01 January 2019 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
There was an obvious data-feed error that caused gold and silver to show monstrous gaps down in their respective prices on the Kitco charts [amongst others] when trading began at 6:00 p.m. EST in New York on Sunday evening. For the most part, this was corrected, but there is no reliable price data for about the first ninety minutes of trading. – Ed
The gold price came under quiet selling pressure almost from the moment that trading began on Sunday evening in New York. The low tick of the day, such as it was, came around 11:45 a.m. China Standard Time on their Monday morning. It began to crawl quietly but steadily higher from there — and the high tick of the day, such as it was, came at 1 p.m. GMT/8 a.m. EST. Once the COMEX opened twenty minutes later, it was sold lower — and wasn’t allowed to get far after that, but did manage to crawl higher starting as soon as the COMEX closed.
The low and high ticks certainly aren’t worth looking up.
Gold finished the Monday session at $1,282.10 spot, up $1.70 on the day. Net volume was virtually non-existent at about 99,500 contracts — and there was around 15,500 contracts worth of roll-over/switch volume in this precious metal.
The price pattern for silver was about the same as it was for gold, except its Far East low tick was set around 9:20 a.m. CST on their Monday morning — and it rallied until shortly before 1 p.m. over there. It traded virtually ruler-flat until shortly before the London open [data feed error?] — and then began to head higher, until the market appeared to go ‘no ask’ around 11:20 a.m. GMT. It was sold lower by a bit over the next hour and change, before heading higher into the COMEX open, where it was smacked to its New York low. That occurred a few minutes after the equity markets opened in New York on Monday morning — and then had a brief up/down move, where it revisited its New York low one more time. It rallied anew going into the COMEX close, but was sold down just before that. Then, like gold, it crept higher until around 3 p.m. in the very thinly-traded after-hours market — and didn’t do much from there.
The low and high ticks in this precious metal were recorded by the CME Group as $15.39 and $15.575 in the March contract.
Silver finished the Monday session in New York at $15.47 spot, up another 12 cents — and above its 200-day moving average by a dime. Net volume was fairly decent at just under 51,000 contracts — and there was 3,878 contracts worth of roll-over/switch volume on top of that.
The platinum price chopped generally sideways until around 2:45 p.m. CST on their Monday afternoon. It rallied a small handful of dollars going into the Zurich open from there — and then didn’t do much of anything until ‘da boyz’ showed up at the COMEX open. It was sold down to its low tick of the day by shortly after 9 a.m. EST — and was bounced off that price multiple time, but began to head higher around 10:15 in New York trading. That lasted, like for silver, until a few minutes before the COMEX close — and it didn’t do much of anything after that. Platinum was closed on Monday at $794 spot, up 5 dollars on the day.
The palladium price didn’t do much of anything until 3 p.m. China Standard Time on their Monday afternoon. It woke up at that point — and was smacked to its low tick of the day at 10 a.m. CET in Zurich trading. It rallied to up 8 dollars on the day shortly after — and then chopped more or less sideways until after the afternoon gold fix in London. It added on a few dollars after that — and then traded more or less flat until the market closed at 5:00 p.m. EST in New York. Platinum finished the Monday session at $1,252 spot, up 12 bucks from Friday — and was the only precious metal that didn’t get a ‘price adjustment’ from ‘da boyz’ during the COMEX trading session in New York.
The dollar index closed very late on Friday afternoon in New York at 96.40 — and opened unchanged once trading began in New York on Sunday evening. It dipped a bit until 8:40 a.m. China Standard Time in Far East trading on their Monday morning — and began to head quietly but unsteadily higher from that juncture. The 96.51 high tick of the day was set at precisely 1 p.m. CST on their Monday afternoon — and then edged quietly sideways until about 2:15 p.m. CST on their Monday afternoon, which coincided with the afternoon gold fix in Shanghai. It began to head very unsteadily lower from there — and finished on its low tick of the day at 96.17…down 23 basis points from Friday’s close.
It was another quiet day in the precious metals as far as volumes were concerned, so it was easy for the powers-that-be to keep their prices in line, despite what was happening in the currency market.
Here’s the DXY chart from Bloomberg once again. Click to enlarge.
And here’s the 6-month U.S. dollar Index chart — and the delta between its close…95.74…and the chart on the DXY chart above, was 43 basis points on Monday. Click to enlarge.
The gold stocks headed lower as soon as trading began at 9:30 a.m. on Monday morning in New York — and their respective low ticks were set around 10:50 a.m. EST. They began to head higher from there — and after that, pretty much followed the gold price around for the rest of the day. But it should be noted that a decent amount of Monday’s gains in the gold shares occurred after the COMEX close. The shares closed higher by 1.54 percent.
There was an issue with Nick’s gold stock chart yesterday, so I borrowed this HUI chart from the folks over at yahoo.com. Click to enlarge.
The silver equities followed the gold stocks to their respective low ticks of the day, which came about ten minutes after the equity markets opened in New York yesterday morning — and silver’s low tick print of the day. They chopped unsteadily higher from there until precisely noon EST — and then quietly sold lower until 2:30 p.m. They headed higher into the close from there, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.46 percent. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment Index — and despite the rally in the underlying precious metal, the silver equities are performing poorly at the moment. That’s because of tax-loss selling, I’m sure. Click to enlarge.
The CME Daily Delivery Report showed that 7 gold and 14 silver contract were posted for Day 2 of the January delivery month. I won’t bother breaking down these tiny amounts, but it was mostly “all the usual suspects” as issuers and stoppers. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest in January fell by 61 contracts, leaving 359 still open, minus the 7 mentioned just above. Friday’s Daily Delivery Report showed that 57 gold contracts were actually posted for delivery on Wednesday, so that means that 61-57=4 gold contracts vanished from the January delivery month. Silver o.i. in January declined by 110 contracts, leaving 885 still around, minus the 14 mentioned in the previous paragraph. Friday’s Daily Delivery Report showed that 102 silver contracts were actually posted for delivery today, so that means that 110-102=8 silver contracts disappeared from the January delivery month.
There were no reported changes in either GLD or SLV on Monday.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, December 28 — and this is what they had to report. During the reporting week, they added 5,363 troy ounces of gold — and 270,195 troy ounces of silver.
And, 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 Friday, as 65,594 troy ounces were reported received — and none was shipped out. The largest amount was 63,762 troy ounces dropped off at HSBC USA — and the remaining 1,832 troy ounces was left at Brink’s, Inc. The link to this is here.
There was more activity in silver, as 1,272,542 troy ounces…two truck loads…found a home over at Brink’s, Inc. But the big activity was in the paper category, where 2,821,054 troy ounces were transferred from the Registered category — and back into Eligible. Four different depositories were involved — and if you wish to see who and how much, the link to that is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong, they reported receiving 1,019 of them. 1,000 of them went into Brink’s, Inc. — and the remaining 19 ended up at Loomis International. 5 kilobars were shipped out of Brink’s, Inc. as well — and the link to all this is here.
Here are three charts that I pulled from Nick Laird’s website yesterday morning. This first one shows ‘Silk Road’ demand up to and including October. It should show up to the end of November, but India is always a month late reporting their imports. You should also note at the bottom where it shows that monthly demand [on average] from these four countries alone accounts for all of current world’s gold production. This state of affairs has lasted for the last six years. One has to wonder [amongst other things, of course] what this chart would look like if we knew how much gold that China’s central bank really had in their reserves, as it’s mostly likely many multiples of the 1,950-odd tonnes they’re currently reporting. Click to enlarge.
The next chart shows current ‘Silk Road’ demand for month 10…October…compared to Octobers from year’s past…back to — and including 2008. October 2018 is not a record month, but it’s way up there. Click to enlarge.
This third chart shows yearly ‘Silk Road’ demand going back to 1995…twenty-three years ago now. So far in 2018, the demand from these four countries totals 2,768 metric tonnes — and should be a bit over 3,000 tonnes by the time the December numbers roll in…which will be in late February, early March sometime. Click to enlarge.
I only have a tiny handful of stories for you today.
For years, as the market rose in seemingly uninterrupted fashion buoyed by trillions in excess central bank liquidity and algos programmed to buy any dip while front-running each and every buy order, virtually nobody – except for a few “fringe”, “fake news” blogs – complained about the threat posed by algo trading and the quiet but dire deterioration in market liquidity.
Now that the S&P has finally suffered its first bear market in a decade, the mass media is out in full force looking for scapegoats and, predictably, in an attempt to deflect attention from the biggest, and only, culprit behind each and every bull-bust cycle namely the U.S. central bank, has focused on “computerized trading.”
In a front page article, the WSJ is out today with “Behind the Market Swoon: The Herd-like Behavior of Computerized Trading“, in which a bevy of WSJ authors, among which the paper’s new ‘Fed whisperer’ Nick Timiraos (who may or may not have been tasked with delivering a piece drawing attention from the inhabitants of the Marriner Eccles building), write that “behind the broad, swift market slide of 2018 is an underlying new reality: Roughly 85% of all trading is on autopilot—controlled by machines, models, or passive investing formulas, creating an unprecedented trading herd that moves in unison and is blazingly fast.”
A quick note: 85% of this “autopilot” trading also took place on the upside, yet the WSJ – and all the other bulls – were oddly quiet for years and years. Of course, to Zero Hedge readers, the story is all too familiar: after all we have covered all of this not just when the market snapped lower, but more importantly, during its levitation phase, setting up the inevitable crash.
Of course, the topic of collapsing momentum was widely discussed here just last Saturday, when we said that as a result of the dominance of algo trading, Deutsche Bank argued that momentum has emerged as the most important force in markets, something we have claimed for years.
This longish Zero Hedge article was posted on their website back on December 26…and I thank Bill Moomau for sending it along — and another link to it is here.
The good doctor and I had 25-minute chat on Sunday afternoon — and it was posted on his Internet site shortly after that.
His national security team had been trying to box him in like every other president. But he called their bluff.
The mainstream media has attacked President Donald Trump’s decision to withdraw U.S. troops from Syria as impulsive, blindsiding his own national security team. But detailed, published accounts of the policy process over the course of the year tell a very different story. They show that senior national security officials and self-interested institutions have been playing a complicated political game for months aimed at keeping Trump from wavering on our indefinite presence on the ground in Syria.
The entire episode thus represents a new variant of a familiar pattern dating back to Vietnam in which national security advisors put pressure on reluctant presidents to go along with existing or proposed military deployments in a war zone. The difference here is that Trump, by publicly choosing a different policy, has blown up their transparent schemes and offered the country a new course, one that does not involve a permanent war state.
The relationship between Trump and his national security team has been tense since the beginning of his administration. By mid-summer 2017, Defense Secretary James Mattis and Chairman of the Joint Chiefs General Joseph Dunford had become so alarmed at Trump’s negative responses to their briefings justifying global U.S. military deployments that they decided to do a formal briefing in “the tank,” used by the Joint Chiefs for meetings at the Pentagon.
But when Mattis and Dunford sang the praises of the “rules-based, international democratic order” that has “kept the peace for 70 years,” Trump simply shook his head in disbelief.
Trump is now well aware that it is virtually impossible to carry out the foreign policy that he wants without advisors who are committed to the same objective. That means that he must find people who have remained outside the system during the permanent war years while being highly critical of its whole ideology and culture. If he can fill key positions with truly dissident figures, the last two years of this term in office could decisively clip the wings of the bureaucrats and generals who have created the permanent war state we find ourselves in today.
This interesting article appeared on theamericanconservative.com Internet site last Friday — and I thank Roy Stephens for pointing it out. Another link to it is here.
The destruction of sound money over the past century stems from actions at the federal level, but there are steps which states can take —and even have already taken —to move toward real, sound, constitutional money.
As state legislatures reconvene in the next few weeks, let’s take a look at the current state of play…
Since 2016, sound money has made a splash on the state level. According to the 2018 Sound Money Index, a new ranking of all 50 states on the extent to which they have implemented the pro-sound money policies, there are currently 38 states with an exemption of sales and use tax on the purchase of gold and silver.
Since 2016, legislators in 10 different states have introduced bills, seven of which were signed into law, to restore sound money by eliminating taxes on gold and silver within their borders.
In 2017, a quarter of all states without a sales tax exemption on gold and silver introduced new measures to eliminate the tax against the monetary metals. As states continue to make inroads on the sales tax issue, Tennessee and West Virginia are expected to introduce bills to remove sales and use taxes on sound money in 2019.
This commentary showed up on the mises.org Internet site on Saturday sometime — and I found it in a GATA dispatch yesterday. Another link to it is here.
U.S. Mint sales of American Eagle gold and silver coins dropped to their lowest in 11 years during 2018, U.S. Mint data showed on Monday, as investors favored higher-yielding assets, despite global stock and bond market volatility late in the year.
Total 2018 sales of American Eagle gold coins sold by the U.S. Mint reached 245,500 ounces, the lowest on a year-over-year basis since 2007. The Mint sold 3,000 ounces of gold coins in December, 85.4 percent lower than November sales, the data showed.
Silver coin sales were 15.7 million ounces, also the lowest since 2007 on an annual basis, according to the U.S. Mint. December American Eagle silver coin sales reached 490,000 ounces, down 70.2 percent from the month prior.
This Reuters story, filed from Chicago on Monday, was another item that I found in a GATA dispatch just after I posted today’s column on the website. It didn’t make the e-mail version, unfortunately. Another link to it is here.
The government is working on an integrated gold policy, which is expected to be released soon, to promote growth of the yellow metal industry and exports of jewellery, Commerce and Industry Minister Suresh Prabhu said.
“We are pushing for it (gold policy) as we need an integrated policy. In the next few days, we will have a meeting of all concerned people to frame the policy on an expeditious basis. We are looking at all elements of gold in the policy,” Prabhu told PTI.
When asked whether it will consider the demand of the industry to cut import duty on gold, he said: “It will also look at that side of it“. The domestic industry has demanded a cut in import duty on gold to 4 percent from the current 10 percent.
The minister said that currently, there is no such policy despite the fact that India is the largest consumer and importer of gold.
India has the potential to become a “good exporter of value-added gold“, he added.
The policy is likely to focus on promoting the domestic gold industry and exports of gems and jewellery, which contribute about 15 per cent to the total merchandise outbound shipments.
This gold-related news story put in an appearance on the moneycontrol.com Internet site on December 27 — and I found on the gata.org Internet site this morning, just before I posted today’s column. Another link to it is here.
The PHOTOS and the FUNNIES
Here are three photos that Nick Laird sent me just before Christmas that he took in his backyard. This is a southern cassowary…the third-tallest and second-heaviest living bird. I’ve posted pictures of these creatures before that Nick has sent me, but I never get tired of looking at them — and this is the first photo I’ve seen of one of their chicks. Click to enlarge for all three.
With the notable exception of palladium, the rallies in the other three precious metals were stopped dead in their respective tracks at the COMEX open in New York yesterday. If they hadn’t, they would have certainly finished materially higher than they did. But with the PPT struggling to keep the equity markets afloat in New York on Monday, I must admit that I wasn’t surprised that the collateral damage was in gold, silver and platinum…along with their respective equities. And it also appears that the those usual ‘gentle hands’ were at work in the currency market as well.
But, having said all that, I’m just happy that the year ended on a positive note in the precious metals arena, regardless of how tiny the gains were.
Here are the 6-month charts for the Big 6 commodities. Silver’s close above its 200-day moving average should be noted, as should copper’s new low close for this move down. The ‘click to enlarge‘ feature works on all six charts.
I don’t have much to add here, as I said my piece in Saturday’s column.
I have no idea what the New Year will bring, except to say that the DoJ appears to be hard on the heels of JPMorgan in this precious metal price management scheme — and sometime during the first six months of this year, this issue should come to a head.
Despite the continuing efforts of the world’s various central banks — and associated Plunge Protection Teams, this decades-long bull market in equities — and all other things paper, has certainly come to an end. Now the bear market is underway — and the long descent to the bottom begins. I’m sure the powers-that-be will fight it hammer and tong all the way down — and I will be a very old man before this budding bear market breaths its last.
But somewhere along the way — and I expect sooner rather that later, the bull market in precious metals [plus all other things physical]…will begin in earnest…if it hasn’t already. And as I mentioned in my Saturday column, a brief engineered sell-off in the very near term, wouldn’t surprise me in the slightest.
But with or without that sell-off, our day in the sun certainly appears to be at hand.
And as I stated in closing in my Saturday missive…”I wish you a happy and, hopefully, prosperous New Year.”
With good wishes,