Don’t Miss What the World is Missing

30 January 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to chop quietly sideways once trading began at 6:00 p.m. EST in New York on Monday evening.  That lasted until a few minutes before 2 p.m. China Standard Time on their Tuesday afternoon — and from that point, began to head higher.  That rate of ascent cooled somewhat, starting at 9:00 a.m. in London.  But despite that fact, the gold price continued to edge quietly but unsteadily higher right into the 5:00 p.m. close of trading in New York.

Rally, or no rally, the low and high ticks aren’t worth looking up.

Gold finished the Tuesday session at $1,311.30 spot, up $8.50 on the day — and almost on its high tick of the day as well.  Net volume in the February contract was virtually nothing at all…it was all roll-over/switch volume out of February…214,500 contracts worth…as the last of the large traders that weren’t standing for delivery, had to either roll or sell their February futures contracts by the close of COMEX trading that day.

The silver price followed the gold price pattern right until shortly before 9 a.m. in London on their Tuesday morning.  From there it didn’t do much — and the tiny but sharp rally going into the COMEX open, was summarily dealt with.  It was sold down a bit going into the afternoon gold fix in London — and really didn’t do a whole lot after that.

The low and high ticks in this precious metal are barely worth looking up, but here they are anyway…$15.725 and $15.925 in the March contract.

Silver was closed on Tuesday at $15.805 spot, up 9 cents on the day.  Net volume was somewhat elevated at 55,000 contracts — and there was a bit over 5,300 contracts worth of roll-over/switch volume on top of that.

The platinum price stair-stepped quietly higher until a few minutes before 10 a.m. in Zurich trading on their Tuesday morning — and from that juncture it didn’t do much until the COMEX open, which turned out to be its high of the day…which isn’t saying much.  It was sold down to its New York low at, or just before, the afternoon gold fix in London.  It jumped up a few dollars from there, before getting sold down into the 1:30 p.m. EST COMEX close — and it didn’t do anything after that.  Platinum was closed at $812 spot, up 2 bucks on the day.

Palladium was sold quietly lower until about noon in Shanghai on their Tuesday — and then wandered unevenly higher until the COMEX open.  Then, like the other three precious metals, its tiny rally at that juncture ran into ‘da boyz’ in New York.  Its low was set about fifteen minutes after the COMEX open — and then it began to head higher, until it ran into ‘something’ a few minutes before noon EST.  It was sold lower until a few minutes after 1 p.m. in COMEX trading — and then edged a few dollars higher in the thinly-traded after-hours market.  Palladium finished the Tuesday session at $1,327 spot, up 12 dollars from Monday’s close.

The dollar index closed very late on Monday afternoon in New York at 95.75 — and began to inch higher once trading began at 7:45 a.m. EST in New York on Monday evening.  That lasted until 9:25 a.m. China Standard Time on their Tuesday morning — and it began to crawl quietly and unsteadily lower from there.  The 95.62 low tick was set at 8:40 a.m. GMT in London — and it began to head higher from that point until around 11:30 a.m. GMT.  The rate of ascent from there slowed somewhat — and it crawled quietly and unsteadily higher from that juncture until trading ended at 5:20 p.m. EST in New York.

The dollar index finished the Tuesday session at 95.82…up 7 basis points from Monday.

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

Here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…95.52…and the close on the DXY chart, was 30 basis points on Tuesday.  Click to enlarge.

The gold stocks had a quick up/down move between the 9:30 a.m. New York open — and the 10:00 a.m. EST afternoon gold fix in London — and then they rallied until about 10:40 a.m. EST.  From that juncture they edged very unevenly higher for the remainder of the Tuesday session — and the HUI closed up a very respectable 2.70 percent, closing almost on its high of the day.

The price pattern for the silver equities was almost the same as the gold shares, except the rally ended around 2:15 p.m. EST in New York trading — and the silver stocks didn’t do much after that.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 2.61 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 zero gold and 8 silver contracts were posted for delivery on Thursday.  The lone short/issuer in silver was ED&F Man Capital out of its client account.  Advantage picked up 2 contracts for its client account — and the CME Group picked up the other 6…which it immediately reissued as 6×5=30 one-thousand ounce COMEX mini silver contracts.  Advantage stopped all 30 of them for its client account.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in January declined by 25 contracts, leaving zero left.  Monday’s Daily Delivery Report showed that those remaining 25 contracts in the January delivery month are out for delivery today.  Silver o.i. in January dropped by 349 contracts, leaving just 8 left, minus the 8 mentioned in the previous paragraph.  Monday’s Daily Delivery Report showed that 351 silver contracts were actually posted for delivery today, so that means that 351-349=2 more silver contracts were added to the January delivery month.

With deliveries done for January, the CME Group reported that 585 gold contracts were issued and stopped during that month — and that number in silver was 1,178.


There were deposits in both GLD and SLV yesterday.  In GLD, an authorized participant added a very hefty 264,613 troy ounces — and in SLV, an a.p. added 1,407,360 troy ounces.

There was another small sales report from the U.S. Mint yesterday.  They sold 1,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and 26,500 silver eagles.

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.

There was far more activity in silver, of course, as one truckload…596,625 troy ounces…was received — and all of that ended up at Canada’s Scotiabank.  There was 216,115 troy ounces shipped out.  Of that amount, there was 167,063 troy ounces shipped out of HSBC USA — and smaller amounts departed CNT — and the International Depository Services of Delaware.  In the paper silver category, there was 1,685,887 troy ounces moved from the Eligible category — and into Registered over at CNT.  I would expect that was in preparation for delivery in the February contract.  The link to all this is here.

It was a fairly active day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving 207 of them, but shipped out 4,257.  Except for 7 kilobars received at Loomis International, all the remaining in/out activity was at Brink’s, Inc. — and the link to all that, in troy ounces, is here.


The Belluno Treasure is an important Lombardic hoard found at Belluno, Italy in the nineteenth century that has been part of the British Museum’s collection since 1897.

The hoard was apparently found in a grave near the town of Belluno in the province of Veneto, northern Italy. Dating to the late 6th or early 7th centuries A.D., the rich grave group probably belonged to a female member of the Lombardic court. It was later purchased by the curator and philanthropist Augustus Franks, who bequeathed it to the British Museum in 1897.

It was largely composed of gold and gem-encrusted jewellery. The style of decoration from the hoard reflect contemporary fashions in the Mediterranean. It includes two gold cross pendants (one with punched ornamentation), a gold and garnet cloisonné disc brooch, a finger-ring, a gold pin with a terminus in the form of a hand (which may have once held a pearl), and gold beads.

It was another very slow news day — and I have very little for you.


CRITICAL READS

Investors Will Fight This Trend… And Lose — Bill Bonner

Stocks got off to a rough start [on Monday].

Heavy equipment maker Caterpillar reported punk numbers; investors took it as a sign that the world economy is slowing.

That’s our guess too.

After a 38-year boom, the fundamentals have reversed. Day is night; night is day. From lower and lower interest rates, we see rising ones. From sunny, clear skies, we see dark storms approaching.

Already, the benchmark 10-year U.S. Treasury Note is yielding twice what it did at the bottom in July 2016. And all the credit that was so free and easy in the boom years, is suddenly getting tight.

China’s economy is slowing down too. The big story of the last 40 years was China’s race into the modern world. In the space of a single generation, 500 million peasants sprinted into the world economy – with real jobs and money incomes.

This commentary from Bill was posted on the bonnerandpartners.com Internet site on Tuesday morning sometime — and another link to it is here.


Largest Junk Bond Since 2017 Set to Price as Investors Flood Back In (With One Exception)

After a 40 day hiatus in December and part of January when not a single high yield bond was sold due to “market conditions”, the longest such stretch since 2008…

… the junk bond market is on fire again, with CommScope Holding in the market with the largest U.S. high-yield bond sale in more than a year, the latest sign that the recent rebound in prices is enticing more issuers.

The wireless network provider, through its CommScope Finance LLC unit, is set to borrow $3 billion to help fund its acquisition of Arris International, according to a filing Monday, Bloomberg reports. The proceeds of three series of notes, which are expected to price next week, follow a $3.869 billion term loan offering last week to help back the $7.4 billion deal.

According to Bloomberg, at $3 billion, this would be the largest junk bond sale since Avantor’s $3.5 billion offering in Sept. 2017. It’s the latest example of a thawing junk-debt market, where collapsing spreads and plunging yields have led to a flood of issuance in both junk and IG, after weeks of hiatus.

High-yield spreads have narrowed 100 basis points since the start of the year as issuance-starved investors came out in force for new supply and risk sentiment soared, thanks to the recent sharp rebound in stocks ever since Steven Mnuchin summoned the plunge protection team.

This Zero Hedge news item put in an appearance on their Internet site at 9:30 a.m. EST on Tuesday morning — and I thank Richard Saler for pointing it out.  Another link to it is here.


If You Don’t Think QE4 & QE5 Are Coming, You’re Smoking Something — Mike Maloney

In this week’s video, Mike reveals some startling information on the increasing number of “Zombie Companies” in the the S&P 1500. Find out what kind of threat these walking dead companies pose to the economy, and prepare accordingly.

[Note: It would be also worth your while to scroll down and read the comment by John Calkins that appears in the “Discussions” sections right below the video clip. – Ed]

This very worthwhile 5:39 minute video clip from Mike showed up on the goldsilver.com Internet site on Tuesday morning sometime — and the first reader through the door with it was Jim Gullo.


If the Army Stands With Maduro, What Is Plan B? — Patrick Buchanan

Pay the soldiers. The rest do not matter.”

This was the deathbed counsel given to his sons by Roman Emperor Septimius Severus in A.D. 211.

Nicolas Maduro must today appreciate the emperor’s insight.

For the political survival of this former bus driver and union boss hangs now upon whether Venezuela’s armed forces choose to stand by him or to desert him and support National Assembly leader Juan Guaido.

Wednesday, Guaido declared Maduro’s election last May to a second six-year term to be a sham, and had himself inaugurated as acting president.

Thursday, the defense minister and army chief General Vladimir Padrino Lopez, with his top brass, dismissed the 35-year-old Guaido as a U.S. puppet, and pledged allegiance to Maduro.

This very interesting commentary by Pat appeared on his website on Tuesday morning sometime — and I thank Phil Manuel for sending it our way.  Another link to it is here.


Trump Admin Hands Venezuela’s U.S.-Housed Bank Accounts Over to Guaido

The Trump Administration has handed control of Venezuela’s bank accounts in the United States to Venezuelan opposition leader Juan Guaido, whom Washington and most Latin American countries have recognized as interim president.

Backing Guaido are the United States, Brazil, Canada, Colombia, Argentina, Peru, Ecuador and Paraguay, while countries including Russia and China continue to recognize Maduro as Venezuela’s president.

The order to to turn over assets held in the Federal Reserve Bank of New York and federally insured banks was signed off on last week by Secretary of State Mike Pompeo, according to AFP.

This certification will help Venezuela’s legitimate government safeguard those assets for the benefit of the Venezuelan people,” said State Department spokesman Robert Palladino.

In a Monday interview with CNN in Spanish, Guaido said that Venezuela’s opposition-controlled congress had authorized a measure asking foreign nations to take measures that would ensure Maduro can’t “loot” the country’s roughly $8 billion in foreign reserves. To that end, the Bank of England last week denied Maduro’s request to pull $1.2 billion of gold, which Guaido has asked to be put under his control.

In a statement to British MPs, Sir Alan Duncan said the decision was a matter for the Bank and its governor, Mark Carney, and not the government. But he added:

It is they who have to make a decision on this, but no doubt when they do so they will take into account there are now a large number of countries across the world questioning the legitimacy of Nicolás Maduro and recognising that of Juan Guaidó.”

Wow!  If the U.S. is prepared to do this to Venezuela, one has to wonder what country will be next.  This Zero Hedge story was posted on their website at 7:15 p.m. EST on Tuesday evening — and I thank Brad Robertson for sharing it with us.  Another link to it is here.


Mystery of the Venezuelan gold: Bank of England is independent of U.K. gov’t – but not of foreign gov’t — George Galloway

Pirates don’t have to look like Johnny Depp in Pirates of the Caribbean. They can fly the Union Jack rather than the skull and crossbones. They can be called the Bank of England rather than the Jolly Roger.

The ‘Old Lady of Threadneedle Street’ is a port in a stormy world for all kinds of countries in which to moor their national wealth. And it’s not even necessarily voluntary.

After the fall of the communist regime in Albania, I had a brief tenure as joint chairman of the Britain-Albania Society with the Tory MP Steve Norris. He and I had to move mountains to try and persuade the British government (which then entirely controlled the Bank of England) to give the Albanians back their gold, which had been seized by the British during Second World War.

This week’s brigandry – unnoticed by any commentator I read – took place in an era when the Bank of England is officially independent of government control. And yet it was triggered by a phone call from a foreign government official.

The bank’s decision to seize – a polite word for steal – more than a billion dollars’ worth of Venezuelan gold was reported to have been ordered by the governor after a call from U.S. National Security Advisor John Bolton and Secretary of State Mike Pompeo – not even the president himself.

George is never lost for words — and never off the mark.  This very worthwhile commentary put in an appearance on the rt.com Internet site at 3:58 p.m. Moscow time on their Tuesday afternoon, which was 7:38 a.m. in Washington — EST plus 8 hours.  I thank Moroccan reader George Whyte for bringing it to my attention — and now to yours.  Another link to it is here.


Russia’s Jan-Nov 2018 gold output rises to 290.3 tonnes — finance minister

Russia produced 290.3 tonnes of gold in the first eleven months of 2018, up from 284.95 tonnes in the same period in 2017, the finance ministry said on Monday.

Production for the period included 243.89 tonnes of mined gold compared with 235.49 tonnes a year ago, the ministry said in a monthly report.

Silver production totalled 1,035.63 tonnes in the January-November period, up from 956.17 tonnes in the same period of 2017, the ministry said.

This tiny 3-paragraph Reuters story, filed from Moscow on Monday morning, put in an appearance on the kitco.com Internet site the same day — and I found it on the Sharps Pixley website.  Another link to the hard copy is here.


Don’t Miss What the World Is Missing — Jim Cook

Let’s consider some of the many reasons that silver should go up. The fact that JPMorgan has used unsavory tactics to hold the price of this important mineral down has created some powerfully bullish consequences. The historically low price has discouraged mining for silver. Many discoveries have been made that have never been mined because of the low level of profitability.

Furthermore, prospecting, drilling and exploring for silver deposits has diminished greatly. A lot less silver has been mined and consequently much less exists above ground. In fact, so little currently exists that a surge of investment buying on top of the existing industrial demand would likely lead to a shortage.

A silver shortage would most certainly lead to a price explosion. That, in turn, would lead to a buying panic among industrial users who must have silver or go out of business. Thousands of companies rely on silver. The low price also nullifies any significant search for alternatives to silver. As the price rises, industrial users won’t have anything cheaper to switch into.

Silver deposits are epithermal, which means they are generally deposited near the earth’s surface. The big deposits like Leadville, Cerro Rico de Potosi and the Comstock Lode were on the surface and easily discovered. Most of those big deposits are mined out. Mining companies now have to do more costly deep drilling. Consequently, discoveries tend to be smaller. Almost two-thirds of the silver mined now comes as a byproduct to copper, lead, zinc and gold mining. That means the production of silver is price insensitive. In other words, no matter how high the price of silver, mining companies won’t increase their production of these other metals to get more silver.

This brief commentary from Investment Rarities president Jim Cook is definitely worth reading.  It showed up on the silverseek.com Internet site at 10:29 a.m. MST [Mountain Standard Time] on Tuesday morning — and another link to it is here.


The PHOTOS and the FUNNIES

Here are two more photos from this series from The Guardian — and courtesy of Patricia Caulfield.  This series is headlined “The best of 2018 wildlife photography awards“.

This first shot is entitled: ‘Rainbow City’ — and the photographer was Cristobal Serrano.  The captions reads “I flew my drone high above the huge flocks of lesser flamingos at the muddy banks of Lake Bogoria [Kenya], where they find their favourite food, cyanobacteria of the spirulina genus, in the alkaline water of the lake. Because of the dry season, minerals and salts from the volcanic subsoil are highly concentrated, creating an explosion of rich colours that is visible from the air“.  Click to enlarge.

This second picture is entitled: ‘American Flamingo’ by Peruvian photographer Pedro Jarque Krebs — and there was no caption with this photo.  Click to enlarge.


The WRAP

It was an interesting trading session on Tuesday — and although I’m not sure what to make of it, I’m encouraged by it, as it’s unusual to see this sort of price activity going into a big delivery month for gold.  Combine that with what happened on Friday…February could prove to be an interesting month for all four precious metals from a pricing perspective.

Here are the 6-month charts for the Big 6 commodities — and although there’s not a lot to see, I’m more than happy that the four precious metals didn’t get slammed lower going into options and futures expiry for February deliveries in gold.  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 crawl a bit higher starting shortly after 9 a.m. China Standard Time on their Wednesday morning. That lasted until just before 3 p.m. over there — and it’s currently up $2.90 an ounce — and off its current high tick by a bit. It was mostly the same for silver, but it popped up to the $15.95 spot mark shortly before 1 p.m. CST — and any all attempts to break higher than that have been carefully turned aside. Like gold, its price was turned a bit lower a minute or so before 3 p.m. over there — and it’s up 10 cents the ounce at the moment. It was the same price path for platinum as it was for silver — and it’s only up 3 dollars currently. Palladium didn’t do much in Far East trading — and it’s back at unchanged as the Zurich open looms.

Net HFT gold volume is around 40,000 contracts — and most of that volume is now in the new front month for gold, which is April. Roll-over/switch volume is around 6,400 contracts. But these numbers during the last few days of any big delivery month are only estimates at best. Net HFT silver volume is more straightforward [and very chunky] at just under 15,000 contracts already — and there’s 987 contracts worth of roll-over/switch volume in that precious metal.

The dollar index has been chopping very quietly and unsteadily lower since trading opened in New York at 7:45 p.m. EST on Tuesday evening/8:45 a.m. CST in Shanghai on their Wednesday morning. The current 95.69 low tick was set at 2:50 p.m. CST on their Wednesday afternoon — and it shot into positive territory by a whisker very shortly after that, but is currently down 3 basis points as of 7:45 a.m. GMT in London.


The FOMC meeting started yesterday — and the smoke goes up the chimney at the Eccles Building at 2:00 p.m. EST today…thirty minutes after the COMEX close.  Stories abound as to what Powell might or might not say in his remarks at that time, but anything said in these stories is all wild-ass speculation as far as I’m concerned.  But it’s a certainty that they won’t be raising interest rates.

However, I certainly do expect that the precious metals markets will ‘react’ to whatever announcement there is, with the only real unknown being…which way — and how much.

And it should also be noted that the remaining traders holding February COMEX futures contracts that aren’t standing for delivery that month, have to either roll or sell those positions by the close of COMEX trading today.  First Day Notice numbers for February delivery will be on the CME’s website tonight — and I’ll have them for you in tomorrow’s column.


The CFTC finally got around to informing the public on how they will post the data on the long-delayed COT Reports and Bank Participation Reports that have been M.I.A. since December 21, 2018.  Here’s the Reader’s Digest version…

COT: The last COT report was published on December 21, 2018. Reports going forward from that date will be published in chronological order beginning with the report previously scheduled for release on Friday, December 28, 2018 (based on data from Monday, December 24, 2018).  The CFTC expects to publish this report on Friday, February 1, 2019.  After this, the CFTC expects to publish one report on Tuesday and another on Friday of each week until the reports are current as per the normal schedule.

BPR: The January 2019 BPR was not published. The CFTC expects to publish this report on Friday, February 8, 2019. The CFTC expects that the report scheduled to be published on February 8 will now be published on February 22. Beginning with the March report, we expect these reports will be published as normal.

What this means in plain English is that we won’t really know the up-to-date state of the COMEX futures market until late February.  So this gives the powers-that-be licence to do whatever skullduggery they wish between now and then — and we won’t be able to see it.  Of course that may not come to pass at all — and we get big rallies instead.  But all that COMEX futures market price action between now and then, won’t be known for at least three weeks.  So we’re still flying mostly blind until that time.

Ted may see it differently, because I’m sure to him, delayed market data is better than no data at all.

If you wish to read the entire CFTC Release Schedule for Delayed Market Data Reports…the link is here.


And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price had ticked a bit higher as the first hour of London trading drew to a close, but was then smacked lower. At the moment, gold is up only $2.10 an ounce. Silver made it back to its high of the day…$15.94 spot, but also sold lower in the last few minutes — and is up 10 cents…where it was at the London open. Platinum is still up 3 bucks, but palladium is now down 4 dollars as the first hour of Zurich trading comes to an end.

Gross gold volume is a bit over 64,500 contracts — and net of the remaining roll-over/switch volume out of February, net HFT gold volume is 47,500 contracts. Net HFT silver volume is now up to around 16,700 contracts — and there’s just under 2,000 contracts worth of roll-over/switch volume on top of that.

The dollar index has been chopping erratically sideways during the first hour of London/Zurich trading — and is down 5 basis point as of 8:45 a.m. GMT/9:45 a.m. CET.

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

Ed