There Are No Markets Anymore…Only Interventions

28 December 2018 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price stair-stepped its way higher by about four dollars and change by shortly after 9 a.m. China Standard Time on their Thursday morning. But it was sold quietly lower from that point until the 8:00 a.m. GMT London open.  It began to rally from there, but it was a struggle…two steps forward, one back…as someone was obviously not going to allow the gold price to run away to the upside.  It was up about 12 dollars by the COMEX close, but that wasn’t allowed to last.

The gold price was forced to trade within a one percent price range once again — and for that reason, the low and high ticks aren’t worth my effort to look up.

Gold was closed on Thursday at $1,275.10 spot, up $8.80 on the day.  Net volume was more than reasonable at just over 206,000 contracts — and there was around 8,800 contracts worth of roll-over/switch volume on top of that.

The silver price chopped generally sideways until shortly before 1 p.m. CST on their Thursday afternoon and, like gold, was sold quietly lower into the London open from there.  From that juncture, it began to head quietly higher — and the high tick of the day occurred around 12:15 p.m. in COMEX trading in New York.  It really didn’t do much after that.

The low and high ticks in this precious metal were reported by the CME Group as $15.005 and $15.335 in the March contract.

Silver was closed yesterday in New York at $15.19 spot, up another 19 cents on the day.  Net volume was pretty decent once again at a bit under 76,000 contracts — and there was a hair under 3,700 contracts worth of roll-over/switch volume in this precious metal.

The platinum price was up to the $800 spot mark by shortly before noon in Shanghai, but sagged unevenly lower until around thirty minutes after the Zurich open.  It crawled a bit higher until shortly after the COMEX open — and then was sold down to its low tick of the day, which came about thirty minutes before the COMEX close.  It chopped very quietly higher from there until about 4 p.m. EST in the thinly-traded after-hours market — and didn’t do much after that.  Platinum finished the Thursday session at $974 spot…down 2 dollars from Wednesday’s close.

The palladium price inches unevenly higher until a few minutes after 11 a.m. China Standard Time on their Thursday morning — and at that juncture, it was up 9 bucks.  It didn’t do much from there until after the 2:15 p.m. CST afternoon gold fix in Shanghai — and then got smacked lower into the Zurich open from there.  But starting at that point, it began to rally very unsteadily higher for the remainder of the Thursday session…topping out, like palladium, at 4 p.m. EST in after-hours trading in New York.  It was sold down a couple of bucks into the close from there.  Palladium finished the Thursday session at $1,251 spot, up 9 dollars on the day.

The dollar index closed very late on Wednesday afternoon in New York at 97.05 — and then opened 12 basis points lower once trading began on Wednesday evening.  From that point it was a long, slow — and uneven slide to its 96.42 low tick of the day, which came at 1:54 p.m. EST in New York.  It chopped just as unevenly higher into the close from there — and finished the day at 96.48…down 57 basis points from Wednesday.  Here’s the DXY chart…courtesy of Bloomberg once again.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart from stockcharts.com — and the delta between its close…96.00…and the close on DXY chart above, was 48 basis points on Thursday.  Click to enlarge.

It’s certainly obvious from the above chart that, like the U.S equity markets, the dollar index would crash and burn if it wasn’t being artificially propped up.

Once again the gold shares rallied at the open, only to be sold lower minutes later — and back into negative territory for awhile.  They popped back into the green around noon in New York trading — and then chopped generally sideways, before popping a bit higher into the 4:00 p.m. close.  The HUI finished up 0.90 percent on the day.

The silver equities followed the same general price path as the gold stocks — and its 3:20 p.m. EST rally into the 4:00 p.m. close, got Nick’s Intraday Silver Sentiment/Silver 7 Index up 1.13 percent by the end of the day.  The Thursday doji is a duplicate of Wednesday’s — and Nick wasn’t returning my e-mails.  Hopefully it’s fixed for tomorrow’s column.  That goes for the doji in the 1-year Silver 7 chart further down as well.  Click to enlarge if necessary.

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

As I pointed out in Thursday’s column — and a few times before Christmas, this counterintuitive  and lacklustre share price action in the precious metals is most likely due to tax-loss selling — and that will be all done with by the end of the year.

And also don’t forget that there’s a buyer for all these shares being sold — and you have to ask yourself who those buyers might be?  They certainly aren’t weak hands…but the strongest of all.


The CME Daily Delivery Report showed that 29 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday…the last delivery date in the December contract.  In gold, the only short/issuer that mattered was Goldman Sachs with 28 out of its in-house/proprietary trading account.  The two long/stoppers were Advantage and the CME Group…the former with 19 for its client account — and the latter with 10 contracts for its own account.  It immediately re-issued them as 10×10=100 ten-ounce COMEX mini-gold contracts.  ADM stopped 95 of them — and International F.C Stone picked up the other 5.  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 fell by 49 contracts, leaving 29 left, minus the 29 mentioned in the previous paragraph.  Wednesday’s Daily Delivery Report showed that 47 gold contracts were actually posted for delivery today, so that means that 49-47=2 more gold contracts disappeared from the December delivery month.  Silver o.i. in December fell by 63 contracts, leaving 1 still around.  Wednesday’s Daily Delivery Report showed that 63 silver contracts are actually posted for delivery today, so the change in open interest and deliveries match.  It appears that gold deliveries are done for December — and only 1 silver contract has yet to be dealt with.  That will obviously occur on Monday.


After a huge deposit into GLD on Wednesday, there was a withdrawal from it on Thursday, as an authorized participant took out 75,630 troy ounces.  There were no reported changes in SLV.

The folks over at the shortsqueeze.com Internet site updated their short position data for both SLV and GLD for the 2-week period ending on December 14 — and this is what they had to report.  The short position in SLV fell from 10,392,900 shares/troy ounces, down to 9,540,700 troy ounces, which is a decline of 8.2 percent.  The short position in GLD rose from 1,033,930 troy ounces, up to 1,342,160 troy ounces, an increase of 29.8 percent.

Not surprisingly, there was no sales report from the U.S. Mint yesterday.

There was some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  They reported receiving 32,030 troy ounces, but shipped out only 128.600 troy ounces.  All of the ‘in’ activity was at HSBC USA — and all of the ‘out’ activity…4 kilobars [U.K./U.S. kilobar weight] occurred at Canada’s Scotiabank.  There was also 24,723 troy ounces transferred from the Eligible category — and into Registered.  That happened over at HSBC USA as well.   That transfer may be in preparation for delivery next month, as December deliveries are done — and there are still 1,179 gold contracts open in January.  We’ll see.  The link to this activity is here.

There was decent activity in silver, as 599,946 troy ounces…one truckload…was received at Canada’s Scotiabank.  There was 830,789 troy ounces received — and of that amount…629,910 troy ounces…one truckload…was dropped off at CNT.  The remaining 200,879 troy ounces ended up at Scotiabank.  The link to this is here.

For a change, there was no in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.


Silver bars at The Central Bank of the Russian Federation…100,000 troy ounces per pallet.  Click to enlarge.

I have even fewer stories today than I did yesterday…


CRITICAL READS

4th Biggest Buy Program of All Time Sends Dow Soaring Over 900 Points

Dow futures plunged over 760 points after tagging yesterday’s highs overnight, but those darn algos ripped the market higher in the last hour erasing the entire drop…  with the biggest buy program since February and biggest reversal since 2010

Dow futures exploded over 900 points higher, taking out yesterday’s highs and ending like yesterday at the highs of the day…

The plunge was not a total surprise after economic confidence crumbled and job expectations crashed, but the buying panic had the same short squeeze and pension panic reallocation fingerprints from yesterday.

But finally, no matter how much lipstick they put on December, it is still a pig…

A ramp job extraordinaire once again.  This chart-filled Zero Hedge news item showed up on their Internet site at 4:02 p.m. EST on Thursday afternoon — and I thank Brad Robertson for sending it our way.  Another link to it is here.


JPMorgan Chase settles SEC charges for $135 million

The U.S. Securities and Exchange Commission announced Wednesday that JPMorgan Chase Bank will pay more than $135 million to settle charges of improper handling of pre-released American Depositary Receipts.

The receipts, also known as ADRs, are U.S. securities that represent shares of a foreign company that require a corresponding number of foreign shares to be held in custody at a depository bank.

The SEC said JPMorgan improperly provided ADRs to brokers in thousands of pre-release transactions when neither the broker nor customers had the foreign shares needed to support the new ADRs.

The agency said the practice essentially inflated the total number of a foreign issuer’s tradeable securities, resulting in abusive practices like inappropriate short selling and dividend arbitrage.

Citigroup Inc. agreed to pay $38.7 million to settle similar SEC charges in November while Deutsche Bank AG agreed to pay about $75 million in July. BNY Mellon was also ordered to pay more than $54 million for its dealings with ADRs.

Not even coffee money.  This interesting UPI news item appeared on their website at 8:34 a.m. EST on Thursday morning — and I thank Roy Stephens for pointing it out.  Another link to it is here.


Furious Iraqi lawmakers demand U.S. troop withdrawal

President Donald Trump’s surprise trip to Iraq may have quieted criticism at home that he had yet to visit troops in a combat zone, but it has infuriated Iraqi politicians who on Thursday demanded the withdrawal of U.S. forces.

Arrogant” and “a violation of national sovereignty” were but a few examples of the disapproval emanating from Baghdad following Trump’s meeting Wednesday with U.S. servicemen and women at the al-Asad Airbase.

Trips by U.S. presidents to conflict zones are typically shrouded in secrecy and subject to strict security measures, and Trump’s was no exception. Few in Iraq or elsewhere knew the U.S. president was in the country until minutes before he left.

But this trip came as curbing foreign influence in Iraqi affairs has become a hot-button political issue in Baghdad, and Trump’s perceived presidential faux-pas was failing to meet with the prime minister in a break with diplomatic custom for any visiting head of state.

On the ground for only about three hours, the American president told the men and women with the U.S. military that Islamic State forces have been vanquished, and he defended his decision against all advice to withdraw U.S. troops from neighbouring Syria, He said the U.S. was once again respected as a nation, and declared: “We’re no longer the suckers, folks.”

The abruptness of his visit left lawmakers in Baghdad smarting and drawing unfavourable comparisons to the occupation of Iraq after the 2003 invasion.

This CP news story put in an appearance on the msn.com Internet site early on Thursday evening EST — and another link to it is here.


There were no precious metal-related news item that I thought worth posting.


The FUNNIES


The WRAP

As I quoted in today’s headline title…”There are no markets anymore…only interventions“…now applies across the board — and it’s obvious to anyone with more than two synapse to rub together.  Even the main stream media has a complete grasp of the obvious now — and saying so.  How long this will last is anyone’s guess, but The President’s Working Group on Financial Markets…a.k.a…the Plunge Protection Team, has been hard at it lately…with the last couple of days being the poster children for that.

Of course these interventions have always been around in the precious metal market — and that obvious in the daily charts from Kitco at the top of today’s column — and in the 6-month charts posted below.  Click to enlarge.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price began to creep a few dollars higher starting around 9 a.m. China Standard Time on their Friday morning.  It then traded sideways until shortly before 2 p.m. CST — and then rallied a few more dollars until 3 p.m. CST.  It has been moving mostly sideways since — and is currently up $5.60 an ounce.  The silver price was up a nickel or so by 1 p.m. CST — and then was sold back to around unchanged shortly thereafter, but began to crawl higher from there — and it’s currently up 12 cents.  Platinum has been quietly creeping higher in Far East trading as well — and is up 4 bucks.  Palladium chopped very quietly and unsteadily sideways-to-down until just after 12 o’clock noon in Shanghai.  It has rallied unsteadily since — and is currently up 2 dollar as the Zurich open looms.

Net HFT gold volume is currently a bit over 32,500 contracts — and there’s only 439 contracts worth of roll-over/switch volume in that precious metal.  Net HFT silver volume is a hair under 13,000 contracts — and there’s only 263 contracts worth of roll-over/switch volume on top of that.

The dollar index traded a small handful of basis points higher once trading began in New York on Thursday evening, but began to head lower starting at exactly 9:30 a.m. China Standard Time on their Thursday morning.  The current 96.33 low tick came at 10:18 a.m. CST — and it’s been trading nervously sideways since — and is down 10 basis points as of 7:40 a.m. 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 Monday.

As I’ve already mentioned in previous commentaries, starting last week, I expect further deterioration in the commercial net short positions in both silver and gold — and this is what silver analyst Ted Butler had to say about it his mid-week commentary on Wednesday…”I would estimate that there was at least a 30,000 net contract deterioration in gold, or at least that amount of managed money buying and commercial selling as a result of the nearly $20 rally thru Monday. Without beating an already dead horse further, the key consideration in both metals will be whether there was any new shorting by you know who.

And as I post today’s missive on the website at 4:02 a.m. EST, I see that all four precious metals got sold lower shortly after the London/Zurich opens. Gold is only up $1.60 now — and silver by only 6 cents. Platinum is only up 2 bucks — and palladium is up a dollar. The dollar index hit its current low tick at 8:08 a.m. GMT — and rallied a bit off that low — and that was all the excuse needed to sell them lower.

Gross gold volume is around 46,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is 45,500 contracts. Net HFT silver volume is now up to about 17,300 contracts — and there’s still only 525 contracts worth of roll-over/switch volume in that precious metal.

The dollar index sagged going into the London open — and the current 96.29 low tick was set at 8:08 a.m. GMT. It has ‘rallied’ a tiny bit since — and is down 12 basis points as of 8:40 a.m. GMT/9:40 a.m. CET.

That’s it for another day — and I’ll see you here tomorrow with all the COT facts…warts and all.

Have a good weekend.

Ed