Ted Butler — Questions Only the DoJ Can Get Answered

11 January 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price opened flat in New York on Wednesday evening — and then rallied a few dollars by shortly before noon China Standard Time on their Thursday morning.  It then traded sideways until a minute or two before 9 a.m. in London — and then the selling pressure began.  There was a bit of a respite between 9:20 a.m. and 1:10 p.m. GMT, about ten minutes before the COMEX open.  But then the pressure began anew — and the powers-that-be continued to sell the gold price quietly lower until the market closed at 5:00 p.m. EST in New York.

The high and low ticks aren’t worth looking up, but the one percent that gold gained on Wednesday, had pretty much disappeared by the end of trading yesterday.

Gold was closed on Thursday at $1,286.00 spot, down $7.20 on the day.  Net volume was pretty light at a bit over 180,000 contracts — and roll-over/switch volume was very heavy once again at just under 52,500 contracts.

The silver price really didn’t do much of anything in Far East and morning trading in London, as even the smallest tick higher in price was capped and sold lower.  Like in gold, this state of affairs lasted until around 1:10 p.m. GMT/7:10 EST — and ‘da boyz’ dealt with the silver price just a they did in gold for the remainder of the Thursday trading session.

The high and low ticks in this precious metal were reported by the CME Group as $15.83 and $15.625 in the March contract.

Silver was closed in New York yesterday at $15.54 spot, down 19 cents from Wednesday.  Net volume was really nothing special at a hair over 59,000 contracts — and roll-over/switch volume out of this precious metal was nothing special, either at a bit under 5,300 contracts.

The platinum price dipped a few dollars in morning trading in the Far East, but was back in the green by noon in Shanghai — and stayed in the plus column until the COMEX open.  It was sold lower until the 1:30 p.m. COMEX close — and didn’t do anything after that.  Platinum was closed at $818 spot, down 5 dollars on the day.

Palladium traded flat until 9 a.m. CST on their Thursday morning — and then was sold down 11 dollars to the $1,300 spot price mark in very short order — and was still down 5 bucks or so by the Zurich open.  The price began to sail from there, but that wasn’t allowed to last — and it then chopped quietly higher until the COMEX open.  It was sold quietly lower into the COMEX close — and then rallied back to unchanged — and that’s where it finished the day, at $1,311 spot.

The dollar index closed very late on Wednesday afternoon in New York at 95.22 — and when trading resumed at 7:44 p.m. EST on Wednesday evening, it opened down 7 basis points.  It moved unsteadily lower from there — and most likely got rescued by the usual ‘gentle hands’ at it 95.03 low tick, which came at 11:58 a.m. China Standard Time on their Thursday morning.  It began to head unevenly higher from that juncture — and the 95.59 high tick came exactly at the 1:30 p.m. COMEX close.  It gave back a small handful of basis points very shortly after that — and then didn’t do much for the remainder of the Thursday session.  The dollar index finished the day at 95.54…up 32 basis points from its close on Wednesday.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at stockcharts.com — and the delta between its close…95.12…and the close in the DXY, was 42 basis points on Thursday.  Click to enlarge.

The gold stocks opened down when trading began at 9:30 a.m. EST in New York on Thursday morning — and continued unevenly lower from there.  Their respective lows came exactly at the 1:30 p.m. COMEX close — and they chopped quietly higher from there until trading ended at 4:00 p.m. EST.  The HUI finished down 1.74 percent, double the amount of the gains that they had on Wednesday.

The silver equities followed almost an identical price path, including the 1:30 p.m. COMEX close low ticks of the day — and they gained back a bit going into the close of trading.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.57 percent, taking back almost everything it gained on Wednesday.  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 45 gold and 142 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the sole short/issuer was HSBC USA with 45 contracts out of its client account.  There were four long/stoppers in total — and by far the largest was JPMorgan with 32 for its client account.  In very distant second place was Advantage with 7 contracts for its client account as well.

In silver, the only short/issuers were International F.C. Stone and JPMorgan, with 122 and 20 contracts out of their respective client accounts.  There were eight long/stoppers in total — and the biggest was JPMorgan with 58 contracts…30 for its clients — and 28 for its own account.  In second spot was Goldman Sachs with 48 contracts for its client account.  In distant third place was Advantage with 13 contracts for its client account as well.

The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in January declined by 36 contracts, leaving 96 still open, minus the 45 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 36 gold contracts were actually posted for delivery today, so that means that the change in open interest and the deliveries matched for a change.  Silver o.i. in January fell by 102 contracts, leaving 616 still around, minus the 142 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 124 silver contracts were actually posted for delivery today, so that means that 124-102=22 more silver contracts just got added to the January delivery month.


There was a withdrawal from GLD yesterday, as an authorized participant took out 47,261 troy ounces — and there were no reported changes in SLV.

The folks over at the shortsqueeze.com Internet site updated their short position data for both GLD and SLV yesterday, as of the close of trading on Monday, December 31 — and this is what they had to report.  The short position in SLV declined from 9,540,700 shares/troy ounces, down to 9,397,600 shares/troy ounces…which is a drop of only 1.5 percent.  The short position in GLD fell from 1,342,160 troy ounces, down to 1,319,140 troy ounces…which is a decline of only 1.7 percent.  Both amounts, if they are to believed…as Ted doesn’t really ever trust them…are insignificant changes.

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

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday was 5,477 troy ounces that was shipped out of Canada’s Scotiabank.  There was also a paper transfer of 8,587 troy ounces out of the Registered category — and back into Eligible over at HSBC USA.  The link to this is here.

There was a lot of activity in silver, but most of it involved transfers from one bank vault to another.  There was 1,203,740 troy ounces received — and 1,856,441 troy ounces shipped out.  Every ounce of the ‘in’ activity involved the ‘out’ activity — and once that is subtracted out, the net activity on Wednesday was 652,701 troy ounces that was shipped out.  One truckload…595,076 troy ounces…left CNT — and the remaining 57,625 troy ounces departed the International Depository Services of Delaware.  You can check all of this action out for yourself — and it’s linked here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They reported receiving 500 of them — and shipped out 507.  All this occurred at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


Here are two charts that Nick Laird passed around last weekend, that I’ve only had the space for now.  They are the usual ones that show the total gold and silver holdings of all known depositories, ETFs and mutual funds, as of the close of business on Friday, January 4.  During that week, a net 830,000 troy ounces of gold was deposited.  Here’s the chart for that precious metal.  Click to enlarge.

In silver, there was a net 2,260,000 troy ounce withdrawn during the last reporting week.

Looking at the chart below, over the last seventeen weeks, fourteen of those have shown net withdrawals — and just eye-balling the chart, I’d guesstimate that around 24 million troy ounce of silver have been removed from various ETFs, depositories and mutual funds during that time period.

If you remember what I said in yesterday’s column — and if you don’t…here it is again…

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.”

So, of that 24 million troy ounce “guesstimate”…19.3 million has come out of SLV — and Ted would be the first one to jump up and say that this was mostly, if not all, conversion of SLV shares into physical metal by JPMorgan.  So virtually all of this 4-month-long down-trend in the chart below is attributable to them.

Keep that in mind as you examine it.  Click to enlarge.

I don’t have all that many stories for you again today.


CRITICAL READS

Donald Trump: Swamp Man — Bill Bonner

In the theories of democratic government are some of the wildest, most extravagant, and least accurate claims in modern mythology.

The general idea is that the best and brightest – or at least not the dullest and most venal – are elected by the masses to represent them in the nation’s capital.

There, with their thinking caps on and their hearts attuned to the needs of “The People,” they do such things as will improve the commonweal.

More specifically, these people – including Ms. Ocasio-Cortez, Chuck Schumer, Mitch McConnell… and Donald J. Trump himself – are charged with tending the nation’s money, remembering that every penny they spend must be squeezed from some poor taxpayer’s time and the sweat of his brow.

No Money shall be drawn from the Treasury but in Consequence of Appropriations made by Law,” sayeth the Constitution. Thus, in solemn deceit, do the people’s representatives bend to their duties.

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


Earnings Season Off to a Dismal Start: Warnings, Guidance Cuts, Mass Layoffs

Earnings season has yet to officially begin when the big banks report next week and it already looks like Wall Street is in for a rude awakening when it comes to corporate profits in both the last quarter of 2018 and the rest of 2019 just one quarter after the best earnings season in history.

The recent warnings, guidance cuts and layoff announcements to date have been nothing short of dismal. Here is a quick summary of what we have observed in just the last week:

  • Apple cut revenue guidance (for the first time in 16 years)
  • Macy’s cut profit guidance, sending its shares plunging the most on record
  • Barnes and Noble cut profit guidance
  • FedEx cut profit guidance
  • American Airlines cut guidance
  • Delta cut profit guidance
  • Kohl’s reported a plunge in comp store sales
  • Ford announced it will cut thousands of jobs in Europe

Virtually every single sector is telegraphing weakness, from transports to techs to autos to retail and finance.

While the rising gloom has already had an impact on analyst expectations, with consensus estimates showing an expectation that S&P profits will rise 7.7%, down from a forecast for a 20% plus increase for all of 2018, the real number may end up being much lower.

This Zero Hedge story put in an appearance on their website at 5:46 p.m. EST on Thursday afternoon — and another link to it is here.  A parallel ZH story from an hour earlier is headlined “Global Earnings Downgrades at Highest Level in 10 Years“.  Then there’s this ZH story from Brad Robertson…”China Car Sales Collapse: First Annual Drop in Over 20 Years


Russia shifts $100bn of its reserves into yuan, yen and euro in a great dollar dump

The Central Bank of Russia has moved further away from reliance on the U.S. dollar and has axed its share in the country’s foreign reserves to a historic low, transferring about $100 billion into euro, Japanese yen and Chinese yuan.

The share of the U.S. currency in Russia’s international reserves portfolio has dramatically decreased in just three months between March and June 2018, from 43.7 percent to a new low of 21.9 percent, according to the Central Bank’s latest quarterly report, which is issued with a six-month lag.

The money pulled from the dollar reserves was redistributed to increase the share of the euro to 32 percent and the share of Chinese yuan to 14.7 percent. Another 14.7 percent of the portfolio was invested in other currencies, including the British pound (6.3 percent), Japanese yen (4.5 percent), as well as Canadian (2.3 percent) and Australian (1 percent) dollars.

The Central Bank’s total assets in foreign currencies and gold increased by $40.4 billion from July 2017 to June 2018, reaching $458.1 billion.

This interesting, but not entirely surprising news item was posted on the rt.com Internet site at 8:46 a.m. Moscow time on their Thursday morning, which was 12:46 a.m. in Washington — EST plus 8 hours.  I thank Larry Galearis for pointing it out — and another link to it is here.  The Bloomberg story on this is headlined “Russia Buys Quarter of World Yuan Reserves in Shift From Dollar” — and I found that in a GATA dispatch yesterday morning.


Fall of Empires: London, Washington and Paris on brink of collapse — George Galloway

Despite the thrashing around of the NATO disinformation apparat, the imperial heartland has entered 2019 in a state of complete chaos.

Washington, London, and Paris – the three capitals of the Empire – are today effectively ungoverned, shutdown, tottering on the brink of collapse or under siege by their own people.
Their self-chosen Nemeses – Moscow and Beijing – meanwhile toast the New Year in a state of considerable optimism and self-confidence. These are the facts, this is the news.

We should start at the top of the Empire. The United States government has closed down amid stasis and a barrage of inter-governmental howitzers.

The defense secretary, ‘Mad Dog‘ Mattis, has resigned as have other uniformed subalterns angry at the president’s re-found determination to withdraw from costly and losing foreign wars. The actual “mad dog” – John Bolton – openly defies President Trump over Syria, Mueller closes in, and the new Democratic majority in the House gears up to “impeach the mother***er.

The old order is dying; the new one cannot be born. If we are not careful, we will soon be alive in the time of monsters.

George Galloway is never lost for words — and is never off the mark by much.  His command of the English language — and his ability to put his thoughts into words of power, is only dimly matched by Nigel Farage.  This ‘op-ed’ piece, which is certainly worth reading if you have the interest, appeared on the rt.com Internet site at 2:07 p.m. Moscow time on their Wednesday afternoon, which was 6:07 a.m. in Washington — EST plus 8 hours.  I thank George Whyte for sending it our way — and another link to it is here.


4 on trial in theft of huge gold coin from Berlin museum

Four young men went on trial in Germany Thursday over the brazen theft of a 100-kilogram (221-pound) Canadian gold coin that disappeared from a Berlin museum two years ago.

Two brothers and their cousin, identified in German media as 24-year-old Wayci Remmo, 20-year-old Ahmed Remmo and 22-year-old Wissam Remmo, are accused of stealing the “Big Maple Leaf” coin from the Bode Museum in March 2017.

The fourth suspect, identified only as 20-year-old Dennis W., worked as a security guard at the museum, which is located in the heart of the German capital. He is accused of scouting out the scene of the crime.

The opening of the trial at Berlin’s district court drew intense media interest in Germany because of the Hollywood-style nature of the heist and their families’ alleged ties to organized crime.

This rather short, but very interesting news story, filed from Berlin, showed up on the apnews.com Internet site on Thursday sometime — and it’s an article I found on the gata.org Internet site.  Another link to it is here.


China’s Cynical Gold Reserve Increase? — Lawrie Williams

At long last, after over two years of reporting zero monthly increases in its gold reserves, the Chinese central bank has announced a reserve rise in December of 9.95 tonnes.  While the amount of the increase may be reasonably realistic we do not think that the announced rise is in any way confirmation of the zero increases over the preceding 26 months, but a perhaps cynical ploy to try and convince doubters that the zero increase announcements were, in fact, genuine.  We still doubt that they were given the bank’s long track record of reporting no rises in its gold reserves and then reporting huge increases at five or six year intervals.  These massive gold reserve rises have very obviously been built up over the periods  when the country has been adamant that its reserves are not being increased.  From China’s viewpoint the additional amounts have been held in accounts which it feels do not need to be reported to the IMF until they are transferred into the country’s official Forex holding accounts.

As the world’s largest producer of gold, and a non-exporter of the precious metal, China certainly has the opportunity to build up its gold reserves surreptitiously.  This may account, in part at least, for the large discrepancy in estimates by the major consultancies, who provide global gold statistics, between China’s gold consumption and the known total of gold imports plus the country’s own gold output.

There have been numerous instances of Chinese officials and academics suggesting that China should control a gold reserve on a par with that of the USA’s reported 8,133.5 tonnes, but even with the latest announced addition the amount of gold officially reported as being held by China in its Forex reserves totals only some 1,852 tonnes – a total not only exceeded by the USA, but also by Germany. Italy, France and Russia – the latter having been raising its own gold reserve figure at a rate of over 200 tonnes a year to its current 2,066.2 tonnes putting it in 5th place among national gold holders – and with France (No. 4 with 2,436 tonnes) firmly in its sights.  China’s ‘official’ holding puts it in sixth place, but many observers, including ourselves, are on record as suggesting the nation’s true gold reserve is substantially higher than the amount it reports to the IMF.

This commentary by Lawrie put in an appearance on the Sharps Pixley website on Thursday sometime — and another link to it is here.


Tanzania’s president wants central bank to buy country’s gold production

Tanzanian President John Magufuli said on Wednesday the central bank should start buying the country’s gold to curb smuggling and build reserves to stabilise the currency.

On Tuesday, Tanzania named its third mining minister since Magufuli was elected in 2015. The mining sector contributes around 4.8%  of GDP, the government said in 2018, but the value of many mining projects in Tanzania have plummeted amid repeated government interventions.

It is impossible to see gold is stolen everywhere… governor, you should work on this,” Magufuli said, referring to the central bank governor during the swearing in of the newly appointed mining minister and other officials.

Bank of Tanzania should put the money there [in gold] instead of reserving the dollars alone. We should reserve dollars and gold together.”

It wasn’t clear whether Magufuli intended to buy all the country’s gold production, thereby bringing the artisanal gold market under government control. He asked the mining and finance ministries and the central bank to come up with a plan.

I posted a story about this in Thursday’s column, but this one has a slightly different take on it, so It thought I’d include it.  It was filed from Dar es Salaam, Tanzania — and posted on the businesslive.co.za Internet site at 7:17 p.m. SAST [South African Standard Time] on their Wednesday evening, which was 12:07 p.m. in New York — EST plus 7 hours.  I found this in a GATA dispatch yesterday — and another link to it is here.


Ted Butler — Questions Only the DoJ Can Get Answered

Reasonable questions should be answered reasonably. When such questions cannot be answered reasonably or at all, particularly by those with a responsibility for answering, something is wrong. A good number of such questions remain unanswered in silver and those not providing answers include the federal commodities regulator (the CFTC), the designated self-regulator (the CME Group), as well as the most important bank in the U.S., JPMorgan.

What constitutes a reasonable question in silver? I would define questions to be reasonable if they encompass occurrences known to be unprecedented either in silver or in any other market and in which the questions have been repeatedly asked, yet remain unanswered.  To be sure, there are several such unanswered questions in silver that date back as long as a decade; each one of which stands out in terms of potential significance, but taken together point to something being seriously out of kilter in the silver market.

Standing in the way of the questions being answered is that those who know, or should know the answers, just won’t provide the answers. But now the Department of Justice has burst upon the silver scene by virtue of its Nov 6 announcement of a criminal guilty plea for manipulation on the COMEX by a long time former trader for JPMorgan, as well as its clear statement that it is immersed in an ongoing investigation. Overnight, the prospects for the previously unanswered questions finally being addressed have greatly improved. Make no mistake, if the Justice Department asks the right questions, the ongoing silver manipulation will come to a screeching halt.

This must read commentary by Ted was posted on the silverseek.com Internet site at 8:30 a.m. Denver time on Thursday morning — and another link to it is here.


The PHOTOS and the FUNNIES

Here are the last two photos from The Guardian article that Patricia Caulfield shared with us.  The first one comes with this comment: “A flock of whistling ducks in Pobitora wildlife sanctuary in Assam, India”  Click to enlarge.

This second photo bears the inscription…”A sika deer in Nara park, Japan” — Photo credit: Behrouz Mehri  Click to enlarge.


The WRAP

It was yet another day where precious metal prices would have certainly closed higher if the powers-that-be hadn’t show up at, or just before the COMEX open in New York yesterday…as all four suffered the same fate during that time period.

But it should be pointed out that net volumes, particularly in gold, were pretty quiet on Thursday — and it made the job of controlling prices that much easier for those with an agenda.

Of course the dollar ‘rally’ that began at noon in Shanghai on their Thursday morning was useful as well.  And if you look back at the DXY chart, you’ll also note that the New York low tick in the dollar index came right at the COMEX open — and its high tick of the day was set precisely at the 1:30 p.m. EST COMEX close.  The chances that this was accidental is somewhere between slim and none — and Slim is out of town.

Here are the 6-month charts for all four precious metals — and the low ticks in both gold and silver occurred after the COMEX close, so that fact is not apparent in their Thursday dojis.  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 began to head quietly higher once trading began at 6:00 p.m. EST in New York on Thursday evening. At the moment it’s up $7.20 an ounce. Silver has been chopping quietly higher as well in Far East trading, but ran into ‘something’ around the afternoon gold fix in Shanghai. It hasn’t done much since then — and it’s up 14 cents currently. Ditto for platinum — and it’s up 4 bucks. The palladium price stair-stepped its way higher until shortly before 1 p.m. China Standard Time on their Friday afternoon — and has been chopping unevenly sideways since. It’s up 8 dollars.

Net HFT gold volume is around 50,000 contracts — and there’s only 757 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is about 13,300 contracts — and there’s 929 contracts worth or roll-over/switch volume on top of that.

The dollar index opened down 10 basis points as soon as trading began at 7:44 p.m. on Thursday evening EST — and its current low tick was set around 1:18 p.m. CST on their Friday afternoon. It had a smallish up/down move since then — and is almost back at its low of the day — and down 16 basis points as of 7:45 a.m. GMT in London.


Here’s a chart that Todd Anthony of First Majestic Silver fame passed around yesterday — and I thought you might find it interesting.  I own stock in seven of the ten companies shown.  Click to enlarge.

And as I post today’s missive on the website at 4:02 a.m. EST…I note that the gold price has been sold a bit lower during the first hour of London trading — and it’s only up $6.30 an ounce. Silver appears to have been capped at the $15.70 spot mark at the moment — and it’s up 16 cents. Platinum and palladium haven’t done much during the first hour of Zurich trading, with the former up 4 dollars — and the latter by 7.

Gross gold volume is now up to around 63,500 contracts — and once you subtract out the roll-over/switch volume, net HFT gold volume is just under 61,000 contracts. Net HFT silver volume is getting up there was well at about 16,700 contracts — and there’s 942 contracts worth of roll-over/switch volume in this precious metal.

These rallies, such as they are, are not going unopposed.

The dollar index has been chopping quietly sideways in a pretty narrow price band during the first hour of London/Zurich trading — and it’s currently down 19 basis points as of 8:48 a.m. GMT/9:48 a.m. CET.

I suspect, but don’t know for sure, that any price action that really matters during the remainder of the Friday session will occur when New York begins to trade at 8:20 a.m. EST — and one should be prepared for any eventuality.

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

Ed