21 November 2018 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price wandered around a few dollars either side of unchanged until a few minutes after 10 a.m. in London…which may or may not have been the time of an early morning gold fix over there. It began to head a bit higher from that juncture, but was obviously capped and turned lower starting a minute or so after 8:30 a.m in New York. It was sold down until around 10:15 a.m. EST — and its rally from that point wasn’t allowed to last long. The low tick of the day, such as it was, came a few minutes after the 1:30 p.m. EST COMEX close. The gold price didn’t do much of anything after that.
Once again, the high and low ticks aren’t worth the trouble of looking up.
Gold was closed in New York on Tuesday at $1,221.10 spot, down $2.80 on the day. Net volume was nothing special at a hair under 202,000 contracts — and there was 52,000 contracts worth of roll-over/switch volume out of December and into future months.
The silver price was sold a nickel or so lower by around 10 a.m. China Standard Time on their Tuesday morning — and then didn’t do much of anything until shortly after 1 p.m. over there. It began to chop erratically higher from that point — and its London low came at the same time as gold’s…a few minutes after 10 a.m. GMT. It headed a bit higher from there — and back above unchanged by a few pennies, but ran into ‘something’ a few minutes after the noon silver fix. It jumped up a bit going into the COMEX open but, like gold, was capped and sold sharply lower starting a few minutes after 8:30 a.m. EST. The low tick of the day appeared to come shortly after 10 a.m. in New York at, or shortly after, the afternoon gold fix in London — and from there its price path was the same as gold’s. That down/up spike just before the London close only affected the spot month — and not December.
The high and low ticks in this precious metal were reported by the CME Group as $14.475 and $14.205 in the December contract.
Silver was closed yesterday at $14.295 spot, down 11 cents from Monday. Net volume was on the heavier side at a bit over 64,000 contracts — and roll-over/switch volume was very heavy at just over 39,000 contracts on top of that.
Platinum was up a couple of bucks going into the Zurich open, but came under selling pressure shortly after. There was a bit of a reprieve in mid-morning trading over there, but shortly after 1 p.m. CET, the price pressure resumed and, like silver and gold before it, was sold lower until shortly after 10 a.m. in New York. It edged higher from there, but then was sold down once more into the COMEX close — and tacked on a couple of bucks in after-hours trading. Platinum was closed at $840 spot, down 11 dollars from Monday’s close.
The palladium price didn’t do much of anything until around 10:30 a.m. in Zurich — and at that juncture the selling pressure began in earnest. It chopped unsteadily lower, with the low price tick of the day coming at the 1:30 p.m. EST COMEX close in New York. It edged a bit higher into the 5:00 p.m. close from there. Palladium finished the Tuesday session at $1,127 spot, down 20 bucks on the day. It has been my opinion for a while that someone is trying to break palladium lower in the COMEX futures market, despite the obvious supply/demand fundamentals.
The dollar index closed very late on Monday afternoon in New York at 96.17 — and began to chop unsteadily sideways as soon as trading began at 6:00 p.m. EST in New York a few minutes later. That lasted until a few minute before 2 p.m. China Standard Time on their Tuesday afternoon, which may or may not have coincided with the afternoon gold fix in Shanghai. The 96.04 low tick was set around 8:15 a.m. in London — and it appeared to me that the usual ‘gentle hands’ showed up at that juncture. The index rallied sharply until 9 a.m. over there, before chopping quietly sideways until around 12:20 p.m. GMT — and then away it went to the upside. The 96.89 high tick was set a few minutes after 2 p.m in New York — and it slid a bit into the close from there. The dollar index finished the Tuesday session at 96.82…up 65 basis points from Monday’s close.
Considering the ramp job on the dollar index, there wasn’t much correlation between what it was doing — and what was happening with silver and gold prices. If left to their own devices it’s obvious that both metals would have closed in positive territory yesterday…as would have platinum and palladium, most likely.
And here’s the 6-month U.S. dollar index — and the delta between its close…96.72…and the intraday chart above, was 10 basis points yesterday.
The gold shares opened unchanged — and quickly fell to their respective low ticks by around 10:25 a.m. in New York trading. A wave of buyers showed up — and by shortly after 11 a.m. EST, had them back to almost the unchanged mark. They drifted lower from that point until a few minutes after 2 p.m. EST…when the dollar index hit its peak…and rallied a bit into the close from there. The HUI finished down 0.76 percent.
The silver stocks traded in a very similar manner as the gold shares, but were down 4 percent by 10:20 a.m. in New York trading. And because of the big sell-off at the open, they never recovered as much in the subsequent rallies that followed, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.21 percent. Click to enlarge.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index. Click to enlarge as well.
Despite the big swoon in the general equity markets yesterday, there was obviously some serious bottom fishing going on in the gold and silver stocks yesterday.
I wasn’t going to post the CME’s Daily Delivery Report until First Day Notice next week because of no activity. But looking at the data at 10 p.m. and midnight EST last night, I changed my mind. There were 3 gold and 51 silver contracts posted for delivery within the COMEX-approved depositories on Thursday. In gold, ADM issued and stopped all 3 contracts for their client account — and in silver, JPMorgan issued 50 contracts — and Advantage issued the remaining contract. JPMorgan stopped 50 contracts — and Morgan Stanley picked up the last one. With the exception of the lone contract stopped by Morgan Stanley, all silver contracts 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 Tuesday trading session showed that gold open interest in November rose by 7 contracts, leaving 12 still around, minus the 3 mentioned just above. Silver o.i. in November rose by a very chunky 74 contracts, leaving 78 still around, minus the 51 mentioned in the previous paragraph. I don’t have today’s deliveries because I didn’t record Monday’s data from the Daily Delivery Report, so I was being somewhat presumptuous that the November delivery month was more or less done, when it actually wasn’t.
There were no reported changes in GLD yesterday, but 563,469 troy ounces of silver were added to SLV.
There was no sales report from the U.S. Mint yesterday.
There was a tiny bit of gold movement over at the COMEX-approved gold depositories on the U.S. east coast on Monday. Nothing was reported received — and only 9,858 troy ounces were shipped out. There was 3,094 troy ounces shipped out of Brink’s, Inc. — and 6,563 troy ounces departed HSBC USA. The link to this activity, such as it was, is here.
But after a week or so of less frantic activity in silver, it was another blow-out day in that precious metal, as one truckload…599,758 troy ounces…was received — and 2,395,979 troy ounces was shipped out. All the ‘in’ activity was at CNT. In the ‘out’ category, there was 1,251,108 troy ounces, two truckloads, shipped out of CNT as well — plus two truckloads…1,111,770 troy ounces…that departed Canada’s Scotiabank. There were much smaller amounts out of the International Depository Services of Delaware and Brink’s, Inc. — and if you wish to check that out, the link to all this silver action is here.
Also in silver, I should point out that there were some paper transfers as well. There was 75,284 troy ounces transferred from the Eligible category — and into Registered over at Brink’s, Inc. But a very chunky 823,170 troy ounces was transferred from the Registered category — and back into Eligible. That occurred at CNT.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday. They reported receiving 2,251 of them — and shipped out only 121. All of this occurred at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.
Since the 20th of November fell on a weekday, the good folks over at The Central Bank of the Russian Federation updated their website with October’s data — and they reported that they added 900,000 troy ounces/28.0 metric tonnes of gold to their reserves that month. That brings their total reserves up to the 66.4 million troy ounce/2,065 tonne mark.
Over the last four month period, they have been adding, on average, a million troy ounces per month to their reserves. Here’s Nick Laird’s most excellent chart showing the update for October. This is serious accumulation — and they’re most likely using the money from the sale of U.S. Treasuries to buy it. Click to enlarge.
I have very few stories for you today.
Mr. Market must have gotten up on the wrong side of the bed yesterday.
The Dow fell 395 points to 25,017. The S&P 500 dropped 1.7 percent to 2,690 as the technology sector pulled back 3.8 percent. The tech-heavy NASDAQ lagged, falling 3 percent to close at 7,028 as Amazon dropped 5.1 percent.
The popular FAANG trade, made up of Facebook, Amazon, Apple, Netflix and Alphabet, is now in a bear market, with each member down more than 20 percent from their one-year highs.
“It’s going to require a recovery in tech to make things happen,” said Greg Luken, the CEO of Luken Investment Analytics. “I think where we are in tech, we’re going to see tough sledding towards the end of the year. I think stocks that are down will see further selling pressure.”
We have no way of knowing what will happen next. Fortunately, we don’t need to know. And we don’t need to duck when Mr. Market starts throwing the silverware.
We’re not even in the room!
One wonders what Bill will say about the markets in his missive today! This commentary put in an appearance on the bonnerandpartners.com Internet site early on Tuesday morning EST — and another link to it is here.
So, what, then, might we expect if a given economy had outlived its usefulness? What if its “owners” – the government and large corporations who actually control the economy – had milked the economy to such a degree that it had passed the tipping point of repair and it was now more cost-effective to do away with it?
Well, the same three considerations would apply, wouldn’t they? First, it would be counter-productive (from their point of view) to have it collapse piecemeal. It would be better to engineer a crash and get it over with, then move on.
Second, it would also be important to control the manner of collapse. An uncontrolled collapse might be costly to the owners. Consequently, the major banks and large corporations would arrange for the government to provide them with bail-outs, bail-ins and other gifts that, instead of them losing money from the crash, they’d actually profit from it. Likewise, those key people in the government that would continue to be needed after the crash could count on the major banks and corporations to kick back a share of the money so that they, too, benefitted more from the crash than from the paltry six-figure salaries that their official jobs provide.
And, finally, if a date for the collapse could be planned in advance, the owners would have the opportunity to sell off those assets that would be casualties in an economic crash.
This very interesting commentary from Jeff showed up on the internationalman.com Internet site on Monday — and I overlooked it for Tuesday’s column, so I’m making amends now. Another link to it is here.
The U.S. announced new sanctions against what a “network of petroleum shipments” to Syria, including Russian and Iranian companies and individuals, in what Washington said was an attempt to disrupt shipments to Syrian-owned ports. Six individuals and three institutions were sanctioned in what the Treasury said was an illicit plot involving officials in Iran working with Russian companies to send millions of barrels of oil to the Assad government in exchange for funds that Tehran then used to fund Islamic militant groups Hamas and Hezbollah.
Those sanctioned include two officials working with the Central Bank of Iran, a Syrian national and his Russia-based company Global Vision Group, and Russia’s state-owned Promsyrioimport, a subsidiary of the Kremlin’s energy ministry, as well as its first deputy director. The administration is also sanctioning an Iranian entity that purports to be a medical and pharmaceutical company that U.S. officials say has been repeatedly used to facilitate illicit money transfers in the scheme.
Officials described the action as the latest effort to ratchet up pressure on Iran for its “destructive and destabilizing behavior” beyond the reimposition of sanctions lifted under the Obama administration as part of the Iranian nuclear deal. Trump announced his decision to withdraw from the deal in May and reinstated sanctions on Tehran earlier this month.
The latest sanctions build on an ongoing campaign against Iran and its allies, which target the country’s banking, shipping, and oil sectors. Banks that provided services to Hamas and Hezbollah were slapped with sanctions, as were shipping companies that moved Iranian troops and supplies around the Middle East.
As reported previously, facing the threat of U.S. penalties, the SWIFT financial messaging system cut the Iranian central bank off from its network a week later, making it even more difficult for the country to settle its import and export bills.
This news item was posted on the Zero Hedge website at 3:25 p.m. on Tuesday afternoon EDT — and another link to it is here.
Apart from barter trade, Tehran and Baghdad are mulling the idea of using the Iraqi dinar for mutual transactions to reduce reliance on the U.S. dollar amid banking problems Iran is facing due to U.S. sanctions.
“Considering the problems that have emerged in dollar-based banking transactions, a joint proposal between Iran and Iraq is using Iraq’s dinar in trade,” Iranian ambassador to Baghdad Iraj Masjedi said, as quoted by Iran’s Fars News Agency.
The announcement comes two weeks after Washington brought into action the second round of anti-Iranian sanctions that target the country’s oil, shipping, and financial sectors. The previous batch of penalties, which came into effect in August, hit cars, carpets, metals trading, as well as access to the U.S. dollar.
According to Masjedi, the current trade turnover between Iran and Iraq totals $12 billion and the countries plan to increase the figure up to $20 billion. The official said that Baghdad has recently been under strong pressure from the White House over its business dealings with Iran, its top trade partner.
This story appeared on the rt.com Internet site at 2:06 p.m. Moscow time on their Tuesday afternoon, which was 6:06 a.m. in Washington — EST plus 8 hours — and I thank Larry Galearis for pointing it out. Another link to it is here.
Moscow wants to boost economic ties with Hanoi, according to the Russian Prime Minister Dmitry Medvedev. He said the two countries have agreed to nearly triple trade turnover by the end of next year.
Medvedev is currently on an official visit to Vietnam where he has already met with the Vietnamese Prime Minister Nguyen Xuan Phuc.
“We have agreed to cooperate more closely and effectively implement a free trade agreement Vietnam has signed with the (Russia-led) Eurasian Economic Union,” Phuc told reporters Monday after meeting with Medvedev.
The volume of Russia-Vietnam trade amounted to $3.37 billion in January-August 2018. Last year, trade turnover increased by 36.2 percent to $5.23 billion. Russia’s exports to Vietnam include machinery and equipment, grain crops, food products, mineral raw materials, metals, etc. Imports included electrical engineering and components, mobile phones, textiles, food, and agricultural raw materials.
Vietnam was the fourth largest buyer of Russian wheat after Egypt, Turkey and Bangladesh in the previous marketing season. The Southeast Asian country has imported 1.2 million tonnes of Russian wheat since the start of the current 2018/19 marketing season on July 1.
This news item, showed up on the rt.com Internet site at 12:22 p.m. Moscow time on their Monday afternoon, which was 4:22 a.m. EST in Washington — EDT plus 8 hours. It’s the second offering in a row from Larry Galearis — and another link to it is here.
London’s gold market owned up to the biggest secret in bullion: it’s not as big as some thought and, for last week at least, smaller than New York’s.
An average of $36.9 billion of gold and $5.2 billion of silver changed hands each day in the city’s over-the-counter market, including metal for delivery in Zurich, according to figures released for the first time on Tuesday by the London Bullion Market Association. Previous World Gold Council estimates, based on 2016 data, were between three and six times higher.
While the data was only for a single week, it shows the Comex futures market in New York is a slightly bigger venue for gold than London, LBMA Chief Executive Officer Ruth Crowell said in an interview with Bloomberg Television. That upends conventional wisdom, but a longer trading period may tell a different story as volatility in both centers is smoothed out.
“This is just a week’s snapshot,” said Crowell, who said the LBMA will start reporting daily once it has three months of data. “In 12 months time, it will be very interesting to look at the figures again.”
Closer, but still no cigar, dear reader. This Bloomberg news item put in an appearance on their Internet site at 12:44 a.m. Pacific Standard Time on Tuesday morning…3:44 a.m. EST — and I thank George Whyte for pointing it out. Another link to it is here. Swedish reader Patrik Ekdahl sent me another story on this from the spglobal.com Internet site — and it’s headlined “London Bullion Market Association new member trade reporting system goes live; to increase transparency“.
Russia produced 194.23 tonnes of gold in the first eight months of 2018, up from 193.58 tonnes in the same period last year, the finance ministry said on Monday.
Production for the period included 162.28 tonnes of mined gold compared with 158.13 tonnes a year ago, the ministry said.
Silver production totalled 701.26 tonnes in January-August, up from 688.89 tonnes in the same period of 2017.
I had a tiny Reuters story from last Friday about this in yesterday’s column — and it was headlined “Russian January-July gold output flat at 157.19 tonnes“. Then on Monday, three days later, the above 3-paragraph Reuters story appeared, but it’s for the time period January through August. Like the previous story from Reuters on this subject in yesterday’s column, I borrowed it from the Sharps Pixley website as well — and another link to the hard copy is here.
Australian bullion sales slowed in October for the first time in five months for gold coins and bars and for the first time in four months for silver coins and bars, according Perth Mint figures published Nov. 1, 2018.
The most recent month-over-month declines lacked a lot of surprise. September was a standout month for the Mint with its silver sales the highest since March 2016 and its gold sales the strongest since January 2017.
Perth Mint bullion sales in October happened against a backdrop of rising precious metals with LBMA prices for the month posting gains of 2.3% for gold and 0.2% for silver.
Sales of Perth Mint gold coins and gold bars moved up by 36,840 ounces last month, marking declines of 41.1% from September.
This precious metals-related news story appeared on the coinnews.net website on Monday sometime — and it’s another item I found on the Sharps Pixley website. Another link to it is here.
The Justice Department’s investigation of manipulation in the precious-metals markets at JPMorgan Chase & Co. spurred prosecutors to ask a judge to delay a civil lawsuit focusing on similar misconduct.
Former trader John Edmonds pleaded guilty last month to federal charges that he placed hundreds of orders in the futures market he never intended to execute, in a six-year spoofing scheme. On Monday, the Justice Department asked the judge overseeing an antitrust lawsuit against JPMorgan to delay the case for six months to “protect the integrity” of its ongoing criminal probe.
JPMorgan didn’t immediately respond to an email seeking comment.
The request signals that the government is aggressively moving ahead with its inquiry. The charges are part of a broad U.S. crackdown on techniques such as spoofing, a trading practice designed to create fake demand that pushes prices up or down to generate profits. Long considered disreputable but rarely dangerous, spoofing has emerged in an era of computerized trading as a deeper threat to markets.
In his plea to conspiracy and commodities fraud in federal court in Connecticut, Edmonds admitted that he and other traders sought to manipulate futures markets for gold, silver, platinum and palladium on the NYMEX and Comex exchanges, prosecutors said.
This very worthwhile Bloomberg story was posted on their Internet site at 3:41 p.m. Pacific Standard Time on Tuesday afternoon — and I found it on the Sharps Pixley website just before I hit the ‘publish’ button on today’s column. 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 ’10 years old and younger’ photographer category — and this one, entitled “Displaced Displayer” — and it was taken by Fred Začek from Estonia.
Fred started taking photos at the age of two and has been awarded in many Estonian nature photography competitions as well as Wildlife Photographer of the Year.
Fred had never seen a wild capercaillie, so when his father discovered a male bird in a reserve close to their home he begged to see it. As they approached, it leapt onto a fallen tree, fanned out its tail, thrust its head into the air, then let out an extraordinary noise that, as Fred recalls, ‘sounded like a gun being loaded and then fired’.
Capercaillies perform an aggressive mating display to attract females but also to defend territories from other males. Usually groups of males gather to display against each other, known as lekking, but this one may have wandered away in search of females elsewhere. It had evidently redirected its competitive display towards Fred and his father. Click to enlarge.
Despite the dollar index ‘rally’ yesterday, it was certainly obvious that gold and silver prices would have closed higher on Tuesday…if allowed — and it’s equally obvious that they weren’t.
We’re still in ‘care and maintenance’ mode — and waiting for whatever. I don’t know when, but how high we go — and how fast we get there when the inevitable rally is allowed to commence, is still entirely up to JPMorgan…as it’s their world. However, Ted’s comment on last Friday’s COT Report was…”“beyond bullish” is inadequate as an accurate description” — and not much has changed since the close of COMEX trading yesterday.
WTIC got it in the neck again on Tuesday — and I would expect a lot of the Managed Money longs racked up enormous losses on this recent and very brutal price decline. It’s also a given that they will lose just as much money, if not more, when they have to cover the short positions that they’ve been putting on for the last week or more. I pointed this out yesterday, but it has become even more extreme since then, because it was the very act of them going short that drove the price lower.
Here are the 6-month charts for the Big 6 commodities once again. JPMorgan now has silver back a somewhat safe distance below its 50-day moving average — and they’re still trying to break palladium’s rally. The WTIC graph is just butt-ass ugly, but I can guarantee you that it won’t stay that for for long. 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 see that with the dollar index creeping lower, all four precious metals are a bit higher as the London and Zurich opens loom. The gold price didn’t do much until around 12:40 p.m. China Standard Time on their Wednesday afternoon. It has been creeping higher since — and is currently up $1.50 an ounce. It was almost the same price path for silver, except nothing happened to its price until at, or just before, the afternoon gold fix in Shanghai — and it’s now up 7 cents. Platinum followed a similar price path to gold — and it’s up 3 dollars. The palladium price followed the gold price pattern for the most part — and it’s up 8 bucks as Zurich opens.
Net HFT gold volume is pretty light…just under 30,000 contracts — and there’s 2,684 contracts worth of roll-over/switch volume out of December and into future months on top of that. Net HFT silver volume is also very light at just about 7,700 contracts — and there’s 1,004 contracts worth of roll-over/switch volume in that precious metal.
The dollar index began to slide quietly the moment that trading began at 6:00 p.m. EST in New York on Tuesday evening. That sell-off became far more pronounced starting about 12:40 a.m. CST — and it’s currently down 17 basis points as of 7:30 a.m. in London.
Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report. Looking at the above charts, I would expect some deterioration in gold, as it broke above — and then closed above its 50-day moving average during the reporting week. But volume levels have been exceedingly light, so I’m not going to put a stake in the ground on that opinion. Silver barely got a sniff of its 50-day moving average, so I’m not expecting much, if any, deterioration.
But Ted is the real authority on all this — and it’s a given that he’ll have something to say about it in his mid-week commentary for his paying subscribers this afternoon.
And as I post today’s column on the website at 4:04 a.m. EST, I note that the gold price continues to crawl quietly higher — and is up $2.80 the ounce as the first hour of London trading draws to a close. Silver is up 11 cents — and platinum and palladium are up 4 and 10 dollars respectively.
Gross gold volume is now up to around 47,000 contracts — and minus roll-over/switch volume, net HFT gold volume is about 40,500 contracts. Net HFT silver volume has shot up to a bit over 11,000 contracts — and there’s 1,254 contracts worth of roll-over/switch volume in that precious metal.
The dollar index hasn’t done much in the last hour, but has been bounced off its current 96.62 low tick a few times ever since it was set shortly before 3 p.m. China Standard Time on their Wednesday afternoon. And as of 8:30 a.m. GMT in London, it’s a bit lower…down 21 basis points.
That’s all I have for today — and I’ll see you here tomorrow.