http://www.caseyresearch.com/gsd/edition/perth-mint-were-not-seeing-any-fear-or-selling-action-from-our-clients/
¤ YESTERDAY IN GOLD & SILVER
As has been the case lately, the gold price didn't do much in Far East and London trading. Gold made it above the $1,680 mark very briefly about an hour after the London open...but that didn't last.
From that point it traded flat until the jobs numbers were posted at 8:30 a.m. in New York. Then the gold price fell off a $20 cliff, but quickly recovered all of that loss, plus a bit more, before running into a not-for-profit seller once the London p.m. fix was in at 10:00 a.m. Eastern time.
It wasn't long before the gold price was back below the $1,580 mark...and then traded sideways into the electronic close. Gold's low and high ticks were $1,560.40 and $1,585.10 spot respectively.
Gold finished the Friday trading session at $1,579.20 spot...up the magnificent sum of 60 cents. Net volume was pretty chunky...around 180,000 contracts.
It was pretty much the same price action in silver, except the subsequent rally after the 8:30 a.m. Eastern time sell-off was much more impressive. But, like every other rally this week, the silver price was back to the $29 spot price in short order.
Silver had an intraday move of over a dollar, as the low price tick was $28.26 spot...and the high tick was $29.39 spot.
The silver price closed on Friday at $29 spot...right on the button. Volume was a very impressive 53,000 contracts.
It should be obvious to one and all that both gold and silver would have finished the Friday trading session materially higher if they hadn't run into a willing seller at the afternoon gold fix in London.
And as the charts below indicate, both platinum and palladium continue to trade like they are on some other planet. Palladium was the star of the day...up 3.17% on Friday.
The dollar index opened at 82.11 on Friday morning in the Far East. From there it rallied a bit up to 82.29 just before 9:00 a.m. in London...and then rolled over to its 82.09 low of the day just before 11:00 a.m. GMT. The subsequent rally didn't amount to much until the jobs numbers were posted...and then the index blasted up to its 82.90 high of the day shortly after 9:00 a.m in London. After that it slid a hair into the close, finishing the day at 82.75...up 64 basis points from Thursday's close.
It should obvious that the dollar index and the precious metals traded almost totally independently of each other again yesterday.
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The CME's Daily Delivery Report showed that 33 gold and 6 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.
There was another withdrawal from GLD yesterday. This time it was 106,641 troy ounces and, once again, there was no reported change in SLV.
Joshua Gibbons the Guru of the SLV Silver Bar List updated his website late last night with the current data as of Wednesday, March 6th...and if you're interested in seeing what happened within SLV as far as Comex good delivery bars coming and going is concerned...you can click here.
The U.S. Mint had another sales report. They sold 8,000 gold eagles and 4,000 one-ounce 24K gold buffaloes, but no silver eagles...and that was probably because they didn't have any to sell.
Over at the Comex-approved depositories on Thursday, they reported receiving 477,756 troy ounces of silver...and shipped 831,510 troy ounces out the door. The link to that action is here.
Well, there were declines in the Commercial net short positions in both gold and silver in yesterday'sCommitment of Traders Report, but they weren't anywhere near as big as I was hoping/expecting...however, they are what they are.
In silver, the Commercial net short position declined by only 8.5 million ounces...and the Commercial net short position is now down to 145.9 million ounces. Of that amount, Ted Butler figures that JPMorgan Chase is short about 120 million ounces, an improvement over last week, as Ted says that JPMorgan aggressively covered short positions during this reporting week.
The Big 4 are short 211.1 million ounces...and that includes the 120 million ounces short position held by Morgan...and the '5 through 8' traders are short an additional 55.8 million ounces.
As of this COT Report, the gross open interest in silver shows as 147,100 contracts...but once you subtract all the visible spread trades out of that number, the true open interest falls all the way down to 103,520 contracts.
Based on this number, the Big 4 are short 40.8% of the entire Comex futures market in silver...and the '5 through 8' big traders are short an additional 11.3 percentage points. So the 'Big 8' are short 52.1% of the entire silver market. JPMorgan is short a bit over 23% of the Comex futures market in silver all by itself.
In gold, the Commercial net short position fell by 382,200 ounces...and now sits at 13.38 million troy ounces.
The Big 4 are short 9.26 million ounces of gold...and the '5 through 8' traders are short an additional 5.22 million ounces of gold. So the 'Big 8' in total are short 14.48 million ounces of gold.
Once the known spread trades are removed, the Big 4 are short 25.8% of the entire Comex futures market in gold...and the '5 through 8' traders are short an additional 14.5% of the gold market. The 'Big 8' in total are short 40.3% of the entire Comex futures market in gold and, like silver these are minimum concentrations.
Ted Butler also mentioned that the technical funds and the managed money are "full up" on the short side...and he also added that their combined short positions are the highest he can ever remember them being. It would appear that we are "locked and loaded"...and it only matters what JPMorgan et aldo on the ensuing rally. Stay tuned.
Here's Nick's most excellent "Days of World Production to Cover Short Positions" for each physically traded commodity on the Comex.
Here's the chart from the prior week so you can see the changes in all four precious metals from one week to the next. Compared to copper, the only other metal on these graphs, the four precious metals have short positions that are light years removed from it.
(Click on image to enlarge)
Of course there were big improvement in the March Bank Participation Report as well...and all the data in this report is extracted from Tuesday's Commitment of Traders Report so, once a month, we can compare apples to apples.
In silver, 3 U.S. banks were net short 158.3 million ounces of silver...a big drop from the 201.0 they were short a month ago. Don't forget that JPM is short 120 million of that 158.3 million ounces...and it's my guess that HSBC USA is short almost all off the remaining 38.3 million ounces that are left...and Citigroup has a tiny immaterial position.
In silver, 14 non-U.S. banks were net short 46.2 million ounces of silver...also a big drop from February when they were short 76.9 million ounces of the stuff. It's my guess that a huge [I'm guessing about two thirds] of this non-U.S. bank short position is held by Canada's Bank of Nova Scotia. This means that the net short positions held by the other 13 non-U.S. banks in silver, divided up more or less equally, are immaterial at around 1.2 million ounces apiece.
In gold, 4 U.S. banks are net short 4.62 million ounces of gold...down from 6.93 million ounces they held net short in February.
In gold, 21 non-U.S. banks are net short 4.33 million ounces of gold...and a huge chunk of that [maybe 50%] is most likely held by Canada's Bank of Nova Scotia. If you divide up the balance [around 2.5 million ounces] between the 20 remaining non-U.S. banks, each one isn't short very much on an individual basis.
As a point of interest, there are 3 U.S. banks that are currently short about 30% of the entire futures market in platinum and palladium as well...and the percentages [on a net basis] would be significantly higher than that if the spread trades were subtracted out. The 14 non-U.S. banks that hold short positions in these two metals are immaterial...but I don't rule out the possibility the Scotia Moccata holds the lion's share of the non-U.S. banks' net short position in platinum and palladium as well.
The next four charts are a graphic representation of the Bank Participation Report for all four precious metals. Each group consists of five charts...The first 3 are easy...but it's charts 4 and 5 that you should concentrate on. Those are the monthly short and long positions held by the US and non-US banks over time...and it's educational.
Note where JPMorgan's short position in silver showed up back in August of 2006 on chart 4 and 5 in silver...and when the one non-U.S. bank [I'm guessing the Bank of Nova Scotia] also showed up in the data starting in October of 2012. This is most obvious in charts 4 and 5 in both silver and gold where the non-U.S. short position blows out in both metals.
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Selected news and views.......
In February Multiple Jobholders Rose By A Record, As Full-Timers Dropped, Part-Timers
When it comes to government data, every silver lining has a cloud. Sure enough even today's NFP number, which on the surface was quite acceptable, had its share of thorny issues.
Those who track the quality composition of the jobs, as opposed to just thequantity, will know that the part and full-time jobs breakdown has long been a major issue. And not unexpectedly, in February according to the Household Survey, the number of full-time jobs declined by 77K from 115,918 to 115,841. The offset: a jump in part-time workers which rose from 27,467 to 27,569, or 102K. Part-time jobs, for those who are unaware, are "jobs" only in the broadest of definitions.
But the most surprising development in February from a quality standpoint was that the number of multiple job-holders rose by a massive 340K, which just happens to be a record. One wonders: how many actual people got new jobs, as opposed to how many qualified single individuals ended up getting more than one job in February in order to boost that much needed weekly income to sustainable levels.
You just read all three paragraphs of this very short article that was posted over at the Zero Hedge website yesterday...but the embedded graph is worth the trip. I thank reader 'David in California' for bringing it to our attention.
Fed mulls putting a "not for sale" sign on its assets
The Federal Reserve is considering jettisoning a plan to eventually sell off the massive haul of bonds it is now buying, a politically defensive strategy that would have the added benefit of supporting the economy for years to come.
In what would be a revision of their blueprint for the eventual tightening of monetary policy, Fed officials have said they could simply allow the trillions of dollars in securities they have bought through three rounds of quantitative easing to mature.
Fed Chairman Ben Bernanke and other officials have said a decision not to sell the mortgage and Treasury bonds would only add about a year to the process of returning the central bank's balance sheet to a more normal size of around $1 trillion, probably around 2020. It is worth some $3 trillion now, and could swell to near $4 trillion by year end.
It seems that we go further down the rabbit hole every week. This Reutersstory was posted on the finance.yahoo.com Internet site yesterday...and it's courtesy of West Virginia reader Elliot Simon.
Doug Noland: Q4 2012 Flow of Funds
Importantly, the government finance Bubble has succeeded in sustaining the U.S. “Bubble Economy” structure that evolved over the prolonged Credit Bubble period. This has ensured unending Current Account Deficits and endless dollar liquidity; historic global financial and economic imbalances; and attendant myriad Bubbles around the world. Desperate global central bankers, meanwhile, are content to disregard precarious Bubble excess throughout global risk markets - fixated instead on acute economic and financial fragilities. Flawed economic doctrine, analytical frameworks and policies over years fostered deep economic maladjustment and market Bubbles. Resulting fragilities these days ensure even more aggressively “activist” policy measures viewed as necessary to bolster an acutely vulnerable global “system.”
Two of the savviest “macro” analysts of this era – Stan Druckenmiller and Marc Faber – this week separately warned that this central banker-induced boom will end badly. Mr. Faber went so far as to predict unpleasant happening for 2013. I don’t know if this historic Bubble will burst this year. But I am convinced the longer the current backdrop continues the greater the eventual economic and financial turmoil. The Q4 2012 “flow of funds” provides added confirmation that policymakers have painted themselves into a corner. It’s hard to believe the Fed will stick with $85bn monthly QE in the face of mounting Credit and market excess. On the other hand, the liquidity backdrop has created such unsettled global markets that central bankers will look for any excuse to avoid watering down the punch.
Doug's commentaries reveal the fantasy that today's financial system has become...and that's why I always consider his Friday column a must read. I thank reader U.D. for bringing yesterday's missive to our attention, which was posted on the prudentbear.com Internet site.
U.S. Air Force scrubs drone strike data from reports
As the US military continues to court scrutiny regarding drone use, the Air Force has stopped sharing information on the number of drone strikes in Afghanistan. Going one step further, it has removed those statistics from prior reports on its website.
Statistics were recorded as part of the policy for November, December and January. But when February's numbers were published on March 7, there was only a blank space where the drone statistics were normally placed.
And beyond that, the monthly reports posted to the Air Force's website had the drone data removed from them in recent weeks, with the data still being posted as late as February 16.
This article appeared on the Russia Today Internet site early Saturday morning Moscow time...and I thank Roy Stephens for sending it along.
Beppe Grillo - an Italian or European phenomenon?
Beppe Grillo's extraordinary success in the recent Italian elections tapped into anti-establishment feeling that is ripe for the plucking in other member states too, say analysts.
Grillo's 5-Star Movement, established by blog in autumn 2009, scooped 26 percent of the vote during last week's elections, effectively putting him in kingmaker position as government negotiations begin.
It was a stunning political debut. And represented an earthquake for Italian politics, marred by corruption scandals, complacency and squabbling.
The 5-Star Movement has a lean programme with five themes: public water, transportation, development, internet connection and the environment. There is nothing on foreign policy. And nothing about the EU.
This new items, filed from Brussels, was posted on the euobserver.com Internet site late Friday afternoon Europe time...and it's definitely worth reading. I thank Roy Stephens once again for sending it along.
Korean Slip-Up Could Be 'Disastrous': Analyst
North Korea's consistently belligerent rhetoric reached new heights this week as a general said the country has a long-range missile armed with nuclear warheads on standby, and supreme leader Kim Jong-un told troops to "prepare for war."
Odds are hostilities will continue into next week as the U.S. and South Korea conduct annual military exercises near the demilitarized zone (DMZ) between the two countries, and North Korea continues large-scale military exercises.
"Tensions will likely go up further next week as both sides start military drills," Ellen Kim, assistant director and Fellow of the Korea Chair at the Center for Strategic and International Studies, told BI. "So this is not a good situation."
This businessinsider.com story is mostly similar to the prior story, but it's different enough to warrant posting...and I thank Roy Stephens for sending it.
Ambrose Evans-Pritchard: Another step towards an East-West trade war
China's trade figures released this morning are shocking. They tell us that China is still flooding the world with excess goods, and is once again a net drain on global demand.
As you may have seen, Chinese exports surged 22pc in February. Imports fell 15pc.
This is exactly what pessimists feared. For all the talk of a great shift by China away from export-led growth to internal demand, the reality is that the Politburo is still propping up the same old system, still shovelling subsidies to loss-making firms and state behemoths to keeps factories open.
Investment is still 49pc of GDP. Consumption is still 36pc. China is still a massively deformed economy, and the global effects of its imbalances are getting bigger every year as the economy grows at far higher rates than the West.
This must read AE-S blog was posted on the telegraph.co.uk Internet site yesterday...and I consider it a must read. It's Roy Stephens final offering in today's column.
GoldSeek Radio interviews GATA Chairman Bill Murphy
GoldSeek Radio's Chris Waltzek interviewed GATA Chairman Bill Murphy yesterday about developments in the gold market and particularly attempts by central banks to repatriate their gold from vaulting abroad and suspicion that the metal really isn't where it is purported to be. The interview is 13 minutes long and can be heard and GoldSeek Radio.
I thank Chris Powell for doing all the heavy lifting, as I stole it all from a GATA release yesterday.
Perth Mint: "We're Not Seeing Any Fear or Selling Action From Our Clients"
In terms of what those Asian buyers are doing right now, Bron said, “The interesting thing about the Indian market particularly, is that they are very canny buyers. They will desert the market if prices move up, [but] will come back in when the prices correct…When they feel the gold price has formed a new base…they’ll see that as the new bottom, they’ll buy that bottom, and they’ll demand returns. [That's when] we have bullion banks calling us up desperate to get kilo bars.”
When asked about the current concerns of clients representing over $3.5B worth of vaulted metals, Bron said, “On the depository side of the business…across the board we’re not seeing any rush to buy with the price dropping down into the $1500 range—but nor are we seeing any selling. I think that’s quite positive. It tells me that [they're] very much strong hands, and are not selling on this price weakness. They’re not fazed by it…[so] from our clients we’re not seeing any fear or selling action.”
This interview with The Perth Mint's Bron Suchecki, which was posted on thebullmarketthinking.com Internet site on Friday sometime, is definitely worth your time...and I thank reader U.D. for passing it along.
¤ THE WRAP
The Bank never goes broke. If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper. - Excerpt from Monopoly rules
Today's pop 'blast from the past' is a 1963 classic that I overheard in a movie that my wife was watching the other night...and I immediately latched on to it for today's column. It was the one and only hit by a group called The Essex...which was formed within the ranks of the USMC of all places...and what a hit is was! It's history is amazing...and so is the song. The link is here...and I remember it all too well, as I was in Grade 10 at the time. Music like this defined our generation...the leading edge of the 'baby boomers'.
Today's classical 'blast from the past' come via England. My favourite English composer by far is Sir Edward Elgar. This 4:20 minute piece is the most well-known movement from his Enigma Variationscomposition that came at the very end of the 19th century...and needs no further introduction from me, as everyone has heard it performed in one form or another during their respective lifetimes. Here is the Chicago Symphony under that baton of a rather youngish-looking Daniel Barenboim...and the link is here. Enjoy!
Well, yesterday's price action was no surprise to me...as we've seen this sort of nonsense at the release of the jobs report many times in the past. And as is always the case, there was a not-for-profit seller waiting in the wings, or the subsequent rallies would have painted closing gold and silver prices that would have taken your breath away.
Where we go from here is anyone's guess. As Ted Butler said on the phone yesterday, the technical funds and managed money are loaded for bear with the biggest short positions they've ever held for as far back as Ted can remember...and he can remember quite a bit.
The other thing that Ted keeps pointing out is that despite the clean-out we've had in silver, the Commercial net short position is still more than double what it was at its lows of last summer...and at the end of December 2011...and Ted is wondering whether they'll be able to get the price lower still, or is JPMorgan Chase now stuck at this higher level. Ted doesn't know...and neither do I.
Here are a couple of charts that I know you'll find of interest. The first is from GATA's good friend Richard Nachbar...and it shows the U.S. wholesale premiums for 90% U.S. junk silver. Here's what Richard had to say in his covering e-mail that accompanied the chart...
Ed:
Here is my weekly US90 wholesale premium/discount graph which I have kept for over a decade. The two "goalposts" were the hype build-up to Y2K in 1998-1999 (22 Jan 99 peak bid price premium of 37.8%) and the post-Lehman silver smash to under $9.00 in 4Q 2008 (31 Oct 08 peak bid price premium of 41.3%).
The usual multi-year "flat-line" at a 3% discount "levitated" throughout 2012 and has now solidly broken through to a premium of 3.3% this week. The groundswell this time feels like early 2001 to me. Time will tell.
If one in a thousand SLV owners switched their funds to Silver Eagles, the U.S. Mint would be overwhelmed and retail Eagle premiums would double to 20%. That would open the door to more "value" buyers who would then quickly vacuum up any remaining US90 silver coins at their local coin dealer's establishment. A tripling in today's wholesale US90 premiums to 10% would then be an easy chip shot, in my opinion.
Here is my weekly US90 wholesale premium/discount graph which I have kept for over a decade. The two "goalposts" were the hype build-up to Y2K in 1998-1999 (22 Jan 99 peak bid price premium of 37.8%) and the post-Lehman silver smash to under $9.00 in 4Q 2008 (31 Oct 08 peak bid price premium of 41.3%).
The usual multi-year "flat-line" at a 3% discount "levitated" throughout 2012 and has now solidly broken through to a premium of 3.3% this week. The groundswell this time feels like early 2001 to me. Time will tell.
If one in a thousand SLV owners switched their funds to Silver Eagles, the U.S. Mint would be overwhelmed and retail Eagle premiums would double to 20%. That would open the door to more "value" buyers who would then quickly vacuum up any remaining US90 silver coins at their local coin dealer's establishment. A tripling in today's wholesale US90 premiums to 10% would then be an easy chip shot, in my opinion.
Richard
(Click on image to enlarge)
Mr. Nachbar has been in the coin business in the U.S.A. for a very long time...and is an authority on this subject.
The last chart is one of my favourites...and I didn't even have to ask Nick Laird to send it this week, as it arrive in my in-box without prodding! It's the "Total PMs Pool"...and despite the smack-down since the beginning of the New Year, the total ounces held continues to progress from lower left to upper right, as Dennis Gartman is wont to say.
(Click on image to enlarge)
In closing, I would like to point out the one thing I am sure of, and that's the realization that the end game for all things paper is drawing closer by the day...and now that the world's central banks have started the printing presses in motion simultaneously, it's also equally obvious that no exit strategy will work...and it has now become a matter of when the end comes...not if it comes...and what the final form will be when it arrives.
See you on Tuesday.
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