A ‘Nothing’ Day in the Precious Metals

28 May 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


With the U.S. markets closed for Memorial Day, I don’t have much for you — and I’m only posting a column because of the news items that I have for you.


Although gold ticked a bit higher in price once trading began at 6:00 p.m. EDT in New York on Sunday evening, that wasn’t allowed to last for more than a few minutes.  It was sold a dollar or so lower until shortly before 9 a.m. China Standard Time on their Monday morning — and it rallied a bit before getting capped at 10 a.m. CST.  It was very quietly down hill from there — and gold was closed exactly unchanged on the day…$1,284.60 spot…which was not by chance, I’m sure.

Net volume is hardly worth mentioning at just under 28,500 contracts, but roll-over/switch volume out of June and into future months was pretty heavy at 24,800 contracts.

It was an identical price pattern in silver, except it was allowed to close higher by 3 whole cents at $14.555 spot.  Net volume was just under 14,500 contracts — and there was only 712 contracts worth of roll-over/switch volume in this precious metal.

Platinum’s quiet rally attempts in early morning trading in the Far East weren’t allowed to get far in Far East trading, or in morning trading in Zurich.   Then, around 2 p.m. CEST, it began to head a bit higher…but ran into ‘something’ shortly after 12 o’clock noon New York time.  It was sold a bit lower from there until trading ended at 1 p.m. EDT.  Platinum finished the Monday session at $807 spot, up 3 bucks from Friday’s close.

Palladium traded unevenly sideways in a fairly tight trading range on Monday in overseas markets — and it too was closed unchanged from Friday at $1,315 spot.

The dollar index closed very late on Friday afternoon in New York at 97.61 — and opened down 4 basis points once trading commenced at 6:30 p.m. EDT in New York on Sunday evening, which was 6:30 a.m. in Shanghai/7:30 a.m. in Tokyo on their respective Monday mornings.  It really didn’t do much of anything until 11:30 a.m. CST — and then began to edge quietly higher, with the 97.55 high tick coming around 4:30 p.m. in London on their Monday afternoon.  It crept a few basis points lower until trading ended at 5:28 p.m. EDT.  The dollar index closed on Monday at 97.74…up 13 basis points from Friday.

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

And with New York closed, there are no charts, GLD and SLV or U.S. Mint sales to report.

But Europe was open — and the folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, May 24.  During that reporting week they added 14,195 troy ounces of gold — and 125,420 troy ounces of silver.

Here are the usual two charts that Nick Laird passed around on the weekend.  They show the amount of gold and silver in all know depositories, ETFs and mutual funds as of the close of business on Friday May 24.  During that reporting week they added a net 20,000 troy ounces of gold — and the silver ETFs added a net 70,000 troy ounces.  Click to enlarge for both charts.

As I mentioned at the top of today’s column, I’m only posting a column today to clear my in-box of stories from the last three days.


CRITICAL READS

Eliminating Free Speech The Smart Way — Jeff Thomas

Left-wing activists have recently been increasingly active in seeking to limit opposing political viewpoints, in order to create a more ubiquitous “groupthink.” One effort in accomplishing this has been to propose the creation of a “Human Rights Committee” in order to monitor the economic transactions of “white supremacist groups and anti-Islam activists.”

This should not be surprising, as, throughout the former Free World, collectivists are, increasingly, coming out of the closet and seeking to eliminate any and all opposition to their cause.

And this should not, in itself, be alarming, as it should be both predictable and understandable that any politically driven group, be it left-leaning or right-leaning, would seek to gain an advantage over its opposite number.

What may be a real cause for alarm, however, is that those whom they are trying to rope into their effort are banks and corporations… and that they’re succeeding without a shot being fired.

It might be hoped that those champions of industry and commerce would at least put up a perfunctory fight, but clearly, this is not the case. They’re not only caving in; they’re entirely on board.

This very interesting commentary from Jeff showed up on the internationalman.com Internet site on Monday morning sometime — and another link to it is here.


In U.K., Farage’s Brexit party storms to E.U. election victory

Nigel Farage’s Brexit Party stormed to victory in the E.U. elections with 31.6% of the vote, final results showed Monday, giving it 29 seats in the European Parliament.

The country’s two main parties hemorrhaged support with May’s Conservatives finishing on 9.1% — their worst result in a national vote in nearly 200 years — and the opposition Labour Party reaching 14.1%. Smaller pro-E.U. parties did well: the Liberal Democrats fetching second place with 20.3%.

Nearly three years after the United Kingdom voted by 52% to 48% to leave the E.U., it remains a member and its politicians are still arguing over how, when or even whether the country will leave the club it joined in 1973.

May quit on Friday, saying it was a matter of deep regret that she had been unable to deliver Brexit and arguing that the decision of the 2016 referendum should be honoured. That opened up a period of further uncertainty as the Conservatives decide on who will take over as party leader and prime minister.

The impact of such a severe election drubbing for the major parties is unclear though potential successors to May are calling for a more decisive Brexit, while Labour leader Jeremy Corbyn is under pressure to openly support another referendum.

This news item put in an appearance on the france24.com Internet site at 1:16 a.m. CEST [Central European Summer Time] on Monday morning, which was 7:16 p.m. EDT in Washington on Sunday evening.  I thank Roy Stephens for sending it our way — and another link to it is here.


France’s Macron Suffers Huge Blow With Defeat to Le Pen

In what may be the biggest shock from today’s European parliamentary elections, President Emmanuel Macron suffered a major blow with French voters set to hand a victory to Marine Le Pen’s National Rally, picking the vocal Eurosceptic and nationalist over the former Rothschild banker.

Macron’s En Marche (Republic on The Move) will have just 22.5% of the vote compared with 24% for Le Pen, according to pollsters Ifop. With Macron and Le Pen neck and neck ahead of the elections, the outcome will be a humiliation for the liberal politician who said before the elections that everything less than 1st place would be a defeat.

Rounding out the The Greens were third with 13%, the conservative Republicans got 8%, while the implosion of the Socialists continues, coming in dead last with just 6.5% of the vote.

Macron’s default took place even as turnout was up around 10% points from 2014, however the increase was particularly marked in regions where Le Pen’s party has gained ground in the past years. In other words, as establishment apathy gets entrenched, the populist vote is increasingly demanding to be heard.

It gets worse: to the shock of globalists and statists everywhere, this is Le Pen’s second straight victory in the E.U. vote. In 2014 she beat the conservatives by 4 percentage points with Macron’s Socialist predecessor Francois Hollande trailing in third.

As Bloomberg notes, the result is a setback for the 41-year-old Macron who played a more prominent role in the campaign than any other European leader as he sought to mobilize voters.

This news item appeared on the Zero Hedge website at 5:33 a.m. EDT on Monday morning — and it’s the first of two offerings from Brad Robertson.  Another link to it is here.  There was a france24.com story about this headlined “French far right shows renewed strength in blow for Macron” — and that comes courtesy of Roy Stephens.


Austrian Government Collapses After Youngest-Ever Chancellor Loses Confidence Vote

Austria’s Chancellor Sebastian Kurz has been removed from office in a stunning culmination of a scandal wherein a political ally was caught red-handed on tape discussing bribes from a woman he thought was the niece of a Russian oligarch.

The so-called “Ibiza-gate” scandal, named after the Spanish island where the video was secretly filmed in 2017, resulted in far-right Freedom Party (FPOe) leader and Vice-Chancellor Heinz-Christian Strache resigning his posts.

On Monday opposition leaders in parliament went further and held a no-confidence vote, ousting the country’s leader Chancellor Kurz from office, in a first in Austria’s post-war history.

Social Democrat (SPÖ) leader Pamela Rendi-Wagner, who had initially proposed the no confidence vote, slammed Kurz during the proceeding, saying, “You have said a lot, but have not yet said that your government has failed. You alone are responsible for it.”

This Zero Hedge story appeared on their Internet site at 2:45 a.m. EDT on Tuesday morning — and another link to it is here.


Far-right League becomes Italy’s largest party, after Five Star’s support slumps in E.U. poll

The far-right League became Italy’s largest party in Sunday’s European parliamentary election, surging past its coalition partner the 5-Star Movement, which saw its own support slump.

The vote looks certain to alter the balance of power within the deeply divided government, giving greater authority to League leader Matteo Salvini, who is pushing for swingeing tax cuts in possible defiance of E.U. budget rules.

Thank you Italy. We will use your trust well. The first party in Italy will change Europe,” a beaming Salvini said in a video posted on Facebook.

With well over half the ballots counted, state broadcaster RAI forecast that the League would win 33.8% of the vote against 17.7% for 5-Star an almost exact inversion of the result of national elections a year ago.

The League took just 6.2% in the last E.U. ballot in 2014 and has seen its support hurtle higher since then thanks largely to Salvini’s uncompromising stance against illegal immigration.

Here’s another france24.com story from Roy Stephens.  This one appeared on their website at 9:51 a.m. CEST on Monday, morning, which was 3:51 a.m. in Washington — EDT plus 6 hours.  Another link to it is here.  A companion story to this from Zero Hedge is headlined “Italian Bond Yields Spike After E.U. Threatens $4 Billion Penalty Over Excessive Debt” — and I thank Brad Robertson for that one.


U.S. sounds alarm: “Iran is moving its country ever closer to our troops!

Tensions between Washington and Tehran continue to increase. Now the United States accuses Iran of moving its borders ever closer to U.S. troops. In part, American soldiers were almost in firing range.

Iran is using its territory to harass our peacefully deployed troops,” said U.S. National Security Advisor John Bolton. “Some of the country’s borders come dangerously close to our soldiers – almost in range, Iran must stop doing that right away!

The U.S. threatened to mobilize its troops. Bolton: “We are a peaceful nation, but if Iran dares to let its borders cross below the feet of our soldiers, that inevitably means war!

There are in total some 20,000+ U.S. troops in the various countries of the Middle East. The additional 900 sent now will not make any difference.

The idiocy of the whole discussion was well captured by the German satire site Der Postillon.  This humorous and tongue-in-cheek story [in German] was posted on the der-postillon.com website back on May 16 — and it in a commentary that Larry Galearis sent our way.


A Big Wake Up Call“: Chinese Bond Market Roiled By First Ever Bank Failure

Late last Friday, we reported that several hours after the market close, China’s financial regulator and central bank made a shocking announcement: for the first time in nearly 30 year, China would take control of a bank, in this case the troubled inner Mongolia-based Baoshang Bank, due to the serious credit risks it poses.

The news which highlights the potential for increased stress at regional lenders that piled into off-book financing in recent years, was strategically timed to hit ahead of the weekend, and with the market closed, it avoided an immediate panic selling waterfall. However, the fact that in China banks are now fair game for failure, and will soon join the record surge in Chinese corporate defaults, slammed the country’s financial sector on Monday, sending funding costs sharply higher and underscoring the potential for increased stress at regional lenders that piled into off-book financing in recent years.

Unfortunately for Beijing, Bloomberg writes overnight that despite the strategically timed news, it wasn’t enough to prevent turmoil from sweep across the nation’s bond market, where funding costs for lenders surged and yields on government debt jumped. The seven-day repurchase rate jumped 30 basis points to 2.85%, the highest in a month, as of late Monday in Shanghai, while the yield on 10Y sovereign bonds climbed 5 bps to 3.35%.

Ironically, Baoshang which was once seen “as a model for funding China’s regional economies” according to Bloomberg, is one of many smaller Chinese lenders that obscured its exposure to risky borrowers by tapping into the country’s shadow-financing system. And while China has been cracking down on such behavior, but UBS Group AG analyst Jason Bedford said the country is rife with regional banks that used special-purpose vehicles to circumvent lending restrictions and hide the true state of their bad loans.

What is even bizarre, is that as we noted last week, the bank’s “official” non-performing loan ratio then was only 1.68% as of December 2016. That, in itself, would never have been sufficient to force a takeover, and suggests that not only was the bank’s real bad debt ratio much higher, but that China continues to chronically under-represent the true state of its NPLs to avoid bank runs.

This longish chart-filled Zero Hedge article was posted on their website at 2:25 p.m. on Monday afternoon EDT — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Trump presses Japan over trade gap, expects ‘good things‘ from North Korea

U.S. President Donald Trump pressed Japanese Prime Minister Shinzo Abe on Monday to even out a trade imbalance with the United States and said he was happy with how things were going with North Korea despite its recent missile and rocket launches.

Trump told a news conference with Abe after their summit that he wanted U.S. exports to be put on a fair footing in Japan through the removal of trade barriers. He said he hoped to have more to announce on trade very soon and said he and Abe had agreed to expand cooperation in human space exploration.

We have an unbelievably large imbalance, as you know, trade imbalance with Japan for many, many years, Japan having the big advantage,” Trump said.

They are brilliant business people, brilliant negotiators, and put us in a very tough spot. But I think we will have a deal with Japan,” he added.

Abe, for his part, said the two leaders had agreed to accelerate trade talks but dodged a question about timing.

This Reuters story, filed from Tokyo, showed up on their website at 5:46 p.m. EDT on Sunday afternoon — and I thank Swedish reader Patrik Ekdahl for pointing it out.  Another link to it is here.


You Can Still Buy a House With Gold Bars in Vietnam

Vietnam may be one of the world’s fastest-growing economies, yet it’s still in the dark ages when it comes to joining the global trend toward cashless transactions. To understand why, look no further than to consumers like Tran Van Nhan, who recently bought his two-bedroom home in Hanoi with gold and a sack of cash.

We paid almost half in gold bars and the rest in cash,” Nhan, a 47-year-old shopkeeper, said of his new $138,000 condo. “We did that because we and the flat’s owner didn’t want to do a bank transfer. We are so used to buying things with cash and gold.”

Prime Minister Nguyen Xuan Phuc is trying to drag his citizens into the modern era of digital payments, reduce the amount of U.S. dollars in circulation in the country and establish the dominance of the nation’s domestic currency, the Vietnamese dong. That also means introducing Vietnamese households to credit cards, bank transfers and digital payments rather than carrying around piles of cash and bullion for purchases.

Behind the push is growing frustration among Vietnamese officialdom about the cost of printing banknotes and the need for more transparent payment records in order to crack down on tax evasion and money laundering, a growing problem as the $237-billion economy continues to expand dramatically.

Officials have their work cut out for them: Just 31% of Vietnamese adults have bank accounts and more than 95% of payments are made with cash and gold, according to the government.

This interesting Bloomberg story was posted on their website at 3:00 p.m. PDT on Monday afternoon — and I found it in a GATA dispatch.  Another link to it is here.


Best March Quarter from Australia’s Gold Mines for 21 years — Lawrie Williams

With the world’s second and third largest gold producers, Australia and Russia both vying with each other for the global No.2 position after China, and increasing output, peak gold looks like it could be ever more distant. At the current rate of growth and with China’s output declining, one of these countries could become the world’s largest gold producer inside the next few years.

We have just received the March quarter figures for Australian gold production from Melbourne-based consultancy, Surbiton Associates, which consistently provides the most accurate statistics for Australian gold, in which it specialises.  This puts March quarter national production at 78 tonnes – the highest March quarter total for 21 years.

Surbiton Director, Dr. Sandra Close, points out that March quarter gold output is usually the lowest of the year as it has one or two less days in it than other quarters and also tends to have more weather-related disruptions than other times of the year.  The March figure suggests an annual production level of around 320 tonnes, particularly as the big Gruyere gold project for Gold Road Resources and Gold Fields is due on stream in the June quarter.  This is expected to produce around 3 tonnes plus this year and build up to 9-10 tonnes of gold next.

Several mines increased output quite substantially in the March quarter including Gold Fields’ St, Ives mine and Newcrest’s Telfer operation  Each of these mines raised output in the quarter by close to half a tonne of gold.

This commentary from Lawrie put in an appearance on the Sharps Pixley website on Sunday sometime — and another link to it is here.


The PHOTOS and the FUNNIES

Continuing eastward on the gravel road on the north side of the South Thompson River yielded ever more spectacular scenery shots — and this first shot of free-range cattle grazing in this small valley with the part of the central interior plateau in the background, I thought worth taking.  The second shot is a very common spring/early summer flower around here…the arrowleaf balsamroot…which I’d never heard of or seen until I moved here.  It’s ‘location specific’ as to where it grows — and when you come across them, it’s usually in very large numbers.  The last shot involved climbing a side road in order to get enough height for a good panorama.  Chase, B.C. is right at the out-flow of Little Shuswap Lake [in the background] — and where the westward journey of the South Thompson River begins.  Click to enlarge.


The WRAP

When you think of the long and gloomy history of man, you will find more hideous crimes have been committed in the name of obedience than have ever been committed in the name of rebellion.” — C.P. Snow


With the markets closed in the U.S. yesterday, what happened in the precious metals world on Monday, really didn’t count for anything — and that’s mostly the case even when the U.S. is open for business.

Because of the holiday, there are no 6-month charts of the Big 6.

And as I type this paragraph, the London open is less than ten minutes away — and I note that all four precious metals made rally attempts as soon as trading began at 6:00 p.m. EDT in New York on Monday evening, but all ran into ‘something’ around 8:20 a.m. China Standard Time on their Tuesday morning. Gold is off its current low — and down $2.30 currently — and silver is down 4 cents. Platinum, which had been up 7 dollars at 8:20 a.m. CST, is now back at unchanged. Palladium was up 10 at its 8:20 a.m. CST high — and was only up 2 bucks just minutes before the Zurich open — but has blasted higher in the last minute or so — and is now up 13 dollars.

Net gold volume is very quiet at around 17,000 contracts — and there’s just under 15,000 contracts worth of roll-over/switch volume out of June and into future months. Net volume in silver, minus Monday’s as well, is around 6,800 contracts — and there’s 820 contracts worth of roll-over/switch volume in that precious metal.

The dollar index was reset to Friday’s close at Bloomberg before trading began yesterday evening in New York for whatever reason — and it’s currently showing up 14 basis points as of Friday’s closing value…but up only 1 basis point taking into account Monday’s close.


Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and depending on today’s price activity in both silver and gold, I may or may not have an opinion of what the report will show.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price hasn’t done much during the first hour of London trading — and is down $1.70 the ounce. But silver is now down 7 cents. Platinum hasn’t done much, either — and is still sitting at unchanged. Palladium’s pre-Zurich open price spike got hit the moment that it did open, but it’s still up 8 dollars as the first hour of Zurich trading draws to a close.

Gross gold volume is coming up on 63,000 contracts — and minus roll-over/switch volume out of June and into future months, net HFT gold volume is still only a bit over 22,000 contracts. All of gold’s numbers are net of Monday’s. Net HFT silver volume is 9,900 contracts — and there’s only 842 contracts worth of roll-over/switch volume on top of that. All of silver’s numbers are net of Monday’s as well.

The dollar index hasn’t really done much over the last hour — and as of 8:45 a.m. BST in London/9:45 a.m. CEST in Zurich, it’s up 17 basis points as of Friday, but only up 4 basis points if you consider its close on Monday.

Thanks all I have for today — and I’ll see you here tomorrow.

Ed