11 April 2019 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was sold down a few dollars by shortly before 11 a.m. China Standard Time on their Wednesday morning — and then wandered sideways until around 9:15 a.m. in New York. At that point a bit of a rally began — and it ran into ‘something’ about ten minutes before the COMEX close. It was sold a few dollars lower until shortly after 2 p.m. EDT in the thinly-traded after-hours market — and didn’t do much after that.
Once again, the low and high ticks aren’t worth looking up.
Gold finished the Wednesday session in New York at $1,307.50 spot, up $3.80 from Tuesday’s close — and back above its 50-day moving average by about four dollars or so. Net volume was nothing out of the ordinary at a hair under 204,000 contracts — and there was a bit over 8,500 contracts worth of roll-over/switch volume on top of that.
The price ‘action’ in silver was a bit more ‘volatile’. Like for gold, its low tick was set shortly before 11 a.m. in Shanghai, but then it rallied unevenly higher from there until shortly before 1 p.m. in London, which was shortly before 8 a.m. in New York. It was sold lower from there until about 9:10 a.m. EDT — and then, just like the gold price, it rallied until shortly after 1 p.m. — and was sold lower until shortly after 2 p.m. in after-hours trading.
Silver traded within a one percent price range on Wednesday as well, so I won’t bother with the low and high in this precious metal, either.
Silver was closed at $15.195 spot, up only 0.5 cents on the day. Net volume was pretty light once again at a bit over 43,000 contracts, but roll-over/switch volume was quite heavy again at a bit under 19,000 contracts.
Platinum was down about six dollars by 8 a.m. China Standard Time on their Wednesday morning, but managed to recover almost all of that loss by shortly after 9 a.m. in New York. Its subsequent rally was capped and turned lower starting around 12:30 p.m. EDT — and after about 2:30 p.m. in after-hours trading, it didn’t do much going into the 5:00 p.m. close. Platinum was closed at $901 spot, up 11 bucks on the day.
Palladium didn’t do a whole lot of anything anywhere on Planet Earth on Wednesday — and it finished the Wednesday session in New York at $1,369 spot, down a dollar from Tuesday’s close.
The dollar index closed very late on Tuesday afternoon in New York at 97.01 — and opened down 2 basis points once trading began at 7:44 p.m. EDT on Wednesday evening, which was 7:44 a.m. China Standard Time on their Wednesday morning. It crawled a bit higher until 9 a.m. CST — and then proceeded to edge unevenly lower until the CPI numbers were released at 8:30 a.m. in New York. It then shot up to its 97.22 high tick, which came at 9:14 a.m. EDT — and from that point it was all down hill to its 96.85 low tick, which happened fifteen minutes before the COMEX close. It edged erratically higher from there until trading ended at 5:15 p.m. EDT. The dollar index finished the day at 96.95…down 6 basis points from Tuesday’s close.
The CPI numbers at 8:30 a.m. had no discernible impact on precious metal prices, but the dollar index decline [but not the preceding rally] that followed about forty-five minutes later, certainly did — and the rallies in three of the four precious metal matched that dollar index decline perfectly.
As to why the precious metals [with the exception of maybe silver] didn’t ‘react’ to the sudden dollar index price spike at 8:30 a.m…is a mystery.
Here is the DXY chart from Bloomberg. Click to enlarge.
And here’s the 6-month U.S. dollar index chart courtesy of stockcharts.com — and the delta between its close…96.04…and the close on the DXY chart above, was 91 basis points on Wednesday.
The gold stocks opened unchanged — and then chopped quietly and mostly sideways, despite the rally in the gold price, until precisely 2 p.m. EDT in New York trading — and were sold lower for exactly one hour — and then traded flat from there into the 4:00 p.m. close. But the interesting thing about this is the fact that the gold price was capped and turned lower about forty minutes before the decline in their underlying equities began. Very mysterious. The HUI closed down 1.50 percent.
The price activity in the silver equities was almost exactly the same. They opened unchanged — and then sagged a bit until around 12:10 a.m. EDT, but rallied back into positive territory until precisely 2:00 p.m. — and were sold lower until exactly 3:00 p.m. — and didn’t do much after that. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 1.11 percent. Click to enlarge if necessary.
And here’s the 1-year Silver Sentiment/Silver 7 Index chart, updated with Wednesday’s doji. Click to enlarge as well.
I’m not sure what should be read into the mysterious one hour long ‘flash crash’ in the precious metal shares between exactly 2 and 3 p.m. EDT in New York yesterday, but it certainly looked deliberate/non free-market to me.
The CME Daily Delivery Report showed that 15 gold and 15 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.
In gold, the two short/issuers were Advantage and Mizuho, a name I don’t see often. They issued 10 and 5 contracts out of their respective client accounts. Advantage also stopped 7 contracts for its client account — and the other two long/stoppers were Citigroup and HSBC USA, picking up 4 contracts each for their respective in-house/proprietary trading accounts.
In silver, ADM was the sole short/issuer. There were four long/stoppers in total. JPMorgan was the largest with 8 contracts for its client account — and The CME Group picked up 2 contracts for its own account, which it immediately reissued as 10 one-thousand ounce COMEX mini silver contracts. Advantage stopped 7 of those — and ADM picked up the other 3. Both transactions involved their respective client accounts.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in April declined by 33 contracts, leaving 292 still open, minus the 15 contracts mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that only 12 gold contracts were actually posted for delivery today, so that means that 33-12=21 gold contracts vanished from the April delivery month. Silver o.i. in April remained unchanged at 16 contracts, minus the 15 contracts mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that 1 silver contract was actually posted for delivery today, so that means that 1 more silver contract had to have been added to April deliveries, because there was no change in April open interest.
There were no reported changes in either GLD or SLV yesterday.
There was the tiniest of sales reports from the U.S. Mint on Wednesday. They sold 500 troy ounces of gold eagles — and that was all.
The only activity in gold over at the COMEX-approved depositories on Tuesday was 4,492.847 troy ounces/139 kilobars [SGE kilobar weight] that was shipped out of Canada’s Scotiabank. The link to that is here.
This is the first time that I can remember seeing Scotiabank receive or send out gold kilobars using the SGE kilobar weight. Normally, when they ship or received kilobars, they use the U.K./U.S. kilobar weight. I don’t know if it means anything, I’m just pointing it out.
And this is also the third day in a row that all gold received, shipped out, or transferred in paper form from all these gold depositories have been of the kilobar variety.
There was more activity in silver — and all of it was at CNT, as one truckload…596,847 troy ounces…was received — and one very large truckload…663,741 troy ounces…was shipped out. The link to all this is here.
It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They reported receiving 4,216 of them — and shipped out 151. All of this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.
Nick Laird sent around a couple of charts yesterday afternoon that I’m always happy to post. The first one shows the gold withdrawals from the Shanghai Gold Exchange, updated with March’s data. During that month, they withdrew a tad over 218 tonnes, which is quite a bit. Click to enlarge.
Since the beginning of 2008, there has been a total of 17,650 metric tonnes of gold withdrawn from the Shanghai Gold Exchange. That’s a lot.
And here’s Nick’s second chart showing Month 3/March withdrawals from the SGE going back to 2008 as well — and it’s about the same amount of withdrawals for Month 3 as it has been for the last four years running. Click to enlarge.
I don’t have all that many stories for you today.
The more time we spend studying it, the more we become convinced that the whole thing is one gigantic swindle. While this insight might be applied to practically anything in public life, we’re talking, specifically, about federal finances and Stimulus Theory.
Many readers think Mr. Trump’s tax cut stimulus has created a real boom.
This boom, they believe, will increase GDP, raise tax receipts, and ease the debt problem. (Mr. Trump even claimed he would pay off the national debt in eight years!)
If true, it will mean that all our theories are defective… that we greatly underestimated the man in the White House… and, in short, that we don’t know shinola about economics!
This commentary from Bill was posted on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.
Recession is coming. We can debate the timing, but the economy will turn decisively downward at some point. My own analysis, looking at the data available on April 4, says recession isn’t likely this year but unfortunately looks very probable in 2020.
In addition to when it will happen, there’s also the question of how deep the next recession will be. A shallow downturn wouldn’t be fun, but compared to the last one might feel relatively refreshing.
Alas, I don’t think we will be that lucky. I think the opposite: The next recession will be deeper, longer and far more painful to many more people than your average recession, and could persist as long as the last one. That is because the next recession in all likelihood will be truly global. If you sailed through 2007–2009 without your lifestyle changing, I wouldn’t assume it will happen that way again.
Ironically, but not surprisingly, it will be the response to the last recession that makes the next one so much worse. Part of the reason is that investors once again “learned” that if you simply stay the course, the market will get you back to where you were and more. The massive move into low-fee index investing instead of active management will make the next recession more painful.
This long commentary from John was posted on the mauldineconomics.com Internet site back on April 5 — and I plucked it from a Zero Hedge commentary yesterday afternoon. Another link to it is here.
This 23:10 minute video interview with Jim Rickards appeared on the youtube.com Internet site on April 7 — and I thank Brad Robertson for sending it our way.
Speaking after five hours of talks at an E.U. summit in Brussels, European Council president Donald Tusk said his “message to British friends” was “please do not waste this time“.
Theresa May said the U.K. would still aim to leave the E.U. as soon as possible.
Irish Taoiseach Leo Varadkar said the U.K. must now hold European elections in May, or leave on 1 June without a deal.
Prime Minister Mrs May had earlier told leaders she wanted to move the U.K.’s exit date from this Friday to 30 June, with the option of leaving earlier if her withdrawal agreement was ratified by Parliament.
Mr Tusk emerged from the talks – and a subsequent meeting with Mrs May – to address reporters at a news conference at 02:15 local time (01:15 BST).
He said: “The course of action will be entirely in the U.K.’s hands: they can still ratify the withdrawal agreement, in which case the extension can be terminated.”
This story from the bbc.com Internet site was something that Swedish reader Patrik Ekdahl sent along at 7 a.m. Central European Summer Time on their Thursday morning — and another link to it is here.
While admitted there’s “a picture of weakening growth” in the euro zone, ECB chief Mario Draghi confidently intoned that the probability of an E.U. recession is low.
However, Draghi dropped the hammer on any doubters that the only thing that matters is him…
“We’re ready to use all instruments. ALL instruments.”
A ‘whatever it takes‘ moment if ever there was one.
EUR/USD tumbled on the headline…Click to enlarge.
But we do note that this is a relatively modest move compared to previous “we’re all in” comments — are central banks losing their mojo?
This brief story showed up on the Zero Hedge website at 9:14 a.m. on Wednesday morning EDT — and I thank Brad Robertson for pointing it out. Another link to it is here.
Car sales in China, the world’s largest vehicle market, continue to tumble, exposing an increasingly ugly picture for the global automotive market. The data marks a dismal and protracted reversal in a market that had done nothing but grow for decades, according to Bloomberg. In March, retail sales of sedans, SUVs, minivans and multipurpose vehicles dropped 12% to 1.78 million units, according to the China Passenger Car Association. This is after an 18.5% drop in February and a 4% drop in January. Click to enlarge a bit.
The country’s slowing economy and continued trade tensions with the United States are weighing on consumer sentiment among its 1.4 billion people. Additionally, changes in tax policies and import tariffs have also acted as a headwind for car demand. Cars were the only consumer product category in China that shrank the first two months of 2019.
Cui Dongshu, secretary general of the CPCA, is among those calling for more government intervention to spur buying: “There are only 200 million private vehicles in China, leaving huge room for growth. Policies should be put in place to spur vehicle consumption in 2019.”
Because as we all know, the government manipulating the market to create demand where there isn’t any could never backfire, right?
This news item put in an appearance on the Zero Hedge website at 12:32 p.m. EDT on Wednesday afternoon — and another link to it is here.
In times past, small denomination coins were made of silver. The U.S. quarter dollar, for instance, once contained 90% silver, which meant that each quarter had 5.6 grams of precious metals. But in 1965 the U.S. Mint stopped issuing coins with silver in them. These days, a quarter is mostly copper with some nickel.
In the U.K., coins contained 92.5% silver up until 1920, and after that were 50% silver. But nowadays, there isn’t a trace of precious metals to be found in any of the circulation coins minted by the Royal Mint.
Why did coins go from being composed mostly of silver to having no silver at all? The answer is simple: technological progress. People discovered that the monetary system worked more efficiently once the denominations formerly represented by silver coins were replaced by coins that contained base metals like nickel and copper. In this post I’ll walk through how “silverless” coins improved the monetary system. But first we have to head back 200 years to the early 1800s.
Bullion Star’s J.P. Koning explains the decline of silver coins around the world as the gradually rising price of the monetary metal overtook imprinted valuations and invited melting coins back into bullion. I borrowed this story from a GATA dispatch that was posted late on Tuesday evening. This commentary showed up on the bullionstar.com Internet site on their Tuesday sometime — and another link to it is here.
Swiss gold refiner Valcambi has lost a contract to refine around 4 million ounces of gold a year from Newmont Mining Corp, one of the world’s biggest producers, five sources familiar with the matter told Reuters.
U.S.-based Newmont put the contract up for tender last year and has split the business between three of Valcambi’s rivals – Asahi in the United States and Argor-Heraeus and PAMP in Switzerland, the sources said.
“It all went up for tender and different refineries won different pieces (of the contract),” said one source.
Valcambi is the world’s largest gold refinery and had processed almost all of Newmont’s gold output for around 15 years, the sources said. Newmont owned a majority stake in Valcambi until 2015 when it sold the shares to India’s Rajesh Exports.
One wonders what happened between Valcambi and Newmont while Newmont was still a stakeholder, as there’s certainly a good reason why they wouldn’t give some of the business to Valcambi. This Reuters story, filed from London, put in an appearance on their Internet site at 1:52 a.m. EDT on Wednesday morning. I found it on the Sharps Pixley website — and another link to it is here.
The PHOTOS and the FUNNIES
Here are the last three photos from the “Let’s drive to Peachland, B.C. for lunch” series. The first is along the waterfront of Okanagan Lake, the second from the summit of “The Connector”…B.C. Highway 97C looking west-to-northwest across the Thompson Plateau on the drive back. The distant snow-capped coastal mountain range in the center of this shot is about 100 miles/160 kilometers away. The third shot shows the ‘descent’ into the Nicola Valley, with the town of Merritt in the center-left of the photo. The water vapour plume comes from one of the four sawmills in town. These pictures were taken on March 3. Click to enlarge for all.
It was mostly a ‘nothing’ sort of a day in the precious metals. Of course there were rallies in three of the four precious metals, but none were very large — and all met the same fate during the COMEX trading session. The volumes in gold were nothing special once again — and very quiet in silver for the third day in a row.
The only event worth noting, which I’d already pointed out at the top of today’s column, was the fact that gold closed above its 50-day moving average by a few dollars on Wednesday.
Here are the 6-month charts for all four precious metals — and except for the doji in gold, there’s not a lot to see once again. 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 had another down/up dip in morning and early afternoon trading in the Far East on their Thursday. It was back at almost unchanged by the 2:15 p.m. CST afternoon gold fix in Shanghai, but was tapped lower at that juncture — and is currently down $1.30 the ounce. It was the same price path for silver, but it was up a penny or two by the afternoon gold fix in Shanghai, but it’s down 2 cents now. Platinum continues to stair-step its way quietly higher — and is up 7 bucks at the moment. Palladium didn’t do anything until 2 p.m. China Standard Time — and then jumped up a whole bunch of dollars, but got smacked lower immediately — and it’s only up a dollar as Zurich opens.
Net HFT gold volume is coming up on 39,500 contracts — and there’s only 556 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is pretty light at around 7,700 contracts — and there’s only 222 contracts worth of roll-over/switch volume on top of that.
The dollar index opened down 6 basis points once trading began at 7:44 p.m. EDT in New York on Wednesday evening. It has tried to break above the unchanged mark on three separate occasions in Far East trading since then, but without much success — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, it’s down 1 basis point.
Tomorrow we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday and, of course, yesterday’s price activity won’t be in it. Ted isn’t expecting much in the way of changes — and I’ll have all his thoughts on this in my Friday missive.
And as I post today’s column on the website at 4:02 a.m. EDT, I see that all four precious metals have continued to be sold lower during the first hour of London and Zurich trading. Gold is now down $2.70 an ounce — and silver is down 6 cents. Platinum is only up 4 dollars now — and palladium is now down 9 bucks…from up 12 dollars less than two hours ago.
Gross gold volume is a bit over 52,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 50,800 contracts. Net HFT silver volume is now up to around 10,700 contracts — and there’s still only 340 contracts worth of roll over/switch volume in that precious metal.
The dollar index continue to attempt a break above unchanged, but still no cigar — and is down 3 basis points as of 8:45 a.m. in London — and 9:45 a.m. in Zurich.
That’s it for today — and I’ll see you here tomorrow.