27 February 2019 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
It was another very quiet trading day in gold on Tuesday — and the price wasn’t allowed to do much. The high tick, such as it was came a few minutes after 11 a.m. China Standard Time on their Tuesday morning — and the low came a few minutes before 1 p.m. GMT in London/8 a.m. EST in New York.
The high and low ticks certainly aren’t worth looking up once again.
Gold finished the Tuesday session at $1,328.40 spot, up $1.30 on the day. Net volume was pretty quiet at a bit under 175,000 contracts — and there was a bit under 12,000 contracts worth of roll-over/switch volume on top of that.
It was a bit different in silver, as the engineered price decline that began shortly before 2 p.m. CST in Shanghai…bottomed out at, or just after, the noon silver fix in London. It rallied a bit starting about forty-five minutes later but, like gold, each rally attempt was capped and sold lower. But the silver price managed to make it back into positive territory by shortly before 1 p.m. — and didn’t do a thing after that.
The high and low ticks in silver were reported by the CME Group as $15.89 and $15.74 in the March contract…which is only a few days away now.
Silver was closed on Tuesday in New York at $15.88 spot, up 2.5 cents from Monday. Net volume was fumes and vapours at 14,200 contracts — and roll-over switch volume was very heavy at a bit over 46,500 contracts, as all the remaining large traders that weren’t standing for delivery in March had to roll or sell their COMEX futures positions in that precious metal before the COMEX close.
Platinum was up six bucks by the afternoon gold fix in Shanghai on their Tuesday afternoon. But at that juncture ‘da boyz’ showed up — and had platinum down six dollars on the day by around 10:20 a.m. CET in Zurich trading. From that point it began to head higher — and that rally lasted until around 11:40 in New York — and the price didn’t really do much after that. Platinum finished the Tuesday session at $859 spot, up 8 dollars from Monday’s close.
Palladium was up twenty dollars by noon CST on their Tuesday — and it was sold off a few dollars until about 3:30 p.m. CST. Then it got smacked lower — and was back at unchanged by the Zurich open. It crawled a bit lower from there, with the low of the day coming around 1:30 p.m. CET, which was 7:30 a.m. in New York. It headed higher from there — and really took off after the afternoon gold fix in London. But that rush higher ended shortly before the Zurich close — and after that it didn’t do a lot. Palladium was closed at $1,546 spot, up 28 dollars on the day but, like most days, would have closed materially higher, if allowed.
The dollar index closed very late on Monday afternoon in New York at 96.41 — and opened about unchanged once trading began at 7:45 p.m. EST on Monday evening. It chopped generally sideways in a very tight range until around 10:12 a.m. in New York. A decline of some size commenced at that point — and the 95.95 low tick was placed around 2:45 p.m. EST. It appeared to get rescued at that juncture — and was hauled back to a bit above the 96.00 mark in very short order — and then didn’t do much from 4:15 p.m. EST onwards. The dollar index finished the day at 96.00…down 41 basis points from Monday.
Gold and silver prices certainly wanted to move higher as the dollar index sank during the New York trading session, but all attempts were turned lower.
Here’s the usual DXY chart courtesy of Bloomberg. Click to enlarge.
And here’s the 6-month U.S. dollar index chart — and the delta between its close…95.86…and the close on the DXY chart above, was 14 basis points on Tuesday. Click to enlarge.
The gold stocks opened unchanged, but then took a bit of a nosedive until shortly before 10:30 a.m. in New York trading. From that juncture, they rose and fell a bit until 1 p.m. EST — and then crawled quietly higher into the close from there. The HUI finished down 0.35 percent.
The silver equities also opened unchanged, then quickly rallied about a percent, but then were sold down a bit over two percent by 10:30 a.m. in New York trading. They rallied a bunch from there before fading a bit until a few minutes before 2 p.m. — and at that juncture, crept back into positive territory by a hair. They traded sideways until a few minutes before the 4:00 p.m. close — and then one of Nick’s Silver 7 companies…Industrias Peñoles…took a 5.21 percent hit — and that drove the silver equities back into the red by a bit…at least that’s what Nick told me. His Intraday Silver Sentiment/Silver 7 Index closed down 0.68 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 152 gold and 19 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday…the last day of the February delivery month.
In gold, the three short/issuers were JPMorgan, Advantage — and Citigroup, with 59, 53 and 40 contracts respectively. The ones from JPMorgan and Advantage were out of their respective client accounts…but the 40 contracts from Citigroup came from their in-house/proprietary trading account. There were only two long/stoppers…JPMorgan, with 100 contracts for their own account, plus 52 for the CME Group. They promptly reissued those as 52×10=520 ten-ounce COMEX mini gold contracts — and ADM picked up 513 for their client account.
In silver, ADM was the sole short/issuer — and Advantage the sole long/stopper.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Tuesday trading session showed that gold open interest in February fell by only 25 contracts, leaving 152 still around, minus the 152 mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 125 gold contracts were actually posted for delivery today, so that means that 125-22=102 more gold contracts just got added to February. Silver o.i. in February rose by 18 contracts, leaving 19 still around, minus the 19 mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 1 silver contract was actually posted for delivery today, so that means that 1+18=19 more silver contracts were added to the February delivery month.
There were no reported changes in either GLD or SLV on Tuesday.
There was no sales report from the U.S. Mint, either.
There was some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday. They reported receiving 2,000 troy ounces — and shipped out 70,477 troy ounces. All of the ‘in’ activity was at HSBC USA. Virtually all of the ‘out’ activity…70,188 troy ounces…occurred at HSBC USA as well. The remaining 289.350 troy ounces/9 kilobars [U.K./U.S. kilobar weight] was taken out of Canada’s Scotiabank. There was also a paper transfer of 44,944 troy ounces out of the Registered category — and back into Eligible. That occurred at HSBC USA as well. The link to all this is here.
There was also some activity in silver, as 599,724 troy ounces were received — and nothing was shipped out. In the ‘in’ category, there was 300,095 troy ounces left outside the door at CNT — and the remaining 299,629 troy ounces found a home over at Brink’s, Inc. The link to that is here.
There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday. They received 1,500 of them — and shipped out 3,601. All of this occurred at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, February 12, showed slight reductions in the commercial net short positions in both gold and silver. This is not particularly surprising, considering the fact that both precious metals trended lower for the week.
In silver, the Commercial net short position declined by 2,710 contracts, or 13.6 million troy ounces of paper silver.
They arrived at that number by adding 11,602 long contracts, but they also picked up 8,892 short contracts — and it’s the difference between those two numbers that represents their change for the reporting week.
The Big 4 traders/banks are short 32.8 percent of the entire open interest in silver in the COMEX futures market — and that number for the ‘Big 8’ is 46.5 percent. And if you subtracted out the market-neutral spread trades, it would be much more than that. How’s that for price control?
Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus much more, as they decreased their long position by 1,814 contracts — and they also added 4,014 short contracts, for a total swing of the sum of those two numbers…5,828 contracts.
As always, the difference between that number — and the Commercial net short position…5,828 minus 2,710 equals 3,118 contracts, was made up by the other two groups of traders in the Disaggregated COT Report…the ‘Other Reportables’ and the ‘Nonreportable’/small traders. Both groups increased their net long positions by decent amounts during the reporting week — and here’s the snip from that report so you can see these changes for yourself. Click to enlarge.
The banks in the ‘Producer/Merchant’ category didn’t do much…increasing their long position by 304 contracts — and the ‘Swap Dealers’ decreased their short position by 2,406 contracts. The sum of those two numbers is the Commercial net short position in silver.
The Commercial net short position is now down to 75,494 contracts, or 377.5 million troy ounces of paper silver…which is still grotesque and obscene.
I forgot to ask Ted about JPMorgan’s current short position. He stated 26,000 contracts in his weekly review on Saturday, but said in my conversation with him on Monday that it could just as easily be more than that…in fact, much more.
Here’s the 3-year COT chart for silver, courtesy of Nick Laird. Click to enlarge.
Friday’s COT Report, for positions held at the close of COMEX trading on Tuesday, February 19, will certainly show an increase in the Commercial net short position in silver, as there was a fairly decent rally during that reporting week.
In gold, the commercial net short position declined by a rather smallish 5,131 contracts, or 513,100 troy ounces of paper gold.
They arrived at that number by increasing their long position by 2,088 contracts — and they also reduced their short position by 3,043 contracts — and it’s the sum of those two numbers that represents their change for the reporting week.
The ‘Big 4’ traders in gold are short 28.9 percent of the entire open interest in COMEX gold — and that number for the ‘Big 8’…which includes the ‘Big 4’ obviously, is 42.0 percent.
Under the hood in the Disaggregated COT Report, the Managed Money traders only made up part of that change, as they not only reduced their long position by 2,589 contracts, they also covered 333 short contracts — and it’s the difference between those two numbers…2,256 contracts, that represents their change for the reporting week.
The difference between that number — and the commercial net short position, was made up, as it always is, by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small traders category. Both reduced their net long positions during the reporting week — and here’s the snip that shows those changes. Click to enlarge.
The commercial net short position in gold has been reduced to 12.61 million troy ounces of paper gold, a rather immaterial reduction.
Here’s the 3-year COT chart for gold, updated with this data. Click to enlarge.
And, as for silver, the commercial net short position in gold should also show an increase in Friday’s COT Report, for positions held at the close of COMEX trading on Tuesday, February 12, because it rallied during that reporting week as well.
It was yet another very quiet news day yesterday — and I only have four stories for you, with none of them precious metal-related.
Russian Security Council Secretary Nikolai Patrushev told Argumenty i Fakty that the U.S. is deploying military assets to Puerto Rico and Colombia for a future military intervention in Venezuela to remove President Nicolás Maduro from power.
“Showing sarcasm and arrogance towards the Venezuelan people, the United States is preparing a military invasion of an independent state,” Patrushev told the Russian newspaper.
According to his statements, Washington is transferring “American special operations forces to Puerto Rico, the landing of U.S. forces in Colombia,” which “clearly indicates that the Pentagon is reinforcing the grouping of troops in the region.”
As he explained, Venezuela rejected humanitarian aid imposed on it by the U.S. because it recognizes that Washington uses aid as a precursor to military intervention.
“And the Venezuelan people understand this well. Hence, such a reaction, the refusal to accept cargo from the aggressor country and the support of their president,” Patrushev added.
The Russian security official said that Washington recommended holding several talks on Venezuela, and Moscow accepted. However, Trump administration officials started using far-fetched pretexts to circumvent these discussions, Patrushev added.
While it remains unclear just how far Russia’s commitment to protecting the Maduro regime would stretch, Venezuelan Foreign Minister Jorge Arreaza said Monday that his government would not tolerate foreign interference. “We are not going to allow intervention, we Venezuelans will solve our problems,” he said.
This Zero Hedge news item appeared on their website at 7:20 p.m. EST on Tuesday evening — and another link to it is here.
The humiliation of United States Secretary of State Mike Pompeo in Warsaw last week was a good thing. The ancient Greeks, exercising their demonstrated ability to synthesize defining characteristics, had a word for it: hubris. Hubris is when one develops an extreme and unreasonable feeling of confidence in a certain course of action that inevitably leads to one’s downfall when that conceit proves to be based on false principles.
Pompeo was in Warsaw for a “summit” arranged by the U.S. State Department in partnership with the Polish government to discuss with representatives of sixty nations what to do about the fractious situation in the Middle East. In advance, he promised that the meeting would “deliver really good outcomes.” The gathering was initially conceived as a “war against Iran” precursor, intended to pull together a coalition against the Persians, but when it became clear that many of the potential participants would balk at such a designation, it assumed a broader agenda concerning “Peace and Security in the Middle East.”
Iran, Iraq, Lebanon, Palestine and Syria were not, not surprisingly, invited as some of them were the expected targets of whatever remedial action the conference might recommend. Israel’s Benjamin Netanyahu was, of course, present, tweeting in advance of the gathering that it would be all about “war against Iran.” He also characteristically delivered a warning that Iran was planning a “second holocaust” for his country.
Many countries, including regional power Turkey, and global powers Russia and China refused to participate at all. The European Union, the French and the Germans all sent career diplomats to the meeting rather than their Foreign Ministers…
[I]t was Vice President Pence who took the prize for unmitigated gall in his address to the conferees in which he accused the Europeans of something close to treason: “They call this scheme a ‘Special Purpose Vehicle.’ We call it an effort to break American sanctions against Iran’s murderous revolutionary regime.’’ He insisted that “The time has come for our European partners to withdraw from the Iran nuclear deal and join with us as we bring the economic and diplomatic pressure necessary to give the Iranian people, the region and the world the peace, security and freedom they deserve.” Pence might just as well have said “my way or the highway” or quoted George W. Bush’s line, “you’re either with us or against us.” The audience, including a large number of Washington-sycophants, responded with silence, unimpressed by Pence’s fulminations and his demands.
This worthwhile commentary/opinion piece showed up on the strategic-culture.org Internet last Thursday — and I thank Brad Robertson for pointing it out. Another link to it is here.
India Bombs Pakistan, Targeting Terrorist Camps In Cross-Border Air Raids; Pakistan Vows Retaliation
With most of the world distracted by President Trump’s second summit meeting with Kim Jong Un in Hanoi, tensions between two nuclear-armed powers flared roughly 2,000 miles West in the contested border region of Kashmir.
In retaliation for one of the deadliest terror attacks in the history of the long-running Kashmiri insurgency – earlier this month, a Muslim ‘mujahidin’ drove a car loaded with explosives into a bus packed with Indian paramilitary soldiers, killing more than 40 — Indian fighter jets carried out a tactical strike on what the Indian government described as a training camp for the militant group Jaish-e-Mohammed (JeM), killing more than 300 militants and infuriating the government in Islamabad, which condemned the attack and insinuated that it could launch a counter-strike of its own, with Prime Minister Imran Khan warning the nation of 200 million and its armed forces to “remain prepared for all eventualities.”
Unsurprisingly, the two countries offered contrasting descriptions of the attack.
Bloomberg described the attack as “the worst escalation” between the two countries since 2001, when India and Pakistan moved ballistic missiles and troops to the contested border following an attack on India’s parliament in New Delhi.
This longish news item was posted on the Zero Hedge website at 6:39 a.m. EST on Tuesday morning — and I thank Brad Robertson for sending it along. Another link to it is here. There was a follow-on Zero Hedge story about this at 5:20 p.m. EST yesterday — and it’s headlined “India’s Military On High Alert, Stands Ready For “Possible Retaliatory Action” From Pakistan“.
And as I stated in the introduction to ‘The Wrap‘…I have no precious metals stories at all today.
The PHOTOS and the FUNNIES
These three photos were taken about five minutes south of Spence’s Bridge alongside, or a few feet off, the Trans-Canada Highway. In the first shot, that’s a train on the CNR tracks on the west side of the Thompson River. The CPR tracks are on the opposite bank. The second shot is of the same CNR train, but here I’m looking south, not north — and right from the edge of the highway. And the third photo is one I had to climb down the hill a few hundred feet to get this clear shot. The sagebrush and ponderosa pine everywhere is indicative of a semi-arid climate.
There was obvious interference in all four of the precious metal on Tuesday, the first in the thinly-traded overseas GLOBEX market — and again in New York where silver and gold in particular attempted to rally in the face of a declining dollar index. But with very light volumes in both precious metals, it was easy enough for anyone with an agenda to keep the selling pressure on them — and they did just that. But for that very reason, not too much should be read into yesterday’s price action, as the February delivery month in gold comes to an end — and the big delivery month for silver arrives.
Here are the 6-month charts for the Big 6 commodities. Gold and silver prices continue to languish, but both platinum and palladium continue to power higher — and I note that WTIC is not doing all that well. Click to enlarge.
And as I type this paragraph, the London open is less than ten minutes away — and I see that the the GLOBEX trading system was down for part of the morning in Far East trading — and the prices of all four precious metals flat-lined for awhile. But they were back up just before noon in Shanghai — and at the moment, gold is down $1.80 an ounce. Silver is down 5 cents. Platinum was down a few dollars by shortly before 3 p.m. China Standard Time on their Wednesday, but turned on a dime — and is now up 2 dollars. But palladium is down 9 dollars as Zurich opens.
Net HFT gold volume is barely anything at 17,000 contracts — and there’s 1,520 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is a tiny 4,505 contracts, with most of that in the new front month for silver, which is May. Roll-over/switch volume out of March is around 1,850 contracts.
The dollar index opened up 3 basis points once trading began around 7:45 p.m. EST in New York on Tuesday evening, which was 8:45 a.m. China Standard Time on their Wednesday morning. It crawled higher until 12:02 p.m. CST — and put in a double top about ninety minutes later. It has slid a bit since — and is up 9 basis points as of 7:45 a.m. GMT in London…8:45 a.m. CET in Zurich.
All the large traders in silver, those with more than 150 COMEX contracts, that weren’t standing for delivery in March, were out of those positions by the close of COMEX trading yesterday. There are still around 15,000 contracts left in March open interest — and once the rest of the traders in COMEX silver futures roll or sell by the close of COMEX trading today, that number will be whittled down a bunch more. And as to how much…I’ll have that number, plus First Day Notice for March silver deliveries, in tomorrow’s column.
And as I post today’s column on the website at 4:02 a.m. EST, I note that gold is now down only $1.90 an ounce. Silver is now down 7 cents. Platinum is still up by 2 — and palladium is now down by 14 bucks as the first hour of Zurich trading draws to a close.
Gross gold volume is only 30,000 contracts — and minus roll-over/switch volume there is, net HFT gold volume is 24,500 contracts. Net HFT silver volume is still not much of anything at a bit over 5,700 contracts — and most of that is now in the new front for silver, which is May. Roll-over/switch volume out of March is 2,442 contracts in this precious metal.
The dollar index continues to head lower — and is now down 2 basis point as of 8:45 a.m. GMT/9:45 a.m. CET in Zurich.
I’m done for the day — and I’ll see you here tomorrow.