Ted Butler: A Crack In the Dike

09 November 2018 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold quietly lower once trading began at 6 p.m. in New York on Wednesday evening.  That ended around 12:30 p.m. China Standard Time on their Thursday afternoon — and from there it chopped generally sideways, except for the almost obligatory sell-off at the COMEX open.  It rallied a few dollars from there, before resuming trading sideways — and that continued for the remainder of the Thursday session.

The high and low ticks definitely aren’t worth looking up.

Gold finished the Thursday session at $1,223.50 spot, down $2.60 from Wednesday’s close.  Net volume was pretty light once again at 188,500 contracts — but roll-over/switch volume was pretty heavy at just under 42,500 contracts on top of that.

Except for a brief rally in early afternoon trading in the Far East on their Thursday afternoon, it was pretty much all down hill for the silver price until 10 a.m. in London.  It rallied back towards the unchanged mark but, like for gold, ran into ‘something’ a few minutes after the COMEX open.  It was then allowed to rally until around 10:20 a.m. in New York — and from that point it chopped unsteadily lower until trading ended at 5:00 p.m. EDT.

The high and low ticks in this precious metal were reported by the CME Group as $14.575 and $14.365 in the December contract.

Silver was closed in New York on Thursday at $14.42 spot, down 12 cents on the day.  This was a new intraday and closing low for this move down — and it was closed back below its 50-day moving average as well.  Net volume was pretty decent at just under 69,500 contracts — and there was a fairly hefty 18,500 contracts worth of roll-over/switch volume in this precious metal.

The platinum price chopped sideways to a bit lower in Far East and Zurich trading on their respective Thursdays, but was back within a dollar of unchanged by the COMEX open.  After getting the gold and silver treatment at that juncture, it rallied back to about unchanged by minutes before the afternoon gold fix in London.  From that point it traded sideways until around 11:45 a.m. EST — and then some serious selling pressure appeared.  It was down 11 bucks by 3 p.m. in the thinly-traded after-hours market, but then tacked on a couple of dollars going into the 5:00 p.m. close.  Platinum finished the Thursday session at $861 spot, down 10 bucks from Wednesday.

The palladium price didn’t do much of anything in Far East trading on their Thursday — and was down a couple of dollars by minutes after 3 p.m. CST on their Thursday afternoon.  Selling pressure appeared at that point — and it was down 10 dollars shortly after the Zurich open.  It traded sideways into the COMEX open from there — and then got smacked just the same as the other three precious metal.  But at 9 a.m. in New York, it began to head higher with a vengeance — and was up a dollar or two by the Zurich close.  It edged quietly lower from that juncture until 2 p.m. in the thinly-traded after-hours market — and it got smacked 10 dollars lower from there.  That sell-off lasted until a few minutes after 3 p.m. EST — and it gained almost half of that back by the time the trading day ended at 5:00 p.m.  Palladium was closed on Thursday at $1,113 spot, down 8 dollars on the day.

The dollar index closed very late on Wednesday afternoon in New York at 96.16 — and began to crawl quietly higher once trading began at 6:00 p.m. EST a few minutes later.  That lasted until 1 p.m. China Standard Time on their Thursday afternoon — and from the point, the index began to bounce around a bit.  That state of affairs lasted until about 10:25 a.m. in New York — and at that point, a ‘rally’ began.  It topped out at the 96.74 mark shortly before 3 p.m. EST — and at 3 p.m. on the dot, it headed quietly lower into the close from there.  The dollar index finished the Thursday session at 96.65…up 49 basis points on the day.

And here’s the 6-month U.S. dollar index — and the delta between its close…96.55…and the close on the intraday chart above, was 10 basis points.

The gold shares gapped down a bit at the open, but from there began to chop generally higher — and their respective high ticks came a few minutes after 2 p.m. in New York trading.  An hour later, they were back in the red, but manged to struggle back into positive territory by the 4:00 p.m. EST close…finishing exactly unchanged on the day.

The silver equities gapped down a percent and change at the open, but then began to head higher and, like their golden brethren, hit their respective high ticks just minutes after 2 p.m. in New York.  An hour later, they were back to just about unchanged, but they ticked higher by a bit in the final hour of trading, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 0.79 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 1 gold and 28 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.   In gold — and for the second day in a row, Advantage issued the lone contract — and stopped it as well.  In silver, the two short/issuers were Advantage and JPMorgan…all from their respective client accounts.  There were three long/stoppers in total, with the largest being Morgan Stanley once again, with 11 contracts for its own account, plus another 4 for its client account.  Advantage came in second with 10 — and ADM picked up the other 3 contracts…all for their respective client accounts.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in November remained unchanged at 6 contracts, minus the 1 contract mentioned just above.  Wednesday’s Daily Delivery Report showed that 1 gold contract was posted for delivery today, so that means that 1 more gold contract was added to the November delivery month.  Silver o.i. in November dropped by 247 contracts, leaving 31 still around, minus the 28 mentioned in the previous paragraph.  Wednesday’s Daily Delivery Report showed that 275 silver contracts were actually posted for delivery today, so that means that 275-247=28 more silver contracts just got added to November.

So far in November there have been 194 gold contracts issued and stopped, but in silver that number is 1,391…which is enormous for a so-called non-delivery month.


There were no reported changes in GLD yesterday, but there was a smallish withdrawal from SLV, as an authorized participant took out 281,782 troy ounces.

There was no sales report from the U.S. Mint on Thursday.

It was another zero in/zero out day in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.

It was yet another unbelievable day in silver, as 3,232,543 troy ounces was reported received, but only 191,723 troy ounces was shipped out.  In the ‘in’ category, there were four truckloads…2,412,73 troy ounces…received over at CNT — and the remaining 819,813 troy ounces found a home over at Canada’s Scotiabank.  All the ‘out’ movement…191,732 troy ounces…departed CNT.  The link to all this action is here.

It was pretty busy over at the COMEX-approved kilobar depositories in Hong Kong on their Wednesday.  They only received 55 of them, but shipped out 4,086.  All this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

And it should be noted that of the 9,012 kilobars that Brink’s, Inc. took in on Tuesday, all had been shipped out, plus a bit more, over the last two days…5,001 on Tuesday, plus the 4,086 on Wednesday…mentioned above.


The Terreaux Hoard (French – Trésor des Terreaux) is a hoard of coins discovered during excavations prior to the construction of an underground car park in Place des Terreaux in Lyon. France in 1993. It was made up of 459 silver coins and 84 gold coins in an earthenware pot. Judging by the coins’ date, it was buried c.1360 during the Hundred Years War. The coins include five écus of Philip VI of Valois, two moutons d’or of John the Good, a Venetian ducat and a number of florins. It is on display at the Museum of Fine Arts of Lyon.  Click to enlarge.

I don’t have all that many stories for you today.


CRITICAL READS

Why Government Can’t Make America Great — Bill Bonner

Yesterday was a big day for the U.S. stock market. October was forgiven. And forgotten.
All is well, because the president and the new Democrat majority in the House are going to work together…

…to rip off the American people. Here’s CNBC:

The Dow closed up 545 points, led by gains in UnitedHealth and Apple. The S&P 500 gained 2.1 percent as the health care, tech, and consumer discretionary sectors each rallied more than 2.8 percent. The NASDAQ Composite rose 2.6 percent.

“Hopefully we can all work together next year to continue delivering for the American people, including on economic growth, infrastructure, trade, lowering the cost of prescription drugs,” Trump said in a news conference. “The Democrats will come to us with a plan for infrastructure, a plan for healthcare, a plan for whatever they’re looking at and we’ll negotiate.”

Yes, Dear Reader, it is a wicked world. Some people are always ready to use force or fraud to get what they want. Hundreds of them were elected on Tuesday.

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


Do Investors Need Stop Losses? — Dennis Miller

Everyone wants to buy at the low point and exit at the top. If you do, you are lucky!

During the tech boom my broker and I both bought a high-flying stock. We watched it double twice. It hit $100; we were sitting on nice gains.

Suddenly it dropped to $80. We talked about getting out – but decided to hang on. We were rewarded; it went back to $100. It did it again – then it hit $75.

It continued down. Each discussion ended with, “It can’t go any lower!” We kicked ourselves, feeling stupid, wishing we sold earlier. We finally capitulated, losing much of our profit. Yes, it can go lower – it bottomed around $4.

Much of today’s market is automated computer trading. Money managers tout their sophisticated tools reassuring investors they have programs to protect against catastrophic losses. They reassure investors about being safely diversified in their “family of funds”.

This longish commentary from Dennis was showed up on his Internet site on Thursday morning — and another link to it is here.


Big investors sue 16 banks in U.S. over currency market rigging

A group of large institutional investors including BlackRock Inc and Allianz SE’s Pacific Investment Management Co has sued 16 major banks, accusing them of rigging prices in the roughly $5.1 trillion-a-day foreign exchange market.

The lawsuit was filed on Wednesday in the U.S. District Court in Manhattan by plaintiffs that decided to “opt out” of similar nationwide litigation that has resulted in $2.31 billion (£1.76 billion) of settlements with 15 of the banks.

Those settlements followed worldwide regulatory probes that have led to more than $10 billion of fines for several banks, and the convictions or indictments of some traders.

The banks being sued are: Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Japan’s MUFG Bank, Royal Bank of Canada, Royal Bank of Scotland, Societe Generale, Standard Chartered and UBS.

This Reuters story, filed from New York, showed up on their Internet site at 3:46 p.m. EST on Wednesday — and I thank Jim Gullo for sending it our way.  Another link to it is here.


Blankfein Was “Mystery” Goldman Exec Present During 1MDB Meeting Noted By DoJ

What was perhaps even more curious about the DOJ complaint, was the reference of a “senior Goldman official” who was instrumental and involved in Goldman’s establishing of close ties with both 1MDB and the Razak government, ties which would eventually allow Goldman to issue $6 billion in three issue in bonds underwritten by Goldman which netted $600 million in fees for the bank.

And, as we added over the weekend, all of this is happening at a terrible time for Goldman, which recently underwent a leadership transition, with longtime former CEO Lloyd Blankfein handing the reins to John Solomon, who is best known for moonlighting as a DJ.

And as the breadth of the scandal – and the likelihood that the bank’s most senior employees may have looked the other way (though, to be sure, Blankfein has repeatedly denied having any knowledge of Goldman’s role) – becomes increasingly apparent, the timing of Blankfein’s exit is looking more and more suspect.

And now we now know why, because it now appears that our veiled reference that Blankfein may have been the unnamed senior Goldman official, was in fact accurate.

In a new report, Bloomberg writes that years before Goldman Sachs arranged bond deals now at the heart of globe-spanning corruption probes, “the firm’s then-CEO Lloyd Blankfein personally helped forge ties with Malaysia and its new sovereign wealth fund.”

But much more importantly, Blankfein was the unidentified “mystery” high-ranking Goldman Sachs executive referenced in U.S. court documents who attended a 2009 meeting with the former Malaysian prime minister, Bloomberg’s sources said. And what’s worse, the meeting was arranged with the help of men who are now tied to the subsequent plundering of the 1MDB fund, according to U.S. court documents unsealed last week.

This very interesting news item was posted on the Zero Hedge website at 12:40 p.m. EST on Thursday afternoon — and it comes to us courtesy of Brad Robertson.  Another link to it is here.  A parallel Zero Hedge story on this issue is headlined “Ex-Goldman Banker Fights Extradition to U.S. Over 1MDB Criminal Charges” — and that comes courtesy of Brad as well.


In Huge Shift, UAE to Reopen Embassy in Damascus as Gulf Rapprochement With Assad Likely

Regional Middle East media have been circulating early reports that the United Arab Emirates is preparing to re-open its embassy in Damascus after six years of closure, which is to kick-start a new regional shift. This comes as Gulf Cooperation Council (GCC) countries are reportedly strongly considering the restoration of diplomatic ties with the Assad government after all GCC states had closed their Syrian embassies in 2012.

The significance of this is huge, coming after seven years of war driven by an official policy of Syrian regime change by these very GCC governments, foremost among them Saudi Arabia, the UAE, and Qatar. Restoration of ties also means countries like the UAE could be major sources of financing reconstruction projects at a key moment when the United States is attempting to block all aid that could benefit the Syrian government.

According to Al Masdar News, Abu Dhabi has “ordered full maintenance works to its Syrian embassy to be ready for opening within the next two weeks.”

Such a speedy turn around signals the UAE is ready to acknowledge Assad as the legitimate leader of Syria after emerging victorious as the international proxy war continues to wind down, and likely with other Gulf states to follow.

This interesting Zero Hedge news item showed up on their website at 1:00 a.m. on Thursday morning EST — and it’s also from Brad Robertson.  Another link to it is here.


Operation ‘Enduring Defeat’? DoD Admits U.S. May Need to “Stay in Iraq For Decades”

Despite reports that the Islamic State terrorist group has lost 99 percent of its territory and shifted to insurgent tactics in Iraq and Syria, a recent report said an enduring defeat of the organization could take “years, if not decades.

This, according to Department of Defense information provided to investigators with the DoD Inspector General, is in large part due to what is still needed to make Iraqi security forces “self-reliant.”

“Systemic weaknesses remain, many of which are the same deficiencies that enabled the rise of ISIS in 2014,” according to the quarterly IG report on Operation Inherent Resolve, the counter-ISIS operation that spans Iraq and Syria.

Though top military officials recognized the gaps in capabilities among the Iraqi forces and that a “resurgence” of ISIS in the region is likely without sustained support and attention, congressional support for the fight against ISIS has decreased in the new fiscal year and an estimated $230 million in U.S. stabilization funds earmarked for Syria has been shifted to other countries.

The quarterly report on OIR [Operation Inherent Resolve] noted that while security in cities such as the capital Baghdad has improved to such a degree that security forces have removed about 300 police and security checkpoints and 1,000 barriers that divided and walled off the city.

This interesting, but not surprising commentary put in an appearance on the Zero Hedge website at 10:17 a.m. EST on Thursday morning — and is yet another contribution from Brad Robertson.  Another link to it is here.


U.S. Warns All Ports to Block Iranian Ships

The U.S. State Department has issued a series of warnings today demanding that all ports in the world avoid even nominal contact with Iranian commercial ships, warning that even limited contact could lead to U.S. sanctions.

Among the demands were that all ports and maritime insurance companies “steer clear” of Iranian ships, saying the U.S. would sanction anyone knowingly providing service to them. The threats were even broader for Iranian oil tankers.

With respect to the tankers, even though the U.S. offered waivers on oil purchases to eight nations, the State Department says no country must be able to allow any Iranian oil tankers to even enter their territorial waters, saying this would result in penalties and “catastrophic economic damage.”

U.S. officials are trying to force the world to stop buying Iranian oil, but say they are also doing so while trying to avoid a major price hike. Since none of Iran’s major oil buyers is willing to stop buying, the U.S. has so far proven unable to stop them.

The above four paragraphs is all there is to this brief article that appeared on the antiwar.com Internet site on Wednesday — and I thank Larry Galearis for pointing it out.  Another link to the hard copy is here.


Abe Meets Xi then Modi: A New Asia ‘Cooperation Sphere’?

One of the more important consequences of the Trump Administration trade war against both China as well as Japan is the recent diplomatic and economic meeting between Japan’s Prime Minister Shinzo Abe and China’s President Xi Jinping in Beijing. Not only was it the first such meeting by a Japanese PM in seven years since the chill in relations over a group of disputed islands in the East China Sea. It also suggested a new political and economic strategy might be emerging across Asia’s largest economic sphere. Hours after leaving Beijing Abe hosted Indian PM Narenda Modi in Tokyo. Does this all foreshadow a new flank in an emerging multi-polar world or merely shrewd politics by Abe?

Showing he saw the meeting in Beijing as more than a photo-op, Abe brought a business delegation of some 1,000 top Japanese businessmen. China Prime Minister Li Keqiang announced that deals worth $18 billion had been signed during the talks. As well the two agreed to resume $29 billion worth of mutual currency swaps in event of future currency crises. Both leaders agreed to create a hotline to communicate in event of possible future tensions. Abe also invited Xi to come to Japan in 2019, a major step.

Less discussed in public media was the fact that Japan has agreed to include the China Renminbi in Japan’s foreign exchange reserves, a significant boost to the credibility of China’s currency. China for its part will allow the Bank of Japan to invest directly in Chinese government bonds.

What was not mentioned in the press accounts either in China or Japan was an historic offer of the Japanese Emperor conveyed through Abe to Xi. According to informed sources in Japan, Abe conveyed the wish of Japan’s Emperor Akihito to visit China before he abdicates next April to formally apologize to the Chinese people for the Japanese invasion of China during the 1930s. At the same time the Emperor extended an invitation to China’s Xi to come to Japan. According to the report, Xi accepted the invitation regardless the Emperor’s decision on his visit to China. Such a move by Japan’s Emperor would be seen by Beijing and the Chinese as more than symbolic.

No kidding!!!  A profuse and magnanimous apology coming from the Emperor of Japan — and given on Chinese soil would be a diplomatic event of earthshaking importance.  Let’s see what happens.  This commentary by William F. Engdahl is definitely worth reading…if you have the interest, that is.  It was posted on the journal-neo.org Internet site on Monday — and it’s the second offering in a row from Larry Galearis.  Another link to it is here.


Ted Butler: A crack in the dike

Tuesday’s announcement by the Department of Justice of a guilty plea by a former trader of JPMorgan for systemic “spoofing” and price manipulation of gold, silver, platinum and palladium traded on the COMEX and NYMEX futures exchanges (owned by the CME Group) sure seemed like a very big deal to me for a number of reasons. The infractions occurred from 2009 to 2015 and the trader admitted to engaging in a conspiracy to commit market manipulation on hundreds of occasions, with the knowledge and consent of his immediate supervisors. Please take the time to read this DoJ announcement…linked here…as it is remarkably plainspoken.

First, let me get some personal feelings out of the way. I’ve received a number of comments to the effect of how this vindicates my long held belief that JPMorgan is the silver (and gold) crook of crooks. The truth is that I don’t consider it vindication (yet), but I will confess to a feeling of relief upon reading the complaint, as I believe it greatly reduces the chances of JPMorgan suing me for openly calling them the crooks that they are. To be sure, my fear of being sued was never really a personal fear, but how it might affect my wife and family. Correctly or incorrectly, I feel a great burden has been lifted.

That aside, the announcement by the DOJ was remarkable in many ways, not the least of which is that this is a criminal case which involves jail time and not a civil case which only involves monetary fines. Also, the announcement makes clear that this is very much an ongoing investigation and it’s hard to see how there won’t be further fall out for JPMorgan, since it’s obvious the guilty trader was doing what others were doing at the bank. It’s also hard for me to see how a trader involved in systemic criminal market activity in coordination with other traders at the bank doesn’t equate to systemic criminal activity by the bank itself. Notable, of course, is that of all the blizzard of spoofing and short term price manipulation cases brought recently in silver and gold, this is the first to zero in on traders at JPMorgan.

This must read commentary by Ted was part of his mid-week column to his paying subscribers on Wednesday — and I’m happy to see that he decided to post it in the public domain…which is where it belongs.  It appeared on the silverseek.com Internet site at 9:31 MST [Mountain Standard Time] on Thursday morning — and another link to it is here.


The PHOTOS and the FUNNIES

Today’s ‘critter’ is another in a series of award-winning photographs handed out by the Natural History Museum in London this year.  This photo, by Argentinian biologist and photographer Darío Podestá, is entitled “Argentine Quickstep”.

Surveying the scene, Darío was captivated by ‘the fragility of the chick’ as it used its oversized legs to scurry after its parents. After an uncomfortable crawl through a salt field in the rain and mud, Darío trained his lens on the speckled fluff of the chick, framing it against the dramatic background of salt and sky.

Two-banded plover chicks will leave their nests almost immediately after they hatch, relying on their stilt-like legs to keep pace with their parents and to evade potential predators. Their long legs also keep their soft down away from the wet ground. After four or five weeks, they will grow large enough to fly away from the care of their mother and father.  I’ve tossed in photos of the adult birds as well.  Click to enlarge.


The WRAP

JPMorgan et al set a new intraday low in gold, plus a slight new low close for this move down on Thursday.  But in silver, they closed it back below its 50-day moving average, as the Managed Money traders are getting whip-sawed in and out of their positions once again by the commercial traders — and losing more buckets of money in the process.

Copper was also sold below its 50-day moving average on Thursday by a few pennies as well — and closed right on it.  WTIC  got horse-whipped for the umpteenth day in a row — and is now off its October 3rd high tick by 21 percent or so.  That translates into more big losses for the Managed Money traders on the long side…and with those of them now loaded to the gills with short positions, they’ll get their faces ripped off when the commercial traders allow crude oil to rally.

It’s such a scam — and going on in full view of the CFTC.

Below are the 6-month charts for all four precious metals, plus copper and WTIC — and the charts pretty much speak for themselves.  The ‘click to enlarge‘ feature only helps with the first four.

And as I type this paragraph, the London open is less than ten minutes away — and I see that once again the gold price was sold quietly lower the moment that trading began at 6:00 p.m. EST in New York on Thursday evening. The current low tick was set shortly after 12 o’clock noon in Shanghai — and it’s edged a tiny bit higher since — and is currently down $4.20 an ounce. It was the same general price path for silver — and it’s down 7 cents. Both are at new lows for this move down. Platinum was down 5 bucks by noon China Standard Time — and it hasn’t done much since — and is still down 4 dollars. The palladium price has been wondering sideways-to-down-a-bit in Far East trading on their Friday — but it’s now back at unchanged as Zurich opens.

Net HFT gold volume is around 39,500 contracts — and there’s a fairly hefty 12,500 contracts worth or roll-over/switch volume in this precious metal already. Net HFT silver volume is right on 15,000 contracts — and there’s only 286 contracts worth of roll-over/switch volume on top of that.

The dollar index has been crawling unevenly higher ever since trading began in New York on Thursday evening. Its current 96.87 high tick was set a very few minutes after 3 p.m. CST — and as of thirty minutes before the London open, it’s up 17 basis points.

Today, around 3:30 p.m. EST, we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday…along with the companion Bank Participation Report.  For this one day a month we get to see what the U.S. and non-U.S. banks have been up to in the precious metals for the last month — and they’re normally up to quite a bit, especially the U.S. banks, with JPMorgan being the primary culprit.

I was of the opinion in Thursday’s column that we’re likely to see further — and decent increases in the short positions of the commercial traders in today’s COT Report.  Ted was of a similar mind, but not as downright negative as I am…so I’m cheering for him to be right — and so should you.

But whatever the numbers are, they are already “yesterday’s news” by a bit, based on the price ‘action’ in silver and gold since the COMEX cut-off on Tuesday.

And as I post today’s missive on the website at 4:02 a.m. EDT, I note that the gold price is a bit higher as the first hour of London trading draws to a close — and it’s down only $3.00 at the moment.  Silver is down 8 cents.  Platinum is a bit higher…only down 2 bucks.  Palladium was unchanged at the Zurich open, but it’s now down 4 dollars.

Gross gold volume is around 74,500 contracts — but net of current roll-over/switch volume, net HFT gold volume is just under 49,000 contracts.  Net HFT silver volume is way up there at just under 19,000 contracts — and there’s still only 569 contracts worth of roll-over/switch volume in this precious metal.

The dollar hit its current 96.89 high tick exactly at the 8:00 a.m. open in London, but has backed off that high by a bit — and is currently up 20 basis points as of 8:30 a.m. GMT.

That’s it for yet another day.  I hope you have a great weekend, but don’t forget to take a minute on Sunday to remember those who made the ultimate sacrifice.

See you here tomorrow.

Ed