JP Morgan et al Paint a Waterfall Decline in Silver

03 March 2017 — Friday


The gold price was sold lower by around 3 dollars in the first hour of trading when it began at 6:00 p.m. EST on Wednesday evening.  It traded mostly flat from there into the London open — and then began to quietly head lower from there, picking up a bit more steam once the London a.m. gold fix was done for the day.  There was a decent counter-trend rally between 9:00 and 11:15 a.m. in New York, but then ‘da boyz’ stepped in — and its low tick of the day was more or less in by shortly before 12:30 p.m. EST.  It chopped mostly higher from there, but only recovered a small fraction of its losses by the 5:00 p.m. close.

The high and low tick were recorded as $1,250.80 and $1,231.10 in the April contract.

Gold was closed in New York on Thursday at $1,234.00 spot, down $15.00 on the day.  Net volume was, as usual, through the roof at 246,000 contracts.  Gross volume was a hair over 300,000 contracts.

Here’s the 5-minute gold tick chart courtesy of Brad Robertson, as always.  Gold volume rose off background levels by a bit starting around 22:30 p.m. Denver time on Wednesday evening, which was 1:30 p.m. China Standard Time on their Thursday afternoon — and really took off once COMEX trading began at 6:20 a.m. MST/8:20 a.m. EST.  It didn’t fall back to what I call background levels until after 4:00 p.m. in New York, which is 14:00 Denver time on the chart below.

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 opened down a few pennies at 6 p.m. in New York on Wednesday evening — and then traded flat as well until the London open.  From there it developed a slight negative price bias until at, of just after, the noon silver fix.  It crawled higher from there — and then began to roll over around 11:15 a.m. in New York.  JPMorgan et al then spun their aglos and pulled their bids, resulting in the waterfall decline, exacerbated by the fact that the 200-day moving average was taken out in a flash.  At that point, the engineered price decline become self-fulfilling, as sell stops were triggered.  The carnage ended at 12:45 p.m.  It chopped mostly sideways from there — and the low tick of the day [in the spot month] was set with a sharp down/up spike just a few minutes before 2:30 p.m. EST.  The price went back to trading sideways after that event.

The high and low ticks in this precious metal were recorded by the CME Group as $18.53 and $17.775 in the May contract, an intraday move of a hair over 4 percent.

Silver finished the Thursday session at $17.72 spot, down 67 cents on the day.  Net volume was sky high of course at a hair over 95,000 contracts.

Here’s the 5-minute tick chart for silver courtesy of Brad Robertson, for which I thank him — and it certainly doesn’t require any explanation or embellishment from me, as the price/volume activity is self-evident.   But you should note that the sharp down/up price tick in the spot month on the Kitco chart above, is nowhere to be seen in the May price chart below.

Like for the 5-minute tick chart for gold, 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 traded flat throughout the entire Far East trading session on their Thursday — and began to inch lower once Zurich opened, which was 03:00 EST/9:00 CET.  The sell-off picked up speed once the COMEX opened — and ‘da boyz’ showed up at 11:15 a.m. EST, just like the did in gold, with the low tick coming minutes after 12 o’clock noon in New York.  It rallied about 6 dollars off its $980 low tick — and then chopped quietly sideways for the rest of the day.  Platinum was closed at $985 spot, down 29 bucks on the day.  And as my coin guy, Michael, pointed out when I was at his store yesterday, the price differential between gold and platinum is huge.  He would be right about that, as normally platinum is usually price far higher than gold.

Palladium traded mostly sideways until shortly after 11 a.m. in Zurich.  Then it was sold down a bit, but was back to unchanged by the Zurich close.  But thirty minutes later, ‘da boyz’ appeared, just like they did in the other three precious metals — and it’s $764 spot low tick was set in the thinly-traded after-hours market.  It finished a dollar higher at $765 spot — and down 9 bucks from its Wednesday close.

The dollar index closed very late on Wednesday afternoon in New York at 101.77 — and when it opened for trading that evening, it tacked on about 10 basis points in short order.  It chopped mostly sideways until a ‘rally’ of some substance began shortly before 9 a.m. GMT in London.  It chopped mostly higher from there — and the 102.26 high tick was set a minute or so before 2:30 p.m. in New York.  It sold off a bit from there, closing at 102.13 — and up 36 basis points on the day.

And here’s the 6-month U.S. dollar index chart — and it appears that a ‘rally’ in the dollar index has now been firmly established, with some help from ‘gentle hands’ whenever required, of course.

The gold stocks gapped down 2 percent at the open — and then kept right on going.  Most of the damage was done by shortly after 2:30 p.m. EST — the dollar index high tick — and they didn’t do much after that.  The HUI got clubbed lower by 4.41 percent.

It was another bloodbath in the silver equities — as they followed their golden brethren lower.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index was slammed to the tune of 6.77 percent.  Click to enlarge if necessary.

The CME Daily Delivery Report for Day 4 of the March delivery sequence showed that 5 gold and 302 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  In gold, Canada’s Scotiabank stopped 4 of the 5 contracts issued.  In silver, the three largest short/issuers were International F.C. Stone, ADM and Merrill…with 121, 108 and 64 contracts out of their respective client accounts.  The only long/stopper that mattered was JP Morgan, as they picked up 294 contracts…218 for its own account, plus 76 for its clients.  The link to yesterday’s Issuers and Stoppers Report is here.

So far this month, there have been 1,420 silver contracts issued and stopped.  Of that amount, JP Morgan has taken delivery of 1,143 of them…80 percent…843 contracts for its own account, plus another 300 for its client account.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in March declined by 43 contracts, leaving 45 still around, minus the 5 contracts mentioned two paragraphs above.  Tuesday’s Daily Delivery Report showed that only 15 gold contracts were actually posted for delivery today, so that means that 43-15=28 more gold contracts exited the March delivery month.  Silver o.i. for March dropped by 422 contracts, leaving 2,951 still open, minus the 302 mentioned two paragraphs ago.  Tuesday’s Daily Delivery Report showed that 289 silver contracts were actually posted for delivery today, so that means that 422-289=133 silver contracts departed the March delivery month as well.

There was another deposit in GLD yesterday, as an authorized participant added 57,138 troy ounces.  But after yesterday’s price action, I would suspect that we’ll see gold beginning to exit GLD in very short order.  There was a small withdrawal from SLV, as 124,832 troy ounces was taken out.  I would suspect that this amount was a fee payment of some kind.

For the second day in a row there was no sales report from the U.S. Mint.

I was surprised to see that there was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.

And I was even more surprised to see the same in silver.  No in/out movement at all.

It was different over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, as 2,570 kilobars were received — but only 197 shipped out.  All of the activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Here are two charts that Nick Laird slid into my in-box shortly before midnight Denver time last night.  They show gold and silver imports into Turkey, updated with February’s data.  The click to enlarge feature works wonders here.

I don’t have all that many stories again today so, once again, your editing chore won’t be too onerous.


Trump Avoids Debt Crisis?…“Extremely Unlikely” – Jim Rickards

The upcoming March 15 U.S. debt ceiling deadline is something that is being largely ignored by markets and most media for now. Despite it being just 9 trading days away. This will change in the coming days and is one of the many reasons why we are bullish on gold.

James Rickards writing for The Daily Reckoning looks at the important ‘next signal to watch’ and explains that Trump and his advisors believe they can avoid a debt crisis through higher than average growth.

Rickards warns that while this is “mathematically possible”, it is “extremely unlikely”.

Rickards explains in detail the challenges facing the U.S. in terms of the fiscal budget, growth of real GDP, debt to GDP ratios, inflation and how deficits are set to soar.

We believe higher allocations to precious metals are merited. These risks come in the form of very ‘toppy’ looking stock and bond markets and digital deposits being vulnerable to currency debasement, cyber warfare and bail-ins.  We [also] believe that 20{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} to 30{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} allocations to physical precious metals – gold as the core position, then silver and smaller allocations to platinum and palladium – are merited.

This very worthwhile commentary was posted on Mark O’Byrne’s website yesterday — and another link to it is here.

Max Keiser and Chris Martenson discuss “the mother of all bubbles” in U.S. equity markets

This 13-minute video interview was posted on the Internet site yesterday — and although I haven’t watched it all as of yet, I’d bet it’s worth your while if you have the time.  It comes to us courtesy of Roy Stephens.

CNN is Terrified of Alternative Media

This 4:27 minute video clip, which features The Duran‘s Peter Lavelle, was posted on their Internet site back on February 28 — and it’s worth watching if you have the interest.  I thank Larry Galearis for pointing it out.

A Solid Retirement Financial Plan Cast in Jell-O — Dennis Miller

A solid retirement financial plan cast in Jell-O is not an oxymoron. Don’t even think about the old “set it and forget it” mindset from the past. A solid financial plan suspended in Jell-O, that can quickly be modified, is a good thing.

I was on David Holland’s (CPA/CFP) PlanStronger TV show. He asked how things have changed for retirees’ finances over the last decade.

I shared what my generation experienced. As our children were leaving the nest, we realized we were not ready to retire; it was time to get serious. We worked with financial planners to set savings and investment goals. We would be “set for life” and retire comfortably if we hit the “magic number” in our account by our retirement day.

What does “retire comfortably” mean? It means no longer needing to work to maintain a comfortable lifestyle, without having to constantly worry about money.

This interesting commentary by Dennis put in an appearance on his Internet site yesterday — and another link to it is here.

Rattled by Russia, Sweden Plans to Bring Back Conscription

Sweden plans to bring back military conscription to counter Russia’s military buildup in the Baltic Sea, in a move that underscores how tensions are mounting along Europe’s borders with the nuclear superpower.

The decision by the government in Stockholm means that some 13,000 young men and women born from 1999 onward will be called for enrollment from July 1, with at least 4,000 of them then selected for compulsory military service starting in 2018, the Swedish Defense Ministry said Thursday.

The return of the draft in Sweden is taking place amid a heated debate across Europe over how the continent should stand up for itself in the face of an “America First” president who insists that U.S. allies should contribute more to the collective defense bill. Recent activity by Russia has rattled the nearby Baltic states and has prompted a debate on whether traditionally non-aligned Sweden should join NATO.

Sweden introduced voluntary military service in 2010, after years of steadily reducing the number of people called up for basic training. While NATO membership is not on the cards for now, Scandinavia’s biggest economy has been forced to rethink its defense policy and last year responded to Russian posturing by placing soldiers on a permanent basis on the Baltic Sea island of Gotland.

“We have had difficulties manning the military units voluntarily, and that needs to be addressed somehow,” Defense Minister Peter Hultqvist told Swedish Radio. “That’s why it’s necessary to reintroduce compulsory military service.

This is the first of two Bloomberg stories — and both are courtesy of Swedish reader Patrik Ekdhal.  This one showed up on their website at 1:26 a.m. MST on Thursday morning — and another link to it is here.

NATO’s scaremongering about ‘Russia threat’ to Baltic States ‘is all about money

The U.S. security establishment is trying to justify its existence, says Daniel McAdams of the Ron Paul Peace Institute, commenting on a new report which lists how NATO can help the Baltic States counter Russian ‘hybrid warfare.’

The American global policy think-tank, the RAND Corporation, published a report that claims NATO should do more to counter the potential Russian threat and strengthen the Baltic countries’ forces. The U.S. government-funded body issued a report titled “Hybrid Warfare in the Baltics: Threats and Potential Responses.”

The document raises concern over “Russian use of “hybrid warfare” best understood as covert or deniable activities, supported by conventional or nuclear forces, to influence the domestic politics of target countries.”

The author of the report, Andrew Radin claims “these tactics are of particular concern in the Baltic countries of Estonia and Latvia, which have significant Russian-speaking minorities.” He warns that there is concern Russia will seek to use these minorities to gain influence in the region, “use covert action to seize territory, use subversion to justify a conventional attack, or otherwise use deniable or convert means to gain influence in the Baltics and undermine the E.U. and NATO.”

This short article appeared on the Internet site at 2:04 p.m. Moscow time on their Thursday afternoon, which was 6:04 a.m. in Washington.  I thank Roy Stephens for sending it our way — and another link to it is here.

E.U. escalates ‘visa war’ with U.S. with Americans set to lose visa-free travel to Europe

Americans should be forced to apply for visas to travel to Europe, the European Parliament has said, in response to Washington refusing to allow all Europeans to travel to the States visa-free.

The vote by show of hands is the latest in the ongoing “visa war” between Brussels and the U.S. capital, which now looks set to come to a head after MEPs today agreed that U.S. nationals crossing the Atlantic should require additional travel documents as long as citizens from five E.U. countries (Bulgaria, Croatia, Cyprus, Poland and Romania) are kept from entering America without a visa. A European Parliament source told Telegraph Travel this was a “serious negative step in the E.U.-USA visa war”.

The E.U. Commission now has two months to reintroduce visas for Americans wishing to travel to Europe, after MEPs agreed the E.U. is now “legally obliged” to suspend the Visa Waiver Programme (VWP) with the U.S. for a year after the U.S. administration failed to meet a deadline to respond something called visa reciprocity. Parliament and the European Council will have the chance to object to anything put forward by the Commission.

This story was posted on the Internet site at 2:09 p.m. GMT on their Thursday afternoon, which was 9:09 a.m. in Washington — EST plus 5 hours.  I thank Brad Robertson for it — and he got it from Zero Hedge.  Another link to it is here.

To Le Pen, “Question Is Not If to Leave Euro, but When and How

French presidential candidate Marine Le Pen reiterated her promise to take the country out of the euro and said her brand of economic nationalism is part of a broader trend that’s sweeping the world.

In a speech in Paris laying out her economic policies, the far-right National Front candidate said France has been “pillaged by the neo-liberal global economic order” and must learn from what’s going on in Washington, Beijing and London.

“Look at the jobs that Donald Trump has brought back to America,” Le Pen said. “From Donald Trump in the U.S. to Xi Jinping in China to Theresa May in Britain, economic patriotism is on the march. The European Union is last one left to still belief in the illusion of a borderless world.

She said the euro had led to a hollowing out of industry in France, Italy and Spain, and it was time for a “friendly separation.” She also said the country’s sovereignty is at risk because 65 percent of French government debt is held outside the country.

The euro is a corpse that still moves,” Le Pen said. “It’s not a question of if we’ll leave the euro but when.”

This second Bloomberg news item showed up on their website at 11:07 a.m. Denver time on Thursday morning — and I thank Swedish reader Patrik Ekdahl for finding it for us.  Another link to it is here.

French Presidential Candidate François Fillon’s home searched by corruption investigators

Alain Juppé, a former French prime minister, was poised to replace François Fillon as corruption investigators searched the home of the scandal-tainted centre-Right presidential candidate yesterday (Thurs) and allies deserted him.

Sources close to Mr Juppé, who had previously ruled out being a “plan B”, told Libération newspaper he had reconsidered because of the deepening crisis in the Républicains party provoked by Mr Fillon’s refusal to stand aside despite haemorrhaging support.

A day after Mr Fillon revealed that judges are to place him under formal investigation later this month over allegations that he illegally employed his British wife and children at taxpayers’ expense, detectives searched his home in the capital’s elegant 7th arrondissement.

His presidential bid appeared close to collapse as more than 60 centre-Right MPs and senators publicly withdrew support for him and key members of his campaign team quit. About 20 mayors also urged him to stand aside in favour of another candidate better placed to regain the Elysée Palace.

With an opinion poll indicating that three-quarters of voters would prefer Mr Fillon to withdraw, key figures in his party fear that he will be knocked out in the first round of voting at the end of next month.

This news item showed up on the Internet site at 7:30 p.m. GMT on their Thursday evening, which was 2:30 p.m. in Washington — EST plus 5 hours.  I plucked it from a Zero Hedge article — and another link to it is here.

Shipping slump: Why a vessel worth $60 million was sold as scrap

In January 2010, the container ship Hammonia Grenada was delivered from a Chinese yard to its new owners, reportedly priced at about $60m (about £37m at that time).

Just seven years later – at the start of this year – it was sold for scrap. The price: an estimated $5.5m (£4.4m today).

It’s not the only vessel to suffer this fate. Last year container ships were sold at rock-bottom prices for scrap in record numbers.

The simple reason is that there are too many ships for too little cargo.

This very interesting, but certainly not surprising news item was posted on the Internet site on Wednesday sometime — and it’s the third and final offering of the day from Patrik Ekdahl.  Another link to it is here.

Rick Rule Interviewed on BNN‘s ‘Market Call‘ on Thursday

This 46-minute video question and answer session on precious metal equities was posted on the Internet site at 1:00 p.m. EST on Thursday afternoon — and my thanks go out to Ken Hurt for digging it up for us.

Central banks and gold — Alasdair Macleod

The very near future is likely to see a sea-change in central bankers’ attitude to the gold allocation in their reserves. The failure of G20 monetary policy since the financial crisis is causing a general rethink, which may eventually lead to a new policy direction.

For now, that is undecided, beyond a growing acceptance that today’s monetary policy does not work and the assumptions of recent decades, that gold as money should be phased out, might have been a mistake.

The idea, that Western central banks could banish gold from the monetary scene over time, has been disrupted by the persistence of Asian demand, fuelled by the remarkable economic progress of ex-communist states embracing capitalist methods. Western financial markets have hardly begun to grasp the wider implications of the shift in economic power from the heavily-indebted welfare economies, to China, Russia and other members of the Shanghai Cooperation Organisation, and their consequences for gold.

The welfare-driven states rely on money and credit expansion to conceal the true costs of their escalating government spending. They have been motivated to deny gold’s fundamental role as sound money, because it is superior to their unsound money. The increasing prosperity of Asians of all races, who still value gold for its ability to retain its purchasing power, ultimately undermines Western monetary policy, as well as the propaganda that goes with it.

The shift of physical demand from West to East has been widely chronicled, ever since the Shanghai Gold Exchange became a conduit for escalating physical demand. Inevitably, the West’s desire to demonise gold has accelerated the process, and we are now at the point where control of the gold price could suddenly shift from Western capital markets, trading in futures, deferred settlements and unallocated accounts, to the markets supplying bullion in Asia.

This longish commentary by Alasdair put in an appearance on the Internet site yesterday sometime — and the first reader through the door with it was Peter Holland.  Another link to it is here.

Who Needs Dollars? Russia and China Are Now Dominating Global Gold Production

You can file this one under “Russia’s economy is about to collapse“.

Despite what The New York Times may have told you, the devaluation of the ruble has tremendous benefits for Russia’s economy.

The major benefit is that a cheap ruble makes “made in Russia” highly competitive in foreign markets.

Agriculture, manufacturing — even gold is now cheaper to produce in Russia. And Moscow is reaping the rewards.

Russia remained the world’s third largest gold producer in 2016 behind China and Australia, data from the Finance Ministry showed on Tuesday.

This interesting gold-related news item appeared on the Internet site  on Thursday sometime — and I thank Roy Stephens for sharing it with us.  Another link to it is here.



I’m somewhat lost for words as I attempt to write about the umpteenth out-of-a-clear-blue-sky JP Morgan et al engineered price decline in the precious metals yesterday.  Of course, with the COMEX market structure in silver. being as wildly bearish as it is, [and today’s COT Report will only add to that] this event should have come as no surprise to anyone that reads Ted’s work, or mine.

What is so shocking and depressing about it, is the fact that this engineered this precious metal price decline, as are all others, for the sole purpose of getting the Managed Money traders to puke up their longs and go short, so JP Morgan et al can cover, making huge profits — and all the while controlling the price in the process.

And, of course, what silver analyst Ted Butler said in his quote in this pace yesterday is very apropos today as well, so here it is again: “In addition, it would appear that JP Morgan has not varied from its physical silver acquisition binge — and has, once again, emerged as the largest stopper or acceptor of metal in the March futures contracts. This is particularly ironic because in order to stop a delivery, one must be long the delivery month, which JPMorgan clearly was. But at the same time JPMorgan was and is long in the March contract, it is short up the ying yang in other COMEX silver futures months, just as it has been over the past few years of the bank taking delivery of tens of millions of actual ounces. That it is standard procedure for this bank to hold many more short contracts than long, yet still emerge as the leading taker of physical deliveries while short overall is something so breathtakingly manipulative, as to leave me shaking my head at its audacity.

Precisely, dear reader.

Here are the 6-month charts for all four precious metals, plus copper — and the powers-that-be be ensured that they all had a bad hair day.  ‘Da boyz’ took silver from way overbought to market neutral in one go.  The click to enlarge feature helps a bit with the first four charts.

And as I type this paragraph, the London open is less than ten minutes away — and I note that gold rose a couple of bucks in the first twenty minutes of trading when the markets opened at 6:00 p.m. EST yesterday evening.  It was soon sold lower — and although it rallied back to unchanged by 1 p.m. China Standard Time on their Friday afternoon, it was soon sold lower once again.  It got hit hard about twenty minutes before the London open — and is currently down $6.50 an ounce.  The silver price traded higher for the first ninety minutes in New York on Thursday evening, but was sold back to unchanged shortly after — and then, like gold, was sold down a bit more going into the London open — and is down 2 cents.  Platinum traded a dollar or two higher in the Far East, but it’s now back at unchanged.  Palladium was up 3 dollars until twenty minutes before the Zurich open — and it’s now up only a dollar.

Net HFT gold volume is pretty hefty already at 39,000 contracts — and that number in silver is sitting at 12,500 contracts.

The dollar index has been chopping mostly lower all night long here in North America — and is down 13 basis points as London opens.

Today, at 3:30 p.m. EST, we get the latest Commitment of Traders Report and, without doubt, it will show a near record short position in the COMEX futures market.  But that will be the high-water mark for this move up, as the internal configuration for silver has certainly changed by a measurable amount after yesterday’s waterfall decline.

But by how much has the futures market changed in silver?  That’s almost irrelevant at this point, as there are still three more trading days left, including today, in the next reporting week — and we won’t know for sure until next Friday’s COT Report.

But it’s a given that the precious metal miners will not say a word in defence of their industry, their companies, or their shareholders…no matter how more egregious or obvious these JP Morgan-initiated engineered price declines become.

And as I post today’s column on the website at 4:03 a.m. EST, I see that the gold price continued to decline until shortly after the London open — and at that juncture was down about 9 dollars on the day.  It has recovered somewhat since, but has rolled over again — and is down $7.60 an ounce currently.  It was the same price path for silver during the last hour — and it’s down 5 cents on the day.  It was a similar price pattern for both platinum and palladium, with the former now up a dollar — and the latter up 2 bucks.

Net HFT gold volume is now up to a chunky 63,000 contracts — and that number in silver is something over 18,000 contracts, which is huge as well.

The dollar index made it back to almost unchanged on the day by a few minutes after the London open, but has slid a bit since — and is down 5 basis points currently.

As Ted said on the phone yesterday, he’s not sure if yesterday was a one-off, or if this was just the beginning of clean-out of the Managed Money traders, which might take a while.

I’m not sure either, but all I/we can do is grit our teeth — and wait it out.

See you tomorrow.


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