Another Day of ‘Care and Maintenance’

28 September 2018 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crawled higher by about four bucks by around 11:30 a.m. China Standard Time on their Thursday morning.  It traded flat from there until exactly 1 p.m. CST — and at that point a dollar ‘rally’ erupted — and those gains for gold were mostly gone by the noon silver fix in London.  It drifted quietly lower from there until 8:30 a.m. in New York — and at that juncture, the spoofing and algo spinning began.  There was brief counter-trend rally about thirty minutes either side of the afternoon gold fix in London, but the sell-off resumed after that — and the low tick of the day was set shortly after the London close.  The price really didn’t do much after that.

The high and low ticks were reported by the CME Group as $1,197.30 and $1,180.50 in the October contract — and $1,202.60 and $1,185.60 in December.

Gold was closed on Thursday at $1,182.40 spot, down $11.70 from Wednesday.  Net volume was very heavy at around 333,500 contracts — and roll-over/switch volume was a bit over 18,000 contracts on top of that.

Silver was lead on a very similar price path as gold, with the only major exception being that the low tick of the day in this precious metal was set at 9:15 a.m. in New York.  From there it crawled mostly quietly higher until a few minutes after 1 p.m. EDT, but then was sold off a few more pennies in the thinly-traded after-hours market.

The high and lows in silver were recorded as $14.48 and $14.195 in the December contract.

Silver was closed in New York yesterday at $14.235 spot, down 6 cents on the day.  Net volume was pretty heavy once again at a bit under 86,500 contracts — and there was 1,884 contracts worth of roll-over/switch volume in this precious metal.

The platinum price rose and fell a handful of dollars in Far East trading on their Thursday, but was still up 3 bucks or so by the Zurich open.  It rallied to its $830 spot high tick around 11:30 a.m. CEST [Central European Summer Time]… but by 1 p.m. CEST it was heading lower — and got kicked even further downstairs once COMEX trading began in New York at 8:20 a.m. EDT.  Like for gold, the low tick was set by ‘da boyz’ a few minutes after the Zurich/London close — and its subsequent rally was capped at 1 p.m. EDT.  It was sold down a few dollars into the COMEX close from there — and didn’t do much of anything after that.  Platinum was closed at $809 spot, down 11 dollars on the day — and 21 dollars off its high tick.

Not surprisingly, palladium was up 7 bucks by the Zurich open on their Thursday morning — and it headed sharply higher an hour later at 10 a.m. CEST in Zurich trading.  That rally petered out about three hours later — and it was sold down a few dollars from there going into the COMEX open.  ‘Da boyz’ took over and smashed it to its $1,056 spot low tick of the day at, or minutes before, the afternoon gold fix in London.  It rallied very sharply from there for the next twenty minutes or so — and then crawled quietly and unsteadily higher until around 3 p.m. in after-hours trading in New York.  At that point, the $1,082 high tick was set — and it was sold a few dollars lower into the 5:00 p.m. close.  Palladium finished the Thursday trading session at $1,081 spot, up 20 dollars on the day.

The dollar index closed very late on Wednesday afternoon in New York at 94.30 — and proceeded to chop very unevenly sideways until precisely 1:00 p.m. China Standard Time on their Thursday morning.  It jumped up about 25 basis points or so by 8:20 a.m. in London — and then proceeded to tick lower until noon BST/7 a.m. in New York.  A ‘rally’ began at that point that, because of its initial saw-tooth pattern, looked like it had some help at the beginning.  The dollar index topped out at the 95.01 mark a few minutes before 6 p.m. EDT — and it sagged a few basis points into the close from there.  The dollar index was closed in New York on Thursday at 94.995 — up 70 basis points on the day.

In a lot of respects this dollar index move higher certainly looked like a short covering rally to me, as the FOMC meeting news was very much ‘yesterday’s news’.  But whatever the reason for the dollar index ‘rally’, it allowed JPMorgan et al to lean on precious metal prices…except for palladium, of course.

And here’s the 6-month U.S. dollar index — and the delta today is 48 basis points compared to the Thursday close on the intraday chart above.

The gold shares gapped down not quite 2 percent at the open — and then crawled quietly and nervously higher until shortly before 2 p.m. in New York trading.  They edged a bit lower into the close from there.  The HUI finished the Thursday session down 0.78 percent.

The silver equities dropped a bit over 3 percent at the open — and chopped very unevenly higher until shortly before noon in New York.  From that juncture they edged quietly lower into the close — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.24 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that zero gold and 490 silver contracts were posted for delivery within the COMEX-approved depositories today.  In silver, it was HSBC USA was the sole short/issuer from its in-house/proprietary trading account. The three largest long/stoppers were JPMorgan, with 286 contracts…4 for its own account — and 282 for its client account.  ADM was in second spot with 131 for its client account.  In third place was the CME Group, as they picked up 67 contracts for their own account, which they immediately reissued as 67×5=335 Thousand Troy Ounce Mini Silver contracts.  And, not surprisingly, it was ADM as the biggest long/stopper of those mini contracts, with 333 for its client account.  Those contracts are out for delivery today as well.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in September fell by 4 contracts, leaving none left.  Wednesday’s Daily Delivery Report showed that 4 gold contracts were actually posted for delivery today, so that means that September gold deliveries are done.  Silver o.i. in September cratered by 508 contracts, leaving zero left, minus the 490 mentioned in the previous paragraph.  Wednesday’s Daily Delivery Report showed that 18 silver contracts were actually posted for delivery today…508-18=490 contracts left — and those are ones out for delivery today as well.  Silver is done for September too.

With September deliveries wrapped up, the CME Group reports that during that month there were 697 gold contacts, plus 7,901 silver contracts delivered.

Gold open interest in October declined by 2,011 contracts, leaving 4,403 still open.  First Day Notice for October showed that only 1 gold contract was posted for delivery on Monday.  Advantage issued from its client account — and HSBC USA stopped it for its own account.  Silver o.i. in October declined by 20 contracts, leaving 221 still openFirst Day Notice for October deliveries in silver showed that 30 silver contracts were actually posted for delivery on Monday.  The two short/issuers were Morgan Stanley and ADM with 15 contracts each from their respective client accounts.  Of the four long/stoppers in total, the two largest were JPMorgan and Advantage, with 18 and 9 contracts for their respective client accounts.


There were no reported changes in GLD yesterday, but for the second time this week there was a withdrawal from SLV, as an authorized participant took out 1,973,626 troy ounces.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 500 troy ounces of gold eagles — and 1,000 one-ounce 24K gold buffaloes.

There was only a tiny amount of activity in gold over at the COMEX-approved depositories on Wednesday.  There was 1,157.436 troy ounces/36 kilobars [SGE kilobar weight] received at Brink’s, Inc. — and that was all.  I won’t bother linking this.

It was much busier in silver of course, as 228,321 troy ounces were received — and a fairly chunky 2,258,592 troy ounces was shipped out.  Most of the ‘in’ activity…223,064  troy ounces worth…was at HSBC USA.  The remaining 5,257 troy ounces was dropped off at Brink’s, Inc.  In the ‘out’ category, the largest by far was the 1,784,219 troy ounces that departed JPMorgan’s depository.  There was also 449,218 troy ounces that departed Brink’s, Inc.  The remainder…25,154 troy ounces…was shipped out of CNT.  The link to that activity is here.

JPMorgan COMEX silver inventory has now slipped back below the 140 million troy ounce mark, at 139.46 million troy ounces.  Here’s the updated chart of the Big 6 COMEX silver holders that matter.  Click to enlarge.

It was another fairly quiet day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They only received 200 of them — and shipped out 342.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

Kushan, Vasu Deva II, 310-330, Stater

Mint: Taxila     Material: gold     Full weight: 7.88 grams

I only have a tiny handful of stories again today.


CRITICAL READS

U.S. Goods Trade Deficit Surges Near Record High

In the few months since President Trump unleashed his trade war, predicated on managing back America’s massive merchandise trade deficit, things have gone very wrong, judging by the numbers.

Against expectations of a $70.6 billion deficit, August’s goods trade balance plunged to $75.8 billion – just shy of July 2008’s record high deficit of $76.025 billion…

Notably, the trade deficit was worse than the forecast range $68b to $73.9b from 36 economists.
Whether this reflects preemptive actions ahead of actual tariffs is unclear.

  • Exports fell 1.6% in Aug. to $137.912b from $140.199b in the prior month
  • Imports rose 0.7% to $213.742b in Aug. from $212.246b in July

With exports of food and beverage and Industrial supplies plunging in August (and consumer goods surging).

Imports were dominated by a 3.2% increase in automotives.

This very brief 1-chart Zero Hedge story was posted on their Internet site at 8:50 a.m. EDT on Friday morning — and I thank Brad Robertson for pointing it out.  Another link to it is here.


What Will Surging Mortgage Rates Do to Housing Bubble 2? — Wolf Richter

The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment jumped to 4.97% for the week ending September 21, the Mortgage Bankers Association (MBA) reported this morning. A week ago, it was still at 4.88%. This is the highest average rate since the brief mini-spike that topped out in March 2011 at 5.01%. The last time before March 2011 that we saw this kind of average rate was in May 2010.

The average rate of 5% — some borrowers are getting lower rates and others higher rates — may sound sky-high for a 30-year fixed rate mortgage with 20% down, in this era of interest-rate repression that caused home prices to balloon. But now those inflated home prices must be financed at these higher rates.

And 6% beckons as the next target. Even 6% is still historically low. It would take rates back to late 2008, just as the Fed was starting to repress long-term rates via its first big bout of QE.

But QE ended in 2014, and the Fed has been raising rates “gradually” since December 2015, and has started to unwind QE in October 2017, which includes shedding its stash of mortgage-backed securities that it had acquired to repress mortgage rates. This is a new interest-rate era that’s going to resemble the old pre-Financial-Crisis interest-rate era a lot more than what we’ve seen in the past 10 years.

This commentary by Wolf was posted on the wolfstreet.com Internet site on Wednesday sometime — and I thank Richard Saler for sending it our way.  Another link to it is here.


‘They’ Want You To Do As ‘They’ Say, Not As ‘They’ Do

Facts are threatening to those invested in fraud.” ― DaShanne Stokes

Insiders at U.S. companies unloaded $5.7 billion of their company stock this month, the highest in any September over the past decade, according to TrimTabs Investment Research.  Insiders, which include corporate officers and directors, sold over $10 billion of their company stock in August, also at the fastest pace in 10 years. With the stock market at all time highs and valuations, based on all historically accurate measures, off the charts, it makes sense for knowledgeable insiders to sell high. Of course, if they were expecting the profits of their companies to soar because Trump says we have the best economy in history, why would they be selling?

When these Ivy League educated superstar CEOs go on CNBC, Bloomberg, and Fox to tout their companies and field softball questions from bimbos and boobs disguised as journalists, they proclaim a glorious future and declare their stocks to be undervalued and a screaming bargain. Buy, buy, buy. They talk the talk, but don’t walk the walk. They personally do the opposite with their own funds versus what they do with shareholder funds. Ethics among corporate executives has never been one of the required traits. Lying with a straight face is the key to being a successful CEO in today’s warped amoral world.

While dumping stock like there’s no tomorrow these very same CEOs of the largest US public companies have authorized a breathtaking $827.4 billion of stock buybacks in 2018 — already a record for any year, according to TrimTabs. Annualized, these CEOs will will buyback in excess of $1.2 TRILLION when stocks are at all-time highs. In contrast, in 2009 when they could have bought their stocks at 10 year lows, they bought back less than $100 billion. Buy high and sell low. How can they go wrong?

This very interesting, but not surprising commentary put in an appearance on the Zero Hedge website at 10:22 a.m. on Thursday morning EDT — and it’s the second contribution of the day from Brad Robertson.  Another link to it is here.


Failing to Check a Simple Box Can Destroy Your Retirement Dreams — Dennis Miller

October 2008

Bob and Ray were close friends; both retired and lived across the street from one another. One fateful morning, each took their coffee into the den, flipped on the computer and checked their brokerage account. As the data popped up, they both did a double take…. “What the heck is going on?” Overnight their lives changed dramatically!

Like TV mysteries, this week’s episode is based on real-life events, although names are changed, and math is simplified.  Bob & Ray both worked hard, raised wonderful families, lived within their means, saved their money, and retired 3 years earlier. Each had a retirement portfolio of $1.2 million.

They self-managed their money conservatively using an online brokerage firm. No more chasing rainbows, preservation of capital and safe, secure income was their mantra. Each had enough guaranteed income to supplement their social security and pay their bills with money left over.

No money worries – their finances were under control. As long as they kept following their plan, they were financially set for life.

This interesting commentary by Dennis was posted on his Internet site on Thursday morning sometime — and another link to it is here.


What Argentina Tells Us About America’s Future — Bill Bonner

The Reagan team won the White House by arguing that government was the problem, not the solution.

But once in office, the feds realized what team they were on… and that they had access to almost unlimited funds.

In the immortal words of Dick Cheney, they saw that “deficits don’t matter.”

By the end of Reagan’s two terms, the insiders were more powerful than ever. And the federales had run up the national debt from $900 billion to $2.8 trillion – the biggest peacetime build-up in history.

Then, after the crash of 1987, deficits and debts in every sector – business, household, and government – got larger and larger.

Soon, the whole country was swamped by debt.

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


Italy Defies Europe, Agrees on 2019 Budget Deficit at 2.4% of GDP

Despite the resistance of Italy’s finance minister Giovanni Tria who had pushed back against demands by the League and the Five Star Movement to push Italy’s budget deficit above 2% in 2019, demanding a hard stop at 1.6%, moments ago the Italian budget negotiations reached a successful conclusion, when Italy’s Deputy Premier Matteo Salvini, and League leader, said that agreement had been reached on the 2019 deficit to be at 2.4% of GDP, as he and Di Maio demanded in recent days to fund what had emerged as key sticking point, namely Universal Basic Income for the people.

Commenting on the outcome, Italy’s other deputy premier Luigi Di Maio, said he had succeeded in a “budget for the people” adding that the budget cancels poverty thanks to “citizen’s income,” at a cost of €10 billion. He added that other measures include reform of job centers, pension reform, and a €1.5 billion fund for victims of bank crises.

Salvini and Di Maio said that Italy’s government is united on the budget goal, although it was unclear if Finmin Tria would stay on after his “fiscally prudent” position had been rejected although Bloomberg reports that according to a League official, Tria had agreed with the 2.4% budget deficit target.

Attention now turns to how Brussels will respond as it will certainly not be excited. Ahead of the decision, E.U. Commissioner Moscovici was quoted in la Stampa, saying that Italy’s deficit must stay below 2%, while the final number is 0.4% above this.

This Zero Hedge news item put in an appearance on their Internet site at 3:37 p.m. on Thursday afternoon EDT — and another link to it is here.


And, for the second day in a row, I saw no precious metal stories that I thought worth posting.


The PHOTOS and the FUNNIES

Today’s ‘critter’ is the flying fish — and there are about 64 species of them.  Flying fish can make powerful, self-propelled leaps out of water into air, where their long, wing-like fins enable gliding flight for considerable distances above the water’s surface. This uncommon ability is a natural defence mechanism to evade predators.   I’ve seen them on a number of occasions — and they’re amazing to watch.  Click to enlarge.  And here’s an amazing 3:20 minute video clip about flying fish.  It’s a must watch — and the link is here.


The WRAP

Although I say that wisdom is better than strength, nevertheless the common wisdom is despised, and its words are not heard. A wise man speaking quietly is worth more than the shouts of a tyrant commanding fools. Wisdom is better than weapons of war, but one sinful man can destroy much that is good.” — Ecclesiastes 9:16-18


Whether real or engineered, the rally in the dollar index on Thursday was put to good use, as JPMorgan continued to keep both gold and silver below their respective 50-day moving averages…moving them even further away after yesterday’s engineered price declines.  They also came close to closing silver back at its 20-day moving average…but it did trade below that moving average for a bit yesterday.

As Ted most succinctly pointed out on the phone yesterday, most of the deterioration in the short positions of the Managed Money traders from the last reporting week, has been pretty much reversed during the last two trading days.  I’m sure that was the object of that exercise.

Here are the 6-month charts for the Big 6 commodities — and besides gold and silver, it should be noted that platinum touched its 50-day moving at its low yesterday.  Palladium is certainly attempting to reach its free-market price, despite all the obstacles that ‘da boyz’ are putting in its way.  The ‘click to enlarge‘ feature only helps with the four precious metal charts.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price rallied a few dollars until noon China Standard Time on their Friday. But, like on Thursday over there, all those gains have vanished in afternoon trading — and gold is now down 90 cents the ounce at the moment. The price pattern in silver was not quite the same, but the result was — and it’s now up only a penny after being up six cents earlier. Platinum was up a couple of bucks in morning trading in the Far East, but was sold down hard about thirty minutes before the Zurich open — and is down 3 dollars. The palladium price was higher as well, but ‘da boyz’ have that back at up only a dollar as Zurich opens.

Net HFT gold volume is a bit over 50,000 contracts — and there’s only 170 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is at 11,000 contracts — and there’s only 14 contracts worth of roll-over/switch volume in that precious metal.

The dollar index was down about 8 basis points by a few minutes before 2 p.m. CST on their Friday afternoon, but it has ticked higher since — and is now up 7 basis points thirty minutes before the London/Zurich opens.

Today, at around 3:30 p.m. EDT, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday — and as I pointed out a few paragraphs ago, in a lot of ways, whatever is contained in that report regarding gold, silver or platinum…is pretty much ‘yesterday’s news’ in most respects.  But regardless of that fact, I’ll report all the numbers in my column tomorrow.

And as I post today’s efforts on the website at 4:02 a.m. EDT, I see that the current low tick in gold came a very few minutes after the London open — and the price is now up 20 cents. Silver has rallied a bit as well — and is now up 5 cents. Ditto for platinum — and it’s only down a dollar now — and palladium is now up 3 bucks.

Gross gold volume is a bit over 66,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is around 66,000 contracts. Net HFT silver volume is about 15,200 contracts and there’s only 41 contracts worth of roll-over/switch volume on top of that.

The dollar index hit its current high tick a few minutes after the 8 a.m. BST London open — and has faded a few basis points since — and is up 7 basis points as of 8:30 a.m. BST/3:30 a.m. EDT.

I received an e-mail from subscriber Mike F. yesterday and, understandably, he was none too happy about yesterday’s precious metal price action.  He had the following to say…”If the “gold bullish set up” is one of the greatest in history, and J. P. Morgan Chase has liquidated its’ short position and now is long, how can the price of gold be collapsing again?!  Sure the Fed is still raising rates, but is J P Morgan going to lose money?  Totally baffled!

Dear “Totally Baffled!” — As I’ve pointed out several times this month, JPMorgan…despite their now long positions in both…still have gold and silver prices in ‘care and maintenance’ mode — and will keep them there until they decide to allow a rally to commence, or until they’re instructed to step aside.  Forcing prices away from those dangerous moving average that matter to the Managed Money traders is all part of the ‘care and maintenance’ routine that we find ourselves in at the moment.  Yes, it’s as frustrating and maddening as hell, but we are just keen observers of an almost five decade old commodities prices management scheme that’s about to come to an end.

So I suggest you take at least one blue pill — and lay down until this frustration you’re feeling goes away…as this too shall pass.

Have a good weekend — and I’ll see you here on Saturday.

Ed