What London Giveth…New York/JPMorgan Taketh Away

17 October 2018 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price wandered quietly sideways until minutes before 2 p.m. China Standard Time on their Tuesday afternoon and, just like on Monday, began to head quietly higher.  That state of affairs lasted until the equity markets opened in New York at 9:30 a.m. EDT yesterday morning.  The price pressure began at that point — and continued until the low tick of the day was set around 4:30 p.m. in the thinly-traded after-hours market.  It didn’t do anything after that.

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

Gold was closed in New York yesterday at $1,224.50 spot, down $2.20 on the day.  Net volume was fairly healthy at a bit over 238,500 contracts — and there was 4,584 contracts worth of roll-over/switch volume in that precious metal.

The silver price was up a nickel or so by around 9:30 a.m. CST on their Tuesday morning, but was capped and turned lower at that point — and the low tick of the day was set very shortly after the London open.  It began to head impressively higher from there — and then jumped up at the COMEX open.  It ran into ‘something’ a minute or so later — and the price was sold down from that juncture until 2:00 p.m. in after-hours trading — and it moved sideways into the 5:00 p.m. EDT close from there.

The low and high ticks in this precious metal were reported by the CME Group as $14.64 and $14.88 in the December contract.

Silver was closed at $14.635 spot, down 3 cents from Monday.  Not surprisingly, net volume was pretty decent at a bit under 64,500 contracts — and there was 3,259 contracts worth of roll-over/switch volume on top of that.

Palladium wasn’t allowed to do much yesterday, spending most of the day trading two bucks either side of unchanged.  Its rally attempt at 8 a.m. EDT — and the one going into the afternoon gold fix in London, were both turned aside — and from 10 a.m. EDT onwards, the price was sold unevenly lower until around 4:30 p.m. in the thinly-traded after-hours market.  I didn’t do much after that.  Platinum was close on Tuesday at $839 spot, down a dollar on the day.

The palladium price didn’t do much of anything until shortly before noon in Zurich…EDT plus 6 hours…and it began to tick erratically higher from there.  The spike high came around 8:40 a.m. in New York — and it was sold lower into the Zurich close from there — and then traded unevenly sideways until the trading day ended at 5:00 p.m. EDT.  Palladium was closed at $1,075 spot, down 5 bucks on the day.

The dollar index closed very late on Monday afternoon in New York at 95.06 — and once trading began at 6:00 p.m. EDT on Monday evening a few minutes later, it began to tick lower — and appeared to get ‘saved’ at the 95.00 mark shortly before 9 a.m. China Standard Time on their Tuesday morning.  It crawled quietly higher from there — and the 95.20 high tick was set around 1:30 p.m. CST on their Tuesday afternoon.  It chopped unevenly lower from there until shortly before 9 a.m. in New York — and then rolled over hard — and was saved at the 94.79 mark about fifteen minutes later.  It ‘rallied’ until the 11 a.m. EDT London close — and was back below the 95.00 mark less than an hour later.  It appeared to get ‘saved’ once again at that juncture — and from there it crept quietly higher into the close.  The dollar index finished the Tuesday session in New York at 95.09…up 3 basis points from Monday’s close.

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

The gold stocks opened unchanged — and then rallied to their respective high ticks of the day by around 10:25 a.m. in New York trading.  They chopped quietly lower from that point — and their respective low ticks were set around 2:35 p.m.  They rallied quietly from there, but couldn’t quite squeeze a positive close, as the HUI finished down 0.34 percent.

The silver equities also opened about unchanged — and then shot higher from there — and were up about 2.5 percent at their 10:25 a.m. EDT high ticks.  Then, like the gold shares, they began to head lower — and you know the rest, as they followed the gold stocks like a shadow from that point onwards.  But because the stocks declined from such a high base, they managed a positive close, as Nick Lairds’ Intraday Silver Sentiment/Silver 7 Index closed up 0.74 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 87 gold and 69 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  In gold, the two short/issuers were Morgan Stanley and Advantage…the former with 82 contracts out of its in-house/proprietary trading account — and the latter with 5 contracts from their client account.  The two largest long/stoppers were JPMorgan with 63 contracts for its client account — and Advantage with 16 for its client account.  Morgan Stanley stopped 6 contracts for its client account as well.  In silver, the two largest short/issuers were ADM and JPMorgan with 47 and 20 contracts out of their respective client accounts. The only long/stopper worthy of the name was JPMorgan with 62 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 October fell by 246 contracts, leaving 853 still around, minus the 87 contracts mentioned just above.  Monday’s Daily Delivery Report showed that only 30 gold contracts were actually posted for delivery today, so that means that 246-30=216 more gold contracts disappeared from the October delivery month.  And, not surprisingly, silver open interest in October rose by a bunch of contracts…48 to be exact, leaving 70 still open, minus the 69 contracts mentioned in the previous paragraph.  Monday’s Daily Delivery Report showed that 1 silver contract was actually posted for delivery today, so that means that 70+1=71 more silver contracts were just added to the October delivery month.


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

The only activity in gold over at the COMEX-approved gold depositories on the U.S. east coast on Monday was 100 troy ounces that was shipped out of Brink’s, Inc.  I shan’t bother linking this, of course.

It was far different in silver, as usual.  There was 2,449,556 troy ounces, four truck loads, reported received — and another 1,313,321 troy ounces shipped out.  Two truck loads…1,238,898 troy ounces arrived at Brink’s, Inc.  Another truck load…600,421 troy ounces…arrived at CNT — and the last truck load…610,237 troy ounces…ended up at JPMorgan.  In the ‘out’ category, there was one truck load…612,633 troy ounces…shipped out of CNT — and the other 700,687 troy ounces departed Scotiabank.  The link to all this action is here.

It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving 6,001 of them — and shipped out only 65.  The link to that activity is here.


Here are two more charts that Nick passed around on the weekend.  You’ve seen them before. They show the total gold and silver holdings of all know transparent gold and silver depositories, ETFs and mutual funds…as of the close of business on Friday, October 12.  For the week it showed that there was 135,000 troy ounces of gold, plus 186,000 troy ounces of silver added to these entities on a net basis.  Click to enlarge for both.

Once again, I only have a tiny handful of stories.


CRITICAL READS

The Great Depression II — Jeff Thomas

Whenever a movie has been a huge hit, the film industry tries to follow it up by doing a sequel. The sequel is almost invariably far more costly, as there’s the anticipation by those who create it that it will be an even bigger blockbuster than the original.

The Great Depression of the 1930’s is seen by most people to be the be-all and end-all of economic catastrophes and there’s good reason for that. Although the economic cycle has always existed, the period leading up to October 1929 was unusual, as those in the financial sector had become unusually creative.

Brokers encouraged people to buy into the stock market as heavily as they could afford to. When that business began to level off, they encouraged people to buy on margin. The idea was that the buyer would only put up a fraction of the money for the purchase and the broker would “guarantee” full payment to the seller. As a condition to the agreement, the buyer would have to relinquish to the broker the right to sell his stock at any point that he wished, should he feel the need to do so to get himself off the hook in the event of a significant economic change.

Both the buyer and the broker were buying stocks with money that neither one had. But the broker entered into the gamble so that he could charge commissions, which he would be paid immediately. The buyer entered into the gamble, as he had been promised by the broker that stocks were “going to the moon” and that he’d become rich.

Banks got into the game, as well. At one time, banks took money on deposit, then lent that money out at interest. They would always retain a percentage of the deposited money within the bank to assure that they could meet whatever the normal demand for withdrawals might be. But, eventually, bankers figured out that, if they were prepared to gamble, they could lend out far more money – many times the amount that they had received on deposit. As long as very few loans turned bad, they would eventually get the money back, with interest.

And so, in the 1920’s, they loaned money to people so that they could buy into the stock market more heavily. From that point forward, an investor who was tapped out and couldn’t afford to buy more stock, then bought on margin. When he was no longer able to even afford to buy on margin, he borrowed money from the bank to buy on margin.

This worthwhile commentary by Jeff showed up on the internationalman.com Internet site on Tuesday sometime — and another link to it is here.


MARGIN CALL: Why The Next Market Crash Will Be Worse Than Anyone Anticipates — Mike Maloney

Last week Mike Maloney unveiled his new indicator, the Market Fragility Index, to the public. Today he shows us a recent discovery that helps explain why the cracks in the financial system are growing larger every day, and why the next market crash may be far more devastating than anticipated.

This 8:18 minute video clip from Mike was posted on the goldsilver.com Internet site on Tuesday sometime — and I thank Roy Stephens for sending it our way.


Venezuela drops U.S. dollar, will use euro for international transactions

Venezuela is abandoning the U.S. dollar, with all future transactions on the Venezuelan exchange market to be made in euro, Tareck El Aissami, the country’s Vice President for Economy, announced.

The sanctions, recently introduced by Washington against Caracas, “block the possibility of continuing to trade using the US dollar on the Venezuelan exchange market,” El Aissami said, adding that the American restrictions were “illegal and against international law.”

The American “financial blockade” of Venezuela affects both the country’s public and private sectors, including pharmacy and agriculture, and shows “just how far the imperialism can go in its madness,” the vice president said.

Venezuela’s floating exchange rate system, Dicom, “will be operating in euro, yuan or any other convertible currency and will allow the foreign exchange market to use any other convertible currency,” El Aissami said.

The vice president added that all private banks in Venezuela are obliged to participate in the Dicom bidding system.

This story put in an appearance on the rt.com Internet site at 6:45 p.m. Moscow time on their Tuesday afternoon, which was 11:45 a.m. in Washington — EDT plus 7 hours.  It comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.


China and Japan Dump Treasuries as Dollar’s Reserve Status Slumps to 5 Year Lows

Treasury International Capital flows showed Brazil the biggest buyer of Treasurys in August (followed by Ireland and France), but it was China and ‘ally’ Japan that dumped the most Treasurys in the month…

Brazil is Steve Mnuchin’s best friend…

As China reduced their holdings of U.S. Treasuries for the 3rd straight month…Japan flipped to a seller again in August back to the lowest holdings since October 2011.

According to the recent data revealed by the International Monetary Fund, share of the US national currency in the global central-bank reserves declined to 62.3 percent in the second quarter with holdings in the euro, yen and yuan gained as a share of allocated reserves.

Sanction risk appears to explain a significant portion of the observed decline,” the analyst said.

This news story was posted on the Zero Hedge website at 4:08 p.m. EDT on Tuesday afternoon — and I thank Brad Robertson for sending it.  Another link to it is here.


James Rickards appears on The Great Reset Opportunity Report

This 1 hour and 5 minute video interview covers some old ground, but there’s some new stuff as well.  The commentary regarding precious metals begins around the 44:40 minute mark — and goes for a while after that.  It’s worth watching if you have the time and/or the interest.  I thank Harold Jacobsen for bringing it to our attention.


Hungary announces 10-fold increase in gold reserves — Ronan Manly

In one of the most profound developments in the central bank gold market for a long time, the Hungarian National Bank, Hungary’s central bank, has just announced a 10 fold jump in its monetary gold holdings. The central bank, known as Magyar Nemzeti Bank (MNB) in Hungarian, made the announcement in Budapest, Hungary’s capital.

The details of Hungary’s dramatic new gold purchase are as follows:

* Before this month, Hungary’s central bank held 3.10 tonnes of gold.
* During the first two weeks of October, the Hungarian National Bank purchased 28.4 tonnes of gold.
* This gold purchase raised the central bank’s gold holdings from 3.1 tonnes to 31.5 tonnes, i.e. a 1,000% or 10-fold increase.
* The Hungarian central bank had not altered its gold reserves since 1986, i.e. 32 years ago.
* The 28.4 tonnes of gold was purchased in ‘physical form’, and ‘its repatriation has already taken place‘ to Hungary.

In conjunction with today’s announcement in Budapest, the Hungarian National Bank put together a very interesting press release on its website (in Hungarian), which I have translated and edited, and which I think is worth reading in its entirety. Therefore, I have replicated it below, adding some bold and underlining in places.

This very interesting gold-related news item appeared on the bullionstar.com Internet site on Tuesday sometime — and I found it on the gata.org Internet site.  Another link to it is here.  The Bloomberg spin on this is headlined “Hungary Boosts Gold Reserves 10-Fold, Citing Safety Concerns” — and I thank Richard Saler for this one.


The PHOTOS and the FUNNIES

Today’s ‘critter’ is the cougar…also commonly known as the puma, mountain lion, panther or catamount.  Its range, from the Canadian Yukon to the southern Andes of South America, is the widest of any large wild terrestrial mammal in the Western Hemisphere — and the second-heaviest cat in the New World after the jaguar. Secretive and largely solitary by nature, the cougar is properly considered both nocturnal and crepuscular.


The WRAP

It was yet another day where rallies in either the Far East or London…or both…were extinguished, then most, or all…if not more…were taken back during the COMEX trading session in New York.  The bullion banks, principally JPMorgan, do their jobs well.  After the big rallies last Thursday, the precious metals have been forced to trade sideways to down ever since, even though it’s more than obvious that they want to rally to the moon and the stars.

Here are the 6-month charts for all four precious metals, plus copper and WTIC…and it should be noted once again that any price action that occurred after the 1:30 p.m. close, does not appear on Tuesday’s dojis.  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 the gold price inched higher for the first two hours of trading once it began at 6 p.m. EDT on Tuesday evening.  It headed lower from there — and the current low tick was set around 1:30 p.m. China Standard Time on their Wednesday afternoon.  It has been heading higher since — and is currently down $1.50 the ounce.  Silver followed a very similar price path — and it’s only down 2 cents at the moment. In most respects platinum and palladium followed similar, but quieter price paths, with the former currently down 3 bucks — and the latter is up a dollar on the day.

Net HFT gold volume is around 43,000 contracts — and there’s 1,075 contracts worth of roll-over/switch volume in this precious metal.  Net HFT silver volume is about 10,200 contracts — and there’s only 152 contracts worth of roll-over/switch volume on top of that.

The dollar index dipped at the 6 p.m. EDT open yesterday evening — and it began to move higher from there.  The current 95.24 high tick came shortly after the 2:15 p.m. afternoon gold fix in Shanghai — and it has been chopping lower since — and is currently up 6 basis points about thirty minutes before the London open.

Despite the fact that the short position in both gold and silver are still white-hot bullish, it’s equally obvious that the powers-that-be…JPMorgan…are not about to allow precious metal prices to rise, at least not for the moment.  JPM is now content to control prices from the long side of the market — and that won’t change until such time as they’re prepared to let precious metal prices run to the upside in a short-covering squeeze for the ages.

In the meantime, they continue to take delivery of the silver that they stopped in the September delivery month.  Ted Butler now estimates that they’re total physical silver stash is up to the 775 million troy ounce mark — and he mentions occasionally that this number might actually be on the conservative side.

And as I post today’s column on the website at 4:03 a.m. EDT, I note that the gold price was turned a bit lower in the latter half of the first hour of London trading, but is now down $2.80 the ounce.  Silver was turned down a bit at the London open — and is lower by 4 cents the ounce at the moment.  Platinum is now down 4 dollars — and palladium is now down 2 dollars on the day.  It was up a buck at the Zurich open.

Gross gold volume is coming up on 52,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is a bit over 50,000 contracts.  Net HFT silver volume is around 12,400 contracts — and there’s only 209 contracts worth of roll-over/switch volume in this precious metal.

The dollar index chopped lower until a few minutes after the 8:00 a.m. BST London open — and began to head higher at that point — and it’s now up 9 basis points.

That’s all I have for today — and I have no idea what awaits us in the precious metal arena in COMEX trading in New York today.

See you here tomorrow.

Ed