08 January 2019 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
After a brief dip shortly after the 6:00 p.m EST open in New York on Sunday evening, the gold price rallied five dollars or so by shortly before 10 a.m. China Standard Time on their Monday morning. From there it traded pretty much ruler flat until 1 p.m. CST — and began to inch quietly higher from there. A stronger rally began shortly after the noon silver fix in London — and that was summarily capped and turned lower the moment that ‘da boyz’ in New York showed up at the COMEX open. It was sold lower until about 11:35 a.m. EST — and didn’t do a thing worth mentioning after that.
The low and high ticks aren’t worth looking up.
Gold was closed in New York on Monday at $1,288.30 spot, up $4.10 on the day. Net volume was pretty heavy in Far East trading on their Monday morning, but really petered out after that, as net volume was only about 188,500 contracts — and there was around 17,800 contracts worth of roll-over/switch volume on top of that.
It was the same general price path for silver. It also ran into ‘resistance’ shortly before 10 a.m. CST — and from that juncture, it chopped erratically sideways until the COMEX open — and you know the rest. The low tick of the day came around 3:30 p.m. EST in after-hours trading — and it didn’t do much after that.
The high and low ticks in this precious metal were recorded by the CME Group as $15.88 and $15.68 in the March contract.
Silver was closed on Monday at $15.615 spot, down 5 cents on the day. Net volume in Far East trading was very chunky as well, but quieted down as the Monday session moved along in both London and New York. Net volume was reported as a bit under 53,000 contracts — and there was 1,984 contracts worth of roll-over/switch volume in that precious metal.
Platinum followed silver’s price path very closely on Monday, except that ‘da boyz’ didn’t step into its price until about twenty minutes after the COMEX open — and the low tick of the day was set shortly after 12 o’clock noon in New York. It edged a few dollars higher into the COMEX close from there — and didn’t do a lot after that. Platinum was closed at $820 spot, unchanged from Friday, but 9 bucks off its high tick of the day.
The palladium price didn’t do much of anything in Far East trading on their Monday — and it made it up to the $1,296 spot mark shortly after 11 a.m. in Zurich. It faded a hair until shortly after 9 a.m. in New York — and at that point was sold lower until about 11:30 a.m. EST. It rallied ten dollars from that point until 1 p.m. — and then traded sideways until the market closed at 5:00 p.m. EST. Palladium was also closed unchanged on the day at $1,287 spot.
The dollar index closed very late on Friday afternoon in New York at 96.18 — and began to chop lower the moment that trading began at 6:00 p.m. EST in New York on Sunday evening. The 95.65 low tick was set at 1:15 p.m. in New York on Monday afternoon — and it didn’t do much of anything after that. The index finished the Monday session at 95.67 — down 51 basis points from Friday’s close.
Except for those whose jobs depend on them not seeing it, it was obvious that all four precious metals would have closed materially higher on Monday if ‘da boyz’ hadn’t show up during the early going in the COMEX futures market in New York yesterday.
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…95.23…and the close on the DXY chart above, was 42 basis points on Monday.
The gold stocks opened up about a percent, but it was all quietly but unsteadily down hill from there until around 2:15 p.m. EST in New York trading. From that juncture they chopped sideways into the close. The HUI finished down 1.36 percent.
The price pattern in the silver equities was the same, but only up until shortly before 11 a.m. EST. They jumped up a bit from there — and then shot into positive territory around 1:15 p.m. That was probably caused by some positive news story on one of the Silver 7 stocks. That boost didn’t last long — and they were back in the red to stay by shortly after 2 p.m. They chopped quietly sideways below the unchanged mark for the remainder of the Monday session — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down only 0.18 percent, so call it unchanged once again. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart as well. Click to enlarge.
The CME Daily Delivery Report showed that 300 gold and 12 silver contracts were posted for delivery within the COMEX-approved depositories on the U.S. east coast on Wednesday.
In gold, the only short/issuer was HSBC USA — and all from its client account. There were seven long/stoppers in total — and the largest was Morgan Stanley, with 97 contracts…68 for its own account, plus 29 for its clients. In second spot was JPMorgan with 76 for its client account — and in third place was Merrill, with 61 contracts for its client account as well.
In silver, Advantage was the largest short/issuer with 10 — and International F.C. Stone issued the other 2. Goldman stopped 5 for its client account — and JPMorgan stopped 5 contracts as well…3 for its own account, plus 2 for its client account.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report showed that gold open interest in January fell by 3 contracts, leaving 350 still around, minus the 300 mentioned a few paragraphs ago. Friday’s Daily Delivery Report showed that 4 gold contracts were actually posted for delivery today, so that means that 4-3=1 more gold contract was added to the January delivery month. Silver o.i. in January dropped by 95 contracts, leaving 725 left, minus the 12 contracts mentioned a few paragraphs ago. Friday’s Daily Delivery Report showed that 106 silver contracts were actually posted for delivery today, so that means that 106-95=11 more silver contracts just got added to January.
There were rather counterintuitive withdrawals from both GLD and SLV on Monday. An authorized participant took 47,263 troy ounces of gold from GLD, but in SLV an a.p…most likely JPMorgan…removed a very hefty 2,426,370 troy ounces.
Rather than silver pouring into SLV on this price rally that began back on November 14…there has been 9.70 million troy ounces of silver withdrawn on a net basis since that date.
Gold began its current rally within a day or so of the above date — and up to and including yesterday, there had been 1,192,790 troy ounces of gold added to GLD.
Ted had a lot to say about all this in his weekly review on Saturday — and he figures that JPMorgan has most likely been shorting SLV shares in lieu of depositing physical metal as the SLV prospectus requires.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on in their gold and silver ETFs as of the close of business on Friday, January 4 — and this is what they had to report. Both ETFs declined by a bit…gold by 2,219 troy ounces — and silver by 12,861 troy ounces.
Much to my surprise, the U.S. Mint had a sales report on Monday. They sold 42,500 troy ounces of gold eagles — 16,500 one-ounce 24K gold buffaloes — 2,521,000 silver eagles — plus 18,200 one-ounce platinum eagles.
There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.
It was much different in silver, as 600,823 troy ounces…one truckload…was received — and that ended up at HSBC USA. There was 1,063,684 troy ounces shipped out. In the ‘out’ category, there was 705,363 troy ounces shipped out of CNT…298,324 troy ounces departed Canada’s Scotiabank — and 57,974 troy ounces left the International Depository Services of Delaware. The remaining 2,022 troy ounces was shipped out of Delaware. There was also a paper transfer of 504,285 troy ounces from the Eligible category and into Registered over at CNT as well. The link to all that activity is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. They received 3,000 of them — and shipped out 104. All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Here are three charts that Nick Laird passed around on the weekend. They show gold imports and exports out of Switzerland for the month of December. This first chart shows the net import and export figures, updated with the current months data. For December they imported 81.4 tonnes — and shipped out 127.1 tonnes. Click to enlarge.
The first chart below show the countries and amounts that shipped gold to Switzerland in December — and the second shows the countries that received gold from Switzerland that month — and the amounts. Click to enlarge for both.
I have an average number of stories for you today.
Both the Fed and the president still have investors’ backs. Or so the punters think.
And we believe, too, that both Trump and Powell will do all they can to save this market. Both have their reputations, power, status… and in the case of the president, a personal fortune… on the line.
Both are committed to avoiding a bloodbath in the capital markets because the blood will inevitably splatter onto their own white shirts.
But what can they do? If officials really could prevent bear markets and debt crises, why do we ever have them? Specifically, what’s wrong with the Japanese?
Long-term Diary sufferers know that we keep an eye on the Japanese. We might not like the direction the Japanese have gone, but we suspect we might be going there too.
This commentary from Bill appeared on the internationalman.com Internet site early on Monday morning EST — and another link to it is here.
For the past two months, the sound of wailing and gnashing of teeth about the Fed’s QE unwind has been deafening. The Fed started the QE unwind in October 2017. As I covered it on a monthly basis, my ruminations on how it would unwind part of the asset-price inflation and Bernanke’s “wealth effect” that had resulted from QE were frequently pooh-poohed. They said that the truly glacial pace of the QE unwind was too slow to make any difference; that QE had just been a “book-keeping entry,” and that therefore the QE unwind would also be just a book-keeping entry; that QE had never caused any kind of asset price inflation in the first place, and that therefore the QE unwind would not reverse that asset-price inflation, or whatever.
But in October last year, when all kinds of markets started reversing this asset price inflation, suddenly, the QE unwind got blamed, and the Fed – particularly Fed Chairman Jerome Powell – has been put under intense pressure to cut it out. Yet it continues:
The Fed shed $28 billion in assets over the four weekly balance-sheet periods of December. This reduced the assets on its balance sheet to $4,058 billion, the lowest since January 08, 2014, according to the Fed’s balance sheet for the week ended January 3. Since the beginning of this “balance sheet normalization,” the Fed has now shed $402 billion.
This article was posted on the wolfstreet.com Internet site on Friday — and comes to us courtesy of Richard Saler. Another link to it is here.
Bears beware: the Fed has listened to the primordial scream of world markets — Ambrose Evans-Pritchard
The U.S. Federal Reserve has called off the hounds. China has abandoned efforts to purge financial excess, reverting to stimulus on multiple fronts.
Policy pirouettes by the world’s twin superpowers mark a critical moment in the tightening cycle, with sweeping implications for global asset markets and for the health of the international economy over the next year.
The shift in Washington — assuming it is more than a rhetorical feint — is the more potent of the two.
It has echoes of the Fed retreat in early 2016 when China’s currency scare threatened to spin out of control. On that occasion the Yellen Fed came to the rescue and shelved plans for higher interest rates, launching a 25 percent surge in the MSCI index of world equities over the following twelve months.
A turbo-charged variant of this happened in late 1998 following the East Asia crisis and Russia’s default. The Greenspan Fed rushed through emergency rate cuts, igniting the final leg of the explosive dotcom boom.
It is too early to judge whether this is a comparable turning point but there is no doubt that current Fed chairman Jay Powell went out of his way to soothe markets on Friday, pointedly invoking the 2016 episode. The message could hardly have been clearer.
I mentioned this in The Wrap in my Saturday missive — and Ambrose really tees that up and drive it down the fairway in this must read article that showed up on the telegraph.co.uk Internet site on Sunday. It’s posted in the clear in its entirety on the gata.org Interne site — and another link to it is here.
In the starkest warning yet about the upcoming global recession, which some believe will hit in late 2019 or 2020 at the latest, the IMF warned that the leaders of the world’s largest countries are “dangerously unprepared” for the consequences of a serious global slowdown. The IMF’s chief concern: much of the ammunition to fight a slowdown has been exhausted and governments will find it hard to use fiscal or monetary measures to offset the next recession, while the system of cross-border support mechanisms — such as central bank swap lines — has been undermined, warned David Lipton, first deputy managing director of the IMF.
“The next recession is somewhere over the horizon, and we are less prepared to deal with that than we should be . . . [and] less prepared than in the last [crisis in 2008],” Lipton told the Financial Times during the annual meeting of the American Economic Association. “Given this, countries should be paying attention to keeping their economy on a level trajectory, building buffers and not fighting with each other.”
While the IMF projected solid, 3.7% growth in the global economy in 2019 in its most recent, October, forecasts, with the IMF set to release updated forecasts later this month, Lipton admitted that the growth outlook is being undermined by trade tensions, policy flaws and weakness in Asia.
This news item put in an appearance on the Zero Hedge website at 7:49 a.m. EST on Monday morning — and I thank Brad Robertson for sending it along. Another link to it is here.
[E] though we presently live in less than ideal times, these are the good old days. The era that we’re about to herald in will be far more challenging that the present one.
To wit: Markets are presently in their biggest bubble in history. We’re also in the longest bull market in history. This bubble is therefore overdue to pop. In the aftermath, we can expect to see treasuries dumped back into the U.S. market. The U.S. dollar will end as the petrodollar and the world’s reserve currency. The overblown real estate market will collapse. Debt default (consumer, bank and national debt) will be defaulted upon. Commodity prices will rise dramatically, whilst asset prices will fall. A currency collapse will occur.
Unfortunately, as scary as all that may seem, it’s a mere thumbnail sketch of events. The reality will be far more complex.
We can expect that, along with these events, will come dramatically increased unrest and civil disobedience, countered by an equal level of retaliation by authorities. Those who now complain about the existing police state can expect a dramatic increase in controlling behaviour from all of the many authorities – DHS, TSA, CIA, FBI, USMS, DEA, ATF, BOP, DOJ, the military, local and state police and a host of other authorities.
The Nazis, by comparison, had a far less extensive web of authorities through which to dominate the German people.
This very disturbing commentary from Jeff, which I have no trouble believing, put in an appearance on the internationalman.com Internet site on Monday — and another link to it is here.
Bolton Threatens Syria: U.S. Troop Withdrawal “On Hold”. Permanent U.S. Military Base on Syria-Iraqi border
On Friday, a State Department official said “(w)e have no timeline for our military forces to withdraw from” the country. Delay may turn out to be not at all.
On Sunday, a senior Iraqi parliamentarian said
“(t)he Americans have built a military base in Erbil (in) the Iraqi Kurdistan region to use…against Iraq’s neighboring countries, in particular Iran and Syria.”
Iraqi media said the Pentagon has 14 military bases in the country – along with a reported 18 in Syria. The U.S. is highly unlikely to abandon them, especially ones considered most strategically important.
An earlier report indicated the Pentagon intends establishing a permanent base along the Iraqi border with Syria. Turkey reportedly established one or more military bases in northwestern Aleppo.
On Saturday, a senior Trump regime official said U.S. forces may remain indefinitely at the (illegally established) al-Tanf base in southeastern Syria near the Iraqi and Jordanian borders.
This worthwhile story was posted on the globalresearch.com Internet site on Monday sometime — and my thanks go out to Tolling Jennings for sending it along. Another link to it is here.
Iran’s central bank has proposed slashing four zeros from the rial, state news agency IRNA reported on Sunday, after the currency plunged in a year marked by an economic crisis fuelled by U.S. sanctions.
“A bill to remove four zeros from the national currency was presented to the government by the central bank yesterday and I hope this matter can be concluded as soon as possible,” IRNA quoted central bank governor Abdolnaser Hemmati as saying.
Proposals to remove four zeros from the currency have been floated since 2008, but the idea has gained strength as the rial lost more than 60 percent of its value in 2018 despite a recent recovery engineered by the central bank in defiance of U.S. sanctions.
The currency was trading at about 110,000 rials per U.S. dollar on the unofficial market on Sunday, according to foreign exchange websites.
This Reuters story, filed from Dubai, appeared on their website on Sunday sometime — and it’s another article that I found on the gata.org Internet site. Another link to it is here.
China’s foreign debt has been rising rapidly, and that’s becoming an increasingly big problem — for the country and, potentially, the world.
Officially, China lists its outstanding external debt at $1.9 trillion. For a $13 trillion economy, that’s not a major amount. But focusing on the headline number significantly understates the underlying risks.
Short-term debt accounted for 62 percent of the total as of September, according to official data, meaning that $1.2 trillion will have to be rolled over this year. Just as worrying is the speed of increase: Total external debt has increased 14 percent in the past year and 35 percent since the beginning of 2017.
This news item from Bloomberg was posted on their website on Saturday afternoon PST — and it’s the second article in a row that I plucked from a GATA dispatch. Another link to it is here.
The United States and China look like two punch-drunk prizefighters squaring off for a major championship fight. They have no good reason to fight and every reason to cooperate now that both their stock markets have been in turmoil.
Six hundred point market swings down and then up look like symptoms of economic nervous breakdown.
Factions in both nations are beating the war drums, putting presidents Donald Trump and Xi Jinping under growing pressure to be more aggressive.
Trump shoulders much of the blame for having started this unnecessary confrontation by imposing heavy duties on Chinese goods. The U.S. president has turned the old maxim on its head that nations that trade heavily don’t go to war. The U.S. and China, both huge trading partners, appear headed to military clashes, or even full scale war, if their governments don’t come to their senses soon.
Trump was clearly trying to bully China into major trade concessions and better commercial behavior. He is right about this. I’ve done business in China for over 15 years and seen every kind of chicanery, fakery and double-dealing imaginable. China learned from the French that the First Commandment is ‘Thou Shalt Not Import.’
This brief, but very interesting essay from Eric showed up on the unz.com Internet site on Saturday — and it comes to us courtesy of Larry Galearis — and another link to it is here.
We’ve been seeing some anomalous figures in Swiss gold imports and exports of late and the recently released November figures are no exception. After several months of gold imports exceeding exports quite substantially, in the latest month’s figures the revers is true with gold exports exceeding imports by almost 46 tonnes. While this serves to partially redress the annual balance it appears to have been a revival in exports to Hong Kong and India – the two leading recipients of Swiss gold that month – which has been key to a rise in exports from the previous couple of months’ figures to the third highest monthly total this year.
For the first time for a number of months Hong Kong took pride of place as the leading importer of Swiss gold with India a close second. Both eclipsed direct exports to mainland China which has been the leading importer of Swiss gold for most of the past two years. However combined exports to Asia and the Middle East still accounted for 82% of all Swiss gold exports in November continuing to emphasise the continuing flow from the West and the world’s major gold producers to what are seem to be firmer hands in the East. Interestingly Europe accounted for much of the balance of Swiss gold exports that month absorbing 15%.
One suspects, perhaps, that there’s something of a timing anomaly between the Hong Kong and mainland China figures with the former’s fabricators and traders building up stocks of gold slightly earlier ahead of the Chinese New Year than their mainland counterparts. In any case the bulk of the Hong Kong imports will find their way to the mainland anyway. (This year the Chinese New Year falls on February 5th). But the figures could also suggest a falling off of Chinese demand in line with what is being generally seen as a declining economy, perhaps being hit by the U.S. imposed trade tariff increases, although there’s little sign of this in the balance of trade between the two global economic superpowers as yet which remains heavily in China’s favour.
This commentary by Lawrie appeared on the Sharps Pixley website on Sunday sometime — and another link to it is here.
After a hiatus of more than two years, China is adding to its gold reserves again.
The People’s Bank of China increased holdings to 59.56 million ounces by the end of December, or about 1,853 metric tons, from 59.24 million ounces previously, according to data on the central bank’s website. They had been unchanged since about 130,000 ounces were added in October 2016.
The world’s biggest producer and consumer boosted holdings of bullion in a month marked by mounting concerns that China’s trade dispute with the U.S. is threatening economic growth. Spot gold had its strongest month in almost two years as those fears spurred gyrations in equities and the dollar and boosted demand for the precious metal as a haven.
Speculation that the Federal Reserve may pause its interest rate hikes has given further strength to gold’s rally into the new year and assets in bullion-backed exchange-traded funds are at a seven-month high. Spot gold was trading 0.5 percent higher at $1,291.83 an ounce.
“It’s a bullish sign for gold,” Matthew Turner, a commodities strategist at Macquarie Group Ltd. in London, said by phone. “The reasons could be diversification, a wish to get away from the dollar, but it’s hard to be certain because we just don’t know enough about what their motivations are.”
Of course they have far more gold than this in reserves than they’re actually reporting. This Bloomberg story put in an appearance on their Internet site at 2:38 a.m. Pacific Standard Time [PST] on their Monday morning — and it’s yet another article from the that gata.org Internet site. 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: “An adult Tibetan antelope in Qiangtang national nature reserve, in China’s Tibet Autonomous Region.” — Photograph: Xinhua Click to enlarge.
The second is captioned: “Oryx walk in the Rub al-Khali desert in Saudi Arabia.” Photograph: Valdrin Xhemaj Click to enlarge.
It was another day where everything was going mostly ‘according to Hoyle‘ as far as precious metal price activity in Far East and London trading was concerned. That all went out the window as soon as the COMEX opened in New York yesterday morning. The powers-that-be obviously did not want their respective prices to reflect the continuing decline in the U.S. dollar index…which began on December 11 — and which has turned a bit nastier during the last three trading sessions.
But this state of affairs can’t continue forever. I’m certainly expecting these rallies in the precious metals — and their respective equities, to continue for a good while long…with or without some sort of engineered temporary set-back along the way.
However, there’s no question in my mind that these rallies are being met with “whatever it takes” to ensure that they don’t run away to the upside…at least not for the moment.
Here are the 6-month charts for all four precious metals, plus copper and WTIC — and there’s not much to see, except to note the fact that all six weren’t allowed to do much on Monday. Click to enlarge.
And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price didn’t do much of anything until shortly after 9 a.m. China Standard Time on their Tuesday morning — and it was sold lower from the point until the current low tick was set around 1:45 p.m. CST. It rallied a few dollars from there over the next forty-five minutes or so, but was sold lower once again — and was bounced off its earlier low. At the moment, gold is down $6.60 an ounce. The price path for silver has been precisely the same in Far East trading, except once the low tick was set around 1:45 p.m. CST, it has rallied a bit — and stayed there, but is still down 10 cents. Platinum was up 3 bucks in early morning trading in the Far East — and then down 3 bucks by noon over there — and is down 2 bucks currently. The price path for palladium was very similar, but more muted than platinum — and it’s down a dollar as Zurich opens.
Net HFT gold volume is fairly hefty already at around 51,000 contracts — and there’s about 3,500 contracts worth or roll-over/switch volume in this precious metal. Net HFT silver volume is about 13,800 contracts — and there’s 473 contracts worth of roll-over/switch volume on top of that.
The dollar index began to head higher the moment that trading began at 7:45 p.m. EST in New York on Monday evening — and its current 95.96 high tick came at 12:05 p.m. China Standard Time on their Tuesday afternoon. It dropped a bunch from there until minutes after the 2:15 p.m. CST afternoon gold fix in Shanghai — and has been bouncing unsteadily higher since. As of 7:45 a.m. GMT in London, the index is higher by 24 basis points.
Normally, the cut-off for this Friday’s Commitment of Traders Report, plus the monthly Bank Participation Report, would be at the close of the COMEX trading session today. But with the U.S. government still shut down, there won’t be any reports again this Friday — and no resolution to this current stand-off appears to be in sight.
And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price hasn’t done much during the first hour of trading on their Tuesday morning — and is down $6.10 an ounce. Silver is up a bit — and down only 6 cents. Platinum is back at unchanged — and palladium is now up 7 bucks.
Gross gold volume is getting up there at just under 70,000 contracts — and net of roll-over/switch volume, net HFT gold volume is around 59,500 contracts. Net HFT silver volume is pretty hefty already at about 17,300 contracts — and there’s only 501 contracts worth of roll-over/switch volume in this precious metal.
The dollar index has been chopping sideways in a fairly narrow range during the first hour of London/Zurich trading — and as of 8:45 a.m. GMT/9:45 a.m. CET…it’s up 18 basis points.
As the headline to my Friday column pointed out…”Both Gold and Silver Now in ‘Overbought’ Territory” — and I’m beginning to wonder if this price activity we’ve seen over the last two or three business day is the beginning of that engineered price decline. If it is, then it’s a certainty that free-market forces are totally absent from this process. It’s too soon to tell for sure, but I thought I’d mention it in closing.
That’s it for today — and I’ll see you here tomorrow.