17 January 2019 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price rose and fell a few dollars in the first four hours once trading began at 6:00 p.m. in New York on Tuesday evening — and the Far East low, such as it was, came around 11:15 a.m. China Standard Time on their Wednesday morning. It began to edge higher from there — and the Far East high tick, such as it was, was set at the 2:15 p.m. CST afternoon gold fix in Shanghai. It was sold quietly lower from there until around 12:45 p.m. in London trading — and then began to rally with some substance. Of course it ran into ‘resistance’ — and the high tick of the day, such as it was, was set around noon in New York. It was sold unevenly lower into the 5:00 p.m. EST close.
The low and high ticks of the day aren’t worth looking up.
Gold was closed in New York on Wednesday at $1,293.20 spot, up $4.10 on the day. Net volume was very quiet once again at only 152,000 contracts — and there was a bit under 30,000 contracts worth of roll-over/switch volume on top of that.
The silver price didn’t do much of anything in Far East trading, but rallied a few pennies shortly after the London open, but even that tiny gain was all gone a few hours later. But once the noon GMT silver fix was put to bed, someone stepped on the price — and the low tick was set about fifteen minutes later. It was bounced off that price multiple times over the next forty minutes or so — and began to head higher with a vengeance at 1 p.m. GMT/8 a.m. EST. The price appeared to go ‘no ask’ at 9 a.m. EST — and a short-seller showed up minutes later — and the high tick was set a few minutes after the afternoon gold fix in London. It was sold down a few pennies after that — and then chopped quietly sideways for the remainder of the Wednesday session.
The low and high ticks, despite the down/up dip after the noon silver fix in London, aren’t worth looking up, either.
Silver was closed on Wednesday at $15.57 spot, up 2 cents on the day. Net volume was very quiet in this precious metal as well…just under 47,500 contracts — and there was 2,233 contracts worth of roll-over/switch volume in this precious metal.
The platinum price crawled quietly but unsteadily sideways during all of Far East and most of Zurich trading yesterday — and was down a dollar at the COMEX open. From that point, it began to edge unsteadily higher — and the price was capped minutes before 12 o’clock noon in New York. It didn’t do much after that. Platinum finished the Wednesday session at $805 spot, up 7 bucks on the day.
The palladium price crawled quietly higher until around 1 p.m. CST on their Wednesday morning — and then traded flat until shortly after the Zurich open. It was up 9 dollars at that point. Then it began to edge quietly higher once again — and then went ballistic just minutes before 9 a.m. in New York. It was obviously capped a few minutes before the afternoon gold fix in London — and then sold quietly lower until a minute or so after 1 p.m. EST in the thinly-traded after-hours market. It stair-stepped its way higher from that juncture going into the 5:00 p.m. close — and finished the day at $1,343 spot, up 41 bucks from Tuesday. It should be noted that the spread between the bid and the ask on this precious metal is now up to 25 dollars.
And as impressive as palladium’s rally has been to date, it should be more than obvious that with the supply issue it currently faces, the price is not being allowed to rise to it’s intrinsic value too quickly. The slightest pick-up investment demand would soon drive palladium’s price to the moon.
The dollar index closed very late on Tuesday afternoon in New York at 96.04 — and it opened down about 11 basis points as soon as trading began at 7:45 p.m. EST yesterday evening. It began to ‘rally’ about fifteen minutes later — and then headed lower starting right at the 8 a.m. GMT London open. The 95.86 low tick was set an hour later — and then it began to ‘rally’ anew. The 96.18 high tick was set at noon in London — and it sank quietly from there until 11:50 a.m. in New York. It then began to edge higher — and back above unchanged — and finished the Wednesday session at 96.06 — up 2 basis points on the day.
Here’s the DXY chart from Bloomberg once again. Click to enlarge.
Here’s the 6-month U.S. dollar index chart — and the delta between its close…95.68…and the close on the DXY chart above, was 38 basis points on Wednesday. Click to enlarge as well.
Despite what the chart looks like, the gold shares didn’t do much of anything yesterday. They opened unchanged, dipped into negative territory for a few minutes — and then began to creep unsteadily higher. Their respective highs came around 11:35 a.m. in New York trading, but were then quietly sold lower — and back to a hair below unchanged by around 2:40 p.m. EST. They popped into positive territory by a bit after that — and the HUI closed up a measly 0.48 percent.
The price pattern for the silver equities followed an almost identical path to their golden brethren, so I won’t bother repeating myself. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 0.21 percent. Click to enlarge.
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 zero gold and 124 silver contracts were posted for delivery within the COMEX-approved depositories on Friday. In silver, the only short/issuer worth mentioning was International F.C. Stone, with 120 contracts out of its client account. There were seven long/stoppers in total, with JPMorgan topping the list with 48 contracts…28 for clients — and 20 for its own account. In second and thirds spots came Goldman and Advantage, with 35 and 23 contracts for their respective client accounts. 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 declined by 3 contracts, leaving 51 left. Tuesday’s Daily Delivery Report showed that 3 gold contracts were actually posted for delivery today, so the change in open interest and deliveries match for a change. Silver o.i. in January dropped by 3 contracts as well, leaving 481 still open, minus the 124 contracts mentioned in the previous paragraph. Tuesday’s Daily Delivery Report showed that 7 silver contracts were actually posted for delivery today, so that means that 7-3=4 more silver contracts were just added to the January delivery month.
There were no reported changes in GLD on Wednesday, but that certainly wasn’t the case in silver, as another 2,158,329 troy ounces were removed from SLV.
Since October 18, 2018…three months ago…there has been 23.03 million troy ounces of silver taken out of SLV. Ted and I had a discussion about this on the phone yesterday — and I was wondering out loud/speculating if there was a physical shortage developing in silver — and the big industrial users were buying SLV shares and then converting them into physical metal, because it wasn’t available anywhere else.
There was another sales report from the U.S. Mint. They sold 3,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 420,000 silver eagles.
There was very little activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday. Nothing was reported received — and only 3,624 troy ounces were shipped out. This occurred at Canada’s Scotiabank — and I won’t bother linking this amount.
For a change, it was very quiet in silver as well. Only 2,050 troy ounces…two good delivery bars…was reported received — and nothing was shipped out. The ‘in’ activity was at Delaware. There was a paper transfer from the Registered category — and back into Eligible over at Delaware as well…15,060 troy ounces worth. The link to this ‘activity’ is here.
But it was another very busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They received 4,827 of them — and shipped out 803. This activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
The Trier Gold Hoard is a hoard of 2,516 gold coins with a weight of 18.5 kilograms found in Trier, Germany in September 1993. It is described as the largest preserved Roman gold hoard worldwide.
On 9 September 1993, an excavator unearthed and ripped apart a bronze cauldron during excavations for an underground parking garage. Part of the cauldron and some coins went to a dump site, initially unnoticed.
An amateur archaeologist, Erich Eixner went back to the excavation site at night and found the larger part of the bronze cauldron, containing 560 coins and an additional lump of 1,500 coins using his metal detector. He informed the authorities of his discovery and received about 20,000 DM, a fraction of their estimated worth.
The earliest coins in the hoard were minted 63 A.D, during the reign of Nero. Ninety-nine percent of the coins were minted before 167 A.D. Only six coins were struck between 193 and 196 A.D. The coins weigh between 5.8 and 7.6 gram. Forty Roman emperors and their relatives are depicted on the coins. Click to enlarge.
It’s another day where I only have a tiny handful of stories for you.
Wondering why U.S. equity markets are soaring at a pace not seen since the March 2009 lows?
Confused by the massive swings higher despite weak macro data, and tumbling earnings expectations?
Well, the answer is simple once again, “it’s not the economy, it’s the central banks, stupid!” Click to enlarge.
Q4 2018 saw global stock markets finally wake up to the fact that the world’s central banks were withdrawing liquidity and played catch-down to an ugly tightening reality. December’s contagion to American stocks was the final straw for the world’s elites however and after the Mnuchin Massacre, it appears the Plunge Protection was ordered back into battle and as the chart below shows – central bank balance sheets suddenly started to grow – aggressively so… and that is what is dragging stocks higher, squeezing shorts at an unprecedented pace, and economically irrationally levitating P/Es despite a wall of uncertainty ahead.
Just like in 2018, 2017, and 2016, the start of the year has prompted a resurgence in the size of global central bank balance sheets… and just like in 2018, 2017, and 2016, global stocks (with U.S. being the most liquid attractor of that flow) are soaring…
A short squeeze it is. This Zero Hedge article, which is certainly worth reading, was posted on their Internet site at 1:36 p.m. EST on Wednesday afternoon. I thank Brad Robertson for that one — and another link to it is here.
It’s a Gas…Germany Outraged by U.S. Colonial Arrogance
This time the outspoken U.S. ambassador in Berlin may have gone too far to be ignored. The German government has denounced as a “provocation” letters that the American envoy sent to companies involved in the Nord Stream 2 project warning them of possible U.S. sanctions.
The German government reportedly told the project companies to “ignore” the missives dispatched by Ambassador Richard Grenell.
Nord Stream 2 is the 1,222-kilometer pipeline being laid in the Baltic seabed which will greatly increase delivery of natural gas from Russia to Germany. It will double Germany’s import of Russian gas when complete. But the Trump administration has repeatedly voiced its objection to the project, claiming that it will give Moscow undue political leverage over Europe. Trump has warned of sanctions on participating companies, which include German and Austrian firms.
The flagrant ulterior agenda is seen as the U.S. trying to undermine German-Russian energy trade, for the purpose of selling more expensive American liquefied natural gas to Europe. So much for American free-market capitalism!
This very worthwhile article by Finian Cunningham appeared on the strategic-culture.org Internet site on Tuesday — and I thank Roy Stephens for pointing it out. Another link to it is here.
Despite years of Western sanctions, Russia will become the world’s fifth-largest economy as early as next year, surpassing Germany and the U.K., multinational bank Standard Chartered said in its long-term growth forecasts.
In a report outlining projections about the world economy up until 2030, the bank said that China is likely to unseat the U.S. to become the world’s biggest economy at some point in the next year, when measured by a combination of purchasing-power-parity (PPP) exchange rates and nominal gross domestic product. It will be joined by the U.S., India, Japan, and Russia in the top five.
This news item showed up on the rt.com Internet site at 10:12 a.m. Moscow Time on their Wednesday morning, which was 3:12 a.m. in Washington. It’s the second offering in a row from Roy Stephens — and another link to it is here.
Following what Bloomberg calculated was a record net reverse repo liquidity injection on Wednesday, when the PBOC injected a whopping 560 billion yuan of liquidity into the financial system via open market operations, the Chinese central bank has done it again and in Thursday’s open market operation, it sold 250BN yuan in 7 Day repos (slightly below yesterday’s record 350BN), and 150BN in 28 Day repos, which net of maturities resulted in a whopping net 380BN yuan ($56.2BN) liquidity injection. Click to enlarge.
This brings the net liquidity injection this week to a near record 1.14 Trillion yuan (Monday 20BN, Tuesday 180BN, Wednesday 560BN and Thursday 380BN) and the week is not even over yet – should tomorrow’s reverse repo be of similar magnitude, then this week will go down in history as China’s biggest liquidity injection on record.
As yesterday, today’s massive liquidity injection was aimed at “keeping reasonable and sufficient liquidity in banking system as liquidity falls relatively fast during peak season for tax payments,” according to a statement from the PBOC, although why this year should be such a significant outlier, even when factoring in the liquidity needs ahead of the Lunar new year, to prior periods was not exactly clear.
There is, of course, a much simpler explanation: with Chinese economic and trade data turning from bad to worse with every passing day, Beijing’s response is increasingly one of a panicked “spasm“, as Nomura’s Charlie McElligott wrote today when he noted that with regard to the response of Chinese authorities in addressing their economic slowdown and credit crunch, “it had to get worse before it got better“—recently collapsing Chinese data has now clearly forced an escalation of easing-/stimulus-/liquidity- policies…
The bigger issue is that if not even China can move the needle with short-term liquidity injections, and a long-term monetary intervention is out of the question for now due to China’s record debt, while fiscal stimulus takes months if not quarters to kick in, once the sugar rush from the current bear market rally is over, the hangover will be especially brutal.
This rather interesting story appeared on the Zero Hedge website at 10:29 p.m. on Wednesday evening EST — and another link to it is here.
If gold is anything to go by, investors are increasingly anxious about the state of the world.
Volatile equity markets and fears of a global economic slowdown have helped gold rally 10 per cent from its August lows, putting it among the best performing metals over that period.
It is a sharp contrast to much of the past two years, when rising U.S. interest rates, a strong dollar, and buoyant equity markets hurt gold bugs and the shares of miners such as Barrick Gold, Newmont Mining and Goldcorp. And when there was a correction in U.S. stocks in early 2018, the gold price failed to benefit.
Almost a year on, the big question is whether 2019 could prove a profitable year to own gold, which is typically bought as hedge or haven by investors.
The amount of physical gold in exchange traded funds has risen to 71.9 million ounces, close to the record high of 72 million touched in May 2018.
“We haven’t seen flows like this since the first half of 2016, when the gold market really took off,” says Joe Foster, a portfolio manager at VanEck in New York.
This Financial Times story from Tuesday is posted in the clear in its entirety in this GATA dispatch on Wednesday — and another link to it is here.
The PHOTOS and the FUNNIES
Here are two more photos in the series titled “Wildlife photographer of the year people’s choice award” that appeared on The Guardian‘s website back on December 26 — and they’re courtesy of Patricia Caulfield.
The first one is entitled: “Shy” by Spanish photographer Pedro Carrillo. It’s captioned “The mesmerising pattern of a beaded sand anemone beautifully frames a juvenile Clark’s clownfish in Lembeh strait, Sulawesi, Indonesia. Known as a ‘nursery’ anemone, it is often a temporary home for young clownfish until they find a more suitable host anemone for adulthood.” Click to enlarge.
The second photo is entitled “The Orphaned Beaver” by U.S. photographer Suzi Eszterhas. It’s captioned “A one-month-old orphaned North American beaver kit is held by a caretaker at the Sarvey wildlife care centre in Arlington, Washington. Luckily it was paired with a female beaver who took on the role of mother and they were later released into the wild.” Click to enlarge.
It was yet another very quiet trading session, both from a volume and price perspective in both silver and gold yesterday. But their respective rallies that began thirty minutes or so before the London open were dealt with in the usual manner…silver even before the afternoon London gold fix — and gold was turned lower at noon.
However, the volumes in both were even lighter than they were on Tuesday, so not much should be read into Wednesday’s price action in either precious metal…but it’s obvious that their respective prices weren’t going to be allowed to get too frisky.
Palladium is now in a world of its own — and only the obvious interference by the powers-that-be are keeping it from blowing sky high in what would turn out to be the short squeeze of the century…as the commercial traders get overrun. That may still happen.
Here are the 6-month charts for all four precious metals, plus copper and WTIC. The big jump in palladium to a new high closing price going back more than a decade, is worth noting. Click to enlarge.
And as I type this paragraph, the London open is less than ten minutes away — and I note that except for a small bump up in price during the first few hours of trading in New York on Wednesday evening, the gold price has been below the unchanged market throughout the entire Far East trading session — and is currently down $1.00 an ounce. It was the same for silver — and it’s down 5 cents now. Ditto for platinum and palladium, with the former down 4 bucks, but the latter has managed to work its way back to almost unchanged during the last hour or so — and is down a dollar as Zurich opens.
Net HFT gold volume is very light once again…coming up on 33,000 contracts — and there’s 2,007 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is very light as well at a hair over 6,900 contracts — and there’s only 190 contracts worth of roll-over/switch volume on top of that.
The dollar index opened about unchanged in New York at 7:45 p.m. EST on Wednesday evening. It dipped into negative territory by a small handful of basis points in the first fifteen minutes of trading — and began to edge quietly higher from there. It made it up to the 96.20 mark by around 1:10 p.m. China Standard Time — and began to head lower immediately — and then began to take flight about an hour later. It’s currently up 13 basis points as 7:45 a.m. GMT in London.
And as silver analyst Ted Butler said in his mid-week commentary to his paying subscribers yesterday…”Has it or has it not added significantly to short positions in gold and silver and if it has added, does it intend to rig prices lower to ring the cash register machine it created over the past 11 years? I wish I knew. In this particular regard we are all in the dark, thanks to the suspension of COT data. However, that doesn’t change the fact that what JPMorgan does or doesn’t do, under the influence of the Justice Department, is the critical element for future silver and gold prices. But it is precisely the involvement of the Justice Department that makes silver more bullish than it has ever been, regardless of what may transpire in the short term.”
He would be exactly right about that.
And as I post today’s column on the website at 4:02 a.m. EST, I see that the gold price has crept a bit higher during the first hour of London trading — and is back at unchanged at the moment. Silver is off its low tick of the day by a few pennies now — and is down 2 cents. Platinum hasn’t done much — and is down 3 dollars currently. But shortly after the Zurich open, palladium jumped up a bunch of dollars — and is currently higher by 16 bucks.
Gross gold volume is coming up on 46,000 contracts — a net of roll-over/switch volume, net HFT gold volume is something over 41,000 contracts. Net HFT silver volume is now up to 9,800 contracts — and there’s still only 204 contracts worth of roll-over/switch volume in this precious metal.
The dollar index has dipped a few basis points during the first hour of London/Zurich trading — and is up only 6 basis points as of 8:45 a.m. GMT/9:45 a.m. CET.
That’s it for yet another day — and I’ll see you here tomorrow.