Jim Cook Interviews Ted Butler

14 February 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was up three dollars or so by shortly before 3 p.m. China Standard Time on their Wednesday afternoon — and from that point it was sold quietly lower until a few minutes after 1 p.m. GMT in London, which was about twenty minutes before the COMEX open.  It began to chop higher from there — and really began to sail going into the afternoon gold fix in London.  The price was capped at that point, or minutes after — and around 10:45 a.m. EST, the price was sold lower into the 1:30 p.m. COMEX close.  Then the real price pressure began — and gold was sold sharply lower until 3 p.m. in the thinly-traded after-hours market — and it traded quietly sideways into the 5:00 p.m. close from there.

The high and low ticks were recorded by the CME Group as $1,321.70 and $1,308.10 in the April contract…an intraday move of one percent.

Gold was closed on Wednesday at $1,305.90 spot, down $4.50 on the day.  Net volume was average — and way higher than it has been for the last ten days or so, at just under 202,500 contracts — and there was a bit under 12,000 contracts worth of roll-over/switch volume on top of that.

The price action in silver was almost the same as it was for gold, so I’m not going to spend any time talking about it.  The post-COMEX close sell-off was fairly hefty, although it did recover a bit going into the 5:00 p.m. EST close of trading in New York.

The high and low ticks were reported as $15.80 and $15.52 in the March contract.

Silver was closed in New York yesterday afternoon at $15.53 spot, down 14 cents from Tuesday.  Net volume was fairly decent [compared to the last ten days] at just under 57,500 contracts — and there was a very healthy 22,000 contracts worth of roll-over/switch volume out of March and into future months in this precious metal.

The price pattern in platinum was a mini version of what happened to silver and gold prices on Wednesday — and it was closed a dollar off its low tick at $785 spot, down 5 bucks from Tuesday.

Palladium was up 9 dollars at the 2:15 p.m. CST afternoon gold fix in Shanghai, but then it came under quiet selling pressure as well — and except for a bit of a bounce shortly after the COMEX open in New York, it continued to crawl lower until around 2:20 p.m. EST in after-hours trading.  It didn’t do anything after that.  Palladium was closed at $1,380 spot, down 6 dollars on the day.

The dollar index closed very late on Tuesday afternoon in New York at 96.71 — and began to chop sideways in a fairly tight range, both below and above unchanged, once trading began at 7:45 p.m. EST in New York on Tuesday evening.  A couple of early rally attempt in morning trading in London didn’t get anywhere.  But starting a few minutes before noon GMT…at its 96.63 low tick of the day…the rally that began at that juncture had more success.  That ended at its 97.26 high tick, which came around 5:00 p.m. EST — and it didn’t do much after that.  The dollar index finished the Wednesday session in New York at 97.13…up 42 basis points from Tuesday’s close.

Here’s the DXY chart, courtesy of BloombergClick 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…96.94…and the close of the DXY above, was 19 basis points yesterday.  Click to enlarge.

The gold shares gapped down a percent and change at the open, but were back in positive territory by shortly after 10 a.m. when gold reached its high tick of the day.  From that juncture, they sold unsteadily lower, right into the 4:00 p.m. EST close of trading in New York.  The HUI finished down 1.03 percent.

The silver equities opened about unchanged — and from that point they rallied very unsteadily — and in a very broad price range until around 11:15 a.m. in New York trading.  It was all very quietly down hill from there, as Nick’s Intraday Silver Sentiment/Silver 7 Index closed down 0.64 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 8 gold and 28 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the sole short/issuer was Advantage — and the only long/stopper worthy of the name was JPMorgan, as they stopped 7 contracts in total…4 for their own account, plus 3 contracts for clients.

In silver, the two short/issuers were ADM and Advantage, with 17 and 11 contracts out of their respective client accounts.  The three long/stoppers were JPMorgan, Advantage and Morgan Stanley, with 17, 8 and 3 contracts…all for their respective client accounts.

The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in February rose by 35 contracts, leaving 583 still open, minus the 8 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 16 gold contracts were actually posted for delivery today, so that means that 16+35=51 more gold contracts just got added to the February delivery month.  Silver o.i. in February rose by 28 contracts, leaving 29 still around, minus the 28 mentioned a few paragraphs…so it’s an excellent bet that those 28 contracts issued for Friday’s delivery are the same 28 contracts that just got added to the February delivery month.  There were zero silver contracts posted for delivery today.


There were withdrawals from both GLD and SLV on Tuesday, as an authorized participant removed 65,312 troy ounces of gold from GLD — and another a.p. took 938,056 troy ounces of of SLV.

There was a sales report from the U.S. Mint yesterday.  They sold 1,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 125,000 silver eagles.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday was 321.500 troy ounces/10 kilobars [U.K./U.S. kilobar weight] that was shipped out of Canada’s Scotiabank.  I won’t bother linking this.

There wasn’t much activity in silver.   Only 299,324 troy ounces were received — and that found a home over at Brink’s, Inc.  The only ‘out’ activity was 75,697 troy ounces that departed CNT.  There was also a paper transfer of 828,504 troy ounces from the Eligible category and into Registered.  Of that amount, there was 813,896 troy ounces transferred at CNT — and the remaining 14,607 troy ounces got transferred over at Brink’s, Inc.  The link to that is here.

There was very little activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  Nothing was reported received — and only 20 were shipped out.  This activity was at Brink’s, Inc. of course — and I won’t bother linking this amount, either.


The Pietroasele Treasure (or the Petrossa Treasure) found in Pietroasele, Buzău, Romania, in 1837, is a late fourth-century Gothic treasure that included some twenty-two objects of gold, among the most famous examples of the polychrome style of Migration Period art. Of the twenty-two pieces, only twelve have survived, conserved at the National Museum of Romanian History, in Bucharest: a large eagle-headed fibula and three smaller ones encrusted with semi-precious stones; a patera, or round sacrificial dish, modelled with Orphic figures surrounding a seated three-dimensional goddess in the centre.  Click to enlarge.

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


CRITICAL READS

History made: U.S. national debt tops $22 trillion

The U.S. national debt has climbed above $22 trillion. It is projected to continue rising by a trillion each year over the next decade, due to the cost of pensions and medical care for the retiring Baby Boomers.

On Tuesday, the U.S. Treasury Department published the daily statement showing outstanding public debt standing at $22.01 trillion. The sum total of government budget deficits has increased by $2.06 trillion since President Donald Trump took office in January 2017.

The Congressional Budget Office (CBO) is projecting the deficit for fiscal year 2019 to be $897 billion, a 15 percent increase over last year’s $779 billion – and greater than the entire Pentagon budget, for comparison’s sake. The CBO has estimated the deficit will continue to increase by $1 trillion annually starting in 2022, due to the rising cost of entitlement programs like Social Security and Medicare.

The deficit nearly doubled during the administration of President Barack Obama, growing by $9.3 trillion as the Federal Reserve engaged in massive “quantitative easing” programs to bail out the financial sector from the crash of 2008.

The new debt record “is another sad reminder of the inexcusable tab our nation’s leaders continue to run up and will leave for the next generation,” according to Judd Gregg and Edward Rendell, co-chairmen of the Campaign to Fix the Debt, a project of the nonpartisan Committee for a Responsible Federal Budget.

This news item put in an appearance on the rt.com Internet site at 12:38 a.m. Moscow time on their Wednesday morning, which was 4:08 p.m. on Tuesday afternoon in Washington — EDT plus 8 hours.  I thank George Whyte for sending it along — and another link to it is here.


A record 7 million Americans have stopped paying their car loans

According to a new report from the Federal Reserve Bank of New York, more than 7 million Americans have reached serious delinquency status on their auto loans, meaning they’re at least 90 days behind on payments.

Fed economists said this is “surprising” considering a strengthening labor market and economy.

People often prioritize car loans because many need to drive to get to work and earn a paycheck, The Washington Post’s Heather Long reported. The fact that a record number of Americans aren’t making those payments is “usually a sign of significant duress among low-income and working-class Americans,” Long wrote.

The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market and warrants continued monitoring and analysis of this sector,” Fed economists wrote in a blog post dissecting the report.

The data show that most of the borrowers whose auto loans have recently moved into delinquency are people younger than 30 years old and people with low credit scores. Eight percent of borrowers with credit scores below 620 — otherwise known as subprime — went from good standing to delinquent on their auto loans in the fourth quarter of 2018.

This story showed up on the businessinsider.com Internet site at 5:37 p.m. EST on Tuesday afternoon — and I thank Brad Robertson for pointing it out.  Another link to it is here.


A 300-year lesson in bubble inflation — Edward Chancellor

Just over 300 years ago, in early December 1718, a Parisian bank was nationalised by the French state. This marked the beginning of the Mississippi Bubble, which captivated France over the following couple of years. The aristocratic world of the “ancien regime” may seem impossibly distant to modern minds. Yet there are parallels between this saga and the modern age of quantitative easing, ultra-low interest rates and highly valued asset prices. As central bankers struggle to reverse their post-crisis monetary measures, the lessons imparted by the Mississippi Bubble are more relevant than ever.

The Banque Royale became France’s first central bank. It was modelled on the Bank of England, founded in 1694, but with a crucial difference. While the Bank redeemed its notes with a fixed quantity of gold, the Banque Royale’s notes were issued in a unit of account, whose value could be changed at royal whim. This paved the way for France to adopt a purely fiat currency.

The bank was founded and managed by a Scottish-born economic visionary named John Law. His great plan was to replace gold with paper money. Law arrived in France at the end of the reign of Louis XIV, at a time when the country was suffering from high unemployment, deflation, and the king’s credit had run out. France’s situation was not dissimilar to the one that afflicted parts of the Eurozone during its recent sovereign debt crisis.

Law petitioned the Regent Philippe II, Duke of Orleans, who ruled in the name of the infant Louis XV, to establish a new bank. He promised this new institution could lower interest rates by making money more abundant, and that this would reduce the cost of public debts, raise prices and bring about more general prosperity. In his wig and frock coat, Law’s appeal sounded much like a contemporary central banker talking up quantitative easing, without the academic verbiage.

This very interesting commentary/opinion piece appeared on the Reuters website on Wednesday morning at 2:52 a.m. EST — and I thank Richard Saler for bringing it to our attention.  Another link to it is here.


Palladium supply shortfall will worsen this year — Johnson Matthey

A deficit in the palladium market that has driven prices of the auto-catalyst metal to record highs will widen dramatically this year, specialist materials company Johnson Matthey said in a report on Wednesday.

The company, a leading auto-catalyst manufacturer, said the shortfall in the roughly 10 million ounce-a-year palladium market narrowed in 2018 to 29,000 ounces from 787,000 ounces in 2017, its widest in three years.

But it said stricter emissions standards would increase demand for palladium for catalytic converters, and despite an increase in recycling, supply would struggle to keep up.

The rate of growth in secondary supplies is likely to be lower than in 2018, while primary shipments (of newly mined metal) are expected to be flat,” the report said.

Palladium-backed exchange-traded funds (ETFs) would no longer be able to bridge the gap between supply and demand by returning metal to the market, it added.

This worthwhile Reuters news item, filed from London, appeared on their Internet site at 5:51 a.m. EST on Wednesday morning — and it’s something I found on the Sharps Pixley website.  Another link to it is here.


Italy government won’t sell ‘a gram’ of gold reserves: League lawmaker

The Italian government has no intention of selling the Bank of Italy’s gold reserves to plug budget holes, a prominent lawmaker of the ruling League party said on Wednesday.

We do not want to sell a gram (of gold),” Claudio Borghi, chairman of the lower-house budget committee and the League’s economics spokesman, said in a interview with state-owned television RAI.

The League has drafted a law proposal which would eventually allow the government to sell the country’s gold reserves if there were also a change to the constitution — a long and complicated legislative process.

Borghi has already tabled a bill intended to establish that the gold is the property of the state rather than of the Bank of Italy, a point which is disputed in Italy.

The idea that Italy could sell part of its gold reserves to fill budget shortfalls has sparked outcry in Germany, Daniel Gros, a German economist and Director of the Centre for European Policy Studies, said on the same TV programme.

This Reuters article, filed from Rome, was posted on their website at 11:57 p.m. on Tuesday night EST — and I found it in a GATA dispatch yesterday morning.  Another link to it is here.


Jim Cook Interviews Ted Butler

Q: As the world’s leading silver bull, are you expecting fireworks in silver?
A: More so than ever.

Q: You know of course that a lot of people who own silver have grown impatient. What do you say to them?
A: I feel the same impatience, however my expectations are based upon an extremely bullish set of facts. Impatience has nothing to do with it.

Q: How do you arrive at your bullish facts?
A: I study the Commitment of Traders and Bank Participation reports and numerous other statistics, trends and reports. There are any number of bullish arguments for why silver is a great buy right now.

Q: What are some of those bullish arguments?
A: Silver has never been more necessary. It is a vital component of just about every modern product. Production of silver has been flat for years. Quite simply, there will not be enough silver to go around and price rationing will be required.

This brief Q&A session with Ted was posted on the silverseek.com Internet site at 2:37 p.m. PST on Wednesday afternoon.  It’s definitely worth reading — another link to it is here.


The PHOTOS and the FUNNIES

Here are two more photos from the “Ocean Art” series that I thank Mike Easton for sending our way.

The photo credit for this first picture goes to Tiffany Poon — and the caption reads “A pod of friendly false killer whales off the coast of Mexico”.  Click to enlarge.

This next photo was taken by Debbie Wallace — and the caption on this one reads “Curious sand tiger shark off the coast of Morehead City, North Carolina, USA”


The WRAP

We do not believe any group of men adequate enough or wise enough to operate without scrutiny or without criticism. We know that the only way to avoid error is to detect it, that the only way to detect it is to be free to inquire. We know that in secrecy, error undetected will flourish and subvert”. –-  J Robert Oppenheimer.


It was more than obvious that the engineered price declines that came in gold, silver and platinum after the afternoon gold fix in London — and after the COMEX close in New York…were the result of spoofing.  Nothing else I can think of offhand could account for those types or price declines.

Confirmation of that came in the big volumes that occurred in both silver and gold in the COMEX futures market.  Not huge on an historic basis, but monstrous compared to the fumes and vapours trading volumes we’ve been looking at over the previous ten trading days.

I can’t image that it was JPMorgan, all things considered — and if it was, it was a big “up yours” to the DoJ.  In reality, it could have been any trading entity that didn’t want precious metals to rise along with a rally in the dollar index.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  And, once again, it should be noted that since the low closes in gold, silver and platinum occurred after the COMEX close yesterday, they don’t appear on the Wednesday 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 see that the gold price crawled higher for a few hours once trading began at 6:00 p.m. EST in New York on Tuesday evening — and has been chopping quietly sideways since — and is currently up $2.60 the ounce. Silver did about the same and, like gold, jumped up a bit at 3:30 p.m. China Standard Time on their Thursday afternoon — and it’s up 8 cents at the moment. Platinum didn’t do anything in Far East trading — and it’s up a dollar. Not so for palladium, as it’s been heading very unsteadily higher in Far East trading — and it’s up 10 dollars as the Zurich open looms.

Net HFT gold volume is a bit over 30,000 contracts — and there’s only 300 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is already up to around 11,700 contracts — and there’s only 368 contracts worth of roll-over/switch volume in that precious metal.

The dollar index rallied about five basis points as soon as trading began at 7:45 p.m. EST in New York on Wednesday evening, which was 8:45 a.m. CST in Shanghai on their Thursday morning. It has been chopping quietly, but very unsteadily lower since — and as of 7:45 a.m. GMT in London, it’s down 9 basis points.

I’m not sure if what happened yesterday is the precursor to an out-and-out bear raid on the precious metals or not.  Gold is market neutral to bullish from a COMEX futures market structure, but the set up in silver is just plain bearish.  And even though we’ve crawling lower in price for the most part for the past few weeks, none of the major moving averages…the 50 and 200-day…has come close to being penetrated to the downside as of yet.  That’s when we’ll see the Managed Money traders really begin to puke up their long positions and go short in a major way…as the commercial traders ring the cash register yet again.

But as I’ve said before, that outcome is not cast in stone.

And as I post today’s column on the website at 4:02 a.m. EST, I note that moments after London and Zurich opened all four precious metal were sold lower. Gold is now down 70 cents at the moment — and silver is up 2 cents. Platinum is now down 3 bucks — and palladium was hit as well, but it has recovered a bit — and is up 8 dollars.

Gross gold volume is a bit over 40,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is 39,500 contracts. Net HFT silver volume is coming up on 14,500 contracts — and there’s 804 contracts worth of roll-over/switch volume on top of that.

The dollar index began to head sharply higher a few minutes before the London and Zurich opens — and from down 9 basis points, it’s now up 11 basis points. I guess that’s all that was needed for the powers-that-be to send precious metal prices lower.

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

Ed