Another COMEX Price-Management Affair on Wednesday

10 January 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Once trading began at 6:00 p.m. EST in New York on Tuesday evening, the gold price rallied a few dollars until shortly before 10 a.m. China Standard Time on their Wednesday morning.  From that juncture it was sold quietly lower until shortly after 12 o’clock noon over there — and then proceeded to chop mainly sideways until shortly after the noon silver fix in London.  It began to head higher from that point, before running into ‘something’ around 10:30 a.m. in COMEX trading in New York.  That smallish ‘correction’ lasted for a couple of hours — and from there.  Then the gold price crawled quietly higher until a few minutes before 4 p.m. in after-hours trading.  It traded flat into the 5:00 p.m. close.

The low and high ticks were reported by the CME Group as $1,280.90 and $1,294.50 in the February contract…a bit over one percent.

Gold finished the Wednesday session in New York at $1,293.20 spot, up $8.50 from Tuesday’s close.  Net volume was nothing special at a bit over 196,000 contracts — and for the second day in a row, roll-over/switch volume out of February and into future months was pretty chunky at at bit under 40,500 contracts.

Silver’s price path on Wednesday was very similar to gold’s, except its rally after the afternoon gold fix in London ran into some serious resistance, because it really wanted to fly.  But at 10:30 a.m. in New York, it was sold down hard — and back to unchanged by precisely 12 o’clock noon EST.  After that — and like gold, it crept quietly higher until around 4 p.m. in the thinly-traded after-hours market.

The low and high ticks were recorded as $15.63 and $15.825 in the March contract.

Silver was closed yesterday at $15.725 spot, up 11.5 cents on the day.  Net volume was fairly hefty at a bit over 65,500 contracts — and there was a hair under 8,500 contracts worth of roll-over/switch volume on top of that.

The platinum price was up 5 dollars or so by shortly before noon in Shanghai on their Wednesday morning — and then chopped unevenly sideways for the remainder of the Wednesday session.  It closed in New York yesterday at $823 spot, up 6 bucks on the day.

The palladium price was higher by 11 dollars by shortly before noon CST on their Wednesday morning — and didn’t do much of anything until about thirty minutes before the COMEX open.  It began to edge higher from there, but was sold unevenly lower as soon as COMEX trading began at 8:20 a.m. EST in New York.  That sell-off lasted until the 1:30 p.m. COMEX close — and it crawled a few dollars higher after that.  Palladium was closed on Wednesday at $1,311 spot, unchanged on the day.  It was yet another day where palladium was not allowed to seek its free-market price.

The dollar index closed very late on Tuesday afternoon in New York at 95.90 — and opened down 9 basis points as soon as trading began at 7:45 p.m. EST on Tuesday evening — and was down another 10 basis points or so by 8:50 a.m. in London.  It edged higher until the 95.91 high tick was set at exactly 11:30 a.m. GMT.  It drifted lower from there until the bottom fell out a couple of minutes before the equity markets opened in New York yesterday morning.  That drop lasted until 10:15 a.m. EST — and it rallied a bit into the 11:00 a.m. EST London close.  From there it chopped quietly lower — and the 95.12 low tick of the day was set at precisely 4:00 p.m. — and it crawled a few basis points higher into the close from there.  The dollar index finished the Wednesday trading session at 95.22…down 68 basis points from Tuesday’s close.

Here’s the DXY chart from Bloomberg once again.  Click to enlarge.

And here’s the 6-month U.S. dollar index — and the difference between its close…94.79…and the close on the DXY chart above was 43 basis points yesterday.  Click to enlarge.

The gold stocks jumped up a bit at the New York open in New York at 9:30 a.m. EST on Wednesday — and their respective high ticks came at, or shortly after, the afternoon gold fix in London.  They were sold lower — and back to almost unchanged by around 12:25 p.m. EST.  From that juncture they chopped quietly and very unevenly higher until trading ended at 4:00 p.m.  The HUI closed up 1.32 percent.  I was underwhelmed.

The silver equities jumped up a bunch at the open — and that rally ended at 10:30 a.m. EST in New York trading.  From that point they chopped very unsteadily sideways for the remainder of the Wednesday session.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up a respectable 2.85 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 36 gold and 124 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the three short/issuers were Advantage, RCG and Morgan Stanley, with 19, 12 and 5 contracts.  Except for Morgan Stanley, all were from their respective client accounts.  There were five long/stoppers in total, with the largest being JPMorgan, with 26 contracts — and in very distant second place was Advantage with 6…both amounts were for their respective client accounts.

In silver, the only short/issuer that mattered was International F.C. Stone with 119 contracts from its client account.  There were eight long/stoppers in total, with the largest being JPMorgan, as they picked up 48 contracts…25 for their own account, plus 23 for clients.  Close behind in second place was Goldman Sachs with 43 contracts for their client account.  In distant third spot was Advantage with 12 for its client account as well.

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 33 contracts, leaving 132 still open, minus the 36 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 46 gold contracts were actually posted for delivery today, so that means that 46+33=79 more gold contracts just got added to the January delivery month.  Silver o.i. in January fell by 18 contracts, leaving 718 still around, minus the 124 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 22 silver contracts were posted for delivery today, so that means that 22-18=4 more silver contracts were added to January.


There was a deposit in GLD yesterday, as an authorized participant added 85,072 troy ounces.  And, once again, there was another withdrawal from SLV, as an authorized participant…most likely JPMorgan converting SLV shares into physical metal…removed 1,126,195 troy ounces.

In Tuesday’s column I stated that…”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.”

I went back a little further in my GLD and SLV numbers — and since October 19, 2018…there has been 1,715,559 troy ounces of gold added to GLD on a net basis as of the end of trading yesterday. In silver since that date, there has been 19,279,416 troy ounces withdrawn from SLV on a net basis. And that’s despite the fact that silver has rallied materially since that date.

Except for Ted…and by extension, myself…none of the other so-called precious metal ‘analysts’ out there are breathing a word about this monstrous and perverted dichotomy.


There was another sales report from the U.S. Mint on Wednesday.  They sold 2,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — 125,000 silver eagles — and another 4,000 platinum eagles.

There was only a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east cost on Tuesday.  Nothing was reported received — and only 500 troy ounces were shipped out of Canada’s Scotiabank.  I won’t bother linking this.

It was certainly busier in silver, as 429,349 troy ounces were received — and all of that was picked up by JPMorgan.  The ‘out’ activity consisted of one truckload…619,904 troy ounces — and that amount departed CNT.  A link to this activity is here.

There wasn’t much happening over at the COMEX-approved gold kilobar depository in Hong Kong on their Tuesday.  Nothing was reported received — and only 3 kilobars…96.453 troy ounces…was shipped out of Brink’s, Inc.  I won’t bother linking this, either.

Here are two more charts that Nick sent my way the other day — and that I didn’t have space for in yesterday’s column.  They show gold and silver bullion coin sales for The Perth Mint, updated with December’s data…and they certainly blew the doors off December sales for the U.S. Mint.  They sold 29,186 troy ounces of gold coins — and 692,971 troy ounces of silver bullion coins.  Click to enlarge for both.

I only a have small handful of stories for you again today.


CRITICAL READS

Fitch Threatens to Cut U.S. Credit Rating as Debt-Ceiling Battle Looms

In what has become a perennial exercise before every debt-ceiling showdown since at least Obama’s first term (when S&P did the unthinkable and cut the U.S.’s coveted AAA credit rating, exposing itself to extensive abuse by Tim Geithner), ratings agencies are starting to beat the credit-rating downgrade drum, with Fitch getting a jump on the competition Wednesday when its head of sovereign ratings warned that an enduring shutdown battle could negatively impact the negotiations over the debt ceiling, which could prompt Fitch to join S&P in eliminating its AAA rating for the U.S.

During an interview with CNBC and a separate appearance in London (where his comments were recorded by Reuters), Fitch’s global head of sovereign ratings James McCormack warned of a possible cut to its AAA rating for the U.S. sovereign should the shutdown continue to March, noting that the shutdown and debt ceiling battle are adding to anxieties triggered by President Trump’s tax cuts and spending hikes, which have blown out the budget deficit and led to a “meaningful fiscal deterioration.”

I think people are looking at the CBO (Congressional Budget Office) numbers. If people take the time to look at that you can see debt levels moving higher, you can see the interest burden in the U.S. government moving decidedly higher over the next decade,” James McCormack, Fitch’s global head of sovereign ratings told CNBC‘s “Squawk Box Europe” on Wednesday.

There needs to be some kind of fiscal adjustment to offset that or the deficit itself moves higher and you’re essentially borrowing money to pay interest on the debt. So there is a meaningful fiscal deterioration there, going on the United States.”

Well, dear reader, cutting U.S. bonds and treasuries directly to ‘junk’ status where they — and most every other country on Planet Earth’s debt belongs — would be about right.  But, alas.  This Zero Hedge news item put in an appearance on their website at 7:47 a.m. EST on Wednesday morning — and I thank Brad Robertson for sending it along.  Another link to it is here.


Here’s Where the Next Crisis Starts — Jim Rickards

The case for a pending financial collapse is well grounded. Financial crises occur on a regular basis including 1987, 1994, 1998, 2000, 2007-08. That averages out to about once every five years for the past thirty years. There has not been a financial crisis for ten years so the world is overdue. It’s also the case that each crisis is bigger than the one before and requires more intervention by the central banks.

The reason has to do with the system scale. In complex dynamic systems such as capital markets, risk is an exponential function of system scale. Increasing market scale correlates with exponentially larger market collapses.

This means a market panic far larger than the Panic of 2008.

Today, systemic risk is more dangerous than ever because the entire system is larger than before. Due to central bank intervention, total global debt has increased by about $150 trillion over the past 15 years. Too-big-to-fail banks are bigger than ever, have a larger percentage of the total assets of the banking system and have much larger derivatives books.

Each credit and liquidity crisis starts out differently and ends up the same. Each crisis begins with distress in a particular over-borrowed sector and then spreads from sector to sector until the whole world is screaming, “I want my money back!

This must read commentary from Jim showed up on the dailyreckoning.com Internet site on Wednesday sometime.  I got a copy from Brad Robertson on Tuesday, but because it wasn’t posted in the public domain at that time, I couldn’t use it…but here it is now.  Another link to it is here.


Alexandria Ocasio-Cortez: A Danger to The Nation — Bill Bonner

A big, new danger appeared in Congress this month: Alexandria Ocasio-Cortez, the newest representative of New York’s 14th district.

At 29, she is the youngest woman ever elected to Congress; she will doubtless be there for decades to come.

Eighteen months ago, she was working as a waitress. Then, even though her opponent outspent her 15-to-1, she won the race to sit in the House of Representatives.

Ms. Ocasio-Cortez has a pleasant look about her. We’d probably like her if we met her. But she is clearly a danger to herself, her constituents, and to the nation.

This very interesting and worthwhile commentary from Bill appeared on the bonnerandpartners.com Internet site early on Wednesday morning EST — and another link to it is here.


Swiss gold refiner Valcambi offers $16 million for Republic Metals Corp: source

Swiss precious metals refiner Valcambi has made a $16 million offer to buy the assets of Miami-based rival Republic Metals Corporation (RMC), which filed for bankruptcy last year, a source familiar with the matter said on Wednesday.

The source said the New York bankruptcy court hearing the case had accepted the offer as a stalking horse bid, implying that any other bids that come in must be higher than Valcambi’s.

A judge’s clerk confirmed there had been a hearing on Wednesday but could not give any further information. RMC referred a request for comment to its lawyers, who did not immediately respond. A Valcambi spokesman did not immediately respond to a request for comment.

This brief Reuters story is something that I pulled from a silverdoctors.com article that Brad Robertson sent my way yesterday afternoon.  It was filed from London at 11:50 a.m. EST on Wednesday morning — and updated a few hours later.  Another link to it is here.


Tanzania’s Magufuli orders central bank to create gold reserve

Tanzanian President John Magufuli on Wednesday ordered the central bank to create a gold reserve, as he urged the government to better control mineral exports from the country, Africa’s fourth largest gold producer.

We should start buying gold, the central bank must invest in this. We must have our reserves in dollars but also our reserves in gold, because gold is money,” Magufuli said at a ceremony in Dar es Salaam.

Magufuli is intent on regulating his country’s mining sector, which has faced allegations of fraud and underreporting of production and profits, and has locked horns with foreign mining companies.

There are still many problems in the mining sector,” he said.

This interesting AFP story was picked up by theeastafrican.co.ke Internet site on Wednesday sometime — and I plucked it from a GATA dispatch.  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 ruddy shelduck and a flock of bar-headed geese fly over a wetland in Nyima county, Tibet Autonomous Region, China.”  Photograph by: Zhang Rufeng  Click to enlarge.

The second photo is captioned: “A slipper orchid, Paphiopedilum papilio-laoticus, discovered on a black market in Vientiane, Laos. Species hunters scouring the globe on behalf of the Royal Botanic Gardens, Kew — and its partners discovered more than 100 kinds of plants this year.” Photograph: Adunyadeth Luang  Click to enlarge.


The WRAP

Despite the rather precipitous decline in the U.S. dollar index during the New York on Wednesday, it wasn’t allowed to be reflected in the price of the precious metals, because ‘da boyz’ were active during the COMEX trading session yesterday.  It was obvious that they weren’t allowing them to rise too far, or too fast.  That was particularly true in silver — but also in gold and palladium as well.

And because there was a decent amount of price action after the 1:30 p.m. COMEX close in New York yesterday, the closing high prices of the day aren’t reflected in the dojis in any of the four precious metal charts below.  I’ve included natural gas once again, so that you can note that the price is now back to ‘normal’.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price rose a couple of dollars in Far East trading on their Thursday morning — and hasn’t done much since. It’s up $1.70 an ounce at the moment. Silver has been trading unevenly sideways throughout all of the Far East trading session — and is down 2 cents currently. Platinum’s trading pattern was very similar to silver’s, except it’s back at unchanged. Palladium traded flat until 9 a.m. in Shanghai — and was sold down to the $1,300 spot mark shortly before 10 a.m. China Standard Time. It has recovered a few dollars since — and is down 4 bucks as Zurich opens.

Net HFT gold volume is already pretty healthy…coming up on 48,000 contracts — and there’s 2,368 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is a bit over 9,100 contracts — and there’s only a dinky 52 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down 7 basis points once trading began at 7:45 p.m. EST on Wednesday evening in New York — and its current 95.03 low tick was set at 11:58 a.m. CET on their Thursday morning. It appeared that the usual ‘gentle hands’ appeared at that point — and the index has been chopping quietly higher since — and is now back at unchanged as of 7:45 a.m. GMT in London.

It will be another week where this no Commitment of Traders Report and, just as important, no Bank Participation Report, either.  Ted mentioned in his mid-week commentary to his paying subscribers on Wednesday, that because of the rallies in the both gold and silver since the last reports, the COMEX futures market in both is neutral at best.  And there’s still no sign that the end to the U.S. government shut-down is anywhere close to a resolution.

And as I post today’s column on the website at 4:02 a.m. EST, I see that the gold price hasn’t done much of anything during the first hour of London trading — and is up $1.70 the ounce.  The silver price jumped a bit higher shortly after the London open, but that wasn’t allowed to get far, before it was tapped lower — and it’s up 1 cent now.  Both platinum and palladium are up during the first hour of Zurich trading…the former by 3 dollars — and the latter is back at unchanged.

Gross gold volume is a bit over 61,500 contracts — and net of roll-over/switch volume, net HFT gold volume is around 56,000 contracts, which is pretty decent considering the price action, or lack thereof.  Net HFT silver volume is around 11,100 contracts — and there’s still only 64 contracts worth of roll-over/switch volume on top of that.

The dollar index jumped up to its current 95.27 high tick around 7:52 a.m. in London, but has fallen back below unchanged — and is down 2 basis points as of 8:50 a.m. GMT.

And if you need a good laugh to start off your day…click here.

That’s all I have this time — and I’ll see you here tomorrow.

Ed