Another 409 Contracts Added to September Silver Deliveries

20 September 2018 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much on Tuesday evening in New York, but at 10 a.m. China Standard Time on their Wednesday morning, it began to wander quietly higher.  That state of affairs was allowed to last until just before 2 p.m. China Standard Time on their Wednesday morning — and it was obviously capped at that juncture.  It was forced to chop sideways until the COMEX open — and then the rally attempt that began at the COMEX open was capped and driven lower by 9:15 a.m. in New York trading.  From that point it chopped quietly sideways for the remainder of the Wednesday session.

For the second day in a row, the low and high ticks aren’t worth looking up.

Gold was closed on Wednesday at $1,203.70 spot, up $5.80 on the day.  Net volume was fairly quiet at a bit over 224,000 contracts — and there was a hair over 10,000 contracts worth of roll-over/switch volume on top of that.

Silver was forced to follow a very similar price path as gold up until the afternoon gold fix in London.  Shortly after that, it began to tick higher — and the moment that London closed at 11:00 a.m. EDT, the price appeared to go ‘no ask’.  It was capped just pennies below its 20-day moving average — and driven lower from there.  That price decline lasted until 2 p.m. in after-hours trading.  The silver price didn’t do much after that.

The low and high ticks in this precious metal were reported by the CME Group as $14.175 and $14.375 in the December contract.

Silver was closed on Wednesday in New York at $14.225 spot, up 9.5 cents on the day — and one can only fantasize at what the closing price might have been if JPMorgan hadn’t stepped in when they did.  Not surprisingly, net volume was pretty heavy at just under 77,500 contracts — and roll-over/switch volume was 2,292 contracts on top of that.

Platinum was up 10 bucks by around 9:30 a.m. CEST…Central European Summer Time…on their Wednesday morning, but by shortly after 9 a.m. in New York, half of those gains had disappeared.  It rallied quietly from there into the 11 a.m. EDT Zurich close — and then was equally quietly sold lower into the COMEX close.  It tacked on a couple of bucks in the thinly-traded after-hours market — and finished the day at $822 spot, up 10 dollars from Tuesday’s close.

Palladium didn’t do much of anything in Far East and most of the Zurich trading session on their respective Wednesdays.  But starting minutes before the COMEX open, the price sprang to life — and had to be capped shortly before the Zurich close, as it went vertical.  From that point, it chopped quietly sideways until trading ended at 5:00 p.m. EDT.  Palladium finished the Wednesday session at $1,033 spot, up 24 bucks on the day — and would have obviously closed significantly higher if this budding short-covering rally had been allowed to run its course without interference.

The dollar index closed very late on Tuesday afternoon in New York at 94.61 — and after a brief dip at the 6:00 p.m. EDT open, it began to edge higher until it touched the 94.68 mark.  From that juncture, it chopped quietly lower until the 8:00 a.m. BST London open — and at that point, the sell-off became a little more serious.  It certainly looked like the usual ‘gentle hands’ showed up the 94.32 low tick around 9:35 a.m. BST — and it was up, up and away from there.  The 94.73 high tick was printed a few minutes after 10 a.m. EDT which, most likely, corresponded to the afternoon gold fix in London.  It fell down from there, but that decline was halted at precisely 12 o’clock noon in New York.  From that point it ‘rallied’ until minutes before the COMEX close — and it edged quietly lower for the remainder of the day.  The dollar index finished the Wednesday session at 94.55 — down 6 basis points.

And here’s the 6-month U.S. dollar index chart…and for the second day in a row, the closing doji was far below what it closed at on the intraday chart just above.  I’m not sure what the cause of that is, as both it and 6-month chart are based on prices on the Intercontinental [ICE] Exchange.

The gold shares took off higher the moment that trading began in New York at 9:30 a.m. EDT on Wednesday morning.  Their respective highs came minutes after the 11 a.m. EDT London close.  They sagged a bit after that, before trading quietly sideways.  By 2:45 p.m., they had rallied back almost to their highs of the day, but then rolled over a bit in the final hour of trading.  The HUI closed up 2.22 percent.

The initial rally in the silver equities was far more subdued — and their respective highs came a minute or so before 3 p.m. EDT and, like the gold stocks, sold off a bit in the last hour.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 2.24 percent.  Click to enlarge if necessary.

 

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

The CME Daily Delivery Report showed that zero gold and 707 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. In silver, yesterday’s mystery has been solved, as the big short/issuer turned out to be none other than Goldman Sachs with 698 contracts out of its own in-house/proprietary trading account.  The other two short/issuers don’t matter.  There were five long/stoppers in total, with the largest being ADM with 422 contracts for its client account.  In second spot came JPMorgan — and the surprise here was they stopped 238 contracts for their client account, but only 8 for their own account.  In very distant third spot was Advantage, with 27 contracts for its client account.  The link to yesterday’s Issuers and Stoppers Report is here.

Here’s a snip from the CME’s year-to-date delivery notices showing what Goldman has been up to so far this year as issuer [I] and stopper [S] for both its house account [H] — and it client account [C].  Click to enlarge.  And if you want to see the entire report for all the issuers and stoppers in the COMEX metals, the link to that is here…which you can bookmark for future reference if you wish.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in September declined by 1 contract, leaving 17 still around.  Tuesday’s Daily Delivery Report showed that 1 gold contract was actually posted for delivery today, so deliveries and the change in open interest match.  Silver o.i. in September rose by another 262 contracts!  September open interest is now up to 1,280 contracts, minus the 707 mentioned in the previous paragraph.  Tuesday’s Daily Delivery Report showed that 147 contracts were actually posted for delivery today, so that means that another 147+262=409 silver just got added to September deliveries!  I said ‘Wow!’ in yesterday’s column about all this, so it’s ‘double Wow’ today…or WTF?…if you prefer.

I would suspect that Goldman Sachs will turn out to the short/issuer on this amount as well, but that won’t be known for sure until the next Issuers and Stoppers Report which comes out sometime before 10 p.m. EDT tonight.

This explosion of activity surrounding Goldman Sachs is a surprise in the fact that it came like a bolt of lightning out of a clear blue sky…right in the middle of the delivery month — and not at the beginning as one would normally expect for this sort of activity.  It’s a given that Ted will have oodles to say about this in his weekly review on Saturday…along with JPMorgan’s warehouse activity in silver that’s discussed further down.  And if you’re not a subscriber to his bi-weekly column, you should be.  The link to his website is here.


For the second day in a row, there were no reported changes in either GLD or SLV.

There was no sales report from the U.S. Mint, either.

It was all zeros in gold over at the COMEX-approved gold depositories on the U.S. east coast on Tuesday.

That certainly wasn’t the case in silver, as one truck load…600,698 troy ounces…was received — and a very chunky 2,614,086 troy ounces was shipped out.  All of the ‘in’ activity was at Canada’s Scotiabank.  In the ‘out’ category, there were three truck loads…1,781,614 troy ounces…shipped out of JPMorgan.  Another 797,020 troy ounces departed Scotiabank as well — and the remaining 35,450 troy ounces left the International Depository Services of Delaware.  The link to all this action is here.

There was a bit of activity in gold over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  Nothing was reported received — and only 320 were shipped out.  That happened at the Brink’s, Inc. depository of course — and the link to that, in troy ounces, is here.

Byzantine Empire, Justin I., 518-527,  Tremissis

Material:  Gold     Full Weight:  1.30 grams

It was another quiet news day — and once again I don’t have a lot for you.


CRITICAL READS

How Politics Poisoned the Earth — Bill Bonner

Yesterday, we looked at what the U.S. republic has become: a vast swamp of idlers, chislers, cronies, and insiders… all angling for the meat in someone else’s burger.

Politicians and public servants no longer retire to their hamlets and farms once their tour of duty is over. Instead, they sign up for a post-career money-grab as consultants and lobbyists… scheming with the feds to get favors for their clients.

But how come? Aren’t the insiders always eager to take advantage of the outsiders? What’s new?

Politics is usually best ignored. But there are times when, like a rusty gas tank at an abandoned garage, it seeps into the groundwater and poisons the earth.

One of those times, we believe, is at hand. Because, the Swamp has become so deep… so wide… and so toxic… that it endangers everything.

How this came to be, is our subject today.

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


Who Bought the $1.47 Trillion of New U.S. National Debt over the Past 12 Months? — Wolf Richter

China, Japan, other foreign investors, the Fed, U.S. government funds? Nope.

Foreign private-sector investors and “foreign official” investors – central banks, governments, etc. – whittled down their holdings of U.S. Treasury Securities by $21 billion at the end of  July, compared to a year ago, to $6.25 trillion, according to the Treasury Department’s TIC data released Tuesday afternoon.

Over the same period, the U.S. gross national debt – fueled by a stupendous spending binge and big-fat tax cuts – soared, despite a booming economy, by a brain-wilting $1.468 trillion, in just 12 months.

So, with foreigners having shed $21 billion over the 12-month period, who bought this $1.468 trillion in new U.S. Treasury debt?

Here’s who didn’t buy…

This commentary by Wolf appeared on the wolfstreet.com Internet site on Wednesday sometime — and I thank Richard Saler for pointing it out.  Another link to it is here.


Danske Bank CEO Quits as Money Laundering Scandal Swells to $234 Billion

Estimates of Danske Bank’s staggering fraud have grown since news that the U.S. had launched an investigation broke last week. Since then, the total amount laundered through the bank by shadowy figures in the former Soviet Union has risen to an estimated €200 billion – or $234 billion. For context, that’s many times the roughly $17 billion that flows through Estonian banks during an average year, meaning that the money laundering perpetuated by Danske effectively transformed the Estonian banking system into a giant front for organized crime groups. And as evidence has proliferated that the bank’s leadership did nothing to inhibit the financial crimes despite being confronted with evidence from internal and external sources, the bank has determined that the time has come to make a token sacrifice so that the wider institution may survive.

And that sacrifice came earlier Wednesday when the Financial Times reported that Danske CEO Thomas Borgen has decided to step down as reports that he was effectively complicit in the fraud have proven deeply embarrassing to him and the bank.

In a statement issued by Borgen along with his resignation, the former CEO avoided accepting any responsibility for the fraud despite leading the bank’s international operations between 2009 and 2012 – when the bulk of the documented laundering took place (Borgen even pushed back when others at the bank advocated for more oversight at the bank).

Of course he won’t go to jail.  I would suspect that Danske is but the tip of the proverbial iceberg in matters such as this.  This news item put in an appearance on the Zero Hedge website at 5:53 a.m. EDT on Wednesday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Decoding Putin’s Response To Attack In Syria

The fog of war and geopolitics makes initial responses to the attack on Russian and Syrian forces recently difficult to assess.

Russian President Vladimir Putin’s response seemed timid and was at odds with statements from his Defense Minister Sergei Shoigu and more recent statements from Russia’s Foreign Ministry.

Putin backed off on explicitly blaming Israel for the downing of the IL-20 ELINT aircraft which killed 15 Russian servicemen, but made it clear he holds them responsible for the attack as a whole.

My thoughts on what the goals of the attack were are the focus of my latest article at Strategic Culture Foundation.

It was obvious to me that this attack was designed as a provocation to start World War III in Syria and blame the Russians for attacking a NATO member without proper cause, since the Syrian air defense forces were the ones responsible for shooting down the plane.

Lying us into war is a time-honored American political tradition, whether we’re talking Fort Sumter, Pearl Harbor or the Gulf of Tonkin.  All of these incidents were avoidable by Presidents intent on getting into a conflict while simultaneously playing the victim card by getting the other side to shoot first.

This very worthwhile commentary by Tom Luongo showed up on the Zero Hedge website at 6:25 p.m. EDT on Wednesday evening — and it’s definitely worth reading if you have the interest.  Another link to it is here.


Russian oil firm seeks dollar alternative amid U.S. sanctions threat — traders

Russian oil producer Surgutneftegaz is pushing buyers to agree to pay for oil in euros instead of dollars if the need arises, apparently as insurance against possible tougher U.S. sanctions, traders who deal with the firm told Reuters.

Russia has been subject to Western sanctions since its 2014 annexation of Ukraine’s Crimea region, but Washington has threatened to impose extra sanctions, citing what it has called Moscow’s “malign” activities abroad.

The prospect that causes most alarm for Russian firms is inclusion on a Treasury Department blacklist that effectively cuts them off from conducting transactions in dollars, the lifeblood of the global oil industry.

Surgutneftegaz, whose chief executive Vladimir Bogdanov is already on a U.S. blacklist in a personal capacity, declined to respond to Reuters questions.

We do not comment on our commercial activity,” said the company, Russia’s fourth largest by output.

This Reuters new item, filed from Moscow, showed up on their Internet site at 10:53 a.m. EDT on Wednesday morning — and was updated about an hour later.  I found this on the gata.org Internet site — and another link to it is here.


China Won’t Devalue Yuan to Boost Exports, Premier Li Says

Hours after China and the U.S. announced their latest tariff salvos in the escalating trade war, Chinese Premier Li Keqiang said the nation wouldn’t devalue its currency in order to make its exports more competitive.

Recent fluctuations in the renminbi exchange rate have been seen as an intentional measure, but that isn’t true,” Li said in a keynote speech at the World Economic Forum in Tianjin on Wednesday. “One-way devaluation will do more harm than good to China’s economy. China will by no means stimulate exports by devaluing the yuan.”

President Donald Trump has repeatedly accused China of artificially keeping its currency weak, although his government has yet to formally class Beijing as being a currency manipulator. While the yuan has lost ground amid the deepening trade tensions since June, its decline has mainly been a reflection of U.S. dollar strength and the nation’s policymakers have consistently denied playing any role in its weakness.

While China won’t actively devalue the currency, that does not guarantee the renminbi will hold up at its current level. What they are trying to do is allow the market to play a bigger role in determining the value of the currency,” said Michelle Lam, greater China economist at Societe Generale in Hong Kong. “It has been the line of Chinese policy makers and Premier Li just reiterated the message to Washington on this occasion.”

This story appeared on the Bloomberg website at 9:26 p.m. Denver time on Tuesday evening — and was updated about four hours later.  I found it in a GATA dispatch yesterday — and another link to it is here.


A-Mark Precious Metals swings to fiscal 4Q net loss due to sluggish precious metals market

A-Mark Precious Metals, the precious metals trading company, swung to a net loss in its fiscal fourth quarter due to higher expenses and sluggish levels of activity in the precious metals market.

For the three months ended June 30, the El Segundo, California-based company’s net loss came to US$3 mln or a loss of US$0.43 per diluted share, as compared to net income of US$1.2 mln or US$0.17 per share in the same period a year ago.

Its revenue, meanwhile, climbed 33% to US$1.77 bn from US$1.33 bn in the year-ago quarter.
Gold sales proved popular in the quarter, jumping 98% to 586,000 ounces from 296,000 ounces last year. Silver, meanwhile, was not in vogue as sales of the precious metal slumped 39% from the year-ago quarter to 8.6 mln ounces from 14.1 mln ounces.

Despite the unprecedented low levels of activity that continue to persist in the market, we further diversified our business model to create additional and more predictable sources of income in an effort to enhance our capabilities and profitability when conditions improve,” said A-Mark CEO Greg Roberts.

Looking ahead to the current quarter, Roberts said a decrease in silver and gold prices is producing volatility and generating “modest, incremental demand” for A-Mark’s physical products.

A-Mark is one of the largest, if not the largest bullion wholesaler in the U.S.  This story was posted on the ca.proactiveinvestors.com Internet site at 4:33 p.m. EDT on Tuesday afternoon — and I plucked it from the Sharp Pixley website very late yesterday afternoon Denver time.  It’s worth reading — and another link to it is here.


The PHOTOS and the FUNNIES

When I was talking about Goldman Sachs further up in my discussion on Issuers and Stoppers and Daily Delivery Reports…that old Matt Taibbi phrase “vampire squid” came to mind, so the squid is the ‘critter’ for today.  Like all other cephalopods, squid have a distinct head, bilateral symmetry, a mantle, and arms. Squid, like cuttlefish, have eight arms arranged in pairs and two, usually longer, tentacles. There are 304 species currently know to science. I’ve seen lots of them while scuba diving in the tropics — and I consider them to be the jewels of the sea.  If prepared properly, they’re very tasty as well.  The second photo is of the ‘vampire squid‘.  Click to enlarge.


The WRAP

It was yet another day where both gold and silver were kept on short leashes — and the silver price obviously had to be hauled back from blasting above its 20-day moving average.  They made platinum behave, but not so for palladium.  It’s in backwardation in the futures market right now — and it would rocket higher if allowed.  Although yesterday’s 24 dollar gain was impressive, it would have been many multiples of that if allowed to trade freely, which it obviously wasn’t.

Here are the 6-month charts for all four precious metal.  The silver chart shows the the 20 and 50-day moving averages, instead of the usual 50 and 200-day moving averages — and it certainly shows you just how tight a rein that JPMorgan has kept on the silver price.  And it should also be noted that the 50-day moving average in gold is creeping lower by the day — and at some point it will be broken decisively — and we’ll see what happens then.  The ‘click to enlarge‘ feature helps a bit with the first four graphs.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price was up a few dollars and change by shortly after 11 a.m. China Standard Time on their Thursday morning, but has been sold quietly and unevenly lower since — and is back at unchanged at the moment. It was the same price pattern in silver — and it was hauled lower the moment it touched its 20-day moving average — and that was minutes after 10 a.m. CST…an hour before the dollar index low and gold’s high tick. It’s up 6 cents. What happened in platinum was a very mini version of what happened in both silver and gold — and it’s up a dollar. Palladium has been inching very quietly and unevenly higher since trading began in New York at 6 p.m. EDT in New York on Wednesday evening — and it’s up 4 bucks as Zurich opens.

Net HFT gold volume is pretty light at a bit over 36,000 contracts — and there’s only 909 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is pretty decent at around 14,000 contracts — and there’s only 120 contracts worth of roll-over/switch volume in that precious metal. Obviously that higher volume level is associated with the price smack-down when it hit its 20-day moving average in morning trading in the Far East.

The dollar index traded flat for the first hour in New York yesterday evening — and began to head lower at that juncture — and it continued lower until 11 a.m. CST on their Thursday morning. It then rallied a handful of basis points until a minute or so before 1 p.m. CST — and rolled over at that point — and is down 11 basis points about twenty minutes before the London/Zurich opens.

I’m not sure what today’s precious metal price action will bring, but we’re drawing ever closer to the day when there will be some sort of resolution to the obscene and grotesque short positions held by the brain-dead/moving average-following Managed Money traders. And if JPMorgan wishes it, or is instructed to stand back, it will be a sight to see when that day does arrive.

But at the moment, it certainly appears that they’re doing everything possible to prevent that from happening.

And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price was sold down a bit more when London opened — and it’s now down $1.90 the ounce. They hit silver pretty good as well — and it’s now down 3 cents. But they laid off both platinum and palladium, as the former is still up a dollar — and the latter by 6.

Gross gold volume is now up to about 57,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is a bit over 53,000 contracts. Net HFT silver volume is very heavy at just a bit under 19,500 contracts — and there’s only 236 contracts worth of roll-over/switch volume on top of that.

The dollar index continues continues to decline quietly — and is now down 17 basis points, so it appears to be yet another day where JPMorgan is not letting a declining dollar index be reflected in gold and silver prices.

That’s all I have for today — and I’ll see you here tomorrow.

Ed