Tuesday, April 8, 2014

EdSteer's gold an silver report April 8 , 2014 -- Data news and views touching on the precious metals ... additional items from GATA and Bill Holter ....... of particular note , Volcker rule gutted almost right after the teeth part allegedly kicked in ( Fed gives banks extra time for compliance with Volcker Rule - banks given an extra two year or until 7/17 for full compliance and selling hidden losses on CLOs ! )



The gold price did little of anything up until noon Hong Kong time---and after that it quietly sold off to just under the $1,300 mark.  The two attempts to break back above that price got sold down almost immediately---and after the second sell-off that came just after the London close, gold traded flat for the remainder of the New York session.
The high and down price ticks aren't worth the trouble of looking up.
Gold closed the Monday session at $1,296.90 spot, down $5.40 from Friday's close.  Volume, net of April and May, was extremely light at 88,000 contracts.
Silver got sold off about 15 cents within the first 15 minutes of trading at the Sunday night open in New York.  The subsequent 'rally' latest until 10 a.m. Hong Kong time---and then it got sold down [unsteadily] to it's low of the day which came at the noon silver fix in London.  The subsequent rally got capped the moment that it hit the $20 spot price mark---shortly after the London close as well---and that was it for the day.
The high and low tick were reported by the CME Group as $20.015 and $19.775 in the May contract.
Silver finished the day at $19.865 spot, down 9 cents from Friday's close.  Net volume was fumes and vapours at 15,500 contracts.
Like gold and silver, platinum and palladium were under selling pressure for virtually the entire day, with most of the selling pressure really getting started around noon Hong Kong time.  Then platinum got hit for $20---and palladium got smoked for over 3% starting shortly after the London close---about the same time as gold and silver got sold down.  After the spikes down in their respective prices, they didn't recover much.
The dollar index closed on Friday at 80.43.  It traded pretty flat until around 12:30 p.m Hong Kong time---and then began to head south, hitting its 80.20 low just before 12 o'clock noon in New York.  After that it traded almost ruler flat into the close, finishing the Monday session at 80.22---down 21 basis points on the day.
The interesting thing to note is that virtually all of the major price declines in all four precious metals occurred between noon in Hong Kong and noon in New York yesterday.  It's a pretty safe call to say that there was absolutely no correlation between the dollar index and precious metal prices yesterday.


The CME's Daily Delivery Report showed that 8 gold and 3 silver contracts were posted for delivery within the Comex-approved depositories tomorrow.  The Issuers and Stoppers Report isn't worth linking.
I note that there are about 1,300 gold contracts still open in the April delivery month, along with a tiny handful of silver contracts.
There were no reported changes in GLD yesterday---and as of 10:36 p.m. yesterday evening, there were no reported changes in SLV, either.
There was a decent sales report from the U.S. Mint yesterday.  They sold 1,500 troy ounces of gold eagles---3,000 one-ounce 24K gold buffaloes---and 659,500 silver eagles.
Over at the Comex-approved depositories on Friday, they reported receiving 37,779 troy ounces of gold, most of which went into the depositories over at HSBC USA.  Only 291 troy ounces were reported shipped out.  The link to that activity is here.
In silver, there was 498,354 troy ounces reported received---and all of it disappeared into the Delaware depository.  39,020 troy ounces shipped out.  The link to that action is here.


Nine King World News Blogs/Audio Interviews

Tocqueville's Hathaway says London probe could scare off investors

Investigations into the London gold fix could scare institutional investors away from the metal, according the head of one of the world's largest investors in gold and precious metals mining shares.
"We as money managers in the space have been hurt more not by the price action but by the feeling among investors that [London pricing] is just too weird, too inexplicable," said John Hathaway, who oversees $2 billion in gold investments for Tocqueville Asset Management.

“Prices have to go up and down but if it’s a rigged game, then you’re not going to get big pension funds etc. getting involved. They’ll say, ‘Boy this thing is too spooky for us to invest in,’” Mr. Hathaway told The Wall Street Journal at the Dubai Precious Metals Conference, one of the world’s largest gatherings of gold investors.

John doesn't come out and say that the precious metal markets are rigged, but he does say that "many people" believe they are---and he would be one of them---and that was his way saying it without uttering the words himself.  This article showed up on the blogs.wsj.com Internet site during the New York lunch hour yesterday---and I found it embedded in a GATA release.  It's not overly long---and it's worth your time.

'$75 billion gold traded through Dubai in 2013'

The Dubai Precious Metals Conference 2014 (‘DPMC 2014’), hosted by DMCC, in association with Foretell and title sponsor Standard Bank, was officially opened in the presence of Maryam Buti Al Suwaidi, Deputy CEO, Securities & Commodities Authority, with DMCC Executive Chairman, Ahmed Bin Sulayem announcing that $75 billion of gold was traded through Dubai in 2013, further cementing the Emirate’s global position as the global bullion hub.

During his keynote address, Ahmed Bin Sulayem, Executive Chairman, DMCC, said: “Dubai has quickly emerged as the leading global hub for the precious metals trade. As a result of DMCC’s continuous efforts to realise the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the Emirate has risen as the destination for global precious metals trading. In 2013 almost 40 per cent of the world’s physical gold trade came through Dubai and the value of total gold traded through Dubai grew to $75 billion, compared to $6 billion in 2003.

“Dubai also saw an annual trade volume increase of 73 per cent accounting for 2,250 tonnes of gold. This market has proven to be resilient under all conditions; even on a year where total global demand fell by 15 per cent, Dubai gained from near-record consumption demand growth. These figures represent a significant shift in the balance of global demand flows with Dubai positioned as one of the global market leaders."

This news item showed up on the emirates247.com Internet site on Sunday---and my thanks go out to Casey Research's own Jeff Clark for digging this story up on our behalf.

March gold imports jump to 10-month high in India

India’s gold imports in March rose to nearly 50 tonnes, the highest since the Reserve Bank of India’s import curbs came into force in May last year, according an estimate by the the All India Gems and Jewellery Trade Federation, an organisation that caters to more than 300,000 jewellers. Last month, Indian imported around 25 tonnes of gold, despite the curbs on the precious metal.
With India's central bank allowing more private banks to bring in the metal, importers had rushed in with their orders, he added. Moreover, with prices moderating in the local market, amidst expectations that the curbs might be lifted any time soon, traders said gold imports could stay high for some more time.
Finance minister P Chidambaram has indicated that the government could further ease restrictions on gold imports, and that the relaxations made a few days ago when more banks were allowed to import gold, was the first in a series of measures unrolled by the government to relax curbs.
This article, filed from Mumbai, was posted on the mineweb.comInternet site yesterday sometime.

Koos Jansen: January India Silver Import 462 Metric Tonnes

Gold researcher and GATA consultant Koos Jansen today takes a close look at gold and silver demand in India, where silver demand has been breaking records because of the government's tighter restrictions on gold imports.

This commentary, along with a slew of excellent charts, was posted on the ingoldwetrust.ch Internet site yesterday---and is definitely worth reading.

Lawrence Williams: Gold manipulation---ex U.S. Treasury top gun tells us how and why

In an era when the general consensus is that ALL markets are manipulated in some way or another – and usually by the financial elite who have the monetary and political backing to be able to do so with virtual impunity – it seems unlikely that gold should be immune, despite denials by some who should perhaps know better, or maybe have their own agenda in muddying the waters. Indeed this kind of manipulation does not only apply to markets, with government issued statistics massaged, and goalposts moved, to present them in the best possible light. This era of state and financial misrepresentations, once the preserve of totalitarian states and their elites, but now seemingly prevalent across all political and financial spectra, may convince some (perhaps the majority) of the people most of the time that everything in the world is coming up roses. But it is an inherently dishonest concept imposed on the general populace by the global elite and in truth there seems to be little one can do to prevent it. Even honest politicians (if that is not a contradiction of terms) eventually get sucked in and have to make major compromises if they want to try and put their own agendas across. 
But back to gold. Former Reagan era ex U.S. Treasury Assistant Secretary, Paul Craig Roberts, has just published an interesting article on his website which not only states categorically that the gold price is indeed manipulated by the U.S. Fed and its bullion banking allies, but how the price control is achieved, together with illustrative charts. Now Roberts may have his own agenda to push, but as a former U.S. Treasury insider – even if of a different era - he should indeed know what he is talking about and his words should be taken seriously by gold bull and bear alike as his views are relevant to those in all gold-related camps. To read his article - The Federal Reserve has no integrity - click here.
There's nothing really new in the Roberts/Kranzler piece, as this scenario has been discussed at length by Ted Butler and myself---along with others---for months [if not years] now, so I suppose it's only because of who is saying it that makes it worth posting---and commenting on.  But it still falls into the must read category---and Lawrie's comments, along with the embedded Roberts/Kranzler essay, showed up on the mineweb.com Internet site yesterday.



It’s important to remember that the Mint is producing and selling Silver Eagles at record capacity this year, yet is still, in effect, unable to keep up with demand. This is a familiar circumstance with Silver Eagles over the past few years, a circumstance not witnessed with Gold Eagles in general. Along with the highly unique movements in COMEX warehouse inventories, this is another decidedly physical factor specific to silver.  While I don’t know who the big buyer of Silver Eagles may be, certainly we can conclude that the buyer strongly expects higher silver prices in time (no one buys anything investment related with the expectation of lower prices).
A subscriber passed along a thought that was already in the back of my mind, namely, that buying Silver Eagles from the Mint might be a way for a big buyer to accumulate physical silver with very little impact on price. I can’t help but think that the COMEX silver warehouse shuffling and extraordinary Silver Eagle sales are two big factors in a developing silver physical story that could [and should] end in pronounced shortage. -Silver analyst Ted Butler: 05 April 2014
Even though volumes in both gold and silver were very light on Monday, it was obvious that there was a seller there to make sure that gold closed below $1,300---and silver below $20 spot.  Why platinum got hit---and palladium hammered---certainly had nothing to do with any real-world supply/demand fundamentals that I'm aware of.  But, like they are in gold and silver, JPMorgan et al can do pretty much as they please in the precious metal arena, as no one is going to life a finger to stop them, or utter a word in protest.  Yesterday's price action in all four precious metals had their boot prints all over it.
Here are the 6-month charts for both gold and silver once again.  Nothing has changed as far as Ted's [and my] opinion of the situation, as the technical set up still indicates that "da boyz" could peel another $100 off the gold price---and a more than a buck off silver.  We could also blast off from here as well---and I certainly don't want to say "This time it's different"---as that will be the kiss of death for sure.
As I said on several occasion last week, the latest being Saturday, that all we can do is wait this out and see what develops.
In Far East trading on their Tuesday, all was quiet once again, although prices developed a positive bias right from the open in early morning trading---and volumes were very light, although not quite as light as they were on Monday.  That all changed in gold and silver around 1:30 p.m. Hong Kong time, as gold spiked above $1,300 the ounce and silver above $20 the ounce.  Platinum and palladium were up a decent amount as well, but their rallies were much more subdued.
And as I type this paragraph, London has been open about 35 minutes---and it's obvious that the prices of both gold and silver are being actively capped, as volumes have exploded---and are up more that 100% from what they were before the price spikes occurred.  So it's obvious that JPMorgan et al are throwing a blizzard of Comex paper at both metal to kill these rallies.  The dollar index, which had been trading as flat as the proverbial pancake for most of the Far East trading session, began to head south around 2:45 p.m. Hong Kong time---about 15 minutes before the London open.
This is what the Kitco gold chart looked like at 5:25 a.m. EDT.
And as I hit the 'send' button on today's efforts at 5:28 a.m. EDT, all four precious metals continue to struggle higher as JPMorgan et al throw everything they can at their prices.  Gold volume is almost triple what it was about three hours ago.  Silver is still above the $20 spot price mark, but struggling. Volume is well over double what it was before this rally started, but still very low all things considered---around 8,300 contracts.  The volumes in both silver and gold are almost all confined to their respective current front months---so it's obvious that the HFT boyz are out in force.  Platinum and palladium are still up, but have made little upwards progress since London opened, as even the tiniest rally is being sold down.  The dollar index is now a hair below the 80.00 mark---and currently down about 25 basis points from Monday's close in New York.
I haven't the foggiest idea what price scenarios will greet me when I power up my computer later this morning, but the one thing that is obvious, is that JPMorgan et al have no intentions of letting precious metal prices rise at the moment, as they have obviously drawn a line in the sand here.  Could they get over run?  Sure, but if they do, it will be---as Ted Butler is wont to say from time to time---the first time it has ever happened.  So the odds aren't lookin' good.
But one of these days it will be different.
I'm off to bed.  See you here tomorrow.

Additional items.....

The latest figures show that we have only 115,000 tonnes of gold left in the earth's crust but only 56,000 tonnes that can be mined out or roughly 20 years worth.  Bill, writes, what will happen in twenty years when there is no more gold to be mined and what will happen to our currency.

(courtesy Bill Holter/Miles Franklin) 


Life in general is a lot about "momentum" and cycles.  This is also true for business, finance and economics, let me explain.  When describing a person's life, a company or an entire system, they are either growing or shrinking, rising or falling.  Let's look at this from a financial standpoint, the economy is growing or it is not.  If it is growing, is it doing so at an increasing rate or a decreasing rate?  If the economy is contracting, is it decreasing at an increasing rate or has the decline begun to slow ?

  Of course there are also "inflection points" along the way where growth reverses and turns into decline or decline reverses and growth begins.  We see this in individual companies, "regions" or groups and the system as a whole.  We also see this throughout the various industry spectrum.  For example, is oil production growing, slowing, peaking or bottoming with new growth ahead of us?  Based on production numbers it looks to me that the world has hit "peak oil" already.  Yes we see fracking in many places but this production has proven to be normally short lived and similar to the final "gush" of water when you squeeze a rag in your sink.  Does this mean that all of a sudden the "spigot" will be shut off?  No, but it does mean that cheap energy is probably behind us.

  The topic of "momentum" came to mind after reading a piece by VirtualCapitalist that displayed an info graphic sponsored by Goldcorp.  What struck me is that they estimate that there are only 115,000 tons of gold left in the Earth's crust.  This number is in comparison to the estimated 170,000 tons of gold that has already been mined throughout history.  (Please do not mail me comments that this 170,000 ton number is wrong because Karen Hudes and others claim an additional 170,000 tons just sitting in Hawaii, it is beyond laughable in my opinion).  They also estimate that of this 115,000 tons, only 56,000 tons are actually recoverable.

  It is this number of 56,000 tons that got me to thinking.  Assuming that it is correct and with the knowledge that the world is currently mining 2,700 tons per year...that leaves a "mining life" of roughly 20 years.  Yes of course, the production will slow beforehand and there will be mines still working in 40 or 50 years but look at where we are in the mining cycle.  If these numbers are true then we are already 75% of the way through everything that is "recoverable".  Of course, "recoverable" is at current prices and presumably as the supply begins to shrink ...the price should rise or at least this is how Mother Nature works...the COMEX somehow seems to work in reverse of this.  Higher prices would mean that it will be economically feasible to recover more than this 56,000 ton number.

  My point is this, "momentum" in the gold mining industry has been flat at best for 10+ years now and it appears that we have peaked production.  The current setback in prices will also further slow future production as some companies have shut down uneconomical mines, other planned mines have been mothballed and exploration budgets have been slashed.  Supply will surely slow which illustrates the old saying that the "remedy to low prices is low prices" because when something is too cheap it creates its own new marginal demand at a time that no one wants to or economically cannot create supply.  We see this in action today.  We have seen China eat up nearly 100% of total global production while the price has dropped.  The lower prices means lower supply.  This is a simple 2+2=what? question over the long term.

  I also thought about "momentum" from the systemic "standard of living" perspective.  Where are we now?  We know a good part of the world called the emerging markets are seeing growth in their standards of living because they were so low or far behind the developed world in the first place.  It is also clear that the overall standard of living in the developed world has already peaked.  If we look at this from a U.S. centric standpoint, our standard of living may have peaked in 2007 or even as far back as 2000.  

  "Momentum" is a very large topic but look at what has happened in the U.S..  Our standard of living has already peaked yet the government didn't want to settle for it (or I should say "allow it to be known").  We have taken on more and more debt in an effort to create more momentum or a higher standard of living, it has clearly not worked.  Taking on the huge amounts of debt since 2007 has only stopped the downward momentum financially and economically...and I would add "only temporarily".  We now have more people dependent on social programs for basic survival than ever before (and even on a percentage basis).  We also are left with a hamstrung Treasury that has bankrupted itself with no hope of ever paying off the debt incurred.

  I wanted to pen this piece to try and help you stand back and look at the big picture from afar.  Where will we be in 20 years from now?  Will global gold production be half or less than what it is today?  Will there be enough to satisfy demand?  Or will prices be high enough to ration demand?  Will any gold even make it as far as the "street level" for individual purchase?  Will our Treasury have the ability to even pay interest only on our debt?  What will this mean for the dollar itself?  We are either growing or we are not, I believe that we in the "West" are at best only treading water.  We have fired almost any and all bullets at this financial monster and 6 years later have nothing to show for it other than debt levels that have nearly doubled.  We have also eaten another 6 years into Mother Earth's non renewable commodities... not to mention our seed corn. 

  Our standard of living will reflect the above realities.  While now sitting on top of too much debt, scarce natural resources will need to be "rationed" by higher prices to reduce the demand.  Higher interest payments and higher prices will act as a double whammy on our standard of living.  The "momentum" has already begun a decline, whether we see an overnight (weekend) "re pricing" or not remains to be seen but the decline itself will accelerate one way or the other. Whether Mother Nature does it or it's done by "decree" remains to be seen.  The inflection points are already behind us, if you can see and understand which direction the overall standard of living is headed then you understand that it is up to you to protect your own.  We have lived through an era of "bountiful goods" when in fact our resources are actually limited.  It is because of this reality that a "re pricing" looms large and will arrive whether invited or not.  

Regards,  Bill Holter

U.S. bristles at China's infringement of its monopoly on currency market rigging

US Warns China After Renminbi Depreciation
By Robin Harding and Josh Noble
Financial Times, London
Tuesday, April 8, 2014
The US has warned Beijing not to go back to manipulating its currency, following a sharp depreciation of the renminbi since the start of 2014.
"If the recent currency weakness signals a change in China's policy away from allowing adjustment and moving toward a market-determined exchange rate, that would raise serious concerns," said a senior Treasury official ahead of this week's IMF, World Bank, and G20 meetings in Washington. ...
... For the full story:

Fed gives banks extra time for compliance with Volcker Rule

By Gina Chon
Financial Times, London
Monday, April 7, 2014
WASHINGTON -- The Federal Reserve granted a fresh concession to banks that are subject to the Volcker rule on Monday, giving them two more years to offload their holdings in collateralised loan obligations to comply with the measure.
The Volcker rule, aimed at banning proprietary trading, would have forced banks to divest their CLO investments, resulting in billions of dollars in losses. ...
... For the complete story: