Tuesday, November 26, 2013

Precious Metals update November 26 , 2013 - Gold and silver in focus , along with Platinum and Palladium ! Data and precious metals news of note , along with noteworthy geopolitical items to consider .....

GATA items.....



Arab gold being reprocessed for Chinese standard, Macleod tells Keiser

Submitted by cpowell on Wed, 2013-11-27 02:29. Section: 
9:22p ET Tuesday, November 26, 2013
Dear Friend of GATA and Gold:
Arab investors are having their gold reprocessed by Swiss refineries from London standards to the higher purity of Chinese standards, GoldMoney research director Alasdair Macleod told Max Keiser on yesterday's "Keiser Report" program on the Russia Today television network. The trend, Macleod said, implies a shift of Middle Eastern economic and political ties from West to East.
Macleod and Keiser also remark that while gold market rigging by central banks is still not widely understood and accepted, it is just part of the fully understood and accepted rigging done by central banks in the interest rate and currency markets.
Macleod appears at the 15:23 mark in the video of the program at the Russia Today archive here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


GLD's gold holdings fall due to metal redemptions, Kaye says

Submitted by cpowell on Wed, 2013-11-27 01:07. Section: 
8:05p ET Tuesday, November 26, 2013
Dear Friend of GATA and Gold:
Continuing his interview today with King World News, Hong Kong fund manager William Kaye says the reported gold holdings of the exchange-traded fund GLD are diminishing because large shareholders are converting their shares into metal for withdrawal:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.



Gold suppression just increases offtake of metal, Kaye tells KWN

Submitted by cpowell on Tue, 2013-11-26 18:50. Section: 
1:45p ET Tuesday, November 26, 2013
Dear Friend of GATA and Gold:
Hong Kong fund manager William Kaye tells King World News today that the gold cartel's pushing down the price of paper gold only increases the offtake of real metal. Kaye also notes the seemingly strange interest in December 2015 gold options priced at $3,000. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.













How Gold Price Is Manipulated During The "London Fix"

Tyler Durden's picture
Submitted by Tyler Durden on 11/25/2013 21:42 -0500




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There was a time when the merest mention of gold manipulation in "reputable" media was enough to have one branded a perpetual conspiracy theorist with a tinfoil farm out back. That was roughly coincident with a time when Libor, FX, mortgage, and bond market manipulation was also considered unthinkable, when High Frequency Traders were believed to "provide liquidity", or when the stock market was said to not be manipulated by the Fed, and when the ever-confused media, always eager to take "complicated" financial concepts at the face value set by a self-serving establishment, never dared to question anything. Luckily, all that changed in the past several years, and it has gotten to the point where even the bastions of "serious", if 3-5 years delayed, investigation are finally not only asking how is the gold market being manipulated, but are actually providing answers.
Such as Bloomberg.
The topic of gold market manipulation during the London AM fix is not new to Zero Hedge: in fact we have discussed both the historical basis and the raison d'etre of the London gold fix, as well as the curious arbitrage available to those who merely traded the AM-PM spread, for years. Which is why we are delighted that none other than Bloomberg has decided to break it down for everyone, as well as summarize all the ways in which just this one facet of gold trading is being manipulated.
Every business day in London, five banks meet to set the price of gold in a ritual that dates back to 1919. Now, dealers and economists say knowledge gleaned on those calls could give some traders an unfair advantage when buying and selling the precious metal. The London fix, the benchmark rate used by mining companies, jewelers and central banks to buy, sell and value the metal, is published twice daily after a telephone call involving Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA.

The fix dates back to September 1919, less than a year after the end of World War I, when representatives from five dealers met at Rothschild’s office on St. Swithin’s Lane in London’s financial district. It was suspended for 15 years, starting in 1939. While Rothschild pulled out in 2004 and the discussions now take place by telephone instead of in a wood-paneled room at the bank, the process remains much the same.
That much is known. What is certainly known is that any process that involves five banks sitting down (until recently literally) and exchanging information using arcane methods (such as a telephone), on a set schedule that involves a private information blackout phase, even if temporary, and that does not involve instant market feedback, can and will be gamed. "Traders involved in this price-determining process have knowledge which, even for a short time, is superior to other people’s knowledge,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former economist at Barclays. “That is the great flaw of the London gold-fixing."
There are other flaws.
Participants on the London call can tell whether the price of gold is rising or falling within a minute or so, based on whether there are a large number of net buyers or sellers after the first round, according to gold traders, academics and investors interviewed by Bloomberg News. It’s this feature that could allow dealers and others in receipt of the information to bet on the direction of the market with a high degree of certainty minutes before the fix is made public, they said.
Yes, the broader momentum creation and ignition perspective is also known to most. At least most who never believed the boilerplate that unlike all other asset classes, gold is somehow immune from manipulation.
“Information trickles down from the five banks, through to their clients and finally to the broader market,” Andrew Caminschi, a lecturer at the University of Western Australia in Perth and co-author of a Sept. 2 paper on trading spikes around the London gold fix published online in the Journal of Futures Markets, said by phone. “In a world where trading advantage is measured in milliseconds, that has some value.”
Ah, hypothetical - smart. One mustn't ruffle feathers before, like in the case of Libor, it becomes fact that everyone was in on it.
There’s no evidence that gold dealers sought to manipulate the London fix or worked together to rig prices, as traders did with Libor. Even so, economists and academics say the way the benchmark is set is outdated, vulnerable to abuse and lacking any direct regulatory oversight. “This is one of the most concerning fixings I have seen,” said Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business whose 2008 paper, “Libor Manipulation?” helped spark a global probe. “It’s controlled by a handful of firms with a direct financial interest in where it’s set, and there is virtually no oversight -- and it’s based on information exchanged among them during undisclosed calls.”
Unless we are wrong, there was no evidence of Libor manipulative collusion before there was evidence either. And since the cabal of the London gold fix is far smaller than the member banks of Libor, it is exponentially easier to confine intent within an even smaller group of people. But all that is also known to most.
As is the fact that when asked for comments, 'spokesmen for Barclays, Deutsche Bank, HSBC and Societe Generale declined to comment about the London fix or the regulatory probes, as did Chris Hamilton, a spokesman for the FCA, and Steve Adamske at the CFTC. Joe Konecny, a spokesman for Bank of Nova Scotia, wrote in an e-mail that the Toronto-based company has “a deeply rooted compliance culture and a drive to continually look toward ways to improve our existing processes and practices."
Next, Bloomberg conveniently goes into the specifics of just how the gold price is manipulated first by the fixing banks, then by their "friends and neighbors" as news of the fixing process unfolds.
At the start of the call, the designated chairman -- the job rotates annually among the five banks -- gives a figure close to the current spot price in dollars for an ounce of gold. The firms then declare how many bars of the metal they wish to buy or sell at that price, based on orders from clients as well as their own account.

If there are more buyers than sellers, the starting price is raised and the process begins again. The talks continue until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other. The procedure is carried out twice a day, at 10:30 a.m. and 3 p.m. in London. Prices are set in dollars, pounds and euros. Similar gauges exist for silver, platinum and palladium.

The traders relay shifts in supply and demand to clients during the calls and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing, which publishes the results of the fix.
.. only this time the manipulation is no longer confined to a purely theoretical plane and instead empirical evidence of the fixing leak is presented based on academic research:
Caminschi and Richard Heaney, a professor of accounting and finance at the University of Western Australia, analyzed two of the most widely traded gold derivatives: gold futures on Comex and State Street Corp.’s SPDR Gold Trust, the largest bullion-backed exchange-traded product, from 2007 through 2012.

At 3:01 p.m., after the start of the call, trading surged to 47.8 percent above the average for the 20-minute period preceding the start of the fix and remained 20 percent higher for the next six minutes, Caminschi and Heaney found.By comparison, trading was 8.7 percent higher than the average a minute after publication of the price. The results showed a similar pattern for the SPDR Gold Trust.

“Intuitively, we expect volumes to spike following the introduction of information to the market” when the final result is published, Caminschi and Heaney wrote in “Fixing a Leaky Fixing: Short-Term Market Reactions to the London P.M. Gold Price Fixing.” “What we observe in our analysis is a clustering of trades immediately following the fixing start.”

The researchers also assessed how accurate movements in gold derivatives were in predicting the final fix. Between 2:59 p.m. and 3 p.m., the direction of futures contracts matched the direction of the fix about half the time.

From 3:01 p.m., the success rate jumped to 69.9 percent, and within five minutes it had climbed to 80 percent, Caminschi and Heaney wrote.On days when the gold price per ounce moved by more than $3,gold futures successfully predicted the outcome in more than nine out of 10 occasions.“Not only are the trades quite accurate in predicting the fixing direction, the more money that is made by way of a larger price change, the more accurate the trade becomes,” Caminschi and Heaney wrote. “This is highly suggestive of information leaking from the fixing to these public markets.”
Oh please, 9 out of 10 times is hardly indicative of any wrongdoing. After all, JPM lost money on, well, zero trading days in all of 2013, and nobody cares. So if a coin landing heads about 200 times in a row is considered normal by regulators, then surely the CTFC will find nothing wrong with a little gold manipulation here and there. Manipulation, which it itself previously said did not exist. But everyone already knew that too.
Cynicism aside, to claim that this clearly gamed process is not in fact gamed, not to say criminally manipulated (because it is never manipulation unless one is caught in the act by enforcers who are actually not in on the scheme) is the height of idiocy. Which is why we are certain that regulators will go precisely this route. That too is also largely known. Also known are the benefits for traders who abuse the London fix:
For derivatives traders, the benefits are clear: A dealer who bought 500 gold futures contracts at 3 p.m. and knew the fix was going higher could make $200,000 for his firm if the price moved by $4, the average move in the sample. While the value of 500 contracts totals about $60 million, traders may buy on margin, a process that involves borrowing and requires placing less capital for the bet. On a typical day, about 4,500 futures contracts are traded between 3 p.m. and 3:15 p.m., according to Caminschi and Heaney.
Finally what is certainly known is that the "London fixing" fix would be very simple in our day and age of ultramodern technology, and require a few minutes of actual implementation.
Abrantes-Metz, who helped Iosco formulate its guidelines, said the gold fix’s shortcomings may stretch beyond giving firms and clients access to privileged information. “There is a huge incentive for these banks to try and influence where the benchmark is set depending on their trading positions, and there is almost no scrutiny,”she said.

Abrantes-Metz said the gold fix should be replaced with a benchmark calculated by taking a snapshot of trading in a market where $19.6 trillion of the precious metal circulated last year, according to CPM Group, a New York-based research company. “There’s no reason why data cannot be collected from actual prices of spot gold based on floor or electronic trading,” she said. “There’s more than enough data.”
Which is precisely why nothing will change. Sadly, that is also widely known.
So did Bloomberg put together an exhaustive article in which virtually everything was known a priori? it turns out the answer is no: we learned one thing.
London Gold Market Fixing Ltd., a company controlled by the five banks that administers the benchmark, has no permanent employees. A call from Bloomberg News was referred to Douglas Beadle, 68, a former Rothschild banker, who acts as a consultant to the company from his home in Caterham, a small commuter town 45 minutes south of London by train. Beadle declined to comment on the benchmark-setting process.
You learn something new every day (incidentally, the same Douglas Beadle who acted as a consultant to the LBMA until March 2010 and was involved from the outset in the project to find a suitable scale for the electronic weighing of gold as documented in "Electronic Weighing of Gold - A Success Story").



http://www.caseyresearch.com/gsd/edition/gold-hammering-leads-to-another-overnight-gold-market-halt



¤ YESTERDAY IN GOLD & SILVER

It was another Far East trading session where the high-frequency traders had their way with the gold price, and tripped the CME's trading circuit breakers around 2 p.m. Hong Kong time as they ran the bid stack once again.  Then there was another spike down shortly after 9 a.m. GMT in London, with the last one occurring either at, or minutes after, the Comex open.
The subsequent rally lasted for the rest of the trading day, both in the Comex market and the electronic market that followed.  But there were sellers of last resort at the ready to makes sure that even these tiny rallies didn't get out of hand.
The low and high ticks were recorded by the CME as $1,225.70 and $1,254.00 in the December contract; of which there are only three business days left.
Gold closed at $1,251.60 spot, up $7.90 from Friday's close.  Gross volume was huge, but net volume was only 126,000 contracts.
Silver was under price pressure right from the 6 p.m. Sunday night open in New York, with the low tick coming shortly after 3 p.m. Hong Kong time, and less than an hour before the London open.
There was a bit of a price rally off its low, but the real action to the upside didn't start until about 10 minutes before the Comex open.  An intermediate high came at 10 a.m. EST, the London p.m. gold fix,  Then it sold off a bit until half past lunchtime in New York.  The rally that followed petered out about 3 p.m. in electronic trading.  However, just before 4:30 p.m. EST, silver blasted skyward, but got capped shortly before the 5:15 p.m. close of electronic trading.
Silver's low and high price ticks in the December contract were $19.57 and $20.30 respectively.
Silver finished the Monday session at $20.205 spot, up 37.5 cents from Friday's close.  Gross volume was very heavy,  but net volume was only 30,000 contracts.
The low ticks for platinum and palladium came just before and just after the London open.  Platinum rallied until 11 a.m. in London, and palladium until 3 p.m. in London, which was the London p.m. gold fix.  Both didn't do much after that.  Here are the charts.
The dollar index closed late Friday afternoon in New York at 80.70, but the index was in rally mode right from the open on Sunday night, with the high tick of 81.02 coming shortly after 11 a.m. in New York on Monday.  From there it chopped lower into the close, finishing the trading day at 80.84, which was up 14 basis points from Friday.


****


The CME's Daily Delivery Report showed that 10 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.
Another day, and another withdrawal from GLD.  This time it was 106,127 troy ounces.  And as of 9:58 p.m. EST yesterday evening, there were no reported changes in SLV.  But when I checked their website at 4:10 a.m. EST this morning, it showed that an authorized participant had withdrawn 963,042 troy ounces.
The U.S. Mint had a small sales report yesterday.  They sold 331,000 silver eagles, and that was all.
There wasn't much movement in Comex gold stocks on Friday, as only 5,518 troy ounces were reported shipped in, and a measly 160 troy ounces were shipped out.  The link to that activity is here.
As is almost always the case, it was another big day in silver at these same depositories.  597,425 troy ounces were reported received, and 156,440 troy ounces were shipped out the door.  Most of the action was at the CNT Depository.  The link to that activity is here.

****

Selected news and views ......


N.Y. Fed seems to be running a full-service investment house

For more than two decades, financial columnist John Crudele has been hypothesizing on whether the Federal Reserve has its fingers in the stock market – directly or indirectly. Tampering with stocks is off limits to the Federal Reserve, as far as the public is aware. Its stated function is to serve as the central bank of the United States, focusing on achieving monetary policy through its open market activities in the bond markets and foreign exchange area.
But the New York Fed itself is helping to fuel suspicions about what’s going on within its cloistered walls at 33 Liberty Street in lower Manhattan. Of the 12 regional Federal Reserve Banks, the New York Fed is the only institution with a trading floor and highly sophisticated trading platforms. But despite multiple requests, the New York Fed will not provide a photo of the full trading area. Photos of its gold vault and currency vault are on line, but photos of the trading area is off limits, for unspecified reasons.
According to the New York Fed’s web site, it employs approximately 3,000 people whose business heads report to the President and First Vice President of the Bank, with the exception of its internal audit function. The President and First Vice President report to the Board of Directors. The Board of Directors sits at the top of the power structure of this institution and has included the CEOs of the biggest Wall Street firms. Sandy Weill, Chairman and/or CEO of Citigroup at the time, served on the Board from 2001 to 2006. The New York Fed ended up funneling over $2 trillion in below market rate loans to Citigroup to prop it up during the 2008-2010 financial collapse. That came on top of other government assistance totaling over $345 billion in equity infusions and asset guarantees.
The incestuous relationship between the New York Fed and the banks in which it has placed its examiners gets even murkier. To carry out its monetary policy, the New York Fed must engage in open market trading operations with Primary Dealers. Primary Dealers include all of the largest Wall Street banks.
The author of this must read commentary, Pam Martens, has stumbled upon G. Edward Griffin's "The Creature From Jekyll Island".  That book is an even bigger must read than this article, which was posted on the wallstreetonparade.com website yesterday.  I found it embedded in a GATA release...and the actual headline reads "New York Fed's Strange New Role: Big Bank Equity Analyst".

Banks Warn Fed They May Have To Start Charging Depositors

The Fed's Catch 22 just got catchier. While most attention in the recently released FOMC minutes fell on the return of the taper as a possibility even as soon as December (making the November payrolls report the most important ever, ever, until the next one at least), a less discussed issue was the Fed's comment that it would consider lowering the "Interest onExcess Reserves" to zero as a means to offset the implied tightening that would result from the reduction in the monthly flow once QE entered its terminal phase (for however briefly before the plunge in the S&P led to the Un-taper). After all, the Fed's policy book goes, if IOER is raised to tighten conditions, easing it to zero, or negative, should offset "tightening financial conditions", right? Wrong. As the Financial Times reports leading U.S. banks have warned the Fed that should it lower IOER,they would be forced to start charging depositors.
In other words, just like Europe is already toying with the idea of NIRP (and has been for over a year, if still mostly in the rhetorical and market rumor phase), so the Fed's IOER cut would also result in a negative rate on deposits which the FTtongue-in-cheekly summarizes "depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households."
What's the point of having cash in the bank if this comes to pass?  This Zero Hedge piece from yesterday is worth reading...and it's another article I found posted over at thegata.org Internet site yesterday.

RBS ‘drove businesses to collapse before stripping their assets’

Royal Bank of Scotland is facing an inquiry by banking regulators into allegations that it drove firms to collapse in order to buy back their assets at rock-bottom prices.
A report into the bank’s “unscrupulous” treatment of small businesses has been passed to the Financial Conduct Authority by the Department for Business, Innovation and Skills. Last night the FCA said it was examining the allegations made but would not comment further.
The Business Secretary Vince Cable said some of the allegations were “very serious”, adding he was waiting for an “urgent response as to what actions have been taken”.
Wow!  You couldn't make this stuff up.  This article was posted on the independent.co.uk Internet site yesterday...and it's certainlyworth reading.  I thank U.K. reader Tariq Khan for sending it our way.

Iran sanctions deal to unleash oil supply but Saudi wild card looms

A global deal to lift sanctions against Iran could unleash a flood of oil onto world markets by next year just as crude output pick ups in Libya, Iraq, and North America, triggering a slide in prices and a major shake-up of the energy landscape.
The prospect of cheaper oil is a welcome relief for the West, but poses a major threat to Russia and string of countries that depend on oil revenues to finance their budgets.
The weekend deal in Geneva between Iran and key world powers opens the way for a gradual end to sanctions, provided the new government of Hassan Rohani delivers on pledges to curb its nuclear programme.
This Ambrose Evans-Pritchard commentary was posted on The Telegraph's website late Sunday evening GMT...and my thanks go out to Roy Stephens for his third contribution to today's column.

India to resume paying Iran in Euros

Government is likely to resume paying Iran in Euros after a historic accord between western super powers and the Persian Gulf state made it easier to import crude oil from one of its biggest suppliers.

India will however stick to its plans to cut crude oil imports from Iran by over 15 per cent to about 11 million tons in the year ending March 31, 2014, as easing of the Western economic sanctions do not yet allow increased buying.

The US and five other world powers struck an accord with Iran yesterday, agreeing to ease part of an economic stranglehold in exchange for steps to cap Tehran's nuclear programme and ensure the Islamist government doesn't rush to develop atomic weapons.

This article was posted on the Economic Times of India website yesterday afternoon IST...and I thank Ulrike Marx once again for bringing it to our attention.

China lashes out at U.S. for ‘interfering’ in territorial dispute with Japan

Beijing has warned Washington not to “meddle” in the territorial dispute between China and Japan. Though the US has many thousands of troops stationed in Japan, China, an emerging naval power, is challenging for control of the surrounding seas.
After Washington expressed its discontent over Chinese plans to put the East China Sea under the control of its air forces, Beijing demanded explanations from the American ambassador and advised the US to “correct its mistakes immediately.”
Chinese Defense Ministry spokesman Col. Yang Yujun called American allegations “completely unreasonable.”
This news item was posted on the Russia Today website early yesterday afternoon Moscow time...and it's certainly a must read for all students of the New Great Game.  I thank Roy Stephens for his final contribution to today's column.


Ten King World News Blogs/Audio Interviews


Jefferies exits metals trading on LME floor after 14 months

Jefferies Group Inc., which said last year it wanted to be among the top five brokers on the London Metal Exchange, stopped trading on the floor of the world’s biggest industrial-metals marketplace after 14 months.
Jefferies Bache Ltd. is now a Category 2 member, the LME said today in a notice to members, meaning it is limited to trading electronically and by telephone. Other Category 2 members include Barclays Plc and Natixis SA, which stopped trading on the LME floor last year.
The change leaves 10 companies including JPMorgan Chase & Co. and Société Générale SA entitled to trade on the LME floor, known as the ring. Floor transactions account for about 5 percent of volume, according to the exchange. Hong Kong Exchanges & Clearing Ltd. pledged to maintain floor trading until at least January 2015 when it bought the LME last year.
This Bloomberg story from yesterday found a home over at themineweb.com Internet site...and it's another offering from Ulrike Marx.

Iran will be allowed to buy gold but not take it as payment for oil

Iran must improve cooperation with United Nations monitors, commit to eliminate its stockpile of uranium enriched to 20 percent levels and halt advanced centrifuge installation, the White House said in a statement. Iran also won’t commission its heavy water reactor at Arak, which, if it became operational, could produce plutonium and give the country a second path to nuclear weapons.
In return, Iran will be able to repatriate $4.2 billion in frozen assets, the Obama administration said. The accord will “suspend certain sanctions on gold and precious metals, Iran’s auto sector and Iran’s petrochemical exports, potentially providing Iran approximately $1.5 billion in revenue,” the administration said.
Some curbs on gold trading also will be removed. While Iran will be allowed to buy and sell precious metals, including gold, it will be barred from accepting them as payment for oil or any other sanctioned transaction, according to the officials. Iran sits on the world’s fourth-largest proven oil reserves.
This part of the deal regarding gold is buried well down in thisBloomberg story posted on their Internet site early on Sunday evening Denver time.  The actual headline reads "Iran Agrees to Deal With Powers to Curb Nuclear Work"...and it's another story I found posted on the gata.org Internet site.

India's trade body pleads for immediate reinstatement of Gold Loan and Credit Facility

According to Haresh Soni, Chairman, GJF, the prevailing 80:20 export norm on imported gold is likely to limit gold imports into the country. The norm specifies that 20% of every lot of imported gold should be used for export purposes. Unless there is exceptional growth in exports, the import of gold into the country may remain subdued. In such circumstances, the trade body urged the government to restore the Standby Letter of Credit (SBLC) Gold Loan Facility which in turn may aid the industry participants in raising adequate working capital to run the business.
The trade body in its appeal to the Finance Ministry sought for reinstatement of other credit facilities for gold buying. It also asked to lift the cash-on-delivery restrictions of gold imports. The jewellers in the country are in a fix over gold imports as they have to pay the cost of gold upfront.
GJF which demanded immediate action with regards to the above two demands also urged the government to slash the gold import duty to 5%.
This plea will most likely fall on deaf ears, but if things change, I'll let you know.  This news item, filed from New Delhi, was posted on the scrapmonster.com Internet site early yesterday morning GMT...and once again I thank Ulrike Marx for sending it our way.

¤ THE WRAP

I attribute the rapid turnover in the Comex silver warehouses to an underlying tightness in the wholesale supply of physical silver since April 2011. Obviously, there has been no shortage yet; but the turnover indicates a slow-boil beneath the surface. Despite rotten price action, the world is not swimming in physical silver; it is swimming in paper short sales. Therefore, it wouldn’t take much of an increased demand to crank the heat up to full-boil. Since it is hard to imagine investor sentiment getting much worse, it is easier to imagine it getting better. On the next up cycle in price, investor demand for silver will set-off the shortage, in my opinion.  - Silver analyst Ted Butler: 23 November 2013
I guess I shouldn't have been surprised by the sudden appearance of the high-frequency traders in afternoon Hong Kong trading on their Monday.  This would be a natural for them, and as you've already figured out, we hit new lows for this move down in all four precious metals at that time.  Here are the charts.
Based on their rather surprisingly rallies off those lows, I'll be amazed if JPMorganet al can spin the prices to new lows at this point in the roll-over cycle out of December, because that's what they'd have to do to get more technical fund/small trader long position selling/short position buying.
The last day for the big traders to be out of the December futures contracts is either today or tomorrow, and it would require a market intervention to the downside so obvious that even the precious metal miners might actually take notice.
The stories about the shortages in both platinum and palladium in the Critical Readssection are absolutely true.  But as I said in my comments under each one, supply/demand fundamentals mean zip when JPMorgan et al are sitting on their prices in the Comex futures market.  They hold record short positions in both metals, and as I said in my column on November 13;
"But the goings on inside the palladium market will make your eyes water."
"3 or less" U.S. banks are short 12,260 Comex palladium contracts.  Note that I didn't say "net" short.  For the second month in a row these "3 or less" bullion banks have held zero long positions against their massive short positions.  The lack of Comex long positions by the U.S. bullion banks in the BPR reports over the months and years is obvious."
"These "3 or less" U.S. bullion banks are short 30.5% of the entire Comex futures market in palladium.  You have to wonder how the %&*# they get away with that, and why the miners aren't screaming bloody murder."
"Except for the willfully blind, it is obvious that three or four U.S banks have total and absolute control of all four precious metals in the Comex futures market, where all prices are set.  And in gold and silver, Canada's Scotiabank adds an "international" flavour, especially in silver."
As Winston Churchill said: "Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened."  That certainly applies to a large swath of people in the precious metals venue who should, and do, know better.  This is especially true when the government's own hard data in front of them now, proves the point.
How did it come to this?
Here are the Bank Participation Report charts for both palladium and platinum as of the close of trading on Tuesday, November 5.
If you want to re-read what I had to say about platinum, gold and silver, and view their associated BPR charts, the link to my November 13 commentary is here.  It's in the top section of the column.
While I'm at it, here's Nick Laird's now-famous "Days of World Production to Cover Comex Short Positions" chart for positions held at the close of trading on Tuesday, November 19th, and is based on data from Friday's COT Report.  This shows the short positions of the four and eight largest traders in each physical commodity traded on the Comex.  This includes all traders, not just the banks.  But it's a safe bet that JPMorgan Chase, HSBC USA, Citigroup and Canada's Bank of Nova Scotia are the dominant players in all four precious metals, plus copper.
Not much happened in Far East trading on their Tuesday.  The spike up in gold at the 6 p.m. New York open on Monday night got dealt with in the usual manner, and it's been very quiet across the board ever since, and that includes all four precious metals.
London has been open about an hour as I write this, and not much is happening there, either.  Volumes, both gross and net, are unbelievably light, even for this time time of day.  The dollar is down about 12 basis points at the moment.
As we wait for December to go off the board, all we can do is sit back and see what JPMorgan et al have in store for us once we get past first day notice.  I haven't a clue as to what Tuesday will bring in New York today, and I really don't care at this point, as it's what happens next that really matters.
And as I hit the send button on today's column at 5:15 a.m. EST, very little has changed in any of the four precious metals.  True, volumes are higher, but most of that is roll-overs out of December, and net volumes are fumes and vapours.  And, not that it matters, the dollar index is still down the same amount as it was 90 minutes ago.
That's all I have for today, which is more than enough, and I'll see you here tomorrow.
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