Another Day in ‘Care and Maintenance’ Mode

10 October 2018 — Wednesday


The gold price crawled a few dollars higher in Far East trading for a while on their Tuesday.  That lasted until shortly before 1 p.m. China Standard Time on their Tuesday afternoon — and it began to drift equally quietly lower, until the low tick of the day was set about fifteen minutes after the equity markets opened in New York on their Tuesday morning.  The price rallied back to a bit above unchanged by just after 11:30 a.m. EDT — and it didn’t do much of anything after that.

The high and low ticks definitely aren’t worth looking up.

Gold finished the Tuesday session in New York at $1,189.10 spot, up $1.60 from Monday’s close.  Net volume wasn’t exactly light at a bit under 230,000 contracts — and there was 7,900 contracts worth of roll-over/switch volume on top of that.

The silver price was up four cents or so by around noon CST on their Tuesday — and from that juncture it traded sideways until 10 a.m. in London.  It was sold lower from that point until around 11:30 a.m. BST — and began to edge higher starting soon after that, although its spike down/up low tick of the day came minutes after gold’s low tick in New York trading.  Its subsequent ‘rally’ also lasted until a minute or so after 11:30 a.m. EDT — and also like gold, the price chopped quietly sideways for the rest of the day.

The high and low ticks in this precious metal aren’t worth looking up, either.

Silver was closed at $14.36 spot, up a penny on the day.  Net volume was up there, at a bit over 61,000 contracts — and there was 2,138 contracts worth of roll-over/switch volume in that precious metal.

Platinum was up 7 dollars by minutes after 1 p.m. China Standard Time on their Tuesday afternoon — and then down it went, with the low tick of the day coming shortly before 2 p.m. in Zurich.  From there, it didn’t do much until minutes after the COMEX open in New York about thirty minutes later.  Then away it went, under obvious price resistance, to the upside.  The price was capped at its previous Far East high…$825 spot…minutes after 11:30 a.m. EDT, just like for gold and silver — and it then traded sideways into the close from there.  Platinum was closed at $823 spot, up 5 bucks on the day.

The palladium price traded flat until shortly before 2 p.m. CST on their Tuesday afternoon.  It jumped a small handful of dollars from there, but was hauled lower starting at 2 p.m. — and by the Zurich open an hour later, it was down 6 bucks.  Forty-five minutes after that it had rallied 14 dollars, but then was hauled down to its low tick of the day at, or shortly before the afternoon gold fix in London.  Its rally attempts after that came to naught — and it was sold back to its low tick of the day in the thinly-traded after-hours market.  Palladium was closed at $1,066 spot, down 8 dollars from Monday.

The dollar index closed very late on Monday afternoon in New York at 95.76 — and chopped quietly sideways once trading began a few minutes later at 6:00 p.m. EDT on Monday evening.  That state of affairs lasted until a minute or so after 12 o’clock noon CST in Far East trading.  It dropped about ten basis points to its Far East low by minutes before 1 p.m. CST.  The ‘rally’ that began at that point topped at the 95.16 mark somewhere around 8 a.m. EDT in New York — and as soon as the COMEX opened at 8:20 a.m…the downhill decent began.  The 95.64 low tick was set a very few minutes before 3 p.m. EDT — and it crawled very quietly and unevenly higher into the close from there.  The dollar index finished the Tuesday session at 95.69…down 7 basis points from Monday.

It was just another day [like on Monday] where it was more than obvious that what the currencies were doing was completely disassociated with what was happening to precious metal prices in the COMEX futures market.

And here’s the 6-month U.S. dollar index chart — and the delta between its close — and the close on the intraday chart above, was 34 basis points yesterday.

The gold shares headed lower the moment that trading began in New York on Tuesday morning.  The reason that happened is very simple.  If you check the Kitco gold chart above, you’ll note that the spike down to gold’s low tick of the day began at exactly 9:30 a.m. EDT — and ended about sixteen minutes later. It’s more than obvious on the New York Spot [Bid] chart.  The shares sold off in sympathy, probably algo driven — and although the gold price had rallied seven bucks by 11:30 a.m. in New York trading, the gold stocks did not follow suit.  They did recover a bit, but then chopped mostly sideways until the markets closed at 4:00 p.m. EDT.  The HUI closed down 1.78 percent.  There were no deep-pocket bottom-fishing buyers around yesterday.

It was an identical price path for the silver equities — and for precisely the same reason as gold, if you check the Kitco silver chart further up.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index got hit by 1.65 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 1 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Thursday.  I was underwhelmed.  In gold, R.J. O’Brien issued — and JPMorgan stopped for its client account.  In silver, ADM issued — and JPMorgan stopped for its client account as well.  The link to yesterday’s Issuers and Stoppers Report is here.

So far this month there have been 851 gold contracts issued and stopped, which isn’t a lot, considering the large amount of open interest at the beginning of the month.  That number in silver is 315 contracts.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in October dropped by 4 contracts, leaving 2,118 still open.  Monday’s Daily Delivery Report showed that zero gold contracts were posted for delivery today, so another 4 gold contracts vanished from the October delivery month.  Silver o.i. in October was unchanged at 5 contracts still open — and zero silver contracts were posted for delivery today.

There were no reported changes in either GLD or SLV yesterday — and no sales report from the U.S. Mint, either.

It was also 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 604,903 troy ounces was received, but only 7,018 troy ounces were shipped out.  The largest ‘in’ movement was 602,903 troy ounces received [one truck load] over at JPMorgan — and the remaining 1,999 troy ounces, two good delivery bars, got dropped off at Delaware.  All of the ‘out’ activity, such as it was, occurred at Delaware as well.  There was also 606,478 troy ounces transferred from the Eligible category — and into Registered.  That happened at Brink’s, Inc. — and the link to all of this is here.

There was some decent activity over at the gold kilobar depositories in Hong Kong on their Monday.  They only received 30 of them, but shipped out 5,050.  This activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

The photos below are of the two principal objects of the “Treasure of Gourdon“.  They date to the end of the fifth or the beginning of the sixth century A.D. They were secreted soon after 524 — and were unearthed, along with a bunch of gold coins, in 1845 near Gourdon, Saône-et-Loire in France.  They aren’t very big.  The chalice is only 75mm/3 inches tall — and the rectangular paten, is 19.5 cm by 12.5 cm, and 1.6 cm deep/8 inches by 4.5 inches by 2/3rds of an inch.  Click to enlarge for both.

It was another incredibly slow news day on Tuesday.


The People Give the Orders and the Government Obeys — Jeff Thomas

The sign above is located in the state of Chiapas in Mexico. In English, it says, “You are in the territory of Zapatista in Rebellion. Here, the people give the orders and the government obeys.”

Well, of course, what that really means is that the Zapatistas give the orders, not the people as a whole. Still, the people generally regard the Zapatistas as being more representative of their wishes (and less parasitical) than the government.

Mexicans are further along than, say, Europeans or Americans in understanding the true role of government. The mask has been off for some time and the people understand that the government does not exist to serve them; it exists to enslave them – that is, to rob them of the fruits of their labour through taxation, whilst doing as little as possible to benefit them.

They understand that this is the norm for all governments and elections do little more than remove one parasite and replace it with another.

This very interesting and worthwhile commentary by Jeff appeared on the Internet site on Tuesday sometime — and another link to it is here.

Erasing History, Diplomacy, Truth, and Life on Earth — Paul Craig Roberts

One of the reasons that countries fail is that collective memory is continually destroyed as older generations pass away and are replaced by new ones who are disconnected from what came before.

Initially, the disconnect was handled by history and by discussions around family tables. For example, when I was a kid there were still grandparents whose fathers had fought for the Confederacy. They had no slaves and owned no plantations. They fought because their land was invaded by Lincoln’s armies. Today if Southern families still know the facts, they would protect their children by not telling them. Can you imagine what would happen to a child in a public school that took this position?

Frustrated by the inability of the Union Army to defeat the Army of Northern Virginia led by West Point graduate Robert E. Lee, Lincoln resorted to war criminals. Generals Sherman and Sherridan, operating under the drunken General Grant, were the first modern war criminals who conducted war against civilian women and children, their homes and food supply. Lincoln was so out of step with common morality that he had to arrest and detain 300 Northern newspaper editors and exile a U.S. Congressman in order to conduct his War for Empire.

Today this history is largely erased. The court historians buried the truth with the fable that Lincoln went to war to free the slaves. This ignorant nonsense is today the official history of the “civil war,” which most certainly was not a civil war.

A civil war is when two sides fight for control of the government. The Confederacy was a new country consisting of those states that seceded. Most certainly, the Confederate soldiers were no more fighting for control over the government in Washington than they were fighting to protect the investment of plantation owners.

Memory is lost when historical facts are cast down the memory hole.

This very worthwhile commentary by Paul, which includes an article by Stephen F. Cohen, showed up on his website on Tuesday sometime — and I thank Richard Connolly for pointing it out.  Another link to it is here — and it’s definitely worth reading.

How America Goes the Way of Argentina — Bill Bonner

Berlin is not a particularly attractive city – at least, not from our hotel room near the famous avenue, Unter den Linden. The buildings are all monumental, graceless, and blockish.
For years, the city has attracted young people from all over. It has some of the cheapest apartments in Europe and a lively, bohemian art scene.

It also has a generous social welfare system that makes it easy to live here with relatively little money.

Maybe that’s why there are so many immigrants… Driving downtown, it looked like nearly half the people we saw on the streets were from east of Byzantium. Dark hair, dark skin, scarves covering their hair – these were not the blonds we think of from the old documentaries on the Hitler Youth!
But the world has changed a lot since jack-booted troops marched through the Brandenburg Gate. And as much as we moan about Fed policy and the Washington circus… at least today, the mass killings and World Wars of the 20th century are no more. What killing that does take place is on a fairly small scale and in fairly remote places.

This wide-ranging, but interesting commentary from Bill was posted on the Internet site.  It showed up there very early on Tuesday morning EDT — and another link to it is here.

E.U. Supervisors Monitoring Italian Bank Liquidity “More Intensely Than Usual

With Italian government bond yields blowing out in recent months to the highest levels in over 4 years, the one sector that has been hit hardest have been Italy’s banks, which have lost a third of their market value in the 6 months since peaking in April.

While traditionally higher yields tend to be positive for local banks which can earn a greater profit on the net interest margin, Italy has in recent years been an “upside down” basket case in this regard largely due to banks’ massive holdings of Italian sovereign debt.

And, as Bloomberg recently wrote, while the balance sheets of Italian banks are much-improved since the Eurozone sovereign debt crisis of 2011, banks used much of the funding later injected by the European Central Bank to buy even more sovereign debt.

Commenting on this structural problem facing Italian banks, Luigi Zingales, a professor of finance at the University of Chicago School of Business said in late September that “Italy is facing a sovereign-bank doom loop that can lead to a crisis similar to the one Italy faced in 2011.” Worse, Zingales warned that “since 2011, nothing has changed at the European level” adding that “without completion of banking union and backstop measures, Italy risks a negative spiral as happened in 2011. Uncertainty is increasing bond spreads, thus affecting the banks’ balance sheets and their cost of funding and ultimately their ability to give credit.”  Hence “doom loop.”

It now appears that Europe itself is starting to be concerned worried, because as Reuters reports European banking supervisors have stepped up their monitoring of liquidity levels at Italian banks “more intensely than usual” due to market turmoil in recent days, which has resulted in a sharp increase in the country’s government bond yields.

And since Italy is the one nation which, after Greece, has the highest risk of a terminal bank run, the last thing the E.U. wants – or the ECB can afford – is to spark a banking panic simply with the news that the banks are now “intensely monitored“, so Reuters cited a senior E.U. source that “there is no cause for alarm.”

Of course, the alternative would be that there is cause for alarm, and overnight lines would form as panicked locals sought to withdraw their deposits and savings and park them in their much safer mattress.

This very interesting, but not entirely surprising news item showed up on the Zero Hedge website at 2:11 p.m. on Tuesday afternoon EDT — and I thank Brad Robertson for sending it along.  Another link to it is here.

Russia wants to ditch U.S. dollar in trade with European partners

The Russian Ministry of Finance said on Monday it may shift to the use of local currencies with European trade partners. The move will be part of the so-called de-dollarization of the Russian economy.

As we can see the main opportunity which can be realized in the short and medium term is the transition to settlements in national currencies with our European counterparts, including settlements involving the euro, and including for the delivery of our energy commodities,” Deputy Finance Minister Vladimir Kolychev told reporters.

According to him, such a decision would benefit Russia’s European partners in several ways.

This would, on one hand, strengthen the euro’s position as a reserve currency, and on the other hand provide a sort of security for such [energy] deliveries if the U.S. were to make some decisions affecting U.S. dollar settlements for our banks and our large energy companies,” Kolychev said.

He suggested that transition to euro payments would be simpler because the euro is already a reserve currency, and it would be logical to expect interest in the idea from European companies.

This news item put in an appearance on the Internet site at 2:54 p.m. Moscow time on their Tuesday afternoon, which was 7:54 a.m. in Washington — EDT plus 7 hours.  I thank Larry Galearis for sending it our way — and another link to it is here.

Alternative China PMI Gauge Says Business “Has Never Been Worse

An indicator produced by a Beijing-based business school in the style of the closely-watched purchasing managers index plunged last month, adding to concerns about the slowing economy and raising the question of whether business conditions may be worse than official statistics show.

The CKGSB Business Conditions Index, compiled by the Cheung Kong Graduate School of Business, dropped to the lowest level in its seven-year history in September as the U.S. and Chinese governments imposed new rounds of tariffs on each other’s exports, escalating the trade war.

The index is based on a survey of CKGSB students and graduates who are executives at companies operating in China. The respondents represent around 300 privately-owned small and mid-sized enterprises across several sectors of the economy. Over the last seven years, the CKGSB index has shown bigger swings than the official PMI gauges produced by China’s National Bureau of Statistics.

Most surveyed companies are now experiencing unprecedented difficulties and have become increasingly pessimistic about business prospects for the next six months,” Li Wei, the economics professor at CKGSB who oversees the survey, said in a commentary accompanying the September survey results. “For most, business has never been worse.”

This brief four-paragraph Bloomberg news item appeared on their Internet site at 10:47 p.m. Denver time on Tuesday night — and I found it linked in a Zero Hedge story.  Another link to this Bloomberg article is here.  The ZH spin on this is headlined “Never Been Worse” – China’s (Non-Government) Business Survey Collapses as Trade War Strikes“.

I saw no precious metal-related news item on the Internet yesterday that I though worth posting.


Here are my last two shots of that lesser yellowlegs that I took on Saturday.  In the second shot, I’m not sure if he’s swimming, or walking along the bottom on his tippy toes.  Click to enlarge for both.


It was another paint drying/grass growing kind of day in the precious metals, where the powers-that-be were content to keep silver and gold prices quietly trading sideways — and that was despite the big machinations going on in the dollar index during the Tuesday trading session.

This was yet more proof, if any were needed, that what the currencies are doing means nothing as far as precious metal pricing is concerned.  In a free market, this certainly would not be the case.  But precious metal prices haven’t been allowed to trade freely for a couple of generations.

But based on JPMorgan’s activities since they took over Bear Stearns ten years ago, Ted is certainly of the opinion that this will all end soon — and I concur.  Right now they’re able to control prices from the long side of the COMEX futures market, so they can stand back any time it suits them, or when they are directed to do so — and watch the Manage Money trader et al burn in hell.

Here are the 6-month charts for all four precious metals, plus copper and WTIC…and there’s not a lot to see.  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 see that precious metal prices did next to nothing in Far East trading on their Wednesday, but all ticked a b bit higher in the last few minutes going into the London open. Gold is up a dollar — and silver is now up 4 cents. Platinum is higher by 4 bucks — and palladium by 3.

Net HFT gold volume is pretty light at a bit over 33,000 contracts — and there’s only 728 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is just under 7,800 contracts — and roll-over/switch volume is only 66 contracts in that precious metal.

The dollar index began to chop unevenly lower as soon as trading began at 6:00 p.m. EDT in New York on Tuesday evening — and its current 95.54 low tick was set shortly before noon China Standard Time on their Wednesday morning. It jumped a few basis points higher from there — and is currently down 6 basis points about thirty minutes before the London open.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and looking at the last five dojis in both silver and gold on the 6-month charts above, I would expect that we’ll see some improvement in the commercial net short positions in both precious metals.  Of course Ted will be interested in what JPMorgan has been up to in silver…along with what’s up with the technically-oriented Managed Money traders.

And as I post today’s column on the website at 4:02 a.m. EDT, I note that all of the gains I spoke of an hour ago have vanished — and then some…except for palladium.  Gold is now down $1.30 an ounce — and silver is down a penny.  Platinum is only up a dollar now — but palladium is still up 3.

Gross gold volume is coming up on 44,000 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is around 42,400 contracts.  Net HFT silver volume is 11,100  contracts– and there’s only 123 contracts worth of roll-over/switch volume on top of that.

The dollar index jumped up starting a minute or so before the London open — and is now up 2 basis points as of 8:30 a.m. BST.  But that tiny 13 basis point rise since the London open was all the cover that was needed to sell precious metals lower.

It’s hard to know if today is going to be another sort of ‘care and maintenance’ session…or something else.  I would suspect that JPMorgan already knows.  As Ted has said on several occasions…”it’s still their game“.

That’s all for today, which isn’t much — and I’ll see you here tomorrow.