A Quiet Day in the Precious Metals

29 December 2018 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was up five dollars or by shortly after the London open on their Friday morning.  It was sold a bit lower at that juncture, but began to creep higher shortly after London closed — and gold finished the Friday session in New York, close to its early-morning London high.

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

Gold closed on Friday in New York at $1,280.40 spot, up $5.30 on the day.  Net volume was very quiet at just under 156,000 contracts — and there was around 8,500 contracts worth of roll-over/switch volume on top of that.

Silver’s price path was very similar to gold’s, except its high tick of the day…such as it was…came at the afternoon gold fix in London.  Then, also like gold, it was sold lower until a bit after London closed for the weekend — and it crept higher until trading ended at 5:00 p.m. EST in New York.

The low and high ticks in this precious metal aren’t worth looking up, either.

Silver finished the day at $15.35 spot, up another 16 cents.  Net volume was about average…whatever that means these days…at 57,800 contracts — and there was 3,462 contracts worth of roll-over/switch volume in that precious metal.

Platinum got back within a dollar of the $800 spot mark about an hour or so before the Zurich open, but that’s as high as it was allowed to get, as the selling pressure began in earnest very shortly after that.  The low came at the Zurich close — and the price didn’t do much of anything after that.  Platinum finished the Friday session in New York at $789 spot, down 5 bucks from Thursday.

The palladium price chopped very unevenly sideways until the COMEX open in New York on Friday morning.  It began to edge higher from there, but it was ‘light’s out’ minutes after the Zurich close.  The low tick of the day was set shortly after 1 p.m. in New York — and it recovered a bit in the thinly-traded after-hours market.  Palladium was closed at $1,240 spot, down 11 dollars on the day.

The dollar index closed very late on Thursday afternoon in New York at 96.48 — and after chopping mostly sideways for a bit once trading began early on Thursday evening EST, it began to head lower starting at exactly 9:30 a.m. China Standard Time on their Friday morning.  It chopped generally sideways in a fairly narrow range, with the exception of a down/up move between 10 a.m. in London — and 8:35 a.m. in New York, for the remainder of the Friday session.  The dollar index closed yesterday at 96.40 down 8 basis points on the day.  Click to enlarge.

Here’s the 6-month U.S. dollar index chart — and the delta between its close…95.96…and the close on the DXY chart above, was 44 basis points on Friday.  And as you should carefully note, the dollar index would also crash and burn if it wasn’t being actively supported by those always-present ‘gentle hands’.  Click to enlarge.

Despite the fact that the gold price was in positive territory by a decent amount throughout the entire trading session on Friday, the gold stocks continued to act poorly.  They opened unchanged — and began to head lower once the afternoon gold fix in London was put to bed.  They began to trend higher starting around 1 p.m. in New York trading, but that rally topped out at around 3 p.m. EST, as the day traders headed for the exits.  The HUI closed lower by 1.96 percent.

The silver equities opened a bit below unchanged — and then proceeded lower until around 11:20 a.m. EST.  From there, they began to head unsteadily higher and, like their golden brethren, were sold lower starting at 3 p.m.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.18 percent.  Click to enlarge if necessary.

And here’s the 10-year Silver Sentiment/Silver 7 Index from Nick as well — and it puts our current ‘rally’ in some perspective.  Click to enlarge.

I’ll certainly be glad when this tax-loss season selling is over and done with.  But the question still remains as to who is buying all these precious stocks being sold, as it sure as hell isn’t John Q. Public.


Here are the usual charts from Nick that show what’s been happening for the week, month-to-date — and year-to-date.  The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI and the Silver 7 Index.

Here’s the weekly chart.  Gold closed up a bit — and silver closed up by more than a bit.  But the precious metal equities underperformed by a huge margin [with respect to the increases in the underlying precious metals] during that time period, most likely due to tax-loss selling…something I’ve been pointing out all week long.  Click to enlarge.

Here is the month-to-date chart — and it’s much happier looking, as this past week’s poor performance didn’t hurt the month-to-date gains by much.  Except for platinum…but only by a hair, it’s all green — and the gold stocks are now back to outperforming the silver equities once again.  That’s compared to the gains in their respective underlying precious metal prices.  Click to enlarge.

Like it was last week, the year-to-date chart, except for palladium as always, continues to be a sea of red.  The silver equities are back to outperforming their golden brethren, compared to their respective underlying precious metals — and that’s mainly because the silver metal itself did so well this past week, relative to gold.  Click to enlarge.

As I said last week — and the week before, it’s still JPMorgan’s world in the precious metals market — and they’ll do whatever they want, or until they’re told to step aside.  It’s still way too soon to know if they will enter as short sellers of last resort in a serious manner once these current rallies develop more ‘legs’.  However, this ongoing DoJ criminal investigation into JPMorgan’s trading activities in the precious metals certainly has the potential to change things in a hurry at any time.

So, once again, we wait some more.


The CME Daily Delivery Report showed that zero gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Monday…the last delivery day in December.  In silver, the short/issuer was Advantage — and the long/stopper was the CME Group, which immediately re-issued it as 5 one-thousand ounce COMEX mini silver contracts.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Friday trading session showed that gold open interest in December fell by 29 contracts, leaving zero left.  Silver o.i. in December dropped by 1 contract, also leaving zero left, so December is done.

For December, there were 7,515 gold contracts issued and stopped — and in silver, that number was 4,385.

Friday was also First Day Notice for delivery in January — and the CME Group reported that 57 gold — and 102 silver contracts were issued for delivery on January 2.

In gold, the two short/issuers were Advantage and ADM, with 48 and 9 contracts out of their respective client accounts.  Of the five long/stoppers in total, the largest was Morgan Stanley with 20 contracts in total…15 for its own account, plus another 5 for its client account.  In second and third place came JPMorgan and Merrill, with 16 and 15 contracts for their respective client accounts.

In silver, the sole short/issuer was HSBC USA, with 102 contracts out of its client account.  There were seven long/stoppers in total.  The two biggest by far were Goldman Sachs, with 39 contracts for its client account — and close behind was JPMorgan, with 36 contracts in total…23 for its own account, plus 13 for its client account.

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

January open interest in gold declined by 493 contracts, leaving just 420 left, minus the 57 contracts mentioned a few paragraphs ago.  January o.i. in silver only declined by 26 contracts, leaving 995 still around, minus the 102 contracts mentioned a few paragraphs ago.


There were no reported changes in either GLD or SLV on Friday.

Much to my surprise, there was a sales report from the U.S. Mint yesterday.  They sold 1,000 troy ounces of gold eagles — and another 40,000 silver eagles.

Month-to-date the mint has sold 3,000 troy ounces of gold eagles — 1,500 one-ounce 24K gold buffaloes — and 390,000 silver eagles.

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  There was 4,020 troy ounces received at Brink’s, Inc. — and that was it.  I won’t bother linking this.

There was also some activity in silver, as 4,996 troy ounces were received — and all of that went into Delaware.  There was also 697,424 troy ounces shipped out, which is a bit more than a truckload — and that departed CNT.  The link to this is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 231 of them — and shipped out 300.  All this occurred at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


The Lava Treasure is the Roman treasure of coins and the gold plate that was discovered underwater in the small Gulf of Lava (part of the Gulf of Ajaccio), southern Corsica, France, probably in 1958. Also known as the “Corsica hoard”, or “Mediterranean Sea hoard”. It is considered as one of world’s most important archaeological finds, and presents a unique testimony for our knowledge of Roman imperial coinage.

The find was never officially declared. Part of it was discovered by two brothers who were diving in the waters searching for sea urchins. Instead they came up with several gold coins that they cleaned and then sold illegally. Under the French law, all underwater archaeological finds belong to the state.

There’s some evidence that the most expensive piece of the hoard – a large golden statue of a youth — has been found but, tragically, later it was melted down by the illegal excavators for its gold value.  In total, the value of this treasure would be estimated at several tens of millions of euros, even not counting the statue. Some of the coins have been valued at €250,000 each.

Mysteriously, 41 pieces of gold, aurei and ‘multiples’, appeared on the market in 1956.  A big group of coins from Lava was seized by the French justice on the coin market in 1986.  Three Corsican divers, Felix Biancamaria, his brother Angel, and their friend Marc Cotoni were involved in these finds, and were convicted in 1994 in court for illegal antiquity trade.  In 2010, a valuable Roman golden vessel belonging to ‘Lava Treasure’ was recovered by police.

These are the only two photos available — and the ‘click to enlarge‘ feature only works on the first one.


Despite what I said in my columns all this week, there was no Commitment of Traders Report on Friday…a fact pointed out by reader Rick Cordes in an e-mail to me early yesterday morning.

According to the CFTC’s website “December 22, 2018: During the shutdown of the federal government, the Commitments of Traders report will not be published. When the federal government operations return to normal, CFTC will resume publication of the Commitments of Traders report.”

When I spoke to Ted about it on the phone later on Friday morning, he confirmed that fact — and had mentioned it briefly in his mid-week review on Wednesday.  I’m embarrassed to say that I missed that sentence somehow.  But Ted also pointed out that it had just appeared on the CFTC’s website on Wednesday, despite the December 22 date — and he was wondering why they had backdated it.

I don’t have much in the way of stories for you today.


CRITICAL READS

Doug Noland: Thoughts on Liquidity

Progressively more reckless central bank measures over the past decade have been necessary to promote the perception of ample and sustainable Liquidity. But with Crisis Dynamics having recently afflicted the “Core,” it is difficult for me not to see a Liquidity environment fundamentally altered. Confidence has taken a significant hit. I believe the leveraged speculating community has been impaired, with outflows and general risk aversion ensuring ongoing de-risking/deleveraging. Similarly, with confidence in “passive” (stock, fixed-income, international) ETF strategies now badly shaken, it is difficult to envisage a return to booming industry inflows. And with derivatives players stung by abrupt market losses and a spike in volatility (option premiums), I expect we’ve passed a critical inflection point in the pricing and availability of market protection.

The backdrop points to an inhospitable Liquidity backdrop. Serious market structural issues have bubbled to the surface, issues market participants either haven’t appreciated or simply believed would readily rectify by central banks before confidence was impacted. The orientation of powerful financial flows has been upset. Hedging and derivatives markets have dislocated. The great fallacy of “moneyness” for risky stocks, bonds and derivatives is being laid bare.

Importantly, I view speculative Credit as the marginal source of global Liquidity. I believe a historic Bubble in securities and derivatives-related Credit has been pierced. This Bubble was fueled by years of zero/negative rates and Trillions of central bank liquidity. As we saw this week, bear market rallies tend to be ferocious. And when a short squeeze and unwind of hedges is in play, surging prices will spur hope the sell-off has run its course and that Liquidity has returned to the markets.

It’s just not going to be that simple. Global markets face serious structural issues years and decades in the making. Hopefully markets can avoid crashes and make necessary adjustments over an extended period of time. For a while now, I’ve feared a scenario where illiquidity becomes a systemic global issue. From closely analyzing previous booms and bust episodes, things often prove even worse than I suspect.

Doug’s last commentary for 2018 is certainly on the longish side, but a must read in my opinion.  It appeared on his Internet site in the very wee hours of Saturday morning EST — and another link to it is here.


Credit Isn’t Buying It: Spreads Blow Out Amid Accelerating Liquidations

Don’t look to credit for confirmation of yesterday’s unprecedented intraday reversal out of Treasurys and into stocks.

While the S&P staged its biggest rebound since 2010 on the heels of what would eventually become the 4th biggest buy order in history, US credit spreads, which have blown out this quarter, widened even more to the highest levels since the summer of 2016 amid accelerating credit funds outflows.

As shown below, investment-grade bond spreads widened 3 basis points to 171bps on Thursday, having widened every day since Dec. 14 and most trading sessions this quarter, confirming that the recent stock purchase has not been a universal change in moody but a stock and Treasury specific reallocation trade even as credit has continued to get pounded.

Meanwhile, junk bond also dropped on Thursday, as the high yield index widened 1 basis point to 531 basis points, the highest level since Aug. 4, 2016. It’s risen a whopping 113 basis points this month, with the average junk bond yield now above 8% for the first time since April 2016.

The reason for the continued blow out? accelerating liquidations to fund redemptions and outflows from credit funds, with Lipper reporting that investment-grade funds saw outflows of $4.4 billion for the week ended Dec. 26, while junk bond funds registered the biggest outflows since October.

TL/DR: someone, somewhere is buying stocks, but this is far from a universal shift in sentiment because unless credit spreads tighten, it will become prohibitively expensive for companies to issue bonds and fund stock buybacks in 2019. As a reminder, buybacks have been the single biggest source of equity demand not only in 2018 but every year since the financial crisis.

This brief 2-chart Zero Hedge article appeared on their website at 9:14 a.m. EST on Friday morning — and comes to us courtesy of Brad Robertson.  Another link to it is here.


Pending Home Sales Crash 7.7%, Biggest Drop in Four Years

There was some hope for a rebound in U.S. housing indicators, after the recent existing home sales print rebounded, but that was promptly dashed after pending home sales dropped again in November, sliding -0.7% vs the expected 1.0% increase, declining in six of the last eight months, with a cumulative loss since March of -5.9% (-8.9% annualized)…and crashed a whopping 7.7% compared to last year, the biggest annual drop since April 2014.

Always eager to put lipstick on a pig, commenting on the collapse NAR chief economist Larry Yun said “the latest decline in contract signings implies more short-term pullback in the housing sector and does not yet capture the impact of recent favorable conditions of mortgage rates.”

Yun added that while pending contracts have reached their lowest mark since 2014, there is no reason to be overly concerned, and he predicts solid growth potential for the long-term.

Finally, not even Larry could spin the report as bullish admitting that the latest government shutdown will harm the housing market. “Unlike past government shutdowns, with this present closure, flood insurance is not available. That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas,” Yun said. “The longer the shutdown means fewer homes sold and slower economic growth.”

This is another Zero Hedge article courtesy of Brad.  It was posted on their website at 10:16 a.m. on Thursday morning EST — and another link to it is here.


Angela Merkel: Nation States Must “Give Up Sovereignty” to New World Order

Nation states must today be prepared to give up their sovereignty”, according to German Chancellor Angela Merkel, who told an audience in Berlin that sovereign nation states must not listen to the will of their citizens when it comes to questions of immigration, borders, or even sovereignty.

No this wasn’t something Adolf Hitler said many decades ago, this is what German Chancellor Angela Merkel told attendants at an event by the Konrad Adenauer Foundation in Berlin. Merkel has announced she won’t seek re-election in 2021 and it is clear she is attempting to push the globalist agenda to its disturbing conclusion before she stands down.

In an orderly fashion of course,” Merkel joked, attempting to lighten the mood. But Merkel has always had a tin ear for comedy and she soon launched into a dark speech condemning those in her own party who think Germany should have listened to the will of its citizens and refused to sign the controversial U.N. migration pact:

There were [politicians] who believed that they could decide when these agreements are no longer valid because they are representing The People”.

Her words echo recent comments by the deeply unpopular French President Emmanuel Macron who stated in a Remembrance Day speech that “patriotism is the exact opposite of nationalism [because] nationalism is treason.”  The French president’s words were deeply unpopular with the French population and his approval rating nosedived even further after the comments.

Europe must be stronger… and win more sovereignty,” he went on to demand, just like Merkel, that E.U. member states surrender national sovereignty to Brussels over “foreign affairs, migration, and development” as well as giving “an increasing part of our budgets and even fiscal resources”.

Why am I not surprised.  This commentary showed up on the Zero Hedge website at 8:10 a.m. on Friday morning EST — and it’s also courtesy of Brad Robertson.  Another link to it is here.


ECB Ends Corporate Bond Buying, and Look What Happens

To the white-knuckle end, 2018 has been a terrible roller coaster ride for Spanish supermarket chain Dia, once one of Europe’s biggest grocery chains. The firm’s shares, reduced to a penny stock — despite the 22% surge today to €0.44 — have plunged 90% since January. During the same period, the company has issued no fewer than three profit warnings. Its credit rating was slashed to junk in a matter of weeks. To top it all off, two weeks ago, Dia suffered the ultimate ignominy of being ejected from Spain’s benchmark index, the Ibex 35, for being worth too little, to be replaced by a pulp mill called Ence.

As the pressure rises, the company’s senior management, newly appointed earlier this month, has promised to offload the firm’s cash & carry division and fragrance brand. It also plans to close its biggest loss-making stores, all in the hope of securing a new €200 million credit line from its lenders, which it hopes will tide it (and its providers) over until Spring, when it hopes — that “h” word, again — to raise a fresh round of capital. It’s a big ask.

As for the company’s creditors, they are understandably concerned. They include four of Spain’s five biggest lenders, Santander, BBVA, CaixaBank and Banco Sabadell, as well as European heavyweights like Barclays, Société Générale, and Deutsche Bank. Also on the long list of creditors, albeit featured less prominently, is the ECB, which owns an unspecified amount of Dia’s outstanding debt.

During is corporate bond-buying days that were part of its QE, the ECB didn’t disclose by name what it was buying, or the amounts. But it does disclose a list of its current bond holdings (you can download the list here). And those holdings include three bonds issued by a certain Distribuidora Internacional de Alimentos — Aka Dia — that are scheduled to mature in 2019, 2021 and 2023. Their total face value is €905 million.

This rather brief commentary, which is certainly worth reading, put in an appearance on the wolfstreet.com Internet site on Thursday sometime — and I thank Richard Saler for pointing it out.  Another link to it is here.


U.K. and U.S. Always Knew Crimea Wanted to Re-join Russia – Archives

London and Washington knew of the overwhelming desire of Crimeans to re-unite with Russia from the early days of Ukraine’s independence. U.K. and U.S. diplomats predicted that Ukraine would split and that Crimea would look to Russia, British Cabinet papers released to the National Archives in London reveal.

In 1994 the British got a chance to learn first-hand about the strength of pro-Russian sentiments in Crimea. A visit by Foreign Secretary Douglas Hurd to Ukraine and Russia coincided with a crisis in relations between Kiev and Simferopol, Crimea’s capital. In May 1994, the Foreign Office informed Prime Minister John Major that the Crimean parliament, the Supreme Soviet, had “decided to renew the validity of the Crimean Constitution adopted in 1992“. This, the FCO memo said, meant ending the legal status of Crimea as part of Ukraine.

Crimea had been an autonomous republic within the Russian Federation; in 1945 it was downgraded to a region within the Russian Soviet Federative Socialist Republic and was in 1954 transferred to the Ukrainian Soviet Socialist Republic in what the Foreign Office described as an “administrative fiat of [Communist leader — NG] Kruschev“.

The Crimean head at the time was sacked for opposing the move. Most Crimeans never accepted the transfer, which many saw as a “virtual deportation from Russia to Ukraine“, and in early 1991 over 80% of them voted in a referendum to restore Crimea’s autonomy. The Ukrainian Supreme Soviet acquiesced. After the dissolution of the Soviet Union in December 1991, the Crimeans began a relentless campaign to reunite with Russia. In May 1992, the Crimean parliament adopted the republic’s constitution, which declared Crimea’s right to self-determination. Kiev threatened to open criminal proceeding against the Crimean leaders and hinted at military action to stamp out “separatism“.

The Crimeans had to put their drive for reunification with Russia on ice. But in 1994 they repeated their attempt and elected their own president on a ticket of re-integration with Russia.

This longish article, which is definitely worth reading, if you have the interest that is…was posted on the sputniknews.com Internet site at 11:11 a.m. Moscow time on their Friday morning, which was 3:11 a.m. in Washington — EDT plus 8 hours.  It was updated about two hours later.  I thank Victor Stewart Naylor for sending it our way — and another link to it is here.


Once again, there were no precious metal-related news items that I thought worth posting.


The PHOTOS and the FUNNIES

This series of nature photos appeared on the guardian.com Internet site back on December 21 — and I thank Patricia Caulfield for sending them along.  The first one was taken by Marc McCormack — and comes with the comment….”A bush stone-curlew looking for food in Cairns, Australia, after Cyclone Owen brought heavy rain.”  Click to enlarge.

This second photo from the same series was taken by Stuart Franklin — and is captioned “An African weaver bird during day four of the Alfred Dunhill Championships at Leopard Creek country golf club in Malelane, South Africa.”  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’…the last one for 2018…need no introduction.  Nor does the name of the tune, or the group the performs it.  It’s instantly recognizable right from opening chord — and is the stuff of music legend.  It will never grow old.  As one person commented below the youtube.com video…”There is one big problem with this song, it ENDS!!! — and another said “This is probably the only song where I enjoy the live version more over the studio version.” The link is here…or here if you’re in the U.S.A.

Today’s classical ‘blast from the past’ is one I’ve posted before, but it’s been a while…I think.  His Piano Concerto No. 2 in F minor was composed by Frédéric Chopin in 1829. Chopin wrote the piece before he had finished his formal education, at around 20 years of age. It was first performed on 17 March 1830, in Warsaw, Poland, with the composer as soloist.

It was the second of his piano concertos to be published (after the Piano Concerto No. 1), and so was designated as “No. 2”, even though it was written first.

Here’s Charles Richard-Hamelin doing the honours at the 17th International Fryderyk Chopin Piano Competition on 20 October 2015 in the Warsaw Philharmonic Concert Hall — and it doesn’t get any better than this.  The link is here.


The President’s Working Group on Financial Markets garnered even more attention yesterday.  In the Friday edition of the King Report, Bill King had this to say…

Blatant ESH manipulation occurred during the final ninety minutes of trading on Thursday.  It marks the second consecutive day of palpable stock market manipulation.  The only question is: Who is doing the ESH and stock manipulation?  Where are the Wall Street advocates for ‘freely traded markets’?

Today [Friday] – The U.S. stock market has been under blatant and extreme manipulation since Christmas.  While many will cheer the artificial rally, the action is detrimental to U.S. capital markets in the longer run.  The upward manipulation could be setting up stocks for a decline that is worse than what transpired from early October to Christmas — and vicious swings can demoralize the investing public.

There is no way to reliable gauge the probabilities of stock movements in the short term now, because stocks are beholden to manipulation.”

As Chris Powell stated back in April of 2008…”There are no markets anymore…only interventions“…which was the headline to my Friday missive.

Of course this manipulation has been going on in form or another in the stock markets since the crash of 1987 — and in the aftermath of that, President Ronald Reagan gave birth to the PPT that Bill King alludes to.  And in the precious metals…gold and silver in particular…for at least a couple of generations — and I’m talking forty-five years.

Back in April of 2001, British economist Peter Warburton spelled it out chapter and verse in his landmark essay “The debasement of world currency: It’s inflation but not as we know it“…when he said this…

What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets. 

It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil, and commodity markets? Probably, no more than $200 billion, using derivatives.

Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital [bases] so flagrantly that if the central banks were to lose the fight on the first front, then the stock of the investment banks would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.

Central banks, and particularly the U.S. Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years…[that’s 1994 – Ed]. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the U.S. dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.”

That essay is almost 18-years old — and is even more true now than it was back then.  It is so obvious beyond any shadow of a doubt that all things paper want to burn…including the currencies — and things physical would soar in price, if it were not for the 24/7 interventions by the powers-that-be.  That’s why the PPT has been at obvious battle stations in December — and as Bill King pointed out further up…even more blatantly obvious since Christmas.

One can only image what the prices of a whole raft of physical commodities would be if their respective prices weren’t being managed…especially the following Big 6.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  Gold is almost in overbought territory — and silver is coming hard on that point as well.

So are the commercial traders, with or without JPMorgan’s participation, going to ring the cash register on the brain-dead moving average-following Managed Money traders — and if so, by how much?

The answer is…I don’t know, nor does anyone.  But I expect that any pull-back to be brief…but maybe a bit ugly.  But the truth is, nobody knows — and I’m just speculating.

With no Commitment of Traders Report for the foreseeable future, we’re sort of flying by the seat of our pants as to what’s happening in the COMEX futures market, particularly with what JPMorgan may or may not be doing on the short side.  However, Ted’s weekly estimates of changes in commercial/Managed Money buying and selling has been pretty close to the mark — and in my conversation with him yesterday, he doesn’t feel that they’ve been too active lately.  But he won’t know for sure until the government gets back to work — and we get our next COT Report, which certainly won’t be next Friday, either.

So here we sit…waiting once more.  All we can do is watch ‘da boyz’ continue their futile attempt to patch together the global economic, financial and monetary system, which now beyond all hope of saving.

2019 could be a real ugly year — and with JPMorgan firmly in the cross hairs of the DoJ, it could be a wild one as well.

How did it come to this?

I’m done, for the day — and the week.  The markets will be open for part of the trading session on Monday in Europe, the U.K. — and in North America — and I will have a column on January 1.  But it may not arrive at its usual time — and it will be mercifully brief as well.

I wish you a happy and, hopefully, prosperous New Year.

Ed