Tuesday, March 25, 2014

Ed Steer's Gold , Silver and Precious Metals Update March 25 , 2014 - News , Data and Views of the day



It was obvious that the gold price was going to have a rough go of it on Monday.  By around 10:30 a.m. Hong Kong time, gold was down ten bucks---and volume was well over 20,000 contracts, which is extremely high for that time of day, so the HFT boyz were busy.  After that, not much happened until precisely 8:30 a.m. EDT---and the New York HFT traders had their work done for the day by 11:30 a.m.  The gold price traded pretty flat from there into the 5:15 p.m. EDT close.
The CME Group recorded the high and low ticks at $1,335.70 and $1,308.50 in the April contract.
Gold closed in New York at $1,309.60 spot, down $25.10 from Friday's close.  Gross volume was well over 200,000 contracts, but once the roll-overs out of the April delivery month were subtracted, the volume netted out at around 118,000 contracts.
Here's the New York Spot Gold [Bid] chart---and you can see where the HFT boyz showed up at exactly 8:30 a.m.
The silver price action was fairly similar, as it was already down a bunch by 10:30 a.m. in Hong Kong, but the real engineered price decline didn't begin until 10:45 a.m. in New York---and most of silver's losses on the day came from that point onwards.
The high and low price ticks in the May contract for silver were reported as $20.315 and $19.92
Silver finished the Monday session in New York at $19.93 spot, which was down 34.5 cents from it's Friday close.  Volume, net of March and April, was 42,500 contracts.
Platinum rallied a bit during early Far East trading, with the high tick coming at 9 a.m. Hong Kong time---and from thereon in the price chopped unsteadily lower for the remainder of the day.  The low tick came at precisely 4 p.m. EDT in New York.  Here's the chart.
Palladium did nothing in Far East trading, but had another go at the $800 spot price mark, only to run into a short seller of last resort.  From that point it headed lower, hitting its low around 11:45 a.m. EDT.  At that point, a willing buyer showed up and bid it back to unchanged by 1 p.m.  After that, it didn't do much.
The dollar index closed in New York late on Friday afternoon at 80.12---and then didn't do a thing until the 8 a.m. GMT London open.  After getting rescued from falling below the 80.00 mark at that point, the dollar 'rallied' to it's 80.28 high minutes after 10 a.m. in London.  After that it chopped quietly lower before falling off a 35+ basis point cliff starting just after 1 p.m. in New York.  The low of 79.79 was in just minutes before 2 p.m., as someone was there to catch the proverbial falling knife.  From there it rallied a bit, cutting its losses on the day, as the index closed at 79.94.
There wasn't a hint of a price change in any one of the precious metals on this precipitous 1-hour drop in the dollar index.


The CME Daily Delivery Report showed that 2 gold and 156 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  The largest short/issuers were Jefferies and ABN Amro with 97 and 58 contracts respectively.  Jefferies was also the biggest long/stopper with 56 contracts---and in second and third place came Canada's Scotiabank and JPMorgan Chase out of it's in-house [proprietary] trading account---with 42 and 24 contracts respectively.  The link to yesterday's Issuers and Stoppers Report is here.
Another day---and another surprise deposit in GLD.  This time an authorized participant added 144,535 troy ounces.  Based on the price action, this looks like another deposit made to cover an existing short position.  And as of 10:28 p.m. EDT yesterday, there were no reported changes in SLV.  There has been no in/out activity of any significance in SLV since March 3---and I'm sure that's just the way JPMorgan wants to keep it until they've bought all the physical silver they can get their hands on.
There was a decent sales report from the U.S. Mint to start the week yesterday.  They sold 1,000 troy ounces of gold eagles---1,000 one-ounce 24K gold buffaloes---and 654,500 silver eagles.  They also reported selling 300 platinum eagles as well.  The question still unanswered is:  Who is buying all these silver eagles, as it's not the general population.
A decent amount of gold was reported received over at the Comex-approved depositories on Friday, as 192,732 troy ounces were shipped in---and nothing was shipped out.  About 5 tonnes went into JPM's vault---and about a tonne into HSBC USA.  The link to that activity is here.
As big as the activity in gold movement was, it paled in comparison to what happened in silver last Friday, as 1,141,122 troy ounces were shipped in---and 1,115,180 troy ounces were reported shipped out.  The big activity was at Brink's, Inc., CNT---and Canada's Scotiabank.  The link to the action is here---and is worth a quick look.
Here's a chart that I thought worth sticking in today's column at this point.  It's the 3-year gold/silver ratio---and as you can tell at glance at almost 66 to 1---it's about the highest it has been in the last three years.  It shows how horrible under-priced silver is vs. gold.


Non redundant news and views.....

Jim Rickards: China slammed gold down, Bundesbank wants suppression, not repatriation

Fund manager, geopolitical strategist, author, and √©minence griseJames G. Rickards has given what seems like his best interview ever -- to GATA's Dutch friends, China gold researcher and consultant Koos Jansen and the entrepreneur and author Willem Middlekoop.
Jansen and Middlekoop get Rickards to argue that China was likely the instigator of the smash down of the gold price last April and that the German Bundesbank does not really want to repatriate its gold from the Federal Reserve Bank of New York because the Bundesbank wants to engage in gold price suppression that can be done only by leasing gold in New York, not in Frankfurt.
There's much else of interest in the interview, which is posted at Jansen's Internet site, ingoldwetrust.ch, headlined "Jim Rickards on the Death of Money".  Harold Jacobsen was the first through the door with this story.

Two more Jim Rickards Interviews

1.  The first one is a 38-minute audio interview with Jim.  It's on Crimea / Russia / Ukraine and Financial Warfare, Russia / China / Saudi potential combination effect of stepping away from the U.S. Dollar, Mutually Assured (Financial) Destruction, “Gold is the only asset that you can't wipe out digitally”, and Yellen’s shocking benchmark change.  It was posted on thephysicalgoldfund.com Internet site on Wednesday, March 19---and it's courtesy of Harold Jacobsen.

2. The second is headlined "Jim Rickards: China is importing gold secretly using military channels---and it's a written Q&A session that doesn't go on too long.." Here's Chris Powell's comments on this interview: "Fund manager, geopolitical strategist, and author James G. Rickards, who seems to be everywhere these days---and who today is to speak at the Mines and Money conference in Hong Kong along with your secretary/treasurer, gives an interview to Mexican financial journalist Guillermo Barba in which he gets more explicit than ever about gold price suppression by central banks and sounds very much like GATA. Rickards says:
"Central banks still have the ability to manipulate gold prices through gold leasing to commercial banks, which then use the leased gold to sell unallocated gold to customers using leverage. But the demand for physical gold by China and others is making leasing and paper gold transactions more difficult because there is less physical to support the trading and greater risk of default by a market participant who suddenly finds itself unable to obtain physical gold to satisfy some paper contract. All manipulation breaks down eventually because market participants begin to pile on the other side of the trade to test the will and resources of the manipulators. When the current manipulation breaks down, probably in the next year or two, gold will surge higher based on fundamental supply and demand. In that environment prices of $3,000 per ounce would not be surprising, although gold may eventually go to $9,000 per ounce or more if needed to restore lost confidence in the international monetary system."
Rickards' interview with Barba is posted at the latter's Internet site, inteligenciafinancieraglobal.blogspot.mx.  Reader Harold Jacobsen was the first person through the door with this interview as well---and the link to that one is here.

Silver Vault for 600 Tonnes Starting in Singapore on Investor Demand

Silver Bullion Pte, a Singapore supplier of coins and bars to retail investors, opens a 600 metric ton vault tomorrow as investor demand increases.
The storage could hold silver worth $390 million at prices on March 21. The company doubled sales to 1.04 million ounces in 2013 from 517,000 ounces a year earlier, said Gregor Gregersen, who founded the company in 2009. Almost all the sales were silver, he said in an interview in Singapore on March 18.
“While prices dropped last year, we saw physical demand went through the roof,” said Gregersen. “Our American customers seem to be concerned about rising government debt in their country and see silver as a form of insurance.” Marketable U.S. government debt outstanding has soared to a record $12 trillion from $4.5 trillion in 2007, according to U.S. Treasury data compiled by Bloomberg.

This Bloomberg story, filed from Singapore, showed up on their Internet site in the wee hours of Monday morning Denver time---and I thank reader 'David in California' for bringing it to our attention.  It's worth reading as well.



Turnover or physical movement of metal into and out from the Comex-approved silver warehouses moderated to under 2.5 million oz. this week, as total inventories fell 250,000 oz to 182.5 million oz. Over the last three weeks, 10 million oz. have come in or departed the Comex warehouses as total levels have barely fluctuated on a weekly basis. There must be a reason for this activity and at the core of that reason must include the fact that most of the existing inventory is not available for sale at current prices, which necessitates the bringing in of new supply to meet demand. This certainly would not seem to be in keeping with silver’s rotten price performance, both absolutely and relative to gold. - Silver analyst Ted Butler: 22 March 2014
I hope you weren't too surprised by yesterday's price action.  This is what I was expecting on Friday, but the out-of-the-blue rally shortly after London opened was a fire that JPMorgan et al had to put out before they could get back to business---which is precisely what they did yesterday.
As I mentioned on Saturday, we have options and futures expiry for the April contract this week---and every trader, both large and small, has to roll, sell, or stand for delivery before the Comex closes on Friday.  Without doubt, I'm sure that "da boyz" would want to arrange for gold to be well below it's 50 and 200 day moving averages by Thursday at the latest.  We'll soon find out if that's in the cards or not.  Here are the 6-month charts for both gold and silver.
In gold, the 50 and 200-day moving averages are very close---and silver is now well under both those moving averages.  But we could still see "da boyz" knock another $75 off the gold price---and a buck off silver---as the technical funds are still massively long despite the sell-off we've had during the last week of trading.
That is, of course, if JPMorgan et al can pull it off.  Ted Butler says that it's a near certainty that they will, it's just a matter of when---and over what period of time---that "da boyz" will slice the salami to the downside.
And while I'm at it, here's the 6-month copper chart---which is another JPMorganet al-controlled metal.
Copper is obviously very oversold---and the RSI trace indicates that.  I'm sure that JPMorgan would like to arrange for the precious metal charts to have RSI traces that look like that as well.  I'm sure they'll give it the old college try as the days unfold.  But one wonders if they can pull it off by the end of trading on Friday.  We'll see.
But there's the international situation to contend with, as this engineered price decline in all four precious metals is occurring in the face of the Ukraine/Russia tensions---and a strike at South Africa's platinum and palladium mines approaching two months in length.  You just have to wonder when something will go 'bump' in the night.  Friday's price activity at the London open could have been a precursor of more of that sort of thing to come, but I'm still on the lookout for "in your ear."
GATA's secretary/treasurer Chris Powell, is at the Mines and Money Conference in Hong Kong at the moment, had this to say to a donor who wrote GATA a rather large cheque/check on the weekend---and I though it worth sharing.
While I do feel deep gratitude to our longtime supporters and much obligation to them, I'm not always sure of the efficacy of what GATA is doing. The gold mining industry is nearly hopeless -- it acts as if the central banks are its largest shareholders (and if I was a gold-suppressing central banker, that's exactly what I would have done -- buy the industry) and the Western financial press is absolutely hopeless. (Certainly most of it is owned by big money.)
My visit to Suriname last month was well-received and made me wonder if our focus should not be redirected on a national basis -- to political agitation in gold-mining countries in the developing world. But I had a personal connection to Suriname, someone very much involved in public life there who arranged my visit and introductions. We don't have such connections elsewhere and even several trips to South Africa by GATA people over the years seem to have produced nothing there. South African remains a rich country adamant on remaining poor.
And as I said in my Saturday column, Russia or China---or both countries jointly---could end this price management scheme in instant if they choose to do so.  It remains to be seen whether they use precious metals as weapon or not.  But if the decision had been left up to me, I would have done it a long time ago---and let the chips fall where they may.
As I write this paragraph, the London open is ten minutes away.  There was a bit of positive price action in all four precious metals during the early going in Far East trading on their Tuesday---and that positive action is still with us with 10 minutes to go.  Net volumes in gold are rather light---but silver's volume is pretty heavy and, not that it matters, but the dollar index isn't doing a thing.
And as I hit the send button on today's effort---gold, silver and platinum are still struggling higher, but palladium is down a percent as of 5:19 a.m. EDT.  Gold and silver volumes have blown out by quite a bit in the last 90 minutes, so even these tiny rallies are being met by the usual not-for-profit sellers.  The dollar index is still flat.
Today is the cut-off for this Friday's Commitment of Traders Report---and whatever price/volume data is reported at the close of Comex trading, should be in Friday's report, if everything is reported in a timely manner, that is.  And as I've said before, JPMorgan et al hold back data if it suits them.
That's more than enough for today.  I'm off to bed.
See you here tomorrow.

Additional items......


gun forcedThe West is not just confronting Russia, but potentially China and the other Shanghai Cooperative Organization members as well.Russia’s relationship with the SCO brings with it the possibility of using gold as a weapon against the West, because most governments involved with the SCO have been actively buying gold while western central banks have been providing it.
So far the SCO members have been content to accumulate the west’s gold on falling prices, being careful not to disrupt the market.
We cannot say the Ukrainian crisis is over. It is more than likely Putin will not be fully satisfied until there is a Russian-friendly government in Kiev. And if a senior Russian politician cares to have another conversation with China over maximizing turmoil on Wall Street, driving up the gold price is the obvious financial weapon of choice. [Read more...]


Iraq Buys Massive 36 Tonnes Of Gold In March

Tyler Durden's picture

From GoldCore
Iraq Buys Massive 36 Tonnes Of Gold In March

Gold rallied from the lowest price in more than four weeks on safe haven demand after the G7 nations threatened more sanctions against Russia after the annexation of Crimea.
Meeting for the first time since last week’s annexation of Crimea by Russia, G7 leaders said they won’t attend a G8 meeting that had been set for Sochi, on Russia’s Black Sea coast, and will instead hold their own summit in June in Brussels. The G7 said in a statement that they remain ready to “intensify actions”, including coordinated sectoral sanctions.
Trading volumes on the COMEX in New York today are 49% higher than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Palladium fell 1% to $786.20 an ounce. The precious metal rose above $800/oz yesterday, the highest  since August 2011, on concern that supplies from top producer Russia will be disrupted.
The Central Bank of Iraq said it bought 36 tons of gold this month to help stabilise the Iraqi dinar against foreign currencies, according to a statement from the bank that was emailed this morning.
It is very large in tonnage terms and Iraq’s purchases this month alone surpasses the entire demand of many large industrial nations in all of 2013. It surpasses the entire demand of large countries such as France, Taiwan, South Korea, Malaysia, Singapore, Italy, Japan, the UK, Brazil and Mexico. Indeed, it is just below the entire gold demand of voracious Hong Kong for all of 2013 according to GFMS data (see chart).
Demand By Country (GFMS via Thomson Reuters)
Iraq had 27 tonnes of gold reserves at the end of 2013 according to the IMF data and thus Iraq has more than doubled their reserves with their allocations to gold this month. Gold remains less than 5% of their overall foreign exchange reserves showing that there is the possibility of further diversification into gold in the coming months. 
The governor of the Iraqi Central Bank, Abdel Basset Turki, told a news conference that, "the bank bought 36 tonnes of gold to boost reserves and this move is to strengthen the financial capacity of the country and increase the elements of security and insurance reserves of the Central Bank of Iraq."
He said, “the purchase quantity comes with the aim of achieving the highest stages of the financial soundness for Iraq”. He pointed out that the measure comes within the purview of the central bank in the use of the fiscal policy tools  of Iraq.
"The Bank has purchased large quantities of gold bullion with a very high purity and in accordance with the approved international standards," according to the Iraqi central bank.
He added that "the central bank seeks through the purchase of large quantities of gold to stabilize the Iraqi dinar against foreign currencies.”
Iraq quadrupled its gold holdings to 31.07 tonnes over the course of three months between August and October 2012, data from the International Monetary Fund shows. The IMF's monthly statistics report showed the country's holdings increased to some 23.9 tonnes in August 2012 to 29.7 tonnes.
That was followed by a 2.3-tonne rise in September to 32.09 tonnes and then a cut of 1.02 tonnes in October 2012 to 31.07 tonnes. 
It is Iraq's first major move to bolster its gold reserves in months.
The central bank of Iraq’s doubling of its gold reserves this month is important as there are many oil rich nations in the world with sizeable foreign exchange reserves, primarily in dollars, and only a small allocation to gold by these central banks alone could lead to higher gold prices.
36 tonnes is a lot of physical gold, however in terms of dollars it is worth just $1.522 billion which is a tiny fraction of the $80 billion of foreign exchange reserves that Iraq holds.
Energy rich Russia alone has foreign exchange reserves of some $440 billion. Should they decide to allocate a sizeable portion of their reserves to gold, it would rapidly result in materially higher prices.
Signs that the global economy is slowing down and the most serious confrontation between Moscow and the U.S. and its allies since the end of the Cold War is likely to lead to central banks continuing their foreign exchange diversification.
Central banks and the smart money will continue to dollar cost average and accumulate bullion on dips.


24 MARCH 2014

Gold Daily And Silver Weekly Charts - Precious Metals Comex Options Expiration on 26 March

There was intraday commentary on Banks and corporations and gaming the system here. I have added a few things to it since first posting it as is my wont when reader comments via email point out things that are either incorrect or unclear.

I appreciate the feedback, and respond to all but the very few thoughtless and/or pointlessly unproductive comments.  It is one of the reasons why I do this for feedback, but do not have a comments section which requires monitoring. I have done that on another forum, and it is just another example of how life imitates high school.

Gold and silver took some fairly obvious hits today. More gold was added to the eligible category on Friday at HSBC and more notably JPM.

As the calendar below shows there will be an option expiration for the precious metals on the Comex, Wednesday 26 March. Antics are often abounding around option expiration. I used to note them on my metal charts until it became too complex and confusing. The reaction is not always straightforward.

April is an active delivery month, and the bullion banks are bracing for it. The inventory levels do not seem overly short, given that the Comex is not much of a venue for taking physical deliveries. Ted Butler has likened it to a 'bucket shop' and that may not be far off the truth, if at all.

Look for more revelations and shocking events as the world progresses. We are in a currency war.

Have a pleasant evening. 

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