total number of notices filed for the month so far at (201) x 5,000 oz = 1,005,000 oz to which we add the difference between the open interest for the front month of April (385) and the number of notices served upon today (200) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the April contract month:
201 (notices served so far) + { OI for front month of April(385) -number of notices served upon today (200} x 5000 oz = 1,930,000 oz standing for the April contract month.
we gained another 200 contracts or an additional 1,000,000 oz will stand for delivery in this April 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:
April 8.2015:no changes in the GLD/Inventory 733.06 tonnes
April 7. we had another withdrawal of 4.18 tonnes of gold at the GLD/Inventory rests at 733.06 tonnes
April 6. no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
April 2/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
April 1/2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
march 31.2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
March 30/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes.
March 27/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
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
April 8/2015 / we had no changes in gold inventory at the GLD/Inventory at 733.06 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 : 733.06 tonnes.
end
And now for silver (SLV):
April 8.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz
April 7.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz
April 6. we had a small withdrawal of 136,000 oz/inventory tonight rests at 321.839 million oz
April 2/2015: no changes in inventory/SLV inventory rests this weekend at 321.975 million oz
April 1.2015: we had a huge withdrawal of 1.913 million oz of silver from the SLV vaults/Inventory 321.975 million oz
March 31.2015: no changes in inventory at the SLV/Inventory at 323.88 million oz
March 30.2015: no changes in inventory at the SLV/inventory at 323.888 million oz.
March 27. we had a huge withdrawal of 1.439 million oz leave the SLV/Inventory rests this weekend at 323.888 million oz
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
April 8/2015 we had no changes in inventory at the SLV/ inventory rests at 321.839 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 8.5% percent to NAV in usa funds and Negative 8.3% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.0%
Percentage of fund in silver:38.6%
cash .4%
( April 8/2015)
Sprott gold fund finally rising in NAV
2. Sprott silver fund (PSLV): Premium to NAV falls to + 1.09%!!!!! NAV (April 8/2015)
3. Sprott gold fund (PHYS): premium to NAV rises -.24% to NAV(April 8/2015
Note: Sprott silver trust back into positive territory at +1.09%.
Sprott physical gold trust is back into negative territory at -.24%
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)
U.S. Hegemony and Dollar Threatened By New Chinese Bank
By Mark O’ByrneApril 8, 20150 Comments
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– Chinese Success in Attracting Major Western Countries to New Bank Marks Beginning of New Era
– Diverse members include UK, Israel, Germany, Australia and Russia and Iran
– Demonstrates the degree to which U.S. global influence is declining
– U.S. needs to reform its approach to IMF and World Bank system if it to successfully reassert its influence
– U.S. “Failure of Strategy and Tactics was a Long Time Coming”
– Beijing’s challenge to post-World War II financial and monetary order
– New bank shows continuing decline of U.S. hegemony and dollar as reserve currency
The success of China in attracting countries traditionally within Washington’s sphere of influence to join its Asian Infrastructure Investment Bank (AIIB), such as the UK, Israel, Australia and Germany, marks another milestone toward a new multi polar world and a new era in international politics and economics.
The AIIB is seen as a potential rival to established lenders the World Bank, IMF and Asian Investment Bank, which are dominated by the United States.
The era of infrastructure investment and multilateral banks and financial institutions controlled, in large part, by Washington – often as an aggressive strategic policy tool – has come to an end. The AIIB which will be controlled by China will compete with the World Bank and the IMF for infrastructure projects and potentially could become a global lender of last resort to sovereign nations such as Greece.
It is almost certain that the AIIB will begin lending in yuan – another phase in the inevitable demise of the dollar as sole reserve currency and the fulfilment of Chinese ambition to make the yuan an internationally traded currency.
Even the Chinese themselves were reportedly “surprised”at their success in attracting key U.S. allies – particularly Britain – to join the AIIB. The U.S. had exerted pressure on its allies to eschew the new Asian bank. However, when Washington’s closest ally – Britain – broke ranks and announced its application in March it led to a slew of western countries following suit.
It is interesting to note that the World Bank’s US-appointed President has vowed to find “innovative” ways to work with a new Chinese-led global bank, welcoming it as a “major new player” in the world. The positive overtures by Jim Yong Kim comes ahead of next week’s World Bank and International Monetary Fund spring meetings in Washington. It also marks a split with the administration of U.S. President Barack Obama which put him forward to head the World Bank in 2012.
According to the Financial Times, China’s success stems from softening of its diplomacy early last year following tensions with Vietnam with the sinking of a Vietnamese fishing vessel. By the time the APEC conference came around China was negotiating agreements and deals with its neighbours, including Japan.
That Britain, Israel, Australia and Germany have turned a deaf ear to Washington on an issue that is of such vital strategic importance to the U.S. demonstrates the shocking degree to which the influence of the U.S. has declined in the past fifteen years.
While Canada and Japan remain on the sidelines for now – many believe that it is just a matter of time before they too join the new bank.
Former U.S. Treasury Secretary Lawrence Summers wrote this week that the “failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the US approach to global economics.”
Summers is a U.S. and international political insider and was Chief Economist of the World Bank from 1991 to 1993. Summers worked as the Director of the White House United States National Economic Council for President Obama from January 2009 until November 2010, where he emerged as a key economic decision-maker in the Obama administration’s response to the financial crisis.
He was widely tipped as the potential successor to Ben Bernanke as the Chairman of the Federal Reserve, though after criticism from the left, Obama nominated Janet Yellen for the position.
If the U.S. is to arrest the decline in its influence through the World Bank, Summers identifies three areas that Washington needs to address . Firstly, in its approach to the wider world it must rebuild a bipartisan foundation and “be free from gross hypocrisy and be restrained in the pursuit of self interest.”
The U.S. needs to apply the same standards to its “state regulators, independent agencies and far-reaching judicial actions” that it demands of other countries. He advises against using the dollar as an “aggressive” geopolitical tool such as the attempts to suffocate the Iranian economy by cutting Iran out of the banking system.
“We cannot expect to maintain the dollar’s primary role in the international system if we are too aggressive about limiting its use in pursuit of particular security objectives.”
Ultimately the new global institution will help China knock the U.S. off its pedestal as the world’s pre-eminent economic and military superpower and will likely lead to a further erosion in trust of the debased dollar as the global reserve currency.
The new emerging order should lead to greater geopolitical stability in the long term. The rising economic power of China seeks to work together financially and economically with both NATO members and indeed nations currently at odds with American foreign policy such as Russia and Iran.
Iran has been accepted as a founding member of the AIIB. Interestingly, China said that the decision was made by existing members, including China, Britain, France, India and Italy. The United Arab Emirates (UAE) has also been accepted. China and Iran have close diplomatic, economic, trade and energy ties.
One would hope that this should limit the potential for large-scale conflict involving Israel, the U.S. and certain NATO members and the current black sheep of the international family – Iran and Russia.
In the shorter term however it may lead to greater geopolitical tension as the neoconservative influence in Washington continues to labour under the delusion that the U.S. is still the indispensable nation chosen by history to rule the world unilaterally. Perversely, the decline in U.S. hegemony especially in the financial and economic realms may embolden the neo-conservative militarists who appear desperate to maintain U.S. hegemony … at all costs.
The clear shift in economic power from West to East will put further pressure on the dollar. The recent strong bounce in the dollar will likely be seen as a short term cyclical bull market within a secular long term bear market.
The coming dollar crisis will impact the currency international monetary system and likely lead to an international monetary crisis. Global property bubbles, leveraged finance and high risk securitization were the elephants in the room in the years prior to the start of global financial and economic crisis in 2007. Many warned but were ignored.
There are similar elephants in the room today which are also being ignored. There is the growing risk of an international monetary crisis due to the real risks posed to the global reserve currency the dollar and to the not so ‘single currency’, the euro.
Gold will continue to act as a safe haven asset and protect people in the event of an international monetary crisis.
Click here in order to read GoldCore Insight –
Currency Wars: Bye Bye Petrodollar – Buy, Buy Gold
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,211.10, EUR 1,113.66 and GBP 811.40 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,208.50 , EUR 1,113.82 and GBP 813.63 per ounce.
Gold fell 0.44 percent or $5.40 and closed at $1,210.30 an ounce yesterday, while silver slipped 0.71 percent or $0.12 closing at $16.88 an ounce.
Gold in Singapore was firm at $1,208.95 an ounce near the end of day trading. Comex U.S. gold for June delivery was also steady at $1,209.70 per ounce.
Gold is being supported by dollar weakness today as market participants reassess the likelihood of rate rises.
Today, at 1800 GMT Fed watchers await the release of the U.S. Federal Open Market Committee’s minutes from the March 17-18th meeting. You may recall the Fed’s dovish tone used the word ‘patient’ when referring to monetary policy. At the time officials suggested an interest rate hike as early as June.
But as we expected, poor economic data, especially the very poor payrolls number last Friday which was well below expectations is revising expectations.
Yesterday, Minneapolis Fed President, Narayana Kocherlakota, spoke about waiting until the second half of 2016 to start raising rates, only a day after New York Fed President, William Dudley, said the timing of an increase was unclear.
Kocherlakota also warned of the possibility of more QE which would be very bullish for gold.
The Russian ruble has extended recent gains in its 2 month rally, setting new 2015 highs against the dollar and the euro. The ruble has become very oversold and the rally in oil prices is also helping. Oil is Russia’s main export.
In India, Platinum Guild International said that sales of platinum jewellery grew by 28% in 2014 in India. Platinum jewellery is the second largest consumer of platinum in the world (35%) after the auto-catalyst market (36%).
Gold is trading near a seven week high. In London, in the late morning gold for immediate delivery was trading at $1,210.76 or up 0.15 percent. Silver is at $16.88 or up 0.30 percent and platinum is trading at $1,173.89 or up 0.59 percent.
Breaking News and Award Winning Research Here
end
How on earth can this little nation lose so much?
(courtesy GATA)
A billion dollars disappears from little Moldova’s banking system
Submitted by cpowell on Wed, 2015-04-08 10:07. Section: Daily Dispatches
By Mihaela Rodina
Agence France-Presse
via Yahoo News
Wednesday, April 8, 2015
CHISINAU, Moldova — A billion dollars is a lot for Europe’s poorest state of Moldova — particularly when it disappears.
Anti-corruption prosecutors and American auditors have been searching the books for clues about the mysterious transactions, an embarrassment for the ex-Soviet state on track for EU membership.
The scandal has even threatened to destabilise the banking system in the country of 3.5 million people.
The case of the vanishing billion came to light when the Central Bank of Moldova discovered that three banks have given out loans worth a total of $1 billion, or 15 percent of the impoverished ex-Soviet state’s GDP.
The financial establishments — Banca de Economii, Banca Sociala and Unibank — hold about a third of all bank assets in the country, including money for pension payments. …
… For the remainder of the report:
http://news.yahoo.com/1-billion-disappears-moldova-looks-answers-0531201…
end
Dave Kranzler talks with David Morgan on silver:
(courtesy Dave Kranzler IRD)
SoT Ep 15 – David Morgan: Silver Is Historically Undervalued
April 8, 2015Financial Markets
“This market isn’t a nightmare, it’s just plain silly – stupid silly” – Dave Kranzler, Shadow of Truth
Based on all the data available, serious market analysts – note: Wall Street robots are not considered serious analysts – silver is historically undervalued. We can point to several metrics, like the gold/silver ratio or the ratio of paper silver claims vs. the amount of available silver to deliver, in order to start making the case.
Instead of going through the monotony of presenting quantitave analysis, the Shadow of Truth hosted David “Mr. Silver” Morgan to make his case for investing in silver right now. Everyone with one brain cell knows that the silver market is the most manipulated in history. But Mr. Morgan makes a very interesting and valid argument with regard to reasons for not focusing on the the degree to which the market is manipulated.
All of the billionaires I know were buying silver aggressively at $4 when the precious metals bull began. Currently silver, on an inflation-adjusted basis, is back to the $4 – 5 dollar level of 2000/2001. Don’t be afraid. Buy when no one else wants to buy – think like a billionaire. The silver market is a gift right now:
end
TURKISH SILVER IMPORTS IN MARCH JUMP TO HIGHEST ON RECORD
0 4 0 Google+0
Apr 7, 2015 – 9:25 AM GMT
by Ian Walker
Turkish imports of silver jumped to the highest on record at 54.6 tonnes in March, according to data from the Borsa Istanbul.The figure is up 67 percent on the previous month’s figure of 32.6 tonnes, and well-above the previous record of 41.6 tonnes in December. The country imported 227 tonnes of silver in 2014.The metal’s price is currently up around seven percent for the year at $16.82 per ounce, after hitting a three-month low in March at $15.29, and is one of the best perfoming metals in the precious metals complex.Turkey did not import any platinum or palladium in March, while the gold number is still to be released.(Editing by Martin Hayes)
– See more at: http://www.bulliondesk.com/silver-news/focus-turkish-silver-imports-march-jump-to-highest-record-92733/#sthash.XsuSe3dU.dpuf
end
( courtesy Sydney Morning Herald)
Somebody is regularly profiting by front-running the Reserve Bank of Australia
Submitted by cpowell on Wed, 2015-04-08 10:25. Section: Daily Dispatches
ASIC Looks at RBA over Currency Trading Anomaly
By Vesna Poljiak
Sydney Morning Herald
Wednesday, April 8, 2015
Unusual trading in the Australian dollar seconds ahead of each of the past three Reserve Bank of Australia policy outcomes could be a result of insider leaks, automated algorithmic trading during a market lull, or shrewd guesses.
The Australian Securities and Investments Commission confirmed on Tuesday it was investigating a spike in the Australian dollar seconds ahead of the RBA’s April policy statement that confirmed that the cash rate would stay on hold at 2.25 per cent. An unchanged decision, all things being equal, would support a higher Australian dollar because of the strong expectation leading into the meeting that the RBA would cut, consistent with its easing bias.
It is not the first time the securities regulator has turned its focus on the RBA. Similar patterns where the Australian dollar has seemingly correctly pre-empted the RBA’s decision were recorded seconds ahead of the February and March meetings, sparking fears the integrity of the central bank’s protocols have been compromised. …
… For the remainder of the report:
http://www.smh.com.au/business/markets/currencies/asic-looks-at-rba-over…
end
Koos Jansen gives a good presentation on the leasing of gold inside the Chinese gold market.
(courtesy Koos Jansen/)
Posted on 8 Apr 2015 by Koos Jansen
Zooming In On The Chinese Gold Lease Market
The primary reasons mainstream gold analysts (and the media) don’t use Shanghai Gold Exchange (SGE) withdrawals as an indicator for Chinese wholesale gold demand, are – after a few others have been tested – Chinese Commodity Financing Deals (CCFD). Regarding gold these financing operations can be be conducted through round-tripping or gold leasing. Because of the structure of the Chinese gold market round-tripping gold flows are completely separated from the SGE system – the Chinese domestic gold market, and thus withdrawals from the SGE. There is no need to further investigate round tripping for our understanding of the Chinese domestic gold market.
The Chinese gold market is structured as such that leases are settled on the SGE; lessor and lessee come to an agreement after which gold is transferred from the lessor’s SGE Bullion Account to the lessee’s SGE Bullion Account. As I’ve stated previously it’s most likely lessees will only withdraw gold from the vaults of the SGE when the leased gold will be used in genuine gold business (The World Gold Council agreed with me in email correspondence), as a lessee that’s merely seeking cheap funds has no interets in obtaining physical gold, but rather prefers to sell the leased gold on spot at the SGE for its proceeds. Therefor the latter gold financing deals (leasing gold for acquiring cheap funds) add little distortion to total SGE withdrawals when used as wholesale gold demand indicator.
For more information on the structure of the Chinese gold market and CCFD’s read:
The Mechanics Of The Chinese Gold Market
Chinese Gold Financing Deals Explained
However, to get to the bottom of this, which seems to be my mission in life, we must zoom in on the Chinese gold lease market. Below I present an article written by Minsheng Banking Corp in 2014, translated by Soh Tiong Hum and BullionStar’s Sales Executive See Hong Kang. The article provides essential data on the Chinese gold lease market, for the first time we can read how total lease volume is compounded, what industry segments are leasing how much gold and in what tenors total volume is divided. In a separated post we will analyze these numbers, as I’m still talking to SGE staff and Chinese banks to be positive on the meaning of all numbers.
If you are confused about what the article states as being Chinese consumer gold demand (1,170 tonnes in 2013), consider this China Gold Association (CGA) estimate is measured at retail level and likely only from sales by CGA members. To familiarize with all demand metrics used in the Chinese gold market read this post.
Some data handles:
Hong Kong gross export to China in 2013 was 1,495 tonnes. Hong Kong net export to China in 2013 was 1,158 tonnes.
According to the World Gold Council total Chinese consumer gold demand in 2013 was 1,312 tonnes (revised numbers), of which 928 tonnes was jewelry demand.
According to the CGA total Chinese consumer gold demand in 2013 was 1176.4 tonnes, of which 716.5 tonnes was jewelry demand.
According to the CGA total Chinese net bullion import in 2013 was 1,507 tonnes and total gold demand, by its widest measure, was 2,198 tonnes.
Translation of the Minsheng Banking Corp article, written by Tang Xiang Bin, 2014:
Gold Supply & Demand, Gold Leasing And Shenzhen Market Research Report
Abstract: In 2013, domestic consumer demand for gold reached a record high of 1,170 tonnes for the first time, more than 35 % over 2012. As rationality returns to consumers, 2014 domestic gold demand may retrace back to normal levels after being depleted by last year’s explosive growth. As imports are able to meet gold demand, China’s gold market shall move from shortage to balance. We expect this year’s first quarter gold and jewelry spending year on year growth will drop to 10 – 20 % of the normal level, while second quarter gold consumption demand will slow further. Expected 2014 domestic gold demand should stay between 900 – 1200 tonnes.
2013 ushered in explosive growth in the gold lease market. The domestic gold lease volume grew substantially to 1,070 tonnes, an increase of 268 % y/y. Based on demand, 2013 gold leasing by enterprises and brand makers reached 781.1 tonnes, 73 % of the year’s total volume, which shows that China’s jewelry market is the most important customer segment.From the rate of growth, interbank gold loans grew rapidly. 2013 interbank leasing increased 439 % y/y which indicates that financialization of gold between China’s banks have strengthened.
Because China’s economy and credit market both face risk of deleveraging this year, gold leasing can satisfy banks’ need to expand their business as well as meet financing needs of gold enterprises when there is a credit crunch in the background. Therefore deleveraging is conducive to the growth of the gold lease market.
At the moment, Shenzhen already has the largest domestic gold and jewelry processing base, the largest center of demand for spot gold, the largest gold wholesale center, the largest physical gold settlement and the largest OTC market. In other words, Shenzhen has a competitive advantage for developing gold market activities. Backed by strong demand and an industrial chain, gold leasing in Shenzhen has great potential and space for development.
End of abstract
Domestic gold demand in 2013 grew enormously due to substantial fall in the gold price. National gold consumption grew to all-time high of 1,170 tonnes, a 35 % increase y/y. Although last year’s gold demand was not evenly distributed, volatile fluctuation between domestic and foreign gold prices reflected the fluctuation in demand. Large increases in gold imports were able to satisfy this sudden increase in demand. We expect this year’s jewelry consumption growth to retrace to normal levels. Gold consumption in 2014 shall maintain between 900 – 1200 tonnes. Following a rise of gold inventory in recent years, gold leasing enters a phase of explosive growth. 2013 gold leasing reached 1,070 tonnes worth RMB 300.6 billion, 268 % higher y/y. With deleveraging going on in 2014, both banks and clients have stronger interest to push gold leasing. Therefore gold leasing should maintain the trend of high-speed growth, hopefully becoming a bright spot when banks are going through downturn.
After explosive growth in 2013, domestic gold demand should retrace to normal this year
Gold demand in 2013 goes through huge growth
China’s domestic gold demand experienced explosive growth last year, overtaking India as the world’s number one gold consumer. For the whole of 2013, transacted spot gold (AU99.99) at Shanghai Gold Exchange hit 3,188 tonnes, 280 % growth y/y. Explosive growth shows demand for spot gold at the exchange exceeded the 2012 level. Besides the exchange, domestic consumer demand (especially in the first half of the year) also experienced explosive growth. For the whole of last year, Gold jewelry consumption broke a record with RMB 296 billion, 34 % increase y/y. In the second quarter, gold jewelry consumption broke quarterly record with RMB 82 billion, 28 % of the whole year.
Gold imports can satisfy domestic gold demand
Increase in gold imports satisfied explosive growth in gold demand. In 2013, gold demand grew explosively. 2,197 tonnes of physical gold left the SGE that year, a 193 % increase y/y. Because domestic production of gold is unable to meet demand, imports became an effective means. Import from Hong Kong increased significantly. In 2013, gold import from Hong Kong reached 1,498 tonnes, 179% increase y/y. Importing gold can satisfy domestic demand effectively.
As gold imports increased, the ability of commercial banks to supply the gold market increased visibly. Since 2012, China’s import from Hong Kong and SGE’s settlement volume on a monthly basis appeared to be consistent. The logic is really simple: The more gold the commercial banks are able to import, the stronger the ability of other participants in the gold market to provide gold liquidity. Conversely, if the banks lower the volume of gold imports, the ability of participants in the market to provide liquidity for gold would weaken. This year, the banks operating in the gold market have seen a test of their ability to react to a demand growth explosion.
Last April’s drop in the international gold price stimulated an explosive increase in demand for spot gold. Vibrant domestic demand quickly depleted inventory so that SGE’s Au(T+D) settlement dropped rapidly. Inventory dropped to 24.85 tonnes, the lowest level in May that implies power by banks and enterprises to deploy gold nearly withered. Gold imports stabilized domestic supply. Deployment by banks and enterprises recovered shortly, SGE’s Au(T+D) settlement also returned to normal.
After rise in demand, domestic gold demand will retrace to normal
It’s noteworthy that 2013’s explosive demand may be ‘abnormal’ consumption because it was triggered by the major correction in the international gold price since many years. As rationality returns, it is difficult to sustain this demand this year. Fact is consumption demand in the second half of 2013 already began weakening. China’s gold jewelry consumption growth y/y already weakened from July’s 44.7 % to 33.9 % at year-end. Demand at the SGE also weakened visibly. SGE’s monthly spot gold transactions fell from a year-high of 358 tonnes in July to 210 tonnes by October. In addition, SGE’s monthly withdrawals fell from 235 tonnes in July to 139 tonnes in October. We estimate that both figures will continue to slowdown and we should see the growth rate return to its’ normal 10 – 20% and gold demand at between 900 – 1200 tonnes.
The scale of gold lease market will continue to grow quickly
Over the past few years, the gold lease market has developed from nothing till the scale it is today. At last count in 2013, 23 commercial banks have gold leasing operations and the businesses participating in leasing have mushroomed to close to a thousand. In terms of scale, last years leasing market grew explosively with leased volume reaching 1,070 tonnes, a 268% increase y/y. Based on demand, 2013 gold leasing by enterprises and brand makers reached 781.1 tonnes, 73% of that year’s total volume, which shows that China’s jewelry market is the most important customer group.From the rate of growth, interbank gold loans grew rapidly. 2013 interbank leasing increased 439% y/y, which indicates that financialization of gold between China’s banks has strengthened. Because China’s economy and credit market both face risk of deleveraging this year, gold leasing can satisfy banks’ need to expand their business as well as meet financing needs from gold enterprises when there is a credit crunch in the background. Therefore deleveraging is conducive to the growth of gold leasing.
Gold lease market grew explosively in recent years
The gold leasing volume reached 398.06 tonnes in 2012. The breakdown of the lease volume:
Interbank leasing was 21.82 tonnes, 5.48% of total.
Refining companies leased 72.9 tonnes, 18.31% of total.
110 tonnes was used to produce brand name gold products, ie, gold products with brand names, 27.78 % of total.
Leasing for jewelry and industrial use accounted for 192.76 tonnes, 48.42% of total.
In 2013, the gold leasing volume grew substantially to 1,070 tonnes, a 268 % increase. The breakdown of the lease volume:
Interbank leasing was 117.7 tonnes, 11% of total.
Refining companies leased 171.2 tonnes, 16% of total.
363.8 tonnes was used to produce brand name gold products, ie, gold products with brand names, 34% of total.
Leasing for jewelry and industrial use accounted for 417.3 tonnes, 39% of total.
Based on growth, gold lease demand in 2013 increased by more than 100%. Interbank lending grew by 439 %, refining companies leasing grew 135 % and brand name companies leasing increased 116 %. Increase in loans between commercial banks indicate that rise in demand pushed the growth in activity between commercial peers as well as increasing financialization of gold in China’s banks.Based on demand, 2013 gold leasing by enterprises and brand makers reached 781.1 tonnes, 73% of that year’s total volume, which shows that China’s jewelry market is the most important customer group.
The Chinese gold lease rate reached its top in the second half of 2013 at 10.2 %, the lowest rate was 2.1 %, the average was 4.19 %. Among various tenors of lease contracts, 1 year leasing accounted for 44.26 % of total contracts, 6 to 12 months was 35.24 %, 3 to 6 months was 10.38 % and less than 3 months 10.12 %.
Gold lease market has prospects to be a bright spot in banking that is deleveraging
China’s economy and credit market are facing risk of deleveraging this year. In