Eight months after Deutsche Bank (NYSE:DB) settled a lawsuit claiming it manipulated prices of precious metals, plaintiffs say documents it disclosed as part of the accord provide "smoking gun” proof that UBS, HSBC, Bank of Nova Scotia (NYSE:BNS) and other firms rigged the silver market.
Separately, an audit commissioned by German regulators suggest that Deutsche Bank employees may have manipulated internal indexes as part of a scheme to help Monte dei Paschi conceal losses.
Speaking at a conference at the Central Bank of Chile, Fed Vice Chairman Stanley Fischer gives no indication the U.S. central bank has any intention of not raising interest rates next month. "The case for removing accommodation gradually is quite strong."
The remarks should be of absolutely no surprise, but they make for a convenient excuse for a whoosh lower in gold in the last few minutes. The metal is now down 2.6% on the session to $1,233 per ounce, a price not seen since the first days of June. Next stop on the charts is $1,200.
Silver is off 4.15% to $17.96, still well above its early June low of about $16.
The 10-year Treasury yield is up another three basis points to 1.73%, its highest level since the start of the summer. On the short end, futures traders have priced in about a 90% chance of a rate hike between now and year-end.
Tomorrow morning brings September's jobs report and it seems only a string of terribly weak prints would be enough to push the Fed off of its promise to raise rates this year.
Gold is lower by another 1% to $1,255 per ounce - now off nearly $100 per ounce over the past couple of weeks. GLD -1%
Silver today is down 2.25% to $17.30 per ounce - almost $3 per ounce less than its level of two weeks ago. SLV -2.7%
With investors this quarter pouring more than $625.5M into the iShares Silver Trust (NYSEARCA:SLV) - the largest quarterly amount since 2010 - holdings in ETFs backed by silver have climbed to their highest ever, according to Bloomberg.
The popularity surge comes as silver has rallied 39% this year.
Barron's interviews Jim Grant, founder of Grant's Interest Rate Observer.
Grant is bullish on metals, including Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM), Goldcorp (NYSE:GG), New Gold (NYSEMKT:NGD), and Pan American Silver (NASDAQ:PAAS): "Gold stocks have come a long way. But many were priced for bankruptcy, notably Barrick Gold, an encumbered mining company priced at $6 at the bottom, as if its debt would not be paid. Now the stock is $20. I personally own Newmont Mining, Goldcorp, and New Gold.
"I'm very bullish on the metal, bullish on miners. Bears on credit finally get paid in gold. At the end of the road to confetti, gold will reclaim some position as an active monetary asset, not a crank's asset. It is now a relatively high-yielding asset, yielding, as it does, nothing.
"We are also bullish on silver. It is the crazy uncle in the attic of monetary assets. It is as volatile as Donald Trump. It has industrial uses as well as monetary ones, which will come to the fore as the gold bull market progresses. In June, we recommended Pan American Silver (PAAS) and long-dated, out-of-the-money call options on the silver exchange-traded fund iShares Silver Trust (NYSEARCA:SLV).
Grant is bearish on Kraft Heinz (NASDAQ:KHC), Campbell Soup (NYSE:CPB), and United Rentals (NYSE:URI): "One idea that hasn't worked yet is being bearish Big Food. Both are indicative of one form of excess, reaching for yield in equities. Campbell is trading for 23 times trailing net income, and Kraft is 46 times. Both are battling new trends in eating."
Gold rallied in today's trade to its highest price since March 2014, and holdings by the SPDR Gold Trust (NYSEARCA:GLD) rose to 31.6M oz. for its biggest total in three years, picking up speed on reports that three U.K. commercial property funds worth ~£10B had suspended trading.
"The bull market in gold and silver is all about negative real interest rates, currency market volatility and failed central-bank policy worldwide,” says Altavest's Michael Armbruster.
UBS analysts think gold's rise is not over, because it thinks the serious money has not come in yet: "Our sense is that individual positions are not particularly large, but rather the extent of involvement has been quite expansive. It’s also worth noting that despite the very strong inflows into gold ETFs YTD, global holdings are still some distance away from record highs."
Not everyone agrees: OptionSellers.com's James Cordier thinks gold will drop to $1,200-$1,250 by year-end because the metal is acting as a currency and will return to acting like a commodity "once the hysteria slows."
Equity markets appear to have moved past the Brexit panic, but that doesn't mean money is exiting gold. The metal is modestly higher today, and mostly hasn't budged from its post-vote levels of Friday.
At $1,327 per ounce, gold is at its highest in two years.
Silver's doing even better, up 2.8% to $18.40 per ounce - surpassing its post-vote levels on Friday.
Gold futures -0.8% at ~$1,284/oz. after weekend polls showed a higher likelihood that the U.K. would vote to stay in the European Union.
“This is a market that’s going to be very emotional this week” ahead of the June 23 referendum, says Peter Hug, global trading director at Kitco Metals, who believes that broader economic concerns and low interest rates will continue to support gold prices regardless of the Brexit outcome.
Gold has risen 21% YTD amid worries over global growth and as the Fed has pushed back plans to raise short-term interest rates.
Gold is lower by another 1.8% this morning, adding to losses since 2 ET yesterday when the FOMC minutes shocked markets by signaling a high chance of a June rate hike. At $1,251 per ounce, gold's returned to late April levels. It had touched $1,300 earlier in May.
At about $17.20 per ounce prior to the news, silver's down another 3.4% to $16.56, it's weakest since the middle of April.