A Snoozefest in Silver and Gold on Wednesday

07 March 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price certainly didn’t do much yesterday.  The tiny ‘rally’ that began shortly after 1 p.m. China Standard Time on their Wednesday afternoon was capped and sold quietly lower until around 11 a.m. in London.  It crawled a few dollars higher into the COMEX open from there — and ran into “all the usual suspects” at that point — and the price didn’t do much of anything after that.

There are no real high or low ticks worth looking up.

Gold finished the Wednesday session in New York at $1,286.00 spot, down $1.30 from Tuesday’s close…and a new low close for this move down.  Net volume was pretty quiet at just under 175,500 contracts — and there was 19,000 contracts worth of roll-over/switch volume on top of that.

It was quiet in silver as well…generally following the same price path as gold. But after the tiny price spike going into the COMEX open, it was subsequently sold lower — and the silver price retested its Tuesday low price tick.  It managed to edge off that mark by a few pennies going into the 5:00 p.m. close of trading.

Like for gold, the high and low ticks aren’t worth looking up.

Silver was closed at $15.04 spot, down 6 cents on the day.  Net volume was nothing special at just under 53,500 contracts — and roll-over/switch volume was around 3,750 contracts in this precious metal.

Platinum was sold quietly and unevenly lower until the low was set in COMEX trading in New York and, like silver and gold, edged off that low as trading ended at 5:00 p.m. EST.  Platinum was closed at $825 spot, down 10 bucks on the day — and back below its 200-day moving average after its big short-covering rally in mid February.

The palladium price edged quietly lower throughout all of Far East and most of Zurich trading on their respective Wednesdays as well — and its low was set at the COMEX open.  At that juncture, it was down 9 dollars on the day.  It began to head higher from there — and that rally lasted until around 2:20 p.m. in the very thinly-traded after-hours market — and it didn’t do much of anything after that.  Palladium finished the Wednesday trading session in New York at $1,515 spot, up 19 dollars from Tuesday’s close.

The dollar index closed very late on Tuesday afternoon in New York at 96.87 — and opened up 3 whole basis points once trading began around 7:45 p.m. EST on Tuesday evening, which was 8:45 a.m. in Shanghai.  It edged a few basis points lower until precisely 10:00 a.m. China Standard Time on their Wednesday morning — and it chopped quietly higher until the high tick of the day…96.99…was set at 11:50 a.m. CST.  From that point it began to chop quietly and unsteadily lower in a fairly wide range — and the 96.78 low tick was set at 10:45 a.m. in New York.  It edged quietly higher and back into positive territory by a few basis points by 12:45 p.m. EST — and sank back to the unchanged mark by the close of trading at 5:28 p.m.  The dollar index finished the day exactly at unchanged…96.87…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 stockcharts.com — and the delta between its close…96.80…and the close on the DXY chart above, was 7 basis points on Wednesday.  Click to enlarge.

The gold shares began to sell off the moment that trading began in New York at 9:30 a.m. EST on Wednesday morning.  That trend continued until shortly after 3 p.m. EST — and they didn’t do much of anything after that.  The HUI closed down 2.72 percent.

The silver equities opened unchanged — and hit their highs of the day, such as they were, at precisely 10:00 a.m. EST in New York trading.  From that point, they followed the gold equities like a shadow until minutes after 3 p.m. — and then managed to tick a bit higher into the close.  But that was cold comfort indeed, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 3.09 percent.  Click to enlarge if necessary.

Although the U.S. equity markets closed down on the day, there was no rhyme nor reason as to why the precious metal equities got sold off so hard, as their underlying metals barely moved all day long during the COMEX trading session.

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

The CME Daily Delivery Report showed that 8 gold and 22 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, ADM and International F.C. Stone issued 4 and 3 contracts out of their respective client accounts.  And the two biggest long/stoppers were JPMorgan and Advantage, with 4 and 3 contracts for their respective client accounts as well.

In silver, the two short/issuers were Advantage and ADM, with 18 and 4 contracts out of their respective client accounts.  JPMorgan was the largest long/stopper, picking up 6 contracts for its own account, plus 9 contracts for its client account.  Advantage came in second place with 6 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 March fell by 31 contracts, leaving 56 still open, minus the 8 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 39 gold contracts were actually posted for delivery today, so that means that 39-31=8 more gold contracts were added to the March delivery month.  I suspect that those 8 contracts are the ones posted for delivery on Friday in the above Daily Delivery Report.  Silver o.i. in March dropped by 352 contracts, leaving 554 still around, minus the 22 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 372 silver contracts were actually posted for delivery today, so that means that 372-352=20 more silver contacts were just added to March.

And I also note that there are 989 contracts of open interest in the March 1,000 ounce mini silver contract, about 200 contracts worth — and that ain’t exactly chopped liver.


There were no reported changes in either GLD or SLV on Wednesday.

And there was no sales report from the U.S. Mint, either.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday was 7,720 troy ounces that was shipped out of Canada’s Scotiabank — and the link to that is here.

It was a bit busier in silver, as 753,425 troy ounces was received — and only 177,885 troy ounces were shipped out.  In the ‘in’ category, there was one truckload…600,820 troy ounces…received at Brink’s, Inc. — and the remaining 152,605 troy ounces found a home over at Scotiabank.  In the ‘out’ category, there was 152,605 troy ounces shipped out of Brink’s, Inc. — and remaining 25,280 troy ounces departed CNT.  The link to that activity is here.

Over at the COMEX-approved gold kilobar depository in Hong Kong on their Tuesday, they reported receiving 1,000 of them — and shipped out 115.  This activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


The Dacian bracelets are bracelets associated with the ancient people known as the Dacians, a distinct branch of the Thracians. These bracelets were used as ornaments, currency, high rank insignia and votive offerings Their ornamentations consist of many elaborate regionally distinct styles. Bracelets of various types were worn by Dacians, but the most characteristic piece of their jewelry was the large multi-spiral bracelets; engraved with palmettes towards the ends and terminating in the shape of an animal head, usually that of a snake.

They were discovered c.2000 in Romania — and were crafted sometime between the 1st century B.C. and the 1st century A.D. ….but other than that, there’s no other information available about the discovery itself.   Click to enlarge.

It was a pretty quiet news day yesterday — and I don’t have much for you.


CRITICAL READS

Fed’s Kaplan says U.S. corporate debt a reason for rate hike pause

A $5.7 trillion borrowing binge by U.S. companies could make a slowdown in the world’s biggest economy even more painful and is one more reason the Federal Reserve was wise to put interest rate hikes on hold, Robert Kaplan, president of the Dallas Fed, said.

It’s something that I’m aware of, which sort of reinforces for me why I feel we should be taking no action for some period of time,” Kaplan said in an interview with Reuters ahead of the publication on Tuesday of an analysis of U.S. corporate debt.

Companies with big debt loads may be more likely to cut spending and hiring in a downturn, “and the danger is that with a sufficient enough slowing, you’ll have a greater deterioration in credit quality than you would otherwise, which could in turn amplify the slowdown,” Kaplan said.

I borrowed this Reuters story from yesterday’s edition of the King Report.  Bill King also posted a tweet by Fred Hickey on his reaction to this statement — and it reads as follows: Fred Hickey @htsfhickey: Are these Fed people brain dead?  Can’t raise rates because of too much corp. debt? Reason there’s too much corp. debt is because Fed has suppressed rates to such low levels it encouraged taking on of debt (all kinds).  Want to reduce debt problem: RAISE RATES.  Amen to that.  Another link to this Reuters article, filed from San Francisco, is here.


Watching the Global Flows Explains Why the Dollar Won’t Be Kept Down

The dollar’s resilience after what some have categorized as the most dovish Federal Reserve turnaround in history comes as little surprise to Exante Data’s Jens Nordvig.

U.S. President Donald Trump may be looking to jawbone the greenback. But for Exante, it’s still all about the grab for yield, with rates on dollar-denominated assets remaining more attractive relative to the painfully low or negative ones found in Europe and Asia. The firm’s analysis of the holdings of global asset managers suggests that isn’t going to change anytime soon.

Exante’s flagship global flow analytics product aggregates fund managers positioning in fixed income and currencies to pinpoint extremes. It’s readings — which have helped snag Exante clients willing to pay $60,000 a year for its insights — include gauges of activity tied to carry trades.

Inflows into this strategy, a bet in which an investor borrows in a lower-yielding currency and invests in one with higher rates, using purchases of dollar-denominated assets surged this quarter to multiyear highs. That’s come even as Fed Chairman Jerome Powell and his colleagues have indicated a resolve to stand pat on policy normalization for now.

People are using the dollar as the long in the carry trade, with European investors still having very little to buy at home that they can accumulate yield in,” said Nordvig, who launched Exante in 2016. “You can absolutely see this in the global fund flows we track. It really explains the dollar holding up in the face off this U-turn by the Fed.”

This is mostly bulls hit, as the only reason that the dollar index hasn’t crashed and burned already is because of the always-present ‘gentle hands’ when it begins heading for the nether reaches of the earth.  This Bloomberg story put in an appearance on their Internet site at 9:00 p.m. PST on Tuesday evening — and was updated about twelve hours later.  I found it embedded in a GATA dispatch — and another link to it is here.


U.S. Credit Card Debt Closed 2018 at a Record $870 Billion

U.S. credit card debt hit $870 billion — the largest amount ever — as of December 2018, according to the data from the Federal Reserve. Credit card balances rose by $26 billion from the prior quarter.

The increase in credit card balances is consistent with seasonal patterns but marks the first time credit card balances re-touched the 2008 nominal peak,” according to the report.

Nearly 480 million credit cards are now in circulation — up by more than 100 million since hitting bottom after the recession a decade ago.

At the end of last year, credit cards were the fourth-largest portion of consumer debt in the U.S. after mortgage, student loan and auto debt. But the quarterly increase in credit card debt was faster than the other categories. Overall debt reached a record $13.5 trillion.

About 37 million credit card accounts had a 90+ days delinquent mark added to their credit report last quarter, an increase of about two million from the fourth quarter of 2017. These 37 million accounts hold roughly $68 billion in debt that is 90-plus days delinquent.

In aggregate, credit card limits rose for the 24th consecutive quarter, with a 1.5% increase in the fourth quarter of 2018.

This Bloomberg story showed up on their website at 4:00 a.m. EST on Tuesday morning — and was updated about four hours later.  It’s the second news item that I ‘borrowed’ from yesterday’s edition of the King Report — and another link to it is here.


U.S. Trade Deficit Soars to $621BN, Highest Since 2008 as Goods deficit Hits Record

Confirming last week’s advance goods data which saw the biggest trade deficit on record in December, moments ago the BEA reported that the U.S. trade deficit soared to a 10-year high of $621 billion in 2018, jumping by $68.8 billion, or 12.5 percent in the year, and crushing Trump’s pledges to reduce it, as tax cuts boosted domestic demand for imports while the strong dollar and retaliatory tariffs weighed on exports.

The data release was originally delayed a month by the partial government shutdown. January figures are due March 27.

Worse, for goods only, the deficit with the world surged to a record $891.3 billion in 2018 from $807.5 billion the prior year, as merchandise deficits with Mexico and the European Union also hit records. Offsetting the record good deficit was the surplus in services which kept rising, and also hit a record – in the other direction – rising to a $270.2 billion surplus in 2018.

The reason for the massive jump in the deficit is that while exports increased $148.9 billion or 6.3% as shipments of goods including crude oil, petroleum products and aircraft engines increased. However, imports increased even more, some 7.5%, or $217.7 billion, on purchases of items from pharmaceuticals to computers, along with services such as travel.

On a monthly basis, the December deficit soared from $50.3 billion to $59.8 billion, also a 10-year high and far worse than the consensus estimate of $57.9 billion.

This news item was posted on the Zero Hedge website at 8:56 a.m. EST on Wednesday morning — and I thank Brad Robertson for sending it along.  Another link to it is here.


OECD Slashes Global GDP Forecast, Warns “Outcome Could Be Weaker Still

The world is rapidly headed for a recession unless something changes, according to the latest gloomy warning from the OECD overnight, which has joined the IMF in warning that the global economy is suffering more than expected from trade tensions and political uncertainty which are clouding prospects particularly in Europe, where the OECD slashed its 2019 growth outlook to just 1%, almost half its prior 1.8% forecast.

The global expansion continues to lose momentum,” the Paris-based Organization for Economic Cooperation and Development said as it downgraded the 2019 GDP forecast of almost every Group of 20 nation including the U.S., China, U.K. and euro area, while it now expects Italy to be headed to worst year since 2013. “Growth outcomes could be weaker still if downside risks materialize or interact.”

The OECD’s growth guillotine was not exactly a surprise as these are the organization’s first forecasts in almost four months, and it is forced to play catch-up with developments in a world in which central banks U-turned from hawkish to dovish to reflect a sharp slowdown from Japan to the U.S. Indeed, as Bloomberg notes, in that period little has gone right for the world’s biggest economies: Weakness in the euro area and China are proving more persistent, trade growth has slowed sharply and uncertainty over Brexit has continued.

Perhaps because it came about a month after the IMF’s own latest forecast cut, the OECD’s numbers were even more downbeat than the monetary fund’s, particularly the euro region and the U.K., where the organization warns that things could get even worse.

This article appeared on the Zero Hedge Internet site at 9:25 a.m. on Wednesday morning EST — and it comes to us courtesy of Brad Robertson as well.  Another link to it is here.


Platinum American Eagle bullion coin sales inching toward sell-out

During the month of February, the U.S. Mint’s authorized purchasers bought another 2,400 of the 2019 American Eagle 1-ounce .9995 fine platinum coins, bringing cumulative totals for 2019 to 29,500 coins.

The Mint has limited itself to a 40,000-coin maximum mintage for the 2019 coins. Mint officials indicated that an initial 30,000 coins were produced in advance of the Jan. 7 sales launch date, with another 10,000 pieces to be minted when the first 30,000 coins are sold.

Of course the U.S. Mint won’t be producing any 1-ounce palladium coins this year, as that would just exacerbate the physical shortage in that precious metal.  This article was posted on the coinworld.com Internet site on Wednesday sometime — and another link to it is here.


Venezuelan opposition asks Citibank to delay gold repurchase

Opposition leader Juan Guaido has asked Citibank to delay by 120 days Venezuela’s scheduled repurchase of gold that President Nicolas Maduro’s government put up as collateral for a loan in 2015, three members of the team advising Guaido said.

Maduro’s government began to use gold swap deals some four years ago in order to obtain financing as oil income plummeted in the face of sanctions. Under such agreements, if the borrower does not pay back the loan on time, the financial institution keeps the gold.

One of the sources told Reuters that Citibank has not yet informed them whether or not it will agree to the request. A Citibank spokesperson declined to comment. Venezuela’s Information Ministry and the central bank did not respond to requests for comment on the status of the loan and its own discussions with Citibank, if any.

The request is part of the opposition’s strategy to safeguard Venezuela’s foreign assets and prevent the socialist Maduro government from selling off gold reserves to raise hard currency amid tightening sanctions.

This Reuters story, filed from Caracas, showed up on their website at 4:06 p.m. on Tuesday afternoon EST — and it’s a news item I found on the gata.org Internet site yesterday.  Another link to it is here.


South Africa’s mines minister calls on police to quell violence at Sibanye mine

Growing unrest at Sibanye-Stillwater’s South African gold operations has left nine people dead since workers downed tools in November, prompting the country’s mines minister to call on the police to step in and protect the local community.

Mineral Resources Minister Gwede Mantashe has requested the assistance of the Minister of Police to “restore and safeguard the safety and security of the community” in Carletonville in the west of Johannesburg, the mines ministry said.

“[The strike] has become violent, impacting negatively on communities in the area, with nine deaths reported thus far and an estimated 62 houses burnt down,” the mineral resources department said.

The Association of Mineworkers and Construction Union (AMCU) has been on strike at Sibanye’s bullion operations since mid-November and plans to extend the strike to its platinum mines as well as all other mines where the AMCU has members.

Sibanye-Stillwater said last month it could cut nearly 6,000 jobs at its gold mining operations, where AMCU has been on strike since mid-November over a wage dispute.

Firms including AngloGold Ashanti, Harmony Gold , Anglo American Platinum who received a strike notice are awaiting a labour court ruling which will decide if mine workers’ can embark on an industry-wide strike.

This Reuters story, filed from Johannesburg on Tuesday, was picked by the news.trust.org Internet site — and I found it on the Sharps Pixley website yesterday.  Another link to it is here.


India’s jewellers restock gold after prices drop 4%

After a lull of almost a fortnight, there was some buzz as demand showed an uptick in the gold market. Price of gold has dropped by 4.17 per cent since February 20, prompting jewellers to restock the metal. The discount of $2-3 per troy ounce at the B2B level last week has disappeared, indicating demand is picking up.

The market expects gold prices could slip to Rs 31,700 per 10 gm by this weekend. On Tuesday, gold price was hovering around Rs 32,445 per 10 gm (without GST).

We are seeing some movement in the market after almost a fortnight. Rupee has appreciated, too, which is supporting gold prices. Indians have started buying jewellery after a long gap,” said Mukesh Kothari, director of RiddiSiddhi Bullion.

This gold-related news item, filed from Kolkata, put in an appearance on the Economic Times of India website at 8:40 a.m. IST on their Wednesday morning, which was 10:30 p.m. in New York on Tuesday night — EST plus 10 hours.  I found it on the Sharps Pixley website — and another link to it is here.


The PHOTOS and the FUNNIES

This first photo was taken about a fifteen minute drive south of Merritt, B.C. on the lightly-travelled Coldwater Road.  It was late in the afternoon on a fall day — and with the sun low in the sky, this photo op showed up.  So I stopped the car in the middle of the road, as there are no shoulders to speak of — and took this shot.  Click to enlarge.

One thing I discovered within weeks of my move to Merritt, B.C. was that the now defunct Kettle Valley Railway extended just about everywhere in lower British Columbia.  These two photos were taken on the KVR rail bed just outside of Hope, B.C. at a place called the Othello Tunnels…which is now a fairly major tourist attraction, but was closed for the ‘winter’ season when we were there.  Because of the huge amount of rain they get, moss grows everywhere on the trees.  Click to enlarge.


The WRAP

It was a ‘nothing’ sort of day in both gold and silver yesterday, although both were closed at new lows for this move down…but not by much.  And because both these low closes occurred after the 1:30 p.m. COMEX close, neither number will appear on their respective dojis on the 6-month charts below.  The same can be said for palladium, as it’s high close of the day came after the COMEX close as well.

Here are the 6-month charts for the Big 6 commodities — and there’s certainly no much to see…except for the fact that ‘da boyz’ have platinum back below its 200-day moving average after its big short-covering rally that began in mid February.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away, I see that the tiny ‘rally’ that began as soon as trading started at 6:00 p.m. EST on Wednesday evening, got capped and turned lower shortly before 10 a.m. China Standard Time on their Thursday morning. It has been edging lower in price ever since. At the moment, gold is down $2.10 the ounce. It was the same price path for silver — and it’s now bouncing along its Tuesday and Wednesday low ticks…down 3 cents currently. Platinum is a bit lower as well — and down 2 bucks. And after being down a few dollars in Far East trading, palladium is back at unchanged as Zurich opens.

Net HFT gold volume is pretty light at 30,500 contracts — and there’s about 3,900 contract worth of roll-over/switch volume in this precious metal. Net HFT silver volume is around 9,200 contracts — and there’s only 282 contracts worth of roll-over/switch volume on top of that.

The dollar index has been doing virtually nothing — and is up 1 whole basis point from its 7:45 p.m. EST open in New York on Wednesday evening.


It’s still impossible to tell whether or not we’ve seen the lows for these engineered price declines or not.  Ted is expecting huge decreases in the commercial net short positions in both silver and gold in tomorrow’s Commitment of Traders Report.  But even if his estimates turn out to be on the conservative side in silver, it’s still very much in bearish territory from a COMEX futures market perspective.

And as I post today’s missive on the website at 4:02 a.m. EST, I note that the gold price had a small, but vicious price spike lower — and recovered all of that, plus a lot more within the next thirty or so minutes — and is currently down only 10 cents an ounce. Ditto for silver, as it was blasted below $15.00 the ounce…but it came roaring back in short order — and is now up 2 cents on the day. Platinum ticked a bit lower at the Zurich open as well, but it recovered as well — and is now back at unchanged. Palladium didn’t get the same treatment as the other three precious metals, but it has roared higher — and is now up 12 bucks as the first hour of Zurich trading comes to a close.

Gross gold volume is now up to a bit over 65,000 contracts — and minus roll-over/switch volume, net HFT gold volume is a bit under 52,000 contracts. Net HFT silver volume is coming up on 13,400 contracts — and there’s only 384 contracts worth of roll-over/switch volume in this precious metal.

The dollar index remains comatose — and is still up one basis point as of 8:45 a.m. GMT in London/9:45 a.m. CET in Zurich.

That’s all I have for today — and I’ll see you here tomorrow.

Ed