Wednesday, May 7, 2014

Gold and silver News and Views for May 7 , 2014 - Ed Steer's Daily Report featured , additional items to ponder after " The Wrap " !


It was a very quiet trading day in gold on Tuesday, both from a price and volume perspective.  Both tiny rallies prior to the New York open got put in their place before they could get far---and the price action in New York was almost ruler flat.  The highs and lows aren't worth looking up.
Gold finished the day at $1,307.90 spot, down $1.80 on the day.  Net volume was extremely light at only 80,000 contracts.
The silver price action was slightly more volatile---getting sold down to its low of the day around noon Hong Kong time and, like gold, the two subsequent rallies got dealt with in the same old way.  New York trading was basically flat, although some thoughtful trader sold the silver price down in electronic trading just enough so that it finished down on the day as well.
The CME Group recorded the low and high price ticks as $19.505 and $19.715 in the July contract.  These number don't quite jibe with the KItco spot silver chart below, but they are what they are.
Silver finished the Tuesday trading session in New York at $19.55 spot, down 3.5 cents from Monday's close.  Volume, net of May and June, was pretty decent at 32,500 contracts, so it's obvious that JPMorgan et al had to throw some Comex paper at the price in London trading to get the price to behave.
Both platinum and palladium had price roller coaster rides of sorts, but in the end, their gains were tiny, as all rally attempts were met by a seller of last resort as well.  Here are the charts.
The dollar index closed in New York late on Monday afternoon at 79.50---and held reasonably steady until around 2 p.m. Hong Kong time on Tuesday.  From that point the index fell rapidly to its 79.07 low at 8:20 a.m. EDT before a "bargain hunters" shows up to stop its fall.  After that it gained a handful of basis points into the close.  The index finished the day at 79.14---which was down 36 points.
It was obvious that the early rallies in both gold and silver were most likely in response to the move in the dollar index---and that the not for profit selling was designed to prevent the correlation from occurring.  It that was the plan, it worked to perfection.


The CME's Daily Delivery Report showed that 3 gold and 60 silver contracts were posted for delivery within the Comex-approved depositories on Thursday.  The only short/issuer of note in silver was Jefferies with 57 contracts---and they were stopped/received by about ten different companies.  The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in GLD---and as of 9:35 p.m. EDT there were no changed in SLV, either. [But when I checked at 3:55 a.m. EDT this morning, there was a withdrawal of 1,921,700 troy ounces showing on the ishares.comInternet site---Ted Butler's "large buyer" avoiding the SEC's reporting requirements, perhaps?]
In my chat with Ted yesterday, his comment on the big deposit in SLV on Monday was that it was in response to the price run-up on Friday---and that the silver deposited was probably already sitting in-house, but not under the control of SLVdirectly, but was being temporarily held in SLV's warehouse in the case of such an eventuality---as there was absolutely no way that 2.6 million ounces could be shipped in over the weekend from anywhere.  Based on that, Ted also wondered how much more silver like that might be sitting around SLV's warehouse for just such a purpose.
Ted posts his mid-week commentary to his paying subscribers later today---and if he has anything to say about this new 1.92 million ounce withdrawal, I'll borrow it for my Thursday column.
The U.S. Mint had a sales report yesterday.  They sold 1,500 troy ounces of gold eagles---1,000 one-ounce 24K gold buffaloes---and 532,500 silver eagles.
Over at the Comex-approved depositories on Monday, they reported receiving 31,905 troy ounces of gold---and it all went into the HSBC USA warehouse---along with with 110,000 troy ounces of gold they received on Friday.  The link to that activity is here.
In silver, there was a big 1,019,085 troy ounce deposit into Canada's Scotiabank depository---and only 998 troy ounces were shipped out.  The link to that action is here.
Here are a couple of charts that Nick sent my way last night.  They are the intraday price movements for both gold and silver for the month of April.  Nick takes every 2-minute tick from each day---and adds it to the same 2-minute tick from each trading day of the month---and when he averages them out, the gold and silver intraday price movements show up as posted below.  It shows the times of the day each day, on average, where "da boyz" show up to lean on the price in both metals.  Sometimes its hard to spot the pattern on a daily basis, but when averaged out like this, it's impossible for JPMorgan et al to cover their tracks.
Both charts are worth a few minutes of your time---and I thank Nick for sharing them with us.


News and views - non redundant.....

Frankfurt issues first bond backed by Chinese currency

China’s currency was once so immovable nobody saw much sense in owning it. But the more Beijing loosens its grip, the more investors want to get their hands on it. The rags-to riches currency now comes to Frankfurt.
Frankfurt is joining London, Singapore and Hong Kong in the fast-moving market for bonds denominated in the Chinese currency, the renminbi. Germany's KfW development bank announced it was issuing a two-year bond with the volume of 1 billion renminbi at the Frankfurt Stock Exchange.
The development underpins Frankfurt's bid to become a key offshore center for facilitating trade transactions and investments in renminbi. It is also the latest success in Beijing's drive to internationalize its once tightly-controlled currency, which is also called yuan.
This interesting article appeared on the German Internet last Friday---and my thanks go out to Brad Robertson for sharing it with us.

G7 energy summit backs Ukraine over Russian pressure

Energy ministers from the G7 group of leading world economies agreed Tuesday to help Ukraine after Russia threatened to halt gas supplies over unpaid bills in a move that could create havoc in Europe.
"We remain united in our determination to provide various types of assistance that Ukraine needs to strengthen its energy security," the ministers said in a joint statement after the energy meeting in Rome.
"We are extremely concerned by the energy security implications of developments in Ukraine, as a consequence of Russia's violation of Ukraine's sovereignty and territorial integrity," they said.
What's wrong with this picture?  You don't pay your bills, then you get cut off from your source of supply until you do.  That's the way business works everywhere I know of.  If it were up to me, I'd have cut off Ukraine's gas supply years ago for non-payment.  This story showed up on their Internet site late on Tuesday evening Europe time---and it's courtesy of South African reader B.V.

Ukraine close to war, says Germany

Ukraine is only a "few steps" away from "military confrontation", the German foreign minister warned on Tuesday, as his country formally advised its citizens to leave the eastern regions.
This deeply pessimistic assessment from Frank-Walter Steinmeier came as the airport serving Donetsk region – the most populous area of Ukraine – cancelled all international flights until further notice.
The information board in the departures hall of Sergei Prokofiev Airport showed a string of cancelled flights to destinations including Moscow, Munich and Istanbul.
One domestic departure to Kiev was allowed to depart, but this appeared to be the only service of the day. An official at Borispol airport in Kiev said that no further flights were expected from Donetsk on Tuesday.
This news story appeared on the Internet site very early yesterday afternoon BST---and it's another contribution from Roy Stephens, for which I thank him.

Many news organizations know all about gold price rigging, including The New York Times

Whenever any mainstream news organization publishes or broadcasts something touching on the Western central bank gold price suppression scheme or GATA, your secretary/treasurer contacts the organization to provide the full documentation that would be necessary to an attempt at actual journalism. Today's appeal to The New York Times is appended. At least it drew a prompt and cordial acknowledgment.
Please understand that the summaries and documentation cited below have been provided to many major news organizations and government regulatory agencies. They all know what is going on. But as you have heard many times from your secretary/treasurer, the true location and disposition of central bank gold reserves are, to governments, secrets far more sensitive than the location and disposition of nuclear weapons. For rigging the gold market is the most powerful weapon of all, as it the prerequisite for rigging all markets.
This commentary/NYTimes article was embedded in a GATA release from yesterday---and it's worth reading.

And the First Thing Ukraine Will Buy With IMF Money is...

A month ago, it was alleged, that Ukraine - under cover of night - loaded its gold reserves onto a plane and shipped them off (for safekeeping) in the US, as the potential price of 'liberation'. So how ironic that, given the massive gas debts that Ukraine owes to Russia (and prepayments pending), and sizable bond maturities pending, the first thing that Ukraine's National Bank governor will be buying with his freshly minted loan from the IMF a billion dollars of gold.
As ITAR-TASS reports:  "Kiev will use the first portion of the International Monetary Fund (IMF) loan for augmenting its gold and currency reserves in order to stabilize the financial situation in the country, National Bank Chairman Stepan Kubiv said on Monday, May 5.
“Over $1 billion from the first portion of the loan will go into the gold and currency reserves of Ukraine, which will strengthen the financial system of the country. The remainder will go to the budget to stabilize the macroeconomic and financial situation in Ukraine,” he said.
Frankly, I don't know what to make of this Zero Hedge story from yesterday morning EDT---and there was a lot of intense discussion about it on the Internet yesterday.  Before declaring it to be "the gospel"---let's see how things unfold.  The devil, they say, is always in the details---and that might be the case here as well.  I thank reader 'David in California' for bringing it to our attention.

Koos Jansen: India's gold imports rose more than 200% in February

Gold market researcher and GATA consultant Koos Jansen reported yesterday that despite import restrictions, India's gold imports increased by more than 200 percent in February, the most recent month for which data has been reported.
Here's another story that I'm having some problems with.  The first thing is that this amount of imports is light years above what the 'official' imports have been lately---and secondly, there isn't a peep about this from any other source because, if true, this is big news.  The first place I checked when I read this was the Internet site---and there's nary a word about it there---and nothing at Sharps Pixley either.
You should read it, but I'd take it with a big grain of salt until confirmed by another source.  I found this gold-related news item on the Internet site yesterday. [I note in the editing process at 5:16 a.m. EDT this morning that this story has now been changed---and the new headline reads "India Imports 32 Tonnes of Gold in April"---so I had every right to be suspicious of the original story.]



You can always count on Americans to do the right thing—after they’ve tried everything else. - Winston Churchill
It was a nothing sort of day yesterday, except for the fact that both gold and silver attempted to rally during the decline in the dollar index---and it was equally as obvious that the sellers of last resort were there to ensure that it didn't occur.  And with volume as light as it was, it wasn't hard for anyone with an agenda to shove precious metal prices in whatever direction they wished---and we saw some of that happening yesterday between 2 a.m. and 8:20 a.m. EDT.
As I mentioned in yesterday's column, the cut-off for this Friday's Commitment of Traders Report occurred at the 1:30 p.m. EDT close of Comex trading on Tuesday.  Just glancing at the gold and silver charts for the 5-day reporting week, I'd guess that we'll see an increase in the Commercial net short positions in both metals when the report comes out on Friday, as there were significant rallies in both metals the previous Friday that negated any possible improvements---unless, of course, the rally was short covering by JPMorgan et al---which I highly doubt.
Here are the 6-month gold and silver charts as of Tuesday's close---and you can see the prior five days worth of price action that this Friday's COT Report will be based.
The gold price is now above its 200-day moving average, but "da boyz" halted the budding rally at that point---and I'll be very surprised, based on the low volumes lately, if the price is allowed to get above the 50-day moving average.  Silver is miles below any moving average of consequence---and until it does rally above them, or the moving averages decline below the current price, there won't be much pressure from the technical funds to rush out and cover the grotesque short positions they currently hold.
In Far East trading on their Wednesday, the smallish rallies that developed in both gold and silver haven't amounted to much---and like Tuesday, the volumes are so light that the current price action really doesn't mean much.  London has been open about 40 minutes as I type this paragraph---and net volume in gold is just under 20,000 contracts, and silver's volume is a hair over 5,000 contracts.
Here's another chart that Nick slid into my in-box late last night.  It's the "Total PMs Pool" graph---and as you can see, it's been chopping more or less sideways since it peaked in February of 2013.  I'm sure that the powers that be would like it to remain that way, as big rallies in all four precious metals would mean that metal would be pouring into all the associated ETFs, which is a situation that would put JPMorgan et al under even greater stress than they are now---especially in silver, platinum and palladium, as there's virtually no wiggle room in the physical supply of these metals.
And as I prepare to fire this out the door to Stowe, Vermont---I see that there were smallish rally attempts in both gold and silver that got dealt with in the usual manner within an hour or so of the London open.  Gold volume [net] is now up to 27,000 contracts---and silver's volume is a hair above 8,200 contracts, a 60% increase in volume since I reported on it 90 minutes ago.  Obviously JPMorgan et alhad to step in front of this silver rally as sellers of last resort to prevent the price from blowing sky high, which it would have done with ease if they hadn't put in an appearance when they did.  The dollar index hasn't done a thing up to this point in the Wednesday trading session.
Like I said yesterday---and it applies once more today---it's obvious that "da boyz" are holding gold and silver prices on a short leash.  How long they can continue this state of affairs is unknown, but in the face of Ted Butler's "locked and loaded" scenario---and the continuing situation in Ukraine, it's difficult to envision that this intolerable situation can last much longer.  Of course I and others have been saying this for years---and only time will tell if this current situation is any different.
I'm done for the day---and I'll see you here tomorrow.

Additional items...


Gold industry shifts east as Dubai plans huge refinery, spot 


By Andrew Torchia
Monday, May 5, 2014
DUBAI -- In the desert on the outskirts of Dubai, one of the world's biggest gold refineries is under construction. When completed next year, it will help to alter the balance of power in the global gold industry.
Growth in demand for the precious metal is shifting east, to Asia's fast-growing economies. But key industry activities such as refining and clearing -- matching investors' buy and sell orders -- remain dominated by Europe and the United States.
The $60 million refinery being built by Kaloti Precious Metals in Dubai is part of efforts to change that pattern, as is a plan by the Dubai Gold and Commodities Exchange to introduce a spot gold contract this June.
"Dubai is already a top global centre for gold trading," Tarek El-Mdaka, chief executive of Kaloti Precious Metals, said in an interview. "The refinery is part of the next stage, making Dubai a top center for physical gold refining and clearing." ...
... For the complete story:

Koos Jansen: Commodity financing deals probably are not 

distorting China's gold demand

10:30p ET Sunday, May 4, 2014
Dear Friend of GATA and Gold:
Gold researcher and GATA consultant Koos Jansen today explains why Chinese commodity financing deals in gold probably have little to do with the data reported for gold imports into China. The detail of Jansen's commentary shows why he knows more about the gold market in China than the World Gold Council and Goldman Sachs put together. His commentary is headlined "The Round-Tripping Myth and Why It Doesn't Hurt Chinese Gold Demand" and it's posted at his Internet site, In Gold We Trust, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Investment Research Dynamics .....

The Easiest Way To Get The Unemployment Rate To Zero Is To Remove Everyone From The Labor Force

It’s frightening the way the “policy-makers” in this country are now twisting the truth into outright lies.  I recall reading Orwell’s “Animal Farm” and “1984″ in high school and thinking:  “I doubt that can really ever happen here.”   Stunningly it’s not only happening here and now but it’s following Orwell’s playbook almost perfectly.
Yesterday Bloomberg News published a report in which Richard Fisher, President of the Dallas Fed, explained that the economy was getting better as private businesses were hiring more workers.   Apparently Fisher is either a professional liar or he doesn’t get his facts straight – in which case he would be a severely unprofessional economist.
We can presume Fisher was referring to Friday’s headline from Friday’s Government jobs report which stated that 288,000 jobs were created in April.  If that was the extent of Fisher’s due diligence of the facts, then he should be fired.
Here’s a table showing the summary data from the Government’s employment report (link):
(click on table to enlarge)
I’ve highlighted the relevant boxes of data.  While apparently there were 288,000 new hires in April, a more careful reading of the Government’s report shows that there were actually 73,000LESS people employed in total in April vs. March.  Not only that, but the size of the labor force declined by 988,000.   In other words, the economy LOST jobs well in excess of the 288,000 new alleged positions that were filled.
Now, maybe Richard Fisher is spending too much tutoring his grand kids in the “new math” being taught by school system these days.   But by traditional arithmetic, when you subtract a bigger number from a smaller number, you end up with a negative number.  Sorry Dick, you are wrong, the economy is not producing jobs.
Everyone knows by now that the Government reduces the “unemployment rate” by reducing the size of the Labor Force every month.  That’s the 988,000 increase from March to April of “Not in labor force” line in the table above.
I’m actually looking forward to the day when we wake up and read an editorial in the NY Times written by someone like Paul Krugman or Larry Summers suggesting that we just get rid of the labor force entirely  so that the Government can proudly present a zero percent unemployment rate.  The new economic policy can then be called “addition by subtraction” and the Orwellian cycle will be complete.

Bill Holter.......

The following commentary is extremely important especially with the news today of a huge drop in the USA dollar index.  

Please pay special attention to every word he says

(courtesy Bill Holter/Miles Franklin)

Why now?

Why all of a sudden does it look like alliances against the U.S. are being formed everywhere.  The Chinese and Russians are doing deals together.  The Chinese have also formed trade deals and even currency exchange deals with NATO countries like Australia, France and even Britain.  It even looks like the Saudis may be switching sides but this one is not yet in concrete.  After writing this piece and while editing it, news has broken that Saudi Arabia has signed a "drone" deal where they will make drone purchases from China.  Further evidence of the Saudis cozying up to China.

  So why now ?  Why the sudden acceleration ?  I think that if you "look under the hood", you may not see any one single reason but instead many.  First, unless you have blinders on, the "manipulation" is getting beyond brutal.  The markets in the U.S. (and globally) are being pushed, shoved, rammed and manhandled 24/7.  Almost nothing trades as it used to nor does anything trade with "logic".  It has gotten to the point where the press really has to stretch and strain to report market reactions to news because the actions lack any credibility.  The other area that lacks credibility are the economic reports.  Inflation, unemployment, housing sales, earnings, "bank capital", you name it, almost nothing adds up or even comes close to the reality that people see in their everyday lives.

  If "2+2" doesn't add up to 4 for the average Joe on the street, do you think that the leaders of Russia or China are fooled by our markets or our reporting?  China is a major buyer in many markets and they know "how much" they have bought and are buying.  Take gold for example, do you think that they don't know how much gold they are buying in relation to total global production?  Do you really believe that they haven't done the calculations of how much they have bought versus how much the West (supposedly) had ?

  Or how about the Russians ?  Do you believe that Mr. Putin just sat back during the Ukrainian coup and thought to himself "oh well, the population wants a new ruler"?  Do you really believe that the "West" had no hand in the coup whatsoever?  Or how about Egypt, Syria...or Benghazi?  Did these things just happen on their own?  All of this goes back a long time now, do you think that there are not Russian and Chinese engineers whom have not done studies to see whether or not steel buildings can both fall from a fire?  Or a 3rd one from nothing at all?  Mainstream media may be able to "work" on the populace but not on knowledgeable people who are skeptical in the first place.  Go back in your own mind 40 years ago, did Pravda "work" on the Russian people ?  To some extent it probably did, but did their propaganda work on Americans?  No, because it did not make any sense and "their 2+2" never added up correctly with other known facts.

  So, back to my original question..."why now?".  I believe it is because the rest of the world senses weakness.  They sense economic, financial, moral and maybe even military weakness on our part.  They know that the "numbers" are all fudged and our markets are all rigged.  They see our moral compass spinning around like an over loaded electric meter.  They see us tolerating all sorts of things that used to mean jail time and they see financial fraud that not only goes unpunished but is actually rewarded.  I am truly sorry to say this but the rest of the world see's a bully that is broke financially, drunk with grandeur, fat, lazy, lies, steals and cheats.  Do you wonder why they "don't want to hang out with us" anymore ?

  From a logistical standpoint, the world simply does not "need" the U.S. anymore like they once did.  The world has rebuilt and grown up since WWII.  They once relied on our knowledge, productive capacity, our capital and even our protection... they now have much of this on their own and no longer need our "help".  Especially when our "help" came at great costs and when "deals" didn't turn out to be such "good deals for them".  What is happening now is merely what should have been expected.  If you were in business with an overbearing partner that twisted the truth, changed the rules (your deal) whenever it suited them and could not be trusted, ...would you keep doing business with them?  THIS is where we are today and why it looks like we are living in a massive "convergence" of international change.  Call it whatever you'd like, George Bush first called it a "new world order" although what is occurring now was probably not part of his vision. 

  It is important that you understand the basic concept of mankind that "gold always flows to where power and wealth is being accumulated".  You are being told every single day that "gold is not money" from various and many sources in the West.  The East however deeply believes that gold is money.  It is crystal clear that gold is flowing like a river eastward along with our productive economy and finances.  Who should you believe?  Not only that, who do you think will "price" gold in the future?  Those who have it or those who don't ? 

  My point is this, we have many different events all lining up together at the same time and none of them "pro U.S.".  Alliances are being formed by "up and coming" nations that have disdain for the U.S. and the dollar, AND who believe that gold IS in fact money.  Greenspan, Bernanke and anyone else in the U.S. can perjure themselves in front of Congress and say that gold is not money doesn't, can't and won't make it so.  It won't make it so because as the U.S. becomes more and more isolated, the new alliances become more and more powerful.  Along with this "power" comes the ability to "make the rules".  Remonetizing gold is not even a rule that is difficult to make since it runs alongside that of Mother Nature.  The tough rules to make or enforce are the ones the West has tried to enforce by convincing the world that gold is not money which are naturally and patently false.  Call it whatever you'd like, re monetization, re set, or what have, the rest of the world wants it, Mother Nature demands is coming soon whether you are ready for it or not !  

Regards,  Bill Holter

China Demands Gold As Collateral For Zimbabwe Loans

Tyler Durden's picture

China, as we noted here, is happy to provide the financing to turn Africa into Disneyland - Monorails and all - but there is one catch... the loans must be backed by gold as collateral. As The Source reports, China wants Zimbabwe to use its mineral proceeds to guarantee any future loans having already extended nearly $1.5 billion in the last three years to Harare’s ailing economy. Various minerals have been discussed to back the loans "but we feel gold is more stablee," Zimbabwe's Mines Minister noted. Of course, China is defending the demand, claiming "it’s in accordance with rules and regulations when granting any loan" and adding that "it doesn’t mean that we will use the collateral." 

As The Source reports, Gold may be used as guarantees for existing, future loans...
China wants Zimbabwe to use its mineral proceeds to guarantee any future loans, a Chinese official said on Tuesday, adding that Beijing had already extended nearly $1,5 billion in the last three years to Harare’s ailing economy. In February, Finance Minister Patrick Chinamasa said the two countries were negotiating what he termed a comprehensive financial rescue package.


“We are discussing whether we can take proceeds of sales for some minerals as collateral for the loans,” said Han.

“The bank and the team from the ministry of finance are now working at a technical level on how they can set up such a mechanism, how much the collateral would be and how much loans they (Zimbabwe government) can get.”
In principle, the funding request and use of minerals as collateral has already been accepted, Han added.
He said Chinese loans to Zimbabwe were nearly $1,5 billion over the last three years – about 37 percent of the 2014 national budget at $4,1 billion – and that it was now burdensome for the government to repay.
China explains this is business as usual...
We are asking for collateral because it’s in accordance with rules and regulations when granting any loan, but it doesn’t mean that we will use the collateral. This is the concept that we are now discussing with the Zimbabwe government,” said Han.
So not hollowing out another nation's reserves at all. But Zimbabwe adds...
“We have looked at gold and diamonds, which we are considering as part of the securitization,” Deputy Mines Minister Fred Moyo says in phone interview from capital, Harare.

Government may also consider using chrome, “but we feel gold is more stable,” Moyo says
But one has to wonder how likely it is that Zimbabwe will promptly repay billions of dollars of loans - given their track record - and what a great way for China to transform its excess USDs to Gold (and get paid interest while it waits).
Especially in light of the ongoing push for a multiple currency system in the nation (i.e. Zimbabwe is about to start printing again)...
Zimbabwe Multiple Currency System Essential to Economy: Mangudya

Multiple currency system is “sine qua non for turning around the fortunes of the economy,” Reserve Bank of Zimbabwe Governor John Mangudya says in 1st statement since assuming office May 1.

Economy faces “significant” challenges, incl. lower domestic demand, deterioration in BoP, banking  “vulnerabilities”

Lack of liquidity and its limited circulation within economy remains biggest immediate challenge; central bank must find solutions to lack of formal interbank market and lack of lender of last resort

Central Bank to arrange for funding to capitalize itself, become lender of last resort
Seems like China is on to something!