Tuesday, March 11, 2014

Gold and silver news and views March 11 , 2014 ... Ed Steer's daily report with dats , news and perspectives from noted commentators , gold and silver start today strong ( geopolitical concerns in ukraine and around the globe sparking a flight to safety ?



The gold price was under selling pressure from the HFT boyz almost right from the open in New York on Sunday evening.  The low of the day came about 90 minutes before the London open---and by 8 a.m. GMT, gold volume was already well north of 30,000 contracts, which is enormous for that time of day for such a "thinly traded" market.
From the pre-London open low, gold rallied until the London p.m. gold fix, which now comes an hour later than normal in New York because London is not yet on British Summer Time, although it did experience a slight downdraft for a couple of hours starting at the Comex open, which is obvious from a quick glance at the Kitco chart below.  Once the "fix" was in, gold got sold down until shortly after 2 p.m. EDT---and then traded flat into the 5:15 p.m. electronic close.
The low/high ticks were recorded by the CME Group at $1,327.50 and $1,344.90 in the April contract.
Gold closed in New York on Monday at $1,339.80 spot, up 30 cents on the day.  Volume, net of roll-overs out of the April delivery month, were pretty light at only 99,000 contracts.  But as I mentioned further up, almost a third of that occurred in the "thinly traded" Far East market, so it's obvious that the JPMorgan et al were out and about to influence prices during that time period.
The silver chart was almost a carbon copy of the gold chart, except for the fact, that the high of the day came at, or just before, the Comex open---and silver never rallied going into the 11 a.m. EDT London p.m. gold fix, before getting sold off in a similar manner to gold in electronic trading.
The low and high ticks in silver were recorded as $20.61 and $21.06 in the May contract.
Silver finished the Monday trading session at $20.835 spot, down a nickel from Friday's close.  Volume, net of March and April, was very chunky at 48,000 contracts.
Both platinum and palladium got sold down before the London open as well.  Platinum managed to claw back most of its losses, but palladium recovered little after that.  Here are the charts.
I mentioned copper's price smash on Friday in my Saturday column---and the HFT boyz were still pounding away again on Monday---and here's what the 6-month copper chart looks like after Monday's action.  I'd guess that major price bottom is in now that JPMorgan et al have the technical funds loaded up on the short side.  When the next rally begins, will they let the technical funds off easy, like they're doing in gold and silver right now, or will they really stick it to them?  It's all to JPMorgan.
The dollar index closed at 79.71 on Friday afternoon in New York---and weakened a handful of basis points during the Far East trading day on their Monday.  But the moment that London opened, a rally developed that was pretty much all done a few hours later---and from there, the dollar chopped sideways into the close in New York.  The index finished at 79.75---up 4 basis points from where it started the day.  Nothing to see here.


The CME Daily Delivery Report wasn't much to look at yesterday, as only 5 gold contracts were posted for delivery within the Comex-approved depositories on Wednesday.  However, just a matter of interest, JPMorgan Chase in its in-house [proprietary] trading account stopped 4 of the 5 contracts.  The Issuers and Stoppers Report isn't worth linking.
And I note that the number of silver contracts still outstanding in the March delivery month is up to almost 700---but it still remains to be seen how many get delivered.  However, from what I'm seeing at the moment, I'd guess most of the long/stoppers will be looking to take delivery.  I would also guess that JPMorgan Chase will gobble up most of them.
Much to my surprise, there was another deposit in GLD yesterday.  This time an authorized participant added a very respectable 240,929 troy ounces.  And as of 9:52 p.m. EDT yesterday evening, there were no reported changes in SLV.
The U.S. Mint also had a sales report to start the week.  They sold 4,000 troy ounces of gold eagles---1,000 one-ounce 24K gold buffaloes---and a very healthy 736,000 silver eagles.  And as Ted Butler has asked on numerous occasions this year---who is the buyer for all these silver eagles, as it certainly isn't the retail trade.
There was only a small amount of gold received at the Comex-approved depositories on Friday, as 4,501 troy ounces were deposited in Scotia Mocatta's warehouse---and nothing was reported received.  The link to that activity, if you wish to dignify it with that name, is here.
Of course the silver action in these same depositories on Friday was far more substantial, as 867,884 troy ounces were shipped in---and only 29,027 troy ounces were shipped out.  The link to that action is here.


Selected news and views ...

SEC, CFTC said to probe whether forex rigging by banks distorted options

The U.S. Securities and Exchange Commission is investigating whether currency traders at the world's biggest banks distorted prices for options and exchange-traded funds by rigging benchmark foreign-exchange rates, according to two people with knowledge of the matter.
The SEC's inquiry adds to European and U.S. regulatory probes of possible manipulation in currency markets. The SEC's investigation is in the early stages, said the people, who asked not to be named because the matter isn't public. The Commodity Futures Trading Commission, which regulates foreign-exchange derivatives, is also investigating possible manipulation, another person said.

This Bloomberg story, filed from New York, was posted on their Internet site very early yesterday morning MDT---and I found it embedded in a GATA release.

Soft-touch FX regulation falls under harsh glare

In July 2006, during lunch at an upmarket restaurant overlooking the sprawling Smithfield meat market in the City of London, Bank of England officials and senior bank dealers discussed evidence of potential manipulation of the foreign exchange market. People at the lunch said the attempts to move the market meant the process of establishing official prices - known as "fixing" - was becoming "increasingly fraught".
It was two years before the issue was discussed again, according to minutes from the meetings, released after a Reuters freedom of information request, and seven years before the Financial Conduct Authority (FCA), Britain's financial regulator, kicked off a global investigation and banks started to suspend or layoff traders.
The FCA probe focuses on whether traders used advance knowledge of customer orders to try and manipulate benchmark foreign exchange rates for their own gain, and is a blow to the "hands off" approach to regulating the world's largest financial market.
This Reuters piece, filed from London, was posted on their website late Friday morning EST---and it's another story that I found tucked away in a GATA release.

Bank of England to launch inquiry over Forex fixing claims

The Telegraph can reveal that the Bank’s oversight committee is set to appoint an external heavyweight to run an independent assessment of the Bank’s actions both in relation to the allegations made and how it has handled those allegations.
The heavyweight figure could be a judge, an academic or a City executive. He or she would need to be far enough removed from the Bank to ensure the inquiry is seen as independent.
The Bank’s committee appointed the law firm, Travers Smith, last week to prepare a formal report which will be made public.
This news item appeared in The Telegraph late on Saturday evening GMT---and is another article I found on the gata.orgInternet site.

Top German body calls for Q.E. blitz to avert deflation trap in Europe

A leading German institute has called for full-blown quantitative easing by the European Central Bank (ECB) to head off a deflation spiral, marking a radical shift in thinking among the German policy elites.
Marcel Fratzscher, head of the German Institute for Economic Research (DIW) in Berlin, demanded €60bn (£50bn) of bond purchases each month to halt the contraction of credit and avert a Japanese-style trap.
"It is high time for the ECB to act. Otherwise Europe risks falling into a dangerous downward spiral of sliding prices and declining demand", he wrote in Die Welt.
"The ECB must counter the deflation threat quickly and decisively, and launch a broad-based programme of bond purchase along the lines of the Federal Reserve," he said. The scale should be 0.7pc of eurozone state debt each month, comparable to 'QE3' in the U.S.
It's "Print, or die" for Europe as well.  This Ambrose Evans-Pritchard commentary showed up on The Telegraph's website early yesterday afternoon GMT---and it's the second contribution in a row from Roy Stephens.  It's worth reading.

Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007; $27 Trillion Is "Foreign-Held"

While the U.S. may be rejoicing its daily stock market all time highs day after day, it may come as a surprise to many that global equity capitalization has hardly performed as impressively compared to its previous records set in mid-2007. In fact, between the last bubble peak, and mid-2013, there has been a $3.86 trillion decline in the value of equities to $53.8 trillion over this six year time period, according to data compiled by Bloomberg. Alas, in a world in which there is no longer even hope for growth without massive debt expansion, there is a cost to keeping global equities stable (and US stocks at record highs): that cost is $30 trillion, or nearly double the GDP of the United States, which is by how much global debt has risen over the same period. Specifically, total global debt has exploded by 40% in just 6 short years from  2007 to 2013, from "only" $70 trillion to over $100 trillion as of mid-2013, according to the BIS' just-released quarterly review.
It should come as no surprise to anyone by now, but the only reason why global stocks haven't plummeted since the Lehman collapse is simple: governments have become the final backstop for onboarding risk, with a Central Bank stamp of approval - in other words, the very framework of the fiat system is at stake should global equity levels collapse. The BIS admits as much: “Given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers,” according to Branimir Gruic, an analyst, and Andreas Schrimpf, an economist at the BIS.
It should also come as no surprise that courtesy of ZIRP and monetization of debt by every central bank, debt has itself become money regardless of duration or maturity (although recent taper tantrums have shown what will happen once rates start rising across the curve again), explaining the mind-blowing tsunami of new debt issuance, which will certainly never be repaid, and whose rolling will become impossible once interest rates rise. But of course, under central planning that is not allowed. As Bloomberg reminds us, marketable U.S. government debt outstanding has surged to a record $12 trillion, up from $4.5 trillion at the end of 2007,  according to U.S. Treasury data compiled by Bloomberg. Corporate bond sales globally jumped during the period, with issuance totaling more than $21 trillion,Bloomberg data show.
This longish but very worthwhile Zero Hedge piece was posted on their website late on Sunday morning EST---and I thank Manitoba reader Ulrike Marx  for her first story of the day.

Eight King World News Blogs/Audio Interviews

Gold and silver dealer Tulving closes after complaints of delays

numerous gold- and silver-coin shipments has closed shop, according to a posting on the company's Costa Mesa office window.
"The Tulving Company has closed. More information the week of March 10th," reads the sign, which was seen Thursday at the firm's headquarters.
It appears a flood of complaints against The Tulving Company and owner Hannes Tulving Jr. led to a state investigation.

No surprises here, as Joshua Gibbons over at the about.agInternet site has been on top of this situation for months.  This news item showed up on the Orange County Register's website last Thursday---and it's another article I found on the gata.orgInternet site on Saturday.

Koos Jansen: Chinese gold demand is 418 tonnes YTD but Western analysts are confused

Gold researcher and GATA consultant Koos Jansen explains today that while a Citi Research report has done a little better in calculating China's gold demand than other Western sources, the report still grossly underestimates it.

Jansen's commentary is headlined "Chinese Gold Demand 418 Tonnes Year to Date, West Confused" and it was posted at the Swiss Internet site ingoldwetrust.ch on Sunday afternoon Europe time.  It's another story I found in a GATA release.

Sharps Pixley's Ross Norman Discusses London Gold Price Fixing

Norman speaks in half-truths in this 6:13 minute video interview on BNN on Friday.  His comments about the London fixes may be true in the context he's talking about---but it's just one element in the overall price management scheme in gold that's been going on for about 15 years.  Maybe he'd like to be re-interviewed and discuss the contents of The Wrap section in my Friday column, as the two charts shows clearly that he lied by omission.  The four charts from the Bank Participation Report in the first section of Saturday's column put icing on the cake.

I found this interview on the sharpspixley.com Internet site in the wee hours of yesterday morning.

Coutts adds gold as demand in China climbs

Coutts & Co. is adding gold for investors as rising wealth in China and increasing political risks including in Ukraine spur demand, helping prices rally from the biggest annual decline in more than three decades.
The private-banking division of Royal Bank of Scotland Group Plc holds 3 percent to 4 percent in its portfolios, from 1 percent to 2 percent last year, said Gary Dugan, chief investment officer for Asia and the Middle East. Coutts had 29.7 billion pounds ($49.4 billion) under management as of Dec. 31.
Gold rebounded this year as rising consumption in Asia and emerging-market turmoil boosted demand. The value of bullion held in exchange-traded products climbed 10 percent to $75.5 billion this year as prices advanced and holdings increased in February for the first time in 14 months. China surpassed India as the world’s largest user last year as demand expanded 32 percent, according to the World Gold Council.
This very interesting Bloomberg story appeared on themineweb.com Internet site yesterday---and I thank Ulrike Marx for her second contribution to today's column.

Eric Sprott: Lawsuit Against Gold-Fix Banks---and Bank of England’s Derivatives Pact

Sprott CEO Eric Sprott, interviewed by Sprott Money News, comments on the lawsuits that are starting to be filed against the investment houses participating in the daily London gold fix.
This audio interview was conducted last Friday---and isdefinitely worth your time.

Russian-Ukrainian news site describes transfer of Ukrainian gold to U.S.

The Russian-language and pro-Russian Internet news organization, Iskra ("Spark") News in Zaporozhye, eastern Ukraine, which perhaps has taken its name from the early socialist newspaper founded by Lenin reported Friday that Ukraine's gold reserves had been hastily airlifted to the United States from Borispol Airport just east of Kiev.
A Google-assisted translation is appended.
Last night GATA asked the Federal Reserve Bank of New York and the U.S. State Department to disclose whether the United States has taken custody of Ukraine's gold reserves. A publicist for the New York Fed immediately acknowledged the inquiry and said he would look into the issue right away. We'll keep you posted.
This GATA release was posted on their Internet site yesterday evening EDT---and is worth reading.  The good folks over atZero Hedge also had a story about this as well---and it's linkedhere.

Turkey's gold imports drop 93% in February

Following a record year for gold imports, Turkey's appetite for the yellow metal is suddenly waning.
According to the country's Hurriyet Daily, Turkey's gold imports dropped 93% in February, compared with the same month in 2013.
The fall comes amid a rise in the gold price – going from an average of $1,214 in December to $1,264 in January – but it's also due to the end of Turkey's gold-for-gas deal with Iran.
Under the controversial scheme, Turkey circumvented Western sanctions by paying for Iranian oil and natural gas in gold. Turkey's Halkbank claims these transactions ended last summer.
This very short story showed up on the mining.com Internet site on Sunday---and I thank reader M.A. for sending it our way.


I don’t know who is buying all these Silver Eagles, as reports from the retail front do not suggest broad demand. As such, if it is one big buyer, perhaps that buying could end. On the other hand, it could continue, particularly if the buyer is well-informed. What I do know is that Silver Eagles are outselling Gold Eagles by an amount never witnessed in the 27 years of the Mint’s bullion coin program. One would think that this demonstrable and heavy relative demand for silver over gold would be reflected somewhat in price, instead of the pronounced relative weakness seen in silver. But one would think that only if he was unaware of the COMEX and JPMorgan. Yes, I know – this is only one slice of the supply/demand equation; but then again more silver is, effectively, consumed in Silver Eagles than in any other single demand component. - Silver analyst Ted Butler: 08 March 2014
You'd never know by just looking at the gold and silver charts from yesterday that there was big activity---but there was.  The volume in Far East trading was about as big as I've seen it---and it was obvious, at least to me, that the HFT boyz were out and about big time.  Even before London opened, all four precious metals had another hole to dig themselves out of by the end of Monday's trading---and some of them didn't make it.  And as far as I'm concerned, that's just another form of price management.  It should be obvious that JPMorgan et al are active in all four precious metal markets 24/7.
Here's a chart I ripped from a Zero Hedge posting further up in today's column.  I'm posting it on its own here, because I know perfectly well that not everyone reads all the stories that I post each day---and I wanted to make sure that you saw this.  It's the "official" gold holdings of all counties in the world as of the end of February 2014.
Like the U.S. jobs numbers and employment figures, you can bet that a lot of these figures are pure bulls hit---starting with China's gold reserves.  The World Gold Council admitted several years ago that their data was only as good as the reporting countries were providing---and for that reason you should take it with a pound of salt as well.
After getting sold down a bit in early Far East trading, all four precious metals are attempting to rally.  Both gold and silver are up a titch---and platinum and palladium are unchanged.  Volumes are very light in both silver and gold---and the dollar index is up a handful of basis points.
Because London hasn't switched over to British Summer Time as of yet, their open is still about an hour away as I write this paragraph.
And as I hit the send button on today's column, I see that both gold and silver popped a bit at the London open, which was just over an hour ago and, not surprisingly, volumes---especially in gold---have picked up substantially.  The dollar index is still up only a handful of basis points.
I haven't a clue how precious metal prices will perform today, or any other day this week.  I know what they should be doing---and what they want to do---but whether they're allowed to or not is entirely up to JPMorgan.
That's all that I have for today, which is more than enough---and I'll see you here tomorrow.


Silver Spikes Most In A Month As Gold Tops $1350

Tyler Durden's picture

Silver is spiking this morning (up over 2.3%) by its most in almost a month as the losses suffered post-Putin's press-conference are now largely retraced. Gold has broken back above pre-Putin levels and is trading back above $1,350(holding above its 1-year average). Bonds, stocks, and the USD are all relatively flat this morning leaving one wondering whether the catalyst for this move is related to the Ukraine-gold rumors although we noted Swiss 2Y rates dropping once again as safe-havens are bid.

Charts: Bloomberg

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