‘Da Boyz’ Ring the Cash Register on the Managed Money Traders

12 April 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price fell and rose a couple of dollars in Far East trading on their Thursday — and that lasted until the 2:15 p.m. CST afternoon gold fix in Shanghai.  At that juncture, the engineered price declines in all of the Big 6 commodities that I track on a daily basis.  The gold price was sold unevenly lower until a few minutes before the 1:30 p.m. COMEX close in New York on Thursday afternoon — and from that point, it crept quietly higher until trading ended at 5:00 p.m. EDT.

The high and low ticks in gold were reported by the CME Group as $1,313.10 and $1,292.90 in the June contract.

Gold was closed by ‘da boyz’ in New York on Thursday at $1,291.90 spot, down $15.60 from Thursday…back below $1,300 spot — and its 50-day moving average.  Of course net volume was sky high at 317,000 contracts — and roll-over/switch volume was a hair over 9,000 contracts on top of that.

‘Da boyz’ manhandled the silver price in almost the same matter, including the time of the start of the engineered price decline — and its end…the afternoon gold fix in Shanghai and a few minutes before the COMEX close in New York.

The high and low ticks in silver were recorded as $15.215 and $14.845 in the May contract.

Silver was closed at $14.94 spot, down 25.5 cents from Wednesday’s close…back below $15 spot — and its 200-day moving average.  Not surprisingly, net volume was pretty heavy as well, at a bit over 78,000 contracts — and there was a pretty chunky 30,600 contracts worth of roll-over/switch volume in this precious metal.

Platinum’s quiet rally in Far East trading on their Thursday was capped at 2 p.m. CST at $909 spot — and wasn’t allowed to trade above that mark after that.  Then shortly after the Zurich open, it was sold lower like everything else — and that state of affairs lasted until a few minutes after 9 a.m. in New York.  It jumped higher at that point — and ran into the $909 spot brick wall a few minutes before the afternoon gold fix in London.  It was sold sharply lower from there until shortly after 12 o’clock noon EDT — and didn’t do much after that until late in the thinly-traded after-hours market, when it edged a few dollars higher going into the 5:00 p.m. EDT close.  Platinum finished the Thursday session in New York at $892 spot, down ten dollars on the day.  At its high tick, platinum was up 7 bucks.

Palladium traded flat until 2 p.m. CST on their Thursday afternoon — and at that juncture, it jumped higher by about 12 dollars.  But the engineered price decline began at that point — and in fits and starts it was sold down to its low, which was shortly after 12 o’clock noon in New York. [I’m ignoring that price spike lower at 8:30 a.m. EDT, because it only occurred in the spot month.]  Anyway, from that low, it crawled higher into the 5:00 p.m. close from there.  Platinum  was closed at $1,348 spot, down 21 dollars on the day.

The dollar index closed very late on Wednesday afternoon in New York at 96.95 — and opened down 6 basis points once trading began at 7:44 a.m. EDT on Wednesday evening, which was 7:44 a.m. CST in Far East trading on their Thursday morning.  It chopped very quietly sideways from there until a couple of minutes after 12 o’clock noon BST in London/7 a.m. EDT in New York.  A ‘rally’ began at that juncture — and all the gains that mattered were in by a few minutes before the 1:30 p.m. EDT COMEX close…which more or less coincided with the low ticks in both gold and silver.  From that juncture the index didn’t do much for the remainder of the Thursday session.  The dollar index closed at 97.18…up 23 whole basis points from Wednesday.

Although the engineered price declines in the precious metals began at the afternoon gold fix in Shanghai on their Thursday, most of the real price damage came during the dollar index ‘rally’ between noon BST and 1:30 p.m. EDT.  I suspect that the ‘rally’ in the dollar index was just as engineered as the ‘declines’ in the precious metal prices.

Here’s the DXY chart, courtesy of BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart courtesy of stockcharts.com — and the delta between its close…96.28…and the close on the DXY above, was 90 basis points on Thursday.  Click to enlarge as well.

Of course the gold shares gapped down at the open, but then quickly rallied back to about the unchanged mark a few minutes after 10 a.m. in New York trading.  But a quiet sell-off began at that juncture — and the low tick of the day appeared to come around 2:45 p.m. EDT.  Then, about thirty minutes later, they rallied rather smartly into the close — and the HUI finished down only 1.46 percent.

The price path for the silver equities was virtually identical, but Nick Laird’s Intraday Silver Sentiment Index closed down only 1.28 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.

Considering how badly the underlying precious metals got hammered yesterday, the losses in their associated equities were rather subdued, as it was obvious that strong hands were there to buy up just about everything that the weak hands were selling.


The CME Daily Delivery Report showed that 49 gold and zero silver contracts were posted for delivery  within the COMEX-approved depositories on Monday.

In gold, the two short/issuers were Morgan Stanley with 42 contracts out of it own account — and Advantage, with 7 contracts out of its client account.  The three largest long/stoppers were HSBC USA with 32 contracts for its in-house/proprietary trading account — and Advantage and JPMorgan, with 10 and 6 contracts for their respective client accounts.

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

The CME Daily Delivery Report showed that gold open interest in April jumped up by 275 contracts, leaving 566 still around, minus the 49 mentioned just above.  Wednesday’s Daily Delivery Report showed that 15 gold contracts were actually posted for delivery today, so that means that 275+15=290 gold contracts were added to the April Delivery month.  Silver o.i. in April declined by 15 contracts, leaving just one left.  Wednesday’s Daily Delivery Report showed that 15 silver contracts were actually posted for delivery today, so the change in open interest — and the deliveries match.


There were no reported changes in either GLD or SLV on Thursday.

Since April 1, there has been 849,080 troy ounces of gold removed from GLD.  But there has only been 133,839 troy ounces of silver removed from SLV during that same time period.  I would suspect that all the SLV shares that have been sold since April 1 now reside in the strongest of hands…most likely JPMorgan’s.  So it wouldn’t surprise me in the slightest to see a monster withdrawal from that ETF at some point.  I’m sure that Ted is expecting that as well.

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

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  The only ‘in’ activity was 64.300 troy ounces/2 kilobars [U.K./U.S. kilobar weight] — and that was received at Canada’s Scotiabank.  The only ‘out’ activity was 16,991 troy ounces that was shipped out of JPMorgan.  The link to this is here.

It was very quiet in silver as well.  There was only 2,045 troy ounces received — and that amount ended up at Delaware.  There was only 74,201 troy ounces shipped out — and that movement involved three different depositories.  I shan’t do the break-down on that, but if you wish to check that out, the link to this ‘activity’ is here.

And there wasn’t much activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They received 587 of them — and shipped out only 109.  All this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here’s a chart from Nick that I asked him to update for me — and it would have been in Thursday’s column if I’d got it back from him in time, but I didn’t.  This one shows the amount of gold withdrawn from the Shanghai Gold Exchange every year going back to and including 2008, compared to total world gold mining production for each year.

As you can see, for the year just passed, the SGE withdrew 2,055 tonnes, compared to total world mine output of 3,260 tonnes.  The SGE withdrawals represent 63 percent of world mine production in 2018.  Click to enlarge.

Back in 2008, the SGE withdrew just under 24 percent of world mine production — and in 2015, the peak year, they withdrew just under 84 percent of world mine production.

And once you add in India, Russia and Turkey, it’s over 100 percent of total mine production…a state of affairs that’s been going on for over six years now.  Where is the physical gold coming from to supply the rest of the world’s yearly gold demand…which is not an inconsequential amount by the way.

I only have a handful of stories for you again today.


CRITICAL READS

Trump and AOC Actually Agree on Something… — Bill Bonner

Yes, Stimulus Theory – the idea that cheap credit and EZ money will make us richer – is a fraud.
But that doesn’t make it unpopular. Au contraire… it is a classic federal program: like the war on drugs, or the war on terror… the more it fails, the more it succeeds.

That is, the more stimulus drags the economy down… the more people want the feds to “do something” to fix it. And what can they do? Stimulate!

And now, The New York Times and the Trump Team are on the same page. Both want more stimulus. The NYT:

…the Fed should have kept interest rates lower for longer after the 2008 recession, to deliver a significantly stronger dose of economic stimulus… it should show a little less fear of inflation the next time the economy needs its help.”

How many bad ideas can you pack into a single sentence? We don’t know… The NYT deserves credit for trying.

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


Kudlow “I Don’t See Rates Rising Again in My Lifetime

Almost five years ago, in May 2014, when he was setting the scene for the biggest asset bubble trap in history – trap because his own policies made it impossible to undo the Fed’s monetary policies without bringing the entire financial system crashing down – Bernanke uttered what was very unwitting gallows humor, when he said that he does not expect the Fed’s interest rate to rise back to its 4% average during his lifetime.

In retrospect, he was right because just a few years later, with the Fed Funds rate at 2.50%, the Fed realized that any further hikes would crash the market, which was already on the verge of a bear market, and as a result Fed Chair Powell put the Fed’s rate hike strategy on hold.

Now, five years after Bernanke’s infamous statement, Trump’s top economic advisor Larry Kudlow has done Bernanke one better, and during an event in Washington, said that he does not think that rates will go up ever again, “maybe never again in my lifetime“, effectively admitting that the U.S. economy is on the verge, if not in, a recession (either that, or giving a pretty dire prognosis of his own health).

Kudlow also said that Powell is doing a good job, despite disagreements. “I do. I know we’ve had some discussions about that in recent weeks.”  Ah yes, it got to the point where Trump even had to call Powell, and while the full conversation shall remain a mystery, Trump told the Fed chair that he is “stuck” with him (for now).

This Zero Hedge news item was posted on their Internet site at 10:52 a.m. EDT on Thursday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Why Buy Bonds? — Dennis Miller

Realizing you are wrong about a basic belief is tough. The last two weeks we discussed “The Bond Fund Risks Your Broker Won’t Tell You” and “Closed-End Bond Funds, Friend or Foe?

We concluded holding top-rated bonds is O.K. – individually, not in a publicly traded fund. Fund managers, chasing high returns, take risks I’m not comfortable with. If bonds are downgraded, or default, the Net Asset Value (NAV) of the fund would drop and could take years to recover.

I planned for this bond article to be positive, showing readers how easy it is to build a do-it-yourself bond portfolio. Unlike a brokerage sponsored bond fund, you would buy, hold, collect interest and when they mature – repeat the process – with minimum fees and risk. We are investors, not interest rate speculators.

My parents relied on FDIC insured Certificates of Deposit (CDs). They used to beat inflation, providing around 6% interest. Corporate bonds paid more interest to compensate for the higher risk.

Start with safety first.

Bloomberg’s warns, “A $1 Trillion Powder Keg Threatens the Corporate Bond Market“…

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


WikiLeaks co-founder Julian Assange arrested in London; faces possible extradition to the U.S.

WikiLeaks co-founder Julian Assange was arrested in London on Thursday morning, nearly seven years after he sought refuge at the Ecuadorian Embassy, and faces a possible extradition to the United States.

The U.K. Metropolitan Police confirmed that Assange was arrested by officers at the embassy after the Ecuadorian government withdrew asylum for the Australian national.

Assange was taken to a central London police station and will be presented before Westminster Magistrates’ Court “as soon as is possible,” police said.

The police said he was arrested for failing to surrender to a court on a warrant issued by the Westminster Magistrates’ Court in June 2012. The police later further updated that the arrest is in relation to an extradition warrant on behalf of the United States authorities.

This event was inevitable at some point — and that time has arrived.  There’s no chance in hell that he’ll get a fair trial anywhere.  This story showed up on the CNBC website early on Thursday morning EDT — and the first reader through the door with this news item was Swedish reader Patrik Ekdahl.  Another link to it is here.  There are two Zero Hedge stories about this.  The first is headlined “Democratic Senator: Assange Is “Our Property” Now” — and the second “The DoJ’s Entire Case Against Assange Hinges on This One Critical Piece of Evidence“.


South Africa’s gold output has longest losing streak since 2009

South African gold production shrank for a 17th straight month in February, the longest string of contractions since the financial crisis.

Gold output fell 21% from a year earlier compared with a revised 23% drop in January, Pretoria-based Statistics South Africa said in a statement on its website Thursday. Production contracted for 29 months through January 2009.

South Africa used to be the world’s top producer of the metal but deeper ore bodies, labour strife, high costs and policy uncertainty have crimped output. A strike by members of the Association of Mineworkers and Construction Union that started in November has slashed output at the South African operations of Sibanye Gold, the biggest producer of the metal from local mines.

While Sibanye is challenging the legality of that strike, it’s also preparing for pay negotiations with Amcu at its platinum business.

Total mining output declined 7.5% from a year earlier, the most since March 2016. The country is the world’s biggest platinum producer. Output of platinum-group metals, which include palladium, rose for a sixth straight month, expanding 18%.

The above five paragraphs are all there is to this Bloomberg story that was picked up by the moneyweb.co.za Internet site yesterday. I found it on the Sharps Pixley website — and another link to the hard copy is here.


China gold demand up marginally so far this year — Lawrie Williams

China’s gold demand as represented by Shanghai Gold Exchange (SGE) monthly gold withdrawals had seemed to be slipping back this year. But this now looks to have been the timing of the Chinese New Year holiday when the SGE was closed for a week.  A boost in withdrawals in March has seen the Q1 figures this year climb above those for the same quarter for the past two years (see table below), albeit only marginally so.  Although it is early days yet, on current figures China could well be heading for another year of +2,000 tonne gold demand.

The Chinese demand news will come as some relief to gold investors.  The February figure had been low compared with the two years previous, but with central bank demand seemingly holding up well so far and some other demand figures looking a little stronger according to Metals Focus’ Gold Focus report, this may be enough to counteract a continuing series of withdrawals from the big GLD gold ETF.  It seems that no sooner does the World Gold Council publish a statement that global ETFs are increasing their gold hogold Trustldings that GLD appears to start moving in the other direction.

To this observer the withdrawals from GLD, in the face of what appears to be a strengthening gold price, is illogical given that the withdrawal figures are not being matched in the other big U.S. gold ETF, the iShares Gold Trust (IAU).  It is possible that closer scrutiny of the COMEX gold futures machinations by the U.S. Justice Department is leading those who would seek to control the gold price to utilise other high profile gold investment channels to perpetrate their agenda, and GLD holdings would fit this purpose well!

We reiterate here our belief that SGE gold withdrawals are an excellent indicator of China’s ongoing gold demand despite arguments against this from some of the premier precious metals consultancies which tend to estimate Chinese demand at a level well below China’s known gold imports plus its own domestic gold production, let alone scrap supplies and gold imports from countries which do not detail their country-by-country gold export breakdowns.  SGE withdrawal totals on an annual basis are far closer to these annual figures than those from other sources – and in the past the official China Gold Yearbook itself has equated SGE gold withdrawal figures to total Chinese demand.  Whatever the truth of this may be, the SGE figures do give a monthly year on year comparison which has to be a great indicator of the overall demand flows for Chinese gold.

This commentary by Lawrie was posted on the Sharps Pixley website on Thursday morning BST sometime — and another link to it is here.


Golden straws in the wind — Alasdair Macleod

Life in the world of gold bullion is full of mysteries. Each mystery is like a straw in the wind, which individually means little, but tempting us to speculate there’s a greater meaning behind it all. Yes, there is a far greater game in play, taking Kipling’s aphorism to a higher level.

One of those straws is Russia’s continuing accumulation of gold reserves. Financial pundits tell us that this is to avoid being beholden to the U.S. dollar, and undoubtedly there is truth in it. But why gold? Here, the pundits are silent. There is an answer, and that is Russia understands in principal the virtues of sound money relative to possession of another country’s paper promises. Hence, they sell dollars and buy gold.

But Russia is now going a step further. Izvestia reported the Russian Finance Ministry is considering abolition of VAT on private purchases of gold bullion. We read that this could generate private Russian annual demand of between fifty and a hundred tonnes. More importantly, it paves the way for gold to circulate in Russia as money.

We should put ourselves in Russia’s shoes to find out why this may be important. Russia is the largest exporter of energy, including gas, pushing Saudi Arabia into second place. This means she is also the largest acquirer of fiat currency for energy. That’s fine if you like fiat currencies, but if you suspect them, then you either turn them into physical assets, such as infrastructure and military hardware, or gold. Russia does both.

Then there is China. China has started announcing monthly additions to her gold reserves. China is up to her neck in dollars, and the relatively minor monthly additions to her reserves really make little difference. However, the link between the gold exchanges in Moscow and Shanghai strongly suggest Russia and China are coordinating gold dealing activities.

In any event, China now dominates physical bullion markets. Deliveries (withdrawals) from the Shanghai Gold Exchange’s vaults into public hands are running at roughly two-thirds of the world’s annual mine supply. At 426 tonnes in 2017, China is the largest gold mining nation by far, and the state owns all China’s refining capacity, even taking in doré from abroad. No gold leaves this version of Hotel California.

This long, but worthwhile commentary from Alasdair appeared on the goldmoney.com Internet site on Thursday morning BST sometime — and I found it embedded in a GATA dispatch.  Another link to it is here.


The PHOTOS and the FUNNIES

A week after our trip to Peachland, B.C.…we were off to Cache Creek via Ashcroft — and on the way there, I took these photos of a bald eagle sitting in a dead ponderosa pine.  A magnificent creature — and they’re a very common sight in these parts.  Click to enlarge for both.


The WRAP

The powers-that-be got the ball rolling down the hill in the Big 6 commodities starting at the afternoon gold fix in Shanghai on their Thursday afternoon — and once the sell stops got hit — and the critical moving averages broken to the downside, the sell-off became self reinforcing.

As Ted always points out at times like this, except for the small amount of selling that the commercial traders do to get things started, plus maintain the downside price momentum, the are always, always, always the big buyers on engineered price declines like this…and never big sellers.

Gold was closed not only below $1,300 spot, but also back below its 50-day moving average — and silver was sold back below its 200-day moving average.  It was all done for profit and price management purposes — and the Managed Money traders were the patsies once again.  You’d think they’d learn after all these years, but they’re slaves to moving averages — and nothing else matters to them.

Here are the 6-month charts for the Big 6 commodities — and you can see the inflicted damage for yourself.  Click to enlarge.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price didn’t do much in morning trading in the Far East — and was down about a dollar at that point. It has been crawling quietly higher since — and is currently up 90 cents the ounce. The price path for silver has been guided in a similar manner — and it’s up a penny at the moment. The platinum price has been chopping very unevenly and quietly higher in Far East trading — and is currently up 2 bucks. Palladium has been inching quietly higher as well — and it’s up 4 dollars as Zurich opens.

Net HFT gold volume is pretty light at a bit over 32,000 contracts — and there’s only 897 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is around 10,600 contracts — and there’s 833 contracts worth of roll-over/switch volume on top of that.

The dollar index opened down 4 basis points once trading began at 7:44 a.m. EDT on Thursday evening in New York, which was 7:44 a.m. in Shanghai on their Friday morning. It made it back to the unchanged mark about thirty minutes after that, but began to head lower from there. That decline lasted until a few minutes before 1 p.m. China Standard Time — and it has been edging quietly and unevenly higher since — and is down 16 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


I just finished reading a book that rare coin dealer Richard Nachbar gave me at the Vancouver Investment Conference in late January.  It’s titled “CONFISCATION: Gold as Contraband…1933 to 1975” by Kenneth R. Ferguson.  It’s only 143 pages long — and I can honestly say that it was worth the read.  I thought I already knew all there was to know on this subject from what I’ve read on the Internet over the last 20-odd years, but I was wrong.  If you’ve got a small handful of dollars laying around, buying this book would be money well spent.

And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price was turned quietly lower shortly after the afternoon gold fix in Shanghai on their Friday afternoon — and it’s now down 60 cents an ounce as the first hour of London trading comes to an end. Silver was guided on a similar price path, but its back to up a penny on the day. Platinum and palladium were sold a bit lower during the first hour of Zurich trading — and both are up only a dollar.

Gross gold volume is coming up on 43,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 41,500 contracts. Net HFT silver volume is about 13,000 contracts — and there’s 989 contracts worth of roll-over/switch volume in that precious metal.

The dollar index hasn’t done much during the last hour — and as of 8:45 a.m. BST in London — and 9:45 a.m. CEST in Zurich, it’s down 16 basis points.

Today, at around 3:30 p.m. EDT, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  This is what silver analyst Ted Butler had to say about it in his mid-week commentary to his paying subscribers on Wednesday…”As far as what Friday’s Commitments of Traders (COT) report may indicate, the reporting week ended yesterday [Tuesday] was definitely mixed, featuring flat-to-weaker prices for the first three trading days in both gold and silver (including [last] Thursday’s new salami slice price low), followed by price strength Monday and yesterday. This makes predictions iffy, but I don’t foresee dramatic revisions in overall market structure.”

That may all be true of course, but is very much “yesterday’s news” in light of Thursday’s price action in all four precious metals.  Therefore my commentary on it will be very brief, as the data in it is pretty meaningless.

That’s all I have for today.  Have a good weekend — and I’ll see you here tomorrow.

Ed