Silver, Platinum & Palladium Rally…But Not Gold

13 December 2018 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was up a few dollars in morning trading in the Far East on their Wednesday, but that all disappeared, plus a few dimes more by the London open.  From that point it chopped very quietly and very unsteadily higher until around 10:30 a.m. in New York — and really didn’t do much after that, although it did get tapped lower minutes after 1 p.m. EST…just like happened to platinum and silver.

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

Gold finished the Wednesday session at $1,245.00 spot, up $2.10 on the day.  Net volume was virtually fumes and vapours at only 135,500 contracts — and there was a bit under 10,000 contracts worth of roll-over/switch volume on top of that.

The price action in silver in Far East trading was identical to the price pattern in gold.  But that certainly changed at the London open — and it began to head higher from there.  The high tick of the day came a very few minutes after 1 p.m. in New York — and from that juncture it was sold a bit lower until 2 p.m. in the thinly-traded after-hours market.  It then traded flat into the 5:00 p.m. EST close from there.

The CME Group recorded the low and high ticks in this precious metal as $14.63 and $14.895 in the March contract.

Silver was closed on Wednesday at $14.72 spot, up 18.5 cents from Tuesday.  Net volume was nothing special [thankfully] at around 56,300 contracts — and there was 6,900 contracts worth of roll-over/switch volume in that precious metal.

The platinum price did almost nothing in Far East and morning trading in Zurich on their respective Wednesday’s.  But shortly after 1 p.m. CET [Central European Time] the price took flight.  It ran into ‘something’ a few minutes after 1 p.m. in New York…as did gold and silver — and was sold down a few dollars until 2 p.m. EST in after-hours trading.  Like silver, it traded flat into the close from there.  Platinum finished the Wednesday session in New York at $802 spot, up 19 dollars on the day.  It’s open to debate as to whether that was a short-covering rally or not.

Palladium chopped very quietly sideways until a few minutes after the Zurich open — and then began a rally of its own.  That lasted until shortly after the Zurich close — and from that point it traded flat until shortly before 2:30 p.m. in the thinly-traded after-hours market in New York.  It was sold a few dollars lower at that juncture — and from the 3 p.m. EST onwards, it traded flat until the market closed two hours later.

The dollar index closed very late on Tuesday afternoon in New York at 97.47 — and fell about 10 basis points shortly after trading began at 6:00 p.m. EST in New York on Tuesday evening.  It then crept mostly sideways until 12:30 a.m. in London.  It took a bit of a tumble from there — and that decline ended the moment it broke through the 97.00 mark at 10:35 a.m. in New York.  It chopped quietly sideways from that juncture until the market closed.  The dollar index finished the Wednesday session at 97.04…and down 43 basis points from Tuesday’s close.  Here’s the DXY chart from Bloomberg once again.  And note that it start at the 6:00 p.m. open in New York on Tuesday evening, which is what it should do, as that’s when the new trading day begins in the Far East.  Click to enlarge.

And here’s the 6-month U.S. dollar index…courtesy of the folks at stockcharts.com once again — and my profuse thanks goes out to reader Paul Wood for finding it for me.  The delta between its close…97.02…and the close on the intraday chart above, was only 2 basis points yesterday.  Click to enlarge.

The gold shares rallied rather sharply at the 9:30 a.m. open in New York on their Wednesday morning — and then the rally became more leisurely once the afternoon gold fix in London was done for the day.  The rally ended a few minutes after 1 p.m. when the gold price was capped and turned lower — and from there they traded quietly sideways until the markets closed at 4:00 p.m. EST.  The HUI closed up 2.62 percent.

The silver equities also jumped up at the open, but all the gains that really mattered were in by minutes after 10 a.m. in New York trading.  From that point, they wandered sideways in a one percent range for the remainder of the day.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 2.60 percent and, all things considered, I must admit I was expecting a better performance than this.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 71 gold and 279 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, there were three short/issuers in total, but the only two that mattered were Advantage and ABN Amro, with 45 and 24 contracts out of their respective client accounts.  There were seven long/stoppers in total, with Goldman Sachs in the number one spot once again, picking up 36 for its own account.  In distant second and third spots came JPMorgan and Advantage, with 13 and 12 contracts for their respective client accounts.

In silver, there were five short/issuers in total, with the two biggest being HSBC USA with 119 contracts from its in-house/proprietary trading account — and International F.C. Stone with 120 from its client account.  Advantage was in distant third place with 33 contracts from its client account as well.  There were six long/stoppers in total.  Once again JPMorgan was the tallest hog, picking up 200 contracts in total…184 for its clients — and another 16 for its own account.  In distant second place was Advantage, with 66 contracts for its client account.

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

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in December declined by 333 contracts, leaving 600 still open, minus the 71 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 395 gold contracts were actually posted for delivery today, so that means that another 395-333=62 more gold contracts were added to the December delivery month.  Silver o.i. in December fell by 78 contracts, leaving 552 still around, minus the 279 mentioned in the above Daily Delivery Report.  Tuesday’s Daily Delivery Report showed that 173 silver contracts were actually posted for delivery today, so that means that 173-78=95 more silver contracts just got added to December.


There were no reported changes in either GLD or SLV yesterday.

There was no sales report from the U.S. Mint, either.

There was more activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.   There was 32,203 troy ounces received — and all of that ended up at HSBC USA once again.  Nothing was reported shipped out.  I expect that will end up as deliveries in December, as they’ve been the principal short/issuer so far this month.  The link to this is here.

There was somewhat more activity in silver.  Nothing was reported received — and 636,874 troy ounces were shipped out the door for parts unknown.  Once truckload…600,551 troy ounces…departed Brink’s, Inc. — and the remaining 36,322 troy ounces left the CNT Depository.  The link to that is here.

It was pretty quiet over at the COMEX-approved kilobar depositories in Hong Kong on their Tuesday.  They received only 200 — and shipped out 134.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


The Staffordshire Hoard is the largest hoard of Anglo-Saxon gold and silver metalwork yet found. It consists of over 3,500 items, amounting to a total of 5.1 kg (11 lb) of gold, 1.4 kg (3 lb) of silver and some 3,500 pieces of garnet cloisonné jewellery.

The hoard was most likely deposited in the 7th century, and contains artifacts probably manufactured during the 6th and 7th centuries. It was discovered in 2009 in a field near the village of Hammerwich, near Lichfield, in Staffordshire, England. The location was in the Anglo-Saxon kingdom of Mercia at the time of the hoard’s deposition.

The hoard is of considerable importance in Anglo-Saxon archaeology. The artifacts are nearly all martial in character and contain no objects specific to female uses. The average quality of the workmanship is extremely high and especially remarkable in view of the large number of individual objects, such as swords and a helmet, from which the elements in the hoard came.  Click to enlarge.

I have very few stories for you once again.


CRITICAL READS

Fed Net Worth Turns Negative Following Record $66 Billion in Paper Losses

While the Fed has been engaging in quantitative tightening for over a year now in an attempt to shrink its asset holdings, it still has over $4.1 trillion in bonds on its balance sheet, and as a result of the spike in yields in the last summer, this massive portfolio suffered substantial paper losses which according to the Fed’s latest quarterly financial report, hit a record $66.453 billion in the third quarter, raising questions about its strategy at a politically charged moment for the central bank, whose “independence” has been put increasingly into question as a result of relentless badgering by Donald Trump.

What immediately caught the attention of financial analysts is that the gaping Q3 loss of over $66 billion, dwarfed the Fed’s $39.1 billion in capital, leaving the U.S. central bank with a negative net worth, which would suggest insolvency for any ordinary company, but since the Fed gets to print its own money, it is of course anything but an ordinary company as Bloomberg quips.

It’s not just the fact that the U.S. central bank prints the world’s reserve currency, but that it also does not mark its holdings to market. As a result, Fed officials usually play down the significance of the theoretical losses and say they won’t affect the ability of what they call “a unique non-profit entity’’ to carry out monetary policy or remit profits to the Treasury Department. Indeed, confirming this the Fed handed over $51.6 billion to the Treasury in the first nine months of the year.

The risk, however, is that should the Fed’s finances continue to deteriorate if only on paper, it could impair its standing with Congress and the public when it is already under attack from President Donald Trump as being a bigger problem than trade foe China.

Commenting on the Fed’s paper losses, former Fed Governor Kevin Warsh told Bloomberg that “a central bank with a negative net worth matters not in theory. But in practice, it runs the risk of chipping away at Fed credibility, its most powerful asset.’’

And what credibility, pray tell, is Mr. Warsh referring to, dear reader???  I’d love to hear from you if you know.  These guys are really being kind to themselves.  This Zero Hedge article was posted on their website at 1:44 p.m. on Wednesday afternoon EST — and it comes courtesy of Brad Robertson.  Another link to it is here.


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…

I had this posted in yesterday’s column, but had the wrong link, so here it is again today — and I thank Doug Clark for pointing that out.  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.


May Survives Brexit Confidence Vote; Final Tally is 200-117

During a brief address to her Tory peers after the results were announced, May said that she had listened to her critics, but that now it is time to ‘get on with it‘ and pass a Brexit withdrawal treaty.

Analysts said that if more than 100 Tories voted against May, it could create problems for her government and draw her credibility as prime minister into question.

Sterling has started moving lower on the result (though it remains up on the day), as traders are correctly assessing that this doesn’t bode well for May’s Brexit deal (though she did receive more votes of support than when she was first elected prime minister, that margin improved by a mere 5 votes from 195 to 200).

As ITV‘s Robert Peston pointed out, more than half of the independent Tory MPs (that is, those who don’t hold a post in the government), voted against the prime minister, which hardly inspires confidence.

May will now return to Brussels on Thursday without the strong mandate she had hoped to win. She will face off against E.U. leaders with “her leadership shaken and leaving behind a bitterly divided party,” according to the Financial Times.

This long, somewhat convoluted — and four-times-updated Zero Hedge article, appeared on their Internet site at 4:58 p.m. EST on Wednesday afternoon — and another link to it is here.  There was a parallel story to this on the CNBC website yesterday afternoon EST.  It’s headlined “U.K. Prime Minister Theresa May wins confidence vote, but faces uphill battle to pass Brexit deal” — and I plucked if from Doug Noland’s website.


Germany Accelerates Plans For Deutsche Bank-Commerzbank Megamerger

It seems the accelerating similarities between Deutsche Bank (once the most systemically dangerous bank in the world) and Lehman Brothers has finally forced the German government’s hand…

The German finance ministry’s oft-reported plans to merge struggling Deutsche Bank with its not-all-that-much-better-off domestic rival Commerzbank have elicited a flood of criticism in the financial press (including an editorial in the Financial Times) following another round of rumor-mongering last week.

But apparently this hasn’t dented the German government’s enthusiasm for orchestrating a merger between two of the country’s largest banks. To wit, the government’s plans to help guide the two toward a merger are intensifying, according to a Bloomberg report, as officials study ways to facilitate a merger – including potential changes to the tax code to make a merger less costly. Still, BBG cautioned that the talks remain in an “exploratory phase.”

DB’s CEO Christian Sewing has repeatedly insisted that a merger isn’t in the cards, but as more legal problems are cropping up, which recently pushed the bank’s shares to record lows, his options for a better alternative are dwindling. Tellingly, both Deutsche Bank and the German Finance Ministry have refused to comment on the report.

This news item showed up on the Zero Hedge website at 9:59 a.m. EST on Wednesday morning — and it’s the second offering of the day from Brad Robertson.  Another link to it is here.


Lukewarm response as Hong Kong releases new HK$1,000 banknotes

The city’s new HK$1,000 banknotes appeared to receive a lukewarm response from the public on the day of their release, failing to draw crowds with their improved security features.

Outside the HSBC branch in Mong Kok on Wednesday morning, only about 20 people, most of them elderly, queued to obtain the newly launched bills.

A 66-year-old man surnamed Hui was the first to arrive at the branch. He turned up at 8.10 a.m., well before the bank’s 9am opening time, to avoid being stuck in a long queue.

I came here before to exchange for banknotes of smaller values, like HK$100 banknotes, and there were many people waiting,” he said.

New HK$1,000 banknotes set to debut in Hong Kong on Wednesday.

Hui, who exchanged a total of HK$20,000 (US$2,560) for 20 new bills, said he would put some of the new banknotes into red packets for his grandson for the upcoming Lunar New Year holiday.

This article put in an appearance on the South China Morning Post at 1:02 p.m. HKT on their Wednesday afternoon…12:02 a.m. EST on Wednesday morning in New York — EST plus 13 hours.  I thank Bill Moomau for pointing it out — and another link to it is here.


I didn’t see a single precious metal-related news item on the Internet that I thought worth posting.


The PHOTOS and the FUNNIES

Today’s photos are two more from the Siena International Photo Awards — and the first one, in the ‘Remarkable Award’ category, was taken by U.S. photographer Barbara Fleming.  It’s entitled “Snowy Ballerina”.  It’s obviously a younger snowy owl, as it still has some black in its feathers, as most adult birds are pure white.  Click to enlarge.

The second photo, also in the ‘Remarkable Award’ category, is by Italian photographer Matteo Visconti — and entitled “Nemo in the House”.  This clownfish/anemonefish knows where it’s safe.  Click to enlarge.


The WRAP

It was a very quiet day in gold yesterday, which was quite a surprise considering the price performance of the other three precious.  As to why that was the case…I don’t know — and I’m not about to speculate.

Here are the 6-month charts for the Big 6 commodities once again and, once again, I thank Paul Wood for helping me track down copper and WTIC, as their URLs had been changed.  The ‘click to enlarge‘ feature helps with all of them.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price hasn’t been doing much in Far East trading on their Thursday…chopping around a dollar or so either side of unchanged — and it’s currently up 50 cents the ounce.  Silver has been trading about the same as gold — and is up 4 cents at the moment.  Platinum has been edging higher by a dollar at time in Far East trading — and is up 3 dollars.  Palladium didn’t do much of anything until shortly before 2 p.m. China Standard Time — and it’s now up 4 bucks as the Zurich open looms.

Net HFT gold volume is exceedingly light at only 20,500 contracts — and there’s only 402 contracts worth of roll-over/switch volume in that precious metal.  Net HFT silver volume is 8,500 contracts — and there’s only 142 contracts worth of roll-over/switch volume on top of that.

The dollar index didn’t do much of anything in Far East trading on their Thursday.  It was up about ten basis points or so by minutes before 2 p.m. CST, but began to head lower about 1:55 p.m. CST — and has now fallen back below unchanged by a bit — and is down 6 basis points as of 7:45 a.m. in London.

Here’s a paragraph from silver analyst Ted Butler‘s mid-week column to his paying subscribers yesterday — and I hope he doesn’t mind that I ‘borrow’ it…

For ten years, the criminal organization also known as JPMorgan has manipulated the price of silver (and gold) in never taking a loss and amassing more physical metal than anyone in history. If [JPMorgan precious metals trader] Edmonds was subject to a maximum 30 years imprisonment for what he pled guilty to, then what the heck should JPM get if it is guilty of what I allege – 3 million years? Of course, it is not possible to imprison a corporation or bank, no matter how egregious the crime. Only individuals can be imprisoned and fines extracted. What possible monetary fine could be leveled against a corporation for manipulating the price of a world commodity for a decade, considering the damage caused to millions of people, as well as companies and countries?

And as I post today’s missive on the website at 4:02 a.m. EST, I see that the gold price hasn’t done much in the first hour of London trading — and is up 30 cents. Silver rallied until very shortly after the London open, but it got knocked lower by a bit — and is up 4 cents currently. Platinum has been sold back to unchanged, but palladium is now up 5 bucks.

Gross gold volume is still exceedingly light…creeping up on 26,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is around 25,500 contracts. Net HFT silver volume is just under 10,900 contracts — and there’s still only 159 contracts worth of roll-over/switch volume in that precious metal.

The dollar index continued to fall right through the London open — and was down 15 basis points at its current 96.89 low tick as of 8:24 a.m. over there. It’s off that low by a bit — and is down 12 basis points as of 8:45 a.m. GMT/9:45 a.m. CET.

That’s it for yet another day — and I’ll see you here tomorrow.

Ed