17 April 2019 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price “midnight move” began at 8:00 a.m. China Standard Time on their Tuesday morning — and it was quietly sold lower until a few minutes before 8:30 a.m. in New York. Then the real engineered price decline got underway. That lasted like it did on Monday, until five minutes after the equity markets opened in New York — and it crawled a bit higher from there until the 11 a.m. EDT London close. It was sold back to its low tick of the day around 12:50 p.m. — and then crept a bit higher from that point until trading ended at 5:00 p.m. EDT.
The high and low ticks were recorded by the CME Group as $1,291.70 and $1,275.50 in the June contract.
Gold was closed on Monday at $1,276.50 spot, down $10.90 on the day — and at a new low for this engineered price decline. Net volume was extremely heavy at just under 313,500 contracts — and there was a bit under 14,000 contracts worth of roll-over/switch volume in this precious metal.
The silver price activity on Tuesday was more ‘volatile’…but the end result was the same, as ‘da boyz’ set the low of the day at the same time as gold…five minutes after the equity markets opened in New York, but it was not a new low for this move down. From there it chopped quietly higher until 3 p.m. EDT in the thinly-traded after-hours market — and didn’t do a lot after that.
The high and lows in this precious metal certainly aren’t worth looking up.
Silver was closed at $14.975 spot, up a penny on the day. Net volume was a bit higher than it was on Monday, but only just, at a bit under 58,000 contracts — and there was a bit over 13,500 contracts worth of roll-over/switch volume on top of that.
Platinum was sold a few dollars lower in Far East trading on their Tuesday. That lasted until around 2 p.m. CST — and it jumped up 6 bucks or so by minutes after 10 a.m. in Zurich. It was all downhill from there until the low tick of the day was set around 10:25 a.m. in New York…a price point which it revisited about two hours and change later. Platinum was closed at $879 spot, down 8 dollars from Monday.
Palladium’s high came at the same time as platinum’s…a few minutes after 10 a.m. in Zurich trading. It had a bit of a wild ride to the downside from there — and the $1,334 spot low tick of the day was set multiple times during the remainder of the day. It closed off that low by a few dollars at $1,338 spot, down 4 bucks.
The dollar index closed very late on Monday afternoon in New York at 96.94 — and then proceeded to chop very unevenly sideways once trading began at 7:44 p.m. EDT on Monday evening. It made numerous attempts to break above the 97.00 mark during the Tuesday session — and finally made it stick starting around 10:40 a.m. in New York…but it was a feeble effort. It crawled very quietly and very unevenly higher from there — and finished the day at 97.04…up 10 basis points from Monday’s close.
It almost goes without saying that, once again, there was no correlation between the currencies — and the engineered price declines in the precious metals yesterday.
Here’s the DXY chart, courtesy of 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…96.12…and the close on the DXY chart above, was 92 basis points on Tuesday. Click to enlarge as well.
The gold stocks gapped down at the open — and crawled unevenly lower until 1 p.m. EDT — and then crawled equally quietly higher until around 3:25 p.m. Then it appeared that the day traders unloaded their positions into the close. The HUI closed down 2.24 percent.
The silver equities turned in a similar performance, so I shan’t bother repeating myself, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 2.17 percent. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Tuesday’s doji. Click to enlarge as well.
I’m surprised that the silver equities didn’t do better yesterday, considering the fact that the metal itself finished in the green on Tuesday. I would suspect that some fund unloaded a position in both precious metals yesterday — and it resulted in a similar down day for all.
The CME Daily Delivery Report showed that 91 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.
In gold, of the five short/issuers in total, the only one that mattered was Advantage, with 82 contracts out of its client account. There were three long/stoppers in total — and the two largest were JPMorgan and Advantage, picking up 78 and 12 contracts for their respective client accounts.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Tuesday trading session showed that gold open interest in April fell by 560 contracts, leaving 798 still around, minus the 91 mentioned three paragraphs ago. Monday’s Daily Delivery Report showed that 1,143 gold contracts were actually posted for delivery today, so that means that another 1,143-560=583 gold contracts were added to the April delivery month. Silver o.i. in April fell by 1 contact, leaving zero left — and Monday’s Daily Delivery Report showed that zero silver contracts were posted for delivery today.
The jury is still out on whether there will be more silver deliveries in April or not.
There was another withdrawal from GLD yesterday, as an authorized participant took out 56,654 troy ounces. There were no reported changes in SLV.
Since the beginning of the month, there has been 1,028,487 troy ounces of gold taken out of GLD. Over the same time period, there has only been 133,817 troy ounces of silver withdrawn from SLV — and you have to ask yourself why that is so.
There was a tiny sales report from the U.S. Mint on Tuesday. They sold 500 one-ounce 24K gold buffaloes — and 500 one-ounce platinum eagles.
There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.
It was far busier in silver of course, as 1,638,751 troy ounces were received — and 616,243 troy ounces were shipped out. In the ‘in’ category, there was one truckload…599,763 troy ounces…received at CNT — and another truckload…559,531 troy ounces…was dropped off at JPMorgan. The remaining 479,456 troy ounces was left outside the vault door at Canada’s Scotiabank. All the ‘out’ activity was one truckload…613,272 troy ounces…that departed CNT. The link to all this activity is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday. They reported receiving 1,000 of them — and shipped out 1,180. All this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.
The Beau Street Hoard, found in Bath, Somerset, is the fifth-largest hoard ever found in Britain and the largest ever discovered in a British Roman town. It consists of an estimated 17,500 silver Roman coins dating from between 32 B.C. and 274 A.D. The hoard was found on Beau Street about 150 metres (490 ft) from the town’s Roman Baths, built when Bath was a Roman colony known as Aquae Sulis.
The Beau Street Hoard is the largest hoard ever found in the U.K. by a professional archaeologist. The coins were found fused together into a large block. It was secreted under the floor of a Roman building near the face of a masonry wall, within a small oval pit measuring about 40 cm × 30 cm (16 in × 12 in). The find’s location makes it highly unusual, as hoards more typically come from rural locations. It was thought initially that the hoard comprised up to 30,000 coins but the estimated number was subsequently reduced to around 17,400. The hoard appears to have been deposited towards the end of the 3rd century A.D…coins spanning a period from 32 B.C. to 274 A.D. have been identified by British Museum conservators.
When the hoard was discovered it was believed that it had been deposited in a wooden box which had since rotted away. The position of the hoard was recorded and then placed into a wooden crate as a single block so that it could be lifted out intact by a crane for later examination at the British Museum. X-ray analysis of the block of coins by Southampton University found that the coins had been stored in a number of leather bags. Six bags were visible on the X-rays, and two more were discovered as the hoard underwent conservation. Traces of the leather are still visible, having been partially protected from decay by contact with the copper coins, which repelled the bacteria that would otherwise have destroyed it. Each of the coins was then cleaned by manual and chemical processes to enable identification. There’s only this one picture — and the ‘click to enlarge‘ feature doesn’t help with it.
Another very quiet news day — and I have very little for you.
Having slipped for two consecutive months, US Manufacturing production was expected to modestly rebound in March (by 0.1% MoM) but it failed, ending unchanged. Click to enlarge.
However, headline industrial production data was not just worse than expected but contracted by 0.1% MoM in March…Click to enlarge.
The biggest drivers were Mining which fell 0.8% in March after no change in February, and Motor vehicles and parts production, which tumbled 2.5% in March to the lowest level since July. Q1 saw auto production slide 6.9% – the biggest drop since Oct 2014.
Capacity utilization fell to 78.8% from 79% in February (revised down from 79.1%).
Manufacturing output fell at a 1.1 percent annual rate in the first quarter, the worst performance since late 2017.
As Bloomberg notes, the data signal further manufacturing softness as producers cope with an inventory buildup, continuing uncertainty around trade and a dimming global growth outlook.
This 3-chart Zero Hedge article was posted on their website at 9:28 a.m. EDT on Tuesday morning — and I thank Brad Robertson for sending it our way. Another link to it is here.
There was some good and some not so good news in Bank of America’s just reported Q1 earnings report. On one hand, the bank unveiled that its quarterly profit rose 6% to $7.3 billion, a new all time high, even as revenues dipped with the company trimming some more fat (and/or muscle) as operating expenses dropped by 4% to offset the continued shrinkage in the bank’s trading revenues (all of which was discussed previously).
And while the rest of BofA’s results were generally in line if on the soft side, there was one aspect of the quarterly report that was especially notable, and it had to do with the bank’s asset quality.
Here, what was remarkable is that even as the economy is reportedly getting stronger with better consumer trends, Bank of America bumped up its provision for credit losses to just above $1 billion, or $1.013BN to be specific, up over $100MM from both a year earlier and Q4. This was the highest credit loss provision number since in 6 years, or Q2 2013.
What was also notable, is that this increase took place even as net charge-offs remained relatively stable and as the bank’s total nonperforming loans declines by $0.1BN to $4.9BN, “driven by improvements in consumer.”
Which begs the question: if the economy is so strong and the bank’s NPLs are declining, just what is BofA seeing to be raising its loss provision to a 6 year high?
This brief 1-chart Zero Hedge article put in an appearance on their Internet site at 9:15 a.m. on Tuesday morning EDT — and it’s the second contribution in a row from Brad Robertson. Another link to it is here.
For years, currency analysts have looked for signs of an international monetary “reset” that would diminish the dollar’s role as the leading reserve currency and replace it with a substitute agreed upon at some Bretton Woods-style monetary conference.
That push has been accelerated by Washington’s use of the dollar as a weapon of financial warfare, including the application of sanctions. The U.S. uses the dollar strategically to reward friends and punish enemies.
The use of the dollar as a weapon is not limited to trade wars and currency wars, although the dollar is used tactically in those disputes. The dollar is much more powerful than that.
The dollar can be used for regime change by creating hyperinflation, bank runs and domestic dissent in countries targeted by the U.S. The U.S. can depose the governments of its adversaries, or at least blunt their policies without firing a shot.
But for every action, there is an equal and opposite reaction.
As the U.S. wields the dollar weapon more frequently, the rest of the world works harder to shun the dollar completely.
This worthwhile commentary from Jim showed up on the dailyreckoning.com Internet site on Tuesday sometime — and another link to it is here.
In my 2014 book, The Death of Money, I wrote, “The United States is Japan on a larger scale.” That was five years ago.
Last week, prominent economist Mohamed A. El-Erian, formerly CEO of PIMCO and now with Allianz, wrote, “With the return of Europe’s economic doldrums and signs of a coming growth slowdown in the United States, advanced economies could be at risk of falling into the same kind of long-term rut that has captured Japan.”
Better late than never! Welcome to the club, Mohamed.
Japan started its “lost decade” in the 1990s. Now their lost decade has dragged into three lost decades. The U.S. began its first lost decade in 2009 and is now entering its second lost decade with no end in sight.
What I referred to in 2014 and what El-Erian refers to today is that central bank policy in both countries has been completely ineffective at restoring long-term trend growth or solving the steady accumulation of unsustainable debt.
In Japan this problem began in the 1990s, and in the U.S. the problem began in 2009, but it’s the same problem with no clear solution.
Another interesting commentary from Jim that put in an appearance on the dailyreckoning.com Internet site on Tuesday as well — and another link to it is here.
A sad day in Paris. In this, the holy week of Christendom… one of its most sacred and beautiful monuments caught fire. The conflagration was reportedly brought under control around 3 a.m.
And when dawn came, Parisians found Notre Dame “disfigured, but still standing.” Its oak beams – dating from the 12th century – were charred and still smoking… its roof had caved in.
It’s “catastrophic,” says a friend who lives nearby.
Adolf Hitler tried to destroy Notre Dame. He sent the order to his man on the scene, General Dietrich von Choltitz, to blow up all the city’s monuments, its bridges, its railroad stations – everything.
He wanted the city leveled. He knew the allies would take Paris soon (they were advancing toward it from Normandy), but Hitler insisted that Paris be “complete rubble” when they arrived.
On the 24th of August, 1944, Hitler telephoned von Choltitz. “Brennt Paris?” (is Paris burning) he asked.
But by then, two things had changed. First, von Choltitz saw which team the gods of war were on… and he had no trouble imagining himself in front of an allied military tribunal or a firing squad after it was over.
He preferred to face the music as the “savior of Paris” rather than its destroyer.
This very interesting commentary from Bill was posted on the bonnerandpartners.com Internet site on Tuesday morning EDT — and another link to it is here.
European subsidiaries of Italy’s biggest bank UniCredit have pleaded guilty to U.S. charges of violating sanctions against Iran and other countries. The lender has agreed to pay $1.3 billion to settle the six-year probe.
UniCredit’s units in Germany, Austria and Italy admitted to illegally moving of hundreds millions of dollars via the US financial system on behalf of sanctioned entities, according to the U.S. Treasury Department. The violations reportedly included sanctions programs against weapons of mass destruction proliferation.
The resolution, which is among the largest ever related to U.S. sanctions laws, followed last week’s $1.1 billion settlement reached by London-based banking multinational Standard Chartered with American and British authorities over similar misconduct.
The latest case revealed that UniCredit’s subsidiary in Germany processed more than 2,000 payments totaling over $500 million through U.S. financial institutions. In addition, over two years through 2012 all the three of the bank’s units reportedly carried out transactions, withholding information on sanctioned persons or countries from the U.S. authorities.
The U.S. Treasury Department noted that the illegal cash proceedings were carried out to several states subject to U.S. penalties, including Burma, Cuba, Libya, Sudan, and Syria.
It will be interesting to see if the Italian government has anything to say about it. This news item appeared on the rt.com Internet site at 10:17 a.m. Moscow time on their Tuesday morning, which was 3:17 a.m. in Washington — EDT plus 7 hours. I thank Larry Galearis for pointing it out — and another link to it is here.
I didn’t find any precious metal stories that I thought worth posting.
The PHOTOS and the FUNNIES
These two photos were taken overlooking the Thompson River just off the Trans-Canada Highway between Cache Creek and Kamloops, B.C. — and like any river that flows over fairly flat terrain, regardless of its size, it meanders. Both photos were taken looking generally east. In the first shot, you can see what remains of the old road between these two population centers before the Trans-Canada Highway came into being after WW2. Click to enlarge for both.
Although both silver and gold were quietly sold lower in Far East and morning trading in London on their respective Tuesdays, ‘da boyz’ saved their real bag of tricks until a minute or so before 8:30 a.m. in New York trading…with gold plunging below its 100-day moving average in the process.
The fact that they didn’t set a new intraday low in silver was somewhat of a surprise, although there’s only so much silver blood that they can get out even the dumbest of the Managed Money traders. We may [or may not] have seen that limit yesterday. Time will tell.
With gold now below its 100-day moving average, it remains to be seen if the powers-that-be will go after its 200-day moving average. Can they do it, you ask? Well, as I think Ted Butler would say at this point…”it’s their game — and they can do anything they want.” He would be right about that.
Not surprisingly, gold volume was enormous yesterday — and not so much in silver obviously, as no new low was made in that precious metal. But — and you can take this to the bank — the commercial traders were the ones that started the engineered price decline yesterday morning, and it was the Managed Money traders that were selling longs and going short — and it was the commercial traders [‘da boyz’] that were gobbling up the other side of every one of these trades that they could get their hands on. This is Ted’s position on this — and he’s 100 percent correct.
The Zero Hedge story on this yesterday was very misleading, but people lap this stuff up like it was The Gospel. Just because a hyperbole-laced story appears on their website, doesn’t mean that it’s correct.
Here are the 6-month charts for all four precious metals, plus copper and WTIC. The new intraday low and close for gold should be noted. Click to enlarge for all.
And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price traded quietly sideways in Wednesday morning trading in the Far East. But starting around noon China Standard Time, the gold price began to edge higher, but got turned a bit lower a few minutes after the 2:15 p.m. afternoon gold fix in Shanghai — and is currently up $1.30 the ounce. It was about the same for silver — and it’s up 4 cents. Ditto for platinum — and it’s up 3 bucks. Palladium has been edging very unevenly higher in Far East trading — and it’s down a dollar as Zurich opens.
Net HFT gold volume is a bit over 48,000 contracts already — and there’s 1,896 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is just about 11,200 contracts — and there’s 1,592 contracts worth of roll-over/switch volume in this precious metal.
The dollar index opened up 3 basis points once trading began at 7:44 p.m. EDT in New York on Tuesday evening. It hit its current 97.12 high tick around 8:35 a.m. CST on their Wednesday morning — and it has been a downhill ride since going into the 2:15 afternoon gold fix in Shanghai. It has rallied a bit since then — and is currently down 10 basis points as of 7:45 a.m. BST in London…8:45 a.m. CEST in Zurich.
Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and it should be a dandy. I’m not even going to hazard a guess at any numbers, as Ted is the real authority on this — and I’ll wait to see what he has to say in his mid-week column to his paying subscribers this afternoon.
And as I post today’s missive on the website, I note that all four precious metals are higher as the first hour of London and Zurich trading draws to a close — and the dollar index heads lower. Gold is up $1.80 — and silver is now up 7 cents. Platinum and palladium are up 7 and 10 dollars respectively.
Gross gold volume is coming up on 62,500 contracts — and minus what little roll-over/switch volume there is, net HFT silver volume is just under 58,500 contracts. Net HFT silver volume is coming up on 14,300 contracts — and there’s 1,883 contracts worth of roll-over/switch volume in this precious metal. Based on these volume numbers, these ‘rallies in both silver and gold are not going unopposed.
The dollar index tick higher after the afternoon gold fix in Shanghai lasted about thirty minutes — and has rolled over since. And as of 8:45 a.m. in London…9:45 a.m. in Zurich, the dollar index is down 21 basis points.
That’s it for yet another day — and I’ll see you here tomorrow.