Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1183.70 down $17. 80(comex closing time)
Silver $16.14 up 4 cents.
In the access market 5:15 pm
Gold $1186.00
Silver: $16.18
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 had a poor delivery day, registering 30 notices serviced for 300 oz. Silver comex filed with 0 notices for nil oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 245.75 tonnes for a loss of 57 tonnes over that period.
In silver, the open interest rose again by 151 contracts despite Friday’s silver price was down by 5 cents. The total silver OI continues to remain extremely high, with today’s reading at 194,742 contracts now at multi-year highs despite a record low price. In ounces, the OI is represented by 973 million oz or 139% of annual global silver production (ex Russia ex China). This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end as they continue to raid as basically they have no other alternative.
In silver we had 0 notices served upon for nil oz.
In gold, the total comex gold OI rests tonight at 421,932 for a gain of 2062 contracts as gold was unchanged on Friday. We had 30 notices filed for 3,000 oz.
we had a huge addition of 3.57 tonnes in gold inventory at the GLD; thus the inventory rests tonight at 705.47 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I am sure that 700 tonnes is the rock bottom inventory in gold. Anything below this level is just paper and the bankers know that they cannot retrieve “paper gold” to send it onwards to China.In silver, /no change in inventory at the SLV/327.874 million oz
We have a few important stories to bring to your attention today…
1. Today, we had the open interest in silver rise by 3547 contracts to 194,591 despite the fact that silver was down in price by 5 cents on Friday.. The OI for gold rose by 2062 contracts up to 421,932 contracts as the price of gold was unchanged on Friday.
(report Harvey)
2. Today, 10 important commentaries on Greece
zero hedge, Reuters/Bloomberg
3. Saudi Arabia and Russia sign 6 cooperative deals putting another dagger into the heart of the USA dollar
(Dave Kranzler/IRD)
4. Gold trading overnight
(Goldcore/Mark O’Byrne)
5. Trading from Asia and Europe overnight
(zero hedge)
6. Trading of equities/ New York
(zero hedge)
7.Bill Holter’s commentary tonight is title:
“It’s already in the market”
8. Koos Jansen comments on gold demand from China
(Koos Jansen)
9. First Majestic Silver’s CEO explains why he issued his complaint to the CFTC on the manipulation of silver.
(GATA)
we have these plus other stories to bring your way tonight. But first……..
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 2,062 contracts from 419,870 up to 421,932 as gold was unchanged in price on Friday (at the comex close). We are now in the big active delivery contract month of June. Here the OI fell by 56 contracts down to 465. We had 4 notices served upon yesterday. Thus we lost 52 contracts or an additional 5200 oz will not stand for delivery as they were no doubt cash settled. The next contract month is July and here the OI fell by 21 contracts falling to 632. The next big delivery month after June will be August and here the OI rose by only 811 contracts up to 274,752. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 62,943. The confirmed volume on Friday (which includes the volume during regular business hours + access market sales the previous day) was awful at 93,785 contracts. Today we had 30 notices filed for 3,000 oz.
And now for the wild silver comex results. Silver OI rose again by 151 contracts from 194,591 up to 194,742 despite the fact that the price of silver was down in price by 5 cents, with respect to Friday’s trading. We continue to have our bankers pulling their hair out with respect to the continued high silver OI. The front non active delivery month of June saw it’s OI remain constant at 73 contracts. We had 0 contracts delivered upon yesterday. Thus we neither gained nor lost any silver that will stand for delivery in this non active June contract month. The next delivery month is July and here the OI surprisingly fell by only 4849 contracts down to 76,070. We have 6 trading days left before first day notice on June 30 and the front month is not contracting much in volume at all. The estimated volume today was poor at 28,634 contracts (just comex sales during regular business hours. The confirmed volume on Friday (regular plus access market) came in at 51,369 contracts which is excellent in volume. We had 0 notices filed for nil oz today.
June initial standing
June 22.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
64,241.629 oz (Scotia)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
30 contracts (3000 oz)
No of oz to be served (notices)
435 contracts (43,500 oz)
Total monthly oz gold served (contracts) so far this month
2689 contracts(268,900 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
99.93 oz
Total accumulative withdrawal of gold from the Customer inventory this month
521,777.9 oz
Today, we had 0 dealer transaction
Dealer withdrawal:
we had zero dealer withdrawals
total Dealer withdrawals: nil oz
we had 0 dealer deposit
total dealer deposit: nil oz
we had 1 customer withdrawal
i) Out of Scotia: 64,241.629 oz (Scotia continues to withdraw gold from its customer account)
total customer withdrawal:64,241.629 oz
We had 0 customer deposits:
Total customer deposit: 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 30 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 19 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the June contract month, we take the total number of notices filed so far for the month (2689) x 100 oz or 268,900 oz , to which we add the difference between the open interest for the front month of June (465) and the number of notices served upon today (30) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the June contract month:
No of notices served so far (2689) x 100 oz or ounces + {OI for the front month (465) – the number of notices served upon today (30) x 100 oz which equals 312,400 oz standing so far in this month of June (9.7168 tonnes of gold). Thus we have 9.7168 tonnes of gold standing and only 17.06 tonnes of registered or for sale gold is available. We lost 52 contracts or 5200 oz to probable cash settlements.
Total dealer inventory 548,744.939 or 17.06 tonnes
Total gold inventory (dealer and customer) = 7,901,108.223 (245.75 tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 247.75 tonnes for a loss of 57 tonnes over that period.
end
And now for silver
June silver initial standings
June 22 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
nil
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
nil
No of oz served (contracts)
0 contracts (nil oz)
No of oz to be served (notices)
73 contracts(365,000 oz)
Total monthly oz silver served (contracts)
222 contracts (11,010,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
526,732.4 oz
Total accumulative withdrawal of silver from the Customer inventory this month
5,243,789.0 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 0 customer deposits:
total customer deposit: nil oz
We had 0 customer withdrawals:
total withdrawals from customer; nil oz
we had 0 adjustment
Total dealer inventory: 57.840 million oz
Total of all silver inventory (dealer and customer) 181.448 million oz
The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in June, we take the total number of notices filed for the month so far at (222) x 5,000 oz = 11,100,000 oz to which we add the difference between the open interest for the front month of June (73) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the June contract month:
222 (notices served so far) + { OI for front month of June (73) -number of notices served upon today (0} x 5000 oz ,= 11,465,000 oz of silver standing for the June contract month.
we neither gained nor lost any silver ounces that will stand for delivery in this non active delivery month of June.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.comorhttp://www.harveyorganblog.com
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
June 22/ a huge increase of 3.27 tonnes of gold into GLD/Inventory tonight: 705.47 tonnes
June 19.2015: no change in gold inventory/rests tonight at 701.90 tonnes.
June 18/no change in gold inventory/rests tonight at 701.90 tonnes
June 17/no change in gold inventory/rests tonight at 701.90 tonnes
June 16./no change in gold inventory/Rests tonight at 701.90 tonnes.
June 15/we lost a huge 2.08 tonnes of gold from the GLD/Inventor rests tonight at 701.90 tonnes
June 12/we had a small withdrawal of .24 tonnes of gold from the GLD/Inventory rests this weekend at 703.98 tonnes.
June 11/we had another huge withdrawal of 1.5 tonnes of gold from the GLD/Inventory rests tonight at 704.22 tonnes
June 10/ we had a huge withdrawal of 2.98 tonnes of gold from the GLD/inventory rests at 705.72
June 9/ no change in gold inventory at the GLD/Inventory rests at 708.70 tonnes
June 8/ a big withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 708.70 tonnes
June 22 GLD : 705.47 tonnes
end
And now for silver (SLV) Please note the difference between GLD and SLV. GLD has been depleting of gold/SLV has been adding to its inventory.
June 22/ no change in silver inventory/327.874 million oz
June 19/no change in silver inventory/327.874 million oz
June 18 no change in silver inventory/327.874 million oz
June 17/no change in silver inventory/327.874 million oz
June 16./no change in silver inventory/327.874 million oz
June 15/we had no change in silver inventory/327.874 million oz
June 12/we had another addition to the tune of 956,000 oz/Inventory rests this weekend at 327.874. Please note that there has been an addition on each of the past 5 days.
June 11.2015: we had another monster of an addition to the tune of 2.791 million oz/Inventory rests at 326.918
June 10/another monster of an addition to the tune of 1.126 million oz/Inventory rests at 324.127
June 9/ a monster of an addition to the tune of 3.393 million oz/inventory rests at 323.001 million oz.
June 8/no change in inventory/SLV inventory rests at 319.608 milion oz.
June 5 a huge addition of 1.433 million oz of silver added to the SLV/Inventory at 319.608 million oz
June 22/2015: no change in silver inventory/SLV inventory rests tonight at 327.874 million oz
end
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 7.5 percent to NAV usa funds and Negative 7.4% toNAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.5%
Percentage of fund in silver:38.1%
cash .4%
( June 22/2015)
2. Sprott silver fund (PSLV): Premium to NAV rises.38%!!!! NAV (June 22/2015)
3. Sprott gold fund (PHYS): premium to NAV falls to – .48% toNAV(June22/2015
Note: Sprott silver trust back into positive territory at +.38%
Sprott physical gold trust is back into negative territory at -.48%
Central fund of Canada’s is still in jail.
Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:
SII.CN Sprott formally launches previously announced offers to Central GoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *
end
And now overnight trading in gold/silver from Europe and Asia/plus physical stories that might interest you:
First: Goldcore’s Mark O’Byrne
(courtesy Goldcore/Mark O’Byrne)
HOLD “PHYSICAL CASH,” “INCLUDING GOLD AND SILVER” TO PROTECT AGAINST “SYSTEMIC RISK” – FIDELITY
By Mark O’ByrneJune 22, 20150 Comments
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– Hold physical cash “including gold and silver” says manager in one of largest mutual fund and financial services groups in the world
– “Systemic risk” threat to deposits says respected Fidelity fund manager
– Record global debt unlikely to be sustained by higher interest rates
– Banks may not be prepared for “shock” of defaults
– Guarantees to depositors unlikely to be honoured
– Savers and investors should hold “physical currencies” “including precious metals”
A fund manager for one of the largest mutual fund and investment groups in the world, Fidelity, has warned investors and savers to have an allocation to “physical cash,” “including precious metals” to protect against “systemic risk”.
Ian Spreadbury, who oversees the investment of over £4 billion of clients money in bond markets for Fidelity told Telegraph Money
“Systemic risk is in the system and as an investor you have to be aware of that.”
He believes that the record debt that has been ballooning since the crisis of ’08 due to interest rates being forced down to near zero by central banks. This debt, particularly where mortgages are concerned, would likely become unsustainable if, and when, rates rise to realistic levels.
“We have rock-bottom rates and QE is still going on – this is all experimental policy and means we are in uncharted territory.”
He points out that in such an environment banks would be unable to sustain the losses caused by defaults on unserviceable debt which would lead to a systemic crisis.
Spreadbury is not the first high profile financial expert to warn of an impending systemic crisis. We recently covered how Stephen King, chief economist at the world’s third largest bank HSBC, likened the global economy to the Titanic. Andrew Wilson,Goldman Sachs Asset Management’s chief executive in Europe recently gave similar warnings.
Spreadbury highlights that the £85,000 guarantee to UK depositors by the Financial Services Compensation Scheme is largely unfunded and that the government has said it will not intervene to rescue failing banks in the future – leaving deposits to be bailed-in.
The EU and other supra national institutions have been agreeing the architecture for bail-ins in recent years. Just this month, at the start of June, the European Commission has ordered 11 EU countries to enact the Bank Recovery and Resolution Directive (BRRD) within two months or be hauled before the EU Court of Justice.
11 countries are under pressure from the EC and had yet “to fall in line”. The countries were Bulgaria, the Czech Republic, Lithuania, Malta, Poland, Romania, Sweden, Luxembourg, the Netherlands, France and Italy.
The new bail-in system is largely in place and emergency resolutions can be brought forward in the event of banks failing in the interim period. The “bail-in” will require that shareholders, bondholders and importantly now depositors will all suffer ‘haircuts’ or be burnt if a financial institution is in trouble.
The European parliament confirmed that depositors with more than 100,000 euros ($137,000) would be bailed in after shareholders and bondholders. It is important to note that the 100,000 figure is an arbitrary figure and there is a possibility that this figure could be reduced by an insolvent government faced with an imploding banking system.
To deal with these risks Spreadbury advocates a well diversified portfolio. Cash should be spread out in different banks. Savers should hold physical cash outside the banking system – a remarkable suggestion coming from somebody so well acquainted with the workings of the financial system.
He also suggests that investors hold gold and silver. He says that the unravelling he foresees is more likely to happen in “the next five years rather than ten”.
Fidelity’s bond manager echoes what we have been advising clients and the wider public for some years now.
Mr Spreadbury concluded
“The message is diversification. Think about holding other assets. That could mean precious metals, it could mean physical currencies.”
Must Read Guides:
Protecting Your Savings In The Coming Bail-In Era
From Bail-Outs To Bail-Ins: Risks and Ramifications – Includes 60 Safest Banks In the World
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,193.70, EUR 1,052.14 and GBP 752.53 per ounce.
Friday’s AM LBMA Gold Price was USD 1,198.15, EUR 1,058.86 and GBP 755.65 per ounce.
Gold closed at $1,200.06 an ounce on Friday and silver was down 0.4 percent and closed at $16.10 an ounce. Palladium lost 1.9 percent to $705.25 after touching a 16-month low.
Gold climbed 1.8 percent in dollar terms last week, its second successive week of gains. Silver prices surged 1.8% last week and increased their year-to-date gain to 3.4%.
Gold in Singapore for immediate delivery ticked lower 0.3 percent to $1,196.60 an ounce near the end of the day, whilegold in Switzerland was lower and fell to $1,193 an ounce.
Greek Prime Minister Tsipras submitted a new list of reforms last night in a last ditch attempt to appease creditors. Crisis negotiations are taking place today in Brussels with Greece’s creditors to see if a deal can be reached after 5 months of stalemate. Greece owes 1.6 billion euros to the IMF by June 30th.
Euro zone leaders meeting in Brussels later on Monday are unlikely to be able to take a formal decision on whether to provide aid to Greece but there is still time this week to finalise an agreement, German Chancellor Angela Merkel said earlier.
“There are still a lot of days in the week in which decisions can be taken,” Merkel said, speaking to reporters in the eastern city of Magdeburg. She noted that without an agreement between Greece and the so-called institutions – the EC, EBC and IMF – the summit on Monday evening could not be more than a discussion forum.
The markets are irrationally exuberant again this morning on hopes for a Greek deal and European stocks have surged higher despite continuing uncertainty.
Chinese markets are closed today.
Platinum and palladium saw losses last week which have been extended today. Platinum is down another 1.3% and edging back towards last week’s more than six-year low at $1,066.50/oz. Palladium has reached its lowest in 18 months, at $696.47/oz this morning.
In late morning European trading, gold is down 0.44 percent at $1,194.53 an ounce. Silver is up 0.50 percent at $16.17 an ounce and platinum is down 0.68 percent at $1,075.68 an ounce.
end
Withdrawals from SGE equals 46 tonnes up 41% from the previous weak. Because of withdrawals from SGEI can distort actual demand it is now difficult to get an accurate reading on gold demand in China:
(courtesy Koos Jansen)
BULLIONSTAR BLOGS
Koos Jansen
Posted on 21 Jun 2015 by Koos Jansen
STRONG WITHDRAWALS MAINLAND & HONG KONG GOLD VAULTS
From June 8 – 12 withdrawals from SGE certified vaults in China mainland and CME Kilobar vaults in Hong Kong accounted 76 for tonnes.
Withdrawals from the vaults of the Shanghai Gold Exchange (SGE) and Shanghai International Gold Exchange (SGEI) came in elevated for this time a year at 46 tonnes in week 23 (June 8 – 12), up 41 % from the previous week.
Year to date a staggering 1,061 tonnes have been withdrawn, up 20 % y/y (2014), up 7 % y/y from 2013.
SGE withdrawals have lost their accuracy since the launch of the SGEI in September 2014 – withdrawals in the Shanghai Free Trade Zone (SGEI) can distort Chinese wholesale demand measured by SGE withdrawals (SGE withdrawals disclosed in the weekly reports capture both SGE and SGEI withdrawals). From numbers available in 2014 we knew that not much of SGEI trading was withdrawn by foreign SGEI members; most of the withdrawals in the Shanghai Free Trade Zone were imported into the mainland by SGE members.
For more information please read The Mechanics Of The Chinese Domestic Gold Market, Chinese Gold Trading Rules And Financing Deals Explained, The Workings Of The Shanghai International Gold Exchange andSGE withdrawals in perspective.
At this stage total SGE withdrawals, as disclosed by the weekly SGE reports, are difficult to analyze as we didn’t get any hints lately from the Chinese as to what is composition of the demand side of withdrawals, how much are SGEI withdrawals that are not imported into the mainland, and what is the composition of the supply side, how much gold is imported into the mainland and/or recycled to supply SGE withdrawals. Technically, all trades (volume) on the SGEI can be withdrawn and exported to, for example, India. This is not likely, but we don’t know. Attempts from my side to obtain the latest data regarding SGEI withdrawals have resulted in little intelligence.
In week 23 (June 8 -12) total SGEI volume was 35 tonnes; international gold trading in renminbi slowly comes to life.
The iAu99.99 contract is traded on the SGEI; Au99.95, Au99.99 and Au(T+D) are traded on the SGE.
Hong Kong Kilobar Withdrawals
In March 2015 the Chicago Mercantile Exchange (CME) launched a gold kilobar futures contract, which can be physically delivered in Hong Kong. The contract can be traded over exchanges (CME Globex, CME ClearPort, CME Direct, New York open outcry) and in the Over The Counter (OTC) market.
The kilobar volume over exchanges is insignificant and I’m not aware if any delivery is made from these trades. However, if we look at the physical gold throughput of the Hong Kong vaults, we must conclude this contract is a popular trade in the OTC market. This has been confirmed to me by a CME representative. Note, withdrawals from the Hong Kong vaults transcend the volume disclosed by the Merc, so the physical settlements must happen in the OTC market.
I would like to emphasize kilobar withdrawals do not have the same significance as SGE withdrawals. The mechanics of the gold market in Hong Kong are completely different from the market in the mainland. Hong Kong has been a trade hub for centuries; gold is imported and exported in vast amounts. Kilobar withdrawals do not reflect gold demand; it does illustrate how much is going through the Chinese Special Administrative Region (Hong Kong).
In week 23 kilobar withdrawals in Hong Kong accounted for 30 tonnes. On June 8 a record 16.61 tonnes in 9999 kilobar gold was withdrawn from the Brink’s vault in Hong Kong.
Koos Jansen
E-mail Koos Jansen on:koos.jansen@bullionstar.com
end
(courtesy Platt’s London/GATA)
So why don’t South African mines and unions agitate against gold price suppression?
Submitted by cpowell on Fri, 2015-06-19 17:34.Section: Daily Dispatches
South African Mine Employers to Offer Unions Pay Linked to Gold Price
From Platt’s, London
Friday, June 19, 2015
JOHANNESBURG, South Africa — Gold employers will present a social package of welfare and training plus a financial plan for the survival of mines on the third day of talks next week in a bid to counter massive wage demands from the unions, the chief negotiator for the employers, Elize Strydom said Friday.
It is a package tied up with a gold-linked pay plan that is unlikely to find favor with the unions.
Unions representing 93,000 gold mine workers will open talks on Monday for a new three year pay deal to come into force from July 1. …
A cash pay offer was unlikely to be made next week, but the employers would also put forward a plan Wednesday to give bonuses when the gold price goes up and discuss pay cuts, before job cuts, if it goes down, she said. “We want people to share in the good times when the gold price has gone and feel the pain when it goes down. …”
… For the remainder of the report:
http://www.platts.com/latest-news/metals/johannesburg/south-african-mine…
end
First Majestic Silver’s CEO Neumeyer elaborates why he issued his complaint to the CFTC on silver manipulation
First Majestic Silver’s Neumeyer elaborates on market manipulation complaint to CFTC
Submitted by cpowell on Sun, 2015-06-21 20:14.Section: Daily Dispatches
4:14p ET Sunday, June 21, 2015
Dear Friend of GATA and Gold:
First Majestic Silver CEO Keith Neumeyer, interviewed by Dan Ameduri of Future Money Trends, explains why he has heeded silver market analyst Ted Butler’s urging to complain to the U.S. Commodity Futures Trading Commission about silver price suppression. Neumeyer adds that it’s plain that the forces manipulating the monetary metals futures markets are also toying with the prices of mining company shares. The interview is 26 minutes long and can be heard at Future Money Trends here:
http://www.futuremoneytrends.com/trend-videos/interviews/silver-producer…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
(courtesy GATA/Chris Powell)
Justice Dept. won’t do anything about metals market rigging, GATA chairman says
Submitted by cpowell on Sun, 2015-06-21 20:36.Section: Daily Dispatches
4:35p ET Sunday, June 21, 2015
Dear Friend of GATA and Gold:
A report that the U.S. Justice Department is investigating investment banks for possible manipulation of the gold and silver market is not true, GATA Chairman Bill Murphy tells Ken Ameduri of Future Money Trends in an interview posted today. Such investigations never get anywhere, Murphy says, because central banks are the instigators of the manipulation. The interview is 15 minutes long and it’s posted at Crush The Street here:
http://www.crushthestreet.com/videos/live-interviews/doj-gold-manipulati…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
(courtesy Lawrence Williams/Mineweb)
Gold mine cost cutting not allaying margin falls – GMP
An analyst’s report from GMP points to declining profit margins among the world’s top and mid-tier gold miners.
Lawrence Williams | 22 June 2015 11:37
FUNCHAL – Some interesting research from analysts at Canadian headquartered GMP Securities builds on a theme we covered here in these pages around six weeks ago. This suggested that, if anything, the cost cutting programmes entered into by most major and mid-tier gold mining companies may have largely gone as far as they can go. (See: Has gold mine cost cutting run its course?)
Indeed in its latest mid-year report the Canadian brokerage and investment bank points out that despite some seemingly effective cost cutting, profit margins have been continuing to fall regardless. It bases its analysis on All In Sustaining Costs (AISC) and that these, despite being far more encompassing, and less open to company by company variations than cash costs, are still reckoned by many bank analysts not to go far enough to account for all corporate costs in running modern day gold mines.
The mining companies have been entering into cost reductions that may perhaps be considered as window dressing to keep individual and institutional holders happy in that the easy cuts are being made regardless of the longer-term implications these may have on a company’s future. These include cutting back and deferring capital programmes (i.e. new mine developments and expansions); selling off less economic or lossmaking mines to smaller companies which may be more flexible in their approach; mining to higher grades, and thus debilitating longer term resource and reserve levels; cutting back management tiers (perhaps an area where the bigger companies can actually make sensible savings); cutting back on exploration expenditures (which like cutting capital programmes can impact on the longer term future for the companies concerned), reducing labour forces etc.
In effect these are the easy options in helping allay shareholder and institutional pressures to cut costs, but once made it becomes increasingly difficult to maintain these or extend them into the future. Most mining companies will have been hoping against hope that there will be a substantial gold price recovery sufficient to enable them to return to better profit margins and reverse some of those cuts to activities which might be beneficial long term, but so far no such rise has been forthcoming with gold trading largely flat over the past year to 18 months.
Indeed GMP subtitles its analysis ‘Cost optimizations can only go so far…’ and notes that although costs did indeed come down in 2013 and remain below 2013 levels in their forecasts for the current year, they do seem to have plateaued. For senior producers the AISC on average have declined 8% from $1,035/oz in 2013 to the 2015 forecast of $958/oz while mid-tier producers are seeing AISC down from $963/oz to $900 /oz – a fall of 7%. Meanwhile the gold price has fallen 16% from 2013 to GMP’s forecast $1225/oz for 2015. The brokerage/investment bank then comments that the question now is how much more the miners can do to cut costs further, if at all, and whether these new cost structures are sufficient to operate in the current environment.
Looking into the analysis further, something that GMP does not seem to comment on specifically is that the analysis includes a chart which, although it still shows an overall costs decline as noted above from 2013 to 2015, what must be disturbing for the miners is that it also shows AISC moving marginally higher for 2015 than they were in 2014. This suggests that although margins have been falling, costs are beginning to rise again – something we pointed out in our earlier article which looked at costs guidance figures for 2015 from all the top tier gold miners.
Another interesting point in the GMP analysis is that higher cost producers appear to have been less successful in cutting costs than the lower cost miners – contrary to expectations. In another chart they show that for the higher cost fraction, costs have only declined 4% from 2013 to 2015, while the lower cost section saw a fall of 10% over the same period. But, again in both cases there appeared to be a marginal increase in estimated costs for 2015 over and above those for 2014.
So with AISC beginning to rise again, and perhaps with the miners having little scope for implementing further reductions, naturally occurring inflation will be eating further into margins unless we see a pickup in the gold price. Some respite has been accorded to non-US producers by US dollar strength against most other currencies and by the big fall in oil prices. But both these seem to have stalled, at least for the time being, which will bring further pressures to bear on marginal gold mining operations. Much of the industry could thus be facing serious problems in the short to medium term if higher gold prices fail to materialise and come to their rescue.
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And finally we have Bill Holter:
(courtesy Bill Holter/Holter-Sinclair collaboration)
“It’s already in the market”?
You have heard the phrase many times “it’s already in the market”, meaning if “something” or some sort of event happens it is already factored in to prices. I was overseas last week, travelled much of the week and stayed in a hotel that had only two English speaking channels …one of which was CNBC. I cannot tell you how many talking heads were paraded forth whom all parroted the same pabulum, “a Greek default is already factored in the market”. Really? REALLY?
For CNBC or any media outlet to downplay a Greek default is plain evil deceit at its core. We have looked at this many times and from many angles, Greece owes close to 350 billion euros and when the amount of written derivatives are included we are probably talking well over 3 trillion euros! Yes, the talking heads keep saying “much of the Greek debt is now off of the banks balance sheets and is now owned by the ECB itself”. Does this make it any better? Or could it make the situation even worse because now a central bank has its balance sheet in peril and exposed?
The other side of the coin is the derivatives situation. Please remember when a “default” occurs, the “notional value” becomes the true at risk amount. This was the problem caused by Lehman Brothers in 2008, derivatives which had been supported by margin alone (and very thin at that) saw margin calls explode and the demands of 100% notional payments began. This is why no one, ever, can be allowed to fail. Because then the triggers are pulled and notional settlements begin …with a minor problem. Derivatives simply cannot perform because they total more than the value of everything else added together on the planet. The “money” simply does not exist for everyone to be paid.
The purpose for writing this piece is not to discuss Greece, whether they pull an “Iceland” and leave the central banks holding the bag …or talk about the odds of their banks openingMonday morning …or to speculate as to “when” they default (“if” is already in the rearview window). A Greek exit from the Eurozone or a change in allegiance from NATO to Russia are both very real possibilities …but NONE OF THIS is “in the market”. Greece is but one of an absolute litany of potential events being ignored!
The list of potential events being ignored by the markets is very long. They include the geopolitics of Ukraine, Syria, Iraq, Yemen, the South Sea islands Iran, and we might as well throw Israel into this mix. Russia and China just announced trade to be done exclusively in yuan and rubles, is this factored in to the valuation of the dollar? The U.S. has moved missiles into Poland and elsewhere to ring fence Russia, Russia has responded by repositioning “EMP” weaponry. China’s economy is slowing while their margin debt and speculation in stock markets are at an all time high after doubling in value over 6 months. As for the U.S., bogus number after bogus number is being reported while the economy declines in recession…and the world moves further and further from the dollar. It’s all “business as usual” as long as markets can be controlled…
The biggest “factor” being ignored is the fact credit markets around the world have already seriously crackedhttp://www.zerohedge.com/news/2015-06-21/credit-market-warning. Interest rates are rising and bond prices falling. Please, never forget this, “credit” is THE FOUNDATONto the “value” of everything we know and believe to have value. “Credit” (debt) is THE foundation to every current currency on the planet. If the underlying debt is beginning to lose value, what will this mean for currencies? What will it mean for the “discount process” to be used to value stocks? Or real estate? Not to mention the fact current cash flows will have the capacity to carry LESS debt …which has been used to hold up current values? To finish this thought process out, the big picture is quite simple. Debt has continually expanded faster and faster than the underlying global GDP. Current GDP is simply not sufficient in size any longer to carry the global debt burden…
I am going to tell you, NOTHING “bad” is factored into today’s markets… even slightly. All markets, all assets, everything has been “priced to perfection”, FORCEFULLY “PRICED”. Do you understand what I am saying here? “Prices”, all prices are being “made”. They are being made to paint a picture of a perfect world. This picture is a must to portray “all is well and no worries”. Almost none of the potentials I wrote of above (and there are many more) have even seen the light of day in the Western mainstream press …because if they did then they might affect values and partly be “priced in”.
Let me finish by talking about “black swans”. A black swan by definition is a surprise event taking participants unaware. How can anything we already know about …and is supposedly priced in to the market be a black swan? Maybe because so few believe a systemic failure can happen? Maybe we should categorize the entire financial system or even our way of life as a “black swan” because almost no one believes “it” (the ride) can ever end? Americans in general know something is wrong but they just can’t put their finger on it. A recent poll taken by Gallup shows confidence in almost everything has dropped
http://www.usnews.com/news/blogs/ken-walshs-washington/2015/06/17/americans-have-lost-confidence-in-everythingto previously unseen lows.
As I have mentioned many times before, the last piece of glue holding the system together is confidence. The confidence of a central bank in another central bank, the confidence of institutions in other institutions and of course the confidence of the general public. While on this topic of confidence, why do you believe four European central banks have requested their gold back? Or closer to home, why does Texas want to retrieve their gold from Yankee bankers? Confidence is a peculiar thing, it takes a long time to build and may be retained by “reputation” for quite some time …but when it breaks it goes away like lightning!
None of the potential black swans have seemed to even move the dial because the puppeteers have used derivatives to collar, support and suppress various prices and thus “hide” any bad reaction. I have to believe the ultimate black swan is exactly this, the loss of control of everything including perception. After all, the most ingrained of thoughts are these; the government can never go broke, the government will never allow it or let it happen. Maybe THE black swan is the most obvious of all, the government is in fact broke and Mother Nature does still exist. We have gone so far down the rabbit hole where absolutely nothing is actually “in the market”, I believe the biggest shock of all will be what the world looks like the day markets try to reopen?
Regards, Bill Holter
Holter-Sinclair Collaboration
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A link to my most recent interview with Collin Kettell of Palisade Radio http://palisaderadio.com/bill-holter-greek-default-to-trigger-48-hour-global-meltdown/ . Thanks, Bill
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