01 February 2019 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
It was a quiet day in gold on yesterday, but it was obvious that the powers-that-be were ready and waiting during the COMEX trading session in New York, as the quiet rallies in all four precious metals were capped and sold lower during that time period.
The gold price didn’t do much of anything until 3 p.m. China Standard Time on their Thursday afternoon — and at that point it began to edge quietly higher. That lasted until about twenty minutes after the COMEX open in New York — and it was sold quietly lower and back to unchanged by 2 p.m. in the thinly-traded after-hours market. From there, it crawled a few dollars higher until trading ended at 5:00 p.m. EST.
The low and high ticks aren’t worth looking up.
Gold was closed yesterday afternoon in New York at $1,320.70 spot, up $1.30 on the day. Net volume was around 213,500 contracts — and there was a bit under 13,500 contracts worth of roll-over/switch volume in this precious metal.
It was almost the same for silver, expect its quiet rally was capped very shortly after the afternoon gold fix in London — and once London closed an hour later…down it went. The New York low…a penny below $16 spot…came at the 1:30 p.m. EST COMEX close — and it ticked a few pennies higher into the close from there.
Silver traded in a one percent price range on Thursday, so I shan’t both with the low and highs in this precious metal, either.
Silver was closed in New York on Thursday at $16.025 spot, down 1.5 cents on the day. Net volume was up there at just under 74,000 contracts — and there was 7,500 contracts worth of roll-over/switch volume on top of that.
Platinum’s price path was similar in most ways to what happened in gold, with a few minor variations. Its rally got sold lower at 9 a.m. in New York, but it continued to power a bit higher after that — and it wasn’t until Zurich was done for the day that ‘da boyz’ really made their presence felt…with the New York low coming a minute or so after 2 p.m. in after-hours trading. It popped four bucks higher into the close from there — and finished the day at $820 spot, up 5 dollars from Wednesday.
Palladium didn’t do much of anything until shortly after 1 p.m. CST on their Thursday afternoon — and then it began to rally quietly. That rally got really serious about 1:30 p.m. CET in Zurich — and ‘da boyz’ showed up at the COMEX open about thirty minutes later to set things right and, like in platinum, they waited until Zurich was closed before they ran the sell stops. The $1,319 low tick was set a minute or so before the COMEX close — and it edged about five dollars higher during the first hour of after-hours trading — and then didn’t do a thing after that. Palladium was closed at $1,325 spot, down 15 bucks on the day — and around 41 dollars off its high tick.
The dollar index closed very late on Wednesday afternoon in New York at 95.34 — and opened a few basis points higher once trading began at 7:45 p.m. EST on Wednesday evening, which was 8:45 a.m. China Standard Time on their Thursday morning. It chopped unsteadily lower from there — and the 95.16 low tick was set around 3:30 p.m. CST on their Thursday afternoon. It began to head quietly and very unsteadily higher from that juncture, but that ‘rally’ developed more legs starting five minutes before the London close. Its 95.62 high tick came at 12:20 p.m. in New York — and it began to edge quietly lower starting a few minutes after 2 p.m. EST. The dollar index finished the Thursday session at 95.58…up 24 basis points from Wednesday’s close.
Here’s the DXY chart from Bloomberg once again. Click to enlarge.
And here’s the 6-month U.S. dollar index chart courtesy of stockcharts.com once again — and the delta between its close…95.30…and the close on the DXY chart above, was 28 basis points yesterday. Click to enlarge.
The gold shares gapped up a bit at the open — and then chopped unsteadily higher for the rest of the day. The HUI closed on its high tick…up 1.95 percent.
The silver equities gapped up a bit at the open as well — and most of the gains that mattered came minutes before 11 a.m. when began to get sold lower. From that juncture, they edged quietly lower in a very broad trading range — and Nick Lairds’ Intraday Silver Sentiment/Silver 7 Index closed up 2.11 percent. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart. Click to enlarge as well.
Since yesterday was the last day of January, here’s how everything precious metal-related fared month and year-to-date. We’re off to a good start…touch wood. Click to enlarge.
The CME Daily Delivery Report showed that a very chunky 5,296 gold contracts, plus 53 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.
In gold, of the eight short/issuers in total, the largest by far was Goldman Sachs with 4,005 contracts out of its in-house/proprietary trading account. In very distant second place came HSBC USA with 1,147 contracts…830 from its own account, plus another 317 from its client account. The other short/issuers didn’t matter. There were twelve long/stoppers in total, with by the far the largest being JPMorgan with 3,018 contracts in total…1,529 for its own account, plus another 1,489 for its client account. In second spot came Citigroup, stopping 1,449 contracts for its in-house/proprietary trading account.
That’s the first time I can remember Citigroup stopping this many gold contracts.
In silver, the two short/issuers were ADM and Advantage, with 30 and 23 contracts out of their respective client accounts. There were five long/stoppers in total, with the largest being JPMorgan with 27 contracts for its client account. In second and third places came Advantage and HSBC USA… with the former stopping 11 for its client account — and the latter picking up 10 contracts for its own account.
The link to yesterday’s Issuers and Stoppers Report is here — and it’s worth a look if you have the interest.
The CME Preliminary Report for the Thursday trading session showed that gold open interest in February fell by 1,433 contracts, leaving 9,082 still open, minus the 5,296 contracts mentioned a few paragraphs ago. Wednesday’s Daily Delivery Report showed that 939 gold contracts were actually posted for delivery today, so that means that 1,433-939=494 gold contracts disappeared from the February delivery month. Silver o.i. in February rose by another 16 contracts, leaving 418 left, minus the 53 contracts mentioned a few paragraphs ago. Wednesday’s Daily Delivery Report showed that 286 silver contracts were actually posted for delivery today, so that means that an eye-opening 286+16=302 more silver contracts were added to February. That’s amazing, but I’ve seen big increases in open interest disappear as fast as they were put on, so I’ll wait and see what develops in the days ahead.
For the second day in a row there were no reported changes in GLD. But for the third day in a row there was a deposit in SLV, as an authorized participant added 1,125,864 troy ounces.
It has been many, many moons since I’ve seen three consecutive days where deposits were made into SLV.
There was a 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 500 one-ounce platinum eagles. But no silver eagles.
For the month of January, the mint sold 65,500 troy ounces of gold eagles — 23,500 one-ounce 24K gold buffaloes — 4,017,500 silver eagles — and 27,100 platinum eagles.
There was a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday. There was 1,794 troy ounces received — and 1,698 troy ounces were shipped out. I’m not going to break down this piddling amounts, but if you wish to see who — and how much…the link is here.
It was far busier in silver, as 1,823,191 troy ounces was reported received — and 1,049,892 troy ounces was shipped out. In the ‘in’ category, there was one truckload delivered into each of Brink’s, Inc., CNT — and Canada’s Scotiabank. The total of all three truckloads was 1,753,795 troy ounces. Smaller amounts…65,437 troy ounces…were dropped off at HSBC USA — and 3,956 troy ounces at Delaware. In the ‘out’ category…493,532 troy ounces left Scotiabank…376,380 troy ounces departed HSBC USA — and 159,081 troy ounces was shipped out of CNT. The remaining 20,899 troy ounces departed the Delaware Depository. On top of that, there was a paper transfer of 220,886 troy ounces out of the Registered category — and back into Eligible. That occurred at CNT. The link to all this action is here.
And, for a change, there was no in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday — and it wasn’t even a holiday over there.
In this space in Thursday’s column, I posted the Swiss gold imports and export charts updated with December’s data. I said yesterday that I would post the charts showing the import/export data for Switzerland for the entire 2018 calendar year in today’s column — and here it is.
The chart below shows the total Swiss imports and exports of gold from all countries, now updated with the data from 2018. They imported 1,500.1 tonnes — and exported 1,473.4 tonnes. Click to enlarge.
The first chart below shows the import totals from each country they received gold from last year — and the second chart shows the amount exported to each country during that year. On the import side, the U.K. [and U.S.] stand out like sore thumbs — and on the export side there were no surprises…China, Hong Kong and India. Click to enlarge for both.
I’m just speculating here, but it would appear that the Bank of England and the Bank of New York had to export that amount of gold because the physical market demanded it, as I can think of no other reason why they would be selling the stuff. But you’re free to draw your own conclusions on this.
I don’t have all that much for you in the way of stories/news items again today.
“What scares me the most longer term is that we have limitations to monetary policy — which is our most valuable tool — at the same time we have greater political and social antagonism.” – Ray Dalio, Bridgewater Associates
Dalio made the remarks in a panel discussion at the World Economic Forum’s annual meeting in Davos on Tuesday where he reiterated that a limited monetary policy toolbox, rising populist pressures and other issues, including rising global trade tensions, are similar to the backdrop present in the latter part of the Great Depression in the late 1930s.
The comments come at a time when a brief market correction has turned monetary and fiscal policy concerns on a dime. As noted by Michael Lebowitz yesterday afternoon at RIA PRO
“In our opinion, the Fed’s new warm and cuddly tone is all about supporting the stock market. The market fell nearly 20% from record highs in the fourth quarter and fear set in. There is no doubt President Trump’s tweets along with strong advisement from the shareholders of the Fed, the large banks, certainly played an influential role in persuading Powell to pivot.”
Speaking on CNBC shortly after the Powell press conference, James Grant stated the current situation well.
“Jerome Powell is a prisoner of the institutions and the history that he has inherited. Among this inheritance is a $4 trillion balance sheet under which the Fed has $39 billion of capital representing 100-to-1 leverage. That’s a symptom of the overstretched state of our debts and the dollar as an institution.”
As Mike correctly notes, all it took for Jerome Powell to completely abandon any facsimile of “independence” was a rough December, pressure from Wall Street’s member banks, and a disgruntled White House to completely flip their thinking.
In other words, the Federal Reserve is now the “market’s bitch.”
This commentary by Lance Roberts was picked up by the Zero Hedge website at 8:45 a.m. on Thursday morning EST — and I thank Belgian reader Eddy Verbinnen for pointing it out. Another link to it is here.
Fed’s QE Unwind to Continue on Autopilot, Rate Hikes on Hold for “Common-Sense Risk Management”: Powell — Wolf Richter
QE may restart only if things get really ugly – think Financial Crisis.
“Patient” has become the Fed’s favorite word in recent weeks as just about all Fed governors slipped it into their speeches. Today the word made its way into the FOMC statement for the first time. During the Q&A at the press conference, reporters tried to get Fed Chairman Jerome Powell to nail down what “patient” actually means, how long “patient” would last. But they walked out empty-handed.
The slowing economy in China and Europe are on the Fed’s worry list, as are Brexit and the effects of the U.S. government shutdown. Plus, “financial conditions” – yields, spreads, and other indicators that show that it is getting harder to borrow money as risk-taking abates – “tightened considerably late in 2018, and remain less supportive of growth than they were earlier in 2018,” Powell said at the press conference – which is precisely what the Fed had set out to accomplish when it started the rate hike cycle.
These are “cross-currents,” he said. And until they’re sorted out, rates are on hold. The talk about “some further gradual increases” in the December statement disappeared, and instead “patient” became [a] leitmotif.
This longish commentary from Wolf was posted on his Internet site on Wednesday sometime — and I thank Richard Saler for sending it our way. Another link to it is here.
Italy fell into recession at the end of 2018, capping a year of political turmoil, higher borrowing costs and fiscal tensions that took their toll on the economy.
Output shrank 0.2 percent in the three months through December, following a 0.1 percent decline in the previous quarter, statistics agency Istat said Thursday. That was more than expected, and will put further pressure on the coalition government, which already appears to be fraying.
The contraction was anticipated, particularly after Premier Giuseppe Conte said Wednesday that he expected the fourth-quarter GDP drop. Separate figures showed the euro-zone economy grew 0.2 percent at the end of 2018, matching the pace of the previous quarter, but slower than the first half.
This news item was posted on the Bloomberg website at 2:00 a.m. PST [Pacific Standard Time] on Thursday morning — and was updated about ninety minutes later. I thank Swedish reader Patrick Ekdahl for sharing it with us. Another link to it is here.
In a move sure to unleash fury from the Trump administration, the European Union has announced it has set up a transactions channel with Iran to bypass U.S. sanctions. The launch of INSTEX — or “Instrument in Support of Trade Exchanges” — by France, Germany, and the U.K. will allow non-dollar trade with Iran and is being described as facilitating humanitarian goods-related transactions only, including food, medicine and medical equipment.
Long anticipated, Thursday’s E.U. announcement marks the most concrete action Europe has taken to thwart Washington sanctions after the U.S. pullout of the 2015 nuclear deal last May, and after SWIFT caved to U.S. pressure. Europe is hoping the mechanism will act as a legal means to preventing Tehran from quitting the JCPOA, which promised sanctions relief should the country halt nuclear weapons research and development. INSTEX is expected to receive the formal endorsement of all 28 E.U. members, which aims to encourage skittish pharmaceutical and agricultural companies to the table with Tehran after many stopped doing business in Iran for fear of U.S. economic retribution.
The Iranians welcomed the new mechanism: “It is a first step taken by the European side… We hope it will cover all goods and items,” Iranian Deputy FM Abbas Araqchi told state TV, referencing E.U. promises to stick to its end of the nuclear deal.
INSTEX will reportedly be based in Paris and run by a supervisory board chaired by the U.K. and managed by a German banking expert, and has further been described in European media as “expandable,” which is likely to provoke a reaction from the United States, especially after Washington was able to pressure the Belgium-based SWIFT financial messaging service to cut off the access of Iranian banks.
German Foreign Minister Heiko Maas cited E.U. strategic and “security interests” during a press briefing in Brussels: “We have been looking for ways to obtain this agreement because we are firmly convinced that it serves our strategic security interests in Europe.” He further bluntly described, “We do not want Iran to get out of this agreement and back into uranium enrichment. This has to do with our security interests in Europe.”
It’s about time! This Zero Hedge news item appeared on their Internet site at 12:33 p.m. EST on Thursday afternoon — and I thank Brad Robertson for this one as well. Another link to it is here. The rt.com spin on this is headlined “E.U. countries move to evade U.S.’ Iran sanctions by setting up payment channel for ‘humanitarian’ trade” — and I thank Swedish reader Patrik Ekdahl for that one.
Central banks bought more bullion last year than anytime since 1971, when the U.S. ended the gold standard.
Governments added 651.5 tons of gold to their coffers in 2018, a 74 percent increase from the previous year, according to a report from the World Gold Council.
Russia, which is “de-dollarizing” its reserves, was the biggest buyer, followed by Turkey and Kazakhstan. Hungary also made a large purchase, citing gold’s lack of counterparty risk and role as a hedge against changes in the international finance system, the WGC said.
“Central banks chose to significantly increase their gold reserves, reinforcing the importance of gold as a reserve asset,” the WGC said.
This Bloomberg article showed up on their website at 9:00 p.m. PST on Wednesday evening — and was updated about five and a half hours later. I found it embedded in a GATA dispatch — and another link to it is here.
Venezuela will sell 15 tonnes of gold from central bank vaults to the United Arab Emirates in coming days in return for euros in cash, a senior official with knowledge of the plan said, as the crisis-stricken country seeks to stay solvent.
The sale this year of gold reserves that back the bolivar currency began with a shipment on Jan. 26 of 3 tonnes, the official said, and follows the export last year of $900 million of mostly unrefined gold to Turkey.
In total, the plan is to sell 29 tonnes of gold held in Caracas to the United Arab Emirates by February in order to provide liquidity for imports of basic goods, the source said, requesting anonymity in order to speak freely.
The United States, which is backing an attempt by the opposition to oust Maduro and call new elections, warned bankers and traders on Wednesday not to deal in Venezuelan gold.
Republican U.S. Senator Marco Rubio sent a tweet to the United Arab Emirates embassy in Washington on Thursday warning that anybody transporting Venezuelan gold would be subject to U.S. sanctions.
This Reuters article, filed from Caracas, put in an appearance on their website at 11:26 a.m. on Thursday morning EST — and it’s another story that I found on the gata.org Internet site. Another link to it is here. The Bloomberg spin from this last night Pacific Standard Time is headlined “Is Venezuela’s 20-Ton Pile of Gold About to Head to Dubai?” — and that’s al from a GATA dispatch as well.
Middle East gold and bar-coin demand surged last year as Iranians hoarded bullion as a safe haven investment amidst the re-imposition of U.S. sanctions and the economic mayhem that ensued, according to a report from the World Gold Council.
The region’s demand more than doubled to 87.1 tonnes from a year earlier, thanks to the quadrupling of purchases in Iran to 61.8 tonnes from 19.2 tonnes a year earlier, the trade body said on Thursday.
“The [Iranian] central bank’s decision to increase the number of coins it released into the market helped satisfy Iranian investor demand and boosted global coin demand,” said the report. “After an exceptionally strong third quarter, Iranian demand eased a little in the final quarter. The rial strengthened following the central bank’s intervention in the foreign exchange market, and authorities moved to limit gold speculation by closing the coin futures market.”
Iranians rushed to buy gold in 2018 to protect their savings after the Iranian rial plummeted 70 per cent against the U.S. dollar amid high inflation and shortage of foreign currency in the run-up and after the U.S. withdrew from a nuclear deal with Tehran.
This gold-related news item was posted on the United Arab Emirates-based website thenational.ae on Thursday sometime — and it’s something that I found on the Sharps Pixley website. Another link to it is here.
China produced 401.119 mt (14.15 million oz) of gold in 2018, down 5.9% from 426.14 mt the previous year, the China Gold Association said Thursday in a statement.
This marks the second consecutive year of falling gold production, after a 6% drop in 2017 — the first annual decline since 2000.
Despite the decrease, China remains the world’s largest gold producing country, a position it has held for 12 consecutive years, CGA noted.
Mined gold accounted for 345.973 mt or 86.3% of China’s 2018 gold output, sliding 6.3% from 369.168 mt in 2017. Gold produced as a byproduct of base metals processing was also lower, down 3.2% to 55.146 mt.
This gold-related news item, filed from Tokyo, appeared on the spglobal.com Internet site on Thursday morning — and it’s the second article in a row that I filched from the Sharps Pixley website. Another link to it is here.
Sales of Mint’s gold coins and gold bars at 29,186 ounces declined 54.6% from November — when they reached their highest point since January 2017, but they advanced 8.1% from December 2017.
Annual 2018 gold sales at 402,049 ounces increased 10% from the 365,410 ounces sold in 2017.
November was the Perth Mint’s biggest month in 2018 for gold bullion with 64,308 ounces sold. The monthly tally was the fourth largest since CoinNews started tracking the Mint’s data in February 2013.
The Mint sold 692,971 ounces in silver coins and silver bars last month — the weakest monthly total since August, posting declines of 20.9% from November and 20.8% from December 2017.
2018 silver sales at 9,243,058 ounces slowed 4.1% from the 9,636,408 ounces moved in 2017. The annual level was the lowest for the Mint since 2014 when sales registered at 7,567,467 ounces.
This story showed up on the coinnews.net Internet site on Wednesday sometime — and it’s the third article in a row that I’ve borrowed from the folks over at Sharps Pixley. Another link to it is here.
The PHOTOS and the FUNNIES
Here are the last two photos from The Guardian — and courtesy of Patricia Caulfield. This series is headlined “The best of 2018 wildlife photography awards“.
This first shot is entitled: “Australian Sea Lion Family Portrait” by Australian photographer Matty Smith. The caption reads “The endangered Australian sea lion is one of the most playful of all the pinnipeds. I waited until all the other snorkellers had exited the water and the high-energy games calmed down. The sea lions settled and became comfortable with my presence, enabling me to shoot this intimate family portrait.” Click to enlarge.
I’m not sure what should be read into Thursday’s price action, except it was obvious that the commercial traders were out and about during the COMEX trading session yesterday. But whether JPMorgan was one of them or not, is impossible to tell.
Looking at the 6-month chart for gold, I see that it’s back in overbought territory according to the RSI trace — and silver is very close to that as well. I’m not sure if that means anything at the moment, but we’ll find out soon enough I’m sure.
I’ll also point out that Wednesday’s post-COMEX close high ticks in gold, silver and platinum are show on Thursday’s dojis on the charts below. 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 traded flat for the first two hours once it began at 6:00 p.m. EST in New York on Thursday evening. Then at 9 a.m. China Standard Time it began to head quietly but unsteadily lower — and is currently down $2.80 the ounce. It was roughly the same price pattern in silver — and it’s down 11 cents at the moment. Platinum was sold lower in early morning trading in the Far East, but has struggled higher since — and is now back at unchanged. Palladium has been wandering quietly and unsteadily higher in Far East trading — and is up 5 bucks as Zurich opens.
Net HFT gold volume is pretty quiet at a bit over 32,500 contracts — and there’s only 897 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is already up to 12,100 contracts — and there’s only 112 contracts worth of roll-over/switch volume in that precious metal.
The dollar index hasn’t been doing much of anything in Far East trading on their Friday — and as of 7:45 a.m. GMT in London, it’s up 3 basis points.
As I mentioned in yesterday’s column, we do get a COT Report today, but it’s based on 5-week old data, so I won’t have much to say about it unless Ted finds out something JPMorgan-related.
And as I post today’s missive on the website at 4:02 a.m. EST, I see that gold hasn’t done much in the first hour of London trading — and is down $2.80 an ounce — and silver is down 13 cents. Platinum is down a dollar now — and palladium is still up 5 dollars.
Gross gold volume is a bit over 41,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is just under 40,000 contracts. Net HFT silver volume is now up to 14,100 contracts — and there’s 619 contracts worth of roll-over/switch volume on top of that.
The dollar index still isn’t doing much — and is sitting at unchanged as of 8:50 a.m. GMT/9:50 a.m. CET.
That’s it for yet another day. Have a good weekend — and I’ll see you here tomorrow.