Ted Butler — Mysterious Metal Movement

26 October 2018 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price rallied quietly but unsteadily right from the open at 6:00 p.m. EDT in New York on Wednesday evening, with the high tick of the day coming at the 2:15 p.m. afternoon gold fix in Shanghai.  It was sold down sharply at that point — and didn’t do much of anything from there until around 9 a.m. in New York.  A tiny rally at that point got blocked immediately — and it was sold quietly lower until shortly before 3 p.m. in after-hours trading.  It rallied quietly until trading ended at 5:00 p.m. EDT.

It was another day where the high and low ticks weren’t worth looking up.

Gold finished the Thursday session in New York at $1,231.60 spot, down $1.60 on the day.  Net volume was slightly elevated at around 243,500 contracts — and there was another 16,500 contracts worth of roll-over/switch volume on top of that.

Silver’s price path was similar up until its London low that came shortly before 9 a.m. BST.  From there it crawled a nickel or so higher until 9:01 a.m. in New York — and at that juncture, suffered the same fate as the gold price.  Silver’s low tick of the day came a minute or so before the London close — and it crept quietly higher for the remainder of the New York trading session.

The low and high ticks in this precious metal were recorded by the CME Group as $14.80 and $14.61 in the December contract.

Silver was closed at $14.61 spot, down 4 cents on the day.  Net volume was very decent at a bit over 66,000 contracts — and there was 4,592 contracts worth of roll-over/switch volume in this precious metal.

Platinum didn’t do much in Far East trading on their Thursday, but was up a couple of bucks by the Zurich open.  At that point it met the same fate as silver and gold — and from that point it proceeded to trade sideways until around 8 a.m. in New York.  It began to rally from there, but ran into the same sellers that gold and silver did at 9 a.m. EDT — and its low tick of the day came shortly after the afternoon gold fix in London.  It rallied rather sharply from there, but ran into ‘something’ around 11:40 a.m. EDT…the moment it got back to the unchanged mark.  It was sold down once again until 3 p.m. in after-hours trading, but tacked on a couple of dollars going into the 5:00 p.m. close.  Platinum was closed at $825 spot, down 4 dollars on the day.

Palladium ran into three different bouts of selling pressure during the Thursday session — and by the time all was said and done, it was closed down 20 bucks on the day at $1,093 spot.

The dollar index closed very late on Wednesday afternoon in New York at 96.36 — and then fell about 5 or so basis points during the first couple of hours of trading once it began at 6:00 p.m. EDT yesterday evening.  From there it traded ruler flat until around 1:35 p.m. China Standard Time on their Thursday afternoon — and then proceeded to jump around 15 to 20 basis points either side of unchanged until a minute or so before 9 a.m. in New York. It began to ‘rally’ sharply from there.  This ‘rally’ moderated as the New York trading session moved along — and the 96.73 high tick was set shortly after 2 p.m. EDT.  It crawled quietly lower into the close from there.  The dollar index finished the Thursday session at 96.61…up 25 basis points from Wednesday.

It’s certainly obvious that ‘da boyz’ hit the sell precious metals/ramp the dollar index button yesterday.  But despite that fact, these dollar index rallies appear to be having less and less impact on precious metal prices.  Yes, they are being sold lower, but not by much considering the gains in the dollar index.

And here’s the 6-month U.S. dollar index chart — and the delta between its close…96.46…was 15 basis points compared to the close on the intraday chart above.

The gold stocks began to head lower the moment that trading began at 9:30 a.m. in New York yesterday morning.  They rallied a bit starting around 11 a.m. EDT — and that lasted for about an hour, before the sell-off resumed.  The gold shares closed almost on their low ticks of the day, as the HUI closed down an eye-watering 6.0 percent.

The silver equities followed an almost identical price path as the gold stocks, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by ‘only’ 4.16 percent.  Click to enlarge if necessary.

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

I would strongly suspect that the surprise selling of the precious metal shares on Thursday was almost all of the institutional variety — and not the average retail investor.  The smallish price declines in both silver and gold certainly wouldn’t elicit that kind of selling from the average precious metal stock holder.  But that’s cold comfort at this point in time.


The CME Daily Delivery Report showed that 10 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  There were no short/issuers or long/stoppers worth mentioning.  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 30 contracts, leaving 24 still open, minus the 10 mentioned just above.  Wednesday’s Daily Delivery Report showed that 30 gold contracts were actually posted for delivery today, so the change in open interest and the deliveries match.  Silver o.i. in October fell by 31 contracts, leaving just 3 still open.  Wednesday’s Daily Delivery Report showed that 32 silver contracts were actually posted for delivery today, so that means that 32-31=1 more silver contract was just added to the October delivery month.


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

There was a tiny bit of gold movement over at the COMEX-approved gold depositories on the U.S. east coast on Wednesday.  This activity was at HSBC USA, as they shipped out 804 troy ounces, plus they transferred 4,726 troy ounces from the Eligible category — and back into Registered.  I won’t bother linking this.

Of course it was another busy day in silver, as one truck load…602,084 troy ounces…was received over at Brink’s, Inc. — and there was two truck loads…1,211,464 troy ounces…of ‘out’ activity over CNT.  The link to all this is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  There was 278 kilobars shipped out of Brink’s, Inc. — and that was all.  The link to that, in troy ounces, is here.

It was another quiet day for stories — and I don’t have all that much for you.


CRITICAL READS

U.S. Goods Trade Deficit Hits Record High

Do not show this to President Trump, he will not be happy.

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 modest improvement in the deficit to $75.1 billion, September’s goods trade balance slumped again to $76.036 billion from a revised $75.5 billion, and just barely surpassing the July 2008’s record high deficit of $76.025 billion, making the September print a record in this series.

Whether this reflects pre-emptive actions ahead of actual tariffs is unclear, although the silver lining was that at least exports rebounded modestly, if not enough, compared to last month when exports declined once more:

Imports rose 1.5% in Sept. to $216.988b from $213.878b in August
Exports rose 1.8% in Sept. to $140.952b from $138.422b in the prior month.

How Trump will react to this record print is unclear, although with the stock market cracking and trade war with China only escalating, the president – and certainly Peter Navarro – will hardly be happy; keep an eye on his twitter feed for any knee-jerk response.

This brief 1-chart Zero Hedge news item was posted on their Internet site at 8:48 a.m. EDT on Thursday morning — and I thank Brad Robertson for sending it along.  Another link to it is here.


$5 Billion Hedge Fund SPO Shutters: “We Find It Exceedingly Difficult to Deploy Capital

While growth stocks are suffering one of their worst bouts in recent history, the recent rebound in “value” has come too late to help one venerable asset manager.

According to Bloomberg, the Mill Valley, CA-based SPO Partners, a $5 billion hedge fund that’s managed money for almost five decades, is closing. The company which lists the billionaire Bass family among its numerous clients, will return a quarter of its assets next month and most of the rest early next year. SPO said clients had asked to pull about 7% of its assets, or $344 million, by the end of the year. It returned about $3.3 billion to investors over the past six years after investments matured.

The challenges, and the reason for the fund’s shuttering are the same as those faced by so many other value investors: “Today, we are finding it exceedingly difficult to deploy capital with an acceptable margin of safety,” wrote Eli Weinberg, SPO co-managing partner, in a letter to investors seen by Bloomberg.

Businesses we admire, in well-positioned sectors with attractive growth prospects, are priced to perfection“, and in some cases, thanks to central banks, well beyond.

This article showed up on the Zero Hedge website at 2:43 p.m. on Thursday afternoon EDT — and it’s the second contribution in a row from Brad Robertson.  Another link to it is here.


Should We Worry About Government Deficit? — Dennis Miller

If our elected leaders are not concerned about the government deficit, should the citizens be worried?

Governments worldwide spend more than their total revenue and borrow to make up the difference.

The U.S. Debt Clock shows the US federal debt to be $21.6 trillion, averaging $177,283 per taxpayer.

The government now pays interest on $21.6 trillion. Below is a graph tracking the 10-year interest rates on US treasuries.

Since December 2016, interest rates have roughly doubled, from 1.5% to 3%. The 1.5% increase adds $324 billion in interest cost to the deficit annually and will continue to rise.

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


Has Big Data Stolen Your Freedom? — Bill Bonner

The Dow fell another 600 points yesterday. Look for a rebound today. But here’s a helpful trading hint: Don’t buy the dip.

Bloomberg tells us why the pros are getting out:

“Stocks in the S&P 500 have dropped in 18 of the 23 days since peaking in September, roughly twice the frequency of the last three corrections.

It’s been such a grind that one of the longest-term technical indicators, the 200-day moving average on the S&P 500, just fell for the first time in 2 1/2 years.

Instead of the pattern traders are used to – one or two nerve-shattering plunges followed by a V-shaped surge – the selling that began three weeks ago has been slower and steadier. One moderately bad day follows another, with fewer breaks. The S&P 500 has declined in 12 of the last 14 days, something that hasn’t happened since March 2009.
Fake money may be unlimited. Technology may be unlimited. Information may be unlimited. But time is not.”

And now, time is running out. Time always runs out. For bubbles… booms… technology… and debt. For life itself. Everything.

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


The Triumph of Evil — Paul Craig Roberts

The murder of Jamal Khashoggi inside the Saudi Arabian embassy in Turkey is unprecedented in its audacity. The response from Washington and the Canadian government is to sell more weapons to Saudi Arabia, weapons that are being used by the Saudis in their destruction of the Yemeni population. The Russian response, if the report I saw was not fake news, is to sell the Saudis the S-400 air defense system. https://on.rt.com/8pd0

What we can conclude from this is that armament profits take precedence over murder and genocide.

Genocide is what is going on in Yemen. I heard a report today on NPR that Yemeni are dying from starvation and from a cholera epidemic that has resulted from the Saudi destruction of the infrastructure in Yemen. The aid worker giving the report was obviously sincere and upset, but had difficulty connecting the high death rate to the Washington-sponsored war, blaming instead a 20% devaluation of the Yemen currency that raised food prices out of the reach of most Yemeni. She said that the solution to the crisis was to stabilize the currency!

It is difficult to understand why in the Western media and among Western politicians there is so much demonization of Iran, Syria, Venezuela, North Korea, China, and Russia. It is not these demonized countries that are murdering people in their embassies, conducting wars of aggression (war crimes under the Nuremburg Standard), and embargoing food and medical supplies to the populations that are being bombed. These crimes are being done by Saudi Arabia, Israel, and the United States and its NATO vassals.

Obviously, the Yemeni, like the Palestinians, don’t count. Their slaughter doesn’t cause a moral ripple in the West.

This interesting and worthwhile commentary by Paul was posted on his website on Thursday sometime — and I thank Richard Connolly for finding it for us.  Another link to it is here.


Treasury official points finger at Turkey over Venezuelan gold trade

The United States should publicize Turkey’s involvement in the Venezuelan gold industry, a Treasury Department official said Wednesday.

Marshall Billingslea, assistant secretary for terrorist financing at Treasury, said at a Brookings Institution event that the Turkish government has skirted international sanctions by purchasing tons of Venezuelan gold in recent months.

 

“These are not your typical gold mines,” Billingslea said. “… We’re approaching a similar kind of ‘blood diamond’ situation here with the gold in Venezuela.”

Billingslea criticized the government for driving out private mining companies and said the country’s mines operate outside of environmental and customs regulation. The mines, according to Billingslea, are a “wholesale” environmental disaster, leading to deforestation as well as disease through mercury contamination of water supplies.

The remarks come days after local opposition figures in Venezuela blamed the ELN, a Colombian guerilla group, of slaying seven people at a remote gold mine in the Venezuelan state of Bolivar.

This UPI story, filed from Washington was posted on their Internet site at 8:35 p.m. EDT on Wednesday evening — and I found it embedded in a GATA dispatch.  Another link to it is here.


The Stealth Gold Bull Market — Ross Norman

There is a tendency to look at the gold price in U.S. dollar terms simply because that is the currency it nominally trades in within the bullion wholesale market. The bias is reinforced by the headline writers who do likewise…yet meanwhile in other currencies gold has been in a stealth bull market these last 4 years.

Guess where gold was trading at on 4thJanuary 2014 ? Exactly where it is now … at $1232.

However, in GBP terms it has risen from £748 to £955 – that’s up 30% or 5.6% per annum compounded. This is roughly half the average rate of increase we have seen over the last 20 years in GBP terms. But still knocking U.K. property prices into a cocked hat.

In Euro terms, it has risen from €888 to €1,080, a gain of 21% or 4.3% per annum compounded. The effect has been equally dramatic in countries that have a strong affinity for buying gold such as in China (up 15%), Russia (up 94%), India (up 18%), Turkey (up 156%) and Switzerland (up 13%)…and the party is just beginning.

This brief 1-chart article by Ross was posted on the Sharps Pixley website early on Thursday morning EDT — and another link to it is here.


Ted Butler — Mysterious Metal Movement

[I] revisit an issue I have written endlessly about since first uncovering it more than seven and a half years ago in April 2011.  That was when an unprecedented physical silver movement commenced in the COMEX-approved warehouses which has continued to this day and very recently has accelerated to absolutely astounding levels – an average weekly physical movement of more than 9 million ounces over the past five weeks, or more than 475 million ounces on an annualized basis. That’s fully 60% of total world annual production, basically being physically moved in and out of 6 warehouses in and around the New York City area. To be sure, this is purely physical silver movement and is not to be confused with paper trading.

Over the past seven and a half years, more than 200 million ounces of physical silver has been moved annually in and out of the COMEX warehouse system, as reported in daily COMEX warehouse releases. In total, more than 1.5 billion silver ounces have been so moved over this time, roughly corresponding to the world’s entire total inventory of silver in the form of 1,000 oz bars. I’ve recounted this highly unusual physical movement weekly since it began in April 2011, all the while noting that was when silver ran to $50 and then collapsed and how that was when JPMorgan first opened its COMEX silver warehouse and began to accumulate physical silver – all while remaining the leading short seller in COMEX silver futures. Starting from zero back then, today JPMorgan holds more than 147 million ounces of silver in its own COMEX warehouse, more than 50% of the total 291 million oz of silver ounces held in the world’s second largest visible depository of silver (the big silver ETF, SLV, holds the most visible silver in the world, some 330 million ounces and not coincidentally, JPMorgan is the custodian for that metal). As I have contended for ten years, JPMorgan is the kingpin of the silver (and gold) market in every way possible.

So what the heck does the frantic and unprecedented physical metal movement in and out of the COMEX silver warehouses have to do with a hit movie from twenty years ago? Just this – close your eyes and imagine for a moment that what has been occurring in the COMEX silver warehouses had been happening in gold instead. I’ve heard more cockamamie stories about gold to last a couple of lifetimes; stories about eligible vs. registered COMEX holdings and the ratio to paper open interest, wacky EFP theories about delivery obligations being transferred to London and about pending COMEX delivery defaults prior to every first delivery day for years.

I’m firmly convinced that people’s heads would explode if what had been happening in silver had been instead occurring in gold. If the same type of physical movement had been occurring in the COMEX gold warehouses as has occurred in silver over the past nearly eight years, it would dominate the conversation – little else would be discussed.  And even more would be made of the issue if the frantic movement were occurring solely in gold and not in any other commodity, as has been the case with silver. Please remember, the COMEX silver physical movement is available on a daily basis (for free) and I know it is being viewed by many – since total COMEX inventories are referenced regularly.

This must read commentary by Ted put in an appearance on the silverseek.com Internet site at 9:17 a.m. Denver time on Thursday morning — and another link to it is here.


The PHOTOS and the FUNNIES

Today’s ‘critter’ is the deer mouse — and is a rodent native to North America.  It’s fairly widespread across the continent, with the major exception being the southeast United States and the far north. Like other Peromyscus species, it is a vector and carrier of emerging infectious diseases such as hantaviruses and Lyme disease. Click to enlarge.


The WRAP

It was another semi-quiet trading day where the powers-that-be were active where they had to — and wanted to be.  But as I said earlier in my discussion of the dollar index, the price damage in gold and silver could have been far worse if ‘da boyz’ had really pressed their advantage.  The precious metal stocks got it in neck yesterday — and as I also said further up, it was probably institutional selling that was responsible.  And don’t forget that there were buyers for all those shares that were sold — and it’s a reasonable assumption that they now lay in the strongest of hands.

Here are the 6-month charts for all four precious metal, plus copper and West Texas Intermediate crude oil — and except for the price beating laid on palladium yesterday, 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 note that the gold price has been chopping quietly sideways since New York opened at 6:00 p.m. EDT yesterday evening — and it’s down a dime at the moment.  The silver price traded sideways for an hour and a bit before getting quietly sold lower.  It was down 7 cents or so a couple of times during Far East trading on their Friday, but has struggled higher in the last few hours — and is only down 3 cents currently. Platinum was forced to follow the silver price once again — and it’s down a dollar.  The palladium price barely had a pulse all day long in the Far East, but is sitting at unchanged as Zurich opens.

Net HFT gold volume is pretty light…coming up 36,000 contracts — and there’s only 787 contracts worth of roll-over/switch volume in that precious metal.  Net HFT silver volume is very decent at around 11,300 contracts — and there’s only 92 contracts worth of roll-over/switch volume on top of that.

The dollar index has been creeping quietly higher at glacial speed since very early yesterday evening in New York, but began to crawl lower starting at 1:30 p.m. China Standard Time on their Friday afternoon — and is up only 4 basis points about thirty minutes before the London open.

Today, 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.  I’m not looking forward to seeing the numbers.  This is what silver analyst Ted Butler had to say about it in his mid-week commentary on Wednesday…”I imagine further managed money buying and commercial selling in both gold and silver in Friday’s report. As far as how much, certainly less than last week, although that’s not saying much. As far as actual numbers, I’d guess around 15,000 net contracts in gold and 5,000 contracts — and hopefully less in silver. These are not high conviction estimates.”

And as I post today’s column on the website at 4:03 a.m. EDT, I see that three of the four precious metals have jumped higher since the London/Zurich opens.  Gold is currently up $4.60 the ounce, silver is up 5 cents — and platinum is up 2 dollars.  But palladium is now down 2 bucks.

Gross gold volume is a bit over 55,000 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is about 54,000 contracts.  Net HFT silver volume is way up there at 14,300 contracts — and there’s still only 98 contracts worth of roll-over/switch volume in this precious metal.

The dollar index continues to crawl quietly lower — and is now back at unchanged as of 8:30 a.m. BST in London…9:30 a.m. CEST in Zurich…3:30 a.m. in New York.

With today being Friday, the last trading day in the week, I have no idea at all as to what to expect as the trading day progresses, so absolutely nothing will surprise me when I roll out of bed later this morning.

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

Ed