Precious Metal Prices Were Well Managed on Wednesday

29 November 2018 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much of anything in Far East and morning trading in London on their respective Wednesdays, as all and sundry were waiting to see what Powell had to say at noon in New York.  And at precisely 12 o’clock noon EST, the price went vertical, but ran into resistance immediately — and was capped and turned lower about ten minutes later.  It rallied anew about thirty minutes after that, but only by a few dollars going into the COMEX close, but even that was taken away in after-hours trading.

The low and high ticks in gold were reported by the CME Group as $1,210.50 and $1,227.70 in the December contract.

Gold was closed in New York on Wednesday at $1,220.70 spot, up $6.10 on the day — and back above its 50-day moving average.  Net volume was virtually nothing, at a bit over 22,600 contracts — and roll-over/switch volume was over the moon at a bit under 218,500 contracts.

It was mostly the same price action in silver, as it traded unevenly sideways in Far East and morning trading in London as well — and the silver price was handled in a similar manner to gold’s from noon onwards in New York.

The low and high ticks in this precious metal were reported as $14.07 and $14.36 in the December contract.

Silver was closed on Wednesday at $14.285 spot, up 16.5 cents on the day…but not above its 50-day moving average.  Net volume was fumes and vapours at a bit over 20,200 contracts — and roll-over/switch volume was enormous at a hair over 63,500 contracts.

The platinum price also traded mostly sideways in Far East and morning trading in Zurich on their respective Wednesdays.  That all ended a few minutes before 2 p.m. CET/8 a.m. in New York, as the price was nudged a couple of dollars lower over the next couple of hours.  Then the bids got pulled — and the algos spun — and the $812 low tick was printed at exactly noon when Powell was set to speak.  It rallied a bunch from there until a few minutes before the COMEX close — and was sold a few dollars in lower in the thinly-traded after-hours market.  Platinum was closed yesterday at $822 spot, down 9 bucks from Tuesday.

Palladium didn’t do much of anything until 10 a.m. in Zurich yesterday morning.  It then rallied about 7 dollars or so over the next hour, before trading flat once again until shortly after the COMEX opened in New York.  Then away it went to the upside.  It ran into obvious ‘resistance’ at 9 a.m. EST, as the market appeared to go ‘no ask’ — and from that juncture it chopped quietly higher until a few minutes after 2 p.m. in after-hours trading.  It was sold down a couple of dollars into the 5:00 p.m. EST close from there.  Palladium finished the Wednesday session at $1,170.00 spot, up 29 dollars from Tuesday’s close.  I wonder what palladium’s close would have been if it hadn’t run into that ‘resistance’ at 9 a.m. in New York.

The dollar index closed very late on Tuesday afternoon in New York at 97.37 — and proceeded to rally a handful of basis points once trading began at 6:00 p.m. EST a few minutes later.  From that point, it began to crawl quietly lower — and that situation lasted until a very few minutes before 3 p.m. China Standard Time on their Wednesday afternoon.  From there it rallied until about 8:45 a.m. in London — and then headed lower until around 11 a.m. GMT.  It began to chop quietly higher from that juncture — and the 97.54 high tick was set minutes before 11 a.m. in New York, which was minutes before London closed for the day.  It sank a bit from there, but even before Powell opened his pie hole at noon in New York, it was already headed for the nether parts of the earth — and went straight down a few minutes later.  A few minutes after that, ‘gentle hands’ appeared, but the subsequent rally lasted less than thirty minutes before the dollar index renewed its plunge.  The 96.69 low tick was set around 1:50 p.m. EST — and it crawled quietly higher until 5:00  p.m. — and didn’t do much after that.  The dollar index closed on Wednesday at 96.83…down 54 basis points from Tuesday.

And here’s the almost 1-year U.S. dollar index — and the delta between its close…96.68…and the intraday chart above, was 15 basis points yesterday.  Click to enlarge.

The gold stocks opened about unchanged — and dipped a bit until around 10:35 a.m. in New York trading.  They began to edge higher from there — and blasted higher at noon when Powell spoke.  Most of the gains that mattered were in by shortly before the 1:30 p.m. COMEX close — and they chopped quietly sideways from there until trading ended at 4:00 p.m. EST.  The HUI closed up 2.92 percent.

It was mostly the same for the silver equities, so I won’t bother repeating myself, except they did somewhat better than their golden brethren.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 3.84 percent.  Click to enlarge if necessary.

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


The CME Daily Delivery Report showed that 1 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories today.  The issuers and stoppers are irrelevant in both precious metals.  But if you wish to look, the link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that 2 gold contracts were posted for delivery today.  Tuesday’s Daily Delivery Report showed that 3 gold contracts were actually posted for delivery today, so that means that 3-2=1 more gold contract was added to the November delivery month yesterday.  Silver o.i. in November rose by 1 contract, leaving 1 still open, minus the 1 contract mentioned in the previous paragraph.  November deliveries are done — and it went right down to the wire, with new contracts added right to the bitter end in both precious metals.

For the month of November, there were 219 gold contracts issued and stopped — and that number in silver was 1,488…which is a hell of a lot for a non-traditional delivery month.

Gold open interest in December fell by 55,300 contracts, leaving 44,407 contracts still open.  Silver o.i. in December dropped by 18,295 contracts, leaving 17,947 still around.  Open interest in both will take another big hit today — and a truly accurate picture of the remaining December open interest really won’t be known for sure until Friday evening’s Preliminary Report.


There were no reported changes in GLD — and a rather smallish 187,802 troy ounces of silver was added to SLV yesterday.

Once again 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 Tuesday was 160.755 troy ounces/5 kilobars [SGE kilobar weight] that were shipped out of Brink’s, Inc.  I won’t bother linking this.

It was fairly busy in silver once again, as three truckloads…1,705,476 troy ounces…were received — and only one good delivery bar…1,092 troy ounces…was shipped out.  Two truckloads…1,110,333 troy ounces…were dropped off at Brink’s, Inc. — and the remaining truckload…595,143 troy ounces…found a home over at Canada’s Scotiabank.  The lone good delivery bar shipped out departed Brink’s, Inc.  The link to this activity is here.

It was pretty busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They only received 200 of them, but shipped out a very chunky 9,215.  All of this occurred at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


In 1966 the Fishpool Hoard of 1,237 15th century gold coins, four rings and four other pieces of jewellery, and two lengths of gold chain was discovered by workmen on a building site near present-day Cambourne Gardens, in Ravenshead, Nottinghamshire, England, an area that was then known as “Fishpool”. It is the largest hoard of medieval coins ever found in Britain. To judge from the dates of the coins, the hoard was probably buried in haste sometime between winter 1463 and summer 1464, perhaps by someone fleeing south after the Battle of Hexham in May 1464, in the first stages of England’s civil war between aristocratic factions, the War of the RosesClick to enlarge.

I have an average number of stories for you today.


CRITICAL READS

Fed warns that a ‘particularly large’ plunge in market prices is possible if risks materialize

The Federal Reserve issued a cautionary note Wednesday about risks to financial stability, saying trade tensions, geopolitical uncertainty and a buildup in corporate debt among firms with weak balance sheets pose strong threats.

In a lengthy first-time report on the banking system and corporate and business debt, the Fed warned of “generally elevated” asset prices that “appear high relative to their historical ranges.”

In addition, the central bank said ongoing trade tensions, which are running high between the U.S. and China, coupled with an uncertain geopolitical environment could combine with the high asset prices to provide a notable shock.

An escalation in trade tensions, geopolitical uncertainty, or other adverse shocks could lead to a decline in investor appetite for risks in general,” the report said. “The resulting drop in asset prices might be particularly large, given that valuations appear elevated relative to historical levels.”

The drop in asset prices would make it more difficult for companies to get funding, “putting pressure on a sector where leverage is already high,” the report said.

This story put in an appearance on the cnbc.com Internet site on Wednesday morning sometime — and was updated about five hours after that.  I found this on Doug Noland’s website — and another link to it is here.


U.S. Trade Deficit Soars to Record High as Exports Tumble

The October advanced trade balance (deficit) of goods worsened to $77.2 billion ($77.0 billion expected) from $76.3 billion in September.

Imports rose 0.1% in Oct. to $217.764b from $217.554b in Sept.  Exports fell 0.6% in Oct. to $140.517b from $141.303b in Sept.

This is a new record high deficit for Trump’s America…

In December 2016, the U.S. goods trade deficit was $63.485 billion.  In October 2018, the U.S. goods trade deficit is $77.2 billion.

A dramatic rise of almost $14 billion since Trump’s election and trade war started.

This news story appeared on the Zero Hedge website at 8:42 a.m. on Wednesday morning EST — and is another contribution from Brad Robertson — and another link to it is here.


New Home Sales Crash in October — Biggest Plunge Since 2011

Following the small MoM blip higher in existing home sales (though dismal YoY plunge), new home sales were expected to rebound in October (after plunging 5.5% MoM in September) but instead they utterly collapsed – crashing 8.9% MoM.

New home sales have now missed expectations for seven consecutive months.

The drop in purchases was led by a 22.1 percent slump in the Midwest, and an 18.5 percent decrease in the Northeast. The South had a 7.7 percent decline while the West fell 3.2 percent.

Tumbling a massive 12% YoY – the biggest drop since April 2011…

And just for good measure, the median price tumbled to $309.7K from $321.3K, lowest since Feb 2017.

This chart-filled story was posted on the Zero Hedge website at 10:08 a.m. EST on Wednesday morning — and it’s the first offering of the day from Brad Robertson.  Another link to it is here.


Mike Maloney Video: “I Found a New Recession Indicator That Says LOOK OUT BELOW!”

Mike Maloney was excited. It was our weekly company meeting, and he interrupted it to tell us all about a new recession indicator he’d just discovered. In fact, he said it is “one of the most reliable indicators of a pending recession I have ever come across.”

This rather interesting video from Mike was posted on the goldsilver.com Internet site on Tuesday sometime — and the first reader through the door with in yesterday was Harold Jacobsen.


Europe’s Diesel Woes Deepen as Strike Halts French Oil Refinery

Europe’s diesel market, already reeling from weeks of low water levels on the Rhine River, is now contending with a major supply disruption in France.

Total SA, France’s biggest refiner, is in the process of shutting its largest plant in the country, the 247,000-barrel-a-day Gonfreville facility in Normandy, due to a labor dispute, a spokeswoman for the company said on Tuesday. A few hundred miles away, in the Netherlands, retail fuel stations are running out of supplies because of shipping constraints on the Rhine, according to Royal Dutch Shell Plc.

A key measure of diesel supply in Europe — the gap between immediate prices and later ones — is surging, indicating shrinking short-term fuel availability. The December-January spread surged as high as $13.25 a metric ton on Tuesday, the highest since the contract began trading.

The same industrial dispute that halted output from Total’s Gonfreville refinery also blocked shipments out of two other plants, according to the spokeswoman. The spat comes at an awkward time for France, which has experienced days of protests about plans to hike a fuel levy.

It’s also challenging for the wider European diesel market. Shell said Nov. 20 that it cut production at its Rheinland refining site, the biggest complex of its kind in Germany, due to low water levels on the Rhine. In a tweet on Tuesday, the company said that it was temporarily unable to supply some unmanned fuel stations in the Netherlands.

This Bloomberg story is one I plucked from a Mish Shedlock piece on Zero Hedge yesterday — and another link to it is here.  The Shedlock piece, headlined “European Gas Stations Out of Diesel: French Refinery Strike Deepens Crisis” is linked here.  I thank Brad Robertson for both these items.


Traders Shocked As Largest Italian Bank Forced to Pay Six Times More Interest to Sell Bonds

In the clearest indication yet of just how severe the recent spike in Italian yields has been on the country’s financial institutions, Italy’s largest bank, UniCredit, surprised the market today when it sold $3 billion in dollar denominated five-year bonds. To find a willing buyer, the bank had to pay the equivalent of 420 basis points over the euro swap rate, which is six times more than the 70 bps over swaps it paid on five-year euro senior non-preferred bonds just this past January.

The spread on the new issue was a shock as it represented a nearly 150bps concession to current market rates, and is an indication of just how much even the strongest Italian banks have to pay up if they hope to access capital markets during the ongoing Italian political turmoil.

And when we say the market was surprised, it wasn’t just by how much UniCredit had to pay, but how many buyers turned up for the sale: just one, namely the world’s largest fixed income manager, Pimco, which was the sole buyer of the bonds.

UniCredit’s decision to raise funding privately with just one investor suggests that analysts are skeptical about the wider market’s appetite for Italian bank bonds, said Jakub Lichwa, a credit strategist at Royal Bank of Canada in London: “The signal would have been far stronger if they had come to market with and built an order book at this level,” he said.

Which is ironic considering that even with a 150bps concession to market, the bank was still unsure it would find willing buyers.

This longish, but interesting news item showed up on the Zero Hedge website at 10:18 a.m. EST on Wednesday morning — and I thank Brad Robertson for this one as well.  Another link to it is here.


Putin says Ukraine is playing a “dirty game” as Russia deploys S-400 missiles to Crimea

Tensions are escalating in the latest dispute between Russia and Ukraine.

The recent spat started Sunday when Russia seized three Ukrainian navy ships and crew in the Kerch Strait. Russian President Vladimir Putin said the ships entered territorial waters illegally to provoke a response. The crisis prompted Ukrainian President Petro Poroshenko to impose martial law in some parts of the country for 30 days.

It’s a provocation initiated by the current authorities, and I think by the [Ukrainian] president, in light of the upcoming elections to be held next year … The incident in the Black Sea happened, it is a border incident, no more,” Putin said at a Moscow business forum, according to CNBC.

Putin went on to say that Poroshenko hopes the crisis will boost his popularity before Ukraine’s March election.  Ukraine called it an “act of aggression” by Russia.

This UPI story put in an appearance on their Internet site at 10:34 a.m. EST on Wednesday morning — and I thank Roy Stephens for pointing it out.  Another link to it is here.  In a parallel story from the france24.com Internet site yesterday, comes this headline “Ukraine-Russia tensions rise as Kiev warns of ‘full-scale war’” — and I thank Roy Stephens for that one as well.


“Kiev would get away even with eating babies”: Putin says Kerch Strait standoff is a provocation

Russia’s President Vladimir Putin said the clash between Russian and Ukrainian military ships was a result of foreign nation’s failing to hold Kiev accountable for bad behavior as long as it remains confrontational towards Russia.

The remarks were the first made by the Russian leader since the confrontation in the Kerch Strait, a narrow passageway between the Black Sea and the Azov Sea, where a strategic bridge connecting Crimea with mainland Russia is located.

The authorities in Kiev are selling anti-Russian sentiment with quite a success today. They have nothing else to do,” Putin said during a business forum in Moscow.

The Russian president said it seemed like Kiev could get away with anything as far as foreign nations supporting Ukraine’s anti-Russian stance were concerned.

If they demand babies for breakfast, they would probably be served babies. They’d say: ‘Why not, they are hungry, what is to be done about it? This is such a shortsighted policy and it cannot have a good outcome. It makes the Ukrainian leadership complacent, gives them no incentive to do normal political work in their country or pursue a normal economic policy.”

Putin said the incident, which ended in Russia’s seizure of three Ukrainian ships and Kiev imposing a partial martial law in the country, was a “dirty game” by Poroshenko, who needs to suppress his political opponents ahead of the March presidential election. He assured that the Ukrainian side was responsible for the escalation of tensions, since the incident was a deliberate and planned provocation by the Ukrainian Navy.

This news story was posted on the rt.com Internet site at 12:00 p.m. Moscow Time on their Wednesday afternoon, which was 4:00 a.m. in Washington — EST plus 8 hours.  It was updated about three hours later.  I thank Swedish reader Patrik Ekdahl for that one — and another link to it is here.


Platinum market set for big surpluses in 2018 and 2019: WPIC

In its latest Platinum Quarterly report, the World Platinum Investment Council (WPIC) revised its forecast for oversupply this year to 505,000 ounces from 295,000 ounces, blaming weak demand for platinum jewelery, and said 2019 would see a surplus of 455,000 ounces.

Supply will grow (in 2019) but demand will grow even more, and reduce the surplus slightly,” said the WPIC’s head of research Trevor Raymond.

Platinum prices hit a 10-year low in August and are down 9 percent this year.

The market flipped from deep deficit earlier this decade to surplus as falling use by automakers, jewelers and investors pushed demand from 8.5 million ounces in 2013 to an estimated 7.5 million ounces this year, said the WPIC, which is funded by platinum miners.

This Reuters article, filed from London, appeared on their website at 11:49 p.m. EST on Tuesday night in New York — and I found it on the Sharps Pixley website.  Another link to it is here.


Palladium closing the price gap with gold — Lawrie Williams

To be fair palladium’s supply/demand fundamentals look more positive than those for gold at the moment., and at today’s price what is now perhaps the most heavily traded PGM is only around $70 below gold after lagging the yellow metal by a few hundred dollars for much of the year   Indeed palladium has been easily the best performing principal precious metal year to date.

Palladium trades more as a true commodity than most of the other precious metals while gold is largely dependent on investment money and this has been sadly lacking over the past few months.
The main reason for palladium’s price strength is that it has become the preferred catalytic metal for petrol (gasoline) engine exhaust emission controls – having replaced its sister metal, platinum, which retains an advantage with diesel engines – and its price has usurped that of platinum – petrol engines being the market leader nowadays with diesel having fallen into disfavour in the big light vehicle market.

Platinum is also seen as being in surplus, and likely to remain so given annual production is greater than that of palladium and demand is probably lower.  The only cloud on the palladium horizon could be that as palladium replaced platinum in exhaust emission control catalysts because it used to be a far less expensive metal, now that its price is at a premium over its sister metal, will the reverse come about?  Experts tell us no! as the chemistry and engineering involved in using palladium-based catalysts has advanced so far that the costs involved, and possible advantages. in switching back to platinum are just too great and effectively non existent even at the current price premium, but this could change if palladium prices continue to advance strongly.

This commentary by Lawrie showed up on the Sharps Pixley website yesterday morning GMT sometime — and another link to it is here.


The PHOTOS and the FUNNIES

Here are some more award-winning photos that Mike Easton sent along that were handed out by the British Wildlife Photography Awards.  Their awards concentrate on local U.K. photographers celebrating the beauty and diversity of Britain’s flora and fauna.  The first photo is the winner of the British Seasons category — and is entitled  “Seasonal Scottish Red Squirrels“, Rothiemurchus Forest, Highland (Credit: Neil Mcintyre / BWPA).  Click to enlarge.

This second photo is the winner in the Animal Portraits category.  Eurasian badger – Peak District National Park, Derbyshire (Credit: Tesni Ward / BWPA).  Click to enlarge.


The WRAP

The precious metals really wanted to fly yesterday, but it wasn’t allowed to happen.   Powell had barely opened his yap — and gold and silver prices got capped.  Platinum  was hammered to its low of the day by noon in New York — and wasn’t allowed to dig itself out of that hole after that.  Palladium was off to the races even before Powell was finished shaving yesterday morning — and didn’t even twitch at noon in New York when he spoke.  So it’s safe to say that all four precious metals were being actively managed yesterday.

But with low net volume, Ted was of the opinion that even though gold broke back above — and closed above its 50-day moving average again on Wednesday, very little…if any…damage as far as COMEX futures market positioning, was done in gold or silver.

Here are the almost 1-year charts for the Big 6 commodities once again — and I thought I’d toss in natural gas, as it had a fairly decent move on Wednesday.  The ‘click to enlarge‘ feature helps with all seven charts.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price crawled quietly higher until around 12:30 p.m. China Standard Time on their Thursday afternoon — and has been trading sideways since, but jumped up a hair about about 20 minutes before the London open — and is currently up $5.50 an ounce. The price path for silver was virtually identical — and it’s up 6 cents at the moment. It was more or less than same in platinum as well — and it’s up 5 bucks. Palladium jumped up 4 dollars or so in very early morning trading in the Far East — and then didn’t do much of anything until the 2:15 p.m. CST afternoon gold fix. It has been edging quietly lower since — and is currently down 2 dollars the ounce as Zurich opens.

Net HFT gold volume is a bit over 36,000 contracts, most of which is in the new front month for gold, which is February — and there’s about 10,500 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is 6,300 contracts, with most of that in the new front month for silver, which is March — and there’s 4,132 contracts worth of roll-over/switch volume on top of that.

The dollar index began to head lower almost from the moment that trading began at 6:00 p.m. EST in New York on Wednesday evening — and its current 96.64 low tick was set around 1:20 p.m. CST on their Thursday afternoon. It then crawled higher until a few minutes after 3 p.m. CST, but has turned sharply lower since — and is down 18 basis points about thirty minutes before the London open.

By the close of COMEX trading this afternoon, all remaining December contract holders in COMEX futures in silver and gold that aren’t standing for delivery next month, have to roll or sell their positions.  So it will be another big volume day, but nearly as big as yesterday.

First Day Notice for Day 1 of December deliveries on Monday will posted on the CME’s website around midnight EST this evening — and I will have all of that for you in tomorrow’s column.

And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price hasn’t done much during the first hour of London trading — and is up $4.30 at the moment. Silver was sold a bit lower the moment that London opened — and it’s up only 2 cents at the moment. Platinum was also been sold lower — and is back at unchanged. But palladium began to edge higher even before the Zurich open — and is back in the green and up 3 dollars.

Gross gold volume is 69,000 contracts — and net of roll-over/switch volume, net HFT gold volume is 45,000 contracts…most of which is in the new front month for gold, which is February. Net HFT silver volume is about 8,200 contracts, most of which is now in the new front month for silver, which is March. Roll-over/switch volume is 4,802 contracts.

The dollar index has been creeping higher since the London open — and is down only 8 basis points as of 8:30 a.m. GMT in London.

That’s all I have for today, which is more than enough — and I’ll see you here tomorrow.

Ed