More Quiet Engineered Price Declines on Thursday

15 March 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Quiet selling pressure in gold began about ninety minutes after trading began in New York at 6:00 p.m. EDT on Wednesday evening — and in the thinly-traded Far East market, ‘da boyz’ had an easy time of it.  The low tick in gold came a few minutes after 9 a.m. EDT in COMEX trading in New York on Thursday morning — and it crawled a few dollars higher into the close from there.

The high and low ticks were reported as $1,310.30 and $1,292.50 in the April contract.

Gold was closed on Thursday afternoon in New York at $1,295.80 spot…down $13.10 on the day — and back below both the $1,300 spot mark, plus its 50-day moving average as well.  Net gold volume was higher than it has been lately, but nothing really extraordinary at around 209,500 contracts — and there was 40,000 contracts worth of roll-over/switch volume in this precious metal.

The silver price was guided lower in a similar fashion during the Thursday trading session, except its low tick came right at the 11 a.m. EDT London close.  It rallied a few pennies from there — and then really didn’t do much for the remainder of the day.

The high and low ticks in silver were recorded by the CME Group as $15.47 and 15.135 in the May contract.

Silver was closed yesterday at $15.15 spot, down 26.5 cents from Wednesday — and back below its 200-day moving average once again.  Net volume was very decent at 66,000 contracts — and there was just about 4,400 contracts worth of roll-over/switch volume on top of that.

It was the same selling pressure price pattern in platinum — and its low of the day came at exactly 2:00 p.m EDT in the thinly-traded after-hours market in New York on Thursday afternoon.  The price didn’t do much after that.  Platinum was closed at $822 post, down 19 dollars on the day.

‘Da boyz’ had palladium down 13 bucks by around 2:45 p.m. China Standard Time on their Thursday afternoon.  From that juncture it wandered higher — and then lower — and finally came close to finishing unchanged on the day.  But that attempt was halted at 1 p.m. EDT — and the price didn’t do much after that.  Platinum finished the Thursday session in New York at $1,532 spot, down 3 dollars on the day.

The dollar index closed very late on Wednesday afternoon in New York at 96.55 — and opened down 7 basis points once trading commenced around 7:45 p.m. EDT on Wednesday evening/7:45 a.m. CST in Shanghai.  It crawled a bit higher until 2:06 p.m. CST — and then began to chop quietly lower — and was back below the unchanged mark at 8:15 a.m. in London.  A ‘rally’ began at that point — and the 96.82 high tick came at 11:30 a.m. GMT — and the index chopped quietly but evenly sideways for the remainder of the Thursday trading session.  The dollar index finished the day at 96.79…up 24 basis points from its close on Wednesday.

It was another day where the dollar index had zero influence on precious metal prices, as it was obvious that the engineered price declines on Thursday were GLOBEX/COMEX futures market related….as ‘da boyz’ did the dirty.

Here’s the DXY chart for Thursday, courtesy of Bloomberg as always.  Click to enlarge.

Here’s the 6-month U.S. dollar index chart, courtesy of the folks over at stockcharts.com — and the delta between its close…96.24…and the close on the DXY chart above, was 55 basis points on Thursday.  Click to enlarge.

The gold shares gapped down a whole bunch at the open of trading in New York yesterday — and then crawled to their respective lows shortly after 12 o’clock noon EDT.  They didn’t do a thing after that.  The HUI closed lower by 3.02 percent.

It was almost the same for the silver equities, with most of their losses coming by 11:30 a.m. in New York trading — and they didn’t do much of anything after that, either.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 3.63 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 1 gold and 10 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

The lone gold contract was issued by ADM — and stopped by JPMorgan.  Both transactions involved their respective client accounts.

In silver, the two short/issuers were Advantage and ADM…with 9 and 1 contracts from their respective client accounts.  ABN Amro and Morgan Stanley stopped 4 and 2 contracts for their respective client accounts.  The remaining 4 contracts were stopped by The CME Group, which immediately reissued them as 4×5=20 one-thousand ounce COMEX silver contracts — and ADM stopped all 20.

It’s not unusual for the CME Group to perform this exercise, as they do it all the time.  However, it’s the first time that I’ve seen them do it this early in the delivery month.  Normally they leave these particular deliveries until the final days of the month.  But not this time, for whatever reason.

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 rose by 1 contract, leaving 38 still around, minus the 1 contract mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that zero gold contracts were posted for delivery today, so that means that 1 more gold contract was added to March deliveries.  Silver o.i. in March dropped by 122 contracts, leaving 75 still open, minus the 10 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 128 silver contracts were actually posted for delivery today, so that means that 128-122=6 more silver contracts just got added to the March delivery month.

The Preliminary Report showed yet another big increase in total gold open interest yesterday…10,521 contracts. Silver’s total open interest fell again…by 1,097 contracts.  These numbers will certainly drop a bit when the CME Group posts the final numbers for Thursday’s trading session later in the morning in New York.


There were no reported changes in GLD on Thursday, but an authorized participant added 1,172,100 troy ounces of silver to SLV.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 2,000 one-ounce 24K gold buffaloes — and that was it.

There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.

There was some activity in silver, as one truckload…597,920 troy ounces…was received — and all of that ended up at CNT.  There was 93,808 troy ounces shipped out — and that departed the International Depository Services of Delaware.  There was also a paper transfer of 349,154 troy ounces from the Eligible Category — and into Registered over at CNT as well.  Without doubt, that’s scheduled for delivery in March.  The link to that is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They reported receiving 500 of them — and shipped out 600.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here’s a 5-year chart that Nick Laird keeps tucked away on his website that I always keep an eye on — and I thought it worth sticking in today’s column.  It shows the gold price plotted against the net long or short positions of the Managed Money traders.  This graph should leave no doubt in anyone’s mind that it’s only what they do…or what the commercial traders trick them into doing…that controls the gold price.

I’m no mathematician, but just eye-balling the correlation between the gold price — and the net positions held by the Managed Money traders, appears to be well in excess of 90 percent.  That’s why Ted says that its only what the Managed Money traders are up to, that is the controlling factor in the gold price — and he is 100 percent correct about that.  The chart for silver is very similar.

The top half of the chart shows the gold price in blue — and the thin black line [on both the upper and lower charts] shows the net long or short positions of the Managed Money traders.  Click to enlarge.

It was another extremely quiet news day — and I had to scrape the bottom of the proverbial l barrel to even find what I have for you today.


CRITICAL READS

U.S. new home sales declined 6.9 percent in January

Sales of new U.S. homes slumped 6.9 percent in January, a possible sign that buyers paused during the government shutdown.

The Commerce Department says that new homes sold at a seasonally adjusted annual rate of 607,000 in January, down from 652,000 in December.

The partial government shutdown during January as well as a battered stock market appears to have hurt sales, even as lower mortgage rates eased affordability pressures and boosted buyer interest. Purchases of homes yet to be constructed to plunged 26.8 percent in January, accounting for all of the month’s decline. Sales increased of homes that were already under construction. New-home sales in January ran slightly below the totals for 2018 and 2017.

The median sales price of a new home in January fell 3.8 percent to $317,200.

The above four paragraphs are all there is to this brief news item that showed up on the cnbc.com Internet site around 11 a.m. EDT on Thursday morning — and it’s a story I found on Doug Noland’s website.  Another link to the hard copy is here.


Socialism: The Real Trickle-Down Economics — Dennis Miller

While politicos like to call tax cuts “trickle-down economics”, the real culprit is socialism. The Robin Hood theory of “steal from the rich and give to the poor” sounds noble however, in practice it doesn’t work that way. The political class tax and spend for their benefit first, then some may trickle-down to the masses.

Margaret Thatcher sums up the problem well. Citizens gladly take government benefits as long as someone else pays for them, while politicians of all flavors are happy to oblige.

Politicos buying votes with tax dollars, offer give-away programs to the citizens and politically connected – only after protecting themselves and millions of government employees. High salaries, generous health care, family leave, and pension benefits garner votes and significant campaign contributions from government workers.

With each election, creative politicos invent new and creative ways to grow and maintain their power spending our tax dollars.

If tax revenues can’t cover the costs, the government raises taxes and/or borrows money to make up the difference. Unlike the federal government, individual states can’t print money. Is there a breaking point on how much they spend, borrow and tax?

This long commentary by Dennis put in an appearance on his Internet site on Thursday morning sometime — and another link to it is here.


Brexit: MPs vote by a majority of 211 to seek delay to E.U. departure

MPs have voted by 413 to 202 – a majority of 211 – for Prime Minister Theresa May to ask the E.U. for a delay to Brexit.

It means the U.K. may not now leave on 29 March as previously planned.

Mrs. May says Brexit could be delayed by three months, to 30 June, if MPs back her deal in a vote next week.

If they reject her deal again then she says she will seek a longer extension — but any delay has to be agreed by the 27 other E.U. member states.

Most Conservative MPs voted against delaying Brexit — including seven cabinet members – meaning Mrs. May had to rely on Labour and other opposition votes to get it through.

This story was posted on the bbc.com Internet site on their Thursday evening sometime — and I thank Swedish reader Patrik Ekdahl for sending it our way.  Another link to it is here.


2018 Swiss gold exports = 46% global gold production! — Lawrie Williams

We have often in these pages recounted the importance of gold refined or re-refined and exported via Switzerland in terms of global gold flows, and the latest figures out of the small European nation serve to emphasise that point despite 2018 being perhaps a weaker year for the nation’s overall gold trade.  In terms of gold imports the country took in some 1,500 tonnes of gold during the year and exported 1,473 tonnes – mostly to Asia where Mainland China was the dominant recipient.  Indeed if we add exports to Hong Kong to the Chinese total, given that most of this will have been fabricated and re-exported to the Chinese mainland, the flows to the Asian giant alone amounted to around 729 tonnes of gold last year.

Switzerland has a batch of major gold refineries which specialise in taking doré bullion from mines, scrap gold and large refined gold bars – the latter primarily from the U.K., probably the centre for global gold trade – and producing high purity gold in the small kilobar sizes and wafers most in demand in Asia.  The amounts flowing through Switzerland have probably fallen in recent years due to the building of new gold refineries in Asia and the Middle East (some owned by by the Swiss refiners) but nevertheless the amount of gold routed through Switzerland remains substantial.  In 2018 it amounted to around the equivalent of nearly half global new mined gold.  Indeed if one takes Chinese gold production (which all remains in China) of around 400 tonnes out of the equation, Swiss refineries handle an amount of gold equivalent to some 50% of global new mined non-Chinese output.

The other statistic which can be gleaned from the Swiss gold export figures for all of 2018 is that around 1,266 tonnes — or close to 86% — flowed to Asian and Middle Eastern nations. This serves to again emphasise the continuing flows of gold from West to East, with the Eastern holdings seen as being in stronger hands and less likely to flow back into the markets.

This 1-chart gold-related article from Lawrie was posted on the Sharps Pixley website yesterday — and another link to it is here.


The PHOTOS and the FUNNIES

These three photos were taken driving on B.C. Highway 97C from the Thompson Plateau and the Highland Valley Copper mine on December 2, 2018…a sequence I’ll have later.  The first photo was on the descent — and the first place I could pull over safely, as it has a very steep grade with no shoulders.  The town of Ashcroft, the Thompson River — and the CPR and CNR tracks, are buried in the valley that runs across the middle of the shot.  The second photo shows the Thompson River — and a 3-mile/5-kilometer long unit grain train snaking along the CPR tracks.  Neither the ‘head end’ or the rear of the train are visible because it’s so long.  Click to enlarge for both.

The third shot on the descent from the plateau shows the town of Ashcroft…at the confluence of the Bonaparte and Thompson Rivers.  All of Highland Valley Copper’s concentrate ends up here via truck — and is then loaded on a CPR train for heaven only knows where.  Having driven this stretch of Highway 97C twice, I would never want to be a truck driver hauling concentrate down from the mine to the rail head.  It was a bit of a white-knuckler even in my car.  Click to enlarge.


The WRAP

Thursday was another day of quietly engineered price declines in gold, silver and palladium and, as ‘da boyz’ always do, they started their attack in the very thinly-traded overnight market in the Far East — and once the sell stops got hit, then the price decline becomes self sustaining.  But when it stopped or reversed a bit for whatever reason, the powers-that-be were there to sell whatever contracts it took to resume the downward price path.  That was in full force yesterday.

And if there was any correlation between what was going on in the currency market and the precious metal market, it certainly wasn’t very evident in the dollar index chart.  These price declines were a completely managed affair — and as Ted Butler said on the phone yesterday, it’s amazing that more people can’t see it for what it is.

Here are the 6-month charts for the Big 6 commodities.  And as I mentioned earlier, silver and platinum were closed back below their respective 200-day moving averages — and gold was closed back below its 50-day.  Click to enlarge for all.

And as I post today’s column on the website at 4:02 a.m. EDT, the London open is less than ten minutes away — and I note that there certainly has been some interesting price activity in the precious metals starting shortly before 11 a.m. China Standard Time on their Friday morning.  All have been heading unsteadily higher since then.  Currently, gold is up $7.10 the ounce, silver is up 18 cents — and platinum and palladium are higher by 8 and 7 dollars respectively.

Gross gold volume is a bit over 75,000 contracts — and minus the current roll-over/switch volume, net HFT gold volume is getting up there at around 56,500 contracts.  Net HFT silver volume is pretty heavy as well at 18,500 contracts — and there’s only 171 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened down 7 basis points once trading began around 7:45 p.m. EDT on Thursday evening in New York, which was 7:45 a.m. CST in Shanghai.  It crept back to the unchanged mark by 9:18 a.m. CST — and then fell down to its current 96.60 low tick at exactly 11:00 a.m. CST.  It appeared to get rescued at that point — and the index ‘rallied’ a bit from there until 1:15 p.m.  — and has turned a bit lower since — and is currently down 14 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.


Today, around 3:30 p.m. EST, we get the latest and greatest Commitment of Traders Report…this one for positions held at the close of COMEX trading on Tuesday, March 12.  In some respects, particularly in silver, this report is already very much “yesterday’s news” after the engineered price declines we had on Thursday.


NOTE: Because of the switch over to Daylight Saving Time in North America this past Sunday, I’m not staying up the extra hour to record the first hour of London/Zurich trading.  Britain and Europe don’t go on British Summer Time [BST] and Central European Summer Time [CEST] for another two weeks.  Once they do the switch-over to BST and CEST, then I’ll resume the usual routine of commenting on the first hour of trading in both those markets.


With today being Friday, the last trading day of the week, I’m not sure what to expect as far as precious metal price action is concerned…especially considering Thursday’s price activity, along with the current price action in Far East trading at the moment.  But, as always, nothing will surprise me when I check the charts when I roll out of bed later this morning.

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

Ed