One Last Shake of the Precious Metals Tree

28 November 2018 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price chopped quietly sideways until around 1:30 China Standard Time on their Tuesday afternoon — and then crept a few dollars lower until shortly before 9 a.m. in London.  It rallied back to a bit above unchanged by the morning gold fix — and then traded flat until a minute or so before 8:30 a.m. in New York.  It began to edge lower from there, but really got kicked downstairs starting at, or minutes after, the afternoon gold fix in London.  The low tick of the day was set a few minutes before 12:30 p.m. EST.  From that point it rallied quietly until shortly before the COMEX close — and didn’t do much after that.

The high and low tick in gold were recorded by the CME Group as $1,225.20 and $1,211.40 spot.

Gold was closed in New York on Tuesday at $1,214.60 spot, down $7.00 on the day — and back below its 50-day moving average once again.  Net volume was a bit under 145,000 contracts — and roll-over/switch volume out of December and into future months [mostly February, the upcoming new front month] was enormous once again at a hair under 143,000 contracts.

Silver followed the same general price path as gold — and all that jumping around in New York, according to Ted, was the fact that Kitco’s feed was jumping back and forth between the December and March contract price…with March being the new upcoming front month for silver.  So most of the price data from 8 a.m. EST onwards, can be safely ignored.  The price went back to normal for the last time starting a few minutes before 1 p.m. EST.  The silver price crept higher from there until shortly before 2 p.m. in after-hours trading and, like gold, didn’t do much after that.

The high and low ticks in this precious metal were reported as $14.265 and $14.05 in the December contract.

Silver was closed yesterday at $14.12 spot, down 7 cents from Monday.  Net volume was very light at around 37,300 contracts but, like for gold, roll-over/switch volume was very heavy as well at a bit under 45,000 contracts.

The platinum price chopped generally sideways a few dollars either side of unchanged — and was sitting at unchanged until, like gold, a few minutes after 10 a.m. in New York.  Then the bids got pulled — and the algos spun — and the low tick of the day was set at precisely noon EST.  Then, also like silver, it crawled higher in price until minutes before 2 p.m. in the thinly-traded after-hours market — and didn’t do much after that.  Platinum was closed on Tuesday at $831 spot, down 11 bucks on the day — and back below its 50-day moving average, which was surely the object of the exercise.

The palladium price traded mostly sideways until 2 p.m. CST on their Tuesday afternoon — and it was quietly sold lower from that juncture.  It was down about ten dollars by around 10:45 a.m. in Zurich — and then crawled unevenly higher until a few minutes before 10 a.m. in New York.  It was hit for twelve or thirteen dollars at that point, with its low tick coming about twenty minutes before the Zurich close.  It began to head unsteadily higher from that point until minutes before 2 p.m. in the thinly-traded after-hours market and, like the other three precious metals, didn’t do much after that.  Palladium finished the Tuesday session at $1,141 spot, up 5 dollars on the day.

The dollar index closed very late on Monday afternoon in New York at 97.05 — and began to chop quietly lower the moment that trading began at 6:00 p.m. EST a few moments later.  It got ‘saved’ at 2 p.m. China Standard Time on their Tuesday afternoon, shortly after it slid back below the 97.00 mark.  That ‘rally’ lasted until a few minute after the 8:00 a.m. GMT London open — and it began to chop quietly lower from there.  It got ‘saved’ again at the COMEX open — and the next ramp job began at the 9:30 a.m. open of the equity markets in New York.  The 97.50 high tick was set about 12:40 a.m. EST — and it began to chop lower once again, only to get ‘saved’ just minutes before 2 p.m.   From that point it edged higher for an hour or so before crawling sideways into the close.  The dollar index finished the Tuesday session at 97.37…up 32 basis points from Monday.

Tuesday was yet another day where if those ‘gentle hands’ hadn’t been around, the dollar index would have certainly finished shockingly lower.

And here’s the almost 1-year dollar index chart — and the delta between its close…97.28…and the close on the intraday dollar index above, was 9 basis points yesterday.  Click to enlarge.

The gold stocks opened unchanged, but began to head lower very shortly thereafter — and their respective lows were set around 12:15 p.m. in New York trading.  They edged higher over the nest hour — and then chopped generally sideways until the markets closed at 4:00 p.m. EST.  The HUI closed down 2.03 percent.

It was mostly the same for the silver equities — and they bottomed out around 12:35 p.m. EST.  They put in a very decent rally starting at that point, but ran out of gas at 2:30 p.m. — and gave some of those gains back as the Tuesday trading session drew to a close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down ‘only’ 1.33 percent.  Click to enlarge if necessary.

And here’s the 1-year Silver Sentiment/Silver 7 Index from Nick.  Click to enlarge as well.


The CME Daily Delivery Report showed that 3 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  The short/issuers and long/stoppers don’t matter — and 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 declined by 1 contract, leaving just 3 open.  No gold contracts were posted for delivery today — and the last 3 contracts are out for delivery tomorrow…as per the above Daily Delivery Report.  So November deliveries are done.  Silver o.i. in November remained unchanged at zero, as the November delivery month in silver was completed on Monday.


There were no reported changes in GLD on Monday, but an authorized participant withdrew 2,300,618 troy ounces of silver out of SLV.  Whether or not that was a conversion of shares for physical metal by JPMorgan, or just normal liquidation, is unknown…but one way or another it’s a certainty the JPMorgan owns every ounce of it now.

The folks over at the shortsqueeze.com Internet site updated their short position data for both SLV and GLD yesterday evening — and this is what they had to report.  The short position in SLV rose from 9,920,500 shares/troy ounces, up to 12,437,400 shares/troy ounces, which is an increase of 25.4 percent.  The short position in GLD fell from 1,230,750 troy ounces, down to 875,650 troy ounces, which was a declined of 33.7 percent.  Ted may or may not comment on this in his mid-week missive later today.

And it was yet another day where 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 Monday was 197 troy ounces that was taken out of the Manfra, Tordella & Brookes, Inc. depository.   I won’t bother linking this.

There was some activity in silver.  There was one truckload received…607,420 troy ounces…and that ended up at HSBC USA.  There was only 55,536 troy ounces shipped out — and that departed CNT.  The link to that is here.

There wasn’t much activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  Only 150 were received — and 34 were shipped out.  The link to that is here.


The Colmar Treasure or Colmar hoard is a hoard of precious objects buried by Jews at the time of the Black Death.

The Treasure was found in 1863 in the wall of a house in the medieval rue des Juifs, in Colmar, Alsace. It is believed that some of the items were sold by the discoverers before the full extent of the Treasure could be recorded. The treasures that survive are mostly in the collection of the Musée de Cluny. It was fully published only in 1999, when exhibited in Colmar.

The Treasure includes one of the few surviving examples of a Jewish marriage ring, with the bezel in the form of a small building instead of a precious stone, in accord with the requirement in Jewish law that wedding rings be made as one piece.

The Treasure includes silver coins, silver table ware, and gold and silver jewelry including elaborate belt buckles and fifteen silver rings.  Click to enlarge.

I only have a tiny handful of stories for you today.


CRITICAL READS

The Best Stock Investors: Dead People — Bill Bonner

That amateur watches the news. He hears that stocks “always go up over the long run.” And he looks back and sees proof – a huge run-up in the stock market over the last 36 years.

What he doesn’t know is that most of that gain is counterfeit. It was caused not by organic growth in sales and profits (the things that make businesses worth owning), but by inflation in the capital markets. The Fed pumped in $4 trillion; it went into stocks and bonds.

That flim-flam is at the heart of today’s economy and markets. Take away the $4 trillion of fake money… and the fake interest rates of the last 10 years… and the whole shebang would look completely different.

If you look at actual company earnings, for example – based on IRS filings – you find that U.S. corporations are earning not a penny more today than they did in 2006… and considerably less than they did in the last four years of the Obama administration.

This commentary by Bill appeared on the bonnerandpartners.com Internet site early on Tuesday morning EDT — and another link to it is here.


Leveraged Loan Market Freezes as Prices Plunge, Four Deals Pulled

After both investment grade and high yield bonds got crushed in the past month with spreads blowing out to multi-year wides — and generated negative YTD returns as Morgan Stanley now sees the bear market gripping credit accelerating into 2019, many traders were wondering how long before the final bastion of the credit bubble – leveraged loans – would also pop.

It appears the answer may be “now” because as Bloomberg reports, no less than four leveraged loans have been pulled this month as a result of the turbulence gripping the broader credit market, the highest number of pulled deals since July when five deals were pulled. Expect more to come.

This comes as the price on the S&P/LSTA U.S. Leveraged Loan 100 Index has plunged since the start of October, when it was just shy of par, to 97.28, the lowest price since November 2006!

Diversified manufacturer Jason Inc. became at least the fourth issuer to scrap a U.S. leveraged loan this month according to Bloomberg, which writes that the company had kicked off the syndication process on its amend and extend on Nov. 13 was seeking commitments from new lenders by Nov. 20.

This news item showed up on the Zero Hedge website at 2:20 p.m. on Tuesday afternoon EST — and another link to it is here.


E.U. Delegates Reportedly Approve Plan to Levy Billions of Euros in Fines Against Italy

For a brief moment on Tuesday, it looked as if the populists running Italy’s government had finally blinked in their months-long budget standoff with the European Commission. Deputy Prime Minister Matteo Salvini, who is effectively running Italy’s government along with fellow Deputy PM Luigi Di Maio, suggested that Italy could back off its 2.4% deficit target, so long as all of the fiscal stimulus promised by their government could be preserved.

But after meeting Monday night with Prime Minister Giuseppe Conte to discuss the country’s response to the Commission’s unprecedented rejection of Italy’s budget (as well as its decision to recommend an “Excessive Deficit Procedure“) Salvini and Di Maio clarified on Tuesday that any reduction in the deficit target would be minimal — 20 or 40 basis points on the outside, keeping it well above the Commission’s recommendation for a 0.8% deficit. For Italian bondholders and those who own Italian bank shares, this is certainly unwelcome news, evidenced by a flattening yield curve on Tuesday as bonds reversed some of their gains from the day before.

And as Italy digs in its heels, its European peers have endorsed the EC’s plan to punish the Italians. According to Reuters, delegates with the European Economic and Financial Committee have endorsed a draft letter signifying their support for the EDP. While the statement could still change, the delegates are expected to formalize it during a Thursday meeting.

Overall, the Committee is of the Opinion that…the debt criterion should be considered as not complied with,” the draft document said.

A debt-based EDP is thus warranted,” the document concludes, referring to the EU disciplinary process known as the Excessive Deficit Procedure.

An E.U. official said the draft was still subject to changes, but its conclusions were not contentious.

This longish Zero Hedge article was posted on their Internet site at 3:36 p.m. on Tuesday afternoon EST — and another link to it is here.


Russia Jails Two Ukrainian Sailors Involved in Kerch Strait Confrontation

Ignoring Ukraine’s demands that its sailors be treated as prisoners of war, Russia has decided to jail two of the Ukrainian sailors captured on Sunday when Russian Navy ships rammed and fired on three Ukrainian vessels that Moscow said were “maneuvering dangerously” near the Kerch Strait. The Russian Coast Guard captured some two dozen sailors after commandeering the ships, which included to Ukrainian artillery ships and a tugboat. Russia has refused to release the ships and the sailors despite demands from European and U.S. officials.

According to Radio Free Europe, a Russian court in Simferopol ruled that the men should be kept in custody for two months while Russia carries out an investigation. News of the court’s decision follows the release of interrogation footage where three of the sailors admitted to “provoking” Russia and said they were just following orders. In Russia “pretrial detention” typically means that the men will be locked behind bars in a jail.

The court would also carry out custody hearings for 12 other captured sailors on Tuesday, with nine more expected on Wednesday.

Russian law allows for the term of their detention to be extended at prosecutors’ request. It’s not clear when the sailors, who have been accused of violating Russia’s border, will face trial.

This story put in an appearance on the Zero Hedge website at 10:13 a.m. EST on Friday morning — and I thank Brad Robertson for this one.  Another link to it is here.


Why the U.S. Mint once issued gold discs to Saudi Arabia — J.P. Koning

I stumbled on some strange gold discs earlier this year.

As you can see, the front of the gold disc has been stamped with the emblem of the U.S. Mint, specifically that of the Philadelphia mint. On the reverse side, contains details about weight and purity. But while they are shaped like a typical coin, the discs are curiously anonymous. Unlike a typical coin they have no date, denomination, issuing country, or the face of some dead President or royal. What are these odd discs and why were they produced?

My curiosity about these coins took me through on a fascinating tour of monetary history. Along the way I also learnt some troubling details about the coin collecting industry. The value of any coin is driven in part by its mythology, but this mythology is not always factual. In this post I’ll share what I learnt with you.

A quick Google search reveals all sorts of websites that sell the gold discs. APMEX, one of the world’s largest online precious metals dealer, describes them thusly:

This Gold disk was made by the U.S. Mint in Philadelphia for ARAMCO (Arabian American Oil Company). ARAMCO needed them to pay royalties to Saudi Arabia for the right to start drilling for the vast oil reserves known to be there, and to help alleviate the shortage caused by the record consumption during World War II.”

This interesting commentary appeared on the bullionstar.com Internet site on Monday — and I thank Paul Wood for pointing it out.  Another link to it is here.


The PHOTOS and the FUNNIES

Here are some more award-winning photos that Mike Easton sent along — and I’ll be featuring these for the next week or so.  Established in the 2009, the British Wildlife Photography Awards concentrate on local U.K. photographers celebrating the beauty and diversity of Britain’s flora and fauna.  The first photo is by the winner of the youth, under 12 category. Who Says Bugs Aren’t Cute? Borrowdale, Cumbria (Credit: Lucy Farrell / BWPA)  Click to enlarge.

This second shot is the winner in the Urban Wildlife category.  Magpie in the Snow – Kelvingrove Park, Glasgow (Credit: Christopher Swan / BWPA)  Click to enlarge.


The WRAP

With options expiry yesterday, I believe — and COMEX futures expiry both today and tomorrow, it is now obvious with 20/20 hindsight that JPMorgan et al took one last opportunity to give the precious metals tree another good shake before the all-all important December delivery month begins.  They were obviously trying to get as many long holders to sell as possible — and suck in whatever Managed Money traders [and the like] to go short.

They closed gold, platinum and copper back below their respective 50-day moving averages by a bit yesterday — and how successful their attempts were to accomplish ‘all of the above’, remains to be seen.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and all of yesterday’s considerable volume/price action will be in it.  I was going to hazard a guess as to what it might show, but because of the huge roll-over/switch volume during the latter part of this reporting week, I’m going to pass on it, as I’m just not qualified to comment.  But if Ted has something to say about it in his mid-week commentary later today, I’ll most likely ‘borrow’ a few sentences for my Friday column.

Here are the almost 1-year charts for the Big 6 commodities — and you can see their handiwork for yourself.  Silver was also closed lower once again — and below its 50-day moving average for the third day in a row.  Palladium was mostly spared, but still had to dig itself out of a 12 dollar price hole that was dug for it, in order to close in the green by a bit.  The ‘click to enlarge‘ feature helps with all six charts again today.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price traded mostly sideways until shortly before the 2:15 p.m. afternoon gold fix in Shanghai on their Wednesday afternoon. It dipped into the fix — and then rebounded a bit before crawling lower in price once again. At the moment, gold is down $2.20 the ounce. Silver traded flat as well, but there was no dip at the gold fix. It edged higher by a bit, but was soon turned lower — and is now down a penny. The platinum price notched down a couple of dollars in Far East trading, but at the afternoon gold fix in Shanghai, it began to gain that back — and is sitting at unchanged at the moment. The palladium price had also been chopping quietly sideways throughout most of Far East trading. It jumped up 3 bucks at the fix, but that’s all gone, plus a bit more — and is down 1 dollar as Zurich opens.

Net HFT gold volume is fumes and vapours at a hair under 7,000 contracts — and roll-over/switch volume out of December and into future months [mostly February] is very heavy at just under 26,000 contracts. Net HFT silver volume is almost non-existent as well, only about 3,200 contracts — and roll-over/switch volume in this precious metal is a hair over 7,000 contracts…mostly into March, the new front month for silver once December goes off the board.

The dollar index rallied by a small handful of basis points during very early morning trading in the Far East, but inched lower from there, with the current 97.33 low tick coming a very few minutes before 3 p.m. China Standard Time on their Wednesday afternoon. It jumped up from that point — and is currently up 5 basis points as of 7:30 a.m. GMT in London.

In my last few conversations with Ted regarding the DoJ and the guilty plea that they got from an ex-JPMorgan trader for spoofing in the precious metals, he mentioned that it was possibly used as a way to indicate to JPMorgan — and the other precious metals traders still employed by JPMorgan…that they would be next on their hit list if they didn’t mend their ways.

A Chinese quote/proverb that I’d picked up somewhere on the Internet years ago, but had forgotten about until it crossed my mind yesterday morning, is worth quoting here.  It’s an old Chinese idiom that states: “Kill the chicken to scare the monkey“… 杀鸡儆猴 …[literally: “Kill chicken, scare monkey], which refers to making an example out of someone in order to threaten others.

Ted’s right.  That’s probably what it is — and we just have to “wait some more” to see if this threat bears any fruit.  But the DoJ certainly sounds like they’re serious to me.  If you missed it, or wish to re-read Ted’s commentary…Silver Scandal…that was posted in the clear on silverseek.com on Monday…the link is here.

And as I post today’s column on the website at 4:03 a.m. EST, I note that all four precious metals are off their lows by a bit in the last few minutes. Gold is currently down $1.50 an ounce. Silver dipped a few pennies lower, but has ticked higher — and is now back at unchanged. Platinum is still sitting an unchanged — and palladium is now up a dollar as the first hour of Zurich trading draws to a close.

Gross gold volume is a bit over 70,000 contracts — and net of very heavy switch volume, net HFT gold volume is about 10,300 contracts. Net HFT silver volume is still very tiny at 4,400 contracts — and there’s a bit over 8,400 contracts worth of roll-over/switch volume in this precious metal.

The dollar index has continued to crawl steadily higher since its low tick minutes before 3 p.m. CST on their Wednesday afternoon — but has leveled off a bit during the last thirty minutes of London trading — and as of 8:30 a.m. GMT/9:30 a.m. CET, it’s now up 15 basis points.

As I mentioned in passing at the top of The Wrap, all the large traders holding COMEX futures contracts that aren’t standing for delivery in December, have to roll or sell their positions by the close of COMEX trading this afternoon — and all the rest have to be out by the close of COMEX trading on Thursday.  Yesterday’s price action — and maybe today’s as well, will be further encouragement for them to sell, rather than roll.  JPMorgan will be standing close buy to scoop up every long contract offered.

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

Ed