That made a big splash at the time but then seems to have been largely forgotten until overnight news surfaced that the amount involved in those less-than-upright deals was in the vicinity of $10 billon!
The metals were stored in two port cities, Qingdao and Penglai. Reports noted that potential losses for foreign banks and commodities firms could be close to $1billion. Worse however was estimates that exposure for Chinese banks could potentially be in the billions ( yes, with an "S") of dollars.
That send copper lower - as if it did not already need any help moving in that direction.
The red metal has pushed down into an important chart support zone. Failure to hold here and copper is going to change handles to a "2". It will, as it always has, take its cues from economic data.
As a way of reminder - that certain website out there, which goes by the name, "We never saw a news article that we could not interpret and spin to be bullish for gold", was pushing that story as one more perma bullish gold theory not that long ago when this thing was in the news. Talk about another one biting the dust!
Their bizarre claim was that somehow double-counted metal was bullish for gold because all of that gold that was hedged was going to have to be covered resulting in a huge rally in the yellow metal. Whoops!
By the way, gold is still holding onto its gains as the equity markets are not as of yet showing any signs of serious buying. The yen remains higher as does the bond market which is up over a full point now. Safe haven buying is definitely keeping gold aloft at the moment.
On the moo-moo front, they simply will not break down even as the beef weakens. Packer margins are already deep in the red but that is not fazing the cattle bulls. I thought that perhaps, just maybe, we might see the cattle sell off with the lower equity markets today, but no dice.
Those who think gold is volatile should try their hands at the hogs. The blasted things fell to practically limit down earlier today and then cut those losses in half as there was what might best be described as a "panic buying" short covering binge that hit the pit 15 minutes before the close of the pit. With the big Quarterly Hogs and Pigs report due out tomorrow, no one knows what to expect.
My view at this point is that regardless of what the report might or might not say, the industry is going to ramp up in a big way. It might not be reflected in that report since many hog producers have gotten wise to telling USDA their breeding plans in advance, but nonetheless, with two vaccines now approved and with dirt cheap corn prices, I expect to see significant efforts to enlarge herds. We shall see. I have been wrong on these wildly unpredictable reports before so it will not be the first time if I am.
What matters more than the report however is the reaction to it and that we will not get until next Monday morning.
One last thing- those corn/wheat spreads are coming right back on again. Amazing.
