Thursday, December 19, 2013

Gold and Silver report - December 19 - 20 , 2013 - P.M. Kitco Roundup: Gold Slumps To 6-Month Low Post-FOMC, And Amid Stronger U.S. Dollar ........Comex registered gold slumps to new multi-year lows ( 490 , 000 ounces ) , JPM takes deliveries as Customer or Eligible gold rises notably ( Turd Ferguson wonders if JP Morgan is buying for China in an interesting post ) ..... Meanwhile London's gold vault' virtually empty .... What gives is the question that should be asked ?That question and how broadly are those chinese buyers smiling as gold price suppression continues unabated along with chinese buying of physical gold ? Additional news , data and views on Gold primarily.......

December 20 , 2013......

20 DECEMBER 2013

JP Morgan Takes On More Gold, 61,790 Ounces Come Out of Mocatta

The big stopper JPM added about two tonnes of gold, and 61,790 ounces of bullion came out of the Scotia Mocatta registered inventory.

This brings the total deliverable (registered) ounces of gold down to 432,612 which is a number that we have not seen in this inventory category since the early 1990's, well before the gold bull market.

Supposedly Simon Weeks of Scotia Mocatta, who is also the chairman of the LBMA, was encouraging producers to start hedging their production, committing their bullion to the banks before prices fall any further.

Now I don't know if that is true, but if I were a highly leveraged bullion bank or mint, and I had multiple paper claims on each ounce of inventory, I would probably encourage my analysts and other sales associates to talk up the bear case too.  But this is what Andrew Maguire says, and it is only hearsay. 

If I were such a one as Weeks I would come out and deny it, if it was not true.  Either you said something as market guidance to some participants, or you did not.

By the way, I wonder what happened to those two JPM whistleblowers that Andrew knows, who are stashed away in some lawyers' offices somewhere.

What a funny, opaque market.  More like a game of liar's poker than an efficient and transparent clearing mechanism where informed producers and buyers meet to allocate resources.  But economic theory says that fraud is not possible because people are purely rational and act in their long term best interests, always.  And at least on the mythical planet of Vulcan, where many Ivy League economists apparently originate, logic dictates that honesty is the best policy.

P.M. Kitco Roundup: Gold Slumps To 6-Month Low Post-FOMC, And Amid Stronger U.S. Dollar

Thursday December 19, 2013 1:50 PM
(Kitco News) - Gold bears quickly took back price gains seen in the immediate aftermath of Wednesday afternoon’s FOMC statement as prices Thursday ended the U.S. day session sharply lower and hit a nearly six-month low. Technical selling was also featured as the bears are in full command of the charts for both gold and silver. February gold was last down $41.40 at $1,193.40 an ounce. Spot gold was last quoted down $24.40 at $1,194.75. March Comex silver last traded down $0.879 at $19.18 an ounce.
With the FOMC meeting over and its results mostly digested it appears, at least for the near term, the winners are the U.S. stock market and the U.S. dollar. The loser is the gold market. While investors, traders and market watchers had pretty much factored into most markets’ prices Wednesday’s FOMC news, the surprise to many was that the stock market rallied sharply. The argument from the stock market bulls is that the FOMC statement “threaded the needle” and was not too hawkish and not too dovish. Or in other words the U.S. economy is growing to the point of not being a big worry to the market place any more, yet the Fed is in no hurry to tap the brakes too hard on its still-very-easy monetary policy.
The gold market and other raw commodity markets saw two significant negatives on the day after the Fed tapering announcement: 1. a stronger U.S. dollar index. 2. money flows that see more funds moving into equities, at the expense of all other investment asset classes.
I am still in the camp that sees the major bull run in the stock market at the tail end of its life. The fact that even more market watchers have turned stock-market-bullish after the FOMC statement makes me even more convinced the bull run in stocks sees its days numbered. While there still may (or may not) be more upside in the U.S. stock indexes in the near term, the vast majority of the energy has already been expended by the bulls, as they have pushed the major stock indexes to record or multi-year highs. Once the money starts to flow out of the stock market, other asset classes, including gold, will then quickly benefit.
The London P.M. gold fix is $1,196.00 versus the previous P.M. fixing of $1,230.50.
Technically, February gold futures prices closed near the session low and careened to a fresh six-month low Thursday. The gold market bears have the strong technical advantage and have gained more power late this week. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,251.70. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the 2013 low of $1,187.90. First resistance is seen at $1,200.00 and then at $1,210.10. First support is seen at Thursday’s low of $1,191.60 and then at $1,187.90. Wyckoff’s Market Rating: 1.0
March silver futures prices closed near the session low and hit a two-week low Thursday. Silver bears have the solid overall near-term technical advantage and have gained more downside momentum this week. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $20.48 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $18.89. First resistance is seen at $19.50 and then at today’s high of $19.905. Next support is seen at Thursday’s low of $19.10 and then at $18.89. Wyckoff's Market Rating: 1.5.


19 DECEMBER 2013

Gold Daily and Silver Weekly Charts - Imbalances Abounding

There was intraday commentary on the metals here and here.
Commentary on Bloomberg TV included the rather shocking observation that the gold vaults in London that were so full not long ago now stand 'virtually empty.'

And JP Morgan finally took delivery of some of the bulk of the gold contracts they have been 'stopping' this month, and plunged the level of registered gold on the Comex down to a new multiyear low.

The decline of physical gold in the ETFs of the West continues apace.

What are we to do?

Just like there are too many real people for The Recovery, compared to just the right amount of virtual corporate people, so there does not seem to be enough physical gold, relative to paper claims on gold.

US Treasury Secretary Jack Lew informed us this afternoon that the 'budget deal' did not address the budget ceiling.  He expects the US to be bumping its political head against it no later than early March, unless another deal is reached, and more hostages are taken.

Damned useless eaters.  Order must be restored.

Not to worry. The Masters of the Universe are working on a fix.  

And having squandered the wealth of the west, and virtually destroyed the real economy of the developed nations in their reckless greed and unrestrained selfishness, they are highly motivated (to do right by themselves.)  

And that is what might well concern us the most.

Have a pleasant evening.

19 DECEMBER 2013

Bloomberg: London Gold Vaults 'Virtually Empty' - Shipped to China Not to Return

"Gold? We don't need no stinkin' gold!"

And the natural reaction at this point in what has proven to be a year of a brutal, almost relentless market correction is to say, 'if this is so, how can they keep selling gold down in price?'

How can they indeed. By being audacious. Like this: Secret Traders' Club Rigged Biggest Market's Rates

And they remain arrogantly defiant.

"But there is a sort of 'Ok guys, you're mad, but how are you going to stop me' mentality at the top."

Robert Johnson

This is going to be interesting.

and from Gata - key articles on gold a, manipulation and China .....

Bloomberg correspondents discuss gold's flight from London to Asia

2p ET Thursday, December 19, 2013
Dear Friend of GATA and Gold:
The depletion of London gold warehouses by shipments to Swiss refineries where metal is recast for export to Asia was discussed by Bloomberg News correspondents yesterday on Bloomberg Television. The segment, 3 minutes long, is headlined "What's Happening to All the Gold?" and it's posted at the Bloomberg Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Secret currency traders' club devised biggest market's rates

By Liam Vaughan, Gavin Finch, and Bob Ivry
Bloomberg News
Thursday, December 19, 2013
It's 20 minutes before 4 p.m. in London and currency traders' screens are blinking red and green. Some dealers have as many as 50 chat rooms crowded onto four monitors arrayed in front of them like shields. Messages from salespeople and clients appear, get pushed up by new ones and vanish from view. Orders are barked through squawk boxes.
This is the closing "fix," the thin slice of the day when foreign-exchange traders buy and sell billions of dollars of currency in the largely unregulated $5.3-trillion-a-day foreign-exchange market, the biggest in the world by volume, according to the Bank for International Settlements. Their trades help set the benchmark WM/Reuters rates used to value more than $3.6 trillion of index funds held by pension holders, savers and money managers around the world.
Now regulators from Bern to Washington are examining evidence first reported by Bloomberg News in June that a small group of senior traders at big banks had something else on their screens: details of each other's client orders. Sharing that information may have helped dealers at firms, including JPMorgan Chase & Co., Citigroup Inc., UBS AG, and Barclays Plc, manipulate prices to maximize their own profits, according to five people with knowledge of the probes.
"This is a market where there is no law and people have turned a blind eye," said former U.S. Sen. Ted Kaufman, a Delaware Democrat who sponsored legislation in 2010 to shrink the largest U.S. banks. "We've been talking about banks being too big to fail. What’s almost as big a problem is banks too big to manage." ...
For the complete story:

ZIRP, not 'tapering,' is important, Macleod says; Embry notes continued gold rigging

11:15p ET Thursday, December 19, 2013
Dear Friend of GATA and Gold:
Economist and GoldMoney research director Alasdair Macleod writes today that what is important from the Federal Reserve's action yesterday is not "tapering" of bond purchases but that the central bank's zero-interest-rate policy (ZIRP) continues:
Which may explain the headline on Sprott Asset Management John Embry's latest commentary for Investor's Digest of Canada, "Suppression of Precious Metals Continues":
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Another Thought Experiment

About a month ago, I was maligned and pilloried by some detractors for having the audacity to suggest that the reported Comex vault stock numbers were obviously dubious. Other bloggers suggested that the deposits in question were easily explained by the deposit of 99.99% pure, Asian kilobars. OK, maybe. For fun today, I thought we'd take these folks at their word and see where it leads us.
First, some histoire....
Back in the middle of October, some very odd and very precise deposits were made into the eligible vault of JPMorgan. Over three days, the total amount of gold booked in was exactly and precisely ten metric tonnes. It looked like this:
These oddly precise eligible deposits prompted me to write this:
The chagrin and malignment came about when it was suggested that, instead of being "bullshit", these deposits are simply the reflection of Kilobars of gold being deposited at The Comex.  Of course, given that dealings on the Comex are so deliberately opaque that the CME Group itself "disclaims all liability whatsoever with regard to the accuracy or completeness" of these reports, there's no point in continuing to debate whether or not these are simple paper shenanigans or Kilobar deposits. We can't know for certain so, in the end, we are just arguing for arguments sake and getting nowhere.
So, today, I thought it'd be more fun to just simply take as fact and accurate the CME Group reports. Let's go ahead and presume that the deposits of late October really were perfect, one kilogram bars....and then let's see where that takes us. And, again, a disclaimer: I'm not claiming to have all of the answers here. This is just a thought experiment and I'm simply trying to lay out the information that I see every day and asking you for your opinion. What do you think?
Some have suggested a simple explanation for the 10 metric ton delivery in October. This addition was the gold that JPM stopped during the October Comex gold delivery process. Hmmm. OK. But here's the problem. JPM only stopped 1,054 contracts that month between their House and Customer accounts. That works out to be about 3 1/3 metric tonnes, yet JPM booked in 10 metric tonnes over the three days in question. Again, hmmm.
JPM also stopped 3,414 contracts in August and that's a little more than 10 tonnes. Could the October bookings simply be the delivery to their vaults of the August metal? That seems plausible, I guess, but more likely just leads us to...
Here's how the Comex math works. According to the CME Rulebook (, this is how deposits and deliveries are accounted:
The contract for delivery on futures contracts shall be one hundred (100) troy ounces of gold with a weight tolerance of 5% either higher or lower. Gold delivered under this contract shall assay to a minimum of 995 fineness and must be an Approved Brand.
Gold meeting all of the following specifications shall be deliverable in satisfaction of futures contract delivery obligations under this rule:
  1. Either one (1) 100 troy ounce bar, or three (3) one (1) kilo bars.
  2. Gold must consist of one or more of the Exchange’s approved brand marks, as provided in Chapter 7, current at the date of the delivery of contract.
  3. Each bar of Eligible gold must have the weight, fineness, bar number, and brand mark clearly incised on the bar. The weight may be in troy ounces or grams. If the weight is in grams, it must be converted to troy ounces for documentation purposes by dividing the weight in grams by 31.1035 and rounding to the nearest one hundredth of a troy ounce. All documentation must illustrate the weight in troy ounces.
  4. Each Warrant issued by a Licensed Depository shall reference the serial number and name of the Approved Producer of each bar.
  5. Each assay certificate issued by an Approved Assayer shall certify that each bar of gold in the lot assays no less than 995 fineness and weight of each bar and the name of the Approved Producer that produced each bar.
  6. Upon receipt of the gold bar by the Licensed Depository who must also qualify and be designated a Licensed Weighmaster for gold, each gold bar shall be weighed in the lot measured to 1/100 of a troy ounce (two decimal points). In accomplishing such measurement, each bar shall be weighed to the nearest 1/1000 of a troy ounce (three decimal points); weights of 4/1000 of a troy ounce or less shall be rounded down to the nearest 1/100 of a troy ounce and weights of 5/1000 of a troy ounce or more shall be rounded up to the nearest 1/100 of a troy ounce.
OK, now this is getting interesting. There are several things to note here.
  • Comex good delivery bars are 995 fineness. This is important because the "Asian Standard" that so many folks are discussing these days is 999 fineness. A difference that is not insignificant. Because of this variance in quality, it would seem quite foolish for an owner of a 999 bar to "register" and sell it on The Comex.
  • Time for a little math. Point #3 from the rulebook states: If the weight is in grams, it must be converted to troy ounces for documentation purposes by dividing the weight in grams by 31.1035 and rounding to the nearest one hundredth of a troy ounce. Hmmm. The actual math then looks like this: One Kilogram = 1000 grams. Divide 1000 grams by 31.1035 and you get 32.1507226 troy ounces. The CME ten says you can "round to the nearest hundredth". This give us 32.15. Multiply that by 1000 and you get...VOILA...32,150.000 troy ounces for every 1000 Kilobars deposited.
  • Problem solved.
  • Not quite.
  • Where I take issue with this is in the accounting. Remember, we're dealing with bankers and bean counters here. They often do not take kindly to "rounding errors". What if we don't "round to the nearest hundredth"? The math changes slightly. Not much to begin with but, with increasing size, it becomes significant.
  • 32.1507226 X 1000 ounces = 32,150.7226. Note that this is NOT 32,150.000. There's 0.7226 troy ounces of gold "lost" in each of these one metric ton bookings. For just one metric ton, that's about $1000. Maybe not much to you and I but, to a soulless, greedy banker, a $1000 rounding error should raise some eyebrows.
  • Then, when you book in ten metric tonnes this way, the error becomes 7.226 troy onces. At current prices this is about $9000. Now we're talking some more serious cheese.
Let's get back to the "fineness" issue. If we're dealing in Kilobars, it is very likely, given all of the reports of Asian demand and refinery backlogs, and given the method through which they were booked in, that the Kilobars allegedly deposited into JPM's eligible vault are of the 999 fineness variety. IF THAT'S THE CASE, these bars are not, and will not, ever be switched to registered. Why? Because the owner would be crazy to do so. If the minimum Comex standard is 995 then, as stated in Point #2 above, wouldn't it seem foolish to sell your 999 bars in New York? Therefore, the only likely way that a 999 bar would ever be registered and sold is if The Comex changes their purity rules. (Hold onto that thought. We'll get back to that in a minute.)
Perhaps here we have actually stumbled upon our answer to this entire riddle:
  • These really are Kilobars, temporarily held for safekeeping in the NY vault of JPM, before being shipped overseas.
  • They are the product of American refiners. They are perfect, brand new 1KG bars destines for China etc. The JPM bankers don't necessarily care about the rounding errors because the very same bars will soon be shipped back out of the vaults, to destinations East.
  • If this is the case, we should eventually see equivalent, ten metric ton withdrawals take place. So far though, in the 2 months since, this hasn't happened. In fact, quite the opposite, which leads us to...
Last Wednesday, JPM booked in another perfect and precise, two metric tonnes of eligible gold. But that wasn't the only day...the four days since have all seen identical deposits. This makes five, consecutive days of exact and precise, two metric ton deposits. It looks like this:
(As rounding errors go, now we're really getting somewhere. 20 metric tonnes X 0.7726 troy ounces/ton = 14.452 troy ounces. Misplacing/disregarding 14.452 troy ounces equals almost $18,000 at current prices.)
Again, some might suggest that this is simply the gold that JPM has stopped during the December delivery month. As we've painstakingly noted each day, JPM has now stopped exactly 5,000 of the total 5,207 December deliveries or 96%. Five thousand contracts is 500,000 ounces and, as shown above, over the past five days JPM has taken delivery of about 643,000 ounces.
But now what do you make of this? Below is the CME Gold Stocks report for November 29, right before the December delivery period began. Note the inventory levels of HSBC and Scotia. Why? Since this report was generated, the House account of HSBC has issued/delivered 2,939 contracts (293,900 ounces) and the House account of Scotia has delivered another 1,225 (122,500 ounces). Here's the 11/29 report:
And here's another look at the report from yesterday:
Note the changes. The amount of gold in the vaults of each have gone UP, not down. In fact, if you go back to the report of 12/9, you'll see that HSBC even got in on the 32,150.000 act:
And I guess this is the main point...These "markets" are broken. The futures markets were set up as a place where producers could hedge and manage risk. Speculators were free to take the other side of these trades if they felt they could profit. Underlying these exchanges was the promise to actually deliver the physical commodity. Without this promise and process, you have an empty shell...a "market" comprised of nothing but paper derivatives and deliveries made with book-entries and the shuffling of warrants and warehouse receipts. The Comex was not designed to "discover price" but that's exactly what it does, and it does so at the whim of HFT speculators and bullion banks. And this has real world consequences.
Look at the past two weeks of market activity. There has been tremendous volatility with price swings from day-to-day of 2-4%. The CFTC-generated CoT reports demonstrably show that all of this price action was due to the squeezing of Spec shorts one day, only to have them and replaced and put back on the next. Nowhere in this price action were the real world, supply and demand fundamentals of the producers ever in play. You tell me, did the fundamentals for silver mining production suddenly improve on December 10th, when price surged 62¢ or 3%? If so, then the fundamentals must have immediately turned back around two days later when price fell by 90¢ on December 12th.
The global pricing mechanism for precious metal is now almost entirely the domain of speculating hedge funds and bullion banks. They do this through The Comex where rarely, if ever, anyone has to deliver against a paper short obligation. By rigging and momo-chasing prices lower, the banks and hedgies are forcing mining companies out of business and real jobs are being lost, often in places where there is no alternative employment. Lives and families are ruined, all to prop up confidence in The Great Ponzi and enrich and fatten some banker bonus pools.
The good news is...Like all fraudulent schemes that distort the laws of supply and demand, this pricing structure will eventually come to and end. For me, it can't happen soon enough.
Just for fun, let's explore one other option....and this is pure speculation and conjecture.
So the question (thought experiment) becomes...Is China planning a takeover/buyout of The Comex? It would seem that The Chinese are readying themselves to dominate metals trading in the 21st Century...They own the LME already and Shanghai is supplanting London as the world's largest volume precious metal delivery hub. Why not take global control of precious metal futures, too?
IF that were to happen, what would this mean for price? With "control" of precious metals futures pricing and trading, would The Chinese perpetuate the manipulation or would they eliminate it? If The Chinese are moving toward the eventual backing of the yuan/renminbi with gold and/or silver, would it benefit them to have higher prices or lower, once they have physically taken control of the majority of the world's gold?
Whoa. That's some heavy stuff. I've been mentally compiling this post for about a week and then physically typing it for the past three hours. Can you now see why it has taken so long? Anyway, welcome to my world! Please roll this information and these ideas around in your head for a while. Let me know what you think. Once again, maybe old William of Ockham provides the best answer....Newly-minted, American-made Kilobars, temporarily stored in JPM's New York vault, on their way to wherever. Then again, maybe not...

JPM's Quiet Scramble To Refill Its Gold Vault

Tyler Durden's picture

As we reported consistently, at times on a daily basis, one of the more memorable stories of the summer of 2013, was the rampant and furious depletion of gold (both eligible and - mostly - registered) stored deep in the gold vault of JPMorgan located under 1 Chase Manhattan Plaza, since sold to a Chinese conglomerate(understandable considering China's insatiable appetite for the yellow metal in physical, not paper form). This culminated with some truly impressive multi-way vault rearrangements in which the other 4 Comex members would provide gold to JPM on an almost daily basis (see here and here). But while Chinese demand may explain the outflow of physical, what is head-scratching is the just as furious scramble by JPM to obtain gold in the past few weeks.
As persistent trackers of the CME's daily depository statistics update are well aware, over the past week, JPM has been accumulating an impressive amount of gold, and what is more curious, it has been precisely in increments of 64,300 ounces of eligible gold on a daily basis. Putting this scramble in context, two months ago JPM had only 181K ounces of eliglble gold. And yet, just today, the Comex announced that JPM's eliglble vault gold rose by almost that amount, increasing by 125K to a reputable 1.2 million eligible ounces.
JPM's total eligible holdings, and especially the recent surge, are shown below:
It bears pointing out that while eligible gold has been surging higher, JPM's registered gold has once again contracted, and as of today, it closed at its lowest ever: just 87K ounces of gold!
So with gold plunging to multi-year lows, is JPM just taking advantage of the "blood on the streets" and becoming the helpful bidder of last (or first) resort and replenishing its record low depleted inventory by taking advantage of below production cost fire sales, or... is something else going on here?
Inquiring minds want to know.

Comex Registered Gold Plummets To New Low of 490,000 As JPM Takes Deliveries

Gold? We don't need no stinkin' gold! Just keep selling!

JPM has managed to control a lot of the December delivery by taking it into their own vaults for their house account.

I don't suppose that anyone from the CFTC has bother to stop by and ask, 'And what are you all up to if we may ask?'

Still, 490,000 of gold remaining deliverable at these prices is a bit thin.

I will print the claims per ounce late tonight or early tomorrow, when we can get the data wrangler away from the barbie. Or is that Sheila? I forget.