01 May 2019 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price began to crawl unevenly and quietly higher once trading began at 6:00 p.m. EDT in New York on Monday evening — and that lasted until shortly before 1 p.m. in London, which was shortly before 8 a.m. in New York. It began to edge a bit lower at that point — and then got booted downstairs by a handful of dollars starting at 8:30 a.m. EDT, with the low tick of the day…such as it was…coming around 9:10 a.m. EDT. The tiny rally after that got capped in very short order — and by 11:30 a.m. the price was settled down — and didn’t do much for the remainder of the Tuesday session.
Once again the high and low ticks aren’t worth looking up.
Gold finished the day at $1,283.10 spot, up $3.70 from Monday’s close. Net volume was respectable at 231,500 contracts — and there was a bit under 9,500 contracts worth of roll-over/switch volume in this precious metal.
The silver price was up 8 cents, or thereabouts, by the 10:30 a.m. BST morning gold fix in London — and then traded flat until ‘da boyz’ showed up at 8:30 a.m. in New York. The low tick, like in gold, was set around 9:10 a.m. EDT — and from there, silver’s price was handled in a similar manner as the gold price.
The high and low ticks in this precious metal were reported by the CME Group as $15.04 and $14.835 in the July contract, which is now the new front month for silver.
Silver finished the Tuesday session at $14.925 spot, up 4 cents from Monday’s close — and below its 200-day moving average for the second day in a row. Like for gold, silver volume was very respectable as well, at a bit under 59,000 contracts — and there was around 3,800 contracts worth of roll-over/switch volume on top of that.
The platinum price edged quietly but unevenly sideways in Far East and morning trading in Zurich — and then got the gold and silver treatment at 8:30 a.m. in New York on the back of whatever b.s. economic news was posted at that particular time. Its low was also at 9:10 a.m. — and its subsequent recovery back to the unchanged mark by noon EDT wasn’t allowed to stand. Platinum was closed at $886 spot, down 7 dollars on the day.
The palladium price was up about 9 bucks within the first thirty minutes of trading when it began at 6:00 p.m. EDT in New York on Monday evening. From that point, it didn’t do much of anything until the 2:15 p.m. afternoon gold fix in Shanghai on their Tuesday. It was sold down to its low tick of the day just a few minutes after the Zurich open — and then crept very unevenly higher until a few minutes before 1 p.m. in New York. It was sold down a handful of dollars going into the COMEX close — and traded pretty flat until trading ended at 5:00 p.m. EDT. Palladium finished the Tuesday session at $1,365 spot, up 16 dollars on the day…but was up well over 30 bucks at one point.
The dollar index closed very late on Monday afternoon in New York at 97.86 — and then crawled quietly and unevenly sideways until around 2:50 p.m. China Standard Time on their Tuesday afternoon. It began to head unsteadily lower from there — and after a 4-hour long up/down move in New York, its 97.44 low tick was set around 1:45 p.m. EDT. It crept a bit higher into the 5:28 p.m. EDT close from there. The dollar index finished the Tuesday session at 97.48…down 38 basis points from Monday’s close.
Of course it was yet another day where it didn’t matter what the currencies were doing, as ‘da boyz’ were all over gold, silver and platinum at 8:30 a.m. in New York. They left palladium alone, at least until 1 p.m. EDT.
Here’s the DXY chart, courtesy of Bloomberg as usual. Click 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…97.20…and the close on the DXY chart above, was 28 basis points on Tuesday. Click to enlarge as well.
The gold shares began to head higher the moment that trading began at 9:30 a.m. EDT in New York on Tuesday morning. But a few minutes before 10 a.m. they began to get sold off — and their respective lows came shortly before 3 p.m. EDT. They then rallied back into positive territory by a hair by the time trading ended at 4:00 p.m. The HUI closed higher by 0.14 percent, so call it unchanged.
It was the same price action in the silver equities at the open New York — and again at the close. In between, there was a big down/up/down price moment — and the tiny rally after 3 p.m. EDT wasn’t big enough to get the silver stocks back in positive territory. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.51 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.
The CME Daily Delivery Report for Day 2 of May deliveries showed that 38 gold and 1,294 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.
In gold, the two largest of the five short/issuers were Advantage and Marex Spectron with 16 and 10 contracts out of their respective client accounts. The largest long/stopper was JPMorgan with 21 contracts — and in distant second and third place were Marex Spectron and Advantage, picking up 8 and 7 contracts. All contracts stopped were for their respective client accounts.
In silver, there were nine short/issuers in total — and by far the two largest were Morgan Stanley and ABN Amro, with 807 and 224 contracts. Morgan Stanley issued 800 contracts out of its client account, plus another 7 from its own account — and ABN Amro issued all its contracts from its client account. In distant third spot was International F.C. Stone with 97 contracts. There were eight long/stoppers in total — and head and shoulder above all others was JPMorgan once again, as they stopped 577 in total…338 for their client account, plus another 239 contracts for their own account. In second place was Standard Charter picking up 309 contracts for its in-house/proprietary trading account. ABN Amro and Advantage were in third and fourth place, stopping 122 and 102 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 May declined by 36 contracts, leaving 188 still around, minus the 38 mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 50 gold contracts were actually posted for delivery today, so that means that 50-36=14 gold contracts were added to the May delivery month. Silver o.i. in May fell by 1,118 contracts, leaving 2,525 still open, minus the 1,294 contracts mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 859 silver contracts were actually posted for delivery today, so that means that 1,118-859=259 silver contracts vanished from the May delivery month.
For the second day in a row there were no reported changes in either GLD or SLV.
There was a tiny sales report from the U.S. Mint on Tuesday. They sold 77,000 silver eagles — and that was it.
There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.
There was some activity in silver. There was 299,521 troy ounces received — and all of that ended up at HSBC USA. There was 629,510 troy ounces shipped out. The majority of that amount…600,274…troy ounces, once truckload, departed Brink’s, Inc. — and the remaining 29,235 troy ounces was shipped out of CNT. There was also a transfer of 496,193 troy ounces from the Eligible category — and into Registered over at CNT as well. Without doubt, this will get shipped out during the May delivery month. The link to that is here.
It was reasonably busy over at the COMEX-approved depositories in Hong Kong on their Monday. They reported receiving 2,600 of them — and shipped out 557. All of this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.
Here’s a chart from Nick that I seem to remember posting about a month ago, but just don’t know for sure, so here it is again anyway.
It’s a plot of the gold price vs. the net long or net short positions of the Managed Money traders in the COMEX futures market. You don’t need a masters degree in mathematics to see that the correlation between the gold price — and what the Managed Money traders are tricked into doing, is well in excess of 90 percent. Click to enlarge.
It was a very quiet news day on Tuesday — and I have very little for you.
Was that it for the global economic recovery?
Just hours after China reported disappointing PMI data across the board, with both manufacturing and services surveys posting a drop to levels just above contraction…
… the latest Chicago PMI confirmed that the slowdown is accelerating in the U.S., as the index tumbled to 52.6 from 58.7, and sharply below the 58.5 estimate. It was also the lowest print since January 2017. Click to enlarge.
More notably, the two-month plunge in the PMI was breathtaking and after printing at 64.7 in February, the index has plunged 12.1 points in the past two months, its biggest drop since mid-2014. Click to enlarge.
And with all that, it now appears that China’s gargantuan credit injection which was 40% greater than a year earlier, has now been exhausted and the credit impulse tailwind is over.
This news item showed up on the Zero Hedge website at 9:59 a.m. on Tuesday morning EDT — and another link to it is here.
Just in case he hadn’t already made his position re: interest rates clear to the FOMC, President Trump apparently wanted to make sure policy makers know their place shortly after their two-day meeting began on Tuesday.
After calling for QE4 and rate cuts earlier this month, Trump is now calling on the central bank to slash interest rates by a full percentage point, which would bring the Fed funds target rate back to 1.25%-1.5%, a level it hasn’t seen in more than a year.
Trump also praised Beijing’s latest massive credit injection and despite surprisingly strong Q1 GDP growth (at least in the headline number), Trump said that “with our wonderfully low inflation, we could be setting major records and at the same time make our national debt start to look small.”
Of course, during its last meeting, Jerome Powell made clear that the central bank would ‘pause’ its rate-hike plans for at least the duration of this year.
Surprisingly, stocks haven’t ramped despite the president moving the goal posts on his rate-cut demands to call for even steeper cuts as U.S. data has at least nominally improved and U.S. stocks have soared to all time highs. A clear pattern has emerged for Trump’s monetary policy demands: The higher the highs in stocks, the steeper the cuts in rates.
How long until Trump calls for the Fed to lower rates all the way back to zero? Or even take them negative?
Let’s see if the Fed does anything. This Zero Hedge article showed up on their Internet site at 3:15 p.m. on Tuesday afternoon EDT — and I thank Brad Robertson for that one. Another link to it is here.
By now you’ve heard that the U.S. economy expanded at an annualized rate of 3.2% in the first quarter of 2019. That was reported by the Commerce Department last Friday morning.
That strong growth coming on top of 4.2% in Q2 2018 and 3.4% in Q3 2018 means that in the past twelve months, the U.S. economy has expanded at about a 3.25% annualized rate. That’s a full point higher than the average growth rate since June 2009 when the expansion began and it’s in line with the 3.22% growth rate of the average expansion since 1980.
It looks as if the “new normal” is back to the old normal of 3% or higher trend growth. Or is it?
The headline growth rate of 3.2% was certainly good news. But, the underlying data was much less encouraging. Most of the growth came from inventory accumulation and government spending (mostly on highway projects). But, business won’t keep building inventories if final demand isn’t there. That’s where the 0.8% growth in personal consumption is troubling.
The consumer didn’t show up for the party in the first quarter.
If they don’t show up soon, that inventory number will fall off a cliff. Likewise, the government spending number looks like a one-time boost; you can’t build the same highway twice. Early signs are that the second quarter is off to a weak start.
This commentary by Jim appeared on the dailyreckoning.com Internet site on Tuesday sometime, even though it’s dated Monday. Another link to it is here.
Financialization creates a fantasy world… funded by a mis-priced, rigged credit market.
Here is how. Imagine that you are 12 years old and you set up a lemonade stand. You make lemonade. You sell it to passers-by for more than it costs you to make it. You end up with a profit.
That is the Main Street economy… the world of the win-win deal… the face of honest capitalism. You want money. You need to give something in return – lemonade.
This is where all real wealth comes from – working, saving, investing, and learning… over time. No tricks. No gimmicks. No stimulus. No counter-cyclical monetary or fiscal policies.
Now, imagine that your lemonade stand is a great success. The local convenience store complains that you are taking its business. The local bottling plant complains that you are stealing its sales.
The feds notice that you aren’t paying minimum wages… and that you don’t have a handicap-access bathroom… that you don’t have your employment posters up on the job site… and your nonexistent kitchen has not passed a health inspection… etc., etc.
This longish, but very interesting and worthwhile commentary from Bill, was posted on the bonnerandpartners.com Internet site on on Tuesday — and another link to it is here.
Tear gas has been fired as clashes broke out in Caracas following a video released by U.S.-backed opposition leader Juan Guaido, in which he called for a full-scale military uprising against Venezuelan President Nicolas Maduro.
Maduro’s spokesman has confirmed that a coup is underway in Venezuela, while the country’s defense minister said: “We reject this coup movement that aims to fill the country with violence.”
Footage shows tear-gas canisters being fired near the Generalisimo Francisco de Miranda, or ‘La Carlota’, air force base. One witness told Reuters that the gas is being fired towards Guaido, who appears to have gathered about 70 men in military uniform.
Guaido, the self-declared interim president, released a video on Tuesday morning appealing to the Venezuelan military to take part in a coup. The footage was apparently shot at a Caracas airbase and followed an earlier tweet from Guaido, in which he claimed to be meeting with “key military units” for what he described as “the beginning of the final phase of Operation Freedom.”
This video clip-filled story put in an appearance on the rt.com Internet site at 10:59 a.m. Moscow time on their Tuesday morning, which was 3:59 a.m. in New York…EDT plus 7 hours. I thank Swedish reader Patrik Ekdahl for sending it along — and another link to it is here. There was an updated version of events in Venezuela on the ZH website. It’s headlined “Venezuela Coup? “Live Fire” Exchanged Outside Contested Air Base, Armored Car Plows Into Protesters“.
The London Bullion Market Association (LBMA) said Société Générale had resigned as a market maker for gold, as France’s third-largest bank pushes ahead with a downsizing of its commodities business.
SocGen said this month it would cut 1,600 jobs to boost profits after poor performance last year and exit over-the-counter commodities trading.
SocGen declined to comment.
In over-the-counter trading deals are done bilaterally between banks and brokers rather than on a financial exchange. London is the world’s largest over-the-counter gold trading hub, overseen by the LBMA.
Market makers commit to provide liquidity to the market. SocGen’s exit leaves 12 LBMA market-making banks including JPMorgan, HSBC and BNP Paribas.
The above five paragraphs are all there is to this interesting turn of events. It was posted on the in.reuter.com Internet site at 6:37 a.m. EDT on Tuesday I believe — and was filed from London. I found it on the Sharps Pixley website — and another link to the hard copy is here.
The PHOTOS and the FUNNIES
Today’s pictures continue our exploration journey around Kamploops, B.C. The first shot was taken from the Sun Rivers golf course, looking southeast across the South Thompson River and the Trans-Canada Highway as they [and CP Rail] enter the city on the right-hand side of the shot. The second photo is west of the city about a mile or so — and taken a week later…March 23. The view is of the Thompson River and its associated flood plain — and the Domtar pulp mill. I took this shot from the dike that protects the low-lying north side of the city and airport from any possible floods. The river feeds into Kamloops Lake a few more kilometers/miles down stream. Click to enlarge.
It was yet another day where what the currencies were doing had zero bearing on precious metal prices, as ‘da boyz’ showed up at 8:30 a.m. in New York to drive three of the four precious metal prices lower based on whatever economic news was released at that time. In most respects, it was just another ‘care and maintenance’ sort of day…but just more obvious than most.
And it still remains to be seen whether or not the powers-that-be still have gold’s 200-day moving average in their sights or not. What they have planned may become more apparent after the ‘news’ from the FOMC meeting at 2:00 p.m. EDT this afternoon in Washington.
But regardless of that, the current market structure in the COMEX futures market is very bullish in both gold and silver.
Here are the 6-month charts for the Big 6 commodities — and there’s not really a lot to see. Click to enlarge for all.
And as I type this paragraph, the London open is less than ten minutes away — and I note that all four precious metals were sold lower in varying degrees since trading began at 6:00 p.m. EDT in New York on Tuesday evening. At the moment, ‘da boyz’ have gold down $5.00 the ounce — and silver by 8 cents. Platinum and palladium haven’t been spared, either…with the former down 8 dollars — and the latter by 11.
Net HFT gold volume is pretty light at just under 28,000 contracts — and there’s only 388 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is even lighter at around 4,900 contracts — and there’s only 90 contracts worth of roll-over/switch volume in this precious metal.
The dollar index opened up 4 basis points points once trading commenced at 7:44 p.m. EDT in New York yesterday evening, which was 7:44 a.m. China Standard Time on their Wednesday morning. It sank back to about the unchanged mark by around 2:05 p.m. CST on their Wednesday afternoon, but shot back to up 5 basis points as of 7:45 a.m. in London/8:45 a.m. in Zurich.
Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and just glancing at the last five dojis in the silver and gold charts above, I’d guess that there may be tiny increases in the commercial net short position in both these precious metals. If there is, it won’t be by material amounts. But Ted has the final word on this — and I’ll ‘borrow’ a sentence or two from his mid-week commentary to his paying subscribers this afternoon.
And as I post today’s column on the website at 4:02 a.m. EDT, I see that gold, silver and platinum hit their current low ticks of the day at, or minutes after the London/Zurich opens — and are off them by a bit. Gold is down only $3.10 an ounce — and silver by 6 cents. Platinum is down only 5 dollars now, but ‘da boyz’ haven’t touched palladium as of yet — and it’s lower by 12 bucks as the first hour of Zurich trading draws to a close.
Gross gold volume is still pretty light at a bit under 38,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit under 37,500 contracts. Net HFT silver volume is still very light at around 6,700 contracts — and there’s still only 135 contracts worth of roll-over/switch volume on top of that.
The folks over at Bloomberg seem to having some issues with their DXY chart at the moment, but a few minutes after the London/Zurich opens, the dollar index went from up 5 basis points, to down 4 basis points as of 8:45 a.m. BST in London/9:45 a.m. CEST in Zurich.
That’s it for today — as all the world waits for whatever words of wisdom emanate from the Eccles Building.
See you here tomorrow.