Friday’s Precious Metal Price Action: Dichotomies Everywhere

05 January 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price edged a few dollars higher once trading began in New York at 6:00 p.m. EST on Thursday evening.  The high of the day was set shortly before 9:30 a.m. China Standard Time on their Friday morning — and from there it was sold quietly but unsteadily lower until shortly before 10 a.m. in London.  From that point it traded sideways with a slight positive bias until about fifteen minutes before the COMEX open…then down it went.  Judging by the New York Spot Gold [Bid] chart, the jobs report had almost no effect on the gold price, but it continued lower on its own, with the low tick of the day coming at, or just a few minutes before, the afternoon gold fix in London.  It crawled higher from there until around noon EST — and didn’t do much of anything after that.

The high and low ticks were recorded by the CME Group as $1,300.40 and $1,278.10 in the February contract.

Gold finished the Friday session in New York at $1,284.20 spot, down $9.70 on the day.  Net volume was pretty heavy at 284,000 contracts — and roll-over/switch volume amounted to just under 17,000 contracts.

And here’s the New York Spot Gold [Bid] chart from Kitco — and you can see in detail the lack of serious price activity at the 8:30 a.m. EST release of the jobs report.  There wasn’t any worth speaking about.

The silver price opened flat — and then didn’t do much of anything until 9 a.m. CST on their Friday morning.  It jumped up a bit over a dime at that juncture, but ran into ‘something’ almost immediately.  This proved to the high of the day.  From there it was sold quietly lower and, like gold, took a breather starting shortly before 10 a.m. GMT in London.  Then, it began to edge very quietly higher until precisely 9:00 a.m. in New York — and at that point, it was sold down 16 cents to its low tick of the day, which came a few minutes after 9:45 a.m. EST.  At 10 a.m…the afternoon gold fix in London…it began to head higher, but wasn’t allowed to get far and, like gold, was sold lower starting around noon EST.  That tiny decline ended about an hour after the COMEX close — and it ticked higher into the 5:00 p.m. close of trading from there.

The high and low ticks in this precious metal were reported by the CME Group as $15.955 and $15.645 in the March contract.

Silver was closed in New York on Friday at $15.665 spot, down 4 cents on the day — and certainly would have closed up on the day, if allowed.  Net volume was pretty heavy at just under 88,000 contracts — and there was a hair over 7,000 contracts worth of roll-over/switch volume on top of that.

The platinum price was up 6 bucks or so by around 9:30 CST on their Friday morning — and it traded pretty flat from there until shortly after the Zurich open.  It began to edge lower from there — and was back to the unchanged mark by around 11:45 a.m. CET in Zurich.  From that point it traded unevenly sideways until the afternoon gold fix in London — and then it blasted higher from there.  Most of the gains that mattered were in by noon EST — and it traded quietly sideways for the rest of the Friday session.  Platinum finished the day at $820 spot, up 24 dollars!

The palladium price traded very quietly sideways through all of Far East and most of Zurich trading yesterday, but began to head a bit lower starting at 2 p.m. CET/8 a.m. EST.  It was down about four dollars by the afternoon gold fix in London — and it then blasted higher as well.  It was obviously capped before it could break the $1,300 spot price mark — and was sold lower until around 1 p.m. in New York.  It traded quietly sideways from there until about 3:30 p.m. in the thinly-traded after-hours market — and ticked a handful of dollars higher into the 5:00 p.m. close.  Palladium finished the Friday session at $1,287 spot, up 33 bucks on the day — and was up a bit over 40 dollars at its high tick.  It also closed higher than the gold price once again.

I’ll have lots more to say about Friday’s price action in the precious metals in The Wrap.


The dollar index closed very late on Thursday afternoon in New York at 96.31 — and when trading resumed early on Thursday evening EST, it opened down 3 basis points.  Then the roller coaster ride began — and I’m only going to touch on the New York price action.  It ‘rallied’ a bit on the jobs report, but it looked rather unconvincing.  The 96.61 high tick was set at 9:50 a.m. EST — and the 96.06 low tick was set at exactly 11:00 a.m. EST, which happened to coincide with the London close.  From that point it chopped quietly higher — and finished the Friday session at 96.18…down 13 basis points on the day.  What a ride.

Of course what was happening in the currency market had no affect whatsoever on what was happening in the precious metals.

Here’s the DXY chart, courtesy of Bloomberg — and you can read into it whatever you wish.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart from the folks at stockcharts.com — and the delta between its close…95.75…and the close on the intraday chart above, was 43 basis points on Friday.  Click to enlarge.

The gold stocks gapped down about three percent at the open — and then wandered higher until about 12:45 p.m. in New York trading — and then didn’t do much of anything after that.  The HUI closed down only 0.94 percent.  It could/should have been far worse.

The silver equities gapped down about 3 percent as well, but came roaring back — and were up one percent by minutes before 11 a.m. in New York.  They held in there until about 12:30 p.m. — and began to chop very quietly lower from there.  They bounced up a bit during the last thirty minutes of the New York trading session — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down only 0.08 percent.  Call it unchanged.  Click to enlarge if necessary.

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

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 month-to-date/year-to-date chart, as I wouldn’t place too much stock in what happened during Monday’s session…the last trading day of the year.

Relative to its underlying metal, the HUI ‘outperformed’ the Silver 7…but that’s not the way an average investor would look at it…including me.  It’s just more proof that silver and its equities will be the place to be when precious metal prices are allowed to rise unencumbered.  Click to enlarge.

After Friday’s price action, I’m not sure what should be made of the precious metal market going forward, so I will wait and see how things shake out over the next week or so.  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.


The CME Daily Delivery Report showed that 4 gold and 106 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  In gold, the only thing worth noting was the fact that JPMorgan stopped 2 of those contracts for its client account.  In silver, the only short/issuer worthy of the name was International F.C. Stone, with 100 contracts out of its client account.  There were eight long/stoppers in total.  The largest was Goldman, with 41 contracts for its client account.  In second spot was JPMorgan with 37 contracts…23 for its own account, plus another 14 for its client account.  In distant third place was Advantage with 10 contracts for its client account.  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 January declined by 12 contracts, leaving 353 still open, minus the 4 mentioned just above.  Thursday’s Daily Delivery Report showed that 29 gold contracts were actually posted for delivery on Monday, so that means that 29-12=17 more gold contracts were added to the January delivery month.  Silver o.i. in January declined by 17 contracts, leaving 820 still around, minus the 106 contracts mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 24 silver contracts were actually posted for delivery on Monday, so that means that 24-17=7 more silver contracts just got added to January.


There was more gold added to GLD yesterday, as an authorized participant deposited 94,530 troy ounces.  There were no reported changes in SLV.

There was no sales report from the U.S. Mint of course.

I forgot to report U.S. Mint sales for all of 2018.  They sold 245,500 troy ounces of gold eagles — 121,500 one-ounce 24K gold buffaloes — and 15,700,000 silver eagles.  The totals for all of 2017 came to 302,500 troy ounces of gold eagles — 99,500 one-ounce 24K gold buffaloes — and 18,065,500 silver eagles.  Only the gold buffaloes showed an increase year-over-year.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday was 2,000 troy ounces that was shipped out of Canada’s Scotiabank — and I won’t bother linking this amount.

It was a hugely busy day in silver, as 1,234,436 troy ounces was received — and 1,278,904 troy ounces was shipped out.  In the ‘in’ category, there was one large truckload…635,176 troy ounces received at Brink’s, Inc. — and the other truckload…599,260 troy ounces…was dropped off at Scotiabank.  All of the ‘out’ action…two big truckloads…was at CNT.  The link to that is here.

There wasn’t much happening over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  Nothing was reported received — and only 250 were shipped out.  This ‘out’ activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


The Hiddensee treasure was found in 1873 on the German island of Hiddensee in the Baltic Sea by chance, during rebuilding after significant flooding in 1872 and 1873.

The treasure consists of 16 pendants, a brooch, and a neck ring, all of gold weighing a total of 600 grams. It is the largest discovery of Viking gold artifacts in Germany.

The jewelry dates from the late Viking Age, c. 10th century. The pendants include both Norse pagan and Christian symbols – Thor’s hammer of Mjölnir and the cross. It is possible that the jewelry originally belonged to the family of the Danish King Harald BluetoothClick to enlarge.

I only have a tiny handful of stories for you today.


CRITICAL READS

This Could Be Worse Than 1929 — Bill Bonner

What were the odds that Apple would continue to come up with knock-your-socks-off new products?

What were the odds that this geriatric bull market would race around the track again and set new records?

Of course, you never know. But stocks ultimately depend on the economy. After all, investors are buying streams of income that must come from consumers. And since the “beautiful economy” story was always counterfeit, there had to come a time when the jig would be up.

This worthwhile story from Bill, written and posted before the PPT ramp jobs on Friday, showed up on the bonnerandpartners.com Internet site early on Friday morning EST — and another link to it is here.


Powell “Listening Carefully To Markets“, Sends Stocks Soaring

After briefly spooking markets briefly with an optimistic readout of how awesome the economy is, Fed Chair Jay Powell gave stocks just what they wanted, when in a stark departure from his December FOMC speech, the Fed chair said that Fed policy can change and is “prepared to adjust policy quickly and flexibly” while adding that “there is no preset path for policy“, confirmed that the Fed is “listening carefully to markets.”

More importantly, Powell also said that the Fed would adjust the balance-sheet normalization policy “if needed” and if it becomes an issue for the market and economy: “We said that we would be prepared to adjust our normalization plans” and this would include the balance sheet.

That said, Powell also noted that “markets are pricing in downside risks” even as he sees no major risks in the economy.

There are no markets anymore…only interventions” — and that fact was on full display for all to see on Friday.  This Zero Hedge news item was posted on their Internet site at 10:31 a.m. EST on Friday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Doug Noland: Global Markets’ Plumbing Problem

December non-farm payrolls surged 312,000. The strongest job gains since February blew away both estimates (184k) and November’s job creation (revised up 21k to 176k). Manufacturing jobs jumped 32,000 (3-month gain 88k), the biggest increase since December 2017’s 39,000. Average Hourly Earnings rose a stronger-than-expected 0.4% for the month (high since August), pushing y-o-y gains to 3.2%, near the high going back to April 2009.

Just 90 minutes following the jobs data, Chairman Powell joined Janet Yellen and Ben Bernanke for a panel discussion at an American Economic Association meeting in Atlanta. Powell’s comments were not expected to be policy focused (his post-FOMC press conference only two weeks ago). But the Fed Chairman immediately pulled out some prepared comments, perhaps crafted over the previous 24 hours (of rapidly deteriorating global market conditions).

Powell heedfully hit the key market hot buttons: “…Policy is very much about risk management.” “We will be patient as we watch to see how the economy evolves…” “…Always prepared to shift the stance of policy and to shift it significantly if necessary…” “We will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy…” A Bloomberg headline: “Powell Shows He Cares About Markets.” Markets heard assurances of an operative “Fed put” – with rate cuts and QE (“all of our tools”) available when demanded – and it was off to the races.

Thursday’s market gyrations hinted at a quite disconcerting scenario: illiquidity, dislocation and a “seizing up” of global markets. Thursday saw an 8% move in the yen vs. Australian dollar – two major – and supposedly highly liquid – global currencies. Trading in the yen dislocated across the currencies market, a so-called “flash crash.” We’ve seen the occasional “flash crash” in equities over the past decade. These abrupt bouts of selling reversed in relatively short order, with recovery only emboldening animal spirits. These recoveries, in contrast the current backdrop, were supported by expanding global central bank balance sheets (QE/liquidity).

I’m concerned that Thursday’s currency “flash crash” has potentially dire implications. Together with other key market indicators, evidence of systemic illiquidity risk is mounting. De-risking/deleveraging dynamics continue to gain momentum globally. Moreover, there are literally hundreds of Trillions of currency-related derivatives transactions – a byzantine edifice fabricated on a flimsy assumption of “liquid and continuous markets.”

This must read commentary by Doug appeared on his website in the wee hours of Saturday morning — and another link to it is here.


Gold imports into Ahmedabad in India fell by 34% in 2018

Gold jewellery sales in the state remained muted in 2018. Data provided by Ahmedabad Air Cargo Complex, indicate that imports of the yellow metal stood at 56.3 metric tonnes (MT) in 2018. This was a decline of 34% from the 85.5 MT of gold imports in 2017. With prices of gold remaining on the higher side throughout the year, the demand for gold dipped significantly, said experts.

Analysts have also blamed the drop in demand on customers increasingly preferring exchange of old gold instead of making fresh purchases.

Gold prices went up primarily because of the devaluation of the Indian rupee, which swung between 63 and 73 against the U.S. dollar and settled at 70.11 on Thursday.

Jewellers also blamed the poor monsoon for the dip in gold purchased by rural customers.  “The impact of shrinking revenues of rural customers is visible on gold sales as the demand is extremely poor,” said Jigar Soni, vice president of the Jewellers’ Association of Ahmedabad.

This gold-related news item showed up on The Times of India website at 2:48 a.m. IST on their Friday morning — and it’s something I plucked off the Sharps Pixley website yesterday evening.  Another link to it is here.  Another parallel story to this from the Sharps Pixley website is headlined “India discounts widen to two-month high on price surge, weak demand


Golden treasure from Thirty Years’ War discovered in Czech Republic

Officials of the Pardubice region recently announced a surprise discovery. Dozens of gold coins were found near the town of Králíky in the north east of Bohemia. Experts, who have analysed the coins, say they date to the period of the Thirty Years’ War and may have been buried while an army was on the march.

An unnamed individual found 60 coins partly buried on a pasture. The discovery was immediately reported and, before publicising the information earlier this week, local experts were asked to look at the objects.

One of them is archaeologist David Vích from the Vysoké Mýto Regional Museum. He says the youngest coin dates back to 1631, which suggests the items were likely buried sometime between the mid- to late-period in the war. The region of Pardubice was threatened multiple times during these phases of the conflict, especially by Swedish forces.

The coins, one of which weighs more than three grams, were likely to have been placed in a leather or textile pouch which rotted away over time.

Aside from Hungarian coins, there are also pieces from Poland, the Netherlands and Turkey. Most are made out of gold with a high purity.

This interesting news item appeared on the the Czech Internet site radio.cz back on December 20, 2018 — and I thank Jim Gullo for pointing it out.  The ‘click to enlarge‘ feature works well for both of the embedded photos in this story.   Another link to it is here.


The PHOTOS and the FUNNIES

Here are two more photos from The Guardian article that Patricia Caulfield shared with us.  The first one comes with this comment: “A Eurasian blue tit on a birch tree branch in Moscow.”  Photograph: Yuri Kadobnov.  Click to enlarge.

The second photo is introduced as follows: “A European badger feeding at the National Trust’s Dinefwr Park in Llandeilo, Wales, in July. Figures published this week showed 32,601 badgers were shot this autumn during the annual cull, the highest number on record.”  Photograph: Graham Harries.  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’ is one I’ve posted before, but it’s been a couple of years.  This Chicago tune from back in 1970…which is 48 years ago now, was their first really big hit.  The twist with this version is that it’s a cover/faithful reproduction by a Russian rock band called ‘Leonid and Friends’.  The recording was done in Moscow, with the lead singer [Serge Tiagniryadno] adding his vocal track from Kiev in the Ukraine.  The lead guitar solos by Sergey Kashirin in this number are literally breathtaking — and the link is here.

Today’s classical ‘blast from the past’…courtesy of Antonio Vivaldi…dates from the early 18th century — and its formal name is “Concerto No. 4 in F minor, Op. 8, RV 297“.  We know it better as “Winter” from ‘The Four Seasons’.

Unusual for the period, Vivaldi published these four concerti with accompanying sonnets (possibly written by the composer himself) that elucidated what it was in the spirit of each season that his music was intended to evoke. The concerti therefore stand as one of the earliest and most detailed examples of what would come to be called program music—i.e., music with a narrative element — and you’ll see lines of that narrative pop up on the youtube.com video linked here.  Without doubt, this is the finest video recording I’ve seen of anything on that website, ever.  It’s like you’re right there in the room…courtesy of 4K photo technology.  Of course the audio track and playing is world class — and full-screen viewing is a must.


If you’re wondering what happened in the precious metal market yesterday…so am I.

The price decline in gold began in New York even before the COMEX open at 8:20 a.m. — and the job numbers at 8:30 a.m. EST.  For a change, the job numbers had no effect on the gold price…not that it should, anyway.  And I got the distinct impressive from looking at the Kitco gold chart, that the gold price would have rallied more after the afternoon gold fix in London, if allowed…but it obviously wasn’t.  But I sensed that there was really no ‘heavy hand’ in gold on Friday.

Then there was silver.  Its price path in Far East and London trading was almost identical to gold’s.  But in New York, it did nothing until 9 a.m. — and at that point it was sold down about 16 cents.  It would have certainly closed in positive territory, if allowed.  I can’t remember a day where there was such a divergence between the price path between it — and gold’s.  It certainly appeared as if JPMorgan et al were nowhere to be found.

Then there’s platinum and palladium.  Both markets appeared to go ‘no ask’ right after the afternoon gold fix in London — and both ran away to the upside in NASA-style space launch style.  I’m not sure if the short-covering rally in platinum ran out of gas on its own, or was capped.  But it certainly appeared that palladium was capped and turned lower before it could break above $1,300 spot…which also appears to be the current line in the sand for the gold price.

These were dichotomies in the precious metals yesterday — and nothing like I’d seen before in the last fifteen years.  If ‘da boyz’ were in the precious metals market yesterday, they appeared to be treading very lightly.

Ted made himself scarce yesterday — and I wasn’t able to speak to him.  I’ll be more than interested in his thoughts on Friday’s price action [if any] when his weekly commentary for his paying subscribers shows up on his website this afternoon.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and the changes in the four precious metals should be noted.  You should also note that copper was up big yesterday — and WTIC closed higher as well.  Only gold and silver weren’t allowed to close up on the day.  Click to enlarge.

But the most amazing part of yesterday was Fed Chairman Jerome Powell’s apparent — and very public total surrender to the will of the stock and bond markets.  Here’s a paragraph from a Zero Hedge article in the Critical Reads section above…

“After briefly spooking markets briefly with an optimistic readout of how awesome the economy is, Fed Chair Jay Powell gave stocks just what they wanted, when in a stark departure from his December FOMC speech, the Fed chair said that Fed policy can change and is “prepared to adjust policy quickly and flexibly” while adding that “there is no preset path for policy“, confirmed that the Fed is “listening carefully to markets.””

I’m sure he didn’t offer these comments without some “encouragement” from people even more powerful than him.

These statements elevated the Chris Powell quote…”There are no markets anymore, only interventions” to iconic status — and ongoing Fed policy.  It shows that they, amongst others, know perfectly well that the entire paper foundation that the world’s financial, economic and monetary system is built on, would collapse in a heap if the various publicly-traded markets were allowed free rein.  They have now committed themselves to holding off the inevitable…which is an impossibility.

This policy may prolong the status quo for a bit, but sooner or later, economic and financial reality will bury them.   And as I [and others] have stated on many occasions…the longer they hold off the inevitable, the worse the ultimate denouement will be when it does arrive.

And as King Théoden whispered in despair as he was armoured-up for the Battle of the Hornburg at Helm’s Deep…”How did it come to this?

I await the Sunday open in New York at 6:00 p.m. EST, not knowing what to expect.

I’m done for the day — and the week — and I’ll see you here on Tuesday.

Ed