The Dow Was Saved — and Precious Metal Prices Were Capped

07 December 2018 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was up about three dollars by 10:30 a.m. China Standard Time on their Thursday morning — and then didn’t do much until around 2 p.m. CST, which could have been an early afternoon gold fix in Shanghai.  It got smacked lower at that point — and the low tick of the day was set at the London open.  From that point it didn’t do much until the COMEX open — and then the gold price attempted to blast skyward.  That ran into ‘resistance’ immediately — and the high tick of the day came at exactly 10 a.m. EST…the afternoon gold fix in London.  From there, it was turned lower in saw-tooth fashion, as every tiny rally attempt was met with renewed selling.  That state of affairs lasted until 2 p.m. in after-hours trading — and the price didn’t do much after that.

The low and high ticks really aren’t worth looking up, as the gold price was forced to trade in a ten dollar price range all day long.

Gold was closed in New York on Thursday at $1,237.20 spot, up a whole 50 cents on the day.  Net volume was certainly higher than I wanted to see, at a hair under 239,000 contracts — and there was around 10,500 contract worth of roll-over/switch volume on top of that.

The silver price was sold a few pennies lower in morning trading in the Far East and, like gold, had the rug pulled out from under it at 2 p.m. CST.  Silver’s low tick was placed around 11:20 a.m. GMT in London — and its choppy rally after that was capped shortly before 10 a.m. in New York — and it wasn’t allowed to do much after that.

The high and low ticks in this precious metal were reported by the CME Group as $14.59 and $14.415 in the March contract.

Silver was closed at $14.44 spot, down 2.5 cents on the day.  Net volume was rather elevated at a hair over 62,500 contracts — and there was 2,205 contracts worth of roll-over/switch volume in this precious metal.

The platinum price was up a couple of bucks by shortly after 9 a.m. China Standard Time on their Thursday morning — and the selling pressure appeared at that point.  It was sold unevenly lower until the low tick of the day was set right at the 5 p.m. Zurich close…11 a.m. in New York.  It rallied a small handful of dollars until 1 p.m. EST — and then didn’t do much for the remainder of the Thursday session.  Platinum was closed at $788 spot, down 11 dollars on the day.

Palladium was up four dollars or so by around 10 a.m. CST on their Friday, but all of those gains — and then some, had disappeared by the Zurich open.  Then the long knives came out — and by the time they were done, they had platinum down 55 dollars by shortly after the Zurich close.  It was bounced off that price several times right up until the 1:30 p.m. EST COMEX close — and then it rallied a decent amount in the thinly-traded after-hours market.  Palladium was closed at $1,193 spot, down 33 bucks on the day.

The dollar index closed very late on Wednesday afternoon in New York at 97.00 — and then traded almost ruler flat once it began at 6:00 p.m. EST a few minutes later on Wednesday evening.  That state of affairs last until just about 2 p.m. CST on their Thursday afternoon — and it began to creep gradually higher from there.  The 97.21 high tick was set shortly after 8 a.m. in London — and from that juncture, it wandered quietly lower until the 96.56 low tick was set minutes before 10:30 a.m. in New York.  It rallied a bit from there until around 11:40 a.m. EST — and the crept lower until a few minutes before the 1:30 p.m. COMEX close.  It crept equally quietly higher from there into the close of trading — and finished the Thursday session at the 96.77 mark, down 23 basis points on the day.

It was more than obvious that despite what was going on in the world, or in the currency market, that JPMorgan et al weren’t going to allow precious metal prices to go anywhere.  That was especially apparent in the price activity in gold during the COMEX trading session in New York — and in the rest of the precious metals long before that as well.

Here’s the intraday DXY chart from the marketwatch.com Internet site once again — and I’m beginning to doubt whether or not the folks at ino.com are ever going to fix their own intraday chart.  But in a note posted on their website in the very wee hours of Friday morning…”One of our feed providers has experienced a major outage this week. We are working hard to restore full service as soon as possible.”  So there is hope.  Click to enlarge, as it’s a big graph.

Here’s the 6-month U.S. dollar index — and the delta between its close…96.76…and the intraday chart above, was only 1 basis point on Thursday.  Click to enlarge.

The gold shares chopped around a bit at the 9:30 a.m. open in New York yesterday morning — and their respective lows came shortly before 10 a.m. EST.  By 10:30 a.m. they were at their highs for the day — and up 2 percent at that point.  They sold off to a bit below unchanged by a few minutes after the 1:30 p.m. COMEX close, but an hour and change later, they managed to rally back into positive territory by a bit — and finished in the green.  The HUI closed up 0.46 percent.

In most respects the price path for the silver equities was about the same, except it was a far more erratic trading pattern.  And, like the gold shares, they managed to rally back into positive territory by a bit at the close as well.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished higher by 0.20 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 707 gold and 128 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the only short/issuer worthy of the name was HSBC USA, with 640 contracts out of its own account.  Advantage was a very distant second with 52 contracts from its client account.  There were nine long/stoppers in total.  The largest once again was Goldman Sachs with 416 contracts for its in-house/proprietary trading account.  In second and third spots were JPMorgan and Advantage with 150 and 48 contracts out of their respective client accounts.  HSBC USA stopped 46 contracts for its client account.

So far this month, with only six delivery days gone, Goldman has already stopped 3,371 gold contracts…all for its own account.  I’m wondering already whether or not they’re going to show up as short/issuer later this month, or some other month…as Ted says that they’ve done that quite a bit over the last number of years.

In silver, there were three short/issuers — and the two largest were ABN Amro and ADM, with 100 and 21 contracts from their respective client accounts.  JPMorgan was the tallest hog at the long/stopper trough once again, picking up 82 contracts in total…62 for clients — and 20 for its own account.  In distant second was Advantage with 29 for its client account.

The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in December fell by 1,111 contracts, leaving 2,368 still open, minus the 707 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 1,150 gold contracts were actually posted for delivery today, so that means that 1,150-1,111=39 gold contracts were added to the December delivery month.  Silver o.i. in December declined by 157 contracts, leaving 630 still around, minus the 128 mentioned about four paragraphs ago.  Tuesday’s Daily Delivery Report showed that 173 silver contracts were actually posted for delivery today, so that means that 173-157=16 more silver contracts were just added to December.


There were no reported changes in GLD yesterday, but there was a very chunky withdrawal from SLV, as an authorized participant removed 2,816,778 troy ounces.  I would suspect that this was a conversion of SLV shares into physical metal by JPMorgan — and even it wasn’t, it’s pretty much a given that JPMorgan owns it now, regardless.

There was no sales report from the U.S. Mint — and it’s getting to that time when they end sales for the current year.  I’m expecting the mint to announce that fact within the next week.

There was some more activity in gold over at the COMEX-approved gold depositories on the U.S. east coast on Wednesday.  There was 32,024 troy ounces received over at HSBC USA.  Nothing was shipped out.  The link to that is here.

In silver, there was 619,005 troy ounces received — and only 18,879 troy ounces shipped out.  In the ‘in’ category, there was one truckload…600,125 troy ounces…received at CNT.  The remaining 18,879 troy ounces was dropped off at JPMorgan — and that amount was a transfer out of Canada’s Scotiabank.  There was also 55,324 troy ounces transferred from the Eligible category — and into Registered — and that involved CNT as well.  Without doubt, that’s for delivery in December.  The link to this activity is here.

There was a tiny bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They reported receiving 250 of them — and shipped out the same amount.  All of this occurred at Brink’s, Inc. of course — and I won’t bother linking this.


Here’s a chart that Nick Laird sent around yesterday evening — and since Lawrie Williams has a story about this in the Critical Reads section below, I thought I’d include it in today’s column.

It shows gold withdrawals from the Shanghai Gold Exchange, updated with November’s data.  During that month there was 179.08 tonnes withdrawn.  Click to enlarge.

I don’t have all that many stories for you again today.


CRITICAL READS

How the Feds Wasted $5 Trillion — Bill Bonner

[I]n Europe, if you claim to be plucking a goose for the good of the environment rather than for your Christmas dinner, you’ll get a whole lot less squawk.

Clear and Present Danger

Here in America, on the other hand, the squawking stops when you claim to be “protecting our military.” What the military needs protection from has never been adequately explained.

Where’s the clear and present danger? No country has a plausible capability of invading the U.S. An invader, if he existed, would be blasted to bits before he even got close.

But the military acts as if an attack is imminent, thus keeping the public in a constant state of alarm and in need of protection.

When people claim to want to protect you, what they usually want is to take your money and boss you around. But we’ll keep an open mind.

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


Trump on Coming Debt Crisis: I Won’t Be Here When It Blows Up

Since the 2016 presidential campaign, Donald Trump’s aides and advisers have tried to convince him of the importance of tackling the national debt.

Sources close to the president say he has repeatedly shrugged it off, implying that he doesn’t have to worry about the money owed to America’s creditors—currently about $21 trillion—because he won’t be around to shoulder the blame when it becomes even more untenable.

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the national debt in the not-too-distant future. In response, Trump noted that the data suggested the debt would reach a critical mass only after his possible second term in office.

Yeah, but I won’t be here,” the president bluntly said, according to a source who was in the room when Trump made this comment during discussions on the debt.

The episode illustrates the extent of the president’s ambivalence towards tackling an issue that has previously animated the Republican Party from the days of Ronald Reagan…to the presidency of Barack Obama.

This news item appeared on the msn.com Internet site on Thursday sometime — and I thank Sonia Marlowe-Marais for sending it our way.  Another link to it is here.  There was a story about this on the businessinsider.com Internet site yesterday as well.  It’s headlined “Trump is reportedly not worried about a massive U.S. debt crisis as he’ll be out of office by then” — and comes to us courtesy of Swedish reader Patrik Ekdahl.


Trump is losing the trade war with China based on his favorite report card

Shrinking the U.S. trade deficit has been a key goal of President Donald Trump’s trade war.

But the U.S. Census Bureau announced Thursday that the U.S. trade deficit grew to $55.5 billion in the month of October, the highest in exactly 10 years. That was a 1.7% jump from September, as imports rose by 0.2% and exports fell by 0.1%.

Trump has long been focused on the trade deficit as a signal that his administration’s tariffs on Chinese goods and metals are working, despite the fact that most economists discount the measure as a sign of effective trade policy.

Looking at the main target of the trade war, China, the trade deficit was similarly dismal. The unadjusted goods trade deficit hit $43.1 billion in October, the highest level ever.

While Trump may not like the results, there are good reasons the trade deficit is expanding. And part of the blame lies in the president’s own policies.

This story, from the businessinsider.com Internet site yesterday, was sent to us by Patrik Ekdahl — and another link to it is here.


What Should Investors Expect In 2019: An interview with Chuck Butler — Dennis Miller

With our current political climate, the EU punishing Britain for Brexit, tariffs, trade wars, the Fed raising rates, record government deficits and whatever hysteria the media can create – the crystal ball is full of clutter.

We’ve assembled a terrific group of highly regarded experts with excellent track records. Readers want me to use them more proactively for our benefit.

Most New Year predictions are amusing but offer little actionable advice.

Our contributors are on top of their market – held accountable by their readers. When they peer into the future their perspective is how their clients can prosper financially – yet invest safely.

I contacted the dean of the group, Chuck Butler. He is my mentor and I am grateful for all the help he has given us.

This commentary/Q&A session was posted on Dennis’s website early on Thursday morning — and another link to it is here.


The Makings of a Global Debt Crisis Are in Place — Jim Rickards

In 2017, the financial world was filled with talk of synchronized sustainable growth in major economies for the first time since before the 2008 global financial crisis. This was being proclaimed by global financial elites including Christine Lagarde, head of the IMF.

Now that vision is in ashes. Synchronized global growth has turned into a synchronized global slowdown. Growth has already turned negative in two of the world’s largest economies, Japan and Germany, and is slowing rapidly in the world’s biggest economies, China and the U.S.

China may report something like 6.8% GDP growth, but when all the waste in its economy is stripped out the actual growth is probably closer to 4.5%. That’s still growth, but not nearly enough to sustain China’s massive debt overload. Its debt is growing faster than the economy and its debt-to-GDP ratio is even worse than the U.S.

For a sense of perspective, China had about $2 trillion total debt in 2000. Today, it’s about $40 trillion. That’s an unbelievable 2,000% increase in under 20 years.

Growth is also slowing in the U.S. The 2009–2018 recovery has already been the weakest recovery in U.S. history despite a few good quarters here and there. And there’s little reason to expect it to pick up from here.

This worthwhile commentary from Jim put in an appearance on the dailyreckoning.com Internet site on Tuesday — and another link to it is here.


Elysee fears ‘putschists’, coup attempt during Yellow Vests protests this weekend in France

With more Yellow Vests protests approaching this weekend Elysee Palace is worried about a possible coup attempt. Calls have been made to attack parliamentarians and police forces, French media report.

Even though the French government abandoned the fuel tax hike after sweeping protests, the movement still calls upon its followers to gather on December 8. “The Act IV” will be held under the motto “we stay on our course.” The Facebook event has already counted 6,000 people who wish to participate and 22,000 others who are “interested.”

On Thursday Eric Drouet one of the movement’s most famous leaders announced the Yellow Vests plans to approach the residence of Emmanuel Macron. “Saturday will be the final outcome, Saturday is the Elysee, we all would like to go to the Elysee,” he said.

The intelligence services have reported to the Elysee Palace, the official residence of the president, that there have been “calls to kill” and “carry arms to attack” parliamentarians, government officials and police officers, Le Figaro newspaper said on Thursday.

They are putschists. [There is] a coup attempt,” a source claimed. The ministry has even been reportedly instructed to forbid its staff and ministers from working this weekend.

This story showed up on the rt.com Internet site at 2:16 p.m. Moscow time on their Thursday afternoon, which was 6:16 a.m. in Washington — EST plus 8 hours.  It represents the third and final offering of the day from Patrik Ekdahl.  Another link to it is here.  There was a parallel story to this on Zero Hedge — and it’s headlined “France Deploys 89,000 Cops Amid Fears Of Yellow Vest Rebellion On Saturday” — and I thank Brad Robertson for that one.


Chinese gold demand slipping…but still up year-over-year — Lawrie Williams

Latest figures for November out of the Shanghai Gold Exchange (SGE) suggest that Chinese gold demand is slipping slightly as the year nears a close with gold withdrawals down compared with the same month for the past two years.  But cumulative demand for the year to date remains marginally higher indicating that gold demand remains on track to exceed 2,000 tonnes yet again for 2018 as a whole, but perhaps marginally lower for the full year than we were predicting earlier.  Our latest estimate for the full year is around 2,060 tonnes – around 30 tonnes higher than in 2017.

However, December figures could surprise us to the upside as it is a time that traders and fabricators build up stocks for what tends to be strong demand around the Chinese New Year.  This year this falls on February 5th – around 11 days earlier in the month than in 2018, which could boost December demand at the expense of January, which was a particularly strong demand month this year.

As we have noted here before, we associate gold withdrawal figures from the SGE with real annual Chinese gold consumption/demand.  At around 2,000 tonnes the figure equates far closer to the known sum of China’s own gold production, plus known gold imports from entities which break down their gold exports on a country-by-country basis (which include Switzerland, the U.K., the U.S.A, Australia and Hong Kong) plus an allowance for gold scrap conversion and unknown gold import sources.

This commentary by Lawrie appeared on the Sharps Pixley website yesterday morning GMT — and I than Patricia Caulfield for pointing it out.  Another link to it is here.


Sudan’s gold rush driven by high-risk, unregulated mining

Sudan is experiencing a gold rush and is now the second-largest producer of gold in Africa and the ninth in the world. But production is driven by unregulated, artisanal (individual subsistence) mining: more than 1.5 million men who put their lives at risk to dig for and extract the precious metal. And much to their dismay, the government in Khartoum is pushing to attract foreign investors and introduce more industrialised methods. Our correspondent reports.

This very interesting and worthwhile 5:05 minute video clip was posted on the france24.com Internet site at 2:58 p.m. Central European Time on Tuesday afternoon — and I found it embedded in a GATA dispatch yesterday.


The PHOTOS and the FUNNIES

Today’s first photo is another one from the Siena International Photo Awards — and was taken by Norwegian photographer Audun Rikardsen around Skjervoy. “A killer whale emerges on the surface while hunting in an Arctic Norwegian fjord during the polar night.”  Click to enlarge.

This next award-winning photo is from Italian photographer Milo Angelo Ramella — and it was taken somewhere in Canada.  “A snowy owl takes flight alarmed by the call of another female. This species gives particular care to protecting its own hunting territory.”  Click to enlarge.


The WRAP

While the Plunge Protection Team was working overtime to save the Dow Jones Industrial Average from the another disastrous decline on Thursday, they were also hard at work preventing precious metal prices from moving higher…particularly during the New York trading session.

Silver traded below its 50-day moving average yesterday, but closed a few pennies above it — and platinum is now miles below its 50-day moving average.  And as I’ve been saying for several weeks now, it certainly appears that someone was trying to break the palladium price lower.  They were hard at it again yesterday — and again in morning trading in the Far East on their Friday.  Copper is back below its 50-day moving average as well.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and the changes should be noted, if you’re interested, that is.  The ‘click to enlarge‘ feature works for all six graphs.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price edged unsteadily and quietly higher until shortly before noon China Standard Time on their Friday morning — and then proceed to edge equally unsteadily lower from there. But it has jumped up a bit in the last twenty minutes or so — and at the moment, gold is up $2.70 an ounce. The silver price has been chopping unevenly sideways a few pennies either side of unchanged through the entire Far East trading session — and it’s up a bit in the last few minutes as well…by a penny. Platinum has been trading in a similar manner as silver — and it’s back at unchanged. The price pressure in palladium continues. It was down 18 bucks by shortly before noon in Shanghai, but is now down ‘only’ 10 dollars as the Zurich open looms.

Net HFT gold volume is ultra light at around 23,500 contracts — and there’s only 399 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is a bit under 7,000 contracts — and there’s only 175 contracts worth of roll-over/switch volume on top of that.

The dollar index rose a handful of basis points as soon as trading began in New York at 6:00 p.m. EST in New York on Thursday evening — and then didn’t do much in early morning trading in the Far East on their Friday. It dipped lower starting around 11:15 a.m. CST — and about fifteen minutes later it was back at unchanged on the day. But the moment that happened, it began to ‘rally’ unsteadily higher — and its current 96.92 high tick was set about 3:15 p.m. CST. It’s off that by a bit now — and up only 5 basis points as of 7:50 a.m. GMT in London.

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.  Along with that we get the monthly Bank Participation Report — and we’ll see what the world’s banks have been up to.  All this will be in my Saturday missive.

I mentioned in Thursday’s column that I expected some deterioration in the commercial net short positions in both gold and silver in today’s COT Report — and silver analyst Ted Butler had this to say about it in his Wednesday commentary to his paying subscribers…”As such, it is reasonable to expect a deterioration in the market structure of both COMEX gold and silver, namely, managed money buying and commercial selling. While I think the actual contract numbers could be significant (around 10,000 net contracts in silver and 25,000 in gold), it is important to recognize that the market structure in each had been extremely bullish for so long (many months) that it started to look normal.”

And he’s even more interested in what those “stone-cold crooks at JPMorgan” have been up to for the reporting week in this week’s COT Report — and month-to-date in the Bank Participation Report.

And as I post today’s column on the website at 4:02 a.m. EST, I see that the gold price hasn’t done much during the first hour of London trading — and is up $2.20 the ounce. Silver is now up 5 cents. Platinum is now down a dollar — and palladium is only down 5 dollars.

Gross gold volume is coming up on 31,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is about 30,500 contracts. Net HFT silver volume is a bit over 10,000 contracts — and there’s still only 198 contracts worth of roll-over/switch volume in that precious metal.

The dollar index is more or less chopping sideways — and is only up 3 basis points as of 8:50 a.m. in London…9:50 a.m. in Zurich…3:50 a.m. in New York.

Today is Friday — and I have no idea what to expect, or what JPMorgan will have in store for us as the New York trading session unfolds.  However, I’m ready for anything.

Have a good weekend — and I’ll see you here tomorrow.

Ed