21 February 2019 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price traded pretty flat for the first two hours after New York opened on Tuesday evening at 6:00 p.m. EST. Then at 9 a.m. China Standard Time on their Wednesday morning, the price began to head higher — and was up by 6 bucks two hours later. That was as high as it was allowed to get on Wednesday — and it edged quietly lower until a few minutes after 3 p.m. CST. At that juncture it began to chop very quietly higher — and that lasted until around fifteen minutes before the COMEX close. It began to tick lower from there — and then got kicked downstairs…and back into negative territory…when the Fed minutes were released. It popped back into the green by a few dollars shortly after that, but was soon sold lower, finishing almost on its low tick of the day.
The high and low ticks certainly aren’t worth looking up.
Gold was closed on Wednesday at $1,337.80 spot, down $2.60 on the day. Net volume was a bit elevated at just under 239,000 contracts — and there was a bit over 10,500 contracts worth of roll-over/switch volume on top of that.
Silver followed the same general price path as gold right up until shortly after 3 p.m. CST — and then rose and fell a few pennies during the London trading session. It began to head higher starting shortly after the COMEX open — and the silver price began to run into serious resistance shortly before the COMEX close — and it too got sold off on the Fed news. From there it followed the gold price pattern very closely until trading ended at 5:00 p.m. EST in New York.
The low and high ticks in this precious metal were reported by the CME Group as $16.01 and $16.22 in the March contract.
Silver was closed at $16.015 spot, up 6 cents from Tuesday. Net volume was fairly heavy at 66,500 contracts — and there was a very chunky 48,000 contracts worth of roll-over/switch volume out of March and into future months in this precious metal.
The platinum price followed a very similar price path a both silver and gold — and its high tick of the day came minutes after 1 p.m. in New York. From there, its price path was handled in a similar fashion as the other two precious metals. Platinum was closed at $826 spot, up 8 bucks from Wednesday.
Palladium’s high in Far East trading on their Wednesday morning came at the exact same time as gold and silver…11 a.m. China Standard Time. From that point it chopped very unevenly sideways until a few minutes after 12 o’clock noon in Zurich trading — and was sold lower until shortly after the Zurich close. It edged a few dollars higher from there until minutes after 1 p.m. in New York trading — and was sold quietly lower until the trading day ended at 5:00 p.m. EST. Palladium finished the Wednesday session at $1,465 spot, up 4 dollars on the day — and 20 bucks off its high of the day.
The dollar index closed very late on Tuesday afternoon in New York at 96.52 — and proceeded to chop rather nervously sideways once trading began around 7:45 p.m. EST on Tuesday evening, which was 8:45 a.m. in Shanghai on their Wednesday morning. It began to head lower about ten minutes after the equity markets opened in New York — and the 96.29 low tick was set at 1:08 p.m. EST. It began to head sharply higher about forty minutes later — and was back in positive territory around 2:15 p.m. — and it chopped erratically sideways until trading ended around 5:15 p.m. in New York. The DXY closed at 96.45…down 7 basis points from Tuesday.
Here’s the DXY chart from Bloomberg. Click to enlarge.
And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at stockcharts.com — and the delta between its close…96.29…and the close on the DXY chart above, was 16 basis points on Wednesday. Click to enlarge.
The gold stocks began to head quietly higher starting about twenty minutes after the equity markets opened in New York yesterday morning — and that lasted until 1:45 p.m. EST. They began to head lower from there — and got kicked downstairs a bit more on the 2:00 p.m. Fed minutes news — and their respective low ticks were set around 2:15 p.m. EST. From that juncture they had an up/down move into the close, as the HUI finished up only 0.96 percent. There were up about 3 percent at their respective highs.
For the most part, the silver equities followed a very similar price path as their golden brethren, so I’ll spare you the play-by-play. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 0.76 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 143 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.
In gold, there were seven short/issuers in total — and the three biggest were Morgan Stanley, JPMorgan and R.J. O’Brien, with 45, 30 and 25 contracts out of their respective client accounts. The only long/stopper that mattered was JPMorgan, picking up 109 contracts in total…103 for its client account, plus 6 for its own account. Advantage was in very distant second place with 18 contracts for its client account.
In silver, Advantage and ADM issued 1 contract each — and Morgan Stanley and ADM stopped 1 contract each. All contracts, both issued and stopped, involved 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 396 contracts, leaving 1,074 still open, minus the 143 mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report shows that 90 gold contracts were posted for delivery today, so that means that 90+396=486 more gold contracts were added to the February delivery month. Silver o.i. in February rose by 2 contracts, leaving 3 still around, minus the 2 mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report shows that zero silver contracts were posted for delivery today…so 2 more silver contracts were just added to February.
There was a deposit into GLD yesterday, as an authorized participant added 66,138 troy ounces of gold — and there were no reported changes in SLV.
There was no sales report from the U.S. Mint on Wednesday.
There was very little activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday. Nothing was reported received — and only 2,250.500 troy ounces/70 kilobars [U.K./U.S. kilobar weight] were shipped out. That occurred at Canada’s Scotiabank. But there were some paper transfers. There was 70,188 troy ounces moved from the Registered category — and back into Eligible over at HSBC USA — and 10,022 troy ounces were transferred from the Eligible category — and into Registered over at Delaware. The link to all this is here.
There was some activity in silver, as 587,790 troy ounces were received — and 256,262 troy ounces were shipped out. All the ‘in’ activity…one truckload…was at CNT. In the ‘out’ category, there was 253,234 troy ounces shipped out of Brink’s, Inc. — and the remaining 3,028 troy ounces departed Delaware. The link to this is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday, they reported receiving 2,802 of them — and shipped out a whopping 9,645. Except for 5 kilobars that were removed from the Loomis International depository, all of the rest came out of Brink’s, Inc. as per usual. The link to this activity, in troy ounces, is here.
Since the 20th of February fell on a weekday, the good folks over at The Central Bank of the Russian Federation updated their website with January’s data. It showed that they added only 200,000 troy ounces of gold to their reserves that month. That brings their total reported gold reserves up to the 68.1 million troy ounce/2,118 metric tonne mark. Here’s Nick’s updated chart that shows that change. Click to enlarge.
It was another quiet news day on Wednesday — and I only have a tiny handful of stories for you.
Key update: it appears that in its rush to blast the fastest headline on the minutes, Bloomberg made a material error, reporting the following:
Bloomberg: ALMOST ALL FED OFFICIALS WANTED TO HALT RUNOFF LATER THIS YEAR
And here what the Fed actually said:
Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year.
Needless to say, there is a huge difference between “ending runoff” and “announcing a plan to stop the runoff“, as the former may last well into 2020 or even 2021.
Aside from that the highlights were in keeping with what Powell said in January namely that:
- The Fed will remain patient in light of ambivalent economic and market data.
- The Fed’s outlook for the economy and the policy rate have both become more uncertain
- Keeping the current policy rate for now “posed few risks“
- As various Fed speakers noted recently, higher than expected inflation may be a requirement for more rate hikes
- The Fed was worried that the dot plot -which has become a Fed forecasting farce – is being “misinterpreted.”
This longish article appeared on the Zero Hedge website at 2:45 p.m. on Wednesday afternoon EST — and I thank Brad Robertson for bringing it to our attention. Another link to it is here.
Austria will continue buying Russian gas despite U.S. pressure and fear-mongering from Poland and Ukraine about dangers to European energy security. The cost of importing U.S. gas is just not right, says its Chancellor Sebastian Kurz.
Meeting with U.S. President Donald Trump in Washington on Wednesday, the 32-year-old chancellor stood up for Austria’s continued support for the Nord Stream 2 pipeline, which is due to be completed later this year.
Austria wants a secure gas supply, Kurz told local media after meeting with Trump, adding that Vienna has no problem with buying liquid natural gas (LNG) from the U.S., “but as long as the price is better, Russia is more attractive as a partner, as Trump can certainly understand as a former businessman.”
The price of U.S. imports is “currently not competitive,” Kurz said, so the gas for Austria “will continue to come mainly from Russia” in the foreseeable future.
This longish, but very interesting article showed up on the rt.com Internet site at 1:08 a.m. Moscow Time on their Thursday morning, which was 5:08 p.m. in Washington on Wednesday afternoon — EDT plus 8 hours. I thank George Whyte for pointing it out — and another link to it is here.
President Donald Trump should take a look in the mirror. China isn’t the currency manipulator.
The U.S. is asking Beijing to keep the value of the yuan stable as part of trade negotiations between the world’s two largest economies, Saleha Mohsin and Katherine Greifeld of Bloomberg News reported. Washington fears that China could weaken its currency to counteract the effect of higher American tariffs on imports from the nation.
That perception is unfair. Despite the trade conflict, the People’s Bank of China has effectively pegged the yuan to the dollar, loyally following the greenback’s cycle.
Since 2015, China’s central bank has been trying to move its peg to a basket of currencies – without much success. Psychology dies hard. The Chinese people still associate the value of their currency with the dollar, so when the yuan weakens – because of the greenback’s strength – they start to move their money abroad.
Last August, when the yuan was edging toward 7.0 per dollar, the PBOC reintroduced its so-called counter-cyclical adjustment factor, essentially admitting that its attempt to move away from the dollar had failed.
The reality is that if the U.S. wants the yuan to be stable, it needs to steady the greenback first. Trump has repeatedly criticized the Federal Reserve on Twitter for raising interest rates, and has made no secret of his desire for a weaker dollar. Fed Chairman Jerome Powell finally changed tack in December, suggesting he would be more cautious about future rate increases. In other parts of the world, such a chain of events could easily be perceived as currency manipulation.
This opinion piece/commentary showed up on the Bloomberg Internet site at 9:05 p.m. on Tuesday evening PST…Pacific Standard Time…and if found it embedded in a GATA dispatch yesterday. Another link to it is here.
A slowing global economy and increasing strain on businesses from a year-long Sino-U.S. trade war are tilting central banks from Japan to Australia toward monetary easing in a remarkable 180 degree turn.
Late last year, the debate in Japan was focused on the demerits of printing money and the Reserve Bank of Australia (RBA) was adamant the next likely move in rates will be up. An emerging market currency sell-off was seen forcing externally vulnerable economies such as India, Indonesia and the Philippines to keep tightening their policy rates.
But even they are now subject to rate cut bets.
A softer dollar and lower oil prices played an important role in the turnaround. But crucially for Asia, regional growth engine China is having a worse than expected start to the year and is exporting disinflation to the rest of the region.
“What’s obviously happening is that central banks are rethinking monetary policy,” said Piyush Gupta, CEO of DBS Group Holdings in Singapore.
It’s “print or die” time for all the world’s central banks — and they’ll do “whatever it takes“. This Reuters news item, filed from Hong Kong, was posted on their website at 9:42 p.m. EST on Tuesday evening — and was updated about thirteen hours later. It’s also another article that I found on the gata.org Internet site. Another link to it is here.
Russian exports of gold fell by a factor of 3.3 in 2018 compared with the previous year, from 56.6 tonnes (1.82mn ounces) to 17.05 tonnes (548,083 ounces), the Assay Office said on February 19, according to RIA Novosti.
Russia has been actively building up gold as a share of its gross international reserves (GIR) since 2007, as bne IntelliNews reported previously. The Central Bank of Russia (CBR) has been buying most of the goal produced domestically and purchased a record amount in 2018.
Last year’s gold purchases were financed from the sale of circa $100bn of U.S. treasury bills by the CBR, as bne IntelliNews reported in November, as Russia begins the long slow process of dumping the US dollar as the currency of international trade.
At the same time the government has approved licenses to develop several very large gold fields that have sat fallow for over two decades, with the Sukhoi Log deposit being the biggest and more important among them.
Russian gold refining plants increased gold production by 2.45% to 314.42 tonnes (10.1mn ounces) in 2018. Last year a little more than 5.4% of the total gold produced in Russia was exported, while about 273.7 tonnes of gold was purchased by the central bank to replenish gold and foreign exchange reserves.
This is the only precious metal-related news item that I could find yesterday, that I thought worth posting. It put in an appearance on the intellinews.com Internet site on Tuesday — and I plucked it off the Sharps Pixley website. Another link to it is here.
The PHOTOS and the FUNNIES
From Merritt, it’s about a thirty minute scenic drive to Logan Lake…a mining town whose inhabitants all work in the local mines, but mostly at the Highland Valley Copper Mine, which is about a twenty minute drive from town — and it is HUGE! I took these three photos, amongst others, on my way there. The last shot is of mother mule deer and her two siblings as they grazed in someone’s front yard in the town. Click to enlarge.
The gold price certainly didn’t do much yesterday anywhere on Planet Earth…trading in a five dollar price range either side of unchanged. But despite that, the volume was fairly elevated — and I expect that had something to do with the sell-off when the Fed minutes were released. Silver’s attempt to break above the $16 spot mark by a decent amount met the same fate as gold — but silver’s volume was fairly heavy even going into the London open. However, the really big volume came during the New York trading session — and it certainly looked like the rally that occurred there ran into fairly hefty price resistance.
However, it should be noted that the powers-that-be took the opportunity to tap all four precious metals lower on the release of the Fed minutes, whether it was warranted or not. But those obviously engineered price declines could have been far worse — and I was happy that they weren’t.
Here are the 6-month charts for all four precious metals, plus copper and WTIC. I’ll point out here that because the low closes in all four precious metals occurred after the 1:30 p.m. EST COMEX close, that data doesn’t show up in their Wednesday dojis on the charts below. Click to enlarge for all.
And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price has been wandering quietly sideways since trading began at 6:00 p.m. EST in New York on Wednesday evening — and at the moment, it’s up 60 cent an ounce. Silver’s tiny rally in the first two hours of trading on Wednesday evening in New York was turned unevenly lower beginning at 9 a.m. in Shanghai — and it’s currently down 6 cents. Platinum has been trading in very similar fashion to silver — and it’s down 4 bucks. Ditto for palladium, except a few minutes after 3 p.m. China Standard Time it was hammered lower — and it’s down 14 dollars — and off its current low tick by at least 9 bucks as Zurich opens.
Net HFT gold volume is coming up on 45,000 contracts already — and there’s only 1,003 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is something over 14,000 contracts — and there’s already 4,433 contracts worth of roll-over/switch volume in this precious metal.
The dollar index had a up/down/up move in Far East trading on their Thursday, with the current 96.66 high tick coming around 2:34 p.m. CST…which was about twenty minutes or so after the afternoon gold fix in Shanghai. It has been chopping very quietly sideways since — and is up 12 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.
With February being a short month, month end is coming up hard now — and only six business days away, including today. March is a big delivery month for silver — and that’s why roll-over/switch volume has been so heavy over the last few days. All the large traders, those holding 150 contracts or more that aren’t standing for delivery next month, have to roll or sell their positions by the close of COMEX trading on Tuesday — and the rest have to be out of their positions by the close of COMEX trading on Wednesday. So expect trading volumes to rise even more as February draws to a close.
And as I post today’s column on the website at 4:02 a.m. EST, I see that both gold and silver have been turned a bit lower since London opened. Gold is now down $2.00 — and silver is down 14 cents — and safely back below $16 spot. Platinum is still down 4 dollars — and palladium is trying to recover from its pre-Zurich open pounding, but without much success — and is down 15 bucks as the first hour of Zurich trading draws to a close.
Gross gold volume is way up there at the 65,000 contract mark — and minus what little roll-over/switch volume there is, net HFT gold volume is around 62,500 contracts. Net HFT silver volume is coming up on 18,000 contracts — and there’s already 6,500 contracts worth of roll-over/switch volume in that precious metal.
The dollar index fell sharply staring a few minutes before the London open — and from up 21 basis points at its earlier high, it’s now back at unchanged on the day. This decline is obviously not being allowed to manifest itself in the prices of either gold or silver at the moment.
That’s it for another day — and I’ll see you here tomorrow.