09 May 2019 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price began to creep higher almost the moment that trading began at 6:00 p.m. EDT in New York on Tuesday evening…but with the odd pothole along the way. That lasted until 8:50 a.m. in New York — and ‘da boyz’ began to do their thing, with the low tick of the day coming very shortly after 1 p.m. in COMEX trading. It ticked higher by a dollar or so after that, before trading sideways until the market closed at 5:00 p.m. EDT.
The high and low ticks in this precious metal were reported by the CME Group as $1,292.80 and $1,280.20 in the June contract.
Gold was closed on Wednesday afternoon in New York at $1,280.30 spot, down $3.80 from Tuesday’s close…taking back all of Tuesday’s gains in the process. Net volume was pretty heavy at a bit under 270,500 contracts — and there was a bit under 36,500 contracts worth of roll-over/switch volume on top of that.
The silver price was up a few pennies by shortly before 11 a.m. China Standard Time on their Wednesday morning — and didn’t do much of anything except chop sideways until around 8:50 a.m. in New York. It was sold lower until shortly after 12 o’clock noon EDT — and didn’t do a thing after that.
The high and low ticks aren’t worth looking up.
Silver was closed yesterday at $14.795 spot, down 8 cents from Tuesday. Net volume was pretty light at a hair under 46,000 contracts — and there was just over 7,700 contracts worth of roll-over/switch volume in this precious metal.
After dipping a bit at the 6:00 p.m. open in New York on Tuesday evening, the platinum price headed unevenly higher — and the high tick of the day came shortly after the Zurich open. It was up 5 bucks at that point. The downward price decent began at that juncture — and that decline lasted until the 1:30 p.m. COMEX close — and it traded flat from there until trading ended at 5:00 p.m. EDT. Platinum was closed at $859 spot, down 9 dollars on the day.
Palladium was up 9 dollars or so by around 11:40 a.m. in Shanghai on their Wednesday morning — and the engineered price decline began in that precious metal at that point. Its low of the day also came at the COMEX close in New York — and it traded flat for the remainder of the day. Palladium was closed back below $1,300 spot, at $1,296 spot, down 11 dollars from Tuesday.
The dollar index closed very late on Tuesday afternoon in New York at 97.63 — and opened down 6 basis points once trading commenced at 7:44 p.m. EDT on Tuesday evening. It sank quietly lower from that juncture — and the 97.42 low tick was set at 2 p.m. CST on their Wednesday afternoon. It began to chop very quietly and extremely unevenly until 97.68 high tick was set, which came a minute or so after 1 p.m. in New York. It edged a bit lower into the close from there. The dollar index finished the Wednesday session at 97.62…down 1 basis points on the day.
In other words, the dollar index did virtually nothing of substance, either up or down, on Wednesday.
Here’s the DXY chart, courtesy of ino.com once again, as the DXY chart at Bloomberg is still no good. And although the chart may be from ino.com, all the data points two paragraphs ago are from Bloomberg, as that data is still OK…it’s their chart that isn’t. The ‘click to enlarge’ feature does not help for this graph.
And here’s the 6-month U.S. dollar index chart from the folks over at the stockcharts.com Internet site — and the delta between its close…97.39…and the close on the DXY chart above, was 23 basis points on Wednesday. Click to enlarge.
The gold shares rallied sharply once trading began in New York on Wednesday morning — and that state of affairs lasted for twenty minutes. Then some thoughtful soul proceeded to sell with abandon — and the low tick for the gold stocks came around 12:15 p.m. EDT. They edged very quietly and unevenly higher into the 4:00 p.m. close of trading from there. The HUI closed down 1.78 percent, taking back almost all of Tuesday’s gains in the process.
The silver equities behaved in a very similar fashion, including both major inflection points, so I shan’t repeat myself. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.64 percent, taking all of Tuesday’s nice gains with it in the process…plus a bit more. 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 showed that 5 gold and 49 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.
In gold, the sole short/issuer was Advantage — and they also stopped 2 contracts as well. JPMorgan picked up the other 3. All contracts, both issued and stopped, involved their respective client accounts.
In silver, the two biggest of the three short/issuers were Advantage and HSBC USA…the latter with 36 contracts out of its client account — and the former with 12 contracts out of its in-house/proprietary trading account. There were four long/stoppers in total — and JPMorgan was the largest once again, picking up 30 contracts in total…21 for clients — and 9 for its own account. Advantage was second with 13 contracts 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 fell by 2 contracts, leaving 128 still around, minus the 5 mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that 7 gold contracts were actually posted for delivery today, so that means that 7-2=5 more gold contracts were added to May deliveries. Silver o.i. in May dropped by 133 contracts, leaving 366 still open, minus the 49 contracts mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that 152 silver contracts were actually posted for delivery today, so that means that 152-133=19 more silver contracts were just added to the May delivery month.
There were no reported changes in either GLD or SLV yesterday.
There was no sales report from the U.S. Mint — and still nothing from the Royal Canadian Mint.
The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday was 46,630 troy ounces that was shipped out. Of that amount, there was 40,629 troy ounces that departed JPMorgan — and the remaining 6,001 troy ounces was shipped out of Canada’s Scotiabank. Nothing was reported received. The link to this is here.
It was fairly busy in silver. There was only 2,923 troy ounces received — and that ended up at the Delaware depository. There was 984,748 troy ounces shipped out — and the vast majority of that…906,752 troy ounces…departed Brink’s, Inc. Most of the balance…73,107 troy ounces…left the vault over at CNT. The remaining 4,888 troy ounces was shipped out of Scotiabank. There were some paper transfers as well, as 168,114 troy ounces was moved from the Eligible category and into Registered over at CNT. But over at Brink’s, Inc. there was 112,819 troy ounces transferred from the Registered category — and back into Eligible. The link to all this activity is here.
There was decent activity once again over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. There were only 160 kilobars received, but 4,032 were shipped out. All of the ‘in’ activity was at Loomis International — and all the ‘out’ activity was at Brink’s, Inc. The link to this is here.
Here’s an interesting chart that Larry Galearis dug up for me yesterday, that I didn’t have room for in Wednesday’s column. It’s from J.P. Morgan — and from Page 64 of their 71-page Q4/2018 Market Insights: Guide to the Markets. It’s entitled “20-year annualized returns by asset class [1998-2017]“. As you can see, gold came in second place. There was also a similar JPMorgan chart for the year ending 2018 floating around the Internet as well the other day — and gold was in No. 2 spot on that chart too, but it was just too tiny to post here. But ‘click to enlarge‘ feature works just fine with this one.
It was a ‘nothing’ sort of news day yesterday — and I only have a tiny handful of stories for you.
Stocks sold off yesterday as investors became alarmed.
“What if The Donald is really serious about this trade war?” they asked themselves.
Some of our most trusted colleagues believe he will go Full Retard on Friday, imposing a 25% tariff on another $200 billion of Chinese goods.
But here at the Diary, we are as calm as a corpse. For while we are ready to believe that he is a “total economic ignoramus” with not even “a vague clue about the economics of global trade,” as our colleague David Stockman puts it, we are not ready to believe he is a complete fool.
Yesterday, Mr. Trump must have been watching the stock market sink; the Dow dropped as much as 648 points intraday.
He knows stocks go up and down. And he fully intends to blame the next downturn on the Fed.
So most likely, tomorrow, he’ll claim some sort of interim “progress” in talks with the Chinese… talk tough… and put off doing anything that might cause a major sell-off.
We’ll have more on the trade war tomorrow… leaving us 24 hours to think about it some more.
This commentary from Bill showed up on the bonnerandpartners.com Internet site on Wednesday morning EDT — and another link to it is here.
Are we perhaps finally getting some clarity on where the latest U.S. blustering on Iran is actually headed? On the one year anniversary of the Trump administration pulling out of the Iran nuclear deal (JCPOA), the president issued new statements affirming the deal is “broken beyond repair” and placed new sanctions on Iran’s industrial metals sector.
The newly announced sanctions seeks to prevent countries from importing Iranian iron, steel, aluminum, and copper exports, targeting a sector that makes up 10% of Iran’s export economy. Yet simultaneously, White House special envoy for Iran Brian Hook stressed to reporters that the U.S. is not seeking war with Iran, but it remains that “any Iranian attack against the United States or allies will be met with force.”
The White House statement said, “The United States will aggressively enforce its sanctions, and those who continue to engage in sanctionable activity involving Iran will face severe consequences.” Toward this end, other nations have been put “on notice that allowing Iranian steel and other metals into your ports will no longer be tolerated,” according to the statement.
The statement justified its increasingly toughening sanctions on because “the regime continues to engage in destructive and destabilizing activities,” including maintaining “its nuclear ambitions and continues to develop its ballistic missile capabilities and support terrorism“.
But new sanctions, including ending the waiver program which allowed up to eight countries to purchase Iranian crude, as well as threats – including this week’s supposed deployment of a carrier and bomber strike group (it was pre-scheduled but “moved up” after Bolton’s claim of immediate threats facing U.S. troops in the Middle East) — don’t appear to be working.
These increasing levels of sanctions remind me of the ever increasing sanctions placed on Japan by the U.S. prior to Pearl Harbor. But the Iranians are too smart to goad the U.S., so it’s a given that a ‘false flag’ event may occur that will be blamed on them anyway. This Zero Hedge article put in an appearance on their website at 3:50 p.m. EDT on Wednesday afternoon — and I thank Brad Robertson for pointing it out. Another link to it is here.
There is just one word to describe today’s just concluded sale of $27 billion in 10Y notes: disastrous.
Sparking immediate speculation if China simply decided not to show up for today’s budget deficit funding operations, the 10Y auction was ugly from top to bottom. The high yield of 2.479% tailed the When Issued 2.465% by a whopping 1.4bps, the biggest tail since August 2016. The tail was so big that whereas the auction was initially expected to price at the lowest yield since December 2018, as the WI was below last month’s 2.476%, the disappointing reception meant that the yield actually rose compared to last month.
But if the tail was bad, the internals were far worse, starting with the Bid to Cover, which plunged from 2.55 to 2.17. There is no point in comparing this to the recent average, because this was the lowest BTC going all the way back to March 209, or a decade earlier.
As for the reason for speculation if China bailed, one look at the Indirects, or foreign official authorities were China traditionally dominates, showed it tumbling from 68.4% to 53.3%, the lowest since November 2016. And with Directs doing their best to offset the collapse in Indirects, and taking down 11.5%, or in line with last month, Dealers were forced to hold 35.2%, almost double April’s 19.6%, and the highest since April 2018.
Overall, a very ugly auction, and if China wanted to send a message to the US, it clearly succeeded.
This brief 2-chart Zero Hedge article was posted on their Internet site at 4:17 p.m. EDT on Wednesday afternoon — and it’s another contribution from Brad Robertson. Another link to it is here.
U.S. Representative Alex Mooney (R-WV) introduced legislation this week to provide for the first audit of United States gold reserves since the Eisenhower Administration.
The Gold Reserve Transparency Act (H.R. 2559) – backed by the Sound Money Defense League and government accountability advocates – directs the Comptroller of the United States to conduct a “full assay, inventory, and audit of all gold reserves, including any gold in ‘deep storage,’ of the United States at the place or places where such reserves are kept.”
HR 2559 requires more than just a physical assay, inventory, and audit, however. Even if all United States gold can be physically accounted for, it may nevertheless be encumbered with third-party obligations – or otherwise be impaired by bank financialization.
Therefore, Mooney’s gold audit bill also requires “a full accounting of any and all sales, purchases, disbursements, or receipts… a full accounting of any and all encumbrances, including those due to lease, swap, or similar transactions presently in existence or entered into in the past 15 years, and an analysis of the sufficiency of the measures taken to ensure the physical security of such reserves.”
Over the years, the U.S. Treasury has faced allegations that it has sold, swapped, leased, or otherwise placed encumbrances upon some of America’s gold reserves.
This story appeared on the moneymetals.com Internet site on Wednesday sometime — and I found it in a GATA dispatch yesterday. Another link to it is here.
The nation’s central bank has been announcing monthly gold purchases again since December last year and in April it reported it added 14.93 tonnes of gold to its reserves – its highest monthly total since it commenced re-reporting monthly increases and the fifth successive month of reported increases. Of course we have always been of the opinion that the reporting of Chinese central bank gold increases is likely something of a fiction and that the nation’s true gold reserves are substantially higher than the estimated 1.911 tonnes if we take the IMF’s latest figures and add in the central bank’s reported monthly increases for March and April. This reported figure still puts China in 6th place among national holders of gold, almost 280 tonnes behind Russia in fifth pace, but we think China’s true gold reserve figure could be far higher, if one takes into account the nation’s track record of holding substantial amounts of gold in accounts it has, in the past, deemed not reportable to the IMF.
To set against these positives, global gold ETFs have seen some gold being liquidated out of their holdings – particularly from the largest of all, GLD in the USA. But at the moment central bank purchases do seem to be more than matching the gold ETF liquidations. It should be remembered though that big gold reductions in the gold ETF holdings back in 2011-2013 accompanied the gold price fall from its 2011 U.S. dollar peak, although gold is riding high in some other currencies even now like the Australian dollar today.
According to the latest figures from the World Gold Council it is estimated that gold ETFs bled 16.3 tonnes in the first 4 months of 2019, led by GLD which shed 41 tonnes on its own. Since the beginning of May, GLD has seen liquidations of a further 6.75 tonnes, although yesterday saw a very small net deposit.
This commentary by Lawrie was posted on the Sharps Pixley website long before ‘da boyz’ went to work on the gold price shortly after the COMEX open in New York yesterday. Another link to this article is here.
The PHOTOS and the FUNNIES
Here are three more shots from Douglas Lake Ranch country up on top of the Thompson Plateau, with the last one on the descent back into the Nicola Lake valley…which I took through the car windshield. These photos were taken on April 7 — and at this altitude, there were few signs of spring…only buttercups…as winter had barely released its icy grip. Photo 4 is a snip from Google Earth. Merritt and Douglas Lake are clearly marked — and Nicola Lake is in about the center of the shot. Click to enlarge.
For no other reason than price management purposes, all four precious metals were closed lower on Wednesday, as there was nothing happening in the currencies or in the news to justify it. This was particularly true in both gold and silver.
As Ted pointed out in his mid-week commentary yesterday “…it seems both gold and silver are “snugging” the key moving averages for an upside penetration.”
Gold was hauled down in price just before it was about to break above two of its key moving averages…the 50 and 100-day…which are now crossing over each other a dollar or so above Wednesday’s high tick in New York yesterday morning. I’ve changed the 6-month chart for gold below, to show the 50 and 100-day moving average situation, compared to Wednesday’s price action, so you can see this for yourself — and so it’s obvious why the gold price was engineered lower when it was.
In silver, volumes were pretty light, as it has been closed below its 200-day moving average every day for about the last month — and any self-respecting technically-inclined Managed Money trader has sold every long position they own — and are as maximum short as they’re liable to get at this juncture. And it’s equally obvious that JPMorgan et al wish to keep things that way for the moment.
Yesterday was another ‘care and maintenance’ session…however, just more ‘in your face’ than most.
And I’ll also point out that platinum was closed back below its 50-day moving average again yesterday…as was copper.
And also note the current price of WTIC vs. its 50 and 200-day moving averages. It wouldn’t take much of a price drop to blast the Managed Money traders out of their long positions in this crucial commodity, either.
Here are the 6-month charts for all four precious metals, plus copper and WTIC — and yesterday’s activities mentioned above, should be noted. Click to enlarge for all.
And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price didn’t do much until shortly after 10 a.m. China Standard Time on their Thursday morning. It began to crawl unevenly higher from there — and at the moment, gold is up $1.50 the ounce. Silver followed a somewhat similar price as as gold — and is up a penny currently. Platinum traded down a few dollars in Far East trading — and is still down a dollar. Palladium crept unevenly higher — and was up 8 bucks by the 2:15 p.m. afternoon gold fix in Shanghai, but that was mostly taken away shortly after that — and it’s up only 2 dollars as Zurich opens.
Net HFT gold volume is already getting up there, at something under 49,000 contracts — and there’s a minuscule 387 contracts worth or roll-over/switch volume in this precious metal. Net HFT silver volume is up there as well, at around 11,400 contracts — and there’s a tiny 241 contracts worth of roll-over/switch volume on top of that.
The dollar index opened down 4 basis points once trading began at 7:44 p.m. EDT in New York on Wednesday evening. Then, starting around 9:30 a.m. CST on their Thursday morning, it began to creep very quietly lower — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is down 8 basis points…according to Bloomberg. There’s not much going on in the currencies.
It appears that a confluence of events are quickly coming together that might be allowed to send precious metals higher, although I just might be imagining things. There’s this trade issue with China — and trouble with Iran…both of which were instigated by the U.S. deep state. With the Mueller Report a big ‘nothingburger’…the only remaining way for them to get rid of Trump would be for a war of some kind, a stock market in precipitous decline, a falling dollar — and commodity prices soaring to the heavens. All led by significant rise in precious metal prices.
This care and maintenance of the U.S. equity markets, the U.S. dollar — and the price management scheme in commodities, can’t go on forever. With the precious metals being the poster boys for that…particularly silver and gold. Maybe we’re on this ‘care and maintenance’ thingy until whatever is allowed to happen, happens.
I’ve always stated that a sharp fall in the prices of all things paper, accompanied by a precipitous rise in hard asset prices, would not happen in an economic or political news vacuum — and I still feel that way.
And as I said at the start of all this, this is all pure speculation on my part.
So we wait some more.
And as I post today’s missive on the website at 4:02 a.m. EDT, I see that the gold price is a bit higher…up $3.50 an ounce — and silver is still up a penny as the first hour of trading London ends. Platinum and palladium were both sold lower starting shortly after the Zurich open. Platinum is down 5 dollars now, but palladium got hammered by more than twenty bucks, but is now down ‘only’ 14 dollars as the first hour of Zurich trading draws to a close.
Gross gold volume is way up there at around 62,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is about 59,500 contracts. Net HFT silver volume is up there as well at around 13,900 contracts — and there’s only 395 contracts worth of roll-over/switch volume in this precious metal.
The dollar index hasn’t done much in the last hour — and is down 9 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.
That’s it for yet another day — and I’ll see you here tomorrow.