21 December 2018 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price began to crawl quietly higher once trading began at 6:00 p.m. EST on Wednesday evening in New York — and that rate intensified once that 2:15 p.m. CST afternoon gold fix was done in Shanghai on their Thursday. But as you can tell from the chart, any time after that, that the price really started to fly, there was a short seller of last resort willing to step in front of it. The price was capped and turned lower for the final time shortly after 2 p.m. EST in after-hours trading — and it was sold lower into the close from there.
The low and high ticks were recorded as $1,246.20 and $1,270.30 in the February contract.
Gold was closed in New York on Thursday at $1,259.40 spot, up $17.10 from Wednesday — and a fair distance above its 200-day moving average. Net volume was extremely heavy at a bit over 303,000 contracts — and there was a bit under 16,500 contracts worth of roll-over/switch volume in this precious metal. As I said in The Wrap in yesterday’s column…”these rallies were not going unopposed.”
Silver attempted to rally a bit the moment that trading began in New York on Wednesday evening, but those attempts were stepped on immediately. Then starting at 9 a.m. China Standard Time on their Thursday morning, the price was sold down to its low tick of the day by shortly before noon CST — and then it didn’t do much until the afternoon gold fix in Shanghai. Its rally from there ran into even more resistance than the rally in the gold price — and it wasn’t allowed to do much. Its high tick came at the afternoon gold fix in London — and after a 3-hour long down/up move, it was capped and turned lower as it tried to breach its earlier high. It was sold lower until shortly before 2 p.m. in after-hours trading in New York — and traded flat from there until trading ended at 5:00 p.m. EST.
The low and high ticks in silver were reported by the CME Group as $14.71 and $14.995 in the March contract.
Silver was closed yesterday at $14.735 spot, up 17.5 cents from Wednesday. Net volume was very decent at just under 75,000 contracts — and there was 2,366 contracts worth of roll-over/switch volume on top of that.
Platinum’s price path was similar in almost all respects to what happened in silver yesterday, although its high tick of the day came around 2:30 p.m. in the thinly-traded after-hours market. It was sold a small handful of dollars lower into the close from there. Platinum finished the Thursday session at $793 spot, up 9 bucks on the day.
The palladium price didn’t do much of anything in morning trading in the Far East — and its low over there came minutes before 1 p.m. CST. It began to head higher from there, but the rally ended shortly before 11 a.m. CET in Zurich. It then chopped quietly sideways until the afternoon gold fix in London — and began to head lower from that point — and really got slammed shortly after the Zurich close. Ignoring the down/up price spike at 1 p.m. in COMEX trading, the low tick of the day was set at noon in New York. It rallied until about 2:20 p.m. EST in after-hours trading — and then didn’t do much after that. Palladium was closed at $1,244 spot, down a dollar on the day. At its high, it was up 13 bucks.
The dollar index closed very late on Wednesday afternoon in New York at 97.04…according to Bloomberg — and then began to trade very quietly sideways once it began in New York at 6:00 p.m. EST a few minutes later. But at 11 a.m. CST on their Thursday morning, it began to head lower — and that decline continued to accelerate until 10:20 a.m. GMT in London, which may or may not have coincided with the morning gold fix over there. It began to chop higher from that juncture until 10:55 a.m. in New York, which was five minutes before London closed for the day. The dollar index resumed its decline at that point — and the 96.17 low tick was set at 2:20 p.m. EST in New York trading. From there, it rallied quietly into the close. The dollar index finished the Thursday session at the 96.28 mark…according to Bloomberg, although that’s not what the chart below indicates…down 60 basis points from Wednesday’s close.
Here’s the DXY from Bloomberg once again, as the folks over at the ino.com Internet site are still having issues. Click to enlarge.
Here’s the 6-month U.S. dollar index chart — and the difference between its close…95.73…and the close on the intraday chart above, was 56 basis points. Click to enlarge.
The gold stocks gapped up about 5 percent at the 9:30 a.m. EST open of the equity markets in New York on Thursday morning — and then wandered very quietly and unsteadily higher until around 3:25 p.m. EST. From that point, they were sold a bit lower into the close. The HUI finished up 4.96 percent, gaining back a decent chunk of what it lost on Wednesday.
The price pattern of the silver equities was virtually the same as it was for gold, so I shall dispense with further commentary about it. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 4.47 percent. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index as well. Click to enlarge.
The CME Daily Delivery Report showed that 27 gold and 85 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.
In gold, the sole short/issuer was Advantage once again — and they stopped 14 contracts as well. The other two long/stoppers were JPMorgan and HSBC USA. The former picked up 10 contracts — and the latter, 3 contracts. All contracts, both issued and stopped, involved their respective client accounts.
In silver, there were four short/issuers in total, the largest being ADM with 39 out of its client account. There were only two long/stoppers. JPMorgan picked up 82 — and Morgan Stanley picked up the other 3. Both amounts were for their respective client accounts.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Thursday trading session showed that gold open interest in December declined by 75 contracts, leaving 138 still open, minus the 27 contracts mentioned a few paragraphs ago. Wednesday’s Daily Delivery Report showed that 84 gold contracts were actually posted for delivery today, so that means that another 84-75=9 more gold contracts were just added to the December delivery month. Silver o.i. in December dropped by 60 contracts, leaving 111 still around, minus the 85 mentioned a few paragraphs ago. Wednesday’s Daily Delivery Report showed that 136 silver contracts were actually posted for delivery today, so that means that 136-111=25 more silver contracts were added to December.
There were withdrawals from both GLD and SLV yesterday. Authorized participants took out 85,090 troy ounce of gold, plus 1,408,101 troy ounces of silver. In light of the current price action in both precious metals, both these withdrawals seem somewhat counterintuitive — and both may have represented conversion of shares for physical metal. This is one of many of Ted’s areas of expertise — and he may or may not have something to say about it in his weekly commentary tomorrow.
There was a tiny sales report from the U.S. Mint yesterday, as they sold 25,000 silver eagles — and that was all.
There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.
It was another pretty busy day in silver, as 341,202 troy ounces were received — and 1,260,523 troy ounces were shipped out. All of the ‘in’ activity was at CNT. In the ‘out’ department, it was JPMorgan leading the pack yet again, with two more truckloads…1,193,992 troy ounces. The remaining 66,531 troy ounces departed CNT. There was also some paper transfers as well. There was 513,252 troy ounces transferred from the Eligible category and into Registered over at CNT. Plus there was 136,554 troy ounces transferred from the Registered category — and back into Eligible over at Brink’s, Inc. The link to all of this activity is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday. They reported receiving 2,000 of them — and shipped out 212. All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Since the 20th of December fell on a weekday this month, the folks over at The Central Bank of the Russian Federation updated their website with their November data — and during that month it showed that they added 1.2 million troy ounces/37.3 metric tonnes of gold to their reserves. That brings their total reserves up to the 67.6 million troy ounce/2,103 metric tonne mark.
This is now the fifth month in a row where they have averaged a bit over 1 million troy ounces of gold added, on average, per month. This is way more than they mine every month, so they’ve either been buying it on the open market or, like China, are not exporting what they’ve been mining for quite awhile now — and using the money from their big sale of U.S. Treasuries to buy it. One has to wonder whether or not their adding to their known silver reserves as well.
Here’s Nick’s most excellent chart updated with November’s data. Click to enlarge.
I have an average number of stories for you today.
Well, we were wrong. We figured the Fed would pause now. Instead, it went ahead with its rate hike and suggested it would pause in 2019.
This was widely expected by the markets, if not by us. Early yesterday, investors guessed – as we did – that the Fed would back off. They bid up the Dow by 350 points.
Then, when the news came out, they went the other direction… selling off by 700 points… to leave the Dow down 351 points, a new low for the year.
The Fed not only raised its key interest rate by 25 basis points; it also said that the economy may not be as strong as previously reported. And spirits visibly darkened in Lower Manhattan.
[T]he debt-soaked economy is so fragile that even a hint of higher rates is like adding a lit cigarette to a gasoline spill. Yesterday’s move puts stocks at their lowest point for the year… and seems set to make this December the worst since 1931.
This commentary from Bill showed up on the bonnerandpartners.com Internet site early on Thursday morning EST — and another link to it is here.
Jeffrey Peshut at RealForecasts.com has composed several very illuminating graphs based on the Rothbard-Salerno True Money Supply (TMS). In one graph Peshut shows the collapse of the growth rate of TMS beginning at the end of 2016, which was caused by the Fed beginning to raise the fed funds target rate at the end of the preceding year.
What is of great interest is that the recent deceleration of monetary growth (the second red arrow) almost exactly matches in extent and rapidity the monetary deceleration (the first red arrow) that immediately preceded the financial crisis of 2007-2008.
With equity prices heading back toward historic highs after the January “correction” and housing prices bubbling to an all time high in major markets, the suppression of the TMS growth rate, if it is sustained for the rest of the year, portends another credit crisis and housing bust, followed by an economic recession for the U.S. economy. As Peshut’s graph below indicates the qualitative relationship between TMS growth, credit crisis, and recession has been remarkably clear since 1978.
Of course, this empirical relationship should not surprise us, because it is nothing but an illustration of the Austrian theory of the business cycle.
This worthwhile 2-chart Zero Hedge article was posted on their Internet site at 1:30 p.m. on Thursday afternoon EST — and I thank Richard Saler for sending it our way. Another link to it is here. In a companion story to this, come this Zero Hedge article headlined “S&P Liquidity Just Dropped to the Lowest on Record” — and I thank Brad Robertson for that one.
President Trump shocked Washington this morning when he Tweeted confirmation of rumors that he would order the removal of U.S. troops from Syria. According to his spokesperson, the order has already been given. The neocons are not happy, with Sen. Lindsey Graham Tweeting that removing troops is an “Obama-like” move. Will Trump’s own staff rebel? What about the fine print? Are we really leaving?
One thing is for sure, the hawks are having a meltdown…
If he follows through, writes Rogin, there will follow “devastating and dangerous consequences for the United States.” And further: “Trump is now contradicting what all of his other top national security officials have been telling the world for months,” says Rogin.
So the President of the United States can’t make a command decision without a nod from the ‘deep state’?
This Zero Hedge story was posted on their website at 8:45 p.m. EST on Thursday evening — and another link to it is here. A follow-on Zero Hedge story from 5:27 p.m. EST last night is headlined “Mattis Quits: Defense Secretary Out After Tense Meeting With Trump“.
The announcement by President Trump that U.S. troops would be leaving Syria has been met with anger not just by neocons, but by Hollywood ‘liberals’ too. Aren’t progressives supposed to oppose wars and illegal occupations?
Of course, we have to be cautious. Trump’s announcement of a troop withdrawal from Syria, for now at least, is just words. We need to see evidence of soldiers leaving before we start to celebrate. We need to read the small print with a large Sherlock Holmes-style magnifying glass.
Even so, it’s a positive development as it marks a further winding down of the conflict. Some though don’t see it that way.
We knew neocons would be upset by the news. They want the U.S. to be in Syria forever. We knew Britain and France – who have invested so much in trying to bring down the Assad government – wouldn’t be happy either. But it’s the reaction of Hollywood liberals which is the interesting thing.
I’m old enough to remember when liberals hummed Pete Seeger songs and marched against wars and illegal occupations of global south countries. When they denounced imperialism and the racist attitudes which underpinned it.
Today, they seem to support imperialism, war and military occupations.
This very interesting — and somewhat amusing commentary from Neil put in an appearance on the rt.com Internet site at 3:52 p.m. Moscow time on their Thursday afternoon, which was 7:52 a.m. in Washington — EDT plus 8 hours. I thank George Whyte for sharing it with us — and another link to it is here.
Almost five years since Russia’s military intervention in Ukraine sparked Western sanctions that have helped to smother growth, European governments are losing the appetite for punishing actions against Moscow. That’s no solace for investors.
While the European Union shied away from penalizing Russia after a naval clash with Ukraine last month that was condemned by the West, the U.S. is threatening escalating sanctions tied to accusations of Russian meddling in the 2016 presidential elections. The risk of new measures has made it much harder for foreign businesses to work in Russia.
“The most effective sanctions are the ones that aren’t entirely clear, because the lack of clarity has a chilling effect on investment,” Frank Schauff, chief executive officer of the Association of European Businesses in Russia, said in an interview. A sanctions law passed by Congress last year that allows for additional steps “will be in place for a long, long time,” he said.
The U.S. and the E.U. imposed sanctions over Russian President Vladimir Putin’s 2014 annexation of Crimea and support for separatists fighting in eastern Ukraine. There’s been little progress on implementing a 2015 peace accord to end the conflict in Ukraine’s east, giving the EU no scope for easing the penalties. The bloc agreed unanimously last week to prolong the sanctions for another six months. Together with a slide in oil prices, the U.S. and EU measures contributed to a slowdown in Russia’s economy and helped deter foreign investment.
With sluggish annual growth of less than 2 percent and the Russian state’s expanding role in business, even a recovery in oil prices isn’t likely to give a boost to the economy, according to Putin’s former finance minister, Alexei Kudrin, who now heads the Audit Chamber that monitors the budget.
For now, major European companies with operations in Russia are hunkered down but are finding it hard to finance expansion because banks are wary of U.S. reprisals. German investment averaged $550 million annually since 2013 compared to $3.6 billion a year from 2007-2012. French companies invested $666 million in the first half of 2018, down from a peak of $2.6 billion in 2010.
This Bloomberg article which…courtesy of their ‘thought police’…now bears the headline “Europe Is Getting Soft on Russia. Investors Just Want Clarity” was posted on their website at 8:00 p.m. Pacific Standard Time [PST] on Tuesday evening. I found it embedded in a Zero Hedge article that Brad Robertson sent our way. Another link to it is here.
One of Russia’s state-run banking giants sanctioned by the US, Promsvyazbank, has brought its security deposits payable to international payment systems – Visa and Mastercard – down to a minimum.
The measure is set to be implemented by converting domestic banking transactions to Russia’s Mir payment system, launched by the Central Bank of Russia in 2015, a year after Western sanctions against the country were introduced.
Russia’s ninth biggest financial institution has also reduced its foreign-exchange holdings, according to Promsvyazbank president Pyotr Fradkov, as quoted by Russian business daily Vedomosti.
Security deposits are commonly used as proof of intent for lenders to guarantee fulfilment of their settlement obligations. The amount of such a deposit depends on the bank’s daily turnaround.
“We have carried out the necessary work with Visa and Mastercard. Our partners agreed with the measure and are ready to work with us in the same mode,” Fradkov told the media. “We are not cancelling work with Visa and Mastercard. There haven’t been any reasons for that yet.”
This interesting news item appeared on the rt.com website at 2:01 p.m. Moscow time on their Thursday afternoon, which was 6:01 a.m. in New York…EST plus 8 hours. It’s the second offering of the day from George Whyte — and another link to it is here.
Russian President Vladimir Putin said Thursday he agrees with President Donald Trump that it’s time for U.S. troops to leave Syria.
Putin’s remarks came one day after the United States said it would withdraw all forces from Syria.
“Donald is right and I agree with him,” Putin said in his annual meeting with reporters. “If the U.S. decided to withdraw its contingent, it has done the right thing. We see no signs of withdraw, but we admit that this is possible, especially since we are moving along the path of a political settlement.”
Putin has said the U.S. presence in Syria was illegitimate, but agrees with U.S. military officials that the Islamic State in Syria has largely been defeated on the ground and has suffered “serious blows.”
This UPI story appeared on their Internet site at 9:23 a.m. EST on Thursday morning — and it comes to us courtesy of Roy Stephens. Another link to it is here.
In keeping with an annual tradition that has persisted since shortly after his election to the highest office in the Russian Federation, Russian President Vladimir Putin held his annual end-of-year marathon Q&A session Thursday in downtown Moscow. This year, the Kremlin said it has accredited more than 1,700 journalists to participate, according to ABC.
Kremlin spokesman Dmitry Peskov, who accompanies Putin on stage and calls on journalists, told media ahead of the event that Putin would focus on domestic issues, and also every “aggressive and hostile” international situation involving Russia – of which there are many. And during the press conference, Putin has, so far, delivered, commenting on every contemporary controversy, from the diplomatic incident between Russia and Ukraine, the killing of Jamal Khashoggi, the poisoning of Sergei Skripal, the U.S.’s decision – made barely a day ago – to withdraw troops from Syria, the U.S.’s intention to withdraw from the INF and the looming possibility of another round of sanctions, which are currently under consideration in the U.S. Congress.
So far, the response that has attracted the most attention was a comment on the U.S.’s impending withdrawal from the INF, a Soviet-era arms control treaty that limits the number of intermediate-range nuclear arms that can be deployed by both sides. Echoing past comments, Putin warned once again that the breakdown of the international arms control framework and lowering the threshold for the use of nuclear weapons might eventually lead to “a global nuclear catastrophe.”
By withdrawing from the ABM 17 years ago, the U.S. forced Russia to develop new nuclear weapons like the hypersonic weapons about which the U.S. GAO warned earlier this week. So, if the U.S. does follow through with the INF withdrawal, “they should not squeak later” Putin said. “We know how to ensure our safety.”
The entire Q&A session lasted for 3 hours and 45 minutes — and there’s a youtube.com video clip of the entire thing embedded at the end of this article, if you’re interested. It was posted on the Zero Hedge website at 8:40 a.m. on Thursday morning EST — and I thank Brad Robertson for pointing it out. Another link to it is here.
CNN warns “officials brace for Trump announcement on Afghanistan” after Trump’s Wednesday bombshell Syria troop pullout announcement. He’s now initiated “a major draw-down” of forces in Afghanistan too, and while inside the beltway neocon heads might continue to explode, the broader public for which the seventeen year long Afghan war is deeply unpopular will no doubt cheer the move. And already NBC reports Thursday evening based on defense sources the White House has asked the Pentagon to draw up plans presenting “multiple options” including a “complete withdrawal“. Following the “options” order it now appears Trump has pulled the trigger and “ordered the start of a reduction of American forces in Afghanistan” according to a breaking WSJ report:
“More than 7,000 American troops will begin to return home from Afghanistan in the coming weeks, a U.S. official said. The move will come as the first stage of a phased draw-down and the start of a conclusion to the 17-year war that officials say could take at least many months. There now are more than 14,000 U.S. troops in Afghanistan.”
In a Thursday Tweet that could have just as well been about Afghanistan, Trump stated: “So hard to believe that Lindsey Graham would be against saving soldier lives & billions of $$$.” And added, “Time to focus on our Country & bring our youth back home where they belong!”
Meanwhile it shouldn’t be forgotten that even the generals responsible for executing the Afghan war have been critics of late, including the commander of NATO’s Resolute Support Mission and U.S. Forces in Afghanistan.
Speaking to NBC News in early November, Gen. Austin Scott Miller made deeply pessimistic public statements after taking charge of American operations, and shocked with his frank assessment that that the Afghan war cannot be won militarily and peace will only be achieved through direct engagement and negotiations with the Taliban — the very terror group which U.S. forces sought to defeat when it first invaded in 2001. “This is not going to be won militarily,” Gen. Miller said. “This is going to a political solution.”
This is another Zero Hedge story from yesterday evening EST — and another link to it is here.
In 1891, the U.S. Treasury printed some $1,000 bills, around 1,500 of them. Rather than enter mass circulation, though, the silver certificates were primarily used as a sort of proto-wire transfer among banks, says Peter Treglia, the director of currency for Stacks Bowers Galleries, a coin and currency auctioneer.
As a result, the bills never made it into private hands; they never even stayed in banks’ hands for long. “Back then, currency changed so frequently that the 1891 bills only circulated for two to three years,” Treglia says.
One of those $1,000 bills ended up in the Smithsonian. Another remained in a private collection for over 80 years; its first reported sale as a collectible item, rather than a piece of currency, was in the 1970s. The rest, presumably, were lost. (“I’d bet a lot of money that another one of these notes won’t turn up,” Treglia says. “Things are discovered all the time, but not of this magnitude.”)
That single remaining note, dubbed the “Marcy Note” because it features a portrait of U.S. Senator (also secretary of war and governor of New York) William Marcy, is now up for auction with an estimate of $2 million to $3 million.
This rather interesting Bloomberg story showed up on their Internet site at 2:00 a.m. PST on Thursday morning — and I thank Swedish reader Patrik Ekdahl for pointing it out. Another link to it is here.
It was another day where I didn’t find any precious metal-related stories I thought worth posting.
The PHOTOS and the FUNNIES
Today’s award winning photo in the ‘Young Photographer of the Year” was this one by Imogen Smith entitled “Stripey Reflection”. Click to enlarge.
I was certainly happy to see gold and silver prices rally on Thursday, but as Ted pointed out on the phone yesterday morning, neither precious metal was being allowed to trade freely, especially silver — and it appears on its face, that JPMorgan et al were the short sellers of first and last resort yesterday.
I certainly wasn’t happy to see the volume numbers in yesterday’s Preliminary Report, as gold open interest blew out by 19,578 contracts. I’m hoping that the final number posted on the CME’s website later this morning will show a meaningful reduction, but I’m not optimistic.
Here are the 6-month charts for the Big 6 commodities — and gold’s close above its 200-day moving average should be noted. WTIC also closed at a new low for this move down as well. Click to enlarge.
And as I type this paragraph, the London open is less than ten minutes away — and I see that with the Christmas/New Year holiday season coming up hard in the West, there certainly hasn’t been much activity in any of the precious metals during Far East trading on their Friday. Gold inched quietly lower until minutes before 3 p.m. China Standard Time on their Friday, but ticked higher at that point — and is now up $1.50 the ounce. Silver was down a handful of pennies until that same point in time — and is now down only a penny. Platinum was down 2 dollars until minutes before 3 p.m. CST — and it’s now up 3 bucks. Palladium was down 7 bucks by around 11:30 a.m. CST — and it crept higher until the same pre-3 p.m. CST time — and it’s now back at unchanged as Zurich opens.
Net HFT gold volume is 32,500 contracts — and there’s only 344 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is 5,600 contracts — and there’s only 51 contracts worth of roll-over/switch volume in this precious metal.
The dollar index was up 21 basis points by precisely 1:00 p.m. China Standard Time on their Friday afternoon — and has rolled over since — and is now up only 1 basis point as of 7:48 a.m. GMT in London.
Today, around 3:30 p.m. EST, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday. As I stated in my Wednesday column, I’m expecting further deterioration in the commercial net short positions in both silver and gold, but as to how much, I wasn’t prepared to hazard a guess.
In his mid-week commentary to his paying subscribers on Wednesday, silver analyst Ted Butler said that “my crystal ball is cloudy this week.”…”I’d guess some further deterioration, namely, managed money buying and commercial selling, but all I’m really interested in is what the crooks at JPMorgan may have done – which is impossible to handicap in advance.”
Of course, today’s report is mostly yesterday’s news when you look at the price action in both silver and gold since the Tuesday cut-off.
As always, whatever the numbers are, I’ll have them all for you in tomorrow’s column.
One of my readers asked me I’d be kind enough to post that list of precious metal companies that I own shares in one again, so here it is.
And as I post today’s missive on the website at 4:03 a.m. EST, I note that all of gold’s tiny gains during the first hour of London trading have vanished — and then some — and is now down 70 cents the ounce. I note that the silver price is being carefully managed once again — and it’s now down 8 cents. Platinum is now back at unchanged, but palladium is now down 3 bucks.
Gross gold volume is coming up on 45,000 contracts — and net of roll-over/switch volume, net HFT gold volume is just under 40,000 contracts. Net HFT silver volume is now up to 7,800 contracts — and there’s still only 55 contracts worth of roll-over/switch volume on top of that.
The current 96.25 low tick in the dollar index came at 8:15 a.m. in London — and it’s now back in the green by 5 basis points as of about 8:50 a.m. in London.
Have a good weekend — and I’ll see you here on Saturday.