The Dollar Index Falls…Precious Metal Prices Kept In Check

22 August 2018 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to rally unevenly higher almost as soon as trading began at 6:00 p.m. EDT in New York on Monday evening.  That lasted until at, or minutes before, the 2:15 p.m. CST afternoon gold fix in Shanghai.  From that juncture it was sold quietly lower until about fifteen minutes after the London close.  It rallied unsteadily from there, right into the 5:00 p.m. EDT close of trading in New York.

Despite all of the above, the high and low ticks aren’t worth looking up.

Gold finished the Tuesday session in New York at $1,195.50 spot, up $5.40 from Monday’s close.  Net volume in October and December combined was pretty light at a bit over 221,000 contracts — and there was only 2,108 contracts worth of roll-over/switch volume on top of that.

The silver price was far more ‘subdued’ yesterday — and was kept corralled in a ten cent price range either side of unchanged throughout the entire Tuesday trading session, despite what the dollar index was doing.

The high and lows certainly aren’t worth looking up here, either.

Silver was closed in New York yesterday at $14.755 spot, up 2.5 cents on the day.  Net volume was pretty quiet at a bit over 43,100 contracts, but roll-over/switch volume out of September and into future months was pretty heavy at just about 26,500 contracts.

The platinum price began to edge unevenly high starting shortly before 11 a.m. China Standard Time on their Tuesday morning.  The high of the day was set at 11 a.m. CEST [Central European Summer Time] in Zurich trading — and it didn’t do much after that until shortly before 2 p.m. over there.  The selling pressure began at that point and, like gold, the low tick was set fifteen minutes after the London/Zurich close.  It headed higher from there until 2 p.m. EDT in New York — and ran into ‘resistance’ the moment it broke above unchanged on the day.  It chopped around with a negative bias until trading ended at 5:00 p.m. EDT.  Platinum was closed at $794 spot, exactly unchanged from Monday.

The palladium price path was mostly similar to platinum’s, although it did have a rather interesting up/down spike shortly after trading began in New York on Tuesday morning.  Its low tick was also set shortly after the Zurich close — and the subsequent rally ran into ‘something’ at 1 p.m…shortly after it broke above unchanged on the day.  It was sold lower from there, closing at $912 spot, down a buck.

The dollar index closed very late on Monday afternoon in New York at the 95.73 mark — and didn’t do much in the first two hours of trading once it began at 6:00 p.m. in New York yesterday evening. But at 8 a.m. CST on their Tuesday morning, it took a bit of a header — and obviously got saved by the usual ‘gentle hands’ about thirty minutes later. It edged quietly higher from there until 10:30 a.m. CST — and then rolled over once again.  That tiny sell-off lasted until a few minutes after 2 p.m. CST, which just happened to coincide with the high ticks in two of the four precious metals up to that stage of the Tuesday trading session.  At that point, the dollar index rallied very unsteadily higher until the 95.72 high tick was set at the 8:20 a.m. EDT COMEX open.  It was all down hill from there until the 95.08 low tick of the day was printed around 2:15 p.m.  It rallied a small handful of basis points until minutes before 3 p.m. — and didn’t do much after that.  The dollar index finished the Tuesday session at 95.21 — down 52 basis points on the day.

It was yet another day where it would be difficult to find a lot of major correlation between what the currencies and precious metal prices were doing.

And here’s the 6-month U.S. dollar index chart.

And by the way, there’s a very interesting article about the U.S. dollar in the Critical Reads section below headlined “5 ways Trump could upend the strong dollar trend, say ING strategists“.  It’s worth reading — and you can read it now, or wait until you get down into that section.


The gold shares traded in a very tight and tiny price range around unchanged until around 12:35 p.m. in New York.  They rallied a bit from there until 2:15 p.m. EDT or so — and then didn’t do a lot after that.  The HUI closed higher by 1.00 percent.

The silver equities traded in precisely the same fashion — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 0.74 percent.  Click to enlarge.

And here’s the 1-year Silver Sentiment/Silver 7 Index from Nick as well.  Click to enlarge.

The CME Daily Delivery Report showed that 16 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  In gold, the two biggest short/issuers were ADM and Advantage with 8 and 7 contracts out of their respective client accounts.  The three long/stoppers included JPMorgan, Advantage and Morgan Stanley with 8, 4 and 4 contracts for their respective client accounts.  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 August fell by 27 contracts, leaving 210 still open, minus the 16 mentioned above.  Monday’s Daily Delivery Report showed that 29 contracts were posted for delivery today, so that means that 29-27=2 more gold contracts were added to the August delivery month.  Silver o.i. in August dropped by 16 contracts, leaving only 22 left.  Monday’s Daily Delivery Report showed that 16 silver contracts were actually posted for delivery today, so the change in open interest and deliveries match for a change.


There was another decent-sized withdrawal from GLD yesterday, as an authorized participant took out 113,603 troy ounces.  There were no reported changes in SLV.

For the second day in a row there was a sales report from the U.S. Mint.  They sold 2,000 troy ounces of gold eagles — and 150,000 silver eagles.

I’m checking the Royal Canadian Mint‘s website every day now, waiting for them to post their second quarter report.  But so far, nothing.  Knowing these cretins the way I do, it will arrive sometime during the final week of the third quarter.

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

It was certainly busier in silver, as two truck loads…1,201,385 troy ounces…was reported received, but only 6,981 troy ounces were shipped out.  One truck load ended up at CNT — and the other at Canada’s Scotiabank.  All the ‘out’ activity was at Delaware.  The link to that is here.

I haven’t posted the COMEX warehouse stocks for silver for bit — and yesterday I received a request from reader Tyler Tredway to include it in one of my columns, so here it is now.  JPMorgan’s record 145.41 million troy ounce silver stash towers above all others —  and represents 50.0 percent of all the silver in all of the COMEX depositories.  Click to enlarge.

There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving exactly 3,000 of them — and shipped out 504.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


Here are two charts that I post every week that you should be more than familiar with.  These 2-year charts show the transparent gold and silver holdings in all know depositories, mutual funds and ETFs as of the close of trading/business last Friday…August 17.  Gold continues to disappear from these entities, but the amount of silver continues to rise.  Ted Butler can’t figure out why, except for him, all the so-called precious metal ‘analysts’ out there aren’t breathing a word about this monstrous dichotomy.  ‘Click to enlarge‘ for both.

I don’t have all that many stories for you today, so I’m including one that I was saving for Saturday.


CRITICAL READS

America is Overdue for Another Economic Disaster — George Will

Eric Sevareid (1912–1992), the author and broadcaster, said he was a pessimist about tomorrow but an optimist about the day after tomorrow. Regarding America’s economy, prudent people should reverse that.

This Wednesday, according to the Financial Times‘ Robin Wigglesworth and Nicole Bullock, “the U.S. stock market will officially have enjoyed its longest-ever bull run” — one that rises 20 percent from its low, until it drops 20 percent from its peak. And September 15 will be the tenth anniversary of the collapse of Lehman Bros., the fourth-largest U.S. investment bank. History’s largest bankruptcy filing presaged the October 2008 evaporation of almost $10 trillion in global market capitalization.

The durable market rise that began March 6, 2009, is as intoxicating as the Lehman anniversary should be sobering: Nothing lasts. Those who see no Lehman-like episode on the horizon did not see the last one.

Economists debate, inconclusively, this question: Do economic expansions die of old age (the current one began in June 2009) or are they slain by big events or bad policies? What is known is that all expansions end. God, a wit has warned, is going to come down and pull civilization over for speeding. When He, or something, decides that today’s expansion, currently in its 111th month (approaching twice the 58-month average length of post-1945 expansions), has gone on long enough, the contraction probably will begin with the annual budget deficit exceeding $1 trillion.

The president’s Office of Management and Budget — not that there really is a meaningful budget getting actual management — projects that the deficit for fiscal year 2019, which begins in six weeks, will be $1.085 trillion. This is while the economy is, according to the economic historian in the Oval Office, “as good as it’s ever been, ever.”

This worthwhile commentary showed up on the nationalreview.com Internet site on Sunday — and I found it embedded in a Zero Hedge article.  I thank Brad Robertson for his first contribution to today’s column — and another link to it is here.


5 ways Trump could upend the strong dollar trend, say ING strategists

President Donald Trump’s recent rhetoric has been fixated on the dollar’s strength against rivals. The U.S. commander in chief doesn’t traditionally jawbone the dollar, but Trump has dispensed with convention and stepped up his assault on currencies and central banks, leaving strategists now speculating on all the ways in which he could seek to influence the buck.

Can President Trump instruct the U.S. Treasury to intervene in FX markets and weaken the dollar? Twelve months ago, we wouldn’t have even considered this question,” wrote ING currency strategists Viraj Patel and Chris Turner.

Trump has made clear that he is no fan of a strong U.S. dollar, and with a popular gauge for the buck hovering near a 14-month high, it seems the government’s tolerance may have run out. Generally speaking, the president has advocated a weaker-buck policy as a way to make the U.S. more competitive on the global stage.

Overall, more active steps from the White House to weaken the dollar could serve to knock the top off of an emerging dollar bull trend,” Patel and Turner said. “We think the U.S. administration’s implicit desire for a weaker dollar that is consistent with its mercantilist U.S. trade policy will inevitably be self-fulfilling over the medium-term—and is one of the reasons why we remain strategically bearish on the U.S. dollar.”

Not that I want to point too fine a point on this, dear reader, but this reeks of possible currency manipulation…the very thing that Trump is accusing Europe, China and others of already doing.  But, I forgot, these laws don’t apply to the U.S.  This interesting news item showed up on the marketwatch.com Internet site at 3:03 p.m. on Tuesday afternoon EDT — and I plucked it from a GATA dispatch yesterday evening.  Another link to it is here.


Treasury Unloads on Moscow: Washington Freezes Russian Assets in the U.S. Worth Hundreds of Millions

Just hours after Microsoft said it had thwarted Russian intelligence attempts to hack two conservative think tanks and government sites used by Congressional staff, on Tuesday, the United States imposed new sanctions on two Russians and one Russian and one Slovakian firm under a U.S. program targeting malicious cyber-related activities.

In a statement on its website, the U.S. Treasury said the sanctioned firms – Saint Petersburg-based Vela-Marine Ltd and Slovakia-based Lacno S.R.O. – and the two individuals were linked to Divetechnoservices, a previously sanctioned entity.

Separately, speaking before the Senate Banking Committee, Sigal Mandelker, the Treasury’s top terror and financial intelligence official said that “the breadth and brazenness of Russia’s malign conduct demands a firm and vigorous response.”

Mandelker touted that the net worth of Oleg Deripaska had dropped by about 50%, and the share price of EN+ fell to $5.40 from $12.20 since the latest round of sanctions against Russia were imposed; she also noted that the net worth of Viktor Vekselberg fell by an estimated $3BN due to American penalties.

This stupidity marches on.  This news item appeared on the Zero Hedge website at 12:39 p.m. EDT on Tuesday afternoon — and it comes to us courtesy of Brad Robertson.  There was a parallel story to this posted on the rt.com Internet site early yesterday morning.  It’s headlined “Washington froze Russian assets in U.S. worth hundreds of millions of dollars – U.S. Treasury” — and I thank Swedish reader Patrik Ekdahl for that one.


Russia Abandons Bond Sale “Due to Market Volatility

Whether it is explicitly U.S. sanctions or the implicit uncertainty injected into global markets by a dollar-squeezing Fed, the latest impact of global tightening has hit Russia head on as it has been forced to abandon its planned weekly bond auction tomorrow.

According to the Russian Finance Ministry’s website, it has decided not to hold primary debt auctions, scheduled for Aug. 22, due to sharp increase in market volatility.

The halt is the first since April.

Who can blame them with 10Y Russia OFZ (ruble-denominated) bond yields now above 8.5% (back above pre-Trump levels)…

Local Russian yields are now higher than Mexico’s — and just lower than South Africa’s…

The Russian Finance Ministry also confirmed it will resume auctions on regular basis once the debt market situation stabilizes.

Russia is the most financially solvent country on the face of the earth, but they’re being denied the rewards of that status.  This is another Zero Hedge article.  This one put in an appearance on their website at 9:50 a.m. on Tuesday morning EDT — and it’s another offering from Brad Robertson.  Another link to it is here.


Germany calls for global payments system free of U.S.

Germany’s foreign minister has called for the creation of a new payments system independent of the United States as a means of rescuing the nuclear deal between Iran and the west that Donald Trump withdrew from in May.

Writing in the German daily Handelsblatt, Heiko Maas said Europe should not allow the United States to act “over our heads and at our expense.”

For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the U.S., creating a European Monetary Fund and building up an independent Swift system,” he wrote.

Maas’ intervention was the “strongest call yet for European Union financial and monetary autonomy vis-a-vis U.S.“, said Thorsten Benner, director of the Global Public Policy Institute, a Berlin-based think-tank.

The above four paragraphs are all there is that’s posted in the clear from this Financial Times of London story.  The rest is behind their subscription wall.  It showed up on the FT website on Tuesday sometime — and I found it on the gata.org Internet site.  Another link to it is here.  The Zero Hedge spin on this is headlined “Germany Calls For Global Payment System Independent of the U.S.“.


New Reality of China’s Failing Economy Is Coming Soon — Jim Rickards

I’ve written for years that Chinese economic development is partly real and partly smoke and mirrors, and that it’s critical for investors to separate one from the other to make any sense out of China and its impact on the world.

My longest piece on this topic was Chapter Four of my second book, The Death of Money (2014), but I’ve written much else besides, including many articles for my newsletters.

There’s no denying China’s remarkable economic progress over the past thirty years. Hundreds of millions have escaped poverty and found useful employment in manufacturing or services in the major cities.

Infrastructure gains have been historic, including some of the best trains in the world, state-of-the-art transportation hubs, cutting edge telecommunications systems, and a rapidly improving military.
Yet, that’s only half the story.

The other half is pure waste, fraud and theft.

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


We cannot afford this“: Malaysia pushes back on China’s big projects

In the world’s most vital maritime choke point, through which much of Asian trade passes, a Chinese power company is investing in a deep water port large enough to host an aircraft carrier. Another state-owned Chinese company is revamping a harbor along the fiercely contested South China Sea.

Nearby, a rail network mostly financed by a Chinese government bank is being built to speed Chinese goods along a new Silk Road. And a Chinese developer is creating four artificial islands that could become home to nearly three-quarters of a million people and are being heavily marketed to Chinese citizens.

Each of these projects — along with many more — is being built in Malaysia, a Southeast Asian democracy at the heart of China’s effort to gain global influence.

But where Malaysia once led the pack in courting Chinese investment, it is now on the front edge of a new phenomenon: a push back against Beijing as nations fear becoming overly indebted for projects that are viable nor necessary — except in their strategic value to China or use in propping up friendly strongmen.

Malaysia’s new leader, Mahathir Mohamad, wraps up a five-day trip to Beijing on Tuesday in which his aim has been to free his country from some of its $250 billion of debt, some of it owed to Chinese companies. His message in meetings with officials, and in public comments, has been unambiguous.

This very interesting New York Times article appeared on the Economic Times of India website on Monday evening IST — and I thank Kathmandu reader Nitin Agrawal for bringing it to my attention — and now to yours.  Another link to it is here.


Social media censorship—here are the deep basics — Jon Rappoport

Orchestrated un-creation of the fabric of free speech—this is what we’re seeing.

Several of the biggest “conservative/libertarian” figures on the Net—Alex Jones, Dennis Prager, Stefan Molyneux, among others—have recently been banned/censored by Google, Facebook, Twitter, and other social media companies.

When you ask why this is happening, one obvious answer pops up right away:

These social media corporations are fulfilling desperate pleas from major news outlets, who have been losing audience, in massive chunks, to the likes of Jones, Prager, and Molyneaux.

The newspapers and TV news networks came to end of their rope. They had no solutions to their problem—so they went to Google, Facebook, and others, and said, HELP US. Meaning: Censor our competition.

On one level, understanding censorship is that simple.

But then you have to ask yourself this question: Why would Google, Facebook, and other social media giants bend to the needs of mainstream news outlets?

I was saving this for Saturday, but since I didn’t have all that much for you today, I thought I’d toss it in now.  This rather brief commentary by Jon is definitely worth reading — and I thank Roy Stephens for pointing it out.  It appeared on his Internet site on Monday — and another link to it is here.


2018 Silver Price Forecasts and Predictions From the Big Investment Banks

Here at GoldSilver.com we’re not huge fans of commercial banks. Deceptive practices, outrageous fees, viewing customers as prey instead of partners.

But they do control enormous amounts of capital, so keeping an eye on where they stand vis-à-vis the gold price is worth monitoring.

So, presented here without further commentary, is a sampling of current institutional views on [silver]:

This interesting article was posted on the goldsilver.com Internet site on Monday — and it nearly goes without saying that the price opinions expressed in it are wildly different than what Ted Butler thinks it will be.  I’ll place my money on Ted’s opinion long before I’d believe a word coming out of the Wall Street banks and investment houses listed in this article.  And it’s very interesting to note that of all the price opinions expressed, JPMorgan’s price prediction…if they had one…is nowhere to be found in this commentary.  I thank Judy Sturgis for pointing it out — and another link to it is here.


Russian gold reserves on way to 2,000 tonnes — Lawrie Williams

The Russian central bank has announced that it has added another 800,000 ounces (24.9 tonnes) to its gold reserves in July, confirming its official position with the IMF as the world’s fifth largest national holder of the precious metals in its reserves. With the latest addition, the Russian gold reserve is at around 1,969 tonnes so the continuation of gold reserves at the current rate will see it surpass the 2,000 tonne mark within a couple of months. Should it continue to add to its gold reserves at the present and recent rate it will move into third place in the table by the end of the current decade.

So far this year, Russia has added a total of just under 131 tonnes of gold to its reserves, which could put it on target to add 225 tonnes over the full year extrapolating this data over the full 12 month period. This would be an increase over the around 200 tonnes a year it has been adding for the past three years. Russia sees gold as a safe haven monetary defence against what it sees as aggressive anti-Russian policies by the USA represented by sanctions being imposed on Russian goods, expertise and individuals. This will undoubtedly drive Russia closer to the third major global power, China.

This worthwhile commentary by Lawrie appeared on the Sharp Pixley website on Tuesday morning BST sometime — and another link to it is here.


The PHOTOS and the FUNNIES

Today’s ‘critter’ is the Virginia rail…a small North American waterbird with long toes for walking on floating vegetation. They remain fairly common despite continuing loss of habitat, but are secretive by nature — and more often heard than seen. They are also considered a game species in some Canadian provinces and U.S. states, though rarely hunted.  Click to enlarge.


The WRAP

It was another rather quiet trading day again — and another where, for the most part, the decline in the dollar index wasn’t allowed to manifest itself in higher precious metal prices.  It certainly appears that they’re being kept on a short leash despite what’s happening in the currencies.

Here are the 6-month charts for all four precious metals, plus copper and WTIC and, as I said in this space yesterday, there’s not a lot to see.  The only exception is palladium — and it’s a stone’s throw away from its 50-day moving average.  I would suspect that Ted raptors, the 24-odd small commercial traders in palladium, other than the Big 8, were probably selling their recently-placed long positions for big profits — and it’s also reasonable to assume that maybe JPMorgan was standing by snapping up every long that the raptors were selling.  We’ll know more in Friday’s COT Report.  The ‘click to enlarge‘ feature only helps with the first four.

And as I type this paragraph, the London open is less than ten minutes away — and I note that all four precious metal prices have been edging very quietly and very unsteadily lower in Far East trading, but they really started to swoon around 2 p.m. China Standard Time on their Wednesday afternoon. At the moment, gold is down $2.40 an ounce — and silver is lower by 4 cents. Platinum is down 5 bucks — and palladium is down by 1 dollar as Zurich opens.

Net HFT gold volume in October and December combined is coming up on 48,500 contracts — and roll-over/switch volume is virtually non-existent at 622 contracts. Net HFT silver volume is a hair over 9,000 contracts — and there’s already 3,034 contracts worth of roll-over/switch volume in that precious metal.

The dollar index has done virtually nothing in Far East trading on their Wednesday, but does have a slight positive bias — and it did jump up a handful of basis points starting at 2 p.m. CST, so I guess that accounts for the sell-offs in the precious metals that began at that moment. The dollar index is now up 10 basis points as London opens.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and all of the data from last Wednesday’s engineered price decline in the four precious metals, plus copper, will be in it.  Needless to say, more records will fall — and records that will most likely stand for all time.  Ted will be face down in the Disaggregated COT Report, as will I.  And how much of JPMorgan’s short position in silver is left, remains to be seen, but I doubt there will be much.

And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price hasn’t done a lot — and is currently down $2.50 the ounce. Silver is now down 7 cents. Platinum and palladium are a bit lower as well, with the former down 6 bucks — and the latter by 1.

Gross gold volume is a bit over 59,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume in October and December combined is a bit under 58,500 contracts. Net HFT silver volume is coming up on 12,000 contracts — and roll-over/switch volume out of September and into future months is 3,797 contracts.

The dollar index isn’t doing much, either — and is up 11 basis points currently.

As I mentioned in this spot yesterday, we get the minutes from the July FOMC meeting around 2 p.m. EDT today.  Then the Federal Reserve’s annual Jackson Hole conference will highlight the week with a speech on Friday from Jerome Powell.  It’s turning out to be an interesting end to the summer in the Northern Hemisphere.

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

Ed