JPMorgan Continues to Hammer the Silver Price Lower

04 September 2018 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was engineered lower as soon as trading began at 6:00 p.m. EDT on Sunday evening in New York…Labour Day holiday or not!  The low tick came around 8:45 a.m. China Standard Time on their Monday morning — and it chopped quietly and unevenly higher until the 10:30 a.m. morning gold fix in London.  It was sold back to the $1,200 spot mark within the next thirty minutes — and didn’t do much after that.

The low tick in the October contract was $1,196.10 — and in December it was $1,201.20.

Gold was closed in New York on Monday at $1,200.90 spot, up one thin dime.  With New York closed, net volume was only 115,000 contracts — and roll-over/switch volume was around 2,700 contracts.

Not surprisingly, the silver price got the same treatment as gold, except its low came shortly after 9 a.m. CST on their Monday morning…a bit later than the low tick in gold.  It edged higher from that juncture until a few minutes after 9 a.m. in London — and the proceeded to drift a few pennies lower into the 1:00 p.m. EDT close.

The low tick in silver on Monday was recorded by the CME Group as $14.43 in the December contract.

Silver finished the Monday session at $14.46 spot, down 4.5 cents on the day.  Net volume was 28,800 contracts — and roll-over/switch volume only amount to just under 800 contracts.

Platinum had a bit of a similar, but inconsequential, down/up dip the same time as gold and silver — and was back to about unchanged by 10 a.m. in Zurich on their Monday morning.  The price chopped quietly sideways from there — and platinum finished the day at $787 spot, up a dollar on the day.

It was about the same for palladium — and its low was also set around 9 a.m. China Standard Time on their Monday morning .  From there it didn’t do much until around 2 p.m.   Then it rallied a handful a handful of dollar by shortly before 10 a.m. in Zurich.  It hung in there until around 1 p.m. CEST — and then was also sold back to about unchanged on the day.  Palladium was closed at $997 spot, down a buck.

The dollar index closed very late on Friday afternoon at 95.10 — and it jumped up around 8 basis points the moment that trading began a few minutes before 5/6 p.m. EDT on Sunday evening in New York, but was back to around unchanged by 2 p.m. China Standard Time on their Monday afternoon.  It chopped quietly, but erratically sideways from there — and from 1 p.m. EDT onwards, didn’t do much.  The dollar index finished the Monday session at 95.14…up 4 basis points from Friday’s close.  Here’s the 1-day intraday chart.

Here’s the 3-day dollar index chart so you can see the activity right from the 5 p.m. EDT open in New York on Sunday evening.

With New York shut tight, there were no reports from anybody, anywhere on Monday.


Here are two charts that Nick Laird always passes out on Friday — and because my Saturday column is full up with other charts, I always leave them for Tuesday — and here they are.  These 2-year charts show the amount of gold and silver in all know depositories, mutual funds and ETFs, as of the close of business last Friday…August 31 — and nothing has changed.  More gold is being withdrawn from GLD — and more silver is being deposited in SLV.   And, except for Ted, not a word is spoken about this screamingly obvious dichotomy.  Click to enlarge for both.

And here are the same two charts as shown above, except they have a 20-year time line.  The dichotomy is even more obvious and extreme in these graphs.  Gold inventories follow the gold prices almost tick for tick…at least up until the start of 2016.  But that’s not the case in silver…not even close.  Click to enlarge for both.

About the only reason I have a column today is because I want to post the stories that I’ve accumulated over the last three days.  I have an average number.


CRITICAL READS

Washington’s Trade Wars Make the Coalition of American Victims Uncomfortably Large

These days, experts both in and out of the U.S. tend to agree that Washington has been resorting to sanctions as the foreign policy tool of choice way too often, thus expanding and strengthening the so-called coalition of American victims. Moreover, this approach tends to be incredibly damaging to the public perception of the United States across the globe, which may prove to be a serious self-inflicted blow to the global dollar system.

As it’s been reported by The Washington Post, a study drafted by the Gibson Dunn law firm shows that the Trump administration blacklisted nearly 1,000 people and entities last year. Experts believe that the United States is already well into overreach territory with the list of individuals and entities sanctioned running more than 1,100 pages.

As the list of countries sanctioned by Washington increases, their respective leaders start reevaluating the ties their states used to enjoy with the United States, which puts them on the list of the coalition of American victims. First of all, the new package of sanctions on Russia coupled with additional tariffs imposed on Chinese exports resulted in the further strengthening of bilateral ties between Beijing and Moscow. These days, those players have formed the most profound economic and military bond since the last formal split between the two states back in 1979, when Russia was still a part of the Soviet Union. Last year alone, the bilateral trade turnover between those states increased by 20%, with its volume exceeding one hundred billion dollars. But what is even more important is that Russia has taken the position of China’s largest and most reliable supplier of energy resources.

Both Moscow and Beijing are sending clear signals to the United States that they will be not shoved aside on the road to the future world order. It’s curious that among the reasons why the United States has actually managed to win the Cold War was the fact that it managed to draw China over back in 1972. However, even a cursory look at the modern history of international relations makes it obvious, that Russia has also been used by Washington on multiple occasions to apply more pressure on China. However, modern American politicians couldn’t care less about history lessons, as they are determined to carry on their sanctions spree without ever giving a second thought to the possible consequences. By attacking both of these Eurasian giants simultaneously, Washington transforms their close ties into a strategic alliance. And should Washington keep dismissing it, the price it’s going to pay for that one day may simply be inconceivable.

This commentary put in an appearance on the journal-neo.org Internet site on August 31 — and it comes to us courtesy of Larry Galearis.  Another link to it is here.


The Weaponization of the U.S. Dollar — Pepe Escobar

Crashing Currency Chaos Spreads Across the Global South

The Iranian rial: crash. The Turkish lira: crash. The Argentine peso: crash. The Brazilian real: crash. There are multiple, complex, parallel vectors at play in this wilderness of crashing currencies. Turkey’s case is heavily influenced by the bubble of easy credit created by European banks.

Argentina’s problem is mostly to do with the neoliberal austerity of President Mauricio Macri’s government admitting it won’t be able to fulfill payment targets agreed with the IMF less than three months ago.

Iran’s has to do with harsh United States sanctions imposed after the Trump administration’s unilateral pullout from the Iran nuclear deal.

Brazil’s has to do with what the Goddess of the Market considers anathema: a victory by the imprisoned Lula (former president Luiz Inácio Lula da Silva) or his appointed candidate in the presidential election next October.

This is a serious currency crisis affecting key emerging markets. Three of these – Brazil, Argentina and Turkey – are G20 members, and Iran, absent external pressure, would have everything to qualify as a member. Two – Iran and Turkey – are under U.S. sanctions while the other two, at least for the moment, are firmly within Washington’s orbit.

This commentary by Pepe appeared on the informationclearinghouse.com Internet site on Sunday sometime — and I thank Brad Robertson for sharing it with us.  Another link to it is here.  There was a parallel story to this posted on the rt.com Internet site yesterday afternoon Moscow time.  It’s headlined “Ditch the dollar: World leaders who challenged reliance on U.S. currency” — and I thank George Whyte for that one.


Mexico’s Central Bank Just Broke with the War on Cash

A strange thing just happened in Mexico. The Bank of Mexico (Banxico), announced that it is considering launching a 2,000 peso note (ca. $105), double the highest denomination note currently in circulation. It’s also considering doing away with Mexico’s lowest denomination 20 peso bill (ca. $1.05), which will be replaced by a coin with the same face value.

Not everyone’s happy about the proposal, which forms part of a range of measures aimed at updating Mexico’s currency notes. Miguel González Ibarra, director of the Center for Financial Studies and Public Finance of the National Autonomous University of Mexico, said that introducing a higher denomination bill flies in the face of the broad trend among advanced economies to weed out such notes.

In Mexico the highest denomination bill currently in circulation, the 1,000 peso note, was introduced in April 2008. But even today the bill is still rejected by many retail establishments due to the inconvenience of providing so much change or out of fear that it could be forged, which begs the question: why the sudden need for an even higher denomination note? The most likely answer? To keep up with inflation.

In the last 10 years the Mexican currency has lost much of its value despite the fact that inflation during that time has been relatively tame by Mexican standards! The accumulated inflation rate of the last 10 years of so-called “moderate” inflation is 51%. The result has been a 34% fall in purchasing power.

This commentary was posted on the wolfstreet.com Internet site on Sunday sometime — and I thank Paul Fillion for pointing it out.  Another link to it is here.


Peso Set to Disintegrate After IMF Tells Argentina to Stop Supporting Currency

On May 11, three days after Argentina secured a $50 Billion IMF bailout – the largest in the fund’s history – we jokingly noted that with the peso resuming its slide, an indication the market did not view the IMF backstop as credible, the ECB would need to get involved.

In retrospect, it now appears that this may not have been a joke, because with the Peso plummeting, and surpassing the Turkish Lira as the worst performing currency of 2018 having lost half its value YTD…with the bulk of the collapse taking place in August.

Christone Lagarde had even more bad news for Buenos Aires and Argentina president Mauricio Macri: the IMF now insists that after burning through billions in central bank reserves, Argentina should stop using funds to support the peso, and float it freely.

According to Infobae, the Argentine foreign currency reserves have declined below the level demanded by the IMF, with Argentine authorities selling $2.5BN to support the peso in August; meanwhile the overall level of reserves has slumped even more, approaching the levels before the IMF bailout while failing to prop up the currency which, as shown below, has collapsed in a move reminiscent of what is taking place in hyperinflating Venezuela.

Worse, the Argentine Peso suffered its latest sharp drop in the days after the central bank unexpectedly hiked rates to 60% – the highest in the world – and another indication that the market is firmly convinced that not even the IMF backstop will force Argentina into a painful, and politically destabilizing structural program.

Meanwhile, as the IMF tells Argentina to let the peso “drop dead“, fears of an economic depression are growing, and as Infobae notes, “unable to defuse the bomb left by the Kirchner regime, the government now faces the obligation to make a painful structural adjustment , as has happened so many other times in Argentina. Everything that the government wanted to avoid with its gradualist policies was ushered in by the market: mega-devaluation, high inflation and a collapse in purchasing power” as IMF enforces another round of austerity in Argentina; the same Argentina which defaulted the last time the IMF was in charge. The result, Infobae laments, is well known: “a fall in activity and increase in poverty.”

This news item showed up on the Zero Hedge website at 1:05 p.m. EDT on Sunday afternoon — and another link to it is here.


Grave Mistake“: Trump Threatens Assad Over Impending Idlib Assault

It seems to happen just about every September and April over the past years: every time the Syrian proxy war seems to have receded from international media attention for a period of a long summer or a winter, a mass attention-grabbing event or massacre happens to suddenly yank the world’s (and the White House’s) focus right back on the war and a return to intervention and escalation mode.

And curiously, this seems to occur the moment Assad and the Syrian Army alongside the Russians are on the path to overwhelming victory.

On Monday evening of Labor Day, President Donald Trump weighed in with what’s clearly a veiled threat warning Syria and its allies via Twitter:

President Bashar al-Assad of Syria must not recklessly attack Idlib Province. The Russians and Iranians would be making a grave humanitarian mistake to take part in this potential human tragedy. Hundreds of thousands of people could be killed. Don’t let that happen!

And immediately following, U.S. Ambassador to the United Nations Nikki Haley tweeted her own statement based on the president’s words, while specifically invoking the U.S. charge that Assad plans to use chemical weapons.

Haley wrote: All eyes on the actions of Assad, Russia, and Iran in Idlib.

These latest threats confirm what we previously reported over the weekend: that the U.S. is seeking to create a quagmire for Russia and Iran in order to pressure both countries to acquiesce to Washington’s demands. In the case of Iran the White House is seeking new negotiations after the U.S. pulled out of the 2015 nuclear deal (JCPOA) last May.

This Zero Hedge story was posted on the Zero Hedge website at 8:39 p.m. on Monday evening EDT — and another link to it is here.


U.S. dollar completely ditched in trade between Iran and Iraq – official

The U.S. dollar is no longer used by Tehran and Baghdad in bilateral trade, giving way to the euro and local currencies, as well as direct barter of goods, head of the Iran-Iraq Chamber of Commerce Yahya Ale-Eshagh has revealed.

“[The] U.S. dollar has been removed from the list of currencies used by Iran and Iraq in their trade transactions and they are using Iranian rial, euro and Iraqi dinar for financial transactions,” Ale-Eshagh said on Saturday, as quoted by local media.

Apart from switching from the U.S. dollar to alternative currencies, Iranian and Iraqi merchants have been engaging in barter operations, according to the official. The banking system, however, still needs improvements, since only a fraction of trade between the two countries actually goes through banks.

Resolving the banking system problem must be a priority for both Iran and Iraq, as the two countries have at least $8 billion in transactions in the worst times,” Ale-Eshagh stated.

Iraq is the second country after China in terms of trade volume with Iran, according to the official. While exports to China are almost exclusively petrochemical products, Baghdad purchases a large variety of Iranian goods, helping to maintain high employment rates, Ale-Eshagh explained.

This news item was posted on the rt.com Internet site at 3:16 p.m. Moscow time on their Sunday afternoon, which was 8:16 a.m. in Washington — EDT plus 7 hours.  I thank Swedish reader Patrik Ekdahl for sending it our way.  Another link to it is here.


Amid Iran’s currency crash, renting apartment requires two gold coins

It’s the commodity that becomes a safe haven at times of economic crisis. Now, with the crash of the rial, Iranians are using gold for more everyday payments, most notably rent — but the resulting price hikes are starting to affect the demographics of Tehran itself. …

Hesam Oqabai, the chairman of the Real Estate Agents Union of Tehran province, said the housing market accounts for about 45 percent of activity in the Iranian economy.

Given our country’s economic condition, the fluctuations in the foreign exchange market are affecting the housing market,” he said.

The result has been a doubling of rents in some Tehran neighborhoods, including Dibaji Jonubi, Shahrake Qarb, Mirdamad and Ferdows Qarb. …

Esamil Jalali is a landlord in Vanak, a wealthy and well-connected bustling neighbourhood in northern Tehran.

He is one of those property owners who not only has increased his rents but also asked for payment in gold rather than in rials.

Currently he is asking prospective tenants to pay two gold coins to rent a 95 square metre apartment for one month.

This gold-related news story showed up on the middleeasteye.net Internet site last Wednesday — and I found it embedded in a GATA dispatch on Saturday.  Another link to it is here.


American hysterics at the meeting of Bolton and Patrushev — Ruslan Ostashko

This 4:11 minute video clip from the Russian program PolitRussia.com Internet site is all in Russian, of course, so make sure you click on the ‘cc’ button to see the English language captions.

This clip found a home over on thesaker.is Internet site back on August 27 — and it’s certainly worth watching if you have the interest.


Nothing But Lies and Deceit” – U.S. Cancels Pakistan Military Aid Over Refusal to Root Out Militants

Amidst slowly deteriorating relations and after pressure to curtail insurgent cross-border activity into neighboring Afghanistan, Pakistan’s routine military aid from Washington has been cut after the vast chunk an originally planned total of $345 million in aid was temporarily suspended.

The Pentagon revealed Saturday that “it has made a final decision” to cancel $300 million in aid to the country — this after another $550 had been stripped by Congress earlier this year, bringing the total withheld from Pakistan to $800 million.

It appears President Trump is following up on prior personal threats to do just this, as his first tweet of 2018 had charged the longtime U.S. ally with paying back American foreign aid with “nothing but lies & deceit“. He also vowed, “They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!

The Department of Defense made future delivery of the aid conditional on Pakistan’s willingness and success in rooting out Islamist militants seeking safe haven in the country, and who throughout the 17-year war in Afghanistan have attacked U.S. troops and Afghan national forces from across Pakistan’s porous northwest border region.

This is another Zero Hedge story.  This one showed up at 2:01 p.m. on Sunday afternoon EDT — and another link to it is here.


Cash ban only taught Indians not to trust the banking system

The chaos of demonetization probably made millions leery of formal finance

The Indian central bank’s final tally of Prime Minister Narendra Modi’s 2016 demonetization drive, intended to take money derived from tax evasion out of circulation, showed that 99.3 percent of outlawed high-value banknotes had been returned. That’s a severe loss of face for officials, who had argued that holders of the cash would rather destroy it than return it to banks, providing a windfall for the government.

The authorities managed to produce several other defenses of the initiative, however. One in particular was appealing to financial markets: The notion that, in Finance Minister Arun Jaitley’s words, “Demonetization appears to have led to an acceleration in the financialization of savings.” Households that traditionally kept their savings in cash would now prefer to put the money into other instruments, perhaps even the stock market. This would increase the amount of capital available for companies to deploy and banks to lend, spurring economic growth.

There certainly were some indicators to support the idea. For one, Life Insurance Corp. of India saw a 142 percent increase in premium collection in the month demonetization was carried out. And Indian stocks have been on a record-breaking run, even though foreign investors were net sellers so far this year.

Unfortunately, the Reserve Bank of India punched a hole in that hypothesis, too. Its annual report, as well as tallying the result of demonetization, provided a breakdown of savings by households, a category that includes small and unregistered enterprises. It turns out that net financial savings for the fiscal year that ended March 31 were 7.1 percent of overall disposable income — less than the average for the five years prior to demonetization.

Worse yet, perhaps, households are keeping far more of their net savings in cash, not less. And their net savings going to banks are almost 50 percent lower than the five-year average before demonetization. In other words, the idea that the crackdown would leave banks flush with household savings that they could lend to productive parts of the economy has been comprehensively debunked.

This very worthwhile Bloomberg article put in an appearance on their Internet site at 6:00 p.m. Denver time on Saturday evening — and I found it on the gata.org Internet site.  Its actually headline reads “India’s Cash Ban Failed Even to Create a Bank Savings Culture” — and another link to it is here.


India’s central bank sells Treasuries and buys gold for first time in nearly a decade

The Reserve Bank of India has bought gold for the first time in nearly a decade, signalling that the metal could be in demand as a store of value when returns and capital values of fixed-income bonds are declining in a rising-rate environment.

The RBI added 8.46 metric tonnes of gold to its stock of holdings during the financial year 2017-18 ending June 30, taking the level of gold reserves to 566.23 metric tonnes, according to its latest annual report.

It last bought 200 metric tonnes from the International Monetary Fund to boost its reserves in November 2009.

Over the past nine years, the gold stock in RBI reserves was stable at 17.9 million troy ounces. But the RBI has started adding to its stock since December 2017, data submitted to the IMF indicate.

The RBI’s stock of gold, as of June 30, amounted to 18.20 million troy ounces or equivalent to 566.23 metric tonnes, up from 17.9 million troy ounces in November 2017.

The RBI’s decision to buy gold is significant because unlike many other central banks such as the People’s Bank of China, the RBI does not regularly trade in gold, although the RBI Act permits it to do so.

This gold-related news item showed up on The Economic Times of India website on Monday sometime — and I extracted it from another GATA dispatch.  Another link to it is here.


Perth Mint’s August gold, silver sales rise on lower prices

Sales of gold products by the Perth Mint in August rose from a month earlier to their highest since October 2017, as lower bullion prices attracted buying, the mint said on Monday.

Sales of gold coins and minted bars surged 30 percent to 38,904 ounces last month, the mint said in a blog post.  Gold sales in August nearly doubled from a year-ago period.

Lower bullion prices continued to support interest in our minted products among investors,” a company spokesman said.

Gold prices fell about 2 percent in August, declining for a fifth straight month in their longest losing streak in 5-1/2-years.

Silver sales rose nearly 7 percent from July to 520,245 ounces. From a year earlier, sales advanced about 33 percent. Silver prices fell 6.5 percent in August, marking their third straight monthly decline.

This very brief new item, filed from Bengaluru in India, was posted on the af.reuters.com Internet site on Monday sometime — and I found it on the Sharps Pixley website.  Another link to it is here.


The PHOTOS and the FUNNIES

It was a decent day on Sunday, so I went out to the pond to see what interesting ‘critters’ were passing through on the fall migration.  Nothing happened for the first twenty minutes or so, but now I have enough photos to last the rest of this week.  The first is this male downy woodpecker that showed up out of nowhere while I was patiently waiting for a kingbird to land on its favourite perch.  Normally I only see these creatures in the winter time, so this was a nice surprise.  Click to enlarge.


The WRAP

Since the interim highs in gold, silver and platinum at the cut-off on Tuesday of last week, the price pressure has been on in all three of these precious metals and, except for platinum, they set new low closes yesterday for this 1-week move lower.  This is particularly true of silver, which JPMorgan et al actually got within a few pennies of its current mid-August low tick for this move down in very early morning trading in the Far East on their Monday.

As Ted pointed out in his weekly commentary on Saturday, he calculates that JPMorgan is within 5-7,000 contracts of being out of its short position in silver in the COMEX futures market — and this past four business days worth of engineered price declines may be their continuing effort to eliminate that remaining amount entirely.   And based on how they’re progressing so far, they just might succeed.

Since the U.S. was closed on Monday, there are no 6-month charts for you.

And as I type this paragraph, the London open is less than ten minutes away — and I note that any and all of the smallish rally attempt in gold in Far East trading on their Tuesday were sold lower.  It made almost back to unchanged by shortly before 2 p.m. China Standard Time, but then was sold down hard starting at 2 p.m. CST — and is currently down $6.10 the ounce.  ‘Da boyz’ had silver follow an identical price pattern, but ‘da boyz’/JPMorgan pulled their bid minutes before the London open — and it’s down 16 cents at the moment — and a new low for this engineered price decline!  It was more or less the same for platinum.  It was up 3 bucks by shortly before 2 p.m. over there but, like the other precious metals, has been hammered lower going into the Zurich open — and is down 5 dollars.  Palladium was forced to trade a dollar or two lower as well in Far East trading — and also got smacked going into the Zurich open — and it’s down 5 bucks.

Net HFT gold volume [minus Monday’s volume] is coming up on 52,000 contracts — and roll-over/switch volume is 2,400 contracts, net of Monday’s volume as well.  Net HFT silver volume [minus Monday’s] is about 9,200 contracts — and roll over/switch volume in that precious metal is 1,600 contracts…net of Monday’s volume.

The dollar index made it up to the 95.27 mark by minutes after 10:30 a.m. CST on their Tuesday morning, before drifting quietly lower until around 1:35 p.m. CST.  A big ‘rally’ began at that juncture — and it’s now up 26 basis points as London opens.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report and the companion monthly Bank Participation Report.  Not that I’m rooting for it or anything, but if JPMorgan is in the process of eliminating the last of their silver short position, I’d be grateful if they had it completed before 1:30 p.m. EDT this afternoon — and it certainly appears that they’re hard at it!

And as I post today’s column on the website at 4:04 a.m. EDT, I see that the price pounding continues in all four precious metals, as ‘da boyz’ are getting more serious.  Gold is down $6.50 an ounce — and silver is down 18 cents.  They now have platinum and palladium down 9 dollars and 11 dollar respectively.

Here’s what the silver chart looks like as I hit the ‘publish’ button on today’s column.

Gross gold volume [net of Monday] is about 84,500 contracts — and once the roll-over/switch volume is taken out…net of Monday’s switch volume as well…net HFT gold volume is now up to  just under 74,000 contracts.  Net HFT silver volume is about 18,500 contracts — and there’s 1,680 contracts worth of roll-over/switch volume in that precious metal.  Both numbers are net of Monday’s volumes as well.

The dollar index took a bit of a breather around the London open, but is now heading higher once again, at least for the moment — and it’s up 32 basis points.

I have no idea how the rest of the Tuesday session will unfold, but after looking at the last couple of hours of price bashing by JPMorgan et al, nothing will surprise me when I roll out of bed later this morning.

See you here tomorrow.

Ed