Tuesday, August 21, 2012

Harvey's blogspot - tuesday August 21, 2012 - best items on PMs , data related to gold and silver and non redundant news items of the day

http://harveyorgan.blogspot.com/2012/08/gold-and-silver-explode.html


TUESDAY, AUGUST 21, 2012

Gold and silver explode!!

Good evening Ladies and Gentlemen:

Gold closed dramatically up by $19.80 to $1639.90 breaking through the $1630.00 resistance barrier.
Silver was the star of the show rising by 83 cents to finish at $29.42.  It broke through a major resistance level of 29.00 dollars leaving only the biggy 30.00 dollar barrier left to crack.

Let us now head over to the comex and see how things progressed today on OI and deliveries.

The total OI for gold rose by 1285 contracts  as gold advanced yesterday.  The OI rests tonight at 386,719 from yesterday's level of 385,434.  The front delivery month of August saw its OI fall 182 contracts from 419 to 237.  We had exactly 182 notices served on Monday so everything is in balance and we neither gained nor lost any gold oz standing.  The September delivery month rose 9 contracts to 1288.  The next official delivery month is October and here the OI fell 158 contracts from 29,921 to 29.763.  Some of the paper players generally seek December due to its high liquidity.  The estimated volume at the gold comex today was fair at 126,086 despite gold's rise.  The confirmed volume yesterday was very weak at 72,728.The total silver OI rose smartly by 2559 contracts from 125,817 to 128,376. This is a 3 year record for silver OI.  Our bankers will have another of those midnight oil sessions trying to figure out how to quell silver's huge demand and higher price. The  August delivery month saw its OI rise by 6 contracts despite zero deliveries yesterday.  So in essence we gained another 6 contracts or 30,000 oz of additional silver standing.  The next official delivery month is September which is a little over a week away.  Here the OI fell marginally by 796 contracts to 36,503 as some of our September paper players rolled into December.  The estimated volume today was quite good at 41,534.  The confirmed volume yesterday was a little weaker at 39,291.
The demand for silver is quite high and JPMorgan will have their hands full trying to defend its massive short positions.If JPMorgan continues to supply paper against its already massive short position  one must be wary of the fact that it is really official sector selling of paper silver. How will the CFTC commissioners get out of this one, as their fiduciary duty is to the public at large and not government or bankers?  Also we should note that yesterday and today we witnessed  silver finish at its highs.  The bankers were desperately trying to cover some of their shorts but they were having troubles doing so. They had no choice but to cover at higher and higher prices. 

*****

This is getting a little scary.  In this big delivery month of August we had no activity inside the gold vaults.
We had no dealer deposit, we had no dealer withdrawal and no customer deposit.

The  only transaction was a tiny customer withdrawal of  260.62 oz consisting of the following:

i) Out of Brinks:  32.15 oz
ii) Out of JPM:  196.32 oz
iii) Out of Manfra;  32.15 oz

total withdrawal by the customer;  260.62 oz.
The registered or dealer inventory rests tonight at 2.954 million oz.

The CME notified us that we had 40 notices filed for 4000 oz of gold. The total number of notices filed so far this month total 9577 for 957700 oz.  To obtain what is left to be served upon, I take the OI standing for August (237) and subtract out today's notices (40) which leaves us with 197 or 19700 oz left to be served upon our longs.

Thus the total number of gold ounces standing in this delivery month of August is as follows;

957,700 oz (served)  +  19,700 (oz to be served upon)  =  977,400 oz or 30.4 tonnes of gold.exactly the same as yesterday.
****

Today we had no deposits of any kind whether by dealer or by customer.
We had no dealer withdrawal but we did have a dandy customer withdrawal:

i) Out of Scotia:  1,062,732.84 oz
ii) Out of Delaware;  996.70 oz

total withdrawal  1,063,729.54 oz
We had no adjustments

The dealer or registered silver rests tonight at 35.479 million oz
The total of all silver rests at 139.397 million oz.



The CME notified us that we had zero notices filed again and thus the total number of notices filed remain
at 184 for 920,000 oz.  To obtain what is left to be served upon, I take the OI standing for August (66) and subtract out today's notices (zero) which leaves me with 66 notices or 330,000 oz left to be served upon our longs.

Thus the total number of silver oz standing in the month of August is as follows;

920,000 oz (served) +  330,000 oz (to be served upon )  =  1,250,000 oz
we gained another 30,000 oz of additional silver standing.


*****

First from Bill Murphy of GATA with great excitement announces the following through his London trader:




(courtesy Bill Murphy/GATA)



*He has rumors from two sources that a LARGE silver transaction was consummated last week. I mean LARGE! It is very possible the increase in the silver open interest is initial pricing by various commercials as they source out physical supply to make actual delivery. What if it is just not there to get?


*His famed London trader has been buying silver, but will load the boat when the price takes out $30.


*****

Last week we had shootings in South Africa and today it is Peru where there is unrest
at Newmont's Minas Conga copper and gold project:

(courtesy Dow Jones newswires)




Peru Declares State of Emergency to Quell Violent Mining Protests




LIMA--Peru's government declared late Tuesday a state of emergency in three provinces in Cajamarca region following violent protests against Newmont Mining Corp.'s (NEM) Minas Conga copper and gold project.

The 30-day state of emergency, which suspends civil liberties like freedom of assembly, took effect Wednesday and is aimed at restoring order in the provinces. Three people were killed Tuesday and 21 others injured during clashes between police and protesters.

Resolving the conflict over Minas Conga is seen as a test of the government's ability to resolve other social conflicts that have delayed investment projects in Peru's mining sector. Companies have lined up investment projects worth more than $53 billion in the next few years.

Opponents of Minas Conga want the project to be canceled, citing concerns about its potential impact on the water supply. Protests have been led by Gregorio Santos, the president of Cajamarca's regional government, as well as civil- society groups.
Minas Yanacocha, the company developing Minas Conga, called for dialogue to resolve the dispute and renewed its commitment to Cajamarca. "We express our deepest condolences to the families of the three people that died," Yanacocha said in a statement.

Newmont holds a 51.35% stake in Yanacocha. Compania de Minas Buenaventura SA (BVN, BUENAVC1.VL) has 43.65%, and International Finance Corp. owns the remainder.

While protests against mining projects in Peru often turn deadly, it is the first time fatalities have been reported during protests against Minas Conga.

Minas Conga, which will require an investment of about $5 billion, was put on hold late last year due to the opposition. The company said this week that it had started environmental work to prepare sites for the construction of water reservoirs, which would increase the supply of water to the local population.

Minas Conga is expected to have an average annual output during the first five years of 580,000 to 680,000 ounces of gold and 155 million to 235 million pounds of copper. Production is scheduled to start in 2017.

****

Russia added another 600,000 oz of gold to its official reserves and China has now decided to
add silver to its official reserves. China announced 272 tonnes (8.744 million oz) of silver added to its official reserves.  Russia's official total in gold is now at 30.1 million oz or 936 tonnes of gold.  They are steadily increasing their reserves in gold.

(courtesy Goldcore)


Russia Accumulates Gold As Consolidates Below Resistance At $1,644/oz

Tyler Durden's picture
Submitted by Tyler Durden on 08/21/2012 08:34 -0400




From GoldCore

** 

Platinum hovered just above the 2 month high hit on Monday over supply concerns from South Africa.  Lonmin is the world’s number three producer and accounts for 12% of global platinum output. Industrial unrest has spread to other platinum mines in South Africa which produces between 70% and 85% of the world’s platinum (different estimates).
44 people died after violence and a massacre at Lonmin’s Marikana mine, and the company is now waiting before firing the 3,000 workers as previously planned, as the mine owners realized it would escalate the situation.
Gold bullion prices inched up despite trading volume for US gold futures being on track to hit a 2012 low. Silver surged almost 3% and there was speculation that platinum's rally may have made some of the silver shorts close some of their massive concentrated short positions. 
Platinum has surged 7% in the last 3 sessions bringing its year to date gain to 7% outperforming gold and silver so far in 2012.
Russia continues to accumulate gold in its large foreign exchange reserves. The reserves include monetary gold, special drawing rights, reserve position at the IMF and foreign exchange.
Russia’s central bank increased its gold holdings to 30.1 million troy ounces as of August  1st, from 29.5 million troy ounces a month earlier, according to a statement published on its website today.
The gold reserves were valued at $48.7 billion at the end of last month, Bank of Russia said in a statement.
Russia's gold and foreign exchange reserves rose to $510.0 billion in the week to August 10 from $507.4 billion a week earlier, central bank data showed last Thursday.  Russia's gold and foreign exchange reserves were $498.6 billion at the end of 2011.
This means that Russia now nearly has some 10% of its foreign exchange reserves in gold bullion. 
Since 2006, Russia has been gradually accumulating gold in order to diversify and protect from devaluation of their dollar and euro foreign exchange reserves and as part of a long term plan to position the Russian rouble as an international reservecurrency.         
For breaking news and commentary on financial markets and gold, follow us on Twitter.
NEWSWIRE
(Bloomberg) – Silver Imports By China In July Rise To 272 TonsSilver imports by China were 272 metric tons in July, according to data released by the customs agency today. That compares with 223 tons in June. Platinum imports were 7.4 tons in July, compared with 6.1 tons a month earlier, data showed. Palladium imports were 1.97 tons, data showed.
(Bloomberg) -- IShares Silver Trust Holdings Unchanged at 9,733 Metric Tons 
Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 9,733.39 metric tons as of Aug. 20, according to figures on the company’s website.
================================================================================
                  Aug. 20    Aug. 17    Aug. 16    Aug. 15    Aug. 14    Aug. 13
                     2012       2012       2012       2012       2012       2012
================================================================================
Million Ounces    312.936    312.936    312.936    312.936    311.579    313.226
 Daily change           0          0          0  1,356,958 -1,647,762          0
--------------------------------------------------------------------------------
Metric tons      9,733.39   9,733.39   9,733.39   9,733.39   9,691.18   9,742.43
 Daily change        0.00       0.00       0.00      42.21     -51.25       0.00
================================================================================NOTE: Ounces are troy ounces.
(Bloomberg) –Bear Market In Tin Risks Global ShortageIndonesia idled about 70 percent of tin-smelting capacity in its biggest producing region amid a three-month bear market, curbing the world’s biggest exports and setting the stage for a global shortage.


****

Is Gold Money? LCH Accepts Shiny Yellow Metal As Collateral

Tyler Durden's picture
Submitted by Tyler Durden on 08/21/2012 14:40 -0400




Whether it is because the CME just did it; or it's all their clients have left; or Gold volatility is lower than EURUSD volatility (9.0% vs 9.6% in last 3 weeks); or they see the painting on the wall of Draghi's grand-plans, the LCH-Clearnet just announced that as of August 28th, unallocated gold will be accepted as collateral for margin cover purposes. This now means all the major exchanges accept worthless barbarous relics as collateral - as well as worthless fiat paper 'money'.

Gold as Collateral Acceptable for Margin Cover Purposes

From 28 August 2012 unallocated Gold (Loco London) will be accepted by LCH.Clearnet Limited (LCH.Clearnet) as collateral for margin cover purposes. 
This addition to acceptable margin collateral will be subject to the following criteria;
• Available for members clearing OTC precious metals forwards (LCH EnClear Precious Metals division) or precious metals contracts on the Hong Kong Mercantile Exchange. Acceptable to cover margin requirements for all markets cleared on both House and ‘Segregated’ omnibus Client accounts.
• Daily valuation, with an initial haircut of 14% applied.
• Concentration limits will be applied as follows;
o lodgement not to represent more than 40% of total margin requirement of participating members across all products, including for contingent variation margin (but not realised variation margin), applied at a legal entity sub account level.o a maximum lodgement limit per member group of USD 200m (currently approximately 130,000 troy ounces).
• LCH.Clearnet will make an accommodation charge of 20 basis points (bps) on utilised collateral amounts based upon member defined usage ordering rules. Costs incurred from the custodian will be passed on to clearing members on a pro rata basis and based on the value of the collateral lodged. 
• Members who are eligible and wish to lodge gold for margin cover purposes will be required to submit an executed Gold as collateral ‘charge’ document for the ‘House’ and/or ‘Client’ accounts together with supporting paperwork. Please contact the Membership Team to request the relevant legal documentation needed for approval to lodge gold as collateral.
• Procedures and account details can be found in at the link below prior to the live date and thereafter in Section 4 – Collateral, of the LCH.Clearnet Ltd Rulebook.http://www.lchclearnet.com/rules_and_regulations/ltd/proposed_rules.asp
• For further details of acceptable margin collateral please see the following link, which will be updated to reflect the addition of Gold Bullion from 28 August 2012.www.lchclearnet.com/risk_management/ltd/acceptable_collateral.asp

****

The Odds At 90%

Tyler Durden's picture
Submitted by Tyler Durden on 08/21/2012 08:17 -0400




Via Mark J. Grant, author of Out of the Box,
Grant’s Rules
Grant’s Rules have never been more important than they are now. There is Rule #1 that is cast in stone and reiterated nine times to form the bulwark of my thinking which is“Preservation of Capital.”  You may do what you like and there is certainly a place for some speculation at the edges but you do not, ever, put the core of your capital at risk. It is on this corner stone where I stand and hold court and have done so for the ten years that my commentary has been in existence. Not only is my viewpoint valid in all markets but the point is now of particular importance in a time of such low interest rates where it takes so long to make lost money back. Hedge fund, money manager, bank or insurance company there is never a time and now is certainly not the time where any risk should be taken that will diminish the bulk of your capital.
Besides the issue with minimal yields there is a second consideration which is the incredible amount of risk that is currently on the table. You may believe what you like about Europe. You may be wildly optimistic or incredibly pessimistic but what cannot be denied is that tremendous risk is currently present and that things could go wildly erratic in one direction or another. Economics, outside of the classroom, never exists without its cousin politics but the political considerations are now so huge and the money at stake is now so large that the sheer size of the capital on the table should and ultimately will give everyone pause. We are about to arrive at moments where the notion of “muddling through” will no longer be possible and where real decisions, tough decisions, are going to come into play. Predicting coming events is never an easy task but it is made easier if you can determine the limits past which boundaries cannot be stretched.
There are many events that could go either way such as the German Constitutional Court’s ruling on the ESM and I think the vast majority of market participants think that the court will allow the Stabilization Fund’s existence in one form or the other and I am not speaking today about these kinds of events.Today I want to pinpoint specifically the 90% events. I want to shift your focus to the boundaries of the playing field so that the consideration of everything else properly lies within the out of bounds lines that I will try to define. Today I mark the perimeter.
Odds at 90%
Germany with a GDP of $3.5 trillion does not have the capital or the resources or the assets to support the rest of Europe. You may think of a wooden cross bar and the Brooklyn Bridge and the absolute inability of some piece of wood to support the trucks that roll across the bridge. It is just not possible and the same can be said with exactly the same amount of certainty for Germany’s position with all of Europe; they cannot support the European Union alone which is exactly what some ill informed people think. Therefore given Germany’s realistic position and not some fantasy notion, it is possible to project the limits of what can be done and what they will allow to be done to preserve their own country and their national interests. I would put forth the point that no country in Europe will bankrupt itself to save its neighbors and work backwards from this proposition.
It may be in September or a few months later or even six months from now but Germany will not keep handing Greece money ad infinitum; it is not happening. Greece, on the other hand, is not capable of paying its debts; sovereign, bank or private obligations, they cannot pay them. They also know they cannot pay them which is why they beg for money using the strategy of a European Union which is all for one and one for all and the common good and all manner of schemes appended to this basic concept but the money they owe cannot be paid back and so they make this and those kinds of noises and plead to put off the final act for as long as they can. There are only three choices here which are growth which is economically impossible or debt forgiveness which is politically impossible or the refusal to fund which is the 90% odds play that I see coming soon. In one sense Greece played the game well and got way more money than they should have ever been given and Germany played the game badly and allowed themselves to be suckered into a corner where they should have never gone but now with the stakes so high it will end soon and you can bet on it; a 90% you have it right bet.
It may be Merkel and her allies or it may be the opposition but I project that the citizens of Germany have just about had it with tossing their hard earned money into the olive tree groves in Greece and that it will soon stop. Germany is being dragged into a recession along with her neighbors and I predict soon that the productions numbers, not quite accurate for their automobile industry among others and the real costs of their Traget2 funding and the cash that is pouring into their ownership of the ECB and of the EU will not only come to light but will glisten with the resonance of a loud “Auchtung” and then a screamed “Verbotin” which will thunder down the Autobahn between Frankfurt and Berlin. As we have seen with the idiocy of the IMF projections and the 120% debt to GDP ratio for Greece that was trotted out and flaunted by the wish-it-would-be’s of Washington; the real numbers a few quarters out eventually show up to embarrass those that created the fairy tale.
Then there is the Draghi Hail Mary pass. He has made a promise that cannot be kept because there is no possible way to keep it. The ECB on its own cannot rescue Europe and his muttered under the breath “whatever it takes” flashing neon billboard proclamation is stopped in its tracks by the realizations that someone has to pay for all of this, that there are economic consequences of printing money and that the ECB is only as sound as the financial health of the nations in the EU which fund it and so with Spain and Italy slipping into the Mediterranean along with Greece there may be the will at present but there are not the resources to do it. In my mind this is another 90% bet because the ECB does not exist in a vacuum and does not stand on its own and people would be better served using their hopes and prayers in other areas of concern rather than wasting them on fantasies of Camelot and on Lancelot riding out of the castle gates to save the day. Don’t bet your money on make believe fables; that is my opinion.
The next 90% bet is Spain; they are going down. For years they have provided inaccurate Real Estate valuations, inaccurate bank numbers, inaccurate regional debt figures and the manure has hit the fan and is splattering. The country can no longer afford itself, cannot afford their obligations for the European Union and I predict a very hard landing. The hogwash about the money being only for some banks that most of us never heard of until recently is a lie compounded by Mr. Rajoy’s desire to remain in power which is also something that I see soon coming to an end one way or the other. Perhaps somewhere in some unknown universe governments can live in castles in the air but not on this world and not in our universe and the rock is going to hit the hard place and the make believe is going to collapse.
The final comment I will make today is about the ECB. It is a 90% bet that the ECB cannot do anything of gravity without the tacit support of Ms. Merkel and of the Bundesbank. There will be no grand scheme without their approval because if there is then I think that Germany will refuse to fund it and so end any fantasy. It can certainly be said that Germany has now found herself in a corner of her own making. Germany has played the Great Game badly and allowed country after country in Europe to get in financial trouble and so the majority of nations in Europe are now up against it and pleading for funds, mercy and alms all under the banner of the motto of the three musketeers but what could be done has been done and now the intrusion of reality is making itself known to one and all. Soon, I think, Italy will be joining the chorus and the tumult will be loud and noisy but the road is already marked by the brambles that have been put in place and so the course is set.
The Days of Muddling are now behind us and the Days of Reckoning are to the fore!

Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)