Silver Smacked Below Its 50-Day Moving Average Briefly

19 October 2018 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price chopped quietly sideways once trading began in New York on Wednesday evening.  That lasted until 10 a.m. China Standard Time on their Thursday morning.  It edged a bit higher from there until around 12:30 p.m. CST — and the selling pressure began at that point.  The low tick of the day was set a few minutes before the London open — and from there it chopped quietly but unsteadily higher until around 12:10 a.m. in New York.  The selling pressure began anew at that juncture — and it was sold equally quietly lower until around 3:45 p.m. in after-hours trading.  It ticked a bit higher into the 5:00 p.m. EDT close from there.

The low and high ticks, which are barely worth looking up, were recorded as $1,221.70 and $1,233.60 in the December contract.

Gold was closed in New York on Thursday afternoon at $1,225.30 spot, up $3.40 on the day.  Net volume was decent at just under 233,500 contracts — and there was 6,014 contracts worth of roll-over/switch volume in this precious metal.

Silver’s price path was guided in a similar fashion to gold’s on Thursday, but was sold down below its 50-day moving average briefly going into the London open.  Its subsequent rally got capped shortly before noon in New York — and at that point silver was up a whole two or three cents on the day.  It was taken lower as well from there — and the quiet sell-off lasted until the 1:30 p.m. COMEX close.  It didn’t do a thing after that.

Silver’s low and high ticks were reported by the CME Group as $14.47 and $14.68 in the December contract.

Silver was closed yesterday at $14.54 spot, down 4 cents from Wednesday.  And because of the break below the 50-day moving average, the Managed Money traders were very active — and net volume checked in at a bit under 72,000 contracts.  Roll-over/switch volume was 3,044 contracts on top of that.

The platinum price traded pretty flat in the Far East yesterday — and that lasted until shortly after 1 p.m. CST on their Thursday afternoon.  It had a five dollar down/up price dip between that time — and 10 a.m. CEST in Zurich.  Quiet price pressure began shortly after that — and it was sold lower until just before 4 p.m. EDT in after-hours trading in New York.  It traded flat from there into the 5 p.m. close.  Platinum finished the Thursday session at $825 spot, down 5 dollars on the day.

The palladium price traded three or four dollars either side of unchanged until at, or minutes before, the afternoon gold fix in London.  A sharp down/up price dip commenced after that — and the high tick of the day, such as it was, came shortly after the Zurich close.  It was sold quietly lower until 2 p.m. in the thinly-traded after-hours market — and then traded flat for the rest of the day.  Palladium was closed on Thursday at $1,064 spot, down 2 dollar from Wednesday‘s close.

The dollar index closed very late on Wednesday afternoon in New York at the 95.66 mark — and then proceeded to chop quietly sideways once trading began at 6:00 p.m. a few minutes later.  There was a tiny bump higher starting at 12:30 p.m. China Standard Time on their Thursday afternoon — and the Far East high appeared to come at the afternoon gold fix in Shanghai.  It swooned a bit from there, before heading unevenly higher — and that started around 12:25 p.m. BST in London.  The 95.99 high tick was set around 3:40 p.m. in New York — and it didn’t do a lot after that.  The dollar index finished the Thursday session at the 95.97 mark…up 31 basis points from Wednesday‘s close.

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

The gold shares dropped into negative territory by a bit as soon as the equity markets opening in New York at 9:30 a.m. EDT on Thursday morning, but were in rally mode soon after.  That state of affairs lasted until around 12:15 p.m. EDT…gold’s high tick of the day…and they were sold quietly lower for the remainder of the Thursday session.  The HUI finished higher by a tiny 0.15 percent.

The price pattern for the silver equities was very similar, except that they dropped almost 2 percent at the open — and never got a sniff of positive territory on their subsequent rallies.  They began to chop unsteadily lower starting around 10:30 a.m. EDT — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down a chunky 2.19 percent.  Click to enlarge.

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

The CME Daily Delivery Report showed that 649 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday In gold, the largest short/issuer by far was HSBC USA with 633 out of its in-house/proprietary trading account — and the remaining 16 came from the client account over at Advantage.  The three largest of the four long/stoppers were JPMorgan, Advantage and Morgan Stanley…with 469, 117 and 40 contracts…all for their respective client accounts.  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 October declined by only 1 contract, leaving 765 still open, minus the 649 mentioned just above.  Wednesday‘s Daily Delivery Report showed that only 1 gold contract was actually posted for delivery today, so the change in open interest…and the deliveries match.  Silver o.i. in October remained unchanged at 1 contract still open — and no silver deliveries were scheduled for Friday, so those numbers match as well.


There were no reported changes in GLD yesterday, but an authorized participant added 1,127,458 troy ounces of silver to SLV.

There was no sales report from the U.S. Mint yesterday.

For the second day in a row, there was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.

As usual, it was far different in silver, as one truck load…601,297 troy ounces…was received — and all of that went into JPMorgan’s vault.  And there was 1,296,038 troy ounces shipped out.  Two truck loads…1,267,910 troy ounces…came out of CNT — and most of the rest…27,128 troy ounces…departed Brink’s, Inc.  The link to that activity, plus a bit more, is here.

And, for a change, there was no activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.

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


CRITICAL READS

The Foxes Are in Charge of The Swamp — Bill Bonner

The Trump team came into office with what might have been a historic opportunity to drain the Swamp and take the feds down a peg. Mr. Trump even said he would eliminate the national debt in eight years.

Instead, he teamed up with Democrats to crash through the debt ceiling, gave the big spenders at the Pentagon even more money, cut taxes, and made the Swamp even deeper.

Predictably, tax revenues declined and the deficit rose. And the national debt went up by more than $1 trillion over the last 12 months.

From The New York Times:

“Personal tax receipts are up on their own, but corporate tax receipts are down by about a third from a year ago.

That overall drop looks worse when you consider inflation. A dollar today buys about 2 percent less than it did a year ago, according to the inflation index used by the Federal Reserve to set monetary policy. So the government brought in slightly less money year over year, and that money was worth less than the equivalent amount a year ago…”

This commentary from Bill appeared on the bonnerandpartners.com Internet site on Thursday morning — and another link to it is here.


How Do You Pick Good Investments Out of Newsletters? — Dennis Miller

When David Galland approached me about writing an investment newsletter, I said, “I’m not a stock picker, I try to pick them out of newsletters. Sometimes I even screw that up!”. David asked me to explain.

In the late 1990’s I self-managed our retirement fund. The market soared; between 1995-2000 the S&P went from 500 to 1500. I felt like I was missing out as my gains were not keeping up.

I subscribed to several newsletters, many boasting of extraordinary gains. I was deluged with stock recommendations that were sure-fire winners promising to make me rich.

I liked one author’s writing style. I’m paraphrasing one of his recommendations. “If you want a nice-juicy 10% dividend yield, buy this rock-solid utility. They have been around for generations. It’s the kind of company you would want your grandmother to own.”

I knew the company, I got a bill from them every month. In our area new homes were selling as fast as they were built, their market was growing like wildfire.

This interesting commentary by Dennis showed up on his website early on Thursday morning — and another link to it is here.


Pompeo defends U.S./Saudi relations amid mounting criticism

Facing mounting criticism for appearing smiling and eager to maintain business-as-usual relations with his Saudi hosts yesterday, U.S. Secretary of State Mike Pompeo insisted today that he has confidence in a Saudi investigation of the suspected murder of journalist Jamal Khashoggi, but conceded that the U.S. administration does not want to see U.S.-Saudi relations suffer depending on what they find.

Look, we had very direct conversations about this, the seriousness of this, how serious President Trump is taking this, how seriously the United States will take this,” Pompeo told reporters traveling with him on a refueling stop in Brussels today after briefly stopping in Turkey for meetings with Turkish officials. “But, as for responses that the United States will take, we need to know the facts before we can begin to formulate what the appropriate response for this would be.”

I do think it’s important that everyone keep in their mind that we have lots of important relationships — financial relationships between US and Saudi companies, governmental relationships, things we work on together all across the world — efforts to reduce the risk to the United States of America from the world’s largest state sponsor of terror, Iran,” Pompeo continued. “The Saudis have been great partners in working alongside us on those issues.”

Pompeo was photographed looking upbeat and convivial with Saudi King Salman and Crown Prince Mohammed bin Salman (often known by his initials MBS) at his long meetings in Riyadh yesterday, which he called “incredibly successful.”

This news item, filed from Washington, was posted on the al-monitor.com Internet site on Wednesday sometime — and I thank Roy Stephens for sharing it with us.  Another link to it is here.  A parallel story on this from Zero Hedge late yesterday morning EDT is headlined “U.S. Treasury Secretary Steve Mnuchin Pulls Out of Saudi Investment Summit” — and I thank Brad Robertson for that one.


More Italians Move Savings To Switzerland As Fears Of Banking “Doom Loop” Intensify

With the euro weakening against the Swiss franc (recently trading at session lows of 1.14) and Italian stocks and bonds tumbling once again on reports that the European Commission is planning to reject the Italian draft budget plan submitted earlier this week – a repudiation of Italy’s populist leaders that was widely anticipated — The Telegraph‘s Ambrose Evans-Pritchard offered a glimpse into how middle-class Italians are reacting to the deteriorating relationship between Italy and the E.U., and its attendant impact on the country’s banks and capital markets. In a trend that’s eerily reminiscent of the banking run that precipitated the near-collapse of the Greek banking system (most recently in 2015), Italians are scrambling to convert their euros into Swiss francs and stash them across the country’s northern border with Switzerland. 

Right now, the movement has mostly been limited to the wealthy. “The big players” have already gotten out

The Swiss group Albacore Wealth Management told Italy’s Il Sole had received a wave of inquiries from Italians with €5m to €10m in liquid capital. The super-rich are already a step ahead. “The big fish have been organizing the expatriation of their wealth for some time,” it said…and those with between €200,000 and €300,000 in assets are moving more quickly, inspired by memories of desperate Greeks struggling with capital controls that restricted ATM withdrawals.

There is fear creeping in,” said Massimo Gionso, head of family wealth managers CFO Sim in Milan.

This Zero Hedge news item showed up on their website at 2:45 a.m. EDT on Thursday morning — and it comes courtesy of Richard Saler.  Another link to it is here.


Skripal and Khashoggi: A Tale of Two Disappearances — Finian Cunningham

Two disappearances, and two very different responses from Western governments, which illustrates their rank hypocrisy.

When former Russian spy Sergei Skripal went missing in England earlier this year, there was almost immediate punitive action by the British government and its NATO allies against Moscow. By contrast, Western governments are straining with restraint towards Saudi Arabia over the more shocking and provable case of murdered journalist Jamal Khashoggi.

The outcry by Western governments and media over the Skripal affair was deafening and resulted in Britain, the US and some 28 other countries expelling dozens of Russian diplomats on the back of unsubstantiated British allegations that the Kremlin tried to assassinate an exiled spy with a deadly nerve agent. The Trump administration has further tightened sanctions citing the Skripal incident.

It is an outrage that based on such thin ice of “evidence”, the British have built an edifice of censure against Moscow, rallying an international campaign of further sanctions and diplomatic expulsions.

Now contrast that strenuous reaction, indeed hyper over-reaction, with how Britain, the US, France, Canada and other Western governments are ever-so slowly responding to Saudi Arabia over the Khashoggi case.

This worthwhile commentary by Finian was posted on the strategic-culture.org Internet site on Wednesday sometime — and I thank Roy Stephens for sending it our way.  Another link to it is here. 


China Crashes as Flood of Margin Calls Sparks “Liquidity Crisis”, Panic Selling

The Treasury’s latest semiannual FX report may have spared China the designation of currency manipulator (for now… in a new twist, there was a section dedicated exclusively to China in the Executive Summary, a clear signal from the Treasury that China is the disproportionate focus of the report stating that ‘it is clear that China is not resisting depreciation through intervention as it had in the recent past’), but the market was not as forgiving.

In the latest shock to Chinese confidence, overnight Chinese shares extended the world’s worst slump as the yuan touched its weakest level in almost two years, testing the government’s ability to maintain market stability and calm as risks continued to mount for Asia’s largest economy.

Two days after we reported that concerns about pledged shares, in which major investors put up stock as collateral for personal loans – a disastrous practice when stock prices are dropping – emerged as a key pressure point for China’s market, overnight Bloomberg confirmed that “rising fears of widespread margin calls fueled a 3 percent tumble in the Shanghai Composite Index, which sank to a nearly four-year low as more than 13 stocks fell for each that rose.”

The concentrated selloff, sent the Shanghai Composite down 2.9%, closing at session lows of 2,486, the lowest level since November 2014, as China’s plunge-protecting “National Team” was nowhere to be seen.

This Zero Hedge article put in an appearance on their website at 7:35 a.m. EDT on Thursday morning — and I thank Richard Saler for pointing it out.  Another link to it is here.


I saw no precious metal stories anywhere on the Internet yesterday that I thought worth posting.


The PHOTOS and the FUNNIES

Today‘s ‘critter’ is the turkey vulture…a bird we have here in the very southern parts of both Alberta and British Columbia.  the turkey vulture ranges from southern Canada to the southernmost tip of South America. It inhabits a variety of open and semi-open areas, including subtropical forests, shrub lands, pastures, and deserts.  The turkey vulture is a scavenger and feeds almost exclusively on carrion.  They ain’t the prettiest things in the world, but even these creatures have their purpose.  Click to enlarge.


The WRAP

It was just another day where precious metal prices were kept well behaved.  They obviously wanted to fly, despite the fact that the dollar index was in ‘rally’ mode for most of the New York trading session.  The most noteworthy thing about yesterday‘s trading action was that JPMorgan punched the silver price back below its 50-day moving average for a brief time before the London open.  That fact was certainly reflected in the volume number yesterday — and it’s way too soon to know if they’re done yet or not.

Here are the 6-month charts for the Big 6 commodities once again.  The brief spike below silver’s 50-day moving average should be noted, as should the new low close below the 50-day moving averages in WTIC.  The click to enlarge feature only helps with the first four charts.

And as I type this paragraph, the London/Zurich opens are less than ten minutes away — and I note that after trading sideways for the first three hours after trading began in New York at 6 p.m. EDT yesterday evening, all four precious metals began to struggle higher.  At the moment, gold is up $2.30 the ounce — and silver is currently higher by 7 cents.  Platinum is up 5 bucks — and palladium is up 12.

Net HFT gold volume is pretty quiet at just over 36,000 contracts — and there’s only 383 contracts worth of roll-over/switch volume on top of that.  Net HFT silver volume is 9,500 contracts — and there’s only 218 contracts worth roll-over/switch volume in this precious metal.

The dollar index traded virtually ruler flat from the 6 p.m. open in New York on Thursday evening, until noon in Shanghai…a 6-hour stretch.  It faded a tiny handful of basis points from there — and is down 4 basis points about 30 minutes before the London open.  Absolutely nothing to see here, dear reader.

Today, around 3:30 p.m. EDT, the latest Commitment of Traders Report will be posted on the CFTC’s website — and I’m somewhat apprehensive of what it might show.  I’m certainly expecting the commercial net long position in gold to vanish — plus more.  But how much more remains to be seen.  Silver analyst Ted Butler‘s comments in his Wednesday‘s commentary were as follows…

…as I indicated on Saturday, we did bust decisively above the key 50-day moving average in gold on Thursday on heavy trading volume — and have remained above that level since. I did throw out an expectation of managed money buying in gold of 50,000 net contracts that still seems reasonable, so let me break it down further to expected ranges. I’d consider more than 60,000 or 70,000 contracts of managed money gold buying to be disappointing, while under 30,000 to 40,000 contracts to be encouraging.

Silver is different in that while we did penetrate the key 50-day moving average, it was nowhere near as decisive a penetration as was the case in gold. In addition, total silver open interest varied little over the reporting week and trading volumes were generally on the light side. I get the feeling that the technical funds are waiting for a more convincing up move, say over the $15 mark before reacting more forcefully on the buy side. I’m expecting moderate managed money net buying in Friday’s report, say 5,000 contracts or, hopefully, less.

Of course that short dive below silver’s 50-day moving average yesterday will certainly, to some extent, negate whatever negative number we get for silver in today‘s COT report.

But whatever these numbers are, I’ll have it all for you in Saturday‘s column.

That’s it for yet another day.  Enjoy your weekend — and I’ll see you here tomorrow.

Ed