http://www.caseyresearch.com/gsd/edition/jpmorgan-chase-and-the-four-precious-metals
http://jessescrossroadscafe.blogspot.com/2013/09/comex-deliverable-gold-bullion-drops.html
Gold bullion available for delivery on the COMEX dropped a little more than 15,000 ounces on Thursday, with one large withdrawal from Scotia Mocatta and one small adjustment that added back a few hundred ounces at HSBC.
There were no other ounces received. Total registered (deliverable) gold at the COMEX now stands at 686,434 ounces of actual bullion.
This number is, according to the COMEX' own language on the report, based on sources believed to be reliable. But COMEX assumes no liability for errors or related counterparty risks.
We have not seen deliverable levels this low since 2003, which was in the earliest stage of the current gold bull market.
There are still over 7 million total ounces of gold bullion in COMEX warehouses. It will probably take higher prices to motivate owners to move their stored bullion into the market.
The claims per deliverable ounce on the COMEX remains unusually elevated at 54.6. If there is a rush to exercise those contracts, the gold on the exchange that is available for delivery will not go very far. That means price would have to go much higher, in the manner of a short squeeze. I tend to watch 'claims per ounce' in the same way you might watch 'days to cover' for the short interest on a stock.
The gold cartel is trying hard to keep the price from breaking out above 1420, which could precipitate some short covering with the leveraged traders, and prompt the ETFs to try and recover some of the bullion which they so graciously surrendered into the price decline earlier this year.
At some point there is always a reckoning, and claims that have been made on paper must be fulfilled or surrendered, one way or the other. And in this case the supply and demand flows worldwide do not seem favorable for those who attempted to knock the price of gold down below a sustainable market value earlier this year.
I marked when enough ounces had been made available from the ETFs to return Germany's gold to their people. But the gold was not returned, and they did not stop their pricing operation there. It is always the greed, and then the coverup.
The strong physical buying, especially out of Asia, seems to have turned a pricing operation into a stubborn trap. Keeping the price lower only seems to prompt more buying, and more scarcity of legitimate supply.
But let's assume the price goes high enough so that all 7 million ounces of gold held in all the COMEX warehouses becomes available to the market. That is a little less than 218 tonnes. That would satisfy the current demand from China through Hong Kong alone for about two months at current rates.
The last chart below shows how import levels into China exploded when the clever boys knocked the prices down well below the natural market rates given demand and costs of production.
If global supply should show signs of faltering at any point, with undue delays from another bullion bank or, worst case, the LBMA, the relatively thin inventories at the COMEX that are used as largely symbolic bollards for the world's precious metals price would evanesce, almost overnight, with bids up limit and none offered. Dรฉfaut, en fait accompli. Quel dommage!
You may wish to fold your cards here, gentlemen, and let the price rise to a more defensible level, before the supply levels becomeuntenable at any price. Once confidence has become broken, it is often difficult to get it back. And there are a lot of delivery days between now and the end of the year.
Weighed, and found wanting.
Stand and deliver.
¤ YESTERDAY IN GOLD & SILVER
After doing precisely nothing for a bit more than fourteen hours during Far East and early London trading, the gold price got smacked at the 8:30 a.m. jobs report.
But that sell off lasted for just a few seconds, as a buyer showed up instantly, and within five minutes gold was up over thirty five dollars off that low. The low tick and high tick came within five minutes of each other, and Kitco recorded those as $1,359.80 spot and $1,394.50 spot respectively. I carefully noted the fact that gold wasn't allowed to encroach on the $1,400 spot price mark.
After the spike, gold sold off a bit, and then rallied into the London p.m. gold fix, before trading sideways in thin volume for the remainder of the New York session.
Gold closed at $1,388.80 spot, up $21.10 from Thursday. Net volume was pretty decent at 165,000 contracts, so it's a good bet that the big price spike did not involve much short covering, if any. And if there was short covering, it was well hidden with spread trades.
Here's the New York Spot Gold [Bid] chart on its own so you can see the Comex price action up close and personal.
The silver chart was more or less the same, but the low tick of the day was a spike down at, or just before, the 12 o'clock noon London silver fix. From that low, silver rallied back to just above unchanged by the Comex open. Silver did not spike down at 8:30 a.m. EDT, but took off immediately, and was up 60 cents in less than five minutes. After that, it chopped higher, with the spike high coming at, or just before, the London p.m. gold fix. Silver traded ruler flat after that.
The low tick in late morning trading in London was a few pennies below the $23 spot mark, and the high tick in New York was recorded by Kitco as $24.05 spot.
Silver finished the New York trading session at $23.84 spot, up 63.5 cents from Thursday's close. Net volume was 41,000 contracts. I was expecting a much higher number than that. I'm not sure if I should read anything into it or not, but we won't know for sure until next Friday's COT Report.
The platinum and palladium charts look like mini versions of the gold and silver charts, and here they are.
The dollar index closed late on Thursday afternoon in New York at 82.63. It sagged a bit during early Far East trading before rallying back to just about unchanged by noon in London. The index headed south minutes before the jobs numbers were released, rallied a bit when they were released, and then rolled over and fell to its low of the day [82.06] at, or just after, the London p.m. gold fix at 3 p.m. BST, which was 10 a.m. in New York. It recovered a handful of basis points going into the close. The index finished at 82.15 on Friday, down 48 basis points, which was everything it gained on Thursday.
****
The CME's Daily Delivery Report showed that 22 gold and 16 silver contracts were posted for delivery on Tuesday within the Comex-approved depositories. JPMorgan was the biggest issuer in both metals. The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in GLD, and as of 10:56 p.m. EDT, there were no reported changes in SLV, either.
The U.S. Mint had nothing to say for itself yesterday. But without doubt they will have a sales report on Monday.
Over at the Comex-approved depositories on Thursday, they didn't report receiving any gold, but did ship out 17,040 troy ounces of the stuff to parts unknown. The link to that activity, such as it was, is here.
These same depositories were far more active in silver on Thursday. They only received 49,469 troy ounces, but they shipped out 822,340 troy ounces. The link to that action is here.
Friday's Commitment of Traders Report showed deterioration in the Commercial net short positions in both silver and gold. However, in both metals, the decline had nothing to do with the technical funds going short either metal, it was mostly a case of the long holders selling positions at a profit, as the technical funds covered their short positions. This has the mechanical effect of blowing out the headline Commercial net short position in both metals, but under the hood the scene was quite a bit different.
In silver, the Commercial net short position increased by 16.7 million ounces, and now sits at 136.8 million ounces. Ted Butler said that the raptors [the small commercial traders other than the Big 8] sold 4,300 of their long positions at a profit, and JPMorgan Chase decreased their short-side corner of the silver market by around 1,000 contracts. Ted says that JPMorgan is still short about 17,000 Comex silver contracts, which represents 85 million ounces of the stuff. Just doing the math, JPMorgan holds more than 50 percent of the entire Commercial net short position all by themselves. How's that for a concentrated trading position?
In gold, the Commercial net short position only increased by 4,800 contracts, or 480,000 troy ounces. It now sits at 9.25 million ounces. JPMorgan sold about 3,000 contracts of its long position, and the raptors sold the other 1,800 contracts.
As you can see, the increase in the Commercial net short position was the result of the Commercials selling long positions at a profit, rather than going short, and as Ted says, there's a big difference between the two.
Both Ted and I agree that the price action since the Tuesday cut-off for this week's COT Report has pretty much reversed [plus more] everything that happened during the prior reporting week, so you can forget everything you just read above!
I wasn't expecting anything good out of the yesterday's companion Bank Participation Report [BPR] for September, and I certainly got my wish. I was surprised by the deterioration from the August BPR, especially in the non-U.S. bank category for both silver and gold.
In silver, "3 or less" U.S. banks were net short 118.4 million ounces, an increase of 22.6 million ounces from the August report. Don't forget that Ted Butler calculated that JPMorgan Chase was short about 17,000 Comex silver contracts as of the Tuesday cut-off, which multiplies out to 85 million ounces of the stuff. I would guess that the other two U.S. banks that hold short positions are HSBC USA, and possibly Citigroup. HSBC USA holds the lion's share of the balance, around 30 million ounces, with Citi holding a few million ounces of silver short.
But the big surprise was in the 11 non-U.S. banks that held short positions in Comex silver. Their short position jumped to 18,987 contracts [94.9 million ounces] in the September BPR, compared to the 11,607 contracts [58.0 million ounces] they held short in the August BPR. That's an increase of 36.9 million ounces in one month. I would bet that Canada's Bank of Nova Scotia is the non-U.S. bank that went short almost all of that amount. That's way more than JPMorgan went short in the same time period.
Here's Nick Laird's Bank Participation for silver updated with the data from yesterday's Bank Participation Report. It's charts 4 and 5 of each metal that you should concentrate on.
(Click on image to enlarge)
It was pretty much the same story in gold, as 4 U.S. banks decreased their long position from 5.95 million ounces in the August BPR to 4.49 million ounces in the current report. Virtually all of that decrease in long position would be from JPMorgan Chase selling Comex long contracts into the ongoing rally in gold.
And, like in silver, the 19 non-U.S. banks blew out their short positions in gold from 2.20 million ounces to 3.67 million ounces during the reporting period. Once again, it would be my guess that Canada's Bank of Nova Scotia holds half of all the Comex short positions held by the non-U.S. banks, all 19 of them.
(Click on image to enlarge)
The short positions held by the "3 or less" U.S. banks in both platinum and palladium is starting to blow out again. The short position in palladium is almost at a record high. Here are Nick Laird's charts for them as well.
(Click on image to enlarge)
(Click on image to enlarge)
The "4 or less" U.S Banks [mostly JPMorgan Chase as well] are short 21 percent of the Comex platinum market and 34 percent of the Comex palladium market on a gross basis. If I had the time, which I don't at the moment, I'd compute it on a net basis. That would show that these short positions percentages are, in fact, much higher. But as a "for instance" these four banks hold 26,800 Comex short contracts in platinum and palladium combined, and only 684 Comex long contracts in these same metals. How's that for concentration on the short side?
With the exception of Canada's Bank of Nova Scotia, this is a "Made in America by JPMorgan Chase" price management scheme in all four precious metals.
*** Selected non redundant news and views....
Quality of August Jobs Added: Absolutely Abysmal
While we already have the quantitative components of today's jobs number (horrendous), here is the qualitative breakdown. For the time constrained readers we will jump to the conclusion:absolutely abysmal, to a degree perhaps not seen in years.
Of the 169K jobs added, the vast majority, some 144K or 85% of the entire August gain, consisted of the lowest paying jobs possible.
But at least they are full-time "lowest paying jobs" possible. If there was one silver lining in today's jobs report it is that Full Time jobs added finally surpassed the Part-Time jobs, which actually declined.
This short news item, with an excellent chart, was posted on theZero Hedge website early yesterday morning...and I thank Manitoba reader Ulrike Marx for being today's first story.
This short news item, with an excellent chart, was posted on theZero Hedge website early yesterday morning...and I thank Manitoba reader Ulrike Marx for being today's first story.
Jim Rickards: We’re in a new currency war, it started in 2010
HILTON TARRANT: Well, the fourth African Cup of Investment Management Conference underway here in Cape Town at the Westin Hotel, we’re on the sidelines of that conference. James Rickards, the author of Currency Wars: The Making of the Next Global Crisis, is with me. James, what is a currency war, let’s start with that?
JAMES RICKARDS: It’s a great question, Hilton. A currency war is different from normal economic adjustments that go on between currencies, it’s when a country intentionally devalues its currency in order to steal trading advantage from its trading partners. Now there are reasons for currency exchange rates to change their own, having to do with technology, comparative advantage, terms of trade, demographics, there are reasons why currency rates might fluctuate normally. But a currency war is when countries do it intentionally as a matter of policy for the sole purpose of stealing trading advantage from the neighbours. The problem is they’re very destructive because if one country could do it there might be some short-term temporary advantage but there’s always retaliation, another country does it and then another country joins in and then they spread around the world and they tend not to end very easily, they can go on for five, ten or 20 years.
This interview with Jim was posted on the mineweb.com Internet site on Monday...and it had to wait for a spot in today's column. I thank reader Harold Jacobsen for finding it for us.
Russia mocks Britain, the little island
Tensions surrounding the Syrian crisis boiled over at a G20 summit in St Petersburg. Mr Cameron has backed calls for military intervention in Syria after the Assad regime allegedly used chemical weapons.
Mr Putin has opposed intervention and questioned Western claims about the attack. Britain has faced questions about its role and influence in the world since Mr Cameron was embarrassed by last week’s Commons vote to rule out a military strike against Syria.
Dmitry Peskov, Mr Putin’s official spokesman, is said to have highlighted that embarrassment, telling Russian journalists that Britain was now diplomatically irrelevant.
This obviously has the British establishment's knickers in a twist. This news item was posted on the telegraph.co.uk Internet site late Thursday evening...and it's the second offering in a row from Roy Stephens.
Syria Spat: Putin Plays Stubborn Host to Obama at G-20
Russian President Vladimir Putin refused to budge at the G-20 summit on Thursday in his rejection of President Obama's plans for a military strike on Syria. The two countries, it became clear over dinner in St. Petersburg, are as estranged as ever.
It was just after 5 p.m. when the black Cadillac from the US arrived at the Constantine Palace in St. Petersburg. Host Vladimir Putin was waiting to receive his guest, US President Barack Obama. Their greeting lasted but a few seconds, but Obama was careful to smile broadly for the cameras, and Putin smiled too. The pair are political professionals after all.
Later, though, the grins were nowhere to be found. Obama, the Associated Press wrote ahead of the G-20 summit in Putin's hometown, was visiting "the lion's den of Russia." And he came with a clear mission: He wanted to generate international support for a military strike against Syria. Putin, though, was intent on preventing exactly that.
As such, an impasse seemed unavoidable as the leaders from the world's 20 most important industrial and developing economies sat down to dinner in Peterhof Palace. Just prior the start of the summit, Putin announced that Syria would be discussed at dinner after all, contrary to the official agenda, which had foreseen an exchange of ideas on sustainable economic development. The change seemed to reflect the Russian president's certainty that he would not be backed into a corner during such a discussion; the majority of those present shared his skepticism of a military strike in Syria.
This very interesting news item was posted on the spiegel.deInternet site late yesterday morning Europe time...and I thank Roy Stephens for bringing it to my attention and now to yours. It's certainly worth reading if you can find the time.
How Many Treasurys Do Russia And China Own?
Between the two of them, this much: $1.414 Trillion, or 25% of all foreign held U.S. Treasury paper.
Now the question is - if the military escalation begins, would one or both dump without regard for price, crush the carefully manicured rate-driven recovery, and punch the ultimate decision-maker behind the Syrian war, the Federal Reserve and the banker uberclass, where it really hurts?
That's all there is to this Zero Hedge story as well. It was posted on their Internet site late yesterday morning EDT, and the embedded chart is certainly worth a quick look. It's another article courtesy of Elliot Simon.
A war the Pentagon doesn’t want
The tapes tell the tale. Go back and look at images of our nation’s most senior soldier, Gen. Martin Dempsey, and his body language during Tuesday’s Senate Foreign Relations Committee hearings on Syria. It’s pretty obvious that Dempsey, chairman of the Joint Chiefs of Staff, doesn’t want this war. As Secretary of State John Kerry’s thundering voice and arm-waving redounded in rage against Bashar al-Assad’s atrocities, Dempsey was largely (and respectfully) silent.
Dempsey’s unspoken words reflect the opinions of most serving military leaders. By no means do I profess to speak on behalf of all of our men and women in uniform. But I can justifiably share the sentiments of those inside the Pentagon and elsewhere who write the plans and develop strategies for fighting our wars. After personal exchanges with dozens of active and retired soldiers in recent days, I feel confident that what follows represents the overwhelming opinion of serving professionals who have been intimate witnesses to the unfolding events that will lead the United States into its next war.
They are embarrassed to be associated with the amateurism of the Obama administration’s attempts to craft a plan that makes strategic sense. None of the White House staff has any experience in war or understands it. So far, at least, this path to war violates every principle of war, including the element of surprise, achieving mass and having a clearly defined and obtainable objective.
The author of this op-ed piece that showed up in The Washington Post on Thursday, is Robert H. Scales, a retired Army major general, is a former commandant of the U.S. Army War College...and it's an absolute must read from one end to the other. I thank reader Dan Lazicki for bringing this excellent essay to our attention.
Pepe Escobar: Dogs of war versus the emerging caravan
The dogs of war bark and the emerging-powers caravan ... keeps on trucking. That's the Group of 20 meeting in St Petersburg in a nutshell. Count on the indispensable (bombing) nation - via US President Barack "Red Line" Obama - to disrupt a summit whose original agenda was to tackle the immense problems afflicting the global economy.
Economy is for suckers. Get me to my Tomahawk on time. The Obama doctrine - Yes We Scan, Yes We Drone - reached a new low with its Yes We Bomb "solution" to the chemical weapons attack in Ghouta, Syria, presenting world public opinion in the run-up towards the G-20 with the illusionist spectacle of a "debate" in the US Senate about the merits of a new bout of humanitarian bombing.
What in fact was served was the appalling spectacle of serial wacko Republicans of the John McCain and Lindsey Graham mold squeezing the desperate Obama administration like little lemons. Their Orwellian gambit - "reverse the battlefield momentum" - pushed by the senile McCain, was duly approved by the Senate Foreign Relations Committee. This means bombing the hell out of Damascus during a "window of opportunity" of three months, with a possibility of extension. Red Line Obama is on board, assuring, before leaving to Sweden and the G-20, that his former "slap on the wrist" would "fit in" with regime change.
Economy is for suckers. Get me to my Tomahawk on time. The Obama doctrine - Yes We Scan, Yes We Drone - reached a new low with its Yes We Bomb "solution" to the chemical weapons attack in Ghouta, Syria, presenting world public opinion in the run-up towards the G-20 with the illusionist spectacle of a "debate" in the US Senate about the merits of a new bout of humanitarian bombing.
What in fact was served was the appalling spectacle of serial wacko Republicans of the John McCain and Lindsey Graham mold squeezing the desperate Obama administration like little lemons. Their Orwellian gambit - "reverse the battlefield momentum" - pushed by the senile McCain, was duly approved by the Senate Foreign Relations Committee. This means bombing the hell out of Damascus during a "window of opportunity" of three months, with a possibility of extension. Red Line Obama is on board, assuring, before leaving to Sweden and the G-20, that his former "slap on the wrist" would "fit in" with regime change.
Here's another must read, especially serious students of theNew Great Game. This article by Pepe was posted on the Asia Times website yesterday...and my thanks go out to Roy Stephens for his last contribution to today's column.
****
¤ THE WRAP
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. - Ernest Hemingway
***
I don't know quite what to read into yesterday's price action, but I'd sure like to know who the buyers and sellers were in the 10-minute time interval between 8:25 and 8:35 a.m. on the Comex in New York yesterday. And as I said further up, we may get some clue when next week's COT Report comes out.
But whatever it was, there was nothing free market about it, and I carefully noted that gold wasn't allowed above the $1,400 spot mark, and silver didn't get above $24 the ounce.
As David Stockman said in his interview on the mises.org Internet site, posted above: "There is no honest pricing left at all anywhere in the world because central banks everywhere manipulate and rig the price of all financial assets. We can’t even analyze the economy in the traditional sense anymore because so much of it depends not on market forces, but on the whims of people at the Fed."
He would be right about that, and it's just a derivative of what GATA secretary/treasurer Chris Powell said at our Washington conference back in 2008, "There are no markets anymore, only interventions."
At the moment, JPMorgan Chase holds a long-side corner in the Comex futures market in gold, along with a short-side corner in silver, platinum and palladium. It's all there in the government reports from the CFTC; the weekly COT Report and the monthly Bank Participation Report.
One has to wonder how long this will continue. The CFTC and the CME Group aren't going to touch this, and the mining industry is "either ignorant, naive, or complicit" as John Embry said some years back. I'll add more more thing to that list of adjectives, they're gutless as well. They couldn't spell fiduciary responsibility, but here's the definition in case any mining company executive is reading this, and I know that quite a few do.
It didn't take much time after the Labour Day long weekend for things to get very serious indeed, and I expect this and other situations to get even more serious in the days and weeks ahead. Whatever happens, I want you to keep it in the context of the Hemingway quote that I posted just above, as I doubt very much that we'll get past Hallowe'en before something goes bump in the night.
Enjoy what's left of your weekend, and I'll see you here on Tuesday.
http://jessescrossroadscafe.blogspot.com/2013/09/comex-deliverable-gold-bullion-drops.html
06 SEPTEMBER 2013
COMEX Deliverable Gold Bullion Drops To Levels Not Seen Since 2003 - Claims Per Ounce Around 55
"Price discovery is not a sexy function of markets, but it is critical to the efficient allocation of scarce capital and resources, and to the preservation of the long term wealth of investors and the economy as a whole. If price discovery is compromised by manipulation, then we will all be gradually impoverished and the economy will be imbalanced and unstable."
London Banker, Lies, Damn Lies, and Libor
"Delivery takes on a note of finality, of a reckoning, when supply has become rehypothecated into little more than a state of mind. The unanswered call for delivery is the final lifting of the veil."
Jesse
Gold bullion available for delivery on the COMEX dropped a little more than 15,000 ounces on Thursday, with one large withdrawal from Scotia Mocatta and one small adjustment that added back a few hundred ounces at HSBC.
There were no other ounces received. Total registered (deliverable) gold at the COMEX now stands at 686,434 ounces of actual bullion.
This number is, according to the COMEX' own language on the report, based on sources believed to be reliable. But COMEX assumes no liability for errors or related counterparty risks.
We have not seen deliverable levels this low since 2003, which was in the earliest stage of the current gold bull market.
There are still over 7 million total ounces of gold bullion in COMEX warehouses. It will probably take higher prices to motivate owners to move their stored bullion into the market.
The claims per deliverable ounce on the COMEX remains unusually elevated at 54.6. If there is a rush to exercise those contracts, the gold on the exchange that is available for delivery will not go very far. That means price would have to go much higher, in the manner of a short squeeze. I tend to watch 'claims per ounce' in the same way you might watch 'days to cover' for the short interest on a stock.
The gold cartel is trying hard to keep the price from breaking out above 1420, which could precipitate some short covering with the leveraged traders, and prompt the ETFs to try and recover some of the bullion which they so graciously surrendered into the price decline earlier this year.
At some point there is always a reckoning, and claims that have been made on paper must be fulfilled or surrendered, one way or the other. And in this case the supply and demand flows worldwide do not seem favorable for those who attempted to knock the price of gold down below a sustainable market value earlier this year.
I marked when enough ounces had been made available from the ETFs to return Germany's gold to their people. But the gold was not returned, and they did not stop their pricing operation there. It is always the greed, and then the coverup.
The strong physical buying, especially out of Asia, seems to have turned a pricing operation into a stubborn trap. Keeping the price lower only seems to prompt more buying, and more scarcity of legitimate supply.
But let's assume the price goes high enough so that all 7 million ounces of gold held in all the COMEX warehouses becomes available to the market. That is a little less than 218 tonnes. That would satisfy the current demand from China through Hong Kong alone for about two months at current rates.
The last chart below shows how import levels into China exploded when the clever boys knocked the prices down well below the natural market rates given demand and costs of production.
If global supply should show signs of faltering at any point, with undue delays from another bullion bank or, worst case, the LBMA, the relatively thin inventories at the COMEX that are used as largely symbolic bollards for the world's precious metals price would evanesce, almost overnight, with bids up limit and none offered. Dรฉfaut, en fait accompli. Quel dommage!
You may wish to fold your cards here, gentlemen, and let the price rise to a more defensible level, before the supply levels becomeuntenable at any price. Once confidence has become broken, it is often difficult to get it back. And there are a lot of delivery days between now and the end of the year.
Weighed, and found wanting.
Stand and deliver.
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