Is JPMorgan Out of Its Short Position in Silver?

05 September 2018 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price made three rally attempts between the 6 p.m. open in New York on Monday evening — and 2 p.m. China Standard Time on their Tuesday afternoon.  The first two were met with quiet selling pressure the moment that they made it back to the unchanged mark.  The third rally attempt got the ‘Full Monty’ — and ‘da boyz’ set the low tick of the day at, or shortly after the, the afternoon gold fix in London.  The price chopped quietly higher from there into the 1:30 p.m. EDT COMEX close — and then it was sold equally quietly and unevenly lower from there until trading ended at 5:00 p.m. EDT.

The high and low ticks are barely worth looking, but here they are anyway.  In October, the high and low ticks were recorded as $1,204.50 and $1,190.00 — and in the December contract, those numbers were $1,209.70 and $1,195.10.

Gold was closed in New York yesterday at $1,191.10 spot, down $9.80 from Monday’s close.  Net volume, minus Monday’s, was around 275,000 contracts — and roll-over/switch volume, also net of Monday’s volume, was about 10,800 contracts.

The silver price didn’t do much of anything from the 6:00 p.m. EDT open on Monday evening in New York, until JPMorgan dropped the hammer at 2 p.m. CST on their Tuesday afternoon.  They set the low tick of the day at, or shortly after, the afternoon gold fix in London and, like gold, it crawled unsteadily higher into the COMEX close from there — and then didn’t do much of anything after that.

The high and lows in this precious metal were reported by the CME Group as $14.59 and $14.035 in the December contract.

Silver was closed on Tuesday at $14.135 spot, down 32.5 cents from Monday — and 37 cents from last Friday’s close.  Not surprisingly, net volume…minus Monday’s…was very heavy at about 100,500 contracts — and [net] roll-over/switch volume was a bit under 4,900 contracts on top of that.

Platinum traded sideways to down a bit until shortly after 1 p.m. China Standard Time on their Tuesday afternoon.  It jumped up 3 bucks at that point, to $790 spot, but ‘da boyz’ were right there with their spoofing and their algo spinning, with the low tick being set shortly after 9 a.m. in New York.  It was allowed to chop quietly higher until around 1 p.m. EDT — and it traded unevenly sideways for the remainder of the Tuesday session.  Platinum finished the day at $777 spot, down an even 10 bucks from Monday’s close.  JPMorgan et al had it down 22 dollars at its low tick of the day.

The palladium price crawled quietly lower in Far East trading on their Tuesday — and was down 2 dollars by shortly before the Zurich open.  At that point, a trap door opened under its price as well — and the spike low tick was set minutes after 8:30 a.m. in New York, although the price trend was already higher starting an hour before that.  It continued to rally sharply, but under obvious interference, until the $987 spot high tick was set shortly before 1 p.m. EDT.  At that juncture it was up 9 dollars on the day.  But ‘da boyz’ wouldn’t let that stand — and a very few minutes later it was hauled lower — and closed at $979 spot, up only 2 bucks from Monday.

The dollar index closed very late on Monday afternoon in New York at 95.14 — and it began to ‘rally’ the moment that trading began very early on Monday evening in New York.  It made it up to the 95.27 mark by around 10:35 a.m. China Standard Time on their Tuesday morning, but it sank back to just about unchanged by 1:30 p.m. CST.  It was up, up and away from there — and all of the gains that mattered were in by shortly after 9 a.m. in London.  From that juncture the index traded mostly sideways until minutes before 9 a.m. in New York five hours later.  Then it began to head unsteadily higher — and the 95.74 high tick of the day came at precisely 10 a.m. EDT…which was the afternoon gold fix in London.  The index more or less hung in there until around 10:40 a.m. — and then began to head sharply lower.  That decline ended around 12:45 p.m. — and it didn’t do much from that point until trading ended late yesterday afternoon EDT.  The dollar index finished the Tuesday session at 95.43…up 29 basis points from Monday’s close.

Only platinum began to head lower as the dollar index began to head higher at 1:30 p.m. CST — and even then, there was a decent time lag between those two events.  Gold and silver didn’t follow until kicked downstairs starting at 2 p.m. CST, about half an hour later — and palladium didn’t get any help lower until a few minutes before the Zurich open…about eighty minutes later.

You’ll excuse me for thinking this once again, but that dollar index ‘rally’ looked just as engineered as the price declines in the precious metals that followed.   But it was a very decent fig leaf — and JPMorgan used it to their advantage.

And here’s the 6-month U.S. dollar index — and we’ll see if this current ‘rally’ continues or not.

The gold stocks gapped down about 3 percent or so at the open — and their respective lows came around 10:45 a.m. in New York trading.  They recovered a hair by the 11 a.m. EDT London close — and then traded almost ruler flat for the rest of the Monday session.  The HUI closed down 4.10 percent.

It was almost the same price path for the silver equities — and at their 10:45 a.m. EDT lows, they were down 6 percent.  But they began to edge quietly and steadily higher — and that continued right until trading ended at 4:00 p.m. in New York.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down another 4.32 percent.  Click to enlarge if necessary.

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

Without doubt there was fairly substantial institutional selling yesterday at the 9:30 a.m. open of the equity markets in New York.  But always remember that every stock dumped in a panic, or in a forced sale situation, was bought by ‘someone’ — and it’s an extremely safe bet that they now reside in the strongest of hands.


The CME Daily Delivery Report showed that 10 gold and 593 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday. In gold, Advantage issued all of them from their client account.  They also picked 3 contracts as a long/stopper.  JPMorgan stopped 2 for its client account — and Morgan Stanley stopped 5 for its in-house/proprietary trading account.  In silver, there were nine short/issuers in total, but the only two that mattered were JPMorgan and International F.C. Stone, as they issued 434 and 117 contracts out of their respective client accounts.  There were also nine long/stoppers in total as well.  The biggest by far was JPMorgan with 307 in total…221 for its own account, plus another 86 for its client account.  The number two and three long/stoppers were HSBC USA and Goldman Sachs.  They stopped 148 and 83 contracts for their respective in-house trading accounts.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session also includes all of the volume data for Monday as well.  Gold open interest in September declined by 43 contracts, leaving 101 still open, minus the 10 mentioned just above.  Friday’s Daily Delivery Report showed that 49 gold contracts were actually posted for delivery today, so that means that 49-43=6 more gold contracts were added to the September delivery month.  Silver o.i. in September dropped by 551 contracts, leaving 1,991 still open, minus the 593 contracts mentioned in the previous paragraph.  Friday’s Daily Delivery Report showed that only 316 silver contracts were posted for delivery today, so that means that a chunky 551-316=235 silver contracts vanished from September.  That’s a lot!


There was another very large withdrawal from GLD on Monday, as an authorized participant removed 265,033 troy ounces.  There were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, August 31 — and this is what they had to report.  Their gold ETF added a very impressive 34,977 troy ounces — and their silver ETF increased by 161,332 troy ounces.

There was a decent sales report from the U.S. Mint to start the month of September.  They sold 6,500 troy ounces of gold eagles — and 400,000 silver eagles…but no gold buffaloes.  It’s an excellent bet that these sales were not to John Q. Public, as they are no longer around.

The only physical activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday, was 2,175 troy ounces that was left at Delaware.  But there was 89,023 troy ounces transferred from the Registered category — and back into Eligible.  Of that amount, there was 69,956 troy ounces at Brink’s, Inc. — and 28,066.950 troy ounces/873 kilobars [U.K./U.S. kilobar weight] at JPMorgan.  A link to that activity is here.

There was a bit more activity in silver, as a truck load…599,984 troy ounces…was received at CNT — and 110,904 troy ounces was shipped out of Canada’s Scotiabank.  The link to that is here.

There wasn’t much happening over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They didn’t receive any — and only 150 were shipped out.  That activity was at Brink’s, Inc. of course — and I won’t bother linking it.


Here are a four charts that Nick passed around yesterday.  These first two, which are both 10-year charts, show gold and silver bullion coin sales for the U.S. Mint, updated with August’s sales data.  The gold coin sales include gold buffalo sales as well as gold eagle sales.  Click to enlarge.

These next two charts are 6-year charts — and are for The Perth Mint…updated with gold and silver bullion coin sales for August as well.  Click to enlarge if necessary.

I only have four stories for you today.


CRITICAL READS

America’s Finances Seem Fishy — Bill Bonner

What the Argentines don’t know about financial fishiness isn’t worth knowing.

Last week, for example, the central bank of Argentina fixed its key rate at 60% – after its previous fix of 45% failed to fix the problem of the failing Argentine peso – leaving the pampas in the same fix they were in before.

The real problem is that they borrow too much money. Then, they’re far from being reliable payers. They default punctiliously – about once every 10 years. Then, they start again, usually with the help of the International Monetary Fund – which lends, of course, other people’s money… and doesn’t worry too much about getting it back.

(We will be going back to Argentina in a couple of weeks, where our dollars are worth about three times as much as they were a year ago. We’ll give you a fuller report then.)

In the meantime, part of the reason Argentina is so desperate is that it has a government deficit of 6% of GDP; by comparison, Italy has a deficit of only 2% of GDP.

But wait. What about the U.S.? Over the last 12 months, government debt rose by about $1.2 trillion.

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


India Joins China in Defying Trump, Will Allow Imports of Iranian Oil

Two weeks after China – the top importer of Iranian crude oil – defied the White House, disclosing that it would continue importing Iranian oil ignoring U.S. sanctions on Tehran, India, the second biggest buyer of Iranian oil exports, has given permission to its state refiners to import Iranian oil using a similar scheme as China in which Tehran would arrange tankers and insurance after firms including the country’s top shipper Shipping Corp of India halted voyages to Iran due to U.S. sanctions.

According to Reuters, New Delhi’s attempt to keep Iranian oil flowing mirrors a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Co. China previously said that it would not stop buying Iranian oil despite U.S. efforts to bring the Iranian exports down to ‘zero.’ But Beijing is also said to have agreed not to increase its oil purchases from Iran.

The move will benefit Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and MRPL, which plan to lift Iranian cargoes during the rest of the fiscal year ending on March 31. India wants to continue buying oil from OPEC member Iran as Tehran is offering almost free shipping and an extended credit period.

With the Indian decision, it is possible that virtually all of Iran’s output could be captured by just China and India if Tehran’s other “pro-U.S.” clients decide to comply with the U.S. sanctions. Indian state refiners, which drove India’s July imports of Iranian oil to a record 768,000 barrels per day, had planned to nearly double oil imports from Iran in 2018/19.

This news story appeared on the Zero Hedge website at 2:45 p.m. EDT yesterday afternoon — and I thank Brad Robertson for sending it along.  Another link to it is here.


Perth Mint August Gold sales mark best since October 2017

The Perth Mint’s Gold products sales shot up by 30 percent month on month to 38,904 ounces during the month of August this year, while Silver products sales gained by 7 percent from July to 520,245 ounces, said the mint in a blog post.

Perth Mint’s Gold products sales during the month of August marked their highest since October 2017 mainly due to as lower prices attracted buying.

However, Perth Mint’s August Gold sales nearly doubled from last year, while silver sales climbed about 33 percent.

Silver prices declined 6.5 percent during the month of August, marking their third straight monthly decline.

The Perth Mint refines more than 90 percent of newly mined gold in Australia, the world’s No. 2 gold producer after China.

The above five paragraphs are all there is to this short news item filed from Perth, Australia.  It showed up on the scrapregister.com Internet site on Tuesday sometime — and another link to it is here.  I ‘borrowed’ it from the Sharps Pixley website.


Japan braces for gold smuggling rush in shadow of tax hike

As Japan prepares to raise the consumption tax for the first time in half a decade next year, the Ministry of Finance worries that gold smuggling will also get a boost.

When the tax was last increased in 2014, to 8 percent to 5 percent, smuggling of the precious metal jumped as criminal organizations quickly realized how to game the system for their own enrichment.

The scheme works like this: Procure gold in places like Hong Kong, which does not tax it. Have mules hide it in their luggage and blend in with tourists, traveling to Japan to sell to stores that buy gold from the public. The stores pay for both the gold itself and the consumption tax. The tax component becomes pure profit.

And with the consumption tax set to rise to 10% in October 2019, margins will grow even fatter.

Japan has an unflattering reputation as a “go-to place” for gold smugglers. In 2017, there were 1,347 cases discovered by law enforcement — 112 times the tally from 2013, the year before the last tax hike. Seized gold last year amounted to 6,236 kg, a 47-fold increase.

This very interesting and worthwhile gold-related article put in an appearance on the asia.nikkei.com Internet site at 3:16 p.m. Japan Standard Time on their Tuesday afternoon, which was 2:16 a.m. in New York…EDT plus 11 hours.  I found it in a GATA dispatch yesterday morning — and another link to it is here.


The PHOTOS and the FUNNIES

Back to the ‘Big Island’…Hawai’i…once again for this photo, plus two video clips.  This is another early-morning picture of the boat ramp at Isaac Hale Beach Park — and a ‘sand’ bar, comprised of black ‘sand’ and lava fragments carried by long-shore currents from the lava delta, continues to block it.  If this boat ramp ever reopens, which is highly unlikely, it certainly won’t be in its current form.  Click to enlarge.

The first video clip is a 34-second aerial shot of fissure 8 that was taken on Monday.  There’s a full description of what you’re seeing at the front of it, so I won’t add anything now — and the link to that is here.  The second video, shot on August 26 — and which runs for 2:15 minutes, is really spectacular.  It’s of the crater rim at Kīlauea volcano.  The volume change, from early May 2018 to present, is over 825 million cubic meters (1 billion cubic yards). The vertical collapse of the crater floor is more than 500 m (1,600 ft).  Full-screen viewing is a must — and the link to that is here.  The photo and videos are courtesy of the U.S. Geological Survey.


The WRAP

In what had all the hallmarks of an engineered dollar index rally to camouflage an equally engineered price decline in all four precious metals…plus copper…JPMorgan went to work to cover what was left of its remaining short position in silver.  They’ve been hard at it ever since the COMEX close back on Tuesday August 28.  It all appeared to end with this final wash-out yesterday.

As silver analyst Ted Butler has already stated in his weekly review on Saturday– and I mentioned in my Saturday missive as well, he estimated JPMorgan’s short position in silver “to be no more than 7,000 contracts to possibly 5,000 contracts or less. And if it was not holding such a small short position as of [last] Tuesday, it would appear to be since the cutoff.

It’s a fairly safe assumption to make that they’re most likely out of it by now, but Ted won’t know for sure until Friday.

Here are the 6-month charts for all of the ‘Big 6’ commodities — and you can see the handiwork of ‘da boyz’ in three of the four precious metals…plus copper.  But it’s the pounding in silver…from its high through its low tick during the reporting week…that really stands out.  The ‘click to enlarge‘ feature only helps with the first four graphs.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price traded sideways until around 9 a.m. China Standard Time on their Wednesday morning. At that juncture it began to edge higher, as the dollar index edged lower. That state of affairs lasted until around 10:30 a.m. CST — and with a rising dollar index, the gold price has been chopping quietly lower ever since. At the moment it’s up $1.20 cents the ounce. The silver price traded virtually ruler flat until around 1 p.m. CST on their Wednesday afternoon — and it’s been ticking quietly lower since — and is down 3 cents at the moment. Platinum is a bit lower in afternoon trading in the Far East…and is down 3 bucks. Palladium is up a dollar as Zurich opens.

Net HFT gold volume is coming up on 41,000 contracts — and there’s only 803 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is about 12,700 contracts — and roll-over/switch volume in this precious metal is 1,134 contracts.

The dollar index didn’t do much when trading began at 6:00 p.m. EDT in New York on their Tuesday evening, but as I said just above, began to head lower at 9 a.m. CST on their Wednesday morning. Its current 95.28 low tick came around 10:30 a.m. CST — and at 11 a.m., began to crawl higher. It took a bit of a jump a few minutes before 2 p.m. CST — and is currently up 8 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 companion Bank Participation Report.  As I just mentioned, Ted will be able to recalibrate JPMorgan’s short position in silver, or what’s left of it…if anything, once he has those reports in hand.

I mentioned in passing in yesterday’s missive that “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“.  It certainly appears that I got my wish.

And as I post today’s column on the website at 4:02 a.m. EDT, I see that except for a minor up/down price spike, not much has changed with the gold price during the first hour of London trading. It’s up $1.50 at the moment. Ditto for silver — and it’s down 2 cents. But platinum and palladium have both been sold lower during the first hour of Zurich trading, with platinum now down 5 dollars currently — and palladium by 4.

Gross gold volume is a bit over 60,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is just under 59,000 contracts. Net HFT silver volume is a hair over 17,500 contracts — and there’s 1,206 contracts worth of roll-over/switch volume in that precious metal.

The dollar index continues to head higher — and is now up 19 basis points as the first hour of London/Zurich trading draws to a close.

So, are we done yet?  I don’t know.  Ted thought so weeks ago…as did I — and I wasn’t shy about saying so.  I even purchased more shares in three different silver mining companies that I already owned stock in.  However, with 20/20 hindsight, I did so too soon.

But I must admit the thought that JPMorgan might actually attempt to cover its remaining 20,000 COMEX contract short position in silver, was not something that seriously crossed my mind.  How wrong I was!  So, if you’re looking for a reason for all this unexpected financial and emotional pain over the last month, that would be the cause of it.

But that changes nothing.  The ‘white hot’ bullish scenario that existed a month ago is even more so now — and far better days lie ahead at some point.

See you here tomorrow.

Ed