08 May 2019 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was up a couple of dollars and change by 12:30 p.m. China Standard Time on their Tuesday afternoon — and from that point it was sold quietly and unevenly lower until shortly before 11:30 a.m. in London. At that point, the sell-off became a little more pronounced — and the low tick of the day was set a minute or so before 8:30 a.m. in COMEX trading in New York. It headed unevenly higher from there — and you can tell by the quiet saw-tooth price pattern, that every tiny rally was met with selling pressure. The high tick of the day, such as it was, came around 2:45 p.m. in the thinly-traded after-hours market — and it was sold a bit lower from there until 4:00 p.m. EDT. It traded flat from there into the 5:00 p.m. close.
Once again, the low and high ticks aren’t worth looking up.
Gold finished the Tuesday session in New York at $1,284.10 spot, up $3.50 from Monday’s close. Net volume was a bit elevated at 220,000 contracts — and there was 36,000 contracts worth of roll-over/switch volume on top of that.
Silver was up 3 cents or so by 8 a.m. CST on their Tuesday morning — and then chopped quietly sideways, with the high tick of the day…such as it was…coming around 9:45 a.m. BST in London. Then, like the gold price, it was sold lower until a few minutes before 8:30 a.m. EDT in COMEX trading. Its subsequent rally was capped and turned a bit lower shortly after the equity markets opened in New York — and it crept unevenly higher until 4:00 p.m. EDT in the thinly traded after hours market. It did little of anything after that.
The high and low ticks in this precious metal aren’t worth looking up, either.
Silver was closed at $14.875 spot, up 1 whole penny on the day. Net volume was nothing out of the ordinary at a hair under 51,000 contracts — and there was a bit over 5,700 contracts worth of roll-over/switch volume in this precious metal.
After a brief dip at the 6:00 p.m. EDT open of trading in New York on Monday evening, platinum rallied to its high of the day shortly before 8:30 a.m. CST on their Tuesday morning. It was sold a bit lower over the next two hours and change — and didn’t do much until around 9:40 a.m. in Zurich. The price pressure began at that juncture — and the low tick was set shortly before 3 p.m. in New York — and about an hour later it rallied a few dollars into the 5:00 p.m. EDT close from there. Platinum was closed at $868 spot, down 6 bucks from Monday.
The palladium price crept unevenly higher until 10 a.m. in Zurich — and it too was taken lower at that point — and the low tick [just below $1,300 spot] was set at the afternoon gold fix in London. It crawled a bit higher over the next three hours — and then didn’t’ do much of anything after that. Palladium was closed at $1,307 spot, down 15 dollars from Monday.
The dollar index closed very late on Monday afternoon in New York at the 97.52 mark — and opened up a hair once trading commenced at 7:44 p.m. EDT on Monday evening. It began to head lower from there — and that quiet decline ended very shortly after 12:30 p.m. CST in Shanghai. Then it didn’t do much of anything until 8:30 a.m. in London — and it began to head unsteadily higher from that point. The 97.74 high tick was set around 12:15 p.m. in New York — and it was quietly and steadily down hill from there. The dollar index finished the Tuesday session at 97.63…up 11 basis points from Monday’s close.
Here’s the DXY chart from ino.com, as the Bloomberg chart is still not right. The ‘click to enlarge’ feature does not help with this chart.
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…97.40…and the close on the DXY chart above, was 23 basis points on Tuesday.
The gold shares opened unchanged…dipped a bit going into the 10 a.m. EST afternoon gold fix in London — and then began to head unsteadily higher. Their highs came around 3:30 p.m. in New York trading — and then they slid a bit into the 4:00 p.m. EDT close from there. The HUI closed higher by 1.93 percent.
It was virtually the same price pattern for the silver equities, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 2.41 percent. Click to enlarge if necessary.
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 showed that 7 gold and 152 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.
In gold, the two short/issuers were ADM and Advantage, with 5 and 2 contracts respectively — and the two long/stoppers were JPMorgan and Advantage, with 5 and 2 contracts respectively. All contracts, issued and stopped, involved their respective client accounts.
In silver, the three short/issuers were JPMorgan, Advantage and International F.C. Stone, with 82, 36 and 34 contracts from their respective client accounts. There were five long/stoppers in total. Topping the list, as always, was JPMorgan with 84 contracts…56 for its client account — and 28 for its own account. In second spot was Advantage, picking up 36 contracts…the same number it issued. In third and fourth place were Standard General and HSBC USA…picking up 16 and 12 contract for their respective in-house/proprietary trading accounts.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME’s Preliminary Report for the Tuesday trading session showed that gold open interest in May rose by 1 contract, leaving 130 still open, minus the 7 contracts mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 6 gold contracts were actually posted for delivery today, so that means that 6+1=7 more gold contracts just got added to the May delivery month. Silver o.i. in May declined by 122 contracts, leaving 499 still around, minus the 152 mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 150 silver contracts were actually posted for delivery today, so that means that 150-122=28 more silver contracts were added to May.
There was a tiny deposit in GLD yesterday, as an authorized participant added 9,440 troy ounces. There were no reported changes in SLV.
There was no sales report from the U.S. Mint again yesterday, but I did notice that they adjusted April gold eagles sales higher by 1,500 troy ounces. So gold eagles sales are now 10,000 troy ounces for that month.
There was still no Q4/2018 or 2018 Annual Report from the Royal Canadian Mint — and still no answer to my e-mail about this issue from a week ago.
There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday. Nothing was reported received — and 20,883 troy ounces was shipped out. Of that amount, there was 10,569 troy ounces shipped out of Canada’s Scotiabank — and the remaining 10,313 troy ounces departed Delaware. The link to that is here.
There wasn’t big activity in silver, as only 299,295 troy ounces was received — and all of that ended up at Brink’s, Inc. All of the ‘out’ activity…24,135 troy ounces…was at CNT. They also transferred 142,555 troy ounces from the Eligible category — and into Registered as well. It appears obvious that is amount is out for delivery in May sometime. The link to that is here.
They had a pretty busy day at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday. They received 8,000 of them — and shipped out another 524. All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Here are two charts that Nick sent around late last week, that I’m only getting around to posting until now, as there were other more important charts that had to precede it. They show gold and silver bullion sales from The Perth Mint, updated with April sales. During that month they sold 19,991 troy ounces of gold coins — and 906,219 troy ounces of silver bullion coins. Click to enlarge for both.
I have an average number of stories for you today.
President Trump shocked markets yesterday when he announced that a new, heavy round of tariffs on Chinese goods will take effect this Friday. Complacent markets had assumed that a trade deal would get done, that it was just a matter of sorting out the details. Now that is far from certain. Failing a last minute deal, which is certainly possible, the trade war is back. And it could get worse.
What most surprised me about the new trade war was not that it started, but that the mainstream financial media denied it was happening for so long. The media have consistently denied the impact of this trade war. Early headlines said that Trump was bluffing and would not follow through on the tariffs. He did. Later headlines said that China was just trying to save face and would not retaliate. They did.
Today the story line has been that the trade war will not have a large impact on macroeconomic growth. It will. The mainstream media have been wrong in their analysis at every stage of this trade war. And it did not see this latest salvo coming.
The bottom line is that the trade war is here, it’s highly impactful and it could get worse. The sooner investors and policymakers internalize that reality, the better off they’ll be.
For years I’ve been warning my readers that a global trade war was likely in the wake of the currency wars. This forecast seemed like a stretch to many. But it wasn’t.
This very worthwhile commentary from Jim on Monday, was posted in the clear on the dailyreckoning.com Internet site on Tuesday sometime — and another link to it is here.
Last week, it was Venezuela in America’s gun sights.
“While a peaceful solution is desirable, military action is possible,” thundered Secretary of State Mike Pompeo. “If that’s what is required, that’s what the United States will do.”
John Bolton tutored Vladimir Putin on the meaning of the Monroe Doctrine: “This is our hemisphere. It’s not where the Russians ought to be interfering.”
After Venezuela’s army decided not to rise up and overthrow Nicholas Maduro, by Sunday night, it was Iran that was in our gun sights.
Bolton ordered the USS Abraham Lincoln, its carrier battle group and a bomber force to the Mideast “to send a clear and unmistakable message to the Iranian regime that any attack on United States interests or those of our allies will be met with unrelenting force.” What “attack” was Bolton talking about?
Flying to Finland, Pompeo echoed Bolton’s warning: “We’ve seen escalatory actions from the Iranians, and … we will hold the Iranians accountable for attacks on American interests. … (If) these actions take place, if they do by some third-party proxy, whether that’s a Shia militia group or the Houthis or Hezbollah, we will hold the … Iranian leadership directly accountable for that.”
Taken together, the Bolton-Pompeo threats add up to an ultimatum that any attack by Hezbollah in Lebanon, the Houthis in Yemen, or Iran-backed militias — on Israel, Saudi Arabia, the UAE or U.S. forces in Iraq, Syria or the Gulf states — will bring a U.S. retaliatory response on Iran itself.
The psychopaths are in full cry in Washington and the Pentagon — and this will not end well. This commentary from Pat showed up on the buchanan.org Internet site on Monday sometime — and I thank Brad Robertson for sending it our way. It’s definitely worth reading — and another link to it is here.
Most libertarians count Murray Rothbard as one of their mentors. They will know that Rothbard’s primary mentors were Ludwig Von Mises and Friedrich Hayek. But Rothbard dug deeper in his search for libertarian thinking. Here is a little-seen paper that he wrote in 1967:
The first libertarian intellectual was Lao-tzu, the founder of Taoism. Little is known about his life, but apparently he was a personal acquaintance of Confucius in the late sixth century BC and like the latter came from the state of Sung and was descended from the lower aristocracy of the Yin dynasty.
Unlike the notable apologist for the rule of philosopher-bureaucrats, however, Lao-tzu developed a radical libertarian creed. For Lao-tzu the individual and his happiness was the key unit and goal of society. If social institutions hampered the individual’s flowering and his happiness, then those institutions should be reduced or abolished altogether. To the individualist Lao-tzu, government, with its “laws and regulations more numerous than the hairs of an ox,” was a vicious oppressor of the individual, and “more to be feared than fierce tigers.”
Government, in sum, must be limited to the smallest possible minimum; “inaction” was the proper function of government, since only inaction can permit the individual to flourish and achieve happiness. Any intervention by government, Lao-tzu declared, would be counterproductive, and would lead to confusion and turmoil. After referring to the common experience of mankind with government, Lao-tzu came to this incisive conclusion: “The more artificial taboos and restrictions there are in the world, the more the people are impoverished… The more that laws and regulations are given prominence, the more thieves and robbers there will be.”
This interesting commentary from Jeff put in an appearance on the internationalman.com Internet site on Tuesday morning sometime — and another link to it is here.
As tensions with Iran reach a boiling point and Washington looks ready to walk away from trade talks with China, Secretary of State Mike Pompeo apparently wanted to make sure the U.S.’s European ‘allies’ know their place.
According to Bloomberg, Pompeo scrapped plans for a Tuesday meeting with German Chancellor Angela Merkel and Foreign Minister Heiko Maas, citing unspecified “pressing issues.”
“Unfortunately, we must reschedule the Berlin meetings due to pressing issues. We look forward to rescheduling this important set of meetings. The Secretary looks forward to being in Berlin soon,” according to a statement from the State Department that was relayed to the American embassy.
Merkel issued a brief statement saying the joint appearance had been cancelled because of the “cancellation by the U.S. side.”
Pompeo was in the region to attend talks in Finland, where he warned China and Russia against pursuing “aggressive” actions in the Arctic, while resisting a diplomatic push by other countries in the region to take steps to curb climate change. He also met with his Russian counterpart, Foreign Minister Sergei Lavrov.
Those speculating about the reason for the cancellation have a veritable buffet of U.S. gripes to choose from. These include: Germany’s decision to balk at banning Huawei from its 5G network, U.S. criticisms of the Nord Stream 2 gas pipeline, and Trump’s persistent NATO bashing, which has largely focused on Germany’s not spending enough on defense.
This news item showed up on the Zero Hedge website at 7:57 a.m. on Tuesday morning EDT — and I thank Brad Robertson for sending it. Another link to it is here.
U.S. State Secretary Mike Pompeo has unexpectedly arrived in Baghdad for an unannounced visit, AFP reported citing Iraqi government sources. Pompeo had scrapped his visit to Germany, citing unspecified “pressing issues.”
Pompeo has reportedly met with Iraqi Prime Minister Adil Abdul-Mahdi. So far, no details of the surprise visit have emerged.
The development, if confirmed, explains the mysterious travel path of Pompeo’s plane, that was spotted flying towards the Middle East region earlier on Tuesday. The plane was tracked up to the airspace above eastern Turkey, where it apparently turned off its transponder while approaching Iraq.
Earlier in the day the U.S. Secretary of State abruptly cancelled his visit to Germany, where he was scheduled to meet with Chancellor Angela Merkel and Foreign Minister Heiko Maas. The “rescheduling” was vaguely explained by emergence of unspecified “pressing issues.” Before scrapping the Berlin visit, Pompeo attended a meeting of the Arctic Council in Rovaniemi, Finland, where he called the region “an arena of global power & competition.”
Pompeo’s visit to Iraq comes as the U.S. has ramped up its military activities in the region, citing a threat of Iranian “attack.” On Monday, the USS Abraham Lincoln carrier strike group set sail to the Persian Gulf, while at least four B-52 strategic bombers were said to be redeployed to the region.
This very worthwhile news story put in an appearance on the rt.com Internet site at 8:16 p.m. Moscow time on their Tuesday evening, which was 1:16 p.m. in Washington — EDT plus 7 hours. I thank George Whyte for pointing it out — and another link to it is here.
Iran is expected to go nuclear, by backing out of some of the terms of the 2015 nuclear deal (JCPOA), at a sensitive time when Washington appears to be ramping up military readiness in response to what the White House says are credible threats against U.S. assets in the Middle East by the Iranian regime.
Simply put, the European Union is not capable of facing U.S. sanctions, and despite some meager past efforts, such as the attempt to establish a ‘SWIFT alternative,’ E.U. initiatives to salvage the deal have been too little too late, as Iran has already hinted to some European officials.
According to a new report in The Wall Street Journal Monday:
“European diplomats warned Monday that Iran is preparing to abandon parts of a landmark nuclear deal in response to new U.S. sanctions, a step that risks inflaming tensions after the Trump administration dispatched warships to the Persian Gulf to deter potential Iranian attacks.”
The WSJ likens it to a “partial withdrawal” after other international signatories such as France and China tried to keep the deal alive following Trump’s ordered U.S. withdrawal last May.
Middle East based war reporter Elijah Magnier reports that Iran’s leaders “seem convinced that the only way to stand against the U.S. sanctions is to go nuclear, gradually, pulling out from the Nuclear deal as the U.S. unilaterally did.” He said “President Hassan Rouhani is expected to announce an important step this week.”
This Zero Hedge was posted on their website at 2:45 a.m. EDT on Tuesday morning — and another link to it is here.
One has to admire U.S. President Donald Trump’s tenacity. Despite the many fiascos of his Middle East policy, he keeps going down the same path, with the same partners, come what may.
Since his first foreign trip landed him in Saudi Arabia and Israel two years ago, the president has been on a roll, trampling all over traditional liberal U.S. policies, defying the United Nations, violating international law and heightening tensions in the Middle East – all at the request, or in support, of these special partners.
This trend intensified over the past few weeks. The White House overrode Congress to continue assisting the Saudi war effort in Yemen and lent its support to the renegade general, Khalifa Hafter, during his assault on the Libyan capital, Tripoli. It also proclaimed the Syrian Golan Heights part of Israel and gave approval to the Israeli annexation of occupied Palestinian territories.
It tightened sanctions on Iran, designated the Iranian Revolutionary Guards Corp a “foreign terrorist organisation” and deployed carrier strike group battleships to the Gulf.
As a result of these policies, tensions throughout the region are escalating, yet the Trump administration won’t reconsider, let alone reverse any of them. It has only really done that once – when it stepped back from its hastily-taken position on the blockade of Qatar by Saudi Arabia, the UAE, Bahrain and Egypt two years ago.
But that’s the exception that confirms the rule.
The White House has given the Israeli, Egyptian and the Saudi regimes and their allies carte blanche to do as they please domestically and regionally, as long as they purchase U.S. weapons, invest in the U.S. economy and support U.S. initiatives in the Middle East, like the soon to be revealed “deal of the century“.
This worthwhile commentary/opinion piece was posted on the aljazeera.com Internet site on Tuesday sometime. I was saving it for Saturday, but it fit in nicely with all the other articles/stories in today’s column, so here it is now. I thank George Whyte for sharing it with us — and another link to it is here.
Market Turmoil Continues After Liu Confirms Washington Visit; Beijing “Prepared For Talks Breakdown“
Continuing the pattern of China countering belligerent American trade rhetoric with attempts to calm its domestic market, turmoil across global markets continued Tuesday even after Beijing confirmed that Vice Premier Liu He would travel to Washington for two days this week to lead trade talks, in what appeared to be an attempt to calm markets.
Just as investors were starting to think that they had dodged a bullet Monday evening after markets had pared most of their declines from overnight, Robert Lighthizer and Steven Mnuchin sent global stocks and the yuan into a tailspin after they affirmed that Washington would impose additional tariffs on Beijing Friday, claiming that China had reneged on its commitments, and – furthermore – that the market’s reaction wouldn’t be a factor in the talks.
Marking a stark departure from Beijing’s more aggressive trade rhetoric, in an editorial in the Global Times, an English-language Communist Party mouthpiece, Beijing adopted a surprisingly cautious tone, advising investors to ‘remain calm‘ in the face of the trade-war turbulence, and insisting that the Chinese people should support Beijing’s strategy – whatever that happens to be – and that Washington was simply anxious for an early deal, so even if talks did fail, the outcome would be ‘controllable‘.
The Op-Ed also said that China is “well-prepared for other potential outcomes” of its trade talks with the U.S., “including a temporary breakdown in talks,” adding the door won’t be closed to trade talks even if the U.S. imposes fresh tariffs this week.
Pre-empting any social panic, the Op-ed also said that the impact on China will be controllable, “even if talks fail“, while cautioning that upgrading and maintaining a long-term trade war not option for Washington as U.S. side also wants a deal and that hasn’t changed.
In the most surprising appeal to public support for a worst case scenario, the Global Times said China should have “courage and endurance” to bear breakdown in talks, create good condition for government, safeguard China’s “core interests.”
Finally, the widely read article said that China is not a market “U.S. can easily give up” (perhaps Beijing was simply projecting as we showed yesterday), adding that trade war is “lose-lose process“, which is certainly true… but China certainly has more to lose than the U.S. over the long run.
This story appeared on the Zero Hedge website at 8:14 a.m. EDT on Tuesday morning — and I thank Brad Robertson for this one as well. Another link to it is here.
There were no precious metal stories that I though worth posting.
The PHOTOS and the FUNNIES
Back around Merritt, my daughter and I decided to drive up on the Thompson Plateau northeast of the town — and into Douglas Lake Ranch country. The first shot is of part of the drive up. That’s Nicola Lake in the center of the photo — and the highway in the photo is B.C. Highway 5A between Merritt and Kamloops. It’s a big scenic drive that has to be driven in both directions to be appreciated. The other two shots are from the top of the plateau. This land was never cleared. This is the way it has always been. But other places on the Thompson Plateau look far different than this — and are covered in large swaths of coniferous forest. Click to enlarge.
Well, there certainly wasn’t any correlation between what the currencies were doing — and what was happening with silver and gold prices in New York trading on Tuesday — as all three were rallying at the same time. And when the dollar index rolled over at noon EDT, there was no corresponding rally in precious metal prices, either. It was all positioning in the COMEX futures market.
And it should be noted that silver was the laggard once again — and not allowed to rally above its 200-day moving average. ‘Da boyz’ have certainly had the silver price on a very short leash for the last month.
Here are the 6-month charts for all four precious metals, plus copper and WTIC — and there really isn’t much to see. Click to enlarge.
And as I type this paragraph, the London open is less than ten minutes away — and I see that, for the most part, the gold price has been creeping quietly higher since trading began at 6:00 p.m. EDT in New York on Tuesday evening. At the moment, it’s up $2.70 an ounce. Silver has been edging quietly higher as well, but is only up 4 cents currently. Platinum is up 4 dollars, but was a bit higher than that in morning trading in the Far East on their Wednesday. Palladium was up about ten bucks by around by shortly after 11:30 a.m. in Shanghai, but was turned sharply lower about twenty-five minutes before the Zurich open — and is now up only 3 bucks on the day. At one point, it was down 3 dollars.
Net HFT gold volume is a bit under 40,000 contracts — and there’s only 1,475 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is 7,200 contracts — and there’s 1,472 contracts worth of roll-over/switch volume in this precious metal.
The dollar index opened down 6 basis points once trading commenced at 7:44 p.m. EDT in New York on Tuesday evening — and has continued quietly lower since. And as of 7:45 a.m. in London/8:45 a.m. in Zurich, its now down 18 basis points.
Yesterday, at the close of COMEX trading in New York, was the cut-off for this Friday’s Commitment of Traders Report. And after reviewing the last five dojis of the reporting week, I’ll pass on making any guesses on what that report may or may not contain.
Nick Laird sent around a chart showing that China added 14.93 metric tonnes of gold to their reserves in April — and I’m not including the chart, because it’s meaningless. Of course this gold was purchased long ago — and has been sitting on their books out of sight — and only being reported as reserves now. Their reserves now show that they hold 1,900 tonnes of the stuff, but it wouldn’t surprise me in the slightest if they held twice as much as that hidden out of sight. Then they will only report it when it suits them…either all at once at some point, or in dribs and drabs like their doing now.
And as I post today’s column on the website at 4:02 a.m. EDT, I note that all four precious metals were tapped lower at or very close to the London/Zurich opens. Gold is only up $1.70 currently. Silver, which jumped up a few pennies at the London open, was sold down as well — and is now back at unchanged. Platinum is now only up a dollar at the moment — and they have palladium lower by 5 bucks.
Gross gold volume is around 56,500 contracts — and minus roll-over/switch volume, net HFT gold volume is about 49,000 contracts. Net HFT silver volume is a bit under 10,000 contracts — and there’s 1,495 contracts worth of roll-over/switch volume on top of that.
The dollar index rally that began around 2:25 p.m. in Shanghai on their Wednesday, has stalled a bit in the first hour of trading in the U.K. and Europe — and as of 8:45 a.m. BST in London/9:45 a.m. CEST in Zurich, it’s down 13 basis points.
That’s it for yet another day — and I’ll see you here tomorrow.