The Dollar Index Crashes…But ‘Da Boyz’ Limit the P.M. Gains

18 January 2017 — Wednesday


The gold price began to rally quietly the moment that trading began at 6:00 p.m. EST on Monday evening in New York.  The rally accelerated, with obvious strong opposition, starting around 1 p.m. China Standard Time on their Tuesday afternoon — and it chopped higher until shortly before 11:30 a.m. GMT in London.  From there it was sold down pretty hard until exactly 1:00 p.m. GMT, which was twenty minutes before the COMEX open.  From that point, it rallied rather unsteadily for the rest of the day, including the thinly-traded after-hours market.

The low and high ticks were reported as $1,198.00 and $1,218.90 in the February contract.

Gold finished the Tuesday session at $1,216.70 spot, up $14.10 on the day.  Net volume was extremely heavy at 233,000 contracts — and that number is net of Monday’s trading volume.

And here’s the 5-minute tick chart for gold courtesy of Brad Robertson as usual.  Volume was the lightest at the start of New York trading on Monday evening, on the far left-hand side of this chart — and then didn’t return to any semblance of background levels until well after the 11:30 a.m. Denver time COMEX close.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must.

The rally in silver was almost identical to gold’s rally.  The 1 p.m. GMT low was followed by a decent rally that got rolled over shortly after 10:30 a.m. in New York.  The silver price began to crawl higher starting shortly after 12 o’clock noon EST — and that continued right into the 5:00 p.m. close in after-hours trading.  Silver appeared to close on its high of the day — and back above $17 spot.

The low and high tick in this precious metal were recorded by the CME Group as $16.805 and $17.245 in the March contract.

Silver closed in New York yesterday afternoon at $17.175 spot, up 40 cents on the day.  Net volume was pretty enormous at 65,500 contracts — and that’s net of Monday’s volume was well.

Here’s the 5-minute tick chart for silver, courtesy of Brad as well.  Volume didn’t start picking up until after 22:00 p.m. Denver time on Monday night, which was shortly after 1 p.m. in Shanghai on their Tuesday afternoon.  Volume levels were pretty decent after that — and didn’t die off until after 12:30 p.m. MST, which was 2:30 p.m. in New York.

Like the 5-minute gold chart, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must as well.

Platinum followed precisely the same path as gold and silver until the London p.m. gold fix, which was 10 a.m. in New York.  But instead of rallying after that, the price was hammered lower until around 2 p.m. EST.  Its low at that point was $971 spot — and it recovered a few dollars into the close from there.  Platinum finished the Tuesday session at $974 spot, down 7 bucks from Monday.  At its high tick on Tuesday, it was up 11 dollars.

The palladium price wandered around a few dollars either side of unchanged in Far East trading — and only began to rally once trading began in Zurich.  It’s high tick came shortly before the London p.m. gold fix — and from there was sold quietly lower for the rest of the New York session.  Palladium managed to finish in positive territory — and up 5 dollars from Monday’s close.  It was up $14 at its high.

The dollar index closed very late on Monday afternoon in New York at 101.57 — and had a 20 basis point down/up dip in the first ninety minutes of trading once New York opened at 6 p.m. a few minutes later.  Then it began to head south with a vengeance.  But from the saw-tooth price pattern, it was obvious that the ‘gentle hands’ that appeared in morning trading in the Far East were trying to soften the fall.  The decline continued through all of London and New York trading — and most of the losses were in by the 10 a.m. EST London p.m. gold fix.  The index continued to creep lower from there, with the 100.26 low tick coming around 5 p.m. EST yesterday afternoon.  It rallied a hair into the close — and finished the day at 100.31 — down 126 basis points.

Apparently Mr. Trump had something to say about the value of the U.S. dollar — and traders took it seriously.  Rightly so, as the greenback is hugely overvalued.  It’s a bug looking for a windshield.

And here’s the 6-month U.S. dollar index chart — and the doji for Tuesday also contains Monday’s data as well.

The gold stocks gapped up to their respective high ticks right at the open of trading in New York yesterday morning — and then headed lower until 11 a.m. EST.  From there they chopped more or less sideways, with a slight positive bias — and finished the day up 2.76 percent.  I must admit that I was underwhelmed.

It was mostly similar for the silver equities, but they actually sold off a bit in the last seventy minutes of trading in New York yesterday — and that’s despite the fact that silver rallied ever higher in price as the day wore on.  Nick Laird’s Intraday Silver 7/Silver Sentiment Index closed up only 2.26 percent.  I was even more underwhelmed by this share price action — and I’m sure I’m speaking for you as well.  Click to enlarge if necessary.

The CME Daily Delivery Report showed that 27 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  Morgan Stanley issued 19 out of its client account…and Canada’s Scotiabank stopped 25 for its own account.  I won’t bother linking this activity.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in January declined by 54 contracts.  Friday’s Daily Delivery Report showed that 61 gold contracts were actually posted for delivery today, so that means that 61-54=7 more gold contracts were added to the January delivery month.  Silver o.i. in January remained unchanged for the second day in a row — and Friday’s Daily Delivery Report showed that no silver contracts were posted for delivery today.

There were no reported changes in GLD yesterday — and as of 6:10 p.m. EST yesterday evening, there were no reported changes in SLV, either.

There was a big sales report from the U.S. Mint yesterday.  They sold 11,000 troy ounces of gold eagles — 1,500 one-ounce 24K gold buffaloes — and 825,000 silver eagles.

Month-to-date mint sales as of yesterday are as follows:  91,500 troy ounces of gold eagles — 26,000 one-ounce 24K gold buffaloes — and 4,572,500 silver eagles.  Ted Butler may or may not have something to say about this in his mid-week column later today.

And still nothing from the Royal Canadian Mint regarding Q3/16 mint sales.

There wasn’t much gold movement at the COMEX-approved depositories on the U.S. east coast on Monday.  Nothing was reported received — and only 40,187.500 troy ounces/1,250 kilobars [U.K./U.S. kilobar weight] were shipped out of Canada’s Scotiabank.  The link to that activity is here.

In silver, the only in/out activity was at JPMorgan’s silver vault, as they received 472,117 troy ounces — and shipped out 299,824 troy ounces.  The link to that is here.

It was another big day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  There were 7,486 kilobars received — and another 4,058 shipped out.  All this action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

It was a quiet news day yesterday once again — and I don’t have all that much for you.


Trump’s comments send dollar reeling

The dollar slid to a one-month low today after President-elect Donald Trump described the currency as “too strong” in an interview with The Wall Street Journal, casting new uncertainty onto the dollars post-election rally.

The WSJ Dollar Index, which measures the U.S. currency against 16 others, fell 1.1 percent to 91.19, its lowest point since the U.S. Federal Reserve raised interest rates on Dec. 14. The dollar was down nearly 1{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} against the Japanese yen and the Mexican peso.

In the interview with the Journal, Mr. Trump said the U.S. dollar was already “too strong,” in part because China holds down its currency, the yuan. “Our companies can’t compete with them now because our currency is too strong. And it’s killing us,” he said.

Mr. Trump had alluded to the dollar throughout the presidential campaign, threatening to label China a currency manipulator for weakening the yuan. But Mr. Trump’s comments were the clearest indication yet that the new administration would prefer a weaker dollar. A stronger dollar can hurt U.S. companies by making their products more expensive overseas.

Of course that will all change when China pulls their ‘surprise’ yuan devaluation at some point in the very near future.  The rest of this Wall Street Journal story is hidden behind their subscription wall — and it’s linked here.  I found this story in a GATA release yesterday morning.  There was a Bloomberg story about this headlined “Trump Takes Aim at King Dollar and It Threatens U.S. Equities” — and that comes to us courtesy of Swedish reader Patrik Ekdahl.

Women’s apparel retailer Limited Stores files for bankruptcy

U.S. women’s apparel chain The Limited filed for Chapter 11 bankruptcy protection on Tuesday after closing all 250 stores, the latest brick-and-mortar retailer to fall victim to changing tastes and online competitors.

The retailer that began as a single store more than 50 years ago blamed declining mall traffic, falling sales, expensive leases and the shift toward online shopping.

Retailers filing for bankruptcy in the past year include Aeropostale Inc, Pacific Sunwear of California Inc, Sports Authority, Vestis Retail Group and American Apparel.

In addition, department store chains such as Sears Holdings Corp and Macy’s Inc are planning on closing scores of locations this year.

This brief Reuters new story showed up on their website at 12:59 p.m. on Tuesday afternoon EDT — and it’s from Zero Hedge via Brad Robertson.  Another link to it is here.

Trump Could Go Down as the Worst President… But It Will NOT Be His Fault

History books remember Herbert Hoover as one of the worst American presidents.

Hoover, a Republican, was a rich and successful businessman with investments all over the world. He was also somewhat of an outsider, having never held elected office until he was inaugurated in March 1929.

Today, people associate him with massive infrastructure projects like the Hoover Dam, as well as the Mexican repatriation program, which deported over 500,000 illegal Mexican immigrants.

Hoover also placed tariffs on foreign products entering the US and established other protectionist trade policies.

Of course, when people think of Hoover, they mostly think of the Great Depression.

This commentary by senior editor Nick Giambruno appeared on the Internet sit yesterday — and it seems familiar, as I seem to remember something similar to this having been posted on their website fairly recently.  Another link to it is here.

Trump’s Tillerson Exaggerates U.S. Capability in the South China Sea: John Batchelor interviews Jed Babbin

“…T-Rex stumbled badly on the Nine Dash line which circumscribes China’s claims of sovereignty over most of the South China Sea. Speaking about China, he began well, saying that China’s construction of military bases on islands contested by Vietnam, the Philippines, and other nations was akin to Russia’s seizure of the Crimean Peninsula.

But he went on, “We’re going to have to send China a clear signal that, first, the island-building stops and, second, your access to those islands also is not going to be allowed.”

China, of course, reacted with threats of war. Two Chinese government-controlled newspapers threatened a large-scale war if the U.S. tried to block China’s access to the islands.

Tillerson broke Trump’s rule against telling the adversary what we intended to do. What Tillerson proposed would, obviously, be an act of war. As CEO of Exxon, he couldn’t have made threats like that (not that any CEO could do anything remotely as serious) without checking first with his board of directors.

If Tillerson made that statement without clearing it first with Trump — and Generals Flynn and Mattis and Rep. Pompeo — he went far beyond what a secretary of state should ever do. T-Rex, if he made the statement in error, will be chastened in private conversation with Trump. If he intended to begin a battle over Trump’s control of foreign policy, T-Rex should be retired quickly from the position of secretary of state.

Tillerson’s statement wasn’t only improper: it was very unwise. At this moment in history we don’t have a vital national security interest in those South China Sea islands. That means we don’t have a sufficient reason to go to war over them. What Tillerson evidently doesn’t realize is that we not only lack the reason to do so, we lack the strategy and forces that would be required….”

This 11:05 minute interview appeared on the Internet site on Monday — and I thank Larry Galearis for pointing it out.  Another link to it is here.

Central Bank Normalization Isn’t as We Know It, Davos Panel Says

Central banks globally may not be pumping in quite so much monetary stimulus as inflation picks up, but they’re a long way from returning to normality.

That’s the view of commentators including Swiss National Bank President Thomas Jordan, UBS AG Chairman Axel Weber and Anthony Scaramucci, an aide to President-elect Donald Trump, at the World Economic Forum in Davos, Switzerland.

If anybody in this room thinks that we are in an interest-rate normalization, we are frankly not,” Scaramucci, the founder of hedge fund Skybridge Capital, said in the panel discussion on Tuesday. Jordan said that while it is a “very positive sign” that the U.S. Federal Reserve has started to raise interest rates, “I would expect that at all central banks, and especially in the U.S., the movement will be gradual.

The global financial crisis almost a decade ago and the slow recovery of major economies since then has taken monetary-policy makers into uncharted territory, including negative rates and massive bond purchases, that will likely take years to unwind. A stronger dollar as the U.S. outperforms its peers is further reducing the need for officials at central banks in Europe and Asia to rein in their stimulus.

This Bloomberg article was posted on their website at 4:51 a.m. MST on Tuesday morning — and I thank Patrik Ekdahl for his second offering in today’s column.  Another link to it is here.

Germany says NATO concerned about Trump ‘obsolete‘ remark

Germany’s Foreign Minister said on Monday that U.S. President-elect Donald Trump’s comments that NATO was obsolete had aroused concern across the 28-member alliance.

Frank-Walter Steinmeier, speaking after a meeting with alliance Secretary-General Jens Stoltenberg in Brussels, said Trump’s remarks contradicted views expressed by designated Defense Secretary James Mattis. He spoke also of “amazement“.

I’ve spoken today not only with E.U. foreign ministers but NATO foreign ministers as well and can report that the signals are that there’s been no easing of tensions,” Steinmeier told reporters when asked about Trump’s interview with Bild newspaper and the Times of London.

Obviously the comments from President-elect Trump, that he views NATO as obsolete, were viewed with anxiety,” he said.

This Reuters article, co-filed from Brussels and Berlin, put in an appearance on their Internet site at 6:11 p.m. EST yesterday evening — and it’s been updated at least once since Brad Robertson sent it to me early on Tuesday morning.  Another link to it is here.

China’s Oil Collapse Is Unintentionally Helping OPEC

China’s production is forecast to fall by as much as 7 percent this year, extending a record decline in 2016, according to analysts at CLSA Ltd., Sanford C. Bernstein & Co. and Nomura Holdings Inc. That’s about the same size as the output cut agreed by Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, which late last year reached a deal to trim supply to support prices.

China’s domestic crude output decline will certainly help OPEC’s plan to reduce global supply,” said Nelson Wang, a Hong Kong-based oil and gas analyst at CLSA, who sees a 7 percent slide this year. ”Even if that isn’t China’s intention, it’s just the reality that China can’t produce more under the current circumstances.”

While China consumes more oil than almost any other country, it’s also one of the world’s biggest producers, with fields stretching from offshore its southern coast to the far north east. The collapse in prices that began in 2014 is taking its toll, and the nation’s output suffered a record decline last year. That plays into the hands of OPEC as it seeks to prop up the global oil market, forcing China to depend more heavily on imports.

This very interesting Bloomberg news item showed up on their Internet site at 5:20 p.m. Denver time on Monday afternoon — and was subsequently updated about 11 hours later.  It’s another Zero Hedge story that comes to us via Brad Robertson — and another link to it is here.

China Said to Intervene in Stock Market as Xi Attends Davos

China is taking steps to support its stock market this week, according to people familiar with the matter, as President Xi Jinping’s appearance at the World Economic Forum in Davos puts Asia’s largest economy in the global spotlight.

State-owned investors bought shares to steady the market on Monday, while some funds were guided on Tuesday not to sell holdings with big weightings in benchmark indexes, the people said, asking not to be identified because they aren’t authorized to discuss the matter publicly. China’s securities regulators asked funds and brokerages to trade prudently this week and directed exchanges to report any abnormal transactions, the people said.

The CSI 300 Index of shares in Shanghai and Shenzhen climbed 0.2 percent on Tuesday, after earlier losing as much as 0.8 percent. On Monday, the index recovered from an intraday drop of 1.7 percent to close little changed, with some traders speculating the afternoon rally was caused by state buying.

China is doing this probably because it wants to paint an image of positivity as President Xi attends Davos,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. Stocks will continue to be volatile as the nation’s monetary conditions tighten, Xie said.

This Bloomberg news item was posted on their website at 2:59 a.m. MDT on Tuesday morning — and was updated about ninety minutes later.  I found it embedded in an article over at Zero Hedge — and another link to it is here.

What was the ‘strong-dollar policy’ except gold leasing and price suppression?

GATA long has maintained that the “strong-dollar policy” was mainly gold price suppression, implemented largely through the gold carry trade devised by President Clinton’s treasury secretary, former Goldman Sachs Chairman Robert Rubin, an enterprise in which Western central banks “leased” gold to investment banks at negligible interest rates and encouraged them to sell the metal and invest the proceeds in U.S. government bonds paying closer to 5 percent. The investment banks thereby collected a spread that was risk-free as long as they had the assurance that, as Federal Reserve Chairman Alan Greenspan told Congress in July 1998, “central banks stand ready to lease gold in increasing quantities should the price rise“.

Gold leasing gave the U.S. government a strong dollar, strong government bond prices, and low interest rates even as the government’s debt began to explode under Presidents Bush and Obama. For inflation was safely concealed behind a gold price that was suppressed by artificial and imaginary supply.

So if the U.S. government wants a weaker dollar, it probably needs only to curtail gold leases and swaps and take some central bank feet off the gold market, feet that seem to have been stomping on gold pretty hard lately, given the explosion of gold swapping through the Bank for International Settlements over the last year.

This easing of gold price suppression probably can be done without prompting any suspicion from mainstream Western financial news organizations, which are either brain-dead or as compliant as news organizations in totalitarian countries. Tonight only Marketwatch seems to have come across a hint of what the “strong-dollar policy” was really about. Of the Rubin years at Treasury, Marketwatch writes:

The Clinton administration’s tune soon changed once Rubin replaced [Lloyd] Bentsen. Rubin drove home the shift by faithfully repeating that a strong dollar was in America’s interest. Some well-timed intervention that burned the fingers of dollar bears also helped.

This commentary by GATA secretary treasurer Chris Powell was posted on their website last night — and is certainly worth a few minutes of your time.  Another link to it is here.

Cash Ban Gives India Gold Lovers No Way to Buy Wedding Rings

A self-imposed cash shortage in India is creating chaos for jewelry retailers in one of the world’s biggest gold-buying countries. Sales are plunging.

Just ask Renita Ferreira. While her February 24 marriage ceremony has been set for a year, she and her fiance haven’t bought wedding rings, even after many trips to stores in Panaji, the capital of the western state of Goa. A majority of retailers aren’t equipped to accept credit cards because India’s jewelry industry runs mostly on cash, something consumers have a lot less of these days.

In November, the government banned what amounts to half the circulated cash, part of a plan to curb corruption and tax evasion. The move cut purchases of everything from cars to soap in a country where 98 percent of consumer payments are in rupee notes. While a replacement currency was issued, the disruption further eroded gold demand already slowed by higher retail costs.

All our plans went for a toss after the demonetization,” said Ferreira, 28, a marketing consultant. “Cash is just not an option now. We can’t get married without rings.”

This gold-related Bloomberg story was something I picked up over at the Sharps Pixley website last evening.  It was posted on the Internet site at 3:00 p.m. Denver time on Monday afternoon — and was updated about fifteen hours later.  Another link to it is here.


I posted one of three red squirrel photos that I took on Sunday — and here are the other two.  The click to enlarge feature really helps here.


Considering the drastic fall in the dollar index yesterday, the corresponding price moves in the precious metals certainly weren’t allowed to reflect that fully.  It was obvious that the powers-that-be were all over these rallies like white on rice, as Ted Butler is wont to say from time to time.  That was particularly glaring in the engineered price declines between 11:20 and 1 p.m. GMT in London.  ‘Da boyz’ in New York took over once trading began on the COMEX.

Gold closed well above its 50-day moving average yesterday — and silver did [for the first time] as well.  Obviously the Managed Money traders were buying longs contracts and covering their short positions — and it’s equally as obvious that JPMorgan et al were there as short buyers and long sellers of last resort as they usually are.  I’ll have more on this in a minute.

Here are the 6-month price charts for all four precious metals, plus copper — and it should be noted that the doji for Tuesday, the last one on each chart, also contains Monday’s trading data as well.

And as I type this paragraph, the London open is less than ten minutes away — and I see that a gently-rising dollar index has put the precious metals under some selling pressure.  Gold was only down a dollar or so by 1 p.m. China Standard Time on their Wednesday afternoon, but has been heading lower since then — and is currently down $5.40 an ounce.  Silver has followed a similar price path — and it’s down a dime.  Platinum is lower by 2 dollars — and palladium by 4.

Net HFT gold volume is already pretty healthy at 42,500 contracts — and that number in silver is sitting at 10,600 contracts.

After hitting its low tick at 5 p.m. on Tuesday afternoon in New York, the dollar index has been chopping quietly higher in Far East trading — and is currently up 38 basis points.

Yesterday, at the COMEX close, was the cut-off for this Friday’s Commitment of Traders Report — and as I said just above, the 50-day moving averages in both gold and silver were broken to the upside with some authority.  As Ted said on the phone yesterday, it remains to be seen if the Big 4 traders/JP Morgan were involved as short buyers and long sellers during the reporting week — and particularly yesterday.  The fact is that the Managed Money traders were active on Tuesday — and somebody had to be taking the other side of their trades.  We were pleasantly surprised with last week’s report — and it remains to be seen if that trend continues now that the 50-day moving averages have fallen.

Just eye-balling the last five trading days in gold and silver on the charts above, I’m not overly optimistic.  But don’t forget that I was born in Missouri in another life.  So I’ll bite my tongue until Friday although, like I said in yesterday’s missive, Ted may have some thoughts on it in his column this afternoon.

And as I post today’s column on the website at 4:00 a.m. EST this morning, I note that gold price began to move a tad higher once London opened — and it’s down only $4.50 an ounce.  Silver is down 7 cents at the moment — and platinum and palladium are down 2 and 5 dollars respectively.

Net HFT gold volume is up to around 49,500 contracts — and that number in silver is 12,400 contracts.  The dollar index began to head lower once trading began in London — and it’s up only 26 basis points at the moment.

As I said in my closing comments in yesterday’s column, there isn’t much point in trying to prognosticate on what may or may not happen between now and the close of trading on Friday…Inauguration Day.  So we’ll just take what we get, as we watch events unfold.

See you tomorrow.


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