A Very Quiet Day…But ‘Da Boyz’ Were Lurking About

15 January 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to head higher as soon as trading began at 6:00 p.m. EST in New York on Sunday evening — and was up five bucks by around 10 a.m. China Standard Time on their Monday morning.  It was sold down a few dollars from there, but began to rally a bit more staring around 3:25 p.m. CST on their Monday afternoon.  It chopped quietly higher until at, or just before, the noon silver fix in London — and that was its high of the day.  The price got stepped on shortly before trading began on the COMEX in New York on their Monday morning, but once that was done, the price crawled higher until shortly before the COMEX close — and it didn’t do a lot after that.

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

Gold finished the Monday session at $1,291.20 spot, up $4.40 on the day.  Net volume was pretty light at 167,500 contracts — and there was heavy roll-over/switch volume once again…just over 57,500 contracts.

The silver price opened flat in New York on Sunday evening — and its rally in early morning trading in the Far East was dealt with in short order — and then it didn’t do much of anything until shortly before 3:30 p.m. CST on their Tuesday afternoon.  At that juncture it began to chop quietly and very unevenly higher until around 2 p.m. EST in after-hours trading in New York — and didn’t do much after that.

The low and high ticks certainly aren’t worth looking up in this precious metal, either.

Silver finished the day at $15.615 spot, up 4.5 cents.  Like for gold, net silver volume was exceedingly quiet at 43,700 contracts — and there was a hair over 4,900 contracts worth of roll-over/switch volume in this precious metal.

The platinum price was up a couple of bucks by around 9 a.m. China Standard Time on their Monday morning — and then was stair-stepped lower in price until about fifteen minutes before the COMEX open.  It rallied a bit from there until shortly before 10 a.m. CET in Zurich — and then chopped quietly sideways, with the New York high tick…such as it was…coming at the afternoon gold fix in London.   It was sold lower until minutes after 1 p.m. EST — and rallied back to the $800 spot mark a hour later, but wasn’t allowed to close there.  Platinum was close in New York on Monday at $799 spot, down down 9 dollars on the day.

The palladium price was sold quietly and unsteadily lower until shortly before the Zurich open as well.  At its low, it was at the $1,295 spot mark.  It rallied a few dollars minutes before the Zurich open — and then traded quietly sideways until shortly before noon over there.  Then away it went to the upside.  Palladium’s high tick was set right at the 9:30 a.m. EST open of the equity markets in New York on Monday morning — and it was sold lower from there until shortly after the Zurich close.  It rallied a few dollars from that point, before chopping unevenly sideways until trading ended at 5:00 p.m. EST.  Palladium was closed at $1,308 spot, up 5 bucks on the day, but 16 dollars off its high tick.  It was another one of those days that palladium would have closed higher by an appreciable amount, if it had been allowed to trade freely.

The dollar index closed very late on Friday afternoon in New York at 95.67 — and opened down 2 basis points once trading began at 6:30 p.m. EST on Sunday evening.  And after popping into the green for a bit, began to head lower — and was down 12 basis points by a few minutes before 10 a.m. China Standard Time on their Monday morning.  It chopped quietly sideways in a fairly narrow range for the remainder of the Monday session — and the index finished at 95.59…down 8 basis points on the day.  Nothing to see here.

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

And here’s the 6-month U.S. dollar index courtesy of stockcharts.com — and there isn’t a lot to see here, either.  The delta between its close…95.21…and the close on the intraday chart above was 38 basis points on Monday.  Click to enlarge.

The gold shares opened unchanged at 9:30 a.m. EST on Monday morning in New York — and began to head lower about fifteen minutes later.  That lasted until a minute or so before noon EST — and then began to head quietly and unevenly higher from there.  That ‘rally’…such as it was…came to an end at exactly 3:00 p.m EST — and they sold off very quietly into the close from there.  The HUI finished down 1.34 percent.

The silver shares were up a bit at the open but, like their golden brethren, began to head lower a few minutes later — and their respective low ticks came a few minutes after 11 a.m. EST in New York.  They rallied very unevenly higher from that juncture — and were back in the green by a bit at 3:00 p.m. EST — and then also ticked lower into the 4:00 p.m. close from there.  Nick Laird’s Silver Sentiment/Silver 7 Index closed down 0.50 percent.  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 5 gold and 22 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.  In gold, the sole short/issuer was Advantage — and JPMorgan stopped 4 contracts for its client account.  In silver, the two short/issuers were ADM and Advantage, with 16 and 6 contracts out of their respective client accounts.  Goldman picked up 8 for its client account — and JPMorgan picked up 8 in total…four four its own account, plus 4 for its client account.  Advantage picked up 4 contracts for its client account as well.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Monday trading session showed that gold open interest in January declined by 3 contracts, leaving 56 still open, minus the 5 gold contracts mentioned just above.  Friday’s Daily Delivery Report showed that 8 gold contracts were actually posted for delivery today, so that means that 8-3=5 more gold contracts just got added to the January delivery month.  Silver o.i. in January fell by 7 contracts, leaving 498 still around, minus the 22 contracts mentioned in the previous paragraph.  Friday’s Daily Delivery Report showed that 29 silver contracts were actually posted for delivery today, so that means that 29-22=7 more silver contracts were just added to January.


For the second day in a row, there were no reported changes in either GLD or SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of trading on Friday, November 11 — and this is what they had to report.  Their gold ETF showed an increase of 7,767 troy ounces, but their silver ETF showed that a whopping 859,293 troy ounces of silver was withdrawn.  That withdrawal is so far out of the ordinary, that I suspect it’s a reporting error.  If it is, I probably won’t find out until next week, as I doubt they’ll post a correction.

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

There was a bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  They didn’t receive anything, but 4,500 troy ounces departed Canada’s Scotiabank.  I won’t bother linking this amount.

It was a lot busier in silver, of course, as 598,412 troy ounces was received — and all of that, one truckload, found its way into JPMorgan’s vault.  There was 1,153,978 troy ounces shipped out — and virtually all of that…two truckloads totalling 1,096,250 troy ounces…was shipped out of Brink’s, Inc.  There were smaller amounts…55,730 and 1,997 troy ounces…shipped out of CNT and Delaware respectively.  The link to all this activity is here.

There was some fairly decent activity in over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They received 4,594 of them — and shipped out 444.  All of this occurred at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


Here are a couple of charts that Nick Laird passed around on the weekend.  The first one shows the withdrawals from the Shanghai Gold Exchange, updated with December’s data.  During that month, there was 178.04 tonnes withdrawn.  Total withdrawals from the SGE since the start of 2008…eleven years in total…shows that 17,113 tonnes have been withdrawn during that time period.  Click to enlarge.

This second chart from Nick shows totally yearly withdrawals for the same 11 year period, now updated with all the data from 2018.  During the calendar year just past, they took out 2,054.6 tonnes.  Click to enlarge.

Lawrie Williams has a story about Chinese gold demand in 2018 based on the above charts.  It’s in the Critical Reads section below, headlined “Chinese gold demand falters but still up y-o-y…just“.  If you want to read it now, the link is here.

It was another very slow news day — and I don’t have all that many articles for you.


CRITICAL READS

Collapse In Global M1 Signals A Worldwide Recession Has Arrived

By now everyone has seen some iteration of this chart showing that the annual change in central bank liquidity is now negative.

When it comes to markets – where the events of December were a vivid reminder that just as QE blew the world’s biggest asset bubble, so QT will deflate it.

But while the immediate effect of the expansion and shrinkage of the Fed’s balance sheet on various asset classes is rather intuitive – if not to Fed presidents of, course – a more pressing question is how will the upcoming liquidity shrinkage affect the global economy.

Unfortunately, the answer appears to be ominous.

And just to confirm that the collapse in Global M1 growth is a major problem – perhaps the biggest for the global economy – Morgan Stanley shows the following chart which confirms that every time M1 has dipped negative – as central bank liquidity injection either slowed or went into reverse – there has been a financial crisis: whether the 2015 EM and Manufacturing Commodity Recession, the Sovereign Debt Crisis of 2011, the Global Financial Crisis and U.S. Housing bubble burst of 2007/2008, the Tech Bubble burst of 2000 and so on.

Needless to say, the above charts confirm that the key variable for the global economy is not whether the Fed stops hiking or starting cutting rates (although any further rate hikes will surely have an adverse impact on global liquidity), but whether the Fed – and other central banks – pause their balance sheet shrinkage, and once again start actively injecting liquidity into the global system, or soon enough we will be looking for the best description of “[insert here] crisis of 2019.”

This chart-filled article put in an appearance on the Zero Hedge website at 7:25 p.m. on Monday evening EST — and another link to it is here.


The Most Absurd Myth of the 21st Century — Bill Bonner

Every era has its busted myths and failed dreams. Wall Street and Washington wallow in them.

The practical challenge for us is not to be smarter than other investors or wiser than other voters… but merely to step outside the myth long enough to get a good look at it.

In the 1960s, the idea was that you could just buy the leading stocks – the Nifty Fifty; it seemed a foregone conclusion that you’d get rich as America’s commercial genius conquered the world.

In the 1980s, it was Japan, Inc. that captured imaginations. Everyone wanted to learn the latest Japanese business jargon and imitate Japan’s extraordinary success.

Then, in the late 1990s came the dot.com boom. Everybody knew that the new internet technology would set the world on fire – with faster growth, higher wages, and no need for debt financing (information would replace the need for capital!).

Then came the myth that “house prices never go down” … which blew up in 2007.

This commentary from Bill appeared on the bonnerandpartners.com Internet sit on Monday morning sometime — and another link to it is here.


Quantitative Brainwashing — Jeff Thomas

We’re all familiar with the term, “quantitative easing.” It’s described as meaning, “A monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.”

Well, that sounds reasonable… even beneficial. But, unfortunately, that’s not really the whole story.

When QE was implemented, the purchasing power was weak and both government and personal debt had become so great that further borrowing would not solve the problem; it would only postpone it and, in the end, exacerbate it. Effectively, QE is not a solution to an economic problem, it’s a bonus of epic proportions, given to banks by governments, at the expense of the taxpayer.

But, of course, we shouldn’t be surprised that governments have passed off a massive redistribution of wealth from the taxpayer to their pals in the banking sector with such clever terms. Governments of today have become extremely adept at creating euphemisms for their misdeeds in order to pull the wool over the eyes of the populace.

At this point, we cannot turn on the daily news without being fed a full meal of carefully- worded mumbo jumbo, designed to further overwhelm whatever small voices of truth may be out there.

This commentary by Jeff was posted on the internationalman.com Internet site on Monday sometime — and another link to it is here.


Newmont takes top gold producer spot with $10 billion Goldcorp buy

Newmont Mining Corp said on Monday it would buy smaller rival Goldcorp Inc for $10 billion, creating the world’s biggest gold producer in the face of dwindling easy-to-find reserves of the precious metal.

The transaction, the biggest ever takeover in the gold sector according to Refinitiv, follows Barrick Gold Corp’s agreement in September to buy Randgold Resources Ltd in a deal valued at $6.1 billion.

Combining forces will give us the sector’s best project pipeline and exploration portfolio,” Newmont Chief Executive Gary Goldberg said on a conference call with analysts. “These prospects translate to the gold sector’s largest reserve and resource base.”

Vancouver-based Goldcorp’s Toronto-listed shares rose 7 percent to C$13.75 at 12:03 p.m. EST (1703 GMT). Newmont Mining’s shares were down about 8.8 percent at $31.83 in New York.

In recent years, investor criticism over inadequate management of capital had largely kept gold companies focused on costs while dampening enthusiasm for acquisitions. But the need to bolster shrinking reserves and production and a rising gold price are now serving as catalysts for increased deal-making.

This Reuters story, was posted on their Internet site at 2:10 a.m. EST on Monday morning — and was updated around 4 p.m. EST on Monday afternoon.  The first person through the door with it yesterday morning was Swedish reader Patrik Ekdahl.  Another link to it is here.


Turkey set to refine more Venezuelan gold as Maduro sends committee

A committee from Venezuela is set to arrive in Turkey to discuss a gold refining deal between Ankara and Caracas, pro-government Yeni Şafak daily reported.

The group sent by Venezuelan President Nicolas Maduro will visit Turkey’s central province of Çorum, where it’s looking to conduct bilateral trade talks and refine thousands of tons of Venezuelan gold as part of an inspection of Turkey’s gold refining facilities, the newspaper said.

The delegation arrives as  Turkey continues to set up joint ventures with the Venezuelan government for gold and coal exploration and has started investing in the country’s oil industry.
Venezuela’s central bank began refining gold in Turkey in 2018 . Gold, worth $834 million in the first 7 months of 2018 alone, is being shipped to Turkey for refinement and procession, with U.S. officials alleging that some may be making its way onto Iran in a violation of sanctions.

In November, the United States announced sanctions against U.S. citizens from dealing with entities or individuals involved with “corrupt and deceptive” gold deals from the country, in a move to curb the inflation-ravaged country’s exports.

This gold-related news item was posted on the ahvalnews.com Internet site yesterday sometime — and I found it embedded in a GATA dispatch yesterday evening.  Another link to it is here.


Chinese gold demand falters but still up y-o-y…just — Lawrie Williams

We still consider Shanghai Gold Exchange (SGE) gold withdrawal data the best comparable measure of the nation’s gold demand year on year and for 2018 the annual total was a little higher than in 2017 or 2016, but still well short of the record figure reported in 2015.  However as can be seen from the table below, this demand slipped quite significantly in the final four months of 2018 compared with a year earlier and in the last three months of the year  compared with 2017, although ended the year marginally higher than in both prior years. (See bar chart of full year figures).  The annual total though still ended up below the figures for 2013 and 2014 as well as comfortably below the 2015 figure.

The faltering in the total gold demand level though ties in with a slowing down of the Chinese economy – particularly over the past three or four months since the onset of the President Trump initiated ‘trade war’ with the U.S.  – so the downturn shouldn’t be a surprise.  Indeed the nation’s gold demand is holding up quite well under the circumstances, but one might suspect a further slowing of gold demand in the current year.  It will thus be particularly interesting to see 2019 monthly data as it is announced.  To an extent the ramifications of the slowing of economic growth will be being offset by the ever-continuing rise in that proportion of the Chinese population achieving middle class status.  The Chinese middle class has a propensity for saving, perhaps not quite so apparent in the current equivalent Western segment, and precious metals play an important role in ongoing wealth protection in Chinese culture.

Chinese demand remains vitally important in the gold supply and demand equation so any slowing down could be significant, but the growth in the country’s middle classes has to be an important factor in keeping the balance reasonably strong.

This commentary from Lawrie showed up on the Sharps Pixley website on Sunday sometime — and another link to it is here.


The PHOTOS and the FUNNIES

Here are the next two photos in a series titled “Wildlife photographer of the year people’s choice award” that appeared on The Guardian‘s website back on December 26 — and it’s courtesy of Patricia Caulfield.

This first shot is by award-winning photographer Federico Verones and entitled “Ambush”.  The caption reads “On a hot morning at the Chitake Springs, in Mana Pools National Park, Zimbabwe, Federico watched as an old lioness descended from the top of the riverbank. She’d been lying in wait to ambush any passing animals visiting a nearby waterhole further along the riverbed.”  Click to enlarge.

The second photo is by David Lloyd — and is entitled “Resting Mountain Gorilla”.  It’s captioned “The baby gorilla clung to its mother while keeping a curious eye on David. He had been trekking in South Bwindi, Uganda, when he came across the whole family. Following them, they then stopped in a small clearing to relax and groom each other.”  Click to enlarge.


The WRAP

Although precious metal prices were obviously managed on Monday, volumes in both gold and silver were almost of the ‘fumes and vapours’ variety — and for that reason, I wouldn’t read too much into them because, as I keep saying, it’s extremely easy for anyone to control prices when there’s not much going on.  Prices are rising on equally quiet volume, but it’s certainly true that prices would keep on rising if the powers-that-be weren’t there to ride shotgun over them.

Here are the 6-month charts for all four precious metals, along with copper and WTIC.  There’s not much to see, but I’ll point out that the gold price has been held in a very tight trading range for the last eight consecutive trading sessions.

WTIC was turned down the moment it broke above its 50-day moving average — and it remains to be seen if this is the start of a new price trend lower.  Click to enlarge for all six.

And a I type this paragraph, the London open is less than ten minutes away — and I note that the gold price has been chopping mostly quietly sideways ever since trading began at 6:00 p.m. EST in New York on Monday evening. That lasted until 10 a.m. CET in Shanghai. It’s been sold unsteadily lower since — and at the moment it’s down $1.70 an ounce. Silver spent almost all of Far East trading in positive territory, but has been sold lower in the last hour or so — and is now down 3 cents. The platinum price has been chopping quietly and unsteadily higher in Far East trading — and it’s up 5 bucks at the moment. Palladium hasn’t been doing much — and is up a dollar currently.

Net HFT gold volume is pretty quiet…coming up on 36,000 contracts — and there’s 3,654 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is quiet as well…6,900 contracts — and there’s 556 contracts worth of roll-over/switch volume on top of that.

The dollar index opened down a small handful of basis points once trading began around 7:45 p.m. EST in New York on Monday evening, which was 8:45 a.m. China Standard Time on their Tuesday morning. Its current 95.47 long tick came at 9:40 a.m. CET — and it’s been edging quietly and unsteadily higher since — and is down 3 basis points as of 7:45 a.m. in London/8:45 a.m. in Zurich.

Today, at the close of COMEX trading, would be the normal cut-off for this Friday’s Commitment of Traders Report but, alas, there obviously won’t be one this Friday, either. This makes it four consecutive weeks without any COT or Bank Participation Report data. How long this semi-shutdown of the U.S. government will continue, is anyone’s guess now…as nothing seems to be going on at the moment as far as negotiations are concerned.

And as I post today’s column on the website at 4:03 a.m. EST, I see that the precious metal price sell-off in gold and silver that began before the London open, has continued. Gold is now down $2.80 an ounce — and silver is now down 5 cents. Platinum is up only 3 dollars now, but palladium is now up 2 bucks.

Gross gold volume is coming up on 61,500 contracts — and minus the current roll-over/switch volume, net HFT gold volume is about 52,700 contracts, a big jump from an hour ago. Net HFT silver volume has also jumped up…about 9,800 contracts — and there’s only 575 contracts worth of roll-over/switch volume in that precious metal.

The tiny dollar index rally that began shortly before 7:30 a.m. GMT, has now taken it back into positive territory by a bit — and is now up 6 basis points.

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

Ed