http://www.caseyresearch.com/gsd/edition/flash-german-gold-report-reveals-secret-sales-likely-were-part-swaps
¤ YESTERDAY IN GOLD AND SILVER
After the obligatory sell-off during the first hour at the Sunday night open in New York, the gold price rebounded once trading began in Tokyo.
After gaining back all the loss from New York, the gold price crawled higher for the rest of the Monday trading day everywhere on Planet Earth.
Gold closed at $1,729.50 spot, up $9.00...almost on its high of the day...which was 1,730.90 spot...and that particular price was printed around 12:50 p.m. in New York. Volume was close to 116,000 contracts, which was pretty light.
It was much the same story in silver, although the high tick of the day [32.56 spot] came at the London p.m. gold fix at 3:05 p.m. BST...10:05 a.m. in New York.
After gaining back all the loss from New York, the gold price crawled higher for the rest of the Monday trading day everywhere on Planet Earth.
Gold closed at $1,729.50 spot, up $9.00...almost on its high of the day...which was 1,730.90 spot...and that particular price was printed around 12:50 p.m. in New York. Volume was close to 116,000 contracts, which was pretty light.
Both silver and gold rallied during the electronic trading session after the 1:30 p.m. Eastern time Comex close...and silver, too, almost finished on its high of the day at $32.45 spot...up 38 cents. Volume, around 31,500 contracts, was light.
The dollar index opened at 79.63...and then spent all of Monday chopping around between 79.65 and 79.50...and then closing at 79.56, virtually unchanged. Nothing to see here.
The gold stocks gapped up a percent at the open...and then flopped around in positive territory for the rest of the trading session, before rallying strongly into the close...with theHUI finishing virtually on its high tick of the day at 502.47...up 1.37%.
The silver stocks did even better...and Nick Laird's Silver Sentiment Index closed up 2.21%.
Here's a new chart that Nick has been working on...at my request. It shows the intra-day price movement of the seven stocks that make up the SSI. It's not a 'live' chart...but a compilation that Nick will be doing at the end of each trading day. This is his first effort...and it's still a 'work in progress'...but I doubt very much that the final product will look a lot different than what you see here...which is OK by me.
The CME's Daily Delivery Report from Monday was a pretty quiet affair, as zero gold and 15 silver contracts were posted for delivery on Wednesday.
(Click on image to enlarge)
It's interesting to compare it to the HUI. As you can see, the silver stocks trade in a very similar pattern to the gold stocks. The only difference is in the magnitude of the gains and losses, one vs. the other. I don't like to use the word 'volatile'...because it's my opinion that this volatility is mostly produced by JPMorgan et al.The CME's Daily Delivery Report from Monday was a pretty quiet affair, as zero gold and 15 silver contracts were posted for delivery on Wednesday.
I was somewhat surprised to see that an authorized participant added 87,226 troy ounces of gold to GLD yesterday...and there were no reported changes in SLV.
The U.S. Mint had a sales report yesterday. They sold 2,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and a chunky 432,500 silver eagles.
The Comex-approved depositories reported receiving 124,939 troy ounces of silver on Friday...and shipped 809,362 troy ounces out the door. The link to that activity is here.
Just as a point of interest, here is an e-mail that I sent to Rick Waugh, the CEO of the Bank of Nova Scotia...or Scotiabank as it's now called. It had to do with the big change in the October Bank Participation Report. As you can tell, I sent it yesterday...and I'll let you know what answer I get, if any.
22 October 2012
Scotiabank
44 King Street West
Toronto, Ontario M5H 1H1
Attention: Mr. Rick Waugh, CEO
Dear Mr. Waugh,
I'm a keen observer of the financial scene, both here in Canada and abroad...but my main area of expertise is in the precious metal markets. I write a daily blog on this subject for Casey Research out of Stowe, Vermont...and here is the link to my webpage.
Part of my reading material includes two reports that are issued by the U.S. Commodity Futures Trading Commission...the CFTC. The most notable of those are the weekly Commitment of Traders Report and the monthly Bank Participation Report.
If you click on the Bank Participation Report link, you'll note that the CFTC has included a comment about its October figures that took quite a few people who follow this report, completely by surprise...including me.
The U.S. Mint had a sales report yesterday. They sold 2,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and a chunky 432,500 silver eagles.
The Comex-approved depositories reported receiving 124,939 troy ounces of silver on Friday...and shipped 809,362 troy ounces out the door. The link to that activity is here.
Just as a point of interest, here is an e-mail that I sent to Rick Waugh, the CEO of the Bank of Nova Scotia...or Scotiabank as it's now called. It had to do with the big change in the October Bank Participation Report. As you can tell, I sent it yesterday...and I'll let you know what answer I get, if any.
22 October 2012
Scotiabank
44 King Street West
Toronto, Ontario M5H 1H1
Attention: Mr. Rick Waugh, CEO
Dear Mr. Waugh,
I'm a keen observer of the financial scene, both here in Canada and abroad...but my main area of expertise is in the precious metal markets. I write a daily blog on this subject for Casey Research out of Stowe, Vermont...and here is the link to my webpage.
Part of my reading material includes two reports that are issued by the U.S. Commodity Futures Trading Commission...the CFTC. The most notable of those are the weekly Commitment of Traders Report and the monthly Bank Participation Report.
If you click on the Bank Participation Report link, you'll note that the CFTC has included a comment about its October figures that took quite a few people who follow this report, completely by surprise...including me.
The comment states... "The October 2012 Bank Participation Report includes COMEX gold and COMEX silver futures and options positions for a newly classified non-U.S. bank, based upon the entity's self-description on its latest CFTC Form 40. Given the methodology of the Bank Participation Report, the entity's most recent Form 40 submission results in all of its futures and options positions now being included within the report. For more information on the methodology used for the Bank Participation Report, see Explanatory Notes" [Emphasis is mine. - Ed]
Looking through the list of market-making members of the LBMA...my first thought was that the bank most likely to fit that description would be The Bank of Nova Scotia - Scotia Mocatta. So I called Andy Montano at your head office about a week ago. We had a pleasant chat...and he said that he knew nothing about it. I asked him who might know...and he had no suggestion.
So I thought I would write directly to you, sir.
All I need to know is if the "non-U.S. bank" that the CFTC is referring to in its comments above...and on its Bank Participation Report home page...is The Bank of Nova Scotia - Scotia Mocatta.
A simple 'yes' or 'no' answer will suffice.
Thank you for your attention in this matter...and I remain,
Yours truly,
Edward Steer, Editor
Ed Steer's Gold & Silver Daily
Here's a chart that I just didn't have room for in Saturday's column, so here it is now. It's Nick Laird's "Transparent PM Holdings" graph, which I've posted on countless occasions over the years. As you can see, it's still progressing from "lower left, to upper right" as Dennis Gartman is wont to say.
Looking through the list of market-making members of the LBMA...my first thought was that the bank most likely to fit that description would be The Bank of Nova Scotia - Scotia Mocatta. So I called Andy Montano at your head office about a week ago. We had a pleasant chat...and he said that he knew nothing about it. I asked him who might know...and he had no suggestion.
So I thought I would write directly to you, sir.
All I need to know is if the "non-U.S. bank" that the CFTC is referring to in its comments above...and on its Bank Participation Report home page...is The Bank of Nova Scotia - Scotia Mocatta.
A simple 'yes' or 'no' answer will suffice.
Thank you for your attention in this matter...and I remain,
Yours truly,
Edward Steer, Editor
Ed Steer's Gold & Silver Daily
Here's a chart that I just didn't have room for in Saturday's column, so here it is now. It's Nick Laird's "Transparent PM Holdings" graph, which I've posted on countless occasions over the years. As you can see, it's still progressing from "lower left, to upper right" as Dennis Gartman is wont to say.
(Click on image to enlarge)
This next chart is courtesy of Washington state reader S.A...which I just know he stole from somewhere...probably Zero Hedge...and it requires no further embellishment from me.
Since this is my Tuesday column, I have a lot of stories for your consideration today...and a lot of them are must reads/views, so I hope you have the time to do them all justice.
* * *
Selected news items.....
Caterpillar cuts profit forecast as global economy slows
Caterpillar has cut its profit forecast for this year as the world's biggest maker of construction and mining equipment is squeezed by a slowing global economy.
The US manufacturer has temporarily laid off some of its almost 130,000 employees and reduced production to compensate for the decline in demand.
The warning comes with just over two months of the year remaining and is significant, because Caterpillar's operations in countries like China and Brazil allow investors to take the pulse of the global economy.
Sales in China, which is a major buyer of Caterpillar's flagship trucks, declined in the third quarter.
This story showed up in The Telegraph at 2:29 p.m. BST yesterday afternoon...9:29 a.m. Eastern time...and I thank Roy Stephens for our first story of the day. The link is here.
The US manufacturer has temporarily laid off some of its almost 130,000 employees and reduced production to compensate for the decline in demand.
The warning comes with just over two months of the year remaining and is significant, because Caterpillar's operations in countries like China and Brazil allow investors to take the pulse of the global economy.
Sales in China, which is a major buyer of Caterpillar's flagship trucks, declined in the third quarter.
This story showed up in The Telegraph at 2:29 p.m. BST yesterday afternoon...9:29 a.m. Eastern time...and I thank Roy Stephens for our first story of the day. The link is here.
Fed considering upping QE3 size and language
After historic changes last month, Federal Reserve officials this week will discuss a possible expansion of the size of its third round of bond buying and better ways to guide markets about future policy actions.
At its two-day meeting that starts today, the Fed may abandon its calendar date.approach to forward guidance and adopt some form of numerical target for policy, analysts said.
And the central bank [may] consider whether to expand its bond-buying at the end of the year to take account of Treasury purchases under its Operation Twist plan that finishes at year-end.
This MarketWatch story was picked up by the finance.yahoo.com Internet site yesterday...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.
At its two-day meeting that starts today, the Fed may abandon its calendar date.approach to forward guidance and adopt some form of numerical target for policy, analysts said.
And the central bank [may] consider whether to expand its bond-buying at the end of the year to take account of Treasury purchases under its Operation Twist plan that finishes at year-end.
This MarketWatch story was picked up by the finance.yahoo.com Internet site yesterday...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.
Parallel Universes in Paris and Berlin Is the Franco-German Axis Kaput?
The most recent European Union summit exposed deep differences between German Chancellor Angela Merkel and French President François Hollande. Berlin wants Brussels to be bestowed with greater power over national budgets and Paris is calling for an end to austerity. The dispute threatens to intensify the euro crisis.
Since the days of former German Chancellor Konrad Adenauer and former French President Charles de Gaulle, Germany and France have generally been run by politicians who placed more value on unity than their differences. The axis between former German Chancellor Helmut Schmidt and former French President Valéry d'Estaing axis proved to be just as resilient as the partnership between their successors, Helmut Kohl and Francois Mitterand.
Under Merkel and Hollande, however, the German-French partnership threatens to deteriorate into nothing but a façade. The two politicians, who hold the fate of the continent in their hands, greet each other politely with kisses on the cheek, and their respective public relations staffs extol their "professional" and "trusting" cooperation.
In truth, however, the relationship began on a cool note and has since slipped below the freezing point. Hollande doesn't want to forgive Merkel for having campaigned for his conservative opponent, former President Nicolas Sarkozy. Now the Chancellery suspects that Hollande is secretly planning a campaign for Merkel's challenger from the center-left Social Democratic Party (SPD), former Finance Minister Peer Steinbrück.
This story, which was originally entitled "Crisis-of-confidence-develops-between-Merkel-and-Hollande", was posted on the German website spiegel.deyesterday...and is courtesy of Roy Stephens. It's well worth reading...and the link is here.
Since the days of former German Chancellor Konrad Adenauer and former French President Charles de Gaulle, Germany and France have generally been run by politicians who placed more value on unity than their differences. The axis between former German Chancellor Helmut Schmidt and former French President Valéry d'Estaing axis proved to be just as resilient as the partnership between their successors, Helmut Kohl and Francois Mitterand.
Under Merkel and Hollande, however, the German-French partnership threatens to deteriorate into nothing but a façade. The two politicians, who hold the fate of the continent in their hands, greet each other politely with kisses on the cheek, and their respective public relations staffs extol their "professional" and "trusting" cooperation.
In truth, however, the relationship began on a cool note and has since slipped below the freezing point. Hollande doesn't want to forgive Merkel for having campaigned for his conservative opponent, former President Nicolas Sarkozy. Now the Chancellery suspects that Hollande is secretly planning a campaign for Merkel's challenger from the center-left Social Democratic Party (SPD), former Finance Minister Peer Steinbrück.
This story, which was originally entitled "Crisis-of-confidence-develops-between-Merkel-and-Hollande", was posted on the German website spiegel.deyesterday...and is courtesy of Roy Stephens. It's well worth reading...and the link is here.
Ambrose Evans-Pritchard: Japan to join currency wars as exports slump
Japan is poised to join the world's "currency wars" as it battles a triple crisis of crashing exports, recession, and a suffocatingly-strong yen.
The country's exports plunged 10.3 percent in September from a year ago, dimming hopes of rapid recovery in the Far East. Exports to Europe crashed 21 percent. Shipments to China fell 14 percent as the Diaoyu-Senkaku islands dispute led to a slump in car sales. Honda, Mazda, and Nissan all saw sales plunge near 30 percent as Chinese consumers boycotted Japanese brands. Nomura said the export slump will push country into full recession.
Stephen Jen from SLJ Macro Partners said the global storm is drifting eastwards into Asia, opening a "third chapter" of the crisis that will last well into 2013. "Many analysts have declared that the low in the global economic cycle is in place. We are not convinced," he said, predicting a rise in currency protectionism.
Japan is the awakening giant in this conflict. The yen has risen 30 percent against China's yuan, 65 percent against the euro, and 80 percent against Sterling since 2008. Tokyo is itching to fight back.
I found this story from the telegraph.co.uk Internet site posted in a GATA release yesterday...and the link is here.
The country's exports plunged 10.3 percent in September from a year ago, dimming hopes of rapid recovery in the Far East. Exports to Europe crashed 21 percent. Shipments to China fell 14 percent as the Diaoyu-Senkaku islands dispute led to a slump in car sales. Honda, Mazda, and Nissan all saw sales plunge near 30 percent as Chinese consumers boycotted Japanese brands. Nomura said the export slump will push country into full recession.
Stephen Jen from SLJ Macro Partners said the global storm is drifting eastwards into Asia, opening a "third chapter" of the crisis that will last well into 2013. "Many analysts have declared that the low in the global economic cycle is in place. We are not convinced," he said, predicting a rise in currency protectionism.
Japan is the awakening giant in this conflict. The yen has risen 30 percent against China's yuan, 65 percent against the euro, and 80 percent against Sterling since 2008. Tokyo is itching to fight back.
I found this story from the telegraph.co.uk Internet site posted in a GATA release yesterday...and the link is here.
Mike Kosares: Golden solution or golden folly?
Mike Kosares of Centennial Precious Metals in Denver heaps skepticism on the idea of using European central bank gold as some sort of collateral for government bonds. The gold is probably gone or otherwise hypothecated into oblivion already, Kosares notes. His commentary is headlined "Golden Solution or Golden Folly?"
I borrowed the headline and the introductory paragraph from a GATA release yesterday. The article is posted over that the usagold.com Internet site...and the link is here.
I borrowed the headline and the introductory paragraph from a GATA release yesterday. The article is posted over that the usagold.com Internet site...and the link is here.
Chinese Gold Imports Through August Surpass Total ECB Holdings, Imports From Australia Surge 900%
First it was more than the UK. Then more than Portugal. Then a month ago we said that as of September, "it is now safe to say that in 2012 alone China has imported more gold than the ECB's entire official 502.1 tons of holdings." Sure enough, according to the latest release from the Hong Kong Census and Statistics Department, through the end of August, China had imported a whopping gross 512 tons of gold, 10 tons more than the latest official ECB gold holdings. We can now safely say that as of today, China will have imported more gold than the 11th largest official holder of gold, India, with 558 tons.
I'd love to see the source documents that this Zero Hedge poster is using. These are eye-watering amount of gold...and if you add in the 350 tonnes that China produces from their own mines, you're talking over one third of the world's gold production disappearing into China. One has to wonder how that is possible without bidding the price of gold up to the moon and the stars...despite what JPMorgan et al are doing.
I thank reader 'David in California' for his second offering in today's column...and the link to the Zero Hedge story is here.
I'd love to see the source documents that this Zero Hedge poster is using. These are eye-watering amount of gold...and if you add in the 350 tonnes that China produces from their own mines, you're talking over one third of the world's gold production disappearing into China. One has to wonder how that is possible without bidding the price of gold up to the moon and the stars...despite what JPMorgan et al are doing.
I thank reader 'David in California' for his second offering in today's column...and the link to the Zero Hedge story is here.
What is China really doing in the gold markets?
Is China building its gold reserves surreptitiously? The balance of probabilities suggests it is - and perhaps at a faster rate than many would contemplate.
Perhaps the biggest conundrum facing gold investors is China. What is it really doing? Is it building gold reserves surreptitiously? Is it buying gold on the dips thus creating a floor price? The answer is that we don't know for sure as the giant Asian economy plays its cards pretty close to its chest. So all we are left with is informed speculation gleaned through trying to pick up guidance from public utterances by senior Chinese officials and, in trying to make sense of the gold import statistics via Hong Kong, believed to be the primary route for gold coming into China. However, one does not know for sure if perhaps there are other channels through which gold is imported as well. We are reliant wholly on what China actually tells us, but Chinese data is not exactly reckoned to be transparent and the general belief is that the statistics only tell the outside world what China's powers-that-be want us to believe.
Lawrence [Lawrie] Williams from over at the mineweb.com steps forward with this more-than-timely article that showed up on their Internet site yesterday. It's a must read...and I thank Donald Sinclair for bringing it to our attention. The link is here.
Perhaps the biggest conundrum facing gold investors is China. What is it really doing? Is it building gold reserves surreptitiously? Is it buying gold on the dips thus creating a floor price? The answer is that we don't know for sure as the giant Asian economy plays its cards pretty close to its chest. So all we are left with is informed speculation gleaned through trying to pick up guidance from public utterances by senior Chinese officials and, in trying to make sense of the gold import statistics via Hong Kong, believed to be the primary route for gold coming into China. However, one does not know for sure if perhaps there are other channels through which gold is imported as well. We are reliant wholly on what China actually tells us, but Chinese data is not exactly reckoned to be transparent and the general belief is that the statistics only tell the outside world what China's powers-that-be want us to believe.
Lawrence [Lawrie] Williams from over at the mineweb.com steps forward with this more-than-timely article that showed up on their Internet site yesterday. It's a must read...and I thank Donald Sinclair for bringing it to our attention. The link is here.
Germany getting suspicious about gold to the point of taking action
Yesterday, the German press was full of stories of concern about the German gold reserves.
Germany's largest newspaper, Bild-Zeitung, reported that the German central bank, the Bundesbank, had refused to let two members of the German parliament, the Bundestag, inspect the nation's gold reserves held abroad. The Internet site of financial news from Germany, MMNews.de, summarizes theBild-Zeitung report in English here.
But the German magazine Der Spiegel reports that the German court of auditors is demanding that the Bundesbank begin auditing its foreign-held gold and, if Zero Hedge's Internet translation is correct, the Bundesbank has already decided to repatriate some of the gold, if very slowly.
This GATA release contains "all of the above" paragraphs...plus much, much more...and I'll let Chris Powell take over. This is a must read of course...and the link is here.
Germany's largest newspaper, Bild-Zeitung, reported that the German central bank, the Bundesbank, had refused to let two members of the German parliament, the Bundestag, inspect the nation's gold reserves held abroad. The Internet site of financial news from Germany, MMNews.de, summarizes theBild-Zeitung report in English here.
But the German magazine Der Spiegel reports that the German court of auditors is demanding that the Bundesbank begin auditing its foreign-held gold and, if Zero Hedge's Internet translation is correct, the Bundesbank has already decided to repatriate some of the gold, if very slowly.
This GATA release contains "all of the above" paragraphs...plus much, much more...and I'll let Chris Powell take over. This is a must read of course...and the link is here.
FLASH: German gold report reveals secret sales that likely were part of swaps
With the Associated Press report appended here, the German gold audit story has just exploded into the English-language press with some important revelations:
-- The gold vaulted by the German central bank, the Bundesbank, with the Bank of England "has fallen 'below 500 tons' due to recent sales and repatriations. ..." So despite the lack of official announcement, Germany lately has been selling gold from London -- perhaps as part of the secret "strategic activities" grudgingly acknowledged two years ago by the Bundesbank to GATA's friend, the German financial journalist Lars Schall:
The lack of announcement of the sale of the German gold in London suggests that the sale was actually part of a gold swap with another central bank -- like the New York Fed. That is, the powerful implication here is that German gold in London was sold at the behest of the United States and in exchange Germany took title to United States gold vaulted in the United States -- or title to gold supposedly vaulted in the United States. This way the Bundesbank could continue to claim ownership of the same amount of gold without lying, at least not technically.
Wow! You can't make this stuff up. Reg Howe, Bob Landis, James Turk...and others...are now completely vindicated. It's been a long time coming. It's incredible what a little group of people, enticed out of obscurity by Bill Murphy and Chris Powell at GATA, has been able to find out despite the walls thrown up against them by all the power and all the money in the world.
This is another must read GATA release...and Chris Powell has a field day with it. The link is here.
-- The gold vaulted by the German central bank, the Bundesbank, with the Bank of England "has fallen 'below 500 tons' due to recent sales and repatriations. ..." So despite the lack of official announcement, Germany lately has been selling gold from London -- perhaps as part of the secret "strategic activities" grudgingly acknowledged two years ago by the Bundesbank to GATA's friend, the German financial journalist Lars Schall:
The lack of announcement of the sale of the German gold in London suggests that the sale was actually part of a gold swap with another central bank -- like the New York Fed. That is, the powerful implication here is that German gold in London was sold at the behest of the United States and in exchange Germany took title to United States gold vaulted in the United States -- or title to gold supposedly vaulted in the United States. This way the Bundesbank could continue to claim ownership of the same amount of gold without lying, at least not technically.
Wow! You can't make this stuff up. Reg Howe, Bob Landis, James Turk...and others...are now completely vindicated. It's been a long time coming. It's incredible what a little group of people, enticed out of obscurity by Bill Murphy and Chris Powell at GATA, has been able to find out despite the walls thrown up against them by all the power and all the money in the world.
This is another must read GATA release...and Chris Powell has a field day with it. The link is here.
and.....
300 FAKE PERTH MINT GOLD BARS DISCOVERED IN AUSTRALIA AS CHINESE GOLD ‘FORGERY FACTORY’ UNCOVERED
and.....
http://www.zerohedge.com/news/2012-10-21/chinese-gold-imports-through-august-surpass-total-ecb-holdings-imports-australia-sur
Chinese Gold Imports Through August Surpass Total ECB Holdings, Imports From Australia Surge 900%
First it was more than the UK. Then more than Portugal. Then a month ago we saidthat as of September, "it is now safe to say that in 2012 alone China has imported more gold than the ECB's entire official 502.1 tons of holdings." Sure enough, according to the latest release from the Hong Kong Census and Statistics Department, through the end of August, China had imported a whopping gross 512 tons of gold, 10 tons more than the latest official ECB gold holdings. We can now safely say that as of today, China will have imported more gold than the 11th largest official holder of gold, India, with 558 tons.
Yet despite importing more gold than the sovereign holdings of virtually all official entities, save for ten, importing more gold in July than in any month in 2012 except for April, importing more gold in 8 months in 2012 than all of 2011, and importing four times as much between January and July than as much as in the same period last year, here is MarketWatch with its brilliant conclusion that the 'plunge' in gold imports in August can only be indicative of the end of the Chinese gold market, and the second coming of infinitely dilutable fiat.
“China’s near-term appetite for gold appears to be waning as bullion imports from Hong Kong slow,” HSBC analysts said in a note following the data release last week.Anecdotal evidence also pointed to the cooling trend, with one Hong Kong bullion dealer saying the word from mainland clients was that gold inventories are saturated.
“What we are hearing from our customers is that they were buying gold rapidly over the last couple of years, but they would now see some of their stocks sold off before they rebuild some of their inventories,” Scotia Mocatta managing director Sunil Kashyap said in Hong Kong.There is spin, and there is of course, reality. We urge readers to identify where on the chart below is the evidence of Chinese disillusionment with gold:
Furthermore, with the status quo cartel in desperate need of China stepping up its monetary easing, and jumping right into the race to debase, which is absolutely critical to halt the plunge in tech company revenues and earnings, any interim slowdown in purchases is merely a springboard for even more purchase in the future once inflation does come back to China with a bang.Incidentally, one thing that MarketWatch completely forgot about is that in Q4 Chinese gold purchasing, all monetary else equal, is set to spike in Q4. From the South China Seas:Fung expects gold imports on the mainland to stay soft this month as prices have continued to remain high."However, gold consumption is likely to climb again in the fourth quarter, a traditionally peak season when Chinese people buy gold jewellery for weddings and presents," he added.
All rhetoric aside, one unspinnable aftereffect of China's relentless appetite for gold comes from a different place, namely Australia, where gold just surpassed coal as the second most valuable export to China. From Bullionstreet:Australia's gold sales to China hit $4.1 billion in the first eight months of this year as it surged by a whopping 900 percent.According to Australian Bureau of Statistics, the yellow metal became the second most valuable physical export to China, surpassing coal and only behind iron ore.The unprecedented jump in gold sales, along with continued acceleration of export revenues for other commodities led by coal, up 80 per cent to $4bn, caused total exports to China to rise by 10.7 per cent for the year to August, the Bureau said.
Perth Mint supplied most of the gold to China through a variety of banks.Analysts said Chinese buyers are hoarding the precious metal amid a slowing economy, property-buying restrictions and uncertain financial markets as its central bank increases its holdings.China's foreign currency reserves of gold are low and its move to build them up will provide an important base demand for gold, they added.In other words, take the chart above, showing only Chinese imports through HK, and add tens if not hundreds more tons of gold entering the country from other underreported export channels such as Australia. One thing is certain: China no longer has any interest in buying additional US Treasurys. What it does have an interest in is up to readers to decide.
http://www.caseyresearch.com/gsd/edition/will-silver-see-major-supply-squeeze-and-massive-price-increase
¤ YESTERDAY IN GOLD AND SILVER
With a quiet Friday volume backdrop...and a slowly but steadily rising dollar index...I guess it should have been expected that the gold price would slowly lower during Far East and London trading.
But by the 8:20 a.m. Eastern Comex open, the gold price was only down about seven bucks from Thursday's close. Friday's New York 'high' came about an hour later...$1,739.60 spot...and was only a couple of bucks lower than Thursday's close.
Then, with 100% of the Friday's dollar index rally already factored into the PM prices, the engineered price decline began...and thirty minutes later the low of the day [$1,714.20 spot] was in. As I love to say at moments such as this, it was sooooo obvious, that even Stevie Wonder could see it.
The gold price recovered a bit from there...and that rally lasted until the 1:30 p.m. Comex close...and from that point it traded sideways as traders headed out the door for the weekend.
Gold closed the day at $1,720.50 spot...down $21.10 from Thursday's close. Volume [about 175,000 contracts] was not as heavy as one would expect, especially considering that this price decline took gold below its 50-day moving average for a few minutes. The reason I'm dwelling on this, is that we had a $16.90 decline in gold on Monday...and volume that day was 189,000 contracts. Very strange.
But by the 8:20 a.m. Eastern Comex open, the gold price was only down about seven bucks from Thursday's close. Friday's New York 'high' came about an hour later...$1,739.60 spot...and was only a couple of bucks lower than Thursday's close.
Then, with 100% of the Friday's dollar index rally already factored into the PM prices, the engineered price decline began...and thirty minutes later the low of the day [$1,714.20 spot] was in. As I love to say at moments such as this, it was sooooo obvious, that even Stevie Wonder could see it.
The gold price recovered a bit from there...and that rally lasted until the 1:30 p.m. Comex close...and from that point it traded sideways as traders headed out the door for the weekend.
Gold closed the day at $1,720.50 spot...down $21.10 from Thursday's close. Volume [about 175,000 contracts] was not as heavy as one would expect, especially considering that this price decline took gold below its 50-day moving average for a few minutes. The reason I'm dwelling on this, is that we had a $16.90 decline in gold on Monday...and volume that day was 189,000 contracts. Very strange.
As usual, the silver price was much more 'volatile'...but the general price path was mostly the same...and the price action in New York was almost identical to the price action in gold during that time period. Silver had an intraday price move of over a dollar...and the absolute low of $31.83 spot came around 12:20 p.m. Eastern.
From that point, there was a tiny rally into the close of Comex trading...and the silver price didn't do much going into the 5:15 p.m. electronic close.
Silver finished down 75 cents, but volume was only 51,000 contracts.
The dollar index opened the day at 79.34...and then traded sideways until 2:00 p.m. Hong Kong time...7:00 a.m. in London. A tiny rally began, which picked up steam at 9:30 a.m. in New York...and was all done by a few minutes after 11:00 a.m. Eastern. From there it traded almost ruler flat into the 5:00 p.m. electronic close. The index finished at 79.63...up about 29 basis points.
From that point, there was a tiny rally into the close of Comex trading...and the silver price didn't do much going into the 5:15 p.m. electronic close.
Silver finished down 75 cents, but volume was only 51,000 contracts.
It nearly goes without saying that the big price declines in gold and silver had zero to do with the any currency movements yesterday. Both metals refused to decline in price during the New York trading session...and had to be shoved. Platinum and palladium prices had already begun to fall many hours earlier but, for whatever reason, gold and silver did not.
The gold stocks opened down a bit, but made an immediate attempt to rally, despite the fact there was considerable weakness in the equity markets. The stocks broke slightly into positive territory shortly after 10:00 a.m. in New York...and then headed lower...with the low tick coming just a few minutes before noon...gold's low tick of the day.
Then away they went to the upside...and by early afternoon were solidly in positive territory...where they stayed for most of the rest of the Friday trading day. The HUI closed up 0.28%...which I found astonishing...especially in light of what happened to the gold price in particular...and the equity markets in general.
Then away they went to the upside...and by early afternoon were solidly in positive territory...where they stayed for most of the rest of the Friday trading day. The HUI closed up 0.28%...which I found astonishing...especially in light of what happened to the gold price in particular...and the equity markets in general.
Not only that, there was no sign whatsoever in the HUI chart of the big waterfall decline in the gold price that occurred between 11:25 and 11:55 a.m. Amazing!
The silver stocks finished mixed...another big surprise...and Nick Laird's Silver Sentiment Index closed down only 0.33%.
The CME's Daily Delivery Report showed that 51 gold and 7 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday. The link to that activity, such as it was, is linked here.
There was a smallish increase of 9,692 troy ounce in GLD...and no reported changes inSLV.
The U.S Mint had a sales report on Friday. They sold 10,000 ounces of gold eagles...and 198,500 silver eagles. Month-to-date the U.S. Mint has sold 41,000 ounce of gold eagles...7,500 one-ounce 24K gold buffaloes...and 2,016,500 silver eagles. Based on these sales numbers, the silver/gold sales ratio is just over 42 to 1 as of the end of the week.
Over at the Comex-approved depositories on Thursday, they reported receiving 1,229,498 troy ounces of silver...and shipped only 195,008 ounces of the stuff out the door. Half of the silver received ended up in the JPMorgan Chase depository, which now sits at 24.81 million ounces. The link to that activity is here.
The Commitment of Traders Report wasn't quite what I was expecting...at least in silver.
What the COT numbers showed in silver was virtually no change in the Commercial net short position. I found this rather surprising for two reasons. The first was that during the reporting week, the silver price declined by a dollar...and second, the Commercial net short position in gold fell by a rather substantial amount. If you're looking for an answer why that is the case, I don't have one...and neither did Ted...at least an answer that satisfied me. So I'll be looking forward what he has to say about it in his weekend review to his paying subscribers later today.
The Commercial net short position in silver sits at 57,094 contracts, or 285.5 million ounces.
On a net basis the 'Big 4' traders, who I now believe to be JPMorgan Chase, the Bank of Nova Scotia, HSBC USA...and Citigroup, are short more than 44% of the entire Comex futures market in silver. But JPM and the Bank of Nova Scotia account for 90% of that short position, so HSBC and Citi each hold only tiny positions. Collectively, they are short 248.9 million ounces of silver, which represents a bit over 87% of the entire Commercial net short position....and the numbers in this paragraph are minimumnumbers. I'm using the legacy COT report...and Ted uses the disaggregated report. That report shows more spread trades than the legacy report. Ted subtracts those as well, and that always ups the concentration level.
There was a smallish increase of 9,692 troy ounce in GLD...and no reported changes inSLV.
The U.S Mint had a sales report on Friday. They sold 10,000 ounces of gold eagles...and 198,500 silver eagles. Month-to-date the U.S. Mint has sold 41,000 ounce of gold eagles...7,500 one-ounce 24K gold buffaloes...and 2,016,500 silver eagles. Based on these sales numbers, the silver/gold sales ratio is just over 42 to 1 as of the end of the week.
Over at the Comex-approved depositories on Thursday, they reported receiving 1,229,498 troy ounces of silver...and shipped only 195,008 ounces of the stuff out the door. Half of the silver received ended up in the JPMorgan Chase depository, which now sits at 24.81 million ounces. The link to that activity is here.
The Commitment of Traders Report wasn't quite what I was expecting...at least in silver.
What the COT numbers showed in silver was virtually no change in the Commercial net short position. I found this rather surprising for two reasons. The first was that during the reporting week, the silver price declined by a dollar...and second, the Commercial net short position in gold fell by a rather substantial amount. If you're looking for an answer why that is the case, I don't have one...and neither did Ted...at least an answer that satisfied me. So I'll be looking forward what he has to say about it in his weekend review to his paying subscribers later today.
The Commercial net short position in silver sits at 57,094 contracts, or 285.5 million ounces.
On a net basis the 'Big 4' traders, who I now believe to be JPMorgan Chase, the Bank of Nova Scotia, HSBC USA...and Citigroup, are short more than 44% of the entire Comex futures market in silver. But JPM and the Bank of Nova Scotia account for 90% of that short position, so HSBC and Citi each hold only tiny positions. Collectively, they are short 248.9 million ounces of silver, which represents a bit over 87% of the entire Commercial net short position....and the numbers in this paragraph are minimumnumbers. I'm using the legacy COT report...and Ted uses the disaggregated report. That report shows more spread trades than the legacy report. Ted subtracts those as well, and that always ups the concentration level.
The '5 through 8' largest silver shorts are short an additional 8.6 percentage points of the Comex futures market. Add that on to more than 44% that the 'Big 4' are short...that makes the 'Big 8' short over 53% of the entire Comex futures market in silver.
And according to the charts from reader EWF, the raptors [all Commercial traders excluding the Big 8] only hold a tiny long position in silver...and the '5 through 8' traders added a small amount to their short position during the reporting week.
But by far the biggest hogs at the trough are JPMorgan Chase and Scotia Mocatta...and what they decide, will determine where silver prices go from here.
In gold, which fell less than $50 during the reporting week, the Commercial net short position dropped by a very chunky 19,605 contracts, or 1.96 million ounces...and is now down to 24.74 million ounces.
On a net basis the 'Big 4' traders are short 35.8% of the Comex futures market in gold...and the '5 through 8' traders are short an additional 14.1 percentage points. So the 'Big 8' are short 49.9% of the entire Comex futures market in gold...and using the numbers from the disaggregated COT report will put these eight trader over the 50% mark.
You can bet your last nickel that virtually every one of the 'Big 8' shorts in silver are the same LBMA market making members as the 'Big 8' shorts in gold...and they all work together to 'make' the market'...with the raptors riding along on their coat tails.
And according to the charts from reader EWF, the raptors [all Commercial traders excluding the Big 8] only hold a tiny long position in silver...and the '5 through 8' traders added a small amount to their short position during the reporting week.
But by far the biggest hogs at the trough are JPMorgan Chase and Scotia Mocatta...and what they decide, will determine where silver prices go from here.
In gold, which fell less than $50 during the reporting week, the Commercial net short position dropped by a very chunky 19,605 contracts, or 1.96 million ounces...and is now down to 24.74 million ounces.
On a net basis the 'Big 4' traders are short 35.8% of the Comex futures market in gold...and the '5 through 8' traders are short an additional 14.1 percentage points. So the 'Big 8' are short 49.9% of the entire Comex futures market in gold...and using the numbers from the disaggregated COT report will put these eight trader over the 50% mark.
You can bet your last nickel that virtually every one of the 'Big 8' shorts in silver are the same LBMA market making members as the 'Big 8' shorts in gold...and they all work together to 'make' the market'...with the raptors riding along on their coat tails.
Here, in graphic form, are the short positions of the 'Big 4' and 'Big 8' as shown in days of world production needed to cover their respective short positions in all physical commodities traded on the Comex. The chart tells all. As always, I thank Nick Laird for providing it.
(Click on image to enlarge)
Without doubt, the Commitment of Traders report would show much more improvement in gold and silver's Commercial net short positions if it was calculated as of the close of business yesterday...but that data won't be available until next Friday's report.
Since the 20th of the month fell on a Saturday in October, The Central Bank of the Russian Federation updated their website with their September data. I must admit that I was disappointed to see that, officially, they didn't add to their gold reserves during that month. Maybe they're keeping their gold accumulation quiet, like China does. Anyway, here's Nick Laird's updated chart.
Here's another chart courtesy of Washington state reader S.A. This one is self-explanatory.
**** selected news items.......
Meredith Whitney: Nobody Can Fix Citi — The Incredible Shrinking Bank
Citigroup released its third-quarter earnings on Monday, and Pandit quit on Tuesday, and though the bank said his departure was voluntary, the timing has raised red flags.
Pandit reportedly clashed with the bank’s board over strategy and operational issues. John Havens, the bank’s chief operating officer, stepped down as well.
“Citigroup is ‘the incredible shrinking bank,’ and the least interest of the big four, in our opinion,” Whitney wrote in a note, according to The Wall Street Journal.
“No CEO will be able to change these facts in the near term. It appears the board feels the same way, as they have appointed an unknown to the outside to the new CEO position, Mike Corbat.”
This story showed up on the moneynews.com Internet site early on Thursday afternoon...and I thank West Virginia reader Elliot Simon for our first story of the day. The link is here.
Pandit reportedly clashed with the bank’s board over strategy and operational issues. John Havens, the bank’s chief operating officer, stepped down as well.
“Citigroup is ‘the incredible shrinking bank,’ and the least interest of the big four, in our opinion,” Whitney wrote in a note, according to The Wall Street Journal.
“No CEO will be able to change these facts in the near term. It appears the board feels the same way, as they have appointed an unknown to the outside to the new CEO position, Mike Corbat.”
This story showed up on the moneynews.com Internet site early on Thursday afternoon...and I thank West Virginia reader Elliot Simon for our first story of the day. The link is here.
Europe mistakes market lull for vote of confidence
Sorry to quibble, but there was no EU banking union deal Thursday night. It was a step backwards from agreements already made in June.
Germany has succeeded in kicking the issue into touch until after the Bundestag elections late next year. There will be no decision until deep into 2013 on whether to recapitalise the banks (i.e. crippled Spanish banks) directly through the European Stability Mechanism.
The crucial issue of whether this can be applied "retroactively" to legacy assets remaining from the Spanish burbuja will be discussed later by finance ministers. i.e., by the same AAA bloc that has already said it won't underwrite this mess.
The final text repeats verbatim the loose commitment from the June summit to break the vicious circle between banks and sovereign states, but Europe is not in fact any closer to doing so. The timetable has slipped further.
Ambrose Evans-Pritchard has his knickers in a twist in this blog posted over atThe Telegraph website yesterday. It's certainly worth readingnonetheless...and the link is here.
Germany has succeeded in kicking the issue into touch until after the Bundestag elections late next year. There will be no decision until deep into 2013 on whether to recapitalise the banks (i.e. crippled Spanish banks) directly through the European Stability Mechanism.
The crucial issue of whether this can be applied "retroactively" to legacy assets remaining from the Spanish burbuja will be discussed later by finance ministers. i.e., by the same AAA bloc that has already said it won't underwrite this mess.
The final text repeats verbatim the loose commitment from the June summit to break the vicious circle between banks and sovereign states, but Europe is not in fact any closer to doing so. The timetable has slipped further.
Ambrose Evans-Pritchard has his knickers in a twist in this blog posted over atThe Telegraph website yesterday. It's certainly worth readingnonetheless...and the link is here.
Syria: An Energy-Based Proxy War in the Making?
The Vietnam war wasn't really about Vietnam. Spaniards may have fought in the Spanish Civil War, but the real opponents were elsewhere. US and Soviet machinations in Afghanistan in the late 1970s had little to do with liberating a repressed population.
They were all proxy wars, struggles between superpowers that chose to fight their battles in faraway lands and inflict their collateral damage on other peoples instead of their own.
Each war had a cover. Each time the superpowers of the world got involved - overtly or covertly - to right an arguable wrong. Really though, they were there to fight each other. To weaken each other. To claim moral superiority and political preeminence. And to win the right to use the proxy nation's resources and location to their advantage.
It would be lovely to think such wars are a thing of the past... but another proxy war is rapidly developing...in Syria.
This Wednesday edition of the Casey Daily Dispatch was written by our own chief energy investment strategist, Marin Katusa. It's a must read for sure...and the link is here.
They were all proxy wars, struggles between superpowers that chose to fight their battles in faraway lands and inflict their collateral damage on other peoples instead of their own.
Each war had a cover. Each time the superpowers of the world got involved - overtly or covertly - to right an arguable wrong. Really though, they were there to fight each other. To weaken each other. To claim moral superiority and political preeminence. And to win the right to use the proxy nation's resources and location to their advantage.
It would be lovely to think such wars are a thing of the past... but another proxy war is rapidly developing...in Syria.
This Wednesday edition of the Casey Daily Dispatch was written by our own chief energy investment strategist, Marin Katusa. It's a must read for sure...and the link is here.
Iraq issues arrest warrant for ex-central bank chief, other officials
Iraqi authorities issued arrest warrants for the former central bank chief and other bank officials after a probe into corruption, a spokesman for the high judicial council said on Friday.
Iraq's cabinet on Tuesday ousted director Sinan al-Shibabi over a parliamentary charges bank officials were abusing dollar sales. His dismissal will do little to ease investor worries the government is undermining the bank's autonomy.
Abdul-Sattar al-Birqdar, a spokesman for the judiciary council confirmed an arrest warrant issue was issued against Shibibi and some other officials. But he did not give any details about the charges they face.
You've just read the entire 3-paragraph Reuters story on this subject. It was posted on their website very early on Friday morning Eastern time...and I thank Scott Pluschau for sending it along. The link to the hard copy is here.
Iraq's cabinet on Tuesday ousted director Sinan al-Shibabi over a parliamentary charges bank officials were abusing dollar sales. His dismissal will do little to ease investor worries the government is undermining the bank's autonomy.
Abdul-Sattar al-Birqdar, a spokesman for the judiciary council confirmed an arrest warrant issue was issued against Shibibi and some other officials. But he did not give any details about the charges they face.
You've just read the entire 3-paragraph Reuters story on this subject. It was posted on their website very early on Friday morning Eastern time...and I thank Scott Pluschau for sending it along. The link to the hard copy is here.
A Golden Solution for Europe's Sovereign-Debt Crisis
Here's an idea that almost certainly wasn't discussed at Thursday night's European summit: using countries' gold reserves to lower the borrowing costs of euro-zone governments.
Central banks of the 17-nation currency union are sitting on more than 10,000 metric tons of gold. At northward of $1,740 a troy ounce, that's a chunk of change.
From the point of view of Europe's debt crisis, most of it is in the wrong place. Nearly a third of it belongs to Germany and almost a quarter of it is in France, neither of which is struggling with high debt-interest costs. For some countries burdened with debt—Spain, which holds 282 tons, Greece with 112 tons and Ireland with just six—their holdings are too small to make much of a difference.
But two countries have enough gold to make a difference to their financing costs. Italy, which has flirted with unsustainably high borrowing costs, is sitting on the second-largest holding of gold reserves in Europe: 2,450 tons. The small economy of Portugal, which is in a bailout program after it lost access to affordable government finance, has reserves of 382 tons.
This Wall Street Journal reporter is a day late and a dollar short with this story, as this idea has been proposed in the gold world...and by your humble scribe...for many years now. The only thing that the reporter didn't mention, that in order to make it really work, gold would have to be re-priced to about ten times its current value...and that's what I expect will happen sooner or later...and probably sooner rather than later.
This story was posted on the WSJ website on Thursday evening...and I thank Ulrike Marx for bringing it to our attention. The link is here.
Central banks of the 17-nation currency union are sitting on more than 10,000 metric tons of gold. At northward of $1,740 a troy ounce, that's a chunk of change.
From the point of view of Europe's debt crisis, most of it is in the wrong place. Nearly a third of it belongs to Germany and almost a quarter of it is in France, neither of which is struggling with high debt-interest costs. For some countries burdened with debt—Spain, which holds 282 tons, Greece with 112 tons and Ireland with just six—their holdings are too small to make much of a difference.
But two countries have enough gold to make a difference to their financing costs. Italy, which has flirted with unsustainably high borrowing costs, is sitting on the second-largest holding of gold reserves in Europe: 2,450 tons. The small economy of Portugal, which is in a bailout program after it lost access to affordable government finance, has reserves of 382 tons.
This Wall Street Journal reporter is a day late and a dollar short with this story, as this idea has been proposed in the gold world...and by your humble scribe...for many years now. The only thing that the reporter didn't mention, that in order to make it really work, gold would have to be re-priced to about ten times its current value...and that's what I expect will happen sooner or later...and probably sooner rather than later.
This story was posted on the WSJ website on Thursday evening...and I thank Ulrike Marx for bringing it to our attention. The link is here.
Will silver see a major supply squeeze and massive price increase?
A note by long term silver analyst (and silver bull), Israel Freidman published on Ted Butler's internet site contains some true gems which will be manna to the ears (if you can have such a thing) of silver investors everywhere. Leading off with the comment that silver is, in Freidman's view, the best raw material of all for the investor to hold, he says he held this opinion 30 years ago (when silver was under $5 an ounce) and holds the same view today (at $33) and that for the investor in bullion, silver remains one of the few commodities that the average person can actually hold in his possession (gold is another but the price precludes the ‘average' investor holding all but a tiny amount in comparison).
And he waxes enthusiastic, particularly about the US Mint's silver eagle coin which he describes as the most beautiful, and popular, coin in the world. He is convinced that it is so popular that one day the US Mint will not be able to keep up with demand (we have seen occasional times in the recent past when the Mint has had to ration sales) and that premiums on the coins will explode if, and when, the Mint has to stop producing them.
Lawrence [Lawrie] Williams, Mineweb's General Manager and Editorial Director, comments on the above essay that I linked in this column on Thursday. Lawrie's take on it is very interesting...and I consider it aworthwhile read. It's almost pointless to mention that it was posted over at the mineweb.com Internet site yesterday...and the link is here.
And he waxes enthusiastic, particularly about the US Mint's silver eagle coin which he describes as the most beautiful, and popular, coin in the world. He is convinced that it is so popular that one day the US Mint will not be able to keep up with demand (we have seen occasional times in the recent past when the Mint has had to ration sales) and that premiums on the coins will explode if, and when, the Mint has to stop producing them.
Lawrence [Lawrie] Williams, Mineweb's General Manager and Editorial Director, comments on the above essay that I linked in this column on Thursday. Lawrie's take on it is very interesting...and I consider it aworthwhile read. It's almost pointless to mention that it was posted over at the mineweb.com Internet site yesterday...and the link is here.
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