The Short Buyers and Long Sellers of Last Resort Show Up Again

11 October 2017 — Wednesday


The trading pattern in gold in Far East trading on Tuesday morning in the Far East was almost a carbon copy of the trading pattern on Monday during that time interval.  That relationship ended at the 2:15 p.m. CST afternoon gold fix in Shanghai — and the price began to rally a bit from there.  It was sold lower between 8:10  and 9:00 a.m. in New York before rallying anew.  That came to an abrupt end at exactly 11:00 a.m…which was the London close.  From that juncture it was sold quietly lower for the rest of the Tuesday session.

The low and high ticks are barely worth looking up — and were reported as $1,284.60 and $1,296.70 in the December contract.

Gold was closed in New York at $1,287.50 spot, up $3.90 on the day — and well off its high tick.  ‘Da boyz’ were out and about in force yesterday, as net volume was extremely heavy at around 289,000 contracts.  Roll-over/switch volume out of December was very decent as well, around 21,000 contracts worth.

The silver price action on Tuesday mirrored Monday’s as well…right up until the afternoon gold fix in Shanghai.  From that juncture it rallied quietly until JPMorgan et al stepped in a few minutes before the 11 a.m. EDT London close.  It was sold quietly lower until 3 p.m. in the thinly-traded after-hours market — and did nothing from there into the 5:00 p.m. close.

The CME Group recorded the low and high ticks as $16.96 and $17.28 in the December contract.

Silver was closed yesterday at $17.10 spot, up 15 cents from Tuesday — and well off its high tick.  Like in gold, net volume was pretty heavy at a bit over 80,000 contracts.  There was decent roll-over/switch volume in this precious metal as well.

Platinum more or less followed the same price pattern as gold and silver, except it continued to chop unsteadily higher after the Zurich close.  That ended at the COMEX close — and it traded flat for the rest of the day from there.  Platinum finished the Wednesday session at $931 spot, up 16 dollars on the day.

Palladium rallied in fits and starts until around 10:30 a.m. in Zurich.  Then it traded sideways in a fairly broad range for the rest of the Wednesday session, but appeared to run into a price ceiling around the $932 spot mark between 9 and 10 a.m. in New York.  It was sold down a bit from there at $927 spot, up 4 bucks.

The dollar index closed very late on Monday afternoon in New York at 93.73 — and after doing nothing for two hours after trading began at 6:00 p.m. EDT, it began to head lower — and by around 8:40 a.m. it was heading down with a vengeance — and was down to the 93.46 mark by shortly before 10 a.m. CST on their Tuesday morning.  It gained about 10 basis points back by minutes after 12 o’clock noon over there — and then began to chop lower once again, with the 93.14 low tick coming a minute or so before the London close.  The subsequent rally didn’t get far, or last long — and the dollar index finished the Tuesday session at 93.26…down 47 basis points.

Once again the decline in the dollar index wasn’t allowed to be fully reflected in precious metal prices, as ‘da boyz’ were at battle stations throughout the entire Tuesday trading session, particularly in morning trading in the Far East.  And they used the turn in the dollar index at the London close, which they themselves probably created, to pare back what little gains were allowed.

Here’s the 6-month U.S. dollar index chart for your entertainment.

The gold stocks opened unchanged, then spent all of fifteen minutes or so in positive territory after that — and were back at unchanged by the 11 a.m. EDT London close.  When the dollar index got turned higher from its low tick of the day at that point, it was all down hill for the shares after that — and the HUI finished lower by 1.24 percent.  I was not impressed.

Ditto for the silver equities, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.88 percent.  A very macabre situation if there ever was one.  Click to enlarge if necessary.

And here’s the 1-year Silver Sentiment/Silver 7 Index updated with Tuesday’s data.  All of Monday’s gains, plus a bit more, disappeared after yesterday’s losses.  Unbelievable.  Click to enlarge.

I have no idea as to why the precious metal equities turned in such a rotten performance yesterday.  Counterintutive price action in their shares, brings back unpleasant memories from the rather distant past.  But before I dredge that up, I’ll wait to see how things unfold for the rest of the week.

The CME Daily Delivery Report showed that, for the second day in a row, zero gold and 1 lonely silver contract were posted for delivery within the COMEX-approved depositories on Wednesday.  Nothing to see here, but the link to yesterday’s Issuers and Stoppers Report is here if you wish to check it out yourself.

The CME Preliminary Report for the Tuesday trading session was finally posted on their website when I checked at 6:52 a.m. EDT this morning.  It showed that gold open interest in October dropped by 3 contracts, leaving 220 still around.  Monday’s Daily Delivery Report showed that zero gold contracts were posted for delivery today.  Silver o.i. in October rose by 8 contracts, leaving 528 contracts open.  Monday’s Daily Delivery Report showed that only 1 silver contract was posted for delivery today, so that means that another 1+8=9 silver contracts were added to the October delivery month.

There were no reported changes in either GLD or SLV yesterday.

The U.S. Mint had a sales report on Wednesday.  They sold 2,500 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 150,000 silver eagles.

It was another ‘zero in/zero out’ day for gold over at the COMEX-approved depositories on the U.S. east coast on Monday.

It was busier in silver, as 600,627 troy ounces were received — and only 62,292 troy ounces were shipped out.  All the silver received, one truck full…was dropped off at Brink’s, Inc.  In the ‘out’ department, there was 60,298 troy ounces shipped out of Canada’s Scotiabank — the other two kilobars departed Delaware.  The link to that activity is here.

With the COMEX-approved gold kilobar depositories in Hong Kong back in the saddle on Monday after their semi-annual Golden Week, it was fairly busy for them.  They reporting receiving 3,778 — and shipped out 3,216.  All of that activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

Here are three more charts from Nick that had to wait their turn — and today’s their day.  The first shows total E.U. gold imports and exports updated with July’s data.  Imports were 71.4 tonnes — and 130.9 tonnes were shipped out.  Exports exceeded imports by 59.5 tonnes — and all of that came out of London.  Click to enlarge.

The second chart shows imports by E.U. country — and the third chart shows exports by E.U. countryClick to enlarge as well.


Another very quiet news day on Tuesday — and I have very little for you.


Bill Gross: “We Have Fake Markets Because of the Fed

Repeating an argument he has made increasingly more forcefully over the past few years, former bond king, Bill Gross, now at Janus Henderson where he oversees the $2.1 billion Unconstrained Bond Fund, said late on Monday that financial markets are artificially compressed, in the process distorting capitalism because of the U.S. Federal Reserve’s loose monetary policy.

I think we have fake markets,” Gross said at a Janus Henderson event quoted by Reuters.

He added that investors should brace for higher bond yields as the Fed begins to unwind its quantitative easing program but yields will edge up “only gradually.”

Repeating observations made here, and elsewhere countless times, Gross said the Fed’s loose monetary policy had resulted in investors chasing yield and thus producing tight corporate spreads everywhere around the globe (but especially in Europe where junk bonds now yield less than matched maturity U.S. treasurys due to the monetization distortions of the ECB).

Even China and South Korea – perfect examples of the risk trade – are at very narrow (corporate spread) levels. There is no real advantage in the global marketplace. Everything is so tight, it is hard to pick a winner from a group that is fake.”

As GATA‘s Chris Powell said back in April of 2008…”There are no markets anymore, only interventions.”  This Zero Hedge article showed up on their Internet site at 1:46 p.m. EDT on Tuesday afternoon — and it comes to us courtesy of Brad Robertson.  Another link to it is here.

This is a Racket” Kucinich Warns “We Must Challenge the ‘Two-Party Duopoly’ Committed to War

In a new interview with host Jesse Ventura at RT, former United States presidential candidate and House of Representatives Member Dennis Kucinich stressed the importance of the American people challenging the “two-party duopoly that’s committed to war.

In the interview, Kucinich discusses his work to expose the misinformation used to argue for U.S. government interventions overseas before and during the Iraq War and, later, concerning the U.S. effort to assist in the overthrow of the Syria government.

Regarding the Iraq War, Kucinich, who is an Advisory Board member for the Ron Paul Institute for Peace and Prosperity, explains that his research showed that

Iraq had nothing to do with 9/11, nothing to do with al-Qaeda’s role in 9/11, didn’t have any connection to the anthrax attack, didn’t have the intention or the capability of attacking the United States, and didn’t have the weapons of mass destruction that were being claimed.”

Continuing with his explanation for the support for the Iraq War and other U.S. military intervention abroad, Kucinich says:

The problem today we have in Washington is that both political parties have converged with the military-industrial complex, fulfilling President Eisenhower’s nightmare and setting America on a path toward destruction.”

This Zero Hedge article contains the 8:17 minute RT news item about the Kucinich/Ventura interview.  It was posted on the ZH website at 5:40 p.m. EDT on Tuesday afternoon — and another link to it is here.

Our Protected, Predatory Oligarchy: Dirty Secrets, Dirty Lies — Charles Hugh Smith

What’s truly noteworthy here is not the sordid allegations and history of payoffs–it’s the 27 years of intense protection the Hollywood/ media /D.C. status quo provided, despite hundreds of insiders knowing the truth. Just as hundreds of insiders with top secret clearance knew about the contents of the Pentagon Papers, and thus knew the Vietnam War was little more than an accumulation of official lies designed to protect the self-serving elites at the top of the power pyramid, only one analyst had the courage to risk his career and liberty to release the truth to the American public: Daniel Ellsberg.

Why are we not surprised that Hollywood, the corporate media and Washington D.C. lack even one courageous insider?

If you want to understand why the status quo is unraveling, start by examining the feudal structure of our society, politics and economy, and the endemic corruption, predation and exploitation of the privileged oligarchs at the top.

Then count the armies of self-serving sycophants, toadies, lackeys, hacks, apologists, flunkies, careerists and legal-team mercenaries who toil ceaselessly to protect their oligarch overlords from exposure.

Open your eyes, America: there are two systems of “justice”: one for the wealthy and powerful oligarchs, and an overcrowded gulag of serfs forced to plea-bargain in the other. If John Q. Public had done the deeds Mr. Weinstein is alleged to have done, Mr. Public would have long been in prison.

As Orwell observed about a totalitarian oligarchy, some are more equal than others.

Wow!  No surprises here.  I wouldn’t normally post a story on subjects such as this, but Charles puts it in the context of an America so corrupted at its highest levels, that its malfeasance can no longer be kept hushed up, because there’s just so much of it.  This must read commentary appeared on his website on Monday — and I ‘borrowed’ it from a Zero Hedge story that was posted on their website at 8:21 a.m. EDT yesterday morning.  I thank Brad Robertson for his second contribution to today’s column — and another link to it is here.

Rajoy Boxed in With Losing Options: Catalonia Suspends Independence Declaration, Posts Guards at Parliament, Seeks Mediation

The Catalan parliament met Tuesday afternoon. Catalonia president Carles Puigdemont asked parliament to suspend the effects of Catalonia voting “yes” for independence to hold talks with Spain.

However, Puigdemont still maintains the legality of the October 1 referendum in Catalonia, stating Catalans had “won their right to become an independent country.

For now, Puigdemont seeks dialogue with Madrid.

This move is exactly as many expected. A declaration of independence would have triggered article 155 with Spain sending in military police or army troops.

Rajoy is boxed in with losing options.  He can hold talks but he said he wouldn’t. And any use of force when calls for dialog are in place will result in widespread condemnation.

Blocking off parliament will prevent the hijacking of the Catalan parliament.  This was a wise move by Carles Puigdemont.

This amalgamation of stories about Catalonia and Spain appeared on the Internet site at 2:11 p.m. on Tuesday afternoon EDT — and I thank Roy Stephens for pointing it out.  Another link to it is here.

Kobe Steel Collapses 37{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} After Admitting Falsifying Data: “Could Destroy International Faith In Japanese Manufacturing

Japan’s third-biggest steel producer is in trouble. After admitting falsifying data about the quality of aluminum and copper it sold, shares in Kobe Steel have collapsed 37{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e},  -20{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} limit down yesterday and another -17{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} at the open today following news that the falsification also involved iron powder product, in the biggest bloodbath the company has ever seen.

Bloomberg provides a quick Q&A:

1. What exactly did Kobe Steel falsify? — Data related to the products’ strength and durability. Kobe Steel says it discovered the falsification in inspections on goods shipped in the 12 months through August, affecting some 4 percent of shipments of aluminum and copper parts as well as castings and forgings. As yet, the company, which employs about 37,000 people, says there have been no reports of safety issues.

2. Was this a rogue event? — Hardly. The fabrication of figures was found at all four of Kobe Steel’s local aluminum plants in conduct the company described as “systematic.” For some items, the practice dated back some 10 years ago, according to executive vice president Naoto Umehara. Details have yet to emerge.

3. What do its customers say? — Here’s a taster. Toyota is “rapidly working to identify which vehicle models might be subject to this situation and what components were used,” according to spokesman Takashi Ogawa. “We recognize that this breach of compliance principles on the part of a supplier is a grave issue.” Toyota found the materials in question in hoods and doors, as did Honda Motor Co. Boeing, which gets some parts from Kobe Steel customer Subaru Corp., said there’s nothing to date that raises any safety concerns. Hitachi Ltd. said trains it has exported to the U.K. contained compromised metal as well as bullet trains in Japan. Mazda Motor Corp. also confirmed it uses aluminum from the company, while Suzuki Motor Corp. and Mitsubishi Motors Corp. all said they were checking whether their vehicles are affected.

This news story showed up on the Zero Hedge website at 9:06 p.m. EDT last night — and another link to it is here.

Western Australia’s Liberals block Labor’s gold royalty increase

Labor’s $392 million gold royalty hike has been killed off, with Liberal MPs voting to block the controversial measure in the Upper House of Parliament.

The move, which comes after hundreds of gold miners rallied at State Parliament this morning, will mean the State Government will be required to plug a near $400 million hole in the budget.

Opposition Leader Mike Nahan said the decision had been reached based on the concerns about job losses.

It was our view that Mr McGowan did not seek or have a mandate to raise the gold royalty rate” he said.

This gold-related news item put in an appearance on the Internet site at 4:05 p.m. local time ‘down under’ on their Monday afternoon, which was Sunday evening in New York.  I found it embedded in a GATA dispatch — and another link to it is here.

India logs 31{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} rise in September gold imports

India’s gold imports in September rose 31 per cent from a year ago as jewellers increased their purchases ahead of a festival at the end of the month, provisional data from GFMS showed.

Higher purchases by India, the world’s second-biggest consumer, could lend support to global prices that are trading near their highest level in a week. The higher imports may also widen the South Asian country’s trade deficit.

The country’s imports were 48 tonnes in September, Sudheesh Nambiath, a senior analyst with GFMS, a division of Thomson Reuters, said on Tuesday.

Much of the gain last month was simply due to the Indian holiday of Dussehra being celebrated on Sept. 30, rather than in October last year, as the holiday shifts since it is based on a lunar calendar.

Gold buying during Dussehra is considered auspicious.

This gold-related news item, filed from Mumbai, was posted on the Internet site yesterday sometime — and I found it on the Sharp Pixley website.  Another link to it is here.

Russian central bank may start buying gold on Moscow Exchange — sources

Russia’s central bank may start buying gold for its official reserves on the Moscow Exchange, two people familiar with the matter told Reuters.

The Russian central bank is one of the world’s largest holders of bullion and the switch would boost currently low turnover in gold trading on the Moscow Exchange, which only launched a precious metals market in 2013.

The bank has been regularly buying gold as it wrestles with weaker oil prices and Western sanctions imposed over Moscow’s role in the Ukraine crisis. It has access to gold trading on the Moscow Exchange but has not been active so far, trading gold on the over-the-counter (OTC) market instead.

The two sources said a final decision had yet to be taken but senior central bank officials were looking at what volumes could be bought via the exchange – which serves as an equity, bond, foreign exchange and derivatives market – and from what date.

Buying gold on the exchange would be a smoother process than buying on the OTC, but the exchange’s turnover in gold trading is still relatively low. It would also improve transparency in the country’s gold market, something the central bank has been working on across financial markets.

This semi-interesting Reuters article, filed from Moscow, was posted on their Internet site at 9:26 a.m. EDT on Tuesday morning — and it’s the second item in a row that I plucked from the Sharps Pixley website.  Another link to it is here.


From the Needles Highway, it was on to historic Deadwood — and just as historic Lead [pronounced: leed].  On the way, I took these four shots, the first three of a dam/reservoir complex called the Pactola Dam.  You’ll excuse me for thinking this, but the construction of this dam’s emergency spillway in the third shot looks precisely the same as the one at the Oroville Dam in California — and we know what happened to it when it was put to its first test in February of this year.  The ‘click/double-click to enlarge‘ feature helps immensely with the first four photos.


Every ambitious would-be empire clarions it abroad that she is conquering the world to bring it peace, security and freedom, and is sacrificing her sons only for the most noble and humanitarian purposes. That is a lie, and it is an ancient lie, yet generations still rise and believe it! 

If America ever does seek Empire, and most nations do, then planned reforms in our domestic life will be abandoned, States Rights will be abolished — in order to impose a centralized government upon us for the purpose of internal repudiation of freedom, and adventures abroad. The American Dream will then die — on battlefields all over the world — and a nation conceived in liberty will destroy liberty for Americans and impose tyranny on subject nations.” — Author Unknown

Yesterday was another day where it was more than obvious that the prices of the precious metals, gold and silver in particular, were being aggressively managed.  This is particularly true during the rally in Far East trading on their Tuesday morning — and Monday morning as well.  JPMorgan et al were standing there as short buyers and long sellers of last resort to prevent silver and gold et al from blowing sky high once again.  And when the dollar index turned, or was turned higher minutes before the London close, they were there once again to take away large chunks of Tuesday’s gains.

I also have my suspicions about the immensely counterintuitive price action in the precious metal equities as well.  It was like a not-for-profit seller was there to ensure that there wasn’t going to be another day where they were allowed to gain, like they did most of last week.  In olden days, a move like this one was most likely a precursor to a price smash in the precious metals themselves.  Whether that turns out to be the case this time, remains to be seen.

I’m not going to post the 6-month precious metal charts because they were having update issues at yesterday.  Even though they’ve been fixed, sort of, they still don’t look right, so rather than confuse you, I’ve left them out.  Hopefully they’ll have them all squared away by this time tomorrow.

But it should be noted that silver traded above both its 50 and 200 day-moving averages yesterday by a few pennies– and ‘da boyz’ closed the silver price right on them, as they’re now both the same price…$17.13.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price rallied quietly as the dollar index fell quietly when trading began at 6:00 p.m. EDT yesterday evening in New York — and then got sold lower the moment that the dollar index was turned upwards. It traded a bit below unchanged until shortly before 2 p.m. CST on their Wednesday afternoon — and then popped back into positive territory by the afternoon gold fix in Shanghai. It got turned lower after the ‘fix’ — and is up 80 cents at the moment. The price pattern for silver was the same — and it’s up 2 cents currently. Ditto for platinum and palladium…with the former up a dollar — and the latter up 4 as Zurich opens.

Net HFT gold volume is coming up on 50,000 contracts — and that number in silver is at 10,000 contracts.

The dollar index began to sag the moment that trading began at 6:00 p.m. EDT yesterday evening in New York — and hit its current 93.12 low tick at 8:30 a.m. China Standard Time on their Wednesday morning. It rallied 20+ basis points by 10:25 a.m. CST — and slid back to almost its previous low tick by around 2:15 p.m. CST…which was the afternoon gold fix in Shanghai — and has rallied a few basis points since. It’s currently down 6 basis points as London opens.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and because I don’t have accurate 6-month charts, I’m not about to hazard a guess in today’s column.  Maybe tomorrow.

I know that Ted will post his mid-week commentary to his paying subscribers this afternoon — and it’s a certainty that he’ll have something to say about it — and as I usually do, I’ll borrow a sentence or two for my Friday missive.

And as I post today’s column on the website at 4:02 a.m. EDT, I note that gold and silver prices have been jumping around a bit during the first hour of London trading. Gold is currently up $1.20 — and silver is still up 2 cents. Platinum is now down a dollar — and palladium is still up 4 bucks.

Gross gold volume is up to around 61,000 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is about 59,500 contracts. Net HFT silver volume is now up to 12,000 contracts.

The dollar index is down 8 basis points.

That’s all I have for today — and I have no idea as to how the Wednesday trading session will unfold in New York today.

See you here tomorrow.