28 August 2015

Recent Trends in the Premium For Silver Coins Versus Spot Silver

"One important aspect of the physical market that is often overlooked is the premium it commands over spot price. Right before the Global Financial Crisis in 2008, the spot Silver price fell as low as USD 9 per oz., whereas the price of a 1 oz. Silver Eagle was around USD 17 on the wholesale market and even higher on the retail market! That’s a price premium of 188%!

That means that if you had held 100 oz. of paper Silver, you might have had to liquidate that for USD 900 (assuming the market was not halted for trading then), whereas if you had held 100 pieces of 1 oz. Silver Eagle coins, you would have gotten at least USD 1700 for them if not more."

BullionStar, The Difference in Paper and Physical Gold and Silver in times of Crisis

For the charts below the price data is the 'Ask'  live price from a major online supplier.

As always, if it is data related to the gold and silver markets and it is publicly available, Nick Laird at goldchartsrus.com is probably keeping track of it.

Shanghai Exchange Has 73 Tonnes of Gold Withdrawn In 4th Largest Week In History

There were a little over 73 tonnes of physical gold withdrawn from the Shanghai Gold Exchange in the latest week ending August 21st.

This is the 4th largest withdrawal of bullion in its history.

It is hard to tell what exactly is going on in such a dodgy, highly leveraged market, with its determined attempts to keep the price knocked lower so often during the late London to NY trading hours.

But I am sensing a change in the market, and more things running under the surface than meets the eye.

Goldman is no major player in the gold bullion market, but it did strike me as odd that they are suddenly stopping large amounts of bullion for their own house account this month. It is not that they are a player in gold, because they are not.  But that they are wired into many sources of information, are good at spotting trends, and are more like a hedge fund, comfortable running on the edge of the markets.

And the gold chart, for what it is worth in these times of market interventions, seems to be trying to form a rounded bottom in the form of  a cup and handle, with a successful retest of the handle this week.  This calls out a price around the bottom of the old trend channel at 1270.

It could also be nothing.  I will pursue the details of such a chart formation if we see the right kinds of follow through next week.

And I will certainly be watching silver very carefully for any signs of life.  It may be pivotal next month.

Let's see what next week brings.  Gold is just one market among many, and it is certainly not the largest one in play.

And while I have your attention, I thought I would include a long term chart of the relation of deliverable gold at current prices to open interest.  It might mean nothing.  But it doesn't seem to be anything familiar before 2013

The charts below courtesy of data wrangler Nick Laird at goldchartsrus.com.

Gold Daily and Silver Weekly Charts - Maintaining Confidence - Keep On Dancing

The action was a bit heavy in the metals today, as the Powers-That-Be quietly attempted to restore confidence and a sense of well-being and recovery after the somewhat disconcerting equity market plunge of Monday.

There was intraday commentary here about some interesting Goldman Sachs activity in an otherwise exceptionally sleepy week at The Bucket Shop.

People often ask me for a possible motive as to why central banks might care about gold and silver. Willem Middelkoop does a decent job of briefly explaining why in the first pictorial below.  It is all a part of the confidence game, when a series of bad decisions place a strain on one's full faith and credit.

The goal of the financial class is to keep the music going, and the public out there on the floor dancing so they don't have time to think.

Still out there bottom watching.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Fly Me To the Moon

Qualis dominus talis est servus.
As is the master, so is the servant.

Titus Petronius

Stocks came in weakly, but managed to rally in the last hour to closely largely unchanged.

The GDP revision for 2Q yesterday was a bit much.

The conversation on financial tv today was replete with interviews from that moveable feast of finance, from the rarified world at Jackson Hole, where the black swans of monetary policy return every so often to molt old forecasts and acquire new ones that are certain to work better than the last seven years of the same old thing.

Mostly it is just the usual nonsense. Alan Blinder had some interesting and surprisingly realistic things to say. Most of the others were just mouth breathing the talking points about our exceptional and improving economy which will allow the Fed to raise interest rates.

The research paper from the Fed asserting that the US is relatively immune (ok they said insulated) from global currency and economic shocks because of the position of the dollar as the settling currency of choice for international invoices was-- interesting.  Why is it that so many economic, and especially monetary, theories feel so comfortable inhabiting an alternate universe where trees are blue and pigs can fly?

And as a particularly astute reader observed, if this is actually true, is there any wonder why the rest of the world would resent the dollar hegemony if it grants that sort of power to the single nation that controls it?  That they are able to wreak havoc on the rest of the world, exporting malinvestment and willfully fraudulent financial instruments, without having to endure any consequences?

Well it doesn't work so nicely as that, but yes they do resent it for other reasons, and they have been doing more than resenting it for some time now.  And that is the basis for the 'currency war' that these jokers still do not understand. They think it is only 'currency devaluations' which, along with tariffs, was the tactic of choice in the last currency war in the 1930's.

But the one that left me gaping was the tendentious conversation this afternoon on Bloomberg about how fragile China and its markets are. And as evidence they cited the 'obvious interventions' in their stock market this week, wherein the Chinese markets slump, but then miraculously recover in the last hours of trading. They are obviously doing this so the leadership will not be embarrassed for their 70th commemoration of the end of WWII next week. Which by the way, the US is gracelessly boycotting.

Knock, knock, hello? Is self-awareness or unintentional irony at home?

Is there any doubt that we have been seeing the exact types of intervention by a powerful unseen hand in our own stock markets this week, on steroids, after the Monday flash crash? Does that mean that our economy is fragile and doomed as well?

Do these people actually believe what they are saying, or is this just some clumsy attempt to try to reassure our public that if their public gets into trouble there is no need to panic because, wait for it, we are so much better, more wisely and so much more virtuously blessed to be led by those archangels of benevolent wisdom in Washington and New York.

One can only wonder.

Have a pleasant weekend.

JPM Customers Issue and Goldman Takes Another 54,100 Ounces of Gold For the 'House Account'

The receipts for another large chunk of bullion changed ownership from a JPM Customer to the Goldman 'house account' at $1,122 per ounce.

With all the usual caveats, and just taking note.

This is especially intriguing since Goldman has been publicly beating the drums for gold to drop well below $1000.  Perhaps, like Rick who moved to Casablanca 'for the waters,' they are merely misinformed.

We ought not to presume anything about how naive the customer might be, or the sly cunning of any particular buyer.  For all we know the 'customer' could be a large and highly competent ETF or fund, and not some naive or desperate or perhaps whimsical individual.

And as for the buyer and its motives, my friend Dave offered some possible insight on this phenomenon here.   

While it is a hypothesis based on a correlation founded in possibly disparate facts, it is no more untoward than those who will simply dismiss the whole thing, and apparently ascribe no significance to almost anything whatsoever, other than the price of gold and silver must go lower. There is no truth, and there are no fundamentals, when things and their values are merely what we say that they are.

And I am sure that all of this is simply more of God's work, and not sly cunning in service to earthly greed, from such a benevolent and public-spirited institution.

27 August 2015

Gold Daily and Silver Weekly Charts - Bottom Watching - Icahn Buys Stake In Miner Freeport-McMoran

Gold took a gratuitous little hit on the NY open/London PM fix this morning. It was held down most of the day.

Silver managed to perk up nicely though, regaining the midpoint to the 15 handle. Next month will be more active for silver, and not so for gold.

Lets see if sparky can carry the day.

Not much ever happens at The Bucket Shop these days, so when Goldman takes 44,200 gold ounces for its house account as they did yesterday it is at least worth of note intraday which you can read about here.

I know, it's not that great, but it's something.  We're hard up for any real action here, except for the daily dump of paper to knock the prices lower in the AM with a slight recovery into the PM and then higher prices overnight.  Rinse and repeat the next day.

Chart formations for the precious metals have not meant much for, oh I don't know, about a year or so now.   Its just a steady knockabout lower, tap tap tap.

It may be dissipating.   Way to early to say.  But let's watch the chance for a rounding bottom here.  No charge for looking.  And after all, Summer is almost over.

Have a pleasant evening.

Related:   Carl Icahn Takes 8.5% Stake In Miner Freeport-McMoran

Check out those 1960's outfits and hairstyles. And that frilly blue cap?  Ouch!