Watching Paint Dry…and Grass Grow

24 January 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price rose and fell a couple of dollars in Far East trading on their Wednesday — and the high tick of the day, such as it was, came a minute or so after 9 a.m. in London.  From there, it didn’t do much until around five minutes before the COMEX open.  The price got sold lower about six dollar from there, but was back at unchanged by shortly after 12 o’clock noon in New York — and that was as high as it was allowed to rise.  It was sold quietly lower into the 5:00 p.m. EST close from there.

Once again, the high and low ticks aren’t worth looking up.

Gold finished the Wednesday session at $1,282.30 spot, down $2.40 on the day.  Net volume was exceedingly light once again at only a bit over 136,000 contracts, but roll-over/switch volume out of February and into future months was enormous once again at a bit over 74,000 contracts.

Silver rallied a few pennies in early morning trading in the Far East — and then traded flat until around 1:30 p.m. China Standard Time on their Wednesday afternoon.  It ticked quietly higher from there until 9 a.m. in London and, like the gold price, didn’t do much from that juncture until five minutes before the COMEX open.  It was sold a dime or so lower until shortly before the afternoon gold fix in London — and it crawled quietly higher in the COMEX close — and didn’t do a thing after that.

The high and lows aren’t worth looking up, either.

Silver was closed in New York yesterday at $15.34 spot, up 3.5 cents on the day.  Net volume was nothing special at a bit over 52,000 contracts — and there was 2,123 contracts worth of roll-over/switch volume in that precious metal.

Platinum didn’t do much of anything in Far East and Zurich trading on Wednesday, but it was sold a few dollars lower starting five minutes before the COMEX open…just like it was for silver and gold.  It crept quietly higher from there until a few minutes after 12:30 p.m. in New York — and that was pretty much it for the day.  Platinum finished the Wednesday session at $793 spot, up 4 dollars from Tuesday’s close.

Palladium didn’t do much of anything in morning trading in the Far East either, but was down 5 bucks by 3 p.m. CST. It jumped higher from there — and minutes before the Zurich open, it was up 13 dollars.  From that point it was sold unevenly lower until a few minutes after the COMEX open — and it jumped up over ten bucks at that point — and then traded unsteadily sideways for the rest of the day.  Palladium closed at $1,330 spot, up 3 bucks from its Tuesday close.

The dollar index closed very late on Tuesday afternoon in New York at 96.30 — and opened flat when trading began at 7:45 p.m. EST on Tuesday evening.  It dipped into negative territory on at least five different occasions during Far East and London trading — and was hauled back into positive territory every time.  The final ‘save’ came very early in New York — and that lasted until around 9:10 a.m. EST.  At that point the dollar index decline became far more intense — and the 96.05 low tick was set around 12:35 p.m. in New York.  From that juncture, it crawled quietly higher until 5 p.m. EST — and dropped a few basis points into the close from there.  The dollar index finished the Wednesday session at 96.12…down 18 basis points on the day.

Here’s the DXY chart from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart — and the delta between its close…95.77…and the close of the DXY chart above, was 35 basis points on Wednesday.  Click to enlarge.

The gold shares were sold into negative territory by a percent and change once trading began in New York on Wednesday morning at 9:30 a.m. EST.  They were back in positive territory by around 11 a.m. — and crawled unevenly higher until a few minutes before the COMEX close.  From that point they headed back into negative territory, but managed to cut their loses in the last hour of trading, as the HUI closed down only 0.14 percent…so call it unchanged once again.

The price pattern for the silver equities was almost identical to the price path for their golden brethren — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 0.34 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 4 gold and 4 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  In gold, the notable activity was that JPMorgan stopped 2 contracts — and Morgan Stanley picked up 1 contract…all for their respective client accounts.  In silver, like for gold, the short/issuers were of no consequence.  JPMorgan picked up 1 contract for its client account, plus 1 contract for its own account.  Goldman Sachs stopped 1 contract for its client account.  The link to yesterday’s Issuers and Stoppers Report is here.

For whatever reason, January deliveries are proceeding ever so slowly.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in January rose by 1 contract, leaving 56 still around, minus the 4 contracts mentioned just above.  Tuesday’s Daily Delivery Report showed that 7 gold contracts were actually posted for delivery today, so that means that 7+1=8 more gold contracts were just added to the January delivery month.  Silver o.i. in January increased by 2 contracts, leaving 359 still open, minus the 4 contracts mentioned in the previous paragraph.  Tuesday’s Daily Delivery Report showed that 3 silver contracts were actually posted for delivery today, so that means that 3+2=5 more silver contracts were added to January.

For quite some time, Ted has been noting a mysterious — and ever-increasing open interest in gold.  Wednesday’s Preliminary Report showed that gold o.i. rose by another 11,930 contracts.  That’s not the final number, which will be up on the CME’s website later this a.m. EST, but it won’t be off it by much.  With such weak price activity, he’s wondering what that’s all about.  He suspects spread trades to some extent, but with no COT Report for the last five weeks — and none forthcoming in the foreseeable future, it will remain a mystery until we see one.


There were no reported changes in GLD on Wednesday.  And after a deposit into SLV on Tuesday, there was a withdrawal yesterday, as an authorized participant took out 938,308 troy ounces.  I would suspect that JPMorgan owns it all now — and if that’s the case, it may not even have left the SLV vault, but has certainly changed owners.

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

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.  There was 15,067 troy ounces received by Canada’s Scotiabank — and that’s all the ‘in’ activity there was.  Nothing was shipped out.  The link to this is here.

There was more activity in silver.  Nothing was reported received — and 883,053 troy ounces were shipped out.  In the ‘out’ category, there was one truckload…600,347 troy ounces…departed Brink’s, Inc. — and 262,438 troy ounces left Scotiabank.  There was also 20,267 troy ounces shipped out of CNT.  The link to all this is here.

It was pretty busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They reported receiving 7,000 of them — and shipped out 2,400.  All of this action was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Broighter Gold or more correctly, the Broighter Hoard, is a hoard of gold artifacts from the Iron Age of the 1st century B.C.

The hoard was found near Lough Foyle in a field in the townland of Broighter (Irish: Brú Íochtair, meaning “lower fort”) 2 km northwest of Limavady in County Londonderry. It was discovered by Thomas Nicholl and James Morrow while working as ploughmen for Joseph L. Gibson in February 1896. They found the hoard whilst double ploughing. That means that one plough would follow the other to gain extra depth. It was estimated that the finds were buried 14 inches (36 cm) deep and were in close proximity to each other.

The find was taken to the farm where Maggie (later Mrs. Nicholl) washed the items in a sink. At that time they did not realise they were made from gold. The hoard was eventually sold to the British Museum for six hundred pounds. It consisted of a 7-inch-long (18 cm) miniature ship, complete with fittings and oars; two necklets, a bowl and a torc (or hollow collar). The find was described as a lump of mud when initially shown. Moreover, the boat had been so badly damaged by the plough that it took a goldsmith to later work out its structure.

A design from the hoard has been used as an image on the 1996 issue of the Northern Ireland British one-pound coins and the gold ship featured in a design on the last Irish one-pound coins. The Broighter Collar and Broighter Ship also featured on definitive postage stamps of Ireland from 1990–1995. The National Museum of Ireland, who now hold the hoard, describe the torc as the “finest example of Irish La Tène goldworking“. Replicas of the collection are kept at the Ulster Museum in Belfast.   Click to enlarge.

Once again, I don’t have much in the way of stories/news items for you.


CRITICAL READS

The Billionaire Backlash is Coming — Bill Bonner

It pays to be one of the elite. Not only do you ride in first class and live in a better zip code, you get richer, too.

An Oxfam report tells us that the richest 26 people on the globe have as much wealth as the entire poorest half of humanity.

None of this should be surprising to you, Dear Reader. Among the Davos crowd are the biggest stock owners on the planet. And since 2009, stocks, as measured by the Dow, have gone up 200%. No wonder they got so rich.

Here at the Diary, we do not begrudge them their good fortune. But it wasn’t “good fortune” alone. Instead, the fix was in. And whether the man on the street knows how it worked or not, he’s beginning to resent it.

And so, he turned his lonely eyes to DJT, in the hopes that the Great Disruptor would do something about it.

Mr. Trump promised to “drain the swamp.” Nobody knew what he meant by that, apparently not even Donald J. Trump himself. But whatever it might have meant, disrupting the rigged financial markets was not included.

This commentary by Bill was posted on the bonnerandpartners.com Internet site early on Wednesday morning EST — and another link to it is here.


Nobel winner Robert Shiller says there’s still a risk of a full-blown bear market

U.S. stock markets may have recovered slightly from sharp falls at the end of last year, but there’s still a risk of a significant downward trend, Robert Shiller, a professor of economics at Yale University and a Nobel laureate, told CNBC Wednesday.

I’m not confident of my ability to predict, but I think there’s a risk (of a bear market in 2019), yes,” he said. “I categorize risks in terms of ‘narratives’ and this bear market narrative has taken a strong hold.”

There is a feeling that the stock market might be due for some deflating now because it’s been a long time, and we’ve seen some hints of it and we haven’t seen the real deflation yet,” he told CNBC at the World Economic Forum (WEF) in Davos, Switzerland.

Shiller, who won the Nobel Prize for Economics in 2013 for his work on asset prices and inefficient markets, said he didn’t pay as much attention to fundamentals driving markets but was “more interested in psychology” and popular “narratives“.

This news item, with a 2:44 minute embedded video interview, was filed from Davos — and posted on the cnbc.com Internet site very early on Wednesday morning EST.  I thank Swedish reader Patrik Ekdahl for sending it our way — and another link to it is here.


Einhorn Crushed By $1.7BN in Redemptions: “Nothing Went Right For the Entire Year

After suffering a record 34% loss on its investments in 2018, it is perhaps surprising that David Einhorn’s Greenlight Capital was not hit with more than $1.7 billion in redemptions, which while a massive number, will allow the fund to continue operating, if with far more subdued ambitions (and less a CFO, because as David Einhorn wrote in his annual letter to Greenlight investors today, the fund’s CFO Harry Brandler will be retiring this month). Still, as Bloomberg notes, it was “a remarkable plummet” for Einhorn, who started this year with $2.5 billion, some 60% below the $6 billion AUM a year ago, and a fraction of the $12 billion Greenlight managed at its peak.

It is also perhaps some latent hubris that prompted Einhorn not to accept any new investor funds since 2014. That has changed, and as Einhorn writes – tongue-in-cheek – “we no longer believe there is risk of our assets growing too quickly (other than through improved performance),” and is why he is once again re-open Greenlight to new capital. “To be clear, we do not plan to initiate a marketing effort, as we plan to continue to focus on the portfolio,” he added, without adding the obvious “… because we can’t afford it.”

Still, for those long-suffering Greenlight LPs who stayed on board even after last year’s debacle, there was some good news: Greenlight started 2019 on the right foot, up 11.4%, thanks to the fund’s two top positions, GM and Brighthouse Financial, finally rebounding, and rising 13% and 17% YTD, respectively.

Whether those gains continue is of course, the $2.5 billion question, because whereas Einhorn laid out various positions closures (and openings) in his latest letter, one notable development stood out – the fund’s short basket of tech names is still there. And as most know, it is these shorts which includes some of the best performing stocks in 2017 and 2018, that has been the biggest drag on performance.

And his parting words:

Our longs are businesses that are performing well and are priced at really low valuations. The shorts have flawed business models, questionable accounting and leadership, and obvious paths to serious problems. We also have a bit of a macro hedge in case the politicians and central bankers continue to act irresponsibly – which seems like a safe bet. We can’t forecast the result, but we are looking forward to the new season.”

This longish item appeared on the Zero Hedge website at 6:25 p.m. EST on Wednesday evening — and I thank Brad Robertson for pointing it out.  Another link to it is here.


Maduro says Venezuela is breaking relations with U.S…gives American diplomats 72 hours to leave country

Venezuelan opposition leader Juan Guaido declared himself interim president on Wednesday, winning over the backing of the Washington and many Latin American nations and prompting socialist Nicolas Maduro to break relations with the United States.

Speaking to supporters outside the Miraflores presidential palace in Caracas, socialist leader Maduro said he would give U.S. diplomatic personnel 72 hours to leave Venezuela, which is suffering from a hyper-inflationary economic collapse.

U.S. President Donald Trump formally recognized Guaido shortly after his announcement and praised his plan to hold elections. That was swiftly followed by similar statements from Canada and a slew of right-leaning Latin American governments, including Venezuela’s neighbors Brazil and Colombia.

The U.S. State Department said in a statement that it would not remove American diplomats because it did not recognize the Maduro regime as the government of Venezuela: “The United States does not consider former president Nicolas Maduro to have the legal authority to break diplomatic relations with the United States or to declare our diplomats persona non grata.”

This is an interesting, but not surprising turn of events.  This story put in an appearance on the CNBC website sometime on Wednesday morning — and I thank Patrik Ekdahl for his second contribution to today’s column.  Another link to it is here.


Syria Ceasefire on Brink of Collapse as Russia Blames Turkey For Terrorist Growth

Four months after Syria and Russia agreed to call off its joint attack on HTS/al-Qaeda held Idlib province, opting amidst U.S. threats to cut a ceasefire deal mediated with Turkey, Moscow now says Ankara has failed to live up to its end of the bargain, which included agreeing to clear Idlib of terrorists and extremist groups. This means a joint Syrian Army-Russia assault on Idlib could again be on the horizon, which was a major source of tension and threats with the United States previously in September.

The collapse of the prior ‘deescalation’ agreement comes at a time when the White House has vowed to stick to the planned U.S. pullout, however, this could be yet a another major development to complicate or delay any possible withdrawal timeline.  The Financial Times described current Turkish-Russian talks in Moscow as follows:

Russia has accused Turkey of failing to live up to a promise to clear Syria’s Idlib of extremist militant groups and admitted that a landmark ceasefire agreement made last September had failed. Ahead of crunch talks between the leaders of the two countries in Moscow on Wednesday, Russia’s foreign ministry said the Islamist extremist group Hayat Tahrir al-Sham (HTS) had “full control” of Syria’s last remaining major opposition stronghold. The damning assessment came four months after Moscow agreed to postpone a planned military assault on the city in exchange for a promise from Turkish president Recep Tayyip Erdogan to clear it of militants.”

HTS is of course the rebranded coalition dominated by former Nusra Front militants, which is Syrian al-Qaeda. Russia has called the situation “rapidly deterioration” and this week pointed to growing numbers of ceasefire violations and incidents and threats against Russia’s Hmeimim airbase in Syria. Russia’s Foreign Ministry cited that “65 people have been killed and more than 200 injured in more than 1,000 recorded breaches of the agreement,” according to FT. This despite Erdogan previously agreeing to keep militants away from a 15km to 20km deep buffer zone established between HTS and pro-Damascus forces.

This news story showed up on the Zero Hedge website at 3:15 p.m. EST on Wednesday afternoon — and is another offering from Brad Robertson. Another link to it is here.


Gold mergers signify lack of discoveries, junior acquisitions likely, Hathaway says

Tocqueville Gold Fund manager John Hathaway, interviewed by Palisade Radio, says the recent big mergers in the gold-mining industry signify a lack of mine discoveries. He expects acquisitions to continue among smaller gold-mining companies, whose valuations he considers unusually low.  John also has things to say about silver as well.  This audio interview is 13 minutes long — and I found it in a GATA dispatch.


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.

This first photo is entitled: “The Extraction” by Russian photographer Konnstantin Shatenev.  The captions reads:  “Every winter, hundreds of Steller’s sea eagles migrate from Russia, to the relatively ice-free northeastern coast of Hokkaido, Japan. They hunt for fish among the ices floes and also scavenge, following the fishing boats to feed on any discards. Konstantin took his image from a boat as the eagles retrieved a dead fish thrown on to the ice.”  Click to enlarge.

This second shot is entitled:  “Roller Rider” by Sri Lankan photographer Lakshitha Karunarathna.  The caption reads “A lilac-breasted roller bird hitches a ride on a zebra.”  Click to enlarge.


The WRAP

Yet another day where there was no price/volume activity worth of the name.  Roll-over/switch volume remains heavier than normal for this time of month, as there still six trading days left before all February futures contract holders [that aren’t standing for delivery] in gold have to roll or sell their March contracts.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and there’s not a lot to see in yesterday’s price action in any of them.  Click to enlarge.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price was allowed to rise less than two dollars in early morning trading in the Far East on their Thursday.  Then at 10 a.m. China Standard Time, the price was rolled over — and it’s been chopping quietly lower since — and is currently down $3.10 an ounce.  It was the same price path for silver — and it’s down 8 cents at the moment.  Platinum has been chopping unsteadily sideways in Far East trading — and it’s down a dollar.  Palladium was up five bucks shortly after trading began in New York at 6:00 p.m. EST yesterday evening.  That lasted until shortly after 10:30 a.m. CST — and it was soon sold back to unchanged.  It traded flat until a few minutes before the Zurich open — and it’s now up 2 bucks.

Net HFT gold volume is very quiet once again…coming up on 26,000 contracts — and there’s a bit over 5,200 contracts worth of roll-over/switch volume on top of that.  Net HFT silver volume is 7,800 contracts — and there’s only 439 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened down about five basis points the moment that trading began at 7:45 p.m. EST in New York on Wednesday evening, which was 8:45 a.m. in Shanghai on their Thursday morning.  Its current low tick was set shortly after that — and it’s been heading quietly but unevenly higher since — and is currently up 9 basis points as 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.

There’s still not much to talk about at the moment. As Ted has been pointing out, gold and silver are about market neutral from his estimate of what the COMEX futures market looks like in both precious metals — and prices could go either way. Up, would be nice…but there’s not a thing stopping the commercial traders from engineered prices lower — and ringing the cash register on the current crop of Managed Money long contract holders.

And as I post today’s column on the website at 4:03 a.m. EST…I see that the gold price didn’t do much in the first hour of London trading, but right at the very end, it got sold lower — and is currently down $4.30 the ounce. The same can be said of silver — and it’s down 10 cents. Platinum is now down 2 dollars. Palladium was up 6 bucks at one point, but has been hammered back to only up 1 in the last few minutes…as the first hour of Zurich trading draws to a close.

Gross gold volume is a bit over 62,000 contracts now — and minus now-considerable roll-over/switch volume out of February and into future months, net HFT gold volume is a bit under 35,500 contracts. Net HFT silver volume is just over 9,700 contracts — and there’s only 477 contracts worth of roll-over/switch volume on top of that.

The dollar index hit its current 96.37 high tick at 8:15 a.m. in London — and is off that by quite a bit now — and is up only 10 basis points.

That’s it for another day — and I’ll see you here tomorrow.

Ed