Commentary on the economic , geopolitical and simply fascinating things going on. Served occasionally with a side of snark.
Thursday, March 20, 2014
Gold and Silver News and views - March 20 , 2014 -- Not surprisingly , on the FOMC Meeting Announcement Day , gold and silver take a tumble ! Ed Steer's daily report , numerous news and views items touching on the precious metals !
Yesterday's trading session in gold turned out pretty much as I talked about in The Wrap yesterday, except for the fact that I thought that JPMorgan et al would hit the gold price harder on the Fed news, but they didn't. But it was still a lousy day nonetheless.
The CME Group recorded the high and low ticks as $1,360.20 and $1,327.80 in the April contract.
The gold price closed in New York yesterday at $1,330.60 spot, down $24.90 from Tuesday's close. Net volume was pretty decent at 167,000 contracts.
Up until 11 a.m. in New York, the silver price followed gold lower, but then it rallied sharply until minutes after 1 p.m. EDT. Then a seller showed up---and within the space of two hours, took back all the gains of the previous rally. Then after 3:15 p.m. in New York, the silver price traded sideways into the close of electronic trading.
The high and low in the May contract were recorded at $20.965 and $20.505.
Silver close on Wednesday at $20.61 spot, down only 20.5 cents from Tuesday's close. Volume, net of March and April, was pretty heavy at 52,500 contracts. Silver closed below its 200-day moving average for the second day in a row---and punctured the 50-day moving average for a brief period yesterday as well.
Platinum and palladium weren't spared either---and both were sold down for small loses. Here are the charts.
The dollar index closed late on Tuesday afternoon in New York at 79.38---and by the time the Fed announcement was made yesterday, the index has added another 7 basis points. The rally on the Fed news ran out of gas an hour later at 80.10---and from that point the index fell back a bit and closed at 80.02---which was up 64 basis points on the day.
The CME's Daily Delivery Report showed that 16 gold and zero silver contracts were posted for delivery within the Comex-approved depositories on Friday. Canada's Scotiabank issued 14 of those contracts---and JPMorgan Chase stopped 11 in its in-house [proprietary] trading account. The link to the Issuers and Stoppers webpage is here.
There were were no reported changes in GLD---and as of 9:32 p.m. yesterday evening, there were no reported changes in SLV, either.
There was no sales report from the U.S. Mint.
Over at the Comex-approved depositories in gold on Tuesday, they reported taking in 24,112 troy ounces of the stuff---and shipped out 1,286 troy ounces. The link to that activity is here.
In silver, there was 15,649 troy ounces reported received----and 380,657 ounces shipped out the door. The link to that action is here.
JPMorgan will sell its commodities trading business to Switzerland-based energy-trading company Mercuria Energy Group Ltd, The Wall Street Journal reported, citing a person familiar with the situation.
In February, Reuters reported that Mercuria, led by two former Goldman Sachs executives, became the front-runner to buy the physical commodities unit, one of the most powerful oil and metals desks on Wall Street.
JPMorgan decided to sell its multi-billion dollar physical commodities division last year under rising regulatory and political pressure to retreat to the bank's core business of lending instead of speculating in raw materials.
It nearly goes without saying that JPMorgan, along with all the other banks getting out of the commodities business, are hanging on to their precious metal positions---and are not part of any sale. How can you rig the precious metal market if you don't have control over the Comex futures market, along with the blessing of the CME Group? This tiny Reuters story showed up on their Internet site very early on Wednesday morning EDT---and I found it on the sharpspixley.com Internet site.
Nickel entered a bull market on speculation Russian supplies will be disrupted at a time when some shipments are already banned in Indonesia.
Last year’s worst performer among industrial metals trading on the London Metal Exchange is this year’s best, gaining 16 percent and on track for the first annual gain since 2010. Prices fell 24 percent in 2011 after touching $29,425 a metric ton in February that year, the highest since April 2008. Indonesia, the biggest producer of mined nickel, banned ore exports in January.
The U.S. and the European Union slapped sanctions on Russia after a disputed vote in Crimea paved the way for President Vladimir Putin to annex the region from Ukraine. Russia’s OAO GMK Norilsk Nickel is the world’s biggest producer of the metal used to make stainless steel. The price reached a record $51,800 in May 2007.
“Nickel has enjoyed the support from expectations that a potential supply deficit is building,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “Nickel suffered some of the biggest losses since the peak in 2011, and on that basis, many funds may view the upside potential as quite significant.”
What is more confidence-inspiring in the Fed's ability to manage the world and the continued dominance of the US Dollar as global reserve currency than a falling gold price... and when better to show that than FOMC meeting weeks. Welcome to the centrally-planned world where the announcement of ongoing trillions in fiat dilution constantly crushes the price of undilutable money.
This is another tiny Zero Hedge piece from yesterday---and you've read it all. But the chart is a must to see---and I thank reader M.A. for bringing it to our attention.
Returning home to the southern Indian state of Kerala from Dubai last month, 27-year-old welder Mohammed Ahmed Jaffer was arrested after customs agents said they discovered gold in the lining of his brass flower pot.
Jaffer allegedly was offered 30,000 rupees ($491) from an importer seeking to bring in 1 kilogram of bullion valued at about $50,000 without paying the 10 percent customs tax, case documents made available to Bloomberg show. Such stories have become commonplace in India, where the government raised duties on gold three times last year and illegal imports almost doubled to about 200 metric tons, the World Gold Council estimates.
“Smuggling is like cancer,” said T.S. Kalyanaraman, the billionaire chairman of Thrissur, India-based Kalyan Jewellers Ltd., which sells everything from necklaces to pendants at 55 stores in India and the United Arab Emirates. “It will spoil the country’s economy. If they continue this arrangement, it will be a heavy loss for the country.”
While Prime Minister Manmohan Singh’s increase in gold levies was intended to help fix India’s record current-account deficit, the move is also fostering the black market for smuggled metal to a country that was the world’s largest buyer in 2012. Based on last year’s average price, the value of illegally imported gold in 2013 totaled about $9 billion, or more than twice the annual revenue of Signet Jewelers Ltd., the largest U.S. jewelry chain.
India has allowed five domestic private sector banks to import gold, in what industry officials say could be a significant step towards easing of tough curbs on the metal imposed last year to cut the country's trade deficit.
The move could boost gold supplies and bring down premiums for the metal in the world's second-biggest consumer after China.
The Reserve Bank of India (RBI) has allowed gold imports by HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank and Yes Bank, officials at the respective banks told Reuters.
¤ THE WRAP
Instead of simply waiting for the silver shortage to end the manipulation, I thought it advisable to try a new approach that was completely compatible with the real silver story to date. Since I (we) couldn’t get the CFTC to do its job and end the manipulation; why not try a different approach? The truth is that I have long believed that the right civil lawsuit stood a good chance at ending the manipulation before a silver shortage hit. I had high hopes initially that the class-action suit that was filed against JPMorgan for manipulating the price of silver a few years ago might succeed; but it seemed to drift off track and I wasn’t particularly surprised that it was ultimately dismissed. My intent should be clear – I want to see the next lawsuit succeed.
The stakes in a COMEX silver/gold/copper manipulation lawsuit are staggering. Not only is market manipulation the most serious market crime possible, the markets that have been manipulated and the number of those injured are enormous. I don’t think it’s an exaggeration to say that any finding that JPMorgan and the COMEX did manipulate prices as I contend could very well result in the highest damage awards in history. That’s no small thing considering the tens of billions of dollars that JPMorgan has coughed up recently for infractions in just about every line of their business. - Silver analyst Ted Butler: 19 March 2014
As I said at the top of this column, except for the severity of the sell-offs in both gold and silver, the precious metal trading pattern yesterday turned out pretty much as I suggested it might in Wednesday's column.
Here's a chart of the gold price action following each of the recent FOMC meetings. It was posted in a Zero Hedge piece further up in today's column---and in case you didn't read the story, I thought the graph was worth looking at on its own.
Here are the 6-month gold and silver charts with yesterday's price action included, so you can see how this engineered price decline is progressing.
As you can tell, there's a ways to go in gold, but we're down over $60 from Monday already---and the situation in silver is much further along. The one thing that we don't know for sure is whether this "slicing of the salami" will go slowly or quickly, but with the 50 and 200-day moving averages so close together, JPMorganet al could end this pretty quick if that's what their plans are. All the have to do is let loose their HFT boyz---and "Bob's your uncle!"
Also worth noting is the fact that we are well along in the roll-overs out of the April delivery month for gold---and it's my opinion that "da boyz" will want this sell-off all done by this time next week. So we wait.
The other interesting thing I've noticed in the last couple of days is the rather counterintuitive price action in the silver equities---especially on Tuesday---and even when they are getting sold down, they are not being sold down as hard as the gold stocks. This is something that I mentioned in yesterday's column that I'm watching carefully.
Something that I didn't notice until I was writing today's column is that despite the fact that silver got sold down for loses every day this week so far, there has been brief counter-trend rallies in that precious metal all three days during the New York trading session. I'm not sure if it means anything, but it's something that I just noticed, and that I'll be watching that going forward as well.
As I write this paragraph at 2:48 a.m. EDT, the London open is still a bit more than an hour away. Gold and silver prices aren't doing much of anything, but both platinum and palladium rallied a few dollars in early Far East trading on their Thursday morning, but have now been sold back to unchanged. Net volumes in gold are already quite high---and silver's volume is about average. The dollar index is down a handful of basis points from yesterday's close.
And as I prepare to send this off to Stowe, Vermont at 5:20 a.m. EDT, I see that gold hasn't done much now that London has been open a bit more than an hour, but the HFT boyz are putting pressure on silver---and have it well below its 50-day moving average at this point. Platinum is still trading around unchanged---and palladium is down about a percent. Net volume in gold is now north of 39,000 contracts---and silver's volume has doubled since I wrote about it the above paragraph---and is just over 12,000 contracts, so it's obvious that JPMorgan et alare buying all the longs that the technical funds are being forced to sell. It's the same old pattern that Ted Butler has been talking about for years. The dollar index isn't doing a thing.
Here's what the Kitco silver chart looked like as of 5:46 a.m. EDT.
I'm very much surprised that gold isn't being hit as hard as silver---but the trading day is still young---and I await the New York trading session with some interest, and trepidation.
By Jamie McGeever Reuters Thursday, March 20, 2014
LONDON -- British regulators are examining evidence relating to a 2012 meeting of currency dealers and Bank of England officials that potentially challenges the central bank's assertion it had not condoned sharing details of client orders.
The practice of sharing details about such orders is at the center of a global rigging probe.
Transcripts of a foreign exchange chatroom, now in the hands of Britain's Financial Conduct Authority, reveal that an unnamed senior dealer who attended the meeting told fellow traders the next day that Bank of England officials had agreed that there were advantages to sharing client order information to minimize market volatility around daily reference rates known as "fixings," two sources familiar with their content told Reuters.
By sharing information during these fixings, traders are able to match trades and minimize price swings, thereby lessening the risk they take on big transactions. ...
High-Speed Trading Faces New York Probe into Fairness
By Keri Geiger and Sam Mamudi Bloomberg News Tuesday, March 18, 2014
NEW YORK -- New York's top law enforcer has opened a broad investigation into whether U.S. stock exchanges and alternative venues provide high-frequency traders with improper advantages.
Attorney General Eric Schneiderman said today that he's examining the sale of products and services that offer faster access to data and richer information on trades than what's typically available to the public. Wall Street banks and rapid-fire trading firms pay thousands of dollars a month for these services from firms including Nasdaq OMX Group Inc. and IntercontinentalExchange Group Inc.'s New York Stock Exchange. ...
High-frequency activity represented more than half of all U.S. stock trading in 2012, according to Rosenblatt Securities Inc. ...
In an interview with Sprott Money News, Sprott Asset Management CEO Eric Sprott discusses gold market manipulation and speculates that the immediate participants in gold market manipulation have had to change their tactics now that they have become the subjects of official investigations. The interview is 8 minutes long and can be heard at the Sprott Money Internet site here: