Sunday, August 17, 2014

Gold , Silver and Precious Metal Update ( August 16 , 2014 ) Not a shocker that when you boil away the fat , it just comes down to the ongoing manipulations allowed by the " Powers That Be " ! Ed Steer's Saturday blog post , Gata links and Koos Jansen links headline items to read and ponder for this weekend !


There was little price activity or volume in gold up until around the noon silver fix in London on their Friday.  Once the 'fix' was done for the day, then everything changed---and within the space of a couple of hours, the gold price was down twenty bucks, and back below its 50-day moving average.  It remained down until about 10:30 a.m. EDT---and then rallied quite a bit, and back above it's 50-day moving average.  The rally got capped at 12 noon---and then sold off a few dollars by 1 p.m. EDT.  After that it didn't do a thing into the close.
The high and lows ticks were recorded by the CME as $1,316.50 and $1,293.00 in the December contract.
Gold closed on Friday in New York at $1,304.50 spot, down $8.40 on the day.  Volume, net of August and September, was way up there at 202,000 contracts.
Silver had it's usual down opening in New York on Thursday evening---and after that the silver price pattern, with some minor variations, was very similar to gold, with everything changing at the noon BST silver fix.  The really big difference was that the sell-off after the noon price capping in New York was much harsher.
The high and low ticks for silver were reported as $19.955 and $19.505 in the September delivery month.
Silver finished the Friday session at $19.55 spot, down 31 cents from Thursday's close.  Net volume was pretty chunky at 47,500 contracts.
The platinum chart looks suspiciously like the gold chart as well well, as that precious metals was closed down 8 bucks on the day.
The palladium price was in the plus column all through Far East and early Zurich trading on Friday---and the HFT boys showed up in palladium about the same time as they did in the other three precious metals.  Palladium's low came at 9 a.m. in New York---and the rally from that point blasted through Thursday's close with ease before it, too, got capped at noon in New York at $892 spot---and after that it traded sideways into the close.  Palladium close up an even ten bucks.
I shan't dwell on the issue, but just about all the price action yesterday was wall-to-wall HFT traders spinning their algorithms---and running the technical funds through their sell/buy stops, as there was nothing about supply/demand fundamentals that would cause all four precious metals to react in such a fashion if there were a free market in any of them.
The dollar index closed late on Thursday afternoon at 81.61---and then traded flat until around 2:30 p.m. Hong Kong time on their Friday.  From that point the index chopped lower for the remainder of the day, as it closed at 81.43, which was down 18 basis points from Thursday.


I'm wondering about Friday's counterintuitive price action in the silver shares, just like I'm wondering about the counterintuitive price action in the silver shares on Thursday---and wondering if they're related in any way.  I'm not about to draw any conclusions, but just thinking out loud, dear reader.
The CME Daily Delivery Report showed that 216 gold and 10 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday.  The big short/issuer in gold once again was Jefferies---and the biggest long stoppers were JPMorgan in its client account with 122---and Canada's Scotiabank with 72.  JPMorgan has been taking delivery of a lot of gold contracts in its client account lately---and I'm not sure if anything should be read into that.  The link to yesterday's Issuers and Stoppers Report is here.
Checking Friday's Preliminary Report from the CME, I note that 330 contracts got shaved off of August's open interest in gold, of which 300 was the Comex delivery on Monday.  There are still 825 gold contracts left open in the August contract---and from that number you can subtract the 216 contracts mentioned above that are posted for delivery on Tuesday.
There were no reported changes in GLD yesterday---and as of 8:54 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
The good folks over at Switzerland's Zürcher Kantonalbank reported the changes in their gold and silver ETFs for the week ending on August 8---and this is what they had to say.  Their gold ETF had another withdrawal, this time it was 9,552 troy ounces.  Their silver ETF also declined, this time by 269,070 troy ounces.
The U.S. Mint had a very tiny sales report.  They sold 1,500 troy ounces of gold eagles---and that was it.
Month-to-date the mint has sold 15,500 troy ounces of gold eagles---4,500 one-ounce 24K gold buffaloes---and 1,180,000 silver eagles.  Based on these sales numbers, the silver/gold sales ratio for August so far is 59 to 1.
It was another fairly active day in both gold and silver at the Comex-approved depositories on Thursday.  In gold, there was 30,086 troy ounces of gold reported received---and all of it at Brink's, Inc.  The link to that activity is here.
In silver, there were 601,977 troy ounces shipped in---all into Brink's, Inc. as well.  There was 130,078 troy ounces shipped out, with most of that coming out the vaults of Canada's Scotiabank.  The link to that action is here.
Here's the 5-minute tick chart for gold on Friday.  The times on the bottom are MDT, so you have to add two hours for EDT.  Once you do that, you'll note that 95% of the volume occurred between 8 a.m. EDT [1 p.m. BST in London] and noon in New York.  I thank Brad Robertson for sending it our way.
Well, I was half right about the Commitment of Traders Report---and that is a failing grade as far as I'm concerned.  Even the part I was right about, was far bigger than I was expecting.
On the engineered priced drop in the silver price during the reporting week, the Commercial net short position declined by 4,477 contracts, or 22.4 million troy ounces.  The Commercial net short position is now down to 219 million troy ounces.  The brain dead/black box technical funds in the Managed Money category went in the opposite direction of course.  They increased their short position by 6,524 contracts as the Commercial HFT boyz with their trading algorithms engineered prices lower---and they were waiting with open arms to buy the long side of every trade.
But despite the fact that the Commercial traders were going long and covering short positions, Ted Butler says that JPMorgan increased their short side corner in the Comex silver market by about 1,000 contracts---and they now are short 19,000 Comex silver contracts.
In gold, it was exactly the opposite as it was in silver.  The Commercial net short position for the reporting week blew out by an astounding 29,045 contracts, or 2.90 million troy ounce of paper gold.  The Commercial net short increased to 16.07 million ounces.  On the other side of this were the brain dead/black box technical funds in the 'Managed Money' category, as they went long 14,538 contracts and covered 11,210 short contracts, for a total of 25,748 contracts.
Ted says that JPMorgan took the opportunity to sell 5,000 contracts of their 20,000 contract long-side corner in the Comex gold market.  They are now down to 15,000 Comex contracts.
As Ted has been saying for years now, it's the Commercial traders and their HFT antics that are running the technical funds in the Manged Money category through the sell and buy stops for fun, profit---and/or price management.  That was certainly evident this week, as gold was allowed to rally---and the silver price got engineered lower.
This is what drives prices in all four precious metals, plus copper---and has zero to do with supply and demand.  The CME Group, aided and abetted by the CFTC, are allowing a tiny group of Commercial traders to dictate world prices of these key commodities and, by extension, the prices of all commodities.
It's my opinion that this is deliberate---and is U.S. government policy---and is part of what is called the Wolfowitz Doctrine.  One can only imagine the number of countries in the world that would be prosperous beyond the dreams of Avarice if there was a free market in commodities.  This would put a quick end to the financial, economic and monetary dominance of the West in general---and the U.S. in particular.
The beauty of it is that both Russia and China know all about this---and if they wanted to, they could stick a pin in it if it suited them.  They just might if push really becomes shove.  [Note to Putin:  Feel free to do it at any time. Ed]

Selected new and views/  items - on / touching on the subject of the precious metals ....

Billionaire Paulson Maintains Stake in Biggest Gold ETP

Billionaire hedge fund manager John Paulson stuck with his holding in the biggest exchange-traded product backed by gold as prices rose on demand for a haven.
Paulson & Co., the largest investor in the SPDR Gold Trust (GLD), kept its stake at 10.23 million shares in the three months ended June 30, a government filing showed yesterday. The holdings were unchanged for the fourth straight quarter.
Gold rallied 9.3 percent in 2014, defying bearish forecasts from Goldman Sachs Group Inc. and outperforming equities and bonds amid escalating conflicts in Eastern Europe and the Middle East. The haven appeal may be waning amid concern that the Federal Reserve will raise interest rates as the U.S. economy accelerates, according to Lance Roberts, the chief strategist for STA Wealth in Houston.

Russia seeks safe haven in gold, away from dollar and euro

Russia is taking steps to ensure that it protects itself from any future dollar or euro sanctions. Moscow boasts the world’s 5th biggest foreign exchange reserves and the 6th largest gold reserves. In total, the assets amount to over $1.5 trillion.
While the West is continuing to try and punish Russia via economic sanctions, the response of the Russian Central Bank has been to diversify away from the euro and dollar – and to buy up more gold.
As the geopolitical situation in Ukraine deteriorates, Russia is moving to protect itself from currency risks associated with the euro and the greenback.
“Due to the worsening geopolitical situation, the Central Bank actively redistributed foreign exchange reserves, replacing US Treasury bonds with gold,” Alfa Bank’s chief economist, Natalya Orlova, told Kommersant.

GoldCore: New LBMA silver price still not transparent

GoldCore's daily commentary complains that the new silver pricing mechanism in London is not transparent and seems rushed and incomplete---and further comments that:
"The entire process has been a bit of a shambles. The Gold Anti Trust Action Committee (GATA) and those concerned about price manipulation will allege that the LBMA and the western bullion banks are engaged in a rebranding and repackaging exercise in order to maintain a cosy gold and silver cartel of bullion banks and ultimately control over precious metal prices."
"If the CME/Reuters aren’t willing to share with the public the presentation that they made at a closed door seminar, especially since they won the competition and are now running the process, what hope is there for transparency in this new process?"
Mark O'Byrne basically rips these guys a new one---and rightly so.  And as I've said before, it's not the silver fix that's important, it's the entire CME/Comex/CFTC-endorsed price management scheme that really matters.  The fixes, both gold and silver, although part of the problem, are not the real problem---and both Ted Butler and I wish that more people would acknowledge that.



Please, don’t worry so much. Because in the end, none of us have very long on this Earth. Life is fleeting. And if you’re ever distressed, cast your eyes to the summer sky when the stars are strung across the velvety night. And when a shooting star streaks through the blackness, turning night into day, make a wish, and think of me. Make your life spectacular. - Robin Williams, from the movie "Jack"
Well, the high frequency traders had a lot of fun whipsawing the technical funds/Managed Money traders back below the 50-day moving average in gold---and then closing the gold price above it once again at day's end.  One wonders how much money they skinned them for with that little maneuver?
Of course, all four precious metals got pretty much the same treatment, except for palladium, which went on its merry way to the upside after it got sold down initially.  And as I said in yesterday's edition of The Wrap---"This was particularly true in gold and silver, along with palladium, another metal that would take off to the moon and stars if allowed to do so."
Here are the 6-month charts for both gold and silver.  The price of gold is going in one direction---and the price of silver in the other.  There's nothing free market about this---and at some point this dichotomy will resolve itself---and if forced to bet ten bucks, I'd guess it will be resolved to the downside.
The silver price, at least according to the Relative Strength Indicator [RSI], is approaching oversold territory, but that is of little comfort at the moment, because the Commercial net short position is still miles away in Comex contract terms from its old low---and it remains to be seen how low JPMorgan et al will have to engineer the silver price to get all the Managed Money technical funds to puke up the rest of their long positions, plus go short again.
Of course the Commercial net short position in gold is getting up there real good---and if 'da boyz' turn the HFT traders and their algorithms loose on gold, they'll use the engineered price decline in that metal to accelerate the down-side price action in silver.  Ted Butler pointed out that on many occasions in the past, the Commercial traders have used a declining gold price to beat down silver.  We'll see if that happens this time around---and all we can do is wait it out.
One thing I am somewhat happy about is the share price action.  Considering how badly both gold and silver got manhandled yesterday, they could/should have done worse.  That outcome may lay ahead, but for the moment they're hangin' in there pretty good.
Well, the new silver fix certainly isn't a hit---and as Goldcore's Mark O'Byrne [and others] made abundantly clear in this story posted further up, it's hardly transparent at all.  But as I mentioned in my discussion on Friday's Commitment of Traders Report at the top of this column, it's not only the fixes that are an issue---"It's the Commercial traders and their HFT antics that are running the technical funds in the Manged Money category through the sell and buy stops for fun, profit---and/or price management."
This has been going on for ages now, especially in gold, silver---and copper.  All aided and abetted by the CME Group and the CFTC.
If you're looking for some sort of guidance going forward, I don't have any---nor does anyone else.  There's always that black swan out there somewhere, along with the chances that JPMorgan et al are going to get over run, but I wouldn't bet the ranch on that outcome.
That's all I have for today---and the week.  I'll see you here on Tuesday.

Additional items to consider.....


Alasdair Macleod: No escape from the dollar as the currency standard

11a ET Friday, August 15, 2014
Dear Friend of GATA and Gold:
Developing countries may be able to trade with each other without the U.S. dollar but so many dollars are floating around the world and constituting so much of central bank reserves that there may be no getting away from the dollar standard without crashing the world financial system. That's the argument today of GoldMoney research director Alasdair Macleod, whose commentary, headlined "No Escape from the Dollar as the Currency Standard," is posted at GoldMoney here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Mike Kosares: Fed's new vice chairman, Stanley Fischer, speaks out

9:33p ET Saturday, August 16, 2014:
Dear Friend of GATA and Gold:
Mike Kosares of Centennial Precious Metals in Denver tonight calls attention to the first speech of the new vice chairman of the Federal Reserve, Stanley Fischer, who said the first objective of central banks at the moment must be to try to restore economic growth. This, Kosares writes, argues against expecting an increase in interest rates any time soon, since raising rates always causes a recession. He adds that low interest rates correlate with a rising gold price, though, of course, lately they also have correlated with gold price suppression by central banks. Kosares' commentary is headlined "Stanley Fischer Speaks Out" and it's posted at Centennial's Internet site, USAGold, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Gold demand in China slumps 52% as buying frenzy subsides, WGC says

From Bloomberg News
Thursday, August 14, 2014
Gold demand in China shrank in the second quarter as consumers in the biggest user bought fewer bars, coins, and jewelry amid a clampdown on corruption and as the buying spurred by last year's price slump wasn't sustained.
Purchases in Asia's largest economy plunged 52 percent to 192.5 metric tons in the three months to June from a year earlier, contributing to a drop in global consumption, the London-based World Gold Council said in a report today.
Every Asian economy tracked by the producer-funded group bought less bullion in the period, apart from Taiwan, as demand across the biggest consuming region shrank 46 percent to 470.9 tons. ...
... For the remainder of the report:

U.S. gold reserve is leased but undeliverable, Jim Rickards tells Peter Schiff

12:02a ET Thursday, August 14, 2014
Dear Friend of GATA and Gold:
Interviewed by fund manager Peter Schiff, geo-political strategist, author, and fund manager James G. Rickards asserts, among other things, that:
-- The U.S. gold reserve has been leased out but has not left its vaults.
-- The leased gold consists only of certificates of title that have been rehypothecated many times, creating a vast supply of imaginary gold that is undeliverable.
-- If called for delivery, those certificates will be nullified by a bullion bank's claim of "force majeure" and settled with yesterday's now-much-discounted cash price.
-- The gold exchange-traded fund GLD was essentially looted of 500 tonnes last year to smash the gold price down but this cannot be done again because that gold is gone too.
-- And gold and the gold market are moving to Asia.
It's a great interview, only 12 minutes long, and has been posted at GoldSeek here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

London gold fix lawsuits to be consolidated in New York

By Andrew Longstreth
Wednesday, August 13, 2014
A federal judicial panel on Wednesday ordered that 18 lawsuits alleging a conspiracy to manipulate gold prices be consolidated into one proceeding in New York.
The cases will be sent to U.S. District Judge Valerie Caproni in Manhattan, who has already been overseeing more than two dozen cases.
The lawsuits name the multinational banks that make up the London Gold Market Fixing Ltd, the company operating the global gold price benchmark known as the 'fix.' ...
... For the remainder of the report:

Koos Jansen: Silver scarce in Shanghai

9p ET Tuesday, August 12, 2014
Dear Friend of GATA and Gold:
Gold researcher and GATA consultant Koos Jansen reports tonight that silver is in backwardation in Shanghai, with metal for immediate delivery being more expensive than metal for future delivery with a premium of 8 percent:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Koos Jansen......

Chinese Gold Demand 1094 MT YTD, Silver Premium At Record High

First let’s go through the Chinese SGE report published on August 8, which covers week 31 (July 28 – August 1). The total volume of gold traded on the Shanghai Gold Exchange (SGE) was 258 tonnes, of which 147 tonnes were traded as the spot deferred contracts Au(T+D) and mAu(T+D), the open interest closed at 141 tonnes. Total deliveries of the spot deferred contracts accounted for 55 tonnes in this week, gold withdrawn from the SGE vaults, which equals Chinese wholesale gold demand, accounted for 32 tonnes.
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HMRC And Eurostat Alter Historic UK Gold Trade Data

It was in August 2013 when I started digging into UK gold trade data. While at the time China was importing unprecedented amounts of gold, through customs data I was able to track the source all the way back to the UK, home of the London Bullion Market. In 2013 the only available database for UK gold trade was Eurostat. When downloading the numbers from 2013 and all the years before something quite remarkable appeared to me. According to Eurostat the UK imported 614 tonnes of gold in August 2008 and 1,352 tonnes in September 2008, just from one country; Germany.
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Chinese Gold Demand 1063 MT YTD

For ten days I’ve been on vacation without internet, hence I missed one week to report on withdrawals from the Shanghai Gold Exchange (SGE) vaults. Here is a quick overview of what happened in the Chinese gold market in week 29 and 30.

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Massive Gold Deposit Found In Xinjiang Province China

In ​China’s Xinjiang Uygur Autonomous Region, the largest province in China, there has been a massive gold deposit discovered, according to Xinhua News. At least 127 tonnes has been found in resource rich Xinjiang, said the regional bureau of geology and mineral exploration and development.​ The deposit is located in Ulugqat near Kyrgyzstan in west Xinjiang​. Cui Hongbin, head of exploration team, expects total reserves may even exceed 200 tonnes.

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