http://www.caseyresearch.com/gsd/edition/japanese-prepare-for-abenomics-failure-scramble-to-buy-physical-gold
¤ YESTERDAY IN GOLD & SILVER
It was another day where very little of anything happened in the gold price in the Far East. The high tick on Friday came at the 8 a.m. GMT London open---and it was all down hill until the low was set at 9:45 a.m. in New York. The price rallied sharply back to the $1,295 spot mark in less than 20 minutes---and then chopped sideways into the 5:15 p.m. EDT close.
The high and low ticks were recorded as $1,299.40 and $1,286.10 in the new front month, which is June.
Gold closed in New York at $1,294.90 spot, up $3.20 on the day. Gross volume was around 238,000 contracts, but net volume was only 75,000 contracts---and most of the activity was in the new front month.
Silver rallied a bit right from the open in the Far East but, like gold, ran into not-for-profit sellers at the London open. The low tick came about five minutes before the Comex open---and the subsequent rally ended at the same time as gold as well, shortly after 10 a.m. EDT. From there, the price got sold down a dime before trading sideways for the remainder of the New York session.
The high and low, such as they were, were recorded at $19.92 and $19.62 in the May contract.
Silver closed the Friday session at $19.82 spot, up 13 cents from Thursday. Volume, net of roll-overs, was only 30,000 contracts.
Platinum rallied about ten bucks during the Far East trading session---and then began to edge lower once London opened. That 'sell-off' ended around 9 a.m. in New York---and from there, the platinum price rallied quietly into the close, finishing up 13 bucks on the day.
The palladium price didn't do much in Far East trading, but began to rally starting moments before London opened. That lasted until shortly after the 1:30 p.m. EDT Comex close in New York---and from there traded flat. Platinum finished the Friday session up $15---gaining back a large chunk of what it 'lost' on Thursday.
The dollar index closed late on Thursday afternoon in New York at 80.13---and then chopped basically sideways in a 10 point range either side of unchanged. The index closed on Friday afternoon at 80.17. Nothing to see here---please move along.
***
The CME Daily Delivery Report for 'Day 1' of the April delivery month showed that 2,642 gold and 189 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday. In gold, JPMorgan was the only short/issuer of note, as they delivered 2,470 contract out of their in-house [proprietary] trading account---and another 170 of their client account. The biggest long/stopper was also JPMorgan, with 505 in its client account.
In silver, JPMorgan was the short/issuer of 128 contracts out of its in-house [proprietary] trading account---and Jefferies came in second with 50 contracts. The only long/stopper of note was Canada's Scotiabank with 164 contracts.
There were at least a couple of dozen stoppers involved in April's First Day Notice deliveries in gold---and yesterday's Issuers and Stoppers Report is worth studying for a minute or so---and the link is here.
March deliveries in the Comex-approved depositories ended the month as follows---84 gold and 2,113 silver contracts. Of those amounts, JPMorgan Chase out of it's in-house [proprietary] trading account, issued 4 contracts and stopped 72 contract in gold. In silver, they issued 74 contracts and stopped/took delivery of 1,313 contracts. Those 1,313 contracts represents 62% of the total March deliveries.
Just for fun, I thought I'd check out palladium, as March was the latest delivery month for that metal as well. There were 1,083 contracts issued and stopped. Of those, JPMorgan Chase [out of both accounts] issued 839 contracts---and Goldman Sachs was a distant second with 102 contracts issued. The big long/stopper was Barclays with 935 contracts. Here's the year-to-date delivery report, current to the end of March, from the CME Group for all four precious metals [plus copper] so you can see for yourself who the most active bullion banks are.
There were no reported changes in GLD---and as of 9:40 a.m. EDT there were no changes in SLV, either.
There was a sales report from the U.S. Mint to end the week. They sold 500 troy ounces of gold eagles---500 one-ounce 24K gold buffaloes---and 121,000 silver eagles. Month-to-date the mint has sold 20,000 troy ounces of gold eagles---12,000 one-ounce 24K gold buffaloes---and 4,476,000 silver eagles. Based on March's sales data to date, the silver/gold sales ratio checks in at a hair under 140 to 1. Year-to-date that ratio stands at 62 to 1. And, as matter of interest, the number of silver eagles sold year-to-date stands at 13,001,000.
It was a very busy day over at the Comex-approved depositories on Thursday. In gold, they reported receiving 61,882 troy ounces of the stuff---and shipped out 29,957 troy ounces. But in reality, the 29,957 troy ounces shipped out of Canada's Scotiabank warehouse, ended up as a deposit at HSBC USA. So the real movement on Thursday was only 32,150 troy ounces [precisely one metric tonne] shipped into Scotiabank. The link to that activity is here.
It was another breath-taking day of in/out movement in silver, as 605,679 troy ounces were reported received---and a very large 1,764,190 troy ounces were shipped out the door for parts unknown. Almost all the silver shipped out came out of Scotia Mocatta's vault. The link to that action is here.
Ted Butler mentioned that this past week was the biggest week of Comex silver activity that he can remember---and I just know that he'll have much more to say about it in his commentary to paying subscribers later today.
The Commitment of Traders showed improvement in the Commercial net short position in both silver and gold, but I was hoping for a bigger improvement than we got.
In silver, the Commercial net short position declined by 4,145 contracts, or 20.7 million troy ounces. The Commercial net short position is now down to 159 million troy ounces. The raptors, the Commercial traders other than the Big 8, bought 5,700 long contracts, but Ted said that the '5 through 8' largest short holders actually increased their short position by 2,200 contracts during the reporting week. JPMorgan covered about 700 contracts of their short-side corner in the Comex silver market---and Ted says that their short-side corner is down to about 19,000 contracts, or 95 million troy ounces. JPM's short position represents 60% of the total net short position in silver---which is preposterous.
In gold, the Commercial net short position declined by 18,313 contracts, or 1.83 million troy ounces. The Commercial net short position is now down to 12.76 million troy ounces. As the technical funds puked up their longs and/or went short---the raptors bought about 15,000 of these long contracts---and the Big 8 short holders covered about 3,500 contracts of their short position. Ted said that JPMorgan added about 500 contracts to their long-side corner in the Comex gold market---and he pegs their current long-side corner at 40,000 contracts, or 4.0 million ounces.
As I said at the start, I was expecting/hoping for a bigger improvement than the numbers showed above. It's obvious that we've had further improvement since the Tuesday afternoon cut-off for the above report, especially now that gold has closed below it's 50 and 200-day moving averages for two days in a row.
Ted pointed out the obvious on the phone yesterday, but he put my concern in concrete numbers. He said that compared to the Commitment of Traders Report at the very lows in late December 2013, both gold and silver have miles to go [in number of contracts---and therefore price] before we get back to that level. In contracts, it's around 15,000 in silver---and about 100,000 in gold. How that translates in price is unknown, but it's a lot lower than it is now.
Don't forget that it was, as Ted Butler said, all technical fund buying that drove the price up---and it's now technical fund selling that's taking it back down again as JPMorgan et al game the tech funds for fun, profit---and price management.
However, a decent chunk of those contracts in both gold and silver have been covered since the Tuesday cut-off, but the sad truth of it is that if "da boyz" wish it, we have a along way to go to the downside. But that may not be in the cards, however I just don't know how this is going to play out going forward. I was expecting much more aggressive down-side price movements going into the April delivery month---and it just never materialized.
Will it materialize next month, or are we done to the downside? Only JPM, the BIS et al, know where we're going from here---and they aren't talking. And as Jim Rickards said in that Sprott interview posted in my column yesterday---"If I were running the manipulation, I would actually be embarrassed at this point because it's so blatant."
He would be right about that---and the three charts below are just another brick in the wall for the three big U.S. bullion banks.
Yesterday, the Office of the Comptroller of the Currency [OCC] updated their website with the 4th quarter 2013 derivatives report for all U.S. banks. Of course it's only the precious metals that concern us---and it's the data from Table 9 on page 38 of this pdf file that all three charts below, are derived.
Except for a handful of readers, these charts are going to be difficult to grasp in their entirety---and to tell you the truth, even though I've been looking at these charts [or similar ones] for over a decade now---and understand them in the broad strokes, trying to describe them in layman's terms is tough.
The first chart shows the total derivatives positions held by all U.S. banks in dollars going back about 17 years. There are only a handful of U.S. banks out of the 6,000 plus registered banks in the U.S.---a half-dozen at most---that hold 100% of all these gold derivatives---and well over 95% of them are held by JPMorgan Chase, Citigroup and HSBC USA. Over 90% of the "Others" category on all three charts is composed of positions held by HSBC USA. As the price of gold has risen, the dollar value of the derivatives written has also risen, which is why chart #1 and chart #3 have the left-to-right shape they do.
As interesting as that chart is, the dollar figures don't tell you a lot. But if you convert the dollars to tonnes of gold that the amounts represent, then you get a chart that looks like the one below---and it's much more meaningful. It shows the monstrous derivatives positions held by the banks when gold hedging/forward selling was at its peak---and as the gold miner's hedge book has been closed out over the years, the derivatives written against what left of the gold hedge book has declined as well. And, as Nick Laird just mentioned---"With the hedge book basically unwound, what's left are the derivatives that are not involved in hedging". Remember that it cost Barrick Gold $10 billion to extricate itself from its hedge book loses. Virtually all of the $10 billion went to JPMorgan Chase, as they were Barrick's bullion bank.
Back on June 27, 1999---when gold hedging/forward selling was at its peak, silver analyst Ted Butler wrote an essay entitled "The Death of Hedging". It falls into the must read category---and I urge you to read it now before continuing, as it will help you understand these OCC charts a little better.
The third chart is similar to the first one. The OCC doesn't provide a break-down of derivatives held for silver, platinum and palladium separately, but just puts them all in one category---and for that reason you can't have a tonnage chart like the one for gold above, as all these metals are at different prices---and tonnages mined.
The take-away on all this, at least in the broad strokes, is that '3 or less' U.S. bullion banks control every aspect of the precious metal markets, with JPMorgan firmly in charge. They run the show on the Comex---and in the OTC derivative market that these charts represent. Yes, there are derivatives written by other foreign banks and probably some large brokerage firms as well [Morgan Stanley comes to mind], but they are spread out over such a large number of players that they're overall impact is minimal. It's JPMorgan et al all the way, both at home and abroad.
****
Non redundant news and views.....
Doug Noland: Q.E., Uncertainty---and CPI
As much as it is reminiscent of the late-nineties, the more apt comparison is to the Roaring Twenties. Major technological innovation throughout the 1920’s had unappreciated consequences on the economic structure and price dynamics more generally. Misunderstanding the forces behind the downward pressure on many prices, the Federal Reserve remained too highly accommodative for too long. In the process, the Fed harbored a prolonged period of deep economic maladjustment, while fostering a historic speculative financial Bubble.
From my reading of history, central banks must be especially diligent with respect to monetary stability (“money” and Credit) during periods of profound technological and financial innovation. Repeating mistakes from the Twenties, the Fed and global central bankers have again done the exact opposite (for a long time now).
From my perspective, the downward pressure on the general consumer price level has been exacerbated by QE3. But this is foremost a “supply” issue as opposed to “deflation.” And as much as the Fed speaks of its 2% inflation “mandate” – and as much as the markets assume this mandate will eventually justify QE4 – low inflation should be recognized at this point as predominantly a global issue. The Fed and its now grossly bloated balance sheet do not control CPI.
As I say every week at this time, Doug's weekly missive over at the prudentbear.com Internet site always falls in the must readcategory for me.
Three King World News Blogs
1. Ben Davies: "Man Who Made Legendary Call in Silver Tells KWN What's Next" 2. Egon von Greyerz: "People Have No Idea a Terrifying Global Meltdown is Coming" 3. Michael Pento: "Shocking - What Pento Said to Get Him Erased From CNBC"
Jim Rickards: Russia, China signposting dollar’s demise and gold’s rise
"Our budget deficit in the U.S. is coming down, but our debt to GDP ratio is still going up. Policy-makers are saying they have cut the deficit from 10 percent of GDP to about three or four percent, but growth is only at two percent, so the debt to GDP ratio is still going up - we are still on the path to Greece."
"I don't see a lot of recognition of the problem. The actual cause of these problems is that the models the policy-makers are using do not accord with reality."
"The Fed wants [benign] inflation but they are not getting it. They have tried everything - QE1, QE2, QE3, Operation Twist, currency wars, forward guidance and nominal GDP targeting - but none of their measures has had the desired effects," he adds.
The most likely outcome is some sort of catastrophic collapse, he said. "You could have a hyperinflationary outburst, followed by collapse and social disorder, followed by some sort of neo-fascist deflation."
Flowing from this, he said, the US currency will be devalued against gold - meaning large increases in the dollar price of gold.
The rest of this rather short interview with The Bullion Desk was posted on the fastmarkets.com Internet site on Thursday---and I thank Harold Jacobsen for bringing it to our attention.
Japanese Prepare For "Abenomics Failure", Scramble to Buy Physical Gold
As we reported on Thursday, the world's most clueless prime minister, Japan's Shinzo Abe, has suddenly found himself in a "no way out" situation, with inflation for most items suddenly soaring (courtesy of exported deflation slamming Europe), without a matched increase in wages as reflected in the "surprising" tumble in household spending, which dropped 2.5% on expectations of a 0.1% increase in the month ahead of Japan's infamous sales tax hike.
How does one explain this unwillingness by the public to buy worthless trinkets and non-durable goods and services ahead of an imminent price surge? Simple - while the government may have no options now, the same can not be said of its citizens who have lived next to China long enough to know preciselywhat to do when faced with runaway inflation, and enjoying the added benefit of a collapsing currency courtesy of Kuroda's "wealth effect." That something is to buy gold, of course, lots of it.
According to the Financial Times, "Tanaka Kikinzoku Jewelry, a precious metals specialist, reported that sales of gold ingots across seven of its shops are up more than 500% this month. At the company’s flagship store in Ginza on Thursday, people queued for up to three hours to buy 500g bars worth about ¥2.3m ($22,500). March has been the busiest month in Tanaka’s 120-year history."
This must read commentary showed up on the Zero Hedgewebsite late on Thursday morning EDT---and my thanks go out to reader M.A. for today's last story.
***
¤ THE WRAP
I think it is absolutely crazy that we have allowed our markets to evolve into such a state where a small (less than 100) group of specialized trading entities (mostly not trading their own money) are determining prices for the rest of the world. Some will be quick to say that the COMEX or CBOT are not the only markets in the world, but that’s naรฏve. These markets set the price of metals and grains, period. Everything is based off these exchanges. This creates problems, since the traders setting the price (the technical funds) are completely distinct and separate from the real producers and consumers of commodities.
What makes technical funds technical is that they are only concerned with price change and not anything else; this is what separates them from the real producers and consumers who must contend with mining costs and profit margins. The technical funds only consider the price and not the underlying fundamentals. This is what makes the stories about pending economic weakness being signaled by lower copper prices ironic, because those who are creating the lower prices (the technical funds) don’t consider economic activity at all. - Silver analyst Ted Butler: 26 March 2014
Today's pop "blast from the past" is one I've posted before, but it's been a few years. It's a tribute to George Harrison of the Beatles. He was no longer with us when this tribute was performed---but his son Dhani was---and he looks just like his dad! The tune is a classic---as are the all-star musicians. Prince is awesome---and the link is here---and it's definitely worth the trip!
Today's classical "blast from the past" is a composition by little-known composer and piano virtuoso Henry Charles Litolff. He was born in London in 1818---and died near Paris in 1891. About the only music of his that still survives to this day is the Scherzo from his Concerto Symphonique No. 4 for piano and orchestra in D minor, Op. 102. It's a virtuoso piece that shows up mostly on recordings these days---and hardly ever in the concert hall. Too bad, as it's extraordinary---and the crowd just eats it up. The link to this 8:21 minute 2006 recording posted over at the youtube.com Internet site, is here. Enjoy.
Another day with not much happening from a price perspective anywhere on Planet Earth yesterday. I've already discussed my COT/price concerns at length in my commentary on the Commitment of Trader Report at the top of today's column, so I shall not revisit the issue here at any length.
Once again I'll post the 6-month gold and silver charts to indicate how this engineered price decline is proceeding.
Can we go lower in price from here? You betcha---but that's entirely up to JPMorgan et al. Can we rally strongly from here? You betcha---that's also entirely up to JPMorgan et al. Forget supply---and forget demand. As Ted Butler has been saying for decades---and I happily agree---it's the technical funds being run up and down through buy and sell stops that sets the price---and when when JPMorgan wills it, the engineered price decline begins and they ring the cash register for fun, profit---and price management purposes.
That's not just for all four precious metals and copper, it's all Comex-traded commodities that "da boyz" have hijacked. How did it come to this?
But that's only part of the attempt by the powers that be to keep the whole world's economic, financial and monetary system from coming unglued---and they can't keep it up forever. But when the end comes, it will probably be ugly. At that time the precious metal will shine, but the world we live in after that will probably leave a lot to be desired.
And on that happy note, I'm done for the day---and the week.
Enjoy what's left of your weekend---and I'll see you here on Tuesday.
Doug Noland: Q.E., Uncertainty---and CPI
As much as it is reminiscent of the late-nineties, the more apt comparison is to the Roaring Twenties. Major technological innovation throughout the 1920’s had unappreciated consequences on the economic structure and price dynamics more generally. Misunderstanding the forces behind the downward pressure on many prices, the Federal Reserve remained too highly accommodative for too long. In the process, the Fed harbored a prolonged period of deep economic maladjustment, while fostering a historic speculative financial Bubble.
From my reading of history, central banks must be especially diligent with respect to monetary stability (“money” and Credit) during periods of profound technological and financial innovation. Repeating mistakes from the Twenties, the Fed and global central bankers have again done the exact opposite (for a long time now).
From my perspective, the downward pressure on the general consumer price level has been exacerbated by QE3. But this is foremost a “supply” issue as opposed to “deflation.” And as much as the Fed speaks of its 2% inflation “mandate” – and as much as the markets assume this mandate will eventually justify QE4 – low inflation should be recognized at this point as predominantly a global issue. The Fed and its now grossly bloated balance sheet do not control CPI.
As I say every week at this time, Doug's weekly missive over at the prudentbear.com Internet site always falls in the must readcategory for me.
From my reading of history, central banks must be especially diligent with respect to monetary stability (“money” and Credit) during periods of profound technological and financial innovation. Repeating mistakes from the Twenties, the Fed and global central bankers have again done the exact opposite (for a long time now).
From my perspective, the downward pressure on the general consumer price level has been exacerbated by QE3. But this is foremost a “supply” issue as opposed to “deflation.” And as much as the Fed speaks of its 2% inflation “mandate” – and as much as the markets assume this mandate will eventually justify QE4 – low inflation should be recognized at this point as predominantly a global issue. The Fed and its now grossly bloated balance sheet do not control CPI.
As I say every week at this time, Doug's weekly missive over at the prudentbear.com Internet site always falls in the must readcategory for me.
Three King World News Blogs
1. Ben Davies: "Man Who Made Legendary Call in Silver Tells KWN What's Next" 2. Egon von Greyerz: "People Have No Idea a Terrifying Global Meltdown is Coming" 3. Michael Pento: "Shocking - What Pento Said to Get Him Erased From CNBC"
Jim Rickards: Russia, China signposting dollar’s demise and gold’s rise
"Our budget deficit in the U.S. is coming down, but our debt to GDP ratio is still going up. Policy-makers are saying they have cut the deficit from 10 percent of GDP to about three or four percent, but growth is only at two percent, so the debt to GDP ratio is still going up - we are still on the path to Greece."
"I don't see a lot of recognition of the problem. The actual cause of these problems is that the models the policy-makers are using do not accord with reality."
"The Fed wants [benign] inflation but they are not getting it. They have tried everything - QE1, QE2, QE3, Operation Twist, currency wars, forward guidance and nominal GDP targeting - but none of their measures has had the desired effects," he adds.
The most likely outcome is some sort of catastrophic collapse, he said. "You could have a hyperinflationary outburst, followed by collapse and social disorder, followed by some sort of neo-fascist deflation."
Flowing from this, he said, the US currency will be devalued against gold - meaning large increases in the dollar price of gold.
The rest of this rather short interview with The Bullion Desk was posted on the fastmarkets.com Internet site on Thursday---and I thank Harold Jacobsen for bringing it to our attention.
"I don't see a lot of recognition of the problem. The actual cause of these problems is that the models the policy-makers are using do not accord with reality."
"The Fed wants [benign] inflation but they are not getting it. They have tried everything - QE1, QE2, QE3, Operation Twist, currency wars, forward guidance and nominal GDP targeting - but none of their measures has had the desired effects," he adds.
The most likely outcome is some sort of catastrophic collapse, he said. "You could have a hyperinflationary outburst, followed by collapse and social disorder, followed by some sort of neo-fascist deflation."
Flowing from this, he said, the US currency will be devalued against gold - meaning large increases in the dollar price of gold.
The rest of this rather short interview with The Bullion Desk was posted on the fastmarkets.com Internet site on Thursday---and I thank Harold Jacobsen for bringing it to our attention.
Japanese Prepare For "Abenomics Failure", Scramble to Buy Physical Gold
As we reported on Thursday, the world's most clueless prime minister, Japan's Shinzo Abe, has suddenly found himself in a "no way out" situation, with inflation for most items suddenly soaring (courtesy of exported deflation slamming Europe), without a matched increase in wages as reflected in the "surprising" tumble in household spending, which dropped 2.5% on expectations of a 0.1% increase in the month ahead of Japan's infamous sales tax hike.
How does one explain this unwillingness by the public to buy worthless trinkets and non-durable goods and services ahead of an imminent price surge? Simple - while the government may have no options now, the same can not be said of its citizens who have lived next to China long enough to know preciselywhat to do when faced with runaway inflation, and enjoying the added benefit of a collapsing currency courtesy of Kuroda's "wealth effect." That something is to buy gold, of course, lots of it.
According to the Financial Times, "Tanaka Kikinzoku Jewelry, a precious metals specialist, reported that sales of gold ingots across seven of its shops are up more than 500% this month. At the company’s flagship store in Ginza on Thursday, people queued for up to three hours to buy 500g bars worth about ¥2.3m ($22,500). March has been the busiest month in Tanaka’s 120-year history."
This must read commentary showed up on the Zero Hedgewebsite late on Thursday morning EDT---and my thanks go out to reader M.A. for today's last story.
***
¤ THE WRAP
I think it is absolutely crazy that we have allowed our markets to evolve into such a state where a small (less than 100) group of specialized trading entities (mostly not trading their own money) are determining prices for the rest of the world. Some will be quick to say that the COMEX or CBOT are not the only markets in the world, but that’s naรฏve. These markets set the price of metals and grains, period. Everything is based off these exchanges. This creates problems, since the traders setting the price (the technical funds) are completely distinct and separate from the real producers and consumers of commodities.
What makes technical funds technical is that they are only concerned with price change and not anything else; this is what separates them from the real producers and consumers who must contend with mining costs and profit margins. The technical funds only consider the price and not the underlying fundamentals. This is what makes the stories about pending economic weakness being signaled by lower copper prices ironic, because those who are creating the lower prices (the technical funds) don’t consider economic activity at all. - Silver analyst Ted Butler: 26 March 2014
What makes technical funds technical is that they are only concerned with price change and not anything else; this is what separates them from the real producers and consumers who must contend with mining costs and profit margins. The technical funds only consider the price and not the underlying fundamentals. This is what makes the stories about pending economic weakness being signaled by lower copper prices ironic, because those who are creating the lower prices (the technical funds) don’t consider economic activity at all. - Silver analyst Ted Butler: 26 March 2014
Today's pop "blast from the past" is one I've posted before, but it's been a few years. It's a tribute to George Harrison of the Beatles. He was no longer with us when this tribute was performed---but his son Dhani was---and he looks just like his dad! The tune is a classic---as are the all-star musicians. Prince is awesome---and the link is here---and it's definitely worth the trip!
Today's classical "blast from the past" is a composition by little-known composer and piano virtuoso Henry Charles Litolff. He was born in London in 1818---and died near Paris in 1891. About the only music of his that still survives to this day is the Scherzo from his Concerto Symphonique No. 4 for piano and orchestra in D minor, Op. 102. It's a virtuoso piece that shows up mostly on recordings these days---and hardly ever in the concert hall. Too bad, as it's extraordinary---and the crowd just eats it up. The link to this 8:21 minute 2006 recording posted over at the youtube.com Internet site, is here. Enjoy.
Another day with not much happening from a price perspective anywhere on Planet Earth yesterday. I've already discussed my COT/price concerns at length in my commentary on the Commitment of Trader Report at the top of today's column, so I shall not revisit the issue here at any length.
Once again I'll post the 6-month gold and silver charts to indicate how this engineered price decline is proceeding.
Can we go lower in price from here? You betcha---but that's entirely up to JPMorgan et al. Can we rally strongly from here? You betcha---that's also entirely up to JPMorgan et al. Forget supply---and forget demand. As Ted Butler has been saying for decades---and I happily agree---it's the technical funds being run up and down through buy and sell stops that sets the price---and when when JPMorgan wills it, the engineered price decline begins and they ring the cash register for fun, profit---and price management purposes.
That's not just for all four precious metals and copper, it's all Comex-traded commodities that "da boyz" have hijacked. How did it come to this?
But that's only part of the attempt by the powers that be to keep the whole world's economic, financial and monetary system from coming unglued---and they can't keep it up forever. But when the end comes, it will probably be ugly. At that time the precious metal will shine, but the world we live in after that will probably leave a lot to be desired.
And on that happy note, I'm done for the day---and the week.
Enjoy what's left of your weekend---and I'll see you here on Tuesday.
Additional items.....
28 MARCH 2014
Gold Daily And Silver Weekly Charts - Here Comes April
"It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste.
But in practice such a society could not remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupified by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realise that the privileged minority had no function, and they would sweep it away.
In the long run, a hierarchical society was only possible on a basis of poverty and ignorance."
George Orwell, 1984
Gold stabilized today, and silver showed a little resilience.
There was the usual in and out of the Comex gold warehouses yesterday, which are preparing for the April active delivery month.
And I would be remiss if I did not remind you that with the end of the month comes a new Non-Farm Payrolls report next week.
There was intraday commentary and an interview with Jim Rickards on gold manipulation today that you might wish to have a look at here.
I see where the IMF is already putting the Ukraine on the loans and austerity treadmill. (cf. Greece)
Have a pleasant weekend.
Gold Daily And Silver Weekly Charts - Here Comes April
"It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste.
But in practice such a society could not remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupified by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realise that the privileged minority had no function, and they would sweep it away.
In the long run, a hierarchical society was only possible on a basis of poverty and ignorance."
George Orwell, 1984
Gold stabilized today, and silver showed a little resilience.
There was the usual in and out of the Comex gold warehouses yesterday, which are preparing for the April active delivery month.
And I would be remiss if I did not remind you that with the end of the month comes a new Non-Farm Payrolls report next week.
There was intraday commentary and an interview with Jim Rickards on gold manipulation today that you might wish to have a look at here.
I see where the IMF is already putting the Ukraine on the loans and austerity treadmill. (cf. Greece)
Have a pleasant weekend.
And from GATA....
Gene Arensberg: Comex commercials covering gold shorts in a hurry
Submitted by cpowell on Sat, 2014-03-29 15:29. Section: Daily Dispatches
10:30p ICT Saturday, March 29, 2014
Dear Friend of GATA and Gold:
Gene Arensberg's Got Gold Report today discloses a huge amount of short-covering in gold futures by commercial traders. Arensberg writes:
"From what we see here and in the positioning of the U.S. banks in futures from last month we have to believe that the gold trade now expects and is positioning for a higher, not a lower gold price in 2014. The sudden, overly large reduction in the producer/merchant gross shorts this commitment-of-traders week is kind of an earthquake in that regard."
Arensberg's commentary is headlined "Comex Commercial Traders Covering Gold Shorts in a Hurry" and it's posted at the GGR Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Class-action anti-trust suit against London gold fixers draws on GATA consultant's work
Submitted by cpowell on Sat, 2014-03-29 08:45. Section: Daily Dispatches
3:40p ICT Saturday, March 29, 2014
Dear Friend of GATA and Gold:
Another class-action anti-trust lawsuit against the five international banks operating the London daily gold price fixings was filed this week in U.S. District Court in New York. The lawsuit complains that the daily gold fixing is anti-competitive and collusive on its face, insofar as it involves nominal market competitors communicating privately to set prices, quite apart from any good intentions they might have. The lawsuit draws on the recent studies reported by news organizations raising questions about the London fixing as well as on the recent work of GATA consultant James McShirley, whose study, "The Curious Case of the PM Fix vs. the AM Fix," was published two weeks ago:
The suit was brought by the law firm of Berger & Montague in Philadelphia and the New York firm of Quinn, Emanuel, Urquhart, and Sullivan. It is packed with market data analysis and price charts and it's posted at GATA's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Alasdair Macleod: China regulates gold too tightly for 'shadow banking system' to play with it
Submitted by cpowell on Sat, 2014-03-29 08:09. Section: Daily Dispatches
3:07p ICT Saturday, March 29, 2014
Dear Friend of GATA and Gold:
GoldMoney research director Alasdair Macleod dismisses speculation that gold has been caught up by commodity financing deals in China. Gold is tightly regulated by the Chinese government, Macleod writes, and it's unlikely that the country's "shadow banking system" would be able to play so fast and loose with it. His commentary is headlined "Chinese Shadow Banking and Commodities" and it's posted at GoldMoney here:
Sprott Asset Management CEO describes the control of Comex option writers over the gold price during option expiration this week:
The TF Metals Report's Turd Ferguson elaborates on evidence that JPMorganChase's long corner on gold on the New York Commodities Exchange is actually a Chinese government position:
And there are three more interviews of interest at King World News.
-- Fund manager Michael Pento describes getting censored by CNBC for comments that the financial establishment may have found incendiary:
-- Gold fund manager Egon von Greyerz itemizes indications of economic collapse:
-- And Hinde Capital CEO Ben Davies provides his views on the prospects for silver:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
and......
The US Is Like A Ship With No Lifeboats (Full Of Suicidal Bankers)
Submitted by Tyler Durden on 03/29/2014 13:04 -0400
- Central Banks
- China
- Germany
- Jim Rickards
- Milton Friedman
- Monetary Policy
- Reserve Currency
- United Kingdom
Authored by Hugo Salinas Price via The Burning Platform blog,
“If the U.S. inflates and devalues the dollar, gold will go much higher in price” Jim Rickards.
The last dollar devaluation took place under President Roosevelt in 1934, when from being worth 1/20.67th of an ounce of gold in 1933, the dollar was devalued to 1/35th of an ounce of gold.
The last opportunity for devaluing the dollar took place in August 1971, when the dollar was still pegged at 1/35th of an ounce of gold. Nixon took the advice of Milton Friedman and made the worst mistake in history; Nixon did not devalue the dollar as he should have done, but simply took the US off the gold standard, such as it was, and thence forth the US refused to redeem dollars held by Central Banks around the world at any price.
Since August 15, 1971, the dollar can no longer be devalued.
Since the dollar is the reserve currency of all Central Banks in the world, all other currencies – the euro included – are only derivatives of the dollar. The proof of this statement is that the value of each and every currency in the world is calculated in dollars,
The world’s currencies are devalued or revalued against the dollar in the world’s currency markets every day of the year.
There is a “Dollar Index” which shows a value of the dollar against a basket of other currencies. However, the currencies selected for the basket are arbitrarily selected and some relatively important currencies are not included in the basket. Besides this, the movement of the dollar in the “Dollar Index” cannot signify either devaluation or revaluation of the dollar, because the currencies in the Index are themselves undergoing either depreciation or appreciation in dollar terms, due to their own national circumstances.
The US cannot declare an official devaluation of the dollar because there is nothing against which it may devalue, or rather, it does not wish to recognize the existence of gold as money, against which it might devalue.
In order for the US to devalue the dollar effectively, it would first be absolutely necessary for the US government to establish gold as the referent for its value. The US government would have to declare that the value of the dollar is equivalent to a given amount of gold, and solemnly promise that that value will be upheld and made good by offering to buy any amount of gold tendered to it, and pay for it in dollars at a price slightly below the officially established price of gold in dollars, as well as offering to sell any amount of gold paid for in dollars, at a price slightly above the officially established price of gold in dollars.
Once an official value of the dollar in gold were established, it would then once again be possible for the US government to renege on its promise and devalue the dollar by establishing a new and lower value of the dollar in gold. In other words, the dollar must first of all be freely convertible into gold at an official rate, before any devaluation can take place.
As things now stand, it is impossible to devalue the dollar.
A rising price of gold does not devalue the dollar, because there is no official link between gold and the dollar. The world’s monetary and financial systems have no link to gold. Gold can be any price without causing any effect upon those systems. We have seen gold at $1900 dollars per ounce, and things were running just as they were when gold was $300 dollars per ounce.
However, the rising price of gold is a huge embarrassment to the US government not because it devalues the dollar (it does not do this) but because it provokes a loss of confidence in the dollar. When the dollar is seen as falling in value against gold, its fall causes investors to exchange dollars and other currencies for gold as a means of protecting wealth. The rising price of gold is a blot on the prestige of the US dollar and the prestige of the US itself.
The price of gold in dollars is therefore under strict government control. This fact, once derided as ridiculous, is increasingly accepted as truth by those interested in monetary matters around the world. The means for controlling the price of gold lies in the massive sales of “paper gold” which take place to suppress its price, as so many investigators have amply documented.
US monetary policy considers that the dollar is here to stay forever, and that gold is no longer – and never again will be – the world’s ultimate money.
The governments of several nations around the world do not share the same conviction with regard to the permanence of the dollar. China invented irredeemable paper money – which is what the whole world uses today – some one thousand years ago, and several dynasties of Chinese emperors learned to their cost that paper money always degenerates into simple trash.
The Chinese government knows that the dollar will not be around forever. China is purchasing enormous amounts of gold to add to their huge pile of US Bonds in the reserves of the Bank of China; the government of China is more enlightened than the government of the US, because it is encouraging the Chinese to purchase gold and silver.
The US government tells the world that it possesses some 8,000 tonnes of gold; the fact that it cannot deliver physical gold held for Germany’s account belies the assurances regarding the physical gold stock of the US.
The situation for the US – and for the world – is dangerous: the US is like a ship with no lifeboats, because it is presumed to be unsinkable.
The US and its allies are allowing the Chinese and Asia in general, to take possession of huge amounts of gold every year, while the US, the UK and Europe are drained of gold by shipments to the East.
The US evidently believes that the dollar is here to stay and that gold is just a passing fancy. This is classic hubris or arrogance.
When serious problems for the dollar surface – as they surely will – and the US has little or no gold to fall back on, the US with its back to the wall may become a very dangerous entity in the world. Would it be possible for those running the US to loose their heads and decide for a suicidal nuclear war in response to a desperate economic situation? Does the destruction of the whole world matter to men about to take their own lives? Do suicidal bankers worry about the fate of the world?
A First Glance At US Official Gold Reserves Audits
I probably missed this story because I didn’t have blog when this came out in 2011, but apparently the official gold reserves of the United States are being audited every year. I thought the last audit was done in 1974, based on information from the mainstream and alternative media; darn media! Though I haven’t been the only one who has ever been misinformed on this subject.
Ron Paul, who was a a well informed member of the US House of Representatives in 2011, proposed new legislation at the time to have yearly audits of the US official gold reserves: The Gold Reserve Transparency Act (not enacted). Only during the preparation of the congressional hearing Dr Paul became aware there had been yearly audits in recent decades. Strangely the biggest proponent of a gold standard in US politics didn’t have access to this information prior to the investigation. From Paul’s opening statement at the hearing June 23, 2011:
In a way, it seems as though someone decided to lock up the gold, put the key in a desk somewhere, and walk off without telling anyone anything. Only during the preparation for this hearing was my office informed that the Mint has in fact conducted assays of statistically representative samples of gold bars, and we were provided with a sample assay report.…This information should be published and available to the American people. This gold belongs to the people, especially since much of it was forcibly taken from them in the 1930s, and the Government owes it to the people to provide them with the details of these holdings. We would greatly benefit from a full, accurate inventory audit and assay with detailed explanations of who owns the gold and who is responsible for ownership, custody, and auditing.
After digging through a few documents (source 1, source 2, source 3) regarding the US official gold reserves and audits that have been done from 1974 till present, I decided to write a post purely based on data published by the US government. This post will be part one of a series.
All Official Gold Reserves Stored On US Soil
In total the US official gold reserves account for 8134 metric tonnes, this gold is owned by the US Treasury. It was handed over to the Treasury by the Federal Reserve in 1934, which in return received gold certificates. Currently these certificates on the balance sheet of the Federal Reserve are still valued at $42.22 – this statutory value was set in 1973. In my view the price of gold on the Fed’s balance sheet was never revalued to mark to market to deny gold’s true value and mask the weakness of the dollar in order to sustain the US dollar hegemony. Note, technically the gold certificates can’t be redeemed for gold, only for dollars.
Currently the US Mint is the custodian for 95 % of the Treasury’s gold, this is stored in 42 vault compartments at three different locations in the US. 4583 metric tonnes is stored at Fort Knox, Kentucky, 1364 metric tonnes at Denver, Colorado, and 1682 at West Point, New York. Additionally the US Mint holds roughly 70 metric tonnes in blank coins and working stock.
Click here for an overview of all US official gold reserves, here for a bars list in PDF or xls held at Fort Knox, Denver and West Point. (click here for the excel sheet from my Google Drive)
The Federal Reserve Bank of New York is the custodian of the remaining 5 % of the Treasury’s gold. 418 metric tonnes rest at the bedrock underneath 33 Liberty street, New York. Build in the early 1920’s this vault has 122 compartments that have a combined maximum capacity of over 12,000 metric tonnes. Excluding the 418 metric tonnes of the US Treasury, at this moment 6196 metric tonnes are being stored at the NY Fed for 60 sovereign nations and the IMF. According to my findings it’s not known how much every single nation has deposited – except for Germany, 1520 metric tonnes, and The Netherlands, 300 metric tonnes.
Click here to track the total of official foreign gold deposits held at the NY Fed.
In the screen shot below we can see the Federal Reserve values not only its own gold holdings at $42.22, but also the gold it stores for foreign nations. One could say this is done for the simplicity of accounting, I would say it supports the US dollar hegemony paradigm.
Some central banks disclose the floating value of gold on their balance sheet, this acknowledges the true value of gold and the anchor, or sun, it represents in the monetary system; the value of fiat currencies can rise and fall relative to gold. This is a screen shot of the balance sheet of the ECB, their gold is valued mark to market:
How much gold from the IMF is stored at the NY Fed is also unknown. I tried to ask the IMF, but this institution appears to be impossible to penetrate regarding gold inquiries. They don’t handle any inquiries over the phone, the only entrance is an email address that repeatedly returned me the usual:
Given security concerns, the information you request is not available for public consumption.We hope for your understanding.Best regards,Office of Public AffairsCommunications DepartmentInternational Monetary FundE-Mail: publicaffairs@imf.org
The WGC, surprisingly, was also unable to help.
At this moment the only information I have is from a statement in writing (page 64) by Eric Thorson, US Inspector General, in 2011:
The U.S. gold contributions to the IMF are not included in the U.S. gold reserves reported by the Mint or Treasury. From 1947 through 1970, the U.S. paid its initial quota subscription and subsequent increases to that quota subscription to the IMF in four separate contributions. Those contributions were in the form of gold and were each valued at the time the payments were made. Overall, the U.S. contributed 47.9 million ounces [1490 metric tonnes] of gold, to the IMF.…It should be noted that once the gold contribution to the IMF was made, it became the property of the IMF. In return, the U.S. received a claim on the IMF equal to the amount of its gold payment. To reiterate, this amount is not included in the U.S. gold reserves. It is our understanding that the gold contributed by the U.S., as well as gold contributed by other countries to the IMF is commingled.We have been told that the IMF holds its gold in the following Central Banks: the Federal Reserve Bank of New York, the Bank of England, the Bank of France, and the Central Bank of India.
If the IMF’s gold is stored at central banks I can’t understand the safety concerns they mentioned. Which of these central bank’s vault is not safe?
Audits Of The US Official Gold Reserves
On September 23, 1974, members of Congress were invited to inspect the US official gold reserves stored at Fort Knox. Following the Congressional inspection, which involved removal of the seals and opening selected vault compartments, an audit was conducted in September and October 1974. The General Accounting Office (GAO), in cooperation with auditors from the Mint, Bureau of Government Financial Operations (BGFO), US Customs Service, and the Treasury Department’s Office of Audit conducted an audit of 21 % of the gold bars stored at Fort Knox. Assay tests were taken. In the report of the audit, the GAO recommended for continuing audits of the gold in custody of the Mint.
During the Congressional inspection the press was also allowed to enter Fort Knox and take pictures, which could have been the reason this audit kept buzzing around in the media for many decades as the last audit.
There have been several audits after 1974. On June 3, 1975 the Secretary of the Treasury ordered a committee, consisting of the Bureau of Government Financial Operations (BGFO), the Mint and the Federal Reserve Bank of New York, to conduct Continuing Audits of all United States Government-owned Gold. The order was designed to audit 10 % of the Treasury’s gold per annum.
Audits Of The US Official Gold Reserves At The Mint
As mentioned before the US Mint is the custodian of all the US Government-owned gold not stored at the Federal Reserve Bank of New York. In 1975 the staffs from the BGFO and the Mint were appointed to audit the gold stored at the Mint. During this process the gold bars were physically moved from one vault compartment to another. The melt numbers and the number of bars in each melt were verified with an inventory list (one melt averages about 20 bars cast from one crucible of molten gold). One in fifty melts was randomly selected for weighing and assaying.
This was done from 1975 to 1986, placing all inventoried vault compartments that it observed and tested under Official Joint SeaI. In 1986, 97 percent of the gold stored at the Mint had been audited.
Statement Eric Thorson from the Office Inspector General (IG) in 2011:
In June 1975, the Treasury Secretary authorized and directed a continuing audit of U.S. Government-owned gold for which Treasury is accountable. Pursuant to that order, the Committee for Continuing Audit of the U.S. Government-owned Gold performed annual audits of Treasury’s gold reserves from 1975 to 1986, placing all inventoried gold that it observed and tested under an official joint seal.…The committee was made up of staff from Treasury, the Mint, and the Federal Reserve Bank of New York. The annual audits by the committee ended in 1986 after 97 percent of the Government- owned gold held by the Mint had been audited and placed under official joint seal.
From 1986 to 1992, the Mint continued on it’s own to perform annual audits in accordance with its own policies over those compartments that had not been placed under Official Joint Seal by the committee.
In 1993 the Office Inspector General Department of the Treasury (IG) took over and began conducting the annual audits of the Mint’s gold, including the Mint’s financial statements. For the first time an independent private contractor, KPMG, was hired to verify all statements. Additionally KPMG accompanied the IG on a number of observations in the vaults. To my understanding the IG has only assayed the final 3 % of gold held at the Mint that wasn’t placed under Joint Seal before 1986 under supervision of KPMG. Assay test that are published were conducted by the private firm Ledoux & Company (2004) and a US army branch White Sands Missile Range (2005-2008). Furthermore the yearly audits consisted of checking the Joint Seals that were placed on 97 % of the Mint’s gold before 1986.
By 2008 all gold held at the Mint, 7715 metric tonnes, was placed under Official Joint Seal. I haven’t found anything about the IG ever breaking old Joint Seals (pre 1986) to re-audit and assay gold in those compartments under the supervision of KPMG.
In 2010 the IG decided to renew all Joint Seals of the 42 vault compartments of the US Mint in the presence of an auditor of the IG itself and staff from the Mint. KPMG did not attend this procedure although KPMG had been contracted to supervise the audits since 1993. I find this remarkable as KPMG’s job was mainly to check the Official Joint Seals every year. Why didn’t they attend when these seals were broken and renewed in 2010?
From a statement (page 48) by Eric Thorson (IG) in 2011:
As discussed earlier, by the end of fiscal year 2008, all of the deep storage gold reserves in the Mint’s custody had been 100 percent inventoried and audited. During our fiscal year 2010 and 2009 audits of the deep storage gold, our audit procedures consisted primarily of inspecting the Official Joint Seals on the previously inventoried compartments to determine whether they had been altered or compromised in any way. We found no exceptions.More recently the Mint decided to replace all of the previously placed Official Joint Seals with new seals. The new seals are more durable, having a double security barrier seal that can only be removed by two cuts with a strong cable cutter.The Mint replaced all of the previously placed Official Joint Seals with new ones during fiscal year 2010. The seal replacement process consisted of two steps: (1) inspection of all previously placed Official Joint Seals on all the compartments containing deep storage gold to determine whether they had been altered or compromised in any way, and (2) placement of a new Official Joint Seal. The seal inspection and replacement process was carried out for all 42 deep storage gold compartments, in the presence of a Treasury OIG auditor, by a Mint headquarter staff person, representing the Mint Director, and a Mint storage facility staff person, representing the facility’s Plant Manager. For each Official Joint Seal removed, the Mint headquarters representative, the Mint storage facility representative, and the observing Treasury OIG auditor signed an inspection report; the same parties also signed the new Official Joint Seal that replaced the one removed.
Audits Of The US Official Gold Reserves At Federal Reserve Bank Of New York
US Treasury’s gold held at the NY Fed was audited periodically from 1975 to 1985 only by examiners of the Board of Governors of the Federal Reserve System. No independent private firm was contracted. The audit procedures followed were different from those at the Mint, as there were no assay samples taken to verify the purity of the gold. In 1985 the NY Fed ceased its audits completely.
It wasn’t until Ron Paul proposed The Gold Transparency Act in 2011 when he pressured Inspector General (IG) Eric Thorson to do an audit of the Treasury’s gold at the NY Fed. The hearing of Thorson, that was part of the investigation for the proposed legislation, revealed some remarkable facts.
Dr Paul confronted Thorson with the 31 U.S. Code § 5302 law (1982) on the Exchange Stabilization Fund (ESF) that states:
Subject to approval by the President, the fund [ESF] is under the exclusive control of the Secretary of the Treasury… Decisions of the Secretary are final and may not be reviewed by another officer or employee of the Government.…The Secretary or an agency designated by the Secretary, with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities the Secretary considers necessary.
Thorson responded that gold stored at the Mint can’t be used for such dealings, but he declined to mention that the gold at the NY Fed perhaps can. (Page 55)
Thorson also stated in 2011 (Page 55):
It should be noted that we are currently working with the Department and the FRB-NY to inventory and audit the Treasury gold that is on deposit with the FRB-NY. As part of the audit, we plan to obtain independent assays of a sample of the gold bars.
After this promise the IG published an audit report in 2012, done without the supervision of KPMG, of the Treasury’s gold stored at the NY Fed. In the report we can’t find any assay tests, though there has been a bar list of the 418 metric tonnes released. (page 129)
The NY Fed claims to have always done continuing audits on their own behalf (page 54):
The FRB-NY holds gold deposits on behalf of a number of account-holders, including the U.S. Government. Upon depositing gold, FRB—NY matches the markings on each bar to the customer’s deposit manifest, and verifies the gross weight of the bars deposited. The FRB—NY refers to this process as earmarking the gold. Once the gold is earmarked, it is physically segregated, for the most part, by account holder. Once segregated, the gold is physically safeguarded and held under what the FRB-NY calls a triple control, continuous audit process. According to the FRB-NY, its continuous audit process includes three-party certification/presence anytime a vault is opened. So, when a vault is opened, it must be done in the presence of one representative from vault custodian team one, one representative from vault custodian team two, and one representative from the intemal audit staff. Furthermore, there are two separate combination locks (the combination of each known only to the respective vault custodian team representative), one audit lock, and an audit seal on every compartment containing customer gold. The FRB-NY also confirms the gold holdings of its respective customers upon request.
End of part one.
In Gold We Trust
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