18 December 2018 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was down about two bucks by the 2:15 p.m. afternoon gold fix in Shanghai — and it began to head higher from there. The rally gained more momentum around 12:15 p.m. in New York, but was capped and turned lower about five minutes before the 1:30 p.m. EST COMEX close. That tiny sell-off lasted until around 3 p.m. in the thinly-traded after hours market — and it didn’t do much after that.
The low and high ticks were reported by the CME Group as $1,239.40 and $1,252.20 in the February contract…a little over a one percent intraday move.
Gold was closed in New York on Monday at $1,245.20 spot, up $7.10 on the day. Net volume was very light as the Christmas break looms, at a bit under 159,500 contracts — and there was about 8,860 contracts worth of roll-over/switch volume on top of that.
The silver price traded pretty much ruler flat until the afternoon gold fix in Shanghai. Its tiny rally at that juncture was capped at the London open — and it chopped unsteadily sideways from that point until the COMEX low tick was set in New York around 10:35 a.m. EST. It headed unsteadily higher and the price was capped a few minutes after 1 p.m. Then, like the gold price, it was sold a bit lower until around 3 p.m. in after-hours trading — and that was it for the day.
The low and high ticks in this precious metal were recorded as $14.62 and $14.775 in the March contract…and bit over a one percent intraday move, like in gold.
Silver was closed yesterday at $14.64 spot, up 10 whole cents. Net volume was extremely quiet at a hair over 41,000 contracts — and there was only 1,919 contracts worth of roll-over/switch volume.
The platinum price traded quietly, but unsteadily higher until the Zurich open — and then was sold down to its $780 low tick of the day within the next thirty minutes. It recovered a few dollars from there, but was sold back to its low of the day starting around 2 p.m. CET/8 a.m. EST. It was bounced off that price point until at, or shortly after, the afternoon gold fix in London — and then away it went to the upside. Like in silver, that rally ran into ‘something’ shortly before 1 p.m. in New York — and like silver and gold, was sold a bit lower into the thinly-traded after-hours market. From shortly after 2 p.m. EST, it didn’t do much going into the 5:00 p.m. close. Platinum finished the Monday session at $792 spot, up 7 dollars on the day.
The palladium price didn’t do much of anything until minutes after 1 p.m. China Standard Time on their Monday afternoon — and then it edged quietly and very unsteadily higher until Zurich closed at 11 a.m. EST. It was sold a bit lower until 1 p.m. — and then didn’t do a lot after that. Palladium was closed in New York yesterday at $1,241 spot, up 19 bucks on the day, but would have closed materially higher than that if the price spike at the Zurich close hadn’t been capped.
The dollar index closed very late on Friday afternoon in New York at 97.44 — and when trading began at 6:00 p.m. EST on Sunday evening, it traded flat until 2:04 p.m. China Standard Time on their Monday afternoon, which may or may not have coincided with an early afternoon gold fix in Shanghai. Its downward journey began at that juncture — and 97.05 low tick was at 1:54 p.m. in afternoon trading in New York. It rallied a bit from there until 4:38 p.m. EST — and then edged a few basis points lower into the 5:20 p.m. close. The dollar index finished the Monday session at 97.10…down 34 basis points from its close on Friday. Here’s the DXY chart, courtesy of Bloomberg. Click to enlarge.
And here’s the 6-month U.S. dollar index chart from stockcharts.com — and the delta between its close…96.55…was 59 basis points on Monday. Click to enlarge.
The gold shares jumped up a bit over 2 percent at the open — and then crawled higher until a minute or so after 1 p.m. EST in New York trading, which was the point where the gold price was capped and turned a bit lower. the gold stocks followed until around 2:25 p.m. — and from that point they crawled quietly higher into the close. The HUI finished up a respectable 2.69 percent.
The silver equities really sailed at the open — and were up 5 percent by around 11:20 a.m. EST. From that juncture they chopped unsteadily sideways, with a slight negative bias, until trading ended at 4:00 p.m. EST. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 4.27 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 3 gold and 38 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. In gold, Advantage issued all three out of its client account — and Goldman Sachs stopped 2 of them for its own account. Advantage picked up the remaining contract. In silver, Advantage was the sole short-issuer as well — and they were also the biggest stopper, picking up 21 for its client account. JPMorgan picked up 12 for its client account — in third spot was Morgan Stanley with 4 contracts for its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest in December fell by 11 contracts, leaving 407 still open, minus the 3 contracts mentioned just above. Friday’s Daily Delivery Report showed that 12 gold contracts were actually posted for delivery today, so that means that 12-11=1 more gold contract was added to the December delivery month. Silver o.i. in December actually rose by 10 contracts, leaving 291 still around, minus the 38 contracts mentioned in the previous paragraph. Friday’s Daily Delivery Report showed that 14 silver contracts were actually posted for delivery today, so that means that 14+10=24 more silver contracts were just added to December.
There were no reported changed in GLD on Monday, but there was a withdrawal from SLV, as an authorized participant removed 938,798 troy ounces. Whether or not that was a conversion of shares for physical metal by JPMorgan or not, they most certainly own it now…one way or another.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, December 14 — and this is what they had to report. Their gold ETF declined by a scant 97 troy ounces, but their silver ETF added a hefty 266,980 troy ounces.
There was yet another small sales report from the U.S. Mint on Monday. They sold 75,000 silver eagles — and that was all.
The only physical activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday, was 160.755 troy ounces/5 kilobars [SGE kilobar weight] that was shipped out of Brink’s, Inc. There were small amounts transferred from the Registered category — and back into Eligible at HSBC USA and JPMorgan, which I won’t bother itemizing. But if you want to see it for yourself, the link is here.
There was very little going on in silver, as only 146,271 troy ounces were received — and 1,985 troy ounces were shipped out. That ‘activity’ was at Delaware. There was also a paper transfer of 5,147 troy ounces out of the Registered category — and back into Eligible at JPMorgan. The link to this is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They received 3,157 of them — and shipped out only 33. All this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
Here are the usual two charts that Nick Laird passes around on the weekend. They show total gold and silver stocks in all known depositories, Mutual Funds — and ETFs, as of the close of business on Friday, December 14. For the reporting week, there was a very chunky 793,000 troy ounces of gold added on a net basis…but in silver, there was 291,000 troy ounces removed on a net basis. Click to enlarge for both charts.
I have an average number of stories for you today.
Two benchmark U.S. stock indexes are careening toward a historically bad December.
Both the Dow Jones Industrial Average and the S&P 500 are on pace for their worst December performance since 1931, when stocks were battered during the Great Depression. The Dow and S&P 500 are down 7.8 percent and 7.6 percent this month, respectively.
December is typically a very positive month for markets. The Dow has only fallen during 25 Decembers going back to 1931.
The PPT has their work cut out for them. This brief 2-chart news item was posted on the cnbc.com Internet site at 5:03 p.m. on Monday afternoon EST — and it comes to us courtesy of George Whyte. Another link to it is here.
A sheepish Scott Wapner dared to ask DoubleLine’s Jeffrey Gundlach an open-ended question about the stock market, and we suspect the response he got was far from what he wanted to hear.
“I’m pretty sure this is a long-term bear market for stocks…S&P is headed to new lows”
“We’ve had pretty much all of the variables which characterize a bear market,”
But from the moment Gundlach started dropping truth-bombs, the market was monkeyhammered…and all the major indices rolled over.
Additionally, Gundlach says the Federal Reserve shouldn’t raise interest rates when it meets this week, citing concerns about the bond market and expectations that a slowing economy may require policy reversals in 2020.
“I don’t think they should,” Gundlach said in the interview on CNBC. “The bond market is saying there’s no way the Fed should be raising interest rates.”
This brief 3-chart news story put in an appearance on the Zero Hedge website at 1:41 p.m. EST on Monday afternoon — and I thank Brad Robertson for sending it along. Another link to it is here. Another Zero Hedge story from Brad on this issue is headlined “Trump Slams Fed On Eve Of Rate Decision: “Incredible” Fed Hiking With “World Blowing Up””
The last leaves are falling from the trees. And the last days of December are counting down, like the quiet moments before an execution.
Friday, the Dow fell nearly another 500 points.
“Investors rushed out of U.S. equity funds in the second-biggest weekly exit on record, according to Bank of America Merrill Lynch, as the market sell-off pushed traders to seek safe havens.”
“U.S. stock funds bled $27.6 billion in the days through Dec. 12, which includes last Friday’s plunge in the S&P 500 Index that capped the worst week for the gauge since March, according to BofA’s note, which cited EPFR Global data. This is the second-biggest redemption since February’s spike in the VIX volatility measure, according to Jefferies Financial Group Inc.”
Is this one of those rare times when the doom-mongers’ predictions understate the approaching danger?
This commentary from Bill appeared on the bonnerandpartners.com Internet site on Monday morning EST — and another link to it is here.
The world’s debt currently exceeds $86,000 per person on average, according to the International Monetary Fund (IMF). The U.S., China, and Japan are the top three global borrowers, accounting for more than half of the global debt.
The IMF has calculated that their share of debt exceeds that of output. It stated that the emergence of China among the top ranking is, however, a relatively new development. Since the beginning of the millennium, China’s share in global debt surged from less than three percent to over 15 percent, underscoring the rapid credit surge in the aftermath of the global financial crisis.
According to the IMF, global debt has reached a record high of $184 trillion in nominal terms. That’s the equivalent of 225 percent of the world GDP in 2017. The debt figure is $2 trillion higher than the estimated number released by the fund in October, because it includes the debts of several countries who had not previously reported their updated data.
This brief news item was posted on the rt.com Internet site on Saturday morning Moscow time — and it comes to us courtesy of Swedish reader Patrik Ekdahl. Another link to it is here.
The pillars of the global financial system are fundamentally unstable and could lead to a frightening chain-reaction in the next crisis, the world’s top watchdog has warned.
Giant “central counterparties” (CCPs) that clear much of the $540 trillion (£428 trillion) nexus of derivatives are themselves vulnerable to failure in times of extreme stress.
This is a worry looming ever larger as rising U.S. interest rates expose the weak links in global debt markets.
The Bank for International Settlements said in its quarterly report that the CCPs could cause “a destabilising feedback loop, amplifying stress.”
The implicit message is that well-meaning regulators may have made the financial architecture more dangerous by mistake.
Normally, the rest of the AE-P article would be behind The Telegraph‘s subscription wall — and it is. But it’s posted in the clear in its entirety over at the gata.org Internet site — and another link to it is here. It’s well worth reading. A parallel story to this from the Asia Times, comes to us courtesy of Tolling Jennings — and it’s headlined “BIS warns of “bumps” in post-stimulus banking path“.
Newton’s first law of motion states that an object at rest tends to stay at rest.
Therefore, if a tablecloth is spread out on a table and an object, such as the fishbowl above, is placed on that tablecloth, the fishbowl will tend to “want” to remain right where it is.
If the tablecloth were to be yanked away quickly, the fishbowl would move very little. Inertia, having been overcome by the tablecloth, would then be overcome, but the fishbowl, already at rest, would tend to remain right where it had been before – on the table.
And the same is true of human nature. If a government or an economic system collapses, the populace will experience an immediate shock of change, but their tendency will be to adapt as quickly as possible to maintain their previous situation as much as can be accomplished.
Has the government collapsed? Create a new one, possibly on similar principles as the previous one (hopefully with revisions made, to prevent the next government from making the same self-destructive mistakes a second time.)
Has the economy collapsed? Throw together whatever new form of economy works best until a more solid one can be created. This could mean relying temporarily on barter, but might mean the establishment of a safer form of currency, such as precious metals. And, again, when a new currency is introduced, revisions might be made as to who controls it, in order to assure that the same mistake is not repeated.
This interesting commentary from Jeff showed up on the internationalman.com Internet site early on Monday morning EST — and another link to it is here.
Canada to Pay Heavy Price for Trudeau’s Groupie Role in U.S. Banditry Against China — Finian Cunningham
You do have to wonder about the political savvy of Canadian Prime Minister Justin Trudeau and his government. The furious fallout from China over the arrest of a senior telecoms executive is going to do severe damage to Canadian national interests.
Trudeau’s fawning over American demands is already rebounding very badly for Canada’s economy and its international image.
The Canadian arrest – on behalf of Washington – of Meng Wanzhou, chief financial officer of Chinese telecom giant Huawei, seems a blatant case of the Americans acting politically and vindictively. If the Americans are seen to be acting like bandits, then the Canadians are their flunkies.
The business executive has since been released on a $7.4 million bail bond, pending further legal proceedings. She is effectively being kept under house arrest in Canada with electronic ankle tagging.
To add insult to injury, it is not even clear what Wanzhou is being prosecuted for. The U.S. authorities have claimed that she is guilty of breaching American sanctions against Iran by conducting telecoms business with Tehran. It is presumed that the Canadians arrested Wanzhou at the request of the Americans. But so far a U.S. extradition warrant has not been filed. That could take months. In the meantime, the Chinese businesswoman will be living under curfew, her freedom denied.
It’s a given that Canada will pay a heavy price for this — and I don’t need Finian to tell me that. As a Canadian, I’m appalled. If Justin’s dad were still alive, he’d kick his son’s ass — as Pierre was never a U.S. lackey. This commentary by Finian showed up on the strategic-culture.com Internet site on Sunday sometime — and I thank Brad Robertson for sending it our way. Another link to it is here.
Theresa May privately warned Emmanuel Macron and Angela Merkel that the Brexit deal is dead unless they compromise, after European leaders rebuffed her requests for help selling the agreement to politicians in London.
May delivered the message during a private 15-minute meeting with the French and German leaders, Dutch premier Mark Rutte and European Council President Donald Tusk at the end of a bad-tempered summit in Brussels on Friday, according to a person familiar with the matter.
The prime minister told the four that the U.K. and the European Union will have reached the end of the road after 18 months of exit negotiations unless they give further assurances on the most contentious part of the package — the back-up plan for the Irish border.
Britain leaves the club of 28 countries on March 29 and May is battling to save the agreement she’s negotiated with the E.U. from being killed off by opponents in Parliament. If May can’t find a plan that Parliament will accept, the U.K. will be on course to crash out of the bloc without a deal to cushion the blow, causing economic damage that British authorities predict could include a 25 percent fall in the value of the pound and a 30 percent crash in house prices.
This Bloomberg story was posted on their Internet site at 4:48 a.m. PST [Pacific Standard Time] — and I thank Patrik Ekdahl for his second offering in today’s column — and another link to it is here.
As most readers know, I’m not a casual political blogger and I prefer producing lengthy research articles rather than chasing the headlines of current events. But there are exceptions to every rule, and the looming danger of a direct worldwide clash with China is one of them.
Consider the arrest last week of Meng Wanzhou, the CFO of Huawei, the world’s largest telecom equipment manufacturer. While flying from Hong Kong to Mexico, Ms. Meng was changing planes in the Vancouver International Airport airport when she was suddenly detained by the Canadian government on an August U.S. warrant. Although now released on $10 million bail, she still faces extradition to a New York City courtroom, where she could receive up to thirty years in federal prison for allegedly having conspired in 2010 to violate America’s unilateral economic trade sanctions against Iran.
Although our mainstream media outlets have certainly covered this important story, including front page articles in The New York Times and the Wall Street Journal, I doubt most American readers fully recognize the extraordinary gravity of this international incident and its potential for altering the course of world history. As one scholar noted, no event since America’s deliberate 1999 bombing of China’s embassy in Belgrade, which killed several Chinese diplomats, has so outraged both the Chinese government and its population. Columbia’s Jeffrey Sachs correctly described it as “almost a U.S. declaration of war on China’s business community.”
Such a reaction is hardly surprising. With annual revenue of $100 billion, Huawei ranks as the world’s largest and most advanced telecommunications equipment manufacturer as well as China’s most internationally successful and prestigious company. Ms. Meng is not only a longtime top executive there, but also the daughter of the company’s founder, Ren Zhengfei, whose enormous entrepreneurial success has established him as a Chinese national hero.
Her seizure on obscure American sanction violation charges while changing planes in a Canadian airport almost amounts to a kidnapping. One journalist asked how Americans would react if China had seized Sheryl Sandberg of Facebook for violating Chinese law…especially if Sandberg were also the daughter of Steve Jobs.
This very interesting commentary, while on the longish side, is certainly worth reading…if you have the interest, that is. It was posted on the unz.com Internet site last Thursday — and I thank Larry Galearis for passing it along on the weekend. Another link to it is here.
About 100 years ago, the town of Nome, Alaska, was a busy place with a population of more than 20,000, most of them gold seekers. Today, fewer than 4,000 people live here and prospecting for gold is no longer the main occupation. Still many come to this town with a golden past hoping to find a share of the precious metal. Natasha Mozgovaya visited Nome.
This very interesting and short 3:18 minute video clip put in an appearance on the voanews.com Internet site very early on Sunday morning — and I extracted it from a GATA dispatch on Monday.
Writing at Bullion Star, economist J.P. Koning recounts attempts from the mid-1800s to standardize the gold coins of the major Western nations to facilitate international trade. The mechanics weren’t too difficult but the politics proved to be.
Of course computers and the internet today make gold’s divisibility and exchange in international commerce easier than ever, but the politics is a greater problem, since no government really wants to diminish its power by increasing gold’s use in the world monetary system and thereby liberating people from fiat money.
This longish, but very interesting gold-related news story was posted on the bullionstar.com Internet site early on Sunday morning Singapore time — and if found it on the gata.org Internet site yesterday. Another link to it is here.
Dominion Diamond Mines has announced the “unexpected” discovery of a 552-carat yellow gemstone.
It was found in October at the Diavik Diamond Mine in the Northwest Territories, which is 135 miles (215km) south of the Arctic Circle.
The company says this diamond “far surpasses” the previous record-holding stone found at the mine in 2015.
The stone measures 33.74mm by 54.56mm (1.3 inches by 2.14 inches).
The gemstone will not be sold in its current rough form but will instead be cut and polished in the coming weeks.
“The size and highly technical nature of this stone means that only a handful of master cutters in the world are qualified to polish it, ensuring that the stone’s beauty, colour and brilliance are maximised,” the company said.
This very interesting news item, along with an embedded 2:32 minute video clip, appeared on the bbc.com Internet site sometime on Monday afternoon in the U.K. — and I thank reader M.A. for sharing it with us. 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, in the ‘Remarkable Award’ category, was taken by Kenyan photographer Hetal “teeku” Patel — and is entitled: ‘Leap of Leopards’. Click to enlarge.
The second picture, entitled ‘School of Barracuda’. It was taken by Spanish photographer Francis Pérez. Click to enlarge.
The rallies in the precious metals were all capped and turned lower in New York trading yesterday, long before the dollar index had bottomed out — and it was obvious that silver would have rallied more, but was kept on an extremely short leash…most likely by JPMorgan. WTIC closed below $50 in the spot month, but above that by a bit in future months, as indicated in the 6-month chart further down.
Until I read silver analyst Ted Butler‘s weekly review to his paying subscribers on Saturday, I wasn’t aware that the DoJ sentencing date for that JPMorgan precious metal trader had been postponed. It was in the last paragraph of the story in my Friday column headlined “JP Morgan faces potential class action lawsuit after guilty pleas by a former metals trader” — and I certainly don’t remember seeing that paragraph when I first read it.
Anyway, the paragraph reads “Edmonds was originally scheduled to be sentenced in Hartford, Conn., on Wednesday, Dec. 19, but a court filing on Nov. 27 shows the sentencing has been postponed until June. A spokesman for the U.S. Attorney for Connecticut could not elaborate on why the sentencing was postponed since the court filing is under seal.”
Ted went on to say in his commentary that…”I don’t think it will take until June for the Justice Department to conclude its findings.”…and…”I’m sure hoping we get to salute the DoJ real soon — and not much later, as justice delayed is justice denied.”
He would be right at about that, dear reader.
Here are the 6-month charts for all four precious metals, plus copper and WTIC. I thought I’d throw in natural gas as well, as it has certainly had a fall from grace recently. Click to enlarge for all six charts.
And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price was up 3 dollars by around 12:30 China Standard Time on their Tuesday morning. But all of that was gone, plus a bit more by a few minutes after 3 p.m. CST. It has bounced a bit since — and is currently up $2.10 an ounce. Silver was only allowed to rise by a few pennies in morning trading in the Far East — and was back below unchanged by a bit by 3 p.m. CST. It has edged higher since — and is now up 3 cents the ounce. Platinum and palladium also came under selling pressure in morning trading in the Far East, but both have rallied in the last few minutes going into the Zurich open. Platinum is now down only 2 dollars, but palladium is still down 4 bucks.
Net HFT gold volume is coming up on 31,500 contracts — and there’s only 350 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is around 8,100 contracts — and there’s only 104 contracts worth of roll-over/switch volume in that precious metal.
The dollar index began to head quietly lower almost as soon as trading began at 6:00 p.m. EST in New York on Monday evening — and appears to have been ‘saved’ at the 97.04 mark a few times in morning trading in the Far East. It began to rally back into positive territory starting around 12:30 p.m. CST, but topped out at precisely 3:00 p.m. CST. It has turned sharply lower since — and is back at unchanged as of about ten minutes before the London open.
Today, at the close of COMEX trading, is the cut-off for this week’s Commitment of traders report — and unless there’s some extraordinary circumstance over at the CFTC due to the Christmas holiday, this will likely be the final COT Report for the year. I’ll wait until tomorrow’s column before hazarding a guess as to what might be in it.
Also today, is the start of the last FOMC meeting of the year — and there’s no lack of commentary or opinion on what may or may not be said when the smoke goes up the chimney at the Eccles Building tomorrow at 2 p.m. EST. I’m sure that discussion will continue for the rest of today — and right up until ‘The Word’ is given unto us.
And as I post today’s column on the website at 4:02 a.m. EST, I see that the gold price is now up $2.70 an ounce — and silver is up only 2 cents. Platinum is down only a dollar now, but palladium is lower by 5 dollars.
Gross gold volume is now coming up on 42,000 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is a bit over 41,000 contracts. Net HFT silver volume is 9,800 contracts — and there’s still only 117 contracts worth of roll-over/switch volume on top of that.
The dollar index continues to head lower — and as of 3:45 a.m. GMT in London, it’s down 18 basis points — and back below the 97.00 mark by a bit.
That’s it for another day — and I’ll see you here tomorrow.