A Bear Raid in the COMEX Futures Market

29 March 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price wandered quietly sideways once trading began at 6:00 p.m. EDT in New York on Wednesday evening — and the high tick of the day was set at the 2:15 p.m. China Standard Time afternoon gold fix in Shanghai.  At that juncture, the engineered price decline began — and culminated in a sharp down move shortly after the COMEX opened in New York yesterday morning, as JPMorgan et al used every dirty trick in the book.  The low tick was set at 12:35 p.m. EDT.  It crawled a few dollars higher over the next forty-five minutes — and crept a bit lower into the 5:00 p.m. close from there.

The high and low ticks were reported by the CME Group as $1,311.10 and $1,287.70 in the April contract.

Gold was closed in New York on Thursday at $1,289.70 spot, down $19.40 from its close on Wednesday — and back below its 50-day moving average by a goodly amount.  Net volume was over the moon at 296,000 contracts — and roll-over/switch volume was 98,000 contracts.  Like for Wednesday’s numbers, both of these numbers are approximations as well.

Silver was engineered lower in price by ‘da boyz’ in a similar fashion as gold…including its Shanghai afternoon gold fix high — and its 12:35 p.m. EDT low in New York.  They were very precise in their handiwork yesterday.

The high and low ticks in this precious metal were recorded as $15.315 and $14.955 in the May contract.

Silver was closed on Thursday afternoon in New York at $14.98 spot, down 28 cents from Wednesday — and back below its 200-day moving average by a fair amount.  Net volume was very heavy at a bit under 71,000 contracts — and there was 6,700 contracts worth of roll-over/switch volume on top of that.

Platinum traded pretty flat until a few minutes after 12 o’clock noon in Shanghai on their Thursday morning.  It stair-stepped its way quietly higher starting at that point — and the high tick of the day [up $12 bucks] came shortly before 9 a.m. in Zurich.  ‘Da boyz’ and their bag of dirty tricks appeared at that point — and the low tick in this precious metal was set around 9:45 a.m. in New York.  Its rally attempt after that wasn’t allowed to get far — and it traded flat once the COMEX closed at 1:30 p.m. EDT.  Platinum was closed at $838 spot, down 13 dollars on the day — and 25 bucks off its Zurich high.

What can I say about palladium today, that I didn’t say on Wednesday, except that JPMorgan et al kicked the living snot out of it for the second day in a row — and the beating they laid on it yesterday was even worse than the one on Wednesday.  I didn’t think that was possible.  The spike low tick of the day came a few minutes after 1 p.m. in New York…a few dollars below $1,300 spot…and it gained back a bunch going into the 5:00 p.m close of trading from there.  ‘Da boyz’ closed palladium at $1,326 spot, down $104 from Wednesday — and back below its 50-day moving average by over 100 bucks.  Simply outrageous.

Ted said that rhodium fell around $270 yesterday.  It was up around the $3,000/ounce mark the last time I heard — and it’s not even traded on any exchange that I know of.


The dollar index closed very late on Wednesday afternoon in New York at 96.77 — and opened up 19 basis points once trading began at 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  From that juncture it crept quietly lower until 2:46 p.m. CST on their Thursday afternoon.  The 96.82 low tick was set at that juncture — and then the ‘rally’ began.  The 97.34 high tick was set at 9:44 a.m. in New York — and from there it chopped rather unevenly sideways until 3:20 p.m. — and didn’t do much after that.  The dollar index finished the Thursday session in New York at 97.20…up 43 basis points from Wednesday’s close.

The dollar index ‘rally’ yesterday reeked of ‘ramp job’ — and used solely as cover to do the dirty in the precious metals.

Here’s the usual DXY chart from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart from the folks over at stockcharts.com — and the delta between its close…96.76…and the close on the DXY chart above, was 44 basis points on Thursday.  Click to enlarge as well.

The gold shares gapped down a bit over two percent once trading began in New York at 9:30 a.m. EDT on Thursday morning.  Their respective lows came at 12:35 p.m…gold’s low tick of the day — and the crept a tiny bit higher into the close from there.  The HUI finished the Thursday session down 2.90 percent.

The price action in the silver equities was almost identical, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 3.05 percent.  Click to enlarge if necessary.

Here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Thursday’s doji.  Click to enlarge as well.

In some respects, I was happy to see that the carnage in the precious metal stocks was only as bad as it was, as it could/should have been much worse.  But always remember one thing, dear reader, is that every share sold yesterday sports a new owner — and their hands are infinitely stronger than the hands that sold it.

In most ways, the sell-off in the shares is the same as engineered sell-off in their respective underlying precious metals in the COMEX futures market…getting the weak longs to dump those positions — and hopefully go short as well.  This is also how JPMorgan milks GLD, SLV and ZKB of physical metal…buying their shares on the very engineered price declines that they most likely have a hand in instigating — and then converting them to physical metal which doesn’t see the light of day again until sold for huge profits.  Those enormous profits are still in the future.


The CME Daily Delivery Report for Day 1 of First Day Notice for April showed that 957 gold and 141 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, there were six short/issuers in total, but the only one that really counted for anything was JPMorgan, with 895 contracts out of their client account.  There were ten long/stoppers in total, but the only two that mattered were Citigroup and Morgan Stanley, as they stopped 606 and 228 contracts for their respective in-house/proprietary trading accounts.  In very distant third place was ABN Amro, with 53 contracts for its client account.

In silver, there were four short/issuers in total…Advantage, Morgan Stanley, ABN Amro and ADM…with 76, 28, 20 and 17 contracts…all from their respective client accounts.  There were five long/stoppers in total, but head-and-shoulders above all was JPMorgan, picking up 124 contracts 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 April crashed by 54,308 contracts, leaving 3,884 still open, minus the 957 mentioned a few paragraphs ago.  Silver o.i. in April actually rose by 40 contracts, which was somewhat of a surprise…leaving 706 still around, minus the 141 mentioned a few short paragraphs ago.


There were no reported changes in GLD yesterday, but an authorized participant…most likely JPMorgan…added 469,349 troy ounces of silver to SLV.

Once again, there was no sales report from the U.S. Mint.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday, was 1,800 troy ounces that was received at Delaware.  I won’t bother linking this amount.

There wasn’t a lot of activity in silver, as only one truckload…599,658 troy ounces…was received at CNT.  In the ‘out’ department, there was 34,977 troy ounces that departed CNT — and 9,773 troy ounces was shipped out of Brink’s, Inc.  The link to this is here.

There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  Nothing was reported received, but 2,150 kilobars were shipped out.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


Here are three charts that I dug up on Nick Laird’s website yesterday.  They show the gold imports by the four major countries on the new “Silk Road”…China, India, Russia and Turkey…updated with data as of the end of January 2019.

Note the the lower embedded chart…Global Production vs. Monthly Demand.  You will note that the monthly demand for physical gold by these four countries handily exceeds monthly global gold production going all the way back to late 2012.  So where is the gold coming from to support this excess demand…not only from these four ‘Silk Road’ countries, but the rest of the world’s monthly demand as well?  It’s my opinion that its coming from both the U.K. and the U.S. via Switzerland.  Click to enlarge.

These next two charts are related to the first one.  The first one below shows Silk Road gold demand for Month 1…January…compared to month 1 of prior years.  The average gold demand in January over the last seven years comes to a bit over 306 tonnes.  Click to enlarge.

And this second chart shows the annual gold demand by these four ‘Silk Road’ countries going all the way back to 1995.  The demand change between 1995 and 2018 is a bit over 3,000 tonnes/year.  World gold production in 2018 was the same amount…a bit over 3,000 tonnes/year.  Click to enlarge.

It was another very quiet news day again on Thursday — and I only have a tiny handful of stories for you.


CRITICAL READS

Pending Home Sales Tumble 4.9% YoY — 14th Straight Month of Declines

With home price growth at the slowest rate since 2012, rates falling, and existing home sales having rebounded notably, pending home sales are expected to slow very modestly in February after rebounding in January, but they fell more than expected.

Pending Home Sales fell 1.0% MoM (against expectations of a 0.5% decline)  Click to enlarge.

Lawrence Yun, NAR chief economist, is (surprise, surprise) optimistic…

In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern,” he said.

As a whole, these numbers indicate that a cyclical low in sales is in the past but activity is not matching the frenzied pace of last spring.”

Yun added that despite the growth in the West, the region’s current sales are well below the sales activity from 2018.

However, this is the 14th month in a row of annual declines in pending home sales…Click to enlarge.

This is the longest stretch of declines since 2008.

This 2-chart Zero Hedge story was posted on their Internet site at 10:07 a.m. EDT on Thursday morning — and I thank Brad Robertson for pointing it out.  Another link to it is here.


The Bond Fund Risks Your Broker Won’t Tell You — Dennis Miller

Historically, funds holding investment-grade bonds have been considered a safe investment. Lending money to hundreds of well-known companies had little chance of major default and provided interest income. Has your broker mentioned new risks emerging?

Bonds ratings fall into two major groups, investment grade and high yield (called junk bonds). The bond rating generally determines the interest rate borrowers have to pay.

For decades retirees relied heavily on Certificates of Deposit (CDs) and top-rated government bonds. Around 6% interest was the norm. Corporate bonds paid higher interest to compensate for the higher risk.

With the 2008 bank bailouts, the game changed as interest rates dropped to historic lows.
Retirees have bills to pay. Pension funds have to meet income projections. Insurance companies need solid returns to cover their annuities. They all looked elsewhere, desperately seeking good, safe returns. Trillions of dollars moved to the corporate bond market.

Today the yield of a 5-year BBB bond (the lowest investment grade rating) is just over 4%, 33% lower than an FDIC insured CD before the bank bailouts.

Despite low yields and higher risk, banks, pension funds, and investors looked for the best companies in the bottom of the investment grade barrel.

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


How the Feds Sedated American Capitalism — Bill Bonner

A Diary Dictum: People are neither always bad nor always good, but always subject to influence.

Want to know why tax cuts, spending increases, and EZ money from the Fed don’t work? Wonder how the feds could add $4 trillion in new money, suppress interest rates below zero for an entire decade, add $13 trillion in deficit spending, and still end up with the weakest expansion ever?

What’s the matter with “stimulus,” anyway?

Try this experiment at home. Tell your teenager that he will get $5,000 a month for the rest of his life, and a lifetime supply of marijuana. See how that stimulates him. Think he’ll study harder… work harder…?

We remind readers that we’re down in Argentina studying the evidence firsthand. Despite runaway budgets, out-of-control spending, and lusty, gaucho printing-press money – that is, despite “stimulus” up the kazoo – the Argentine economy is now in a depression, with a 6% annual loss of GDP and an inflation rate estimated as high as 100%.

Why?

This worthwhile commentary from Bill appeared on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is here.


Russia Throws Down the Gauntlet to U.S. on Venezuela

The Foreign Ministry spokesperson Maria Zakharova acknowledged in Moscow on Tuesday that Russian “specialists” are indeed in Venezuela within the ambit of a 2001 military-technical cooperation agreement with Caracas. Zakharova underscored that Russia’s bilateral military cooperation with Venezuela is in accordance with the latter’s constitution and has legal underpinning, which “doesn’t require any additional approval from the (opposition-controlled) National Assembly of Venezuela.”

This followed media reports that two Russian air force planes landed at Caracas on Saturday carrying Vasily Tonkoshkurov, chief of staff of the ground forces with nearly 100 military personnel and some 35 tonnes of material. An unnamed official at the Russian embassy in Caracas told the Sputnik that the Russian personnel had arrived to “exchange consultations. Russia has various contracts that are in the process of being fulfilled, contracts of a technical-military character.”

Zakharova’s remarks came a day after Foreign Minister Sergey Lavrov received a phone call from the U.S. Secretary of State Mike Pompeo on March 25. The Russian readout said Pompeo was “interested in certain issues related to the developments in Venezuela.” It added,

Sergey Lavrov emphasised that Washington’s attempts to organise a coup d’etat in Venezuela and threats to its legitimate government are a violation of the U.N. Charter and blatant interference in the domestic affairs of a sovereign state… After stating principal differences in Russian and U.S. positions, the officials agreed to stay in touch and continue to exchange assessments.”

The state department readout, however, claimed that Pompeo warned Russia “to cease its unconstructive behavior” in Venezuela” and that Washington and its regional allies “will not stand idly by as Russia exacerbates tensions.” It also said Pompeo accused Russia of “continued insertion … to support the illegitimate regime of Nicolas Maduro in Venezuela [which] risks prolonging the suffering of the Venezuelan people who overwhelmingly support interim President Juan Guaido”.

This longish news item/commentary showed up on the globalresearch.com Internet site yesterday sometime — and it comes to us courtesy of Larry Galearis.  Another link to it is here.


Venezuela bars Guaido from holding public office for 15 years

U.S.-backed self-declared “Interim President” Juan Guaido has been barred from holding public office in Venezuela for 15 years by the Maduro government, Reuters reports, citing Caracas officials.

Venezuelan state comptroller Elvis Amoroso in public statements on Thursday said it was the maximum punishment allowable by law, and charged that Guaido had “inconsistencies in his personal financial disclosures and a spending record that did not match his level of income,” according to Reuters.

After the shock announcement it remained unclear what this means in terms of Guaido’s immediate fate as majority leader of the National Assembly.

Crucially Guaido’s being banned from public office came less than 24 hours after the opposition leader announced plans for his supporters to launch “tactical actions” starting next week as part of his “Operation Freedom” to overthrow President Nicolas Maduro.

He began publicly referencing the plan earlier this month at opposition rallies and described it as a “full-fledged revolution in all states of Venezuela simultaneously.”

Notably the White House called Rosales “Venezuela’s new Interim First Lady” in statements related to the event.

No doubt, Caracas is now sending its own firm message in banning Guaido for public office for 15 years, something sure to result in a swift U.S. reaction.

This story put in an appearance on the Zero Hedge website at 6:05 p.m. EDT on Thursday evening — and another link to it is here.


Countries Must Seek ECB Approval to Manage Gold Reserves, Draghi Says

The European Central Bank needs to approve any operation in the foreign reserves of euro zone countries, including gold and large foreign currency holdings, the ECB’s President Mario Draghi said on Thursday.

The ECB shall approve both the operations in foreign reserve assets remaining with the NCBs (national central banks)…and Member States’ transactions with their foreign exchange working balances above a certain threshold,” Draghi told two Italian members of the European Parliament.

The purpose of this competence is to ensure consistency with the exchange rate and monetary policy of the Union.”

I’m sure that this will go over like the proverbial lead balloon in some member states of the E.U.  The above three paragraphs are all there is to this brief Reuters article that was filed from Frankfurt at 1:54 a.m. EDT on Thursday morning…6:54 a.m. CET.  I found it embedded in a GATA dispatch that Chris Powell filed from Hong Kong early on their Thursday afternoon — and another link to the hard copy is here.


The PHOTOS and the FUNNIES

Today’s two photos were taken from the Trans-Canada Highway north of Spence’s Bridge — and on the way to Cache Creek…the first one looking north, the second…south.  In the first shot, there had been a ground fire in the foreground recently — and that’s why the ponderosa pines on the right are partially dead…and the fence posts, burned and blackened.  The Thompson River is straddled on each side by the CNR and CPR railway tracks.  Both photos were taken on December 16…a time of year when river levels are at their lowest.  Click to enlarge for both.


The WRAP 

As I’ve said on too many occasions to remember…JPMorgan et al have precious metal prices in their iron grip — and they had their stompin’ boots on yesterday.  Of the Big 6 commodities, only copper was allowed to close higher on the day.

The technical damage was immense.  But what does technical analysis mean in a managed market dear reader?  It shouldn’t mean anything to you, but to the Managed Money traders, it’s the Gospel.  The 50-day moving averages got blown out to the downside in both copper and palladium — and ‘da boyz’ took out silver’s 200-day moving average with real authority as well.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and you can survey the damage for yourself.  Click to enlarge.

Yesterday was the last trading day in the April contract, as all remaining small traders that weren’t standing for delivery next month had to roll or sell their COMEX contracts before the 1:30 p.m. EDT COMEX close.  The engineered price declines yesterday by JPMorgan et al were there to encourage them to sell as many contracts a possible, rather than roll them over.  And why they didn’t start this down-side blow-out on Wednesday, when all the large traders had to be out by the COMEX close on that day, is a mystery to me.

How successful they were remains to be seen — and that data won’t be available until next Friday’s COT Report.

While talking about the COT Report, the one coming out this afternoon around 3:30 p.m. EDT is ancient history.  And unless Ted finds something ‘under the hood’ in the Disaggregated COT Report, I won’t waste any more than a few words — and two charts…in my discussion on it in my Saturday column.  But I would give a King’s ransom to know what the COT Report looked like at the close of COMEX trading yesterday.

Not only did all the remaining April contract holders [in gold in particular] have to exit their positions yesterday, but today is also the last trading day of the month — and of Q1/2019.  It’s a certainty that this event — and the pounding  the precious metals took yesterday, helped a lot of fund managers decide to exit some or all of their positions in the precious metals…both yesterday and again today.  It’s a certainty that the deepest of pockets were standing by and picking up everything that these funds, plus John Q. Public were selling in a panic yesterday — and will be again over the next few days.

Then there’s Basel III.  Today is the last trading day before that goes into effect — and gold becomes a Tier 1 asset.  Did the bombing of the precious metals have anything to do with that imminent event?  I don’t know, but it’s really too soon to tell.

I’ll have more about this in The Wrap in my Saturday missive.


And as I post today’s column on the website, the London open is upon us — and I note that the gold price didn’t do much of anything until the 2:15 p.m. afternoon gold fix in Shanghai on their Friday afternoon. It was sold lower by a few dollars at that juncture — and is currently down $2.70 the ounce — and at a new intraday low for this move down. Silver has been wandering around a few pennies above and below unchanged through all of Far East trading — and it’s sitting at unchanged at the moment. Platinum was up 7 bucks by shortly before 2 p.m. CST, but once the afternoon gold fix was done in Shanghai, it was sold down a bit as well — and is currently up 4 dollars. Palladium was up around 23 dollars by shortly before 2 p.m. CST, then it go whacked for around 28 bucks or so — and back below unchanged by about 5 dollars. It has recovered a bit in the last few minutes — and is up about 18 bucks or so as Zurich opens.

Gross gold volume is pretty heavy at around 61,500 contracts — and minus roll-over/switch volume, net HFT gold volume is a bit over 59,500 contracts, with virtually all of that in the new front month for gold, which is June. Net HFT silver volume is pretty chunky as well at a bit over 15,500 contracts — and there’s only 583 contracts worth or roll-over/switch volume in this precious metal.

The dollar index opened unchanged once trading commenced at 7:45 p.m. EDT on Thursday evening in New York, which was 7:45 a.m. China Standard Time on their Friday morning. It chopped very quietly sideways until 12:54 p.m. CST on their Friday afternoon — and has been edging unsteadily lower since — and is down 3 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.


That’s all I have this time — and I have no idea what to expect for the remainder of the Friday session, especially considering what’s been going on in Far East trading so far today.  But after yesterday’s pounding, one would think that they were done.  Ted didn’t think that ‘da boyz’ would go after gold’s 200-day moving average, as it’s 45 dollars away.  But it’s their world — and you just never know.

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

Ed