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Ed Steer
“Da Boyz” Show Up at Precisely 9:00 a.m. EDT on Monday
1 month ago

16 May 2017 —  Tuesday


The gold price chopped mostly higher right from the moment that trading began in New York at 6:00 p.m. EDT on Sunday evening, with the Far East high tick coming right at the afternoon gold fix in Shanghai.  It was sold down a bit from there for an hour or two before beginning to head higher shortly before 10 a.m. in London.  The price rally obviously got too frisky for the powers-that-be — and at exactly 9:00 a.m. EDT in New York, they stepped on the gold price — and the prices of the other three metals as well…which was the exact same moment that dollar index stopped falling and began to move higher.

Coincidence you think?  Not bloody likely.

The New York low was printed a minute after the COMEX close — and it rallied about a buck from there, before trading sideways for the rest of the day.

The low and high ticks for gold, which are barely worth looking up, were recorded by the CME Group as $1,226.80 and $1,237.40 in the June contract.

Gold was closed in New York on Monday at $1,230.40 spot, up only $2.70 on the day.  Net volume was pretty high at just over 170,000 contracts — and roll-over/switch volume out of June was nothing special.

In silver, the low tick was set minutes after 8 a.m. in Shanghai on their Monday morning — and the price rallied quietly until about forty minutes after the noon silver fix in London.  Then away it went to the upside — and ran into ferocious not-for-profit sellers immediately.  Silver’s high tick was also set at precisely 9 a.m. EDT — and the spike low tick was around 1:10 p.m. in New York, which was about twenty minutes before the COMEX close.  It rallied about a nickel in the thinly-traded after-hours market, but that was all taken back before trading ended at 5:00 p.m. EDT.

The low and high ticks in silver were reported as $16.41 and $16.815 in the July contract.

Silver was closed in New York yesterday afternoon at $16.60 spot, up 16 cents on the day.  Volume was huge, as the short buyers and long sellers were out in force yesterday.  Net volume checked in at just over 76,000 contracts.

Here’s the 5-minute tick chart for silver courtesy of Brad Robertson as usual.  There was light and spotty volume in Far East and London trading, but that changed sharply on the rally that began shortly after the noon silver fix in London, which shows up as 05:30 a.m. Denver time on the chart below.  By 11:30 a.m. MDT/1:30 p.m. in New York, volume was back to background once again.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon China Standard Time [CST] the following day in Shanghai—and don’t forget to add two hours for EDT.  The ‘click to enlarge‘ feature is a must.

Platinum followed an almost identical chart pattern to silver — and the inflection points were the same as well — so nothing else needs to be said.  Platinum finished the Monday session in New York at $927 spot, up 8 bucks on the day, but ten dollars off its high tick.

The palladium started off following a similar price pattern as the other three precious metals, including the price capping in New York at 9 a.m.  But thirty minutes later, the long knives were out — and not only did all the gains vanish, but ‘da boyz’ sold it well into the red by the COMEX close.  Palladium was closed at $792 spot, down 13 bucks on the day — and 26 dollars off its high tick!  Was someone shorting this precious metal?  We’ll know more in Friday’s COT Report.

The dollar index closed very late on Friday afternoon in New York at 99.18 — and it shed a small handful of basis points when trading began at 5:00 p.m. EDT on Sunday afternoon in New York.  From there it crawled up to its 99.26 high tick of the Monday session, which came around 8 a.m. China Standard Time on their Monday morning.  It was all down hill from there — and the Monday low tick of 98.79 was set at exactly 9:00 a.m. in New York…the precise moment that all four precious metals were capped and turned lower.  The ‘rally’ from that juncture lasted until around 2 p.m. in the after-hours trading session, just as it touched the 99.00 mark.  The rally faded from there — and the dollar index finished the day at 98.88…down 30 basis points from its close on Friday.

It was another day when JP Morgan et al used the slimmest of dollar index rallies, which they probably manufactured, to pound the precious metals lower, as it’s an absolute certainty that they would have all close materially higher if ‘da boyz’ hadn’t show up to turn the dollar index around with one hand — and smack the precious metals with the other.

Here’s the 3-day dollar index chart so you can see the ‘action’ on Sunday as well as all of Monday’s.

And here’s the 6-month U.S. dollar index, which you are free to read into whatever you wish.

The gold stocks gapped up to their respective high ticks within the first five minutes of trading on Monday morning in New York.  They were sold back to just above unchanged in short order, before heading back into the red starting at precisely 12:00 p.m. noon EDT.  Their low ticks were set fifteen minutes before the COMEX close — and they rallied quietly but steadily until the trading day was done at 4:00 p.m. in New York.  The HUI closed down 0.04 percent.  Call it unchanged.

The silver equities outperformed their golden brethren once again — as Nick Laird’s Silver Sentiment/Silver 7 Index closed up 0.85 percent — and here’s the 6-month chart so you can see how they’re progressing from their lows.  Click to enlarge.

The CME Daily Delivery Report on Friday, which was missing in action if you remember, never materialized on the CME’s website over the weekend, but did show up on their website very late in the day on Monday.  There were 10 gold and 22 silver contracts posted for delivery within the COMEX-approved depositories today.  There was nothing special happening in gold — and the only thing of note in silver was that, once again, ABN Amro showed up as both an issuer and stopper.  They issued all 22 contracts, plus they stopped 7 as well.  ADM stopped 13.

The CME Daily Delivery Report that came out on Monday showed that 8 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  There were no issuers and stoppers worth noting — and I shan’t bother linking this amount — and Friday’s data mentioned in the previous paragraph has already been overwritten by Monday’s data.

The CME Preliminary Report for the Monday trading session showed that gold open interest in May fell by 8 contracts, leaving 33 left, minus the 8 contracts mentioned in the previous paragraph.  Friday’s Daily Delivery Report [two paragraphs above] showed that 10 gold contracts were actually posted for delivery today, so that means that 10-8=2 more gold contracts were added to the May delivery month.  Silver o.i. in May declined by 12 contracts, leaving 83 still around.  Friday’s Daily Delivery Report showed that 22 silver contracts were posted for delivery today, so that means that another  22-12=10 silver contracts were added to the May delivery month.

There were no reported changes in GLD yesterday — and as of 9:12 p.m. EDT yesterday evening, there were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank were quick to update last week’s numbers in both their gold and silver ETFs as of the close of business on Friday, April 12 — and this is what they had to report:  Their gold ETF declined by a smallish 5,272 troy ounces, but their silver ETF added a very decent amount of metal for the second week in a row, as they took in 659,636 troy ounces.

As the silver price fell during the engineered price decline that started on April 17, there has been 1.07 million ounces of silver added to Zürcher Kantonalbank’s silver ETF in the last three weeks.

There was no sales report from the U.S. Mint on Monday.

For a change, there was fairly decent gold movement over at the COMEX-approved depositories on the U.S. east coast on Friday…most of it outbound.  There was 600 troy ounces reported received…all of which ended up at Brink’s, Inc.  And except for a few bars…99 percent of the gold shipped out…128,609.541 troy ounces…about 4,000 kilobars worth…came from Canada’s Scotiabank.  Also at Scotiabank, there was 38,716 troy ounces transferred from the Eligible category — and into Registered.  The link to that activity is here.

In silver, there was a container load…604,920 troy ounces…shipped into Scotiabank, plus another 30,067 troy ounces was shipped out as well.  The link to that activity is here.

It was fairly quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  The reported receiving 1,000 of them — and they shipped out 148.  All of this action was at Brink’s Inc. — and the link to that, in troy ounces, is here.

Here are two charts that Nick Laird passed around on Saturday.  The first shows that they U.K. received 67 tonnes of gold in Marchand the countries of origin, plus the respective amounts, are shown on the first chart.  Click to enlarge.

This second chart shows that the U.K. exported 28 tonnes in March — and the shipments to Switzerland and Turkey are all that matter.  The bars going to Switzerland will be further refined to 4-nines fine — and shipped off to China and India.  Click to enlarge.

Because of news over the weekend, I have a few more stories than normal — and I hope there are some in here that you find worth your time.


How is This Not a Recession? Ford to Slash 10% of Global Workforce

Having admitted in March that “used car prices will drop for years” and amid near-record inventories,  a so-called ‘plateau’ in car sales, and soaring auto-loan losses, WSJ is reporting that Ford is planning substantial cuts to its global workforce amid CEO Mark Fields’s drive to boost profits and address the auto maker’s sliding stock price, according to people briefed on the plan.

With near record high inventories of 3.9 million vehicles…demand tumbling…and a flood of off-lease vehicles set to send prices tumbling, as Morgan Stanley recently pointed out, we’re just getting started as they see used car prices dropping by up to 50% over the next 5 years.

It appears Ford has seen the light of survival in this non-recession, recession…

This news item showed up on the Zero Hedge website at 10:40 p.m. EDT on Monday night — and another link to it is here.

Doug Noland: The VIX and the Scheme

I expect U.S. system Credit growth to surpass $2.2 TN this year, roughly broken down by the government sector ($850bn), Business ($750bn), Household Mortgage ($350bn) and Consumer Credit ($250bn). Another big federal deficit is expected, with the perception of a blank checkbook ensuring that deficits inflate until the markets decide otherwise. Rising home prices coupled with low mortgage rates ensure a 2017 expansion of mortgage borrowings. Loose financial conditions and record debt issuance would seem to ensure another big year of Business debt growth. And while there appears to be some tightening in subprime auto and Credit cards, I would be surprised to see Consumer Credit expand by much less than 2016. As such, the relatively stable outlook for U.S. Credit growth certainly supports the global liquidity and market backdrop.

The situation in Chinese Credit is altogether different. Credit growth (Total Social Financing and government borrowings) is on track to approach a record $3.5 TN this year. But I wouldn’t be stunned neither by $4.0 TN or a crisis-induced rapid Credit slowdown. April lending data was out Friday. Total Social Financing (TSF) expanded $201bn during April, down from March’s $307bn. New Loans expanded $159bn during the month, about a third greater than expected. Bank lending took up some of the slack from a sharp decline in various “shadow banking” components. Overall mortgage Credit growth slowed during April. TSF (which excludes government borrowings) expanded a record $1.205 TN during the first four months of the year.

From my analytical perspective, China has evolved into the key marginal source of global Credit. Why is the VIX – along with the price of other market “insurance” – so low? Because of the market perception that Beijing these days has everything under control. Notable complacency, yes. At the same time, and making things more intriguing, I don’t believe markets are all too confident in China prospects over the intermediate and longer-term. So, we’ll continue to monitor closely for indications of escalating Chinese instability. After an “inconclusive” past five days in the markets, Risk On/Risk Off will be monitored diligently once again next week.

Once again I forgot all about Doug Noland’s weekly Credit Bubble Bulletin when I was writing my Saturday column, so here it is now.  Another link to it is here.

It’s Really Crazy What This ECB Has Wrought

At the end of the week, something special happened, something totally absurd but part of the new normal: the average yield of euro-denominated junk bonds – the riskiest, non-investment-grade corporate bonds – dropped to the lowest level ever: 2.77%.

April 26 had marked another propitious date in the annals of the ECB’s negative yield absurdity: the average euro-denominated junk bond yield had dropped below 3% for the first time ever.

By comparison, what is considered the most liquid and safe debt, the 10-year US Treasury, carries a yield of 2.33%; the 30-year Treasury yield hovers at 3%.

It’s not like there’s deflation in the Eurozone, despite rampant scaremongering about it. The official inflation rate in April was 1.9% for the 12-month period.

In other words, the average “real” junk bond yield (after inflation) according to the above two indices is now 0.87%. That’s the return bond-buyers get as compensation for handing their money for years to come to non-investment grade corporations – as per an average of the ratings by Moody’s, S&P, and Fitch – with an appreciable risks of default looming on the horizon.

You couldn’t make this stuff up!  This worthwhile commentary showed up on the Internet site on Sunday — and it comes to us courtesy of Richard Saler.  Another link to it is here.

Hit by Run on Deposits, Banco Popular Denies it’s Looking for Rushed Takeover to Avert Collapse

In the world of banking, confidence and trust are a precious currency. The moment a bank loses them, things tend to spiral down quickly. Spain’s sixth biggest and desperately troubled bank, Banco Popular, appears to be well along the process of losing the confidence of its customers, and with it their deposits. Last year the bank lost 6.5% of its deposit base. But now, according to a report by the financial daily El Confidencial, the deposit outflow is swelling from a trickle into a deluge.

The bank responded by making its deposits more attractive. Its deposit rates now range between 0.75% and 4%. With the eurobor at 0%, offering such enticing rates will obliterate Popular’s wafer-thin margins.

Yet the outflow only accelerated. Last week, when the bank reported a quarterly loss of €139 million, it disclosed that deposits had dropped an additional 5%, to €78.8 billion, in the January-March period.

But then came a fresh bombshell yesterday afternoon. El Confidencial reported that the outflow of deposits by private and institutional depositors has reached such proportions that the bank was on the verge of default. Its senior management had contacted the CEOs of Spain’s five biggest banks, Santander, BBVA, Caixabank, Banc de Sabadell and majority publicly owned Bankia, to discuss the urgent need for a quickfire takeover. The report stated that Popular’s new chairman, Emilio Saracho, a former vice-president of JP Morgan Chase, had hired JP Morgan, Lazard and Société Générale to find a buyer.

The bank’s shares plunged 6.6% on Thursday and another 5% on Friday to €0.75.

Just looking at the share price, dear reader, one would think that this bank has been in trouble for a while.  This is the second story in a row from the Internet site — and this one was posted there on Friday sometime.  I thank Richard Saler for this one as well — and another link to it is here.

Padoan Says Extent of Bad Loans at Italian Banks Overestimated

The numbers circulating about bad loans at Italian banks are too high, Finance Minister Pier Carlo Padoan said.

The numbers that have been floating around” amount to several hundred billion euros — this “grossly overestimates the impact, I would say that now we are talking about tens of billions,” Padoan said on Saturday in a Bloomberg Television interview in Bari, Italy, where his nation was hosting a meeting of Group of Seven finance chiefs and central bankers.

Italy approved a law to plow as much as €20 billion ($22 billion) into troubled lenders as part of its efforts to revamp its banking industry and break a slump in lending. With the mountain of bad loans estimated as high as 360 billion euros, the government is seeking to avoid a resolution for the weakest lenders that would impose heavy losses on savers and retail investors.

While Italy’s banks weren’t on the G-7’s agenda, Padoan still managed to spread the word to his colleagues.

After every chat with Padoan, I’m a little bit less worried” about Italy’s banks, German Finance Minister Wolfgang Schaeuble told reporters in Bari.

If this isn’t case of  “whistling past the [proverbial] graveyard”…I don’t know what is.  If the NPL situation isn’t as bad as stated, why does the Italian banking system need to be continually propped up by the ECB?  As Draghi said, he’ll do “whatever it takes” — and that includes buying whatever garbage that the Italian banks are selling in order to prevent Italian interest rates from blowing sky high, which is precisely what they’d do if the free market was involved.  The above five paragraphs are all there is to this brief Bloomberg story that put in an appearance on their website at 8:56 a.m. Denver time on Saturday morning.  I thank Swedish reader Patrik Ekdahl for sharing it with us — and another link to the hard copy is here.

‘Mad Dog’ Mattis to NATO: “Problems we have with Russia will be solved by diplomats and no other way

U.S. Defense Secretary Jim Mattis met with Danish Prime Minister Lars Loekke Rasmussen and discussed NATO’s “democracy spreading wars” and of course “Russian aggression” with Russian President Putin’s fantasy plan to take over the tiny NATO Baltic nations, that no one wants or cares about.

Jim Mattis did note…

In terms of our commitment to defense, year 2014 was an eye opener for all of us I think. And we now confront concerns from the East and threats from the South . And we’re going to have to stand visible, but also indivisible as we deal with these issues. I’m on my way from here, sir, to Lithuania where I’ll observe the NATO troops together under the German framework nation there, as we make very clear that these problems we have between us and Russia will be solved by diplomats and no other way.

Along with a 2:09 minute embedded video clip, this tiny news item appeared on Internet site very early on Monday morning EDT — and I thank Roy Stephens for pointing it out.  Another link to it is here.

Confirmed: The Donetsk People’s Republic seeks to join the Russian Federation

Many people have wondered whether the leaders of Donetsk and Lugansk wish their young countries to remain independent republics when the war is over or whether they see their long term future in the Russian Federation.

Today, the answer came from Donetsk People’s Republic leader Alexander Zakharchenko.

Speaking at a press conference during a meeting with Russian politicians, Zakharchenko said,

We have only one goal, returning to the homeland”.

The Donetsk leader spoke fondly of Russia and reminded his audience that the people of Donbass are Russian and always have been. Today, only a war and legal technicalities stand in the way of the inevitable. There are many hurdles yet to jump, but Donbass is on its way home.

The above text is all there is to this news item that showed up on Internet site on Saturday.  But there’s a 2:20 minute embedded video clip, complete with English subtitles, as well.  I thank Roy Stephens for this story — and another link to it is here.

The Escape From Collectivism — Jeff Thomas

There are two forms of exit from collectivism. The first is national; the second is personal.

Russia has crawled out of the collectivist tar pit, but not before an economic collapse in 1991. The political leaders that were responsible for the reinforcement of collectivism were able to bail out and retire in comfort to their dachas, whilst the hoi polloi suffered the pain of collapse and slow recovery.

East Germany made a concurrent recovery from collectivism but had a bit of help from the more free-market West Germany after their reunification. (This fast-track form of recovery is rare.)

The German recovery is especially notable, as the West Germans eagerly encouraged the East Germans to join the job market and otherwise participate in the then-vibrant West German economy. The initial result was that, whilst East Germans looked forward to the opportunity to have more money, better jobs, bigger apartments, and luxuries like new cars and televisions, they began whingeing immediately at the longer hours and increased productivity expected by West German employers. They were also miffed at the loss of holidays, extended paid leave, medical benefits, and other unrealistic collectivist perks that West Germans did not receive.

However, most Germans were of the same race and ancestry, so the East Germans could not cry, “discrimination.” As a result, they got on with the changes. However, the change in mindset was slow and, to this day, some older East Germans still grumble that they had hoped to gain free-market advantages whilst hanging on to collectivist perks.

This very worthwhile commentary by Jeff put in an appearance on the Internet site on Monday sometime — and another link to it is here.

Zimbabwe: Black Market in Currencies Thrives as Banks Run Dry

Harare’s Road Port has become the unofficial bank of last resort, never short of cash, no queues, and a multicurrency platform.

The money market at this busy bus terminus now plays the role that the formal banking sector has failed. It is effectively making a mockery of the Reserve Bank of Zimbabwe (RBZ).

Bundles of bond notes, hard United States dollars, and the South African rand openly exchange hands here without any fear of the police who mill around everywhere.

Most of the dealers are poor and do not own the huge heaps of money that they carry around. The money belongs to some big shots in the corridors of the financial institutions, government, and business owners — mostly Chinese nationals who pour hard cash on the market every day.

Having spent a serious amount of time in that nation back in the early 1970s when Ian Smith ran the place, I’m always interested in any story that pops up about this country  — and here’s one.  It was posted on Internet site on Sunday — and I found it on the website.  Chris Powell has given it a different headline…”Report from another gold-rich country insisting on being poor”…which is certainly true enough — and not just for that country, either.  Another link to it is here.

Spring-cleaning India’s most magnificent tent

Rajasthan’s Royal Red Tent is as tall as a double-decker bus, made from silk, velvet and gold – and it’s getting its first proper clean in more than three centuries, says Melissa Van Der Klugt.

High up on the ramparts of Mehrangarh, in one of Rajasthan’s most famous forts – one of the most visited in India – a small team is dusting down a large tent.

Each section is so big that the three conservationists – dressed in neat white overalls and equipped with pocketfuls of soft brushes – must clamber around on tables and chairs. “The priority is the object,” says one, pointing to the elaborate design of lotus flowers stitched in solid gold thread.

For this is no ordinary tent – but one that excites huge interest and controversy in India. It was once thought to have been the home of Shah Jahan, the great 17th-Century Mughal emperor who built the Taj Mahal.

This very interesting news item was posted on the Internet site on Sunday sometime — and I thank Patrik Ekdahl for bringing it to our attention.  The photos are worth the trip — and another link to it is here.

The multi-polar world comes to China to talk business

World leaders, including Russia’s President Putin have been attending meetings in Beijing as part of the ‘One Belt–One Road’ initiatives launched by China in 2013.

The ambitious project aims to set up transport and trade corridors that will help connect East-Asia, Eurasia and Europe, using both rail and maritime links.

China’s goals represent the most ambitious project to re-define the logistical and financial nature of world-trade since the creation of the World Trade Organisation (WTO) in 1995.

The projects logistics are immense and any project of this size will not come to fruition in a day. This is especially true as the countries leading the project seek cooperation and consent. Intimation and domination, hallmarks of western economic imperialism, are off the table.

President Xi made this abundantly clear. The Chinese President said,

We have no intentions to meddle in the internal affairs of other countries via bringing our social system and the development model, or by imposing our will (on other states)”.

This very worthwhile news item showed up on website on Sunday sometime — and it’s another offering from Roy Stephens — and another link to it is here.

Behind China’s Silk Road vision: cheap funds, heavy debt, growing risk

Behind China’s trillion-dollar effort to build a modern Silk Road is a lending program of unprecedented breadth, one that will help build ports, roads and rail links, but could also leave some banks and many countries with quite a hangover.

At the heart of that splurge are China’s two policy lenders, China Development Bank (CDB) and Export-Import Bank of China (EXIM), which have between them already provided $200 billion in loans throughout Asia, the Middle East and even Africa.

They are due to extend at least $55 billion more, according to announcements made during a lavish two-day Belt and Road summit in Beijing, which ends on Monday.

Thanks to cheaper funding, CDB and EXIM have helped to unblock what Chinese president Xi Jinping on Sunday called a ‘prominent challenge‘ to the Silk Road: the funding bottleneck.

But as the Belt and Road project grows, so do the risks to policy banks, commercial lenders and borrowers, all of whom are tangled in projects with questionable business logic, bankers and analysts say.  EXIM, seeking to contain risk, says it has imposed a debt ceiling for each country.

This Reuters news item, filed from Beijing, showed up on their Internet site at 7:00 a.m. EDT on Monday morning — and it’s from Zero Hedge via Brad Robertson.  Another link to it is here.

So what happened to Donald Trump’s Korean War 2.0?

News that North Korea has tested a ballistic missile which hit the Sea of Japan 500 kilometres from the Russian coastline begs the question of what happened to the great crisis in the Korean Peninsula that the world media was talking about so excitedly throughout much of April?

As The Duran’s readers may recall, during April the headlines were filled with stories of North Korea planning a sixth nuclear test, of President Trump warning of the U.S. being prepared to take unilateral action if North Korea’s nuclear programme was not stopped, of the the U.S. carrier Carl Vinson with its accompanying “armada” closing on North Korea and of the U.S. submarine USS Michigan with its vast battery of cruise missiles doing the same, of the entire U.S. Senate being called to the White House to be briefed about the threat from North Korea, of the ‘Mother of All Bombs’ being dropped on ISIS in Afghanistan as a ‘warning’ to North Korea, and of Wang Yi – China’s Foreign Minister – warning that war might break out on the Korean Peninsula at any moment.

In the event April has passed with no sign of a North Korean nuclear test and no military action by the U.S.  North Korea since then has dropped out of the news whilst South Korea has elected a new more liberal minded President – Moon Jae-in – who seems intent on reducing tensions in the Korean Peninsula, has spoken of his desire to travel to North Korea to meet with Kim Jong-un, and who within a day of his inauguration spoke over the telephone with Russia’s President Putin, with the Kremlin’s summary of their conversation containing these interesting words that appear to signal Moon Jae-in’s strong opposition to any attack on North Korea

While exchanging views on the situation on the Korean Peninsula, both leaders underlined the importance of finding ways to resolve the crisis politically and diplomatically.

This is another story from Internet site.  This one appeared there on Sunday sometime — and once again I thank Roy Stephens for pointing it out.  It’s certainly worth reading if you have the interest — and another link to it is here.

Rick Rule talks precious metal stocks on BNN‘s “Market Call

Rick Rule, founder and CEO of Sprott U.S. Holdings, takes viewer questions on precious metals stocks on Friday.

Well, dear reader, I could get this page on the Internet site to load up OK, but the 45:37 minute video clip itself doesn’t appear.  Ken Hurt, who sent this story our way, said he had no problems viewing it, so I’m posting it in case this is just a local issue, or maybe just me.  But if there’s no interview, don’t come to me looking for answers.  I might suggest you use a different web browser to open it.  I find it hard to believe that the Broadcast News Network would block it for Canadian viewers — and if they were, there would be a notice on the screen to the effect.

State Department memo explains U.S. policy to drive gold out of the financial system

A long memorandum written in March 1974 by a U.S. State Department official for Secretary of State Henry Kissinger and copied to future Federal Reserve Chairman Paul Volcker, then the Treasury Department’s undersecretary for monetary affairs, describes the desire of the United States and its options to prevent European countries from increasing the use of gold in the international financial system.

The memo, titled “Gold and the Monetary System: Potential U.S.-E.C. Conflict,” was recently discovered in the State Department archive by GoldMoney Vice President John Butler and brought to GATA’s attention this week by GoldMoney research chief Alasdair Macleod. It emphasizes the longstanding U.S. government policy of subverting gold as a reserve currency in favor of the Special Drawing Rights issued by the International Monetary Fund, an agency then and now largely controlled by the United States.

The memo’s author, Sidney Weintraub, deputy assistant secretary of state for international finance and development, wrote:

To encourage and facilitate the eventual demonetization of gold, our position is to keep the present gold price, maintain the present Bretton Woods agreement ban against official gold purchases at above the official price, and encourage the gradual disposition of monetary gold through sales in the private market.”

An alternative route to demonetization could involve a substitution of SDRs for gold with the IMF, with the latter selling the gold gradually on the private market, and allocating the profits on such sales either to the original gold holders or by other agreement.”

This interesting, but longish commentary showed up in a GATA dispatch on Saturday — and it’s certainly worth reading if you have the interest.  Another link to it is here.

Silver price prospects set fair — Lawrie Williams

According to the latest figures from GFMS, prepared on behalf of The Silver Institute – global silver production fell by 5 million troy ounces last year – the first fall in new production for 15 years.  Although the fall was a minimal 0.6%, global silver demand in 2016 was estimated to have exceeded supply by a rather larger 147.5 million ounces – a seemingly ever-continuing global deficit in silver supply vs demand.  Further some preliminary Q1 figures from some of the leading producers suggest that supply may fall further in the current year, perhaps rather more sharply, while demand will likely be unchanged, or perhaps higher still with growth in the photovoltaic sector in particular.

Whether real supply/demand figures have much impact on silver prices short term is contentious – the price is driven largely by some rather anomalous dealings in the futures markets, but in terms of a long term trend, assuming these are continuing signs of future continuing, and perhaps growing, shortfalls in supply, fundamentals are likely to assert themselves as time progresses.

Longer term, the decline in usage in photography, which used to be silver’s main area of demand, now seems to have dwindled to almost insignificant proportions, and has been more than replaced by growth in the photovoltaic sector – which is continuing to see annual advances due to the increasing impact of the green energy sector.  Other industrial uses do seem to be growing too so there remains a good prospect of continuing supply/demand deficits provided investment demand holds up.  Should gold advance too then the prospects for silver would seem to be set fair.  Recently the Gold:Silver Ratio (GSR) rose back above 75.  As gold steadies and rises the GSR should fall back to silver’s advantage.  We have been predicting a level of 65 which could prove conservative – but remember 2011.  If silver rises too far too fast it will likely be brought crashing down again by the big money to protect  some very large short positions.

Caveat emptor.

This silver commentary by Lawrie showed up on the Sharps Pixley website on Monday smetime — and another link to it is here.

Metal detectorist to receive £2m reward for discovering Britain’s biggest Viking hoard

Derek McLennan, 50, a retired businessman, found the remarkable 10th century artefacts in a field on church land in the south west of Scotland in 2014.

The haul included silver bracelets, brooches and ingots, a gold ring, an enamelled Christian cross and a bird-shaped gold pin.

He has since complained about the time taken to make a decision on what should happen to the treasure, but has now learned that he stands to receive £1,982,200.

Sharon McKee, Mr McLennan’s partner, who is also involved in his treasure hunting, wrote on Facebook that that they felt “honoured and feel privileged to have saved this internationally significant treasure”.

This worthwhile news item, complete with a few terrific photos, was posted on the Internet site at 5:25 p.m. BST on their Friday afternoon — and I thank David Larsen for pointing it out.  Another link it is here.


Today’s ‘critter’ is a Stellar’s jay…a bird I’ve feature before…but it’s been so many years ago that I’ve forgotten how long it was.  It’s closely related to the blue jay found in the rest of the continent, but with a black head and upper body.  It occurs in coniferous forest over much of the western half of North America from Alaska in the north to northern Nicaragua.  I’ve seen lots of them, but never with camera equipment at hand.  Click to enlarge.


Not only has the crooked COMEX futures positioning scam become obvious to more observers than ever based upon the explosion in COT commentary, we are now seeing clear signs of adjustment to it in actual trading (apart from the large core non-technical fund managed money long position). Never before have the other large reporting traders and the smaller non-reporting traders bought so aggressively on sharply lower prices than they have over the past three weeks. Clearly, these traders have seen the COMEX wash, rinse, repeat cycle often enough over the years that they know what to expect, namely, when the technical funds are done selling to the downside, then up we go in price. Same as I preach here.

Simply put, other futures traders see what is going on and are reacting to it. So here we have not only growing and widespread commentary and a substantial and growing core non-technical fund managed money long position, we now have bona fide evidence of other traders entering the fray opposite to the technical funds.  I know the CFTC pretends not to see what many more are reacting to, but let me ask you this – with such strong and varied evidence that more are reacting to the COMEX silver manipulation, does this sound like something that will reach a ripe older age…or does it not have the elements of blowing up shortly?” — Silver analyst Ted Butler: 13 May 2017

It was obvious that ‘da boyz’ weren’t going to let precious metal prices run away to the upside yesterday — and they hit the ‘Ramp dollar index/Smack Precious Metals’ button at precisely 9:00 a.m. in New York yesterday morning.  Of all the precious metals, they really laid the lumber on palladium.

Looking at the changes in open interest in both silver and gold in yesterday’s Preliminary Report from the CME, did not make me jump for joy, as they showed very decent increases.  I suspect they will be revised downward when the final numbers are posted on the CME’s website later this morning in New York, however I certainly wasn’t happy with what I saw last night.

But, as Ted Butler has pointed out over the years, it’s dangerous to read too much into these preliminary numbers — and we won’t know for sure until Friday’s COT Report.

Here are the 6-month charts for all four precious metals, plus copper once again — and it’s still too soon to write off the possibility that JP Morgan et al are done to the downside yet, particularly in gold.  The ‘click to enlarge’ feature helps a bit with the first four charts.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price didn’t do much until around 8:30 a.m. CST on their Tuesday morning.  At that point it rallied into the morning gold fix in Shanghai — and then traded pretty flat until shortly before 2 p.m. over there.  Then it rallied another couple of dollars going into the afternoon gold fix in Shanghai — and is trading mostly sideways going into the London open.  At the moment it’s up $4.60 an ounce.  It was almost the same price pattern for silver — and it’s up 12 cents.  Ditto for both platinum and palladium, with the former up 7 bucks — and the latter by 4.

Net HFT gold volume is already pretty chunky at just over 34,000 contracts, with very little roll-over/switch volume out of June.  HFT silver volume is very healthy as well, approaching 9,700 contracts.

The dollar index began to edge lower as soon as trading began at 6:00 p.m. EDT in New York on Monday evening, but turned south with a vengeance shortly after 12:30 p.m. China Standard Time — and as London opens, it’s down 22 basis points.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report and, without doubt, despite what may or may not happen from a price perspective during the rest of the Tuesday session, we’re certainly going to see an increase in the Commercial net short positions in both gold and silver.  But, as I always like to add, I’d love to be proven spectacularly wrong about that.

And as I post today’s column on the website at 4:02 a.m. EDT, I note that gold hasn’t done much during the first hour of trading in London — and is only up $4.10 at the moment.  Silver is lower by a few pennies as well — and currently up a dime.  Platinum is still up 7 dollars — and palladium is now up the same amount as well.

Net HFT gold volume is fast approaching 40,000 contracts — and that number in silver is a hair over 11,000 contracts, which is certainly a number that I don’t like to see.

The dollar index continues to head steadily lower — and is down 33 basis points at the moment.  This continued decline certainly isn’t being allowed to show up in gold and silver prices, at least not at the moment.

Tuesday’s price action so far looks very similar to what happened on Monday — and it remains to be seen if the powers-that-be will show up in New York again during the COMEX trading session to take back all of the current gains.  Maybe some other price pattern will be allowed to develop, so nothing will surprise me when I check the charts later this morning.

That’s all I have for today, which is more than enough — and I’ll see you here tomorrow.


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