JPMorgan Was a Big Stopper in Silver on First Day Notice

30 November 2018 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to creep quietly higher once trading began at 6:00 p.m. EST in New York on Wednesday evening — and was up four dollars and change by shortly before 1 p.m. China Standard Tim on their Thursday afternoon.  It chopped quietly sideways from there until the COMEX open — and its feeble rally attempt that began at that juncture wasn’t allowed to get far.  Then, starting shortly before 11:30 a.m. in New York, it was sold quietly lower until minutes before 2:30 p.m. EST in the thinly-traded after-hours market — and it didn’t do much after that.

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

Gold was closed on Thursday at $1,223.90 spot, up $3.20 on the day.  Net volume was around 253,000 contracts — and virtually all of that was in the new front month for gold, which is February.  Roll-over/switch volume out of December was about 55,000 contracts.  This is one of those days every delivery month where the net volume/switch data is difficult to calculate.  That goes for silver as well.

The silver price followed the same general price path as gold — and that lasted until the London open.  It was sold down to its low tick of the day…such as it was…by minutes after 11 a.m. GMT.  From that point it chopped quietly higher until shortly before 11:30 a.m. in New York — and after that it was handled in a similar manner as the gold price.

Also like for gold, the low and high ticks aren’t worth looking up, either.

Silver was closed yesterday at $14.285 spot…unchanged from Wednesday.  Net volume was just under 82,000 contracts, most of which was in the new front month…March — and roll-over/switch volume out of December was just under 23,500 contracts.  As I just said about the gold data, this particularly day of the month is pretty hard to get right — and I would take these numbers with more than a grain of salt if I were you.

Platinum was higher by about four dollars at the Zurich open — and that was as high as it was allowed to get.  It was sold unsteadily lower from that point — and the low tick was set around 1 p.m. in New York.  It didn’t do much of anything after that.  Platinum was closed on Thursday at $818 spot, down 4 dollars on the day.

Palladium wandered around a handful of dollars either side of unchanged during Far East and most of Zurich trading.  The low tick, such as it was, came at the COMEX open.  It crept unsteadily higher until around 3:30 p.m. in the thinly-traded after-hours market — and didn’t do a thing after that.  Palladium finished the Thursday session at $1,174 spot, up 4 bucks from Wednesday’s close.

The dollar index closed very late on Wednesday afternoon in New York at 96.83 — and began to head quietly lower once trading began at 6:00 p.m. in New York on Wednesday evening.  The 96.63 low tick was set a few minutes after 3:30 p.m. China Standard Time on their Thursday afternoon…which was about twenty-five minutes before the London open.  It began to ‘rally’ around 8:25 a.m. GMT — and the 97.005 high tick was set about three hours later at 11:30 a.m. GMT.  It fell down to the 96.70 mark by 8:30 a.m. in New York, but regained about half of that drop by 9 a.m. EST — and chopped unsteadily higher for the remainder of the Thursday session.  The dollar index finished the day at 96.80…down 3 basis points from Wednesday’s close.

Here’s the almost 1-year U.S. dollar index — and the delta between its close…96.70…and the close on the intraday chart, was 10 basis points yesterday.  Click to enlarge.

The highs in the gold shares came within the first fifteen minutes of trading in New York on Thursday morning — and from there they chopped very quietly lower for the rest of the day…closing on their absolute low tick.  The HUI finished down 0.97 percent.

The silver equities opened unchanged — and began to chop very unsteadily lower starting shortly after 10 a.m. EST.  They closed on their low ticks as well, giving up over half of Wednesday’s gains in the process.  Nick Laird’s Intraday Silver Sentiment Index closed down 2.36 percent.  Click to enlarge.

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

I would suspect that the poor performance of the precious metals stocks yesterday may have had something to do with month-end book-squaring, as the sell-offs in the silver and gold equities was certainly counterintuitive — and I was underwhelmed by it.


The CME Daily Delivery Report for Day 1 of December deliveries, showed that 2,083 gold and 1,463 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, of the five short/issuers in total, the only one that mattered was HSBC USA with 2,071 contracts from its own in-house/proprietary trading account.  There were eighteen long/stoppers in total — and only three are noteworthy:  Goldman Sachs with 1,036…of which 1,035 were for its own account.  JPMorgan stopped 504 contracts for its client account — and in somewhat distant third place was HSBC USA, with 260 for its client account as well.

In silver, there were seven short/issuers in total.  The three largest were HSBC USA with 500 contracts from its in-house/proprietary trading account.  Morgan Stanley issued 448 contracts…406 from its own account, plus another 42 from its client account.  In third place came International F.C. Stone with 408 contracts from its client account.  And in very distant fourth spot was ADM with 75 contracts.  There were eleven long/stoppers in total — and head and shoulders above all was JPMorgan, as they stopped 1,066 contracts…882 for its client account — and 184 for its own account.  The ‘also rans’ were HBSC USA with 103 contracts, ABN Amro with 67 — and Advantage with 64.  All were for their respective client accounts.  The link to yesterday’s Issuers and Stoppers Report is here — and it’s worth a look if you have the interest.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in December crashed by 34,468 contracts, leaving 8,924 still open, minus the 2,083 contracts that are out for delivery on Monday.  Silver o.i. in December also cratered…by 14,204 contracts…leaving only 3,541 still around, minus the 1,463 contracts mentioned in the Thursday’s Daily Delivery Report.


There were no reported changes in either GLD or SLV on Thursday.

It was yet another day where there was no sales report from the U.S. Mint.

The Royal Canadian Mint finally got around to posting their third-quarter report on the their website yesterday. Year-over-year the mint reported that gold maple leaf sales fell by 25 percent — and silver maple leafs by 12 percent.  Q3/18 compared to Q3/17 showed that gold maple leaf sales were up 21 percent, but silver maple leaf sales were down 7 percent.  I was more than intrigued by the line item that reads “Less: ounces from customer inventory deals”…as it certainly sounds like they’re getting inventory back, because it’s subtracted from “Gross” numbers across the board…both in ‘revenue’ and ‘ounces’.  I don’t recall seeing that line item before.

Here’s the snip from Page 7 of the RCM’s third-quarter report.  Click to enlarge.  And if you wish to see all fifty pages of this report, the link to it is here.

The only physical activity in gold on Wednesday over at the COMEX-approved depositories on the U.S. east coast was 5,907 troy ounces that was received at Delaware.  There were some minor adjustments/transfers in three different depositories on Wednesday as well — and if you wish to view all this, the link is here.

It was another very big day in silver, as 1,104,826 troy ounces were received — and 853,780 troy ounces were shipped out.  In the ‘in’ category, there was one truckload…600,681 troy ounces…received at CNT — and one small truckload…504,144 troy ounces…received at Brink’s, Inc.  In the ‘out’ category, there was 823,170 troy ounces that departed CNT — and the remaining 29,611 troy ounces was shipped out of the International Depository Services of Delaware.  There was also a lot of transfers from the Eligible to Registered category — and vice versa as well.  There was 2,515,851 troy ounces transferred from the Eligible category and into Registered over at HSBC USA, plus another 43,982 troy ounces at Brink’s, Inc.  I would suspect that this is directly related to the December delivery month.  But over at Canada’s Scotiabank, there was 997,209 troy ounces transferred from the Registered category — and back into Eligible.  The link to all this action is here.

It was fairly quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They reported receiving 450 of them — and shipped out 445.  All of this activity was at Brink’s, Inc. — and the link to that is here.

The Lampsacus Treasure was accidentally found in 1847 by farmers digging in a field near the village of Lapseki (ancient Lampsacus) in north-west Turkey. Dating to 6th and 7th centuries A.D., the hoard of largely silver objects provides a significant catalogue of design and fashion from the early Byzantine period. Soon after its discovery, the bulk of the treasure came into the possession of Henry Richard Charles Wellesley, Earl of Cowley, who donated it to the British Museum in 1848. Two other institutions also have objects from the treasure: the Istanbul Archaeological Museum possess two bowls; the Louvre a further two spoons.

The hoard includes a wide range of ecclesiastical objects that may have originally belonged to a church or a wealthy individual connected with the church. It includes a silver tripod lamp-stand with five imperial control stamps that date from the reign of Justinian I (527-65A.D.). In the British Museum there are also twelve pear-shaped spoons, six of which bear inscriptions and verse in Greek and/or Latin, a (slightly damaged) silver chalice, two silver dishes with nielloed monograms in the centre, an ornate silver polycandelon, part of a folding stool, and various jewellery and furniture/vessel fittings.  Click to enlarge.

It’s another day where I don’t have much in the way of stories.


CRITICAL READS

Treacherous Times for Bond Funds Ahead — Wolf Richter

Bond ETFs and open-end bond mutual funds sound conservative in marketing materials, but they pack special risks and surprises in a downturn that can entail a catastrophic loss for investors.

Exchange-traded bond funds and bond mutual funds are big business. They’re a lot easier for retail investors to buy and sell than the actual bonds, particularly bond ETFs, which trade on stock markets just like stocks — and can even be day-traded. But this liquidity for investors is precisely the potentially catastrophic problem.

And in this era of rising interest rates and deteriorating credit, bonds already have plenty of other problems.

Corporate America carries record amounts of debt. Part of this debt is in form of bonds (the other part is in form of loans). The amount of bonds outstanding has ballooned over the past five years, even as the credit quality has deteriorated. Now there are $6.1 trillion of investment-grade US-corporate bonds outstanding, according to Moody’s (plus over $1.2 trillion of “junk bonds”). These bonds are everywhere, including in bond ETFs and bond mutual funds, and therefore in retail investors’ portfolios.

This commentary by Wolf appeared on the wolfstreet.com Internet site yesterday sometime — and I thank Richard Saler for sending it along.  Another link to it is here.


Pending Home Sales Plunge To Weakest Since 2014

Hope was high for a rebound (after new-home-sales slumped), but that was dashed as pending home sales plunged 2.6% MoM in October (well below the expected 0.5% MoM bounce).

Additionally, Pending Home Sales fell 4.6% YoY – the 10th consecutive month of annual declines…

As Bloomberg notes, the results underscore the challenges as elevated prices and rising mortgage rates are keeping more Americans on the sidelines of the housing market. Economists consider pending-home sales a leading indicator because they track contract signings; purchases of existing homes are tabulated when a deal closes, typically a month or two later.

This brief 2-chart news item appeared on the Zero Hedge website at 10:11 a.m. EST on Thursday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.


When The Music Stops, Who Gets Stuck With The Bad Loans? — Dennis Miller

The Federal Reserve is raising interest rates. Higher rates = higher monthly payments = more defaults. Who will get stuck with bad loans?

Wolf Street recently interviewed Mike Jackson, CEO of AutoNation, the largest auto retailer in the country:

We knew ‘free money would inevitably end. Affordability would become an issue…

The double whammy are rising costs for highly leveraged companies, such as auto dealers, and consumers facing rising prices of vehicles to be financed at higher rates. Something has to give.

This commentary by Dennis was posted on his website on Thursday morning — and another link to it is here.


What Trump Will Say at the G20 — Bill Bonner

And here we are… still no crisis… the key rate is still only between 2% and 2.25%, while the inflation rate (CPI) is 2.5%… The Donald is on the Fed’s back for raising rates… and Fed chief Powell’s knees are already quaking.

Yesterday, investors, anticipating EZ money forever, bid up the Dow by more than 600 points. And our guess is that they will bid it up even further when our second prediction turns out to be true, too – tomorrow.

Economic advisor Larry Kudlow set the stage for President T.’s meeting with the Chinese president on Friday. From CNBC:

There’s a good possibility a deal can be made,” Kudlow said at a press briefing on Tuesday afternoon, noting that Trump personally called Xi to “get things started.”

Certain conditions still need to be met in order to resolve the standoff between the world’s two largest economies, Kudlow said.

This commentary by Bill showed up on the bonnerandpartners.com Internet site early yesterday morning EST — and another link to it is here.


Deutsche Bank Offices Are Searched in Money Laundering Investigation

Deutsche Bank’s efforts to escape a history of scandal, wrongdoing and mismanagement suffered a serious setback Thursday after the German police raided its headquarters in Frankfurt as part of an investigation into whether the lender helped criminals launder money through offshore tax havens.

Arriving in a fleet of blue-and-white police vans, 170 prosecutors, federal agents, police officers and tax authorities searched the headquarters and five other sites in the area, prosecutors in Frankfurt said. The officers seized paper documents and electronic records related to the case, which involved hundreds of millions of euros, and were still at the bank late Thursday.

The investigation stems from information contained in the so-called Panama Papers and Offshore Leaks, a trove of confidential documents that helped to expose the workings of global money laundering and tax evasion, prosecutors said. Deutsche Bank employees, who were not identified, are suspected of guiding customers to establish companies in offshore tax havens and transfer money earned through criminal activity using Deutsche Bank accounts, the prosecutors said. A subsidiary in the British Virgin Islands is under intense scrutiny.

This story appeared on The New York Times on Thursday morning sometime — and I thank Roy Stephens for pointing it out.  Another link to it is here.


Trump Cancels G-20 Meeting With Putin

Just minutes after suggesting he was open to the meeting, ahead of being briefed on the details, it appears ‘the details’ were enough to push him over the edge as he has decide to cancel his meeting with Russian president Vladimir Putin in Argentina at the G-20 meeting.

A Kremlin aide said on Wednesday that the two leaders would look for ways to break out of a deadlock in relations when they meet for talks that will touch on strategic stability, Syria, Iran and North Korea.

The meeting was thrown into doubt on Tuesday when Trump said he might cancel it after an incident between Russia and Ukraine over the weekend.

Perhaps, Trump is under pressure from Deep State as the Mueller ‘noise’ rises…

This Zero Hedge story showed up on their Internet site at 11:41 a.m. EST on Thursday morning — and I thank Brad Robertson for sharing it with us.  Another link to it is here.  The rt.com version of this event is headlined “How Trump was finally tripped by sabotage of every meeting with Putin” — and I thank George Whyte for sending it our way.


I didn’t see any precious metal-related new items on the Internet yesterday that I thought worth posting.


THE PHOTOS and the FUNNIES

Here are some more award-winning photos 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 in the Hidden Britain category, entitled: Waiting for her Prey – Dunchideock, Devon (Credit: Andrew McCarthy / BWPA)  Click to enlarge.

This second photo is the winner in the Habitats category, entitled: Spectacular IsolationCairngorms National Park, Highlands, Scotland (Credit: Andrew Parkinson / BWPA)  Click to enlarge.


The WRAP

It was a pretty quiet trading session in the precious metals on Thursday, as nothing much happened…or was allowed to happen…you choose.  Silver broke above its 50-day moving average by a penny yesterday, but was closed a few pennies below it.  Platinum was closed at a new low for this move down — and palladium continues to climb to new record highs.  It should also be noted that WTIC hit a new intraday low yesterday as well.

Here are the almost 1-year charts in the Big 6 commodities — and all the changes I mentioned in the previous paragraph should be noted.  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 gold and silver prices have done absolutely nothing in Far East trading on their Friday. Gold is currently up 40 cents — and silver by 1 cents. The platinum price traded sideways until 9 a.m. China Standard Time on their Friday morning — and began to stair-step quietly lower in price from that juncture — and at the moment it’s down 5 dollars. The price action in palladium was almost the opposite…up 6 bucks by around 10:30 a.m. CST — and it’s been trading flat ever since.

Net HFT gold volume is fumes and vapours at around 20,200 contracts in February — and roll-over/switch volume is a tiny 925 contracts on top of that. Net HFT silver volume is equally tiny at around 5,700 contracts in March — and there’s only 573 contracts worth of roll-over/switch volume in that precious metal.

The dollar index has been virtually comatose in Far East trading on their Friday — and as of about 7:30 a.m. in London, it’s up 3 basis points after being down a small handful of basis points in morning trading in Shanghai.

November went off the board at the COMEX close yesterday — and now we’re into December deliveries, which are off to a rather robust start.  JPMorgan showed up as a pretty big stopper in both gold and silver, but particularly in silver…although not much for its own account.  I know that Ted is always interested in what the criminal elements are up to over there — and it will be interesting to see what they stop on Day 2.  He’ll certainly have something to say about all this in his weekly review on Saturday.

And as I post today’s column on the website at 4:02 a.m. EST this morning, I see that the gold price has dipped back to a few dimes below unchanged — and silver is now down a few cents.  Platinum is down 10 dollars now — and palladium is up 7 bucks.

Gross gold volume is very quiet at a bit over 29,000 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is 26,000 contracts.  Net HFT silver volume is a bit over 7,700 contracts — and there’s only 695 contracts worth of roll-over/switch volume on top of that.

With a bigger time line to work with, it’s now plain that the dollar index’s current low tick came at exactly 11 a.m. China Standard Time on their Friday morning.  It began to crawl quietly higher from there, but began to move up a bit more aggressively starting around 2:40 p.m. CST — and as of 8:30 a.m. in London, it’s now up 6 basis points.

Today, around 3:30 p.m. EST, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  In his Wednesday missive, silver analyst Ted Butler wasn’t about to stick his neck out as to what might be in that report, although he is expecting more improvements in this report.  Here are two sentences from what his thoughts were…

As far as this week’s COT report, price action through yesterday’s cutoff would suggest net managed money selling and commercial buying, given the general price weakness into the cutoff date, as well as the renewed penetration to the downside of the 50-day moving averages in both silver and gold. However, I’m reluctant to predict by numbers of contracts, given the generally low net volume — and my questioning of the capacity of the managed money technical funds to add to new short positions, [as] there’s got to be some limit to these traders’ stupidity.”

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

Ed