Jim Cook: A Q&A Session With Ted Butler

24 May 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crawled a dollar or so lower by noon in Shanghai on their Thursday — and was up a bit more than that amount by the London open.  It began to head quietly higher about an hour later, until the 8:20 a.m. EDT COMEX open — and then it took flight.  Ten minutes later it ran into ‘da boyz’ — and was sold lower until the equity markets open in New York.  It rallied a bit more from there until 10:45 EDT — and was then sold quietly lower into the 5:00 p.m. close.

The low and high ticks in gold were reported by the CME Group as $1,272.10 and $1,287.10 in the June contract.

Gold was closed in New York on Thursday at $1,282.80 spot, up an even 10 bucks on the day.  Net volume was getting up there at a bit over 246,000 contracts.  But roll-over/switch volume out of June and into future months was enormous once again at 85,500 contracts.

The price path that silver was allowed to travel was nearly identical to that of gold, with the only real difference being the timing of its high of the day…$14.61 spot…which came around 11:10 a.m. in New York.  It wasn’t allowed above that price after that.  Once the COMEX closed at 1:30 p.m. EDT, silver’s price was edged quietly lower until the market closed at 5:00 p.m.

The low and high ticks in this precious metal were recorded as $14.40 and $14.635 in the July contract.

Silver was closed at $14.555 spot, up 14.5 cents on the day…but, like gold, would have closed considerably higher than that, if allowed…which it obviously wasn’t.  Net volume was very decent at a hair under 65,000 contracts — and there was 3,900 contracts worth of roll-over/switch volume in this precious metal.

The platinum price was sold unevenly lower until the low tick was set around 12:30 p.m. in Zurich.  It jumped around — and higher by a bit in COMEX trading in New York.  But by shortly after 12 o’clock noon EDT, ‘da boyz’ had it settled down — and it was closed at $798 spot, down 5 dollars on the day — and at a new low close for this engineered price decline.

The palladium price was down ten dollars by shortly before 11 a.m. China Standard Time on their Thursday morning — and it chopped very unevenly, but quietly sideways for the remainder of the day.  I’m ignoring the vicious down/up spike shortly before 10 a.m. in New York, as this is a frequent occurrence in this precious metal, as its always a very tiny and illiquid market at the best of times.  Palladium finished the Thursday session at $1,292 spot, down 7 bucks from its close on Wednesday.

The dollar index closed very late on Wednesday afternoon in New York at 98.04 — and opened up about 2 basis points once trading commenced at 7:45 p.m. on Wednesday evening, which was 7:45 a.m. CST on their Thursday morning.  It crept a bit higher until around 8:10 a.m. BST in London — and then crept lower, giving back almost all that gain [such as it was] by 8:35 a.m. in New York.  It jumped a bit higher starting at that juncture — and the 98.37 high tick was set a few very minutes after the equity markets opened in New York yesterday morning.  The index began to slide from there — and the 97.81 low came around 1:15 p.m. EDT.  It chopped quietly sideways from that juncture until the market closed at 5:30 p.m.

Of course the sell-offs in both silver and gold that occurred in early morning trading in New York will be attributed to the ‘rally’ that occurred in the dollar index at that point.  But it was just as obvious that neither precious metal was allowed to benefit much from the rather precipitous decline in the DXY that followed thereafter.

The dollar index finished the Thursday session at 97.86…down 18 basis points from Wednesday’s close.

Here’s the DXY chart, courtesy of Bloomberg as usual.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of stockcharts.com — and the delta between its close…97.72…and the close on the DXY chart above, was 14 basis points on Thursday.  Click to enlarge as well.

The gold stocks jumped up at the open, with most of the gains coming by minutes before 10:30 a.m. in New York trading.  They crept unevenly higher from that point until a few minutes before the 1:30 p.m. COMEX close — and then were sold rather sharply lower until trading ended at 4:00 p.m. EDT.  The HUI closed up only 0.44 percent, giving up about two percentage points of its gains on the day in the process.

The rally in the silver equities was far less impressive — and the sell-off in their shares began at the exact same moment as they did for the gold stocks…a very few minutes before the COMEX close.  They actually closed down on the day, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished lower by 0.67 percent.  The choppy chart pattern that existed until minutes before noon EDT was caused by a data feed error on Nick’s website.  Click to enlarge if necessary.

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

Excuse me for thinking this, but the sell-offs in the precious metal equities that began a minute or so before the COMEX close yesterday, looked deliberate to me…as no profit-maximizing seller would unload a position in such a manner.  This was not John Q. Public selling, as they were buyers yesterday.


The CME Daily Delivery Report showed that zero gold and 3 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.  In silver, Advantage issued all three — and ADM and JPMorgan picked up 2 and 1 contracts.  All contracts, both issued and stopped, involved their respective client accounts.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in May remained unchanged at 58 contracts for the second day in a row — and no gold contracts are out for delivery today.  Silver o.i. in May dropped by 48 contracts, leaving 209 still open, minus the 3 silver contracts mentioned in the previous paragraph.  Wednesday’s Daily Delivery Report showed that 48 silver contracts were actually posted for delivery today, so the change in open interest and deliveries match in this precious metal as well.


There were no reported changes in either GLD or SLV on Thursday.

And there was no sales report from the U.S. Mint, either.

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  Nothing was reported received — and only 2,712 troy ounces was shipped out — and that occurred at HSBC USA.  I won’t bother linking this.

It was a lot busier in silver, as 599,578 troy ounces…one truckload…was received — and all that ended up at Canada’s Scotiabank.  There was 753,816 troy ounces shipped out.  One truckload…600,637 troy ounces…departed Scotiabank — and the remaining 153,178 troy ounces left the Brink’s, Inc. depository.  There was also a tiny paper transfer, as 9,973 troy ounces was moved from the Eligible category — and into Registered…destined for delivery in the May, no doubt.  That occurred at CNT.  The link to this activity is here.

It was fairly busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  There were 1,800 reported received — and 1,167 shipped out.  This activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Middleham Hoard is a coin hoard found near Middleham, North Yorkshire in England. It dates from the period of the English Civil War, and consists of 5,099 coins, all silver. It is the largest hoard of coins buried during the Civil War to have been discovered. The hoard was discovered in June 1993 by William Caygill while using a metal detector. Though referred to as one hoard, the coins were buried in three pots in two pits. These had slightly different deposition dates; likely in the later 1640s, though the person making the deposits was probably the same. The coins are dispersed between museums and private collections, 54 of them now in the Yorkshire Museum’s numismatic collection.

Two of the pots (A and B) were discovered together, and the third pot (C) was discovered about twenty paces to the west. All three pots were covered with a capstone made from local Coverdale sandstone. The latest coins in Pots A and B date to 1645–1646, suggesting a date of deposition of about 1646. Pot C includes ten shilling coins with a late portrait of Charles I that are not represented in either Pot A or Pot B; Pot C also includes a single shilling with a “sceptre” privy-mark that was in use from 1646 to 1649. These features suggest that Pot C was deposited at a slightly later date than Pots A and B, possibly in 1648.

One of the main features of the hoard is the relatively large proportion of Spanish coins. There are 247 coins from the Spanish Netherlands and Spanish America, comprising nearly 5% of the hoard by numbers, but these coins are of high value — and the face value of these Spanish coins is about £65, which is some 20% of the face value of the entire hoard.

The three pots in which the coins were buried in are all rather similar types of mid-seventeenth century kitchen ware. They are all handled jars that would have been used in the kitchen, and as they show no signs of being used for cooking it has been surmised that they would have been used for food storage.  Pot ‘A’ is featured in the first photo — and Pot ‘B’ in the third.  Click to enlarge.

For the second day in a row I don’t have all that much in the way of articles/stories for you.


CRITICAL READS

U.S. PMIs Crash as Business Confidence Collapses to 7-Year Lows

Following disappointments in Europe’s PMI this morning (with Germany slumping even further, and seeing IFO hit a 4.5 year low), preliminary May data for US PMIs were expected to rebound very modestly after its recent collapse.

But both Manufacturing and Services PMI slumped again in May:

  • Flash U.S. Composite Output Index at 50.9 (53.0 in April). 36-month low.
  • Flash U.S. Services Business Activity Index at 50.9 (53.0 in April). 39-month low.
  • Flash U.S. Manufacturing PMI at 50.6 (52.6 in April). 116-month low.
  • Flash U.S. Manufacturing Output Index at 50.8 (52.7 in April). 35-month low

It’s ugly!!  Click to enlarge.

This 2-chart Zero Hedge story was posted on their website at 9:52 a.m. EDT yesterday morning — and I thank Brad Robertson for sharing it with us.  Another link to it is here.


Hey Parker Brothers! Bankers Changed The Rules Of Your Monopoly Game —  Dennis Miller

In 1935, Parker Brothers introduced the game “Monopoly”. Wikipedia tells us:

Monopoly is a board game…. Players roll…dice to move around the game board, buying and trading properties, and developing them with houses and hotels. Players collect rent from their opponents, with the goal being to drive them into bankruptcy.

Money can also be gained or lost through Chance, Community Chest cards, and tax squares; players can end up in jail, which they cannot move from until they have met one of several conditions. …hundreds of different editions exist…. Monopoly has become a part of international popular culture….”

I remember Monopoly as a multi-generational game we played for hours. We all started with the same amount of money. The goal was to acquire property and drive your opponents bankrupt.

The bank was passive, collecting fines and paying out $200 every time you passed GO. Passive? Not anymore!

This interesting commentary from Dennis was posted on his Internet site on Thursday morning sometime — and another link to it is here.


Trump Missed His Chance to Make America Great Again — Bill Bonner

In the last 20 years, there were probably only a couple of opportunities to stop this Debtball Express.

One of them came in June 2000, says our colleague David Stockman. Then, it was obvious – to Alan Greenspan, as well as others – that the monetary system inspired by Milton Friedman and put in service by Richard Nixon wouldn’t work. Friedman’s system – monetarism – called for controlling the growth of money, keeping it at around 3% per year.

But after 1971, when the final thread between gold and the dollar was severed, America’s real purchasing power came from a new source – credit.

And by the end of the 20th century, Greenspan noticed that the Fed no longer knew what “money” was… and could neither measure it nor control it.

Greenspan, the former gold bug, might have stood up straight before his fellow Fed governors and explained the situation:

Uh… guys… this isn’t working. We’ve got to go back to a gold-based system.”

Instead, he let the credit money system erupt, reducing the cost of money/credit from a federal funds rate of 6% to a rate of 1% – the lowest at that point in history.

This worthwhile commentary from Bill put in an appearance on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is here.


U.K. Pound Headed For Record 14-Day Losing Streak as May Resignation Expected

Instead of hanging on for what would be a fourth vote on the withdrawal agreement she negotiated with the European Union – an agreement that is widely despised in Parliament because of the possibility that the hated ‘Irish Backstop’ could trap the U.K. in the E.U. Customs Union indefinitely – Theresa May might instead step down, or set a date for her resignation, according to a Financial Times report.

When the government published its itinerary for future business on Thursday, it left no time set aside for debating the “WAB” – that is, the withdrawal agreement bill – during the week of June 3. Though a senior Tory whip filling in for Andrea Leadsom (who resigned as Commons leader last night) insisted that the government still wanted to debate the bill, anonymous sources cited in the British press were skeptical.

Rumors that May had been preparing to resign on Wednesday night didn’t pan out, but many still expect May to either resign or decide on a firm departure date before the end of the week, as the backlash to the latest iteration of her withdrawal plan – which included a provision for a Parliamentary vote on a second referendum – intensifies. Graham Brady, the leader of the 1922 Committee of Tory backbenchers, reportedly told the prime minister that she would face another leadership challenge if she decides to move ahead with a vote on her withdrawal bill. Leadsom’s departure has also fostered rumors that more cabinet members could follow her lead and resign.

Should the Brexit Party garner a decisive plurality of the vote in the European Parliamentary elections on Thursday – as is widely expected – that would be yet another rebuke to the PM.

Amid all of the uncertainty, the pound weakened on Thursday for the 14th straight session as May’s refusal to go quietly creates more uncertainty surrounding the Brexit outlook.

This news item showed up on the Zero Hedge Internet site at 7:15 a.m. on Thursday morning EDT — and another link to it is here.  I thank Brad Robertson for sending it our way.  There was this somewhat related Zero Hedge story from 4:15 a.m. EDT on Thursday morning — and that one is headlined “How Farage’s Brexit Party is Destroying The U.K. Political Establishment” — and that’s from Brad as well.  It’s worth reading.


Deutsche Bank CEO Vows to Make “Tough Cutbacks” as Shares Slump to Record Low

Watching Deutsche Bank shares crash to new all-time lows (around €6.35/US$7.07) just as the troubled German lender’s annual shareholder meeting was getting underway in Frankfurt on Thursday, we could hardly imagine anything more appropriate. Actually, that’s not true – there is one thing: The revelation, just hours before the meeting’s start, that a ‘software glitch’ had blocked reporting of suspicious transactions for years.

With DB’s brand mired in controversy thanks to Congressional subpoenas that have drawn attention to its lending relationship with the Trump Organization, anything that would appear to support Maxine Waters’ claim that DB is “the biggest money laundering bank in the world” is perhaps the last thing shareholders need to see (other than maybe another capital raise).

Following the collapse of merger talks with Commerzbank, Deutsche’s frustrated shareholders let it be known that their patience with the bank’s perennial underperformance and its cratering share price (the bank’s market capitalization is now under €15 billion) has run out. Now is the time for CEO Christian Sewing, who was heralded as a reformer when he was elevated to replace John Cryan 14 months ago, to make good on his promise to turn DB around.

And though Sewing didn’t give as much ground as investors would probably have liked, he did deliver a grudging concession during his speech: It’s time to make “tough cutbacks” to DB’s investment bank. WSJ described Sewing’s statement to shareholders as “his strongest public admission yet that the business needs a dramatic overhaul.”

This article showed up on the Zero Hedge website at 11:31 a.m. EDT on Thursday morning — and I thank Brad Robertson for sending it along.  Another link to it is here.


China’s Insurmountable Global Weakness: Its Currency — Charles Hugh Smith

If China wants superpower status, it will have to issue its currency in size and let the global FX market discover its price.

Quick history quiz: in all of recorded history, how many superpowers pegged their currency to the currency of a rival superpower? Put another way: how many superpowers have made their own currency dependent on another superpower’s currency?

Only one: China. China pegs its currency, the yuan (RMB) to the U.S. dollar. It adjusts the peg a bit here and there, but the yuan’s value is set by the Chinese state, not by the market of buyers and sellers.

Second question: is pegging your currency to a rival power’s currency a sign of strength? The obvious answer is no. It’s a sign of weakness. A real financial power issues its own currency and let’s the global FX (foreign exchange) market discover the relative price / value of the currency. The financial power trusts the market to discover the value / price of its currency, and it responds by raising or lowering the yields on its government bonds and other pricing inputs.

If the issuing nation won’t allow users and owners of its currency price discovery, few will want the currency because they can’t trust the state’s arbitrary, non-market price. This reality is reflected in the chart below of global currencies’ relative share in global payments, loans and reserves. China’s currency, the yuan (RMB) is basically signal noise: its global role in payments, loans and reserves is near-zero.  [The ‘click to enlarge’ feature does not help with this chart.]

This commentary by Charles appeared on the Zero Hedge website at 10:40 a.m. on Thursday morning EDT — and it’s another contribution from Brad Robertson.  Another link to it is here.  A related story from the South China Morning Post is headlined “Could China Dump Its U.S. Treasuries to Fight the Trade War? A Contrarian View is Emerging in Beijing” — and I found that one in a GATA dispatch.


Jim Cook Interviews Ted Butler: JPM, Silver Investors & More

Cook: A lot of silver investors are frustrated these days. Can you give them any hope?
Butler: I’d be lying if I said I wasn’t frustrated as well. But I have no doubt that silver will eventually prove its great worth.

Cook: Does everything still depend on what JPMorgan does?
Butler: If you don’t know by now that silver is manipulated by COMEX paper trading, largely at the hands of JPMorgan, you’re missing the whole story.

Cook: OK, we get all that. We want to know when will it change?
Butler: When JPMorgan decides it will change. Look, you know I can’t tell you the precise time in advance.

Cook: Is that the best you can do? People are getting tired of hearing that.
Butler: Tired of what – the only explanation that makes any sense?

This rather brief, but must read Q&A between Jim and Ted was posted on the silverseek.com Internet site at 11:15 a.m. EDT on Wednesday morning — and I lifted it from Ted’s mid-week column to his paying subscribers on Wednesday afternoon.  Another link to it is here.


The PHOTOS and the FUNNIES

A week after our day trip to Hope, we headed east from Kamloops towards Chase, B.C...partly on the Trans-Canada Highway on the south shore of the South Thompson River.  We crossed over to the north shore at a rather hole-in-the-wall place called Pritchard on this 1-lane wooden bridge that you can see in the first photo.  It was a glorious sunny and warm day…not a cloud in the sky.  The last two shots were from the gravel road that leads to Chase — and the river and the Trans-Canada Highway are clearly visible in both shots…the first looking southwest — and the second looking due east.  Click to enlarge.


The WRAP

Everything was not fine that spring with the American economy. It was showing ominous signs of trouble. Steel production was declining. The construction industry was sluggish. Car sales dropped. Customers were getting harder to find. And because of easy credit, many people were deeply in debt. Large sections of the population were poor and getting poorer…

It was this nature of mass illusion. Prices were going up, people bought. That forced prices up further, that brought in more people. And eventually, the process becomes self-perpetuating. Every increase brings in more people convinced of their God-given right to get rich.

At the end of 1929, as they celebrated New Year’s Eve, all that lay in the future. Nobody knew that the Great Depression was coming — unemployment, bread lines, bank failures — this was unimaginable. But the bubble had burst. Gone was that innocent optimism, the confidence, the illusion of wealth without work. One era had ended. They toasted the coming of the 30s, but somewhere, deep down, they knew the party was over.” — PBS American Experience: The Great Crash of 1929


Although gold and silver were allowed to rally by a bit before being capped and turned lower, neither price increase came anywhere near breaking above gold’s 50-day moving average, or silver’s 200-day moving average.  There was most likely some increase in the commercial net short positions in both these precious metals, but it wouldn’t have been by material amounts.

Platinum was closed at another new low for this move down — and copper hit a new intraday low for this move down, but finished the Thursday trading session a hair above its Wednesday’s close.  Oil got hammered back below its 200-day moving average on the inventory build-up report yesterday.  But the price drop occurred because the Managed Money traders were puking up longs — and going shorts…the same reason that prices decline in the precious metals.  It’s all paper.

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

And as I type this paragraph, the London/Zurich opens are minutes away — and I note that the gold price didn’t do much of anything in Far East trading — and is down 20 cents currently. Silver hasn’t done a thing in Far East trading, either — and it’s down 2 cents. Platinum has been stair-stepping its way quietly higher in price — and is up 6 bucks at the moment. Ditto for palladium, except it’s now up 14 dollars.

Net HFT gold volume is pretty light at just under 30,000 contracts — and there’s 5,800 contracts worth of roll-over/switch out of June and into future months. Net HFT silver volume is pretty decent already at around 10,400 contracts — and there’s 400 contracts worth of roll-over/switch volume in this precious metal.

The dollar index has been trading very quietly sideways ever since trading began at 7:45 p.m. in New York on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning. That lasted until 2 p.m. CST on their Friday afternoon. It has been heading lower ever since — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is down 12 basis points…and off its current low tick by a hair.


Today, around 3:30 p.m. EDT, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday — and I’m expecting big declines in the commercial net short positions in both silver and gold…plus platinum as well.

Silver analyst Ted Butler had this to say about what he expects in today’s report…”As far as what to expect in this Friday’s COT report, the reporting week ended yesterday was a mirror-image of the previous reporting week, so the hope is that much if not all of the prior week’s deterioration in gold was reversed…It may be too optimistic to expect a complete reversal of the prior week’s 40,000 net contracts of managed money buying, but I do hope we come reasonably close…The main focus of my attention in Friday’s report will be what the crooks at JPMorgan did.”

As the May delivery month in silver draws to a close, all eyes should now be on the upcoming delivery month for gold in June.  As you are most likely already aware, roll-over/switch volume out of June and into future months has really picked up this week — and will continue to be heavy right until next Thursday…the day before First Day Notice.  The heaviest volume day will most likely occur on Wednesday, as all the large trader that aren’t standing for delivery in that month, will have to sell their June positions, or roll them over into future months.


And as I post today’s efforts on the website at 4:02 a.m. EDT, I see that the gold price has done very little during the first hour of London trading — and is still down 30 cents the ounce. Silver is still down 2 cents. Platinum and palladium are up 5 and 20 dollars respectively.

Gross gold volume is a bit over 53,500 contracts — and minus roll-over/switch volume out of June and into future months, net HFT gold volume is 39,000 contracts. Net HFT silver volume is a bit over 12,500 contracts — and there’s still only 400 contracts worth of roll-over/switch volume on top of that.

The dollar index hit it current low about twenty minutes before the London/Zurich opens — and has crawled a bit higher since — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the index is down 7 basis points.

That’s all I have for today.  I hope you have a great weekend — and I’ll see you here tomorrow.

Ed