26 September 2018 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Despite how good the Kitco gold chart looks below, not much happened yesterday, or should I say…was allowed to happen. The low tick, such as it was, came around 10:20 a.m. China Standard Time on their Tuesday morning, as the dollar index rallied to its high of the day about that time. From that point the gold price chopped quietly but steadily higher before running into obvious ‘resistance’ at the afternoon gold fix in London. The high tick of the day, such as it was, came shortly before the London close — and it was sold lower until the COMEX close at 1:30 p.m. EDT. It inched quietly higher from there in the thinly-traded after-hours market.
The low and high ticks certainly aren’t worth looking up.
Gold finished the Tuesday session in New York at $1,200.80 spot, up $2.00 on the day. Net volume was very quiet at a bit under 175,000 contracts — and roll-over/switch volume in that precious metal was a hair over 18,000 contracts.
The silver price traded a few pennies either side of unchanged until around 9:30 a.m. in London on their Tuesday morning — and it began to rally from there. It really took flight shortly after 9 a.m. in New York — and it was obvious that the price ran into fairly stiff ‘resistance’ very shortly after that. The price was capped for good and turned lower very shortly after the London close and, like gold, was sold lower into the COMEX close from there. It rallied a few pennies from that juncture, but almost all that was taken by the time trading ended at 5:00 p.m. EDT.
The low and high ticks in this precious metal were reported by the CME Group as $14.25 and $14.595 in the December contract.
Silver was closed on Tuesday at $14.43 spot, up 20.5 cents — and well above its 20-day moving average. Net volume was very heavy at a bit over 90,000 contracts — and roll-over/switch volume was another 4,510 contracts on top of that.
The platinum price chopped unsteadily sideways by a dollar or so until around 9:30 a.m. CEST in Zurich. It began to head higher from there — and the $831 spot high tick was set minutes after the COMEX open — and it was obvious that ‘da boyz’ stepped in at that juncture. Then, like for gold and silver, it was sold lower into the COMEX close from there — and didn’t do much after that. Platinum was closed at $821 spot, down 4 dollars from Monday — and 10 bucks off its high of the day.
Palladium was up 7 dollars or so by the 2:15 p.m. CST afternoon gold fix in Shanghai on their Tuesday afternoon, but then got hammered to its low tick of the day by around 9:30 a.m. in Zurich trading. Then, like platinum, it began to head higher from there — and it jumped a bit more once the COMEX opened in New York. The price was capped and turned lower at, or just before, the afternoon gold fix in London — and from that point it suffered the same fate as the other three precious metals. Palladium was closed at $1,057 spot, up 2 dollars on the day.
The dollar index closed very late on Monday afternoon in New York at 94.25 — and dipped down a dipped down a few basis points by around 8:20 a.m. China Standard Time on their Tuesday morning. It rallied to its 94.36 high tick of the day just before 10:30 a.m. CST. It then proceeded to chop very unsteadily lower from there — and it certainly appeared like the usual ‘gentle hands’ were out and about yesterday on more than one occasion. The last time was when they showed up to save it at 94.01 mark — and that occurred around 10:35 a.m. in New York. It rallied very unsteadily from there until around 2 p.m. EDT — and then sold off a handful of basis points into the close from there. The dollar index finished the Tuesday session at 94.15…down 10 basis points on the day.
Considering the fact that an interest rate increase is the expected outcome of the Fed meeting today, the dollar index is certainly behaving poorly in front of that news.
And here’s the 6-month U.S. dollar index chart — and the delta between its closing value — and the close in the above 1-day intraday chart was 44 basis points. I’m still looking for a reason why that is.
The gold shares were up over two percent within fifteen minutes of the New York open yesterday morning. They hung in there until shortly after the 11 a.m. EDT London close — and when gold was capped and sold lower at that point, the stocks followed suit. The HUI finished just off its low tick of the day — and up 0.67 percent.
In most respects, the price action in the silver equities was the same as their golden brethren — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up only 0.33 percent. Click to enlarge.
And here’s the 1-year Silver Sentiment/Silver 7 Index chart. Click to enlarge as well.
The CME Daily Delivery Report showed that 14 gold and 3 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday. In gold, there were three short/issuers in total — and the only long/stopper worth noting was JPMorgan with 10 contracts for its client account. In silver, there were two short/issuers — and the only long/stopper that mattered was JPMorgan with 2 contracts for its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Tuesday trading session showed that gold open interest in September fell by one contract, leaving 16 still around, minus the 14 contract mentioned just above. Monday’s Daily Delivery Report showed that zero gold contacts were posted for delivery today. Silver o.i. in September declined by 62 contracts, leaving 510 still open, minus the 3 contracts mentioned in the previous paragraph. Monday’s Daily Delivery Report showed that 64 silver contracts were actually posted for delivery today, so that means that 64-62=2 more silver contracts were added to the September delivery month.
There were no reported changes in GLD on Tuesday…and after a big deposit into SLV on Monday, there was a decent-sized withdrawal of an almost equal amount on Tuesday totalling 1,644,717 troy ounces.
There was a somewhat respectable sales report from the U.S. Mint on Tuesday. They sold 2,500 troy ounces of gold eagles — 2,500 one-ounce 24K gold buffaloes — and 395,000 silver eagles.
It was all zeros in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.
There was some activity in silver, as 868,004 troy ounces were received, but only 30,278 troy ounces were shipped out. In the ‘in’ category, there was one truck load…600,538 troy ounces…dropped off at CNT — and the remaining 267,466 troy ounces was left at Brink’s, Inc. All of the ‘out’ activity was at CNT as well. The link to this is here.
For the second day in a row it was very quiet at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday. They didn’t receive any — and only shipped out 50 of them. I won’t bother linking this.
Here are the usual two charts that Nick sends around every weekend. It shows the transparent gold and silver holdings of all known depositories, mutual funds and ETFs, as of the close of business on Friday, September 21. This past week, there was a tiny bit of gold added…the first addition in about three month, but only around 70,000 troy ounces worth. There was a net 939,000 troy ounces of silver added. Click to enlarge for both.
I have very few stories for you today.
Free riding is one of the oldest problems in economics and in society in general. Simply put, free riding describes a situation where one party takes the benefits of an economic condition without contributing anything to sustain that condition.
The best example is a parasite on an elephant. The parasite sucks the elephant’s blood to survive but contributes nothing to the elephant’s well-being.
A few parasites on an elephant are a harmless annoyance. But sooner or later the word spreads and more parasites arrive. After a while, the parasites begin to weaken the host elephant’s stamina, but the elephant carries on.
Eventually a tipping point arrives when there are so many parasites that the elephant dies. At that point, the parasites die too. It’s a question of short-run benefit versus long-run sustainability. Parasites only think about the short run.
The biggest free riders in the financial system are bank executives such as Jamie Dimon, the CEO of J.P. Morgan. Bank liabilities are guaranteed by the FDIC up to $250,000 per account.
This very interesting commentary by Jim showed up on the dailyreckoning.com Internet site on Tuesday — and I thank Brad Robertson for pointing it out. Another link to it is here.
Out of money and out of time, people become desperate. But there will be no use raising a fist and howling at the cosmic injustice of it. Neither money nor time will care… and neither should the Supreme Court.
The bull market on Wall Street is running out of time. The economic expansion, too, is at the end of its life expectancy. A trade war is heating up, which could cripple the Chinese economy… and flatten that of the U.S., too.
China depends on its surpluses with the U.S. But so do the Deep State moneybags. If trade seizes up, it’s just a matter of time before the whole thing blows up. And the Supremes, as we showed yesterday, are partly to blame.
And here we connect some dots… perhaps unwanted, and surely unwelcome.
But time is not to be trifled with. The minutes leave; they don’t come back. It doesn’t matter what anyone remembers… what they want… or how they feel about it.
This commentary by Bill appeared on the bonnerandpartners.com Internet site early on Tuesday morning EDT — and another link to it is here.
President Trump’s second address to the U.N. General Assembly didn’t include any bombshell revelations (like last year’s speech where Trump threatened North Korea with nuclear annihilation and referred to Kim Jong Un as ‘Little Rocket Man’), but it was just as much of a repudiation of the global order that the UN represents. In a speech that rejected internationalism and embraced the nationalist populism that Trump has long championed, Trump blasted “the ideology of globalism” and multinational organizations like the U.N. that he said infringe on national sovereignty. During the speech, Trump urged other nations to look out for themselves and their own interests – and allow the U.S. to do the same.
“I honor every nation to pursue its own customs, beliefs and traditions. The United States will not tell you how to live or work or worship,” Mr. Trump said. “We only ask that you honor our sovereignty in return.”
In a speech that lasted roughly 30 minutes, Trump vowed that the U.S. would “not be taken advantage of any longer” and slammed both its friends and foes for taking advantage of the U.S.’s defense spending and its trading largess.
Trump kept his composure throughout the speech despite his hostile audience, which broke out into laughter when Trump boasted that his administration “has accomplished more than any administration in the history of our country” in just two years.
This very long commentary, which includes his entire speech, was posted on the Zero Hedge website at 11:47 a.m. EDT yesterday morning — and another link to it is here. A follow-on Zero Hedge article on this matter is headlined “U.N. Audience Laughs When Trump Lists His Accomplishments“. It showed up on their website at 5:27 p.m. on Tuesday afternoon.
The European Union is moving forward with the creation of a “legal entity” to protect Iran’s ability to export oil and import European goods, its foreign policy chief Federica Mogherini announced on the eve of the U.N. General Assembly.
“E.U. member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue trade with Iran,” Mogherini said on Monday night. She spoke while alongside Iranian Foreign Minister Javad Zarif.
The mechanism will initially be geared toward European companies, but could be extended to cover third parties seeking legal protection from U.S. sanctions, she said following a ministerial meeting with fellow Iran deal signatories: Russia, China, the U.K., Germany and France.
The United States pulled out of the Joint Comprehensive Plan of Action, better known as the Iran nuclear deal, in May. An initial tranche of sanctions was reimposed in August, and a second round is coming in November.
The E.U. announcement comes a day after French state-owned bank Bpifrance said it was suspending a plan to support companies seeking to do business with Iran.
This news item was posted on the Asia Times website at 6:48 p.m. Hong Kong time on their Tuesday evening, which was 6:48 a.m. in Washington — EDT plus 12 hours. I thank Tolling Jennings for sending it our way — and another link to it is here. The UPI take on this is headlined “5 nations, E.U. dodge U.S. sanctions with system to trade with Iran” — and I thank Roy Stephens for that one. The Zero Hedge spin is headlined “Europe Unveils “Special Purpose Vehicle” to Bypass SWIFT, Jeopardizing Dollar’s Reserve Status“.
The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss Viktor Orban’s recent trip to Moscow following a contentious E.U. Parliament session where the Hungarian PM was punished by MEPs with an Article 7 sanctioning of Hungary, for daring to take on the George Soros globalist paymaster.
The “salon des refusés” of political dissidents in the E.U. is getting bigger by the day. Less than a week after his government was condemned in a vote in the European parliament, Orban is in Moscow for talks about energy with Putin. His visit to Russia is the political equivalent of giving the E.U. the finger following last week’s humiliation.
Orban is not alone. In his battle with the E.U. over immigration and the rule of law, he is supported by Poland and the Czech Republic. Poland, which is also facing an Article 7 procedure against it by the European Commission, has vowed to protect Hungary, just as Hungary has vowed to protect Poland. So there is no way that the voting rights of either country can be removed, since the ultimate vote to do so requires unanimity. Orban also recently received the support of Czech Prime Minister Andrej Babis and of the Italian Minister of the Interior, Matteo Salvini.
These politicians have voiced support for Orban’s stance against immigration. But they also support his pragmatic approach to Russia. Salvini is a well-known critic of the Russia sanctions, and Italy has said they should end.
This news item, complete with an embedded 15-minute long video clip, put in an appearance on theduran.com Internet site yesterday sometime — and it comes to us courtesy of Roy Stephens. Another link to it is here.
Trade tensions between the U.S. and China could drag on for decades but China’s focus on its Belt and Road Initiative could provide relief
Alibaba’s Jack Ma has warned that the ongoing U.S.-China trade war could last at least 20 years. As we’ll see, it’s actually more like 30 – up to 2049, the 100th anniversary of the foundation of the People’s Republic of China (PRC).
Steve Bannon always boasted that President Trump was bound to conduct a “sophisticated form of economic warfare” to confront China.
The logic underpinning the warfare is that if you squeeze the Chinese economy hard enough Beijing will submit and “play by the rules.”
The Trump administration plan – which is, in fact, trade deficit hawk Peter Navarro’s plan – has three basic targets…
This commentary/opinion piece appeared on thesaker.is Internet site on Monday at it comes courtesy of Larry Galearis. Another link to it is here.
I didn’t see any precious metal-related news items that I thought worth posting.
The PHOTOS and the FUNNIES
Today’s ‘critter’ is the long-horned orb-weaver spider…macracantha arcuata. They build the usual circular webs, but the purpose of the disproportionately long body horns, up to 45mm long, however remains a mystery. They hail from parts of southeast Asia. ‘Click to enlarge‘.
“Wealth, in even the most improbable cases, manages to convey the aspect of intelligence. Wealth is the relentless enemy of understanding. In a community where the primary concern is making money, one of the necessary rules is to live and let live. To speak out against madness may be to ruin those who have succumbed to it. So the wise in Wall Street are nearly always silent. The foolish thus have the field to themselves. None rebukes them.
People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right.” — John Kenneth Galbraith
As I mentioned at the top of the column, the gold price really wasn’t allowed to do much yesterday, as it’s still being kept below its 50-day moving average, so the brain-dead/moving average-following Managed Money traders weren’t doing anything. It was certainly different in silver, as it both broke above — and closed above its 20-day moving average on Tuesday. The small group of Managed Money traders that use the 20-day moving average as a buy/sell point, were very active yesterday…covering shorts –and perhaps going long as well. Of the most interest to Ted was…what group of traders were on the other side of those Managed Money transactions? And there certainly appeared to be concerted ‘resistance’ when the short-covering rally really developed some legs.
Here are the 6-month charts for the Big 6 commodities — and I’m back to using the 50 and 200-day moving averages for silver. As you can tell, we’ve got a bit to go before the critical 50-day moving average comes into play for the Managed Money traders in that precious metal. The ‘click to enlarge‘ feature helps a bit 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 hasn’t been doing much of anything — and has been trading about a dollar either side of unchanged in Far East trading on their Wednesday, but has been sold down in the last hour. At the moment it’s down $1.30 the ounce. It was the same for silver. It was up 4 cents or so just before 2 p.m. China Standard Time — and it’s been sold lower as well…and is back at unchanged currently. Platinum was up five bucks or so in late morning trading in Shanghai, but it has been sold down a bit as well — and is up 2 dollars at the moment. Palladium hasn’t been doing much of anything — and is down a buck as Zurich opens.
Net HFT gold volume is very light at a bit over 32,000 contracts — and there’s 1,866 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is about 12,100 contracts — and there’s only 55 contracts worth of roll-over/switch volume in that precious metal.
The dollar index has been meandering around 5 basis points either side of unchanged since trading began at 6:00 p.m. EDT in New York yesterday evening — and is back at unchanged about twenty minutes before the London open.
Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report. Now that all five trading/reporting days are on display in the above charts, I’d suspect that any changes in market structure for gold won’t be material for the third week in a row. In silver, I’d say there was some deterioration, as a certain portion of the brain-dead/moving average-following Managed Money traders were heading for the exits yesterday.
And as I post today’s missive on the website at 4:02 a.m. EDT, I note that there’s not much going on as the first hour of London/Zurich trading draws to a close. The gold price is off its current low tick by a bit, but still not doing much of anything. It’s down $1.10 at the moment. Silver is still at unchanged — and palladium is up 3 dollars. But palladium is now down 4.
Gross gold volume is coming up on 53,000 contracts — and minus the current roll-over/switch volume, net HFT gold volume is about 48,000 contracts. Net HFT silver volume is now up to 16,400 contracts — and there’s only a tiny 59 contracts worth of roll-over/switch volume in that precious metal.
I see that the dollar index is still chopping aimlessly around unchanged — and as of 8:40 a.m. BST in London, the index is now up 2 basis points.
It’s very quiet out there.
Today ‘the word’ comes down from on high from the Fed at 2:00 p.m. EDT — and we’ll see how precious metal prices react, or are allowed to react, once that happens.
That’s all I have for today — and I’ll see you here tomorrow.