Hochschild Mining Share Discussion Threads

[pixi] 15/11/2016 17:35

Hec,it would a mistake to go blindly over the top with all guns blazing at the end of November. Please check that the way is clear first otherwise you might get caught up in barbed wire and become a stationery target!

Don't worry, I will assemble all the troops and give everyone a briefing so they all know the score.The ground will be carefully scanned for problems and a route will be chosen to the target to maximise the cover of available dead ground before we become exposed to enemy positions. I will lead the charge, as usual! Lol.

[gaaston] 15/11/2016 17:32

Maybe I am naive but was and am expecting Trump to sort all these things out. Namely, corruption in high places.

[chipperfrd] 15/11/2016 17:30

breaktwister,

The following article won't make you feel any better about the situation, but at least you will have a clearer picture of what the LBMA, so called 'market', consists of.



Chip

[chipperfrd] 15/11/2016 16:42

breaktwister

Problem is that all the 'authorities' are banked up on the 'other' side. So COMEX itself apparently allows for the possibility of cash settlement. It is rumored that settlement can also occur in PM ETF shares - but I have absolutely no confirmation of that!

I don't think anyone ought to be under the illusion that the PM market is fair. On the contrary, in so many ways (IMO) it is heavily biased AGAINST PMs. So we, along with the producers we hold, are always up against a loaded system. Just part of the creeping financial repression that we live under.
Chip

[chipperfrd] 15/11/2016 16:04

Thanks H, your feedback is appreciated.
Regards & good luck with it all.
Chip

[hectorp] 15/11/2016 16:00

Rodders g afternoon
-thats probably true about the US Shares market but there is also a correlation over the last week of falling PM's and rising USD / Yen. This ratio is a must-follow these days. It used to be the carry trade affected PM prices, perhaps nowadays, Fund Manegers long USD/YEn /short PM's.
However this is short term observation only - it may NOT be correlated.

PS are millions of US Bonds being sold to buy Stocks, thinking Bonds are finhsed for now? I guess that is very plausible!
But is it clever eh!
They should stick 10% in gold when they are flush with cash.

[hectorp] 15/11/2016 15:56

chip - I've always appreciated your comments and your studied observations as you know. You are also pretty selfless in sharing things that took you a lot of time and effort , and it's never taken for granted.
Drip feeding as you were doing with your holdings, still makes perfect sense long term, in my case I am usually cash strapped so am making the most of any pearls of wisdom. Your comments ten days ago about the Dec OI got me very interested and you've come up with them revised again today.
We talked 3 years ago about building silver positions in the good and prospectively promising silver miners, I'll be surprises if 2017-18 are not very good indeed for a raft of mining prices and valuations.

H

[dstorey1] 15/11/2016 15:46

ODR….Better correlation would be with $ Index.

[onedayrodders] 15/11/2016 15:38

I mentioned yesterday there is currently a direct DOW v PM correlation ... DOW has been moving up and PM's down.

Today the DOW moved down from the off and PM's had a little spike.

After last week it's just nice to be able to make some sense of movements for a change

[goldenshare888] 15/11/2016 15:27

PM stocks gone into oversold status, expect buying into year end.

[crosseyed] 15/11/2016 15:10

chip,
Thanks for a very clear description of how this artificial "market" operates.
c

[goldenshare888] 15/11/2016 14:47

The Chinese are probably lapping up all the cheap GOLD from the West! Laughing as they do so no doubt......

[chipperfrd] 15/11/2016 13:18

H,

I find the irony exquisite!

You took notice of my comments regarding the upcoming 'crunch' over the Dec16 futures contracts - and acted accordingly.

I have been watching the Dec16 contract OI since August and posted about it here recently - but still went ahead and continued with my programmed trading routine which required me to buy on given percentage drops across the swathe of PM stocks that I hold ???

Admittedly, I take a multi-year view with regards to fundamentals on all my stocks. But I still find it illogical that I should not adapt my buy margins to take into account the high probability of downwards price management that was likely to occur over this month because of the dangerous levels of the Dec16 contracts.

I guess I am a bit chastened :-]
Chip

edit: in my own defense I did expect arbitrage to the SGE to prevent or weaken the paper control over the PM market. On that count I guess I was wrong.

[chipperfrd] 15/11/2016 12:55

Gold premiums have averaged $4.5 to $5 and silver around 50c until the Chinese 'Golden Week' holiday. During that week, without the SGE operating, PM prices dropped considerably. Gold c. -US$60/oz and silver c. -US$2/oz.

Since then the PMs have struggled to get back to previous levels and have, of course, been hit really hard since the US election.

"if it waddles and quacks it's likely to be a duck" !!

That basically is how I see the price control being exerted in order to reduce the near-term problem arising from an initial impossible level of Dec16 Open Interest. And, given the situation on the COMEX, one would have to assume it is probably about twice as bad on the LBMA - but of course, that 'market' is totally opaque.
Chip

[chipperfrd] 15/11/2016 12:45

Meanwhile there is a US$1.22/oz premium for silver on the SGE physical market to the LBMA/COMEX paper-based markets - which gives some measure of the desperate efforts to lower silver, even if arbitrage causes relatively small losses of metal to the East.

On gold the premium is currently US$11.4/oz.

Both of these premiums are much higher than I have seen on average since the summer.

Chip

[hectorp] 15/11/2016 12:32

Chip, it is an eye opener , the vast differences of gain and loss eg JPM v HSBC
appear to be 42% apart ! How could HSBC lose so much. Of course there may be underlying reasons and strategies that I have no idea of. I still feel JPM is ammassing metal as a medium term core strategy, but of course also play both sides of the contract game.

I think everything regarding Dec IO especially in silver is pointing to wait until the sergeant's whistle blows , then we go over the top with our guns blazing AFTER the end of November .
regds
H

[chipperfrd] 15/11/2016 12:22

Further .....

The Dec16 OI HAS to be reduced in short order because COMEX does not have anything like enough metal for these levels of OI to be met.

Vast majority of Sell contracts are NOT covered by actual metal in their possession. These are naked short positions.

So my logic determines that everything that needs to be done to force Longs to close and therefore reduce OI will actually happen before the end of November.

If too many Longs remain and stand for delivery then pressure is put on the paper-based system to find enough metal to honour contracts - or they could be cash-settled.
Chip

[chipperfrd] 15/11/2016 12:13

Topicel

Each contract has a buyer and a seller - classic 'zero-sum' game.

The number of contracts per future month provides the Open Interest (OI) per month and the total of ALL the contract OI over all future months is the Total COMEX OI.

I do everything in tonnes because numbers of contracts don't mean much to most people who use these boards. But for clarity, a gold contract is for 100 troy oz and a silver contract is for 5,000 oz.

Contract trading is leveraged (ie margin is put up). Margin on gold is 4.6% of total gold x contract price prevailing on that contract month and silver requires a 6.3% margin.

The Long side is contractually obliged to buy metal once the contract goes 'off the board' and the Short side is contractually obliged to supply the metal. This is done by the issuance of warrants (warehouse receipts on metal in vault) and delivery is recorded once a 'stopped' notice is issued.

So no, they cannot just extend the contract!

Historically, there has been an ongoing high volume of trading in all these contracts without much (if any) metal ever being exchanged. Just like the gold and silver ETFs (GLD & SLV, except they are traded on the stock markets).

Futures markets are MEANT to provide risk management for producers of a commodity so that they can forward sell their expected production and for speculators on the other side to game possible price changes occurring in those future months.

Problem (at least for me) is that this 'normal' futures market has not worked in that fashion for PMs, but has become much more of a price management function which is dictated by a few concentrated sellers who can completely change the supply/demand balance at whim so that the PM price reflects paper contract price discovery as opposed to physical market price discovery. Evidence of this (IMO) is clear from many years of recording Net Short Interest and the corresponding price movements in the PMs and also the exceedingly high OI that has accompanied these movements - particularly in recent years.

Chip

[johntrustee] 15/11/2016 12:10

RBS said "Sell everything" ahead of a deflationary slump. I am beginning to think they are right. With the Dow and FTSE at record levels, and near zero interest rates, the conditions for a bursting bubble are all there. When markets crash gold has always gone down.

I think HOC is an excellent company and the share price does not do it justice, but I will be sitting on the sidelines for a while. I don't like the way things are going. I can always buy back in.

[chipperfrd] 15/11/2016 11:48

H,

In terms of 'winners & losers' re the COMEX contract trading.

YTD the winners are (in terms of tonnage gained):

Silver
JPM (house acct) ~ 27.8%
Bank of Nova Scotia (house) ~ 15.5%
Macquarie (house) ~ 6.7%

YTD Losers (Silver)
Int FCStone (Client acct) ~ -25.8%
ABN Amro (Client) ~ -15.8%
ADM (Client) ~ -4%

Gold winners
JPM (Client) ~ 24.5%
JPM (House) ~ 11.7%
Macquarie (House) ~ 6.4%

Gold losers
HSBC (House) ~ -21.7%
Bank of Nova Scotia (House) ~ -9.1%
SG Americas (Client) ~ -7.4%

Obviously JPM has been doing rather well!
Chip

[topicel] 15/11/2016 11:16

My thanks too Chip, it is good to have some clear thinking and silver related details even if, by the sound of it, they aren't necessarily going to be good for silver prices over the next fortnight or so.

In layman's terms, could you possibly explain why 'they' have to reduce their open interest? Why can't delivery of warrants be extended beyond December and negate the need to cancel? And indeed, why would anyone put an open interest on the Comex with the intention just to cancel?

Is this the kind of dumping practice we've been wary of and mentioning lately? More manipulation to suppress a natural market in physical delivery and prices?

TIA

Topicel

[hectorp] 15/11/2016 11:01

CHIP - Thank for your data above, I have made a few notes to remind me of the siatuation gold and silver.
- Could JPM be taking phys delivery to add to their large silver vault position, ?
H

[goldenshare888] 15/11/2016 10:47

Risk looks heavily skewed to the UPSIDE for PM Miners to me.

Local currency input costs falling and dollar sales value rising, should feed through very nicely to the bottom line in next reporting figures!

The double whammy will be GOLD & SILVER price rises. The optionality/leverage you get with HOC will make it a must have investment in that scenario.

2017?

Glad I topped up again on the dip.