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Gold: $1159.60 down $10.00
Silver: $15.67 down 3 cents
In the access market 5:15 pm
Gold and silver had a terrible day today. As I warned you on Friday,
“Monday is a critical day. Rarely do they ever let gold rise in a follow through.”
The bankers came to work early this morning at 6 am est and knocked gold and silver down badly and the kept the pressure on throughout the day.
The gold comex today had a poor delivery day, registering 0 notices served for nil oz.
Silver registered 0 notices for nil oz.
A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 255.02 tonnes for a loss of 48 tonnes over that period. .
In silver, the open interest rose a bit despite Friday’s huge rise in price. It looks like we have a few nervous shorts in silver racing against the clock to cover some of their shortfall!! The OI remains extremely high and today at 169,091 contracts.
The December silver OI lowered to 100,965 which is as expected with a normal contraction as some of the paper longs move to March..
Today, we had a huge withdrawal of gold Inventory at the GLD of 1.87 tonnes/ inventory rests tonight at 725.36 tonnes.
In silver, the SLV inventory had an addition of 1.438 million ounces of silver.
SLV’s inventory rests tonight at 344.888 million oz.
We have a few important stories to bring to your attention today…
Let’s head immediately to see the major data points for today.
First: GOFO rates: still deep in backwardation!!
All months basically moved ever so slightly into the positive direction.
(except the one year GOFO which moved closer to the negative) Now, the first 3 month GOFO rates remain deeply into the negative. On the 22nd of September the LBMA stated that they will not publish GOFO rates. However today we still received today’s GOFO rates.
It looks to me like these rates even though negative are still fully manipulated.
London good delivery bars are still quite scarce.
The backwardation in gold is incompatible with the raid on gold yesterday morning. It does not make any economic sense.
Nov 10 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
-.135% -0.0875% -0.0575% + .0100% + .1375%
Nov 7 .2014:
1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate
-.1625% + -.1175% +-.0752% -.0000 % + .145%
Let us now head over to the comex and assess trading over there today,
Here are today’s comex results:
The total gold comex open interest rose by a humongous margin of 16,366 contracts from 417,929 up to 434,295 with gold up $27.30 on Friday. Is it possible that a sovereign is standing for gold metal? As I pointed out to you on Friday, today’s reading of OI will be very important to see how the bankers reacted to gold/ silver’s rise. The bankers reacted firmly to the huge increase in oI for gold. The next delivery month is November and here the OI actually fell by 18 contracts We had 0 delivery notices filed on Friday so we lost 18 contracts 1800 oz of additional gold ounces will not stand for the November contact delivery month. The big December contract month strangely saw it’s Oi rise by 5,207 contracts up to 259,840. The estimated volume today was poor at 109,401. The confirmed volume on Friday was gigantic at 329,022. Strangely on this 8th day of notices, we had zero notices filed for nil oz.
And now for the silver comex results. The total OI rose marginally by 425 contracts from 168,666 up to 169,091 as silver was up 31 cents on Friday. It seems that judging from gold’s OI, our banker friends got more nervous and continued to cover their massive shortfall in silver. In ounces, this represents a total of 845 million oz or 120.7% of annual global supply. We are now in the non active silver contract month of November and here the OI fell by 1 contract down to 101. We had 0 notices filed on Friday so we lost 1 contract or we have an additional 5,000 oz that will not stand for the November contract month. The big December active contract month saw it’s OI fall by 4,648 contracts down to 100,965. In ounces the December contract is represented by 504 million oz or 72.1% of annual global production (production = 700 million oz – China). The estimated volume today was tiny at 26,604. The confirmed volume on Friday was huge at 87,954. We also had 0 notices filed today for nil oz.
Data for the November delivery month.
November initial standings
|Withdrawals from Dealers Inventory in oz||nil|
|Withdrawals from Customer Inventory in oz||64.30 oz(,Manfra,) 2 kilobars|
|Deposits to the Dealer Inventory in oz||nil|
|Deposits to the Customer Inventory, in oz||16,075.000 oz (Scotia) 500 kilobars|
|No of oz served (contracts) today||0 contracts(nil oz)|
|No of oz to be served (notices)||43 contracts (4300 oz)|
|Total monthly oz gold served (contracts) so far this month||10 contracts (1000 oz)|
|Total accumulative withdrawals of gold from the Dealers inventory this month||80,224.3 oz|
Total accumulative withdrawal of gold from the Customer inventory this month
Today, we had 0 dealer transactions
total dealer withdrawal: nil oz
total dealer deposit: nil oz
we had 1 customer withdrawals: and again we had these wonderful kilobar transactions
ii) Out of Manfra; 64.3 oz (2 kilobars)
total customer withdrawals : 64.30 oz
we had 1 customer deposits:
i) Into Scotia: 16,075.000 oz (500 kilobars)????
total customer deposits : 160,075.000 oz
We had 0 adjustments:
Total Dealer inventory: 869,309.361 oz or 27.03 tonnes
Total gold inventory (dealer and customer) = 8.199 million oz. (255.02) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 48 tonnes have been net transferred out. We will be watching this closely!
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped by JPMorgan customer account.
To calculate the total number of gold ounces standing for the November contract month, we take the total number of notices filed for the month (10) x 100 oz to which we add the difference between the OI for the front month of November 43) – the number of gold notices filed today (0) x 100 oz = the amount of gold oz standing for the November contract month.
Thus the in initial standings:
10 (notices filed today x 100 oz + (43) OI for November – 0 (no of notices filed today) = 5300 oz or .1648 tonnes. We lost 1800 oz of gold standing for the November contract month.
November silver: initial standings
|Withdrawals from Dealers Inventory||nil oz (Scotia)|
|Withdrawals from Customer Inventory||99,396.300 oz
|Deposits to the Dealer Inventory||nil|
|Deposits to the Customer Inventory||nil|
|No of oz served (contracts)||0 contracts (nil oz)|
|No of oz to be served (notices)||101 contracts (505,000 oz)|
|Total monthly oz silver served (contracts)||112 contracts (560,000 oz)|
|Total accumulative withdrawal of silver from the Dealers inventory this month||183,382.9. oz|
|Total accumulative withdrawal of silver from the Customer inventory this month||3,904,139.1 oz|
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 1 customer withdrawals:
i) Out of CNT: 99,396.300 oz
total customer withdrawal 99.396.300 oz
We had 0 customer deposits:
total customer deposits: nil oz
we had 1 adjustment
i) Out of Delaware:
59,677.73 oz was adjusted out of the customer and this landed into the dealer at Delaware
Total dealer inventory: 66.1200 million oz
Total of all silver inventory (dealer and customer) 179.776 million oz.
The total number of notices filed today is represented by 0 contracts or nil oz. To calculate the number of silver ounces that will stand for delivery in November, we take the total number of notices filed for the month (112 ) x 5,000 oz to which we add the difference between the total OI for the front month of November(101) minus (the number of notices filed today (0) x 5,000 oz = the total number of silver oz standing so far in November.
Thus: 112 contracts x 5000 oz + (101) OI for the November contract month – 0 (the number of notices filed today) = amount standing or 1,065,000 oz of silver standing.
we lost 5,000 oz of silver standing.
It looks like China is still in a holding pattern ready to pounce when needed.
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
Nov 10. we lost another 1.79 tonnes of gold at the GLD/Inventory 725.36 tonnes
Nov 7 wow!! we lost another huge 5.68 tonnes of gold at the GLD/inventory 727.15 tonnes
Nov 6.2014: we had another huge withdrawal of 2.99 tonnes of gold. Inventory 732.83 tonnes
This gold is also heading to Shanghai. If I was a shareholder of GLD I would be quite concerned as there will be no real gold inventory left per outstanding shares.
Nov 5 we had another huge withdrawal of 3.000 tonnes of gold. This gold will be heading to Shanghai/GLD inventory 735.82 tonnes
Nov 4.2014: a huge withdrawal of 2.39 tonnes of gold/GLD inventory/738.82 tonnes
Nov 3.2014: no change in gold inventory at the GLD/741.21 tonnes
Oct 31.2014: no change in gold inventory at the GLD despite the raid/inventory at 741.21 tonnes
October 30.2014: we had another 1.2 tonnes of gold leave the GLD and heading to Shanghai/Inventory 741.21 tonnes
October 29.2014: we had another .99 tonnes of gold removed from the GLD/inventory 742.40 tonnes
Oct 28.2014: we had another withdrawal of exactly 2 tonnes of gold heading to Shanghai; Inventory 743.39 tonnes
Oct 27.2014: no change in gold inventory at the GLD/inventory 745.39 tonnes.
Oct 24.2014: a huge withdrawal of 4.48 tonnes of gold at the GLD/Inventory 745.39 tonnes. This gold is heading to friendly territory: namely Shanghai.
Oct 23.2014: no change in gold inventory at the GLD/Inventory at 749.87 tonnes.
Oct 22.2014: we lost another 2.1 tonnes of gold at the GLD. Inventory rests at 749.87 tonnes. This tonnage no doubt is off to Shanghai.
Oct 21.2014: no change in inventory/GLD inventory rests tonight at 751.96 tonnes.
Today, Nov 10. a huge withdrawal of 1.87 tonnes gold inventory at the GLD
inventory: 725.36 tonnes.
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).
GLD gold: 725.36 tonnes.
And now for silver:
Nov 10/ we had an addition of 1.438 million oz of silver into inventory at the SLV/Inventory 344.888 million oz (again note the difference between gold and silver)
Nov 7/ 2014/no change in silver inventory/inventory rests at 343.45 million oz. (please note the difference between silver (SLV) and gold (GLD)
Nov 6.2014: no change in silver inventory/(as of 6 pm est) inventory rests at 343.45 million oz.
Nov 5 today, the total silver inventory drops of 2.074 million oz/SLV inventory: 343.45 million oz
Nov 4.2014: wow!! we had another addition of 1.151 million oz of silver inventory/SLV inventory rises to 345.524
Please note the difference between GLD and SLV. The GLD has physical gold to send on its way to Shanghai/SLV has no silver to offer to the participants to give to various players..
Nov 3.2014: this is good news: the “actual silver inventory” rose by 958,000 oz to 344.373 oz
(I guess there is no physical silver to raid from the SLV vaults:)
October 31.2014: despite the huge raids yesterday and today: no change in silver inventory at the SLV/inventory at 343.415 million oz
October 30.2014; no change in silver inventory at the SLV/inventory at 343.415 million oz
October 29.2014 no change in silver inventory at the SLV inventory/343.415 million oz
October 28.2014: no change in silver inventory at the SLV/Inventory at 343.415 million oz
Oct 27.2014: no change in silver inventory at the SLV
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now deeply into the positive to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 11.2% percent to NAV in usa funds and Negative 10.9% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.7%
Percentage of fund in silver:37.80%
( Nov 10/2014)
2. Sprott silver fund (PSLV): Premium to NAV falls to positive 4.57% NAV (Nov 10/2014)
3. Sprott gold fund (PHYS): premium to NAV falls to negative -0.86% to NAV(Nov 10/2014)
Note: Sprott silver trust back hugely into positive territory at 4.57%.
Sprott physical gold trust is back in negative territory at -0.86%
Central fund of Canada’s is still in jail.
And now for your most important physical stories on gold and silver today:
Early gold trading form Europe early Monday morning:
1. The biggest news was gold rigging settlement with UBS/with many to follow.
2. Last week 47.5 tonnes of gold was demanded (removed ) from Shanghai (see below)
(courtesy Goldcore/Mark O’Byrne)
Gold Rigging Settlement With UBS – Other Banks To Follow
Suspicions that the price of precious metals are frequently manipulated by a few international banks were further confirmed over the weekend. UBS agreed to settle with various international regulatory bodies investigating rigging in foreign exchange and precious metals markets.
While failing to admit wrongdoing one person familiar with UBS’s internal probe said that the bank found “a small number of potentially problematic incidents at its precious metals desk,” reports the Financial Times:
UBS is expected to strike a settlement over alleged trader misbehaviour at its precious metals desks with at least one authority as part of a group deal over forex with multiple regulators this week, two people close to the situation said. They cautioned that the timing of a precious metals deal could still slip to a date after the forex agreement.
Regulators around the world have alleged that traders at a number of banks have colluded and shared information about client orders to manipulate prices in the $5.3 trillion a day forex market. UBS has previously disclosed that it launched an internal probe of its precious metals business in addition to its forex investigation. It declined to comment for this article.
Unlike at other banks, UBS’s precious metals and forex businesses are closely integrated. The business units have joint management and the bank’s precious metals staff – who mainly trade gold and silver – sit on the same floor as the forex traders.
A small number of problematic incidents in precious metals trading, a small number of problems in forex trading, some problems in LIBOR … It seems that major banks have quite a large amount of small numbers of rigging problems.
While UBS have agreed to settle with regulators, the victims of price manipulation- mining companies and people who have bought precious metals in recent years and incurred financial losses – will receive not a penny. Nor is there any way for them the get to the bottom of what actually occurred.
It is important to remember the context of this settlement. Those who have voiced concerns that precious metals markets are being rigged have been dismissed as conspiracy theorists for years.
The Gold Anti Trust Action Committee or GATA have been very vocal and most prominent in this regard.
Yet, the so called conspiracy ‘theories’ are being proven to be real conspiracies by banks.
Former advisor to President Reagan and Assistant Secretary of the U.S. Treasury, Dr. Paul Craig Roberts pointed out over the weekend how the smashes on precious metals, similar to what happened last week, are executed.
Futures contracts representing vast quantities of gold, up to forty tonnes worth, are dumped onto the electronic futures market over the course of a few minutes. This frequently happens after trading in Asia has finished and Europe is not yet open for business. In other words – at a time when the least amount of traders are available to buy. This guarantees a precipitous fall in the price.
Dr. Roberts quite reasonably surmises that this is an act of blatant manipulation to force prices down.
It smacks of either arrogance or desperation that even as the outcome of investigations by regulatory bodies into the manipulation of gold and silver prices are beginning to be made public such displays of manipulation should occur.
Manipulation can be effective in the short term. However, prices will eventually be dictated by real world forces of supply and demand for physical precious metals. This has been seen throughout history and was seen as recently as the 1960’s and the failure of the London Gold Pool which gave rise to the bull market of the 1970’s.
Acclaimed writer of the Dow Theory letters, Richard Russell observed the strong surge in precious metals prices on Friday and saw it as a positive indicator suggesting further gains are likely.
The sage ninety-year-old and respected writer of one of the oldest investment newsletters in the world, wrote that he thinks “big money sees QE4 ahead and is protecting itself.”
Given the significant macroeconomic, systemic, geopolitical and indeed monetary risks of today, owning physical gold coins and bars as insurance remains prudent and will again reward those who take a long term view.
Access 7 Key Bullion Storage Must Haves here
Today’s AM fix was USD 1,172.00, EUR 938.20 and GBP 737.25 per ounce.
Friday’s AM fix was USD 1,145.00, EUR 923.39 and GBP 723.17 per ounce.
Gold climbed $31.80 or 2.8% to $1,175.30 per ounce Friday and silver rose $0.29 or 1.88% at $15.74 per ounce. Gold finished up 0.25% for the week and silver finished down 2.60%.
Gold surged 3.2% on Friday as market participants adjudged the recent sell off excessive and bought the dip. The gains may have also been due to a short covering rally.
Spot gold was down 0.7% at $1,168.80 an ounce at 1200 GMT. Gold bullion has built on Friday’s gains and is marginally lower this morning after Friday’s sharp gains. Friday’s U.S. payrolls data was slightly lower than expectations and may contributed to safe haven buying and the gains .
Silver was down 0.6% at $15.68 an ounce, spot platinum was down 0.2% at $1,210.25 an ounce, and spot palladium was down 0.1% at $766.97 an ounce.
Futures trading volume was double the average for the past 100 days for this time of day, Bloomberg data showed.
Possibly the single most important benchmark of global gold demand today remains gold withdrawals from the Shanghai Gold Exchange (SGE).
Last week saw a very robust week for Chinese demand despite talk of weak demand and low premiums in China. For the week ending October 31, there were withdrawals of 47.5 tonnes for the week. This means that the world’s largest gold buyer continues to be headed for annual gold demand of some 2,000 tonnes.
Manipulation of markets can work effectively in the short term (see above). However, in the long term prices will be dictated by the global supply and the global demand of 7 billion people, many in Asia who believe in gold as a store of wealth.
Not to mention, sovereign central banks such as the People’s Bank of China and the Russian central bank – who also believe in gold as an important monetary asset.
The numbers have been published by the Shanghai Gold Exchange (SGE) on the amount of gold withdrawn from the vaults in week 44 (October 27 – 31); just of over 47 tonnes were withdrawn, another strong week. Year to date 1654 tonnes have been withdrawn – SGE withdrawals equal Chinese wholesale gold demand, as has been confirmed by the SGE and the China Gold Association (CGA).
These numbers are hard to reconcile with a Wall Street Journal (WSJ) article from November 3, which quoted a leading Hong Kong-based executive with an international bank, who didn’t want to be identified, stating: “The physical buying in gold has dried up.”
Reuters also reported on November 3 about weak Chinese gold demand:
Chinese unmoved by gold price drop, see it cheaper still
Even with gold prices dropping to near 4-year lows, buyers in China – the world’s leading market – aren’t tempted, suggesting prices have further to fall.
When gold prices are in a slump, Chinese buyers, eyeing a bargain, traditionally move in and stop the rot. But that doesn’t seem to be happening this time around.
World gold prices are at their lowest since 2010 and slid $25 an ounce on Friday as the U.S. dollar strengthened, but Chinese buyers still aren’t biting, predicting prices have further to drop.
On November 5 I wrote an article in which I strongly disagreed with the WSJ and Reuters and thoroughly expanded why Chinese gold demand has been very strong in recent weeks.
On November 9 Reuters came out with a new article covering Chinese gold demand. This time they reported Chinese gold demand was strong in week 45 (November 3 – 9)! From Reuters November 9:
A rush of physical buying in the past week – from jewelry in Shanghai to coins in Germany – may prove to be a dead-cat bounce that is too feeble to offset a broader trend of selling by investors betting on further gains in the dollar, U.S. equities and an improving U.S. economy, according to the survey of more than two dozen analysts and traders.
In contrast to what they’ve reported on November 3, Reuters now states Chinese demand was strong – but, of course, will weaken in the future.
I’ll leave the quality of Reuters’ reporting on Chinese gold demand up to you.
Next to quoting sources the WSJ and Reuters (November 3) stated SGE gold traded at a discount to London that day, hence Chinese gold demand was weak. According to my data, which tracks the end of day (EOD) premium/discount, SGE gold was not trading at a discount on November 3. A journalist from Reuters told me the discount often occurs intra-day, subsequently ending the day at a premium (I don’t have the tools to chart the intra-day premium/discount, yet).
However, as I stated in a previous post, the SGE price of gold, the EOD SGE premium and SGE withdrawals are all correlated. In the chart above we can see SGE withdrawals increasing when the price of gold (in yuan per gram) declines. In the chart below we can see the EOD SGE premiums rising when the price of gold drops. This clearly illustrates the Chinese buy on falling prices.
According to my thesis Chinese gold demand is not only up because SGE withdrawals are strong, also because the price is falling and EOD premiums have not been negative for over a month. (conversely, in March and July 2014 SGE gold was trading at a discount when withdrawals were down.) And so, I see absolutely no signs of weak Chinese gold demand.
Silver on the Shanghai Futures Exchange (SHFE) is still trading in backwardation, since August 6.
The discount on silver on the SHFE (ex VAT), though, tumbled from 4 % to 8 %. This can have been caused by the revelation about Chinese traders that found a loophole to export silver bullion, circumventing VAT laws, to arbitrage the pure price spread between China and London. When this story came out I presume Chinese authorities stepped in and closed to loophole.
SHFE silver inventory stands at 124.9 tonnes.