Precious Metal Prices Put on Ice Again

24 October 2018 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price rallied quietly, but unevenly higher once trading began at 6 p.m. EDT in New York on Monday evening.  That lasted until minutes after 2 p.m. China Standard Time on their Tuesday afternoon, which may or may not have corresponded with the 2:15 p.m. afternoon gold fix in Shanghai.  It shot higher from there — and ran into ‘something’ shortly after the London open — and the high over there came at the 10:30 a.m. morning gold fix.  It was sold a bit lower from there, but began to head higher once the noon silver fix was in — and the rally was capped for good and sold lower starting about ten minutes before the COMEX open in New York.  It was sold down until just before 1 p.m., before rallying a bit into the 1:30 p.m. EDT COMEX close.  But even that tiny gain vanished in after hours trading.

The low and high ticks were recorded by the CME Group as $1,224.50 and $1,243.00 in the December contract.

Gold was closed in New York yesterday at $1,229.90 spot, up $8.20 on the day.  Net volume was decent, but not overly heavy, at just over 272,00 contracts — and roll-over/switch volume was another 6,453 contracts on top of that.

Silver traded flat until shortly before 10 a.m. CST on their Tuesday morning — and some price pressure showed up at that juncture.  The low tick of the day was set a few minutes after 2 p.m. in Shanghai and, like gold, jumped higher from there.  The trading pattern after that was very similar to gold’s, with the only real difference being the fact that silver’s high tick came around 9:10 a.m. in New York before the ‘price pressure’ showed up.

The low and high ticks for silver were reported as $14.54 and $14.84 in the December contract.

Silver was closed on Tuesday at $14.705 up 17.5 cents from Monday.  Net volume was fairly hefty at just under 80,500 contracts — and there was 3,251 contracts worth of roll-over/switch volume in this precious metal.

Platinum was forced to follow the same general price pattern as silver for the second day in a row, including its high tick of the day, so there’s nothing really to talk about here.  Platinum finished the Tuesday session at $831 spot, up 11 dollars from Monday’s close.

It was generally the same for palladium, as it ran into the same price interference as the other three precious metals. Its sharp price spike at its high tick of the day came just minutes after the COMEX open — and it was hammered back to unchanged shortly before the Zurich close.  However, it rallied steadily after that until the 1:30 p.m. EDT COMEX close in New York — and traded flat until the 5:00 p.m. close from there.  It finished the Tuesday session at $1,128 spot, up 17 dollars on the day — and around ten dollars off its high tick.  One has to wonder what its true free market price would be if it was allowed to rise without interference.  I have a story about palladium in the Critical Reads section of today’s column.

The dollar index closed very late on Monday afternoon in New York at 96.03 — and when trading began in New York yesterday evening at 6 p.m. EDT, it dipped down the 96.00 mark in mid-morning trading in the Far East.  It appeared to get rescued at that point — and didn’t do much until a few minutes before 2 p.m. CST on their Tuesday afternoon.  At that juncture it spiked up to its 96.16 high tick by a few minutes after 2 p.m. over there.  It began to trend lower from there — and every rally attempt above the 96.00 mark after that, was immediately sold lower — and the 95.81 low tick was set a few minutes before the 1:30 p.m. EDT COMEX close in New York.  It rallied a bit until minutes before 3 p.m. EDT — and didn’t do much after that.  The dollar index finished the Tuesday session at 95.93…down 10 basis points on the day.

It would take a very great leap of faith to believe that what happened in the precious metals market yesterday was either directly, or indirectly related to what the currency market was doing.

And here’s the 6-month U.S. dollar index — and the delta between its close…95.71 — and the close on the intraday chart above, was 22 basis points.

The gold stocks gapped up 4 percent at the open, but mysterious selling appeared right away — and they were sold quietly lower until shortly before 1 p.m. EDT.  From that point, they traded mostly sideways with a slight positive bias into the close.  The HUI finished up only 1.24 percent.

The silver equities jumped up about 3 percent at the open — and after that they fell back into negative territory by around 10:40 a.m.  They rallied a bit for the next hour, before selling off  quietly and unevenly lower into the close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.22 percent.  I was not impressed.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 32 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  In gold, the two short/issuers were Advantage with 27 — and ADM with 5 contracts.  There were six long/stoppers in total, but the only one worth mentioning was Morgan Stanley, as they stopped 20 contracts.  In silver, Advantage issued both contracts — and ADM picked them up.  All contracts in both gold and silver, issued and stopped, were from or for their respective client accounts.  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 rose by 15 contracts, leaving 80 still around, minus the 32 mentioned in the paragraph above.  Monday’s Daily Delivery Report showed that 16 gold contracts were actually posted for delivery today, so that means that 16+15=31 gold contracts were added to the October delivery month.  Silver o.i. in October fell by 57 contracts, leaving just 3 left, minus the 2 contracts mentioned in the previous paragraph.  Monday’s Daily Delivery Report showed that 59 silver contracts are actually posted for delivery today, so that means that 59-57=2 more silver contracts were added to October.


There were no reported changes in GLD yesterday, but a very chunky 2,818,452 troy ounces was removed from SLV — and I would suspect that this was a conversion of shares for physical metal — and that Ted might think that JPMorgan’s name was attached to it.

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

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday was 100 troy ounces that was deposited at JPMorgan.  There was also a paper transfer from the Eligible category — and into Registered over at HSBC USA…49,828 troy ounces worth.  Without doubt, that’s destined for deliveries in October.  I won’t bother linking this.

It was another very busy day in silver, as 1,747,384 troy ounces were received — and another 1,202,087 troy ounces were shipped out the door for parts unknown.  In the ‘in’ category, there were two truck loads…1,146,794 troy ounces…dropped off at JPMorgan — and the other truck load…600,589 troy ounces…ended up at CNT.  In the ‘out’ category, there was also a truck load out of CNT as well…602,084 troy ounces.  The remaining truck load…600,003 troy ounces…departed Scotiabank.  The link to all this activity is here.

There was some activity at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They received exactly 2,000 of them — and shipped out 213.  This activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


Nick’s charts showing gold and silver imports and exports for September for Switzerland that appeared in yesterday’s column had some major errors — and as I pointed out in the website version of my column yesterday, once those issues had been laid to rest, I would revisit the charts — and that’s what I’m doing here.  I’d seen them, but had forgotten about it after typing the preamble to those charts.  Lawrie Williams, of Sharps Pixley fame, sent Nick Laird an e-mail about that — and this is the reply he and I got back yesterday afternoon…”Swiss gold flows for September.  Please ignore the prior update as it had many mistakes — they had added in a new country which corrupted my spreadsheet“.

Here are the updated charts…and all those extra countries that were reported to have imported gold…Gabon, Ivory Coast, Hungary, etc….have vanished in the process.  It never happened. And if it did, it wasn’t in September.

The first chart, which is the same as Chart 1 yesterday, shows Switzerland’s total imports and exports in September.  These numbers haven’t changed from yesterday…117.8 tonnes imported — and 119.4 tonnes exported.  Click to enlarge.

These last two charts are the corrected ones.  The first shows the countries from which gold was imported in September — and the second shows the countries that received gold from Switzerland during the same month.  These are [hopefully] the true countries and amounts.  Click to enlarge for both.

I don’t have all that many news items/stories for you today.  Even Zero Hedge has been grasping at straws lately.


CRITICAL READS

Paul Volcker Trashes Fed, Washington Plutocrats: World’s In “A Hell Of A Mess In Every Direction”

While we have grown used to Alan Greenspan’s flexible world views appearing regularly among US media channels, when former Fed Chair Paul Volcker speaks, it’s low frequency nature tends to make on pay attention, and he is not optimistic about the state of the world… at all.

When he looks around now, he sees “a hell of a mess in every direction,” including a lack of basic respect for government institutions..

Respect for government, respect for the Supreme Court, respect for the president, it’s all gone,”he said.

Even respect for the Federal Reserve.”

And it’s really bad. At least the military still has all the respect. But I don’t know, how can you run a democracy when nobody believes in the leadership of the country?

…a current Fed that seems to be following a completely arbitrary benchmark…“I puzzle at the rationale,” he wrote. “A 2 percent target, or limit, was not in my textbook years ago. I know of no theoretical justification.”

…and a “swamp” in Washington run by plutocrats.

There is no force on earth that can stand up effectively, year after year, against the thousands of individuals and hundreds of millions of dollars in the Washington swamp aimed at influencing the legislative and electoral process,”

This very interesting story was posted on the Zero Hedge website at 6:25 p.m. EDT on Tuesday afternoon — and includes a link to Paul’s interview with The New York Times.  It’s definitely worth reading — and I thank Brad Robertson for pointing it out.  Another link to it is here.


U.S. ready to blow another arms control treaty to feed its war economy — Finian Cunningham

The United States’ economy is a military-industrial complex. Therefore any multilateral arms control treaty that limits weapons and war tensions is by definition incompatible with the functioning of American-style capitalism.

President Donald Trump’s announced intention of withdrawing the US from the 1987 Intermediate-Range Nuclear Forces (INF) Treaty is but the latest move by Washington in undoing decades of hard-won arms controls agreements.The US unilaterally scrapped the Anti-Ballistic Missiles (ABM) Treaty back in 2002 under then-President G.W. Bush. That breach of a decades-old treaty has led to the installation of American missile systems in Europe ever-closer to Russian territory, as the U.S.-led NATO military alliance relentlessly expanded eastwards.

If Trump goes ahead with pulling the U.S. out of the INF, that will leave only one remaining pillar in the arms control architecture, the START Treaty limiting the deployment of all types of nuclear weapons. START is due to expire in 2021 and several hawkish U.S. politicians are urging no replacement.

No wonder then that Trump’s unravelling of the nuclear non-proliferation regime is unnerving many people, including NATO allies in Europe. French President Emmanuel Macron reportedly phoned Trump, imploring that the INF is vital for European security. Macron’s views were reiterated by German Foreign Minister Heiko Maas.

Moscow and Beijing said the anticipated U.S. move will undermine the strategic balance and unleash a new arms race, reminiscent of the Cold War.

This very interesting and worthwhile commentary by Finian appeared on the rt.com Internet site at 2:53 p.m. Moscow time on their Monday afternoon, which was 7:53 a.m. in Washington — EDT plus 7 hours. I thank Brad Robertson for pointing it out — and another link to it is here.


The Future of Privacy — Jeff Thomas

Roughly one hundred years ago, the people who “ran things,” – the drivers behind governments, big business and banking – formulated a concept which became known by a number of names, but, predominantly, as the “New World Order.”

The concept was to put an end to unnecessary competition and warfare and have a central, unelected group of people run the entire world. It was not considered necessary to completely eliminate individual countries; the idea was to control them all centrally. It also didn’t necessarily mean that wars would end. Warfare can be quite useful for rulers, as they provide an excellent distraction from resentment toward the leaders who impose control over a people.

Ever since that time, this same rough group of people has continued generationally. Sometimes, but not always, the family names change. Useful people are added on and less useful ones removed. But the concept itself has continued, evolved and, in fact, gained strength.

But, as yet, the process remains incomplete. Several facets to a New World Order are not yet in place. It’s proven difficult to “fool all of the people all of the time,” so the effort to subjugate an entire world has taken more time than originally anticipated.

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


Insights From Our Conference — Bill Bonner

First, a news flash: Donald Trump is proposing another tax cut.

Huh?” wondered Washington and the media. “How are we going to pay for government? The deficit is already out of control.”

The Donald works in mysterious ways,” replied his fans.

But it’s not so mysterious to us or our dear readers, is it? No one has more to lose from a correction than Donald J. Trump.

He’s claimed credit for the bubble on Wall Street… and staked his credibility (to the extent that he has any) on the expansion on Main Street (such as it is).

Not only that, but his personal fortune in real estate was built on artificially low interest rates, which boosted New York metropolitan area property values. Higher interest rates could cost him billions.

So how can he keep the boom going? Pump in more money! That’s why he is attacking the Fed’s “normalization” policy… And it’s why he’s preparing the nation for another tax cut.

Stay tuned… This is going to be exciting.

This commentary by Bill was posted on the bonnerandpartners.com Internet site very early on Tuesday morning EDT — and another link to it is here.


As U.S. sanctions loom, China’s Bank of Kunlun to stop receiving Iran payments — sources

Bank of Kunlun Co, the key Chinese conduit for transactions with Iran, is set to halt handling payments from the Islamic Republic under pressure of imminent U.S. sanctions against the country, four sources familiar with the matter told Reuters.

Kunlun, the main official channel for money flows between China and Iran, has verbally informed clients that it will stop accepting yuan-denominated Iranian payments to China from Nov. 1, said the sources, who include external loan agents and business officials who trade with Iran.

The bank, controlled by the financial arm of Chinese state energy group CNPC [CNPC.UL], had already quietly suspended euro-denominated payments from Iran in late August, the four sources said, declining to be named due to the sensitivity of the matter.

Kunlun did not respond to an emailed request seeking comment. A CNPC spokesman declined comment.

This semi-longish Reuters story, filed from Beijing, appeared on their website at 4:32 a.m. EDT on Tuesday morning — and I dug it out of a GATA dispatch.  Another link to it is here.


Kyle Bass: China is Desperately Short of Dollars

Kyle Bass:

The most interesting thing, when you really look down at the numbers, is (China’s) current account has gone negative for the first time since 2001. So, it’s really 17 years since it’s been negative and the first half of this years it’s negative and there are a few reasons why: the travel services deficit, getting the $320 billion, and the second thing when you look at their current account is they’re such a massive net importer of energy… You remember in the end of 2014 when crude oil collapsed from $100 down to $35, and iron ore and the base metals went with it, that gave China a huge reprieve. Their current account was right at zero at the end of 2014 and then it bounced back up… because all of a sudden their raw material costs collapsed. So what’s interesting is that the net volume of crude oil that they import has gone up 45% in four years and now what’s the price doing? It’s turning… The price of crude has gone from the mid thirties to…$70 and the same for base metals, iron ore, and a lot of the inputs that they have. So when you look at their current account, this is not an aberration. The reason they are fighting so hard on trade is while they run a big trade surplus with the US, they run trade deficits with everyone else everywhere else… They run a $400 billion trade surplus with the US and their current account is negative and what we’re doing is putting some tariffs to at least level the playing field on unfair trade practices and that’s why they are really pushing back so hard, cause they are out of dollars… they are desperately short dollars and now their current account is negative. So when you think about this fallacy of China can have it’s cake and eat it too forever, I think we all know that that can’t happen and what we are seeing now is all of the preconditions are set forth for a pretty material devaluation.

While it is an exaggeration to say that China has trade deficits with “everyone” other than the U.S., it is a little appreciated fact that the U.S. provided roughly 90% of China’s trade surplus in 2017 and is on pace to contribute around 100% this year.

This brief 2:19 minute video clip feature Kyle — and hosted by Grant Williams, is obviously part of a much larger interview which you have to sign up for at the realvision.com Internet site.  This clip showed up on the soundingline.com Internet site on Wednesday afternoon — and it’s another contribution from Brad Robertson.  Another link to it is here.  There was another Kyle Bass related story headlined “Kyle Bass: Trump Has “Strongest Negotiating Position We’ve Ever Had” Against China“.  That one put in an appearance on the Zero Hedge website at 9:45 p.m. on Wednesday night EDT — and that comes courtesy of Brad Robertson as well.


Palladium ETF Rallies, Tests Record Highs

Palladium and related ETFs climbed Monday, pushing toward their record levels last seen since January as supply concerns helped prop up the white metal.

The ETFS Physical Palladium Shares (NYSEArca: PALL) rose 3.4% Monday, with the palladium spot price up 3.4% to around $1,120 per ounce.

R. Michael Jones, chief executive officer of Platinum Group Metals Ltd., argued that palladium, which is widely used in catalytic converters to reduce pollution emissions for gasoline-powered automobiles, has reached an “important glass ceiling” on the charts, MarketWatch reports.

The factors for palladium’s rise are all still in place—growing car sales around the world, popular small gasoline engines with palladium catalysts, big American [sport-utility vehicles] on gas with palladium, and South African platinum mine closures in the works cutting palladium production despite the good price,” Jones told MarketWatch, adding that platinum is the main metal at the South African platinum mines, while palladium is a by-product.

Supporting the recent price surge in the palladium market, traders grew wary of potential supply concerns out of Russia in response to President Donald Trump’s plans to pull out of a nuclear treaty with Moscow. Trump said Saturday that Washington will step away from an intermediate-range Nuclear Forces Treaty with Russia, claiming that Moscow has been violating the treaty.

I found this very interesting article from the etftrends.com Internet site posted on Sharps Pixley yesterday — and another link to it is here.


The PHOTOS and the FUNNIES

Today’s ‘critter’ is the smooth trunkfish, it’s a species of boxfish found on and near reefs in the Caribbean Sea, Gulf of Mexico and subtropical parts of the western Atlantic Ocean. It has an angular body sheathed in plate-like scales, growing to a maximum length of 47 centimetres (19 in), though 20 cm (8 in) is a more normal size.  It uses its protuberant lips to expel a jet of water which disturbs the sandy seabed and reveals any shallowly buried invertebrates.  Click to enlarge.


The WRAP

It was obvious as I was watching my computer screen between the afternoon gold fix in Shanghai — and the morning gold fix in London yesterday, that the powers-that-be weren’t going to allow any more excitement in the precious metals than necessary.  The Zero Hedge story from 4:00 p.m. EDT yesterday afternoon pretty much sums it up…”U.S. Plunge Protection Team Rescues Market as Global Stocks Turn Red For 2018“.  They were everywhere they had to be yesterday.  I doubt that they’ll be this successful when the equity markets really begin to head south — and the precious metals, north.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and it should be noted that any price activity that occurred after the COMEX close yesterday won’t show up on Tuesday’s dojis.  It should also be noted that WTIC was smashed back — and closed well below, its 200-day moving average yesterday — and it’s a certainty that the Managed Money traders in that commodity were dumping copious amounts of long positions at a big loss — and putting on oodles of short positions as well.  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 gold and silver began to crawl very unsteadily higher once trading began at 6:00 p.m. EDT in New York yesterday evening.  Gold was up 3 bucks — and silver by 6 cents at exactly 2:00 p.m. China Standard Time on their Wednesday morning.  Both were tapped lower at that juncture — and at the moment, gold is only up 80 cents — and silver is up 3 cents.  Platinum didn’t do much in Far East trading on their Wednesday, but it was also tapped a few dollars lower at 2 p.m. CST — and is down a dollar at the moment.  Palladium traded a few dollars lower all night long — and is down 2 bucks as the Zurich open looms.

Net HFT gold volume is just under 40,000 contracts — and there’s a tiny 181 contracts worth of roll-over/switch volume on top of that.  Net HFT silver volume is just about 9,300 contracts — and there’s only 101 contracts worth of roll-over/switch volume in that precious metal.

The dollar index didn’t do much of anything in morning trading in the Far East, but began to creep higher starting around 11:30 a.m. CST…making it back above the 96.00 very briefly around 2 p.m. CST.  It has fallen back below that mark currently — and it’s up a whole 3 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.  Up until the afternoon gold fix in Shanghai yesterday, silver and gold prices had been comatose for the first four days of the reporting week.  That situation certainly changed in a hurry — and Ted Butler is the only person qualified to comment on what changes we’re likely to see in Friday’s Report — and I doubt that it will make for happy reading…although I’d love to be proven wrong.  Ted will have his mid-week commentary for his paying subscribers up on his Internet site this afternoon — and I’ll steal ‘borrow’ a few relevant sentences on this subject for my Friday column.

And as I post today’s missive on the website at 4:02 a.m. EDT, I note that very little happened during the first hour of London/Zurich trading.  Gold is up $1.00 — and silver is up 3 cents.  Platinum is now down a dollar — and palladium is down 3.

Gross gold volume is about 53,000 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is around 52,500 contracts.  Net HFT silver volume is about 12,800 contracts — and there’s still only 210 contracts worth of roll-over/switch volume.

The dollar index was sliding lower into the London open, but at precisely that point…8:00 a.m. BST…it began to ‘rally’ — and after being down a handful of basis points, it’s been screaming higher since — and up 25 basis points as of 8:30 a.m. BST — and obviously back above the 96.00 mark once again.  Will it hold this time?

That’s all I have for this commentary — and I’ll see you here tomorrow.
Ed