Ex-JPMorgan Trader’s Sentencing Date Postponed Again

04 May 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price really didn’t do much of anything in either Far East or morning trading in London on their respective Fridays.  But when the job numbers came out at 8:30 a.m. EDT in New York, the price dipped a hair — and then began to rally from there.  That last until shortly after the afternoon gold fix in London — and it was then sold very quietly lower until trading ended at 5:00 p.m. EDT.

As is normally the case, gold wasn’t allowed to rally more than one percent, so the low and high ticks aren’t worth looking up.

Gold was closed in New York on Friday at $1,278.50 spot, up $8.10 on the day.  Net volume was very decent at a bit under 270,000 contracts — and there was a bit over 12,000 contracts worth of roll-over/switch volume in this precious metal.

The silver price traded quietly sideways until a few minutes before 10 a.m. in London — and began to crawl unevenly higher from that juncture — and was a up a nickel or so by the COMEX open.  It began to head sharply higher once the job numbers hit the tape ten minutes later — and that rally was stopped dead in its tracks around 10:10 a.m. in New York, the same as it was for gold.  It obviously wasn’t allowed to get more than a penny or so higher than that for the remainder of the Friday session.

The low and high ticks in silver were reported by the CME Group as $14.60 and $14.995 in the July contract.

Silver was closed yesterday at $14.90 spot, up 30.5 cents on the day — and a penny below its 200-day moving average.  Net volume was, not surprisingly, pretty heavy at a bit over 81,000 contracts — and there was just under 4,400 contracts worth of roll-over/switch volume on top of that.

After a down/up price dip to a new low for this move down…centered around 10 a.m. China Standard Time  on their Friday morning…the platinum price returned to trading mostly sideways.  That state of affairs lasted until 8:30 a.m. in New York — and it began to head higher as well.  That lasted until around 1 p.m. in COMEX trading — and it traded flat into the 5:00 p.m. EDT close from there.  Platinum finished the Friday session at $870 spot, up 20 dollars from Thursday’s close — and back above its 50-day moving average.

The palladium price was all over the map on Friday.  Its low came shortly after 1 p.m. CEST [Central European Summer Time]  — and the high came a very few minutes before the Zurich close.  It was sold back to just about unchanged by around 12:15 p.m. in New York — and didn’t do much until the last hour of trading in the thinly-traded after-hours market, where it tacked on a few more dollars.  Palladium closed at $1,348 spot, up 10 bucks on the day.

The dollar index closed very late on Thursday afternoon in New York at 97.83 — and opened unchanged once trading commenced at 7:44 p.m. EDT on Thursday evening, which was 7:44 a.m. CST on their Friday morning.  It traded very quietly and evenly sideways until around 1:45 p.m. China Standard Time on their Friday afternoon — and from that point, began to edge quietly and unsteadily higher until 12:15 p.m. BST in London.  It began to decline from there — and except for a bit of a brief up/down spike at 8:30 a.m. EDT on the job numbers, continued to head lower until a minute or so after 11 a.m.   Its rather precipitous fall up to that point was halted, but after a brief upward respite, crawled lower into the close from there.  The dollar index finished the Friday session in New York at 97.48…down 35 basis points from Thursday’s close.

Here’s the DXY chart from Bloomberg.  Click to enlarge.

And here’s the 5-year U.S. dollar index chart from the folks at stockcharts.com — and the delta between its close…97.26…and the close on the DXY chart above, was 22 basis points on Friday.  Click to enlarge as well.

The gold shares gapped up a bit at the open — and then crawled quietly and unevenly higher until minutes before 12:30 p.m. in New York trading.  From that juncture they began to sell off a bit — and the HUI only closed higher by 1.50 percent.

The silver equities traded in a very similar fashion as their golden brethren for the second day in a row so, like in Friday’s column, I shan’t bother repeating myself.  But despite the fact the silver price handily outperformed gold, it certainly didn’t help the silver stocks, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index only closed up only 1.36 percent.  I was underwhelmed.  Click to enlarge if necessary.

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

Here are the usual charts from Nick that show what’s been happening for the week, month-to-date — and year-to-date.  The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI and the Silver 7 Index.

Here’s the weekly chart — and it’s red and ugly across the board.   And as you already know, the shares got hammered out of all proportion to the declines in their respective respective precious metals.  Without Friday’s gains, such as they were, this chart would look even worse.  I have no explanation as to why this is so. Click to enlarge.

With the current month only three days old, I’m not going to bother with the month-to-date charts, as it’s rather meaningless.

The year-to-date chart shows only platinum and palladium up on the year — and for the first time, the silver equities are underperforming the gold shares on a yearly basis.  Click to enlarge.

As I said last week, I suspect that we’re far closer to the end of this engineered price decline than the beginning.  Just looking at gold and silver prices for the week, they were only down small amounts, despite the bloodbath in their underlying equities.  And still the only big unknown is whether the powers-that-be are going to go gunning for gold’s 200-day moving average or not.  It appeared that way earlier in the week, but after yesterday’s rally in gold, it remains to be seen if ‘da boyz’ can pull it off.


The CME Daily Delivery Report for Day 5 of the May delivery month showed that 13 gold and 76 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, the two short/issuers were ADM and Advantage, with 8 and 5 contracts respectively.  The two long/stoppers were JPMorgan and Advantage, picking up 9 and 4 contracts respectively.  All contracts, both issued and stopped, involved their client accounts.

In silver, the two short/issuers were Advantage with 71 — and ADM with 5 contracts.  All were issued from their respective client accounts.  There were four long/stoppers in total, with JPMorgan being the largest, picking up 49 contracts in total…32 for clients, plus 17 for its own account.  Advantage stopped 17 for its client account — and Standard Charter stopped 9 contracts for its in-house/proprietary trading account.

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

So far in May, there have been 158 gold contracts issued/reissued and stopped — and that number in silver is 2,977 contracts.

The CME Preliminary Report for the Friday trading session showed that gold open interest in May declined by 17 contracts, leaving 136 still open, minus the 13 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 27 gold contracts were actually posted for delivery on Monday, so that means that 27-17=10 more gold contracts were added to the May delivery month.  Silver o.i. in May dropped by 340 contracts, leaving 671 still around, minus the 76 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 362 silver contracts were actually posted for delivery on Monday, so that means that 362-340=22 more silver contracts just got added to May.


For the second day in row there was a withdrawal from GLD, as an authorized participant took out a fairly chunky 151,050 troy ounces.  And, also for the second day in a row, there was a deposit into SLV, as an a.p. added 843,321 troy ounces of silver.

So far this month, which is only three business days old, there has been 188,813 troy ounces of gold taken out of GLD, but 3,712,865 troy ounces of silver have been added to SLV.  It’s a given that Ted will have something to say about this in his weekly review later this afternoon.

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

The e-mail I sent to the Royal Canadian Mint on Wednesday asking when their Q4/2018 — and 2018 Annual Report might be available, has not been dignified with a reply as of yet.

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  There was a tiny paper transfer of 803 troy ounces out of the Eligible category and into Registered over at Delaware.  I suspect that this amount will be delivered in May.  I won’t bother linking this.

There was more activity in silver, as 600,947 troy ounces…one truckload…was left at Canada’s Scotiabank — and that was all the ‘in’ activity there was.  There was 625,484 troy ounces shipped out, which involved three different depositories.  The largest amount…one truckload…600,839 troy ounces departed Scotiabank as well — and the tiny remainder was split up between CNT and Delaware.  In the paper transfer category, there was 486,268 troy ounces shifted from the Eligible category — and into Registered over at CNT — and 76,434 troy ounces was transferred from the Registered category — and back into Eligible at Brink’s, Inc.  The link to all this is here.

There wasn’t much activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  There were 200 received — and 200 kilobars shipped out — and all that activity was at Brink’s, Inc.  I won’t bother linking this, either.


Here are two charts that I received from Nick late on Thursday afternoon.  They show U.S. Mint sales updated with April’s sales data.  They sold 16,500 troy ounce of gold eagles/buffaloes — and 1,196,000 silver eagles that month.  Retail investment demand sucks.  Click to enlarge for both.


The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, April 30 showed the expected increases in the commercial net short positions in both silver and gold…very small in silver, but shockingly big in gold.

In silver, the Commercial net short position only increased by 1,368 contracts, or 6.8 million troy ounces during the reporting week.

They arrived at that number by selling 14,545 long contracts, but they also reduced their short position by 13,177 contracts — and it’s the difference between those two numbers that represented their change for the reporting week.

Under the hood in the Disaggregated Report, it was all Managed Money traders — and much more, unfortunately, as they reduced their net short position by 3,801 contracts.  They did this by adding 2,593 long contracts, plus they reduced their short position by 1,208 contracts as well — and it’s the sum of those two numbers that represents their change for the reporting week.

As always, it was the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader category that accounted for the…3,804 minus 1,368 equals 2,436 contract difference, as both categories reduced their net long positions during the reporting week.

The Commercial net short position in silver sits at 106.8 million troy ounces, which is a rather insignificant increase from the prior week.

Update…3:15 p.m. EDT on Saturday:  Ted said that it appeared that JPMorgan may have actually added about 2,000 contracts to their long position during the reporting week, bringing their long position in the COMEX futures market in silver up to around the 5,000 contract mark…close to the largest long position it has ever held.

Here’s the 3-year COT Report for silver — and the rather insignificant change should be noted.  Click to enlarge.

Of course, as I said yesterday, this COT Report in silver is already very much yesterday’s news, because there certainly have been big changes, both down and up, since the Tuesday cut-off.


In gold, the commercial net short position rose by an eye-watering 30,916 contracts, or 3.09 million troy ounces of paper gold — a far larger number than ever crossed my mind.

They arrived at that number by reducing their long position by 7,115 contracts, but they also added a monstrous 23,801 short contracts — and it’s the sum of those two numbers that represents their change for the reporting week.

Under the hood, it was all Managed Money traders, plus a bit more, as they added 6,170 long contracts — and reduced their short position by 27,735 contracts — and it’s the sum of those two numbers…33,905 contracts…that represents their change for the reporting week.

The difference between that number — and the change in the commercial net short position…2,989 contracts…was made up by the traders in the other two categories, but each went about it in entirely different manners.  The ‘Other Reportables’ decreased their long position by a net 5,081 contracts — and the ‘Nonreportable’/small traders reduced their short position by a net 2,092 contracts.  The difference between those two numbers equals those 2,989 contracts…which it has to do.  Here’s the snip from the Disaggregated COT Report showing the weekly change in all three of these categories.  Click to enlarge.

The commercial net short position in gold is back up to 8.83 million troy ounces.

I must admit that this monstrous increase in the commercial net short position in gold during the reporting week came as an unpleasant shock, as no moving average of any kind, not even the 100-day was violated — and gold only rose around 5 bucks or so during that time.

I’m certainly going to be interested in what Ted has to say about this.

Here’s the 3-year COT chart for gold — and this week’s change, albeit temporary, should be noted.  Click to enlarge.

But, like this week’s COT Report in silver, this report for gold is very much yesterday’s news as well — and it remains to be seen what the last two reporting days [Monday and Tuesday] of next week’s COT Report will bring.  Next Friday also brings the latest Bank Participation Report.

In the other metals, the Manged Money traders in palladium increased their net long position in this precious metal by 665 contracts — and the traders in the other two categories didn’t do much.  The Managed Money traders are net long the palladium market by 9,942 contracts.  Total open interest in palladium is 22,689 COMEX contracts, up 550 contracts from the previous week.  It’s a very tiny market.  In platinum, the Managed Money traders didn’t do much, decreasing their net long position by a piddling 239 contracts.  The Managed Money traders are now net long the platinum market by 21,859 contracts.  Total open interest is 75,798 contracts.  In copper, the Managed Money traders increased their net short position by a further 3,147 contracts during the reporting week — and are now net short the COMEX futures market by 10,272 contracts.  They’re even more short now after the pounding copper took on Wednesday — and again on Thursday.


Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading this past Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 101 days of world silver production, which is down 1 day from last week’s report — and the ‘5 through 8’ large traders are short an additional 59 days of world silver production, up 3 days from last week’s report — for a total of 160 days that the Big 8 are short, which is a bit over 5 months of world silver production, or about 373.4 million troy ounces of paper silver held short by the Big 8.  [In the prior week’s COT Report, the Big 8 were short 158 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 106.8 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 373.4 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 374.4 minus 106.8 equals 267.6 million troy ounces.

The reason for the difference in those numbers…as it always is…Ted’s raptors, the 33-odd small commercial traders other than the Big 8, are net long that amount.

As I mentioned in my COT commentary in silver above, JPMorgan was net long the COMEX futures market in silver by about 3,000 contracts as of last Friday’s COT Report, but was unavailable to updated his estimate yesterday, as he had other fish to fry.  If I remember, I’ll update this paragraph once his weekly commentary to his paying subscribers shows up on his website this afternoon.

The Big 4 traders now in that category are short, on average, about…101 divided by 4 equals…25.25 days of world silver production each.

The four traders in the ‘5 through 8’ category are short 59 days of world silver production in total, which is 14.75 days of world silver production each.

Ted’s of the opinion that there are most likely three Managed Money traders with short positions large enough in the COMEX futures market to inhabit the Big 8 category now.  But, without doubt, some of them were covering some of those short positions during the reporting week just past.

The Big 8 commercial traders are short 38.0 percent of the entire open interest in silver in the COMEX futures market, which is up a fair amount from the 33.7 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be a bit under the 45 percent mark.  In gold, it’s now 37.9 percent of the total COMEX open interest that the Big 8 are short, up from the 34.1 percent they were short in last week’s report — and something also approaching 45 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 33 days of world gold production, up 1 day from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 24 days of world production, up 4 days from what they were short last week…for a total of 57 days of world gold production held short by the Big 8…up 5 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold only 57 percent of the total short position held by the Big 8…down 5 percentage point from last week’s COT Report. Ted will certainly be happy about that.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 63, 75 and 83 percent respectively of the short positions held by the Big 8.  Silver is down 2 percentage points from a week ago, platinum is down 1 percentage point from last week — and palladium is up 4 percentage points…a record high!

I have very little for you in the way of stories today.


CRITICAL READS

Class 8 Heavy Truck Orders Decimated in April, Down 57% Year Over Year

North American Class 8 net order data shows the industry booked 14,800 units in April, down 57% from a year-ago. The number also marks a sequential decrease of 6.2% from March. The decline is being blamed on companies filling orders from a bloated backlog of last year’s record purchases and buyers juggling remaining orders. The numbers from last month were the lowest for an April since 2016.

Year to date, the numbers continue to look ugly. There have been 63,000 trucks ordered, a 63% percent decline from the 169,186 orders placed during the same period in 2018. And it doesn’t look like the rest of the year is going to get any better.

Don Ake, FTR vice president of commercial vehicles commented:  “They remember what happened last year when they needed trucks, but could not get enough of them. New orders are expected to remain soft until ordering for 2020 begins this fall.”

Bob Costello, chief economist of the American Trucking Associations went back to an old favorite – blaming the weather. He said: “In March, and really the first quarter in total, tonnage was negatively impacted by bad winter storms throughout much of the U.S.

This data comes on top of March orders falling an astounding 66%, making April’s sequential decrease stand out even more. Specifically, March Class 8 net orders were just 15,700 units (16,000 SA; 192,000 SAAR), down 66% YoY from 49,600 a year ago and down 6.7% sequentially.

The decline in March was also attributed to a 300,000+ vehicle backlog potentially prompting fleets to halt purchases in the near term. We don’t doubt that the economic slowdown is also playing a major part in the latest collapse.

This news item put in an appearance on the Zero Hedge website at 1:15 p.m. on Friday afternoon EDT — and I thank Brad Robertson for sending it our way.  Another link to it is here.


The Fed Has Lost Control of Rates as ‘Technical Tweak’ Fails

While the rest of the world is distracted by the plummeting unemployment rates and trade deal hype, a funny (well not so funny) thing happened in the short-term funding markets in the world’s reserve currency.

As we noted previously, something unexpected has been going on in overnight funding markets: ever since March 20, the Effective Fed Funds rate has been trading above the IOER. This is not supposed to happen.

This week, The Fed tried to do something about it by cutting the IOER.  It has failed!

In other words, as one veteran funding market trader exclaimed, “it’s getting worse!

Simply put, this is front and center a dollar liquidity shortage signal that The Fed is unable to solve… for now.

As Barclays’ Joseph Abate recently ominously concluded:

The large move also suggests that the banking sector is “nearing the steeply sloping part of the reserve demand curve” which means that “bank reserves are now significantly closer to what individual banks consider their ‘least comfortable level of reserves’ and thus banks are more willing to pay higher rates to retain these balances.”

In other words, some $1.5 trillion in excess liquidity created by the Fed is no longer enough for banks which are starting to scramble to obtain additional liquidity, which needless to say, is very troubling for a banking system which is supposedly “fortress” and “much more stable” than it was before the financial crisis. If anything, this means that even a modest liquidity draining crisis at any point in the future could have vastly more dire consequences than even the pessimists believe.

This is an issue that won’t go away any time soon.  Only an interest rate cut, or a fairly steep decline in the U.S. dollar…or both, will relieve the pressure.  This is certainly worth keeping an eye on — and I’ll have more about this in The Wrap.  This Zero Hedge piece was posted on their Internet site at 2:22 p.m. EDT on Friday afternoon — and another link to it is here.


Are We Finally Beaten? — Bill Bonner

We’ve been writing this Diary (previously known as the Daily Reckoning) for the entire 21st century… and then some.

Our battle has never been with conservatives or liberals, Democrats or Republicans… Keynesians or monetarists… Chicago boys or Austrians…

…Our fight is with claptrap, whether dressed in a fine Italian suit… or grimy overalls… whether from a Nobel-winning economist, or a neighborhood loudmouth…

…whether from a clown on the street… or a clown in the White House…

And it is a losing battle.

Over the entire time we have been writing, claptrap has increased, growing in power and popularity every year. We see it everywhere, but we confine our analysis to economics and finance, where there is plenty of claptrap to keep us busy.

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


Doug Noland: Transitory Histrionics

I don’t fault the Powell Fed for having attempted in December to let the markets begin standing on their own. It was about time – actually, way overdue. Fault instead unsound markets and decades of “activist” Fed policy making. And when markets were on the cusp of dislocating, Chairman Powell did what he believed the Fed had to do: Dovish U-turn. From my point of view, the grave mistake was the unnecessary (“gas on a flame”) “exceed dovish expectations” March 20th meeting. I’ll assume the FOMC was prepared in March to err on the side of both caution and message consistency.

But it’s May now. Record stock prices, bubbling bond markets and a return to quite loose financial conditions – along with a marketplace having gone a little crazy with the rate cut narrative. It would have been unwise for the Fed to oblige. To further accommodate this highly speculative market environment would ensure an only greater price to pay down the line. Besides, does it really make sense to split hairs on the undershooting of the Fed’s 2% inflation target with the S&P500 returning 18% in about four months and the unemployment rate down to a 49-year low 3.6%? “Transitory” Histrionics.

We live in an era where unstable global financial markets dictate financial conditions and economic performance like never before. Moreover, the world is in the throes of history’s greatest financial and market Bubbles. So discard any fanciful notion of “equilibrium.” At this point, the Bubble either inflates or falters – and the longer it inflates the more acutely vulnerable everything becomes. The global Bubble was in jeopardy in December, with ill-prepared central bankers coming feverishly to the markets’ rescue. Their next rescue attempt will come with greater challenges.

This weekly commentary by Doug was posted on his website in the wee hours of Saturday morning — and is always a must read for me.  Another link to it is here.


Decline and Fall of the American Empire: Part II — Doug Casey

Like the Romans, we’re supposedly ruled by laws, not by men. In Rome, the law started with the 12 Tablets in 451 BCE, with few dictates and simple enough to be inscribed on bronze for all to see. A separate body of common law developed from trials, held sometimes in the Forum, sometimes in the Senate.

When the law was short and simple, the saying “Ignorantia juris non excusat” (ignorance of the law is no excuse) made sense. But as the government and its legislation became more ponderous, the saying became increasingly ridiculous. Eventually, under Diocletian, law became completely arbitrary, with everything done by the emperor’s decrees—we call them Executive Orders today.

I’ve mentioned Diocletian several times already. It’s true that his draconian measures held the Empire together, but it was a matter of destroying Rome in order to save it. As in the U.S., in Rome statute and common law gradually devolved into a maze of bureaucratic rules.

The trend accelerated under Constantine, the first Christian emperor, because Christianity is a top-down religion, reflecting a hierarchy where rulers were seen as licensed by God. The old Roman religion never tried to capture men’s minds this way. Before Christianity, violating the emperor’s laws wasn’t seen as also violating God’s laws.

The devolution is similar in the U.S. You’ll recall that only three crimes are mentioned in the U.S. Constitution—treason, counterfeiting, and piracy. Now you can read Harvey Silverglate’s book, Three Felonies a Day, which argues that the average modern-day American, mostly unwittingly, is running his own personal crime wave—because federal law has criminalized over 5,000 different acts.

Once again Doug doesn’t pull his punches — and this should be read at your own risk, so don’t tell me that you weren’t warned!  It appeared on the internationalman.com Internet site on Friday sometime — and another link to it is here.


Is Trump for Detente With Russia and Militarism With China and Iran? — Paul Jay interviews Stephen F. Cohen

Trump’s stated aim is to reduce tensions with Russia, but is it motivated by peaceful objectives or is it preparations for aggression towards Iran and China – Stephen Cohen joins host Paul Jay for a spirited discussion on Reality Asserts Itself.

This 32-minute video interview between Jay and Cohen is definitely worth watching.  It was posted on the youtube.com Internet site on April 18 — and I thank Larry Galearis for pointing it out.


Central Banks keeping up gold buying pressure…or are they? — Lawrie Williams

This week the World Gold Council (WGC) produced its latest, always insightful, Gold Demand Trends report which suggested overall that demand for the yellow metal remains strong, although with the suggestion that new mined gold supply is not yet starting to fall as many analysts have been predicting.  Peak gold may not be with us quite yet, although the likelihood remains that any new-mined gold production increase that may arise this year will be small in total.

Last year reported increases in central bank gold holdings were the highest since President Nixon ended dollar/gold convertibility back in 1971 so an additional rise in Q1 this year could prove to be significant, although perhaps not as significant as some have been suggesting. The rises in global central bank holdings were, as far as reported increases were concerned, led primarily by Russia which has almost entirely wound down its dollar related foreign exchange holdings in response to U.S. economic sanctions and other potential measures.  However there has always been the suspicion that China has been building its own gold reserves surreptitiously without reporting increases to the IMF which could be adding another dimension to global central bank gold advances.

Now, in its latest Gold Demand Trends report the WGC has stated that Q1 official gold holding increases have advanced by a very large 68% year on year to 145.5 tonnes, but before gold followers get too carried away, around 33 tonnes (over 70%) of the actual rise in reported holdings relates to China which only re-started reporting monthly gold accumulation figures at the end of last year.  Whether the nation actually added hidden amounts of gold to its holdings in the first 11 months of 2018 remains shrouded in secrecy.  As we have reported here before, the country has a track record of adding gold to accounts it says it has no need to report to the IMF, and only announces these at multi-year intervals when it consolidates these holdings into its official forex figures.

Further, if we extrapolate the Q1 central bank new holding figures over the full year we wind up with a total of only 582 tonnes which is around 70 tonnes less than the rise in 2018 official gold holdings as detailed by the WGC earlier this year.  It is obviously early days yet to quantify any trend developing, but just because Q1 saw a big year on year rise in central bank holdings it doesn’t necessarily mean that the full year total will rise by a similar percentage.  One should note, for example, that some significant gold purchasers last year – notably Hungary and Poland – have not added to reserves at all this year nor have Mongolia, Tajikistan and Uzbekistan, all important buyers last year but which appear to have sold off some of their gold holdings so far in 2019!  Central banks certainly don’t seem to show a concerted penchant for increasing gold reserves so talk of them en masse increasing reserves is looking a little suspect.

This worthwhile commentary from Lawrie appeared on the Sharps Pixley website in London on Friday morning — and another link to it is here.


Criminal sentencing of former JP Morgan Chase precious metals trader delayed as federal probe continues

The criminal sentencing of former J.P. Morgan Chase precious metals trader John Edmonds has been postponed six more months, to December, as federal investigators continue to probe possible manipulation of metals markets.

Edmonds, 37, pleaded guilty in October in Connecticut federal court to working with other “unnamed co-conspirators” to manipulate the prices of gold, silver, platinum and palladium futures contracts between 2009 and 2015 while employed at J.P. Morgan.

The New York City man admitted learning illegal trading tactics from senior traders — and to using those tactics with the knowledge and consent of supervisors.

His sentencing has been postponed twice, suggesting he is continuing to cooperate with prosecutors in their investigation. No one else has been charged.

Edmonds’ attorney could not be reached for comment.

This news item showed up on the cnbc.com Internet site at 5:06 p.m. EDT on Thursday afternoon — and I found it in a story posted on the silverdoctors.com Internet site yesterday.  I thank Brad Robertson for pointing it out — and another link to it is here.  I would think that Ted will have something to say about this in his weekly commentary this afternoon.


The PHOTOS and the FUNNIES

Heading east out of Kamloops on the less-travelled north side of the South Thompson River we ran into some rather inclement weather about an hour out.  But before the roof caved in, I got these two shots.  The first is of four mule deer…probably females — and with them looking at me with ears perked up, it’s easy to see how they came by their name.  Then up in the hills/mountains we came across a small farm yard full of rabbits, sheep and goats.  The sheep were penned in, but everything else was free range…no fences gates or anything — and we walked right up to them.  I took this ‘head and shoulders’ shot of a goat with her new kid.  Click to enlarge for both.


The WRAP

Today’s pop ‘blast from the past’ dates from 1979 — and I can hardly believe that it’s forty years old already.  This English ‘rock’ bank was founded in 1969 — and reached their commercial peak in 1979.  This was one of the tunes that got them to the top of the charts.  The link is here.

Today’s classical ‘blast from the past’ is an orchestral work for large orchestra by Gustav Holst while WW1 was raging in Europe.

The Planets, Op. 32, is a seven-movement orchestral suite that he composed between 1914 and 1916. Each movement of the suite is named after a planet of the Solar System and its corresponding astrological character as defined by Holst.

From its premiere to the present day, the suite has been enduringly popular, influential, widely performed and frequently recorded.  The work was not heard in a complete public performance, however, until 15 November 1920.

Here is the Warsaw Philharmonic Orchestra & Female Choir with Maciej Tarnowski conducting.  This performance dates from 27 November 2015.  The link is here.


Despite the fact that neither gold nor silver closed above any of their major moving averages on Friday, it appeared obvious from the volume that there was some amount of Managed Money short covering and long buying going on.  But how much, won’t be known until next Friday’s Commitment of Traders Report.

It was also obvious that ‘da boyz’ went out of there way to ensure that silver wasn’t allowed to break above its 200-day moving average by more than a penny or two on an intraday basis — and was closed a penny below it.

Platinum bounced off its 50-day moving average yesterday — and closed 8 bucks above it.  The same can be said of copper, except it only closed up above it by 4 cents on the day.   Ditto for WTIC as well, but it only closed higher by a dime or so.

It was certainly apparent that the precious metals took their cue from what the dollar index was doing, but you could also make the case that it was the other way around.  However, that relationship only lasted until shortly after 10 a.m. in New York, when it was obvious that ‘da boyz’ intervened before things got too far out of hand to the upside.

However, with the gold price sitting in no-man’s land between its 50 and 200-day moving averages — and silver being obviously kept below its 200-day moving average, it’s way too soon to read much into Friday’s price action in those two precious metals.  And the jury is still out on whether the powers-that-be are still in the process of taking out gold’s 200-day moving average to the downside.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and you can note yesterday’s changes for yourself.  Click to enlarge.

The jobs report on Friday, like the recent Q1/2019 GDP numbers, looked good on the surface.  But once you dug down a bit, it wasn’t impressive as it appeared at first glance.

As I said in last week’s missive, the real economy in the U.S. is starting to slowly fall away at an ever increasing rate, leaving the equity markets grossly overvalued.  It’s only being kept alive by the relentless cheer-leading from Wall Street, the main stream media — and now by Tweets from the White House.

If you’re memory is good enough, you’ll remember a Federal Reserve member some many years ago stating that the economy would improve “if we all just join hands and buy an new SUV“.   That’s where we are again today, except the situation is now far more precarious — and the debt loads at all levels…state, federal, corporate and personal…are at new all-time highs never thought possible a decade ago.  Most of that will never be repaid, at least not with the U.S. dollar priced where it is today.

I guess I shouldn’t say “never”…as those debts that aren’t defaulted on, will have to be inflated away at some point in the not-to-distant future.  The U.S. is not the only culprit here, as most of the rest of the world is in the same situation.

Here’s the 5-year DOW chart, courtesy of the folks, over at Bloomberg — and this triple top certainly indicates that the current bull market, mostly thanks to free money from the Fed, is on its very last legs unless the money machine is turned back on.  Click to enlarge.

The “Inflate…or die” scenario is on the doorstep right now. And certainly before the year is out, it will be pedal-to-the-metal money printing both at home and abroad in order to ‘save’ the equity markets — and provide whatever liquidity is necessary.  That’s particularly true in the U.S…as the 2020 Presidential election draws closer.  The thin edge of the wedge is showing up in the IEOR…Interest Rate on Excess Reserves — and I’ve posted several stories about this during the last week, including one in today’s column.

But the moment that the Fed does move to lower interest rates, or extend Quantitative Easing, the entire commodities complex will catch a bid, as it will indicate to the world that the U.S. only has those actions left in its toolbox — and that it’s prepared to burn its currency in the process.

That will signal the beginning of the end, not only of the U.S. dollar, but all fiat currencies, as the rush to tangible assets will shift into high gear on a global basis.

In his landmark essay in April 2001…”The debasement of world currency: It’s inflation, but not as we know it“…British economist Peter Warburton got it exactly right when he said the following…which I quote in this space for the umpteenth time over the last eleven years…

What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the U.S. dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets. 

It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil, and commodity markets? Probably, no more than $200 billion, using derivatives.

Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital [bases] so flagrantly that if the central banks were to lose the fight on the first front, then the stock of the investment banks would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.

Central banks, and particularly the U.S. Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. [That’s since 1994 – Ed]  Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the U,S. dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.”

It’s been a good run for the U.S. since 1994…but the above circumstances have now reached the end of their useful lives.  Before the year is out the ghost of John Law will reappear in after an almost 300 year absence — and I’m already wondering if Fed Chairman Jay Powell is prepared to be the author of what is about to come next.  But he is trapped in the deadly web of free money that Greenspan, Bernanke and Yellen have spun for him over the last 31 years.

I suspect that’s one of the reasons that some of the central banks of the world are now rushing to gold.  As the World Council reported, they purchased more gold in 2018 than they had “since President Nixon ended dollar/gold convertibility back in 1971“…according to what Lawrie Williams said in his article in today’s Critical Reads section.

So the precious metals’ time in the sun is approaching, but it will only occur when JPMorgan decides, or when they’re told to step aside.

Obviously, that day still lies ahead, but getting closer all the time.  However, it can’t come soon enough for either you, or for me.

I’m done for the day — and the week — and I’ll see you here on Tuesday.

Ed