Yet Another Day of Managed Markets

12 December 2018 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to chop quietly and unsteadily higher starting about two hours after trading began in New York on Monday evening.  That lasted until at, of just before, the morning gold fix in London — and then the selling pressure began.  Any and all rally attempts were sold lower for the rest of the London session — and all through the COMEX trading day in New York as well.  The low tick was set sometime before 3 p.m. in the thinly-traded after-hours market, just like occurred on Monday — and it also rallied a bit from there into the 5:00 p.m. EST close.

Once again, the high and low ticks weren’t worth looking up.

Gold was closed on Tuesday at $1,242.90 spot, down 90 cents on the day.  Net volume was exceedingly light at just under 165,000 contracts — and there was about 11,900 contracts worth of roll-over/switch volume in that precious metal.

The silver price also began to rally unsteadily around 9 a.m. China Standard Time on their Tuesday morning — and that lasted until shortly before 1 p.m. CST.  From that juncture, it traded quietly sideways until around 11:20 a.m. in London.  It caught a serious bid at that point, but the rally got capped minutes before 9 a.m. in New York — and then the bids were pulled the moment that London closed at 11 a.m. EST.  It dropped like a rock from there. The low tick of the day was set shortly before 2 p.m. in the thinly-traded after-hours market — and then like on Monday, rallied a bit into the 5:00 p.m. EST close.

The low and high ticks were recorded by the CME Group as $14.58 and $14.82 in the March contract.

Silver was closed yesterday at $14.535 spot, up 3.5 cents on the day.  Net volume was certainly elevated at just under 66,500 contracts — and there was a bit under 5,900 contacts worth of roll-over/switch volume on top of that.

The platinum price didn’t do much of anything in Far East trading on their Tuesday — and was down 4 bucks by the Zurich open.  It began to head higher shortly before 11 a.m. CET and, like silver, was capped and turned lower starting minutes before 9 a.m. in New York.  The low tick was set around 11:45 a.m. EST — and it wandered back into positive territory about an hour after the COMEX close.  But even that disappeared before the 5:00 p.m. close — and platinum was finished at unchanged on the day…$783 spot.

Palladium didn’t do much in Far East trading yesterday, either…but began to rally starting about thirty minutes after the Zurich open.  It ran into ‘something’ minutes after 9 a.m. in New York — and was sold sharply lower once Zurich closed at 11 a.m. EST.  It began to edge quietly and unsteadily higher shortly before 1 p.m. in New York trading — and didn’t do much in after-hours trading.  Palladium finished the Tuesday session at $1,228 spot, up 18 bucks on the day, but at least 12 dollars off its high tick.

It was yet another day where palladium ran into ‘resistance’ as it was about to run away to the upside.

The dollar index closed very late on Monday afternoon in New York at 97.22 — and began to sink quietly lower from there.  That lasted until shortly after 10 a.m. CST on their Tuesday morning — and from that point it traded sideways until 2 p.m. CST on their Tuesday afternoon.  It jumped a small handful of basis points going into the 2:15 p.m. CST afternoon gold fix in Shanghai — and began to head quietly lower once again.  The 96.88 low tick was set minutes before 11:45 a.m. in London — and a ‘rally’ began at that juncture, with the 97.53 high tick coming at 11:46 a.m. in New York.  It chopped quietly sideways in a very tight range from there — and finished the Tuesday session at 97.47…up 25 basis points from Monday’s close.

It was yet another trading session where those ‘gentle hands’ had to put in an appearance, or the dollar index would have certainly close materially lower on the day.  There’s still no intraday chart from ino.com, so here’s the one from Bloomberg once again.  It begins at the 6:00 p.m. open in New York on Monday evening — and ends twenty-four hours later.  Click to enlarge.

Once again, the folks over at the stockcharts.com Internet site don’t have a six month chart posted on their website.


The gold shares rallied a bit in early morning trading in New York, but were soon headed lower, with the low tick of the day coming around 1:45 p.m.  They rallied almost back to the unchanged mark by minutes after 3:30 p.m. EST — and then edged lower into the 4:00 p.m. close from there.  The HUI finished down 0.74 percent — and it certainly looks like Nick Laird was having data feed problems of his own during the first two hour of trading.

With only minor variations, which aren’t worth pointing out, the silver equities followed a similar path as the gold stocks.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.28 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 395 gold and 173 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, of the six short/issuers in total, the largest by far was HSBC USA once again, with 322 contracts out of its in-house/proprietary trading account.  In very distant second place was Advantage with 44 out of its client account.  There were seven long/stoppers in total.  It top spot once again was Goldman Sachs with 224 for its own account.  Next came JPMorgan and Advantage, with 80 and 55 contracts for their respective client accounts.  And as in Monday’s Daily Delivery Report, in fourth spot was HSBC USA with 25 contracts for its client account.

In silver, the three short/issuers were HSBC USA with 65 contracts from its own account — and in second and third place came ABN Amro and Advantage, with 60 and 48 contracts out of their respective client accounts.  Of the seven long stoppers in total, JPMorgan was the biggest with 126 contracts in total…112 for clients — and 14 for its own account.  In distant second place was Advantage, with 33 contracts for its client account.

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

So far this month there have been 7,137 gold contracts issued and stopped — and in silver, that number is 3,594.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in December declined by 634 contracts, leaving 933 still around, minus the 395 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 662 gold contracts were actually posted for delivery today, so that means that 662-634=28 more gold contracts just got added to December.  Silver o.i. in December actually rose by 157 contract, leaving 630 still open, minus the 173 contracts mentioned several paragraphs ago.  That means that 157+2=159 more silver contracts just got added to the December delivery month.  That’s a lot!


There was a very decent deposit into GLD on Tuesday, as an authorized participant added 104,010 troy ounces.  There were no reported changes in SLV.

Much to my surprise, there was a sales report from the U.S. Mint yesterday, albeit a tiny one.  They sold 1,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 75,000 silver eagles.

There was more activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  There was 12,860.400 troy ounces received — and 160.755 troy ounces shipped out.  All of the ‘in’ activity…400 kilobars [SGE kilobar weight]…was at HSBC USA again — and the all of the ‘out’ activity…5 kilobars [SGE kilobar weight] was at Brink’s, Inc.  There was also a transfer from the Eligible category and in Registered over at HSBC USA as well…48,226.500 troy ounces/1,500 kilobars [SGE kilobar weight] — and that was the exact amount they received on Friday.  It’s obviously for Delivery in December.  The link to this activity is here.

There was some activity in silver, as 621,664 troy ounces were received — and 121,203 troy ounces were shipped out.  There was one truckload…600,727 troy ounces…delivered to CNT — and the remainder of the ‘in’ activity…20,936 troy ounces…ended up at Brink’s, Inc.  There were four depositories involved in the ‘out’ activity.  The two largest were CNT, with 50,962 troy ounces — and in second spot was the International Depository Services of Delaware, with 49,186 troy ounces.  There were smaller deposits at HSBC USA and Delaware — and if you want to check it out, the link to all this is here.

It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They received 3,000 of them — and shipped out 113.  All this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The St. Ninian’s Isle Treasure found on St. Ninian’s Isle, Shetland, Scotland, is the best survival of Scottish silver metalwork from the Early Medieval period, some pieces gilded. There are pieces for secular use such as a series of different penannular brooches (some of them probably as unfinished half-ware) and different chapes from sword scabbards, pieces which might have been used for religious ceremonies — and rituals like the bowls, spoons, and “thimbles” and all of those joined with some pieces of unsure meanings like the heavy ring chains or collars which are referred to as “power symbols of Pictish chieftains” by some scholars.

The treasure was discovered under a cross-marked slab in the floor of the early St. Ninian’s church, on 4 July 1958 by a local schoolboy, Douglas Coutts.  Coutts was helping visiting archaeologists led by Professor A. C. O’Dell of Aberdeen University at a dig on the isle. The silver bowls, jewellery and other pieces are believed to date from approx. 800 A.D.

I have very few stories for you today.


CRITICAL READS

Yellen warns of another potential financial crisis: “Gigantic holes in the system”

Former Federal Reserve Chair Janet Yellen told a New York audience she fears there could be another financial crisis because banking regulators have seen reductions in their authority to address panics and because of the current push to deregulate.

I think things have improved, but then I think there are gigantic holes in the system,” Yellen said Monday night in a discussion moderated by New York Times columnist Paul Krugman at CUNY. “The tools that are available to deal with emerging problems are not great in the United States.”
Yellen cited leverage loans as an area of concern, something also mentioned by the current Fed leadership. She said regulators can only address such problems at individual banks not throughout the financial system. The former fed chair, now a scholar at the Brookings Institution, said there remains an agenda of unfinished regulation. “I’m not sure we’re working on those things in the way we should, and then there remain holes, and then there’s regulatory push-back. So I do worry that we could have another financial crisis.

In the wake of the financial crisis, some agency regulatory powers were vastly expanded, but others, for example, the ability of the Fed to lend to an individual company in a crisis, were curtailed. Current Fed officials have pushed back against criticism that their reforms are making the system riskier, saying they are making the system more efficient.

This story put in an appearance on the cnbc.com Internet site very early on Tuesday morning EDT — and it was updated about ten hours later.  I plucked it from today’s edition of the King Report.  Another link to it is here.


What They Aren’t Telling You About The Yield Curve — Mike Maloney

Join Mike Maloney as he reveals an important factor of the partial Yield Curve inversion that is being ignored by mainstream news and media. Then stick around to the end of the video to see yet another indicator that is suggesting a huge change in markets could be upon us…

This 12:37 minute video commentary from Mike appeared on the goldsilver.com Internet site yesterday — and I thank Roy Stephens for sharing it with us.


Nassim Taleb: We Tried to Fix a Debt Problem with Debt

Legendary trader, risk analyst, and author, Nassim Taleb, recently spoke with RiskMinds International about economic and structural risks facing the world economy today. Mirroring his warnings before the 2008 financial crisis, Nassim Taleb cautions about high levels of debt and rising moral hazard.

Nassim Taleb:

The economic risk is quite acute in that we have much more debt than we did ten years ago, and ten years ago… we had a crisis. So it’s like we cured a debt crisis with debt. So we have an accumulation of debt and it’s not very good. We also have an increase in moral hazard in the system. In other words, people gaming the system… So we have to worry about it… People are still unable to realize that there should be no risk management. You should study risk taking, not risk management, because we cannot separate the income generating technique from the risk associated with it. They’re not separable. It’s the same decision making and they should all be in the class of ‘decision making in uncertainty…’ You have to worry about an industry dominated by non-risk takers discussing risk…

This 10-minute video interview was posted on thesoundingline.com Internet site on Tuesday — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Pedal to the yellow metal: Russia boosts year-on-year gold output by 3%

Russia’s gold production increased by three percent from January through September against the same period a year ago, according to the Gold Industrialists’ Union.

Gold output reached 243,000 kilograms, the data from the Moscow-based group showed. The significant boost was reportedly due to increased volumes of ore processing in several of the country’s gold mines, including Olimpiada, the Blagodatnoe gold-sulfide deposit, the Verninskoe and Kuranakh mines, as well as others.

Production of high karat gold saw a two-percent increase, while by-product gold output was reduced by 13 percent. Scrap gold production declined by four percent. Output of the precious metal from derived products saw an enormous increase of 57 percent.

Russia is currently third in the global rating of gold miners after Australia and China. The Russian gold mining sector has nearly doubled its volume of extraction over the last two decades. Over the last ten years, the country’s producers mined 2,189 tonnes of gold, the Russian Union of Gold Producers reported in January.

This gold-related news item showed up on the rt.com Internet site at 3:03 p.m. Moscow time on their Tuesday afternoon, which was 7:03 a.m. in Washington — EDT plus 8 hours.  I thank George Whyte for sending it our way — and another link to it is here.


India’s Gold Smugglers Are Getting Really Creative

India’s immense appetite for gold means smugglers are getting more creative to bypass the country’s high import tax.

The Directorate of Revenue Intelligence arrested four people last week for smuggling in 66 kilograms of gold, worth about 210 million rupees ($3 million), and seized fours cars in operations in two northern states that border Nepal, Bhutan and Bangladesh, according to a statement on the Press Information Bureau. Indians can travel to Bhutan and Nepal freely because of bilateral treaties.

The world’s second-biggest consumer raised import taxes three times in 2013 to control a record current-account deficit, with the rate still standing at 10 percent. The high duties spurred a spate of smuggling, including attempts to bring in bullion via planes and trains. The cars seized last week had gold concealed in a specially-built box fixed behind the dash board and also in cavities near the car’s gearbox or driver’s seat.

Indian customs authorities seized about 2.63 tonnes of gold between April and November, according to Monday’s statement. That compares with 3.22 tonnes in the 2017-18 financial year, more than double the volume seized in 2016-17. Bullion is suspected to be smuggled through India’s land borders with Bangladesh, Myanmar, Nepal, Bhutan and China, it said.

This Bloomberg story put in an appearance on their Internet site at 2:40 a.m. Pacific Standard Time on Monday morning — and it’s something that I lifted from the Sharps Pixley website.  Another link to it is here.


The PHOTOS and the FUNNIES

Today’s photos are two more from the Siena International Photo Awards — and the first one, which received an ‘Honourable Mention’, was taken by Canadian photographer Andrew Mclachlan near Thorton, Ontario.  “I live in a rural farming area in south-central Ontario. Every winter, Snowy Owls fly south from the Arctic to spend the winter hunting meadow voles in the farm fields. On this particular day, as blizzard conditions persisted, this Snowy Owl remained hunkered down on the ground. A minimalistic scene was composed, showing the owl within the surrounding habitat, amid the inclement weather.”  Click to enlarge.

This second photo came in the ‘Remarkable Award’ category.  The photographer’s name is Hamad Bouresli from Kuwait — and is entitled “Egrets Fight”.  But there was no other description posted.  Click to enlarge.


The WRAP

It was the second day in a row of managed markets pretty much across the board…the Dow, the currencies — and the precious metals.

As I’ve said on too many occasions to remember…”if the powers-that-be weren’t propping up everything paper that wanted to crash and burn — and suppressing the prices of everything physical that wanted to blast to the moon and the stars, the world’s economic, financial and monetary system would be a smouldering ruin within five business days.”  That was more than evident on Monday — and again yesterday.

The longer they keep this Frankenstein situation afloat, the worse the crash will be when it finally does manifest itself, either by accident…or design.

Here are the 6-month charts for all four precious metals and, once again, the folks over at the stockcharts.com Internet site have blank pages where copper and WTIC normally are.  And like the folks over at ino.com, they’re obviously have data-feed issues.  Click to enlarge.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price was up a couple of dollars by mid-morning in Far East trading, but that has all been taken back — and then some, as gold is currently down $1.00 an ounce. Silver was up 6 cents in late morning trading in the Far East, but that has all vanished, plus a penny more — and it’s down a penny currently. Platinum hasn’t done much in Far East trading — and it’s up a buck at the moment. The palladium price jumped up about three dollars shortly after trading began in New York at 6:00 p.m. EST yesterday evening. It hasn’t done anything since — and is currently up that amount as Zurich opens.

Net HFT gold volume is very light at a bit over 27,500 contracts — and there’s a tiny 319 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is a hair under 8,000 contracts — and there’s only 393 contracts worth of roll-over/switch volume in that precious metal.

The dollar index spent most of the Far East trading session down about ten points or so, but has edged a bit higher in the last fifteen minutes — and is down 4 basis points as of 7:50 a.m. in London.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report.  Just eye-balling the 6-month gold and silver charts above, it certainly appears that there will be further increases in the commercial net short positions in both of these precious metals.  I would suspect that the numbers won’t be as ugly as they were in Monday’s COT Report…touch wood.  But Ted is the real authority — and I’ll wait to see what he has to say about all this in his mid-week column to his paying subscribers this afternoon.

And as I post today’s column on the website at 4:02 a.m. EST, I note that all four precious metals jumped up a bit at the London/Zurich opens. Gold is now up 90 cents — and silver is up 5 cents. Platinum is up a dollar — and palladium is now up 9 bucks.

Gross gold volume is a tiny bit over 36,000 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is a bit under 35,500 contracts. Net HFT silver volume is about 10,600 contracts — and there’s 401 contracts worth of roll-over/switch volume on top of that.

The dollar index has been chopping sideways during the first hour of London/Zurich trading — and is down 8 basis points as of 8:50 a.m. GMT/9:50 a.m. CET.

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

Ed