20 August 2017 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price traded sideways until 9 a.m. in Shanghai on their Thursday morning — and then dipped below the $1,200 spot mark by 10 a.m. CST. It rallied back above it, only to revisit it shortly before the London open. Then minutes after that it rallied, but wasn’t allow to get back much above Wednesday’s close — and it chopped sideways until exactly 8:30 a.m. in New York. ‘Da boyz’ hit the ‘ramp the dollar index/sell precious metals’ button when Draghi spoke — and the low tick was set at precisely 10:00 a.m. EST….which was the London p.m. gold fix. The subsequent rally got capped a minute or so after London closed — and the price didn’t do much until 2 p.m. in the thinly-traded after-hours market. It rallied for an hour and a bit, before trading sideways into the 5:00 p.m. close.
The low and high ticks were reported as $1,195.40 and $1,206.40 in the February contract.
And here’s the 5-minute gold tick chart from Brad as usual. I wouldn’t describe volume as overly light except in late morning/early afternoon trading in the Far East — and the hour or so before the COMEX open. As you can tell, volume picked up starting at 06:00 a.m. Denver time, which was 8:00 a.m. in New York — and twenty minutes before the COMEX open. Then after 2 p.m. Denver time…4 p.m. in New York…volume finally did die down.
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.
Silver received almost exactly the same price treatment as gold, so it’s not worth my while to repeat myself. You’ll note that silver was taken back below $17 spot in early Far East trading on their Thursday morning — and wasn’t allowed back above that price for any length of time after that. It would have certainly closed in positive territory — and well above $17 spot — if it had been allowed to rally without interference once the London p.m. gold fix was done. But that wasn’t allowed to happen.
The high and low in this precious metal was reported by the CME Group as $17.125 and $16.745 in the March contract.
Silver was closed in New York yesterday at $16.99 spot — and down 3.5 cents on the day. It was briefly below its 50-day moving average at the p.m. gold fix — and only time will tell if it was by enough [and for long enough] to make a difference to the Managed Money traders. Net volume was huge at just under 73,000 contracts.
Here’s the 5-minute tick chart for silver — and as you can tell, there was a bit of volume associated with the two sell-offs in Far East trading yesterday. But, like gold, the real volume kicked in at 06:30 a.m. Denver time on the chart below, when JPMorgan et al hammered the silver price lower into the London p.m. gold fix. Once the subsequent rally ran out of gas shortly after 1:30 p.m. MST/3:30 p.m. EST…volume vanished.
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.
The powers-that-be dealt with platinum in a similar manner to both silver and gold. However the down/up moves in platinum in Far East trading are barely noticeable on the Kitco chart below. The rally from the p.m. gold fix inched along uninterrupted into the 5 p.m. close.
Palladium traded lower by a dollar or so in the Far East on their Thursday. But shortly after Zurich opened it developed a slight positive bias, only to have its lights punched out starting about ten minutes before the London p.m. gold fix. The low was at the fix — and it was back to being up a couple of dollars an hour later. By the time trading ended, palladium was up 5 dollars at $751 spot.
The dollar index closed very late on Wednesday afternoon in New York at 101.29 — and was up 10 basis points by shortly before 9 a.m. China Standard Time on their Thursday morning. It chopped lower from there — and was rescued both times it fell below the 101.00 mark. The first time around 9:20 a.m. in London — and the second, right at 8:00 a.m. precisely in New York. The ramp job began in earnest at the 8:20 a.m. COMEX open — and ran into some big sellers on its way to its 101.73 high spike tick, which came at the London p.m. gold fix. From there it headed mostly lower until it hit the 101.10 mark at 3 p.m. EST — and it traded sideways from there into the close. The dollar index finished the Thursday session at 101.14 — and down 15 basis points from its close on Wednesday.
The ramp job at the COMEX open looked particularly anemic — and ran into a couple of willing sellers of some size. From this performance, I get the impression that Yellen’s open-mouth policy talk on Wednesday won’t have a long shelf life — and only Draghi saved the dollar index briefly yesterday.
The gold shares gapped down at the open — and hit their respective low ticks at the London gold fix. The subsequent rally flamed out barely in positive territory just minutes after 11 a.m. EST when the subsequent rally off the p.m. gold fix was caped. They were sold lower until minutes after 1 p.m. — and finally began to move higher as gold rallied into positive territory. That rally rolled over as gold was sold off a bit after 3 p.m. EST — and the HUI closed down 0.60 percent.
The CME Daily Delivery Report showed that 10 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. Canada’s Scotiabank stopped all 10 gold contracts — and they picked up 1 silver contract as well. JPMorgan picked up the other silver contract for its client account. I won’t bother linking this activity.
The CME Preliminary Report for the Thursday trading session showed that gold open interest in January declined by 35 contracts, leaving 72 still around, minus the 10 contracts mentioned just above. Wednesday’s Daily Delivery Report showed that 41 gold contracts were actually posted for delivery today, so that means that 41-35=6 more gold contracts were added to the January delivery month. Silver o.i. in January dropped by 121 contracts, leaving 109 still left, minus the 2 mentioned in the previous paragraph. Wednesday’s Daily Delivery report showed that 122 silver contracts were actually posted for delivery today, so that means that 122-121=1 more silver contract was added to January.
There were no reported changes in GLD yesterday — and as of 6:16 p.m. EST yesterday evening, there were no reported changes in SLV, either.
The U.S. Mint had a small sales report yesterday. They sold 5,500 troy ounces of gold eagles, plus 500 ounce 24K gold buffaloes — but no silver eagles.
There wasn’t much activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday. There was 300.000 troy ounces/30-ten ounce bars deposited into Brink’s, Inc. — and 1,607.500 troy ounces/50 kilobars [U.K./U.S. kilobar weight] shipped out of Canada’s Scotiabank. I shan’t bother linking this activity, either.
It was a horse of an entirely different colour in silver however, as 1,351,944 troy ounces were received — and 2,737,966 troy ounces were shipped out the door for parts unknown. There was so much in/out activity at so many of the warehouses, that I shan’t bother attempting to list it all — and none of it was intra-depository transfers from what I could see. But I will point out that JPMorgan picked up another 751,821 troy ounces — and its COMEX silver stash now totals 88.15 million troy ounces, a hair under 49 percent of all the silver held in all eight of the COMEX depositories. The link to all that action is here — and it’s worth a quick look if you have the interest.
After a monster day on Tuesday, things were a lot quieter over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday. Only 2,204 were received — and 790 were shipped out. All of that activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
It was another quiet day for stories — and I hope there are a couple in here that you’ll find of interest.
Treasury Secretary nominee Steven Mnuchin told lawmakers today the long-term strength of the U.S. dollar is important and said President-elect Donald Trump’s comments that the currency was too high weren’t meant as a longer-run policy.
The dollar’s “long-term strength — over long periods of time — is important,” Mnuchin said in response to questions at his confirmation hearing before the Senate Finance Committee in Washington. “The U.S. currency has been the most attractive currency to be in for very, very long periods of time. I think that it’s important and I think you see that now more than ever.”
Of course Mr. Market may have other ideas — and it’s been obvious for some time now that the dollar index is only being kept levitated by the always-present ‘gentle hands’. This news item was posted on the Bloomberg website at 10:36 a.m. EST on Thursday morning — and was updated about seventy-five minutes later. I found it in a GATA release — and another link to it is here.
According to a report from The Hill this morning, President-elect Trump’s transition team is already working with career staff at the White House on plans to slash federal spending. The Hill reports that significant cuts are expected to the budgets of the Department of Commerce, Energy, Transportation, Justice and State, among others, and would total $10.5 trillion over 10 years.
The departments of Commerce and Energy would see major reductions in funding, with programs under their jurisdiction either being eliminated or transferred to other agencies. The departments of Transportation, Justice and State would see significant cuts and program eliminations.
The Corporation for Public Broadcasting would be privatized, while the National Endowment for the Arts and National Endowment for the Humanities would be eliminated entirely.
Overall, the blueprint being used by Trump’s team would reduce federal spending by $10.5 trillion over 10 years.
While details are scarce now, a 200 page “skinny budget” document is expected to be released within the first 45 days of Trump’s administration with a “full budget” to be released toward the end of his first 100 days in office.
This article showed up on the Zero Hedge website at 7:20 p.m. Thursday evening EST — and another link to it is here.
Just as we warned was likely, Mario Draghi first remarks were dovish, highlighting the potential downside risks in the E.U. economy and suggest that inflation trends were not convincing…. in other words, the un-taper is on the cards. And EUR/USD reacted instantly…
- DRAGHI SEES NO CONVINCING UPWARD TREND IN UNDERLYING INFLATION
- DRAGHI SAYS UNDERLYING INFLATION PRESSURES REMAIN SUBDUED
- DRAGHI SAYS INFLATION PICKED UP DUE TO ENERGY
- DRAGHI SAYS RISKS TO ECONOMIC OUTLOOK REMAIN ON DOWNSIDE
- DRAGHI SAYS ECB HASN’T DISCUSSED REDUCING STIMULUS
This has obviously sent the dollar index soaring to the highs of the day – how long until President Trump tweets?
This new story showed up on the Zero Hedge website at 8:52 a.m. on Thursday morning EST — and another link to it is here.
Ideological Civil War in Davos: Dutch Premier Labels “Political Union a Dangerous Romantic Fantasy, Gone, Buried”
European solidarity erupted in a full scale Ideological Civil War in Davos today as Dutch prime minister Mark Rutte called the E.U.’s dreams a “dangerous romantic fantasy”.
“The whole idea of an ever-closer Europe has gone, it’s buried,” said Dutch premier Mark Rutte, dismissing calls for full political union as a dangerous romantic fantasy.
“The fastest way to dismantle the E.U. is to continue talking about a step-by-step move towards some sort of superstate,” he said at the World Economic Forum.
His comments went to the heart of a fierce battle under way for control over the E.U. project, and provoked an impassioned counter-attack from Martin Schulz, the European Parliament’s president.
Mr Schulz called it profoundly misguided to give up the dream of political union and retreat to the nation state. “If it’s Angela Merkel, or Mark Rutte, or whoever else, they must have the courage to say that we need ever-closer union more than ever in the 21st century, and without it the E.U. has no future,” he said.
“We have some members sitting inside the European Parliament trying to destroy the E.U. from within. They are drawing E.U. salaries, and one of them is running for the presidency of France,” he said.
This commentary was posted on the mishtalk.com Internet site at 4:37 p.m. EST on Thursday afternoon — and it comes to us courtesy of Roy Stephens. Another link to it is here.
Heading into the Chinese Lunar New Year, local banks are suddenly starved for liquidity like never before. On Tuesday China’s benchmark money-market rate jumped the most in two years, with unprecedented cash injections by the central bank being overwhelmed by demand before the Lunar New Year holidays.
Demand for cash in China tends to increase before the Lunar New Year holidays, when households withdraw money to pay for gifts and get-togethers. Month-end corporate tax payments are adding to the pressure this time, with the break running from Jan. 27 through Feb. 2. At that point the PBOC usually steps in with liquidity “injections” in the form of reverse repos. However, what it has done this year is literally off the charts.
On Wednesday, the People’s Bank of China put in a net 410 billion yuan ($60 billion) through open-market operations, the biggest daily “injection” on record. Despite this massive boost in liquidity, the interbank seven-day repurchase rate still jumped 35 basis points, the most since December 2014, to 2.76 percent, according to weighted average prices. Yesterday, the overnight repo rate rose 10 basis points to 2.50 percent, the highest since April 2015, according to weighted average prices.
So, with liquidity still scarce, moments ago on Thursday morning, the PBOC added another net injection of 190 billion consisting of 100Bn in 7-day repo and 150BN in 28-day repos, offset by 60bn yuan in previous loans maturing.
As a result, the PBOC has injected a net of 1.035 trillion yuan via reverse repos so far this week, an all time high.
This is another news item from the Zero Hedge website. This one was posted there at 9:47 p.m. on Wednesday evening EST — and I thank ‘David in California’ for passing it around last night. Another link to it is here.
On August 15, 1971, President Nixon killed the last remnants of the gold standard.
Since then, the dollar has been a pure fiat currency, allowing the Fed to print as many dollars as it pleases.
Removing the U.S. dollar’s last link to gold eliminated the main motivation for foreign countries to store large dollar reserves and to use the dollar for international trade.
At this point, demand for dollars was set to fall… along with the dollar’s purchasing power. So the U.S. government concocted a new arrangement to give foreign countries another compelling reason to hold and use the dollar.
The new arrangement, called the petrodollar system, preserved the dollar’s special status as the world’s reserve currency.
This worthwhile commentary by Nick Giambruno put in an appearance on the internationalman.com Internet site yesterday — and another link to it is here.
The CIA recently released a series of declassified 1970s memos relating to the gold market and the newly created SDR. These memos give new insight how the CIA viewed the gold market, the perceived manipulation of gold and the potential for the SDR to become a gold substitute in the international monetary system.
The classification of the documents is significant because “secret” is the CIA’s second-highest classification. The CIA notes unauthorized disclosure of secret information would cause “serious damage” to national security.
Each of the declassified gold and SDR documents was marked “SECRET” with a warning: “The document contains information affecting the national defense of the United States within the meaning of Title 18 sections 793 and 794 of the US Code.”
Document: Intelligence Memorandum – The World Gold Market- Semi Annual Review January – June 1970.
The 1970 CIA memorandum reviewed in the video below shows a CIA concerned about gold market manipulation by the Swiss whom they characterize as “in an excellent position to influence the London free market fixing.” The memorandum points to “strong circumstantial evidence that Zurich bullion dealers, under the leadership of the Union Bank of Switzerland are again manipulating the gold markets”
This manipulation in turn was interfering with an IMF agreement with South Africa to sell its gold to the IMF under certain conditions when it could not sell its newly mined out put on the free market.
This gold-related news item first appeared on the smaulgld.com Internet site yesterday — and it was picked up by Zero Hedge — and that’s the copy that I’ve posted. I thank Ellen Hoyt for sending it our way — and another link to it is here.
Central Banks are rigging the metals markets. Does it signal a buying opportunity? Will they ever be prosecuted for this illegal activity?
I recently interviewed good friend Ed Steer who writes Ed Steer’s Gold and Silver Digest, a daily must-read. We discussed an article written by Peter Warburton in 2001 outlining the relationship between central banks and investment banks rigging the metals market price:
“…(Central Banks) incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value.
Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.“
Eight major players are blatantly manipulating the price of all precious metals; making billions from their illegal activity. So far, despite a preponderance of evidence presented by the Gold Anti-Trust Action Committee (GATA), the government takes no action.
My interview with Dennis showed up on his website yesterday — and you might find it worth reading. Another link to it is here.
GoldMoney research director Alasdair Macleod explains why Elliott wave theory has no application to gold trading — and why amid steadily depreciating currencies, gold has every reason to rise.
Macleod’s commentary is headlined “Gold — A Primer for 2017” and it was posted at GoldMoney‘s internet site on Thursday sometime. It’s on the longish side — and and I found this on the gata.org Internet site. Another link to it is here.
The PHOTOS and the FUNNIES
While I was looking at photos of those Chinese Button Quail for yesterday’s column, I came across this rather magnificent looking fellow. It’s a Lady Amherst Pheasant — and the second photo is the female of the species. Click to enlarge really helps with the first photo.
Speaking of share to metal conversions in SLV, this week nearly 3 million oz were so converted. With silver prices rising steadily and SLV trading volumes mostly below average over the past few weeks, there is not a hint of suggestion that there has been net investor selling behind the sudden redemption of silver from the trust this week. Instead, the only plausible explanation for the redemption is that a large shareholder (because it didn’t want to be identified as a large shareholder) converted shares into metal. Once again, this is done to evade SEC share ownership reporting requirements.
This conversion of shares to metal seems to have been behind the recent big redemptions of metal from the big gold ETF, GLD. On gold’s sharp plunge in price from Election Day into yearend, it should be considered normal that the metal holdings in GLD would and did decline sharply, as investors sold on balance. But the gold redemptions continued even as prices rose in the New Year, puzzling many. Once again, the most plausible answer seems obvious – deliberate conversions of GLD shares to metal to avoid reporting requirements. And guess who is most likely behind the conversions in both GLD and SLV? (No prizes offered, as you should know this). — Silver analyst Ted Butler: 14 January 2017
It was certainly no coincidence that Draghi chose to speak at the exact time that the COMEX opened for trading in New York yesterday morning. That would have made it around 2:20 p.m. in Europe on their Thursday afternoon — EDT plus six hours.
The effect on the dollar index was immediate, but only lasted until the p.m. gold fix at 10 a.m. EST before it began to fade. But it allowed JPMorgan et al to hammer all four precious metals to their respective low ticks of the day — plus silver down to a hair below its 50-day moving average, which it didn’t break below by much.
I would guess that the Managed Money traders were fleeing the long side — and maybe putting on short positions at the same time — and ‘da boyz’ stood beside them happily covering their short positions and going long themselves. It was, as Ted said on the phone yesterday, the classic “scam within a scam“.
And as I type this paragraph, I see that the London open is less than ten minutes away — and I note that gold traded mostly flat until 9 a.m. China Standard Time on their Friday morning — and it crawled quietly higher from there, but was turned lower around 3:20 p.m. on their Friday afternoon. Gold is up only $1.50 at the moment. Silver made it back above $17 spot in early Far East trading, but not by a lot. Then the same kind soul that turned gold lower at 3:20 p.m. CST, performed the same maneuver on silver — and it’s now down 4 cents on the day — and back below $17 spot. Platinum was up 5 bucks by noon in Shanghai, but it has been turned lower as well — and is up only 2 dollars. The price path for palladium was similar — and it’s down 2 bucks at the moment.
Net HFT gold volume is around 39,500 contracts, which is very much on the lighter side when you consider what the volume’s been like this time of day all week long. Net HFT silver volume is around 8,700 contracts — and that’s on the lighter side, relatively speaking, as well.
The dollar index opened flat yesterday evening in New York, but took a header minutes before 9 a.m. CST — and by 11:30 a.m. in Shanghai, it was down about 25 basis points, around 100.87. Since then it’s traded either side of the 101.00 mark by 10 basis points or so — and has rallied back above the 101.00 mark by a bit, but still down 15 basis points as London opens. It was the start of that rally shortly after 3 p.m. CST that gave ‘da boyz’ all the reason they needed to lean on the precious metal prices.
We’re getting very close to the end of January — and roll-overs out of the February contract all have to be done by January 30…so there are seven business days left, including today, to get it all done. Roll-over/switch volume should start to pick up rather substantially between now and then — and if it doesn’t start today, it will certainly be in full swing starting at the beginning of next week.
Today we get the latest Commitment of Traders Report for positions held at the close of trading on Tuesday — and as I said yesterday, it’s already “yesterday’s news” in most respects — and that’s even more the case after Thursday’s price action. Whatever the numbers are, I’ll have them for you in my Saturday missive.
And as I post today’s column on the website at 4:00 a.m. EST this morning, I see that the gold price continues to edge lower — and is down $2.40 at the moment. Silver is down 9 cents, platinum is back to unchanged — and palladium is down a dollar.
Net HFT gold volume is just over 47,500 contracts — and that number in silver is around 10,500 contracts.
The dollar index continues to wander quietly higher and is down only 8 basis points as I hit the ‘publish’ button.
I’m on the road until Tuesday, so my next two columns will be compiled on my laptop, which is a much longer process than when I’m doing it on my home computer, as the keyboard on the laptop is not as easy to use when you’re a touch typist as I am. They will be as short as I can possibly make them, as I’ll be speaking at the Vancouver Resource Investment Conference on both Sunday and Monday — and I’ll have my hands full with that.
I’m done for the day — and I won’t hazard a guess as to what may or may not happen in the precious metals during the rest of the Friday session, as Inauguration Day for Trump unfolds.
See you on Saturday.