Ted Butler: Silver Scandal

27 November 2018 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price chopped unevenly sideways for about the first three hours once trading began at 6:00 p.m. EST in New York on Sunday evening.  It then began to chop unevenly higher starting a few minutes before 10 a.m. China Standard Time on their Monday morning — and that tiny rally was capped and turned lower starting a few minutes after the London open.  The low tick of the day — and back into negative territory by a bit, was set at the COMEX close — and it didn’t do much after that.

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

Gold was closed on Monday afternoon in New York at $1,221.60 spot, down 70 cents on the day.  Net volume was very tiny at just under 104,000 contracts — but roll-over/switch volume out of December and into future months was absolutely astronomical [as expected] at around 152,500 contracts.

The silver price was guided on a mostly similar path as gold, with the only real difference being that silver was closed right on its low tick of the day.

The high and low ticks in this precious metal were reported by the CME Group as $14.415 and $14.18 in the December contract.

Silver was closed on Monday at $14.19 spot, down 7 cents from its close on Friday.  Net HFT silver volume was exceedingly light as well, at a hair over 31,000 contracts.  But, not surprisingly, roll-over/switch volume was very heavy, at just under 50,500 contracts.

The platinum price rallied rather unsteadily until just before 11 a.m. CET in Zurich — and it was up 9 bucks at that point, but was sold equally unsteadily lower until just after 9 a.m. in New York.  From there, it chopped higher until shortly after 2 p.m. in the thinly-traded after-hours market — and was sold down into the 5 p.m. close after that.  Platinum finished the Monday session at $842 spot — and up 4 dollars from its close on Friday.

Palladium was up 16 dollars by 10 a.m. CST on their Monday morning — and then didn’t do much until shortly after 12 o’clock noon over there — and then began to crawl quietly higher from that juncture.  The rally became somewhat more intense once trading began in New York — and the rally ran out of steam right at the Zurich close.  It was sold 5 bucks lower from there — and traded flat from shortly before 1 p.m. EST onwards, until the market closed at 5 p.m.  Palladium finished the Monday session at $1,136 spot, up 32 bucks on the day.  But judging by the price rally/price spike that began shortly after the afternoon gold fix in London, would have closed materially higher, if allowed.

The dollar index closed very late on Friday afternoon in New York at 96.94 — and then rallied a bit in morning trading in the Far East on Monday.  The 97.03 Far East high was placed a very few minutes before 11 a.m. in Shanghai — and from there it began to head lower.  The 96.66 low tick of the day was set around 9:35 a.m. in London — and it certainly appeared as if the usual ‘gentle hands’ showed up at that point.  The subsequent rally made it up to it 97.10 high tick, which came minutes before 4:30 p.m. in New York — and it crawled a handful of basis points lower into the close from there.  The dollar index finished the Monday session at 97.05 — and up 11 basis points from Friday.

Here’s the intraday chart that starts at midnight in New York/1 p.m. CST in the Far East.

And here’s the 3-day intraday chart so you can see the DXY action from the open of trading in New York on Sunday evening.

And here’s the almost 1-year U.S. dollar index chart — and the delta between its close…96.98…and the intraday chart above, was only 7 basis points on Monday.  Click to enlarge.

The gold shares rallied about two percent at the open, but willing sellers showed up minutes before 10 a.m. in New York trading — and after taking most of the earlier gains away in a few short minutes, they drifted quietly lower for the remainder of the Monday trading session — and the HUI closed almost on its low tick of the day…down 0.81 percent.

It was the same basic price pattern for the silver equities.  Their collective lows came a few minutes before 3 p.m. EST — and they proceeded to chop quietly sideways into the close from there.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down another 3.10 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 zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that gold open interest in November remained unchanged at 4 contracts still open — and Friday’s Daily Delivery Report showed that 1 gold contract was actually issued for delivery today, so that means that 1 more gold contract just got added to the November delivery month.  Silver o.i. in November fell by 2 contracts, leaving zero contracts left — and according to Friday’s Daily Delivery Report, both are out for delivery today.


There was a withdrawal from GLD yesterday, as an authorized participant took out 37,828 troy ounces.  There were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of trading on Friday, November 23 — and this is what they had to report.  They added 2,605 troy ounces of gold, plus they added 81,727 troy ounces of silver.

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

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday was 21,873 troy ounces that was shipped out of Canada’s Scotiabank and into Brink’s, Inc.  The link to that is here.

There was a bit more activity in silver, as nothing was reported received — and only 627,041 troy ounces were shipped out.  Of that amount, one truckload…597,805 troy ounces…departed JPMorgan — and the remaining 29,236 troy ounces was taken out of the International Depository Services of Delaware.  The link to this is here.

And there was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They didn’t receive any, but 3,368 kilobars were shipped out.  This occurred over at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


Here are the usual two charts that I receive from Nick on the weekend.  They show the weekly changes in all know gold and silver depositories, mutual funds — and ETFs, as of the close of business on Friday, November 23.  During this reporting week there was 27,000 troy ounces of gold removed on a net basis — and that number in silver was 782,000 troy ounces.  Click to enlarge for both.


The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, November 20 was well under the 5,000 contract increase in the Managed Money change in position that Ted had hoped for — and there was even better news ‘under the hood’ in the Disaggregated COT Report.  In gold, the headline number was bigger than expected, but there was a positive surprise that also appeared ‘under the hood’ in the Disaggregated COT Report as well.

In silver, the Commercial net short position rose  by only 1,947 contracts, or 9.9 million troy ounces of paper silver.

They arrived at that number by increasing their long position by 1,692 contracts, but they also increased their short position by 3,639 contracts — and it’s the difference between those two numbers that represented their change for the reporting week.

The position changes of the Big 4 and Big ‘5 through 8’ traders are back to being immaterial once again because of the contamination of that data by the large number of Managed Money traders that still inhabit this group.  JPMorgan is now long gone — and even Citigroup’s short position in silver would probably not be big enough to make it into the Big ‘5 through 8’ traders category.

But it was under the hood in the Disaggregated COT Report where the big positive surprise was to be found.  But firstly — and not surprisingly, it was all Managed Money traders plus much more, that made up the changes for the reporting week.  They reduced their already tiny long position by a further 881 contracts, plus they reduced their short position by 9,000 contracts — and it’s the difference between those two numbers…8,119 contracts…that represents their change for the reporting week.

The difference between that number — and the Commercial net short position…8,119 minus 1,947 equals 6,172 contracts, was made up [like it always is] by the traders in the other two categories…the ‘Other Reportables’ and the ‘Nonreportable’/small traders.  Both categories decreased their net long positions by very decent amounts…especially the small trader category.

But the very big positive surprise was the ‘Producer/Merchant’ category, where JPMorgan hides out.  Although the Commercial net short position rose 1,947 contracts during the reporting week, the traders in this category, read JPMorgan, actually reduced their net short position by 4,234 contracts.  Along with the 11,000 contracts Ted figures that covered in the previous week’s COT Report, they have now covered their remaining short position in silver.

Here’s the usual snip from the Disaggregated COT Report for silver — and the changes in all five of the categories should be noted, as they are substantial.  The headline change in the Commercial net short position in silver  in this week’s Legacy COT Report [up 1,947 contracts] in no way reflects the enormity of the changed that occurred ‘under the hood’.  Click to enlarge.

The Commercial net short position in silver is now up to 6,894 contracts, or 34.5 million troy ounces of paper silver which, on an historical basis, still places it in the ‘wildly bullish’ camp.

Here’s the 3-year COT chart– and it’s still in the ‘wildly bullish’ category as I just stated, despite the smallish increase in the Commercial net short position during the reporting week.  Click to enlarge.

But the even bigger kicker to this ‘wildly bullish’ scenario is the fact that JPMorgan is now back in a market neutral position.


In gold, the commercial net short position blew out by 21,317 COMEX contracts, or 2.13 million troy ounces of paper gold.  Ted was hoping for something under the 15,000 contract mark.  But, like in silver, the real big surprise was in the ‘Producer/Merchant’ category in the Disaggregated COT Report — and I’ll get to that in a bit.

The commercial traders arrived at the above number by reducing their long position by a piddling 95 contracts, but added a whopping 21,222 short contracts — and it’s the sum of those two numbers that represents their change for the reporting week.

The position changes of the Big 4 and Big ‘5 through 8’ traders are back to being mostly immaterial once again because of the contamination of that data by the large number of Managed Money traders that still inhabit this group.  I would suspect that maybe Citigroup by a bit would be back in the Big ‘5 through 8’ trader category, but at the bottom of the group — and I also suspect that Canada’s Scotiabank is most likely in the Big 4 category, but certainly not the biggest.

Under the hood in the Disaggregated COT Report, it was all Managed Traders, plus more, that made up for the changes during the reporting week.  They added 4,827 long contracts — and they reduced their short position by a very chunky 22,516 contracts — and its the sum of those two numbers…27,343 contracts…that represents their change for the reporting week.

As always, the difference between that number — and the commercial net short position…27,343 minus 21,317 equals 6,026 contracts…was made up by the traders in the other two categories, although each of those two categories went about it in a slightly different manner.

The big and happy surprise for Ted was that although the commercial net short position blew you by 21,317 contracts during the reporting week, the ‘Producer Merchant’ category only accounted for 4,147 of those contracts.  That’s not very much considering the fact that the gold price spent almost the entire reporting week trading above its 50-day moving average.

Silver analyst Ted Butler had this to say about in gold in his commentary late yesterday afternoon…”It’s not quite as clear in gold, but I’d venture that JPM bought back the entire 30,000 gold contracts it shorted in October, as well.”

Here’s the snip from the Disaggregated Report for for gold and, as in silver, the wildly different changes in each of the five categories should be noted.  Click to enlarge.

The commercial net short position in gold is now up to the 23,140 contract mark, or 2.31 million troy ounces of paper gold which, like in silver on an historical basis, is bullish beyond belief.

Here’s the 3-year COT chart for gold — and despite the smallish increase during the reporting week, not much should be read into it.  Click to enlarge.

I’ve got nothing else to add to this COT Report in gold, except that its price is still sitting on the proverbial launch pad…waiting for whatever.

Since the Tuesday cut-off, gold is down a bit during the first three days of this reporting week, but not yet back below its 50-day moving average.  Silver traded above — and closed above its 50-day moving average on Wednesday last week…but all of that price activity, plus much more, has been reversed during the Friday and Monday trading sessions.  I would suspect that next week’s COT Report should add to the bullish situation in both precious metals.  But we have to get through today’s trading session unscathed for that to be the case.  But with the November contract going off the board at the COMEX close on Thursday — and First Day Notice for December a day later, I doubt if silver and gold prices will be allowed to do much between now and then.

In the other metals, the Managed Money traders stole the show in palladium, as they increased their net long position by 831 contracts.  In platinum, these same traders reduced their net long position by 1,339 contracts.  And in copper, the Managed Money traders increased their long position by a net 13,487 contracts — and are now back to being net long the copper market by a bit.  That mainly occurred, because like in gold, copper spent four of the five days during the reporting week trading above its 50-day moving average.


Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading last Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

But, like the COT Report itself, the chart above is basically irrelevant at this point as well — and for the same reason. Except for Scotiabank — and one U.S. bank…most likely Citigroup…the positions of the Big 4 and Big 8 traders in silver are still made up of the brain-dead/moving average-following Managed Money traders now.

For the current reporting week, the Big 4 traders are short 106 days of world silver production, down 4 days from what they were short in last week’s report — and the ‘5 through 8’ large traders are short an additional 44 days of world silver production, which is also down 4 days from last week’s report—for a total of 150 days held short, which is five months of world silver production, or about 350.1 million troy ounces of paper silver held short by the Big 8. [In last week’s COT Report the Big 8 were short 158 days of world silver production.]

The Big 8 commercial traders are short 31.4 percent of the entire open interest in silver in the COMEX futures market, which is down a hair from the 31.7 percent that they were short in last week’s COT Report. And once whatever market-neutral spread trades are subtracted out, that percentage would be a bit over 35 percent. In gold, it’s 30.4 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 28.4 percent they were short in last week’s report — and around 35 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 39 days of world gold production, which is unchanged from what they were short last week — and the ‘5 through 8’ are short another 17 days of world production, which is up 2 days from what they were short the prior week, for a total of 56 days of world gold production held short by the Big 8 — which is up 2 days from what they were short in last week’s report. Based on these numbers, the Big 4 in gold hold about 70 percent of the total short position held by the Big 8…which is down about 2 percentage point from last week’s COT Report.

And, once again, don’t forget that like in silver…most of the traders in the Big 4 and Big 8 categories in gold are still Managed Money traders — and not the commercial variety.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 71, 72 and 75 percent respectively of the short positions held by the Big 8. Silver is up 1 percentage point from the previous week’s COT Report, platinum is unchanged from a week ago. And palladium is also up 1 percentage point from last week’s COT Report.  These are huge concentration numbers.

I have an average number of stories for you today.


CRITICAL READS

Investors Are Going to Get Scalped — Bill Bonner

This morning brings a particularly moronic news item from CNBC. The report tells us that the Dow has another 2,000 points left to drop before recovering:

“More than half of the members of the CNBC Global CFO Council think the Dow Jones Industrial Average will fall below 23,000 – roughly 2,000 points from its current level – before the stock market barometer is ever able to top the 27,000 level. The 23,000 level would equate to another 8 percent in decline among the Dow group of stocks before the selling stops.”

But hey… why stop there?

If CFOs think they can predict the stock market future, maybe they should tell us who will win the White House in 2020 or who will win the next Super Bowl.

Here at the Diary, we’d also like to know when the 10-year Treasury yield will hit 4%, too. It’s currently at about 3% – up from 2.4% at the start of this year.

We’re watching for 4% like one of Custer’s scouts looking out for the Sioux. When it shows up, a lot of investors are going to get scalped.

This commentary from Bill was posted on the bonnerandpartners.com Internet site very early on Monday morning EST — and another link to it is here.


“The Federals Are Coming!” — Jeff Thomas

Americans were taught about Paul Revere’s ride in school. He was said to have ridden from his home in the North End of Boston, to Lexington and Concord, to warn the people there that Federal troops had landed in Boston Harbour and would soon reach the townships.

Of course, the story was tarted up a bit for the history books. First, it’s unlikely that he shouted, “The British are coming,” since, at the time of the ride, in 1775, he was in fact British – a British colonial – and would have regarded himself as British, as would the townspeople.

It’s also unlikely that he galloped through the towns shouting, “To arms! To arms!” since a major portion of the British colonists, particular those who were older and had a lot to lose, were loyalists, and taking up arms would be treasonous. (At that time, treason was one of only two capital crimes.)

So, what did he shout on his ride… or did he in fact shout anything? It’s more likely that he simply went to the back doors of select sympathisers and asked them to spread the word that the Federal troops were on the way. But, of course, that would have made for a far less colourful story.

It is likely, though, that the ride itself did actually take place and that he did succeed in rousing the townspeople. Amongst them were the minutemen, who later did quite a good job of picking off the Federal troops.

This interesting commentary by Jeff appeared on the internationalman.com Internet site on Monday sometime — and another link to it is here.


Italian Yields Tumble, Bank Stocks Soar as Populists Blink in Showdown With E.U.

That didn’t take long.

Two days after boldly threatening to take down Italy’s populist-led government should lawmakers try to change the 2.4% projected budget deficit that has locked Italy into a geopolitical staring contest with the European Commission, Deputy Prime Minister Matteo Salvini has become the first to blink.

Salvini, the deputy minister who is effectively in charge of Italy’s government (a view confirmed by opinion polls), told Italian media for the first time on Monday that his government would be “open” to a lower deficit spend after an anonymous official said the government was looking at changes to the budget plan’s deficit target. Last week, the European Commission roiled Italian markets when it issued an unprecedented rejection of Italy’s 2019 budget planned and started preparing for an “Excessive Debt Procedure” against its third-largest economy – a proceeding that could lead to billions of euros of fines against the already-struggling Italian government.

This longish chart-filled article showed up on the Zero Hedge website at 6:09 a.m. on Monday morning EST — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Ukraine Declares Martial Law As Russia Refuses To Release Captured Ships

Update 2: Ambassador Nikki Haley had some choice words for Russia during Monday’s emergency meeting of the U.N. Security Council, blasting Russia’s decision to detain three Ukrainian ships as “arrogant” and accusing Russia of making normal relations with the U.S. “impossible.” She also accused Russia of violating Ukraine’s “sovereign territory” with its annexation of Crimea.

* HALEY CALLS RUSSIAN ACTION IN KERCH STRAIT `ARROGANT’
* HALEY SAYS RUSSIA VIOLATED UKRAINE’S SOVEREIGN TERRITORY
* HALEY: U.S. WILL MAINTAIN CRIMEA-RELATED SANCTIONS ON RUSSIA
* HALEY SAYS SHE SPOKE TO TRUMP, POMPEO ABOUT RUSSIA, UKRAINE
* RUSSIA ACTIONS MAKE NORMAL TIES WITH U.S. `IMPOSSIBLE’: HALEY

Seemingly out of nowhere, a diplomatic crisis has erupted between Ukraine and Russia after Russia detained three Ukrainian ships which it said had been “maneuvering dangerously” near the Kerch Strait – a crucial Russia-controlled choke point which separates the Sea of Azov From the Black Sea. In response to what he decried as unprovoked Russian aggression, increasingly unpopular Ukrainian President Petro Poroshenko signed a declaration on Monday to declare martial law for 60 days through Jan. 26. He also started mobilizing the Ukrainian army despite the martial law order still needing approval by the country’s Parliament, according to RT.

Ratcheting up the anxieties of NATO commanders, who are probably fearful of being drawn into a potential military conflict with Russia, Ukraine has put its troops on full combat alert (though it isn’t a member of NATO, Ukraine has become closely allied with the defense alliance after shelving plans for membership a decade ago). Poroshenko met with the country’s military leaders Sunday night to discuss imposing martial law.

As the U.N. calls an emergency meeting of the Security Council (of which Russia is a permanent member) to be held on Monday, Russia is resisting international demands to release the two Ukrainian artillery boats and the tugboat, which it seized after firing on the ships and ramming one of them. A spokeswoman for the Kremlin said Russia is opening a criminal case into what it claimed was the ships’ illegal entry into Russian waters surrounding the narrow Kerch Strait, according to Reuters.

Russian newswire Interfax reported that Russian border guards had detained 24 Ukrainian sailors accused of taking part in the border provocations.

Kiev has maintained that Russia was notified ahead of time that the ships were approaching the strait, and denied its ships had done anything wrong. Russia says the ships disobeyed orders to halt.

This very worthwhile news item put in an appearance on the Zero Hedge website at 12:00 p.m. on Monday EST — and it’s the second offering of the day from Brad Robertson.  Another link to it is here.  The bbc.com spin on this, courtesy of reader Garry Robinson, is headlined “Russia-Ukraine tensions rise after Kerch Strait ship capture“.  The Saker wades on this with an article headlined “About the latest Ukronazi provocation in the Kerch strait (UPDATED)” — and I thank Larry Galearis for pointing it out.  It’s definitely worth reading.


Gold losing its luster as palladium prices soar; so why is Russia smiling?

Palladium prices have been hitting record highs, jumping more than nine percent this year – the best performance among major metals, and investors are betting the bull run is just getting started.

Almost 70 percent of palladium demand comes from the auto industry, according to researcher CPM Group. The metal, which is used mainly in catalytic converters, has benefitted from the automobile industry’s move away from diesel to petrol engines. The shift has boosted demand in a market which currently has limited supply.

Experts say China’s fight with smog was another contributing factor to roaring demand for palladium. Tougher pollution standards mean car makers are using more catalytic converters.

The market has a very positive fundamental outlook,” Maxwell Gold, director of investment strategy at Aberdeen Standard Investments, which oversees $730 billion, told Bloomberg.

We’ve been dealing with supply deficits going on eight years, and that’s expected to continue. Supply’s certainly been an issue on the mining front as well as the draw-down of existing stockpiles,” he said.

No surprises here, as I’ve been preaching this supply/demand thingy in palladium for ages now.  This rt.com new item, along with some very interesting photos, appeared on their Internet site very early on Saturday morning Moscow time — and my thanks goes out to Swedish reader Patrik Ekdahl.  Another link to it is here.


Gold price hits record high in Pakistan as inflation looms

Gold prices in Pakistan shot up to a record high at Rs63,700 per tola (11.66 grams) on Friday as people turned to the precious yellow metal, which is considered a safe haven for investment, ahead of likely return of inflationary pressures in the country.

Karachi Saraf and Jewellers Association Secretary Ghulam Hussain Deedar said the association revised gold prices upwards by Rs800 to Rs63,700 per tola on Friday despite a drop of $7 to $1,222 per ounce in the international market.

This price is a historic high. The new price broke the previous record of Rs63,600 per tola reached on October 5, 2012,” he added. “Cumulatively, the bullion price has soared by a total of Rs2,000, or 3.2%, in the last two days.”

Gold is a safe haven that protects from inflation,” Rays Commodities Chief Operating Officer Adnan Agar told The Express Tribune.

This gold-related news item, filed from Karachi, appeared on the Pakistani website tribune.com.pk on Friday — and I lifted it from a GATA dispatch on Saturday.  Another link to it is here.


Australian Gold Output Still Near Record Levels…Surbiton — Lawrie Williams

Peak gold may be with us, or thereabouts, but some of the world’s largest producing nations, like Australia (No. 2), Russia (No.3), the U.S. (No. 4) and Canada (No. 5) are ensuring that any decline in global gold output remains small, or it may even still possibly be rising, albeit by a very small amount.  Those countries with still rising, or maintained, gold outputs are countering those, like China and South Africa where annual gold production is seen to be falling quite sharply.

Thus it is always interesting to receive the quarterly analysis of Australia’s gold production from Melbourne-based gold mining consultants, Surbiton Associates.  Surbiton, which specialises in analysis of the Australian gold sector, probably produces the most accurate assessment of gold mine production from the world’s No.2 producer.

Surbiton’s latest data on Australian gold output, covering the three months to 30 September 2018, puts the country’s Q3 production at 81 tonnes, which it reckons was just a few thousand ounces less than in the previous quarter but six tonnes more than in the same quarter of 2017.

This interesting commentary from Lawrie showed up on the Sharps Pixley website on Sunday sometime — and another link to it is here.


Hugo Salinas Price: A Message for Trump

Mr. President Trump, Sir: you are working tirelessly, against tremendous odds, to carry out your mission in life, which is to “Make America Great Again”.

I propose to you a measure fully in accord with your vision of a great, united nation of America, working for prosperity; a measure that conveys a fundamental message of inspiration for the American people. The greatness of a nation flowers when its moral stature is elevated, and such is the object of the measure that I suggest to you.

I suggest that you restore to Americans the use of silver money as a means of savings, to grant Americans the peace of mind that such savings provide, immune to the ravages of inflation which now decimate the savings of the whole world.

If you should take up the challenge which such a measure involves, you would, without any doubt, be accorded a stature of greatness as President of the United States of America, not seen since the time of Andrew Jackson.

And not only that: you would achieve a landslide electoral victory in your re-election as President in 2020.

Of course if JPMorgan took its foot off the silver price, that would pretty much have a somewhat similar effect,  It’s just that Trump wouldn’t get the credit.  This rather brief, but very worthwhile commentary from Hugo was posted on the plata.com.mx Internet site on Monday sometime — and I found it on the gata.org Internet site.  Another link to it is here.


Ted Butler: Silver Scandal

A few follow up comments about the still rather remarkable announcement by the Department of Justice concerning the guilty plea by the former JPMorgan trader for spoofing in precious metals. Contained in the announcement was the statement that the guilty plea was accepted and sealed on Oct 9, nearly a month before it was unsealed on Nov 6. With a rather short sentencing date approaching on December 19, and the time it took to unseal the plea, it may be assumed that the trader has already fully cooperated in the hopes of reducing his jail time, said to approach 30 years with no cooperation.

The thought of facing serious jail time for someone that never thought such an outcome was possible for everyday practices known to supervisors and other traders at the bank had to come as a shock. For years, the trader was riding high, a master of the trading universe in a highly respected position, now suddenly facing incarceration. Companion reporting suggested that JPMorgan itself was unaware of the guilty plea, according to a person with knowledge of the matter. It was not indicated if the CFTC was closely involved. Since the former trader left JPMorgan last year, it’s not hard to imagine how his cooperation with the DOJ could remain unknown to the bank.

No one in the silver market is as crooked as JPMorgan and the announcement by the Department of Justice of a guilty plea by one of its former traders is the first solid connection between my allegations of the past ten years about JPMorgan and a finding of wrongdoing by a trader for the bank in COMEX silver and gold. This goes a very long way towards vindicating my narrative of the past ten years.

It’s been reported by Bloomberg that the Justice Department asked a judge overseeing a civil antitrust case against JPMorgan to postpone the case for six months “to protect the integrity” of its ongoing criminal probe. This indicates that the Justice Department is serious about pursing the matter of a silver price manipulation and JPMorgan’s involvement.

Inside the bank, this must come as a bombshell. Further indictments appear inevitable. If the media gets wind of the full story it could turn into a momentous scandal reaching to the top. A lot of people at JPMorgan must now be sweating bullets. What they have been doing for years is clearly illegal. Nobody can get by using tactics like spoofing to suppress the price of a commodity in the futures market while loading up on the physical asset itself. How could they be so myopic as to pull of this gross manipulation in silver for almost eight years without fear of consequences? They have 150 million ounces of their silver hoard in their COMEX warehouse which is more physical silver than the Hunt Brothers acquired in the 1980 silver scandal.

This commentary by Ted was posted on the silverseek.com Internet site at 2:07 p.m. Denver time on the Monday afternoon — and it’s definitely worth reading as well.  Another link to it is here.


The PHOTOS and the FUNNIES

This is the last in a series of award-winning photo given out by the Natural History Museum in London this year.  It’s also from the ’10 years old and younger’ photographer category — and this one, entitled “Meadow Song” was taken by Fred Začek of Estonia…the second of his photographs to receive recognition in this contest.

Eight-year-old Fred visited this secluded meadow close to his home over three days, to photograph the migratory birds that had arrived to breed. On the third evening, he spotted this yellow wagtail, singing in the soft evening light. Surrounded by stinging nettles and clouds of flying gnats, it took Fred several attempts to capture the beak ‘in a nice open position’.

Perched on a delicate stem of cow parsley, this male yellow wagtail is singing to attract females, but also to deter other males in the area. There are numerous subspecies of yellow wagtail, best distinguished by the colour of the male’s head but also by differences in song. All wagtails earn their name from their tendency to wag their tails up and downClick to enlarge.


The WRAP

Well, what the Far East market added to gold and silver prices on Monday, were all reversed — and a bit more, in both London and New York trading on Monday.  That was basically true in platinum as well.  Palladium, with its well-known supply/demand fundamentals, hoed its own row yesterday, although it was obvious that its run-away price spike shortly after the afternoon gold fix in London, was summarily stomped on.

With the obvious exception of palladium, it was just another ‘care and maintenance’ sort of day as November goes off the board — and the big December delivery month in both silver and gold looms ahead.  Roll-over/switch volume out of December and into future months was very heavy — and as I said on Saturday, will remain that way pretty much up until the close of COMEX trading on Thursday.

Here are the almost 1-year charts for all four precious metals, plus copper and WTIC — and with the exception of palladium, there’s not a lot to see…although it should be pointed out that silver was closed below its 50-day moving average for the second day in a row — and copper below its by a penny or so.  The ‘click to enlarge‘ feature helps with all six charts today.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price chopped quietly sideways until shortly after 1 p.m. China Standard Time on their Tuesday morning. It dipped a bit at that point — and is down $1.20 the ounce, but off its current low tick by a bit. It was mostly the same for silver, although after hitting its current low tick, it’s now back at unchanged on the day. Platinum hasn’t done much of anything in Far East trading — and it’s down 2 dollars at the moment. Palladium traded mostly sideways until 2 p.m. CST — and began to tick quietly lower from that juncture — and is currently down 4 bucks.

Net HFT gold volume is pretty quiet…coming up on 30,500 contracts — but there’s a chunky 13,500 contracts worth of roll-over/switch volume on top of that already. Net HFT silver volume is a bit over 8,600 contracts — and there’s 4,811 contracts worth or roll-over/switch volume in that precious metal.

The dollar index began to chop quietly lower as soon as trading began in New York on Tuesday evening — and that lasted until a minute or so after 1 p.m. China Standard Time on their Tuesday afternoon. The current 96.97 low tick was set at that point — and it has been chopping quietly but unsteadily higher since — and is currently up 9 basis points thirty minutes before the London open.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and I’ll wait until tomorrow’s column before I attempt to divine what may or may not be in it.

And as I post today’s missive on the website at 4:03 a.m. EST, I see that the gold price continued to edge lower until shortly before 9 a.m. in London trading. It has rallied off its low since…and is down only 80 cents as the first hour of London trading draws to a close. Ditto for silver — and its back at unchanged again. Platinum is down 4 dollars now — and palladium is now lower by 8 bucks.

Gross gold volume is a bit over 76,000 contracts — and net of about 19,400 contracts worth of roll-over/switch volume, net HFT gold volume is around 37,500 contracts. Net HFT silver volume is a bit over 11,000 contracts — and there’s 6,137 contracts worth of roll-over/switch volume in that precious metal.

The dollar index continued to work its way higher — but has currently topped out at minutes after the 8:00 a.m. GMT London open — and is now up only 15 basis points as of 8:30 a.m. in London…9:30 a.m. in Zurich.

That’s all I have for today — and I’ll see you here tomorrow.

Ed