Ted Butler: Confirmation, Outrage and Disgust

05 April 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to edge quietly and unevenly higher as soon as trading began at 6:00 p.m. EDT in New York on Wednesday evening — and that lasted until shortly after 1:30 p.m. China Standard Time on their Thursday afternoon.  It began to crawl lower from there, but then ‘da boyz’ began to put the boots to the price at, or shortly before, the noon gold fix in London.  That process accelerated starting at 1 p.m. BST, which was twenty minutes before the COMEX open — and the low tick of the day was set shortly after the equity markets opened in New York.  This was a new intraday low for this engineered price move.  A decent rally began at that juncture — and that was allowed to continue until precisely 3:30 p.m. EDT in the thinly-traded after-hours market.  It was sold off a bit into the 5:00 p.m. close from there.

The high and low ticks in gold [which are barely worth looking up] were recorded by the CME Group as $1,297.90 and $1,284.90 in the June contract.

Gold finished the Thursday session in New York at $1,291.90 spot, up $2.40 from Wednesday’s close.  Net volume was fairly decent at a bit over 248,000 contracts — and there was a hair over 15,000 contracts worth of roll-over/switch volume on top of that.

The price path that ‘da boyz’ took silver on yesterday was virtually identical to the one for gold, including all the inflection points mentioned above…so I’ll spare you the play-by-play.  They also set a new intraday low for silver for this move down as well.

The low and high ticks in this precious metal were reported as $15.125 and $14.86 in the May contract.

Silver finished the day at $15.135 spot, up 3 cents from Wednesday — and spent a bit of time trading above it’s 200-day moving average — and closed above it by a few pennies in the May contract as well.  Net volume was robust at a hair over 62,000 contracts — and there was a bit over 13,000 contracts worth of roll-over/switch volume in this precious metal.

The platinum price inched quietly higher until shortly before 1:30 p.m. CST on their Thursday afternoon — and at that juncture the rally became far more substantial.   But, like silver and gold, it ran into ‘something’ about ten minutes before the COMEX open in New York — and that tiny sell-off lasted until a few minutes after 9 a.m. EDT.  It began to rally some more, but ran into a willing seller as it was about to break above $900 spot around  1 p.m. EDT.  It was sold a couple of dollar lower going into the COMEX close — and didn’t do much after that.  Platinum finished the Thursday session at $896 spot, up an even 30 dollars on the day.

The palladium price chopped very evenly sideways throughout all of Far East and most of Zurich trading on their respective Thursday’s.  But the moment the COMEX opened, the bids got pulled — and that engineered price decline ended a few minutes before the equity markets open in New York yesterday morning.  Its tiny rally attempt after that wasn’t allowed to get far — and it was then sold quietly lower until shortly after 12 o’clock noon in New York — and except the down/up spike at 1 p.m. EDT, it didn’t do much after that.  Palladium was closed on Thursday at $1,347 spot, down 41 bucks on the day.

The dollar index closed very late on Wednesday afternoon in New York at 97.09 — and opened down 5 basis points one trading commenced at 7:45 a.m. EDT in New York on Wednesday evening, which was 7:45 a.m. CST in Shanghai on their Thursday morning.  It crawled unsteadily higher from there until a few minutes after 8 a.m. in London, but was back at unchanged by 8:30 a.m. BST.  At that point a ‘rally’ began — and all the gains that mattered were in by 9:40 a.m. in New York, which happened to be the low tick of the day for both gold and silver.  From that juncture, the index chopped quietly and erratically sideways until trading ended at 5:28 p.m. EDT.  The dollar index finished the Thursday session at 97.31…up 22 basis points from Wednesday’s close.

‘Da boyz’ certainly used that most-likely-engineered dollar index ‘rally’ as a fig leaf to do the dirty in the precious metals yesterday.

Here’s the DXY chart from Bloomberg as usual.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at stockcharts.comand there appears to be something seriously wrong with it, because it shows that the delta between its close…96.40…and the close on the DXY chart above, was 91 basis points on Thursday.  Click to enlarge.

The gold stocks gapped down a percent and change once trading began in New York at 9:30 p.m. EDT yesterday morning.  But after that it was a slow, steady climb for most of the rest of the day — and the HUI closed up 2.84 percent — and just off its high of the day.

With no exceptions that mattered, the silver equities followed an identical path as their golden brethren — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up by 2.52 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 105 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, of the four short/issuers, the three largest were Advantage, with 51 contracts out of its client account — and in second spot was Morgan Stanley with 32 out of its in-house/proprietary trading account.  In third place was Marx Spectron with 16 contracts out of its client account.  There were five long/stoppers in total — and the four biggest were: Citigroup with 39 contracts for its own account…JPMorgan and Advantage came in second and third, with 25 and 22 contracts for their respective client accounts — and in fourth spot was HSBC USA with 15 for its in-house 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 fell by 786 contracts, leaving 476 still around, minus the 105 mentioned a couple of paragraphs ago.  Wednesday’s Daily Delivery Report showed that 881 gold contracts were actually posted for delivery today, so that means that 881-786=95 more gold contracts were added to the April delivery month.  Silver o.i. in April declined by 2 contracts, leaving 75 still open.  Wednesday’s Daily Delivery Report showed that 2 silver contracts were actually posted for delivery today, so the the change in open interest and deliveries match for the second day in a row.


For the fourth day in a row there was a withdrawal from GLD.  This time an authorized participant took out 55,804 troy ounces.  There were no reported changes in SLV.

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

There was some activity in gold over at the COMEX-approved depositories on Wednesday — and all of the in/out activity was confined to Canada’s Scotiabank.  They received 9,645.000 troy ounces/300 kilobars [U.K./U.S. kilobar weight] — and shipped out 160.750 troy ounces/5 kilobars [U.K./U.S. kilobar weight].  The other activity was a transfer of 83,815.050 troy ounces/2,607 kilobars [U.K./U.S. kilobar weight] from the Eligible category — and into Registered over at JPMorgan.  Without doubt, this is destined for delivery in April.  The link to all this is here.

The only activity in silver was 29,792 troy ounces that was shipped out of CNT — and I won’t bother linking this amount.

It was somewhat busier over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They received 478 of them — and shipped out 408.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two charts that Nick Laird passed around on Tuesday that I thought worth sharing.  They show Turkey’s gold and silver imports, updated with February’s data.  They only imported 5 tonnes of gold that month, but a fairly hefty 21.7 tonnes of silver….160,700 troy ounces — and 697,700 troy ounces respectively.  Here’s the 5-year chart for both.  Click to enlarge.

I don’t have all that many stories for you today.


CRITICAL READS

Initial Jobless Claims Crash to Lowest in 50 Years

The last time this few Americans sought the help of government after losing a job was in November 1969…

Initial Jobless Claims tumbled 10K from the prior week to 202k.  Click to enlarge.

Certainly provides some optimism for tomorrow’s [now today’s – Ed] payroll print being better than expected and better than last month’s dismal data.

For some context:

  • The Beatles’ “Abbey Road” Album hit #1
  • Wendy’s Hamburgers, American fast food restaurant chains founded by Dave Thomas opens in Columbus, Ohio
  • Alcatraz Island off San Francisco, is seized by militant Native Americans
  • U.S. performs nuclear test at Nevada Test Site
  • USSR performs nuclear test at Eastern Kazakh/Semipalitinsk USSR

So much for that Q1 weakness?

This brief 2-chart news item was posted on the Zero Hedge website at 8:40 a.m. on Thursday morning EDT — and I thank Brad Robertson for sharing it with us.  Another link to it is here.


Crash Alert — Bill Bonner

[I]t looks like the next recession is coming fast. And based on the early data I have, it looks like the Doom Index will hit 8 in our official reading this quarter.

That doesn’t necessarily mean that a stock market crash is imminent. In back-tests, the Doom Index sounded the crash alert several quarters early in 2007.

But it could very well be that this bull market already peaked last September, and the Doom Index is warning of a larger crash to come.

That’s what happened in our back-tests around the dot-com bust. Stocks were trading around their peak in August 2000 and they had already fallen 6% when the Doom Index hit an 8 in the third-quarter reading. But then, the S&P 500 went on to plummet 45% from there – wiping many investors out in the process.

That being the case, it may make sense to give readers an advanced warning before the next official Doom Index reading comes out in a few weeks… The tattered Crash Flag shall fly again.

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


Closed-End Bond Funds, Friend or Foe? — Dennis Miller

In our article, “Is Your Money Manager Really Listening?”, subscriber Rick G. reported a bad experience when his money manager invested in a closed-end bond fund:

…. He put me in several Closed-End Bond Funds (CEFs). He said they were good deals as they were selling at a discount to Net Asset Value (NAV).

Upon further research, these CEFs ALWAYS trade at a discount to NAV….

With the Fed raising rates, they now trade at an even higher discount to NAV. …. Maybe I am missing something.”

Tim Plaehn is an income investing expert, editor of The Dividend Hunter specializing in high-yield investments and a member of our panel of experts.

His recent article, “Sell These 3 High-Yield Dividend Stocks” grabbed my attention…

This longish commentary by Dennis was posted on his website on Thursday morning sometime — and another link to it is here.


U.S. revokes visa of International Criminal Court prosecutor

The U.S. has revoked the entry visa for the prosecutor of the International Criminal Court (ICC), Fatou Bensouda.

The decision is thought to be the U.S. response to Ms Bensouda’s investigation into possible war crimes by American forces and their allies in Afghanistan.

The U.S. secretary of state had warned the U.S. might refuse or revoke visas to any ICC staff involved in such probes.

Ms Bensouda’s office said the ICC prosecutor would continue to her duties “without fear or favour“.

Secretary of State Mike Pompeo said: “If you’re responsible for the proposed ICC investigation of U.S. personnel in connection with the situation in Afghanistan, you should not assume that you will still have or get a visa, or that you will be permitted to enter the United States.”

We’re prepared to take additional steps, including economic sanctions if the ICC does not change its course,” he added.

Psychopaths are like that — and Pompeo and his ilk are card-carrying members.  This news story was posted on the bbc.com Internet site in the wee hours of Friday morning British Summer Time — and I thank George Whyte for sending it our way.  Another link to it is here.


May and Corbyn hold crisis talks as MPs back Brexit delay

The British government and the main opposition were to hold further crisis talks on Thursday after MPs voted in favour of a Brexit delay that would avoid Britain crashing out of the E.U. on April 12.

With options running out, May switched course and invited Labour leader Jeremy Corbyn for talks on Wednesday in a bid to forge a compromise that avoids a chaotic “no-deal” departure from the European Union in eight days’ time.

Negotiating teams for both sides were to meet again on Thursday for a full day of urgent discussions.

May’s divorce deal with the other 27 E.U. nations has been rejected three times by parliament and patience is wearing thin in Brussels as the deadline to end Britain’s 46-year membership nears with no agreement in sight.

The premier said Tuesday she would seek another “short” Brexit extension at an E.U. leaders’ summit in Brussels on April 10.

Well, Thursday has come and gone — and there’s still no news of an agreement in the circus this Brexit issue has become.  This commentary on the current state of affairs put in an appearance on the france24.com Internet site at 8:46 a.m. CEST [Central European Summer Time] — and I thank Roy Stephens for sending it along.  Another link to it is here.


Trump nominates a second gold-standard advocate for Fed Governor

President Trump said Thursday he intends to nominate former GOP presidential candidate Herman Cain to the Federal Reserve’s board of governors, signaling his desire to remake the nation’s central bank after complaining about it for months.

The selection of Mr. Cain, following the president’s decision to nominate his former campaign adviser Stephen Moore, marks an effort to install two Fed critics and loyal Trump supporters on the central bank’s powerful seven-seat board.

While the nominations would be subject to Senate confirmation, they would underscore Mr. Trump’s growing unhappiness with Fed policy under Jerome Powell, whom the president tapped to lead the central bank.

Messrs. Cain and Moore have previously advocated, for example, a return to the gold standard. The gold standard periodically compels a central bank that is losing gold reserves to raise interest rates, even if that causes consumer-price deflation and recession. But both men are strong supporters of the president and have indicated they now favor positions in sync with his call for easier policy.

The remaining portion of this Wall Street Journal story that’s posted in the clear is contained in a GATA dispatch that Chris Powell filed from Hong Kong on their Friday morning.  Another link to it is here.


Changes Coming to Russia’s Gold Market

This year is highly likely to be a year of changes for the investment gold market in Russia: the Ministry of Finance will assess the feasibility of VAT [Value Added Tax – Ed] exemption on investment gold, the State Duma will consider a bill to allow citizens to purchase precious metals in individual investment accounts, and the Central Bank will make changes to its pricing policy when conducting its market operations.

Moscow Exchange sees potential in attracting the demand of non-residents through the International Clearing Members mechanism and has launched three new Asian POPs (point of presence) – Singapore, Hong Kong and Shanghai.

According to the World Gold Council, the demand for precious metals from individuals in Russia in 2018 was near 2.8 tonnes per year, whereas in China it reached 304.2 tonnes, 162 tonnes in India, and 96 tonnes in Germany. The main reason for such low figures is the current tax regime on physical precious metals. As an instrument of savings, gold is promising, but individuals buying the metal from a bank must pay VAT at a rate of 20%, which is not refunded to the individual investor when he/she sells it. This makes investing in gold unattractive.

The VAT exemption on investment gold in Russia is a promising change that may occur. If this happens, it would lead to a significant change in the structure of the precious metals market, growth in demand for this class of assets among individuals, and a significant increase in market liquidity. Gold as a financial instrument is protected from inflation and can be a good alternative to foreign currency deposits. As such, the initiative fits into the general course of de-dollarisation of the Russian economy. The total volume of foreign currency deposits of Russians for 2018 decreased by 6.3% – from $94 billion to $88 billion – due to a 21% fall in long-term foreign currency deposits (from $58.3 billion to $46 billion).3 In the case of VAT cancellation for investment gold, we can assume that about 3-5% of all deposits can be transferred to savings in gold, or approximately $2.6 billion to $4.4 billion.

The government also pays considerable attention to the repatriation of capital. It turned out that a number of citizens are open to repatriating their capital, but want to invest it not in the banking system, but in gold bars. Russian Deputy Finance Minister Alexei Moiseyev said in an interview with Reuters that he had seen appeals from banks, which reported that many customers are ready to de-dollarise, but need a VAT-friendly mode of buying and selling bullion. Sanctions pressure on Russia, as well as the risks of blocking funds of legal entities and individuals, has created a unique situation for the development of the gold market in the country. Customers are interested in physical gold. They want to transfer a part of their funds, including FX, to gold and to have a liquid asset that is independent of sanctions. This became particularly urgent in 2018.

This longish, but interesting commentary from someone close to the bullion market in Russia showed up on the sbma.org.sg Internet site most likely on Thursday, but there is no dateline.  I found it on the Sharps Pixley website yesterday evening PDT — and another link to it is here.


Ted Butler: Confirmation, Outrage and Disgust

A recent interview with former CFTC Commissioner Bart Chilton nearly knocked me off my feet because it confirmed what I have alleged, starting more than 12 years ago. I’ll include the interview later, but first I will set the background of the subject and timeline in order put Chilton’s words into the proper perspective. The subject is JPMorgan’s manipulation of the silver market. The timeline is important because Chilton does misstate some facts that need to be corrected. I’m not a big fan of articles that include lots of links to past articles, but in this case it’s unavoidable.

Shortly after Bart Chilton took office as a commissioner in August 2007, he began to make public speeches in which he asserted that the CFTC was no regulatory pushover, like Barney Fife on the “Andy Griffith Show” but more like Elliot Ness or James Bond and that the agency was a tough cop on the beat. I assumed Chilton was genuine in his faith in the agency, but since he was brand new to commodity regulation I was sure that he was unaware of my allegations to the agency over the prior 20 years about a silver manipulation due to a concentrated short position on the COMEX. So I wrote to him about his claims of regulatory toughness at the agency and encouraged others to do so as well.

To his credit, Commissioner Chilton, responded to my and others’ e-mails quickly, pointing out that CFTC staff were aware of the allegations and having responded in the past, they would do so again in the future.

I would ask you to note that my first contacts with Commissioner Chilton took place shortly after he assumed office in 2007 and the subject matter revolved around the concentrated short position in COMEX silver futures, an issue that has remained at the heart of the allegations of price manipulation to this day.

This absolute must read commentary by Ted, which confirms everything that Ted has said about JPMorgan and the CFTC…plus more…appeared on the silverseek.com Internet site at 11:17 a.m. Denver time on Thursday morning.  I tried to get their webmaster to change the rather aggressive font type, but never heard back from him, so it is what it is.  Another link to this very important article is here.


The PHOTOS and the FUNNIES

One exit that I’d driven by countless times on B.C. Highway 5 just a few miles north of Kamloops, was the one to the Sun Peaks ski resort — and on March 2 my daughter and I decided to check it out.  We certainly weren’t expecting much, as this place is basically in the middle of nowhere in the interior of British Columbia.  We were in for a rude awakening, as it was basically a mini version of Whistler, with homes starting at $1 million plus dollars.  It was a world-class ski resort in every respect.  Here are the first 3 shots from our experience.  I’ll have more tomorrow.  Click to enlarge for all.


The WRAP

It was more of Ted’s “salami slices” in gold, silver and palladium in the COMEX futures market on Thursday…although for palladium, it was more like an axe.  And as I pointed out at the top of the column, it’s a near certainty that this so-called ‘rally’ in the dollar index yesterday, was the cover that JPMorgan et al used to do the dirty…although it doesn’t explain who ran the prices up and into positive territory in both gold and silver after that, because the dollar index traded flat for the rest of the New York session.

There are no markets anymore…only interventions.”

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  You’ll note that the closing high prices in both silver and gold yesterday occurred after the COMEX close, so those data points don’t show up on their respective Thursday dojis.  And as I’ve already pointed out, silver spent a little time above its 200-day moving average after the COMEX close.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I note that gold’s attempted rally that began at the 6:00 p.m. EDT open in New York on Thursday ran into opposition right away — and in less than an hour it was turned lower, with the current low tick coming a few minutes after 12 o’clock noon in Shanghai on their Friday afternoon. It rallied a couple of dollars from there, but was turned lower once again at 1:30 p.m. CST — and is down $4.00 the ounce at the moment. Silver was guided on an identical path as gold — and is down a penny currently. Ditto for palladium, but from its low…down 12 dollars…it has rallied quietly higher with no interference since then — and it’s down only 3 bucks. Palladium’s price path was a tiny derivative of what happened in the other three precious metals, expect it’s up 4 dollars as Zurich opens.

Net HFT gold volume is just about 33,000 contracts — and there’s only 302 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is just under 6,700 contracts — and there’s only 178 contracts worth of roll-over/switch volume on top of that.

The dollar index opened down 1 lone basis point once trading began at 7:44 p.m. EDT in New York on Thursday evening, which was 7:44 a.m. CST on Friday morning in Shanghai. From that juncture, it traded quietly sideways until a few minutes before noon CST — and has been heading quietly lower ever since — and is currently down 9 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Today, around 3:30 p.m. EDT, we get the latest Commitment of Traders Report and companion Bank Participation Report for positions held at the close of COMEX trading on Tuesday, April 2 — and it should be a happy read.

Silver analyst Ted Butler had this to say about it his mid-week commentary on Wednesday…”I mentioned in slightly different words on Saturday that I believed that the managed money traders sold — and the commercials bought around 60,000 net gold contracts and at least 20,000 net silver contracts. Anything substantially less than that on Friday will be disappointing, even though those are aggressive predictions. Even more than the overall positioning changes, I will be quite sensitive to any changes I can detect by JPMorgan, particularly in silver.”

And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price has crept a bit higher during the first hour of London trading — and is only down $2.00 at the moment. Silver is now up 2 cents. Platinum is back above unchanged — and up 3 bucks, but palladium is now down 2 dollars on the day as the first hour of Zurich trading draws to a close.

Gross gold volume is just under 43,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 42,300 contracts. Net HFT silver volume is about 9,500 contracts — and there’s only 283 contracts worth of roll-over/switch in this precious metal.

The dollar index hit is current 97.19 low tick about twenty-five minutes before the London open — and has been creeping unsteadily higher since — and is down 9 basis points as of 8:45 a.m. BST in London…9:45 a.m. CEST in Zurich.

Today at 8:30 a.m. EDT in New York we get the latest and greatest job numbers — and I suspect that the precious metals will ‘react’ to that change in one form or another.

That’s all I have for today — and I’ll see you here tomorrow with my longest report of the month.

Have a good weekend.

Ed