01 November 2018 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was sold lower until a few minutes before noon China Standard Time on their Wednesday morning — and from there it traded unevenly sideways until the noon silver fix in London, which was 8 a.m. in New York. It was sold down some more from that point — and the low tick of the day was set at, or just before, the afternoon gold fix in London. It rallied a few dollars from there until noon EDT — and didn’t do much of anything after that.
It was yet another day where the gold price traded in less than a one percent range — and the high and low ticks aren’t worth looking up.
Gold was closed in New York on Wednesday at $1,214.10 spot, down $8.50 on the day — and another new low close for this engineered price decline. Net volume was pretty quiet at a bit under 209,500 contracts — and there was 25,000 contracts worth of roll-over/switch volume on top of that.
The silver price was taken lower by about a dime by minutes before the 12 o’clock noon in Shanghai — and from that point it traded flat until the London open. From that juncture it was sold quietly, but unevenly lower until the market closed at 5:00 p.m. EDT in New York — and also finished the day at another new low close for this move down.
The high and low ticks in this precious metal were recorded by the CME Group as $14.49 and $14.24 in the December contract.
Silver finished the Wednesday session at $14.215 spot, down 22.5 cents on the day. Net volume was pretty decent at 71,500 contracts — and there was 5,337 contracts worth of roll-over/switch volume in this precious metal.
The platinum price traded sideways within a two dollar price range either side of unchanged, right up until the COMEX open in New York yesterday morning. It chopped unsteadily higher from there — and back above unchanged by a bit. But shortly after 12 o’clock noon in New York it was sold lower until around 2 p.m. EDT — and didn’t do a lot after that. Platinum closed at $835 spot, up a dollar on the day.
Palladium was up four or five dollars by the Zurich open on their Wednesday morning, but that all vanished and a bit more by 11 a.m. CET…Central European Time. It crawled quietly higher from there — and jumped up to its high of the day around 9:30 a.m. in New York. It was sold down into the COMEX close — and didn’t do a lot after that. Palladium finished the Wednesday session in New York at $1,067 spot, up 3 dollars on the day.
The dollar index closed very late on Tuesday afternoon in New York at 97.01 — and then traded flat once the currencies began to trade a few minutes later at 6:00 p.m. EDT. That lasted until around 3 p.m. China Standard Time on their Wednesday afternoon — and it began to chop erratically higher in a very wide range, with the 97.20 high tick coming around 9:35 a.m. in New York. But when all was said and done, the dollar index closed the Wednesday session at 97.11…up only 10 basis points on the day.
And here’s the almost 1-year U.S. dollar index chart — and the delta between its close…96.90…and the close on the intraday chart above was 30 basis points yesterday. Click to enlarge.
The gold stocks fell about a percent and a half at the open in New York yesterday morning — and then proceeded to chop aimlessly sideways for the remainder of the Wednesday session. The HUI closed down 1.58 percent.
It was the same trading pattern for the silver equities — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.80 percent. Click to enlarge if necessary.
And here’s the 1-year Silver Sentiment/Silver 7 Index. Click to enlarge as well.
But if you look at the HUI and the Silver 7 charts more closely, you can see that someone was ‘buying the dips’ all day long yesterday.
The CME Daily Delivery Report showed that 32 gold and 467 silver contracts were posted for delivery with the COMEX-approved depositories on Friday. In gold, Advantage issued 22 contracts — and ADM 10. The two long/stoppers were JPMorgan with 22 contracts — and Advantage with 10. All contracts, issued and stopped, were from and for their respective client accounts. In silver, of the two short/issuers, the only one that mattered was ABN Amro with 462 contracts out of its client account. There were six long/stoppers in total — and the three biggest were Morgan Stanley with 136 for its own account, plus another 39 for its client account. In second spot was HSBC USA with 142 for its own in-house/proprietary trading account. And thirdly came JPMorgan with 96 contracts for its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in November fell by 71 contracts, leaving 55 contracts still around…minus the 32 mentioned just above. Tuesday’s Daily Delivery Report showed that 116 gold contracts were actually posted for delivery today, so that means that 116-71=45 more gold contracts were added to the November delivery month. Silver o.i. in November dropped by 425 contracts, leaving 863 still open, minus the 467 mentioned in the previous paragraph. Tuesday’s Daily Delivery Report showed that 459 silver contracts were posted for delivery today, so that means that 459-425=34 more silver contracts were added to November.
There was a tiny withdrawal from GLD yesterday, as an authorized participant took out 28,378 troy ounces. A withdrawal of that size usual represents a fee payment of some kind. There were no reported changes in SLV.
There was no sales report from the U.S.Mint.
For the month of October, the mint sold 22,000 troy ounces of gold eagles — 6,500 one-ounce 24K gold buffaloes — and 1,405,000 silver eagles. I’m sure that Nick Laird will have the updated charts for us soon.
There was some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday. Nothing was reported received, but 20,178 troy ounces was shipped out of JPMorgan. A link to this activity is here.
As always, it was another very busy day in silver, as 1,873,327 troy ounces were reported received — and 600,347 troy ounces were shipped out…3 truckloads in — and 1 truckload out. Two truckloads…1,272,980 troy ounces ended up at JPMorgan — and the other truckload…603,610 troy ounces…was dropped off at Brink’s, Inc. The lone truckload shipped out…600,347 troy ounces…departed CNT. The link to this action is here.
As Ted pointed out on the phone yesterday, the amount of silver taken in by JPMorgan during October is now far in excess of the 10.6 million ounces that they stopped for their own account in the September delivery month. He thought it possible that they may now be storing silver for their client account as well. It’s a good bet he’ll have lots to say about this in his weekly review on Saturday. But regardless of that, JPMorgan’s COMEX silver stockpile is now up to a new record high once again…150.38 million troy ounces.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They received 2,000 of them — and didn’t ship out any. This activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
I only have a handful of stories for you today.
Yesterday we asked if, as a result of its ongoing operational troubles and recent downgrade by S&P, GE was facing another Commercial Paper “moment”, with a Moody’s downgrade now imminent. The reason is that GE has traditionally been one of the biggest issuers of Commercial Paper to fund daily operations, and used to be one of the biggest issuers of the debt: veteran readers may recall that during the financial crisis, GE’s loss of access to the frozen CP/Money Market nearly resulting in a terminal liquidity crisis at the industrial conglomerate.
Since then, GE’s reliance on commercial paper was material, and in the second quarter, GE had on average around $16.6 billion of the debt outstanding – a sizeable portion of its total $116 billion in debt.
A warning shot came in early October, when S&P cut GE’s short-term grade to A-2, a level below the top tier. That’s a rating of commercial paper that some classic prime money market funds are reluctant to buy. In fact, prime money market funds historically had to have at least 97% of their securities rated at least A-1 from S&P and P-1 from Moody’s, but those rules were loosened amid this decade’s money market reform. Even so, as Bloomberg noted, many funds would be far less willing to buy securities with a split rating, i.e., where at least one rating is below A-1 or P-1.
And with fewer funds interested in buying GE paper, the company would be forced to pay higher rates to sell its commercial paper, according to Peter Crane, president of Crane Data, which tracks money market funds. “They’ll still be able to find buyers, but at a cost of course,” Crane said. It cost 2.34% for a top-tier corporation to borrow for 90 days, according to U.S. Federal Reserve data. Companies the next tier down, where one ratings firm has GE, paid 2.71%.
Fast forward to today when moments ago GE found itself completely shut out of the Commercial Paper market, when Moody’s downgraded its senior unsecured rating to Baa1, from A2, and downgraded the short-term rating to P-2, from P-1, making future sales of C.P. impossible.
This news item showed up on the Zero Hedge website at 3:24 p.m. on Wednesday afternoon EDT — and another link to it is here.
According to Bloomberg, after a period of surprising resilience which saw junk spreads touch the narrowest since the financial crisis as recently as a month ago, October was the worst month for junk bonds since 2008.
October has been positive for high-yield bonds in every year since 2008, when the market tumbled almost 16 percent in the month.
And while October has been typically a good month for high yield, this month is on track for the biggest loss since December 2015 as equity volatility, economic fears, earnings and trade worries weigh.
After months of outperformance, U.S. high yield finally cracked, generating a -1.81% return in October, making it the second-worst performer of all the main bond market indexes and exceeded only by the 1.87 percent decline for global high yield.
The October rout wiped out more than two-thirds of all high yield YTD gains, and while the sector is still up 0.72% in 2018, it is well short of the 2.57% racked up by the close on Sept. 28. The former star performer in the space, the “triple hooks” or CCC rated bonds, gave up half their YTD gains, and were up by 3.07%, compared to a 6.24% return at the end of last month. Meanwhile, investment grade bonds are now well in the red for the year, losing 3.5% after a 1.2% drop this month.
This story was posted on the Zero Hedge website at 2:51 p.m. EDT on Wednesday afternoon — and I thank Brad Robertson for sending it along. Another link to it is here.
Treasury Secretary Steven Mnuchin is about to surpass Timothy Geithner’s achievement of selling a record amount of notes and bonds as he seeks to finance America’s soaring budget deficit.
According to the latest quarterly refunding statement, the U.S. Treasury is about to sell a record amount of debt, surpassing levels seen both in the aftermath of the Great Depression and the Global Financial Crisis.
On Wednesday, the U.S. Treasury Borrowing Advisory Committee unveiled that it will increase the amount of debt to be sold at the upcoming quarterly refunding auctions to $83 billion from $78 billion three months earlier. This will be the fourth straight quarter of increasing refunding auction sizes and is driven by the soaring U.S. deficit shortfall, which in 2018 hit $779 billion the highest since 2012, as well as the Fed’s ongoing balance sheet shrinkage.
This is another Zero Hedge item courtesy of Brad Robertson. It put in an appearance on their website at 11:28 a.m. EDT yesterday — and another link to it is here.
The Dow closed up more than 400 points. End of the correction? Mr. Market’s fake-out?
In a bull market, you buy the dips. In a bear market, you sell the bounces. Which is it?
We don’t know yet, but our guess is that you won’t regret selling now.
In the meantime… when we left off yesterday, we had just connected some dots. And a disturbing picture was coming into clearer focus.
Here’s what we’re looking at…
Government spending is now impossible to restrain. Donald J. Trump probably had the last opportunity to bring it under control. We suspected that the promise of “draining the swamp” was just a political feint. But we kept an open mind.
Now, we know… Instead of cutting the budget, he increased it. The deficit is projected to hit $1.3 trillion next year. And now, between the Deep State insisting on more money for “defense” and aging voters insisting on their pills and pensions, deficits are certain to increase.
This commentary by Bill appeared on the bonnerandpartners.com Internet site very early on Wednesday morning EDT — and another link to it is here.
I posted Episode 9 in Wednesday’s column — and Episode 10 is now up on the youtube.com Internet site as well. This segment runs for 41 minutes. I’ve listened to all of it — and it’s definitely worth your while. I thank Harold Jacobsen for bringing it to my attention — and now to yours.
The youngest brother of Saudi Arabia’s King Salman has returned from self-imposed exile to “challenge” Crown Prince Mohammed bin Salman (MbS) “or find someone who can,” reports the Middle East Eye.
Prince Ahmad bin Abdulaziz is reportedly hoping to oust his 33-year-old nephew in the wake of an allegedly state-sanctioned murder of journalist Jamal Khashoggi. MbS has virtual control over Saudi Arabia after a June 2017 shakeup in which King Salman removed Muhammad bin Nayef as heir apparent.
The septuagenarian prince, an open critic of bin Salman (MBS), has travelled with security guarantees given by U.S. and U.K. officials.
“He and others in the family have realised that MBS has become toxic,” a Saudi source close to Prince Ahmad told Middle East Eye.
Prince Ahmad has reportedly been meeting with other members of the Saudi royal family living outside the kingdom, along with “figures inside the kingdom” who have encouraged him to usurp his nephew. According to MEE, “there are three senior princes who support Prince Ahmad’s move,” who remain unnamed to protect their security.
According to Saudi dissident Prince Khalid Bin Farhan Al Saud, he expects a coup to be orchestrated against King Salman and MbS, as reported by the Middle East Monitor, which reports that a coup is “imminent.”
“The coming period will witness a coup against the king and the crown prince,” said Prince Khalid while commenting on the Khashoggi murder.
This very interesting news story was posted on the Zero Hedgewebsite at 12:57 p.m. EDT on Wednesday afternoon — and we should find out reasonably quickly if anything comes of this. I thank Brad Robertson for pointing it out — and another link to it is here.
India is considering allowing some imports from China to be settled in yuan, people familiar with the proposal said, as the South Asian nation moves to limit its currency’s loss against the dollar.
The plan would enable direct convertibility between the rupee and yuan and will help cut transaction and hedging costs, the people said, asking not to be identified citing rules. The proposal would allow Indian exports of pharmaceuticals, oil seeds and sugar to China to be settled in rupee, while keeping out trade in high volume products such as electronics, they said.
India-China trade is mainly settled in U.S. dollars since currencies between the two nations aren’t directly convertible. By allowing Indian importers to pay for Chinese goods in yuan, the South Asian nation would be able to save on dollars to pay for escalating oil import costs in the face of higher crude prices and the rupee’s slump to a record low.
Oil is India’s biggest import item and the government estimates it will pay a record $125 billion, or 8.8 trillion rupees, for crude imports this fiscal year, the highest in rupee terms since 2001.
This Bloomberg news item put in an appearance on their website back on Sunday — and I found it embedded in a GATA dispatch. Another link to it is here.
After facing down U.S. threats of possible economic sanctions should it follow through with its plans to purchase nearly $5.4 billion in Russian S-400 anti-ballistic missile systems, India has successfully called the U.S.’s bluff. After India stood its ground and insisted on moving ahead with the arms deal, the White House said it would consider giving India a waiver on the deal, according to RT.
For anybody who has followed our coverage of the growing mutiny against the dominant dollar-based trade paradigm – a rebellion that’s being led by Russia and China – the U.S.’s reasons for granting the concession should be self-evident. After the U.S. threatened to block the deal via SWIFT, the supposedly “politically independent” system for international payments over which the U.S. Treasury exercises de facto veto power via economic sanctions, Russia and India found a viable workaround: Carry out the transaction in rubles and rupees.
New Delhi and Moscow officially agreed on the deal during a summit earlier this month, where they also pledged to work toward closer military and economic ties, much to the chagrin of the U.S. In addition to the S-400s, India is also reportedly planning to buy Russian T-14 Armata tanks and guided-missile frigates, and could even pursue the development of next-generation submarines and fighter jets in cooperation with Moscow.
By deciding to tolerate the deal, the U.S. is, in effect, acknowledging that Russian President Vladimir Putin had a point when he said earlier this month that the U.S.’s willingness to impose economic sanctions is a “colossal strategic mistake.”
This story showed up on the Zero Hedge website at 7:25 p.m. on Wednesday evening EDT — and another link to it is here.
A giant and extremely rare emerald worth an estimated £2 million ($2,549,954) has been discovered at a mine in Zambia. The gemstone is a whopping 5,655 carats.
The 1.1kg emerald, named “Inkalamu,” meaning lion in the local Bemba language, was discovered by geologist Debapriya Rakshit and miner Richard Kapeta on October 2 at Kagem, the world’s largest emerald mine. The site is majority-owned by London-based Gemfields.
Naming is reserved for only the rarest and most valuable gems, and the lion emerald is only the second the company has ever named. The 6,225-carat “Insofu” or elephant stone, was its first to be named, back in 2010.
“The discovery of this exceptional gemstone is such an important moment both for us and for the emerald world,” London-based gemologist at Gemfields Elena Basaglia said as cited by MSN news.
This very interesting news item appeared on the rt.com Internet site at 2:56 p.m. Moscow time on their Wednesday afternoon, which was 7:56 a.m. in New York — EDT plus 7 hours. The photo is definitely worth the trip — and I thank Larry Galearis for sharing it with us. Another link to it is here.
The PHOTOS and the FUNNIES
Today’s ‘critter’ is the hermit thrush. “It’s a medium-sized North American thrush. It is not very closely related to the other North American migrant species of thrushes, including the robin, but rather to the Mexican russet nightingale-thrush. Hermit thrushes breed in coniferous or mixed woods across Canada, southern Alaska, and the northeastern and western United States. They make a cup nest on the ground or relatively low in a tree.” They’re supposed to make it this far north in Canada during the breeding season, but I have never seen one — and if I have, I didn’t recognize it for what it was. Click to enlarge.
It was another day of new intraday and/or closing lows in four of the Big 6 commodities…gold, silver, copper and WTIC — and it’s most unfortunate that this data won’t be in tomorrow’s Commitment of Traders Report.
We’re now well below silver’s 50-day moving average, but JPMorgan has work to do in gold — and I doubt very much if they’ll be satisfied with just a tiny penetration of its 50-day moving average, but you just never know.
Here are the 6-month charts for all four precious metals, plus copper and WTIC — and for the second day in a row the handiwork of JPMorgan et al is easy to spot. The ‘click to enlarge‘ feature works for all six charts.
And as bad as the obvious price management of the Big 6 commodities is, here is what Bill King of the King Report fame had to say about the shenanigans in the stock market on Tuesday…”During the final seventy minutes of trading, money managers and traders did the necessary manipulation to game performance. The manipulation to boost miserable October performance was one of the most blatant manipulations in decades. The S&P 500 Index rallied 31 handles from 14:50 ET to the close…Another egregious manipulation occurred after the NYSE close when Facebook reported disappointing results. The stock immediately sank 5%. Then, someone from the scores of hedge funds, traders and money managers that own large amounts of FB forced the stock to a 2% gain.”
As GATA’s secretary/treasurer Chris Powell stated ten years ago…”There are no market anymore, only interventions.”
And as I post today’s column on the website at 4:04 a.m. EDT…the London open is less than ten minutes away — and I note that the gold price rose quietly until about noon China Standard Time on their Wednesday morning. From there, it traded sideways into the afternoon gold fix in Shanghai — and it’s been heading higher ever since. It’s up $9.80 currently. It was the same price action in silver — and it’s now up 17 cents the ounce. Ditto for platinum and palladium, with the former up 12 dollars — and the latter by 6 as Zurich opens.
Gross gold volume is around 54,000 contracts — and minus 1,231 contracts worth of roll-over/switch volume, net HFT gold volume is about 51,500 contracts. Net HFT silver volume is around 13,700 contracts — and there’s only 137 contracts worth of roll-over/switch volume in that precious metal.
The dollar index didn’t do much for the first hour of trading once it began in New York at 6:00 p.m. EDT yesterday evening…then it began to head sharply lower — and back below the 97.00 mark. And thirty minutes before the London open, it’s down 35 basis points.
Friday morning at 8:30 a.m. EDT, we get the latest job numbers — and it will be interesting not only to see what they are, but how all markets…particularly the precious metals…will be allowed to ‘react’ to them.
I’m off to bed — and I’ll see you here tomorrow.