18 September 2018 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price rose and fell a dollar or so between the 6 p.m. open in New York on Sunday evening until about 1:20 p.m. China Standard Time on their Monday afternoon. It began to chop quietly higher at that point until shortly before 9 a.m. in New York. The rally gained more momentum at that juncture — and that state of affairs lasted until the dollar stopped falling around 10:40 a.m. EDT. It was sold quietly lower into the COMEX close from there — and then didn’t do much of anything after that.
The low and high ticks were recorded by the CME Group as $1,192.90 and $1,205.00 in the October contract — and $1,197.50 and $1,209.70 in December.
Gold was closed in New York on Monday at $1,201.10 spot, up $8.00 from Friday. Net volume was pretty quiet at a bit under 199,000 contracts — and roll-over/switch volume was only 7,600 contracts on top of that.
For the most part, the price of silver traded in a similar fashion to gold, although once the afternoon London gold fix was in at 10 a.m. EDT, its subsequent rally looked like it had to be restrained. That lasted until the dollar index stopped falling at 10:40 a.m. EDT and, like gold, was sold lower into the COMEX close from there.
The low and high ticks in this precious metal were reported as $14.065 and $14.285 in the December contract.
Silver was closed in New York yesterday at $14.17 spot, up 14 cents on the day. Net volume was nothing out of the ordinary at about 54,700 contracts — and roll-over/switch volume was recorded as only 1,642 contracts.
Platinum was forced to trade in a similar price pattern as gold during the Monday trading session on Planet Earth yesterday, so I shan’t bother repeating myself. ‘Da boyz’ closed platinum at $798 spot, up 6 bucks on the day, but it was up 14 dollars at its high, before it was hauled lower.
Palladium traded mostly flat until 10 a.m. CEST in Zurich — and its price was capped and sold lower starting very shortly after the Zurich close. It finished the Monday session at $982 spot, up 7 dollars from Friday’s close.
The dollar index closed very late on Friday afternoon in New York at 94.95 — and began to edge very quietly lower as soon as trading began at 6:00 p.m. EDT on Sunday evening. That lasted until a minute or two before 2 p.m. CST on their Monday afternoon. It chopped quietly higher until precisely 8:00 a.m. BST…an hour and change latter — and it began to head lower from there. The decline ended at 10:40 a.m. EDT in New York, although the 94.44 low tick was set a very few minutes before 1 p.m. EDT. It inched quietly higher from there into the close — and finished the Monday session at 94.51…down 44 basis points from its close on Friday.
Here’s the 1-day intraday chart from midnight New York time on Monday onwards.
And here’s the 3-day chart so you can see the activity right from the 6:00 p.m. open in New York on Sunday evening.
And here’s the 6-month U.S. dollar index — and you already know my opinion of it.
The gold shares opened up a bit — and didn’t really start to rally until minutes before 10 a.m. EDT, which was probably when the afternoon gold fix in London was settled. They rallied until about noon in New York — and then chopped sideways into the close from there. The HUI closed up 2.27 percent.
The silver equities began to head higher right at the opening bell at 9:30 a.m. in New York on Monday morning — and their respective highs came a few minutes after the London close. They edged a bit lower until a few minutes after 12 o’clock noon EDT — and chopped generally sideways for the remainder of the day. Nick Laird’s Intraday Silver Sentiment Index closed higher by 2.66 percent. Click to enlarge if necessary.
And here’s the 1-year Silver Sentiment/Silver 7 Index courtesy of Nick as well. Click to enlarge.
The CME Daily Delivery Report showed that zero gold and 107 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. In silver, of the three short/issuers in total, the two that mattered were S.G. Americas and Advantage, with 85 and 20 contracts out of their respective client accounts. There were seven long/stoppers in total — and the largest was JPMorgan with 33 contracts…24 for its own account, plus 9 for its client account. Advantage was in second spot with 30 for its client account — and HSBC USA stopped 13 for its own account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest in September fell by 1 contract, leaving 17 still around. Friday’s Daily Delivery Report showed that 1 gold contract was actually posted for delivery today, so the change in open interest and the deliveries match for a change. Silver o.i. in September fell by 66 contracts, leaving 247 still open, minus the 107 mentioned in the previous paragraph. Friday’s Daily Delivery Report showed that 76 silver contracts were actually posted for delivery today, so that means that 76-66=10 more silver contracts were added to the September delivery month.
There were no reported changes in either GLD or SLV on Monday.
The good folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings on inside both their gold and silver ETFs as of the close of business on Friday, September 14 — and this is what they had to report. For the fifth week in a row they showed increases in both ETFs, but this week it was only tiny amounts. There was only 2,187 troy ounces of gold added, plus 9,484 troy ounces of silver.
There was a sales report from the U.S. Mint on Monday. They sold 3,500 troy ounces of gold eagles — and a very respectable 925,000 silver eagles.
There was no gold reported received over at the COMEX-approved depositories on the U.S. east coast on Friday, but there was 22,923.663 troy ounces/713 kilobars [SGE kilobar weight] shipped from HSBC USA. The link to that is here.
In silver, there was 871,511 troy ounces received, but only 67,388 troy ounces shipped out. There was one truckload…600,468 troy ounces…dropped off at CNT — and 200,489 troy ounces was left at HSBC USA. The remaining 70,553 troy ounces was picked up by the International Depository Services of Delaware. In the ‘out’ category, there was 52,432 troy ounces shipped from Brink’s, Inc. — and 14,955 troy ounces left Delaware. The link to all this is here.
It was pretty quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. Only 200 were received — and 223 were shipped out. The link to that is here.
Here are the usual two charts that Nick passes around on the weekend. They show the weekly changes in all the transparent depositories, mutual funds and ETFs for both gold and silver as of the close of business on Friday. The decline in gold continues unabated — and for the first time in many weeks, there was a small decline in total silver held as well. Click to enlarge for both.
I have a decent number of stories that I’ve accumulate over the weekend — and from Monday as well.
With the 10th anniversary approaching of the catalyst for the last major global stock market crash – the Lehman Brothers’ collapse – strategists from JPMorgan are predicting the next financial crisis to strike in 2020.
Wall Street’s largest investment bank analyzed the causes of the crash and measures taken by governments and central banks across the world to stop the crisis in 2008, and found that the economy remains propped up by those extraordinary steps.
According to the bank’s analysis, the next crisis will probably be less painful, however, diminished financial market liquidity since the 2008 implosion is a “wildcard” that’s tough to game out.
“The main attribute of the next crisis will be severe liquidity disruptions resulting from these market developments since the last crisis,” the reports says.
Changes to central bank policy are seen by JPMorgan analysts as a risk to stocks, which by one measure have been in the longest bull market in history since the bottom of the crisis.
“The shift from active to passive asset management, and specifically the decline of active value investors, reduces the ability of the market to prevent and recover from large drawdowns,” said JPMorgan’s Joyce Chang and Jan Loeys.
This article was posted on the rt.com Internet site last Thursday — and I thank Swedish reader Patrik Ekdahl for pointing it out. Another link to it is here.
The system isn’t stable. It’s brittle and fragile. Eventually some non-linear dynamic manifests: a blight that’s resistant to the herbicide destroys the crop, an insect that’s resistant explodes out of nowhere and eats the crop, etc.
Pushing the system to an extreme only made it more vulnerable to an increasingly broad range of disruptors.
Systems made to appear stable by brute-force application of extremes will never be stable. Stability arises from all the features erased by brute-force application of extremes.
The previous two bubbles that topped/popped in 2000-01 and 2008-09 both exhibited non-linear dynamics that scared the bejabbers out of the central bank/state authorities accustomed to linear systems.
In a panic, former Fed chair Alan Greenspan pushed interest rates to historic lows to inflate another bubble, thus insuring the next bubble would manifest even greater non-linear devastation.
This interesting commentary by Charles is certainly worth reading. It showed up on the dailyreckoning.com Internet site on Monday sometime — and another link to it is here.
During the financial crisis of 2008, the world’s central banks, including the Federal Reserve, injected trillions of dollars of fabricated money into the global financial system. This fabricated money has created a worldwide debt of $325 trillion, more than three times global GDP. The fabricated money was hoarded by banks and corporations, loaned by banks at predatory interest rates, used to service interest on unpayable debt or spent buying back stock, providing millions in compensation for elites. The fabricated money was not invested in the real economy. Products were not manufactured and sold. Workers were not reinstated into the middle class with sustainable incomes, benefits and pensions. Infrastructure projects were not undertaken. The fabricated money reinflated massive financial bubbles built on debt and papered over a fatally diseased financial system destined for collapse.
What will trigger the next crash? The $13.2 trillion in unsustainable U.S. household debt? The $1.5 trillion in unsustainable student debt? The billions Wall Street has invested in a fracking industry that has spent $280 billion more than it generated from its operations? Who knows. What is certain is that a global financial crash, one that will dwarf the meltdown of 2008, is inevitable. And this time, with interest rates near zero, the elites have no escape plan. The financial structure will disintegrate. The global economy will go into a death spiral. The rage of a betrayed and impoverished population will, I fear, further empower right-wing demagogues who promise vengeance on the global elites, moral renewal, a nativist revival heralding a return to a mythical golden age when immigrants, women and people of color knew their place, and a Christianized fascism.
The 2008 financial crisis, as the economist Nomi Prins points out, “converted central banks into a new class of power brokers.” They looted national treasuries and amassed trillions in wealth to become politically and economically omnipotent. In her book “Collusion: How Central Bankers Rigged the World,” she writes that central bankers and the world’s largest financial institutions fraudulently manipulate global markets and use fabricated, or as she writes, “fake money,” to inflate asset bubbles for short-term profit as they drive us toward “a dangerous financial precipice.”
“Before the crisis, they were just asleep at the wheel, in particular, the Federal Reserve of the United States, which is supposed to be the main regulator of the major banks in the United States,” Prins said when we met in New York. “It did a horrible job of doing that, which is why we had the financial crisis. It became a deregulator instead of a regulator. In the wake of the financial crisis, the solution to fixing the crisis and saving the economy from a great depression or recession, whatever the terminology that was used at any given time, was to fabricate trillions and trillions of dollars out of an electronic ether.”
This commentary by Chris Hedges, a Pulitzer Prize-winning journalist — and a New York Times best-selling author, appeared on the truthdig.com Internet site last week — and it comes to us courtesy of Patricia Caulfield. Another link to it is here.
Tim Geithner, Ben Bernanke and Hank Paulson dealt a catastrophic blow to public faith in American institutions.
By the time Lehman Brothers filed for the largest bankruptcy in American history on Sept. 15, 2008, the country had been navigating stormy global financial waters for more than a year. Bear Stearns had been rescued in a bailout-facilitated merger with JPMorgan Chase, and the government had nationalized housing giants Fannie Mae and Freddie Mac. For anyone paying attention to the financial system, the situation had been quite dire for a long time.
And yet throughout the mess, the Federal Reserve and the U.S. Treasury had been permitting the largest banks in the country to funnel as much cash as they wanted to their shareholders ― even as it became clear those same banks could not pay their debts. Lehman itself had increased its dividend and announced a $100 million stock buyback at the beginning of 2008. Insurance giant AIG paid its highest dividend in company history on Sept. 19, 2008 ― three days after the Federal Reserve handed the insurance giant $85 billion in emergency funds. According to Stanford University Business School Professor Anat Admati, the 19 biggest American banks passed out $80 billion in dividends between the summer of 2007 and the close of 2008. They drew $160 billion in bailout funds from the U.S. Treasury, and untold billions from the Fed’s $7.7 trillion in emergency lending.
When poor people engage in such activity, we call it looting. But for the princes of American capital and their lieutenants at the Fed and the Treasury, this was pure crisis management.
Today, Ben Bernanke, Hank Paulson and Timothy Geithner insist they did what they had to under conditions of extreme duress. Mistakes were made, the government’s former top financial overseers acknowledge in a recent piece for The New York Times, but they did ultimately “prevent the collapse of the financial system and avoid another Great Depression.”
Except they didn’t really rescue the banking system. They transformed it into an unaccountable criminal syndicate. In the years since the crash, the biggest Wall Street banks have been caught laundering drug money, violating U.S. sanctions against Iran and Cuba, bribing foreign government officials, making illegal campaign contributions to a state regulator and manipulating the market for U.S. government debt. Citibank, JPMorgan, Royal Bank of Scotland, Barclays and UBS even pleaded guilty to felonies for manipulating currency markets.
Not a single human being has served a day in jail for any of it.
This very worthwhile commentary put in an appearance on the huffingtonpost.ca Internet site very late on Sunday night EDT — and I thank Bill Christmas for pointing it out. Another link to this excellent article is here.
That U.S. stocks returned to record highs last month – picking up steam even as the world teetered on the bring of another debt crisis – has prompted even the most tenacious bears to recalibrate their forecasts, an effort, we think, to appease investors and clients who are luxuriating in the seemingly unstoppable gains of what is now the longest bull market in US history.
But while the wash of record returns (on paper, at least) has helped assuage the nagging doubts of many a “rational” investor, others are clinging ever-tighter to a pragmatic – if uncomfortable – realism. And one of the most strident voices among this group has been David Stockman, formerly the director of the OMB under Ronald Reagan and now the author of Stockman’s Contra Corner.
This article/interview was posted on the Zero Hedge website at 3:15 p.m. EDT on Monday afternoon. The embedded video clip runs for 16:44 minutes — and because of bad editing, the Stockman interview doesn’t start until 50 second into it. Another link to it is here.
As an increasing number of people realize that their home country is becoming a liability to them, the most common question I hear from them is, “What do I have to do to remain where I am and still be assured that I’ll be able to retain both my wealth and my freedom?”
The simple (and tragic) answer to this question is that there is no such solution. The two objectives are mutually exclusive.
Throughout the ages, whenever an empire has begun its inevitable collapse, no country has ever woken up and reversed the process. In every case, the government rides the decline to the bottom. And, along the way, a series of policies is invariably undertaken to save those in government in the downward rush. These policies are always at the expense of the populace.
Invariably, as the decline worsens, governments drag out the same policies that all other failing empires have implemented before them: Devaluation of currency, default on debt, increased warfare, creation of a police state and, finally, the looting of all those citizens who have even a modicum of wealth.
The question is not whether we like our home country as it presently is, but whether we’re prepared to accept what it’s about to become.
This very worthwhile commentary by Jeff appeared on the internationalman.com Internet site on Monday morning sometime — and another link to it is here.
Russia and Turkey have agreed a “demilitarized zone” between militants and government troops in Syria’s Idlib, President Vladimir Putin said after hours-long talks with Turkey’s Recep Tayyip Erdogan focused on solving the crisis.
“We’ve focused on the situation in the province of Idlib, considering presence of large militant groups and their infrastructure there,” Putin said at a press conference after the talks.
“We’ve agreed to create a demilitarized zone between the government troops and militants before October 15. The zone will be 15-20km wide, with full withdrawal of hardline militants from there, including the Jabhat Al-Nusra.”
As part of solving the deadlock, all heavy weaponry, including tanks and artillery, will be withdrawn from the zone before October 10, Putin said. The zone will be patrolled by Turkish and Russian military units.
Before the end of the year, roads between Aleppo and Hama, and Aleppo and Latakia must be reopened for transit traffic, he said.
The agreement has received “general support” from the Syrian government, according to Putin.
This news story appeared on the rt.com Internet site at 4:23 p.m. Moscow time on their Monday afternoon, which was 9:23 a.m. in Washington — EDT plus 7 hours. I thank Larry Galearis for bringing it to our attention — and another link to it is here. The BBC spin on this is headlined “Syria war: Russia and Turkey to create buffer zone in Idlib” — and I thank Patrik Ekdahl for that one.
The world once again was taken to the brink of World War 3 Monday night, and the situation is still extremely dangerous. A massive wide-ranging assault on multiple Syrian provinces, including the coastal cities of Latakia and Tartus, occurred Monday evening reportedly by Israel and possibly with the help of France or the US, though the Pentagon is denying any US assistance during the assault.
With Syrian and Russian air defenses responding during the over hour-long attack which targeted among other things an alleged chemical weapons research center, and in the confusion of missiles cross the sky, a Russian maritime patrol plane was shot down with 14 personnel on board. The Pentagon is claiming it was Syrian defense which “accidentally” downed the plane, while Russia is pointing out its radar observed a French frigate firing in the area just before the plane went down.
Regardless, this is an incredibly dangerous situation which puts world powers closer to major war. And crucially, the whole event came immediately after Russia and Turkey announced they’ve agreed to establish a “demilitarized zone” around Idlib.
The Russian Ministry of Defense (MoD) announced just hours before the reported Israeli attack was initiated that Russia and Turkey have agreed to establish a 15-20km demilitarized zone along Syrian government positions.
This means the widely reported Syrian-Russian offensive is off for the time being, according to the Russian MoD.
But this raises the following questions given the timing of Monday’s night’s escalation: with Putin negotiating for a ‘world power deescalation’ over Idlib after the U.S. threatened attack, was Monday’s attack part of an Israeli (and Western allies) strategy for keeping regime change in Damascus on the table? Why escalate now?
This at the very least appears a conscious effort to keep the fires burning in Syria, to prevent Putin from being in the driver’s seat, and to continue to provoke hostilities with the Tehran-Damascus axis, and to further keep alive the possibility of the eventual military ouster of Assad.
This news item was posted on the Zero Hedge Internet site at 9:55 p.m. EDT on Monday night — and another link to it is here. A ZH story from an hour earlier on this is headlined “Pentagon Says Russian Plane Shot Down By Syrian Defense Responding To Israeli Attack“.
With traders waiting with bated breath for hours, moments ago the White House announced that it has imposed tariffs on approximately $200 billion worth of imports from China, effective September 24.
The tariffs will start at 10% until the end of the year, but in an unexpected twist, are set to rise to 25% on January 1, 2019, in what is worse case scenario than what the market had been pricing in, namely a 10% rate indefinitely.
Trump also warns that if China takes any retaliatory action “against U.S. farmers or other industries“, the U.S. will immediately pursue “phase three“, and impose an additional $267 billion in tariffs on Chinese imports.
The statement notes that while the U.S. has given China “every opportunity to treat us more fairly“, so far China “has been unwilling to change its practices.”
Trump concludes by saying that it is his duty “to protect the interests of working men and women, farmers, ranchers, businesses, and our country itself. My Administration will not remain idle when those interests are under attack. China has had many opportunities to fully address our concerns. Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices.”
Separately, the USTR announced that it has removed about 300 product categories from the tariff list and has cut some subsets of products, but the total value remains “approximately $200 billion“, and – as we showed earlier – a substantial portion of the imports targeted this time are consumer goods, which means that the pain to the U.S. household bottom line is about to get real.
This news item showed up on the Zero Hedge website at 6:51 p.m. EDT yesterday evening — and another link to it is here. There was a companion Bloomberg article from Monday morning headlined “China to Cancel Talks If Trump Moves Ahead With Tariffs, Sources Say” — and I thank Patrik Ekdahl for that one.
U.S. tariffs and threats of more tariffs have not been particularly well received in China, which is already being rattled by corporate credit problems, quakes in the shadow banking system, a peculiar Enron-type phenomenon at provincial and municipal governments called “hidden debt,” and the implosion of nearly 5,000 P2P lenders that have sprung up since 2015. And so today, the Shanghai Composite Index dropped 1.1% to 2,651.79.
This is a big milestone:
- Below the low of its last collapse on January 28, 2016 (2,655.66)
- Down 25.5% from its recent peak on January 24, 2018, (3,559.47)
- Down 49% from its bubble peak on June 12, 2015 (5,166)
- Down 56% from its bubble peak on October 16, 2007 (6,092)
- Below where it had been for the first time on December 29, 2006 (2,675), nearly 12 years ago. That’s quite an accomplishment.
This chart of the Shanghai Stock Exchange Composite Index shows the last bubble in Chinese stocks. Note the rise from the last low in January 2016. This rise has been endlessly touted in the U.S. as the next big opportunity to lure U.S. investors into the Chinese market, only to get crushed again.
But what makes Chinese stocks interesting is not the collapse of one bubble and then the collapse of the subsequent recovery, but the longer view that is now taking on Japanese proportions.
This worthwhile commentary by Wolf was posted on the wolfstreet.com Internet site on Monday sometime — and I thank Richard Saler for sharing it with us. Another link to it is here.
Good work Mr. President! You have now managed to lay the groundwork for a grand Chinese-Russian alliance. The objective of intelligent diplomacy is to divide one’s foes, not to unite them.
This epic blunder comes at a time when the U.S. appears to be getting ready for overt military action in Syria against Russian and Syrian forces operating there. The excuse, as before, will be false-flag attacks with chlorine gas, a chemical widely used in the region for water purification. It appears that the fake attacks have already been filmed.
Meanwhile, some 303,000 Russian, Chinese and Mongolian soldiers are engaged in massive maneuvers in eastern Siberia and naval exercises in the Sea of Japan and Sea of Okhotsk. The latter, an isolated region of Arctic water, is the bastion of Russia’s Pacific Fleet of nuclear-armed missile submarines.
Interestingly, President Vladimir Putin, who has attended the war games with his Chinese counterpart, Xi Jinping, just offered to end the state of war between Russia and Japan that has continued since 1945. He also offered some sort of deal to resolve the very complex problem of the Russian-occupied Kuril Islands (Northern Territories to Japan) that has bedeviled Moscow–Tokyo relations since the war. The barren Kurils control the exits and entry to the Sea of Okhotsk where Russia’s nuclear missiles shelter.
On a grander scale, Beijing and Moscow were signaling their new ‘entente cordiale’ designed to counter-balance the reckless military ambitions of the Trump administration, which has been rumbling about a wider war in Syria and intervention in, of all places, Venezuela. The feeling in Russia and China is that the Trump White House is drunk with power and unable to understand the consequences of its military actions, a fact underlined by recent alarming exposés about it.
Russia and China appear – at least for now – to have overcome their historic mutual suspicion and animosity. In the over-heated imagination of many Russians, China often appears to be the modern incarnation of the Mongol hordes of the past that held ancient Rus in feudal thrall. Russians still call China ‘Kitai’, or Cathay.
This brief, but worthwhile commentary by Eric put in an appearance on the unz.com Internet site on Saturday sometime — and I thank Larry Galearis for passing it along. Another link to it is here.
South Korean President Moon Jae-in and North Korean leader Kim Jong Un will meet for their third summit on Tuesday in Pyongyang.
Moon will fly to Pyongyang Tuesday morning for the three-day summit with a 52-member delegation, including leaders of political parties and business magnates, as well as major cultural, religious figures and members of civil society.
“President Moon is expected to arrive at Pyongyang International Airport at 10 a.m. on Tuesday and be greeted in an official welcoming ceremony. The first summit will be held after a luncheon,” said Im Jong-seok, Moon’s chief presidential secretary at a briefing in Seoul Monday.
Moon will be the third South Korean president to visit the North Korean capital. Moon’s two predecessors — Presidents Kim Dae-jung and Roh Moo-hyun — met former North Korean leader Kim Jong Il, father of current leader Kim Jong Un, in 2000 and 2007, respectively.
Moon and Kim will hold talks on Tuesday and Wednesday to discuss ways to advance inter-Korean relations and ease military tensions on the Korean Peninsula.
This semi-longish UPI story was posted on their website at 6:06 a.m. EDT on Monday morning — and it comes courtesy of Roy Stephens. Another link to it is here.
Barrick Gold Corp. may slash 400 jobs and involve Chinese partners in its troubled Tanzania operations, Executive Chairman John Thornton told The Globe and Mail newspaper.
The Toronto-based company has slashed middle management by half to about 700 and “we want to get it down to 300,” Thornton, who’s been in his role since 2014, told the Globe in an interview in London. The former Goldman Sachs Group Inc. executive wants a leaner, entrepreneurial partnership more like the early days under late founder Peter Munk, the Globe said.
Thornton said there’s “an almost 100 percent” chance Chinese partners will get involved in Barrick’s projects in Tanzania that are operated through its 64 percent stake in Acacia Mining Plc. Acacia has plummeted 84 percent since its high in 2016 amid disputes with the government, which imposed a ban on exports of mineral concentrates last year and slapped the miner with a $190 billion tax bill.
The Acacia mines have never paid income tax to the Tanzanian government, which wants a new deal, Thornton told the Globe. Chinese companies can bring capital, technical expertise and — above all — political connections in Africa and Latin America that North American miners can’t match, he told the Globe.
“It’s one thing to be a Canadian company. It’s another to have China as your partner,” Thornton told the Globe. “If I know one thing, I know this is right: we have the thinnest talent in the most difficult areas and we can’t develop all these projects alone.”
This brief gold-related Bloomberg story showed up on their Internet site at 12:07 p.m. Denver time on Saturday morning — and I plucked it from a GATA dispatch. Another link to it is here.
There can be little question that there has been a literal explosion in awareness and public commentary focusing on the Commitments of Traders (COT) Report and the analysis of silver and gold (and other markets) in accordance with futures market positioning. No doubt the interest has been generated by the reliability of the COT market structure approach over the long term, but also by the recent extreme and unprecedented massive size of the short positions of the managed money traders in gold and, particularly, in silver. The managed money short position in COMEX silver futures is now nearly 50% larger than it was at the previous record peak in April.
Coincident with the explosion in COT commentary and the unprecedented managed money short positions, there have been a number of questions related to the current efficacy and accuracy of the report. Some have raised questions whether the report is still a valid barometer of past and prospective price change, as well as if the report accurately reflects actual positioning by traders or whether there is deliberate misreporting. These are significant concerns worthy of analysis. After all, if the COT report is no longer valid or trader positions are being misreported, the growing commentary is especially misplaced.
Behind the question of whether the COT report is still valid seems to be the reality that positioning has reached extremes never witnessed in the face of prices yet to reverse. This raises the alarm to some that something has gone haywire and the premise behind market structure analysis no longer works. While understandable, nothing could be further from the truth. Yes, the managed money short positions in silver and gold have reached extremes never before witnessed, but the positioning extremes are completely in sync with price performance.
To be clear, I’m not claiming that the record extreme short positioning by the managed money traders has resulted in the lowest prices ever recorded for silver and gold, as that would clearly be untrue. What I am claiming is that the record short positioning by the managed money traders has resulted in an equally unprecedented pattern of price – there has never been a consecutive weekly decline in the price of silver extending to 14 weeks in history. In other words, the positioning matches the price pattern perfectly; which is exactly what it is supposed to do. Just because no one (certainly including me) predicted we would have record and unprecedented managed money shorting starting on June 12 does it mean the COT report is no longer valid. Many things are beyond prediction.
In fact, the nearly identical pattern of positioning and price change is the clearest proof to date of the validity of the market structure approach based upon the COT report. Far from questioning whether the market structure approach is still valid, there should instead be heightened awareness that the unprecedented short selling by the managed money traders is the sole cause of the unprecedented string of consecutive weeks of lower prices.
This absolute must read commentary by Ted was posted on the silverseek.com Internet site at 12:27 p.m. Denver time on Monday afternoon — and another link to it is here.
The PHOTOS and the FUNNIES
Today’s ‘critter’ is the purple martin, the largest member of the swallow family — and a bird that does not make it this far north, as I can’t remember ever seeing one. They are known for their speed and agility in flight, and when approaching their housing, will dive from the sky at great speeds with their wings tucked. Purple martins suffered a severe population crash in the 20th century widely linked to the release and spread of European starlings in North America. Starlings and house sparrows compete with martins for nest cavities. Where purple martins once gathered by the thousands, by the 1980s they had all but disappeared. Click to enlarge.
It was yet another day where the dollar index was searching for its intrinsic value…starting exactly at the 8:00 a.m. BST London open — and the precious metals were responding as they should. I doubt that it was much of a coincidence that a dollar ‘rally’ appeared out of the blue in New York yesterday morning. It certainly allowed the powers-that-be to nip their respective rallies in the bud, plus sell them lower — and prevent them from, once again, breaking above any dangerous moving averages….the 50-day in gold and platinum — and the 200-day in palladium. Silver’s 50-day moving average was obviously in no danger, but JPMorgan certainly wasn’t going to allow that precious metal to run away to the upside on its own.
Here are the 6-month charts in all four precious metals, plus copper and WTIC. You should also note that the copper price is being carefully kept below its respective 50-day moving average as well. The ‘click to enlarge‘ feature only helps with the first four.
And as I type this paragraph, the London open is less than ten minutes away — and I note that gold was sold lower starting a few minutes after the 6:00 p.m. EDT open in New York on Monday evening — and that corresponded to a small, but sharp up-tick in the dollar index. It was sold lower until around 11 a.m. China Standard Time on their Tuesday morning — and it rallied in fits and starts from there until the 2:15 p.m. afternoon gold fix in Shanghai. It has been sold lower since — and is currently down $2.10 the ounce as London opens. It was more or less the same price pattern in silver, except its low of the day [so far] came about 7:45 a.m. CST on their Tuesday morning — and it’s down 4 cents at the moment. For the most part, platinum followed silver, but it’s up 2 bucks. Ditto for palladium, at least until 2 p.m. CST — and then it shot up from there — and is higher by 4 dollars as Zurich opens. Both platinum and palladium have been sold down since the afternoon gold fix in Shanghai as well.
Net HFT gold volume is a bit over 50,000 contracts already, but there’s only 1,239 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is around 12,400 contracts — and there’s 1,060 contracts worth of roll-over/switch volume in that precious metal.
The dollar index opened flat at 6:00 p.m. in New York yesterday evening, but jumped a bit over 10 basis points higher a few minutes later. It was sold very unsteadily lower from there — and its current 94.35 low tick came right at the afternoon gold fix in Shanghai. It’s off that low by a bit — and down 6 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 I’ll take a stab at what the report might show in tomorrow’s column when I have all five dojis to look at in both gold and silver in the above 6-month charts.
And as I post today’s column on the website at 4:02 a.m. EDT, I see that all four precious metals were sold lower in the first hour of London/Zurich trading, but are all of their current London/Zurich low ticks by a bit. Gold is down $3.70 an ounce at the moment — and silver is down 6 cents. Palladium is back at unchanged — and platinum is now up 6 dollars.
Gross gold volume is pretty chunky at around 77,500 contracts — and net of what roll-over/switch volume there is, net HFT gold volume is around 73,500 contracts. Net HFT silver volume is getting up there as well at a hair over 17,000 contracts — and there’s 1,294 contracts of roll-over/switch volume in this precious metal.
The dollar index has been creeping higher ever since its current low at the afternoon gold fix in Shanghai — and is now up 9 basis points.
Not surprisingly, it looks like ‘push’ became ‘shove’ in the Middle East in the wee hours of their Tuesday morning. But it certainly isn’t being allowed to manifest itself in precious metal prices…so it appears that the big ‘event’ that will be allowed to set precious metal prices rocketing higher, is still to come.
That’s all I have for today — and I’ll see you here tomorrow.