Central Bank Gold Buying Shows Readiness For ‘Demise Of The Dollar’

December 10, 2014

It was a very quiet trading day in gold on Monday---and even the the price spike that came minutes after the close of COMEX trading yesterday, didn't have a lot of volume associated with it.  But it did improve moral a bit, as the gold price managed to close above $1,200 spot.

The low and high tick were reported by the CME Group as $1,187.30 and $1,209.30 in the February contract.

Gold finished the Monday session in New York at $1,204.20 spot, up $11.10 from Friday's close.  Net volume was 117,000 contracts.

24 hour spot gold

Here's the 5-minute tick chart courtesy of Brad Robertson---and it shows the volume associated with the post-COMEX close price spike---and it was only around 9,000 contracts in total.

5-minute tick chart

Silver didn't do much of anything yesterday either and, including the price spike, traded within about a two bit range for the entire session.  It was just another day where silver was kept on a very tight price leash.

The low and high ticks were recorded as $16.165 and $16.44 in the March contract.  Volume, net of December and January, was only 27,000 contracts.

24 hour spot silver

Platinum rallied until around 10:30 a.m. in Zurich on their Monday morning---and then chopped sideways into the New York close.  Platinum finished the day at $1,228.00 spot, up ten bucks on from Friday's close.

24 hour spot platinum

Palladium spent most of the Monday session above the $800 spot price mark.  The high tick came shortly before 10 a.m. in Zurich---and once the London gold fix was in, the price was taken back below the $800 spot price mark.  It closed at $798 spot, down 3 bucks.

24 hour spot palladium

The dollar index closed late on Friday afternoon at 89.36---and didn't do much until 2 a.m. Hong Kong time.  At the point it rallied to its 89.54 high, before slowly rolling over.  The decline got more serious as the New York session progressed---and it appeared that 'gentle hands' were there to catch a falling knife as the index broke through the 89 level, hitting its 88.92 low tick shortly after 2 p.m. EST.  It rallied unsteadily from there---and the dollar index closed at 89.12---down 24 basis points from Friday.

It would have obviously closed much lower if allowed to continue trading freely, which it obviously wasn't after 2:10 p.m. EST.  Here's the 3-day chart.

5-min line chart

The gold stocks opened in positive territory, but began to sell off almost immediately, hitting their low ticks [and down over 2 percent] just minutes before noon EST.  From that point they chopped sideways until the surprise rally in gold just minutes after the COMEX close.  They were up almost 2 percent at one point, but sold off in the last hour of trading.  The HUI closed up 0.85%.

ARCA gold bugs index

The silver equities followed a very similar pattern, but since they were sold down much harder during the early going in New York, they had a much bigger hole to dig themselves out of.  Even though they managed to make it into positive territory, they finished basically unchanged, as Nick Laird's Intraday Silver Sentiment Index closed down a tiny 0.06%.

intraday silver 7 index

The CME Daily Delivery Report showed that 753 gold and 5 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  In gold, the two short/issuers of note were Scotiabank and JPMorgan out of its client account with 160 and 592 contracts respectively.  HSBC USA stopped 264 contracts---and JPMorgan out of its in-house [proprietary] trading account was the long/stopper on 486 contracts, sticking it to its clients for the benefit of the company once again.  The link to yesterday's Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in December dropped by 28 contracts, down to 1,935 contract---also minus the 753 contracts posted for delivery in the previous paragraph.  Silver's December o.i. declined by 29 contracts down to 587 contracts still open---minus the 5 contracts mentioned above.

There was another withdrawal from GLD by an authorized participant yesterday.  This time 57,648 troy ounces were taken out.  And as of 9:22 p.m. EST yesterday evening, there were no reported changes in SLV.

There was another Silver Eagles sales report from the U.S. Mint on Monday.  They sold 495,500 of them.  No Gold Eagles or gold buffaloes were sold.  It's another record year for Silver Eagles sales, as 42,864,000 have been sold so far in 2014---compared to 42,675,000 reported sold in 2013.

BIG GOLD editor Jeff Clark sent me this silver eagle story posted on the silvercoinstoday.com Internet site on Sunday.  It's headlined "2015 American Eagle Silver Bullion Coins Available January 12"---and it's very much worth reading.  It's also posted in the Critical Reads section further down.

It was another whopper in/out day in both gold and silver over at the COMEX-approved depositories on Friday.  In gold---186,465 troy ounces were reported received, with the lion's share going into JPMorgan and Scotiabank.  There were 10,383 troy ounces shipped out the door.  The link to that activity is here.

In silver---600,325 troy ounces were reported received---and 1,064,019 troy ounces were shipped out the door.  The 600,325 troy ounces were received at the CNT Depository---and the withdrawals were spread around between four of the six depositories.  The link to that action is here.

Although the 'unofficial' China gold imports through Hong Kong figures for October were reported about ten days ago in stories from Reuters and Bloomberg, the 'official' numbers weren't released until yesterday.  They show that 77.626 tonnes imported.

As you may be aware, I had written off the chart below many months ago, as it was becoming obvious that it was no longer a proxy for gold being imported into China.  The last three months have shown that I may have been premature in my opinion, as it's obvious China is buying gold from all sources now, even to the point of resurrecting imports through Hong Kong.  Here's Nick Laird's most excellent chart---and it has returned to moving from lower left to upper right with a new vigor.

monthly Chinese gold net imports

Minting of gold in the U.S. stopped in 1933, during the Great Depression.