Monday, November 14, 2016

Gold World News Flash

Gold World News Flash


Gold Prices Have Overreacted To The US Election

Posted: 14 Nov 2016 12:08 AM PST

Sk Options Trading

China Money Market Rates Spike To 1-Month Highs As Yuan Hits 7-Year Lows

Posted: 13 Nov 2016 08:30 PM PST

In what appears to be yet another effort to spook shorts out of speculative positions in offshore Yuan, China appears to have tamped down its liquidity spigot driving overnight HIBOR rates up a shocking 194bps to 3.53% - the highest in over a month. The spread between offshore and onshore yuan has collapsed, even as the Yuan plunges to to its weakest against the dollar since September 2009.

As Yuan hits its post-leg record lows, it seems each streak of selling is met with a kneejerk liquidity plunge in money markets...

 

Which has spooked the specs out of the arb between onshore and offshore Yuan...again

Of course, while 3.53% is notable for overnight money and a big shock, there is plenty of room to go if the capital flight and speculation continues - ON/HIBOR neared 25% in September as turmoil re-appeared.

Backwardation Profit Taking, Report 13 November, 2016

Posted: 13 Nov 2016 07:46 PM PST

The big news this week is that Donald Trump was elected to be the next president of the United States. Whether due to his comments about restructuring the government debt, tariffs on imported goods, or other economic concerns, many expected news of his election to push up the price of gold.

They were wrong.

Every day since last Friday (November 4) has seen the price of gold falling. From a peak of over $1308, the price fell to $1227 on Friday.

There was a rally from $1269 to $1337 on the evening of election day, from 8pm to midnight in New York. This is roughly the time when election results began to trickle in and show that Trump was going to win. At the same time, the stock market tanked. S&P futures fell from 2150 to 2028, or -5.7%. Volume was off-the-charts high for US evening time.

But then what passes for normal took hold once again. The price of gold resumed its slide. The stock market recovered.

One thing is for sure. The price of gold does not go up for the reasons supposed by most gold bugs. Any more than it goes down for the reasons given by the propaganda of the paper bugs.

There is something else going on that could drive the gold price up. I refer to the new Indian policy of demonetizing larger-denomination cash (500- and 1000-rupee notes, worth $7.40 and $14.80—i.e. not so large). So many Indians rushed out to buy gold that credible sources report a temporary 20% spike in the rupee-price of gold.

We doubt that Prime Minister Modi can force many Indian cash holders to increase their bank balances. However, he could push the marginal cash holder to increase his holdings of gold. If that proves to be durable, that could drive the price of gold up substantially. This situation with cash and gold in India needs to be watched.

The price of silver took a big dive on Friday, ending down a buck twenty. Yes a buck twenty, as in -6.4% (the low of the day was 15 cents lower).

The question is: what did the election do to the fundamentals? Are people now stacking silver bars and gold coins, who had not been doing it before the election? Or is this price move just more noise that will be lost in a month, much less over the long term?

We will give a teaser. Something changed in the market this week.

We will update the pictures of the gold and silver fundamentals below, and show our first-ever intraday basis charts. But first, here's the graph of the metals' prices.

       The Prices of Gold and Silver
prices

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It rose this week, how could it not with the big price move in silver? 

The Ratio of the Gold Price to the Silver Price
ratio

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

       The Gold Basis and Cobasis and the Dollar Price
gold

And now we see our old friend, who has been absent for a while. Backwardation. The cobasis is over +0.3% (30 bps).

We admit that we have a conundrum. We are not quite sure how to handle Friday. In the US, Friday was a bank holiday Veteran's Day. The Treasury bond market was closed, as were the banks. However, the stock market was open as was the gold futures market. And there was high volume (the third highest day of the year, after Thursday and June 27).

We are including Friday.

Friday had a big price move in gold, with the dollar up almost 2/3 of a milligram gold (muggles will see this as gold going down -$32).

Last week, we said:

"Are we predicting a crash, much less on Monday morning (as we write this, the price of gold is down in Asian trading by $11)? No, but we are saying gold is not looking like a good value here. If you don't have any, then there is never a bad time to buy. But if you're trading a position, we could think of better times to buy than now. Maybe now (especially at Friday's price over $1,300) might be a good time to consider selling a covered call."

That was then and there (a week and 76 bucks ago).

And something else changed. The fundamentals got stronger. Unless this turns out to be an anomaly due to the bank holiday and the absence of some market makers, the fundamentals are stronger now than they have been in quite some time.

We calculate a fundamental price of over $1310.

We will take a look at intraday basis charts for gold and silver, below.

Now let's look at silver.

The Silver Basis and Cobasis and the Dollar Price
silver

The same thing happened in silver. And unlike last week, it occurred across all contracts. Falling basis (abundance) and rising cobasis (scarcity). 'Course, in silver, the price drop was epic, much bigger than in gold.

We calculate a fundamental price of just over $17. So, like with gold, we had buying of physical metal and selling of futures.

Many times over the years, we have seen reports of a big paper flush amidst strong physical demand. We have debunked several of them, and dismissed the rest.

What happened on Friday was different than those other events. Here are intraday graphs showing basis and price (the cobasis moved pretty much inverse to basis so not included to keep the graph as readable as possible).

Intraday Gold Basis and Price
gold intraday basis

From just before 13:30 (London time, or 90 minutes before the PM gold fix), the basis begins falling. The basis is the spread of futures – spot. So futures begin selling off before even the price begins to decline. Shortly after 2pm, the price of gold is still holding at $1259, but the basis is already dropping. And boy does it drop, to a trough of -64bps. From there on, the basis recovers somewhat.

We have annotated the graph to highlight three distinct phases. In the first phase, it is simply selling, driven by selling of futures. How do we know? First, the basis begins to fall before the price. Of course, the fact that the price begins to fall while the basis continues to fall proves it.  It is simple enough, lots of traders sold gold futures and the price fell around $30 initially.

The second phase is more interesting from a market theory point of view. Here we see the basis rising, and it's a pretty big move up from a low of -64bps to -38bps—just about a 2/3 retracement of the original drop. However, the price is sideways to positive. The basis is
changing but the price is not. In other words, the spread between futures and spot is compressing (basis is
negative here, so rising value means tighter).

What this means is simple. For an hour and a half, the panicky herd of speculators stampeded at will. After that, the market makers were able to reassert some control. No, not over price but of spread! The market makers did not manipulate the price of gold up or keep it from falling. They began to decarry gold, that is sell spot and buy futures. This pushes down the bid price on spot, and pushes up the offer price on the futures contract.

Why would they decarry? To take profits, of course! In recent months, the profit on offer to carry gold has been very high. This has tempted many arbitrageurs to exploit the opportunity: by buying a bar of metal and simultaneously selling a futures contract. They are long metal and short a future.

When the basis drops, that provides an opportunity to close the position and make more than one would have made by holding to maturity. For example, suppose you put on this trade on June 27. You locked in a profit of 1.45% on your investment (in dollars, of course). Ever since then, the basis has been declining. Now the basis hit a low of -0.64b%. At that moment, the cobasis was +0.44%. So you could close your trade a month and a half early, and add 44 bps to your profit.

And after this, in the third phase, the basis goes sideways while the price falls another $13. In this phase, the arbitrageurs are still decarrying. What's our evidence for this? The price is moving down, which means lots of selling again. But in this phase, the arbitrageurs are keeping up. They are decarrying as fast as speculators are selling.

As we have described in many past Reports, while basis is rising the marginal demand for metal is to go into the warehouse. It feeds the gold carry trade. We emphasize that when this builds up, it's dangerous because the marginal demand can abruptly turn off and a new marginal supply come online. A high basis cannot predict the timing, but it can tell you that the market is ripe for a drop the way a supersaturated solution is ripe for a precipitation. They have seen their opportunity to profit, and are reluctant to keep holding their positions and risk the basis continuing to rise.

Intraday Silver Basis and Price
silver intraday basis

We did not mark up the silver chart. It is interesting that the basis correlates more highly with the price. Or, in other words, while the selling pressure in gold largely abated, it continued in silver. The total drop in the Dec silver basis was nearly 100bps.

If you had carried silver on August 10, you could have locked in a profit of 156bps. If you decarried it on Friday, you could have added another 95bps.

If gold was in a supersaturated solution, then silver was in a superdupersaturated solution.

It will be interesting to see this week, if the arbitrageurs can catch up in silver and we see a rising basis. And if the elevated silver fundamental price of $17.08 holds.

It is also possible that some market makers were off on holiday on this Veteran's Day.

 

© 2016 Monetary
Metals

Alert ! America Preparing For 200 Meters Tsunami

Posted: 13 Nov 2016 07:30 PM PST

Alert ! America Is Preparing For Killer Tsunami & Mega Earthquake WW3 Martial Law Economic collapse and financial crisis is rising any moment. Getting informed about collapse and crisis may earn you, or prevent to lose money. Do you want to be informed with Max Keiser, Alex Jones, Gerald...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

BOMBSHELL: RUSSIAN BOMBERS GO ON ALERT

Posted: 13 Nov 2016 05:00 PM PST

Russia must be feeling enough is enough. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many more

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

In The News Today

Posted: 13 Nov 2016 03:40 PM PST

Bill Holter's Commentary Please note, the following is not a joke in any manner, it is a direct and exact quote from Eddie George. Please google his name, while you are at it, look up Judy Shelton! This will end spectacularly and without notice! 'We looked into the abyss if the gold price rose further.... Read more »

The post In The News Today appeared first on Jim Sinclair's Mineset.

Anonymous: Today with Trump we take our Country back

Posted: 13 Nov 2016 03:30 PM PST

Anonymous: Today we take our Country back   Anonymous: The New Elected President.We Are Anonymous.We Are Legion.We Can Forgive.We Do Not Forget.United As One. Expect Us. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Copper calls Gold Bottom on Trumphoria Surge...

Posted: 13 Nov 2016 03:08 PM PST

Clive Maund

Disturbing Events Are Taking Place All Over The World, Civilization is About To Change FOREVER!

Posted: 13 Nov 2016 03:00 PM PST

 Earthquakes, Volcanoes, Outbreak, Pestilence, Famine, Civil Unrest, WW3, LGBTQ and other End Times events in the news. Events are happening on a daily basis that prove we are in the End Times. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists ,...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Copper calls Gold Bottom on Trumphoria Surge...

Posted: 13 Nov 2016 01:22 PM PST

Let's suppose that Trump at least partially goes ahead with his grandiose plans – what does it mean? Well, it means helicopter money, because there's no other way to pay for it. This could indeed drive the stockmarket higher, which is what last week's breakout may signify. However, it will also mean inflation, so gold and silver should bottom soon and turn higher. While copper may continue in a bullmarket action in it on Friday indicates temporary burnout, so it should now react.

Regardless Of Price, Gold Investment Demand Increases On Rising Market Uncertainty

Posted: 13 Nov 2016 01:20 PM PST

Global gold investment demand has increased due to rising uncertainty in the financial markets and the unpredictability associated with a new Trump Presidency. Not only has gold investment demand surged this year, sales of the U.S. Mint Gold Eagles spiked the day after the U.S. President election. Interestingly, the current price action in gold and silver seems to suggest that market has no need for top two precious metals. While the gold price spiked to almost $1,340 late Tuesday night when Trump began to lead in the Presidential election, it has continued lower to $1,226 on early Friday trading.

Krugman Gets His Alien Invasion – And Gold Bugs Get Paradise

Posted: 13 Nov 2016 01:18 PM PST

There's just one problem. Those programs were enacted when debt levels as a percentage of GDP were miniscule compared to today. Since borrowing, like any other activity, tends to become less effective with overuse, ladling another few trillion on top of the hundred or so trillion already owed won't accomplish much. In economists' terms, the "marginal productivity of debt" has plunged as total debt has soared, which implies that we can now borrow infinite dollars and get virtually zero new wealth.

The Panic Has Begun! Economic Collapse Coming After The Election

Posted: 13 Nov 2016 01:00 PM PST

 Economic collapse and financial crisis is rising any moment. Getting informed about collapse and crisis may earn you, or prevent to lose money. Do you want to be informed with Max Keiser, Alex Jones, Gerald Celente, Peter Schiff, Marc Faber, Ron Paul,Jim Willie, V Economist, and many...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Dollar Collapse Has Started! Preparing For War In America

Posted: 13 Nov 2016 12:30 PM PST

 Economic collapse and financial crisis is rising any moment. Getting informed about collapse and crisis may earn you, or prevent to lose money. Do you want to be informed with Max Keiser, Alex Jones, Gerald Celente, Peter Schiff, Marc Faber, Ron Paul,Jim Willie, V Economist, and many...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

How To Explain Donald Trump To Children

Posted: 13 Nov 2016 12:00 PM PST

 "As the media pushes the narrative that Donald Trump creates bullies, I see multiple articles on how to talk to children about the election results. What message would you tell parents to give their children?" The Financial Armageddon Economic Collapse Blog tracks trends and...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Alert -- Anti Trump Protester Shot in Portland! #OTBTV News

Posted: 13 Nov 2016 11:00 AM PST

A man in a silver sedan shot at an anti Trump protester on the east end of the Morrison bridge.  The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Krugman Gets His Alien Invasion – And Gold Bugs Get Paradise

Posted: 13 Nov 2016 10:03 AM PST

Nobel Prize winning economist and uber-liberal New York Times columnist Paul Krugman likes to illustrate his philosophy by noting that the threat of an alien invasion would help the economy by stimulating government spending.

George Soros ups the ante for protesters and their hourly wage skyrockets

Posted: 13 Nov 2016 09:48 AM PST

CANCEL his US citizenship - deport him back to where he was born (Hungary) - they'll turn him over to the Russians and collect the reward. Everyone wins ! Except the Lib elites and the NWO. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists ,...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

ALERT MASSIVE BOND SELLOFF! BEWARE OF THIS STOCK MARKET By Gregory Mannarino

Posted: 13 Nov 2016 09:47 AM PST

 Economic collapse and financial crisis is rising any moment. Getting informed about collapse and crisis may earn you, or prevent to lose money. Do you want to be informed with Max Keiser, Alex Jones, Gerald Celente, Peter Schiff, Marc Faber, Ron Paul,Jim Willie, V Economist, and many...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Breaking News And Best Of The Web

Posted: 13 Nov 2016 01:37 AM PST

Political class still searching for an explanation. Stocks and dollar rise, bonds and gold fall but inflation fears begin to dominate global markets. Anti-Trump protests erupt with occasional violence.   Best Of The Web The cognitive dissonance cluster bomb – Dilbert Get ready… change is upon us – Peak Prosperity Trump won yet gold is […]

The post Breaking News And Best Of The Web appeared first on DollarCollapse.com.

Jack Chan: This Past Week in Gold, Silver and Copper

Posted: 13 Nov 2016 12:00 AM PST

Technical analyst Jack Chan charts a break in copper, as well as recent movements in the gold and silver markets.

The Ice-Nine Plan

Posted: 12 Nov 2016 07:00 AM PST

This post The Ice-Nine Plan appeared first on Daily Reckoning.

The main metaphor I use in my newest book The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis (claim your free copy here) is something called "Ice-9."

Ice-9 may be familiar to some listeners and readers, maybe not to others, but this is something I borrowed from the novelist Kurt Vonnegut.

He wrote a short novel in the early 1960s called Cat's Cradle. Some readers may be familiar with it. If not, I recommend a copy. It's short and hilarious.

My book, on the other hand, is not funny at all. I discuss the end of the financial system and the very real possibility of people losing all their savings. Hopefully, it's engaging, entertaining and readable, but I can't honestly say it's funny. But Kurt Vonnegut's is, even though he talks about a doomsday machine.

It involves a variation of a water molecule a scientist invented. It was different, a variation of water different in one respect: It melted at 114 degrees Fahrenheit, and it was frozen at room temperature. If one molecule of this unusual water came in contact with a regular molecule of water, the regular molecule would turn to ice-9. This happened over and over again, in geometric progression.

Ice-9 was kept in a vial. But if the vial was opened and one molecule was poured into normal water, all that water would freeze. Then it would spread, and would sweep through the lakes and the rivers and the oceans. And all the water in the world would ultimately freeze.

Of course, everyone on the Planet Earth would die. It was a doomsday machine, a metaphor for nuclear annihilation. This book came out right around the time of the Cuban Missile Crisis, so it was quite topical.

In my book, I take that metaphor of ice-9 and apply it to the financial system. The point I make is that one part of the financial system cannot be shut down in isolation. A contagion beginning in one part spreads to the entire system. That's because the minute one part shuts down, everybody runs for a different part in a quest to get their money back.

It speaks to the best description I've ever heard of a financial panic: everybody wants their money back at once.

The process soon grows out of control. Everyone sells stocks, sells bonds, sells real estate, sells everything. They all want their money back at once. Of course, people think they can get their money back. But they can't. They'll discover that what they actually have are stocks, bonds, and real estate, and money markets, so called, and they can't get their money back.

Imagine the money market funds are shut down. No one can get their money out of them. Then everyone runs to the banks to get their money. But the banks are closed. Then, everyone tries to sell their stocks, but the stock market's shut down. And so on. In other words, the minute one part of the system shuts, all of the demand for liquidity moves to another part. But it dries up. And that part of the system has to be shut that down, too. Soon the entire system is shut down because it's all so deeply interconnected. That's where the ice-9 metaphor comes in because it's not just one water molecule turning to ice. All the water in the world turns to ice because it's all connected.

(I describe all the critical details in The Road to Ruin. Go here now to get your copy for free, instead of paying the full $23).

Again, you might want to pick up "Cat's Cradle," before "The Road to Ruin" comes out. It's a great novel. You'll find it amusing, and I think it'll make my metaphor a little more clear. Regardless, the serious point is that pressure just moves from one part of the system to another. You can't just shut down one part. You have to shut down the entire system. And that's what could happen.

For what it's worth, the safest place to put your money is in the bank, up to the insured limit. I believe the federal government will have to honor FDIC insurance, which guarantees money up to $250,000 per account.

If you have more than that amount, you can divide your money between two banks. If you're a lone individual with, say $500,000, you can put $250,000 in one bank and $250,000. Not in a different branch of the same bank, but a different bank altogether. Both accounts will be insured to the full amount. That is what happened in Cyprus. The government honored its insurance to the stated amount. But everything over the insured amount was confiscated and turned into bank equity.

I explain this process in my book. It's called a bail-in. A bail-in is different than a bailout. A bailout is when the government uses the printing press and taxpayer money to save a financial institution. All the people who have transactions with this financial institution, whether it's depositors, bondholders, etc., are preserved. They all keep their money. A bail-in is different…

In a bail-in, the government says, "No, we're not going to help you. We're not going to use government money. We're not going to use central bank money. We're going to take the money that's in the bank and convert it to equity in the bad bank, where if you're a bondholder, you're not going to get 100 cents on the dollar. You're going to get 80 cents on the dollar, etc., etc."

They'll use the money already in the bank, whether it's depositors, bondholders, or equity holders, and use that money to repair the balance sheet.

That is what's going to happen with Deutsche Bank and with the Italian banks that are in trouble. It'll also happen with any other banks that fail in the United States. As I said, you'd probably be insured up to the guaranteed amount, although the government could close the banks for several days.

That's why I recommend you keep some cash in a safe place outside the banking system. I'm talking paper money now. Having some cash is like having a battery and flashlights. I live in a place that occasionally gets hurricanes and nasty storms, so the power goes out on occasion. You want to keep some flashlight batteries around. And that means cash.

Remember, when the power's out, nothing works. The ATMs don't work. The gas stations don't work, etc. It's good to have some what we used to call in Philadelphia "walking around money." But you can't withdraw too much from your bank because the government won't let you.

Try withdrawing $20,000 in cash from your bank and you'll be reported to the government on a currency transaction report. That report will be put in a file right next to Al-Qaeda and the drug cartels, with the Financial Crimes Enforcement Network. That's not a lot of fun.

The point is, you might think you can get your cash, but you can't. When you go down to the bank and actually try to, you'll be treated like a criminal. This is of course part of the war on cash. And it's dangerous. The American people are being led like sheep to the slaughter. They're being herded into digital pens, which are the banks.

Most people think we have a cash system. But we really don't. How much cash do you carry in your purse and wallet? Probably not that much. You use your debit card. You use autopay. You use your online banking account. You use your iPhone if you have Apple Pay. You use your credit card. It's all digital. You don't actually have that much cash, and if you try to get it, you can't get it.

That's why I recommend you put some money into physical gold or silver, in a monster box. A monster box has 500 ounces of American silver eagles, one ounce each. They cost about $10,000 on the market. You should find a good dealer that doesn't charge too much commission.

But it'll preserve your wealth. In an emergency situation, people will take it. Many people will gladly give you some groceries for a solid ounce of silver because no one trusts any other money.

I also recommend real estate as part of your portfolio. It'll still be there if there's a storm or a power outage or your bank's shut down. These are some of the things I recommend before the next great crisis strikes. They are in the book, as are many other important ways to preserve your wealth in the years ahead.

I lay out the ideal "all-weather" portfolio in The Road to Ruin. It'll preserve your wealth in the coming collapse and mitigate an "ice-9" freeze of your assets.

You don't have to be helpless when the crisis arrives. You can see it coming a mile away if you know what to look for, and there are definitely steps you can take.

Regards,

Jim Rickards
for The Daily Reckoning

P.S. The Road to Ruin. might be my most important work to date. What will be the "ice-9" molecule that freezes the entire financial system? And how will global elites react? Most importantly, how can you protect yourself? Click here now for all the critical details.

The post The Ice-Nine Plan appeared first on Daily Reckoning.

Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Almost 6% on the Week

Posted: 11 Nov 2016 01:18 PM PST

Gold gained $7.95 to $1264.75 in Asia before it fell back to $1221.12 in early afternoon New York trade and then bounced back higher into the close, but it still ended with a loss of 2.32%. Silver slipped to as low as $17.199 and ended with a loss of 6.32%.

Gold, Miners Under Trump

Posted: 11 Nov 2016 09:00 AM PST

Donald Trump's epic underdog victory climaxing the US presidential race was radically unexpected by the great majority of the world. Equally if not more surprising was the subsequent days' market reaction. Stock markets, gold, and gold-mining stocks did exactly the opposite of what was universally forecast for a Trump win. This has left contrarian traders wondering how gold and gold stocks will likely fare under Trump.

No comments:

Post a Comment