JPMorgan Back at the Silver Trough For a Second Day

01 December 2018 — Saturday


The gold price didn’t do much of anything in Far East trading on their Friday morning.  That lasted until around 1 p.m. China Standard Time — and then quiet price pressure began.  That ended at exactly 9:30 a.m. in New York, when it got kicked downstairs a bit more — and the low tick came twenty minutes later, around 9:50 a.m. EST, which may or may not have coincided with the afternoon gold fix in London.  It began to head higher from there — and really began to sail a very few minutes before noon in New York, but the price got stepped on right at 12 o’clock noon.  It was sold lower until shortly after 1 p.m. EST — and it crawled quietly higher into the close from there.

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

Gold closed in New York on Friday at $1,222.10 spot, down $1.80 on the day.  Net volume was exceedingly quiet at around 164,500 contracts — and roll-over/switch volume was approximately 8,500 contracts on top of that.

The silver price traded a few pennies either side of unchanged in Far East trading on their Friday — and the price pressure began right at the London open.  It was sold quietly lower from that juncture until shortly after COMEX trading began in New York yesterday morning.  Then the real price pressure began, with the low tick of the day coming a minute or so before 10 a.m. EST…the afternoon gold fix in London.  It was allowed to rally from that point, until noon — and then really didn’t do much of anything after that…trading almost ruler flat in the after-hours market.

The high and low ticks in silver were reported by the CME Group as $14.41 and $14.115 in the March contract.

Silver was closed in New York on Friday at $14.15 spot, down 13.5 cents on the day.  Unlike gold, net silver volume was pretty heavy at just under 74,000 contracts — and there was a bit over 6,000 contracts worth of roll-over/switch volume in that precious metal.  Ted didn’t know what to make of that — and as he pointed out on the phone yesterday, we won’t find out until next Friday’s COT Report.

Platinum traded flat until 9 a.m. CST on their Friday morning — and from that point, it was quietly stair-stepped lower until it jumped a few dollars higher just before 2 p.m. in Zurich/8 a.m. in New York.  It was all mostly down hill from there, with the low tick coming minutes after 1 p.m. EST — and it traded sideways from there until trading ended at 5:00 p.m.  Platinum was closed at $797 spot, down 21 dollars on the day.

Palladium was up 6 bucks or so by shortly after 10:30 a.m. China Standard Time on their Friday morning — and then traded flat until 10:30 a.m. CET in Zurich.  It began to edge unsteadily higher from there — and the $1,191 high tick was set around 8:30 a.m. in New York.  Then it was handled in a similar manner to platinum — and its COMEX low came minutes after 1 p.m. EST.  It then traded sideways until a very few minutes before the 5:00 p.m. close — and jumped up 7 dollars at that point.  Palladium was closed at $1,170 spot, down 4 bucks on the day…but 21 dollars off its high tick.

The dollar index closed very late on Thursday afternoon in New York at 96.80 — and then proceeded to edge lower until precisely 11:00 a.m. China Standard Time on their Friday morning — and it was down about 8 basis points at is low tick of the day.  At that juncture, a ‘rally’ began that topped out at the 97.31 mark a few minutes after 1 p.m. in New York — and from there it crawled quietly lower into the close.  The dollar index finished the Friday session at 97.20…up 40 basis points on the day.

And here’s the almost 1-year U.S. dollar index chart.  The delta between its close…97.20…and the close in the intraday chart above, was 11 basis points on Friday.  Nothing much should be read into this graph, as it’s just as ‘manufactured’ as all other indices are these days.  Click to enlarge.

The gold shares slid by two percent during the first half-hour of trading once it began at 9:30 a.m. EST in New York on Friday morning.  Once the afternoon gold fix was in, they began to chop higher…making it almost back to unchanged by a minute or two after 12 o’clock noon.  They headed lower for the next hour, but after the dollar index topped out — and the gold price began to tick higher, and the shares rallied unsteadily right into the 4:00 p.m. EST close.  The HUI closed down only 0.96 percent.

The silver equities were sold lower by a bit over two percent in the first thirty minutes of trading, but the subsequent rally actually poked its nose into positive territory by a hair just before noon EST.  After that, the trading pattern was very similar as it was for the gold stocks — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down only 0.63 percent.  Click to enlarge if necessary.

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

It’s obvious that there was a decent amount of bottom fishing going on in the precious metal equities on Friday.

Here are the usual charts from Nick that show what’s been happening for the week, month-to-date — and year-to-date.  The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI and the Silver 7 Index.

Here’s the weekly chart — and both gold and silver closed about unchanged.  The gold stocks finished in the green, but the silver equities were sold lower.  Click to enlarge.

The month-to-date chart show the gold shares outperforming their silver brethren by a very wide margin indeed, even though there wasn’t much difference in how well the underlying precious metals performed.  The silver equities really got creamed in November — and I suspect that some of the earnings reports that came out earlier in the month didn’t help their cause.  There might have been some tax loss selling as well.  Click to enlarge.

The year-to-date chart, except for palladium as always, continues to be a sea of red.  But it’s still crystal clear that the silver equities are ‘outperforming’ their golden brethren over the longer term.  Click to enlarge.

As I said in this space last week — and the week before…it’s still JPMorgan’s world in the precious metals market– and they’ll do whatever they want, or until they’re told to step aside. However, this DoJ criminal investigation into JPMorgan’s trading activities in the precious metals certainly has the potential to change things in a hurry.  We’ll just have to wait and see, as the wheels of justice are very slow to turn at times.

But that’s no consolation at the moment of course, as all precious metal investors are in a world of hurt right now…including yours truly and, also like you, probably…have a wife to answer to as well.  These are very trying times — and after eighteen years of this, the end of all this pain can’t come to soon for you…or for me.

The CME Daily Delivery Report for Day 2 of December deliveries showed that 1,529 gold and 1,050 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, there were fifteen short/issuers in total — and the largest was Standard Chartered PLC…a name I hadn’t see before, up until now.  They issued 1,000 contracts out of their in-house/proprietary trading account — and in distant second place was HSBC USA with 313 contract out of their own account as well.  Of the twelve long/stoppers in total, the biggest by far was Goldman Sachs, as they stopped 900 contracts for their own account.  JPMorgan came in second with 297 contracts — and in third spot was HSBC USA, stopping 146 contracts…both amounts were for their respective client accounts.

In silver, there were eleven short/issuers in total — and the only one that really mattered was HSBC USA with 885 out of its proprietary trading account.  There were eleven long/stoppers — and the head-and-shoulders biggest was JPMorgan, stopping 793 contracts…595 for clients — and 198 for its own account.  The link to yesterday’s Issuers and Stoppers Report is here.

[The paragraph below was added at 6:45 p.m. EST on Monday afternoon – Ed]

The CME Preliminary Report for the Friday trading session showed that gold open interest in December fell by 3,066 contracts, minus the 1,529 contracts mentioned a few paragraphs ago. Thursday’s Daily Delivery Report showed that 2,083 gold contracts were actually posted for delivery on Monday, so that means that 3,066 minus 2,083 equals 983 gold contracts vanished from the December delivery month.   Silver o.i. in December fell by 1,268 contracts, leaving 2,239 still open, minus the 1,050 contracts posted for delivery on Tuesday…today. Thursday’s Daily Delivery Report showed that 1,463 silver contracts were actually posted for delivery today, so that means that 1,463 minus 1,268 equals 195 silver contracts just got added to the December delivery month.

There were no reported changes in GLD yesterday, but an authorized participant removed 1,220,682 troy ounces of silver from SLV.  Regardless of the reason for its withdrawal, it’s a reasonably safe bet that JPMorgan owns it all now.

Once again, there was no sales report from the U.S. Mint.

For the month of November, the mint sold 8,000 troy ounces of gold eagles — 3,000 one-ounce 24K gold buffaloes — and 1,270,000 silver eagles.  For the entire month, the mint only had two days of reported sales.  Just awful.

There was no physical activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  But there was a big paper transfer…199,638 troy ounces…from the Eligible category — and into Registered over at HSBC USA.  Without doubt, that was to cover the 2,000 contracts they posted as short/issuer in Thursday evening’s Daily Delivery Report.  The link to this is here.

There was decent activity in silver on Thursday, as 823,170 troy ounces were reported received — and 599,758 troy ounces, one truckload, was reported shipped out.  All of the ‘in’ activity was at Brink’s, Inc. — and that was the same amount of silver that was shipped out of CNT on Wednesday.  All of the 599,758 troy ounce ‘out’ activity was at CNT as well.  There was also a big transfer of silver from the Eligible Category — and into Registered…2,052,834 troy ounces…and that transfer occurred at CNT as well.  The link to all this action is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving only 25 of them — and shipped out 382.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

The Middleham Hoard is a coin hoard found near Middleham, North Yorkshire in England. It dates from the period of the English Civil War, and consists of 5,099 coins, all silver. It is the largest hoard of coins buried during the Civil War to have been discovered.

William Caygill, a metal detector enthusiast discovered the hoard on 22 June 1993 within the grounds of Cotescue Park, on the south-west edge of the small market town of Middleham. Caygill discovered the first two pots, and returning two days later he discovered a third pot.  The three pots in which the coins were buried in, are all rather similar types of mid-seventeenth century kitchen ware.  Click to enlarge for both.

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday actually was not quite what I was expecting, as it showed a slight increase in the Commercial net short position in silver — and a smallish decrease in gold.

In silver, the Commercial net short position in silver rose by 1,947 contracts, or 9.7 million troy ounces of paper silver.

They arrived at that number by reducing their long position by 3,365 contracts, but they also reduced their short position by 1,418 contracts as well — and its the difference between 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 still immaterial 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.  The only big bank or Commercial trader left, would be Canada’s Scotiabank — and their short position would be somewhere near the bottom of the ‘Big 4’ category.

It was under the hood where the really big changes occurred, as the Managed Money traders were front and center again.  They didn’t account for all the change in the Commercial net short position during the reporting week…a bit over half of it…1,076 contracts.  They reduced their long position by another 2,644 contracts, but the surprise was that despite the fact that silver was sold back below its 50-day moving average during the reporting week, they actually reduced their short position by 3,720 contracts.   It’s the difference between those two numbers that represents their change for the reporting week.  One would have thought they would have added short positions on that sort of price move, but that obviously didn’t happen.

And as is always the case, the difference between that number — and the Commercial net short position…3,720 minus 2,644 equals 1,076 contracts…was made up by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader categories.  But both went about it in different ways, as the former increased their net short position — and the latter increased their net long position.  Here’s the snip from the Disaggregated COT Report for silver.  Click to enlarge.

Although there was an increase in the short position the Producer/Merchant category, Ted didn’t think that it was JPMorgan’s doing.  There was an increase in the number of traders in that category — and they most likely accounted for that change.  Ted still feels that JPMorgan is neither long nor short the COMEX futures market in silver.

The Commercial net short position in silver now sits at 8,841 COMEX contracts, or 44.2 million troy ounces of paper silver which, in an historical sense, is really not much of a short position at all.

Here’s the 3-year COT chart for silver — and the changes this reporting week certainly fall into the ‘immaterial’ category.  Click to enlarge.

The market structure in silver is still in the “wildly bullish” category — and is even more so since the Tuesday cut-off.

In gold, the commercial net short position fell by 7,040 contracts, or 704,000 troy ounces of paper gold.  They arrived at that number in rather odd fashion…selling 28,901 long contracts, plus they reduced their short position by 35,941 contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Like for silver, 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 certainly expect that Scotiabank is somewhere in the Big 8 category — and if there is a U.S. bank in that lot, it would be Citigroup, but their position would be somewhere near the bottom of the pile.

The Managed Money traders made up for most of the change in the commercial net short position in gold.  They reduced their long position by 4,364 contracts — and they added 2,175 short contracts as well — and it’s the sum of those two numbers…6,539 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position is only 501 contracts.  Virtually all of that change showed up in the ‘Other Reportables’ category, as the ‘Nonreportable’/small traders were market neutral for the week.  You can see all this in the snip from the Disaggregated COT Report below.  Click to enlarge.

The commercial net short position in gold is now down to 16,100 contracts, which is only 1.61 million troy ounces of paper gold, which in reality…like in silver…is no short position at all.

Here’s the 3-year COT chart for gold — and the small improvement should be noted but, like for silver, it’s mostly immaterial…but in a positive way this week.

Like silver, gold is set to rock and roll higher any time that JPMorgan decides.

In the other metals, the Managed Money traders increased their net long position in palladium by a tiny 385 contracts during the reporting week…selling 42 long contracts — and covering 427 short positions.  I’ve said that this was a tiny and illiquid market on many occasions — and I wasn’t kidding!  There’s just no liquidity worthy of the name.  In platinum, the Managed Money traders increased their long position by a net 1,371 contracts…purchasing 1,677 long contract and adding 306 short contracts.  The total open interest in palladium is only 25,748 contracts — and in platinum its 72,373 contracts.  There wasn’t much activity in copper, as the Managed Money traders decreased their long position by a tiny 1,206 contracts.  They arrived at this number by reducing their long position by 3,312 contract — and also reducing their short position by 2,106 contracts.  The total open interest in copper is 220,177 contracts.

The total open interest in gold and silver in this week’s COT Report was 442,801 and 199,783 contracts respectively.

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.

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 and maybe one U.S. bank…most likely Citigroup…the positions of the Big 4 and Big 8 traders in silver are back to being made up of the brain-dead/moving average-following Managed Money traders now.

For the current reporting week, the Big 4 traders are short 113 days of world silver production, up 7 days from what they were short in last week’s report — and the ‘5 through 8’ large traders are short an additional 42 days of world silver production, which is down 2 days from last week’s report—for a total of 155 days held short, which is five months and a bit of world silver production, or about 361.7 million troy ounces of paper silver held short by the Big 8. [In last week’s COT Report the Big 8 were short 150 days of world silver production.]

The Big 8 commercial traders are short 36.3 percent of the entire open interest in silver in the COMEX futures market, which is up a very decent amount from the 31.4 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 40 percent. In gold, it’s 34.7 percent of the total COMEX open interest that the Big 8 are short, also up a decent amount from the 30.4 percent they were short in last week’s report — and around 40 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 14 days of world production, which is down 3 days from what they were short the prior week, for a total of 53 days of world gold production held short by the Big 8 — which is down 3 days from what they were short in last week’s report. Based on these numbers, the Big 4 in gold hold about 74 percent of the total short position held by the Big 8…which is up 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 73, 73 and 77 percent respectively of the short positions held by the Big 8. Silver is up 2 percentage points from the previous week’s COT Report, platinum is also up 1 percentage point from a week ago. And palladium is up 2 percentage points from last week’s COT Report.  These are huge concentration numbers — and all bigger than last week’s numbers.

Like on Friday, I don’t have all that much in the way of stories for you today.


Trump Will Claim Victory — Bill Bonner

This is the big day. The music starts. The lights go on. And the curtain rises…

And there, on stage, President T. is scheduled to meet with China’s leader and decide the fate of the world economy.

Our colleague, David Stockman, thinks investors who bet on an end to the trade spat are going to be disappointed:

Wall Street’s complacent belief that the impending confrontation with China is all about the Donald playing an especially rough hand of the art-of-the-deal is flat-out delusional. He is not even close to compromising on his Trade Wars because, as the Donald sees it, his weapon of choice – targeted tariffs – is essentially a congenial tool and an acceptable end in itself if he doesn’t get sweeping, impossible-to-deliver concessions from the other side.

David’s view got a boost yesterday when it was reported that Trump’s crackpot trade advisor, Peter Navarro, will be with him in Buenos Aires for the meeting with Xi Jinping tomorrow. If anyone can mess up a trade deal, Navarro should be able to do it.

But we’ll stick with our prediction. The Donald is smarter than he seems. And more cunning.

This commentary by Bill was posted on the Internet site very early on Friday morning EST — and another link to it is here.

The Fed: ‘A Much Bigger Problem Than China’ — New York Sun Editorial

Before enplaning for the G20 meeting at Argentina, President Trump gave an eye-opening interview to the Wall Street Journal. The focus was trade, tariffs, and Communist China. Toward the end, the Journal’s reporter, Bob Davis, asked Mr. Trump about the Federal Reserve chairman, Jay Powell. Responded Mr. Trump: “I think the Fed right now is a much bigger problem than China.”

What a remarkable thing for the — or any — President to say enroute to a sit-down dinner with the Chinese party boss (Messrs. Trump and Xi seem set to sup Saturday), and we, for one, were delighted to hear the president make the point. It’s not that the Sun is dug in one way or another on interest rates, even if Mr. Trump is irked at the Fed chairman for raising them. It’s that it opens up the monetary debate.

It would be a lot easier for the world financial leaders gathering in Buenos Aires to figure out coherent policies were an honest monetary system functioning today. Instead, the world has been at sea — a sea of fiat money — since the collapse of the Bretton Woods system in 1971. It’s a tragedy that Mr. Trump and the 115th Congress failed to step to the problem when the GOP had control of the House.

Particularly because, during the campaign, Mr. Trump seemed to grasp the problem. The issue erupted at the GOP debate at Denver, where Rick Santelli of CNBC put the question of the Federal Reserve to Senator Cruz. The Texan nailed it, replying that the Fed should “get out of the business of trying to juice our economy and simply be focused on sound money and monetary stability, ideally tied to gold.”

This editorial was post on The New York Sun‘s website on Friday sometime — and I found it in a GATA dispatch.  It’s certainly worth reading — and another link to it is here.

Doug Noland: “Framework for Monitoring Financial Stability”

The Fed’s fourth broad category is “Funding Risk.” “A measure of the total amount of liabilities that are most vulnerable to runs, including those issued by non-banks, is relatively low.” I don’t disagree that “bank funding is less susceptible to runs now than in the period leading up to the financial crisis.” “An aggregate measure of private short-term, whole- sale, and uninsured instruments that could be prone to runs-a measure that includes repos, commercial paper, money funds, uninsured bank deposits, and other forms of short-term debt-currently stands at $13 trillion, significantly lower than its peak at the start of the financial crisis.”

But… “Total assets under management in corporate bond mutual funds and loan mutual funds have more than doubled in the past decade to over $2 trillion… The mismatch between the ability of investors in open-end bond or loan mutual funds to redeem shares daily and the longer time often required to sell corporate bonds or loans creates, in principle, conditions that can lead to runs, although widespread runs on mutual funds other than money market funds have not materialized during past episodes of stress.”

Throughout this Bubble period, I have referred to the “Moneyness of Risk Assets.” A “run” on money-like Credit instruments sparked the collapse of the mortgage finance Bubble. Runs unfold when holders of perceived safe and liquid instruments suddenly recognize risk is much greater than previously appreciated. Past crises have typically originated in the money markets. But never have central bank and government policies so fostered the perception of safety and liquidity (“moneyness”) for risk assets – equities and corporate Credit, in particular. I would argue the proliferation and massive growth of index fund products poses a major risk to financial stability. And when it comes to policy-induced distortions, already extraordinary risks to financial stability are only compounded by the proliferation and growth of derivative trading strategies, both retail and institutional.

One might ponder the notion of financial stability when the S&P500 sinks 3.8% one week and then rallies 4.8% the next. Expectations are now high that the Fed will be soon winding down “normalization,” and that President Trump is hankering to strike a deal with the Chinese. Should be an interesting weekend. It was an interesting market rally – or lack of a rally in corporate Credit. Leveraged loans had a notably poor week. High yield debt remains suspect with crude at $50. Weak link GE was notably weak in the face of market strength. And while dollar weakness stoked the short squeeze in EM, the Shanghai Composite struggled to end the week little changed. Moreover, seeing German bund yields decline another three bps (to 0.31%) hardly conjures bullish imagery. Financial Instability.

Doug’s weekly commentary appeared on his website sometime after 2 a.m. EST on Saturday morning — and it’s always worth reading.  Another link to it is here.

Why is Ukraine’s Kerch Crisis Any of Our Business? — Patrick Buchanan

Upon his departure for the G-20 gathering in Buenos Aires, President Donald Trump canceled his planned weekend meeting with Vladimir Putin, citing as his reason the Russian military’s seizure and holding of three Ukrainian ships and 24 sailors.

But was Putin really the provocateur in Sunday’s naval clash outside Kerch Strait, the Black Sea gateway to the Sea of Azov?

Or was the provocateur Ukrainian President Petro Poroshenko?

First, a bit of history.

In 2014, after the pro-Russian regime in Kiev was ousted in a coup, and a pro-NATO regime installed with U.S. backing, Putin detached and annexed Crimea, for centuries the home port of Russia’s Black Sea fleet.

With the return of Crimea, Russia now occupied both sides of Kerch Strait. And this year, Russia completed a 12-mile bridge over the strait and Putin drove the first truck across.

The Sea of Azov became a virtual Russian lake, access to which was controlled by Russia, just as access to the Black Sea is controlled by Turkey.

If you have the interest, this commentary by Pat is certainly worth reading.  It was posted on internet site at 12:01 a.m. EST on Friday morning — and I thank Roy Stephens for sending it our way.  Another link to it is here.

Über-loser Poroshenko goes “full Saakashvili”

Petro Poroshenko is in deep trouble. His ratings have been in the single-digit range in spite of a vast propaganda effort, and his latest attempt to create a salvific crisis involving the usual “Russian aggression” has not only failed but appears to be backfiring.

It is now becoming abundantly clear that the Ukronazi provocation was not only breathtakingly stupid and irresponsible, but also breathtakingly poorly planned and executed. The documents seized by the FSB on the Ukrainian ships show that the Ukrainian captains were given the order to “covertly” sneak under the Kerch bridge. I have no idea what the Ukronazi junta leaders were thinking, maybe they were drunk or terrified to tell Poroshenko that this was a suicidal mission (most likely he was too drunk to care anyway), but the fact that they could even imagine that three old boats could somehow sneak around the Crimean Peninsula and then covertly pass under the Kerch bridge is just amazing (as is the fact that the crews failed to destroy this damning evidence!). One of the most heavily monitored sections of our planet, right next to a war zone, which has been the object of innumerable threats, and yet they thought that they could somehow avoid being detected and intercepted. Wow, just wow!

As for the crews of these three tiny ships, they all owe their lives to the FSB Coastguard officers who could have merely blown all three ships away in seconds, but who clearly did their utmost to avoid killing any of the Ukrainians. Only after many hours of absolutely ridiculous slow speed maneuvering, did the Russians eventually fire a few shots and ram the Ukrainian tug.  Frankly, these Coastguard officers deserve some kind of humanitarian award.

This longish commentary by The Saker showed up on his Internet site sometime on Friday — and I thank Larry Galearis for pointing it out.  Another link to it is here.  There was also a commentary about this situation from Pepe Escobar that was posted on the Internet site on Wednesday — and it’s headlined “Drama in the Kerch Strait: Teasing the Russian Bear“.  I thank Tolling Jennings for that one.

Palladium supply — and its ability to respond to a soaring price

It may appear surprising that palladium prices have almost tripled since the start of this decade, but supply in 2018 is only looking at a rise of just over 10% since 2010. It therefore seems worthwhile to present our latest findings on palladium supply and assess whether this structural lack of price response can change. This article also provides some background, which we hope will be of use to those less familiar with palladium.

It is important to note that palladium is mined in polymetallic ore bodies with the metal forming only a portion of total mine revenues. As such, mining operation’s economics are limited in their exposure to the rise in palladium price. For the largest palladium producer, Nornickel, palladium represents 36% of total metal sales revenue. This week, the company reiterated an essentially flat production profile out to 2020. In lieu of additional mine supply the company is releasing stocks accumulated by its Global Palladium Fund.

Over the next five years, we continue to forecast only a limited supply response from South Africa, with additional ounces from the five growth projects in our data-set offset by cost driven closures at Implats and Lonmin. Platinum forms a larger share of these operations’ revenue and thus the fall in platinum price has mitigated the benefit of rising palladium revenues. The palladium-rich ore bodies of Sibanye’s U.S. operations and North American Palladium’s Lac des Iles have meant that both operations have benefited and each is pursuing growth. However, the 250 koz additional contribution to North American production in 2021 will be partially offset by losses from Vale, which produces palladium as a by-product of nickel mining. This highlights why it is necessary to view palladium production in the context of the PGM basket price. For most operations, the decline in the platinum price has mitigated the rise in palladium. As a result we forecast global palladium production to decline by 2% to 6.7 Moz next year.

This article put in an appearance on the internet site yesterday.  I lifted it from the Sharps Pixley website — and another link to it is here.

Venezuelan opposition asks U.K. bank not to give Maduro gold

A pair of Venezuelan opposition leaders urged the Bank of England on Friday not to hand over $550 million worth of gold sought by President Nicolas Maduro, saying officials in the South American country would either steal the gold or use it to finance its dictatorial government.

In a letter to the bank, former National Assembly president Julio Borges and opposition party leader Carlos Vecchio said Maduro’s socialist administration would pocket the last 14 tons of the Venezuelan gold in the bank’s vaults or use it to illegally imprison and kill its opponents.

It reminded the bank that the United States, United Kingdom and many European countries consider Maduro’s government illegitimate following his re-election this year in what was widely considered a fraudulent vote.

Maduro is not the legitimate owner of the gold,” the letter said. “Without doubt the intention of Maduro and his regime is to steal these resources that rightly belong to the people.”

This A.P. story from Friday was picked up by Internet site on Friday sometime — and it’s another article I found on the Internet site.  Another link to it is here.


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 Documentary Series. It’s titled: Rehabilitated Grey Seals Being Released into the Wild – Cornwall (Credit: Ben Watkins / BWPA)  Click to enlarge.

This second photo is the winner in the Coast and Marine category. It’s named: Storm Gull – New Haven, East Sussex (Credit: Craig Denford / BWPA)  Click to enlarge.


Released as a single in February of that year, today’s pop ‘blast from the past’ was the No. 1 hit on Billboard’s Top 100 back in 1971…47 years ago.  It was described by members of the band as a “kid’s song” and a “silly song.”  I remember it all too well, as I was in Canada’s High Arctic at Alert, N.W.T…spinning this 45 on CHAR Radio…105.9 on your FM dial.  The link is here.

Today’s classical ‘blast from the past’ is one I’ve posted before, but I’m not sure how long ago it was, but here it is again anyway.  It’s Max Bruch’s Violin Concerto No. 1 in G minor, Op. 26.  It was completed in 1866 — and the first performance was given on 24 April of that year.  It is one of the most popular violin concertos in the repertoire and, along with the Scottish Fantasy, the composer’s most famous work.  [Add in Kol Nidrei as well – Ed]

Here’s child prodigy Sarah Chang doing the honours. In 1986, when Chang was 5 years young, she auditioned for and was accepted to the Juilliard School of Music by performing this very concerto.  Here she is, somewhat older — and if there’s a better recording of this concerto around, I’m not aware of it.  The link is here.

It was another day where JPMorgan et al took precious metal prices lower…gold only by a bit, but silver and platinum really got clocked — and palladium’s nice gains, plus more, vanished in COMEX trading yesterday morning as well.

It’s obvious that ‘da boyz’…principally JPMorgan…want to keep precious metal prices on a very short leash — and with the exception of platinum…plus palladium, for supply/demand reasons…are doing a fine job of it.  As Ted said on the phone yesterday, we’ve been in this “wildly bullish” set up in both gold and silver for quite a while now, but as to when they’re going to set them free, heaven only knows.  But that day is mostly certainly coming at some point or other…because if they weren’t, why would JPMorgan have moved heaven and earth to get out of its short positions in both silver and gold?

Here are the almost 1-year charts in all Big 6 commodities — and I’ve also included natural gas again, as its price is still way up there.  The ‘click to enlarge‘ feature helps with all of them once again.

Well, all eyes are now focused on what happens between China and the U.S. at the G-20 meeting in Buenos Aires that is now underway.  Everything else has become a side show to this event.  If a trade deal is struck, I would suspect that we’ll see a short squeeze of Biblical proportions in world equity markets, starting once trading begins in Japan on Monday morning over there…early evening in New York on Sunday.

But if that doesn’t occur, then things could turn ugly in a hurry.  I don’t get a sense of how it will turn out, as both combatants are playing their cards very close to their respective chests at the moment.

But despite all the drama and Kabuki theatre that’s going on down there, it changes nothing in the rot that permeates everything economic, financial and monetary in the world today.  And it’s most ironic that the country in the best financial shape on every front, just happens to be Russia.  The deep state in the West is doing everything in their power to cut it down to size, but so far they don’t have much to show for all their efforts.  What makes it even harder for them is the fact that Russia has been converting about US$1.2 billion worth of fiat currency into around 30 tonnes of gold each and every month for the last little while.

On the other end of the spectrum is China…an economic and financial disaster in the making.  They’ve been accumulating gold in secret for decades now — and nobody really knows how much they have hidden off their books.  It’s been many years since they’ve updated their central bank’s holdings, which stand at something a bit under 2,000 tonnes, at least that’s what they publicly proclaim.  I’ll be the most surprised person in the world if they don’t have at least three times that amount by the time they decide to come clean again.

But Trump — and by extension, the U.S. deep state, is certainly in a position to either help China…or kick them over the financial and economic precipice if they so desire.  So I’m wondering out loud just how much of this G-20 show in Buenos Aires is actual economics — and how much of it revolves around the geopolitics of ‘The New Great Game‘.

Whatever the answer is, we won’t have long to wait.

That’s all I have for the day — and for the week — and I’ll see you here on Tuesday.