Another Microscopic Volume Day in Gold and Silver

07 February 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold a couple of dollars lower in Far East trading on their Wednesday morning — and it chopped quietly sideways from there.  Both attempts to rally above the unchanged mark were turned aside…one during the first hour of trading in London — and the second a few minutes before the equity markets opened in New York on Wednesday morning.  The quiet sideways chop ended about fifteen minutes before the 1:30 p.m. EST COMEX close — and it was sold sharply lower at that juncture, with the low tick of the day coming a few minutes before trading ended at 5:00 p.m. in New York.

Despite that sell-off, the high and low ticks aren’t worth looking up once again.

Gold was closed on Wednesday at $1,306.20 spot, down $8.60 on the day — and despite the engineered price decline, net volume was microscopic once again at just under 133,000 contracts.  There was a hair over 5,000 contracts worth of roll-over/switch volume on top of that.

The sell-off in silver began shortly before 9 a.m. China Standard Time on their Wednesday morning — and the London low came at the noon silver fix over there.  It rallied a bit once trading began on the COMEX at 8:20 a.m. EST in New York yesterday morning but, like gold, was sold lower as soon as the price came close to encroaching on the unchanged mark.  It was pretty much all down hill from there, with the low tick coming shortly after 2 p.m. in the very thinly-traded after-hours market.  From that point, it crawled higher into the 5:00 p.m. EST close by a few pennies.

The high and low ticks in this precious metal were recorded by the CME Group as $15.87 and $15.67 in the March contract.

Silver was closed in New York yesterday afternoon at $15.64 spot, down 18.5 cents from Tuesday.  Net volume was extremely quiet at a bit over 42,000 contracts — and there was just over 11,800 contracts worth of roll-over/switch volume in this precious metal.

The platinum price edged quietly sideways through all of Far East and most of Zurich trading on their respective Wednesdays — and was down a buck at the COMEX open in New York.  It ticked a few dollars higher from there but, like with silver and gold, the selling pressure appeared shortly after 9 a.m. EST — and it was sold down into the afternoon gold fix.  From that point it crawled quietly sideways, but was kicked downstairs by a few more dollars starting a few minutes after 2 p.m. in after-hours trading…which is also what happened to silver.  The price didn’t do a thing after that.  Platinum was closed on Wednesday in New York at $804 spot, down 13 dollars on the day.

Palladium ticked quietly lower in price starting a minute or so after 9 a.m. China Standard Time on their Wednesday morning — and the low tick of the day came around 11:15 a.m. in Zurich.  It then traded flat going into the COMEX open — and really began to sail at that juncture.  That rally was capped hard a few minutes after 9 a.m. in New York, just like the other three precious metals — and about twenty minutes later, quiet selling pressure appeared.  Its quiet straight-line decline ended shortly after 3:30 p.m. in the thinly-traded after-hours market — and it was kicked a few dollars lower from there, before trading flat into the 5:00 p.m. EST close.  Palladium finished the Wednesday session at $1,353 spot, down 8 bucks from Tuesday.

It was yet another day where palladium would have closed at heaven only knows what price if a willing seller of last resort hadn’t appeared minutes after 9 a.m. in New York yesterday morning.

The dollar index closed very late on Tuesday afternoon in New York at 96.08 — and began to chop very quietly, but very unsteadily higher until around 8:10 a.m. EST on Wednesday morning.  At that point, the rally became far more organized, plus it picked up speed by a bit.  All the gains that mattered were in by 2:15 p.m. EST — and the index traded quietly sideways for the rest of the day.  The DXY closed at 96.39…up 31 basis points from Tuesday.

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 — and the delta between its close…96.15…and the close on the DXY above, was 24 basis points on Wednesday.  Click to enlarge.

The gold stocks gapped down — and back below unchanged by a bit, as soon as trading began in New York at 9:30 a.m. EST yesterday morning.  They were soon back in the plus column by a small amount — and that state of affairs lasted until exactly 1:00 p.m. in New York trading.  They began to head lower from there — and kept right on going until trading ended at 4:00 p.m. EST.  The HUI closed a hair off its low tick…down 0.96 percent on the day.

The price path for the silver equities was virtually identical to their golden brethren, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.65 percent.  Click to enlarge if necessary.

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 28 gold and 11 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, of the four short/issuers in total, the two largest were ABN Amro and Advantage, with 20 and 6 contracts out of their respective client accounts.  There were three long/stoppers, with JPMorgan being the biggest, picking up 12 for its own account, plus 3 for clients.  Citigroup came in second with 8 contracts for its house account — and lastly came Advantage, stopping 5 contracts for its client account.

In silver, the sole short/issuer was Advantage from its client account — and the only long/stopper worth mentioning was Morgan Stanley with 8 contracts for its client account.

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 February declined by 258 contracts, leaving 920 contracts still open, minus the 28 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that only 54 gold contracts were actually posted for delivery today, so that means that 258-54=204 more gold contracts vanished from the February Delivery Month.  Silver o.i. in February actually rose by 3 contracts, showing 20 still around, minus the 11 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 9 silver contracts were actually posted for delivery today, so that means that 9+3=12 more silver contracts just got added to February.


For the fourth consecutive day…every business day in February so far…there was a withdrawal from GLD, as an authorized participant removed another 66,147 troy ounces.  There was also a withdrawal from SLV, as an a.p. took out 938,146 troy ounces.

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

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.  Canada’s Scotiabank received 25,446 troy ounces — and that’s all the ‘in’ activity there was.  Nothing was shipped out.  There were some paper transfers, as 80,390 troy ounces was moved the the Registered category — and back into Eligible.  There was 64,421 troy ounces transferred over at HSBC USA — and the remaining 15,969 troy ounces was transferred at JPMorgan.  The link to that activity is here.

There wasn’t much going on in silver, as nothing was reported received — and only 332,329 troy ounces was shipped out.  Four different depositories were involved in this ‘out’ activity — and by far the largest was the 210,066 troy ounces shipped out of HSBC USA.  If you wish to see the rest, the link to that is here.

There was no activity in or out over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.


The Morgantina treasure is a set of 16 pieces of Greek silverware with details in gold dating from the 3rd century B.C., which was illegally excavated from Morgantina, an Ancient Greek city in Sicily, near modern Aidone.

The treasure was discovered in a building of Morgantina, perhaps hidden there at the sack of the city at the hands of the Romans in 211 B.C. The creation of the objects is dated to around 240 B.C., when the city was subject to Hieron II of Syracuse.

According to some scholars, the treasure belonged to the hierophant, the high priest of Demeter and Persephone.

The hoard includes two large bowls, a cup with two handles, plates and several drinking utensils. It was probably excavated around 1978 (the date of a modern coin found buried at the most likely site), and was bought by the Metropolitan Museum of Art in New York in 1981 and 1982. After protracted pressure, in 2010 the treasure was transferred from the Metropolitan to Rome, before returning to SicilyClick to enlarge.

It was another very quiet news day on Wednesday — and I only have a tiny handful of stories.


CRITICAL READS

The “Retail Apocalypse” Isn’t Over: It is Only Just Getting Started

Last year’s holiday sales season was one of the strongest in years. But unfortunately for America’s struggling retailers, many missed out on the sales bonanza as Amazon and other e-commerce platforms accrued nearly all of the sales growth while foot traffic at U.S. malls was stagnant. Already, Kohl’s and Macy’s have helped crush the narrative of the strong consumer by slashing their earnings guidance, something that doesn’t bode well for Q4 GDP, thanks to what we warned would be an unsustainable inventory build up that has inflated growth numbers in recent quarters.

The retail space has already seen the first headline-grabbing retail bankruptcy of the year (see: Gymboree). And as Bloomberg warned in a story published this week, even after high-profile bankruptcies including Sears and Toys R’ Us, the “retail apocalypse” is far from over.

Though the Fed has capitulated to the whims of the market, retailers still make up about one-fifth of the universe of distresses borrowers. And on Friday, the head of the biggest mall owner in the U.S. warned that more bankruptcies are coming this year. Economists are increasingly worried about a recession this year or next.

Simon Property Group CEO David Simon told investors on Friday during a conference call that there are chains that his company is “nervous” about. Anybody who has traveled to a U.S. mall recently may have noticed this change: Where once there were shoppers, now they halls look disconcertingly empty.

This Zero Hedge new item showed up on their website at 10:05 p.m. EST on Wednesday night — and another link to it is here.


Class 8 Heavy Truck Orders Crash 68% in January

Among the latest dismal news about the strength of the U.S. economy, on Tuesday ACT Research released preliminary truck orders for January 2019 which showed that Class 8 truck orders collapsed an astounding 68% for January. The decline is being attributed to a 300,000+ vehicle backlog potentially prompting fleets to halt purchases in the near term.

Specifically, in January Class 8 net orders were 15,800 units, down 68% YoY and down 26% MoM. Class 5- 7 January net orders were 23,400 units, down 24% YoY but up 3% MoM.

Class 8 trucks are one of the more common heavy trucks on the road, used for transport, logistics and occasionally (some dump trucks) for industrial purposes. Typical 18-wheelers on the road are generally all Class 8 vehicles, and traditionally are seen as an accurate coincident indicator of trade and logistics trends in the economy.

Stephen Volkmann of Jefferies told Bloomberg that the collapse “should not be a surprise, but is likely to feed the bears“. He also guessed that upgrade demand could continue to “support high production through 2020“. We’ll believe that when we see it.

According to Neil Frohnapple at Buckingham, January is the third month in a row of year over year declines after Q3 of 2018 proved to be better than expectations. Frohnapple told Bloomberg he was “a little surprised” that net orders for January came in at just 16,000.

Back in December, BMO analyst Joel Tiss said that while “there is no doubt that freight and freight-rate growth have slowed, we do not think that it is time to panic just yet” after December’s sharp 43% plunge.

With January’s collapse now in the books, we ask “how about now?

This Zero Hedge news item was posted on their Internet site at 5:25 p.m. on Wednesday afternoon EST — and another link to it is here.


Record Demand For 5x Oversubscribed 30-Year Italian Bond Despite Recession

Heading into 2019 with the ECB’s sovereign debt QE ending, there was a question who would buy Italian debt at a time when the biggest buyer of Italian debt in the past two years, Mario Draghi, had stepped away. The answer, it appears, is everyone.

On Wednesday, Italy priced €8 billion euros ($9.1 billion) of 30-Year bonds in its second syndicated sovereign sale this year, as investor appetite is appears to only be growing following the record-breaking deal just three weeks ago.

Not only was the total order book the largest on record, with demand for the 30Y paper surpassing €41 billion, but coming in at over 5x oversubscribed, today’s offering was even stronger than January’s sale of €10 billion in 10Y notes which saw a total of €46.5 billion in demand. Confirming the demand frenzy, the September 2049 notes priced at 18 bps above benchmark rates, as much as four basis points tighter than the initial price target.

Today’s record oversubscribed offering came even as the European Commission was said to slash Italy’s 2019 growth forecast to a fraction above recession, or 0.2%, from 1.2%. This also means that the Italian budget deficit, the source of so much consternation heading into 2019, will indeed be far greater than what is generally accepted due to the lack of growth which will have to be made up with, you guessed it, even more debt.

One month after the best return for junk and IG bonds in years, coupled with record trading volumes, demand for fixed-income paper has been scorching. Just a few days earlier, Japan received the strongest response for a 10-year offering in 13 years, while even serial defaulter Ecuador managed to sell $1 billion in new debt without a glitch. Most remarkably perhaps, a recent €2.5BN Greek bond offering was four times oversubscribed.

Wow, who would have thought this possible?  The bond vigilantes of yesteryear are obviously an extinct species, or have very short memories.  This is another Zero Hedge news story — and it put in an appearance on their website at 1:35 p.m. EST yesterday afternoon.  Another link to it is here.  Here’s a Bloomberg piece on Italy’s debt from this past Sunday that’s headlined “Why Italy’s Debts Are Europe’s Big Problem” — and I thank Roy Stephens for that one.


Maduro Sold 40% of Venezuela’s Gold Last Year Amid Cash Crunch

President Nicolas Maduro blew through more than 40 percent of Venezuela’s gold reserves last year in a desperate bid to fund government programs and pay millions to bondholders.

The government sold a total of 73 tons of gold to two firms in the United Arab Emirates and another in Turkey, opposition lawmaker Carlos Paparoni told reporters in Caracas on Wednesday. That drained reserves to about 110 tons at the end of last year from 184 tons, according to a person with knowledge of the situation, who corroborated Paparoni’s data.

Maduro raided the central bank’s vaults of the 2.34 million ounces of gold (worth about $3.1 billion at current spot prices) as debt piled ever higher and financing options dried up after the U.S. imposed sanctions against his regime. Amid an international push to persuade the authoritarian ruler to cede power to a transitional government, the opposition is also seeking to thwart further gold sales to prevent a ransacking of the country during Maduro’s final days in power.

About 24 tonnes of the gold was sold to Istanbul’s Sardes Kiymetli Madenler SA, according to Paparoni. The company got regulatory approval to operate as a member of Borsa Istanbul’s Precious Metals Market on Dec. 26, 2017, just days after signing its first contract with Venezuela’s central bank, according to documents obtained by Bloomberg. A company official declined to comment.

Some 27.3 tonnes went to the UAE’s Noor Capital, which was identified by U.S. Senator Marco Rubio as orchestrating a gold transaction with Venezuelan authorities that collapsed last week following growing international condemnation. After the plans came to light, Noor said it would refrain from conducting business with Venezuela until the situation “stabilizes.”

I’m not sure how much of this is the truth — and how much is ‘fake news’.  Bloomberg is owned by the deep state, so that fact should be taken into account to a certain extent as you read this story.  It was posted on their Internet site at 10:42 a.m. Pacific Standard Time on Wednesday morning –and I found it on the gata.org Internet site yesterday.  Another link to it is here.


French magazine challenges Banque de France‘s gold lending plans

Politique magazine in Paris this week published a report by Edouard Freval about the Banque de France‘s new interest in lending and swapping gold through JPMorganChase & Co. even as credit and currency risks are rising and other central banks are acquiring the monetary metal to guard against those risks.

The report quotes former French central bankers criticizing the scheme. It also quotes GATA’s secretary/treasurer at some length.

Even when read in English through Google Translator the report does very well casting suspicion on the Banque de France’s scheme and reminding readers that gold is the ultimate money, not to be trifled with.

The article is headlined “La France Est-Elle en Train d’Hypothequer Son Stock d’Or?” — “Is France Mortgaging Its Gold Stock?

This article is en français, of course — and if you don’t speak/read the language, you’ll need to open it in a Google Chrome browser window. A small dialogue box will appear at the top right of the screen asking if you want it translated. Click yes — and the window will change everything to English.  The translation is hardly perfect, but you’ll get the essence of it — and it’s definitely worth reading.  I plucked it from a GATA dispatch yesterday — and another link to it is here.


When China wanted silver from the rest of the world

A route across the Pacific in the 16th century was a catalyst for the integration of the planet. The Silver Way: China, Spanish America and the Birth of Globalisation, 1565-1815 reveals how the Ruta de la Plata connected China with Spanish America, furthering economic and cultural exchange and building the foundations for the first global currency.

It can be argued that when Spain instituted a common currency in the form of the real de a ocho, also known as pieces of eight or the Spanish dollar, globalisation’s first chapter had been written. The acceptance of the dollar coins for commercial transactions throughout Asia, the Americas and much of Europe resulted in a cultural exchange between nations, as well as the relatively free movement of people and goods between the three continents.

The main objective behind the sea route plied by Spanish galleons was to establish trade with China. These European vessels became known as China Ships. They transported silver from the Americas to exchange for goods in Asia, mostly commodities of Chinese origin.

China had an appetite for silver, while the West hungered for goods from China.

When the Spanish tried to establish commercial ties with China, they found little taste for goods from the outside world. However, the Chinese had a voracious appetite for silver. During the latter part of the 16th century, during the Ming dynasty, Beijing ruled that taxes should be paid in silver, and without domestic recourse to the precious metal, the demand for imported silver soared.

Spain’s colonies in the Americas could mine enormous quantities of silver and the Spanish began to export the commodity to China via their Manila connection.

This longish, but extremely interesting photo-filled essay showed up on the South China Morning Post website at 8:04 a.m. CST on their Wednesday morning, which was 7:04 p.m. in Washington — EST plus 11 hours.  I was going to save this for Saturday’s column, but it showed up on Sharps Pixley yesterday, so that’s why I’m posting it now — and I thank Bill Moomau for pointing it out.  Another link to this very worthwhile read, is here.


The PHOTOS and the FUNNIES

Today’s first photo was taken by Misael Reyes — and is captioned: “Brown water snakes tangled on a branch in the Everglades National Park.”  Click to enlarge.

This second photo is not credited, but is captioned: “This tufted duck, the first ever sighted in Australia, was spotted at Werribee treatment plant near Melbourne.”  Click to enlarge.


The WRAP

Finally, the speculators – the hot fast money on the futures exchange in New York – faithless, but devastating in terms of the short term effect on prices. We estimate they have a net long position but modest by comparison to historical levels – and therefore there is scope to go very much higher.” — Ross Norman, Sharps Pixley…06 February 2019


This was the third day in a row of extremely quiet trading volume in both gold and silver — and I must admit that I’m wondering what this is all about, as it’s a phenomenon that I don’t recollect seeing before at any other time…except between Christmas and New Years.

Despite the price declines in both these metals, no moving averages of any significance were broken to the downside, so it’s a reasonable assumption that the Managed Money traders didn’t do much of anything yesterday.

And because the volume was so incredibly light, it was easy for anyone with an agenda to engineer prices in any direction they chose.  Because of that fact, I’ve very reluctant to read anything into Wednesday’s price action.  However, looking at the 6-month charts below, the trends are not what I want to see, but aren’t unexpected — and I hope you aren’t surprised by them.

Here are the usual 6-month charts for all four precious metal, plus copper and WTIC.  It should be pointed out…once again…that since the lows in all four precious metals came after the 1:30 p.m. EST COMEX close yesterday afternoon, they don’t show up on the Wednesday dojis.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price was sold quietly but unsteadily lower staring shortly before 10 a.m. China Standard Time on their Thursday morning — and the current low was set around 1 p.m. CST. It has been edging ever-so-slowly higher since — and is down $1.90 an ounce at the moment. Silver was sold down a nickel or so by around 12:35 p.m. CST — and it began to inch quietly higher shortly after that — and was up a penny by shortly before 3 p.m. over there. It has been trading sideways since — and is now down a penny. Platinum has been trading a few dollars lower in Far East trading — and is currently down a dollar. The palladium price has been trading erratically and unevenly higher since trading began at 6:00 p.m. in New York on Wednesday evening — and it’s now up only 1 dollar as Zurich opens.

Net HFT gold volume is pretty light at a bit over 29,500 contracts — and there’s 722 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is about 6,400 contracts — and there’s 699 contract worth of roll-over/switch volume on top of that.

The dollar index has ticked very quietly and very unsteadily higher in Far East trading — and it’s up 7 whole basis points as of 7:45 a.m. GMT in London…8:45 a.m. CET in Zurich.

Silver analyst Ted Butler posted his mid-week commentary on his Internet site on Wednesday afternoon — and after ruminating on Tuesday’s COT Report, here’s a short paragraph that he wrote about JPMorgan’s short position in silver…

Of the 53,000 commercial silver contracts sold since Nov 13, 17,000 contracts were sold by commercials classified in the Producer/ Merchant/Processor/User category (where JPMorgan is carried) and 36,000 contracts were sold by the commercials classified as swap dealers. Accordingly, I would guess that JPMorgan’s short position as of Dec 31 to be around 15,000 contracts, perhaps 20,000 contracts at the outside. This week’s release of Bank Participation report for the beginning of January may or may not shed a clearer light on the big crook’s short position.

And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price hasn’t done much during the first hour of London trading — and it’s down $2.30 an ounce. Silver is now up a penny — and platinum and palladium are down 2 dollar and 4 dollars respectively.

Gross gold volume is coming up on 37,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is about 36,000 contracts. Net HFT silver volume is a bit under 7,900 contracts — and there’s 747 contracts worth of roll-over/switch volume on top of that.

The dollar index began to head higher a couple of minutes before the London/Zurich opens — and is now up 12 basis points 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