03 November 2017 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price rallied a bit in early morning trading in the Far East, as the dollar index collapsed. ‘Gentle hands’ rescued it minutes before 10 a.m. China Standard Time on their Thursday morning — and that was all the excuse ‘da boyz’ needed to sell gold lower as well. The low tick of the day was set at 1 p.m. BST in London, which was twenty minutes before the COMEX open — and it rallied a bit until the afternoon gold fix in London. At that juncture, the dollar index collapsed again — and the gold price soared…until the powers-that-be turned up to rescue the dollar index and turn the gold price lower a few minute later. They were successful on both counts – and by 12:40 p.m. in New York they the gold price back to almost unchanged, after being up about ten bucks earlier. From that point it didn’t do much.
For the third day in a row, the low and high ticks in gold aren’t worth looking up.
Gold was closed in New York on Thursday afternoon at $1,275.50 spot, up $1.20 from Wednesday. It was another monster volume day at something around 360,000 contracts…a tad lower than Wednesday.
The price action in silver on Thursday was very much a mini version of what happened in gold, except it never made it back into positive territory after ‘da boyz’ sold it lower starting minutes after its 10 a.m. EDT rally at the London afternoon gold fix.
The low and highs for this precious metal definitely aren’t worth looking up, either.
Silver was closed yesterday at $17.09 spot, down 2 cents on the day. Net volume was very heavy once again at around 89,000 contracts.
Platinum traded pretty flat until shortly after 1p.m. CST on their Thursday afternoon. It began to tick lower in price at that point — and its low tick of the day, such as it was, came shortly before 9 a.m. in New York. Then, like silver and gold yesterday, it rallied a bit into the afternoon gold fix in London, which was 10 a.m. EDT — and at that point it was back at unchanged on the day. Then, also like gold and silver, the selling pressure began — and that lasted until around 2 p.m. From there it traded sideways for the rest of the Thursday session, finishing the day at $923 spot — and down 8 dollars from Wednesday.
Palladium made another attempt to break above the $1,000 spot mark in morning trading in the Far East — and that was easily turned aside. It drifted lower from there — and got sold down a bit harder once Zurich opened. That lasted until shortly after 10 a.m. CEST — and it began to head higher about three hours later. Its next assault on $1,000 spot occurred about 9:40 a.m. in New York — and that met the same fate as the other three precious metals. The $984 spot low tick came around 12:30 p.m. EDT — and it rallied a bit into the COMEX close from there, before doing not much of anything for the rest of the Thursday session. Palladium was closed at $990 spot — down 6 dollars on the day.
The dollar index closed very late on Wednesday afternoon in New York at 94.77 — and after a brief tick higher in the first fifteen minutes of trading when it started at 6:00 p.m. EDT on Wednesday evening, it began to head south at a hyperbolic rate. ‘Gentle hands’ appeared around the 94.40 mark around 9:40 a.m. in Shanghai — and that’s when the rallies in silver and gold came to an end. It struggled higher from there, but rolled over once again starting an hour before the London open — and it got rescued for the second time at 8:00 a.m. BST on the button at the London open. It got ramped to its 94.80 high tick about 9:20 a.m. in New York — and by 10:10 a.m. the index was back around its earlier 94.40 low in Far East trading. The ‘gentle hands’ obviously reappeared — and rallied it back to around the 94.72 mark — and that’s pretty much what it traded at for the remainder of the Thursday session. The dollar index finished the day at 94.72 — and down 5 basis points on the day.
But without those ‘gentle hands’ out and about yesterday, dear reader, it’s obvious that the dollar index would have crashed and burned — and that’s why I always present the 6-month U.S. dollar index for its entertainment value only. That could apply to the daily chart as well, with yesterday’s being a case in point.
And while on the subject, here’s the 6-month U.S. dollar index chart — and I’ve given you my little sermon on it already.
The gold stocks rallied to their highs of the day, which came with gold’s high tick — and that was a few minutes after 10 a.m. in New York. They were up a percent and change at that point, but were sold back to almost unchanged by around 12:40 p.m. EDT. They chopped generally sideways until about 2:15 p.m. — and then rallied a bit into the close from there. The HUI finished higher by 0.60 percent.
The silver equities followed a mostly similar price path, but once they were sold to their low ticks of the day around 2:30 p.m. in New York trading, they weren’t able to make it back into positive territory, as their rally attempt at that juncture was pretty anemic. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.21 percent. Click to enlarge if necessary.
And here’s the 1-year Silver Sentiment/Silver 7 chart. Click to enlarge.
The CME Daily Delivery Report for Day 3 of November deliveries showed that 63 gold and 18 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. In gold, the three short/issuers were Merrill, Advantage and RCG with 40, 17 and 6 contracts out of their respective client accounts. There were six long/stoppers in total — and the only two that mattered were Scotiabank and Advantage, with 42 and 13 contracts respectively…Scotiabank for its in-house/proprietary trading account — and Advantage for its client account. In silver, the two short/issuers were Advantage with 16 and R.J. O’Brien with the other 2 contracts…both from their respective client accounts. There were five long/stoppers in total — and Goldman Sachs topped them all with 13 for its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Thursday trading session showed that gold open interest in November remained unchanged at 135 contracts, minus the 63 mentioned just above. Wednesday’s Daily Delivery Report showed that 57 gold contracts were actually posted for delivery today, so that means another 57 gold contracts must have been added to the November delivery month if open interest in gold was unchanged yesterday. Silver o.i. in November fell by 243 contracts, leaving 21 still around, minus the 18 mentioned in the previous paragraph. Wednesday’s Daily Delivery Report showed that 261 silver contracts were actually posted for delivery today, so that mean that another 261-243=18 silver contracts were added to November.
So far in November there have been 829 gold contracts issued and stopped — and 846 in silver.
There was a withdrawal from GLD yesterday, as an authorized participant removed 113,969 troy ounces. There was also a smallish withdrawal from SLV…137,293 troy ounces…and I would expect that would represent a fee payment of some kind.
There was a very tiny sales report from the U.S. Mint. They sold 1,000 troy ounces of gold eagles — and that was it.
There wasn’t much movement in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday. There was 9,376 troy ounces reported received — and 1,300.000 troy ounces shipped out. There was 8,076 troy ounces received at Delaware — and 1,300.000 troy ounces received at Canada’s Scotiabank. That 1,300.000 troy ounces would be in 10 oz bar form — 130 of them — and that amount corresponds precisely with the 1,300.000 troy ounces that was shipped out of Delaware. The link to that activity is here.
It was pretty busy in silver, as 1,200,188 troy ounces was received — and 311,076 troy ounces was shipped out. One truck load…599,880 troy ounces…was shipped into HSBC USA — and another load…600,307 troy ounces was dropped off at Brink’s, Inc. All the ‘out’ activity was at Canada’s Scotiabank. There was a paper transfer from Eligible to Registered over at CNT — and the amount was 607,869 troy ounces. The link to all that action is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, they reported receiving 2,153 of them — and shipped out 906 of them. All this activity was at Brink’s, Inc. — and a link to that, in troy ounces, is here.
Here are two more charts courtesy of Nick Laird. They show U.S. gold and silver bullion coin sales updated with October’s data — and the gold coin sales include both gold eagles and buffaloes. Its easy to spot where JPMorgan stopped buying — and that’s late 2016…most likely after November. Click to enlarge for both.
It was another fairly quiet news day on Thursday — and once again I don’t have much for you.
On Thursday afternoon, around 3 p.m., Donald Trump will officially nominate Jerome Powell to be the next Chair of the Federal Reserve, replacing Janet Yellen when her term is up on February 1st. According to virtually every financial analyst, the former Carlyle Partner, Jay Powell, represents “continuity” on the Federal Reserve and would conduct monetary policy in a similar fashion as Yellen. As a result, Powell will proceed with the current balance sheet normalization schedule and continue to guide markets toward the “dots”. He is also expected to put a greater priority on scaling back financial market regulation, working with Randy Quarles who is the newly appointed Vice Chair for Supervision.
Jerome Powell is a trained lawyer and not an economist. Powell has been a Fed Governor since 2012 and was involved in the decision-making behind QE3 and then policy normalization in recent years. Prior to joining the Board, he was a visiting scholar at the Bipartisan Policy Center, a partner at the Carlyle Group, and worked at the Treasury under the GWH Bush administration.
Powell is a Republican who built a vast wealth as a partner at Carlyle. Powell’s latest financial disclosure from June lists his net worth between $19.7 million and $55 million. If he gets the job, Powell would be the richest Fed chair since banker Marriner Eccles, who held the position from 1934 to 1948, according to The Washington Post.
And going back to Bank of America, in a note from its chief economist out this morning, Michelle Meyer writes that there are two important questions that the new Fed leadership will have to address in short order:
- What is the ultimate size of the Fed’s balance sheet and should we continue to rely on administered rates?
- What is the long-run equilibrium rate (R*)?
This commentary from Zero Hedge showed up on their website a few hours before the official announcement was made — and I thank Brad Robertson for sending it along. Another link to it is here.
It’s a scary feeling when you retire and cut the cord from your full-time job. I stared at our brokerage statements and realized my new job was investment manager. I had to make our money last so we could enjoy the rest of our lives.
Several friends had recently rolled their 401k into self-directed accounts, and we discussed our feelings. My friend Pete said it best, “If you are not a little bit scared, you don’t understand the problem!”
I was confident in my investing skills and had done well in building our nest egg. Like most investors, I learned some expensive lessons along the way. Once retired, things changed overnight. In the past when I took a loss, I had my job and the benefit of time as my security blanket. With that security blanket removed, risk tolerance, confidence, and the emotional reaction to taking losses all changed.
My stockbroker invited me to an event. The president of their bond department was conducting a class on bond basics. His credentials were impressive, so I signed up.
This commentary by Dennis put in an appearance on his website on Thursday sometime — and another link to it is here.
During a nationwide TV address, Venezuela’s socialist president Nicolas Maduro said the country will seek to restructure its global debt after the state-owned oil company makes the PDVSA payment due at midnight. Maduro blamed a financial blockade that is preventing the nation from rolling over its debt, according to Bloomberg.
“I decree a refinancing and restructuring of all foreign debt and all Venezuelan payments,” Maduro said. “We’re going to a complete reformatting. To find an equilibrium, and to cover the necessities of the country, the investments of the country.”
“We have had to face a real global financial persecution,” Maduro said, adding that OPEC member Venezuela had paid $71.7 billion in debt since he came to power in 2013, despite losing $100 billion in revenues to falling oil income. Too bad he didn’t blame the “speculators” for the collapse of his socialist paradise.
“If Venezuela wants to refinance one of its bonds, it is prohibited by the global financial dictatorship,” Maduro added according to Reuters, warning that “they will never suffocate us. We will never surrender to the U.S. empire,” he added, also criticizing Colombia for allegedly blocking a shipment of medicines under U.S. pressure.
The good news is that bondholders of the PDVSA bonds maturing Thursday will get paid in full: according to Maduro, the government will make the last $1.1 billion PDVSA principal payment due overnight. The bad news, is that everyone else is about to get a big, juicy haircut, or as Bloomberg reports, “from there on out, the nation will renegotiate its debt with banks and investors, he said in a national address.”
Of course, since there is no such thing as a “unilateral restructuring” in the world of debt, and since the country has effectively previewed it will be hair cutting its creditors few if any of whom will agree to Maduro’s terms, another way of putting what Maduro just said is that Venezuela is – finally – about to default.
This fairly longish news item was posted on the Zero Hedge website at 7:32 p.m EDT on Thursday evening — and it’s worth reading if you have the interest. Another link to it is here.
What’s Driving U.S. Social Discord: Russian Social Media Meddling, or Soaring Wealth/Power Inequality? — Charles Hugh Smith
The nation’s elites are desperate to misdirect us from the financial and power divide that has enriched and empowered them at the expense of the unprotected many.
There are two competing explanatory narratives battling for mind-share in the U.S.:
1. The nation’s social discord is the direct result of Russian social media meddling– what I call the Boris and Natasha Narrative of evil Russian masterminds controlling a vast conspiracy of social media advertising, fake-news outlets and trolls that have created artificial divides in the body politic, or exacerbated minor cracks into chasms.
2. The nation’s social discord is the direct result of soaring wealth/power inequality– the vast expansion of the wealth and power of the nation’s financial elites and their protected class of technocrat enablers and enforcers (the few) at the expense of the unprotected many.
Core to this narrative is the view that the elites and technocrats have engaged in a massive, coordinated official/media propaganda campaign of fake news aimed at persuading the bottom 95% that their prosperity and financial security are expanding when the reality is they have lost ground they will never be able to recover.
This propaganda campaign includes official (i.e. gamed/distorted) statistics such as unemployment and inflation, a reliance on the manipulated stock market to “signal widespread prosperity” and a steady drumbeat of corporate media coverage promoting the Boris and Natasha Narrative as the primary source of all our troubles.
The reality the elites must mask is that the few (the elites) have benefited at the expense of the many. The rising tide of financialization, globalization and neofeudal/neocolonial/neoliberalism has not raised all boats; the yachts have floated higher while the rowboats have either sunk or are leaking badly.
This excellent — and right-on-the-money commentary by Charles found on a spot on the Zero Hedge website at 1:10 p.m. on Thursday afternoon EDT — and I thank reader M.A. for pointing it out. Another link to it is here.
Over ten years since the last rate hike by the Bank of England in July 2007 (when incidentally, cable was trading above $2.00), and following years of market expectations of an imminent rate hike that failed to materialize.
Moments ago the BOE – which had telegraphed the move extensively in recent months despite some dovish misgivings – finally pulled the trigger, and raised rates by 25bps to 0.5% in order to curb the effect of high inflation brought about by the post-Brexit plunge in the pound, squeezing local households and pressuring the U.K. economy. However, while cable initially spiked higher on the news, it subsequently slumped on the news that the vote was not a unanimous 9-0 decision as some had expected, as would telegraph a normal rate hike cycle, and instead had a decidedly dovish tilt with a far more contested 7-2 vote, with Cunliffe and Ramsden dissenting based on insufficient evidence that domestic costs, particularly wage growth, would pick up in line with central projections.
- While the 7-2 vote split was clearly less hawkish than an ideal scenario would suggest, what has spooked traders are the following parts from the statement that appear especially dovish:
- In the MPC’s central forecast, conditioned on the gently rising path of Bank Rate implied by current market yields, GDP grows modestly over the next few years at a pace just above its reduced rate of potential.
- In line with the framework set out at the time of the referendum, the MPC now judges it appropriate to tighten modestly the stance of monetary policy in order to return inflation sustainably to the target.
- Monetary policy continues to provide significant support to jobs and activity in the current exceptional circumstances. All members agree that any future increases in Bank Rate would be expected to be at a gradual pace and to a limited extent.
This long Zero Hedge article appeared on their website at 8:05 a.m. EDT yesterday morning — and it’s courtesy of Brad Robertson as well. Another link to it is here.
The sudden resignation of British Defence Minister Michael Fallon is a symptom of the profound political crisis at the heart of the British elite ever since the British people voted by a clear majority for Brexit in the referendum last year.
I discussed this crisis the day after the vote took place, and it is important to say that it continues today unabated
There is something of a whiff of 1789 in the mood in Britain today.
The people have voted, the pro-EU liberal centre where Britain’s political class is located has discovered to its horror that the people have rejected it (decisively so in England outside London), but there is no clear sense of where things are going.
I get the strong sense that several of the leaders of the Leave campaign did not expect to win and were using the campaign more to gain leverage within the Conservative party than because they believed in the cause. Now that to their amazement they have won they don’t know what to do with their victory……..
The mood here is febrile with much of the political class struggling to understand a result that none of them truly anticipated or fully understand and with no-one having a clear plan for going forward. The extent to which the party leaderships in London have become disconnected from their supporters and have lost legitimacy amongst English voters has come as a shock. So much so that there are some people who are talking quite seriously about cancelling the referendum result and holding the vote all over again in order to get a different result. That of course has been done previously elsewhere in the EU. However trying to do it in Britain after a clear vote to leave the EU would be complete madness and would risk turning the mood here very ugly. I cannot seriously believe that in the end it will be done.
This very interesting and very worthwhile commentary by Alex was posted on theduran.com Internet site at 4:17 a.m. EDT on Thursday morning — and I thank Larry Galearis for pointing it out. Another link to it is here.
Eight sacked Catalan ministers have been remanded in custody by a Spanish high court judge over the region’s push for independence.
Prosecutors had asked the judge to detain eight of the nine former regional government members who turned up for questioning in Madrid.
They are accused of rebellion, sedition and misuse of public funds.
Prosecutors are also seeking a European Arrest Warrant for ousted Catalan leader Carles Puigdemont.
The request also covers four other dismissed Catalan ministers who did not show up in court in Madrid as requested, but have been in Belgium since Monday.
Spain has been gripped by a constitutional crisis since a referendum on independence from Spain was held in Catalonia on 1 October in defiance of a constitutional court ruling that had declared it illegal.
This news item put in an appearance on the bbc.com Internet site yesterday morning sometime — and I thank Swedish reader Patrik Ekdahl for bringing it to my attention — and now to yours. Another link to it is here.
Italy’s central bank knew Banca Monte dei Paschi di Siena SpA papered over a loss of almost half a billion dollars two years before prosecutors were alerted to the complex transactions, documents revealed in a Milan court show.
A 2010 report from the Bank of Italy, headed at the time by Mario Draghi, now president of the European Central Bank, shows inspectors were aware that a 2008 trade struck with Deutsche Bank AG was the mirror image of an earlier deal Monte Paschi had with the German lender. The Italian bank was losing about €370 million ($431 million) on the earlier transaction, dubbed Santorini, as of December 2008. The new trade posted a gain of roughly the same amount and allowed losses to be spread out over a longer period, the document shows.
The newly revealed report — dated Sept. 17, 2010, and marked “private” — shows the Bank of Italy was aware that by choosing not to book the trade at fair value Monte Paschi avoided showing a loss at the time. If the bank had used a mark-to-market valuation in the fourth quarter of 2008, it would have been included in its year-end report as the credit crisis was cresting, with potentially grave consequences on the bank’s finances.
Deutsche Bank and former executives of the Frankfurt-based lender are on trial in Milan for colluding with Monte Paschi on charges of market manipulation and false accounting. At a hearing Oct. 3, a lawyer for the former employees, Giuseppe Iannaccone, introduced the central bank’s 2010 findings as part of their defense.
Wow! Well, dear reader, this certainly smacks of collusion and market manipulation to me — and it will be interesting to see how this all turns out when the verdict comes down. This Bloomberg news item showed up on their website at 10:01 p.m. Denver time on Wednesday evening — and I thank Patrik Ekdahl for his second contribution in a row. Another link to it is here.
Iran’s supreme leader has urged Russian president Vladimir Putin to join forces with Tehran to beat the United States’ sanctions against them by ditching the dollar.
Ayatollah Ali Khamenei branded the United States an enemy and urged Moscow to sever ties with the U.S. currency.
Mr Khamenei said: “By ignoring the negative propaganda of the enemies that seek to weaken relations between countries, we can nullify U.S. sanctions, using methods such as eliminating the dollar and replacing it with national currencies in transactions between two or more parties, thus isolating the Americans.”
This news item appeared on the British tabloid express.co.uk Internet site very early on Thursday evening BST, which was around 1 p.m. in New York — EDT plus five hours. I found it in a GATA dispatch — and another link to it is here.
The 19th Party Congress has made it very clear that “socialism with Chinese characteristics” – as codified by President Xi Jinping – is China’s road map ahead. Not only the strategy graphically eschews those much-lauded “Western values”; it will, in Xi’s own words, offer “a new option for other countries and nations who want to speed up their development while preserving their independence.”
Xinhua even dared to venture, “the 21st century is likely to see capitalism lose its appeal while the socialist movement, led by China, rapidly catches up”.
To say this won’t go down very well in the West, especially in the U.S., may be the understatement of the century – even considering that the Chinese system is more like “neoliberalism with Chinese characteristics.”
It’s enlightening to crisscross what happened in Beijing with what was happening in Washington on the eve of President Trump’s trip to Asia, when he will visit China but also Japan, South Korea, Vietnam and the Philippines. Discussion of virtually all the key issues in Asia-Pacific will be on the table.
Asia-Pacific is where the real action is – geopolitically and geoeconomically. And once again, the number one issue in the intractability stakes will be the DPRK.
This very interesting commentary/opinion piece by Pepe was posted on thesaker.is Internet site yesterday sometime — and it’s the second offering of the day from Larry Galearis — and another link to it is here. It’s certainly worth reading, although I think the EMP weapon being discussed as a possibility, stretched the bounds of credibility for me. It sounds like fear mongering to me.
I found no precious metal stories worth posting in today’s column.
The PHOTOS and the FUNNIES
Back in Edmonton where there is no exotic scenery or animals worthy of the name, here I am with this female mallard duck that I photographed back on October 4. It, along with the other ducks and geese around the pond, were preening and exercising in preparation for the long trip south. This photo with the 400mm lens is from something under ten meters/35 feet away — and even at that distance, depth of field proved to be an issue when she stretched out her left wing and leg in the last shot. ‘Click to enlarge‘.
I’m not sure what to make of yesterday’s price action, but there were a few balls in the air. The dollar index got saved from imploding at least twice on Thursday, silver wasn’t allowed to close above its 50 and 200-day moving averages for the second day in a row — and palladium wasn’t allowed over $1,000 spot. Volume in gold and silver, although not quite as heavy as on Wednesday, was certainly in the over-the-moon category.
But still nothing is resolved to the downside, or the upside, as the COMEX futures market configuration is still very bearish in both silver and gold.
Here are the 6-month charts for all four precious metals, plus copper, as usual — and 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 has been wandering around a dollar or two above unchanged throughout the entire Far East trading session on their Friday, but has been edging quietly lower during the last few hours — and at the moment it’s down a dime. Silver was up a penny or two during the same time period, but has slid a bit during the last hour — and is down 2 cents currently. Platinum has traded in a similar fashion to silver — and is up a dollar. Palladium ticked quietly higher throughout Far East trading session as well, but was turned lower starting a 1 p.m. China Standard Time on their Friday afternoon. It was up 6 bucks at that juncture, but is only up 1 dollar as the Zurich open approaches.
Net HFT gold volume is coming up on 26,000 contracts, which is exceedingly light — and that number in silver is 5,200 contracts, which is fumes and vapours. Based on this level of volume, not much should be read into the current price action.
The dollar index has been chopping very quietly lower since trading began at 6:00 p.m. EDT in New York on Thursday evening — and as London opens, it’s down 6 basis points. Nothing too see here, either.
Today, at 3:30 p.m. EDT, we get the latest and great Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday. And as I said in my Wednesday missive…”I’d guess that the report won’t show much change in either silver or gold. A very tiny improvement in both, perhaps, but certainly nothing material.” And in Ted’s mid-week commentary to his paying subscribers on Wednesday, his comments were the same as they were for last week’s report…”I have no strong convictions about what this Friday’s COT report will show — and will stick to analyzing the report after it’s released.”
And as I post today’s column on the website at 4:02 a.m. EDT I note that the gold price has been sold a bit lower during the first hour of trading in London — and it’s currently down 90 cents an ounce. Silver is lower by 3 cents…platinum is down 2 bucks — and palladium is now back at unchanged.
Gross gold volume is a bit over 34,000 contracts — and there’s no roll-over/switch volume worth mentioning, so net HFT gold volume is about 33,500 contracts. Net HFT volume in silver is a hair over 7,100 contracts.
The dollar index bottomed out an hour before London opened, which was 2 p.m. CST on their Friday afternoon — and it’s now in the plus column to the tune of 3 basis points — and that appears to be all the cover that JPMorgan et al have needed to work precious metal prices lower for the last couple of hours.
Today, at 8:30 a.m. EDT, we get the latest jobs report — and I would suspect that the powers-that-be will be there to guide precious metal prices when the numbers are released. But as to which direction — and by how much — remains to be seen.
That’s it for another day. Have a good weekend — and I’ll see you here tomorrow.