14 November 2018 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price rose quietly higher until around 11:30 a.m. China Standard Time on their Tuesday morning — and was up four bucks and change at that juncture. Then about two hours later it was sold equally quietly lower — and the low tick of the day was set at, or very shortly before, the morning gold fix in London. It crawled unsteadily higher from there — and back above $1,200 spot, but was capped and then turned lower shortly after London closed for the day. That quiet sell-off lasted until a minute or so after 3 p.m. in the thinly-traded after-hours market — and it edged a bit higher into the close from there, finishing in positive territory by a bit.
The high and low closes really aren’t worth looking up, but here they are anyway…$1,205.50 and $1,196.60 in the December contract.
Gold finished the Tuesday session in New York at $1,201.90 spot, up $2.00 from Monday’s close, but JPMorgan set a new intraday low in gold yesterday as well. Net volume was very much on the lighter side at 192,500 contracts — and there was just under 51,000 contracts worth of roll-over/switch volume out of December and into future months.
The silver price had a far more erratic price ride yesterday — and from its high tick, which came shortly before 9 a.m. in London, it chopped very unsteadily lower, with the low tick set shortly before 3 p.m. in after-hours trading in New York. And, like gold, silver’s low tick was a new intraday low price for this engineered price decline as well.
The high and low ticks in this precious metal were reported by the CME Group as $14.105 and $13.92 in the December contract.
Silver was closed at $13.985 spot, up 0.5 cents on the day. Net volume was pretty decent at just under 70,800 contracts — and there was about 14,700 contracts worth of roll-over/switch volume in this precious metal.
In most respects, platinum traded in a similar fashion as silver, with its respective high and low ticks coming at the same time as well. Platinum was closed at $837 spot, down a dollar on the day.
Up until around 11 a.m. in Zurich [5 a.m. in New York] the palladium price path was similar to the other three precious metals. But at that point, the price began to chop quietly, but unsteadily higher. However, once COMEX trading began at 8:20 a.m. EDT, the palladium price was forced to trade generally sideways until the market closed at 5:00 p.m. EDT in New York. Palladium finished the Tuesday session at $1,097 spot, up 15 dollars on the day.
The dollar index closed very late on Monday afternoon in New York at the 97.64 mark — and began to edge quietly lower once trading began at 6:00 p.m. EST a few minutes later. That sell-off lasted until a few minutes after noon China Standard Time on their Tuesday. It chopped rather unsteadily higher from there until about 10:25 a.m. GMT in London, which most likely coincided with the morning gold fix over there. It headed lower from that juncture — and bottomed out between 11 a.m. and noon in New York. It headed higher from there until precisely 2:00 p.m. — and then began to head lower — and fell like a rock in the last forty-five minutes of the Tuesday session. The dollar index closed back below the 97.00 mark at 96.96 — and on its low tick of the day…down 68 basis points from Monday’s close.
You should carefully note that, with the exception of palladium, the other three precious metals were not allowed to rally in spite of what the dollar index was doing, or not doing — and in fact, JPMorgan set new intraday lows for this move down in all three.
And here’s the 6-month U.S. dollar index — and the difference between its close…97.14…and the close on the intraday chart above, was 18 basis points yesterday.
The dollar index would crash and burn if allowed, but those ‘gentle hands’ won’t let it happen, at least for the moment — and Tuesday’s currency action was certainly testament to that.
The gold stocks rallied a hair at the open, but were then sold down hard to their respective low ticks by shortly before 11 a.m. EST…about ten minutes before the London close. They headed higher from there — and back into positive territory by a bit. They hung in there until around the 1:30 p.m. COMEX close — and they headed quietly lower from that juncture — and the HUI finished down another 1.36 percent.
It was almost exactly the same for the silver equities, but the rally off their 10:30 a.m. EST lows did not make it back into positive territory at all — and they headed quietly lower starting around 12:30 p.m. in New York trading. That sell-off accelerated a bit during the final hour and change of trading, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished down 2.40 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.
And as I pointed out last week, despite the fact that the precious metal equities are getting slaughtered — and there’s really no other word to describe it…there was a buyer for every share sold in a panic yesterday. You have to wonder who the buyers are, but whomever they may be, you can rest assured that they now reside in very strong hands — and they won’t be selling them for a loss.
The CME Daily Delivery Report showed that 1 gold and 3 silver contracts were posted for delivery on Thursday. I won’t bother breaking down these tiny amounts…but if you wish to look, the link to yesterday’s Issuers and Stoppers Report is here.
The Preliminary Report for the Tuesday trading session showed that gold open interest in November remained unchanged at 7 contracts still open, minus the 1 contract mentioned just above. Monday’s Daily Delivery Report showed that zero gold contracts were posted for delivery today. Silver’s o.i. in November increased by 3 contracts, leaving 6 still open, minus the 3 mentioned in the previous paragraph — and it’s a good bet that the 3 contracts posted for delivery on Thursday are the same 3 contracts that were just added to November’s open interest.
The other thing that caught my eye in this Preliminary Report was the massive increase in open interest in gold yesterday…20,660 contracts. Silver’s open interest increase on Tuesday was 4,798 contracts. These are, by definition, Preliminary numbers, but both those numbers are pretty chunky — and Ted may or may not have something to say about it in his mid-week commentary today if the final numbers don’t change by much…as he’s the world authority on all this. Normally these numbers hint at big increases in Managed Money shorting, but the new intraday lows set yesterday weren’t all that impressive — and there wasn’t big volume. But Friday’s COT Report will tell all.
There were smallish withdrawals from both GLD and SLV on Tuesday. Authorized participants took out 27,130 troy ounces of gold — and 328,721 troy ounces of silver.
There was no sales report from the U.S. Mint once again.
There was a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday, as 3,506 troy ounces of gold was dropped off at the Delaware depository. Nothing was reported withdrawn. I won’t bother linking this activity.
It was busier in silver — and although nothing was reported received, there were two truckloads…1,202,773 troy ounces…shipped out of CNT. The link to that is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, as 1,803 were reported received — and 520 were shipped out. All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
The Valchitran Treasure was discovered on 28 December 1924 by two brothers who were working in their vineyard near the village of Valchitran, 22 km southeast of Pleven, Bulgaria. They did not realize the find’s value and even tried to cut the objects and use them as farm tools. Small portions of some of the items were damaged, but, in general, the treasure has been well kept since then. The hoard consists of 13 receptacles, different in form and size, and weighs in total 12.5 kilograms. Click to enlarge.
It’s another day where I don’t have all that much for you.
The new, fake money succeeded largely because of a historical accident. Volcker came along at the very bottom of a stock, bond, debt, and economic cycle.
Putting the screws to inflation, he allowed the economy to begin a very natural, healthy expansion that carried it along (with more help from the Fed) for the next 36 years. It was only two years ago – in 2016 – that the interest rate cycle finally turned.
Another big part of that accident was the arrival of the Chinese into the world economy. Increases in fake money usually lead to increases in consumer prices (which is what happened in the 1970s).
But, beginning in 1979, hundreds of millions of Chinese workers began laboring in unheated factories for $10 a day so that Americans could enjoy Everyday Low Prices at Walmart for the next four decades.
Those lucky trends have run their course. And now, the U.S. economy faces a historical accident of another sort… with much different consequences.
This worthwhile commentary from Bill put in an appearance on the bonnerandpartners.com Internet site early on Tuesday morning — and another link to it is here.
In geopolitics events are rarely what they seem to be. This is especially true when we look more closely at the otherwise bizarre “war” launched this spring under the guise of trade war, supposedly redressing America’s huge annual balance of trade deficits, the most extreme being that with China. The true driver behind Washington’s otherwise inexplicable tariff war attacks on especially China make sense when we view them through the prism of a new Administration report on the defense industrial base of the United States.
In early October a U.S. Government inter-agency Task Force, headed by the Department of Defense (DoD) released the unclassified part of a year-long study on the domestic industrial base required to provide vital components and raw materials for the U.S. military. Titled “Report Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States,” the Inter-agency Task Force document was commissioned a year ago in a little-noted Executive Order 13806 of the U.S. President.
The report is the first such detailed analysis of the adequacy or lack of, of the industrial supply chain that feeds vital components to the U.S. Military in recent years.
The declassified version of the report is shocking enough. It cites a laundry list of 300 “gaps” or vulnerabilities in the U.S. military industrial base. What it reveals in stark detail is a national economy no longer able to support the most basic essentials of a national defense, a direct consequence of the economies of globalization and offshore outsourcing. It details dramatic shortages of skilled workers in areas such as machine tooling, welding, engineering. Vital machinery such as numerically-controlled machine tools must be imported, most from Germany, which has not the best relations with Washington at present. Many of the small, specialized suppliers of key sub-components are single-source suppliers many on the brink of insolvency owing to U.S. Budget uncertainties in recent years. And the U.S. defense industry is dependent on China for virtually all its rare earth metals. Since the 1980’s U.S. domestic mining of the metals has virtually collapsed for economic reasons as suppliers turned to China for far cheaper sources. Today 81% of world rare earth metals needed in military equipment, superconductors, smart phones and other high tech applications come from China.
I posted a story about this a while ago, but Engdahl goes into far more detail about it. It’s on the longish side, but worth your while if you have the interest. This commentary appeared on the journal-neo.org Internet sit on Sunday — and another link to it is here. I thank Larry Galearis for pointing it out.
World leaders gathered in Paris on Sunday under the Arc de Triomphe to mark the centennial anniversary ending World War I. In an absurd way, the Napoleon-era arc was a fitting venue – because the ceremony and the rhetoric from President Emmanuel Macron was a “triumph” of lies and platitudes.
Among the estimated 70 international leaders were U.S. President Trump and Russian counterpart Vladimir Putin, each sitting on either side of Macron and his wife. German Chancellor Angela Merkel was also given pride of place beside the French president.
Macron’s address to the dignitaries was supposed to be a call for international multilateralism. He urged a “brotherhood” for the cause of world peace. He also made a pointed rebuke of “nationalism” as posing a danger to peace – a remark which seemed aimed at Donald Trump who recently boasted of his politics with that very word.
But, ironically, everything about the ceremony and Macron’s speech resonated with jingoistic French nationalism, not his avowed multinationalism. As the politicians sat under the Arc de Triomphe, Macron walked around its circular esplanade in a salute to assembled French military forces bearing assault rifles and bayonets. The French anthem – The Marseillaise – was played twice, once by an army brass band, the second time sung by an army choir. There was also a military plane flyover displaying the blue, red and white tricolor of the French national flag.
In his speech, Macron talked about soldiers coming from all over the world to “die for France” during the 1914-18 Great War. He even said at one point that the war was fought for “the vision of France” and its “universal values”.
This was fluent drivel, French-style. No wonder Russia’s Putin momentarily gave a look of boredom as Macron waxed lyrical.
This interesting commentary/opinion piece was posted on theduran.com Internet site on Monday — and I thank Roy Stephens for sending it our way. Another link to it is here.
The Elysee Palace protocol was implacable. Nobody in Paris would be allowed to steal the spotlight away from the host, President Emmanuel Macron, during the 100th anniversary of Armistice Day marking the end of World War I.
After all, Macron was investing all his political capital as he visited multiple World War I battlefields while warning against the rise of nationalism and a surge in right-wing populism across the West. He was careful to always place the emphasis on praising “patriotism.”
A battle of ideas now rages across Europe, epitomized by the clash between the globalist Macron and populism icon Matteo Salvini, the Italian interior minister. Salvini abhors the Brussels system. Macron is stepping up his defense of a “sovereign Europe.”
And much to the horror of the U.S. establishment, Macron proposes a real “European army” capable of autonomous self-defense side by side with a “real security dialogue with Russia.”
Yet all these “strategic autonomy” ideals collapse when you must share the stage, live, with the undisputed stars of the global show: President Donald Trump and President Vladimir Putin.
This commentary from Pepe showed up on the Asia Times website at 10:41 a.m. Hong Kong Time on their Tuesday morning, which was 9:41 p.m. EST on Monday evening in Washington. I thank Tolling Jennings for pointing it out — and another link to it is here.
Goldman Sachs famously avoided liability after the Libyan Investment Authority accused the bank of squandering more than $1.5 billion belonging to the country’s sovereign wealth fund after the bank plied employees of the fund with “hookers and five-star hotels” before losing all of their money in complex derivatives trades. But as the DOJ ramps up an investigation into the bank’s role in the sprawling 1MDB scandal (the federal government believes Goldman helped now-jailed former Malaysian Prime Minister Najib Razak siphon $4.5 billion from the fund), it’s looking like the bank (and possibly its ex-CEO Lloyd Blankfein, whose involvement in the scandal was recently revealed by Bloomberg) may not escape culpability this time.
Yesterday, Goldman shares cemented their largest two-day drop since 2010, crashing to a two-year low after Malaysian Finance Minister Lim Guan Eng demanded a “full refund” of the $600 million in fees that Goldman charged Malaysia for the three 1MDB bond offerings underwritten by the bank. Eng also demanded that Goldman repay the “interest-rate differential” that Malaysia paid, which was 100 basis points over the benchmark rate. Goldman has argued that it demanded such high fees because it took many of the unrated bonds on to its balance sheet, increasing its exposure, because Malaysia said it wanted the money “right away” for “development projects“. Of course, Goldman had sold the local currency bonds long before 1MDB defaulted in April 2016.
And on Tuesday, Malaysia turned up the heat when the country’s 93-year-old Prime Minister Mahathir Mohamad accused Goldman bankers during an interview with CNBC of “cheating” Malaysia (though he also said the country wanted to “see the results” of the DOJ’s investigation).
“There is evidence that Goldman Sachs has done things that are wrong,” Mahathir said.
“Obviously we have been cheated through the compliance by Goldman Sachs people,” he said, without specifying details.
The bank’s compliance controls “don’t work very well,” he added.
If it ain’t JPMorgan ripping the world’s face off, it’s “vampire squid” G.S. This news item appeared on the Zero Hedge website at 6:05 p.m. EST on Tuesday evening — and I thank Brad Robertson for sending it our way. Another link to it is here.
Is the return to a gold standard inevitable? Grant Williams, Senior Advisor at Vulpes Investment Management, breaks down the history of the gold standard and the impact it will have on the future of world currency.
This 41-minute video presentation by Grant was recorded at the Cambridge House Silver and Gold conference in San Francisco last month and, of course, he never once mentions the price management scheme in the precious metals, even though he knows full well that it’s going on. But Grant’s video presentations are always full of interesting, witty and catchy comments — and so well put together that everyone enjoys them, including me. But you’ll notice that the proverbial 800 lb. gorilla in the middle of the living room never gets mentioned. It’s headlined “Cry Wolf” — and was posted on the youtube.com Internet site on November 2 — and I thank Richard Saler for pointing it out. Another link to it is here.
The PHOTOS and the FUNNIES
This is another award-winning photo given out by the Natural History Museum in London this year. It’s from the ‘Animals in their Environment’ category — and this one is by South African photographer Isak Pretorious. It’s entitled “Cool Cat”.
‘I love creating photos with impact,’ says Isak, who is often on the lookout for Zambia’s most iconic animals. He was photographing a pride of lions when this lioness wandered off. Anticipating it was going for a drink, he positioned himself by the nearest waterhole. It then appeared through the long grass, framed by a wall of lush green.
Lions kill more than 95 per cent of their prey at night, and spend the majority of the day resting. Although they drink readily when water is available, they are also capable of consuming sufficient moisture from their prey and plants – making them perfectly adapted to their arid landscape. Yet despite this, lion numbers are decreasing significantly. Click to enlarge.
Despite the fact the dollar index took a big hit yesterday — and fell far more on Tuesday than it ‘rallied’ on Monday, JPMorgan didn’t allow three of the four precious metals to reflect that fact.
And as I pointed out earlier, in the face of the big dollar index decline, they were able to set new intraday lows in gold, silver and platinum as well. And as I’ve also pointed out on too many occasions to count, JPMorgan continues to hold the precious metals in their iron grip — and as Ted Butler says…”Until that changes, nothing changes.”
Here are the 6-month charts for all four precious metals, plus copper and WTIC. There was also a new intraday low in copper as well, but it also broke above its 50-day moving average intraday during the Tuesday trading session as well. WTIC is getting crushed — and as silver analyst Ted Butler pointed out in his weekly review on Saturday…”[I]t’s no coincidence that the positioning match up in the leading crude oil futures exchange, the NYMEX, involves the same managed money technical funds that dictate silver and gold pricing on the COMEX“. Oil, copper — and all four precious metals, plus others — have all caught Ted’s “silver disease“.
And it should also be noted that the new intraday low ticks in silver and platinum didn’t occur until long after the COMEX close, so that data doesn’t show up on their respective dojis on the charts below. But it will be reflected in today’s doji, unless JPMorgan sets another new low during the Wednesday trading session.
The ‘click to enlarge‘ feature only helps with the four precious metal graphs.
And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price wasn’t allowed to do much in Far East trading on their Wednesday. It’s currently down 50 cents an ounce. There was a tiny bit more ‘volatility’ with the silver price — and even the tiniest rally got capped and sold lower — and it’s now back at unchanged on the day. Platinum was up a few dollars by the open in the Far East, but was sold lower from there — and was back in the red by around 11 a.m. China Standard Time — and is down 5 dollars currently. The price pattern for palladium was virtually the same as it was for platinum — and it’s down 5 bucks as well as Zurich opens.
Net HFT gold volume is nothing special…coming up on 38,000 contracts — and there’s only 701 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is already pretty hefty at around 14,300 contracts — and there’s 2,038 contracts worth of roll-over/switch volume in this precious metal.
Not surprisingly, the dollar index began to ‘rally’ off its closing low tick of the day the moment that trading began at 6:00 p.m. EST in New York on Tuesday evening — and it has been chopping erratically higher since — and is up 14 basis points as of thirty minutes before the London open.
Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report. There have been new intraday or closing lows in most of the four precious metals nearly every day during the reporting week, so it’s a given that there will be improvements in the commercial net short position in all of them. But as to what those numbers might be, that’s Ted’s area of expertise — and if he has something to say about it in his mid-week column today, I may ‘borrow’ a few sentences for my Friday column.
And as I post today’s missive on the website at 4:02 a.m. EST, I see that the gold price is bit lower than it was at the London open an hour ago — and is down $1.30 an ounce. Silver is down 2 cents. Platinum is still down 5 dollars, but palladium is now down by 6.
Gross gold volume is around 49,500 contracts — and net of roll-over/switch volume out of December, net HFT gold volume is about 47,500 contracts. Net HFT silver volume is now up to 17,200 contracts — and there’s 2,176 contracts worth of roll-over/switch volume on top of that.
The dollar index continues to chop very unevenly higher — and is up 26 basis points as of 8:30 a.m. GMT in London…9:30 a.m. in Zurich — and 3:30 a.m. in New York.
I have no idea how long this current engineered price decline in the precious metals will last, but as of right now we’re back in very, very bullish territory from a COT perspective. But as bullish as it is, as long as JPMorgan is calling the price shots in the COMEX futures market, nothing will change.
I’m sure you can’t wait for all this to end, as I’m as sick of it as you are, dear reader.
See you here tomorrow.