‘Da boyz’ Appear At the COMEX Open Yesterday Morning

01 March 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold a bit lower in Far East trading on their Thursday — and was down a couple of dollars by the 2:15 p.m. CST afternoon gold fix in Shanghai.  It rallied a bit from there until at, or a few minutes after, the noon silver fix in London.  The selling pressure began at that point — and then accelerated once the COMEX opened at 8:20 a.m. in New York.  The low tick was set around 10:35 a.m. EST.  It rallied a couple of dollars into the London close from there — and crawled quietly lower until trading ended at 5:00 p.m.  The gold price was closed virtually on its low tick of the day.

The high and low ticks were reported by the CME Group as $1,328.90 and $1,314.50 in the April contract.

Gold was closed on Thursday at $1,312.90 spot, down $6.50 on the day.  Net volume was very decent at a bit over 243,000 contracts — and there was 11,000 contracts worth of roll-over/switch volume in this precious metal.

As is most usually the case, ‘da boyz’ handled the silver price in a very similar manner, with the only difference being that its low tick of the day was set shortly after the 1:30 p.m. COMEX close in New York — and it crept a few pennies higher into the 5:00 p.m. EST close of trading from there.

The high and low ticks were recorded as $15.86 and $15.605 in the May contract.

Silver was closed at $15.57 spot, down 13 cents on the day.  Net volume was fairly decent as well at just under 62,000 contracts — and there were a hair under 4,200 contracts worth of roll-over/switch volume on top of that.

The price pattern in platinum was similar in most respects to both silver and gold, with the high price tick of the day coming at the COMEX open.  From that juncture it was sold a bit lower until about thirty minutes before the Zurich close — and then it didn’t do much of anything after that.  Platinum was closed at $869 spot, up 2 dollars from Wednesday.

The palladium price chopped very unevenly sideways until shortly after the Zurich open.  It stair-stepped its way quietly higher from there until noon Central European Time [CET] — and from there it traded flat until noon in New York…six hours later  At that point it was sold a bit lower into the 5:00 p.m. EST close.  Palladium finished the Thursday session at $1,522 spot, up 13 bucks.

The dollar index closed very late on Wednesday afternoon in New York at the 96.15 mark — and then opened down 6 basis points once trading began at 7:45 p.m. EST on Wednesday evening.  It traded quietly sideways until 3:08 p.m. China Standard Time on their Thursday afternoon — and then began to quietly head lower, with the 95.82 low tick coming around 12:15 p.m. in London.  It began to head sharply higher around 8:10 a.m. in New York — and that rally lasted for about thirty-five minutes — and it chopped very unevenly higher from the until around 4:30 p.m. EST — and didn’t do a lot after that.  The dollar index finished the Thursday session at  96.16 — up 1 whole basis point from Wednesday’s close.

Here’s the 24-hour DXY chart from BloombergClick 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…96.04…and the close on the DXY chart above, was 12 basis points on Thursday.  Click to enlarge.

The gold shares began to chop quietly lower once trading began at 9:30 a.m. in New York on Thursday morning — and they were down about 1 percent at their low ticks, which came around 10:35 a.m. EST.  From there they edged quietly and unsteadily higher — and actually made it back into positive territory a few minutes before trading ended.  But they couldn’t quite squeeze a positive close, as the HUI finished lower by 0.07 percent.  Call it unchanged.

The silver stock began to head quietly lower almost as soon as trading began in New York yesterday morning — and were down a percent and a bit by 10:35 a.m…the same as the gold stocks.  From there they chopped quietly and unevenly sideways — and Nick Laird’s Intraday Silver Sentiment/Silver 7 index closed down 1.13 percent.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart as well.  Click to enlarge.

The CME Daily Delivery Report for Day 2 of March deliveries showed that 66 gold and 530 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, there were six short/issuers in total — and the two largest were Marex Spec and Advantage, with 33 and 19 contracts out of their respective client accounts.  There were seven long/stoppers in total — and the three largest were JPMorgan, Marex Spec and Advantage, with 29, 14 and 14 contracts, with all for their respective client accounts.

In silver, there were thirteen short/issuers in total.  The three largest were Advantage, ABN Amro — and HSBC USA, with 163, 110 and 103 contracts respectively.  The contracts for the first two were from their respective client accounts — and the 103 HSBC USA contracts came from their in-house/proprietary trading account.  There were seven long/stoppers in total, with the largest by far being JPMorgan once again, stopping 191 for their client account, plus 77 for their own account.  Morgan Stanley came in second, with 93 in total…6 for their own account, plus 87 for their client account.  In third spot was Advantage, with 86 for their client account.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in March declined by 95 contracts, leaving 240 still open, minus the 66 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 126 gold contracts were actually posted for delivery today, so that means that 126-95=31 more gold contracts just got added to the March delivery month.  Silver o.i. in March fell by 3,207 contracts, leaving 1,435 still around, minus the 530 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 3,339 silver contracts were actually posted for delivery today, so that means that 3,339-3,207=132 more silver contracts just got added to March.


There was another withdrawal from GLD yesterday, as an authorized participant took out 132,262 troy ounces.  There were no reported changes in SLV.

The folks over at the shortsqueeze.com Internet site updated the short positions for both GLD and SLV as of the close of trading on Friday, February 15 — and this is what they had to report.  The short position in SLV declined from 10,756,600 shares/troy ounces, down to 9,946,200 shares/troy ounces…a drop of 7.5 percent.  The short position in GLD rose from 1,336,050 troy ounces, up to 1,731,790 troy ounces, which was an increase of 29.6 percent.  Ted said on the phone yesterday that theses changes weren’t material.

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

There was no physical movement in gold, either in or out, over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  But there was a very impressive amount of paper transfers from the Registered category — and back in to Eligible…137,255 troy ounces worth.  Four different depositories were involved — and I won’t bother listing them.  But if you wish to look for yourself, the link is here.

In silver, there was 1,184,856 troy ounces received — and only 23,183 troy ounces shipped out…plus there was a whopping 4,522,161 troy ounces [net] transferred from the Eligible category and into Registered.  All the action that really mattered, both physical and paper, occurred at CNT.  They took in all of the silver received — and shipped out almost all of the ‘out’ amount as well…20,122 troy ounces.  Along with that, they transferred 4,602,821 troy ounces of silver from the Eligible to the Registered category…which is certainly destined for delivery in March.  There was a bit of activity in other depositories, but it’s not worth mentioning — and if you wish to view it, the link is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They received 500 of them — and shipped out 1,500.  All of this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


Here’s a chart that I ran across on Nick’s website yesterday, which I didn’t know still existed.  I asked Nick to make these up for me many years ago — and I thought when he did it, they were for one-time use, but they’re now permanently in his data base.  Click to enlarge.

It shows what happens to a theoretical ‘investment’ of $100 made in gold in the COMEX futures market on January 2, 1970…49 years ago now.  As the embedded dialogue box states…The Intraday Gold Fix Index is created by subtracting the morning gold fix in London [10:30 a.m. local time] — from the afternoon gold fix in London [3 p.m. local time]…which is 4.5 trading hours — and dividing that difference by the gold price at that afternoon gold fix.  The resulting number/percentage change, either positive or negative, is then either added or subtracted to this theoretical $100 ‘investment’.

If you reinvested the proceeds every single trading day at the morning gold fix — and sold it at the afternoon gold fix in London, every day for the last 49 years and 2 month…more than two generations…your original $100 theoretical ‘investment’ would have been whittled down to $9.52 as of the LBMA close in London on February 28, 2019.

That’s because, with some minor exceptions, the p.m. gold fix in London is always lower than the a.m. gold fix. That’s pernicious price management in action since gold began to trade in the COMEX futures market starting on January 1, 1975 — and it’s more than obvious on the chart above.

Here’s an essay I wrote about all this back in March of 2015 — and it’s based on a presentation I gave at the Casey Research conference in San Antonio, Texas in September 2014.  Not a thing has changed since I wrote that — and it’s definitely worth reading, or re-reading as the case may be.  The link is here.

In tomorrow’s column, I’ll show you what the above chart looks like if you invested that theoretical $100 at the afternoon gold fix in London — and held it throughout all of Far East trading overnight and early morning trading in London — and then sold it at the 10:30 a.m. morning gold fix…19.5 trading hours.  Needless to say, the chart looks radically different than the one above, so stay tuned.

It was another day where there wasn’t a lot of what I call hard news stories, so I don’t have all that much in the way of stories for you.


CRITICAL READS

Our Third Bold Prediction — Bill Bonner

We made two bold predictions, about a year ago.

Today, we make another one.

Our first prediction was that the Fed would never normalize interest-rate policies, allowing the free market to set short-term rates, rather than the Fed itself.

Our second was that Donald J. Trump would never follow through on his threat of a Full Retard trade war with China.

The two are related in an important way. Fed policies, and the fake money system behind them – not tariffs – caused the trade deficit with China. Prior to the introduction of fake money, not connected to gold, in 1971, the U.S. ran a trade surplus, the biggest in the world.

Now it runs the world’s biggest deficit. Why the difference? Because now it can simply print the money to pay its foreign creditors.

This commentary from Bill, which is definitely worth reading, showed up on the bonnerandpartners.com Internet site early on Thursday morning EST — and another link to it is here.


Is Jay Powell the Arthur Burns of Today?

Let’s take a walk down memory lane, shall we?

My relations with the Fed,” Nixon said, “will be different than they were with [previous Federal Reserve chairman] Bill Martin there. He was always six months too late doing anything. I’m counting on you, Arthur, to keep us out of a recession.”

Yes, Mr. President,” Burns said, lighting his pipe.

I don’t like to be late.” Nixon continued. “The Fed and the money supply are more important than anything the Bureau of the Budget does.” Burns nodded. “Arthur, I want you to come over and see me privately anytime . . .”

Thank you, Mr. President,” Burns said.

I know there’s the myth of the autonomous Fed . . .” Nixon barked a quick laugh. “. . . and when you go up for confirmation some Senator may ask you about your friendship with the President. Appearances are going to be important, so you can call Ehrlichman to get messages to me, and he’ll call you.”

January, 1970 (John Ehrlichman, “Witness to Power”)

This rather brief, but absolutely fascinating commentary, authored by Ben Hunt via EpsilonTheory.com, was posted on the Zero Hedge website at 2:01 p.m. on Thursday afternoon.  I thank Brad Robertson for sending it our way — and another link to this very worthwhile commentary it is here.


Don’t Get Caught In The Fed Trap Again — Dennis Miller

The Government surprised the world in 2008 when the Fed bailed out the banks at the expense of seniors and savers.

The Fed dropped interest rates to historic lows while buying U.S. treasuries and bad loans through their Quantitative Easing (QE) program. Seniors and savers lost over $4 trillion in interest income they would have normally received.

The stock market tanked. Investors, desperately searching for yield, redeployed their money into the market and higher risk bonds. Retirees had to take on more risk in order to survive.

Former Fed Chair Ben Bernanke called the consequences “collateral damage”. Seniors and baby boomers called it “catastrophic damage” as they downsized and altered their retirement plans.

Since the 2016 election the Fed raised rates eight times. In January 2019 they held rates, but continue to sell off mortgages and treasuries. It appears the Fed is starting a U-Turn and we could soon see more QE.

This very interesting commentary from Dennis put in an appearance on his website very early on Thursday morning MST — and another link to it is here.


Farm loan delinquencies highest in 9 years as prices slump

The nation’s farmers are struggling to pay back loans after years of low crop prices and a backlash from foreign buyers over President Donald Trump’s tariffs, with a key government program showing the highest default rate in at least nine years.

Many agricultural loans come due around Jan. 1, in part to give producers enough time to sell crops and livestock and to give them more flexibility in timing interest payments for tax filing purposes.

It is beginning to become a serious situation nationwide at least in the grain crops — those that produce corn, soybeans, wheat,” said Allen Featherstone, head of the Department of Agricultural Economics at Kansas State University.

While the federal government shutdown delayed reporting, January figures show an overall rise in delinquencies for those producers with direct loans from the Agriculture Department’s Farm Service Agency.

Nationwide, 19.4 percent of FSA direct loans were delinquent in January, compared to 16.5 percent for the same month a year ago, said David Schemm, executive director of the Farm Service Agency in Kansas. During the past nine years, the agency’s January delinquency rate hit a high of 18.8 percent in 2011 and fell to a low of 16.1 percent when crop prices were significantly better in 2015.

This AP article…filed from Witchita, Kansas…was posted on their website very early on Thursday morning CST — and I thank Mike Easton for sending it our way.  Another link to it is here.


Pakistan to Release Captured Indian Pilot as “Goodwill Gesture

Before international intermediaries even had a chance to step in to try to quell the escalating conflict, the Indian military started digging bunkers and deploying tanks along the border with Pakistan as the Hindu nationalist government of Narendra Modi — who is struggling to revive sagging poll numbers in the final weeks before a crucial election — told Islamabad that it would not negotiate for the release of captured pilot Commander Abhinandan Varthaman, who was taken into custody by Pakistani jawans after his plane was shot down Wednesday following an aerial skirmish that led to downed planes on both sides.

Fearing not only a military escalation, but also the pressing financial economic concerns as his country seeks another bailout from the IMF, Pakistani Prime Minister Imran Khan said during a joint session of Parliament on Thursday that the captured pilot would be released as a “gesture of goodwill” on Friday.

Before Khan’s announcement, Foreign Minister Shah Mahmood Qureshi told Pakistani television station Geo TV on Thursday that “we are willing to return the captured Indian pilot if it leads to de-escalation,” per Reuters.

The decisions comes as several western powers, including the U.K., as well as China, had urged caution in the intensifying conflict. Moscow has also offered to mediate between the two sides.

This story put in an appearance on the Zero Hedge website at 6:46 a.m. EST on Thursday morning — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Worthless Venezuelan notes get new life as raw material for artists

Venezuela’s completely worthless currency has a chance at a new life, as long as it’s not as money.

The country’s economic crisis that began in 2010 under President Hugo Chavez and continued under his successor, Nicolas Maduro, resulted in a rate of inflation that rendered its currency valueless. In a recent issue of Forbes, Steve Hanke, professor of economics at The Johns Hopkins University, calculated a hyperinflation rate for 2018 of 80,000 percent for 2018. Other estimates go as high as 2 million percent.

Maduro knocked five zeroes off the bolivar in August and created the bolívare soberanos or sovereign bolivar, issued in values of 2-, 5-, 10-, 20-, 50-, 100-, 200- and 500-bolívares soberanos denominations. These are already worthless.

There is a better use for them across the border in Cucuta, Colombia. That city is flooded with them from the 20,000 people who enter Colombia daily and exchange them to buy necessities.

Since the bolivares cannot be spent, local artists, mostly emigres from across the border, are turning them into origami, including purses, model cars, birds, baskets and wallets.

This cute story, with a neat photo embedded, was posted on the coinworld.com Internet site on Monday — and I thank Tolling Jennings for sending it our way.  Another link to it is here.


Romanian parliament leaders want their gold reserves brought home

Chamber of Deputies President Liviu Dragnea and PSD senator Serban Nicolae have proposed a bill to force the National Bank to store 95 percent of Romania’s gold reserves in the country.

The bill is meant to change the Law that establishes the National’s Bank statute. According to the document, the reason for this demand is that gold stored abroad only produces additional costs with storage. The bill also wants to eliminate the world “international” from the terminology used by the National Bank in “international gold reserves”.

Romania’s gold reserves, in total of 103.7 tonnes, are stored in three countries, according to the National Bank officials.  Three years ago, the institution announced that 60 percent of the gold reserves were stored abroad. The situation has not changed – 61 tonnes of the gold is stored today in the Treasury of the National Bank of England, more than 40 tonnes of the gold is kept at the Bank of Romania in Bucharest and less than five tonnes are stored at the Bank of International Settlements in Basel, Switzerland.

No surprises at all by this turn of events.  They will be the first country of many that demands their gold reserves be returned home.  This gold-related new item showed up on the business-review.eu Internet site at 10:24 p.m. CET [Central European Time] on Wednesday night — and I found it in a GATA dispatch early yesterday evening.  Another link to it is here.


Uzbekistan plans to significantly increase its gold, uranium reserves

Uzbekistan expects an increase in gold reserves in the country in 2020-2024 by 474 tons and uranium by 32,000 tons. In monetary terms, this is equivalent to $ 18.7 billion.

This is stated in the Concept of the geological industry development, put up for public discussion until March 13.

As noted in the draft concept of the development of the geological industry of Uzbekistan for 2020-2024, developed by the State Committee on Geology and Mineral Resources, the country intends to increase the gold and uranium reserves thanks to geological exploration.

The document informs that gold reserves in the country will increase to 89.7 tons, and uranium reserves to 6,200 tons in 2019.

According to the results of 2017, gold production in the country amounted to 89.9 tons. Proven reserves of uranium are 97,000 tons, production was recorded at 3,600 tons.

This interesting news story was posted on the azernews.az Internet site on Wednesday afternoon at 5:50 p.m. UZT, which was 7:50 a.m. in New York — EST plus 10 hours.  I found this on the Sharps Pixley website — and another link to it is here.


The PHOTOS and the FUNNIES

This first photo is of the Thompson River up close and personal…taken from the edge of the Trans-Canada Highway.  It’s a roaring river even at its low  water mark, which will be coming up in a few months, as this photo was taken in late October.  You can tell from the ‘high tide’ mark along the shore, what the water level is like during the spring melt/run-off.  Of course I had to include a train to give the photo a point of interest and some colour.  Click to enlarge.

These next two shot are a continuation of our trip from Lytton to Lillooet.  The first is just a general shot of the Fraser River from one of the many pull-offs along the highway, but this one is from several hundred feet above the water, rather than the several thousand that the two photos were taken of this river in yesterday’s column.  The second shot is from a vantage point just above Lillooet as we came into town, with a fruit orchard in the foreground — and the Fraser River just behind it.  Click to enlarge for both.


The WRAP

It was another day where it was obvious that ‘da boyz’ were still around, with virtually all the price damage coming during the COMEX futures market in New York.  Volumes in both silver and gold were certainly elevated, but nothing too extreme.  If JPMorgan et al were really serious, they could do some real serious price damage if they wished.  But with spoofing no longer evident since the DoJ conviction back in early November, there has been little, if any signs of that since — and certainly none yesterday.  There wasn’t much reaction in the precious metal stocks, either.

Here are the 6-month charts for all four precious metals, plus copper and WTIC once again.  Silver came within a penny of its 50-day moving average yesterday on an intraday basis — and platinum continues to power higher.  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 didn’t do much of anything in Far East trading for the first five hours, but was turned lower starting around 1 p.m. China Standard Time on their Friday afternoon. At the moment, it’s down $4.50 the ounce. Silver has been under quiet price pressure throughout all of Far East trading — and it’s down 5 cents. Platinum and palladium have been creeping quietly sideways since trading began at 6:00 p.m. EST in New York on Thursday evening — and the former is down a dollar — and the latter by 2 bucks as Zurich opens.

Net HFT gold volume is coming up on 39,500 contracts — and there’s only 822 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is pretty decent already at 12,200 contracts — and there’s a tiny 124 contracts worth of roll-over switch volume in this precious metal.

The dollar index opened up 5 basis points once trading began around 7:45 p.m. EST in New York on Thursday evening, which was 8:45 a.m. in Shanghai on their Friday morning. It has been edging quietly and nervously higher since — and is up 10 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.


Today, at 3:30 p.m. EST, we get the latest Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, February 19. And as I mentioned in my Wednesday missive, I’m expecting to see an increase in the commercial net short positions in both precious metals, because there was a bit of a rally in both during the reporting week. As to how bad those numbers might be, I’m not about to hazard a guess. But whatever they are, I’ll have all of it for you in my Saturday column.

And as I post today’s effort on the website at 4:02 p.m. EST, I see that the sell-off in gold and silver continued during the first hour of London trading. Gold is now down $6.20 an ounce — and silver is now lower by 9 cents — and back below its 50-day moving average. Both platinum and palladium got hammered at the Zurich open, with the former now down 9 dollars — and the latter by 12.

Gross gold volume is now up to a bit over 66,000 contracts — and minus what is now considerable roll-over/switch volume, net HFT gold volume is just under 52,500 contracts. Net HFT silver volume is now up to about 14,800 contracts — and there’s still only a tiny 190 contracts worth of roll-over/switch volume on top of that.

The dollar index began to head higher a minute or so before the London/Zurich opens — and as of 8:45 a.m. GMT/9:45 a.m. CET, it’s up 17 basis points.

Since today is the Friday, the last trading day of the week, absolutely nothing will surprise me when I check the charts after I roll out of bed later this morning.

Have a good weekend — and I’ll see you here tomorrow.

Ed