Friday, January 31, 2014

Gold In 2014: Scramble For Physical Gold As Price Manipulation Unravels ? As we head into the Feb Contract delivery for gold , some news , data and views to ponder ( h/t GATA )

Market cornered or is JP Morgan cornered ? Might depend on how they are positioned for their less than one year derivative holdings !

Market Cornered: JPMorgan Owns Over 60% Notional Of All Gold Derivatives

Tyler Durden's picture

Perhaps the only question we have after seeing the attached table, which shows that as of Q3, 2013 JPMorgan owned $65.4 billion, or just over 60% of the total notional ($108.2 billion) of all gold derivatives in the US, is whether the CFTC will pull the "our budget was too small" excuse to justify why it allowed Jamie Dimon to ignore any and all position limits and corner the gold market?

And purely as a reference point, the chart below compares the total value of gold held in JPM's vault (registered and eligible) as of Friday's closing price with its reported gold derivative notional holdings.

Finally, for the purists out there, we realize that gross is not net... until there is a breach in the derivative counterparty collateral chain, and gross becomes net.
Source: OCCComex

Gold In 2014: Scramble For Physical Gold As Price Manipulation Unravels?

GoldCore's picture

Today’s AM fix was USD 1246.50, EUR 920.538 and GBP 757.336 per ounce.
Yesterday’s AM fix was USD 1,254.00, EUR 922.20 and GBP 761.89 per ounce.
Gold fell $26.80 or nearly 2% yesterday to $1,243.00/oz. Silver fell $0.58 or nearly 3% to $19.20/oz.

Gold in USD - This Week
Gold is marginally higher in all currencies this morning but is trading near a one-week low and headed for the first weekly loss since December. Gold rose as much as 8.2% from the 6 month low set December 31 and reached a 2 month high of $1,279.61/oz prior to weakness this week.
Speculation that the Federal Reserve may reduce their massive bond buying programme may be making traders nervous. The Fed said on Wednesday that it will cut its monthly bond buying to $65 billion from $75 billion.
Gold traders and analysts are bullish for prices next week due to the likelihood that the emerging market asset sell will lead to haven demand. The Bloomberg gold survey shows that that for next week, there are 16 bullish analysts, 10 are bearish and 4 were neutral on prices.

Gold in USD - 3 Month
It is important to note that gold has rallied since and despite the Fed’s taper in late December. It is also worth noting that the Fed’s printing of nearly $0.78 trillion a year or $65 billion a month to buy U.S. government debt remains extraordinary and shows how fragile the U.S debt markets and economy still are.
There is also the possibility that the emerging markets crisis impacts developed markets as was seen in the Asian crisis in 1998. In our vastly interconnected financial and economic world, the notion that there will not be knock on effects may be proven to be optimistic. The risk of contagion remains as turmoil in markets tends to be contagious
As long as the turmoil continues in the emerging economies and U.S. and global stock markets come under pressure, gold is likely to remain in demand as a safe haven.
Economic concerns and the risk of currency devaluations in emerging markets may lead to greater demand for gold in those markets.
People in Asia and especially China, India view gold as a store of value and one of the key reasons that they own gold is in order to protect against the devaluation of paper currencies. It is hard to get data on gold demand in many smaller emerging markets countries such as Argentina, Venezuela and South Africa but it is safe to say that a sudden bout of currency weakness should lead to inflation hedging buying.
The data from Turkey shows that demand has been very robust there in recent months and should the lira continue to decline in value, the gold souks in Istanbul will do brisk business.
Growth in emerging markets, especially China and India, contributed to much of the commodities demand we have seen in recent years. Thus a slowdown in China and other economies could hurt demand for commodities in general. However, gold's store of wealth and money credentials should see it insulated from this due to safe haven demand.
There is still a debate amongst many in the western world about whether gold is a safe haven.
However, in China, Asia and most emerging markets there is a strong belief in gold as a safe haven due to their experience with paper currencies. People in Argentina can attest to that fact after their currency, the peso, fell 25% against gold in January alone.
The currency crisis in the emerging markets may lead to a renewal of the recently dormant currency wars and may be a prelude to a global currency crisis. Just this week, the World Bank's former chief economist said the world should replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
"The dominance of the greenback is the root cause of global financial and economic crises," Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. "The solution to this is to replace the national currency with a global currency."
The currency and gold wars of recent years are set to continue.  
Grant Williams’ excellent recent article on the continuing gold wars is a must read.
Grant Williams and the team at Mauldin Economics have been producing excellent market commentary and insights for many years. Williams has written ‘Things That Make You Go Hmmm’ since 2009 and it has become a must read weekly commentary.
Grant’s recent edition grabbed our attention for a number of reasons:
  • It’s timely and very relevant.
  • For years we have been expressing concerns that the gold price may be manipulated. These concerns have long been dismissed as “conspiracy theories” but the theories may become “conspiracy facts” as financial regulators investigate price manipulation today.
  • Grant brings together many strands that we have covered in our Market Update in recent months and years. He is fast becoming one of the more knowledgeable commentators writing about the gold market.
  • He is a very good writer and it’s a thoroughly engaging read!

31 JANUARY 2014

Gold Daily and Silver Weekly Charts - Next Stop, February

There was very little movement into the bullion storage category at the Comex.

Next week we being the active delivery month of February.

If I were a naked bullion short I would seriously consider getting flat and taking the money from one of the greatest market manipulations in history while I could.
But let's see what happens.  

There is still plenty of room for more monkeyshines before the trading desks bring the Western financial system back to the brink of collapse again, and belly back up to the bailout bar for more.

So far they have been doing pretty well for themselves, thanks to a lax regulatory climate and a white collar criminal friendly system of 'justice.'  What could go wrong?  Why quit while you are ahead?  Winning!

Have a pleasant weekend.

Koos Jansen: January's gold offtake in Shanghai likely to set record

1:50p ET Friday, January 31, 2014
Dear Friend of GATA and Gold:
Gold researcher and GATA consultant Koos Jansen reports today that offtake on the Shanghai Gold Exchange has exceeded weekly world mine production for the third straight week and that it seems likely that January's gold demand in China will be the largest monthly offtake ever. Jansen's report is headlined "Chinese Gold Rush Heating Up" and it's posted at his Internet site, In Gold We Trust, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Paul Craig Roberts and Dave Kranzler: Why is the Fed tapering?

9:25a ET Friday, January 31, 2014
Dear Friend of GATA and Gold:
Former Assistant U.S. Treasury Secretary Paul Craig Roberts and fund manager Dave Kranzler examine the high-frequency shorting that drove the gold price down yesterday, attribute it to the U.S. government, and speculate that the government is trying to strengthen the dollar right now to head off a dollar crisis, which would be even bigger than a bank crisis. Their commentary is headlined "Why Is the Fed Tapering?" and it's posted at Roberts' Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Alasdair Macleod: Emerging markets, interest rates, and tapering

9:12a ET Friday, January 31, 2014
Dear Friend of GATA and Gold:
When the issuer of the world reserve currency does what it thinks is best for itself, it can devastate other countries, GoldMoney research director Alasdair Macleod notes today. "A whisper in New York becomes a storm in Delhi, Ankara, Sao Paulo, Buenos Aires, and Pretoria," he writes. (Shouldn't they have understood that when they gave up gold and surrendered to the U.S. dollar they also gave up their sovereignty?) Macleod's commentary is headlined "Emerging Markets, Interest Rates, and Tapering" and it's posted at GoldMoney here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Bron Suchecki: Central banks should be clear about gold swaps and leases

8:30a ET Friday, January 31, 2014
Dear Friend of GATA and Gold:
The Perth Mint's Bron Suchecki writes today that the Reserve Bank of Australia has been transparent about its gold swaps and leases over the last decade and that other central banks owe the same sort of accountability to their publics as well, especially since central banks require similar transparency from the financial corporations they regulate. Suchecki's commentary is headlined "Central Bank Gold Reserves Transparency" and it's posted at his Internet site, Gold Chat, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Anatole Kaletsky: Central bankers have a 'license to lie'

By Anatole Kaletsky
Thursday, January 30, 2014
Federal Reserve Chairman Ben Bernanke, who retires this week as the world's most powerful central banker, cannot be trusted.
Neither can Janet Yellen, who will succeed him this weekend at the Federal Reserve.
And neither can Mark Carney, governor of the Bank of England; Mario Draghi, president of the European Central Bank; or any of their counterparts at the central banks of Turkey, Argentina, Ukraine, and so on.
I am not trying to aim a valedictory insult at Bernanke or his central banking colleagues. On the contrary, I am drawing attention to the skill and determination required by central bankers to perform one of the world's most demanding and important jobs. For just as James Bond has a "license to kill" in the Ian Fleming books, so central bankers possess a "license to lie" -- or, putting it more diplomatically and politely, to make promises about the future that cannot be honored and often turn to be false. ...
... For the complete commentary:

Key items......

Let us now head over to the comex and assess trading over there today,

Here are today's comex results:


The total gold comex open interest rose slightly today by 167 contracts from 376,144  up to 376,311 as gold was down $20.00 yesterday.  The non active front month of January is now off the board. The next big active month for gold is February where first day notice is today and here the OI fell by 13,737 contracts to 8,993 . The next non active gold contract month is March and here the OI rose by 52 contracts. The estimated volume today was poor at 114,632 contracts as many players have opted out of playing at the comex.    The confirmed volume yesterday was fair coming in at 221,725 despite the many rollovers.  

Comex gold/ contract month

Jan 31.2014   the February delivery month.

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
No of oz served (contracts) today
 55  (5500 oz)
No of oz to be served (notices)
8938  (893,890)
Total monthly oz gold served (contracts) so far this month
55  (5,500 oz)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month


Strangely on first day notice we had miniscule activity in the Comex gold vaults today and still no gold enters the dealer and little gold enters any vaults.

We had 0 dealer deposit  and 0 withdrawals

total dealer deposits and withdrawals;  zilch

 we had 1 tiny Customer deposits

i) Into Brinks:  160.75 oz

Total customer deposits: 160.75 oz

We had 0   customer withdrawals:

Total customer withdrawals: nil oz.

Today we had 0   adjustments.

Thus we end this weekend with the following with respect to JPMorgan's inventory.

JPM dealer inventory remains  tonight at 87,071.35:  oz or 2.708 tonnes

JPM customer inventory remains  tonight at: 728,956.437 oz  or 22.673 tonnes

Today, on first day notice, 0 notices was issued from  JPMorgan dealer account and 53 notices were issued from their client or customer account. The total of all issuance by all participants equates to 55 contracts  of which 11 notices were stopped (received) by JPMorgan dealer ( house account or 0% of the issuance) and 5 notices stopped by JPMorgan customer account.
The total dealer comex gold  remains  tonight  at  439,900.008 oz or only 13.68 tonnes of gold . However this will decline in inventory once settlement occurs. The total of all comex gold (dealer and customer) rests at 7,141,230.857 oz or  222.12 tonnes.

Tonight, we have dealer gold inventory for our  3 major bullion banks(Scotia, HSBC and JPMorgan) with its gold inventory  resting  tonight  at only 10.896 tonnes.

i) Scotia:  88,532.124 oz or 2.753 tonnes
ii) HSBC: 174,742.211 oz or  5.435 tonnes
iii) JPMorgan: 87,071,35 oz or 2.708 tonnes

total: 10.896 tonnes

Brinks dealer account which did have  the lions share of the dealer gold saw its inventory level remains constant tonight  at only 85,140.4 oz or 2.648 tonnes.  A few months ago they had over 13 tonnes of gold at its registered or dealer account.

In summary:

55 notices x 100 oz per contracts already served this February month or 5500 oz
+  (8993 notices)  -  ( 55) notices filed today  x 100 oz  =   899,300 oz or 27.97 tonnes of gold.

This greatly exceeds the registered gold inventory at the comex. The bankers no doubt will try and use fiat to buy out some contracts as no gold can be seen entering the comex vaults.   

As you will see below we have only 10.896 tonnes in the registered or for sale category for the big 3 (JPMorgan, HSBC,Scotia) and 13.544 tonnes if you include Brinks.(If you include the tiny Manfra, we end up with a total dealer gold of only 13.6827 tonnes). We have witnessed little gold enter the dealer except small deposits from Brinks.