02 May 2019 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Ted’s “midnight move” in gold started the moment that trading began at 6:00 p.m. EDT in New York on Tuesday evening — and the price edged unevenly lower until a few minutes after the London open. It then proceeded to crawl even more unevenly higher until “The Word” came from the Eccles Building in Washington at 2:00 p.m. EDT on Wednesday afternoon. The initial price reaction was to the upside, but once the dollar index ‘rally’ began around 2:30 p.m., it was all the excuse that ‘da boyz’ needed to slam gold lower — and that’s precisely what they did. It bounced back a few dollars from there, before trading sideways into the 5:00 p.m. EDT close.
The high and low ticks in gold, which really aren’t worth looking up, were reported by the CME Group as $1,288.50 and $1,279.20 in the June contract.
Gold was closed in New York yesterday at $1,276.30…., down $6.80 from Tuesday. Net volume was on the heavier side, but not that heavy at just under 263,000 contracts, as no moving averages of significance were broken to the downside during the Wednesday trading session. Roll-over/switch volume was a bit over 13,500 contracts on top of that.
The silver price crept sideways until just before 9 a.m. China Standard Time on their Wednesday morning and, like gold it was sold quietly lower until a few minutes after the 8 a.m. BST London open. It then crawled higher for the next couple of hours, before quietly turning lower once again. The sell-off became somewhat more intense starting a few minutes before 10:30 a.m. in New York — and most of the price damage in COMEX trading was done within the next hour. From that juncture it edged quietly sideways until Powell opened his pie hole — and the remainder of the Wednesday session was the same in silver, as it was for gold.
The high and low ticks in this precious metal were recorded by the CME Group as $14.985 and $14.70 in the July contract.
Silver was closed in New York yesterday at $14.645 spot, down 28 cents from Tuesday — and at a new low for this move down, on both an intraday day and closing basis. Net volume was pretty heavy at just over 80,000 contracts — and roll-over/switch volume was just under 6,400 contracts in this precious metal.
Platinum was down a couple of dollars by shortly before 2 p.m. CST, but was then sold down into the Zurich open. It rallied a few dollars from there before chopping sideways until shortly after the equity markets opened in New York yesterday morning. The engineered price decline in that precious metal began at that point — and the low tick in COMEX trading came shortly after 12 o’clock noon EDT. It rallied a decent amount from there until the ‘rally’ in the dollar index began — and then it was sold down hard to its absolute low of the day, which came at precisely 4:00 p.m. in the thinly-traded after-hours market. It rallied a handful of dollars into the close from there. Platinum was closed at $866 spot, down 20 bucks from Tuesday.
The palladium price edged quietly lower until shortly after 9 a.m. in New York yesterday morning — and then got the same treatment as platinum. The low tick in that precious metal was set a few minutes before the Zurich close. Shortly after that, it began to head a bit higher — and from the COMEX close onwards, it really didn’t do much. Palladium was closed at $1,328 spot, down 37 dollars on the day, but was down about double that amount at its low tick.
The dollar index closed very late on Tuesday afternoon in New York at 97.58 — and opened up 4 basis points once trading commenced at 7:44 p.m. EDT on Tuesday evening, which was 7:44 a.m. CST in Shanghai on their Wednesday morning. It traded almost ruler flat until two minutes before the London open — and from that juncture it began to slide very unevenly lower until the 97.15 low tick was set at 2:16 p.m. in New York. It began to tick a few basis points higher from that point until around 2:30 p.m. EDT — and then the ramp job began. The 97.73 high tick was set at 3:08 p.m. EDT — and it fell a handful of basis points going into the close. The dollar index finished the Wednesday session at 97.69…up 11 whole basis points from Tuesday…hardly a rally that would justify price declines that occurred in the precious metals yesterday.
Without doubt, the dollar index ‘rally’ and the engineered price declines in silver and gold were all the handiwork of ‘da boyz’.
Here’s the DXY chart from the Bloomberg website — and they’re now starting to have real issues with this chart, just like the folks over at the ino.com Internet site had earlier this year. I hope they get it fixed soon. 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 — and the delta between its close…97.41…and the close on the DXY chart above, was 28 basis points on Wednesday. Click to enlarge as well.
The gold stocks opened unchanged, but then headed quietly lower until 11 a.m. EDT in New York trading. They crept sideways from there until 2 p.m. — and then jumped back into positive territory shortly after that. But when ‘da boyz’ ramped the dollar index — and engineered the price decline commenced in gold, the shares followed. The HUI closed down 1.94 percent.
The silver equities followed an identical price pattern as their golden brethren — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.23 percent. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Wednesday’s doji. Click to enlarge as well.
The CME Daily Delivery Report for Day 3 of May deliveries showed that 30 gold and 386 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.
In gold, the three short/issuers were Advantage, Marex Spectron and Advantage, with 17, 8 and 5 contracts. The two largest of the four long/stoppers were JPMorgan and Advantage with 16 and 8 contracts. All contracts, both issued and stopped, involved their respective client accounts.
In silver, of the six short/issuers in total, the three largest were ABN Amro, International F.C. Stone and Advantage, with 176, 100 and 91 contracts out of their respective client accounts. Of the seven long/stoppers, the largest once again was JPMorgan, picking up 208 contracts in total…123 for its own account, plus 85 more for its clients. In second and third spots were Standard Charter with 76 contracts for its in-house/proprietary trading account — and Advantage, with 57 contract for its client account.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in May declined by 35 contracts, leaving 153 still around, minus the 30 mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that 38 gold contracts were actually posted for delivery today, so that means that 38-35=3 more gold contracts were just added to May. Silver o.i. in May dropped by 1,120 contracts, leaving 1,123 still open, minus the 386 mentioned a few short paragraphs ago. Tuesday’s Daily Delivery Report showed that 1,294 silver contracts were posted for delivery today, so that means that 1,294-1,120=174 more silver contracts just got added to May.
And for the third day in a row, there were no reported changes in either GLD or SLV.
There was no sales report from the U.S. Mint.
For the month of April, the mint sold 8,500 troy ounces of gold eagles — 6,500 one-ounce 24K gold buffaloes — 6,500 one-ounce platinum eagles — and 1,196,000 silver eagles.
And still not a word from the Royal Canadian Mint about their Q4/2018 financial statements, or their 2018 annual report. I sent them an e-mail just now asking when that information might be forthcoming, but I’m not holding my breath waiting for a reply.
There was no physical activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday. But there was 51,166 troy ounces transferred from the Registered category — and back into Eligible. Of that amount, there was 40,629 troy ounces transferred at JPMorgan — and the remaining 10,537 troy ounces was transferred over at Canada’s Scotiabank. The link to that is here.
It was pretty quiet in silver, as only 422,213 troy ounces were received — and only 39,748 troy ounces was shipped out. All of the ‘in’ activity was at CNT, as was 27,941 troy ounces of the ‘out’ activity as well. The remaining 11,807 troy ounces that was shipped out, departed Delaware. But there was a big paper transfer over at CNT, as 2,242,058 troy ounces was transferred from the Eligible category — and into Registered. No doubt that his amount is scheduled for delivery in May. The link to this is here.
It was a pretty busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They only received 30…but shipped out a chunky 7,280 of them. All this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
The Corbridge Lanx is the name of a Roman silver dish found near Corbridge, northern England in 1735. Once part of a large Roman treasure, only the silver lanx remains from the original find. The British Museum eventually purchased it in 1993.
The large silver tray is rectangular in shape and is engraved with mythological scenes from antiquity. Designed either as a serving dish for Roman banquets or as a ritual tray for sacrifices, this particularly extravagant example is similar in style to several platters from the Mildenhall Treasure and can be dated to the 4th Century A.D. The main scene on the dish shows the god Apollo at the entrance to a shrine, clasping a bow with a lyre at his feet. To his left enters the goddesses Artemis and Athena in conversation. The two female deities in the centre have not been conclusively determined. In front of the gods is depicted an altar, flanked by Artemis’s hound, a fallen stag and a griffin, a mythical animal often associated with Apollo. Click to enlarge.
It was another very quiet news day — and I’m posting a couple of items to make up for that, that would normally find a home in my Saturday missive.
The party’s over. Despite a reversal of the modest rise in mortgage rates in early March, mortgage applications continue to collapse.
Overall, mortgage applications fell 4.3% on the week, following last week’s 7.3% plunge; but refis tumbled 5.0% on the week…
In fact this is the biggest four-week crash in refinancings since March 2013…Click to enlarge.
Is the housing market really this sensitive to mortgage rates? If so, Jay Powell is in an even more serious box here than even he knows.
And with the market pricing in 30bps of rate-cuts in 2019, where can Powell go from here?
This brief 3-chart Zero Hedge article showed up on their website at 1:30 p.m. EDT on Wednesday afternoon — and another link to it is here.
One week ago, when discussing how the Fed had lost control of rates specifically highlighting the recent spike in the Effective Fed Funds rate above the IOER, i.e., the traditional ceiling in the Fed Funds corridor, which today hit an all time high of 5 bps…Click to enlarge.
… we said that “the Fed might consider an imminent IOER reduction, possibly at the May meeting next week.”
And as we learned today, not only did the Fed consider this, but went so far as to stun markets by pulling the trigger, or rather, the market may have been shocked, but our readers certainly were prepared for this “surprising” development. Confirming this initial “shock”, the market’s reaction suggested that its take on the Fed’s announcement was seen as one of profound dovishness, only to sharply reverse just moments after, when Powell confirmed that the IOER move was entirely related to the clogged piping in funding markets, following his discussed of the “transitory” nature of inflation, sending the dollar and yields surging, and stocks tumbling as the Fed suddenly sounded like its old, mid-2018 hawkish self.
The reversal was painful enough to give traders whiplash, and as BMO’s Ian Lyngen and Jon Hill wrote after the press conference, “we’ll be the first to acknowledge surprise (though not total shock) at the FOMC’s cut of IOER” although as they also note, the logic holds that the Fed wants to separate the “fine-tuning” being accomplished (i.e. keeping effective fed funds within the target range) from actual policy rate decisions. This point, Lyngen notes, was driven home during the press conference, adding that “the communications risk was always Powell’s biggest challenge for such an action and in this context, 2-year yields temporarily touching 2.20% and 25 bp on 2s/10s seems a small price to pay for the ‘needed’ policy tweak (not tweet).”
This rather dense article put in an appearance on the Zero Hedge website at 6:05 p.m. on Wednesday evening EDT — and another link to it is here.
We’ve made three bold predictions in this space:
- The Fed would never voluntarily normalize monetary policy.
- The Donald would never go Full Retard on his trade war with China.
- Republicans and Democrats would both come to embrace Bernie Sanders’ Modern Monetary Theory (MMT).
As to the first – check. The Powell Pivot ended the Fed’s hesitant, pseudo-tightening program. The Fed chairman, panicked by the market’s decline at the end of 2018, said no rate hikes this year.
Normal Fed policy allows markets to correct. Now, there is no question that the Fed will not permit a normal market correction.
As to the second… well… so far, so good.
The negotiators are at work. Most likely, POTUS will soon announce a wonderful… beautiful… trade deal that will satisfy lobbyists and cronies while having little real effect on the economy.
It’s the third one that is most extraordinary. Modern Monetary Theory is the goofball idea – popular with Sanders and AOC – that the feds should borrow, print, and spend as much money as they want… as long as nothing bad happens.
There are some things you shouldn’t do… even though nothing bad happens right away. You jump out of a 30-story window. Nothing bad will happen for at least 29 stories.
This worthwhile commentary from Bill appeared on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.
Wall Street legend and former special adviser to President Donald Trump, billionaire Carl Icahn, is out starkly warning against the idea of modern monetary theory, according to Bloomberg. Icahn believes that inflation could revive and “spin out of control” if the tenets of modern monetary theory are embraced.
This makes Icahn the latest in a long line of economic voices to speak out against the progressive “economic doctrine” – if you can even call it that – that has dominated the financial news headlines over the last year.
The idea that a country can’t go broke simply because it prints its own currency has backing from such economic intellectual heavyweights as freshman congresswoman and socialist Alexandria Ocasio-Cortez. The idea that the country can run larger budget deficits as long as prices stay low has made MMT one of the proposed solutions for expensive proposed legislation, like AOC’s Green New Deal.
Icahn, who has been around slightly longer than AOC, disagrees:
“You can print money up to a point, but after that point, it could become very dangerous. We don’t want to hit a wall that you can’t recover from. Once you get into an inflationary spiral, it’s very difficult to get out of it — and therein lies the danger.”
This Zero Hedge story was posted on their Internet site at 5:05 p.m. EDT on Wednesday afternoon — and another link to it is here.
‘Hapless’ Guaido ‘worth more dead than alive’ to Venezuela coup cause – Ron Paul Institute director
Venezuelan opposition leader Juan Guaido failed to kick-start a military uprising on Tuesday. After this fizzle, his life may be in danger from his own CIA backers, the director of the Ron Paul Institute argued in a debate.
Daniel McAdams and Ron Paul, the former libertarian representative from Texas, discussed the repeated attempts by Guaido to oust Venezuelan President Nicolas Maduro with the backing from the U.S. government. Despite all the efforts, Maduro remains in power, supported by many Venezuelans and in control of its military and police forces.
Paul said he was concerned that the Latin American country may be plunged into large-scale violence by some provocation.
“The big danger is a hard war breaking out. I’d still bet it won’t be too bad, with thousands of troops moving. But it could be a guerrilla war or something like that. If there is a false flag or some important official on either side gets killed, you can’t tell what might happen,” he said.
McAdams pointed out that Guaido himself, with his record of failing to mobilize the protest against the Maduro government, could be a target for such a provocation.
This news item/commentary was posted on the rt.com Internet site at 11:51 a.m. Moscow time on their Wednesday morning, which was 4:51 a.m. in Washington — EDT plus 7 hours. Reader George Whyte sent this along yesterday evening — and another link to it is here.
The Empire has suffered painful defeats in Afghanistan and Iraq, but one has to admit that these are “tough” countries to crack. The Empire also appears to have lost control of Libya, but that is another complex country which is very hard to control. We also saw all the pathetic huffing and puffing with the DPRK. But, let’s be honest, the USA never stood a chance to bully the DPRK into submission, nevermind invading or regime-changing it. Syria was much weaker, but here Russia, Iran and Hezbollah did a world class job of repelling all the AngloZionist attacks, political and military. Besides, I for one will never blame Trump for not listening to Bolton and not triggering WWIII over Syria (yet?)
No Hezbollah or Iran backing Maduro there. And Venezuela is way too far away from Russia to allow her to do what she did in Syria. In fact, Venezuela is in the proverbial “backyard” of the USA and is surrounded by hostile puppet regimes. And yet, tonight, it appears that the U.S. puppet Guaidó has failed in his coup attempt.
Moon of Alabama did a great job covering the events of the day, so I will refer you to the excellent article “Venezuela – Random Guyaidó’s New Coup Attempt Turns Out to Be a Dangerous Joke“. I fully concur that today’s coup was both a joke and very dangerous.
Russian readers can also check out this article by Vzgliad which also gives a lot of interesting details, including the fact that Guaidó launched his coup from the Colombian Embassy in Caracas (see here for a machine translation).
But the thing which amazes me most tonight is the truly breathtakingly pathetic weakness of the clowns who launched this latest failed operation: Pompeo and Mr. MAGA.
This commentary from the Saker appeared on his Internet site on Tuesday sometime — and I consider it worth reading. It also comes courtesy of Larry Galearis — and another link to it is here.
Iran will not necessarily look for escalation: to wriggle through will be to win a major symbolic victory. But if it is pushed to the limit, Iran likely will first respond by pushing back in the region and in Afghanistan against U.S. interests.
With the U.S. decision to end the eight waivers issued in respect to the import of oil and gas from Iran on 2 May, the Trump Administration effectively is taking its first steps along the path of undeclared war on Iran: An attempt to break the morale of the Iranian people (by pushing a greater proportion of the population towards absolute poverty), and to acquiesce to terms (Pompeo’s 12 conditions), which would amount to abject (and improbable) Iranian capitulation.
It is a narrow path, bordered on all sides by lurking unforeseen, unforeseeable disasters – thorny thickets, in which Bolton and Pompeo may well find themselves painfully entangled. Will these steps then inevitably lead to grave escalation? They might; but also, Iran knows that if it can wriggle around these formidable impediments, and still remain standing, then Iran will stand victorious. To survive is to win. To survive will turn from Iran’s to America’s hurt.
Why should they take these steps? Why take the risk? All American foreign policy ultimately is domestic politics. Vice-President Pence at the Munich Security Conference earlier this year lauded Trump’s hard-nosed, shoot-from-the-hip decision-making. He commended ‘tough government’ as a quality that the E.U. too should try to emulate. This clearly will be the Trump platform for 2020: ‘I am the man who makes tough decisions and who then just ‘does it’’. The entrepreneur translated into politics.
But this is not what U.S. Iran policy is about. It may be true that Washington is disappointed that its pressures on Iran, so far, have achieved no results – in terms of changing the Iranian polity. But this waiver declaration is more about attending to Trump’s Evangelical base. It is a particularly loyal base which wholly concurs with the Israeli Right that Revolutionary Iran stands as an impediment to the coming into being of the prophesied ‘Greater Israel’ – and concomitantly, with the return of the Messiah.
This commentary/opinion piece was posted on the strategic-culture.org Internet site on Monday — and is one of two stories that I was saving for Saturday. I thank Larry Galearis for pointing it out — and another link to it is here.
In just a little more than a week after the mighty Newmont-Goldcorp merger was finalized, the company suspended operations of its largest gold-silver mine in Mexico. The Penasquito Mine, which produced more than a 500,000 ounces of gold and 25 million ounces of silver in a single year, has been dealing with a blockade of its operations since March 27th.
The blockade was started due to issues with the local community in regards to water supply concerns and problems with a trucking contractor. However, the protests by the local community over water rights have been going on ever since the Penasquito Mine started operations in 2010.
According to the article, Goldcorp using excessive water at Peñasquito mine – critics, research by McGill Research Group, reported that the Penasquito Mine was using three times the amount of water than it originally agreed upon. Furthermore, the large open-pit gold-silver mine, located in the state of Zacatecas, was also consuming three times the amount of water supplied to the entire City of Zacatecas (population 129,000).
To get an idea the amount of water being consumed by the Penasquito Mine, I looked at the data from Goldcorp’s most recent Sustainability Report. In 2017, the Penasquito Mine withdrew a staggering 7.9 billion gallons of water to supply its operations for the year. Of that total amount, 93% came from groundwater. That is one hell of a lot of water.
This article put in an appearance on the srsroccoreport.com Internet site yesterday — and I thank Brad Robertson for sharing it with us. Another link to it is here.
Like many others in the precious metals community, I was deeply saddened upon hearing the news of Bart Chilton’s passing this weekend.
Bart will forever be known (especially by those in the silver community) as one of the former commissioners of the CFTC. And in particular, the one CFTC commissioner who often spoke out about how he did feel there was illegal trading activity going on in the silver market.
His tenure with the CFTC coincided with several of the investigations into the silver market manipulation. And in addition to acknowledging that he felt the market was being manipulated, he was also the only commissioner who took the time to respond to the many market participants who wrote in expressing their concern.
Of which I was one, as I actually did contact the CFTC commissioners back in 2011 with my own concerns of what I’d been seeing. And indeed Bart was the only one to respond.
So when I thought about contacting Bart, I thought it would be incredible to get his perspective. Although was not sure if he would be willing to talk about this topic. Or even more importantly, if he would be able to open and up and share what he really felt.
Although to the contrary, not only was Bart incredibly encouraging and receptive to the idea, but in addition to happily offering to do the interview, he shared a lot of stunning information that I don’t believe has previously been made public. [He did — and it was astonishing. – Ed]
This tribute, along with the must watch/listen 42-minute interview with Bart Chilton…with Chris Marcus as host…was posted on the arcadiaeconomics.com Internet site on Wednesday. If you haven’t listened to this interview…it’s a must — and if you have, it’s worth a second listen…as he basically nails JPMorgan’s posterior to the wall, proving Ted Butler right in everything that he’s said about the company. Another link to it is here.
The PHOTOS and the FUNNIES
The first photo was taken from the dike on the Thompson River a mile or so west of downtown Kamloops that I featured yesterday…and looking west. It’s a popular walking/bike trail — and Saturday, March 23 was the first warm day of spring — and lots of people were out taking advantage of it. The next two shots were taken from a park bench a couple of hundred meters/yard further down the trail, looking north towards the airport. This WestJet Bomardier Dash 8 Q400 aircraft was about to take off — and with nothing better to take of a photo of, I took this shot — and with the hills/mountains in the background in deep shadow, the picture turned out better than I expected once I’d cropped it. The second shot was of its climb-out, silhouetted against a mountain background. As I write this at 9:22 p.m. EDT on Wednesday evening, it’s in the air on a flight between Fort St. John and Vancouver, B.C. Click to enlarge.
Using what I considered to be an engineered rally in the dollar index, JPMorgan et al wasted no time in hitting gold, silver and platinum. ‘Da boyz’ left palladium prices alone after the COMEX close. But the engineered price declines on Wednesday began long before the Fed ‘news’ at 2 p.m. EDT…and that’s particularly true with silver, which set a new low close for this move down on Wednesday.
It certainly appears that the powers-that-be are now gunning for gold’s 200-day moving average — and all that is not known is how long the “salami slicing” will go on — and how low they take the price below it. Of course all the other precious metals will be engineered lower in price as well.
And as silver analyst Ted Butler so succinctly put it in his mid-week column to his paying subscribers yesterday…”Prices will stop going down when the last managed money sell order that can be tricked into being sold…is sold. I thought we were close to that point — and still feel that way. By definition, the last 25 cents or so down in silver always feels the most painful. Then, the attention will turn, once again, to what the crooks at JPMorgan intend to do when prices inevitably rally.”
It’s that inevitable rally that will follow, that one should focus on now, as this engineered price decline is far closer to the end, than it is to its beginning.
Here are the 6-month charts for all four precious metals, plus copper and WTIC — and the new closing low in silver should be noted. Click to enlarge.
And as I type this paragraph, the London open is less than ten minutes away — and I see that all four precious metals are lower in overnight trading in the Far East on their Thursday. At the moment, ‘da boyz’ have gold down $5.30 an ounce — and silver is down 3 cents. They have platinum lower by 5 bucks — and palladium by 10.
Net HFT gold volume is a bit over 41,500 contracts — and there’s only 876 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is around 8,900 contracts — and there’s 1,152 contracts worth of roll-over/switch volume on top of that.
The dollar index opened down 6 basis points once trading began at 7:44 p.m. EDT in New York on Wednesday evening, which was 8:44 a.m. China Standard Time on their Thursday morning. It has been chopping quietly sideways since — and is down 3 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.
Of course, none of yesterday’s price/volume action in the precious metals will be in this Friday’s Commitment of Traders Report, because it occurred the day after the cut-off.
And as I post today’s effort on the website at 4:02 a.m. EDT, I note that gold and silver haven’t done much in the first hour of London trading. Gold is down $5.40 an ounce — and silver is still down 3 cents. The other two white metals are off their pre-Zurich open lows — and platinum is only down 4 dollars now — and palladium only by 5.
Gross gold volume is now up to about 55,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit under 53,000 contracts. Net HFT silver volume is up there as well at about 11,400 contracts — and there’s 1,590 contracts worth of roll-over/switch volume in that precious metal.
The dollar index popped a hair above the unchanged mark at the London/Zurich opens, but has been sliding quietly lower since — and is now down 14 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.
That’s all I have for today — and I’ll see you here tomorrow.