07 November 2017 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Gold didn’t do much in Far East trading on their Monday morning. There was a bit of a down/up dip on a brief dollar index rally centered around 9:00 a.m. China Standard time, but that was all the price activity there was. The gold price began to crawl higher for real starting at 3 p.m. CST — and that state of affairs continued until London closed at 11 a.m. EDT. Then the price really began to sail. That ended on gold’s high tick of the day, which came about 12:35 p.m. EST in New York. It was sold off a few dollars from there until shortly after the COMEX close, before inching higher during the remainder of the after hours trading session.
The low and high tick was recorded by the CME Group as $1,266.40 and $1,283.90 in the December contract.
Gold finished the Monday session in New York at $1,281.50 spot, up $12.10 from Friday’s close. Not surprisingly, net volume was over the moon at something under 320,000 contracts. Roll-over/switch volume out of December is starting to pick up.
Silver traded pretty flat until just before 3 p.m. CST on their Monday afternoon — and began to edge over-so-unsteadily higher until minutes before 10 a.m. in New York. It began to rally sharply at that point, then went vertical minutes before 11:30 a.m. EST. It was more than obvious that ‘da boyz’ showed up at that juncture — and silver’s high tick was printed around 12:15 p.m. in New York. The price traded pretty flat from there.
The low and high ticks in this precious metal were reported as $16.795 and $17.27 in the December.
Silver was closed yesterday at $17.20 spot, up 40 cents on the day. Silver broke above — and closed above — both its 50 and 200-day moving averages by a few pennies yesterday. Net volume was enormous once gain at around 88,500 contracts.
Brad wasn’t able to provide the 5-minute tick charts for either silver or gold yesterday, as he had other fish to fry.
Platinum had the same little down/up price dip around 9 a.m. CST that gold had — and then it traded a dollar or so above unchanged until minutes after the COMEX open in New York yesterday morning. It was sold down to its low of the day by around 9:40 a.m. EST — and then it began to tick higher from there. Once Zurich closed at 11 a.m. EST, the platinum price also headed higher with a vengeance. It also ran into JPMorgan et al as the usual sellers of last resort at the same time as gold…12:35 p.m. in New York. It was sold down a bit into the COMEX close, but crept higher from there until around 4:30 p.m., before flat-lining into the 5:00 p.m. close. Platinum finished the day at $934 spot, up an even $15 from Friday.
The palladium price traded pretty flat until the Zurich open — and then began to head higher. Once again the powers-that-be were there a couple of times during the morning session to ensure that palladium didn’t break above the $1,000 spot mark. After it’s second attempt, which came shortly after 12 o’clock noon Central European Time [CET] on their Monday afternoon, it was sold down to its low tick of the day, which came around 9:40 a.m. in New York. It’s attempt to join the rally of the other three metals was nipped in the bud shortly before the Zurich close — and it chopped unsteadily sideways for the remainder of the Monday session, but managed to close up a buck on the day at $994 spot.
The dollar index closed very late on Friday afternoon in New York at 94.92 — and gapped down about 5 basis points once trading began at 3:00 p.m. EST on Sunday afternoon. It crawled quietly back to the unchanged mark by 8:30 a.m. China Standard Time on their Monday morning. Thirty minutes later it was at its 95.09 high tick, which came at precisely 9:00 a.m. in Shanghai. By 10:30 a.m. CST, it was back to unchanged, but began to creep higher from there almost immediately. The index made two more attempts to break above the 95.00 mark during London trading — and the last one, shortly after 9 a.m. GMT, crashed and burned badly enough that the usual ‘gentle hands’ had to show up shortly before 11 a.m. over there. From that point, several more attempts to break above, then stay above, the 95.00 mark, all met with the same fate. Once the London p.m. fix was in, the index finally gave up the ghost. The 94.67 low tick was printed a minute or so after 5 p.m. in New York — and it ‘rallied’ a handful of basis points into the close from there. The dollar index finished the Monday session at 94.75 — and down 17 basis points from Friday.
Here’s the 3-day dollar index chart, so you can see Sunday and Monday’s EST price action in context of what happened on Friday.
And here’s the 6-month U.S. dollar index — and it remains to be seen if ‘da boyz’ can ram the dollar index above the 95.00 mark or not — and keep this short covering rally going.
The gold shares opened about unchanged — and began to rally for good starting about ten minutes later. Their respective highs were printed just a few minutes before 12:30 p.m. in New York — and from that point they chopped quietly lower for the rest of the Monday session. The HUI finished the day up 1.46 percent.
The silver equities rose, then fell during the first forty minutes of trading once it began at 9:30 a.m. EST on Monday morning in New York — and by 10:15 a.m. they rallied out of slight negative territory — and after that their price path was very similar to gold’s…including the timing of the high tick of the day. They also chopped quietly lower for the remainder of the Monday session from that high as well. Nick Laird’s Intraday Silver Sentiment Index closed up only 1.14 percent, although a lot of the junior silver producers fared far better. But, having said that, the share price action was terrible considering how well the underlying metal performed yesterday. Click to enlarge if necessary.
And here’s the 1-year Silver Sentiment/Silver 7 Index. Click to enlarge.
The CME Daily Delivery Report showed that 110 gold and 7 silver contracts were posted for delivery within the COMEX-approved depositories on the U.S. east coast on Wednesday. In gold, of the five short/issuers, the only two that mattered were ABN Amro and Macquarie Futures, with 64 and 31 contracts…ABN Amro from its client account — and Macquarie from its in-house/proprietary trading account. Of the seven long/stoppers the three largest were JPMorgan, Scotiabank and Goldman Sachs…with 53, 22 and 16 contracts. JPM’s and Goldman’s contracts were for their respective client accounts — and Scotiabank was for its in-house/proprietary trading account. In silver, there were two short/issuers — and R.J. O’Brien stopped them all. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest in November rose by 48 contracts, leaving 188 still open, minus the 110 mentioned above. Friday’s Daily Delivery Report showed that 27 gold contracts were actually posted for delivery today, so that means that another 27+48=75 gold contracts were added to the November delivery month. Silver o.i. in November fell by 3 contracts, leaving 10 left, minus the 7 contracts mentioned in the previous paragraph. Friday’s Daily Delivery Report showed that 10 silver contracts were actually posted for delivery today, so that means that at least 7 more contracts are going to have to get added to November today, in order to deliver that number of contracts on Wednesday per yesterday’s Daily Delivery Report.
For the second day in a row there was a small withdrawal from GLD. This time it was 9,392 troy ounces. There were no reported changes in SLV.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, November 3 — and this is what they had to report. Their gold ETF added 11,966 troy ounces, but their silver ETF went in the other direction by a smallish 3,537 troy ounces.
There was a smallish sales report from the U.S. Mint on Monday. They sold 1,500 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and 90,000 silver eagles.
There was very little activity in gold over at the COMEX-approved gold depositories on the U.S. east coast on Friday. There was 6,637 troy ounces reported received at Canada’s Scotiabank — and nothing was shipped out. I won’t bother linking this amount.
But it was another monster day in silver, as 3,040,694 troy ounces were received, but only 202,97 troy ounces were shipped out. There was one truck load…599,995 troy ounces…dropped off at Scotiabank; three truck loads…1,546,790 troy ounces…at HSBC USA; plus a load and a half…893,908 troy ounces…left at CNT. All the ‘out’ activity was at Brink’s, Inc. The link to all this action is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They reported receiving 2,072 of them — and shipped out 188. All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Here are two charts that Nick passed around on Sunday. They show gold and silver imports into India, updated with September’s data. During that month they imported 40.5 metric tonnes of gold — and 566.8 metric tonnes of silver. Click to enlarge.
I have an average number of stories for you today — and I hope there are a few in here that you find worth your while.
Market valuations, on these measures, presently approach or exceed the 1929 and 2000 extremes, placing U.S. equity market valuations at the most offensive levels in history.
Indeed, with median valuations on these measures now more than 2.7 times their historical norms, there is strong reason to expect a market loss on the order of -63% over the completion of the current market cycle; a decline that would not even bring valuations below their historical norms (which we’ve typically seen by the completion of nearly every market cycle outside of the 2002 low).
“…unlike the 2000 valuation extreme, which was largely focused on a subset of extremely overvalued technology stocks, the current market extreme is the broadest episode of extreme equity market overvaluation in history. The chart below shows the median price/revenue ratio of S&P 500 component stocks, which set yet another record high in the week ended November 3, 2017, and now stands more than 50% above the 2000 extreme.”
While it feels like it at the moment, trees can’t grow to the sky, but as Hussman concludes, it’s clear from market internals that investors again have the speculative bit in their teeth.
What’s important, however, is to distinguish near-term speculative outcomes from longer-term investment outcomes.
If history is any guide, the first leg down from the current speculative blow-off is likely to be abrupt and rather vertical. Investors will be tempted to buy into that decline, and may very well be rewarded for it over the shorter-run. The problem is that while investors are reluctant to sell into strength here, they may also have no tolerance for selling into a market loss once internals break down. Instead, they will likely pass up their opportunity to reduce exposure to market losses even after market internals deteriorate clearly.
After that, the intermittent hope from fast, furious (but ultimately failing) rallies will likely encourage them to hold on all the way into a deep market collapse. That’s how severe market declines unfold.
This abridged version of John Hussman’s latest market commentary was posted on the Zero Hedge website at 4:24 p.m. EST on Monday afternoon — and it’s the first contribution of the day from Brad Robertson. Another link to it is here.
Nearly 20 years ago, we described Amazon as the “River of No Returns.”
Since then, the stock has made investors rich, and we looked like a fool for two decades.
But the markets make fools of us all, sooner or later. The hardest decision you face is when to get egg on your face – at the beginning or the end of a trend.
Amazon is now one of the most richly valued stocks in the whole world… and Mr. Bezos, visionary extraordinaire, is the world’s richest person. His personal wealth, based on Amazon’s current share price, is more than $90 billion.
Capitalism is a win-win world. You get, more or less, what you give. Which makes us wonder: What new thing has Mr. Bezos given the world that should make him its richest biped?
This worthwhile — and very entertaining commentary from Bill was posted on the bonnerandpartners.com Internet site last Friday. I missed it for my Saturday column, so here it is now — and another link to it is here.
Instead, we wondered why Tesla and Amazon are such popular stocks, despite losing so much money.
They are very different companies. One makes electric cars; the other sells stuff online. About the only things they have in common are that neither makes money and both are vaguely “tech” companies.
Tesla is a classic money-loser. It has a charismatic Pied Piper at the head of it, in the form of Elon Musk, drawing away investors’ money. But it lacks a business model that makes sense. Yes, it can make cars. But so can a lot of companies with vastly more know-how, more money, and more marketing skills.
Most likely, if Mr. Musk finds there is a good market for his all-electric performance cars, the other automakers will take it away from him.
Tesla is hugely unprofitable. But it is not doing what Amazon is doing – destroying the profits of a whole industry. In that regard, Amazon is exceptional.
Another worthy commentary from Bill. This one showed up on his Internet site yesterday — and another link to it is here.
Grant Williams discusses the U.S. dollar, petro-yuan oil, gold, inflation, interest rates, bonds — and more
This 57-minute audio interview was posted on the marketsanity.com Internet site last Thursday — and I thank Judy Sturgis for sending it our way on Saturday. Normally something of this length would have to wait until this coming Saturday, but by then it will be ten days old, so I thought I’d include it in today’s missive. The time counter on the interview say 1 hour and 22 minutes, but the interview with Grant last until the fifty-seven minute mark. I listened to the entire interview on Sunday — and I thought it worthwhile.
The French Revolution began in 1789. Maximilien Robespierre was one of its most eager proponents. An extreme left-winger, he sought a totalitarian rule that claimed to be “for the people” (echoing the recently successful American Revolution), but in reality was “for the rulers.” He in turn inspired Karl Marx, author of The Communist Manifesto.
Both Robespierre and Marx had been well-born and well-educated but rather spoiled and, as young adults, found that they had no particular talent or inclination to pay their own way in life through gainful employment. Consequently, they shared a hatred for those who succeeded economically through their own efforts and sought a governmental system that would drain such people of their achievements, to be shared amongst those who had achieved less.
Interestingly, neither one saw himself as a mere equal to the proletariat that they championed. Each saw himself in the role of the one who was to cut up the spoils and make the decisions for the rest of society.
It’s worthy of note that collectivist leaders never see themselves as becoming the humble and patient recipients of whatever bones the government chooses to throw them. They always see themselves in the role of rulers.
This must read commentary by Jeff appeared on the internationalman.com Internet site on Monday sometime — and it comes to us courtesy of Scott Otey. Another link to it is here.
Marks & Spencer is expected to ramp up its store-closure plan next week as a result of falling profits and tough trading conditions on the high street.
Last year M&S announced it would close 30 stores as part of an overhaul designed to slash by 10% the amount of shop floor space devoted to its struggling clothing arm. But industry sources suggest M&S’s chief executive, Steve Rowe, has been working on a bolder restructuring plan with the new chairman, Archie Norman, before its first-half trading update on Wednesday.
Rowe, who took over the top job last year, is seeking to revive the fortunes of the 133-year-old retailer whose profits have gone backwards in recent years. Analysts expect pretax profits to have fallen by more than 10% to £201m in the six months to the end of September and have been calling for the retailer to undertake a more drastic closure programme as clothing sales shift online. The retailer made a full-year profit of more than £1bn in 2008.
Last November, when Rowe set out a five-year turnaround plan for the business, he said 30 of M&S’s more than 300 “full-line” stores – which sell clothing, homewares and food – would close down. A further 45 would be downsized or converted into food-only stores. Analysts suggested some of these targets could now be revised.
This news item was posted on theguardian.com Internet site at 9:00 a.m. GMT on Saturday — and I thank Swedish reader Patrik Ekdahl for sharing it with us. Another link to it is here.
It’s not just businesses and investors that are losing faith in Italy’s financial sector; so too is the public. Just 16% of Italians still have confidence in the country’s lenders, according to a poll by the SWG research group of Trieste on Friday.
Trust in the Bank of Italy is also in decline, having plunged from 36% in June to 24% in October. Such widespread public mistrust didn’t stop the national central bank from awarding the bank’s governor, Ignazio Visco, another six-year term after presiding over the worst banking crisis of a generation.
The Bank of Italy’s reputation was further dented this month after documents presented in a Milan court case revealed that Italy’s central bank knew that MPS’ management had papered over a loss of almost $500 million in 2010 and failed to report it. At the time the governor of the Bank of Italy was Mario Draghi.
Now, as chairman of the ECB, Draghi is in charge of withdrawing the QE monetary punch bowl upon which many peripheral E.U. economies have grown dependent to keep servicing their debts.
Saddled with one of the biggest public debt mountains on the planet, Italy is particularly vulnerable to this change in policy. Even after three years of Q.E., Italy’s economy is growing at a rate of 1.5% a year — good for Italy, but still the worst in Europe. Once the the ECB stops snapping up Italian debt over the coming years, the southern European nation will almost certainly struggle to find buyers for its government bonds.
This very worthwhile story put in an appearance on the wolfstreet.com Internet site on Sunday sometime — and I thank Richard Saler for pointing it out. Another link to it is here.
Contrary to the slick U.S. and E.U. propaganda that has portrayed former President Massoud Barzani and his Kurdish Democratic Party (KDP) as champions of western-style democracy, Barzani is a clan warlord who has ruthlessly pursued ethnic cleansing against a Yazidi and Christian Assyrian minority in order to gain control of oil lands those peoples had historically occupied until 2014. The Barzani clan and his Peshmerga military arm were trained beginning the late 1960s by Israeli Mossad Lt Colonel Tzuri Sagi, initially to go against Saddam Hussein’s rule. Israeli ties to the Barzani clan have remained since.
Since that time the Massoud Barzani clan has built a dictatorial power in the Kurdish region of Iraq using assassination, corruption and since 2014, control of sales of Iraqi oil via Turkey. Such is Barzani’s mafia-power, despite the fact that his term as President of the Iraqi Kurdistan ended in 2015 and the Kurd regional parliament refused to renew it, he has ruled since without any legal basis by preventing the parliament from convening and formally ousting him. Massoud’s son controls the region’s security council and all all military and civilian intelligence.
Barzani, with open backing of Israel’s Netanyahu, despite major opposition from most of the world, went ahead with a referendum for an independent Kurdish state. It was to have been the beginning of a domino-style reshaping of the geopolitical map of the entire Middle East along the lines of U.S. Army Col. Ralph Peters’ 2006 Armed Forces Journal, “Blood Borders: How a Better Middle East Would Look.”
Since the British and French carved up the oil-rich lands of the collapsing Ottoman Empire in the secret Sykes-Picot Agreement of 1916 during the First World War, the ethnic peoples known as Kurds were divided, deliberately, between the borders of Iran, Iraq, Syria and of Turkey. To now create a single Kurdish state would destabilize the entire region and beyond. The issues among the various ethnic Kurds themselves are as well vast with differences in Kurd dialects sometimes being as vast as that between English and modern German. The political differences as well are significant.
This commentary by William is certainly an absolute must read if you have the interest in Middle East affairs — and I thank Larry Galearis for sending it our way — and another link to it is here.
The heir to the throne in Saudi Arabia has consolidated his hold on power with a major purge of the kingdom’s political and business leadership.
A new anti-corruption body, headed by Crown Prince Mohammed bin Salman, detained 11 princes, four sitting ministers and dozens of ex-ministers.
Prince Alwaleed bin Talal, a billionaire with investments in Twitter and Apple, is among those held.
Separately King Salman replaced the national guard and the navy chiefs.
Attorney General Sheikh Saud al-Mojeb said the status of the detainees would not influence “the firm and fair application of justice“, AFP news agency reports.
“Firm and fair justice” from the Saudis…right! This story broke on Sunday — and I received this bbc.com news story from Patrik Ekdahl in the wee hours of Sunday morning. Another link to it is here. There was a Zero Hedge story about this at 9:18 a.m. EST yesterday — and it’s headlined “Saudi Banks Begin Freezing Accounts of Arrested Royals, Private Jets Grounded”
Following the death of Prince Mansour bin-Muqrin in a helicopter crash near the Yemen border yesterday, the Saudi Royal Court has confirmed the death of Prince Abdul Aziz bin Fahd — killed during a firefight as authorities attempted to arrest him.
Prince Aziz (44) who was the youngest son of King Fahad.
Prince Abdul Aziz’s strange and sudden death which is said to have occurred during an attempted arrest, sheds light on the theory that the clearly forced resignation of former Lebanese Prime Minister Saad Hariri had more to do with internal Saudi affairs than the Saudi attempt to bring instability to Lebanon.
The Saudi Royal family has now lost two princes in 24 hours.
As Al Jazeera notes, in this Saudi version of ‘Game of Thrones‘, the 32-year-old Bin Salman shows that he is willing to throw the entire region into jeopardy to wear the royal gown.
His actions have already all but destroyed the Gulf Cooperation Council (GCC); Yemen can no longer be referred to as a functioning state; Egypt is a ticking time bomb; and now Lebanon may erupt.
This Zero Hedge story was posted on their Internet site at 7:32 p.m. EST yesterday evening — and I thank Brad Robertson for sending it our way. Another link to it is here.
The House of Saud’s King Salman devises an high-powered “anti-corruption” commission and appoints his son, Crown Prince Mohammad Bin Salman, a.k.a. MBS, as chairman.
Right on cue, the commission detains 11 House of Saud princes, four current ministers and dozens of former princes/cabinet secretaries – all charged with corruption. Hefty bank accounts are frozen, private jets are grounded. The high-profile accused lot is “jailed” at the Riyadh Ritz-Carlton.
War breaks out within the House of Saud, as Asia Times had anticipated back in July. Rumors have been swirling for months about a coup against MBS in the making. Instead, what just happened is yet another MBS pre-emptive coup.
A top Middle East business/investment source who has been doing deals for decades with the opaque House of Saud offers much-needed perspective: “This is more serious than it appears. The arrest of the two sons of previous King Abdullah, Princes Miteb and Turki, was a fatal mistake. This now endangers the King himself. It was only the regard for the King that protected MBS. There are many left in the army against MBS and they are enraged at the arrest of their commanders.”
To say the Saudi Arabian Army is in uproar is an understatement. “He’d have to arrest the whole army before he could feel secure.”
This commentary by Pepe showed up on the Asia Times website at 7:42 p.m. Hong Kong time on their Monday evening, which was 6:42 a.m. EST in Washington on Monday morning. I thank U.K. reader Tariq Khan for bringing it to our attention. I had to read it twice just to get it all straight in my mind — and I suggest [if you do read it] that you do the same. Another link to this must read article is here.
As expected, Saudi Arabia has cast itself as the victim of external Shia plotting after its internal weekend of chaos which included a missile attack from Yemen, the deaths of two princes and other high officials within a mere 24 hours, and an aggressive crackdown against dissent in the royal family which saw close to a dozen princes placed under house arrest. And as Al Jazeera noted, in this Saudi version of ‘Game of Thrones’, the 32-year-old Mohammed Bin Salman (MBS) shows that he is willing to throw the entire region into jeopardy to wear the royal gown.
While Saudi Arabia has long blamed Iran for sowing unrest in the region, this evening’s declaration by Saudi Gulf affairs minister Thamer al-Sabhan that Lebanon has “declared war” against the kingdom is truly an historic first. But perhaps the biggest problem is that international media is currently uncritically spreading the statement, whereas what such a bizarre claim actually warrants is laughter. Thankfully, Nassim Nicholas Taleb sums it up nicely with a basic geography lesson: “Either the media is stupid, or Saudi rulers are stupid, or both. Lebanon did not formally declare war and there is no common border.”
Though clearly absurd (that Lebanon has declared war on KSA), the statement is driven by legitimate and deep-rooted fear, for not only has Hezbollah transformed itself into a Middle East powerhouse whose influence has grown vastly in the midst of the Syrian war, but it has transitioned into a quasi-state which has gained the respect of Lebanese and Arabs across the region. As we’ve noted many times before, it is fear of Hezbollah and its increasingly broad acceptance and legitimacy within Lebanese state institutions that also drives heightened Israeli rhetoric and bellicosity of late, which has once again “surprisingly” found itself on the same side as Saudi Arabia.
Just when you thought that things would quiet down in the Middle East after the wind-down of the Syria thingy…we get this. This Zero Hedge piece was posted on their Internet site at 7:41 p.m. on Monday evening EST — and another link to it is here.
Rear Admiral Michael Dumont expressed the opinion on behalf of the Joint Chiefs of Staff in a letter to Congressman Ted Lieu.
Mr Dumont said calculating “even the roughest” potential casualty figures would be extremely difficult.
He also gave some detail on what the first hours of a war would involve.
“The only way to ‘locate and destroy – with complete certainty – all components of North Korea’s nuclear weapons programs’ is through a ground invasion,” he wrote in response to Congressman Lieu’s questions about a potential conflict. The risks involved included a potential nuclear counter-attack by North Korea while U.S. forces attempted to disable its “deeply buried, underground facilities“, he said.
In a statement with more than a dozen other military veterans turned congressmen, Mr Lieu, a Democrat, said the assessment was “deeply disturbing” and warned that a conflict “could result in hundreds of thousands, or even millions of deaths in just the first few days of fighting.”
This news item appeared on the bbc.com Internet site on Sunday sometime — and it’s the third and final offering of the day from Patrik Ekdahl. Another link to it is here.
The Ministry of Commerce and Industry asked Kuwait Municipality to allocate a plot to build a special ‘gold and jewelry city’ over a total area of 100,000 sq m, to be the largest of its kind in the region.
The ministry’s letter to the municipality explained that municipality approval was needed so that the project could be included in the ministry’s development plan projects.
The ministry’s letter added that the city will include a building to administer precious metals and a parking for employees over an area of 10,000 sq m, in addition to special lounges for both local and imported jewelry, a hall for customer reception, a VIP hall, offices for 300 employees, an archive section, a central well-secure safe, safes in every section, labs for examining diamonds, laser labs, chemical labs and an employee training hall, in addition to parking spaces for 500 employees and 1,000 visitors.
This brief story showed up on the zawya.com Internet site on Sunday — and I thank Malcolm Roberts for sending it our way. Another link to it is here.
The tiny valuation of silver compared to other asset classes is shown for what it really is in this graphic visualization that was posted on the Visual Capitalist website back on October 26.
It appeared in Ted Butler’s mid-week column last Wednesday — and I was going to post it, but forgot until David Larsen jogged my memory again yesterday.
It’s certainly worth a brief –and careful look.
The PHOTOS and the FUNNIES
I took these photos back on September 24 down at the pond — and they too had to wait for my U.S. vacation photos to end. I believe that they’re lesser scaups…small diving ducks. They’re in non-breeding colours, photographed in the late-afternoon sun, which is always the best light to shoot in, because the colours are so rich. In the last shot, the female is just up from a dive, with a big water droplet about to fall off the tip of her bill. The ‘click to enlarge‘ feature makes a huge difference with these shots.
Having just positioned the managed money traders onto the short side through Tuesday’s close, what better way for the raptors to cash in on their just-added long positions than by inducing managed money short covering on the Wednesday rally, which popped up to the two key silver moving averages? In Wednesday’s report, I couldn’t be sure what the price jump that day was all about, but with the subsequent price action and new COT report, it certainly appears the price changes were of the scam within a scam variety.
I would estimate that the short term pop in silver prices on Wednesday and subsequent smash on Friday involved roughly 5,000 net contracts or so and around 30 or 40 cents per contract that the raptors made and the managed money traders lost. Thus, I would quantify the silver raptor’s gain and the managed money trader’s loss to be around $7.5 to $10 million, not an insignificant amount for a very short term trade to be divided between the dozen or so traders involved.
However, to achieve that realized short term positioning and gain/loss, the overall mark to market experience of the 8 largest shorts in silver had to move much more. A forty cent pop in the price of silver equates to a $200 million adverse money move for the 8 big shorts, a much more significant amount than the $7.5 to $10 million made and lost by the raptors/managed money traders. Like a ten ring circus, there are different levels of activity and traders involved in COMEX silver and gold. The trick is trying to identify and quantify what’s going on in the most important circus rings – sometimes the elephant parade takes center stage, other times it’s the clowns. — Silver analyst Ted Butler: 04 November 2017
I must admit that I don’t know what to make of yesterday’s decent rally in three of the four precious metals. I didn’t see any news, although the dollar did take a bit of a swan dive.
But there should be no doubt in your mind that the Big 8 were there as sellers of last resort to prevent prices from blowing sky high once again, which is certainly what they would have done if they hadn’t ridden to the rescue.
When I talked to Ted on the phone yesterday he said it smelled of the first half of a “scam within a scam” just like he described in his quote above, which came from his weekly review on Saturday. All that remains now is to see if these same traders rip the faces off the Managed Money traders again later this week, or even today.
Here are the 6-month charts for all four precious metals, plus copper — and you can read into these price moves whatever you wish. And as I pointed out at the top of today’s column, JPMorgan et al were there once again to ensure that palladium didn’t break above $1,000 spot.
And as I type this paragraph, the London open is less than ten minutes away — and I note that there was no follow-through rally in gold during the Tuesday morning trading session in the Far East. The price wandered lower until 1 p.m. China Standard Time — and has been trading sideways since. It’s down $3.00 an ounce at the moment. Silver was sold quietly lower until shortly before 11 a.m. CST — and has been trading pretty much ruler flat since — and is down 7 cents. Platinum traded in a similar fashion to silver — and it’s down 6 bucks. Palladium was sold lower by 4 dollars until 1 p.m. CST on their Tuesday afternoon. It was back at unchanged by around 3 p.m. over there, but has been sold down bit since — and is down by a dollar as the Zurich open approaches.
Net HFT gold volume is coming up on 44,000 contracts — and roll-over/switch volume is extremely light. Net HFT silver volume is about 10,300 contracts — and both these numbers are pretty hefty considering the price action.
The dollar index began to chop unsteadily higher until around 2:40 p.m. CST on their Tuesday afternoon — and then began to rally more strongly — and is up 19 basis points as London opens.
Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report, plus the monthly Bank Participation Report — and I’ll hold off any prognostication until tomorrow’s column.
And as I post today’s missive on the website at 4:02 a.m. EST, I see that all four precious metals continued to get sold lower once London and Zurich opened. At the moment gold is down $5.80 an ounce, silver’s down 18 cents, platinum is lower by 8 — and palladium by 4.
Gross gold volume is about 66,000 contracts — and net of roll-over/switch volume, net gold volume checks in at around 60,000 contracts. Net HFT silver volume is 15,200 contracts.
The dollar index continues to crawl higher — and is now up 30 basis points — and a couple of basis points above the 95.00 mark.
That’s it for another day — and it will be interesting to see if all of Monday’s gains are gone by the time I roll out of bed later this morning.
See you tomorrow.