Commentary on the economic , geopolitical and simply fascinating things going on. Served occasionally with a side of snark.
Thursday, May 1, 2014
Gold and Silver News and Views - May 1 , 2014 --- Ahead of Friday Non Farm Payroll Report ( a day for much mischief and manipulation of gold and silver ) , items of note from Jesse's Crossroads Cafe , Investment Dynamics and Gata ...... Overt manipulations , the sense something isn't just not right but rather seriously wrong , shrinkage at both COMEX and GLD ( 21 tons since mid- April ) ?
( For all of the charts referenced , head to the link above ... )
01 MAY 2014
Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Tomorrow
"Every century is like every other, and to those who live in it seems worse than all times before it...
God alone knows the day and the hour when that will at length be, which He is ever threatening; meanwhile, thus much of comfort do we gain from what has been hitherto, not to despond, not to be dismayed, not to be anxious, at the troubles which encompass us. They have ever been; they ever shall be; they are our portion."
John Henry Newman
As Newman said so well, every century is like every other, but seems to be the worst to those who live in it. I had a little chuckle the other day when I was reading essentially the same sentiment from Augustine of Hippo, who was writing about the beginning of the fifth century.
I had the opportunity some years ago to visit Newman's personal living quarters, and look through his amazing private library, at The Oratory on Hagley Road in Birmingham, England. His sense of history is profound. And it was moving to sit at his very desk, to see some of his personal notes still there, his glasses, and to see the little bedroom and private chapel off his study where the notes and pictures of those for whom he prayed are still there on the wall.
I always get a thrill when I see the actual places and things of historical figures, because it reminds one that they were people just like us, with our own weaknesses and strengths, anxieties and trials, and our own hopes and misgivings.
Nothing really happened in the metals today, except for some withdrawals shown in the Comex gold warehouses, and some brave souls standing for 'delivery' in May.
Tomorrow is non-Farm Payrolls, and if the wiseguys have anything more to say, that is probably when they will say it.
The overt and blatant manipulation of the gold and silver markets on the Comex reflects frantic desperation – but why?
Perhaps the most unsettling recent event was the announcement by the CME that it was looking at putting daily price limit curbs on gold and silver futures. Why now? The daily volatility of gold is at a 4-yr low. Why were limits not in place a year ago when the bullion banks took the price of gold down $200 in a 24 hour trading period?
The only reason to put price limit curbs in is to prevent true price discovery. Anyone with a pulse knows that the last year’s manipulated trouncing of the metals using Comex futures triggered an avalanche of physical gold and silver buying globally. And based on the fact that over 1000 tonnes of gold was removed – and disappeared from sight – from all of the physical gold investment trust globally combined, including over 500 tonnes from GLD, the massive and determined price take-down last year was anything but true price discovery.
But there are other, equally as disturbing smoke signals:
1) Silver was hammered early this morning, after the a.m. London “price fix” and leading up to and during the opening of Comex futures floor trading. All of the European/eastern REAL physical markets were closed today – Switzerland, China, Viet Nam, Turkey. London was not closed but I think we’re fooling ourselves if we consider London a true physical market. Today was nothing but a pure paper jam job to try to force potential holders of Comex contracts to sell and not stand for delivery. Note: no other correlated markets, like the U.S. dollar index or currency futures flinched during the raid on the metals.
2) Since the beginning of March, 452 tonnes of silver were removed from the Shanghai Futures Exchange + the Comex AND the U.S. exported a record amount of gold to Hong Kong in January.
3) Deustche Bank resigns from the LBMA gold and silver fix committee and can’t sell its seat. Why? Because why would any prospective buyer pay for the right to fix the price of gold and silver if they won’t be allowed to manipulate it and make money from it. This is a more significant event than has been attributed to it by anyone. Those LBMA price fix committee seats have zero value if they can’t be used to manipulate the markets.
4) What was the emergency and secretive Fed meeting about two days ago? It certainly had no bearing on the policy announcement from the FOMC yesterday because the FOMC policy was basically unchanged, with the standard fraudulent comments about an improving economy and labor market.
5) China and Russia shifted into overdrive mode to work toward eliminating the U.S. dollar from their trade activities. Ironically this was triggered by the U.S. intervention in Ukraine.
6) Unexplainedly, Belgium in the last 5 months has become one of the largest holders/buyers of U.S. Treasury bonds, amassing a quantity that is roughly 3/4′s the size of the country’s GDP. Belgium has been running a current account deficit and a trade deficit. Where are the funds coming from to buy this amount of Treasury paper? Ironically, Belgium’s holdings jumped up significantly right around the time over $100 billion in Treasuries were removed from the Fed’s foreign custodial account (rumored to have been Russia’s bonds).
Please note: Brussels is the headquarter city for both the EU and NATO.
Something is seriously wrong behind the scenes and I have a bad feeling – as do many of my colleagues – that we might find out exactly what it is before the end of the summer…
“Central Banks stand ready to lease gold in increasing quantities should the price rise.” - Alan Greenspan, “The regulation of OTC derivatives,” Before the Committee on Banking and Financial Services, U.S. House of Representatives, July 24, 1998
James Turk did an interview with Greg Hunter of USAwatchdog.com (interview link) in which he asserted that the current backwardation in the London gold bullion bar market is historically unprecedented. In response to this, my friend and colleague “Jesse” of Jesse’s Cafe Americain asked me if this was indeed the case.
My first comment in response to Jesse was: “First let’s define the “backwardation” to which he (Turk) refers. The paper market, the Comex gold futures, is not in backwardation. He’s referring to the LBMA negative GOFO, which is backwardation in the sense that someone is willing to pay money to borrow physical gold bars AND collateralize that loan with dollars. This implies that physical gold in hand is worth more than the promise to deliver physical gold in the near future, which is backwardation.”
In terms of the relative scale of historicity that can be applied to this current period of backwardation, I knew that between now and last July the amount of time the GOFO rates have been negative was unprecedented since 1999. But I went digging around for the historical data to define “historically unprecedented.”
It turns out that, going all the way back to 1989 (I can’t find any data prior to 1989, which is probably because gold leasing didn’t really go into full swing until then), there’s only been two other instances when the GOFO was negative. It first occurred in the last two days of September 1999. It lasted only two days. The second time was November 20, 21 and 24, 2008. The backwardation lasted for three days.
When the GOFO went negative last summer, it began in early July and lasted for nearly 3 months. It went positive for a month then negative again for over two weeks (November). It also spent half of December negative. Since the beginning of 2014, the GOFO has been negative for 34 of the 81 days that the LBMA has been open.
Turk’s commentary (as always) in the interview linked at the top is well worth reading. The implication of the long stretch of time in which the GOFO has been negative since last July is that, despite being covered up by the extreme degree of price manipulation in the gold market using paper Comex futures, there is a severe strain on the ability of the bullion banks to deliver physical gold bullion into the massive accumulation by buyers in the eastern hemisphere. At some point the amount of pressure building up – think of it as being the equivalent of trying to stuff a beach ball into a test tube – is going to result in a massive upside explosion in the price of gold.
Koos Jansen: China wants gold not for currency backing but for confidence
China wants to acquire gold not to make its currency convertible but simply to give the currency the implicit strength of gold and build confidence in the currency, gold researcher and GATA consultant Koos Jansen writes today, providing a translation of commentary to that effect by Tan Weihuan of the China Gold News letter. Jansen's report is posted at his Internet site, In Gold We Trust, here:
UK Financial Conduct Authority Could Intervene If Fewer Set Commodity Prices
By Clara Denina and Susan Thomas Reuters Tuesday, April 29, 2014
LONDON -- Britain's financial watchdog could intervene if there are too few participants to set commodity benchmarks including gold and silver, a senior official at the Financial Conduct Authority (FCA) said.
U.S. investors and traders have filed almost 20 antitrust lawsuits against the five banks involved in the London gold fix, accusing them of colluding to manipulate the bullion price.
One of them, Deutsche Bank, resigned from the gold and silver fix tables on Tuesday, just three months after putting its seat up for sale, after failing to find a buyer.
Sources told Reuters the lawsuits had deterred potential buyers. ...
Deutsche Bank Resigns Gold, Silver Fix Seat with No Buyer
By Clara Denina Reuters Tuesday, April 29, 2014
LONDON -- Deutsche Bank has resigned its seat on the London precious metal fixes without finding a buyer, a spokesman for the lender said today, leaving four banks to set the global gold price benchmark under increasing regulatory scrutiny.
Sources told Reuters last week that Deutsche's attempt to exit the fix was likely to end without a buyer as U.S. lawsuits alleging price-rigging by the five banks that set the benchmark had turned potential suitors cold.
A source close to the matter said the bank gave two weeks' notice and that it would cease to be part of the price-setting process as of May 13. ...
Deutsche's resignation leaves Barclays, HSBC , Bank of Nova Scotia and Societe Generale to set the gold benchmark, and just HSBC and Bank of Nova Scotia to set the silver benchmark. ...
May 1/We lost 2.39 tonnes of gold from the GLD/no change in silver inventory/gold and silver hit as physical markets closed today/Tomorrow the jobs report so expect huge volatility/Agnico eagle reports strong earnings despite the low price of gold and silver.
Gold closed down $12.50 at $1283.10 (comex to comex closing time ). Silver was down 13 cents at $18.99
In the access market tonight at 5:15 pm
I forgot that today was a May day holiday for most of Europe and Asia. Since all the physical zones for gold and silver were closed, it is no wonder that we had our attack orchestrated by the criminal bankers as they did not happy to worry about any deliveries. Tomorrow will be a different story.
Speaking of tomorrow, we will have the famous jobs report and you all know what that means. Expect massive volatility.
I am noticing plenty of gold and silver leave the comex these past few days. Is this the beginning of a run on the comex bank? Dave Kranzler of IRD also notices this and he comments on this and other strange phenomena re the gold and silver markets.
The GLD inventories lowers by 2.39 tonnes of gold despite the fact that gold remains in backwardation from one month to 3 months out. It is within a whisker of backwardation going out for one year.
The silver inventory at the SLV tonight remains constant.
( GLD suffering from shrinkage ? )
Editor's comment ................
And now the Gold inventory at the GLD: May 1.2014: tonnnage/ 785.55. we lost another massive 2.39 tonnes of gold which left England for Shanghai. April 30.2014: tonnage 787.94 we lost a massive 4.2 tonnes of gold which followed on the heels of a massive 3.4 million oz withdrawal from silver yesterday. As Koos Jansen reports, China's appetite for these metals is insatiable. April 29.2014: tonnage 792.14/again no change in inventory. I may be mistaken but it seems that the GLD has no gold to give the boys over at Shanghai who continue to bring in 4 tonnes per day. This will be watched closely. For 9 days the inventory has remained constant at 792.14 tonnes April 28.2014: tonnage 792.14/no change in inventory. April 25.2014 tonnage 792.14 No change in inventory. April 24.2014: tonnage 792.14. No change in inventory April 23.2014: tonnage 792.14. No change in inventory April 22.2014: tonnage 792.14 . No change in inventory April 21.2014: tonnage: 792.14. we lost another 3.00 tonnes of gold. I have no doubt that this gold has left England's shores and is on its way to Shanghai. April 17.2014: 795.14. We lost another 3.29 tonnes of gold. Dave Kranzler stated that he thought we would have a run on the GLD once we had negative GOFO rates. I believe he is perfectly correct as there is no place on obtain gold needed to satiate the needs of Shanghai April 16.2014: 798.43. Today we lost a whopping 8.39 tonnes of gold. China must be needing more of our ancient metal of kings. April 15.2014: 806.82. Today we had a gain of .6 tonnes of gold. April 14: 2014: 806.22. Today we had a gain of 1.8 tonnes of gold. This is extremely good news as it confirms both demand from China and demand for gold by the GLD custodians>