22 November 2018 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price chopped unevenly sideways until shortly after 1 p.m. China Standard Time on their Wednesday afternoon. It began to head higher from there, but it was obvious from the saw-tooth price pattern that started at 10 a.m. in London, that this ‘rally’ was not going unopposed. The market appeared to go ‘no ask’ shortly before 10:30 a.m. in New York — and it was equally obvious that ‘someone’ stepped in as a short seller of last resort at that juncture. It was sold lower until noon EST — and then really didn’t do much after that.
The low and high ticks certainly aren’t worth looking up.
Gold finished the Wednesday session in New York at $1,225.60 spot, up $4.50 on the day. Net volume in pre-Thanksgiving holiday trading was exceedingly light at a bit under 163,000 contracts — and there was a hair over 58,000 contracts worth of roll-over/switch volume out of December and into future months.
The price path for silver was almost identical to that of gold, except its rally in the Far East began around 2 p.m. CST — and after that, everything else was the same…so I’ll spare you the play-by-play.
The low and high ticks in this precious metal were reported by the CME Group as $14.26 and $14.54 in the December contract.
Silver was closed at $14.495 spot, up 20 cents from Tuesday — and back above its 50-day moving average by a bit. Net volume was just under 53,500 contracts — and there was a bit under 23,000 contracts worth of roll-over/switch volume in this precious metal.
The price path for platinum was almost the same as it was for silver. Its smallish rally was capped and turned lower shortly before 9 a.m. in New York — and then it was sold even lower starting at the same time as silver and gold…around 10:25 a.m. EST. The New York low came at the Zurich close. It rallied a small handful of dollars going into the COMEX close from there — and then didn’t do much after that. Platinum finished the Wednesday session at $844 spot…up 4 dollars from Tuesday.
The palladium price traded flat until shortly after 1 p.m. China Standard Time on their Wednesday afternoon and, like gold, began to head higher at that point. The rally lasted until shortly after the Zurich open — and it didn’t do much of anything from there until noon in New York. Then it was quietly sold lower until around 2:30 p.m. EST in the thinly-traded after-hours market — and didn’t do a thing after that. Palladium was closed in New York yesterday at $1,133 spot, up 6 bucks on the day — and off its noon EST high tick by 8 dollars.
The dollar index closed very late on Tuesday afternoon in New York at 96.82 — and then traded sideways once it began at 6:00 p.m. EST a few minutes later on Tuesday evening. That lasted until shortly after 12:30 p.m. CST on their Wednesday afternoon — and it began to head lower from there. There was a bit of a counter-trend rally that began around 8:45 a.m. in London — and that flamed out minutes before 11 a.m. GMT — and from that point it resumed its choppy decent. The 96.50 low tick was set right at 8:30 a.m. in New York — and from that juncture it chopped unevenly higher until a few minutes before 4 p.m. EST — and didn’t do a lot after that. The dollar index finished the Wednesday session at 96.73…down 9 basis points from Tuesday’s close.
Here’s the almost 1-year U.S. dollar index — and the delta between its close…96.58…and the close on the intraday chart above, was 15 basis points yesterday. Click to enlarge.
The gold shares rallied sharply right from the 9:30 a.m. open in New York yesterday morning — and most of the gains that mattered were in by around 10:25 a.m. EST. They crawled quietly and unevenly higher from that point — and their respective high ticks were set sometime before 3:30 p.m. — and they faded a bit from there into the close. The HUI finished up 3.00 percent on the day.
The silver equities followed a very similar price pattern as their golden brethren. All of the gains that mattered for them, came by around 11:45 a.m. in New York trading — and they chopped quietly sideways from that point until trading ended at 4:00 p.m. EST. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 3.19 percent. Click to enlarge.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index. Click to enlarge as well.
The CME Daily Delivery Report showed that 5 gold and 26 silver contracts were posted for delivery within the COMEX-approved depositories on Monday. In gold, Morgan Stanley issued all 5 contracts — and the two long/stoppers were ADM with 4 contracts and ABN Amro picked up the other one. In silver, the only short/issuer worth mentioning was JPMorgan with 25 contracts — and they stopped all 25 contracts as well. All contracts issued and stopped in both gold and silver, were from and for their respective client accounts. The link to yesterday’s Issuers and Stoppers Report is here.
So far this month there have been 214 gold contracts issued and stopped — and in silver, that number is a very impressive 1,485 contracts. Don’t forget that November has never been a traditional delivery month for either precious metal. Going back fifteen or so years ago, according to Ted, a regular non-delivery month such as this one would have shown a tiny fraction of these numbers issued and stopped. This has changed radically in recent years…particularly in silver.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in November fell by 3 contracts, leaving 9 still open, minus the 5 mentioned just above. Tuesday’s Daily Delivery Report showed that 3 gold contracts are posted for delivery on Friday, so the change in open interest and deliveries match. Silver o.i. in November fell by 50 contracts, leaving 28 still around, minus the 26 mentioned in the previous paragraph. Tuesday’s Daily Delivery Report showed that 51 silver contracts were actually posted for delivery on Friday, so that means that 51-50=1 more silver contract was added to the November delivery month.
There was an addition to GLD yesterday, as an authorized participant deposited 66,208 troy ounces. There were no reported changes in SLV.
It was yet another day where there was no sales report from the U.S. Mint.
There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.
There wasn’t a lot of activity in silver, as only 354,576 troy ounces were received — and 640,912 troy ounces shipped out. All of this occurred at CNT — and the link to that is here.
The only activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday was 53 kilobars/1,704.003 troy ounces that was withdrawn from Brink’s, Inc. I won’t bother linking this.
Here are three charts that Nick passed around on Tuesday, that I just didn’t have room for in yesterday’s column. They show Swiss gold imports and exports, updated with October’s data. During that month, they imported 170.8 metric tonnes — and shipped out 114.7 metric tonnes. The first chart shows this data, including the net numbers. Click to enlarge.
These next two charts show the countries and amounts that were imported during October — and the countries and amounts that were exported. Click to enlarge for both.
I have only a tiny handful of stories for you today.
One of the questions I am asked most frequently in my global travels is what will be the cause of the next financial crisis. This question is asked by those who understand that this crisis is coming but want to pin down the date or a specific turn of events that will help them know when to react.
My answer is always the same: We can be certain the crisis is coming and can estimate its magnitude, but no one knows exactly when it will happen or what the specific catalyst will be.
The second part of my answer is to prepare for the crisis now. When it happens, it could unfold very quickly. If you’ve been paying attention to the stock market lately, you know how quickly selling fever can spread once it starts. Just look at these past two days alone.
We’ve had multiple days since October when the Dow loses several hundred points, with the other major indexes posting similar losses on a percentage basis.
There may not be time or opportunity in the middle of the crisis to take defensive measures. That’s why I keep reminding my readers that the time to prepare by increasing allocations to cash and gold is now.
This worthwhile commentary from Jim appeared in the public domain on the dailyreckoning.com Internet site yesterday — and another link to it is here.
Today [Wednesday] will be an interesting day. After falling the last two days, stocks should bounce. And the futures market says they will.
But now, we will see what the speculators are really thinking.
Will they want to go away for a four-day holiday with the stocks they’re holding?
Or will they want to lighten up a little more… just in case?
The combined value of the FAANG stocks – the big tech companies Facebook, Apple, Amazon, Netflix, and Google (Alphabet) – is down by about $1 trillion from its peak. That money disappeared over the last few days. Don’t try to get in touch; it left no forwarding address.
This commentary by Bill was posted on the bonnerandpartners.com Internet site very early on Wednesday morning EDT — and another link to it is here.
Yields on Italian government bonds fell on Wednesday morning as the euro climbed following reports that Italy’s ruling coalition might be open to reviewing its budget plan. Though the Italian government swiftly denied the reports about being open to changes in its plan, the moves in the euro and yields persisted, as analysts said they didn’t appear to be news driven.
The spread between the 10-year BTP and 10-year German bund tightened to tightening as much as 16 basis points to 309 basis points.
Italian bank shares also eased off their highs of the session after the denials, but remained 2% higher on the day after sinking to two-year lows on Tuesday.
And in the most significant sign yet that the confrontation between Italy and Europe is heading toward the point of no return, the European Union confirmed Wednesday morning that it would officially reject Italy’s budget plan, an unprecedented move that will likely lead to billions of euros in fines being levied against Rome for violating the bloc’s budget rules. Furthermore, the EC said it would call for the opening of an Excessive Debt Proceeding against the Italian government, which could lead to billions of euros in fines.
This news item put in an appearance on the Zero Hedge website at 7:26 a.m. EST on Wednesday morning — and I thank Brad Robertson for sending it along. Another link to it is here.
It appears that an aggressive lobbying campaign by the US and the UK has succeeded in stopping a qualified Russian candidate from winning the presidency of Interpol.
One day after four U.S. senators, Secretary of State Mike Pompeo, and the home office of the U.K. expressed outrage at the notion that Interpol Vice President Alexander Prokopchuk, a general in the Russian Interior Ministry, had emerged as the front-runner to become the international police agency’s next president. Both the U.S. and U.K. urged Interpol members to vote instead for Kim Jong Yang, who assumed the role of acting president after the last president, Meng Hongwei, disappeared in China following rumors of a corruption prosecution, according to the Financial Times.
On Wednesday, U.K. Home Secretary Sajid Javid praised Kim’s “clear win” which he said “comes despite Russia’s best efforts.” He added the result was an “encouraging victory for rules and rights-based security co-operation.”
Meanwhile, the Kremlin criticized the international opposition to Prokopchuk as yet another example of the West meddling in affairs concerning Russia.
“We are witnessing the foreign mass media’s campaign to discredit the Russian candidate for Interpol president,” ministry spokesperson Irina Volk told newswire Interfax. “We think it is inadmissible to politicise Interpol as a professional international organisation combining the efforts of…countries in the fight against transnational crime and terrorism.”
Western democracies feared that the election of Prokopchuk would transform Interpol into a tool of the Russian state (ignoring the many safeguards in place that limit the Interpol president’s power). Specifically, they feared Russia would use the organization to prosecute political dissidents (something that China neglected to do when one of its top security officials served as president). Interpol has denied claims that it is vulnerable to abuse by authoritarian regimes due to provisions in its constitution that specifically guard against this.
More mindless Russia bashing. This Zero Hedge story showed up on their website at 6:26 a.m. EST yesterday morning — and it comes courtesy of Brad Robertson as well. Another link to it is here. Another story on this from rt.com Internet site is headlined “A Russian not becoming head of Interpol is bigger news than the person who did” — and it’s worth reading as well.
China’s secret accumulation of gold in the 1980s was also an insurance against future economic instability, which is why it was spread round the institutions that were fundamental to the state, such as the Peoples Liberation Army, the Communist Party and the Communist Youth League. Only a relatively small portion was declared as monetary reserves.
In the 1990s, inward capital flows were beginning to be supplemented by exports, and a new wealthy Chinese class was emerging. The PBOC still had an embarrassment of dollars. Fortunately, gold was unloved in Western markets, and bullion was readily available at declining prices. The PBOC was able to accumulate gold secretly on behalf of the state’s institutions in large quantities.
But there was a new strategic reason emerging for buying gold, following the collapse of the USSR.
The end of the USSR in 1989 meant it was no longer America’s and China’s common enemy, altering the strategic relationship between the two. This led to a gradual change in China’s foreign relationships, with America becoming increasingly concerned at China’s emergence as a super-power, threatening her own global dominance.
These shifting relationships changed China’s gold policy from one where gold acted as a sort of general insurance policy against monetary unknowns, to its accumulation as a strategic asset.
Of course they don’t control the price yet. This interesting Zero Hedge commentary, a lot of which is pure speculation, should be read with a very open mind. It was posted on the safehaven.com Internet site on Wednesday — and was something I found on the Sharps Pixley website. Despite my best efforts, I couldn’t find out who authored this piece — and I’m never happy about posting anything like this, that isn’t. 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 “Small World” — and was taken by Carols Perez Naval from Spain. Carlos has been taking photographs since he was five. He has won prizes in Spain, Italy and France, and was named Young Wildlife Photographer of the Year in 2014. He loves nature and spends as much time as possible photographing the plants and animals near his home in Spain.
Growing on the low stone wall of a house, this pyrolusite mineral looked ‘like oriental drawings on rice paper,’ says Carlos. Some resembled trees, others mountains. Crouching to capture the scene, he waited half an hour for this ladybird to wander over. For Carlos, the image ‘shows the beauty of small and common places when you stop to look closely’.
Manganese dioxide, also known as pyrolusite, is a mineral commonly found when water percolates through the cracks of sedimentary rocks. A closer look reveals the minute fissures from which the pyrolusite mineral emanates, spreading out in a self-repeating pattern. The ladybird is a twenty-two spot, and unusually feeds on mildew rather than aphids. Click to enlarge.
It was obvious that all four precious metals really wanted to fly yesterday — and that was particularly true of silver and gold. The saw-tooth price patterns in both were certainly proof of that, as any and all rallies met the same fate. The fact that both metals appeared to go ‘no ask’ shortly before 10:30 a.m. in New York was a bit of a surprise but, like every other rally, that was beaten lower as well. But pre-Thanksgiving holiday volume was very light, so whoever was riding shotgun over the precious metals arena yesterday, had a relatively easy time of it.
I was also somewhat surprised that silver’s volume wasn’t heavier than it was, considering the fact that it traded above — and then closed above its 50-day moving average on Wednesday.
Here are the almost 1-year charts for all four precious metals, plus copper and WTIC — and except for the close in silver, there’s not a lot to see. I also decided to toss in the almost 1-year chart for natural gas once again, so you can see how it’s doing. The ‘click to enlarge‘ feature helps on all seven charts today.
And as I type this paragraph, the London open is less than ten minutes away — and I note that after chopping sideways until around 9 a.m. China Standard Time on their Thursday morning, the gold price began to wander higher, but was never allowed to get too far — and as London opens, it’s up $1.00 the ounce. Silver traded a few pennies lower until 1 p.m. CST — and it crept a higher at that point — and was actually up 4 cents by shortly before 3 p.m. over there. It was knocked back below unchanged an hour and change later — and is currently down 2 cents. Both platinum and palladium have been comatose in Far East trading. Platinum is sitting at unchanged — and palladium is down a dollar as Zurich opens.
Gross gold volume is a bit over 33,000 contracts — and there’s 3,516 contracts worth of roll-over/switch volume in that precious metal. Net HFT gold volume is fumes and vapours at a bit over 26,000 contracts. Net HFT silver volume is 8,700 contracts — and there’s 1,643 contracts worth of roll-over/switch volume on top of that.
The dollar index began to trend lower the moment that trading began at 6:00 p.m. EST in New York on Wednesday evening. It’s current 96.56 low tick was set at 2:30 p.m. CST — and it’s off that mark by a bit now, but still down 9 basis points as of 7:30 a.m. in London.
With the December delivery month coming up hard, it will be a real busy trading week after the holiday weekend, as I don’t expect much to happen on Friday. Absenteeism on Wall Street will be rampant, as most will make it the traditional 4-day long weekend.
All of the large traders…those with 150 COMEX contracts or more…that aren’t standing for delivery in December, have to be out by the close of COMEX trading next Wednesday — and the rest have to be out by the same time on Thursday. First Day Notice for the big December delivery month in both silver and gold will be posted on the CME’s website around midnight EDT Thursday evening. There will be big volumes during the first four days of next week…especially the first three.
And because of the Thanksgiving holiday in the U.S. today, there won’t be a Commitment of Traders Report on Friday…a fact I found out when I was talking to Ted yesterday. It will come out on Monday — and I’ll have all the details in my Tuesday missive.
I’m posting my column an hour earlier than normal today, as there’s just nothing going on — and barring anything coming out of left field today, I most likely won’t have a column on Friday. So if one doesn’t arrive in your in-box, or there’s nothing new on the website tomorrow…you’ll know why. However I will have one on Saturday…but because there isn’t a COT Report to talk about, there won’t be much in it — and it will be as brief as I can make it.
I’d like to take this opportunity to pass along happy Thanksgiving holiday greetings to my wonderful American subscribers. I hope that you have the time to spend with family and friends, because that’s what it’s really all about.
If I don’t see you here tomorrow, then Saturday for sure.
Have a good weekend…long, or not.