It Was “Déjà vu all over again” on Wednesday

03 January 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold down 3 bucks during the first two hours of trading once New York opened at 6:00 p.m. EST on New Year’s Day.  Then, an hour later, it began to rise unevenly — and the the high tick of the day came shortly after 9 a.m. in London.  From that point it was sold equally unevenly lower until the afternoon gold fix.  It jumped up a few dollars from there, but by 11:20 a.m. EST in New York trading, the selling pressure reappeared — and the low tick of the day in New York was set a few minutes before 2 p.m. in the thinly-traded after-hours market.  It rallied quietly into the 5:00 p.m. EST close from there.

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

Gold finished the Wednesday session in New York at $1,284.20 spot, up $2.10 the ounce.  Net volume was a little over 206,500 contracts — and there was a bit under 18,000 contracts worth of roll-over/switch volume on top of that.

Silver was also sold lower starting at 6:00 p.m. in New York on Tuesday evening — and was down 17 cents the ounce by shortly before 10 a.m. China Standard Time on their Wednesday morning.  From that juncture, it chopped quietly higher until a few minutes before 9 a.m. in London — and was capped at that point.  From there, it was sold lower until a few minutes after the equity markets opened in New York on their Wednesday morning — and the price blasted higher from there, but under obvious resistance.  The high tick of the day was set at exactly 11:30 a.m. EST, as the price was obviously capped and driven lower.  Then, like gold, it was sold lower until a few minutes before 2 p.m. in after-hours trading — and it edged quietly higher from there into the 5:00 p.m. close.

The low and high ticks in this precious metal were reported by the CME Group as $15.385 and $15.68 in the March contract.

Silver was closed in New York yesterday at $15.49 spot, up a whole 2 cents on the day.  Net volume was very chunky at 85,500 contracts — and there was 3,273 contracts worth of roll-over/switch volume on top of that.

Platinum opened unchanged on Tuesday evening in New York, but was sold lower starting just before 9 a.m. CST on their Wednesday morning.  It chopped around between down 5 dollars — and the unchanged mark until shortly after 11 a.m. CET in Zurich.  Then down it went.  That sell-off lasted until 9 a.m. in New York — and the low tick of the day was set at that point.  Then, about half an hour later it began to head higher, only to run into ‘resistance’ just below the unchanged mark, but popped above it the moment that Zurich closed at 11:00 a.m. EST in New York.  The price then chopped sideways until the 1:30 p.m. COMEX close — and was sold lower until a few minutes after 2 p.m. in the thinly-traded after-hours market.  It was back at unchanged a couple of hours later, but wasn’t allowed to close there, as platinum finished the Wednesday session at $793 spot, down a dollar from Monday.

The palladium price traded a few dollars either side of unchanged in Far East trading on their Wednesday, but popped back into positive territory by a bit as soon as Zurich opened.  That was its high of the day — and it was sold lower until shortly before 10 a.m. CET.  From that juncture, it crawled very quietly higher — and back into positive territory by around the Zurich close.  But shortly after that, it was sold very quietly lower until trading ended at 5:00 p.m. EST in New York.  Palladium was closed on Wednesday at $1,247 spot, down 5 bucks on the day.

The dollar index closed very late on Monday afternoon in New York at 96.09…according to Bloomberg…and began to crawl quietly higher as soon as trading began at 6:00 p.m. EST on January 1.  That lasted until around 1:15 p.m. China Standard Time on their Wednesday afternoon — and it began to slide lower from that point.  The 95.83 low tick was set at the 2:15 p.m. CST afternoon gold fix in Shanghai — and it began to head higher from there.  All the gains that mattered were in twelve hours later — and the 96.94 high tick was set at 1:12 p.m. in New York.  It hung in there until 2:22 p.m. EST — and sold off a bit for the remainder of the Wednesday session.  The dollar index finished the day at 96.82…up 73 basis points from Monday’s close.

Despite the ‘rally’ in the dollar index yesterday, it was obvious that precious metal prices would have really flown, if allowed…which they equally obviously weren’t.  Here’s the DXY chart from Bloomberg once again…click to enlarge.

And here’s the 6-month U.S. dollar index chart [from the folks over at the stockcharts.com Internet site], which is being just as well managed as precious metal prices.  Click to enlarge.

The gold shares opened unchanged on Wednesday morning in New York, but dipped to their respective low ticks at the afternoon gold fix in London.  From that juncture, they rallied to their respective highs shortly after 12 o’clock noon in New York — and were up almost 2 percent at that point.  From there they were sold back to unchanged by shortly before 2 p.m. EST — and chopped quietly around that mark until the markets closed at 4:00 p.m.  The HUI finished up 0.12 percent, so call it unchanged.

In almost all respects the silver equities followed the price path of their golden brethren on Wednesday, except their initial rallies in morning trading in New York, were far more robust.  The main difference was that once they stopped declining a few minutes before 2 p.m. EST, they began to head higher shortly after — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up an impressive 2.28 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 1 gold and 40 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  In gold, Advantage issued — and JPMorgan stopped.  Both transactions involved their respective client accounts.  In silver, the only short/issuer that mattered was ADM, with 36 contracts out of its client account.  The largest long/stopper was Goldman with 16 contracts for its client account — and in very close second place was JPMorgan, with 15 in total…9 for its own account — and 6 for clients.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in January rose by 1 contract, leaving 360 still open, minus the 1 contract mentioned just above.  Monday’s Daily Delivery Report showed that 7 gold contracts were actually posted for delivery today, so that means that 7+1=8 more gold contracts just got added to the December delivery month.  Silver o.i. in January fell by 12 contracts, leaving 873 still around, minus the 40 contracts mentioned in the previous paragraph.  Monday’s Daily Delivery Report showed that 14 silver contracts were posted for delivery today, so that means that 14-12=2 more silver contracts were added to January.


There was a deposit in GLD yesterday, as an authorized participant added 245,782 troy ounces.  There were no reported changes in SLV.

Of course there was no sales report from the U.S. Mint — and it’s unlikely any will be forthcoming for at least the next two weeks, so I won’t bother reporting on this on a daily basis until there’s something to report.

There was no activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.

It was certainly different in silver, as nothing was reported received, but 651,011 troy ounces were shipped out the door for parts unknown.  There was one large truckload…635,176 troy ounces…shipped out of CNT — and the remaining 15,835 troy ounces departed Delaware.  The link to this activity is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, the only activity reported was 1,000 kilobars that were shipped out of Brink’s, Inc.  There was no ‘in’ activity.  The link to that, in troy ounces, is here.


The Lyon-Vaise Hoard is a 3rd-century ancient Roman hoard of precious objects, found in Lyon, France (Roman Lugdunum) in 1992 and now on display in the Gallo-Roman Museum of Lyon. It includes dishes, jewellery, statuettes and coins. It was buried for fear of Germanic raids and the coins in it allow its burial to be dated to after 258 (perhaps during the 259 raid).  Click to enlarge.

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


CRITICAL READS

You Have to Be Crazy to Start a Hedge Fund in This Environment

2018 was the worst year for hedge funds since the financial crisis – just ask David Einhorn who had his worst year on record  – and according to Bloomberg, 2019 is slated to be the worst environment that new hedge funds have seen to raise money in years.

Given the success of passive funds over the last decade, and with major market indices rising significantly across the board, hedge funds have fallen out of favor heading into 2019.

“You have to be borderline crazy to be starting a hedge fund in this environment and the only way you should do it is if you feel you have something differentiated to offer,” said Ilana Weinstein, founder and chief executive officer of IDW Group, a hedge fund recruiter.

The lack of fanfare around this year’s newbies contrasts with several hotly anticipated startups in 2018 — including Michael Gelband’s ExodusPoint Capital Management, which began with a record $8 billion in commitments, and Dan Sundheim’s D1 Capital Partners, which launched with about $4 billion. Investors and bankers say the number of inaugural funds in 2019 probably won’t exceed the 450 that started last year, the lowest number since 2000, according to Hedge Fund Research.

This story showed up on the Zero Hedge website at 7:25 p.m. EST on Wednesday evening — and another link to it is here.


The euro has failed, threatens democracy, and should be abolished — Ambrose Evans-Pritchard

To be charitable, you could say the euro has proved itself merely by surviving until its 20th birthday this January. That is a low bar.

Monetary union has otherwise failed as an economic and political endeavour. The evidence of Europe’s ‘Lost Decade’ is that it can be made to work only under a regime of technocrat Caesaropapism — that is to say by stripping elected parliaments of their lifeblood control over taxation, spending, and the core economic policies of the nation-state.

One day the house of cards will collapse,” says Professor Otmar Issing, the founding chief economist of the European Central Bank and the chastened prophet of the euro project.

The London School of Economics has assembled package of papers by illuminati from Europe and North America to mark this week’s anniversary, published by the journal Comparative Political Studies.

Mark Copelovitch, Jeffry Frieden, and Stefanie Walter do not pull their punches in the prologue. The calamitous European Monetary Union saga has led to the “most serious economic crisis in the history of the European Union.” It has done “more lasting damage” to swaths of Europe than the Great Depression of the 1930s and has pitted eurozone states against each other in a bitter struggle for control over the levers of policy.

The political dynamics have become poisonous. Years of rolling crisis “entrenched and amplified the power and influence of creditor countries such as Germany,” working through the European Central Bank and the European Council.

In other words, E.U. bodies became debt collectors for the creditor bloc, and enforcers of a German-imposed strategy of debt deflation and fiscal contraction. The burden of adjustment fell on the weaker states, leading to a contractionary bias for the whole system. The Nobel fraternity have watched this display of pre-modern and pre-Keynesian illiteracy with a mixture of horror and despair.

Wow!  This loooong, but absolute must read commentary by AE-P put in an appearance on thetelegraph.co.uk Internet site on Wednesday — and is posted in the clear in its entirety at the gata.org Internet site.  Another link to it is here.


How the War Party Lost the Middle East – Patrick J. Buchanan

Assad must go, Obama says.”

So read the headline in The Washington Post, Aug. 18, 2011.

The story quoted President Barack Obama directly:

The future of Syria must be determined by its people, but President Bashar al-Assad is standing in their way. … the time has come for President Assad to step aside.”

France’s Nicolas Sarkozy and Britain’s David Cameron signed on to the Obama ultimatum: Assad must go!

Seven years and 500,000 dead Syrians later, it is Obama, Sarkozy and Cameron who are gone. Assad still rules in Damascus, and the 2,000 Americans in Syria are coming home. Soon, says President Donald Trump.

But we cannot “leave now,” insists Sen. Lindsey Graham, or “the Kurds are going to get slaughtered.”

This worthwhile commentary put in an appearance on Pat’s Internet site in the wee hours of Wednesday morning EST — and it comes to us courtesy of Phil Manuel.  Another link to it is here.


Trump: Syria is “Sand and Death“, U.S. Exit Will Be “Over a Period of Time

After early this week Trump’s promised “full” and “immediate” U.S. troop withdrawal from Syria was put on shaky ground following a prior meeting with hawk Sen. Lindsey Graham, and following immense push back from the career Washington deep state, the president is showing signs that he could be changing his tune.

President Trump said on Wednesday the U.S. will get out of Syria “over a period of time” and in such a way that will protect America’s Kurdish partners on the ground, at a moment pro-Turkish forces backed by Turkey’s army are set to invade and annex Kurdish enclaves in the north of the country.

During a Wednesday Cabinet meeting in front of reporters – the first of the new year – Trump did not provide a timetable for a planned military exit while strongly emphasizing he would “not forget” the extraordinary sacrifices the Kurds made in the fight against ISIS.

And in a statement sure to give John Bolton a conniption fit, Trump commented in response to a question on Iran’s role in Syria, saying “they can do what they want there, frankly.”

This news item was posted on the Zero Hedge website at 10:16 p.m. on Wednesday night EST — and another link to it is here.


Taiwan Will “Never Accept” Reunification With Beijing, President Says

Following a menacing speech by Chinese President Xi Jinping where he threatened violence against Taiwan should it pursue de jure independence from China and laid bare his intentions to push for a “one country, two systems” arrangement for what China considers to be a ‘rogue province‘, pro-independence Taiwanese President Tsai Ing-wen clapped back at Xi in comments to the BBC on Wednesday, where she said the island would never accept reunification with China on Beijing’s terms.

After defending the status quo and calling on Beijing to “face the reality” of Taiwan’s continued independence, Tsai declared on Wednesday that the island, which has functioned like a de facto country since 1949, when defeated nationalists led by Kuomintang leader Chiang Kai Shek fled across the Strait of Taiwan to seek refuge from the Communists, would never agree to the “one country, two systems” arrangement like the one that governs Hong Kong.

Since cementing his untrammeled power over the Chinese government and clearing the path for lifetime rule, Xi has exerted more pressure on Taiwan to bend to Beijing’s will. Last year, he successfully pressed for global airlines to identify Taiwan as a part of China, and has authorized threatening military exercises in the Taiwan Strait.

But what are the chances that Xi adopts a more aggressive posture toward Taiwan, one that potentially involves military conflict? One BBC analyst said this possibility remains remote.

This story showed up on the Zero Hedge Internet site at 10:45 p.m. last night EST — and another link to it is here.


Russia’s $75 trillion in resources is why sanctions are impossible

The country with the largest mineral reserves in the world, Russia, is the second top exporter of rare earth minerals. Its natural resources are estimated at tens of trillions of dollars.

It has abundant supplies of oil, natural gas, timber and valuable minerals, such as copper, diamonds, lead, zinc, bauxite, nickel, tin, mercury, gold and silver. Most of those resources are located in Siberia and the Far East.

Russia’s mining industry, which is the country’s second largest after oil and gas, accounts for a significant share of its GDP and exports. The country is among the top three producers of mineral commodities such as platinum, gold and iron ore. It is also the world’s largest producer of diamonds and palladium. The Ural Mountains have vast amounts of minerals while most deposits of coal, oil, gas and timber are located in Siberia.

Russia is the world’s fifth largest producer of coal, with reserves of about 175 billion tons. Most of those mines are in Siberia and the Urals.

The timber industry, which is worth about $20 billion annually, is also a significant economic contributor to the Russian economy. The country’s fishing industry is the fourth largest in the world.

The value of Russia’s resources is huge and, according to statistics, is estimated at $75 trillion. In comparison, the U.S. natural resources are worth approximately $45 trillion while China’s stand at $23 trillion.

This article was posted on the rt.com Internet site early on Monday afternoon Moscow time — and I thank Larry Galearis for sending it along.  Another link to it is here.


Why I Believe 2019 Will Be the Year For Gold and Silver (Part 1) — Mike Maloney

Join Mike Maloney for his latest in-depth forecast for the stock markets, gold and silver, and more speculative investments like cryptocurrencies and mining stocks. Will 2019 be the year that gold and silver finally assert themselves as THE safe-haven asset?

This 23:18 minute youtube.com video was posted on that website yesterday sometime — and the first reader through the door with it on Tuesday was Richard Saler.


The PHOTOS and the FUNNIES

I only have one photo for you today — and that’s courtesy of Patricia Caulfield.  I plucked it from a photo-packed essay she sent me from theguardian.com Internet site on December 29.  There were lots of others, of course, but this one was so incongruous that I thought it worth sharing.  The caption that accompanied it reads…”People play golf as an ash plume rises from the Kilauea volcano on the ‘Big Island, Hawai’i on 15 May, 2018” — Photograph: Mario Tama/Getty Images.  Click to enlarge.


The WRAP

The first trading day of the New Year began in similar fashion as the first trading day after Christmas…”Déjà vu all over again“…with the powers-that-be everywhere they had to be…with a dollar index and Dow/S&P ramp jobs — and with one finger left over to keep precious metal prices from blowing higher.  That was particularly true in silver.

Silver closed above its 200-day moving average for the second day in a row, but copper was closed at a new low for this move down.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  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 took off the moment that trading began in New York at 6:00 p.m. EST on Wednesday evening — and that may have had something to do with a “a chained liquidation stemming from the collapse of AAPL shares after-hours” that was discussed in a Zero Hedge story that Brad Robertson sent me headlined “Multiple FX Pairs Suddenly Flash Crash, Yields Tumble, Gold Surges” — and linked here.

The gold price was capped and sold down immediately, but began to chop very unevenly higher starting about an hour later — and until 3 p.m. China Standard Time on their Thursday afternoon.  The price was capped and turned lower at that juncture — and is currently up only $4.10 the ounce.  It was up over 8 bucks at its current high tick.

Silver took off a bit too at 6:00 p.m. EST in New York yesterday evening.  It was quickly sold back below unchanged, but has chopped equally unsteadily higher — and was capped at the $15.59 spot mark shortly before 3 p.m. CST — and was sold lower about thirty minutes later.  It’s up 6 cents at the moment.  Platinum has been trading between unchanged — and down three or four dollars in Far East trading — and is up a dollar currently.  Palladium hasn’t been doing much, but it is up 2 bucks as Zurich opens.

Net HFT gold volume is fairly reasonable already…coming up on 50,500 contracts — and there’s 1,352 contracts worth of rollover/switch volume on top of that.  Net HFT silver volume is pretty heavy already at about 16,200 contracts — and there’s only 256 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened down 11 basis points once trading began in New York at 7:45 p.m. EST in New York yesterday evening — and continued to decline very unsteadily until the current 96.43 low tick was set at 2:54 p.m. China Standard Time on their Thursday afternoon.  It has been ‘rallying’ since then, but is still down 31 basis points as of 7:50 a.m. GMT in London.

With the U.S. government basically shut down, there’s obviously no chance of any Commitment of Traders Report tomorrow — and it’s not looking good for next week, either…although it’s too soon to tell for sure at the moment.  Next week’s COT Report [if it arrives] will also be accompanied by the monthly Bank Participation Report — and I’d love to see what’s in it…as would Ted.

And as I post today’s column on the website at 4:02 a.m. EST, I see that all four precious metals haven’t been allowed to do much since the London/Zurich opens. Gold is currently up $5.20 an ounce — and silver by 8 cents. Platinum is up 2 bucks — and palladium by 3.

Gross gold volume is way up there now at around 64,000 contracts — and net of roll-over/switch volume, net HFT gold volume is about 60,800 contracts. Net HFT silver volume is now up to 21,300 contracts — and there’s only 298 contracts worth of roll-over switch volume on top of that. These ‘rallies’…such as they are, are not going unopposed.

The dollar index continued to chop quietly higher until 8:15 a.m. in London, but has turned a bit lower since — and is down 30 basis points as of 8:50 a.m. GMT/9:50 a.m. CET.

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

Ed