06 September 2018 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price traded flat until around 8:30 a.m. China Standard Time on their Wednesday morning– and then began to edge very unsteadily higher until around 8 a.m. in New York/1 p.m. in London. At that point, it began to rally with a bit more authority, but was capped shortly before the equity markets opened in New York. The price didn’t do much after that.
The low and high ticks definitely aren’t worth looking up.
Gold finished the Wednesday session at $1,196.30 spot, up $5.20 from Tuesday’s close. Net volume was pretty light at a hair over 200,000 contracts — and roll-over/switch volume amounted to about 9,800 contracts.
The silver price did nothing in Far East and most of London trading. There was a rally of less than ten cents around 9 a.m. in New York, but that was quietly capped — and the silver price chopped very quietly sideways for the remainder of the Wednesday session.
The low and high ticks in this precious metal aren’t worth looking up, either.
Silver closed in New York on Wednesday at $14.165 spot, up 3 cents on the day. Net volume was pretty decent at a hair over 65,000 contracts — and roll-over/switch volume in this precious metal was just about 3,200 contracts.
Platinum traded sideways until shortly after 1 p.m. CST on their Wednesday afternoon — and at that juncture, the price pressure began — and it was sold lower until the COMEX open. The subsequent rally, which ran into a bit of ‘interference’ at or just after the London p.m. gold fix, ran out of gas/was capped at the Zurich close — and it didn’t do much of anything after that. Platinum was closed in New York yesterday at $784 spot, up 7 bucks from Tuesday.
The platinum price traded a small handful of dollars either side of unchanged in Far East trading, but was sold lower shortly after the Zurich open. It chopped quietly and unsteadily higher from there until at, or minutes before, the afternoon gold fix in London — and then was clocked for a bunch of dollars going into the Zurich close. Like platinum, the price traded pretty flat from there until trading ended at 5:00 p.m. EDT in New York. Palladium was closed at $970 spot, down 9 dollars on the day.
The dollar index closed very late on Tuesday afternoon in New York at 95.43 — and then fell down to the 95.28 mark by 10:30 a.m. China Standard Time on their Wednesday morning. But thirty minutes later it was headed higher. The 95.66 high tick was set sometime during the first hour of London trading — and it chopped unsteadily lower from there until exactly 9:00 a.m. in New York. It fell like a stone by about 35 basis points during the next few minutes. It gained a bit of that back by shortly after 11 a.m. EDT, but quietly chopped lower from there until trading ended. The dollar index finished the day at 95.11…down 32 basis points points.
It should be carefully noted that the 35 basis waterfall decline in the dollar index at 9 a.m. in New York wasn’t allowed to have much impact on precious metal prices. I’m sure that they would have been hammered lower if the dollar index rallied that much under similar circumstances.
And here’s the 6-month U.S. dollar index — and nothing should be read into it.
The gold shares opened about unchanged — and then headed lower until around 10:25 a.m. in New York trading. Thirty minutes later they were back in positive territory by a hair…but by around 1:45 p.m. EDT, they were back at their earlier lows — and they only recovered a bit after that. The HUI closed down 0.84 percent.
In most respects that mattered, the silver equities traded in a similar pattern as their golden brethren — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.64 percent. Click to enlarge if necessary.
And here’s the 1-year Silver Sentiment/Silver 7 Index courtesy of Nick Laird as well. Click to enlarge.
I would suspect that the precious metal share price action on Wednesday was a combination of forced selling by mutual funds and the like, combined with some serious bottom fishing. If I’d waited until now to back up the truck, I would have been a big buyer yesterday as well, that’s for sure…but, alas…
The CME Daily Delivery Report for Day 3 of September deliveries showed that 5 gold and 291 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. In gold, it was Advantage as the sole short/issuer — and they also stopped 3 of those contracts as well. In silver, the largest short/issuer by far was ABN Amro with 238 contracts out of its client account. Once again it was JPMorgan as the largest long/stopper, with 146 contracts in total…105 for its own account, plus another 41 for its clients. In second spot was HSBC USA with 71 for its own account. Tied for third were Citigroup and Goldman Sachs…21 for the former, for its client account — and the same number of course for Goldman, except they were for their in-house/proprietary trading account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in September declined by 9 contracts, leaving 92 still open, minus the 5 mentioned just above. Tuesday’s Daily Delivery Report showed that 10 gold contracts were actually posted for delivery today, so that means that 10-9=1 more gold contract was just added to the September delivery month. Silver o.i. in September dropped by 549 contracts, leaving 1,442 still open, minus the 291 contracts mentioned in the previous paragraph. Tuesday’s Daily Delivery Report showed that 593 silver contracts were actually posted for delivery today, so that means that 593-549=44 more silver contracts were added to September.
There were no reported changes in GLD yesterday…but here was a small withdrawal from SLV, as an authorized participant removed 147,104 troy ounces. I suspect that a withdrawal of that size would represent a fee payment of some kind.
There was a sales report from the U.S. Mint yesterday. They sold a chunky 637,500 silver eagles, but no gold bullion coins of any description.
In the first two business of days of September, the mint has sold 1,037,500 silver eagles — and in conjunction with that fact, the Internet was all atwitter yesterday with a rumour/fact that the U.S. Mint is out of stock of silver eagles. When Ted was informed of this situation by reader Rick Cordes, he had this to say…”Obviously, the Mint has scaled back production in response to the fall-off in sales (all JPM’s doing)“. He would be right about that.
Then, late last night I got this e-mail from subscriber and rare-coin dealer Richard Nachbar…
Just a heads up in case your usual eagle-eyed subscribers didn’t see this today. The U.S. Mint stopped selling 2018 Silver Eagles [ASE] today…but only temporarily. They sent an e-mail to their Authorized Purchasers [A.P.s] stating that recently increased demand had depleted their inventory.
Some A.P.s with existing 2018 ASE inventory then raised their wholesale asking prices for sealed case quantities from the usual Spot + $2.25 or so to Spot + $3.00 per coin (the Mint currently charges their A.P.s spot + $2.00). That is a wholesale premium of about 21% over spot, basis $14.20, highest this year.
Back-dated ASE product in the secondary market – which has been plentiful for the last year or so due to investor dis-hoarding – has mostly been bought up also.
Hmmm…isn’t that interesting!
There was a bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday. Nothing was reported received, but 44,045 troy ounces were shipped out. There was 27,907.068 troy ounces/868 kilobars [SGE kilobar weight] shipped out of HSBC USA — and 16,138 troy ounces shipped out of JPMorgan. There was also a transfer of 8,846 troy ounces from the Eligible category — and back into the Registered category over at HSBC USA as well. The link this activity is here.
There was some activity in silver. There was 680,938 troy ounces received — and 20,062 shipped out. One truck load…599,644 troy ounces…ended up at CNT — and the remaining 81,293 troy ounces found a home at Canada’s Scotiabank. All of the ‘out’ activity was at HSBC USA. There was also one truck load…596,583 troy ounces…transferred from the Eligible category — and into Registered — and that most likely has to do with September deliveries. The link to all this is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they reported receiving 1,200 of them — and shipped out 248. This activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Here’s an interesting chart that I pulled off Nick Lairds’ website just now. It shows gold withdrawals from the Shanghai Gold Exchange vs. World Gold Mining Production for the last ten years. Once you add India, Russia and Turkey’s gold imports on top of that, virtually all of the world’s yearly gold production has disappeared into those four countries over the last five years — and counting. Of course this demand doesn’t include the ‘rest of the world’…which is not an insignificant number.
But despite all that, JPMorgan et al have managed to keep the gold price suppressed while this has been transpiring. Click to enlarge.
It was a fairly quiet news day on Wednesday — and I have an average number of stories for you today.
The big story we’re following, by the way – which will dominate the money world for the next 10 to 20 years – is how the U.S. goes broke.
Our guess: first, with a whimper… and then a bang. Today, we look at the whimper.
The U.S. was already on the road to ruin long before the 2016 presidential election…
George W. Bush abandoned fiscal conservatism in favor of activism, war, and deficits. Barack Obama continued the program. And the Fed misled the entire world with phony price signals – putting the real cost of money at less than zero.
There was some hope that The Great Disrupter, Donald J. Trump – with his army of fed-up patriots – would drain the swamp and change the course of history. But the general quickly revealed that 1) he had no idea where the real battle was taking place… and 2) he wanted no part of it anyway.
Instead, with its tax cut, defense-spending hike, and dozens of petty distractions, the Trump administration squandered what might have been the last chance of squaring things up.
Even if the Trump team is thrown out of office in the next general election, the replacements are not likely to be any more eager to take on the Deep State than their predecessors.
Bill’s latest commentary appeared on the bonnerandpartners.com Internet site very early on Wednesday morning EDT — and another link to it is here.
When investor optimism over U.S. stocks is on the rise, so are Wall Street warnings.
Sentiment has climbed to levels that foreshadowed the year’s worst rout, prompting Citigroup to caution that another pullback may be in the offing. At Goldman Sachs, elevated valuations and a tightening labor market have driven the firm’s bull/bear market indicator to alarming highs.
It doesn’t mean the bull market will end soon. But after a 9 1/2-year rally where the S&P 500 rose 19 percent annually, investors should be prepared for lower returns in coming years, according to Goldman Sachs strategists led by Peter Oppenheimer. The firm’s bull/bear market indicator has shown a close relationship with the S&P 500’s forward returns since 1955, with peak readings coinciding with the start of the last two bear markets. Right now, it’s “flashing red”, said the strategists.
The warnings mark a turnaround from last month, when persistent stock gains prompted at least two strategists to raise their year-end forecasts for the S&P 500. The index fell 0.3 percent to 2,888.60 at 4 p.m. in New York.
This Bloomberg new story was posted on their Internet site at 6:09 a.m. Denver time on Wednesday morning — and was updated about eight hours later. I found it today’s edition of the King Report — and another link to it is here.
The July trade deficit – a closed watched number in a time of trade wars – came in at $50.1BN, fractionally better than the $50.2BN expected, but 9.5% worse than last month’s revised print of $45.7BN. This was the biggest one month move since 2015.
The deficit deteriorated as a result of less exports (-1.0%) and more imports (+0.9%). Broken down, July exports were $211.1 billion, $2.1 billion less than June exports, while July imports were $261.2 billion, $2.2 billion more than June imports. The July increase in the goods and services deficit reflected an increase in the goods deficit of $4.2 billion to $73.1 billion and a decrease in the services surplus of $0.1 billion to $23.1 billion.
But what was most important is the geographic distribution of trade, and this is where Trump will be displeased because in July the trade deficit with both China ($36.8 billion)…and the E.U. ($17.6 billion), were the highest on record.
While the number will not have much of an impact on Q3 GDP, it could have a major impact on future trade because if Trump wanted one final “sign” to slap China with $200BN of tariffs on Friday, he just got it.
This 3-chart Zero Hedge item was posted on their Internet site at 8:45 a.m. EDT on Wednesday morning — and another link to it is here. It’s the first contribution of the day from Brad Robertson.
Before I proceed in addressing some issues that Paul Craig Roberts raised in his article, partially addressed to me and Andrei Raevsky (aka Saker), I want to express my profound admiration for Dr. Roberts and his courageous civic position and his real, not for show, American patriotism. It is an honor and a privilege to be engaged in conversation with such an esteemed person, even when I disagree with him in some aspects of geopolitical reality when related to, the now official, Cold War 2.0 between the United States and Russia, and Russia’s posture in this conflict. Dr Roberts writes:
As I have made the same points, I can only applaud Martyanov and The Saker. Where we might differ is in recognizing that endlessly accepting insults and provocations encourages their increase until the only alternative is surrender or war. So, the questions for Andrei Martyanov, The Saker, and for Putin and the Russian government is: How long does turning your other cheek work? Do you turn your other cheek so long as to allow your opponent to neutralize your advantage in a confrontation? Do you turn your other cheek so long that you lose the support of the patriotic population for your failure to defend the country’s honor? Do you turn your other cheek so long that you are eventually forced into war or submission? Do you turn your other cheek so long that the result is nuclear war?
Here is where I and Paul Craig Roberts differ dramatically on the issue of Russia’s strategy. Yes, I agree with Dr. Roberts that, quoting William Fulbright, “words are deeds and style is substance insofar as they influence men’s mind and behavior”. But while insults and provocations are unpleasant and in some cases do influence mind and behavior of some, with modern day Russia it is different. I already laid out some basics of Russia’s strategy here at Unz Review, I will expand a bit more in answering Dr. Roberts’ undeniably valid question.
This very interesting commentary was posted on the unz.com Internet site yesterday — and the first reader through the door with it was Brad Robertson. Another link to it is here.
Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.
The loss of investor confidence in the Turkish lira, which has surrendered more than 40 percent of its value this year, is only a preview of debt problems that could engulf countries such as Brazil, South Africa, Russia and Indonesia, some economists say.
“Turkey is not the last one,” said Sebnem Kalemli-Ozcan, an economics professor at the University of Maryland. “Turkey is the beginning.”
For now, few experts think that a broader crisis is imminent, though Argentina last week asked the International Monetary Fund to accelerate a planned $50 billion rescue as the peso crashed to a historic low. But the danger of a financial contagion that could hit Americans by crushing U.S. exports and sending the stock market plunging should be taken more seriously in light of a massive increase in global debt since the 2008 downturn, the economists said.
Total debt is a whopping $169 trillion, up from $97 trillion on the eve of the Great Recession, according to the McKinsey Global Institute.
This worthwhile news item showed up on The Washington Post‘s website on Tuesday — and it’s the first of two stories that I lifted from Wednesday’s edition of the King Report. Another link to it is here.
Turkey’s economic troubles are reverberating in a market for short-term investors all the way across the Eurasian continent in South Korea.
Investors pulled 8.7 trillion won (US$7.8 billion) from mutual funds dealing in short-term debt and other cash-like instruments on Friday, the biggest single-day outflow ever from such products, according to the latest data from the Korea Financial Investment Association. While some of that may have been down to month-end withdrawals, such funds had been snapping up securities backed by deposits at Middle East banks in recent months.
“Investors seem to have gotten nervous about the situation in Turkey,” said Kim Ki-myung, a credit analyst at Korea Investment & Securities Co. in Seoul.
The pullback by Korean investors underscores the broad impact of Turkey’s troubles on global markets. Korea’s money market funds have been trying to earn extra yield by betting on deposits at Middle Eastern banks, especially those from Qatar, but the lenders’ exposure to Turkey has started to cause concern among those investors.
This article was posted on the Bloomberg website at 11:35 p.m. Denver time on Tuesday night — and I found it in yesterday’s edition of the King Report. Another link to it is here.
False-flag Failure: The U.S. Cuts to the Chase to Defend its Terrorists in Syria — Finian Cunningham
Last week the U.S. warned of military strikes on Syria “if” government forces use chemical weapons (CW). This week, Trump comes clean by dropping any mention of a CW pretext – simply warning Syria not to attack terrorists.
Trump tweeted his warning to Syria, as well as its allied Russian and Iranian forces, to not launch a military offensive to retake control of the northwest province of Idlib. The area is the last remaining stronghold of illegally armed militant groups in Syria. It’s potentially the endgame to the nearly eight-year war.
On Monday, Trump said: “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.”
The U.S.’ top general, Joseph Dunford, the chairman of the Joint Chiefs of Staff, also reiterated seeming anxiety for humanitarian casualties, calling for a “tailored operation.”
So, alleged chemical weapons are no longer part of the U.S. rationale. It’s basically: don’t make any military move. The American president added that “hundreds of thousands of lives” could be lost if Syria and its allies move to rid the province of an estimated 10,000 militants among a civilian population of three million.
Trump’s apparent “humanitarian” concern seems alarmist, if not cynical. When did he articulate similar misgivings when U.S. air forces were pounding Raqqa to bits last year, causing thousands of civilian deaths?
This longish, but very worthwhile commentary by Finian appeared on the informationclearinghouse.com Internet site on Wednesday sometime — and I thank Brad Robertson for finding it for us. Another link to it is here.
South Africa’s unexpected slump into a second recession in almost a decade has boosted fears of another round of credit-rating downgrades that could see a sell-off in local-currency bonds.
The cost of insuring the country’s debt against default for five years using credit-default swaps spiked to the highest since November 2016 while yields on the government’s benchmark local-currency bonds due in December 2026 rose to a nine-month high. The rand weakened the most against the dollar among major and emerging-market currencies.
Rand-denominated bonds — which comprise about 90 percent of the country’s liabilities — have the lowest investment-grade rating with a stable outlook at Moody’s Investors Service. Today’s data could see the company follow S&P Global Ratings and Fitch Ratings Ltd. by reducing this to junk, traders including Michelle Wohlberg at FirstRand Bank Ltd. said.
The release “has reignited fears of a possible Moody’s downgrade on Oct. 12,” she said. “Low growth impacts on key revenue streams like tax collection, and given the already high strain on our [finances], this growth figure is concerning.”
This Bloomberg story put in an appearance on their website at 7:30 a.m. MDT on Wednesday morning — and it’s the third news item that comes to us courtesy of yesterday’s edition of the King Report. Another link to it is here.
India’s gold imports more than doubled in August to hit their highest level in 15 months as lower prices prompted manufacturers to replenish inventory for a jewellery exhibition, provisional data from metals consultancy GFMS showed.
The 116.5 percent jump in gold purchases year-on-year to 100 tonnes last month by the world’s second biggest consumer could support global prices, which have so far slid 8.5 percent in 2018.
But rising gold imports could widen India’s trade deficit and further pressure its currency, the rupee, which hit a record low of 71.95 against the dollar on Wednesday.
In August, local gold prices fell to their lowest level in seven months, prompting jewellers to buy the bullion to fulfill jewellery show orders, said Cameron Alexander, a Perth, Australia-based analyst at GFMS.
For the first eight months of 2018, Indian gold imports fell 12.6 percent from a year earlier to 532.1 tonnes, data compiled by GFMS showed.
Indian gold demand is set to improve in the second half of the year after falling 6 percent in the January-June period, as government steps to boost farmers’ incomes are expected to boost rural buying power, the World Gold Council said last month.
This gold-related story, filed from Mumbai, appeared on the uk.reuters.com Internet site at 3:49 a.m. British Summer Time on their Wednesday morning — and it’s something I found on the Sharps Pixley website. Another link to it is here.
Asia’s super rich advised to add more gold to their portfolios to protect assets amid storms pounding equity markets
Advisers to Asia’s super rich think their clients should put more of their money into gold, taking advantage of price declines to buy the yellow metal amid volatile global markets and U.S.-China trade tensions, a new report said.
A survey of these advisers found a preference for gold holdings amounting to 5 per cent to 10 per cent of total assets. That is up from an earlier recommendation of 3 per cent to 5 per cent, according the report, “Going for Gold”, which was released on Wednesday by U.S. financial services firm INTL FCStone.
Most advisers in the survey – 62 per cent – said their clients should or maybe should increase their weighting in gold, versus 38 per cent who said they should not. The survey was of 174 private banks, family offices, wealth management advisers and other market experts in Asia.
“Not only does Asia, and especially Singapore, offer a remarkably complete and professional gold market infrastructure, but the current global economic, financial and geopolitical factors could be considered as highly supportive of the rationale to hold and grow the portions of gold in any [high net worth] portfolio,” said Martin Huxley, head of precious metals Asia at INTL FCStone.
This article put in an appearance on the South China Morning Post website at 6:01 p.m. CST on their Wednesday evening, which was 6:01 a.m. in New York — EDT plus 12 hours. It’s the second story in a row that I found on the Sharps Pixley website — and another link to it is here.
The PHOTOS and the FUNNIES
Today’s ‘critter’ photos looks rather uninteresting, but it’s the first one I’ve ever seen with camera in hand. It’s the eastern kingbird… a small passerine birds of the tyrant flycatcher family. These birds wait on an exposed perch and then catch insects in flight…which is precisely what this one was doing as I was observing it. They have long pointed wings and large broad bills. Their breeding habitat is open areas across North America. Click/double-click to enlarge.
For the most part, it was a ‘nothing’ day in the precious metals…including copper. But WTIC was closed below its 50-day moving average. The other thing I noticed, which I’ve already mentioned, was that despite the lack of price activity, silver’s volume was pretty decent…most likely some spill-over from Tuesday’s engineered price decline.
Here are the 6-month charts for the Big 6 commodities — and except for West Texas Intermediate, there’s not a lot to see. 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 see that the gold price rose and fell a couple of dollar in Far East trading on their Thursday morning…in tandem with a dollar drop and rally during that time period. At the moment, it’s up 40 cents an ounce. Silver’s ‘rally’ during the same time period was virtually non-existent — and it’s now down a penny. Ditto for platinum and palladium, with former down 2 dollars — and the latter back at unchanged.
Net HFT gold volume is around 44,500 contracts — and roll-over/switch volume is only 298 contracts on top of that. Net HFT silver volume is a hair under 10,000 contracts — and there’s only 557 contracts worth of roll-over/switch volume in that precious metal.
The dollar index took a bit of a nose dive shortly after trading began at 6:00 p.m. EDT in New York on Wednesday evening. It fell below the 95.00 mark briefly around 7 p.m. EDT — and traded flat until around 10:45 a.m. China Standard Time on their Thursday morning. It has been edging quietly higher since, but is off its 2:00 p.m. CST current high tick by a bit — and is up 6 basis points as London opens.
With precious metal prices and their associated equities piled in a bloody mess at Jamie Dimon’s feet, we await developments. What event[s] will be allowed to light the fuse to this COMEX powder keg — and how soon?
Casting an eye on what’s going on in the world right now, I expect the process to begin with either events Washington, or the Middle East, or both.
So we wait some more.
And as I post today’s missive on the website at 4:02 a.m. EDT, I note that the gold price has been inching higher ever since 2 a.m. CST on their Thursday afternoon — and as the first hour of London trading draws to a close, the gold price is up $2.00 the ounce. It’s been the same for silver — and it’s now up 4 cents. Ditto for platinum and palladium, with the former up a dollar — and the latter by two.
Gross gold volume is just over 54,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is around 53,000 contracts. Net HFT silver volume is 12,500 contracts — and there’s 558 contract worth of roll-over/switch volume in that precious metal.
The dollar index traded flat during the hour preceding the London open — and then dropped a few basis points at that juncture — and is up 4 at the moment.
Tomorrow we get the latest and greatest Commitment of Traders Report, plus the companion Bank Participation Report — and both will be ones for the record books as well.
See you then.