Good evening Ladies and Gentlemen:
We are entering options expiry week.
Comex options expiry Tuesday, July 28.
LMBA options expiry: noon London time July 31.2015
OTC options expiry: midnight July 31.2015
Here are the following closes for gold and silver today:
Gold: $1096.50 up $10.90 (comex closing time)
Silver $14.59 up 11 cents.
In the access market 5:15 pm
Gold $1095.20
Silver: $14.57
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a poor delivery day, registering 0 notices for 0 ounces . Silver saw 91 notices filed for 455,000 oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 244.29 tonnes for a loss of 59 tonnes over that period.
In silver, the open interest rose by 55 contracts despite the fact that Friday’s price was down by 20 cents and the gold price was pummeled (down $8.40). The total silver OI continues to remain extremely high, with today’s reading at 190,439 contracts now at decade highs despite a record low price. In ounces, the OI is represented by .951 billion oz or 135% 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. Today again, we must have had bankers contemplating falling off the roof due to silver’s refusal to buckle with respect to open interest.
In silver we had 91 notices served upon for 455,000 oz.
In gold, the total comex gold OI rests tonight at 443,402 for a loss of 11,910 contracts as gold was down $8.40 on Friday. We had 0 notices filed for nil oz today.
We had no withdrawals in gold tonnage at the GLD / thus the inventory rests tonight at 680.15 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I thought that 700 tonnes is the rock bottom inventory in GLD gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold. In silver, we had no change in inventory at the SLV / Inventory rests at 328.834 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 55 contracts up to 190,439 despite the fact that silver was down by 20 cents on Friday in another massive bear raid. We again must have had some shortcovering by the bankers as they feared something was brewing in the silver arena. The OI for gold fell by 11,910 contracts down to 443,402 contracts as the price of gold was down by $8.40 on Friday.
(report Harvey)
2 Today, 4 important commentaries on Greece
(zero hedge, Bloomberg/)
3. Today, 3 stories on the huge fall in Chinese stocks overnight
zero hedge
4. Gold trading overnight
(Goldcore/Mark O’Byrne/)
5. Czech Republic and Poland say no to joining the Euro monetary zone
(zero hedge)
6 Trading of equities/ New York
(zero hedge)
7. we have two oil related stories
(zero hedge/)
8. Dave Kranzler of IRD discusses the criminal actions of GLD
(Dave Kranzler IRD)
9 USA stories;
i) durable goods falter
ii) Dallas Fed Manufacturing Index plummets after rising last month
(zero hedge)
10. Andrew Maguire discusses the gold whacking last Sunday night. He also informs us that gold is in backwardation in London to the tune of $7.40 spot/over near by month.
(Andrew Maguire/Kingworldnews)
11. Chris Powell on the negligent press
(courtesy Chris Powell./GATA)
12. jessie of American cafe comments that last week China’s demand for gold came in at 69 tonnes, one of the largest on record. The sum total so far this year 1366 tonnes, a huge 59 tonnes greater demand than last year.
(Jessie/American cafe)
13. Bron Suchecki on why he believes the Chinese undervalued their reserves reporting to the west:
(courtesy Bron Suchecki/Perth Mint)
plus other topics…
Here are today’s comex results:
The total gold comex open interest fell by 11,910 contracts from 455,312 down to 443,402 as gold was down $8.40 in price on Friday (at the comex close).For the past two years, we have strangely witnessed the gold comex collapse in OI as we enter an active delivery month, and today this again is the norm. What is interesting is that the LBMA gold is witnessing a 7.40 premium spot/next nearby month as gold is now in backwardation over there. We are now in the next contract month of July and here the OI rose by 0 contracts remaining at 154 contracts. We had 95 notices filed on Friday and thus we gained 95 gold contracts or an additional 9500 oz will stand in this non active delivery month of July. The next big delivery month is August and here the OI decreased by 28,162 contracts down to 125,568. We have 4 trading days before first day notice for the big August active gold contract (july 31). The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was excellent at 282,076. However today’s volume was aided by HFT traders. The confirmed volume on Friday (which includes the volume during regular business hours + access market sales the previous day was excellent at 320,593 contracts. Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI rose by 55 contracts from 190,384 up to 190,439 despite the fact that the price of silver was down by 20 cents with respect to Friday’s price. We continue to have our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver arena. We are in the delivery month of July and here the OI fell by 73 contracts down to 173. We had 91 notices served upon yesterday and thus we gained 18 contracts or an additional 90,000 ounces of silver will stand for delivery in this active month of July. This is the first time in quite some time that we have not lost any silver ounces standing immediately after first day notice. The August contract month saw it’s OI fall by 6 contracts down to 166. The next major active delivery month is September and here the OI rose by 66 contracts to 129,666. The estimated volume today was fair at 30,588 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 58,308 contracts which is excellent in volume. We had 1 notice filed for 5,000 oz.
July initial standing
July 27.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
66,012.548 oz (HSBC,Scotia)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
0 contracts (nil oz)
No of oz to be served (notices)
154 contracts (15,400 oz)
Total monthly oz gold served (contracts) so far this month
607 contracts(60,700 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
203.60 oz
Total accumulative withdrawal of gold from the Customer inventory this month
422,122.6 oz
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: zero
we had 2 customer withdrawals
i) Out of HSBC: 64,012.533 oz
ii) Out of Scotia: 2000.015 oz
total customer withdrawal: 66,012.545 oz
We had 0 customer deposits:
Total customer deposit: nil
We had 1 adjustment
i) Out of JPMorgan;
we had 104.302.608 oz leave the dealer account and land into the customer account at JPMorgan
JPMorgan has only 3.600 tonnes left in its registered or dealer inventory.
.
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the July contract month, we take the total number of notices filed so far for the month (702) x 100 oz or 70,200 oz , to which we add the difference between the open interest for the front month of July (154) 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 July contract month:
No of notices served so far (702) x 100 oz or ounces + {OI for the front month (154) – the number of notices served upon today (0) x 100 oz which equals 85,600 oz standing so far in this month of July (2.6625 tonnes of gold).
we gained 95 contracts or an additional 9500 oz will stand in this non active delivery month of JULY.
Total dealer inventory 378,476.13 or 11.77 tonnes
Total gold inventory (dealer and customer) = 7,920,206.028 oz or 246.35 tonnes
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 244.29 tonnes for a loss of 59 tonnes over that period.
end
And now for silver
July silver initial standings
July 27 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
oz (CNT, Delaware)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
813,933.710 oz (CNT,Scotia)
No of oz served (contracts)
91 contracts (455,000 oz)
No of oz to be served (notices)
172 contracts (860,000 oz)
Total monthly oz silver served (contracts)
3474 contracts (17,370,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
nil
Total accumulative withdrawal of silver from the Customer inventory this month
9,315,632.0 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 2 customer deposits:
i) Into Brinks: 13,599.48 oz
ii) Into CNT: 300,146.67
total customer deposit: 313,746.15 oz
We had 2 customer withdrawals:
i)Out of Scotia: 730,580.97 oz
ii) Out of CNT: 83,352.74 oz
total withdrawals from customer: 813,933.710 oz
we had 1 adjustment
From Delaware:
15,459.639 oz leaves the customer and this lands into the dealer account at Delaware
Total dealer inventory: 58.158 million oz
Total of all silver inventory (dealer and customer) 177.337 million oz
The total number of notices filed today for the July contract month is represented by 1 contract for 5,000 oz. To calculate the number of silver ounces that will stand for delivery in July, we take the total number of notices filed for the month so far at (3474) x 5,000 oz = 17,370,000 oz to which we add the difference between the open interest for the front month of July (173) and the number of notices served upon today (1) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the July contract month:
3474 (notices served so far) + { OI for front month of July (173) -number of notices served upon today (1} x 5000 oz ,= 18,230,000 oz of silver standing for the July contract month.
We gained another 90,000 oz that will stand for delivery in this non active month of July. Somebody was in great need of silver and gold today.
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:
July 27/no change in inventory/rests tonight at 680.13 tonnes
July 24.2015/we had another massive withdrawal of 4.48 tonnes of gold form the GLD/Inventory rests at 680.13 tonnes.
July 23.2015: we had another withdrawal of 2.68 tonnes of gold from the GLD/Inventory rests at 684.63 tonnes
july 22/another withdrawal of 2.38 tonnes of gold from the GLD/Inventory rests at 687.31
July 21.2015: a massive withdrawal of 6.56 tonnes of gold from the GLD.
Inventory rests at 689.69 tonnes. China and Russia need their physical gold badly and they are drawing their physical from this facility.
July 2o.2015: no change in inventory
July 17./a massive withdrawal of 11.63 tonnes in gold tonnage tonight from the GLD/Inventory rests at 696.25 tonnes
July 16./we lost 1.19 tonnes of gold tonight/Inventory rests at 707.88 tonnes
July 15/no change in inventory/gold inventory rests tonight at 709.07 tonnes.
July 14.2015:no change in inventory/gold inventory rests at 709.07 tonnes
July 13.2015: a big inventory gain of 1.49 tonnes/Inventory rests tonight at 709.07 tonnes
July 10/ we had a big withdrawal of 2.07 tonnes of gold from the GLD/Inventory rests this weekend at 707.58 tonnes
July 27 GLD : 680.13 tonnes
end
And now for silver (SLV)
July 27/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 24/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 23.2015; no change in silver inventory/rests tonight at 328.834 million oz
july 22/no change in silver inventory/inventory rests at 328.834 million oz.
July 21.we had a massive addition of 1.241 million oz into the SLV/Inventory rests tonight at 328.834 million oz.
Please note the difference between gold and silver (GLD and SLV). In GLD gold is being depleted and sent to the east. In silver: no depletions, as I guess this vehicle cannot supply physical metal.
July 20/no change
july 17.2015/no change in silver inventory tonight/inventory at 327.593 million oz
July 16./no change in silver inventory/rests tonight at 327.593 million oz
July 15./no change in silver inventory/rests tonight at 327.593 million oz/
July 14.2015: no change in silver inventory/rests tonight at 327.593 million oz.
July 13./an inventory gain of 1.051 million oz/Inventory rests at 327.593 million oz
july 10/no change in silver inventory at the SLV tonight/inventory 326.542 million oz/
July 9/ a huge increase in inventory at the SLV of 1.337 million oz. Inventory rests tonight at 326.542 million oz
July 27/2015: tonight inventory rests at 328.834 million oz
end
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 11.9 percent to NAV usa funds and Negative 11.7% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.0%
Percentage of fund in silver:37.6%
cash .4%
( July 27/2015)
2. Sprott silver fund (PSLV): Premium to NAV falls to -.31%!!!! NAV (July 27/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV rises to – .59% to NAV(July 27/2015)
Note: Sprott silver trust back into positive territory at- 0.32%
Sprott physical gold trust is back into negative territory at -.59%
Central fund of Canada’s is still in jail.
Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:
SII.CN Sprott formally launches previously announced offers to CentralGoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *
>end
And now for your overnight trading in gold and silver plus stories
on gold and silver issues:
(courtesy/Mark O’Byrne/Goldcore)
Gold Bullion “Extremely Rare” – All World’s Gold Fits In Average Four Bedroom House
By Mark O’ByrneJuly 27, 20151 Comment
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– Gold is extremely rare and all gold ever mined would fit in giant bar the size of a four bedroom house
– Gold is a tangible asset which always retains value – unlike paper assets
– Growing Chinese, Indian and Asian middle class provide “fundamental pillar of support” to gold
– Jewellery is not a suitable vehicle for gold investment due to high mark-ups and VAT
– “Something romantic about gold” and a “premium product” said Bobby Kerr
– Risk of further weakness in short term but buying opportunity presenting itself
– History and academic research shows gold a “hedging instrument” and safe haven asset
Research Director and founder of GoldCore, Mark O’Byrne, was interviewed by Bobby Kerr on Newstalk’s “Down to Business” on Saturday morning. A range of aspects pertaining to gold and the gold market were discussed including the rarity of physical gold; the enormous demand for gold from China and India and gold’s proven safe haven qualities.
All the gold in the world in a giant gold cube (0.9999 pure)
When explaining the true scarcity of physical gold, Mark was asked whether all the gold ever mined would fit into a 4-bedroom house. Mark agreed, stating that if all above ground gold in existence were refined to 99.9% purity it would fit in a cube with 21-meter sides. This would be comparable to the centre court of Wimbledon or two olympic size swimming pools. It is therefore an extremely rare metal.
Gold is a tangible asset which, regardless of how poorly it may perform in the short term due to the ebb and flow of markets – always retains a value in the long term. When stocks and shares enter into crisis periods there is always the risk that their value can be completely erased as happened with Bear Stearns, Lehman Brothers and as almost happened to some Irish banks.
History and empirical data demonstrate that gold is a time-tested form of financial insurance said Mark O’Byrne. He cites Trinity College Dublin’s Brian Lucey and the work of Dr. Constantin Gurdgiev whose academic research shows that gold is a “hedging instrument” and a “safe haven asset”.
He refers to the old Wall Street adage that one should have 10% of one’s assets in gold and hope that it never works. The implication being that if the gold price is rising it is usually in an environment where stocks and shares, bonds, property and one’s business are suffering.
He emphasises that placing all of one’s wealth in gold is risky but an allocation is essential financial insurance.
When asked by Bobby whether the recent declines in prices were related to the crashing stock market in China, Mark pointed out that there have been a couple of months of weak demand from China but that on a quarterly or yearly basis demand remains robust. Chinese demand for this year is expected to amount to 1,000 metric tonnes.
Four-bedroom house
The Shanghai Gold Exchange sees an average of 50 tonnes of gold bought each week but last week saw demand spike to over 60 tonnes. He points out that the middle classes of China and India do not trust banks or national currencies due to historical crises such as the Chinese hyperinflation of 1949.They therefore view gold as a currency and savings mechanism and prefer to save in that format.
In 1949, Chairman Mao banned ownership of physical gold in China and the market was not liberalised until 2003. Therefore, Chinese demand is coming from a population of 1.3 billion people who had no access to gold only twelve years ago. This offers a “fundamental pillar of support” to the gold price.
Mark explains that jewellery is not way to invest in gold. Investment grade coins and bars are 99.99% pure whereas jewellery in Ireland – mainly 9 carat – is 37.5% pure. The mark-ups on bullion coins and bars range from roughly 2% to 4% whereas the mark-up on jewellery can be as high as 300%. There is no VAT payable on bullion coins and bars whereas there is on jewellery.
Mark believes that some downward risk to the gold price remains due to the momentum of the recent severe correction in price. He points out that GoldCore had suggested on Bloomberg three years ago that a 50% correction in price was not unlikely at that time as is normal in long term bull markets.
However, in the long term gold should perform well due to the fact that the problems that led to the global debt crisis have not been addressed – too much debt globally. Indeed, debt levels have continued to surge which risks compounding the global financial crisis and risks a new and global debt crisis worse than the last one.
The Newstalk interview can be listened to here
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,098.60, EUR 992.42 and GBP 708.39 per ounce.
Friday’s AM LBMA Gold Price was USD 1,083.75, EUR 990.042 and GBP 699.89 per ounce.
Gold in USD – 1 Week
Gold and silver fell over 3% and 1% respectively last week – to $1,098.70/oz and $14.69/oz.
Today, gold in Singapore ticked lower initially prior to seeing gains in late Asian and early Swiss gold bullion trading.
This morning in European trading, silver for immediate delivery was 0.3 percent lower at $14.78 an ounce. The metal slumped to $14.3842 on Friday, the lowest price since 2009.
Spot platinum fell 0.7% percent to $985 an ounce, while palladium fell 1.1% percent to $622 an ounce.
Must-read bullion guide: Gold and Silver Storage Must Haves
Mark O’Byrne
Published in Daily Market Update
end
(courtesy Bloomberg/GATA)
Hedge funds are holding first-ever gold net-short position
Submitted by cpowell on Sat, 2015-07-25 19:08. Section: Daily Dispatches
By Joe Deaux
Bloomberg News
Saturday, July 25, 2015
Hedge funds are holding the first ever bet on a decline in gold prices since the U.S. government started collecting the data in 2006.
The funds and other speculators shifted to a net-short position of 11,345 contracts in New York futures and options in the week ended July 21, according to figures from the U.S. Commodity Futures Trading Commission.
Gold futures on Friday fell to the lowest since 2010 on the Comex, and the short wagers show investors expect the rout to deepen. Bullion has fallen almost every day in July, leaving the metal poised for the biggest monthly decline since June 2013. …
… For the remainder of the report:
http://www.bloomberg.com/news/articles/2015-07-24/hedge-funds-hold-first…
end
A very important commentary form Andrew Maguire tonight. He basically states that the crooked BIS is running attacks on gold and silver. However expect a short squeeze shortly. Interestingly he states that gold is in backwardation to the tune of $7.40 spot/next nearby month.
a must read..
(courtesy Andrew Maguire/Kingworldnews/GATA)
BIS ran attack on gold and short squeeze is imminent, Maguire tells KWN
Submitted by cpowell on Sat, 2015-07-25 16:53. Section: Daily Dispatches
12:50p ET Saturday, July 25, 2015
Dear Friend of GATA and Gold:
In commentary posted today at King World News, London metals trader Andrew Maguire provides evidence that last week’s attack on the gold price was operated through the Bank for International Settlements, that commercial traders have turned speculators short and gotten themselves long, and that a short squeeze is imminent. Maguire’s commentary is posted at KWN here:
http://kingworldnews.com/andrew-maguire-a-gold-and-silver-tsunami-is-for…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
(courtesy Chris Powell/GATA)
Silence from the gold mining industry and timidity from the World Gold Council
Submitted by cpowell on Sat, 2015-07-25 15:27. Section: Daily Dispatches
11:33a ET Saturday, July 25, 2015
Dear Friend of GATA and Gold:
On Friday your secretary/treasurer sought comment from the World Gold Council and the investor or media relations offices of six large gold mining companies about last Sunday night’s attack on the gold market. Only Newmont Mining responded, saying it had no comment. Not responding were the gold council, Barrick Gold, Goldcorp, Kinross, Anglogold Ashanti, and Agnico-Eagle.
The gold council’s statement about the attack, conveyed to you by GATA Friday evening —
http://www.gata.org/node/15588
— was discovered by your secretary/treasurer not in the “News and Events” and “Press Releases” section of the council’s Internet site —
http://www.gold.org/news-and-events
— but rather in the “Tweets” section —
https://twitter.com/GOLDCOUNCIL
— where it had been almost immediately overshadowed by an item about jewelry purchases in India. One could have gotten the impression that the council was not eager to be seen addressing the issue.
And yet one GATA supporter was a bit encouraged by the council’s statement. He wrote:
“This was probably the most interesting statement I’ve seen the World Gold Council issue. They acknowledged gold as money, something they’ve been loathe to do. They are acknowledging all our observations about shady activity in the gold market and expressing some rationales, but quietly. It’s almost as if they want to protest but someone is keeping them from making a direct protest and this is the best they are permitted to do. If they really wanted to bury this, why issue a statement at all?
“I think that in the fullness of time someone in the gold council will rat out what is going on over there. Perhaps the council is dominated by government interests but has some people who are sympathetic to gold as money. Yes, gold investors and mining companies needed a full-throated protest of last week’s attack and didn’t get it, and yes, the gold council was still a little defensive about the status quo. Yet my expectations for the gold council are so low that the council actually exceeded them for once. I don’t admire the council by any means, but I do wonder what they’re up to with this statement.”
Well, here’s a guess: The attack on gold was so extreme and so obviously a market manipulation that the council figured that its own relevance would evaporate if it had absolutely nothing to say but that saying anything relevant risked upsetting the market-rigging establishment to which the council is so closely connected. So it said something timid and quickly buried it.
But eventually even the World Gold Council may realize that it will be out of business if the gold price is taken down to zero. Then central banks will no longer need the council’s help in getting the price down.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
(courtesy Bron Suchecki/Perth Mint Director/GATA)
Bron Suchecki: The message behind the Chinese gold reserves announcement
Submitted by cpowell on Sat, 2015-07-25 14:49. Section: Daily Dispatches
10:48a ET Saturday, July 25, 2015
Dear Friend of GATA and Gold:
Perth Mint research director Bron Suchecki has done a spectacular job compiling and analyzing interpretations of China’s latest gold reserve announcement, which, he writes, likely was aimed at influencing and even misleading various audiences.
In a particularly astute observation, Suchecki writes:
Knowing that a lower-than-expectations figure would likely be negative for gold prices, China may well have considered it fortuitous that the gold price was weak at the same time they wanted to encourage people to invest in the stock market. As Jim Rickards tweeted, “China is still buying gold and favors a lower price. So timing the big ‘reveal’ for when gold prices are weak anyway makes perfect sense,” both for the State Administration of Foreign Exchange in terms of acquiring more gold and for discouraging domestic investors from shifting money from the stock market to gold.
Suchecki’s analysis is headlined “The Message Behind the Chinese Gold Reserves Announcement” and it’s posted at the Perth Mint’s Internet site here:
http://research.perthmint.com.au/2015/07/24/the-message-behind-the-chine…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
Morons!!
(courtesy GATA)
World Gold Council dismisses gold price plunge
Submitted by cpowell on Fri, 2015-07-24 21:32. Section: Daily Dispatches
5:30p ET Friday, July 24, 2015
Dear Friend of GATA and Gold:
The World Gold Council yesterday published a fairly involved statement responding to this week’s attack on the gold market, acknowledging the suspiciousness of the trading that began the attack last Sunday night but dismissing it as the doings of speculators and emphasizing what the council considers the favorable fundamentals for gold, as if fundamentals might prevail any time soon against surreptitious trading by central banks. The council’s statement is posted in PDF format at GATA’s Internet site here:
http://www.gata.org/files/WorldGoldCouncilStatement-07-23-2015.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
(courtesy Dave Kranzler/Craig Roberts)
Supply and Demand in the Gold and Silver Futures Markets – Paul Craig Roberts and Dave Kranzler
July 27, 2015| Categories: Articles & Columns| Tags: |Print This Article
This article establishes that the price of gold and silver in the futures markets in which cash is the predominant means of settlement is inconsistent with the conditions of supply and demand in the actual physical or current market where physical bullion is bought and sold as opposed to transactions in uncovered paper claims to bullion in the futures markets. The supply of bullion in the futures markets is increased by printing uncovered contracts representing claims to gold. This artificial, indeed fraudulent, increase in the supply of paper bullion contracts drives down the price in the futures market despite high demand for bullion in the physical market and constrained supply. We will demonstrate with economic analysis and empirical evidence that the bear market in bullion is an artificial creation.
The law of supply and demand is the basis of economics. Yet the price of gold and silver in the Comex futures market, where paper contracts representing 100 troy ounces of gold or 5,000 ounces of silver are traded, is inconsistent with the actual supply and demand conditions in the physical market for bullion. For four years the price of bullion has been falling in the futures market despite rising demand for possession of the physical metal and supply constraints.
We begin with a review of basics. The vertical axis measures price. The horizontal axis measures quantity. Demand curves slope down to the right, the quantity demanded increasing as price falls. Supply curves slope upward to the right, the quantity supplied rising with price. The intersection of supply with demand determines price. (Graph 1)
A change in quantity demanded or in the quantity supplied refers to a movement along a given curve. A change in demand or a change in supply refers to a shift in the curves. For example, an increase in demand (a shift to the right of the demand curve) causes a movement along the supply curve (an increase in the quantity supplied).
Changes in income and changes in tastes or preferences toward an item can cause the demand curve to shift. For example, if people expect that their fiat currency is going to lose value, the demand for gold and silver would increase (a shift to the right).
Changes in technology and resources can cause the supply curve to shift. New gold discoveries and improvements in gold mining technology would cause the supply curve to shift to the right. Exhaustion of existing mines would cause a reduction in supply (a shift to the left).
What can cause the price of gold to fall? Two things: The demand for gold can fall, that is, the demand curve could shift to the left, intersecting the supply curve at a lower price. The fall in demand results in a reduction in the quantity supplied. A fall in demand means that people want less gold at every price. (Graph 2)
Alternatively, supply could increase, that is, the supply curve could shift to the right, intersecting the demand curve at a lower price. The increase in supply results in an increase in the quantity demanded. An increase in supply means that more gold is available at every price. (Graph 3)
To summarize: a decline in the price of gold can be caused by a decline in the demand for gold or by an increase in the supply of gold.
A decline in demand or an increase in supply is not what we are observing in the gold and silver physical markets. The price of bullion in the futures market has been falling as demand for physical bullion increases and supply experiences constraints What we are seeing in the physical market indicates a rising price. Yet in the futures market in which almost all contracts are settled in cash and not with bullion deliveries, the price is falling.
For example, on July 7, 2015, the U.S. Mint said that due to a “significant” increase in demand, it had sold out of Silver Eagles (one ounce silver coin) and was suspending sales until some time in August. The premiums on the coins (the price of the coin above the price of the silver) rose, but the spot price of silver fell 7 percent to its lowest level of the year (as of July 7).
This is the second time in 9 months that the U.S. Mint could not keep up with market demand and had to suspend sales. During the first 5 months of 2015, the U.S. Mint had to ration sales of Silver Eagles. According to Reuters, since 2013 the U.S. Mint has had to ration silver coin sales for 18 months. In 2013 the Royal Canadian Mint announced the rationing of its Silver Maple Leaf coins: “We are carefully managing supply in the face of very high demand. . . . Coming off strong sales volumes in December 2012, demand to date remains very strong for our Silver Maple Leaf and Gold Maple Leaf bullion coins.” During this entire period when mints could not keep up with demand for coins, the price of silver consistently fell on the Comex futures market. On July 24, 2015 the price of gold in the futures market fell to its lowest level in 5 years despite an increase in the demand for gold in the physical market. On that day U.S. Mint sales of Gold Eagles (one ounce gold coin) were the highest in more than two years, yet the price of gold fell in the futures market.
How can this be explained? The financial press says that the drop in precious metals prices unleashed a surge in global demand for coins. This explanation is nonsensical to an economist. Price is not a determinant of demand but of quantity demanded. A lower price does not shift the demand curve. Moreover, if demand increases, price goes up, not down.
Perhaps what the financial press means is that the lower price resulted in an increase in the quantity demanded. If so, what caused the lower price? In economic analysis, the answer would have to be an increase in supply, either new supplies from new discoveries and new mines or mining technology advances that lower the cost of producing bullion.
There are no reports of any such supply increasing developments. To the contrary, the lower prices of bullion have been causing reductions in mining output as falling prices make existing operations unprofitable.
There are abundant other signs of high demand for bullion, yet the prices continue their four-year decline on the Comex. Even as massive uncovered shorts (sales of gold contracts that are not covered by physical bullion) on the bullion futures market are driving down price, strong demand for physical bullion has been depleting the holdings of GLD, the largest exchange traded gold fund. Since February 27, 2015, the authorized bullion banks (principally JPMorganChase, HSBC, and Scotia) have removed 10 percent of GLD’s gold holdings. Similarly, strong demand in China and India has resulted in a 19% increase of purchases from the Shanghai Gold Exchange, a physical bullion market, during the first quarter of 2015. Through the week ending July 10, 2015, purchases from the Shanghai Gold Exchange alone are occurring at an annualized rate approximately equal to the annual supply of global mining output.
India’s silver imports for the first four months of 2015 are 30% higher than 2014. In the first quarter of 2015 Canadian Silver Maple Leaf sales increased 8.5% compared to sales for the same period of 2014. Sales of Gold Eagles in June, 2015, were more than triple the sales for May. During the first 10 days of July, Gold Eagles sales were 2.5 times greater than during the first 10 days of June.
Clearly the demand for physical metal is very high, and the ability to meet this demand is constrained. Yet, the prices of bullion in the futures market have consistently fallen during this entire period. The only possible explanation is manipulation.
Precious metal prices are determined in the futures market, where paper contracts representing bullion are settled in cash, not in markets where the actual metals are bought and sold. As the Comex is predominantly a cash settlement market, there is little risk in uncovered contracts (an uncovered contract is a promise to deliver gold that the seller of the contract does not possess). This means that it is easy to increase the supply of gold in the futures market where price is established simply by printing uncovered (naked) contracts. Selling naked shorts is a way to artificially increase the supply of bullion in the futures market where price is determined. The supply of paper contracts representing gold increases, but not the supply of physical bullion.
As we have documented on a number of occasions (see, for example,http://www.paulcraigroberts.org/2014/12/22/lawless-manipulation-bullion-markets-public-authorities-paul-craig-roberts-dave-kranzler/ ), the prices of bullion are being systematically driven down by the sudden appearance and sale during thinly traded times of day and night of uncovered future contracts representing massive amounts of bullion. In the space of a few minutes or less massive amounts of gold and silver shorts are dumped into the Comex market, dramatically increasing the supply of paper claims to bullion. If purchasers of these shorts stood for delivery, the Comex would fail. Comex bullion futures are used for speculation and by hedge funds to manage the risk/return characteristics of metrics like the Sharpe Ratio. The hedge funds are concerned with indexing the price of gold and silver and not with the rate of return performance of their bullion contracts.
A rational speculator faced with strong demand for bullion and constrained supply would not short the market. Moreover, no rational actor who wished to unwind a large gold position would dump the entirety of his position on the market all at once. What then explains the massive naked shorts that are hurled into the market during thinly traded times?
The bullion banks are the primary market-makers in bullion futures. they are also clearing members of the Comex, which gives them access to data such as the positions of the hedge funds and the prices at which stop-loss orders are triggered. They time their sales of uncovered shorts to trigger stop-loss sales and then cover their short sales by purchasing contracts at the price that they have forced down, pocketing the profits from the manipulation
The manipulation is obvious. The question is why do the authorities tolerate it?
Perhaps the answer is that a free gold market serves both to protect against the loss of a fiat currency’s purchasing power from exchange rate decline and inflation and as a warning that destabilizing systemic events are on the horizon. The current round of on-going massive short sales compressed into a few minutes during thinly traded periods began after gold hit $1,900 per ounce in response to the build-up of troubled debt and the Federal Reserve’s policy of Quantitative Easing. Washington’s power is heavily dependent on the role of the dollar as world reserve currency. The rising dollar price of gold indicated rising discomfort with the dollar. Whereas the dollar’s exchange value is carefully managed with help from the Japanese and European central banks, the supply of such help is not unlimited. If gold kept moving up, exchange rate weakness was likely to show up in the dollar, thus forcing the Fed off its policy of using QE to rescue the “banks too big to fail.”
The bullion banks’ attack on gold is being augmented with a spate of stories in the financial media denying any usefulness of gold. On July 17 the Wall Street Journal declared that honesty about gold requires recognition that gold is nothing but a pet rock. Other commentators declare gold to be in a bear market despite the strong demand for physical metal and supply constraints, and some influential party is determined that gold not be regarded as money.
Why a sudden spate of claims that gold is not money? Gold is considered a part of the United States’ official monetary reserves, which is also the case for central banks and the IMF. The IMF accepts gold as repayment for credit extended. The US Treasury’s Office of the Comptroller of the Currency classifies gold as a currency, as can be seen in the OCC’s latest quarterly report on bank derivatives activities in which the OCC places gold futures in the foreign exchange derivatives classification.
The manipulation of the gold price by injecting large quantities of freshly printed uncovered contracts into the Comex market is an empirical fact. The sudden debunking of gold in the financial press is circumstantial evidence that a full-scale attack on gold’s function as a systemic warning signal is underway.
It is unlikely that regulatory authorities are unaware of the fraudulent manipulation of bullion prices. The fact that nothing is done about it is an indication of the lawlessness that prevails in US financial markets.
Paul Craig Roberts, Ph.D., is a former Assistant Secretary of the U.S. Treasury.
Dave Kranzler is a University of Chicago MBA and is an active participant in financial markets.
end
(courtesy Martin Armstrong/Peter Cooper/Arabian Money)
Martin Armstrong calls cyclical bottom for gold prices, now to $5,000?
Posted on 26 July 2015
Famously controversial futurologist, economist and business cycle expert Martin Armstrong, who forecast ‘$5,000+’ an ounce gold for 2016 on November 7th 2009 more than five years ago, now says gold touched rock bottom last week.
His website comment last week said: ‘If we hold $1,084 for the weekly closing, then we can see a two week bounce and everyone will proclaim the low, so hurry