The Managed Money Traders Get Skinned Yet Again

08 November 2017 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price wandered quietly lower until around noon China Standard Time on their Tuesday — and then traded flat into the London open.  It sold off a few dollars more at that point — and then spent about four hours trading flat.  A smallish rally developed around 12:40 p.m. GMT, which ran into a not-for-profit seller right at the 9:30 EST open of the equity markets in New York.  By 10:25 a.m. it was at its low tick of the day — and on enormous volume was well.  The subsequent rally going into the London close got summarily dealt with — and from that point, it continue to crawl higher until shortly after 3 p.m. EST.  From there it was sold equally quietly lower into the 5:00 p.m. close.

The high and low ticks aren’t worth looking up.

Gold finished the Tuesday session in New York at $1,274.80 spot, down $6.70 from Monday’s close.  Net volume was enormous at something under 303,000 contracts, with respectable roll-over/switch volume out of December as well.

Here’s the 5-minute gold tick chart from Brad — and I’m only including it because I want you to note the very high volumes, particularly in that engineered price decline between 7:30 and 8:25 a.m. Denver time/9:30 and 10:25 a.m. in New York.  Volume didn’t fall off to anything resembling background levels until well after the COMEX close.

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

The silver price was stair-stepped lower in price during Far East and morning trading in London on their respective Tuesday’s.  The London low tick came at the noon silver fix — and it rallied smartly from that point onwards.  It ran into the sellers of last resort about fifteen minutes after the gold price did in New York — and from that juncture was sold lower into the COMEX close.  It rallied a nickel or so in after-hours trading, but even that got taken away just before the markets closed at 5:00 p.m. EST.

The high and low in this precious metal was reported by the CME Group as $17.24 and $16.92 in the December contract.

Silver was closed on Tuesday at $16.91 spot — and down 29 cents on the day, as ‘da boyz’ took back most of Monday’s gains in the process.  Volume was pretty heavy at a bit under 78,000 contracts — and there was very decent roll-over/switch volume out of the December contract as well.

The platinum price was sold quietly lower until about 9:30 a.m. CST on their Tuesday morning — and it traded pretty flat until the price began to fade anew starting just before the Zurich open.  The $920 low tick was set around 8:30 a.m. in New York — and its rally at that juncture was rolled over hard at the same time as JPMorgan et al showed up in gold and silver, which was at, or just after, the open of the equity markets at 9:30 a.m. EST.  It was sold back to its low tick of the day after that — and didn’t do much from there into the close.  Palladium finished the Tuesday session on its $920 spot low tick of the day — and down 14 bucks from Monday.

Palladium was under the same sort of selling pressure as platinum — and it traded in a fairly wide range, but not with a lot of conviction.  It was closed in New York yesterday at $988 spot, down 6 dollars on the day.

The dollar index closed very late on Monday afternoon in New York at 94.75 — and it chopped unsteadily sideways from the 6:00 p.m. EST open on Monday evening, until about 2:40 p.m. China Standard Time on their Tuesday afternoon.  At that point it blasted higher — and the 95.15 high tick of the day was set shortly after 11 a.m. GMT in London.  It bounced around above the 95.00 mark until around 11:20 a.m. in New York — and it was mostly down hill from there, as the dollar index finished the Tuesday session at 94.85…up 10 basis points on the day.

It was another failed attempt to rally, then keep the dollar index above the 95.00 mark.

The tiny rally between 9:30 a.m. and 10:15 a.m. was the thin thread that ‘da boyz’ used as cover to blast gold and silver lower during that time period.  Of course ‘da boyz’ can do what they please with precious metal prices whenever they want, but it helps them if they can get the currency markets to co-operate.

And here’s the 6-month U.S. dollar index, which you can read into whatever you wish — and I’m watching the 95.00 mark with great interest.  It’s been trading sideways just below that point for the last eight business days.  We’ll have to see if the ‘gentle hands’ can break it to the upside — and its current 95.00 ceiling.

The gold shares opened unchanged, then dipped to their respective lows of the day around 10:20 a.m. in New York when the gold price was taken down to its low tick.  By around 12:30 p.m. they were back above unchanged by a hair, but couldn’t hold that gain going into the close of trading.  The HUI finished the Tuesday session down only 0.15 percent, which I was very happy to see.

The trading pattern for the silver equities was mostly similar to what happened in the gold stocks — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by only 0.34 percent.  That has to be considered something of a ‘win’ as well.  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 7 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Thursday.  In gold, Advantage issued all 7 — and JPMorgan and Scotiabank stopped 4 and 2 contracts respectively.  In silver, Advantage issued — and R.J. O’Brien stopped.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in November fell by 104 contracts, leaving 84 still open, minus the 7 contracts mentioned above.  Monday’s Daily Delivery Report showed that 110 contracts were actually posted for delivery today, so that means that 110-104=6 more gold contracts were added to the November delivery month.  Silver o.i. in November declined by 7 contracts leaving 3 left, minus the 1 contract mentioned in the previous paragraph.  Monday’s Daily Delivery Report showed that 7 silver contracts were posted for delivery today, so the change in open interest and the contracts delivered, match for a change.


There were withdrawals from both GLD and SLV on Tuesday.  In GLD an authorized participant took out 37,987 troy ounces — and 944,042 troy ounces departed SLV.  I would suspect that JPMorgan owns that silver now.

There was no sales report from the U.S. Mint.

There wasn’t a lot of activity in gold over at the COMEX-approved gold depositories on the U.S. east coast on Monday.  Nothing was reported received — and only 29,312 troy ounces were shipped out.  Of that amount, there was 22,674 troy ounces shipped out of JPMorgan — and the balance…6,637 troy ounces…departed Brink’s, Inc.  The link to that is here.

There was some activity in silver, as 594,598 troy ounces was received — and 209,236 troy ounces were shipped out.  All the ‘in’ activity, one truck load, found a home over at JPMorgan — and that’s their first receipt of silver for them in many months.  In the ‘out’ department, there was 140,147 troy ounces out of Canada’s Scotiabank…66,082 troy ounces from CNT — and 3,006 troy ounces [3 good delivery bars] were shipped out of Delaware.  The link to that is here.

There was a fair amount of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  There were 3,516 reported received — and 1,708 shipped out.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


Here’s a chart that Nick Laird passed around early on Tuesday evening.  It shows gold withdrawals from the Shanghai Gold Exchange updated with October’s data.  There was 14.684 metric tonnes…14,684 kilobars withdrawn.  Lawrie Williams has a story about this in the Critical Reads section of today’s column.  Click to enlarge.

It was a pretty quiet news days yesterday — and I don’t have a lot for you.


CRITICAL READS

Trump Makes Swamp Critter New Fed Chief — Bill Bonner

Washington is rigged by the Deep State insiders.

The students and the professors at Georgetown Law Center all wanted in on the scam.

We decided not to practice law; Powell decided otherwise. He went into the kind of “administrative law” (which, we argued, was oxymoronic) that Georgetown specializes in… and then began a long career, slithering around the swamp, in and out of government and finance.

He worked for the regulators… then he worked for the industry he was meant to be regulating — and then, back to the regulators.

All of this back and forth seems to have been good for Mr. Powell. He is reported to have a personal fortune of more than $100 million.

The important thing, from our point of view, is that he can be relied upon to do exactly as expected.

This very worthwhile commentary by Bill was posted on the bonnerandpartners.com Internet site on Tuesday sometime — and another link to it is here.


The Hidden Danger Bulls Are Missing — Jim Rickards

Bull markets in stocks seem unstoppable right up until the moment they stop. Then comes a rapid crash-and-burn phase.

Is there ever any warning that a collapse is about to happen?

Of course there is. Analysts warn about it all the time and provide mountains of data and historical evidence to back up their analysis. The problem is that everyone ignores them!

You can talk about the dangers represented by CAPE ratios, margin levels, computerized trading, persistent low volatility and complacency all you want, but nothing seems to slow down this bull market.

Yet there is one thing that can stop a bull market in its tracks, and that’s corporate earnings.

This commentary by Jim showed up on the dailyreckoning.com Internet site back on November 1 — and it was posted in the clear on their website yesterday.  Another link to it is here.


The Black Swan in Plain Sight: Debt Out the Wazoo — David Stockman

The black swan in plain sight does emit the Donald’s orangish glow, but at the end of the day its true color is actually red.

That is, monumental towers of rapidly rising debt loom everywhere on the planet. For the moment, the artificial cash flow from this unsustainable borrowing spree is keeping a simulacrum of growth and prosperity alive. Yet this whole outbreak of debt madness—-represented by $225 trillion outstanding on a global basis—-is careening toward a financial and economic dead end that will soon crush today’s fiscally profligate politicians and heedless financial punters, alike, in a devastating reset of bond yields.

For our first case in point, the always excellent Wolf Richter published a great chart over the weekend on the exploding U.S. public debt. To say the least, it constitutes a clanging wake-up call amidst the absolute fantasy world that prevails on both ends of the Acela Corridor. That’s because during the mere eight weeks since the public debt ceiling was suspended by the Donald’s end-run with Nancy and Chuckles in September, the national debt has spiked by $640 billion.

That’s about $16 billion per Federal business day, and they are not done yet. The U.S. Treasury will continue to borrow heavily until the current debt ceiling “suspension” expires on December 8—-at which time it will repair to the old game of divesting trusting funds and employing other gimmicks which circumvent the ceiling, while waiting for Congress to blink and raise the ceiling or authorize a new “temporary” suspension.

As Wolf pointed out, this pattern played out during the debt showdowns of 2013 and 2015, as well, when the resulting “temporary” suspension resulted in borrowing spikes of $464 billion and $650 billion, respectively.

This longish commentary by David put in an appearance on his contracorner.com Internet site on Monday sometime — and I extracted it from a Zero Hedge article that Brad Robertson sent our way.  Another link to it is here.


U.S. Credit Card Debt Rises Above $1 Trillion as Student, Auto Loans Hit All Time High

Earlier in 2017, using the latest Fed data newspapers and financial media reported that U.S. consumer credit card debt had risen above $1 trillion for the first time since the financial crisis. Ironically, just a few months later the Fed revised its data series sending the revolving credit total back under this “psychological number.” At least until today, when the latest consumer credit update from the Fed disclosed that in September, consumer credit rose by $20.8 billion, more than the $17.5 billion expected, of which $14.4 billion was non-revolving, auto and student loans, and $6.4 billion was credit card debt. Total consumer credit rose by 6.6% Y/Y, rising to $3.788 trillion as of Sept. 30. This was the single biggest monthly increase since November 2016.

And while non-revolving credit reached a fresh record high of $2.782 trillion, revolving – or credit card debt – is now back over a trillion dollars, or $1.006 trillion to be precise, and fast approaching the all time bubble high of $1.02 trillion hit in the summer of 2008.

And speaking of student and auto loans, the Fed’s latest data showed that in the third quarter, these rose to a new all time high, of $1.112 trillion for auto loans, and a record $1.486 trillion in student loans. The Fed also reported that non-revolving lending to consumers by the Federal government, which is mainly student loans, rose to $1.137t, on a non-seasonally adjusted basis.

This 3-chart Zero Hedge news item was posted on their website at 3:29 p.m. on Tuesday afternoon EST — and it’s the second offering a row from Brad Robertson.  Another link to it is here.


Italy Target2 Imbalance Hits Record €432.5 Billion as Dwindling Trust in Banks Plunges

Contrary to ECB propaganda, Target2 imbalances are a direct result an unsustainable balance of payment system. The imbalances represent both capital flight and debts that can never be paid back. If you think Italy can pay German and other creditors a record €432.5 Billion, you are in Fantasyland.

The interesting aspect of Italy’s new record Target2 Imbalance is that it comes just as Dwindling Trust in Italian Banks is on the rise.

Just 16 percent of Italians have confidence in the country’s lenders, down from an already meager 17 percent in June, according to a poll by the SWG research group of Trieste on Friday. Only 24 percent trust the Bank of Italy, plunging from 36 percent in June.

    One likely reason: a tortuous bank crisis that caused losses for savers and led the government to rescue three lenders with taxpayers’ money this year. The vanishing confidence is likely to show in campaigns for national elections expected by next spring.

    Supporters of the populist Five Star Movement and anti-migrant Northern League have the least confidence in lenders and the Bank of Italy among those with a definite opinion, according to the survey of 1,000 adults conducted Oct. 23-25.

This worthwhile commentary by Mish Shedlock appeared on themaven.net Internet site on Monday — and I ‘borrowed’ it from a Zero Hedge article that Richard Saler passed along.  Another link to it is here.


First shots fired in a Saudi civil war — Alex Mercouris

The ongoing purge in Saudi Arabia for the first time asks a question which has not been asked since the coup of 1964, in which Prince Faisal bin Abdul-Aziz overthrew his brother King Saud and made himself King of Saudi Arabia in Saud’s place: how stable is the Saudi Kingdom?

The short answer is that we do not know, but the situation today appears to be much more serious than it was in 1964.

At the time of the 1964 coup King Saud was widely perceived as a weak and extravagant ruler, no match to his austere and thrifty brother Faisal, who had no difficulty labelling him corrupt and incompetent.  Moreover in launching his coup Faisal had the support of the great majority of the Saudi Princes and of Saudi Arabia’s religious establishment, as well as the strong backing of the armed forces and of the National Guard.

The result was that the coup was bloodless and swift, with Faisal replacing Saud swiftly, first as Regent and then as King, and then ruling the Kingdom vigorously and effectively for ten years in his ousted brother’s place.  The 1964 coup nonetheless unsettled the Kingdom, leading to an attempted coup against the Saudi Royal Family by the army in 1969, which led to Faisal creating the elaborate internal security and intelligence apparatus which protects the position of the Saudi Royal Family to this day.

The purge which Crown Prince Muhammad bin Salman has now launched bears some similarities with the events of 1964 in that a member of the Saudi Royal Family is once again using the issue of corruption to eliminate rivals for the throne.  As was the case with Faisal in 1964, Crown Prince Muhammad bin Salman is also trying to project the image of a reformer and moderniser, though whereas Faisal projected an image of thrift and prudence Crown Prince Muhammad bin Salman advocates a break-neck industrialisation programme financed by massive spending.

However, there the parallels end.

This very interesting commentary by Alex was posted on theduran.com Internet site at 2:27 a.m. EST on Tuesday morning.  I thank Larry Galearis for pointing it out — and another link to is is here.


China’s Central Bank Chief Warns of ‘Sudden, Contagious and Hazardous’ Financial Risks

China’s financial system is becoming significantly more vulnerable due to high leverage, according to central bank governor Zhou Xiaochuan, who has made a series of blunt warnings in recent weeks about debt levels in the world’s second-largest economy.

Latent risks are accumulating, including some that are “hidden, complex, sudden, contagious and hazardous,” even as the overall health of the financial system remains good, Zhou wrote in a lengthy article published on the People’s Bank of China’s website late Saturday.

The nation should toughen regulation and let markets serve the real economy better, according to Zhou. The government should also open up markets by relaxing capital controls and reducing restrictions on non-Chinese financial institutions that want to operate on the mainland, he wrote.

High leverage is the ultimate origin of macro financial vulnerability,” wrote Zhou, 69, who is widely expected to retire soon after a record 15-year tenure. “In sectors of the real economy, this is reflected as excessive debt, and in the financial system, this is reflected as credit that has been expanding too quickly.

The Bloomberg news story showed up on their website at 7:55 a.m. MDT on Saturday morning — was updated about thirty-six hours later.  It’s an article I found in yesterday’s edition of the King Report — and another link to it is here.


‘Buy bitcoin’ overtakes ‘buy gold’ as online search phrase

Add bitcoin to the list of things denting gold’s appeal.

Bullion’s rally faltered in the past two months as the dollar strengthened and global equities set new records, while concerns over Brexit and Catalonia’s push for independence failed to drum up notable haven demand. Now, bitcoin’s surge is attracting investor interest toward the cryptocurrency and away from the metal, the biggest online vaulting service said.

According to Google Trends, global searches for “buy bitcoin” have overtaken “buy gold” after previously exceeding searches for how to purchase silver. Last month, the amount of gold changing hands on BullionVault’s online trading platform dropped by almost a third from the 12-month average.

With the U.S. stock market setting fresh all-time highs day after day, it’s no surprise gold prices have retreated,” Adrian Ash, research director at London-based BullionVault, said in a report. “Some investors are also being distracted by the noise around Bitcoin and other cryptocurrencies. Altogether, that’s made interest from new gold investors the weakest since the metal’s half-decade price lows of end-2015.

That’s pure bulls hit dear reader — and Adrian knows better.  The reason why precious metal prices are not advancing is for the very reason that Ted Butler has been stating for years…”8 traders, virtually all of them U.S. banks or investment houses — and all working in collusion, are short more than 50 percent of the total open interest in both gold and silver in the COMEX futures market.”  That’s all there is, there ain’t no more!  This Bloomberg story appeared on their Internet site at 2:08 a.m. MST on Tuesday morning — and I found it in a GATA dispatch.  Another link to it is here.


Titan sees jewellery sales rising more than 25 percent in 2017/18 — CFO

India’s biggest-listed jeweller Titan Co expects jewellery sales to leap more than a quarter this fiscal year as tighter rules on cash flows and a new sales tax hurt the mom-and-pop firms that dominate the business, a senior company official told Reuters.

Both “demonetisation” – removing higher currency bills from circulation – and a new national goods and services tax (GST) are expected to have a marked impact on the gold jewellery industry in India, the world’s second-biggest consumer of the precious metal.

Family firms control nearly 70 percent of the $30 billion gold jewellery trade, but many cash transactions are believed to take place outside the tax man’s purview. Greater transparency in the economy and higher tax receipts are key policy goals for India’s government.

Events like demonetisation and implementation of the Goods and Services Tax are helping us to increase market share as the industry is getting organised,” said Subbu Subramaniam, Chief Financial Officer of Titan, predicting sales growth of more than 25 percent in the 12 months through March.

Titan last week reported a 71 percent surge in net profit in the July-September quarter. In the first half of 2017/18, the company’s jewellery sale surged 47 percent to 61 billion rupees ($941 million), the company said in a statement last week.

This gold-related Reuters article, filed from Mumbai, put in an appearance on their Internet site at 1:18 a.m. EST on Tuesday morning — and I found this on the Sharps Pixley website.  Another link to it is here.


SGE gold withdrawals still up 6% YTD — Lawrie Williams

While Shanghai Gold Exchange gold withdrawals in October – always a difficult month because of the country’s Golden Week holiday right at its beginning when the SGE was closed – were marginally lower than a year earlier (by only 1.71 tonnes), year to end-October withdrawals are still over 6% higher than in 2016.  But they are 23.5% lower than the record 2015 levels (see table below). 2015 saw the main turnaround in what had been a declining gold price while the past two years have largely seen periods of gold price consolidation.

The figures year to date suggest that SGE withdrawals this year could come out at over 2,000 tonnes again – indeed possibly as much as 2,100 tonnes, as against 1,970 tonnes last year.  Arguably, as we have often stated beforehand, we consider the level of SGE gold withdrawals as being a probably more accurate representation of the country’s true gold demand (calculated by known gold imports plus national production and scrap supply) than the far lower ‘consumption’ or ‘demand’ figures calculated by the world’s major precious metals consultancies.  The consultancies’ figures for consumption look likely to come out at a around 1,100 tonnes this year – probably a little higher than in 2016 – but they represent a restricted consumption sector and do not take into account gold imports for financial transactions and probably understate some other sectors too.  The latest figures – to end-September – from the China Gold Association which uses similar data to the consultancies, also shows this rising consumption trend compared with 2016 with particularly strong growth in gold bars for investment, but also something of a positive turnaround in gold jewellery consumption too.

This worthwhile commentary by Lawrie was posted on the Sharps Pixley website on Tuesday as well — and another link to it is here.


The PHOTOS and the FUNNIES

A rather large red-sided building in the background is not conducive to great nature photography when its colour is reflecting off the water.  It puts this muskrat in an almost psychedelic setting in the first shot.  Once it swam into the clear, it looked perfectly normal, but there is a hint of red reflection in the top right-hand corner of the photo that shows from where it just came.  The third photo is a shot of the pond and the offending building that I took in early October of 2016.  The difference in the red colours in the two shots has to do with the fact that I took the photo of the building on October 3rd around high noon — and the muskrat shot three weeks later — and very late in the afternoon.  The ‘click to enlarge‘ feature helps with all three pictures.


The WRAP

Bull markets are born on pessimism, grow on scepticism, mature on optimism — and die of euphoria.Sir John Templeton (1912-2008)


I would suspect that Ted’s raptors  were out and about ringing the cash register for fun, profit and price management purposes on Tuesday…all at the expense of a large swath of the Managed Money traders who had poured in on the long side on Monday.  This is particularly true in silver.

That includes gold, silver, platinum and, to a certain extent, copper. But I’ll hold off on casting that suspicion in stone until Ted comments on it in his mid-week column to his paying subscribers this afternoon…but yesterday’s price action had all the hallmarks of his “scam within a scam“, with the volumes to match.

It didn’t appear that they got all of the trades that the Managed Money traders put on, on Monday…so there may be more downside to go before they’re done, if they can pull it off, that is.  However, this up/down move over the previous twenty-four hours or so doesn’t change a thing regarding the still unresolved issue surrounding the Big 8 traders.  This appeared to be the raptors skinning the Managed Money traders for a quick ten million or thereabouts.

Here are the 6-month charts for all four precious metals, plus copper once again — and you can make up your own mind if this was one of Ted’s patented “scams within a scam” that he’s been talking about for years already.  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 see that the gold price began to rally quietly the moment that trading began at 6:00 p.m. EST in New York on Tuesday evening. It crawled higher until a minute or so after 1 p.m. China Standard Time on their Wednesday afternoon. It sold off a bit from there, but rallied back to its high shortly after, but has now been turned lower. At the moment, gold is up $2.50 an ounce. Silver followed an identical price path to gold — and the moment it poked its nose above $17 spot a minute or so after 1 p.m. CST, it got sold down as well. It rallied again — and also got sold down the moment the price hit ticked above $17 spot for the second time. It’s now up only 7 cents, but was up a dime at its current high tick. Platinum and palladium followed somewhat similar, but more disjointed price paths, with the former up 5 dollars — and the latter by 3 bucks as Zurich opens.

Net HFT gold volume is coming up on 51,000 contracts, which is pretty chunky — and roll-over/switch volume out of December is almost nothing. Net HFT silver volume is only around 7,500 contracts, which is pretty light, with no roll-over/switch volume worthy of the name.

The dollar index fell a handful of basis points once trading began at 6:00 p.m. EST in New York yesterday evening — and then traded flat until shortly before 2 p.m. CST.  It then rallied a bit for about thirty minutes — and has rolled over since the afternoon gold fix in Shanghai — and is down 2 basis points as London opens.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report, plus the monthly companion Bank Participation Report.  Just eye-balling the last five trading days of this reporting week in the 6-month silver and gold charts above, I suspect that they’re will be some non-material increases in the commercial net short positions in both metals.  And if I’m wrong and there are decreases, they certainly won’t be material, either.

And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price has crawled higher by a bit, but has rolled over in the last few minutes — and is currently up $3.70 an ounce. Silver has been allowed to get above $17 spot by a penny or so — and we’ll see how long that’s allowed to last. At the moment, silver is up 10 cents. Platinum and palladium are higher as well, the former by 7 — and the latter by 4.

Gross gold volume is something over 67,000 contracts — and net of roll-over and switch volume, the net HFT number is about 65,500 contracts. Net HFT silver volume is around 10,500 contracts.

The dollar index isn’t doing much — and is down 6 basis points.

That’s all I have for today — and I’ll see you here tomorrow.

Ed