30 August 2018 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price crawled quietly and unevenly higher until around 1 p.m. China Standard Time on their Wednesday afternoon — and was then sold down a bit from there going into the London open. From that point it chopped more or less sideways until a few minutes after 1 p.m. BST/8 a.m. EDT — and began to edge unsteadily higher from there. That lasted until shortly after 4 p.m. in after-hours trading — and it didn’t anything after that.
The low and high ticks certainly aren’t worth looking up.
Gold finished the Wednesday session in New York at $1,206.30 spot, up $5.80 from Tuesday’s close. Net volume, including October and December combined, was a hair over 250,000 contracts — and roll-over/switch volume was only 2,838 contracts.
As is almost always the case, silver was forced to follow a similar price path as gold — and the high and low ticks in this precious metal aren’t worth looking up, either.
Silver closed on Wednesday at $14.725 spot, up 3.5 cents on the day. Net volume was a tiny 2,784 contracts, but roll-over/switch volume out of September and into future months was very heavy at a bit over 66,000 contracts, the vast majority of which ended up in the December delivery month.
It was mostly the same for platinum, with the only real difference being that the low of the day at 1 p.m. CEST in Zurich. It chopped quietly higher from there until around 1 p.m. in New York — and didn’t do much after that. Platinum finished the Wednesday trading session at $795 spot, up 7 dollars on the day.
Palladium was up 5 dollars by around 9:30 a.m. in Zurich trading on their Wednesday morning — and from there it was sold down to its low tick of the day shortly after 11 a.m. CEST. From that juncture it edged quietly higher until minutes after 2 p.m. in Zurich/8 a.m. in New York — and then away it went. The price ran into ‘something’ shortly after 1 p.m. EDT during the COMEX trading session. It was sold lower over the next hour, before ticking a few dollars higher going into the 5:00 p.m. EDT close. Palladium was closed at $959 spot, up 23 bucks on the day — and would have obviously close significantly higher, if allowed.
The dollar index closed very late on Tuesday afternoon in New York at 94.72 — and except for a bump up — and then down, in morning trading in the Far East, it traded flat until 1:05 p.m. China Standard Time on their Wednesday afternoon. It began to chop unsteadily higher from there — and the 94.32 high tick came minutes before 8 a.m. in New York. The index began to head unevenly lower from that juncture — and really took a header starting at, or just before, the afternoon gold fix in London. That 25 basis point plunge got stopped in its tracks less than fifteen minutes later — and after a feeble rally that was very short-lived, began to head lower staring a few minutes before the 11 a.m. EDT London close. That decline continued for the remainder of the Wednesday trading session — and the dollar index closed right on its low of the day at 94.54 — down 18 basis points from Tuesday.
With the obvious exception of palladium, it was yet another day where precious metal prices weren’t allowed to reflect what was happening in the currency market.
And here’s the 6-month U.S. dollar index.
The gold shares opened unchanged — and then bounced around that mark for the entire Wednesday trading session — and the HUI closed higher by the magnificent amount of 0.05 percent. Call it unchanged.
It was mostly the same for the silver equities, except the ‘rally’ that began in negative territory around 2 p.m. EDT managed to hang in there until the markets closed at 4:00 p.m. Nick Laird’s Intraday Silver Sentiment Index closed higher by 0.50 percent. Click to enlarge if necessary.
And here’s the 1-year Silver Sentiment/Silver 7 Index. Click to enlarge as well.
The CME Daily Delivery Report showed that 28 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Thursday. In gold, there were four short/issuers, with the largest being ADM with 14 contracts from their client account. The sole long/stopper was the CME Group for their in-house trading account — and they immediately reissued those 28 contracts as 280 of the 10-ounce gold mini contracts. Of the three long-stoppers of those contracts, ADM picked up 270 of them for their client account. In silver, ABN Amro issued — and ADM stopped…both transactions involved their respective client accounts. Silver deliveries are done for the month. The link to yesterday’s Issuers and Stoppers Report is here.
For the month of August, there were 1,213 silver contracts issued and stopped…a hair over 6 million troy ounces, which is more than respectable considering the fact that August is not a regular delivery month in that precious metal.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in August fell by 71 contracts, leaving 31 still open, minus the 28 mentioned just above. Tuesday’s Daily Delivery Report showed that 62 gold contracts were actually posted for delivery today, so that means that 71-62=9 more gold contracts disappeared from the August delivery month. Silver o.i. in August declined by 1 contract, leaving 1 contract still around — and that contract, as mentioned in the previous paragraph, is out for delivery tomorrow.
Just for your information, gold open interest in September fell by 281 contracts yesterday, leaving 619 still around — and silver o.i. in September cratered by 18,868 contracts leaving 13,290 still open. Both these numbers will be significantly smaller than this by the COMEX close today…when trading in the September contract comes to an end. But because of slow reporting by some of the trading houses, a small portion of Thursday’s trading action won’t show up in the records until Friday’s Daily Delivery Report.
And lastly, First Day Notice for September silver deliveries should by up on the CME’s website by 10 p.m. EDT this evening. I know that Ted will be watching closely to see what JPMorgan is up to in their own in-house/proprietary trading account.
There were no reported changes in either GLD or SLV on Wednesday.
There was a small sales report from the U.S. Mint yesterday, as they sold 3,000 troy ounces of gold eagles, plus another 25,000 silver eagles.
There was a tiny amount of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday. Nothing was received — and only 2,175 troy ounces were shipped out. That activity was at JPMorgan — and I shan’t bother linking it.
It was very quiet in silver as well. Only 15,589 troy ounces were received at Brink’s, Inc. — and 1,031 troy ounces…one good delivery bar…was shipped out of Delaware. I won’t bother linking this activity, either.
The star performer yesterday was over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. Nothing was reported received, but 5,146 were shipped out. That activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.
Origin: Roman German Empire Mint: Saalfeld Material: Silver Full weight: 28.78 grams
I only have a small handful of stories for you today, including the latest Cohen/Batchelor interview.
In reality TV – and performance art of the wraslin’ genre – you add dramatic tension by creating simplified, cartoon personalities and then allowing them to get into snits with one another. The audience tunes in to find out how the spats will be resolved.
In both politics and entertainment, the feuders appear to be going at one another with hammers and tongs. But they are really on the same team.
In the entertainment world, ratings and name recognition for both sides generally go up.
And in the political world, though elections give the win to only one of the contenders, they are all playing the same game.
The political system transfers money and power from the public to politicians, their handlers, their cronies, and their zombie clients.
Various moving coalitions of these people fight over who gets what… But they all favor big, ambitious government… with themselves at the head.
This commentary by Bill appeared on the bonnerandpartners.com Internet site very early on Wednesday morning EDT — and another link to it is here.
Bloomberg TV’s Romaine Bostick has put together a fascinating chart that looks at speculative risk sentiment in the futures market, by summing up net spec exposure in traditional risk-off assets: gold, 10-year Treasuries and the VIX:
The chart speaks for itself, but as Bloomberg‘s Michael Regan explains, “the obvious takeaway is that positioning is all on one side of the boat and speculators are woefully unprepared for a major risk-off event, suggesting complacency may be reaching epidemic levels as equities break out to new highs.”
As we noted previously, speculators are record net short Treasuries…Extremely net short precious metals…and VIX speculators just can’t help themselves, despite losing an arm and/or leg in February…
As DoubleLine’s Gundlach noted “Massive increase this week in short positions…Could cause quite a squeeze.”
This brief 4-chart Zero Hedge new item is definitely worth your time. It showed up on their website at 6:05 p.m. EDT yesterday evening — and another link to it is here. There’s a parallel ZH piece to this headlined “Hedge Funds Pile Into Tech Shorts Just As NASDAQ Hits All Time High” — and it was posted on their Internet site a 11:26 a.m. EDT yesterday morning — and I thank Brad Robertson for that one.
Mauricio Macri’s presidency was meant to lead Argentina out of a dismal period of debt defaults, currency controls and recession. But, as Bloomberg reports, markets show investors are losing faith in the new dawn for South America’s second-largest economy.
Despite all the constant propaganda spewing forth from officials in Argentina (and at The IMF), we leave it to an old friend and veteran EM trader to sums things up: “The Argies are proper f**ked.”
Indeed, judging by today’s market action and headlines, he is right, as despite the promise of a US$50 billion International Monetary Fund (IMF) bailout (which is now being accelerated), the Argentine peso continues to collapse, inducing the next wave of inflation, and it could shortly usher in the next recession/depression.
With a run on the peso, Argentines and investors are bracing for financial volatility, which judging by the latest declines in emerging-market currencies – it might have already started – as the peso has crashed 8% today to a new record low above 34.0/USD…This is the biggest single-day drop since 2015’s devaluation.
This very long chart-filled news item was posted on the Zero Hedge website at 1:25 p.m. EDT on Wednesday afternoon — and it comes courtesy of Brad Robertson as well. Another link to it is here.
Tales of the New Cold War:The Kremlin Mole(s) who may not exist. Extended Le Carre Edition — John Batchelor interviews Stephen F. Cohen
Part 1: The title is a reference to the famous author of espionage novels that gives us a hint that this podcast is about geopolitical games and important changes in the relationships between East and West countries. Batchelor opens with Putin and his growing fondness for video on his countrywide trips, and professor Cohen notes something similar with Putin dancing with the Austrian foreign minister at her wedding. These are all early indications of relaxing geopolitical relationships. Even of more significance Cohen describes an about face of both Merkel of Germany and Macron of France who suddenly announced that they are turning their back on Washington. Merkel is now officially backing Nord Stream 2 – the Russian LNG pipeline – and Macron is stating a rejection of Washington’s “security” relationship with Europe. Both are looking at cooperation with Russia. Another important news item is the proposed U.S. meeting with the Taliban to discuss the future of Afghanistan in Moscow! So far the Afghan government and Washington are refusing to attend.
From here Cohen makes a brief foray into recent Russiagate stories and a list of culprits that have nothing to do with Russia but reminds Batchelor of an old story resurfacing about Washington having a mole in the Kremlin. This story for Cohen is about “we are approaching the dark soul of the Watergate saga”, and as preposterous as the original New York Times article was, the story has reemerged as “news” in a recent New York Times article that that Russia is targeting the mid term elections. Cohen is positive that this whole fiction is a product of the CIA. But Cohen lists a number of incidents over the past 100 years that show both governments meddling in Russian and American internal affairs at very much more serious levels. Please listen to the podcasts.
Part 2: Batchelor fixates on the mole in the Kremlin story – which has morphed into more than one source in the latest rendition. He is intrigued by the very outlandish and preposterous nature that any spies in Russia could be “outed” for Washington politics. That would put those “sources” at real risk, if the story was true, maintains Cohen, and all for the “core” reason that Putin put Trump in the White House. Now the mid term elections are threatened. This new accusation is getting very thin on the ground, and while they are attempting to de-legitimize Trump, Cohen states that now they are attempting to de-legitimize Congress. And by extension de-legitimizing the U.S. electoral process. This is the damage of Russiagate and the perpetrators need to be held accountable. The remaining portion of the podcast concerns the role of the mole in the Kremlin story and its veracity. But Cohen raises a final point about how this same story has crippled the U.S. intelligence apparatus through the expulsion of U.S. embassy staff in Russia.
The strength of this podcast is in early Part 1 — and there is even a common theme that can be detected in the news items listed. We may have turned the corner of Washington control of Europe and that turn is toward Moscow. I was also most impressed with the Taliban story where they (insist?) want the future of Afghanistan discussion with the Americans to take place in Moscow. The U.S. military situation in Afghanistan is worsening by the day as increasingly the Taliban is denying the countryside to the American forces and limiting them to the cities and their military bases. They are in essence in a corner and fighting a defensive war. This means that the Taliban is now also in control now of the peace process. The meeting in Moscow would concern the withdrawal of American forces in a negotiated peace, a peace that would announce both the American loss of the war and an acknowledgement that, as Cohen said several podcasts ago, that Russia would need to have Washington’s back in order for the withdrawal of U.S. forces to happen. For the Taliban agrees — and for history it would also add the descriptive “humiliating” to the loss of the war for Washington. And once again Putin the statesman rescues the United States.
The theme is also repeated as both Merkel and Macron are also looking for solutions to their countries energy supply and security respectively by looking to Russia. Several times I have stated that NATO is failing as a “security” institution and to think that both of the strongest countries in Europe (and one may also include Turkey in this discussion) are opting out as enemies of Russia is a very new and welcomed reality. This is verification. Russia is the solution that the U.S. pretends to be, but as we all know by now Europe must also look east for the future of all Europe. NATO would not have French, Turkish, or probably German support for NATO action against Russia and I see this as a stage in the disintegration of NATO. This is a start in a new direction – and a big one at that!
This 2-part audio interview, with each part running about twenty minutes, appeared on the audioboom.com Internet site on Tuesday. I thank Larry Galearis as always, for excellent executive summary — and his closing commentary. If I remember, this interview will also appear in my Saturday column if you don’t have the time for it just now. The link to Part 1 is in the headline — and here. And the link to Part 2 is here.
Reuters has confirmed a bombshell report which first surfaced Tuesday in Lebanese media saying that a high level delegation of U.S. intelligence officials made a secret visit to Damascus in June to meet with President Bashar al-Assad’s most trusted senior advisor, Ali Mamlouk, who serves as Syria’s top security chief.
The meeting, which took place near Damascus international airport, was first revealed by the Lebanese daily al-Akhbar, which reported it as lasting up to four hours and part of an ongoing secret back-channel dialogue.
Such talks are unprecedented for the fact that the two countries haven’t had such direct dealings since near the start of the conflict in 2011, and the United States and its allies have bombed Syrian government forces and locations multiple times over the past years.
Perhaps the biggest revelation is contained in the following, according to Reuters: “U.S. officials had demanded the withdrawal of Iranian forces from southern Syria and data on “terrorist groups”, including foreign fighters, and had also requested a role in the oil business in eastern Syria.”
And the Syrian delegation’s response according to Reuters was as follows: “Mamlouk said Damascus would not cooperate with Washington on security issues until they had normalized ties and he also demanded a complete withdrawal of U.S. forces from Syria, al-Akhbar reported.”
Reuters cites a trusted regional source to say “most details in the al-Akhbar report were correct,” which makes the mention of U.S. eyeing Syrian oil interesting, especially as when Trump publicly mulled pulling U.S. troops out of Syria altogether prominent neocon pundits urged “staying the course,” while saying, “We took the oil. We’ve got to keep the oil.”
But it appears the Syrian government, fully aware it has won the seven year long proxy war, and now headed to complete military victory in Idlib (barring any last minute “provocation” which could spark a new round of major external military intervention), has shut the door on the U.S. intelligence officials.
Good for them! This longish, but very interesting news story put in an appearance on the Zero Hedge Internet site at 3:50 p.m. EDT on Wednesday afternoon — and I thank Brad Robertson for pointing it out. Another link to it is here.
With massive coffee and sugar inventories already weighing on the softs market, the reinvigorated emerging market crisis has created a “perfect storm,” encouraging local producers in countries such as Brazil and Colombia to boost sales which fetch dollars in return, said Julio Sera, risk management consultant for INTL FCStone in Miami.
In fact, the Bloomberg Softs Subindex, which measures returns for those commodities plus cotton, tumbled to a record low…
However, with speculative positioning in sugar and coffee at or near all-time record net short, the worst could be over. (the softs are a close proxy for emerging markets, but with elevated covering risks). As Bloomberg Intelligence details below:
Further declines in the softs are highly dependent on a weaker Brazilian real and sugar. The worst is likely over for sugar, down over 30% in 2018. Recovery is highly dependent on similar weakness in the real, down about 20% vs. the U.S. dollar this year. Short sugar has been the proper position, but with prices near a 10-year low at key 10-cents-a-pound support and net short positions leading all major commodities, covering risks are quite elevated.
Sugar futures’ managed-money net positions are close to being the most short in the database since 2006 at 150,341. Next in line is soft companion coffee, at 104,336 as of Aug. 28. Brazil sugar supply estimates from CONAB, Brazil’s food statistics agency, are the lowest since 2009. Supply is unlikely to increase until prices do.
Short has been the right position in coffee futures, but covering risks are about as elevated as they get. Prices dipping to a 12-year low in August probably reflect about the worst of the substantial increase in Brazilian supply and the currency’s drop. Net managed-money short futures positions have consistently set records in 2018. Recently, their velocity has accelerated at the greatest pace on record since 2006. Net shorts have increased over 66,000 since the end of May, the most in any similar period.
New shorts are weighing on prices but are ripe for cleansing.
Besides the precious metals, these Managed Money traders are short up the ying-yang in just about every commodity under the sun as well…something Ted has been pointing out for quite a number of months. This very worthwhile chart-filled story was posted on the Zero Hedge website at 7:25 p.m. on Wednesday evening EDT — and another link to it is here.
Trade data, released at the start of the week by the Census and Statistics Department of the Hong Kong government, confirms that gold demand in China remains “subdued,” said Commerzbank.
The report shows that China imported only 44.8 tonnes of gold, on a net basis, from Hong Kong in July – significantly less than either the prior month or July of 2018. The year-on-year shortfall since the start of the year has widened again to 19% or 87 tonnes.
The Swiss gold trading data published last week had already indicated weak Chinese gold demand, Commerzbank added.
The above data is based on ‘unofficial’ sources — and Nick won’t have the actual data — and the charts, until next next week some time. That above three paragraphs are all there is to this very brief news item that was posted on the scrapregister.com Internet site yesterday — and I lifted it from the Sharps Pixley website. Another link to it is here.
CFTC orders UBS to pay US$15 million penalty for attempted manipulation and spoofing of precious metals futures
A CFTC order finds that that from January 2008 through at least December 2013, UBS, by and through the acts of certain precious metals traders on the spot desk (Traders), attempted to manipulate the price of precious metals futures contracts by utilising a variety of manual spoofing techniques with respect to precious metals futures contracts traded on the Commodity Exchange (COMEX), including gold and silver, and by trading in a manner to trigger customer stop-loss orders.
James McDonald, the CFTC’s Director of Enforcement, says: “Today’s enforcement action demonstrates the Commission’s continued commitment to root out manipulation and spoofing in our markets. At the same time, this action shows that the CFTC will recognise and reward market participants who self-report misconduct, cooperate in the investigation, and remediate to fix the problems. Over the past year, the Division has worked to enhance its self-reporting and cooperation program, including through the announcement of new cooperation advisories. The resolution in this case, and the substantially reduced penalty for UBS, should send a strong signal to the market that the Commission takes seriously the benefits of self-reporting and cooperation. In addition, today’s actions reinforce the point of our whole cooperation program – which is to identify and hold individuals accountable for misconduct, and not just the companies that employ them.”
“Further, as a reflection of the Division’s enhanced self-reporting and cooperation program, today’s action shows that the Commission will recognise and give meaningful credit to companies that substantially cooperate in our investigations and proactively undertake remedial efforts.”
Of course silver analyst Ted Butler was less than enthused and, in part, had this to say about it his mid-week column yesterday…”the new Enforcement Division charges are more annoying than meaningful, since they are penny-ante — and avoid the real gold and silver manipulation revolving around JPMorgan.” This story put in an appearance on the hedgeweek.com Internet site yesterday morning EDT — and I found this on the Sharps Pixley website as well. Another link to it is here — and it’s worth reading if you have the interest.
The PHOTOS and the FUNNIES
In the U.S. they’re called katydids — and are one of more than 6,400 known species in the insect family Tettigoniidae. Primarily nocturnal in habit, with strident mating calls, many katydids exhibit mimicry and camouflage, commonly with shapes and colors similar to leaves. We have at least one species in this neck of the woods, but they are not common. Click to enlarge.
With August going off the board, it was obvious that the powers-that-be wanted to keep things quiet, despite what was happening in the currency market. They were, as always, successful…like they have been most of the week so far. Palladium has been the outlier, but there are real-world supply/demand imbalances in this precious metal — and that can’t be kept under wraps forever.
Of course all of the precious metals would be priced far higher than they are now if the Managed Money traders weren’t mega short them all…including palladium. And as you can tell from the various Zero Hedge stories in the Critical Reads section above, these Managed Money mega short positions extend into many other markets as well, which is a fact that Ted has been going on about for many months now. But it’s just is so obvious and gargantuan, that even the main stream media is picking up on it.
Here are the 6-month charts for all of the Big 6 commodities — and the four precious metals contain the low tick information from just after the COMEX close on Tuesday. Palladium continues higher — and WTIC finally closed above its 50-day moving average. The ‘click to enlarge‘ feature helps with the first four.
And as I type this paragraph, the London open is less than ten minutes away — and I see that after a brief tick higher around 7:30 p.m. in New York on Wednesday evening, the gold price was turned lower — and that decline ended right at 2 p.m. China Standard Time on their Thursday morning. It has edged higher since, but is still down $4.20 an ounce. It was the same price path for silver. It was down 12 cents at the 1 p.m. CST low, but is only down 7 at the moment. It was the same for both platinum and palladium, but they both shot higher at 2:15 p.m. CST, which was the afternoon gold fix in Shanghai. Platinum is only down a dollar now, but palladium is up 4 bucks — and off its high tick by a few dollars as Zurich opens.
Net HFT gold volume in October and December combined is about 50,500 contracts — and there’s 2,340 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is 9,300 contracts, with virtually all of that in the next front month, which is December. Roll-over/switch volume is only 1,386 contracts.
The dollar index sank to its current 94.52 low tick around 7:30 p.m. EDT in New York yesterday evening — and began to chop quietly higher from there. That lasted until a few minutes before 2 p.m. CST — and it sold off a handful of basis points going into the afternoon gold fix in Shanghai. It’s been chopping mostly sideways since — and is currently up 8 basis points as London opens.
All the large traders, those holding 150 COMEX futures contracts or more, that weren’t standing for September delivery in silver, had to roll or sell their positions by the close of COMEX trading yesterday — and the remainder have to be out by the close of COMEX trading today. I’ll have First Day Notice delivery numbers for September silver in tomorrow’s column.
And as I post today’s column on the website at 4:04 a.m. EDT, I note that despite the fact the the dollar index has mostly declined since its 2 p.m. CST high tick, it’s not being allowed to show up in precious metal prices once again. Gold is down $3.60 an ounce — and silver is now down 9 cents — and well off its London high tick. Platinum is now down 3 dollars — and palladium is up only 3 bucks — and both those metals are off their Zurich highs as well.
Gross gold in October and December combined is coming up on 72,500 contracts — and net of roll-over/switch volume, net HFT gold volume in those two months combined is about 67,800 contracts. Net HFT silver volume, almost all of which is in December, is about 12,500 contracts — and roll-over/switch volume in that precious metal is 2,831 contracts.
The dollar index headed lower starting at its current 1 p.m. CST high tick in Shanghai trading — and fell into negative territory briefly, but that ended shortly after the London open — and it’s off its current 94.47 low tick by a bit — and up 2 basis points as the first hour of London/Zurich trading draws to a close.
There are only two trading days left in August — and I won’t even hazard a guess as to how precious metal prices will be allowed to behave between now and the close of trading on Friday. But it’s fairly obvious that they’re being kept on a very short leash at the moment, despite what is or isn’t happening in the currency market.
That’s all I have for today — and I’ll see you here tomorrow.