Gold $1253.10 up $1.90
Silver 17.39 DOWN 2 cents
In the access market 5:15 pm
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est and 2:15 am est
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
Shanghai morning fix OCT 14 (10:15 pm est last night): $ 1263.11
NY ACCESS PRICE: $1258.90 (AT THE EXACT SAME TIME)
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 1262.18
NY ACCESS PRICE: 1255.25 (AT THE EXACT SAME TIME)
HUGE SPREAD TODAY!! 7 dollars
London Fix: OCT 14: 5:30 am est: $1256.15 (NY: same time: $1256.20: 5:30AM)
London Second fix OCT 14: 10 am est: $1251.75 (NY same time: $1258.10 , 10 AM)**STRANGE!! SECOND FIX!!
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.
For comex gold:
0 NOTICES FILED FOR NIL OZ
for the Oct contract month: 2 notices for 10,000 oz.
As I have pointed out to you on several occasions the criminals like to raid on Friday’s due to the fact that Shanghai has already been put to bed by the time comex gold/silver starts trading. By noon time, London is also fully put to bed and it is at that time that the crooks whack again.
However they must face the music on Monday when Shanghai demands gold at that cheaper price.
Let us have a look at the data for today
In silver, the total open interest ROSE by 131 contracts UP to 186,091. The open interest FELL as the silver price was DOWN 5 cents in yesterday’s trading .In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .930 BILLION TO BE EXACT or 133% of annual global silver production (ex Russia &ex China).
In silver for October we had 2 notices served upon for 10,000 oz
In gold, the total comex gold ROSE by 2,557 contracts with the RISE in price of gold( $3.10 yesterday) . The total gold OI stands at 498,014 contracts. The bankers have done a great job fleecing our comex gold longs
With respect to our two criminal funds, the GLD and the SLV:
TODAY WE HAD NO CHANGES AT THE GLD:
Total gold inventory rests tonight at: 961.57 tonnes of gold
we had A HUGE CHANGE at the SLV/ A DEPOSIT OF 1.138 MILLION OZ INTO THE SLV
THE SLV Inventory rests at: 362.285 million oz
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver ROSE by 131 contracts UP to 186,091 as the price of silver FELL by 5 cents with yesterday’s trading.The gold open interest ROSE by 2,557 contracts UP to 498,014 as the price of gold rose $3.10 IN YESTERDAY’S TRADING.
2.a) The Shanghai and London gold fix report
2 b) Gold/silver trading overnight Europe, Goldcore
and in NY: Bloomberg
2c) Federal Reserve Bank of New York/earmarked gold removal
2d) COT report
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 2.43 POINTS OR 0.08%/ /Hang Sang closed UP 202.01 POINTS OR 0.88%. The Nikkei closed UP 82.13POINTS OR 0.49% Australia’s all ordinaires CLOSED DOWN 0.03% /Chinese yuan (ONSHORE) closed UP at 6.7260/Oil ROSE to 50.95 dollars per barrel for WTI and 52.29 for Brent. Stocks in Europe: ALL IN THE GREEN Offshore yuan trades 6.7346 yuan to the dollar vs 6.7260 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS A BIT AS MORE USA DOLLARS ATTEMPT TO LEAVE CHINA’S SHORES
REPORT ON JAPAN SOUTH KOREA NORTH KOREA AND CHINA
b) REPORT ON JAPAN
c) REPORT ON CHINA
4 EUROPEAN AFFAIRS
The hits just keep coming to Deutsche bank as one day after announcing a hiring freeze, they decide to fire another 10,000 workers. A great reason for gold to be whacked today by the crooks:
( zero hedge)
ii)Qatar is now worried about their investment in Deutsche bank
(courtesy zero hedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
Raoul Pal is one smart cookie. Pay attention to him as he discusses the global economy:
( Raoul Pal/Barbara Kollmeyer/Market Watch)
i)That did not last long: stocks begin to fall as crude crumbles back below 50 dollars per barrel
( zero hedge)
ii)Oil rig counts continue to rise and this will have a huge damper effect on the price in the coming months as production increases
( zero hedge)
i)We brought this story to you yesterday but it is worth repeating; Gold prices in this hugely physical geographical zone has now gone to a premium for the first time this year despite the huge 10% tax
( David Forest/OilPrice.com/GATA)
ii)Your weekly commentary tonight from Alasdair Macleod:
( Alasdair Macleod
iii)Copper is falling badly and it is killing Freeport McMoran, B. H. Billiton along with huge derivative player Glencore:
( Steve St Angelo/SRSRocco report)
10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER
ia)This data is important as retail sales is the dominant force behind the growth in GDP. It has now slumped to its weakest level since 2015:
( zero hedge)
ib)Dave Kranzler discusses the real unadjusted retail sales number. It shows a contraction of 2.6%
( Dave Kranzler/IRD)
ii)Another biggy!! Producer Prices rose much higher than expected. This is the forerunner to a rise in actual inflation:
( PPI/zero hedge)
iii)The following was not suppose to happen: consumer confidence right before the election crashes to a 2 yr low:
iv)Eliz. Warren demands Obama fire SEC chief Mary Jo White for her decision not to craft rules requiring public companies to disclose their political spending activities. That would be a good start:
( zero hedge)
v)Finally, we have one newspaper, the Wall Street Journal that lashes out as all of the press that have been burying Hillary Clinton’s crimes and concentrating just on Trump’s sexual prowess.
( Wall Street Journal/zero hedge)
vi)Supreme Court Justice Roberts sold his soul to Obama in the passing of Obamacare as President Obama applied huge pressure on the court.
( zero hedge)
viia)Another state in trouble because of Obamacare: Minnesota Governor Mark Dayton: “Affordable Care is no longer affordable”
that says it all!
( zero hedge)
viib)At least 1.4 million Americans who liked their healthcare plan will lose it in 2017:
viii)For the whole year, the Atlanta Fed has come out with figures to suggest that the entire year will grow at 1.4% having slashed Q3 GDP down to 1.9%
( Atlanta Fed/zero hedge)
ix)Total debt rises by 1.422 trillion dollars. The deficit rose by 587 billion dollars up from 439 billion. Thus the budgetary deficit rose by 34% and it is represented by 3.2% of GDP (very high)
( zero hedge)
Let us head over to the comex:
The total gold comex open interest ROSE BY 2,557 CONTRACTS to an OI level of 498,014 as the price of gold rose by $3.10 with YESTERDAY’S trading.
We are in the delivery month is October and here the OI GAINED 177 contracts UP to 369. We had 41 notices filed yesterday so we gained another 218 contracts or 21,800 additional oz will stand.
The next delivery month is November and here the OI FELL by 12 contracts DOWN to 2940 contracts. This level is extremely elevated as generally November is a very poor delivery month.The next contract month and the biggest of the year is December and here this month showed an increase of 731 contracts up to 373,385.
And now for the wild silver comex results. Total silver OI rose BY 131 contracts from 185,960 up to 186,091 as the price of silver fell to the tune of 5 cents yesterday. We are moving further from the all time record high for silver open interest set on Wednesday August 3: (224,540). The next non active delivery month is October and here the OI rose by 5 contracts up to 121. We had 0 notices filed yesterday so we gained 5 contracts or 25,000 additional oz will stand for delivery.The November contract month saw its OI lose 8 contracts down to 333. The next major delivery month is December and here it FELL BY 1477 contracts DOWN to 149,380
Today the estimated volume was 164,898 contracts which is fair.
Yesterday, the confirmed volume was 169,215 which is also fair.
today we had 2 notices filed for silver:
|Withdrawals from Dealers Inventory in oz||NIL|
|Withdrawals from Customer Inventory in oz nil||
|Deposits to the Dealer Inventory in oz||nil oz|
|Deposits to the Customer Inventory, in oz||
|No of oz served (contracts) today||
|No of oz to be served (notices)||
|Total monthly oz gold served (contracts) so far this month||
|Total accumulative withdrawals of gold from the Dealers inventory this month||oz|
|Total accumulative withdrawal of gold from the Customer inventory this month||175,209.0 oz|
Today, 0 notices were issued from JPMorgan dealer account and 0 notices were issued form their client or customer account. The total of all issuance by all participants equates to 0 contract of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped received) by jPMorgan customer account.
|Withdrawals from Dealers Inventory||NIL|
|Withdrawals from Customer Inventory||
|Deposits to the Dealer Inventory||
|Deposits to the Customer Inventory||
|No of oz served today (contracts)||
|No of oz to be served (notices)||
|Total monthly oz silver served (contracts)||355 contracts (1,775,000 oz)|
|Total accumulative withdrawal of silver from the Dealers inventory this month||NIL oz|
|Total accumulative withdrawal of silver from the Customer inventory this month||3,921,481.3 oz|
NPV for Sprott and Central Fund of Canada
will not provide today.
At 3:30 pm we receive the COT which gives us position levels of our major players and we also get to see how many contracts the commercial crooks covered:
Let us now head over and see what the gold COT offers:
|Gold COT Report – Futures|
|Change from Prior Reporting Period|
|non reportable positions||Change from the previous reporting period|
|COT Gold Report – Positions as of||Tuesday, October 11, 2016|
criminals in the highest order and nobody does anything to stop these crooks
Our large speculators:
those large specs that have been long in gold pitched a gigantic 40,750 contracts from their long side and they were royally fleeced by the crooked bankers
those large specs that have been short in gold added a huge 9539 contracts to their short side and they are now coming over to the short side of the boat.
And wait until you see this:
OUR ILLUSTRIOUS CRIMINAL COMMERCIALS
those commercials that have been long in gold added only 498 contracts to their long sidethose commercials that have been short in gold covered a gigantic 49,545 contracts
we thus thank the regulators for free markets.
Our small specs:
Those small specs that have been long in gold pitched a large 1261 contracts from their long side
Those small specs that have been short in gold covered 1507 contracts from their short side.
(to our class action lawyers)
however it is bullish that the commercials go net long by 49,000 contracts.
Now let us now see how the crooks slaughtered our specs in silver
|Silver COT Report: Futures|
|Small Speculators||Open Interest||Total|
|non reportable positions||Positions as of:||159||115|
|Tuesday, October 11, 2016||© SilverSeek.com|
Just as bad!
Our large specs:
Those large specs that have been long in silver were fleeced out of 13,237 contracts.
those large specs that have been short in silver covered a tiny 327 contracts.
those commercials that have been long in silver added 3289 contracts to their long side
those commercials that have been short in silver covered a huge 9972 contracts from their short side.
Our small specs:
those small specs that have been long in silver pitched a tiny 666 contracts from their long side.
those small specs that have been short in silver covered a tiny 315 contracts.
Bullish as the commercials go net long by 6308 contracts. However judging from the huge fleecing in gold, the commercials seem to be having a little problem exiting all of their shorts in silver.
FEDERAL RESERVE BANK OF NEW YORK/GOLD INVENTORY MOVEMENT:
Last month we had a reading of 7883 million dollars worth of gold at the FRBNY at $42.22 dollars per oz. This month we had a reading of 7849 million dollars
Thus we had 34 million dollars worth of gold valued at $42.22 shipped out.
34,000,000 divided by $42.22 = 805,305 oz
in tonnage:25.048 tonnes
Since Germany is the only official nation seeking its gold, no doubt that this gold was repatriated towards Frankfurt.
And now your overnight trading in gold,FRIDAY MORNING and also physical stories that may interest you:
“Gold Is A Great Hedge Against Politicians” – Goldman
“Gold Is A Great Hedge Against Politicians” – Goldman Sachs
Gold has risen another 1.7% in British pound terms this week and is 1.8% higher in euro terms and is again acting as a hedge against currency devaluations, Brexit, eurozone and heightened political and geo-political risk in the UK, EU, U.S. and most of the world.
Gold is marginally higher in dollar terms this week after surging on the open in Asia on Sunday night. Gold quickly rose 1% from $1,251/oz to $1,264/oz as China and the Shanghai Gold Exchange (SGE) began trading again after being closed for the Chinese Golden Week.
Since then gold prices moved lower despite the return of the world’s largest gold buyer – India – as seen in the return of gold premiums in the Indian gold market. Gold in dollar terms is now marginally higher for the week.
Goldman Sachs has long been the most vocal, prominent and widely quoted bear in the gold market. However, in recent weeks there is a marked change in their tune and they are now bullish on gold in the medium and long term. They are concerned about further price weakness in the short term as we run into year end but believe this will be a buying opportunity.
Goldman is now saying that the precious metal will be good to own in an environment of “political uncertainty” ahead of the November elections.
Goldman Sachs Head of Commodities Research Jeff Currie told CNBC’s “Power Lunch” this week that it is good to own gold in our current political state.
“I always like to say gold is a great hedge against politicians, and we have a lot of political risk in the market right now. So gold has a strategic purpose,” he explained.
“Why? What’s the tie between gold and politicians?” Brian Sullivan of CNBC asked Currie.
“Well, if you think about the correlation between rates and you think about when you debase a currency or weak dollar, what people gravitate to are hard assets and gold is the epitome of the hard asset,” Currie explained.
In a recent note, Goldman analysts Max Layton, Mikhail Sprogis and Jeffrey Currie wrote:
“Indeed, we would view a gold sell-off substantially below $1,250 an ounce as a strategic buying opportunity, given substantial downside risks to global growth remain, and given that the market is likely to remain concerned about the ability of monetary policy to respond to any potential shocks to growth.”
The bank also believed Chinese investment demand for gold may pick up after the current selloff, particularly from medium to long-term asset allocators.
“The potential drivers of increased Chinese physical buying include purchasing gold as a way to hedge for potential currency depreciation in the face of capital controls, and purchasing gold as a way of diversifying away from the property market, which has this year to date had a remarkable rally (with the government moving to rein in speculation and price growth),” the analysts added.
‘Peak gold‘, the largely unappreciated phenomenon of peak gold production is also another bullish fundamental factor that Goldman has written about.
Given the particularly poor caliber of politicians in office and seeking office in much of the western world today, author, political activist and intellectual George Bernard Shaw’s witty quote regarding voting for gold, rather than for politicians and governments is very apt today.
Ironically, the socialist agreed with Goldman Sachs and wrote:
“You have to choose, as a voter, between trusting to the natural stability of gold and the natural stability and intelligence of the members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.”
Gold and Silver Bullion – News and Commentary
Gold Prices (LBMA AM)
14 Oct: USD 1,256.15, GBP 1,028.79 & EUR 1,140.08 per ounce
13 Oct: USD 1,258.00, GBP 1,029.93 & EUR 1,141.76 per ounce
12 Oct: USD 1,255.70, GBP 1,024.53 & EUR 1,139.05 per ounce
11 Oct: USD 1,256.40, GBP 1,021.58 & EUR 1,130.76 per ounce
10 Oct: USD 1,262.10, GBP 1,016.62 & EUR 1,129.71 per ounce
07 Oct: USD 1,255.00, GBP 1,012.91 & EUR 1,127.62 per ounce
06 Oct: USD 1,265.50, GBP 994.30 & EUR 1,131.23 per ounce
Silver Prices (LBMA)
14 Oct: USD 17.47, GBP 14.28 & EUR 15.86 per ounce
13 Oct: USD 17.59, GBP 14.40 & EUR 15.95 per ounce
12 Oct: USD 17.44, GBP 14.23 & EUR 15.83 per ounce
11 Oct: USD 17.48, GBP 14.26 & EUR 15.78 per ounce
10 Oct: USD 17.78, GBP 14.31 & EUR 15.92 per ounce
07 Oct: USD 17.33, GBP 14.01 & EUR 15.55 per ounce
06 Oct: USD 17.76, GBP 13.98 & EUR 15.88 per ounce
Recent Market Updates
– Sell Gold Now – Time To Liquidate Gold ETF, Pooled and Digital Gold
– Gold In GBP Up 43% YTD – “Massive Twin Deficits” To Impact UK Assets
– Ron Paul Says “Gold Going Up” Whether Trump Or Clinton Elected
– Gold Trading COT Report “Means Lower – Then Much Higher – Prices Coming”
– Currency Shock Sees Sterling Gold Surges 5% In One Minute “Flash Crash”
– Top Gold Forecaster: “As Quickly As Gold Fell” May “Rally Back” on Global Risks
– Gold Buying ‘Opportunity’ After Surprise 3.4% Drop
– Deutsche Bank “Is Probably Insolvent”
– GBP Gold Rises 1.3% as Sterling Slumps On ‘Hard Brexit’ Concerns, Up 36% YTD
– Why Krugman, Roubini, Rogoff And Buffett Hate Gold
– ECB Refused “To Answer Questions” – Deutsche Bank “Systemic Threat” Is “Not ECB Fault”
– Euro “Might Start To Unravel” If Collapse Of Deutsche Bank
– Do You Really Own Your Gold?
We brought this story to you yesterday but it is worth repeating; Gold prices in this hugely physical geographical zone has now gone to a premium for the first time this year despite the huge 10% tax
(courtesy David Forest/OilPrice.com/GATA)
Gold prices in India go to premium for first time this year
Submitted by cpowell on Thu, 2016-10-13 20:23. Section: Daily Dispatches
Gold Prices Just Did Something They Haven’t Done All Year
By Dave Forest
Thursday, October 13, 2016
Finally the global gold market is getting some good news from its top consuming nation — India.
Reports this week suggest that something very unusual has just happened with India’s local gold prices: They’ve jumped to a premium above worldwide bullion prices.
That’s big news because — so far this year — India’s prices have been lagging the rest of the world. With gold here selling at discounts of $50 or more per ounce below average global prices.
But that situation has now apparently reversed itself. With local media reporting that gold sellers in Mumbai’s Zaveri Bazar were quoting gold at $1 to $2 above benchmark pricing. Marking the first time this year that India’s prices have pulled back to parity. …
… For the remainder of the report:
Your weekly commentary tonight from Alasdair Macleod:
(courtesy Alasdair Macleod)
Alasdair Macleod: How not to manage a currency
Submitted by cpowell on Thu, 2016-10-13 15:11. Section: Daily Dispatches
By Alasdair Macleod
GoldMoney.com, St. Helier, Jersey, Channel Islands
Thursday, October 13, 2016
Make no mistake, sterling’s collapse is a very serious development, and has serious consequences for sterling interest rates.
While it is becoming apparent that interest rates are going to have to rise possibly for all currencies on a one-year view, sterling’s problems are the consequence of bad judgement, and perhaps intellectual arrogance on the part of the Bank of England’s Monetary Policy Committee. The committee in turn is not and cannot be independent from the influence of Mark Carney, the bank’s governor, who made the expensive error of intervening in the Remain campaign.
Many commentators are saying that sterling was overvalued, and the fall will stimulate exports. But value is wholly subjective and not formulaic, as the ivory-tower economists would have us believe. The idea of stimulating exports through lower currency rates overlooks the depressing effect of the transfer of wealth it triggers from ninety per cent plus of the population, in favour of foreigners and owners of export businesses. That is the point about stagflation. …
It is a process that cannot continue indefinitely, because, as the adage goes, markets eventually reassert themselves. This adage is a summation of all that’s wrong with monetary and financial collectivism, the inability of central planning to allocate capital resources as efficiently as free markets. Sooner or later, a mistake, changing circumstances, or a black swan event leads to a financial or currency crisis. This happens from time to time, and every time the lenders of last resort manage to save their carefully constructed artifices, they say there are lessons learned, and it won’t happen again. Hubris. …
… For the remainder of the commentary:
Copper is falling badly and it is killing Freeport McMoran, B. H. Billiton along with huge derivative player Glencore:
(courtesy Steve St Angelo/SRSRocco report)
BIG TROUBLE FOR COPPER: The Breakdown Of The Industry Has Begun
by SRSrocco on October 13, 2016
The king of base metals is in big trouble as indicators point to a breakdown of the global copper industry. This goes well beyond the typical “slowdown” or “downturn” in the copper market. Instead, we are going to witness what I refer to as “Copper Industry Carnage.”
While some readers may feel as if I am being a bit “doom and gloomy” here, the situation in the global copper industry is much worse than most analysts realize. This is due to the fact that many analysts are forecasting copper supply deficits in the next few years, which would push the price of copper higher.
Unfortunately, this sort of industry analysis is well behind the curve or even worse, guilty of wishful thinking. The world economy is slowing down… and this will likely pick up speed by the end of the year. Which means, demand for copper will continue to weaken, pushing prices even lower.
Today, the price of copper is down 2%, impacting the copper miners. Freeport’s stock price was hammered lower by over 7% today in market trading.
Low copper prices are already causing damage in the top two copper mining companies in the world. The second largest copper producer, Freeport-McMoran, suffered an adjusted income loss of $214 million in the first half of 2016. Part of the loss was due to their lousy shale oil and gas investments.
For some stupid reason, many base metal mining companies jumped into the oil and gas business with both feet when the shale energy bonanza took off in the United States. For example, BHP Billiton reported a hefty $7.2 billion impairment (write off) on its onshore shale oil and gas assets last year (for their year ending Q2 2016).
While that may seem like one hell of a lot of money for BHP Billiton to write-off on its shale oil and gas assets, Freeport-McMoRan did one even better. According to FreePort-McMoRan’s annual report, they reported a staggering $13 billion impairment on their oil and gas properties in 2015 on top of another $3.7 billion write off in 2014.
As they say… easy come, easy go.
So, not only are the big base metal miners suffering from low base metal prices, they are also enjoying a wonderful shale oil and gas enema from the other end. I don’t mean to be harsh here, but who on earth was in charge of making these lousy shale energy investment decisions for these base metal mining companies??
And it gets even worse. I just read this jewel of an article yesterday on the Financial Times, BHP Billiton Bets Long On U.S. Shale Assets:
Five years after BHP Billiton plunged $20bn into the US shale revolution, the wait goes on for shareholders.
Even if oil prices rally by one-third the fields will not generate significant free cash flow until the turn of the decade, the mining company cum oil producer revealed at investor briefings last week.
….. BHP’s acquisition of two US shale producers in 2011 was followed by $17bn of investment, beefing up an oil business that has long set the world’s most valuable mining company apart from its peers. About one-third of BHP’s group earnings before interest, tax, depreciation and amortisation have come from petroleum over the past five years.
The timing of its shale bet proved ill-judged. Following a savage market downturn that has seen oil prices more than halve, BHP has racked up $12bn of impairments and the US shale business is now valued at just $12.6bn. Output is expected to fall by a quarter this year, the consequence of a much reduced drilling programme.
So, the Einsteins at BHP Billiton acquired U.S. shale oil and gas assets that are now only worth $12.6 billion, after they racked up $12 billion of losses in impairments since 2011. Furthermore, even if the oil price increases by one-third, they won’t generate any significant free cash flow until 2020.
Warning to BHP Billiton shareholders….. GET OUT WHILE YOU CAN.
I tell ya, it is amazing to see supposedly savvy businessmen in high-dollar suits making these sort of insane investment decisions.
Okay, let’s get back to the destruction of the copper mining industry.
The First Signs of the Gutting Of The Copper Mining Industry
We are we witnessing the first signs of the gutting of the copper mining industry when we see a collapse of mining truck purchases by Chile. This is bad news as Chile is the largest copper producer in the world. Chile produced 5.7 million tons of copper in 2015, way ahead of the second ranked country, China, that mined 1.6 million tons.
According to a report by the Chilean Copper Commission, new mining truck sales fell to a low of 40 units in 2015, down from a peak of 392 in 2012. As you can see, this is not a slowdown. Rather, truck purchases have fallen off a cliff:
We have to go all the way back to 2004 to see a unit number that low. Even with the huge downturn in the global markets in 2009, Chile still imported 122 new mining trucks that year… more than triple the figure for 2015.
Why is this such a big deal? I took the total number of new trucks imported (purchased) by Chile and compared it to the annual average price of copper:
There seems to be a correlation between the copper price and new truck purchases by the Chilean Copper Industry. When the price of copper fell to $1.34 a pound in 2009, Chile still imported three times more new mining trucks that year than in 2015, when the copper price was double ($2.70). Sadly, Chile’s new mining truck purchases are down 90% from their peak in 2012.
Of course, there were new projects coming online to justify some of the large number of truck purchases in 2011 and 2012. However, Chile’s copper production has only increased from 5.4 million tons in 2010 to 5.7 million tons in 2015. Would a 5% increase in Chile’s total copper production justify the need for 322 new trucks in 2011 and 392 new units in 2012??
Regardless, demand for new mining trucks in Chile has fallen 90% from its peak.just a few years ago I would imagine new truck sales in 2016 will likely be even weaker. This is not a good sign for the largest copper producer in the world.
The Top Copper Mining Companies Are Getting Hammered
As I mentioned in the beginning of the article, Freeport-McMoRan suffered a $214 million adjusted income loss in the first half of 2016. That’s pretty bad because “adjusted” income removes many items (such as impairments) from the bottom line to arrive at figure that represents a more realistic day-to-day cost of mining copper.
For example, Freeport also suffered an additional $4 billion impairment on its shale oil and gas assets in the first half of 2016. So, if we add that to the $13 billion of shale asset impairments last year, Freeport has racked up a cool $17 billion in shale asset write-downs in just a year and a half.
Maybe it would have been a good idea for the management at Freeport to stick with mining copper, rather than blowing big money on the U.S. Shale Oil & Gas Black Hole.
If we look at Freeport-McMoran’s free cash flow for the past eight years, something is dreadfully wrong now. For a quick refresher, free cash flow comes from deducting CAPEX (capital expenditures) from their cash from operations: