Precious Metal Prices Kept On a Short Leash Yesterday

20 December 2018 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crawled higher by two bucks or so by around 1 p.m. China Standard Time on their Wednesday afternoon, but that disappeared, plus a bit more by 11 a.m. GMT/8 a.m. EST.  It began to edge higher from that point — and really took flight starting minutes after 9 a.m. in New York.  That ran into JPMorgan [most likely] at the afternoon gold fix in London — and about twenty-five minutes later the price was capped and then turned lower.  From there it sank quietly into the Fed news — and then got hammered lower, with the low tick of the day coming minutes after 4 p.m. EST in after-hours trading.  It didn’t do much after that.

The high and low ticks were reported as $1,262.20 and $1,245.30 in the February contract.

Gold was closed on Wednesday in New York at $1,242.30 spot, down $6.70 from Tuesday, but on that price spike into the afternoon gold fix in London, it broke above its 200-day moving average briefly.  Net volume was very decent at a bit over 253,000 contracts — and there was around 8,500 contracts worth of roll-over/switch volume on top of that.  I have much more to say about all this in The Wrap.

The price action in silver was very similar to what happened in gold, so I’m not going to repeat what I just said above.  The only real difference was that the low tick of the day in silver came an hour earlier than it did for gold…minutes after 3 p.m. EST.

The high and low ticks were reported by the CME Group as $14.90 and $14.615 in the March contract.

Silver was closed yesterday at $14.56 spot, down 4 cents on the day.  Net volume was reasonably healthy at about 65,700 contracts — and there was a bit over 3,400 contracts worth of roll-over/switch volume in this precious metal.

The platinum price didn’t do much of anything in Far East and morning trading in Zurich on their respective Wednesdays.  But, like silver and gold, began to head sharply higher around 9 a.m. in New York trading — and its price was handled in a similar manner as silver’s…including the end of the engineered price decline at 3 p.m. in the thinly-traded after-hours market.  Platinum was closed at $784 spot, down 5 bucks on the day.

The palladium price was up ten bucks or so by noon CST on their Wednesday — and then didn’t do much of anything until 9 a.m. CET/8 a.m. EST.  It was sold down to its low tick of the day about thirty-five minutes later — and began to chop higher with a real vengeance from there.  The price went ‘no ask’ at noon in New York — and at the $1,260 spot mark, it got brutally capped and turned lower within minutes.  It was sold down, like platinum and silver, until shortly after 3 p.m. EST — and traded sideways into the 5:00 p.m. close from there.  Palladium was closed at $1,245 spot, up 17 dollars on the day, but was up 32 bucks at its high tick and, as always, heaven only knows how high it would have closed at…if allowed to trade freely.

The dollar index closed very late on Tuesday afternoon in New York at 96.98 — and it began to chop unevenly lower as soon as trading began at 6:00 p.m. EST on Tuesday evening.  That lasted until shortly before London opened — and it proceeded to chop generally sideways until a minute or so before 9 a.m. in New York.  Then down it went, with the 96.55 low tick being set around 10:20 a.m. EST.  It obviously got rescued at that juncture…at well below its 50-day moving average — and it chopped unsteadily sideways from that point until 1:58 p.m…two minutes before the Fed news came out.  It was blasted higher from there, but judging from the saw-tooth price pattern after that, there were willing sellers all the way up to the 97.10 high tick of the day, which was set about 4:20 p.m. in New York.  It sold off from there, but was carefully closed a hair above the 97.00 mark, at 97.01…up 3 basis points on the day.

It was certainly obvious to me that those ‘gentle hands’ were leaving nothing to chance yesterday as far as the currency market was concerned.  We’re back to the intraday dollar index from the folks at ino.com once again…but it stopped working right at the end of the Wednesday trading session — and did not start again at 6:00 p.m. EST, so they’re obviously still having issues.

Here’s the 6-month dollar index chart — and as you can see from the last two dojis, it’s been a real struggle for those ‘gentle hand’s to keep it from crashing and burning, which is precisely what it would do if it were allowed to trade freely.   The difference between its close…96.48…and the close on the intraday chart above, was 53 basis points on Wednesday.  Click to enlarge.

The gold stocks were up almost 2 percent by the afternoon gold fix in London — and then they began to sell off quietly from there.  The selling accelerated once the Fed ‘news’ was out — and the gold shares closed on their absolute lows of the day…down 5.86 percent…taking all of Monday and Tuesday’s gains with them in the process.

It was exactly the same for the silver equities, so I won’t bother with the play-by-play on their performance yesterday.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 5.33 percent.  Click to enlarge if necessary.

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

The pounding  that the precious metal shares took yesterday was out of all proportion to the sell-offs in their respective underlying precious metals.  I’m wondering out loud if the stocks being purchased in the big rallies on Monday and Tuesday weren’t for the express purpose of being sold on Wednesday to kill whatever rally developed on that day.  I would put nothing past these bastards.


The CME Daily Delivery Report showed that 84 gold and 136 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, it was Goldman Sachs as the largest short/issuer with 80 contracts out of its house account — and the only other long/stopper was Morgan Stanley out of their client account.  The three long/stoppers were JPMorgan, Advantage — and HSBC USA, with 38, 35 and 11 contracts for their respective client accounts.

In silver, the two short/issuers were ABN Amro and Advantage, with 104 and 32 contracts out of their respective client accounts.  The two long/stoppers were the CME Group with 103 for its own account [it doesn’t have a client account] — and JPMorgan with 33 for its client account.

Like in yesterday’s Daily Delivery Report, the 103 contracts stopped by the CME Group were immediately re-issued as 103×5=515 thousand-ounce bar mini silver COMEX contracts.  And, once again, it was ADM and Advantage snapping them up…369 and 146 contracts for their respective client accounts.

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 dropped by 174 contracts, leaving 213 still open, minus the 84 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that only 1 gold contract was actually posted for delivery today, so that means that 174-1=173 gold contracts vanished from the December delivery month.  Silver o.i. in December fell by 86 contracts, leaving 171 still around, minus the 136 mentioned several paragraphs ago.  Tuesday’s Daily Delivery Report showed that 119 silver contracts were actually posted for delivery today, so that means that 119-86=33 more silver contracts were added to December.


There were no reported changes in GLD yesterday, but there was a deposit in SLV, as an authorized participant added 750,997 troy ounces.

It slipped my mind until just now, but I failed to mention the changes in the short positions for GLD and SLV when they were posted by the folks at the shortsqueeze.com Internet site back on Tuesday, December 11…so I’ll make amends now.  For the two week reporting period ending on November 30th, the short position in SLV declined from 12,437,400 shares/troy ounces, down to 10,392,900 shares/troy ounces…which is a drop of 16.4 percent.  The short position in GLD rose from 875,650 troy ounces, up to 1,033,930 troy ounces…which is an increase of 18.1 percent.

There was no sales report from the U.S. Mint yesterday.

It was all zeros in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.

It was a huge day in silver, as 1,084,361 troy ounces were received — and another 1,846,612 troy ounces were shipped out.  In the ‘in’ category, there was one truckload…593,045 troy ounces…received at HSBC USA — and a smaller truckload…491,315 troy ounces…shipped into CNT.  In the ‘out’ category, the big Kahuna for the second day in a row was JPMorgan, as they shipped out another two truckloads…1,190,475 troy ounces.  There was a big truckload out of CNT as well…656,136 troy ounces.  There was also a transfer of 473,451 troy ounce from the Eligible category — and into Registered.  That happened at CNT.  The link to all this action is here.

It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  There were 2,600 received — and 3,601 shipped out.  All of this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


The Rogozen Treasure, called the find of the century, is a Thracian treasure.  It was discovered by chance in July 1985 by a tractor driver digging a well in his garden in the Bulgarian village of Rogozen.

It consists of 165 receptacles, including 108 phiales, 55 jugs and 3 goblets. The objects are silver with golden gilt on some of them with total weight of more than 20 kg. The treasure is an invaluable source of information for the life of the Thracians, due to the variety of motifs in the richly decorated objects. It is dated back to the 5th–4th centuries B.C.  Click to enlarge.

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


CRITICAL READS

Fed raises interest rates, signals more hikes ahead

After weeks of market volatility and calls by President Donald Trump for the Federal Reserve to stop raising interest rates, the U.S. central bank instead did it again, and stuck by a plan to keep withdrawing support from an economy it views as strong.

U.S. stocks and bond yields fell hard. With the Fed signaling “some further gradual” rate hikes and no break from cutting its massive bond portfolio, traders fretted that policymakers could choke off economic growth.

Maybe they have already committed their policy error,” said Fritz Folts, chief investment strategist at 3Edge Asset Management. “We would be in the camp that they have already raised rates too much.”

In a news conference after the release of the policy statement, Fed Chairman Jerome Powell said the central bank would continue trimming its balance sheet by $50 billion each month, and left open the possibility that continued strong data could force it to raise rates to the point where they start to brake the economy’s momentum.

This Reuters story, filed from Washington — and obviously updated since it was first posted…appeared on their Internet site at 10:04 p.m. EST on Wednesday evening.  I found it on Doug Noland’s website — and another link to it is here.


No Matter What the Fed Does, We All Lose — Bill Bonner

The modus operandi of the Fed and the president are now well known. The Fed eases too much for too long. Then, it tightens, setting off a correction. And then, it panics and slashes rates again.

Mr. Trump, meanwhile, starts a fight… causes a big ruckus with insults and wild charges… And then, he announces a victory, while quietly backing off.

The media loves it. One fight after another… the mud flies… the spectators gawk…

The fans think Trump is fighting for them. Critics think he is fighting against them. And life goes on.

But this fight – between the Fed and the president – is different. Most likely, the Fed will pause. But whichever way it goes, both sides lose.

This commentary from Bill put in an appearance on the bonnerandpartners.com Internet site early on Wednesday morning and, in some ways, is already ‘yesterday’s news’.  Another link to it is here.


Interest Due on U.S. National Debt Starts to Explode

This past year is one that will be remembered for many things, but perhaps the one thing for which it may someday be best remembered is that it was the year in which the amount of interest that the U.S. government had to pay on its total public debt outstanding began to break all its previous records.

Visual evidence for that fact is shown in the following chart, which indicates the gross and net amounts of interest that the U.S. Treasury Department reports have been paid from 1997 through 2018 in each of its fiscal year-end Monthly Treasury Statements for these years.

At $521.5 billion in 2018, the total amount of interest paid on debt securities issued by the U.S. government to all its creditors exceeds the national GDP, adjusted for purchasing price parity, of 187 countries. If you want to look at just the net amount of interest that the U.S. government pays on its national debt, at $324.7 billion, that amount exceeds the national GDP of 173 countries.

For both measures, the current trend that led to the records for the amount of interest paid on the U.S. total public debt outstanding began after 2015, which is when the U.S. Federal Reserve began its recent series of interest rate hikes.

Those interest rates combine with the growth of the size of the national debt, which has itself exploded over the last two decades, and especially so in the last 10 years. Near-zero interest rates kept the size of the U.S. government’s interest payments relatively flat over much of this time when the amount of its debt skyrocketed, but with interest rates now rising, having to pay the bill for having racked up so much debt is becoming painful.

This rather brief 3-chart commentary was posted on the economicpolicyjournal.com Internet site on Wednesday sometime — and I thank Richard Saler for sending it our way.  Another link to it is here.


The $7.9 Trillion Pile of Negative-Yielding Debt Is Growing Fast

For all the hand wringing over the end of ultra-loose monetary policy, the world just doesn’t seem able to shake its addiction to negative-yielding debt.

Only two months ago, speculation was rife that the Bank of Japan would have to step in to stop yields from rising. Now, rates on benchmark bonds are poised to drop back below zero. In Germany there are no positive yields as far as seven years along the curve. And globally, bonds with negative yields total $7.9 trillion — close to levels seen at the start of the year — and up from the 2017 low of $5.7 trillion reached in October.

I expect the global economy to be substantially worse in 2019 than this year,’’ said Akira Takei, global fixed income manager in Tokyo at Asset Management One Co., which oversees the equivalent of $500 billion. “The recent drops in bond yields and equities reflect such outlook. Investor views are also changing on the U.S. as an end of the current policy tightening is coming into sight.”

Small wonder developed-market bonds are headed for their best December in seven years, and 10-year U.S. Treasury yields have fallen as low as 2.80 percent, further undermining forecasts they were headed for 4 percent or higher. A cocktail of bad news from sliding U.S. home sales to worsening global manufacturing data point to slowing growth, putting further pressure on yields.

This Bloomberg news item showed up on their website at 3:49 p.m. Pacific Standard Time on Tuesday afternoon — and I found it in a GATA dispatch on Wednesday morning.  Another link to it is here.


Russophobic tide is rising as Britain is a basket case – George Galloway

In almost 30 years as a member of parliament and another 20 years watching it from the outside, I have never seen – or imagined – a basket-case Britain like this.

It’s not one damned thing, it’s one damned thing after another,” as the former Conservative premier Harold MacMillan once said. That Britain no longer has a functioning prime minister is just one damned thing. Add the dysfunctional government, a parliament of herded cats, a foreign policy deep in disgrace, a media subverted to the core by the deep-state, a wholly uncertain economic future, at “war” with the European continent and with our special relationship to the United States daily undermined by a parallel collapse of the power structures in Washington it’s hard not to be pessimistic about the future.

The sight of the prime minister literally rushing from the chamber seconds after Labour leader Jeremy Corbyn rather cleverly wrong-footed everyone (not least his own party) by tabling a no-confidence motion not in the government – which would have united her own side and their allies on the principle that turkeys seldom vote for an early Christmas, in this case an early general election – but in the prime minister personally. It was a rational assumption that some at least of the 117 Conservative MPs who had just expressed their own no-confidence in Theresa May might do so again, or even sit on their hands and abstain. They would, after all, be then rid of her and keep their government.

But there’s nothing rational about British politics in this weather.

George is a real straight-shooter — and this commentary/opinion piece appeared on the rt.com Internet site at 12:44 p.m. Moscow time on their Wednesday afternoon, which was 4:44 a.m. in Washington — EST plus 8 hours.  I thank Roy Stephens for pointing it out — and another link to it is here.


IMF approves $4 billion financial aid package for Ukraine

The IMF had agreed on the $4 billion, 14-month loan in mid-October but the board was waiting for the government to follow through with a series of economic policies before approving the aid to the war-torn nation, including raising gas and heating rates.

Another key step was approval of the 2019 budget late last month with a deficit of about 2.3 percent of GDP.

The Ukrainian authorities have successfully restored macro-economic stability and growth, with support from the international community,” IMF number two David Lipton said in a statement.

The authorities have taken important steps” to mitigate risks to the program, he said, but stressed that the “full and timely implementation of the program will be critical for its success in light of the difficult challenges.”

Ukraine Prime Minister Volodymyr Groysman sought the additional financing from the Washington-based lender to help his crisis-hit nation.

They haven’t got the money yet — and if you believe what the IMF is saying about the Ukraine, boy do I have a bridge for you!  Only the IMF [read the West] is keeping them afloat — and this is their vehicle of choice for doing it.  This loan has already gone to money heaven, as it will never be paid back.  This story showed up on the france24.com Internet site at 6:05 p.m. Central European Time on Wednesday — and it’s courtesy of Roy Stephens.  Another link to it is here.


Pentagon withdrawing all U.S. forces from Syria

The U.S. military is preparing for a full withdrawal from Syria, in a move that will pull about 2,000 service members from the country and signal a major Middle East policy shift.

U.S. troops have been training local forces to combat Islamic State militants in Syria, also known by the acronyms ISIS and ISIL. The withdrawal will be “full” and “rapid,” CNN reported.

White House spokeswoman Sarah Sanders acknowledged the pullout in a statement Wednesday.

Five years ago, ISIS was a very powerful and dangerous force in the Middle East, and now the United States has defeated the territorial caliphate,” she said. “These victories over ISIS in Syria do not signal the end of the Global Coalition or its campaign.”

We have started returning United States troops home as we transition to the next phase of this campaign. The United States and our allies stand ready to re-engage at all levels to defend American interests whenever necessary, and we will continue to work together to deny radical Islamist terrorists’ territory, funding, support, and any means of infiltrating our borders.”

This UPI news story, datelined Wednesday at 3:59 p.m. EST, has certainly been updated since it was first posted, as Roy Stephens sent it to me at 11:42 a.m. EST yesterday.  Another link to it is here.  In a companion story from aljazeera.com, is this item headlined “U.S. plans complete withdrawal of troops from Syria: officials” — and I thank Roy for that one as well.  Roy also sent this longish story on the issue headlined “In Syria the Entire Nation Mobilized…and Won” — and it’s certainly worth reading…if you have the interest.

I didn’t see any precious metals stories worth posting in today’s column anywhere on the Internet yesterday.


The PHOTOS and the FUNNIES

Here are some more award-winning nature photos.  This first one in the ‘Young Photographer’ category, was taken by photographer Jack Olive — an is entitled “Leopard Gecko“.  Click to enlarge.

This second photo in the ‘Young Photographer’ category is entitled “The Natural Habitat of a Frog”.  The photographer here was Rebecca Keen.  Click to enlarge.


The WRAP

There’s no question in my mind that the financial and monetary events surrounding yesterday’s pronouncement from the Fed was about as carefully contained as possible…in the currencies, the New York equity markets — and in the precious metals…and their associated equities.  There wasn’t anything that was stage-managed to the nth degree, as the heavy hand of the PPT was everywhere you cared to look on Wednesday.  ‘Da boyz’ were there to make sure that the only safe harbour was the bond market.

As I previously noted at the top of today’s missive, gold broke above its 200-day moving average on its price rally into the afternoon gold fix in London, but was hauled lower before the trading day ended at 5:00 p.m. EST yesterday afternoon.  From a T.A. perspective, the gold and silver price patterns on Wednesday exhibited a key reversal to the downside…even though it was a completely manufactured event. However, that matters not to these brain-dead traders.

There’s no doubt that the Managed Money traders were covering short positions for big losses — and going long hand over fist…with the commercial traders taking the other side of that trade all the way up during yesterday morning’s rally — and for big profits.  How much of that commercial activity can be chocked up to JPMorgan is not known at the moment.  But since all of this happened on the day after the cut-off for tomorrow’s COT Report, that data won’t be in it.

Of course the strong possibility exists that all those Managed Money traders got blown out of their newly-minted long positions on the engineered price decline on the Fed news.  Yesterday’s trading action in gold and silver could have been one of Ted Butler’s patented “scams within a scam“.  He’s the real authority on all this — and pretty much everything else precious metals-related, so I expect he may have something to say about all of this in his weekly review on Saturday.

Here are the 6-month charts for all four precious metals, plus copper and WTIC. And because the lows in all four precious metals occurred after the COMEX close yesterday, they don’t show up in Wednesday’s dojis…but will at the close of trading today.  You’ll see that in tomorrow’s charts.  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 has been sneaking quietly higher during the Far East trading session on their Thursday — and is currently up $5.50 an ounce. Silver tried to rally during the first two hours of trading once it began in New York at 6:00 p.m. EST on Wednesday evening, but was allowed to get far. It was sold a nickel or so lower by shortly before noon China Standard Time — and then traded sideways until the afternoon gold fix in Shanghai was put to bed at 2:15 p.m. CST. It has rallied a bit more — and is now in the plus column by 3 cents the ounce. Platinum followed exactly the same price path as silver — and it’s up 4 bucks. It was mostly the same for palladium, except its rally began a few minutes before 1 p.m. CST — and it’s now higher by 3 dollars as the Zurich open looms.

Net HFT gold volume is already pretty healthy at a bit over 46,000 contracts — and there’s 1,686 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is coming up on 11,000 contracts — and there’s only 303 contracts worth of roll-over/switch volume on top of that.

The dollar index ticked a bit higher once trading began in New York yesterday evening — and one basis above unchanged by 9:06 a.m. China Standard Time. It’s been heading lower at an ever-accelerating rate since then — and is down 35 basis points [and off its current low tick by a bit] as of 7:45 a.m. GMT in London this morning.

The banking stocks got it in the ear again yesterday — and the KBW Bank Index set another new low for this move down.  I didn’t see what happened with the European banking stocks, but I expect they had a big down day as well.  Click to enlarge.

And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price continues to inch quietly higher — and is up $7.10 the ounce as the first hour of London trading draws to a close.  Silver continues to struggle — and is up only 5 cents.  Platinum and palladium haven’t done much during the firs hour of Zurich trading.  The former is up 3 bucks — and the latter up 6.

Gross gold volume is a bit over 62,500 contracts — and net of roll-over/switch volume, net HFT gold volume is around 59,000 contracts.  Net HFT silver volume is up there as well at about 13,400 contracts — and there’s only 318 contracts worth or roll-over/switch volume in that precious metal.  These rallies, such as they are, aren’t going unopposed.

The dollar index stopped falling for a bit — and then had a tiny rally going into the London open.  But it rolled over once again starting at precisely at the 8:00 a.m. London/Zurich opens — and is currently down 43 basis points.

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

Ed