Wednesday, June 11, 2014

Gold , Silver and PM Report ( June 12 , 2014 ) --- News of the day discussing or touching upon the precious metals !

Chinese Gold Demand Stable (823 MT YTD), Shanghai Silver Scarce

Chinese wholesale demand for physical gold, measured by SGE withdrawals, was more or less equal in week 22 (May 26 – 30, 2014) at 35.7 metric tonnes, relative to 36.4 tonnes in week 21. The year to date weekly average is 37.4 tonnes, which is 1908 tonnes annualized.

Shanghai Gold Exchange withdrawals only 2014 week 22

Silver remains scarce in Shanghai, premiums for spot silver past week have been above 6 percent over the international price and some contracts on the Shanghai Futures Exchange (SHFE) are still trading inbackwardation. On June 6, when the SHFE closed, the bid price for the first delivery month silver contract, which expires on June 16, was ¥ 4058 yuan. The ask price for the December contract was ¥ 4053 yuan. This means that when you own physical silver, or can get your hands on any, you can sell it in June and at the same time buy it back in December for less money. Silver delivered in June trades over a premium to silver delivered in December, which emphasizes spot demand. Normally precious metals trade in contango; future prices being higher than spot.

SHFE silver backwardation june 6, 2014
The open interest on the SHFE is calculated bilaterally. One contract resembles 15 Kg silver, fineness no less than 99.99%.

The profit opportunity has attracted supply because the backwardation between the first delivery month and future contracts has decreased since a few weeks.

In previous posts I’ve reported the SGE silver premium based on the weekly Chinese SGE reports that always lag one week. Additionally, these reports quote silver premiums by the SGE’s most liquid silver contract Ag(T+D), though this contract is not fully deliverable. That’s why I manually calculated the premium of the spot silver contract Ag99.99 and the spot-deferred contract Ag(T+D) on the SGE over the international price this past week (June 3 – 6, 2014). There was quite a difference in the premiums.

Silver premiums Shanghai week 22, 2014

Spot 9999 silver on the Shanghai White Platinum & Silver Exchange closed at 6.6 % on June 6.

This table is a trading overview from the SGE of June 6:

SGE trading June 6, 2014

Let’s examine the data highlighted in red to get a better understanding about trading on the SGE. The spot-deferred contracts (T+D) can be delivered every business day if both longs and shorts agree on delivery. Intensions must be submitted between 15:00-15:30 (GMT+8). If the amount of longs that want to take delivery transcends the amount of shorts that want to make delivery, the “deferred compensation fee” payment direction is short to long. I believe at this moment the daily compensation fee rate for Ag(T+D) is 1.5/10000 (times the silver price times the amount of Kg’s in the contracts), but the SGE often adjusts the rates. The settlement price of (T+D) contracts is disclosed as the “weighted average price”. On June 6, some Ag(T+D) longs apparently wanted to take delivery, perhaps to sell the silver bars instantly as Ag99.99 to pocket a profit, but the Ag(T+D) shorts refused to deliver any; the “delivery volume” was zero and the payment direction was short to long. By the payment direction we can tell some longs submitted for delivery.


Overview Shanghai Gold Exchange data 2014 week 22

- 35. metric tonnes withdrawn in week 22 (26-5-2014/30-5-2014)
- w/w – 1.88 %
- 823 metric tonnes withdrawn year to date.

My research indicates that SGE withdrawals equal Chinese wholesale gold demand. For more information readthis.

Shanghai Gold Exchange withdrawals 2014 week 22

This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 计交割量) is the total YTD.

Schermafbeelding 2014-06-06 om 11.18.39

This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).

SGE premiums

In Gold We Trust


London gold fixing is open to manipulation, LME executive says

By Eric Onstad
Tuesday, June 10, 2014
LONDON -- The global gold price setting benchmark or "fix" is open to manipulation, said the head of the London Metal Exchange (LME), which is competing to offer an alternative to the silver fix when the system is disbanded in August.
The gold and silver fixes, along with other commodity benchmarks, have come under increasing scrutiny by regulators in Europe and the United States since a London Interbank Offered Rate (Libor) manipulation case last year.
"When people sit around a table and lift a flag in the gold market and say this is where the price is, obviously it is open to manipulation if it's done in this opaque way," LME Chief Executive Garry Jones told a conference in London on Tuesday, giving no further details. ...
... For the rest of the story:

Alasdair Macleod: Market positions for gold and silver

11:35a ET Monday, June 9, 2014
Dear Friend of GATA and Gold:
Futures market positions in gold and silver indicate the likelihood of a short squeeze since the biggest trading banks are not as short as usual, GoldMoney research director Alasdair Macleod writes today. His commentary is headlined "Market Positions for Gold and Silver" and it's posted at GoldMoney here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


news and views....

Veris Gold files for bankruptcy protection in Nevada and BC
11th June 2014

TORONTO ( – Vancouver-based Veris Gold has filed for creditor protection in British Columbia and Nevada, where its flagship Jerritt Canyon mine and mill operations are located.
The TSX-listed miner on Monday said that the Supreme Court of British Columbia had issued an order granting the company’s application for creditor protection under the Companies’ Creditors Arrangement Act (CCAA), after Deutsche Bank (DB) London Branch declared payment defaults under the two forward gold purchase agreements between DB and the company.
The order also shields Veris’ subsidiaries Queenstake Resources, Ketza River Holdings and Veris Gold USA…

From Ed Steer's Gold and Silver Report....


News and views .......

Palladium soars on strike news

Palladium, the emission-scrubbing cousin of platinum, has soared to a 39-month high as the South African government failed to end a 19-week strike.
The metal hit a high of $855.40 an ounce early Tuesday, according to Bloomberg, a 35.4% gain since its low on June 26, 2013. Impala Platinum, the world’s second-largest platinum producer, said on Tuesday it “has exhausted all its financial means” in its wage offer, according to Reuters.
Palladium’s main use is in catalytic converters. Russia is the chief palladium producer, followed by South Africa. Prices have been squeezed by rising car sales in the U.S., political uncertainty in Russia, and the strike in South Africa.

Government offers housing to help unlock platinum deadlock

Government has offered to deliver housing for mineworkers in the platinum belt in an effort to free up a housing allowance that if added to basic salaries, puts the R12 500 per month wage demand within reach of employers.
This was the essence of the newly appointed mineral resources minister Ngoako Ramatlhodi’s intervention to bring negotiations back on track and bring an end to the debilitating strike that has so far cost the mines R21.8 billion in revenue and mineworkers R9.7 billion in earnings. The strike has been dragging on since 23 January.
Ramathlodi briefed journalists on Tuesday morning on his efforts that were terminated the day before without a settlement being announced.
This news item appeared on the Internet site at 11:43 a.m. SAST [South African Standard Time] on Tuesday morning---and it's the second offering in a row from reader B.V.

China's "Evaporated" Collateral Scandal Spreads to Second Port

Starting back in May of 2013, we first predicted that China's "Lehman event", even more troubling than the recent advent of Chinese corporate bankruptcies and perhaps even its housing crisis, namely the "discovery" that behind China's virtually-infinite rehypothecation machine - the backbone of its shadow funding markets - the amount of actual physical commodities is severely limited and misrepresented, meaning that for every paper claim on an underlying "funding" metal, there are pennies on the dollar, or renminbi as the case may be, of actual underlying collateral. Or, as MF Global's Jon Corzine may say,"it evaporated."
A year later, this too prediction has come true, and overnight none other than Goldman laid out a checklist of just how the recent revelation that not all bonded warehouses at the port of Qingdao, China's third largest, will become the catalyst to further CCFD unwinding.
And while this story is very slow to gain prominent media coverage for obvious reasons, the few outlets that have been keeping up, continue to disclose ever more troubling details, of which the latest and greatest one is not that China's key bank, state-owned Citic Resources has moved to secure the metals (it hopes) it has possession of at Qingdao: this was perfectly expected and the only question was who would be the first counterparty to admit there is a massive rehypothecation problem, and will be the second leg in the crisis, as one claimant after another rushed for their physical only to find that it has been pledged a countless number of times to other counter-parties.
There's smoke billowing everywhere around this copper rehypothecation issue in China---and if it turns out to be true, then it's a huge problem.  When they start taking people away in state-manufactured stainless steel bracelets, then I'll be a believer.  But, for the moment, I'll leave all the wild speculation to others.  In the meantime I'll be watching any unfolding events with great interest.  This Zero Hedge piece showed up on their Internet site at 10:18 a.m. EDT on Tuesday morning---and it's the second offering in a row from reader M.A.

Shrouding China's gold trade, more imports go under radar

Banks have started trial gold imports directly into the Shanghai free trade zone ahead of the launch of a gold exchange there, threatening to further obscure the level of buying by the world's top consumer.
The bulk of gold bought by China used to flow through Hong Kong, making its export data a useful proxy for Chinese demand as Beijing treats data about imports of the precious metal as a state secret.
"If gold enters China via Shanghai then it is not going to be easy anymore to draw conclusions about Chinese demand by just looking at Hong Kong data," said Carsten Fritsch, an analyst with Commerzbank AG.
The Shanghai Gold Exchange - the world's biggest platform for physical gold trade - is in talks with foreign banks and producers on the new exchange in the city's pilot free trade zone.
There's nothing really new in this Reuters piece, which was filed from Singapore early this morning---as I [and others] have been pointing out these facts ever since they first became known.  But this is the first time I've seen a major story about it in the main stream press---and that makes it worth reading.  I thank Ulrike Marx for her final contribution to today's column.