“Midnight Moves” & Salami Slicing Once Again

16 April 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Gold’s tiny rally attempt at the 6:00 p.m. EDT open in New York on Sunday evening ran into ‘something’ right away — and it was sold generally lower until 1 p.m. BST in London/8 a.m. EDT in New York.  It rallied about three dollars from that juncture going into the 8:20 a.m. COMEX open, but ran into ‘da boyz’ at that point.  Its low tick — and new intraday low for this move down, came about five minutes after the equity markets opened in New York on Monday morning.  From there it rallied until 12:50 p.m. EDT — and was then sold lower into the 1:30 p.m. COMEX close.  The price traded virtually ruler flat into the 5:00 p.m. close from there.

Despite all the movement, gold traded in a ten dollar price range on Monday — and the high and low ticks aren’t worth looking up.

Gold was closed in New York yesterday at $1,287.40 spot, down $2.40 on the day.  Net volume was a bit heavier than normal, but nothing earthshaking, at a bit under 222,500 contracts — and there was a bit over 11,000 contracts worth of roll-over/switch volume in this precious metal.

The price path for silver was somewhat similar, at least up until the 8:00 a.m. BST London open — and from that juncture it chopped quietly sideways until the COMEX open in New York yesterday morning.  From that point it traded exactly the same as gold — and its low tick…and a new low for this move down…came at 9:35 a.m. EDT as well.  It should be carefully noted that silver was capped at the same time as gold, just as it was about to break above $15 spot.  It was sold a bit lower until around 2 p.m. in after-hours trading and, like gold, traded flat from there until trading ended at 5:00 p.m. EDT.

The low and high ticks in silver really aren’t worth looking up, either…but here they are anyway…$14.99 and $14.795 in the May contract.

Silver was closed on Monday afternoon EDT at $14.965 spot, up 1.5 cents from Friday.  Net volume was reasonably heavy, but nothing earthshaking either, at a bit over 60,500 contracts — and there was just under 16,000 contracts worth of roll-over/switch volume on top of that.

In most respect that mattered, platinum was forced to trade in a similar fashion as gold and silver on Monday, so I don’t need to repeat myself for a third time.  Platinum was closed at $887 spot, down 3 dollars on the day.

Palladium came under quiet price pressure about two hours after trading began at 6:00 p.m. EDT in New York on Sunday evening — and it chopped quietly lower for the rest of the Monday session.  It also got sold lower around 1 p.m. EDT in COMEX trading, but that tiny decline was mostly lost in the general price action.  Once the COMEX session ended at 1:30 p.m…it didn’t do a lot after that.  Palladium finished the Monday session in New York at $1,342 spot, down 10 bucks from its close on Friday.

The dollar index closed very late on Friday afternoon in New York at 96.96 — and opened down 3 basis points once trading began at 6:34 p.m. EDT in New York on Sunday evening.  It headed quietly and unevenly lower from that point until about 8:35 a.m. BST in London — and then chopped sideways until around 9:05 a.m. in New York.  It then proceeded to chop quietly and unevenly higher until around 2:35 p.m. EDT — and it edged a few basis points lower until trading ended at 5:15 p.m.  The dollar index finished the day at 96.94…down 2 basis points from its Friday close.

Needless to say, it was yet another day where the currencies had nothing to do with the precious metal price action, as that was all paper trading in the GLOBEX/COMEX futures market.

Here is the DXY chart from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…96.03…and the close on the DXY chart above, was 91 basis points on Monday.  Click to enlarge as well.

The gold shares gapped down a bit at the open — and then proceeded to chop quietly higher and back into positive territory.  Their respective highs came when the gold price was capped in very late COMEX trading on Monday — and they edged a bit lower into the close from there.  The HUI closed up 0.19 percent.

It was the same general price action in the silver equities, except their respective highs came a few minutes before noon in New York — and from that juncture they were sold quietly and unevenly lower until trading ended at 4:00 p.m. EDT.  Nick Lairds’ Intraday Silver Sentiment/Silver 7 Index closed higher by 0.54 percent.  Click to enlarge.

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

I was very happy to see the positive price action in the precious metal equities yesterday, as it was obvious that strong hands were the buyers yesterday — and they equally obviously overwhelmed whatever selling pressure was around.


The CME Daily Delivery Report showed that 1,143 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, the only short/issuer that mattered was Citigroup, with 1,142 contracts out of its in-house/proprietary trading account.  The only long/stopper that mattered was JPMorgan, with 1,005 for its client account — and in non-consequential second place was Advantage, with 91 contracts for its client account as well.

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

The CME Preliminary Report for the Monday trading session showed that gold open interest in April rose yet again, as it had to, for the third day in a row…this time by 492 contracts, leaving 1,358 still around, minus the 1,143 contracts mentioned three short paragraphs ago.  Friday’s Daily Delivery Report showed that 10 gold contracts were actually posted for delivery today, so that means that 492+10=592 more gold contracts were added to the April delivery month.  Silver o.i. in April fell by 1 contract, leaving zero left.  Friday’s Daily Delivery Report showed that 1 silver contract was posted for delivery today, so there are zero silver contracts left to deliver in the April delivery month.

And as I mentioned in my Saturday column, I’ll be very surprised if that proves to be the last silver contract delivered in April.  But if that does turn out to the case, it will be the earliest in the month that deliveries have concluded in silver or gold…ever — and not by a small amount.  Normally, deliveries are concluded on the last, or second last delivery day of the month.  Why does it appear to be turning out so different this month?


There were withdrawals from both GLD and SLV on Monday.  In GLD, an authorized participant took out 122,753 troy ounces — and in SLV, and a.p. removed 749,827 troy ounces, which was within 22 troy ounces of the amount that was deposited last Friday.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, April 12 — and this is what they had to report.  There were small amounts withdrawn from both.  In gold, it was 1,125 troy ounces — and their silver ETF shed 36,974 troy ounces.

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

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.

The only activity in silver last Friday, was one truckload…609,395 troy ounces, that was shipped out of CNT.  The link to that is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  There was 4,115 kilobars received — and none were shipped out.  This all happened at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

Here are the usual two charts that Nick Laird passes around on the weekend.  They show the totals of all known gold and silver depositories, ETFs and mutual funds at the close of business on Friday, April 12.  For the week just ended, there was a net 154,000 troy ounces of gold taken out — and in silver, that number was 763,000 troy ounces.  Click to enlarge for both.

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


CRITICAL READS

Uncle Sam Takes More Than Taxes From the Middle Class — Bill Bonner

The latest budget proposal calls for a 20% increase over Obama-era spending, with $2 trillion more in debt added in the last 24 months.

As David Ricardo demonstrated 200 years ago, the cost is the same, whether it is taken from people directly in taxes, or embezzled from them in the form of debt.

But as the number of PhD economists has gone up, the public’s awareness of basic economics has gone down.

Now, people are ready to believe six impossible things before breakfast. They think that, somehow, the Fed will take care of it… or that the rich will pay it… or that we will grow our way out of it.

None of those things will happen. Instead, the tax cut was a typical win-lose deal from the feds, taking money from the many to pay off the few. The winners were people who owned businesses, such as your editor. We benefited from substantial tax reductions.

The losers were middle-income consumers and taxpayers… who will eventually pay higher taxes, higher prices, with lower incomes.

And the bill is coming due remarkably fast.

This commentary from Bill showed up on the bonnerandpartners.com Internet site early on Monday morning EDT — and another link to it is here.


Time to Become a Hindu — Jeff Thomas

For centuries, East Indians have regarded gold as the primary source of wealth. All Indians own gold if they can afford to. They keep it as close as possible, sometimes in coin form, but often as jewellery, since “wearing wealth” means that it can be kept very close. They’re often especially reluctant to trust banks to hold their gold.

Hindus make up 80% of India’s population and, to Hindus, gold is sacred. Lakshmi is the Hindu goddess of purity, prosperity and good fortune. Her symbol is gold, so gold plays an important part in Hindu ceremonial occasions and Hindus donate large amounts of gold to the temples in Lakshmi’s name.

In recent years, the Indian government has tried one ploy after another to gain control of the temples’ gold. The most recent ploy was a programme whereby the temples could deposit the parishioners’ gifts to Lakshmi in banks. The gold would then be melted down and the temples would be given cash in an amount that would exceed the value of the gold.

Sounds pretty good. In many countries, the average individual would be shortsighted enough to go for it, thinking that he would have a few extra rupees. Internationally, even some Prime Ministers have thought it a good idea. UK PM Gordon Brown sold England’s gold at the bottom of the market between 1999 and 2002. More recently, Canadian PM Justin Trudeau sold off all of Canada’s gold during a major downward correction as soon as he took office. (Two excellent examples of proof that it’s possible to be elected the leader of a major country and still be an imbecile.)

But, returning to India, those running the temples tend to be distrustful of governments. Most are also distrustful of bank storage, although some do store gold in banks. The majority of the gold that they hold, however, remains in the temples.

This interesting commentary from Jeff put in an appearance on the internationalman.com Internet site on Monday morning sometime — and another link to it is here.


Foreigners Dump a Record $205BN in U.S. Stocks in the Past Year

Led by selling from Belgium (whose Euroclear is often seen as a proxy for China), down $10.1 BN…Click to enlarge.

…foreign central banks dumped Treasuries for the 5th consecutive month (-$157bn), and 10th of last 11 months (-$252bn)…although much of this was offset by buying from private accounts.  Click to enlarge.

But the real action was away from the bond market, where TIC data showed that foreigners sold U.S. stocks for a record 10th consecutive month…and 12 of the past 13:

The aggregate $205 billion sale in the past 12 months, is the largest liquidation of U.S. equities by foreigners on record.

This chart-filled Zero Hedge article was posted on their Internet site at 4:19 p.m. on Monday afternoon EDT.  I thank Brad Robertson for sending it our way — and another link to it is here.


Salvini is Positioning Italy for Confrontation — Tom Luongo

Italy’s Matteo Salvini is riding high right now. Having weathered a couple of cheap legal moves to derail his assault on the European Parliament this May, Salvini is working to galvanize Euroskepticism across the continent into a viable political force.

He’s got his work cut out for himself.

But, he has at least two major allies. Marine Le Pen of the National Rally in France and Viktor Orban, the leader of Hungary. Salvini and Le Pen met last week to announce they would be campaigning together for the European elections as well as a major summit in Milan soon.

This is only the beginning, however.

I’ve been saying for over a year now that Salvini needs to be the person who lays the foundation for a wholesale revolt against the European Union and Italy’s participation in the Euro.

His Lega party have skyrocketed in the polls, reversing the dynamic between it and coalition partner Five Star Movement. It’s a coalition that is of the kind which frightens the political establishment in Europe because it isn’t formed on the traditional left-right false divide.

It is a populist one united on the common cause of overthrowing the corrupt, corporatist system which most western governments are fronts for.

This very interesting commentary from Tom showed up on the strategic-culture.org Internet site last Wednesday — and I thank Roy Stephens for pointing it out over the weekend.  Another link to it is here.


Why won’t Jim Grant ever say gold is rigged like stocks and interest rates?

Thanks to Zero Hedge for calling attention tonight to the interview of the Zurich-based financial letter The Market with James Grant, editor of Grant’s Interest Rate Observer, wherein Grant remarks that the Federal Reserve is manipulating the stock market up and interest rates down. Grant calls the latter rigging “very near to a crime.”

But, as always, Grant has nothing to say about the rigging of the gold market by government, which seems especially strange since gold traditionally has maintained an inverse relationship with real interest rates. That is, in the old days low real rates meant high gold prices, and vice versa.

The closest Grant gets in the interview to the paradox of the gold price is to call it “a little bit of a disappointment.” He adds: “It seems as if gold were not reading the newspapers. But seriously, I really wish gold had done better, and I wish it were doing better. Yet I’m as convinced as ever that gold is an attractive and rational alternative to these monetary shenanigans and to the consequences of 10 years of artificially imposed ultra-low interest rates. Unfortunately, when this great bet pays off is hard to say.”

A few years ago Grant and your secretary/treasurer were invited to speak at a meeting of the Committee for Monetary Research and Education, held as always in New York. Following Grant’s remarks and regretting that he had not addressed manipulation of the gold market, your secretary/treasurer said that since there were no longer any interest rates for his financial letter to observe, Grant might do the world a service to examine the documentation of gold market manipulation, which your secretary/treasurer has sent to him from time to time.

Despite his longstanding criticism of central banking and his inclination to gold, Grant is frequently quoted by mainstream financial news organizations and often appears on financial television news networks. So does he really believe that governments are diddling with stock prices and interest rates but not gold? Or does he fear or has he been told that his respectability with mainstream news organizations will disappear if he carries his complaint about market manipulation one critical step further?

I would suspect that to be the case, dear reader.  This worthwhile commentary from Chris Powell appeared on the gata.org Internet site on Sunday evening — and another link to it is here.  Reader Jim Gullo sent me the original Zero Hedge article on Sunday afternoon — and it’s headlined “Jim Grant: “The World-Wide Suppression of Interest Rates Has Been a Crime


Venezuela Sells $400 Million in Gold Amid Sanctions, Sources Say

Venezuela sold about $400 million in gold despite a growing international push to freeze the country’s assets, according to two people with knowledge of the matter.

The amount, which would equal almost 9 tonnes, was reflected by a drop in the bank’s total reserves, which fell to $8.6 billion on April 12, according to data provided by the central bank. About $5.1 billion of that is gold.

A central bank press official didn’t immediately respond to requests for comment on the sale Monday.

The sale could mean President Nicolas Maduro has found a way to skirt the economic blockade. Maduro has blown through reserves, selling gold to firms in the United Arab Emirates and Turkey, as sanctions increasingly cut off his authoritarian regime from the global financial system. While he maintains a stranglehold on power on the ground — including the military and government bureaucracy — opposition leader Juan Guaido is using support from dozens of countries to slowly seize Venezuela’s financial assets abroad.

This gold-related news item was posted on the Bloomberg website at 12:43 p.m. Pacific Daylight Time on Monday afternoon — and I plucked it from a GATA dispatch.  Another link to it is here.


World’s Largest Primary Silver Miner Production Plunges

Silver production at the world’s largest producer fell significantly in the first quarter of the year.  Fresnillo PLC reported a decrease in silver production in Q1 2019 versus the same period last year, due to lower ore grades and reduced volumes of processed ore at its Fresnillo Mine.

Furthermore, while silver production fell the most at its Fresnillo Mine, the company also experienced declines at its Saucito and San Julian Mines. Total silver production at Fresnillo PLC dropped by 15% in the first quarter compared to the same quarter in 2018.

Total silver mine supply at the company fell to 13.1 million oz (M oz) in Q1 2019 versus 15.4 M oz in Q1 2018.  According to the press release, the majority of the decline was due to expected lower ore grades and throughput at its main flagship mine, Fresnillo Mine.  The Fresnillo Mine’s silver production fell 1.4 M oz (-31%), while the San Julian dropped 615,000 oz (-17%), followed by loss of 500,000 oz (-10%) at the Saucito Mine.

So, as we can see, silver production fell across the board at all of the company’s mines.

Surprisingly, another primary silver producer also reported a substantial decline in production. Endeavour Silver saw its production fall a stunning 21% in the first quarter.

Silver production and Endeavour plunged to 1.07 M oz in Q1 2019 versus 1.35 M oz during the same period last year.

Well, dear reader, drops in production they are to be sure, but the total of both companies production declines total well under one day’s worth of world silver production, so it’s important to put this news item in some perspective.  This rather breathless 2-chart silver-related news story put in an appearance on the srsroccoreport.com Internet site on Sunday sometime — and I thank Brad Robertson for sending it along.  Another link to it is here.


Tocqueville Gold Strategy First Quarter 2019 Investor Letter: What If “Whatever It Takes” Isn’t Enough? — John Hathaway

Reasons to buy gold and precious metals mining stocks have been numerous for many years.  Rarely, however, have so many of these considerations been as timely as now.  To summarize, and connect as many dots as possible in a brief note, here are ten that come to mind (all in our opinion):

  1. U.S. fiscal situation is dreadful and promises to worsen
  2. Rising populism
  3. Positive supply and demand fundamentals
  4. Global economy weakening
  5. Monetary policy turning dovish globally
  6. Inflation is rising
  7. Gold is undervalued and unloved
  8. Gold has gone through a multi-year correction/base-building process
  9. Gold is a proven diversifier, risk mitigator, and capital protector
  10. Outlier/Systemic Risks

It is quite possible, in our view, that ground zero for the next systemic crisis will be sovereign credit itself.  The promise to do “whatever it takes” in the application of monetary and fiscal policies, no matter how drastic or innovative, could appear impotent.  Since Mario Draghi’s famous pronouncement of 7/26/12, financial markets have been buoyed, in our opinion, by the expectation that public policy would always backstop downside exposure to a possible repeat of the 2008 global financial crisis.  We are not so sure that investor faith in Draghi’s promise is well founded.  More debt issuance, more deeply negative interest rates, wider budget deficits, and overt money-printing (Modern Monetary Theory) have, in our opinion, already run into the brick wall of diminishing returns.  If so, exposure to gold, even in small proportions – the only systemically bulletproof asset that is both liquid and readily deployable – will, in our opinion, prove highly satisfactory.

This quarterly commentary from John, which never breaths a word about the real reason why precious metal prices remain stagnant, appeared on the tocqueville.com Internet site on Monday, even though it’s dated last Friday.  Another link to it is here.


The PHOTOS and the FUNNIES

I finally got the photos of a bald eagle that I’d been waiting for months to get.  The first shot is with my 24-70mm walk-around lens at its full 70mm ‘telephoto’ setting, as I just wanted to get the shot in case it flew away before I had the 400mm strapped on.  The second shot is with the aforesaid mentioned lens attached.  This is the best of the four photos I kept.  And in case you’re thinking I was out in the middle of nowhere when I took these…I shot them from the comfort of the driver’s seat of my car in the parking lot of a rather run-down motel in Cache Creek on March 10. But judicious cropping makes them seem otherwise.  Click to enlarge for both.


The WRAP

It was another day of Ted’s “Midnight Moves” and salami slicing again on Monday.  Gold set a new intraday low for this move down — and to a new low going back to the end of the first week in March.  In silver, the new intraday low that ‘da boyz’ set, was at a price going back to December 24 of last year.  And in platinum, they set a new intraday low for this move down as well.

But despite the rather non-impressive volumes in both silver and gold, it was…as Ted said on the phone yesterday…another day where the commercial traders were going long and covering short positions — and the brain-dead Managed Money traders were doing the opposite.

But it was comforting to see that the precious metal equities managed to close in positive territory yesterday.

Here are the 6-month charts for the Big 6 commodities — and the above mentioned changes in all three precious metals should be noted.  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, after crawling a few dimes higher in the first two hours of trading in New York on Monday evening, began the ‘midnight move’ at 8 a.m. China Standard Time on their Tuesday morning — and the current low tick was set at 2 p.m. CST. It has edged a bit higher since — and is currently down $1.50 an ounce. The price path for silver was identical, but silver is now back at unchanged currently. In most respects the price action in platinum was the same — and it’s now up a dollar at the moment. Palladium didn’t do much until shortly after 10 a.m. CST — and then it began to edge unevenly higher from there — and is up 4 dollars as Zurich opens.

Net HFT gold volume is about 38,000 contracts — and there’s only 578 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is around 9,300 contracts — and there’s 951 contracts worth of roll-over/switch volume on top of that.

The dollar index has been basically chopping sideways even since trading began at 7:44 p.m. EDT in New York/7:44 a.m. CST in Shanghai. It did make it above the 97.00 mark very briefly just minutes before 10 a.m. CST…but has fallen back — and is sitting at down 2 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and despite the fact that it is Good Friday as well, the report will be issued at its usual time on that date.

And as I post today’s column on the website at 4:02 a.m. EDT, I see that all four precious metals haven’t done much in the first hour of London trading, although gold and silver are a bit lower. Gold is now down $2.80 an ounce — and silver is down 4 cents. Platinum is up 3 dollars — and palladium by 5.

Gross gold volume is coming up on 51,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 49,500 contracts. Net HFT silver volume is just under 12,000 contracts — and there’s 1,229 contracts worth of roll-over/switch volume in that precious metal.

The dollar index continues to chop quietly sideways — and is down 3 basis points as of 8:45 a.m. GMT in London…9:45 a.m. CEST in Zurich.

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

Ed