16 November 2018 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price wasn’t allowed to do much on Thursday. After sinking a few dollars in early morning trading in the Far East, it crawled quietly higher from there — and was obviously capped around 9:30 a.m. in London. It was sold lower into the COMEX open — and the subsequent rally got capped at the $1,215 spot mark, the same price it was capped in London — and from that point onward, it was never allowed above that price.
The low and high ticks definitely aren’t worth looking up.
Gold was closed in New York on Thursday at $1,213.00 spot, up $2.50 on the day — and back above its 50-day moving average by a hair. Net volume was nothing special at a bit under 224,000 contracts — and there was a bit under 31,000 contracts worth of roll-over/switch volume on top of that. The roll-over/switch volume out of December and into future months in gold is starting to pick up noticeably — and will continue to grow as the November begins to wind down.
It was somewhat the same price pattern for silver, except the high in London came minutes after trading began over there at 8 a.m. GMT and, like gold, it was sold quietly lower into the COMEX open. It rallied in fits and starts from that juncture — and you can tell from the saw-tooth price pattern that every tiny rally was capped and sold lower. The high tick of the day came around 2:40 p.m. EST in the thinly-traded after-hours market.
The low and high ticks in this precious metal were recorded by the CME Group as $14.07 and $14.325 in the December contract.
Silver finished the Thursday session at $14.27 spot, up 14 cents on the day. Net volume was very decent at just under 66,500 contracts — and there was a hair over 14,000 contracts worth of roll-over/switch volume in this precious metal.
Platinum didn’t do much until around 2 p.m. CST on their Thursday afternoon. It rallied a bit from there until about thirty minutes after the Zurich open — and then was sold lower until 11 a.m. CET. From that point it chopped quietly sideways until the afternoon gold fix in London — and began to head higher from there. The price topped out/was capped around 2:40 p.m. New York — and was sold down a bit from there, before trading sideways until the trading day ended at 5:00 p.m. EST. Platinum finished the Thursday session at $840 spot, up 7 bucks from Wednesday’s close.
Palladium was sold quietly lower — and was down five bucks until 2 p.m. China Standard Time on their Thursday afternoon, but by shortly after the Zurich open, it was up 8 dollars. It chopped mostly sideways from that point, but was sold back to a bit below unchanged starting about twenty minutes before the COMEX open. It edged quietly higher until the afternoon gold fix in London was put to bed — and then away it went. The big rally was capped just before 12:30 p.m. in New York trading — and then sold down hard into the COMEX close. It didn’t do much of anything after that. Platinum was closed at $1,141 spot, up 29 dollars on the day. But at its high tick, it was up 50 bucks.
The dollar index closed very late on Wednesday afternoon in New York at the 96.99 mark — and began to edge quietly and a bit unsteadily lower, with the 96.77 low tick coming about twenty minutes after London opened on their Thursday morning. It began to ‘rally’ sharply from there — and the 97.39 high tick was set less than two hours later at around 10:15 a.m. GMT. It began to weaken unsteadily from there, but took a real header starting a minute or so before 2 p.m. in New York trading. That rather precipitous decline was halted in its tracks thirty minutes later — and it wandered higher into the close from there — and back above the 97.00 mark. The dollar index finished the Thursday session at 97.07 — and up 8 basis points from Wednesday’s close.
And here’s the 6-month U.S. dollar index chart — and the delta between its close…96.79…and the intraday chart above, was 28 basis points yesterday.
The gold shares rallied right out of the chute when trading began at 9:30 a.m. EST in New York on Thursday morning. That lasted for a bit over an hour — and by a few minutes after 11 a.m…they were almost back at unchanged. But they caught a bid at that juncture — and chopped very unevenly higher for the remainder of the day — and the HUI closed up 2.10 percent.
The trading pattern for the silver equities was very similar to that of the gold stocks, although their trading pattern was far more erratic…if that makes any sense. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 1.75 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 zero gold and 3 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. In silver, Advantage was the sole short/issuer — and Morgan Stanley picked up 2 of those contracts — and JPMorgan the other. All contracts, both issued and stopped, were from and 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, for the second day in a row, gold open interest in November remained unchanged at 6 contracts. Wednesday’s Daily Delivery Report showed that zero gold contracts were posted for delivery today…so the change in open interest and the deliveries match, obviously. Silver o.i. in November rose by 3 contracts, leaving 6 still around, minus the 3 mentioned in the previous paragraph. Wednesday’s Daily Delivery Report showed that zero silver contracts were posted for delivery today…so it’s obvious that three more silver contracts just got added to the November delivery month.
There were no reported changes in either GLD or SLV on Thursday.
There was a sales report from the U.S. Mint yesterday for the second day in a row. They sold, 2,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and another 450,000 silver eagles.
There was a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday. There was 2,189 troy ounces of gold received at Delaware — and that was all the ‘in’ activity there was. Nothing was shipped out — and I won’t bother linking this.
And, for the first time in a very long time, there was no physical in/out activity in silver. But there was a transfer of 155,657 troy ounces from the Registered category — and back into eligible. This occurred at Canada’s Scotiabank. I won’t bother linking this, either.
It was quite a bit busier over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday. They reported receiving 4,500 of them — and shipped only 580. All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
The Sutri Treasure, a rich grave group, was found in 1878 near the town of Sutri in the province of Viterbo in central Italy. Dating to the 6th-7th centuries A.D., the treasure was buried at a time of conflict between the Kingdom of the Lombards and the Eastern Roman Empire. Given the large number of prestigious items in the treasure, it probably belonged to a noble lady of high rank from the Lombardic court. Nine years after its discovery, the hoard was purchased by the British Museum, where it resides to this day. Click to enlarge.
I don’t have all that much in the way of stories for you today.
Ford Motor Co. could be close to getting junked again.
That’s what the bond market is saying. The company’s debt is trading like it’s speculative grade, as investors worry about how higher steel tariffs and slowing sales will weigh on its profits. Ford is rated one step above junk by Moody’s Investors Service and two steps by S&P Global Ratings.
Any downgrade could be painful for bond investors, and for the company. The automaker has more than $150 billion of short- and long-term debt globally, and is one of the 15 biggest corporate bond issuers in the U.S. outside the financial sector. Hedge funds turned in their worst monthly performance in nearly three years in the first part of 2005, when Ford was cut to junk along with General Motors Co.
Bob Shanks, Ford’s chief financial officer, said on an earnings call last month that the company is committed to maintaining its investment-grade ratings, and doesn’t intend to lose that status again. The company is “moving with a sense of urgency and taking proactive steps to redesign and restructure the business,” and over time “the market will recognize our progress,” spokesman Brad Carroll said.
But debt investors are skeptical. The extra yield that money managers get for holding Ford’s 4.346 percent bonds due 2026 rather than similar Treasuries jumped to levels typical of high-yield companies. The cost of protecting Ford’s debt against default using credit derivatives rose in October to the highest levels since 2012 before settling down again. Moody’s downgraded the company in August to one level above junk, and said further cuts are possible in the medium term.
This Bloomberg story appeared on their website back on November 9 — and I thank Brad Robertson for sharing it with us. Another link to it is here.
“What I’ve learned at the Federal Reserve is a new language which is called “Fed speak.” You soon learn to mumble with great incoherence.” – Former Federal Reserve chairman Alan Greenspan
Alan Greenspan is alive and well. Aged 92, he was on TV yesterday telling viewers that “unless they get control of the debt,” there will be hell to pay.
Greenspan is one of the most interesting characters in modern economics. And, unlike his successors, Bernanke and Yellen, he is not just an academic simpleton. He once had a very clear idea of how economies work. He saw the critical role of gold, for example, and warned that removing it from the U.S. monetary system would lead to trouble.
Here he is in 1966:
“This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
We invited him to our office in Baltimore in late 2016. We wanted to see if he still had his head screwed on straight. But it was hard to know. Wiley and elusive, Mr. Greenspan resisted direct questions.
This very worthwhile commentary from Bill was posted on the bonnerandpartners.com Internet site early on Thursday morning EST — and another link to it is here.
In response to our recent article about investing offshore, many readers asked for more information. They expressed many concerns, particularly about safety.
Jamie Virjhof, Relationship Manager of Weber Hartmann Virjhof & Partners Ltd. recently interviewed me and addressed those concerns — and I have permission to share it with our readers.
Dennis Miller’s recent article, “Should Investors Have Money Offshore?” raised the ever-important question whether you can really trust the government. Dennis elaborated how the government does not always have the best interest of their people in mind. This was one of the reasons why he decided to bring some of his wealth offshore.
This interesting commentary by Dennis put in an appearance on his Internet site on Thursday morning — and another link to it is here.
Seven high profile resignations have followed on the heels of Theresa May’s announcement that her cabinet has settled on a Brexit deal, with Labour claiming that the Conservative government is at risk of completely dissolving.
Shailesh Vara, the Minister of State at the Northern Ireland Office was the first top official to resign after the prime minister announced that her cabinet had reached a draft E.U. withdrawal agreement.
An hour after his announcement, Brexit Secretary Dominic Raab – the man charged with negotiating and finalizing the deal – said he was stepping down, stating that the Brexit deal in its current form suffers from deep flaws. Esther McVey, Secretary of State for Work and Pensions, submitted her letter of resignation shortly afterwards. More resignations have followed.
Labour’s shadow Cabinet Office minister, Jon Trickett, predicted that this is the beginning of the end for May’s government.
This news item put in an appearance on the rt.com Internet site at 11:29 a.m. Moscow time on their Thursday morning, which was 3:29 a.m. in Washington…EDT plus 8 hours. It was updated a bit more than seven hours later. I thank Roy Stephens for sending it our way — and another link to it is here.
As if there wasn’t enough non-stop chaos out of the U.K. as the fate of Brexit and Theresa May is being decided on twitter, between flashing red Bloomberg headlines, and media speculation and rumors, moments ago Italy decided to remind everyone just how unstable its own political situation is, when Claudio Borghi, chief economic advisor to Italy’s de facto leader Salvini, said that the E.U. has used “made-up numbers” in judging Italy’s budget (the E.U. has effectively accused Italy of doing the same), and then asked if the E.U. would have the “courage” to sanction Italy.
As a reminder, the last time a populist European played chicken with the E.U., the ECB promptly caused Greek banks to be shuttered indefinitely and Varoufakis’ political career was promptly over. Maybe this time it will be different.
But what really spooked markets, and caught traders’ attention, was the following headline: BORGHI, CHIEF ECONOMIC ADVISOR TO SALVINI: IF THE LEAGUE GETS A MAJORITY IN THE NEXT ELECTIONS ITALY WILL EXIT THE EUROZONE.
In knee-jerk reaction, yields on 10Y BTPs spiked to session highs, hitting 3.54% — and sending “lo spread” between German and Italian bonds to 315bps, creeping ever closer to the 400bps red line beyond which the Italian bank runs will likely begin.
Amid this chaos out of Italy, Europe’s Stoxx 600 Index has fallen 1%, hitting its lowest intraday level since Oct. 31, dragged not only by the sell-off in U.K. stocks due to Brexit risks, but fresh concerns about “Italeave” as Europe suddenly finds itself defending its integrity on two fronts.
This story was posted on the Zero Hedge website at 9:25 a.m. EST on Thursday morning — and it comes to us courtesy of Richard Saler. Another link to it is here.
Nearly 18 months after Hayman Capital’s Kyle Bass declared that he intended to stand by his massive offshore yuan short even as his fund moved deep into the red (unlike all of those other “tourist China bears” who had jumped ship at the first stirrings of dollar weakness), the Dallas hedge fund manager revealed that he had finally broken even after his fund sunk 20% last year, according to Reuters.
Which means now is the perfect time to double down…
Bass, who has long argued that the yuan will slide 30% against the dollar as the country’s credit bubble bursts, told his audience that he has added to his currency short as the currency hovers just above the big round 7-to-the-dollar level. He also praised President Trump’s trade policies, which he said would be “100% healthy for the next 10 years“, though he clarified that he was “not a Trump voter” and that he would jump at the opportunity to throw his support behind Michael Bloomberg.
As corporate defaults soar, Bass believes that China is headed for a “reset” that he expects to arrive during “the next couple of years.”
This item appeared on the Zero Hedge website at 11:25 p.m. EST on Wednesday night — and I thank Brad Robertson for pointing it out. Another link to it is here.
Paulson & Co, led by longtime gold bull John Paulson, kept its stake in gold investments during the third quarter of 2018 while other heavyweights including Soros Fund Management LLC, Jana Partners LLC and Caxton Corp remained unexposed to the metal.
New York-based Paulson & Co maintained its stake as spot gold prices declined more than 5 percent, with investors continuing to favor the U.S. dollar and riskier assets against the backdrop of a global trade war.
Paulson left its interest in SPDR Gold Trust unchanged at 4.3 million shares for the third quarter, though the value decreased to $487.13 million from $512.57 million in the prior quarter, a U.S. Securities and Exchange Commission 13F-HR filing showed on Wednesday.
This Reuters story, filed from New York, put in an appearance on their Internet site at 8:43 a.m. EST on Wednesday — and I lifted it from the Sharps Pixley website. Another link to it is here.
The Bank of England claims to be one of the largest physical gold custodians in the world, holding gold bars in vault storage on behalf of more than 70 central banks and a number of commercial (bullion) banks.
As a long-standing and well-known gold custodian, it should therefore be a simple matter operationally and logistically for any central bank customer from around the world to withdraw gold bars from the Bank of England and to have those gold bars sent overseas. These types of shipments have been happening at the Bank of England for hundreds of years.
Such an event would normally not generate any media interest nor even be known about in the public domain such is the secrecy and opacity of central bank gold transactions. For these reasons, the current case involving the Bank of England’s refusal to deliver Venezuela’s gold stored in London, and the way its been publicized, raises some questions and deserves comment.
This longish article doesn’t get to the point until the last two paragraphs under the “Conclusion” headline. So if you’re pressed for time, what he says there is all you really need to know. I found this commentary by Ronan on the gata.org Internet site yesterday — and another link to it is here.
An exceptionally large pink diamond – nearly 19 carats – has set a price-per-carat record after being sold for $50 million to U.S. luxury jewelry brand Harry Winston at the Christie’s auction in Geneva.
“The Pink Legacy brought this extremely high price of $50 million, so $2.6 million per carat which is a world record price for a pink diamond,” Francois Curiel, Christie’s chairman for Europe, told journalists.
“This stone for me is the Leonardo Da Vinci of diamonds, I don’t think there is anything better.”
The rare stone is categorized as a ‘Fancy Vivid’ diamond, the highest grade of color intensity. Only one in one hundred thousand diamonds receive this grading. The size makes it an even more exceptional find, as Fancy Vivid Pink diamonds larger than 10 carats are “virtually unheard of,” according to Christie’s.
This interesting and photo-filled news item showed up on the rt.com Internet site at 9:40 a.m. Moscow time on their Wednesday morning, which was 1:40 a.m. in New York…EST plus 8 hours. I thank Swedish reader Patrik Ekdahl for pointing it out — and 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 Austrian photographer Marc Graf entitled “Bear Territory”.
The brown bears of Notranjska Regional Park in Slovenia are cautious, and so avoided the area where Marc had set up his camera trap, aware something had changed in their environment. However, after 14 long months the box protecting the camera lost all its scent, and the bears finally acclimatised. One morning a young bear strolled up the hill at sunrise ready for its close-up.
Brown bears were once found throughout much of Europe, but today their range is greatly diminished and fragmented. While the trend for Slovenia’s brown bear populations shows a steady growth, just a short distance away in Marc’s Austrian homeland there are very few bears left – their biggest threat is conflict with humans. Click to enlarge.
With the full chart of the Thursday session to look at, it’s obvious that JPMorgan wasn’t going to allow the gold price to rally much above the $1,215 spot mark — and it was closed a dollar or so above its 50-day moving average. It appeared that ‘someone’ may have been protecting a short position. Silver didn’t break above its 50-day moving average yesterday by a long shot, but the quiet and choppy rally appeared to indicate that someone was placing new long positions, as the Managed Money traders would have been mostly sitting on their hands yesterday…unless they’ve decided to change their trading pattern…which is highly unlikely.
And after breaking through its 50-day moving average to the downside intraday on Wednesday, platinum rallied a bit above that mark yesterday. Palladium, which has really wanted to scream higher for many months now because of a genuine supply/demand crunch, was obviously hit hard by a not-for-profit seller before the COMEX close. There was nothing free-market about that at all — and we’ve seen it a lot in palladium lately.
I’ve also posted the 6-month natural gas chart once again, so you can take a gander at what was done to it yesterday. It didn’t look very free-market to me.
Here are the 6-month charts for all four precious metals, plus copper and WTIC — and yesterday’s precious metal price action should be noted. The ‘click to enlarge‘ feature only helps with the four precious metal charts.
And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price crept very quietly higher in Far East trading on their Friday. It also appears that Kitco lost its data feed for several hours on all four precious metals — and they just came back on line about thirty minutes before the London open. I was suspicious of the numbers at first, so I cross-checked them again the numbers at goldseek.com, which uses a different data feed — and they seem OK now.
At the moment, gold is higher by $1.00 an ounce, after being up $2.30 less than thirty minutes ago — and silver didn’t do much in Far East trading, either — and is back at unchanged, after being up 3 cents about thirty minutes ago as well. Ditto for platinum and palladium, with the former also back at unchanged — and the latter now down by a dollar.
Net HFT gold volume is pretty quiet at just over 31,000 contracts — and there’s 2,938 contracts worth of roll-over/switch volume out of December and into future months. On the other hand, net HFT silver volume is already a bit over 9,200 contracts — and there’s 1,694 contracts worth of roll-over/switch volume in that precious metal.
The dollar index has been chopping quietly, but very unevenly lower since trading began at 6:00 p.m. in New York on Thursday evening — and is currently down 22 basis points as of 7:30 a.m. GMT in London.
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. As I’ve already stated, I’m expecting fairly decent improvements in the commercial net short positions in both silver and gold in today’s report.
I said in Thursday’s column that I would ‘borrow’ a few sentences from Ted’s mid-week column about what he expects this report to show — and here they are…”[T]otal open interest in both gold and silver increased dramatically over the reporting week; gold by nearly 45,000 contracts and silver by nearly 11,000 contracts. Unless the increases in total open interest were due to some type of uneconomic spread trading, I would guess we would see net managed money selling of such amounts in Friday’s COT report.”
Of course Ted will be ultra sensitive to whatever JPMorgan may have been up to during the reporting week…especially considering the surprise announcement from the DoJ regarding the conviction of that ex-JPMorgan precious metal trader. I’m hoping/praying for a big drop in their short position in both silver and gold, as is he.
And as I post today’s column on the website at 4:02 a.m. EST, I see that all four precious metals jumped higher once London and Zurich opened, but it wasn’t long after that their respective prices were sold lower. At the moment, gold is now up $2.20 an ounce — and silver is up 2 cents. Platinum, which had been up 4 dollars, is now back at unchanged — and palladium, which was up 13 bucks, is now up only 7…but the day is still young.
Gross gold volume has jumped up to around 54,500 contracts — and net of roll-over/switch volume out of December, net HFT gold volume is about 46,500 contracts. Net HFT silver volume is now up around 12,400 contracts — and there’s 1,849 contracts worth of roll-over/switch volume in that precious metal. These rallies are obviously not going unopposed.
The dollar index continues to head lower — and is currently down 26 basis points as of 8:30 a.m. in London.
That’s all I have for today. I hope you have a great weekend — and I’ll see you here tomorrow.