The Precious Metal Equities Close in the Green

18 May 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Well, ‘da boyz’ had the ‘long knives’ out for the precious metals yesterday.

The gold price didn’t do much in morning trading in the Far East on their Friday, but staring shortly after 12 o’clock noon in Shanghai, it began to edge higher.  That lasted until the London open — and it was sold quietly and unevenly lower until shortly after 11:30 a.m. BST.  Then the real price pressure began.  The low tick of the day was set at the 11:00 a.m. EDT London  close — and it managed to tick a few dollars higher in the thinly-traded after-hours market.

The high and low ticks in gold were recorded by the CME Group as $1,289.00 and $1,274.60 in the June contract.

Gold was closed in New York on Friday afternoon at $1,277.10 spot, down another $9.30 on the day — and well below its 50-day moving average.  Net volume was decent, but not that overly heavy, at a bit over 237,000 contracts — and there was a bit under 28,000 contracts worth of roll-over/switch volume on top of that.

Silver was down a couple of pennies by the London open — and around 8:30 a.m. BST, the price was engineered quietly lower until the London close — and it didn’t do much of anything after that.  The down/up price spike in after-hours trading, only involved the spot month, not future months.

The high and low ticks were reported as $14.555 and $14.38 in the July contract.

Silver was closed yesterday at $14.38 spot, down 14.5 cents from Thursday.  Net volume was elevated a bit at just under 59,500 contracts — and there was around 4,450 contracts worth of roll-over/switch volume in this precious metal.

The platinum price traded sideways for two hours once trading began at 6:00 p.m. EDT in New York on Thursday evening.  It was sold down a few dollars at that juncture — and opened down 3 bucks when trading began in Zurich on their Friday morning.  The price began to ‘slide’ ever-so-slowly from there — and most of the decline that mattered was in by a few minutes after 12 o’clock noon in New York.  Platinum was closed at $816 spot, down 17 dollars on the day — and firmly back below its 200-day moving average.

The palladium price began edge very unevenly lower starting shortly after 8 a.m. China Standard Time on their Friday morning.  That lasted until a few minutes before the COMEX close in New York — and it didn’t do much of anything after that.  Palladium finished the Friday session at $1,297 spot, down 19 bucks from Thursday’s close.

The dollar index closed very late on Thursday afternoon in New York at 97.86 — and then opened down 3 basis points once trading commenced at 7:44 p.m. on Thursday evening, which was 7:44 a.m. CST on their Friday morning.  It edged mostly lower from there, with the 97.77 low tick of the day coming a minute or so after the 8:00 a.m. BST London open.  A ‘rally’ commenced at that time — and the index headed very unevenly higher until the 98.03 high tick was set at 4:28 p.m. EDT in New York.  It backed off a few basis point going into the close — and it finished the Friday session at 97.995…up 14 basis points from Thursday’s close.

A ‘rally’ of that size, which I feel was engineered in a similar manner as the declines in precious metal prices on Friday, was a pretty thin reed for ‘da boyz’ to hang their hats on.  However the media will lap up the gold price decline on a dollar index ‘rally’ once again, as that’s as far as their critical thinking level goes.

Here’s the DXY chart, courtesy of BloombergClick to enlarge.

And here’s the 5-year U.S. dollar index chart, courtesy of stockcharts.com — and the delta between its close…97.82…and the close on the DXY chart above, was 18 basis points on Friday.  Click to enlarge as well.

The gold shares sold off a bit as soon as trading commenced at 9:30 a.m. in New York yesterday morning — and their respective lows came around 10:25 a.m. EDT.  From there, it was very unsteadily higher — and the stocks managed to pop into positive territory in the last fifty minutes of trading.  The HUI closed up 0.57 percent.

The trading pattern in the silver equities was almost identical to what happened with the silver equities, except their respective lows came a few minutes before 11 a.m. EDT.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 0.55 percent.  Click to enlarge if necessary.

And here’s Nick Laird’s 5-year Silver Sentiment/Silver 7 Index chart.  I didn’t think it possible that the silver equities would fall below their lows of very early December 2018…but they have.  Click to enlarge as well.

No short selling yesterday, dear reader.  And one should take very great comfort from the fact that ‘deep pockets’ were scooping up all precious metal stocks that were offered on Friday, plus a bunch more.


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, to no one’s surprise, all four precious metals are down on the week — and only the gold stocks finished in the green, with the silver equities not all that far behind.  Of course it was Monday’s big ‘up’ day that makes this chart look as ‘good’ as it does, as it was pretty much all down hill for everything after that. Click to enlarge.

The month-to-date chart is a sea of red., although gold is only down a hair — and silver by not all that much…relatively speaking that is. But the performance of their related equities is pretty bad — and the decline in the silver equities is particularly brutal.  Click to enlarge.

The year-to-date chart — and gold is still hanging in there, even though it’s slightly in the red.  It’s obvious that JPMorgan et al have their sights set on silver.  And what can I say about their associated equities that I haven’t already said.  Although rather perverse and incongruous at this juncture, the silver equities are down less as a percentage than the gold stocks, compared to the declines in the underlying precious metals.  But I certainly get no comfort from that.  Click to enlarge.

The only positive news to be gleaned from this is that at least the brutal shorting of the precious metal equities came to an end sometime this week, which will be rocket fuel during the next rally as they rush to cover.  And the positive closes in the precious metal equities on Friday certainly means that the ‘strong hands’ were out and about in force.  As I and many others have said before, “it’s always darkest just before dawn.”


The CME Daily Delivery Report showed that 1 gold and 49 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, Advantage issued the lone contract — and JPMorgan stopped it.  Both contracts involved their respective client accounts.

In silver, The three short/issuers were ADM, JPMorgan and Advantage, with 35, 11 and 3 contracts out of their respective client accounts.  JPMorgan was the largest long/stopper as always, picking up 28 for its client account, plus another 7 for its own account.  Advantage and Standard General came in second and third…6 for Advantage’s client account — and 5 contracts for S.G.’s in-house/proprietary trading account.

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

So far this month, there have been 291 gold contracts issued/reissued and stopped — and that number in silver is 3,441 contracts.

The CME Preliminary Report for the Friday trading session showed that gold open interest in May declined by 2 contracts, leaving 67 left, minus the 1 contract mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 2 gold contracts were actually posted for delivery today, so the change in open interest and deliveries match for a change.  Silver o.i. in May fell by 66 contracts, leaving 287 still around, minus the 49 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that only 15 silver contracts were posted for delivery today, so that means that 66-15=51 silver contracts vanished from the May delivery month.


There was some gold added to GLD by an authorized participant on Friday…94,392 troy ounces worth.  But over at SLV, there was a monstrous withdrawal, as an a.p. took out 3,185,270 troy ounces.  Whether or not that was honest liquidation because of the current price action, or a conversion of shares for physical metal by JPMorgan, is something I leave Ted to pass judgement on his weekly review later today.

There was no sales report from the U.S. Mint once again.

So far this month the mint has sold 1,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 160,000 silver eagles.  How pathetic is that?

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.

There was some movement in silver.  Only 11,134 troy ounces was received — and 600,006 troy ounces shipped out.  All of the ‘in’ activity was at Brink’s, Inc.  In the ‘out’ category, there was one truckload…597,082 troy ounces…shipped out of CNT — and the remaining 2,923 troy ounces departed Delaware.  There was also a paper transfer of 24,783 troy ounces from the Eligible category and into Registered.  That occurred at Brink’s, Inc. — and is probably out for delivery in May.  The link to all this, is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 2 of them — and shipped out 457.  The ‘in’ activity was at Loomis International — and all the ‘out’ activity was at Brink’s, Inc.  The link to this, in troy ounces, is here.


The Huxley Hoard is a hoard of Viking jewellery from around 900-910 found buried near Huxley, Cheshire, England. It consists of 21 silver bracelets, one silver ingot, and 39 lead fragments, weighing around 1.5 kilograms (3.3 lb) in total. The bracelets might have been produced by Norse settlers in Dublin and possibly buried for safekeeping by Viking refugees settling in Cheshire and the Wirral in the early 900’s. It was discovered by Steve Reynoldson in November 2004 after he found fragments of lead 30 centimetres (12 in) underground using a metal detector.

The bracelets were folded flat, sixteen decorated by punched patterns, six with crosses stamped in their centre, and another six with centre cross and one at each end. Two have lattice patterns, one an hourglass stamp around the edge, one chevrons with central and end crosses, and one (found as a twisted bar) a zig-zag pattern; the remaining four are plain. The lead fragments suggest the hoard could have been buried either in a lead sheet or a lead-lined wood box.

The second photo is of the lead fragments found.  Click to enlarge for both.


The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday came in as Ted expected in gold — and as we both hoped/prayed for in silver…a huge increase in the commercial net short position in the former — and a nice decrease in the latter.

In silver, the Commercial net short position declined by a further 3,881 contracts or 19.4 million troy ounces of paper silver.

The Commercial traders arrived at that number by adding 1,440 long contracts — and they also decreased their short position by 2,441 contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report the Managed Money traders didn’t do much — and it’s still very much bifurcated.  The non-technical/value investing Managed Money traders added 924 long contracts to their already impressive long position…while the brain-dead/moving average-following Managed Money traders added a further 982 short contracts to their very impressive short position.  It’s the difference between those two numbers…a tiny 982 minus 924 equals 58 contracts…that represents their change for the reporting week.

The difference between that number and the Commercial net short position…3,881 minus 58 equals 3,823 contracts…was made up, as it always is, by the traders in the other two categories.  The ‘Other Reportables’ decreased their net long position by 1,194 contracts — and the ‘Nonreportable’/small traders decreased their net long position by 2,629 contracts.  Those two numbers add up to the 3,823 contracts, which they must do.

The Commercial net short position in silver is down to 63.9 million troy ounces, a very low number.

Ted figures that JPMorgan sold about 2,000 of their long contracts in order to cap Monday’s rally — and their net long position is now only 3,000 contracts as of the Tuesday cut-off.

Here is the 3-year COT Report chart from Nick — and the change should be noted.  Click to enlarge.

Of course, Friday’s COT Report is already ‘yesterday’s news’ in just about every respect.  Not only is the Commercial net short position far lower as of the COMEX close on Friday, but as Ted correctly pointed out on the phone yesterday, it’s a given that JPMorgan has bought back whatever COMEX contracts it had to sell on Monday, plus probably a bit more.


In gold, the commercial net short position rose by a knee-wobbling 40,824 contracts, which is pretty much what Ted said it would be.  This number shouldn’t be surprising, as gold broke above and then closed above its 50-day moving average on Monday, plus closed above it again on Tuesday.

The commercial traders arrived at that number by adding 17,366 long contracts, but they also added an eye-watering 58,190 contracts to their short position — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus a bit more…as they added 35,492 long contracts — and they also reduced their short position by 7,507 contracts — and it’s the sum of those two numbers…42,999 COMEX contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…42,999 minus 40,824 equals 2,175 contracts…was made up by the traders in the other two categories.

And as is normally the case, both categories went about it in wildly different manners.  The ‘Other Reportables’ actually increased their net long position by 6,126 contracts, while the ‘Nonreportable’/small traders decreased their net long position by 8,301 contracts.  The difference between those two numbers is those same 2,175 contracts, which it must be.

Here’s the snip from the Disaggregated COT Report, so you can see these numbers for yourself.  Click to enlarge.

The commercial net short position in gold jumped up to 13.72 million troy ounces as of Tuesday’s cut-off.

Ted says that JPMorgan sold its entire 5,000 contract long position on Monday’s big rally — and most likely 5-10,000 contracts more than that to cap that rally.  They appeared to be the short sellers of both first and last resort in gold and silver this week.

Here is the 3-year COT chart for gold — and this week’s change should be noted as well.  Click to enlarge.

But, as in silver, this COT Report in gold is very much ‘yesterday’s news’ as well — and one should expect that all of last week’s deterioration has been reversed — and then some, since Tuesday’s cut-off.

Ted’s of the opinion that the price action in the precious metals this week was a premeditated act — and its sole purpose was get the short position in silver as low as possible.  Yes, the commercial traders ripped the Managed Money trader’s faces off in the process, both on the way up through gold’s 50-day moving average — and again on the way down, but that was secondary to the real purpose.

Were they successful?  You betcha.

Is the bottom in yet?  Who knows.  As Ted always says, you’ll won’t know the bottom is in until you see it in the rear-view mirror.

In the other metals, the Manged Money traders in palladium decreased their net long position in this precious metal for a second week in a row, this time by 1,163 contracts.  The Managed Money traders are net long the palladium market by 8,119 contracts.  Total open interest in palladium is 20,834 COMEX contracts, down about 650 contracts from the previous week.  It’s a very tiny market.  In platinum, the Managed Money traders decreased their net long position by a further 4,750 contracts.  The Managed Money traders are still net long the platinum market by a fairly hefty 13,012 contracts, but it’s now much lower than that since the Tuesday cut-off.  Total open interest is 75,331 contracts.  With copper engineered lower for another week, the Managed Money traders increased their net short position in that metal by a further 8,550 contracts during the reporting week — and are now net short the COMEX futures market by a whopping 37,706 contracts.


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 99 days of world silver production, which is down 2 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 62 days of world silver production, up 1 day from last week’s report — for a total of 161 days that the Big 8 are short, which is a bit over 5 months of world silver production, or about 375.8 million troy ounces of paper silver held short by the Big 8.  [In the prior week’s COT Report, the Big 8 were short 162 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 63.9 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 375.8 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 375.8 minus 63.9 equals 311.9 million troy ounces.

The reason for the difference in those numbers…as it always is…Ted’s raptors, the 34-odd small commercial traders other than the Big 8, are net long that amount.  Unbelievable.

As I mentioned in my COT commentary in silver above, Ted said that JPMorgan was long the COMEX futures market in silver by around 3,000 contracts, down about 2,000 contracts from the previous reporting week after their silver price capping exercise on Monday.

The Big 4 traders now in that category are short, on average, about…99 divided by 4 equals…24.75 days of world silver production each.

The four traders in the ‘5 through 8’ category are short 62 days of world silver production in total, which is 15.50 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.

The Big 8 commercial traders are short 36.8 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 37.9 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 over the 40 percent mark.  In gold, it’s now 35.5 percent of the total COMEX open interest that the Big 8 are short, down a bit from the 36.5 percent they were short in last week’s report — and a bit over 40 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 37 days of world gold production, up 4 days from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 27 days of world production, up 3 days from what they were short last week…for a total of 64 days of world gold production held short by the Big 8…up 7 days from last week’s report.  Based on these numbers, the Big 4 in gold hold 58 percent of the total short position held by the Big 8…up a percent from last week’s COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 61, 74 and 86 percent respectively of the short positions held by the Big 8.  Silver is down 1 percentage point from a week ago, platinum is also down 1 percentage point from last week — and palladium is up another 3 percentage points — and at another new record high!

If you look at the above ‘Days to Cover’ chart, you can see these percentages for yourself between the red and the green bars for each precious metal.  The grotesque short position of the Big 4 traders in palladium should be noted.

I don’t have much in the way of stories for you today, but most of the ones I do have are definitely worth reading.


CRITICAL READS

America’s “Light Unto the World” Is Now a Bonfire — Bill Bonner

The week moved along quickly… like a piece of trash in a fast-moving stream.

At the beginning of the week, investors were worrying about an intensifying trade war. By its end, they thought they heard the “all clear,” and convinced themselves that stifling trade either won’t happen or won’t matter.

Of course, we agreed with them, predicting that The Donald would never go “Full Retard” in the trade war.

Unless he can pin the next bear market/recession on the Fed, he will suffer more than anyone. His career, his reputation, and his private fortune – all could go downstream in a downturn.

But now that investors have gotten on board with our point of view, we disembark. Because we’re beginning to wonder: What if the trade war is real, and not merely part of the president’s performance art?

What if he really is foolish enough to risk a major market sell-off? And what if his rise to power was not just a fluke, after all, but a signal of a deep, megapolitical shift?

This interesting commentary from Bill put in an appearance on the bonnerandpartners.com Internet site on Friday sometime — and another link to it is here.


Doug Noland: True Start to U.S. vs. China Trade War

Increasingly, it appears as if the respite from Q4 global market instability has about run its course. As an economy – from governments to corporations to households – I can’t imagine a more poorly prepared system for the gathering storm. I know: fundamentals are “sound” and the banking system is “well capitalized.” Besides, there’s the Quadruple Puts – a deeply entrenched market misperception that really concerns me. Complacency is pervasive – especially so. Ignore fundamental developments, while placing faith in the power of politicians and central bankers (and corporations forever enjoying access to cheap finance to fund buybacks). Such a backdrop creates extraordinary risk for an abrupt change in perceptions and resulting crisis of confidence – in policymakers and the markets.

We started with the markets and will end with the markets. At this point, I don’t see great contradictions between the markets: Safe haven bonds and the risk markets are not actually telling wildly different stories. Seeing low market yields, loose financial conditions, seemingly great underlying U.S. economic fundamentals and Quadruple Puts, highly speculative (trend-following and performance-chasing) markets have been behaving about as one would expect near the end of a historic cycle: an intense, overarching short-term focus on speculative market gains. The safe havens, much less concerned with timing, see speculative Bubbles primed for bursting. Treasuries, bunds, JGBs, Swiss bonds, etc. see an acutely fragile global market structure.

And for the crowd that these days harbors delusions of U.S. markets and economic activity largely immune to global issues, I pose the question: How do U.S. markets perform in the event of illiquidity and a “seizing up” of global markets? As I’ve posited before, the U.S. economy is extremely vulnerable to a dramatic market-induced tightening of financial conditions. What would markets look like if the marketplace turns against negative cash-flow enterprises? How would the U.S. economy function in the event of if debt market illiquidity?

The Powell U-turn granted markets four months of fun and games – and only greater systemic vulnerability. Now comes the downside, with a Fed that just might prove somewhat slower to come to the markets’ rescue than everyone presumes. This week marked the True Start to the U.S. vs. China Trade War. The degree of cluelessness is shocking.

This commentary by Doug, which is always a must read for me, appeared on his Internet site in the wee hours of Saturday morning — and another link to it is here.


Who Wants This War With Iran? — Patrick Buchanan

Speaking on state TV of the prospect of a war in the Gulf, Iran’s supreme leader Ayatollah Khamenei seemed to dismiss the idea.

There won’t be any war. … We don’t seek a war, and (the Americans) don’t either. They know it’s not in their interests.”

The ayatollah’s analysis — a war is in neither nation’s interest — is correct. Consider the consequences of a war with the United States for his own country.

Iran’s hundreds of swift boats and handful of submarines would be sunk. Its ports would be mined or blockaded. Oil exports and oil revenue would halt. Air fields and missile bases would be bombed. The Iranian economy would crash. Iran would need years to recover.

And though Iran’s nuclear sites are under constant observation and regular inspection, they would be destroyed.

Tehran knows this, which is why, despite 40 years of hostility, Iran has never sought war with the “Great Satan” and does not want this war to which we seem to be edging closer every day.

This very worthwhile commentary by Pat appeared on his Internet site on Friday sometime — and it was picked up by the folks over at Zero Hedge — and that’s where I found it.  I thank Brad Robertson for pointing it out — and another link to it is here.


Beijing Backs Iran, “Firmly Opposes” Unilateral U.S. Sanctions

In the latest sign of Beijing’s frustration with the U.S., the Chinese leadership have reiterated their opposition to American sanctions against Iran. After a meeting with Iranian Foreign Minister Javad Zarif, Chinese Foregin Minister Wang Yi reiterated Beijing’s ‘firm opposition‘ to unilateral U.S. sanctions against Iran.

  • CHINA’S FOREIGN MINISTER WANG YI MEETS IRAN’S ZARIF
  • CHINA FIRMLY OPPOSES U.S.’S UNILATERAL SANCTIONS AGAINST IRAN

With the U.S. moving more firepower into the Persian Gulf, an attempt to send Tehran an unmistakable message, Zarif asked Beijing to try and save the 2015 nuclear deal, the WSJ reports.

Zarif’s meeting with his Chinese counterpart is the first step on a tour of Asia, as Iran canvasses its key economic partners now that U.S. sanctions have been reimposed.

China imports crude from Iran and has expressed reservations about U.S. sanctions in the past. However, given the state of the relationship between Washington and Beijing, the Chinese appear to be signaling that a proxy war over Iran could be just around the corner if Washington doesn’t seriously reevaluate its approach.

This news item showed up on the Zero Hedge website at 10:20 a.m. on Friday morning EDT — and I thank Brad Robertson for this article as well.  Another link to it is here.


Houthi drone attacks in Saudi “show new level of sophistication

Drone attacks on a Saudi oil pipeline west of Riyadh on Tuesday have revealed an apparent significant leap in the capabilities of the Ansar Allah fighting group, otherwise known as the Houthis.

The Aramco East-West pipeline, stretching across the country to the port and oil terminal at Yenbu, was damaged in two places as pumping stations were hit.

The attacks caused minor damage but alarmed an international community already rattled by the sharp downturn in relations between Iran and the United States.

Information on the attacks is scarce, posing more questions than providing answers.

Drones have been increasingly used by the Houthis in operations against the Saudi-UAE-led coalition. In July 2018 a drone exploded at Abu Dhabi airport causing only minor damage but sending a message to the UAE that its economic interests were not invulnerable.

In January 2019, a senior intelligence chief, along with several officers, were killed at the al-Anad air force base just outside Aden by a weaponised drone that exploded above the delegation.

This latest attack signifies a big jump in abilities as the drone flew more than 800km into Saudi Arabia to successfully attack its target.

This interesting article showed up on the aljazeera.com Internet site on Wednesday — and for obvious content reasons, I though it should wait for today’s column.  I thank George Whyte for bringing it to our attention — and another link to it is here.


Not Just a Trade War, But a Shooting War With China — Doug Casey

The Chinese came from nothing; only 40 years ago, they had nothing but a billion impoverished peasants. No money. No technology. No power. Today, they’re on par with the United States. But, if this trend continues – which it will – their economy will be triple the size of the US economy in 20 years.

Not just a trade war, but a shooting war with the Chinese seems inevitable. Because when tensions build up between states they eventually fight with each other. China is the major rising power. It’s got four times the U.S. population, it’s soon going to be more economically powerful, and it’s going to reach military parity. It’s of a different culture than the U.S. The U.S. government may figure it’s best to take them out while the balance still favors them. It’s a bit like the situation was with the USSR in the ’80s. They could see they were going into decline, and some Soviet generals figured it was “now or never” for a successful war. Fortunately they collapsed first.

The Chinese don’t like seeing U.S. aircraft carriers off their coast any more than we would like to see Chinese aircraft carriers in the Gulf of Mexico or off Santa Catalina Island.

The last thing that we need is a war with the Chinese. But if something that’s been called the Thucydides Trap is valid – and I think it is – then it’s highly likely. It refers to the Peloponnesian War between Athens and Sparta, at the end of 5th century B.C. The Trap is sprung when a reigning power strikes out at the advancing power while they still have a chance of winning.

The American military thinks that a shooting war is inevitable. And it probably is. Why? Well, 5,000 years of history teaches us that it’s better to start a war when you’re more powerful than your enemy rather than wait until they’re more powerful than you. It’s always been this way. The Golden Rule of statecraft is: ‘Do unto others – but do it first.’  It’s a very dangerous situation.

This very worthwhile commentary by Doug was posted on the internationalman.com Internet site on Friday sometime — and another link to it is here.


The Gold Manipulation Question — Grant Williams

Is the price of gold manipulated? If so, who is manipulating it, and why? Real Vision co-founder Grant Williams asks a host of experts that question to decipher the truth. This video is excerpted from a piece published on Real Vision on February 23, 2018 entitled “Gold: The Story of Man’s 6000 Year Obsession.”

This 14:47 minute video clip was posted on the youtube.com Internet site on Thursday — and I found in a GATA dispatch yesterday.


Venezuela Sells $570 Million From Gold Reserve Despite Sanctions

Venezuela sold about $570 million in gold from central bank reserves over the past two weeks, skirting U.S. Treasury sanctions designed to freeze assets of the Nicolas Maduro’s administration, according to people with knowledge of the matter.

The central bank sold about 9.7 tons of gold on May 10 and an additional 4 tons three days after, the people said, driving its reserves down to a 29-year low of $7.9 billion. The proceeds will be partly used to fund imports through the country’s foreign trade office, according to one of the people.

A central bank press official didn’t immediately respond to requests for comment on the sales.

Venezuela has sold 23 tons of gold since the beginning of April, defying an economic blockade meant to stop the lucrative trading Maduro has been using to keep the military loyal to his regime. Last month, the U.S. Treasury’s Office of Foreign Assets Control included the Venezuelan central bank its list of sanctioned entities.

Maduro has been selling gold to firms in the United Arab Emirates and Turkey, as sanctions increasingly cut off his authoritarian regime from the global financial system. While he maintains a stranglehold on power on the ground — including the military and government bureaucracy — opposition leader Juan Guaido is using support from dozens of countries to slowly seize Venezuela’s financial assets abroad.

This gold-related news item appeared on the Bloomberg website at 10:44 a.m. PDT on Friday morning — and I found this story on the gata.org Internet site.  Another link to it is here.


The PHOTOS and the FUNNIES

The day after taking the photos on the barren Thompson Plateau on super-scenic B.C. Highway 5A between Kamloops and Merritt, we drove to Hope, B.C.…less than an hour’s drive southwest of Merritt on the Coquihalla Highway.  On the west side of the Northern Cascade mountains, the grass was green, flowers were blooming — and spring was in full cry.  Here are first three shots of our trip there.  The second shot is of a magnolia tree in full bud — and the second is most likely a cherry tree…although I’m not up on my flowering trees in this area.  I could be an ornamental crab-apple tree as well.  Click to enlarge.


The WRAP

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” — Ernest Hemingway


Today’s pop ‘blast from the past’ is in remembrance of one who left us on Monday…Doris Mary Kappelhoff, but everyone knew her as Doris Day.  I remember singing this song in the kitchen with my Mom back in 1956 when it was a big hit.  I was eight years old — and the link is here.  And I’m also old enough to remember this one from 1939 as well, even though it was an “oldie, but goodie” by then.  R.I.P Mary — and “thanks for the memories.”

Today’s classical ‘blast from the past’ is a short piece from Piotr Ilyich Tchaikovsky’s “The Nutcracker“, Op. 71.  Of all the great waltzes that he wrote, this is my favourite — and needs no introduction.  Here’s Daniel Barenboim conducting the Berlin Philharmonic.  The video quality is dated, but the soundtrack certainly isn’t.  The link is here.


As I stated at the top of today’s column…”the ‘long knives’ were out for the precious metals yesterday.”  None of Friday’s price action had anything to do with China, the U.S. dollar index, or anything else.  This was all engineered by ‘da boyz’ in the COMEX futures market…forcing the brain-dead/moving average-following Managed Money traders to puke up long positions for big losses  — and slamming them onto the short side for more losses later when precious metal prices are allowed to rise.

Gold is now well below its 50-day moving average — and silver below its 200-day.  Platinum was closed well below its 200-day moving average as well on Friday — and another new low for this engineered price decline.  Palladium’s 200-day moving average is proving to be a tougher nut to crack.

Copper has been closed below its 200-day moving for the eighth consecutive day — and the Managed Money traders in that metal are mega short…as I pointed out in my COT discussion further up.  WTIC has been quietly pulling away from its 50 and 200-day moving averages for the last four trading days.

I don’t know if we’re done to the downside or not.  I was surprised that JPMorgan et al were able to get more blood out of the silver stone yesterday — and I would have paid a decent sum to have a peek at silver COT Report as of the close of COMEX trading on Friday.

Gold’s 200-day moving average is the only moving average of importance left — and it remains to be seen if they go for it or not.  This has been the Sword of Damocles hanging over the gold market for the last couple of month now — and I feel badly that I have to keep mentioning it.  But I’d be remiss if I didn’t.

However, to end this discussion on a positive note, there was some very serious bottom fishing going on in the precious metal equities yesterday — and it wasn’t John Q. Public or the mutual fund crowd doing the buying.  These was the smart ‘deep pockets’ money that knows that far better days are ahead.  And despite the big down day in the metals on Friday, their buying was actually aggressive enough to close the p.m. stocks in the green.  So all is not lost.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and the above changes should be noted.  Click to enlarge.

Bill King had this to say in his King Report on Wednesday…”Have we mentioned that the U.S. stock market is so perverted and manipulated that it is nothing more than a parlor game dominated by shills and riggers?

That’s the way it has to be now, as John Q. Public is no longer actively involved…leaving only the index and hedge funds with their algorithms and high-frequency trading running the show.

Here’s a 50-year chart of the Dow Jones Industrial Average.  The active management of the stock market began after the “crash of 1987″…which I remember all to well.  It was at that point where President Ronald Reagan’s  “Working Group on Financial Markets” was formed — and they’ve been hard at it ever since.

The real economy separated from stock market valuations long ago — and none of the companies currently in the Dow were there fifty years ago — and some of them didn’t even exist back then.  So what kind of average if this really?  I could show the S&P500, but its price pattern is the same.

And as Doug Noland so correctly pointed out in his commentary from a week ago…”[T]this week had me pondering the next crisis. It will, after all, be the first international market crisis in an era of competing global powers. Do the rivals come together or seek advantage at the other’s expense? I grimaced some months back when President Trump began using his Twitter account to troll the struggling Chinese markets and economy. And in this age of the strongman head of state, where will this leave central bankers when things turn dicey? Has the era of putting a select group of like-minded global central bankers in a room and empowering them to orchestrate a strategy to reliquefy the world run its course?

And it is coming, dear reader, just as surely as the sun rises in the east — and sets in the west.

Larry Galearis pointed out in an e-mail late this week that maybe a war with Iran was, in actuality, was a Trojan Horse of some kind.  Along with multiple U.S. casualties in both personal and hardware — and a crashing stock market, a war would put an end to Trump’s re-election chances in 2020.

It was a subject that I was planning on bringing up in today’s column anyway, but I see that Patrick Buchanan already beat me to it.  So rather than wordsmithing my own narrative, I’m more than happy to bow to his thoughts.  Here’s what he had to say in his commentary in the Critical Reads section of today’s column…

Who wants us to plunge back into the Middle East, to fight a new and wider war than the ones we fought already this century in Afghanistan, Iraq, Syria, Libya and Yemen?

Answer: Pompeo and Bolton, Bibi Netanyahu, Crown Prince Mohammed bin Salman and the Sunni kings, princes, emirs, sultans and the other assorted Jeffersonian democrats on the south shore of the Persian Gulf.

And lest we forget, the never-Trumpers and neocons in exile nursing their bruised egos, whose idea of sweet revenge is a U.S. return to the Mideast in a war with Iran, which then brings an end to the Trump presidency.”

And as I’ve been saying forever and a day now, the price management scheme in the precious metals will not end in a news vacuum.  It will be coordinated with some other ugly event of great financial, economic, or military significance.

This war, which will certainly be ignited by some sort of ingenious ‘false flag’ event…as Iran wants no part of it…is tailor made for this sort of thing.  And with the war drums sounding — and the belligerence level in the West, particularly in Washington and the Pentagon, now rising to an almost fever pitch…it certainly appears that some sort of military action is close at hand.

Of course the U.S. deep state is behind all this — and with ‘da boyz’ covering shorts and going long across the board in the precious metals and copper, you have to wonder what they know that we don’t…yet.

I’m done for the day — and the week.

Monday is a national holiday here in Canada…a long weekend — and I expect to be on the road most of that day.  So my Tuesday column will unbelievably brief…just the facts.

Enjoy what’s left of your weekend — and I’ll see you on that day.

Ed