The Salami Slicing Begins Again

31 October 2018 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price traded flat for the first two hours and change once it began at 6:00 p.m. EDT in New York on Monday evening.  From that juncture, it was sold very unevenly lower until its low tick of the day [and a new low for this move down] was set at the 10:30 a.m. GMT morning gold fix in London.  From there it rallied quietly until shortly after 9 a.m. in New York.  It didn’t do much from there until around 12:10 p.m. EDT, where it was sold a few dollars lower over the next thirty minutes — and drifted quietly sideways into the 5:00 p.m. close.

Once again, the low and high ticks aren’t worth looking up.

The gold price finished the Tuesday session in New York at $1,222.60 spot, down another $6.00 from Monday’s close…another new low close for this move down.  Net volume was pretty quiet at just under 211,500 contracts — and there was only 7,357 contracts worth of roll-over/switch volume on top of that.

Silver was up 8 cents or so by shortly before 11 a.m. China Standard Time on their Tuesday morning, but that was as high as it was allowed to get.  From that point it traded sideways for an hour, before the selling pressure began.  The low tick of the day came a bit after the morning gold fix in London — and it was a new intraday low for silver as well at that juncture. Its quiet rally from the point got capped around 9:45 a.m. in New York — and it didn’t do much for the rest of the day.

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

Silver was closed on Tuesday at $14.44 spot, up 3 cents from Monday, but still finished below its 50-day moving average for the second day in a row.  Net HFT silver volume was very decent at a hair under 70,000 contracts — and there was 3,555 contracts worth of roll-over/switch volume in this precious metal.

Platinum was up 4 dollars by shortly before 11 a.m. CST on their Tuesday morning — and it then traded flat until 2 p.m. over there.  It was quietly sold down to its low tick of the day, which came at the same time as silver’s low…shortly after the morning gold fix in London.  Then, also like silver, it rallied until around 9:45 a.m. in New York, where the price was capped — and immediately sold lower.  That sell-off lasted until 1 p.m. EDT — and it rallied a few dollars into 5 p.m. close from there.

Palladium was up 8 bucks by 11 a.m. CST on their Tuesday morning — and it was quietly sold lower until 1 p.m. in New York.  It crawled equally quietly higher from that point until 4 p.m. EDT in the thinly-traded after-hours market — and then traded flat into the 5 p.m. close from there.  The down/up spike in after-hours trading looked like a data feed error to me.  Palladium finished the Tuesday session in New York at $1,064 spot, down 14 dollars from Monday’s close.

The dollar index closed very late on Monday afternoon in New York at 96.68 — and was down 5 basis points or by shortly before noon in Shanghai on their Tuesday morning.  It rallied unsteadily from there until a minute or so before noon in London…8 a.m. in New York.  It slid a bit until about 9:40 a.m. EDT — and began to rally anew.  The 97.02 high tick was set very shortly after 2 p.m. — and it traded flat from there into the close.  The dollar index finished the Tuesday session at 97.01…up 34 basis points from Monday.

And here’s the 1-year U.S. dollar index chart.  The delta between its close…96.79…and the close on the intraday chart above, was 22 basis points yesterday.  Click to enlarge.

The gold shares dipped a hair at the open — and then quickly jumped to their respective high ticks a few minutes before 10 a.m. in New York trading…which was a few minutes after the dollar index low tick — and the point where the gold price stopped rallying.  From that juncture they were sold lower until around 11:30 a.m. — and back into negative territory.  They didn’t do much from that point until exactly 2:00 p.m. EDT — and then they caught a bid.  They jumped back into positive territory — and the HUI finished the Tuesday session up 0.85 percent…which was a surprise to be sure, considering the fact that JPMorgan et al closed gold down 6 bucks on the day.

The price path for the silver equities was virtually a carbon copy of what happened with the gold stocks…complete with the 2 p.m. afternoon rally in New York.  But, alas, they weren’t able to squeeze a positive close — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.67 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report for First Day Notice for November deliveries showed that 116 gold and 459 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday. In gold, the three short/issuers were Morgan Stanley, ADM and Advantage with 60, 39 and 17 contracts out of their respective client accounts.  The three long/stoppers were JPMorgan, Advantage and ABN Amro, with 68, 35 and 13 contracts for their respective client accounts.  In silver, the only short/issuer that mattered was International F.C. Stone with 454 contracts out of their client account.  There were six long/stoppers in total — and the three largest were Morgan Stanley, with 135 contracts for its own account, plus 36 more for its client account.  In second spot was HSBC USA with 142 for its own in-house/proprietary trading account — and in third spot was JPMorgan with 95 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 was zero for both metals, as the balance of the gold contracts for October were delivered yesterday — and the 2 remaining silver contracts are being delivered today.

Gold open interest in November rose by 28 contracts, leaving 126 still open, minus the 116 mentioned just above.  Silver o.i. in November rose by 55 contracts, leaving 1,315 still around, minus the 459 contracts mentioned in the previous paragraph.


There were no reported changes in either GLD or SLV yesterday.

There was a sales report from the U.S. Mint on Tuesday.  They sold 3,000 troy ounces of gold eagles — 1,500 one-ounce 24K gold buffaloes — and 75,000 silver eagles.

The only activity in gold over that COMEX-approved depositories on the U.S. east coast on Monday was 100 troy ounces that was shipped out of Manfra, Tordella & Brookes, Inc. — and I certainly won’t bother linking this.

It was another big day in silver, as 601,749 troy ounces was received — and another 1,226,395 troy ounces were shipped out.  In the ‘in’ category, one truck load…599,810 troy ounces…ended up at Canada’s Scotiabank — and the remaining 1,939 troy ounces was dropped of at Delaware.  In the ‘out’ category, two truck loads…1,225,438 troy ounces…departed CNT — and the remaining one good delivery bar…957 troy ounces…was taken out of Delaware.  The link to all this activity is here.

It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They received 2,000 of them – and shipped out another 2,671.  All of this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

I have an average number of stories for you today.


CRITICAL READS

Hedge Fund Meltdown Accelerates — and There is No End in Sight

It’s already been an abysmal month for hedge funds, as the Goldman Hedge Fund VIP Index clearly demonstrates…having just suffered its worst month on record.

With every passing day, it’s only getting worse as hedge funds, forced to deleverage in this chaotic market, are unable to pick a correct side of the market and stay on it.

Consider that according to Nomura’s Charlie McElligott, Monday was fifth worst one-day drawdown for his U.S. Equities Long-Short Hedge Fund model year-to-date, as the now daily shakeout continued in the form of accelerated deleveraging of legacy status quo positioning, i.e., popular shorts/underweights in “Value” and “Quality” ripping higher, while consensual longs overweights in “Growth” and “Momentum” were once again violently reduced.

The above is bad news for hedge funds: as shown in the chart below, equity hedge fund performance continues to suffer due to legacy positioning effectively being “long high beta” vs “short low beta”, which means that despite cutting net exposure to lows, they still bleed on high “market” exposure…

That said, McElligott believes that “THIS current freak-out is not “the one”—instead, it will be the early-to-mid 2019 event where after the 2nd hike the market “sniffs the slowdown,” the curve powerfully steepens, and we see the “ultimate” risk-off trade (and the “sustainable” Value over Growth” move).” Instead, the current market in my eyes remains a “de-leveraging cleanse” off the back of a Fed “policy error” scare.

Unfortunately, for battered hedge funds – who just saw a spike in redemption requests in September – it doesn’t matter: once their LPs see the latest disastrous performance, the outflows will accelerate forcing even more derisking, deleveraging and debuying.

This article showed up on the Zero Hedge website at 10:46 a.m. EDT on Tuesday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.


The U.S. Secretly Halted JPMorgan’s Growth for Years

For almost six years, Washington secretly shackled JPMorgan Chase & Co., the nation’s biggest bank.

Now the chains are off, thanks to bank-friendly regulators in the Trump administration.

In actions never before made public, Obama administration regulators prevented the bank from opening branches in new states as punishment for violating banking rules, according to people familiar with the matter. JPMorgan’s ambitious plan to expand nationally, announced earlier this year, was made possible by the Trump administration’s rollback of those restraints, which date from 2012, said the people, who asked not to be identified discussing regulators’ impact on the bank’s plans.

JPMorgan has racked up more than $30 billion in penalties, legal costs and related obligations since the 2008 financial crisis, some of which stemmed from its acquisitions of Bear Stearns Cos. and Washington Mutual Inc. Missteps include excessive risk taken by the London Whale trader and failing to flag transactions related to Bernard Madoff’s Ponzi scheme. Privately, the U.S. Office of the Comptroller of the Currency stopped JPMorgan from expanding into additional states while resolving compliance breakdowns as part of an unwritten regulatory policy, the people said.

While banks often have private conversations with regulators and even gauge their reactions to potential plans, the people with knowledge of the matter described the ban as one of the more extreme ways they exerted their control behind the scenes.

This very interesting Bloomberg story/commentary put in an appearance on their Internet site last Friday — and I thank ‘Zoey’ for sharing it with us.  Another link to it is here.


America’s Debt: A Recipe for Disaster — Bill Bonner

Little-noticed yesterday was a report from the U.S. Treasury admitting that budget deficits are running wild. The feds are now borrowing at a rate of $1.6 trillion a year and forecasting a deficit of $1.3 trillion next year – about twice the deficit the Trump team inherited from the previous administration.

And here, you can connect the dots yourself. The deficit is going to get bigger, not smaller.

First, people are getting older… Budgets for Medicare, Medicaid, Social Security, and other “non-discretionary” items are rising. This spending is baked in the cake, so to speak. It is the result of open-ended entitlements granted by the feds.

Defense spending, too, is increasing. This is discretionary, but effectively out of congressional control, since the military/security/surveillance wing of the Deep State calls the shots.

Defending the nation could be very cheap, since we have no capable or motivated enemies; it could be done for, say, a quarter of the present $700 billion budget.

Archenemy Russia spends only $60 billion per year on defense, for example. Apparently, that’s enough to keep the Chinese or the Poles from invading.

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


First, Secure the Borders — Jeff Thomas

As Ludwig von Mises correctly stated, in a free state, no one is forced to remain within the state. Anyone who seeks to emigrate is free to do so. This is, in fact, one of the primary tenets of liberty – if you don’t like it, you can leave.

And so, it follows that, if the right to exit is curtailed in any way, the state has ceased to be free.

There are those, including myself, who feel that, once this line has been crossed by a state, it’s time to skedaddle. Don’t wait for conditions to “get better.” They won’t. History shows us that, in every case where migration has become curtailed, the state never reverses to a more open policy; in fact, it becomes decidedly more restrictive.

We’re presently living in a period in which most of the countries that were formerly the most free, half a century ago, have declined considerably and many are approaching a state of totalitarianism.

Readers of this publication will be familiar with my forecasts that the principle countries that are at the forefront of this decline will be steadily increasing both their capital controls and their migration controls. With regard to the latter concern, the emphasis will not be on keeping non-productive people out, it will be on keeping productive people in.

This very interesting commentary from Jeff was put in an appearance on the internationalman.com Internet site on Tuesday sometime — and another link to it is here.


Is America Finished? — Paul Craig Roberts

Americans are now so polarized that they “no longer share basic sympathies and trust, because they no longer regard each other as worthy of equal consideration.” Codevilla blames the progressives and their attitude of moral superiority, but his explanation is independent of who is to blame. I blame both sides. The Constitution and our civil liberties took a major hit from the “conservative” Republican regime of George W. Bush.

The consequence has been to weaponize government for use against the domestic adversary. In other words, unity has departed us. The absence of unity makes it easy for the ruling oligarchy to achieve its material interests at the expense of the welfare of the American people. Indeed, it is amazing to find progressives aligned with the military/security complex to block Trump from normalizing relations with Russia.

The provocations of Russia, which have been ongoing since the Clinton regime, have reached unprecedented levels under the neoconservative regimes of Obama and Trump. The conflict that has been orchestrated is good for the $1,000 billion annual budget of the military/security complex at the cost of maximizing the chance of nuclear war. The demonizations of Russia, Putin, China, and Iran are so extreme as to have convinced Russia and China that Washington intends war.

For Russia, Trump’s withdrawal from the intermediate range missile treaty (INF) confirms that an attack on Russia is being prepared. Intermediate range missiles cannot reach the US. The treaty gave safety to Russia and Europe, which is why Washington’s claim that Russia is violating the treaty is absurd. The only reason for Washington to withdraw from the treaty is to be able to place intermediate range nuclear missiles on Russia’s borders that would substantially increase the likelihood of success of a US first strike against Russia.

This very worthwhile commentary by Paul was posted on his Internet site on Tuesday sometime — and I thank Richard Connolly for bringing it to my attention — and now to yours.  Another link to it is here.


Italy’s economy stalls as eurozone slows down

Italy’s economy came to a standstill in the third quarter of the year, registering no growth at all,

It comes as the new coalition government is arguing with the European Commission over the need for an expansionary budget to boost growth.

Meanwhile, figures from the European Union showed economic growth in the 19 countries using the euro currency slowed by more than expected.

Eurozone growth slowed to 0.2%, from 0.4% in the previous quarter.

Growth across all 28 countries of the E.U. fell to 0.3% from 0.5%.

Italian Prime Minister Giuseppe Conte said the zero growth in Italy justified Rome’s expansionary 2019 budget, which the European Commission has rejected because it breaks EU rules.

This story showed up on the bbc.com Internet site on Tuesday morning GMT sometime — and I thank Swedish reader Patrik Ekdahl for pointing it out.  Another link to it is here.


Fall of Empires: Rome vs. USA (Hidden Secrets of Money Episode 9) — Mike Maloney

In Episode 9 of Hidden Secrets of Money, Mike Maloney draws eerie parallels to the misguided leaders and monetary policies that doomed civilizations from Ancient Rome to modern-day America.

Can President Trump save America? Will the Federal Reserve Board be able to pull off yet another round of extremist interference and postpone a crisis?

Find out how Mike he believes it will play out.

This 28:26 minute video from Mike, which I’ve watched from beginning to end, is worth your while.  I know most of it already, but this is certainly a new and alarming spin on it.  This video was posted on the youtube.com Internet site very yearly on Tuesday morning — and I thank Harold Jacobsen for bringing it to our attention.  Another link to it is here.


Zimbabwe Gold Producers Warn Currency Shortage Threatens Output

Zimbabwean gold producers may suspend operations because a foreign-exchange shortage has left them with insufficient funds to cover production costs, the main industry lobby group said.

Curbing output would deprive the country of a key source of export earnings as Finance Minister Mthuli Ncube tries to stabilize an economy wrecked by the misrule of former leader Robert Mugabe.

Zimbabwe’s mining industry is facing “severe viability challenges” because of the shortage of hard currency, the Gold Producers Committee, an affiliate of the Chamber of Mines of Zimbabwe, said in a report to be submitted to the central bank and seen by Bloomberg. Producers are only allowed to retain 30 percent of the proceeds of gold sales, which isn’t adequate to cover the cost of mining the metal, it said.

If this situation is not addressed the majority of (gold) mining houses, whose going concern have been undermined, may find it impossible to continue in production,” the committee said. It proposed allowing mineral producers to retain a larger share of the proceeds from metal sales.

Zimbabwe is projected to produce 30 metric tons of gold in 2018, up from 24.8 tons last year. The metal is Zimbabwe’s second-biggest export, after tobacco, according to World Trade Organization data.

The above five paragraph are all there is to this brief Bloomberg article that showed up on their website at 4:58 a.m. Pacific Daylight Time on Monday.  I found it on the gata.org Internet site — and another link to it is here.


LBMA’s new trade volume data will do nothing for the transparency of the London Gold Market — Ronan Manly

At its annual conference this week in Boston, the London Bullion Market Association (LBMA) announced that commencing 20 November, it will begin publishing data showing the size of trading activity in the London gold and silver markets, a move which it claims will make the London precious markets more transparent. This trade data initiative of the LBMA is an initiative that has been promised for over 4 years now, but which sadly but predictably now appears to be a lost opportunity to provide real transparency to that market.

For the LBMA has now confirmed that the new data will only cover “LBMA’s membership share of the loco London and Zurich OTC market and will reflect 5 day aggregate of trades.” Unbelievably, the LBMA will not even begin publishing a daily rolled up trade volume number for the first 3 months of the data releases, until early 2019.

There is nothing transparent about this initiative. A rolled up aggregate number of trading volumes in any market is by definition opaque not very useful. The LBMA reporting will provide no granularity of trades by trade type, transaction type, client profile (eg ETF trades, central bank trades, miner trades, refiner trades), no breakdown of physical gold trades vs paper gold trades, and no information on the secretive central bank gold trades, gold loans and gold swaps.

Given that the London precious metals market trade data is now being collected in an LBMA database, all of the above granular trade data could be published. The fact that the LBMA will not publish any of this data speaks volumes about its true intention which is to continually stifle the availability of any real data about the London gold and silver markets.

Availability of trade data is crucial to the efficiency of any financial market and to the proper functioning of price discovery in that market. Bond markets and equity markets are in general efficient because of the full availability of granular trading data. Without granular trade data for the London gold and silver markets, these markets will remain completely untransparent and open to the continued abuse by the very bullion banks of the LBMA (and their central bank supporters) which thrive on market secrecy while paying lip-service to the notion of increasing transparency.

The above five paragraphs are all there is to this worthwhile commentary by Ronan.  It appeared on the bullionstar.com Internet site yesterday — and I found it in a GATA dispatch.  Another link to the hard copy is here.


Precious Times Ahead — Kamran Ghalitschi 

Behind the scenes, the dynamics steering the gold price are undergoing some fundamental changes that could lead to this breakout, Eric Strand of Swedish Pacific Fonder suggests. One indication, he believes, came when the CFTC (Commodity Futures Trading Commission) reported in early September 2018, that for the first time in 17 years, commercial participants in gold futures flipped their COMEX positioning from short, to being net long.  Retail, and technical funds, however, now have big short positions, “which could lead to a big short squeeze”, Strand adds.

The price of gold has been suppressed artificially for too long, Strand believes, and now may be the time for a change”.

Strand refers to Silver expert Ted Butler who has monitored the market every single day for over 30 years and describes it as follows: “Every time we’ve had a rally in the last 10 years, ever since J.P. Morgan took over the investment bank Bear Stearns, J.P. Morgan has added aggressively to its paper short division on the COMEX as retail speculators and technical funds come in to chase rallies higher. J.P. Morgan has always been the seller of last resort, and they sell whatever is required to satisfy all buying. And, ultimately, after that buying is satisfied, the prices roll over and come back down. J.P. Morgan adding short positions has stopped every rally in silver – and gold, for that matter – over the last 10 years.

J.P. Morgan never sells on the way down. They only sell and add short positions on the way up. And, when J.P. Morgan adds short positions, once they’re done selling and the buyers are done buying, the price stops going up and people turn to sell. That’s when J.P. Morgan rings the cash register and buys back all the shorts that they’ve added at lower prices than where they sold, meaning they always make a profit.”

This worthwhile precious metal-related commentary put in an appearance on the Stockholm, Sweden-based hedgenordic.com Internet site on Tuesday sometime — and I thank reader E.S. for finding it for us.  Another link to it is here.


Divers searching for ‘extremely rare’ gold coins on 1840 shipwreck off South Carolina

There’s a mysterious spot about 20 miles off South Carolina where centuries-old gold coins have been found strewn across the ocean floor for decades.

It’s believed to be the final resting place of the S.S. North Carolina, a steamship that historians say sank in 1840 under bizarre circumstances.

In November — 178 years after the ship went down — an expedition is being launched to “reconfirm with absolute proof” the wreck’s identity and unravel the mystery of why the North Carolina seemingly sank itself by heading straight into the path of another ship.

But make no mistake: It’s the stories of gold coins the are driving the expedition.

Project partners Blue Water Ventures International and Endurance Exploration Group are convinced hundreds of highly prized gold and silver coins are still on the wreck, promising a big pay off.

The S.S. North Carolina sank so quickly that few of its affluent passengers could gather their belongings before boarding a rescue ship, say the organizers. Among the passengers was a businessman who reportedly lost $20,000 in gold pieces, says Blue Water Ventures International.

This very interesting gold-related news story showed up on the charlotteobserver.com Internet site on Sunday morning EDT — and was updated about 24 hours later.  I found this item in a GATA dispatch as well — and another link to it is here.


The PHOTOS and the FUNNIES

Yesterday’s ‘critter’ was the mountain goat…today it’s the bighorn sheep.  It’s a species of sheep native to North America named for its large horns. These horns can weigh up to 14 kg (30 lb), while the sheep themselves weigh up to 140 kg (300 lb).  They originally crossed to North America over the Bering land bridge from Siberia; the population in North America peaked in the millions, but by 1900, the population had crashed to several thousand, due to diseases introduced through European livestock and over hunting.  A program of reintroductions, natural parks, and reduced hunting, allowed the bighorn sheep to make a comeback. I saw about 40 or so in a herd last weekend…very impressive.  I’ll have those photos later.  Click to enlarge.


The WRAP

It appears that the salami-slicing is back, as JPMorgan et al either set new low closes, or new intraday lows…or both…not only in three of the four precious metals, but in copper and WTIC as well. Copper was closed back below its 50-day moving average for the first time in over a month.

How long this process will take in this cycle of engineered price declines remains to be seen, but ‘the bottom’ isn’t anywhere near as far away as it used to be. All we can do is sit here and wait it out.

Here are the 6-month charts for the Big 6 commodities — and yesterday’s handiwork by ‘da boyz’ is on display.  The ‘click to enlarge‘ feature only helps with the four precious metal charts.

And as I type this paragraph, the London/Zurich opens are less than ten minutes away…now 4:00 a.m. EDT, as the U.K. and Europe are off Daylight Saving Time.  Normally the time difference from New York to London is five hours, but that time difference won’t revert back to normal until North America goes off Daylight Saving Time in about two weeks.  So, as of 4:00 a.m. EDT, the gold price was sold quietly lower until minutes before 12 o’clock noon in Shanghai.  It traded sideways from there, but got smacked to a new intraday low right at the London open — and it’s currently down $7.00 the ounce.  It was the same price path for silver, with its new intraday low coming at the same time as gold’s — and is now down 11 cents.  Platinum was more or less forced to follow the same general price trajectory as silver and gold — and is down 3 bucks at the moment.  Palladium ticked quietly higher throughout the Wednesday session in the Far East — and that lasted until 2 p.m. China Standard Time on their Wednesday afternoon, when it was up 5 dollars the ounce.  It was sold lower from there — and is now back at unchanged as Zurich opens.

Gross HFT gold volume is a bit under 55,000 contracts — and there’s 1,730 contracts worth of roll-over/switch volume on top of that, so net HFT gold volume is around 51,300 contracts.  Net HFT silver volume is coming up on 10,800 contracts — and there’s only 73 contracts worth of roll-over/switch volume in that precious metal.

The dollar index was up 5 basis points by early afternoon trading in the Far East, but the index is now down 3 basis points on the day thirty minutes before the London/Zurich opens.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report.  I would suspect that there might be some improvement in the commercial net short position in gold, but about unchanged wouldn’t surprise me, either.  But there should be a definite improvement in silver, because it closed lower for four of the five trading days during the reporting week, plus it was closed below its 50-day moving average both days this week.  But as to how much improvement, I shan’t hazard a guess.  Ted won’t have a mid-week column today, because he’s on the road, so we’ll see how my guesses stand up without his guiding hands.

And because the U.K. and Europe are back on regular hours, I’ll be filing an hour earlier than normal for the rest of this week and next, until North America is back on Standard Time.  I’m not prepared to stay up that extra hour, as the hours I spend working on this daily column are crazy enough as it is.

See you here tomorrow.

Ed