Another New Intraday Low For Gold on Thursday - Ed Steer's Gold and Silver Digest

19 April 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

The gold price was engineered quietly lower — and a tiny new intraday low for this move down was set a few minutes before the London open on their Thursday morning. It rallied about seven dollars or so from there on pretty ferocious volume — and the high tick of the day, such as it was, came at…or just before…the 10:30 a.m. morning gold fix in London. It crawled very quietly and unevenly lower until a few minutes before 12:30 p.m. in New York — and then crept a bit higher into the 5:00 p.m. EDT close from there.

The low and high ticks certainly aren’t worth looking up.

Gold finished the Friday trading session at $1,275.50 spot, up $1.90 from Wednesday’s close. Net volume was pretty decent at 225,000 contracts — and that certainly had something to do with the fact that there was far heavier volume that normal during the first two hours of trading in London yesterday morning. Roll-over/switch volume was around 5,300 contracts.

The price path for silver was mostly the same as it was for gold, at least up until the 10:30 a.m. BST morning gold fix in London on their Thursday morning. It broke above $15 spot by a penny — and after that, any and all rally attempts that tried to break above that price mark, were carefully turned aside. And after about 12:20 a.m. in New York, not much happened from a price perspective, as traders headed out early for the Easter long weekend.

The low and high ticks in this precious metal aren’t worth looking up, either.

Silver closed in New York on Thursday at $14.975 spot, up 2 cents on the day. Net volume was exceptionally quiet at around 38,300 contracts, even though…like for gold…there was elevated trading volume during the first two hours in London. Unlike gold, silver did not set a new low for this move down on Thursday. Roll-over/switch volume out of May and into future months was a hefty 21,500 contracts.

Platinum was sold down to its low of the day by around 11:30 a.m. China Standard Time on their Thursday morning — and it didn’t do much over the next couple of hours. It then rallied a few dollars into the Zurich open — and then didn’t do much until around 1:30 p.m. CEST. It began to chop quietly higher from there — and that continued throughout the entire New York trading session — and into after-hours trading as well. Platinum finished on its high of the day…$900 spot…up 13 dollars from Wednesday’s close.

The palladium price began to slide quietly in price starting about two hours after trading began in New York at 6:00 p.m. EDT on Wednesday evening — and its low came around 10:40 a.m. in Zurich. It gained about half of its losses back in the next two hours — and then didn’t do anything until 9 a.m. in New York. The price stair-stepped its way quietly higher from there — and it came close to finishing the Thursday session on its high tick as well…closing at $1,402 spot, up 23 dollars on the day.

The dollar index closed very late on Wednesday afternoon in New York at 97.01 — and opened unchanged once trading commenced at 7:44 p.m. EDT on Wednesday evening, which was 7:44 a.m. China Standard Time on their Thursday morning. From that juncture it didn’t do much of anything — and it’s 96.96 low tick, such as it was, coming around 2:35 p.m. CST in Shanghai. Then minutes before 8:30 a.m. BST in London, it jumped higher by 20+ basis points — and rallied unevenly higher until around 1:05 p.m. in New York. Its high at that point was 97.49 — and it crawled generally sideways for the remainder of the Thursday session. The dollar index closed at 97.47…up 46 basis points from Wednesday.

Here’s the DXY chart, courtesy of Bloomberg as usual. Click to enlarge.

And here’s the 5-year U.S. dollar index chart, to put the current 6-month dollar index activity in some context. The delta between its close…96.61…and the close on the DXY chart above, was 86 basis points on Wednesday. Click to enlarge as well.

The gold stocks opened unchanged, rallied a bit into the afternoon gold fix in London — and then some kind souls, most likely mutual or hedge funds, sold them lower until around 12:45 p.m. EDT in New York trading. They crept a bit higher from there — and the HUI closed down 1.91 percent.

The price activity in silver equities was almost the same as it was for the gold shares, with all the same price inflection points, so I’ll spare you the play-by-play on that. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 1.56 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.

It certainly wasn’t John Q. Public selling the precious metal shares lower yesterday, but whoever the buyers happened to be, those stocks now reside in the strongest of hands.

The CME Daily Delivery Report showed that 19 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, the only short/issuer was Advantage — and they also stopped 3 contracts. JPMorgan picked up the other 16. All contracts, both issued and stopped, involved their respective client accounts.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in April declined by 837 contracts, leaving only 164 left, minus the 19 contracts mentioned a few paragraphs ago. Wednesday’s Daily Delivery Report showed that 839 gold contracts were actually posted for delivery on Tuesday. That means that 839-837=2 more gold contracts were added to the April delivery month. Silver deliveries are done for the month, unless something pops up between now and First Day Notice on April 29.

After a small deposit into GLD on Wednesday, there was a withdrawal from GLD on Thursday, as an authorized participant took out 37,769 troy ounces. There were no reported changes in SLV.

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

There was some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday. There was 1,999.990 troy ounces/62 kilobars [U.K./U.S. kilobar weight] deposited at Delaware. Nothing was shipped out. There was also a paper transfer in gold, as 88,023.030 troy ounces/2,737 kilobars [U.K./U.S. kilobar weight] was transferred from the Registered category — and back into Eligible. That occurred at HSBC USA. The link to this is here.

As usual, there was much more activity in silver, as 1,198,984 troy ounces was reported received — and 648,092 troy ounces were shipped out. In the ‘in’ category, there was one truckload…600,598 troy ounces…dropped off at HSBC USA — and the other truckload…598,386 troy ounces…found a home over at CNT. In the ‘out’ category, there was one truckload…631,631 troy ounces shipped out of CNT. Lesser amounts…14,480 and 1,980 troy ounces…departed Loomis International and Delaware respectively. The link to all this is here.

It was another busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday. They reported receiving 5,585 of them — and shipped out 5,862. All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

The Bitterley Hoard is the largest post medieval / English Civil War Coin Hoard found to date from Shropshire, England. It was discovered on 17 February 2011 by a metal detector user near the village of Bitterley, South Shropshire. The find consists of one gold coin and 137 high denomination silver coins. These were placed within a high quality leather purse which was contained within a pottery vessel called a tyg. The earliest coin was from the reign of Edward VI, the latest from the Bristol Provincial Mint of Charles I, indicating it was buried after early 1644.

On 28 June 2012 the coin hoard was declared as Treasure under the 1996 Treasure Act by the Coroner for Shropshire — and has been valued by the independent treasure valuation committee of the Department for Culture, Media and Sport. Shropshire Museum Service has expressed an interest in acquiring the hoard for display at Ludlow Museum. Funds are being raised via public subscription by the Friends of Ludlow Museum. There’s only this one photo. Click to enlarge.

With the Easter long weekend upon us, there wasn’t much in the way of relevant news yesterday.

CRITICAL READS

U-Turn In Trucking: Cass Freight Shipment Index Contracts For 4th Consecutive Month

The Cass Freight Index, a measure of truck shipments is down for the fourth consecutive month year-over-year. The ‘click to enlarge‘ feature only helps a bit.

Please consider the Cass Freight Index Report for March 2019.

“The Cass Freight Index was one of the first freight flow indicators to turn positive (in October 2016) and confirm our prediction of a recovery in the U.S. economy. Beyond our concern that the Cass Freight Shipments Index has been negative on a YoY basis for the fourth month in a row. Bottom line, the data in coming weeks will indicate whether this is merely a pause in the rate of economic expansion or the beginning of an economic contraction.”

We are concerned about the severe declines in international airfreight volumes (especially in Asia) and the recent swoon in railroad volumes in auto and building materials
We are reassured by the sequential increase in the Cass Freight Shipments Index (up 2.0%) and the volumes in U.S. domestic trucking (especially in truckload dry van)
We are closely watching the volumes of chemicals and other shipments via railroad, as they have lost momentum in recent weeks and may give us the first evidence of the global slowdown spreading to the U.S.

J.B. Hunt, the largest U.S. trucking company had this to say: “Volume, or lack thereof, is obviously the main story. The inventory pile-up hurts. And the driver shortage is ending.”

The global economy is on life support. We have simultaneous slowdowns in the U.S., China, and the E.U.

This Zero Hedge article was posted on their Internet site at 11:30 a.m. EDT on Thursday morning — and another link to it is here.

U.S. Services PMI Crashes to 2-Year Lows, Signals GDP Slump

While all eyes focused on retail sales rebound in March, the flash US composite PMI plunged to 31-month lows in April, led by a collapse in the Services economy, catching down to the Manufacturing side. Click to enlarge.

Flash U.S. Composite Output Index at 52.8 (54.6 in March). 31-month low.
Flash U.S. Services Business Activity Index at 52.9 (55.3 in March). 25-month low.
Flash U.S. Manufacturing PMI at 52.4 (52.4 in March). Unchanged.

So it seems ‘hard data’ was right after all and ‘soft’ surveys wrong…Click to enlarge.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“The U.S. economy started the second quarter with its weakest expansion since mid-2016 as businesses reported a marked slowing in output, new orders and hiring.”

“The survey indicates that the manufacturing downturn seen in the first quarter has persisted into April, but growth in the service sector has now also slumped to a two-year low as the malaise showed further signs of spreading beyond the factory sector.

“The April surveys are consistent with GDP rising at an annualised rate of just under 2%, with the official measure of manufacturing production remaining in decline.

This news item put in an appearance on the Zero Hedge website at 9:54 a.m. on Thursday morning EDT — and it comes courtesy of Brad Robertson. Another link to it is here.

When is Capital Preservation Not Enough? — Dennis Miller

Pundit Bill Bonner’s article about our growing government debt grabbed my attention.

“…. When it comes to government debt, the borrower never pays; the feds have no money. The lenders – big banks, investment funds, well-heeled insiders – don’t want to pay.

Generally, they collude with the feds to make sure the real cost is put on innocent third parties – taxpayers and consumers.”

Governments pass the real cost to taxpayers and consumers by creating high inflation. Mr. Bonner lives in Argentina. At the end of February, the official annual inflation rate jumped to 51.3% per year. He estimates it is over 100%.

The next article I picked up quoted Fed Chairman Powell:

“Powell called out the need for the Fed and other central banks to find better ways to deal with pervasive low inflation, and said…it ought to pay serious attention to strategies that would drive inflation higher….” (my emphasis)

That is government lingo, meaning pass the cost of government debt to taxpayers and consumers by devaluing the dollar.

This interesting commentary from Dennis put in an appearance on his Internet site early on Tuesday morning — and another link to it is here.

Deutsche Bank is Scrambling For a ‘Plan B’ to Justify Abandoning Commerzbank Merger Talks

The fraught, government-assisted courtship of troubled German banking giants Deutsche Bank and Commerzbank has hit yet another snag. According to a series of reports published Thursday morning, concerns about a mass defection of mutual clients moving some, or all, of their business is giving Deutsche Bank – long reputed to be the more reluctant partner – cold feet.

Deutsche CEO Christian Sewing is reportedly trying to devise a ‘Plan B’ to pitch to investors who support the tie-up. These investors are reportedly demanding that if Deutsche doesn’t go ahead with the merger, it must come up with a plan to turnaround its struggling business as its streak of declining revenue is widely expected to continue.

However, while investors are demanding that the bank try ‘something different’, the options reportedly under consideration (as described by Bloomberg) sound like more of the same: They include a) more cost cuts, focusing on DB’s investment bank and b) a nebulous ‘strategy shift’ that would involve more upfront costs. However, Sewing must at least find a way to paint the turd gold, so to speak, since a return to his original strategy simply ‘wouldn’t be credible’.

In another sign that the deal could be headed for the rocks, BBG noted that after five weeks of talks, the two banks are apparently no closer to a deal. Meanwhile, more Social Democrats, the party of finance minister Olaf Scholz – who is perhaps the biggest proponent of a merger, which he hopes will create a new German ‘national champion’ to support its industrial sector – are siding with the labor unions from the two banks, which have warned that a merger could lead to the loss of 40,000 jobs.

But in a sign that critics of the deal (of which there are many, including the Qatari wealth funds that are among the biggest shareholders in the two banks) are making headway in trying to stop it, the Financial Times reported that the prospects for ‘revenue attrition’ are why DB is suddenly getting nervous. BBG added that doubts about cost savings and the battle to raise capital to finance the deal are also among the bank’s concerns.

But in a ironic twist, it’s looking increasingly plausible that Deutsche Bank’s track record of being “the biggest money laundering bank in the world” – as Maxine Waters so eloquently put it – might end up sinking the deal that its CEO so clearly doesn’t want. According to a separate report in the FT citing internal Deutsche Bank sources, the bank has reportedly estimated that it processed at least €175 million ($197 million) of dirty money for Russian criminals between 2011 and 2014. The bank is bracing itself for fines and litigation. And this doesn’t include the €160 billion ($180 billion) in ‘suspicious’ money that it processed on behalf of Danske Bank’s Estonian branch.

Regulatory concerns about AML [anti-money laundering] might be one potential out for DB. But if the bank really must come up with a ‘Plan B’ if it wants to justify abandoning the talks without risking shareholder backlash, well, we can only think of one realistic alternative: Let Deutsche Bank fail.

This longish story showed up on the Zero Hedge website at 9:04 a.m. EDT on Thursday morning — and it’s another contribution from Brad Robertson. Another link to it is here.

Rumors of War: Washington Is Looking for a Fight

It is depressing to observe how the United States of America has become the evil empire. Having served in the United States Army during the Vietnam War and in the Central Intelligence Agency for the second half of the Cold War, I had an insider’s viewpoint of how an essentially pragmatic national security policy was being transformed bit by bit into a bipartisan doctrine that featured as a sine qua non global dominance for Washington. Unfortunately, when the Soviet Union collapsed the opportunity to end once and for all the bipolar nuclear confrontation that threatened global annihilation was squandered as President Bill Clinton chose instead to humiliate and use NATO to contain an already demoralized and effectively leaderless Russia.

American Exceptionalism became the battle cry for an increasingly clueless federal government as well as for a media-deluded public. When 9/11 arrived, the country was ready to lash out at the rest of the world. President George W. Bush growled that “There’s a new sheriff in town and you are either with us or against us.” Afghanistan followed, then Iraq, and, in a spirit of bipartisanship, the Democrats came up with Libya and the first serious engagement in Syria. In its current manifestation, one finds a United States that threatens Iran on a nearly weekly basis and tears up arms control agreements with Russia while also maintaining deployments of U.S. forces in Syria, Iraq, Afghanistan, Somalia and places like Mali. Scattered across the globe are 800 American military bases while Washington’s principal enemies du jour Russia and China have, respectively, only one and none.

Never before in my lifetime has the United States been so belligerent, and that in spite of the fact that there is no single enemy or combination of enemies that actually threaten either the geographical United States or a vital interest. Venezuela is being threatened with invasion primarily because it is in the western hemisphere and therefore subject to Washington’s claimed proconsular authority. Last Wednesday Vice President Mike Pence told the United Nations Security Council that the White House will remove Venezuelan President Nicolás Maduro from power, preferably using diplomacy and sanctions, but “all options are on the table.” Pence warned that Russia and other friends of Maduro need to leave now or face the consequences.

The development of the United States as a hostile and somewhat unpredictable force has not gone unnoticed. Russia has accepted that war is coming no matter what it does in dealing with Trump and is upgrading its forces. By some estimates, its army is better equipped and more combat ready than is that of the United States, which spends nearly ten times as much on “defense.”

This commentary/opinion piece showed up on the strategic-culture.org Internet site on Thursday sometime — and I thank Roy Stephens for pointing it out. Another link to it is here.

Asia Gold: China premiums bounce to two-year highs as prices dip, yuan gains

Gold premiums in top consumer China jumped to their highest in more than two years, as a drop in global prices and strengthening yuan encouraged purchases amid optimism about the state of the economy. Click to enlarge.

Chinese premiums climbed to about $20 an ounce over global benchmark prices this week, a level last seen in March 2017. Premiums of about $13-$15 were charged last week.

“Lower prices are giving way to a rise in buying,” said Alfonso Esparza, senior market analyst at OANDA.

“Physical demand has been climbing as central banks have stepped up their efforts, leaving investors to follow their lead.”

Data earlier this month showed China raised its gold reserves for a fourth straight month during end-March. Some central banks often use bullion to diversify their reserves away from the U.S. dollar.

This Reuters story, co-filed from Bengaluru and Mumbai, appeared on their website at 6:20 a.m. EDT on Thursday morning — and I picked it up off the Sharps Pixley website. Another link to it is here.

The PHOTOS and the FUNNIES

These next two photos were taken within a hundred meters or so of where I took the photos of the bighorn sheep that I posted in yesterday’s column, but looking towards Kamloops Lake and the CN tracks at the Savona siding, instead of the hills on the left. In the first shot, you can see that the lake level is way down — and the cut in the hill on the left is the CN rail right-of-way. I waited for about thirty minutes before a train showed up — and the wait resulted in photo number two. Click to enlarge.

The WRAP

‘Da Boyz’ took another tiny salami slice out of gold on Thursday — and that occurred about twenty minutes or so before the London open. To tell you the truth, I’m somewhat surprised that they weren’t far more aggressive than the were. I’m not sure how to interpret that — and I’ll be interested in what happens when trading begins at the New York open at 6:00 p.m. EDT on Sunday evening.

Here are the 6-month charts for all four precious metals, plus copper and WTIC. Gold’s new intraday low for this move down should be noted…as should the fact that silver’s price is being carefully kept in line on a closing price basis. Once again it was platinum and palladium that were the stars of the day. Click to enlarge.

The precious metal market is closed for Good Friday, so there’s nothing else to report except the fact that there is supposed to be a Commitment of Traders Report today, despite the holiday.

And because today is a holiday just about everywhere in the Western world, my Saturday missive won’t have a lot in it because the U.S. will be shut tight.

Enjoy your holiday weekend if you’re lucky enough to get one — and I’ll see you here tomorrow.