The Precious Metals Show Some Signs of Life

03 April 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price chopped unevenly sideways once trading began at 6:00 p.m. EDT on Monday evening in New York — and the low tick of the day was set a few minute before 1 p.m. China Standard Time on their Tuesday morning.  From there it rallied quietly and nervously for the remainder of the Tuesday session, closing on its high tick of the day…such as it was.

The low and high ticks aren’t worth looking up.

Gold finished the day at $1,292.10 spot, up $4.80 on the day.  Net volume was relatively quiet at 187,500 contracts — and roll-over/switch volume was a bit under 10,000 contracts on top of that.  And it should also be mentioned that gold’s low tick in Far East trading yesterday, was a slight new intraday low for this move down.

Silver was down a nickel or so by 1 p.m. CST on their Tuesday afternoon.  It edged back to unchanged by the 2:15 p.m. afternoon gold fix in Shanghai.  It was back below the $15 spot mark by 9 a.m. in London — and then didn’t do much until 1 p.m. GMT/8 a.m. EDT.  It was sold down a dime or so by minutes after 8:30 a.m. in COMEX trading in New York — and that was its low tick of the day.  It rallied a bit until shortly before 10:30 — and then inched unevenly higher until trading ended at 5:00 p.m. EDT.  Like for gold, silver also closed on its high of the day…such as it was.

The low and high ticks in this precious metal, like yesterday, are barely worth looking up…but here they are anyway…$14.905 and $15.09 in the May contract.

Silver finished the Monday session at $15.085 spot, up one whole cent on the day.  Net volume was nothing out of the ordinary at 54,500 contracts — but roll-over/switch volume was pretty heavy at just under 16,500 contracts. A tiny new intraday low in silver was set yesterday as well.

Platinum was up 2 bucks by the 2:15 p.m. afternoon gold fix in Shanghai on their Thursday afternoon and, like silver and gold before it, was sold lower until a few minutes after 10 a.m. in Zurich.  It edged unevenly higher until the equity markets opened in New York yesterday morning — and then was sold back into negative territory by the 1:30 p.m. EDT COMEX close.  From that juncture, it stair-stepped its way higher until trading ended at 5:00 p.m.  Platinum closed at $849 spot on Tuesday, up 1 whole dollar from Monday.

Palladium traded very unevenly sideways in the Far East on their Tuesday — and was down about 6 bucks by 10 a.m. CEST in Zurich.  Its low tick was set an hour and change later — and it crept up a bit in price until the 8:20 a.m. EDT COMEX open.  Then it blasted higher until a short seller of last resort appeared a few minutes later and, like platinum was sold sharply lower until 11:30 a.m. in New York.  From that point it rallied back to above unchanged — and most of the gains that mattered were in by the 1:30 p.m. COMEX close.  From there, it chopped quietly sideways for the remainder of the Tuesday session.  Palladium was closed at $1,411 spot, up 10 dollars on the day.

The dollar index closed very late on Monday afternoon in New York at 97.23 — and opened up 10 basis points once trading began at 7:44 p.m. EDT in New York on Monday evening, which was 7:44 a.m. in Shanghai.  It chopped quietly sideways, with a very slight positive bias, until the 10 a.m. EDT afternoon gold fix in London.  The ensuing tiny rally topped out at the 97.52 mark around 11:50 a.m. in New York — and then chopped unsteadily lower until trading ended at 5:28 p.m. EDT.  The dollar index finished the Tuesday session at 97.36…up 13 basis points from Monday’s close.

It was yet another day where there was no correlation between what was happening in the currency markets — and price moments in the precious metals.

Here’s the DXY chart from BloombergClick 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…96.92…and the close on the DXY chart above, was 44 basis points on Tuesday.  Click to enlarge.

The gold shares opened unchanged — and then chopped very unsteadily higher from that juncture, with their respective highs came a few minutes after the 1:30 p.m. COMEX close.  They headed very unevenly lower from there until around 3:35 p.m. in New York trading — and then notched a bit higher into the 4:00 p.m. EDT close from there.  The HUI finished up on the day by 0.64 percent.

The silver equities opened down about half a percent — and then were all over the map after that.  Their respective highs, such as they were, came shortly after 1 p.m. EDT, but they quickly sank back into the red, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.48 percent.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Tuesday’s doji.  Click to enlarge.

The CME Daily Delivery Report for Day 4 of the April delivery month showed that 131 gold and 20 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, of the six short/issuers in total, the largest was Advantage with 59…followed by JPMorgan and Marex Spectron with 29 and 26 contracts.  All were issued from their respective client accounts.  There were seven long/stoppers in total.  Citigroup stopped 69 for its own account, JPMorgan stopped 21 for its client account — and in third place was HSBC USA, picking up 19 contracts for its own account as well.

In silver, of the four short/issuers, Marex Spectron was the largest with 11 — and ADM and Advantage issued 4 contracts apiece.  Of the three long/stoppers JPMorgan and Morgan Stanley picked up 16 and 3 contracts for their respective client accounts.

Marex Spectron just stopped a bunch of gold and silver contracts during the first three delivery days in April — and here they are reissuing some of that.

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

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in April fell by 1,120 contracts, leaving 1,334 still around, minus the 131 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 1,131 gold contracts were actually posted for delivery today, so that means that 1,131-1,120=11 more gold contracts were just added to the April delivery month.  Silver o.i. in April fell by an even 100 contracts, leaving 97 still open, minus the 20 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 121 silver contracts were actually posted for delivery today, so that means that 121-100=21 more silver contracts just got added to April.


For the second day in a row there was a withdrawal from GLD.  This time an authorized participant took out 151,102 troy ounces.  There was also a small withdrawal from SLV…133,839 troy ounces…and a withdrawal of that size usually represents a fee payment of some kind.

There was another smallish sales report from the U.S. Mint.  They sold 500 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — 500 one-ounce platinum eagles — and 276,500 silver eagles.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday was 5,002 troy ounces that was shipped out of Canada’s Scotiabank.  Nothing was reported received.  But there was some paper activity, as 89,768 troy ounces was shifted from the Eligible category — and into Registered…47,726 troy ounces at HSBC USA — and the remaining 42,041 troy ounces was at Canada’s Scotiabank.  These transfers are certainly related to the April delivery month.  The link to all this is here.

It was much busier in silver, as 1,197,608 troy ounces…two truckloads…was reported received, but only 101,640 troy ounces were shipped out.  All of the ‘in’ activity was at CNT.  Most of the ‘out’ activity was at Brink’s, Inc…96,716 troy ounces.  The remaining 4,923 troy ounces departed CNT.  There was also 894,009 troy ounces transferred from the Registered category — and back into Eligible.  Of that amount…796,285 troy ounces was transferred at CNT — and the remaining 97,723 troy ounces was transferred at Brink’s, Inc.  Ted would suspect that these transfers, particularly the one at CNT, represents silver that JPMorgan took delivery of in March, but is keeping in other warehouses, because their silver depository is full.  He may or may not broach this subject in his mid-week commentary this afternoon.  The link to all this activity is here.

There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving 2,390 of them — and shipped out 1,372.  All of this occurred at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


Here are two charts that Nick passed around on Monday.  They show U.S. Mint sales, updated with the March data.  So far this year, sales have been a bit higher in Q1 of 2019 than they were were over the same time period last year…but that’s not saying a whole heck of a lot.  Click to enlarge for both.

Another quiet news day — and I don’t have much for you once again.


CRITICAL READS

Durable Goods Orders Slump in Feb – Weakest Annual Growth in 16 Months

After a modest rebound from October’s collapse, Durable Goods Orders were expected to slide lower once again in February but the drop (down 1.6% MoM) was slightly better than expected (down 1.8% MoM).

Additionally, January’s data was revised lower (from +0.3% to +0.1%).  Click to enlarge.

On a year-over-year basis, durable goods headline data rose at only 1.844% – the weakest since Oct 2017.

Capital Spending proxy (Cap Goods Non-Defense, Ex-Air) slipped 0.1% (worse than expected) for the third time in four months, suggesting corporate investment remains subdued amid a slowing global economy and uncertainty over the trade war with China.

Critically, non-defense aircraft and new parts orders plunged 31.1% MoM – and this is before Boeing’s impact.

This brief 4-chart article from Zero Hedge comes courtesy of Brad Robertson.  It appeared on their Internet site at 8:39 a.m. on Tuesday morning EDT — and another link to it is here.


Recession Signs Everywhere — John Mauldin

This month, the Federal Reserve joined its global peers by turning decisively dovish. Jerome Powell and friends haven’t just stopped tightening. Soon they will begin actively easing by reinvesting the Fed’s maturing mortgage bonds into Treasury securities. It’s not exactly “Quantitative Easing I, II, and III,” but it will have some of the same effects.

Why are they doing this? One theory, which I admit possibly plausible, was that Powell simply caved to Wall Street pressure. The rate hikes and QT were hitting asset prices and liquidity, much to the detriment of bankers and others to whom the Fed pays keen attention. But that doesn’t truly square with his 2018 speeches and actions. The Fed’s March 20 announcement suggests more is happening.

I think two other factors are driving the Fed’s thinking. One is increasing recognition of the same slowing global growth that made other central banks turn dovish in recent months. The other is the Fed’s realization that its previous course risked inverting the yield curve, which was violently turning against its fourth-quarter expectations and possibly toward recession (see chart below, courtesy of WSJ’s “Daily Shot”). That would not have looked good in the history books, hence the backtracking.

On the second point… too late. The yield curve inverted, and recession forecasts became suddenly de rigueur among the same financial punditry that was wildly bullish just weeks ago.

My own position has been consistent: Recession is approaching but not just yet. Yet like the Fed, I am data-dependent and the latest data are not encouraging. Today, we’ll examine this and consider what may have changed.

This loooong commentary from John put in an appearance on the Zero Hedge website at 4:25 p.m. on Tuesday afternoon EDT — and it’s worth your while…if you have the time, that is.  I thank Brad Robertson for sending it our way — and another link to it is here.


A Message From the Future: Thanks a Lot… You Jerks — Bill Bonner

Remember, yesterday and today, we let the shades speak.

We make no predictions. Nor do we connect any dots.

Instead, we merely stand back and marvel at the gall… the conceit… the shameful, egotistical, self-dealing of it. We’re talking about the vanity of the living.

And rather than pass judgement ourselves, we call upon the dead… and the unborn… to do the talking. Yesterday, we heard from the ghosts of the past. Today, the phantoms of the future tell their tale:

Thanks. I’ll get right down to it. Thanks a lot… you jerks.”

You’re supposed to leave your children and grandchildren a richer, safer world. You are doing neither.”

This commentary from Bill was posted on the bonnerandpartners.com Internet site sometime ealry on Tuesday morning EDT — and another link to it is here.


China Sends Over 120 Troops to Venezuela In Defiance of U.S. Warnings

It doesn’t appear last Friday’s strong warning from national security adviser John Bolton for countries “external to the Western Hemisphere” to keep their militaries out of Venezuela had the intended effect. Bolton’s and other White House statements saying “Russia has to get out” came following Russian Air Force planes landing in Caracas with about 100 troops, which the Kremlin said were there as “specialists” servicing existing defense equipment contracts.

And now according to Al-Masdar News, citing defense analyst photographs and local reports, “more than 120 soldiers from the Chinese People’s Liberation Army arrived at Venezuela’s Margarita Island to deliver humanitarian and military supplies to the government forces.”

The military flight appears to have touched down on Sunday, two days after a prior Chinese cargo plane delivered 65 tons of medicine and other aid to Venezuela. The Chinese troops are also there ostensibly to assist with the humanitarian mission, but it appears Beijing is also now alongside the Russians pushing back against Washington ultimatums to stay out of Venezuela, after repeatedly condemning any external coup plotting against President Nicolas Maduro.

We strongly caution actors external to the Western Hemisphere against deploying military assets to Venezuela, or elsewhere in the Hemisphere, with the intent of establishing or expanding military operations,” Bolton had warned in his statement.

Early in the now months-long crisis since Maduro’s reelection, Paul Craig Roberts predicted the following:

“If Russia and China quickly established a military presence in Venezuela to protect their loans and oil investments, Venezuela could be saved, and other countries that would like to be independent would take heart that, although there is no support for self-determination anywhere in the Western World, the former authoritarian countries will support it. Other assertions of independence would arise, and the Empire would collapse.”

And we previously highlighted the not so minor issue of China over the past decade lending over $50 billion to Caracas as part of an oil-for-loan agreements program. It underscores just how quickly what appears a new White House full court press for regime change could bring Washington again into indirect conflict with both China and Russia.

Good luck with their regime change plans now, dear reader.  This Zero Hedge news story showed up on the Zero Hedge website at 12:46 p.m. EDT on Tuesday afternoon — and it’s another contribution from Brad Robertson.  Another link to it is here.


Brexit: PM asks Corbyn to help break deadlock

Theresa May will ask the E.U. for an extension to the Brexit deadline to “break the logjam” in Parliament.

The PM says she wants to meet Labour leader Jeremy Corbyn to agree a plan on the future relationship with the E.U.

But she insisted her withdrawal agreement – which was voted down last week – would remain part of the deal.

Mr Corbyn said he was “very happy” to meet Mrs May, and would ensure plans for a customs union and protection of workers’ rights were on the table.

The cross-party talks offer has angered Tory Brexiteers, with Boris Johnson accusing ministers of “entrusting the final handling of Brexit to Labour“.

The 3-ring Brexit circus continues.  This article appeared on the bbc.com Internet site yesterday afternoon London time — and I thank Swedish reader Patrik Ekdahl for sending it our way.  Another link to it is here.


The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

It was a state secret and the source of a kingdom’s riches. It was so important that U.S. military planners once debated how to seize it by force. For oil traders, it was a source of endless speculation.

Now the market finally knows: Ghawar in Saudi Arabia, the world’s largest conventional oil field, can produce a lot less than almost anyone believed.

When Saudi Aramco on Monday published its first ever profit figures since its nationalization nearly 40 years ago, it also lifted the veil of secrecy around its mega oil fields. The company’s bond prospectus revealed that Ghawar is able to pump a maximum of 3.8 million barrels a day — well below the more than 5 million that had become conventional wisdom in the market.

As Saudi’s largest field, a surprisingly low production capacity figure from Ghawar is the stand-out of the report,” said Virendra Chauhan, head of upstream at consultant Energy Aspects Ltd. in Singapore.

The Energy Information Administration, a U.S. government body that provides statistical information and often is used as a benchmark by the oil market, listed Ghawar’s production capacity at 5.8 million barrels a day in 2017. Aramco, in a presentation in Washington in 2004 when it tried to debunk the “peak oil” supply theories of the late U.S. oil banker Matt Simmons, also said the field was pumping more than 5 million barrels a day, and had been doing so since at least the previous decade.

This interesting article put in an appearance on the Bloomberg website at 4:34 a.m. PDT on Tuesday morning — and was updated about twelve hours later.  I thank Patrik Ekdahl for this story as well — and another link to it is here.


Draft law to bring international gold reserves back to Romania passes in the Senate

Romanian senators adopted a draft law introduced by PSD leader Liviu Dragnea and senator Serban Nicolae to force Romania’s National Bank (BNR) to bring almost all of Romania’s gold back from reserves being held at the Bank of England in London, according to profit.ro.

The supporters of this project say that the BNR should no longer pay the fees to hold the gold abroad, considering that Romania has reached the status of a functional economy.

The project will now be sent to the Chamber of Deputies for debate. The Legislative Council says that such a change of the BNR statute needs endorsement from the Central European Bank.

Of the reserve, the BNR can store gold abroad only with the purpose of obtaining revenue. Gold held by the BNR abroad cannot exceed 5 percent of the total amount of gold reserve,” the project reads. The current estimate is that 65 percent of Romania’s gold is being held abroad.

This gold-related news item showed up on the business-review.eu Internet site at 8:15 a.m. CEST on their Tuesday morning — and I found it on the Sharps Pixley website.  Another link to it is here.


Perth Mint’s gold sales jump 68 percent in March

The Perth Mint said on Monday its gold products sales in March surged about 68 percent from the previous month, touching the highest level since November last year.

Sales of gold coins and minted bars in March rose to 32,757 ounces from 19,524 ounces in February, the mint said in a blog post.

Silver sales last month jumped 60.2 percent from the previous month and touched their highest since October last year at 935,819 ounces.

In March, benchmark spot gold prices posted their second straight monthly decline, falling about 1.6 percent, hurt by a strong dollar.

The Perth Mint refines more than 90 percent of newly mined gold in Australia, the world’s second-largest gold producer behind China.

This tiny Reuters story, posted on their website on April 1, was picked up by the finance.yahoo.com Internet site — and it’s another precious metal-related news item I found on the Sharps Pixley website.  Another link to the hard copy is here.


The PHOTOS and the FUNNIES

Here are the last three photos from our brief stop at Harrison Lake/Hot Springs.  We took a drive around the lake as far as we could get — and I took this first shot along the shore looking about NNW.  Click to enlarge.

These second two shots were taken along the same road beside  the lake.  These are frozen waterfalls…water that seeps out of the rock during the winter months and freezes as it attempts to run to the ground.  And as impressive as these ice waterfalls are, I’ve seen much bigger ones.  The lake is just out of frame across the road on the left.  Click to enlarge for both.


The WRAP

I was happy to see a bit of life in the precious metals yesterday.  And it should be pointed out once again that ‘da boyz’ set new intraday lows in both silver and gold yesterday, but only by tiny amounts.  I also note that WTIC traded above — and closed above its 200-day moving average on Tuesday as well.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and these changes should be noted…if you’re interested, that is.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price has been chopping quietly sideways ever since trading began at 6:00 p.m. EDT in New York on Tuesday evening — and is currently sitting an unchanged. The silver price didn’t do much until a few minutes after 8 a.m. China Standard Time on their Wednesday morning. It then crept higher until around noon in Shanghai — and has been edging quietly sideways since — and is 5 cents the ounce. Platinum began to rally at the same time as silver — and its choppy rally has it up 8 bucks currently. Palladium has been chopping quietly sideways in Far East trading…with a slightly positive bias…and as Zurich opens, it’s up 3 dollars.

Net HFT gold volume is a bit under 32,000 contracts — and there’s only 319 contracts worth of roll–over/switch volume on top of that. Net HFT silver volume is about 10,600 contracts — and there’s 865 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened down 6 basis points when trading began at 7:44 a.m. EDT on Tuesday evening in New York. It began to sink quietly lower almost immediately — and the current low tick was set at 2:04 p.m. CST on their Wednesday afternoon. It has crept a few basis points higher since then — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the dollar index is down 19 basis points.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and companion Bank Participation Report.  Even without those tiny new intraday lows in both gold and silver on Tuesday, both reports will show big improvements in the commercial net short positions — and the short positions of the world’s banks.

And as I post today’s column on the website at 4:02 a.m. EDT, I see that gold was sold a bit lower starting just before the London open — and it’s currently down $1.00 the ounce. Silver is up 6 cents. Platinum is now up 9 dollars, but palladium is up by only 2.

Gross gold volume is 44,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit over 43,000 contracts. Net HFT silver volume is a bit over 12,000 contracts — and there’s 1,130 contracts worth of roll-over/switch volume on top of that.

The dollar index has rolled over a bit since before the London open — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s down 28 basis points.

That’s it for yet another day — and I’ll see you here tomorrow.

Ed