29 May 2019 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
After a smallish up-tick in price in the first couple of hours of trading once it began in New York at 6:00 p.m. EDT on Monday evening, the gold price ran into ‘something’ shortly before 8:30 p.m. China Standard Time on their Tuesday morning. It didn’t do much from there until around 1 p.m. CST — and then edged very unevenly higher until a few minutes before 1 p.m. BST in London/8 a.m. in New York. ‘Da boyz’ pulled their bids — and gold was down 7 bucks in no time at all, with the low tick of the day coming about 10:15 a.m. in New York. It crawled unevenly higher from that point until trading ended at 5:00 p.m. EDT.
Despite the price action, gold only traded within a ten dollar price range on Tuesday, so the high and low ticks really aren’t worth looking up.
Gold was closed on Tuesday at $1,278.90 spot, down $5.70 from Monday’s close. Net volume was only about 108,500 contracts, but roll-over/switch volume out of the June delivery month — and into future months was enormous at a bit under 201,000 contracts. These figures are net of Monday’s trading and roll-over volumes.
The price path for silver was mostly similar, except once it got capped shortly before 8:30 a.m. in Shanghai, it continued to inch quietly lower by a few pennies until exactly 1:00 p.m. BST in London/which was 8:00 a.m. in New York. The engineered waterfall price decline that was initiated at that juncture, dropped the price by just under 20 cents during the next hour — and the low came about the same time as it did for gold — and I’m ignoring that down/up price spike at the London close, as it only occurred in the spot month. From its low, it crept higher into the 1:30 p.m. COMEX close — and then didn’t do anything after that.
The high and low ticks in silver were reported by the CME Group as $14.61 and $14.265 in the July contract.
Silver was closed yesterday at $14.335 spot, down 22 cents from Monday — and at a new engineered low price for this move down — and a new low going all the way back to very late November 2018. Net volume was extremely heavy at around 85,700 contracts — and there was just under 5,900 contracts worth of roll-over/switch volume in this precious metal. Like for gold, these volume and roll-over figures are net of Monday’s trading action as well.
Platinum was up about 7 dollars by around 8:30 a.m. CST on their Tuesday morning — and at that juncture its price was sold lower, just as it was for the other three precious metals. The price was stair-stepped lower until shortly before 1 p.m. in New York — and it added a couple of dollars to its price in the thinly-traded after-hours market. Platinum was closed at $796 spot, down 11 dollars from Monday — and a new low for this move down.
Palladium was up about 10 dollars by about 8:30 a.m. in Shanghai — and it met the same fate as well. It did spike higher minutes before the Zurich open, but that was summarily dealt with an hour later. But from there, it headed sharply higher until 2 p.m. in Zurich/8 a.m. in New York — and its price was capped and turned lower as well. The price managed to edge a bit higher until the afternoon gold fix in London — and it chopped unevenly and quietly sideways until trading ended at 5:00 p.m. EDT. Palladium finished the day at $1,323 spot, up 8 bucks from its Monday close — and would have obviously closed materially higher, if allowed.
The dollar index closed very late on Monday afternoon EDT at 97.74…but was immediately marked down to Friday’s close, which was 97.61 the moment that trading began at 7:45 p.m. EDT in New York on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning. It crawled about ten basis points higher until minutes before 1 p.m. CST — and then headed lower until a few minutes before 10:30 a.m. in London. It’s 97.70 low tick of the day was set at that point — and it began head quietly and very unevenly higher until 12:45 p.m. in New York — and then chopped quietly sideways until trading ended at 5:30 p.m. EDT. The dollar index finished the Tuesday session in New York at 97.95…up 21 basis points from Monday, but 34 basis points from its close on Friday.
Of course there was was no correlation between the engineered price declines in gold and silver — and what was happening with the currencies yesterday. The action in the precious metals was all paper trading on the COMEX between the commercials and the Managed Money idiots.
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 the folks over at the stockcharts.com Internet site. The delta between its close…97.48…and the close on the DXY chart above, was 47 basis points on Tuesday. The 6-month chart shows that the dollar index closed down 25 basis points on Tuesday. Click to enlarge as well.
The gold shares gapped down about a percent at the open in New York on Tuesday morning, but then crawled higher until minutes after 10 a.m. EDT. Fifteen minutes later they were headed lower — and that lasted until around 3:20 p.m. — and they rallied a bit into the close from there. The HUI closed down another 1.01 percent.
The silver equities sold off a percent and change in the first few minutes of trading yesterday morning in New York. They recovered a bit from there, before chopping unevenly sideways until a few minutes before noon EDT. Then they headed lower as well — and from that point, their price path was very similar to gold, including the rally into the 4:00 p.m. close. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.88 percent. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Tuesday’s doji. Click to enlarge as well.
The CME Daily Delivery Report showed that zero gold and 77 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.
In silver, there were five short/issuers in total — and the only two that mattered were JPMorgan and International F.C. Stone, as they issued 41 and 30 contracts out of their respective client accounts. There were five long/stoppers as well. The three largest were ADM, Advantage — and the CME Group. ADM and Advantage picked up 46 and 11 contracts for their respective client accounts — and CME Group stopped 9 contracts for its own account. It immediately reissued them as 9×5=45 one-thousand ounce silver mini-contracts — and ADM stopped them all. JPMorgan was in fourth place with 8 contracts in total…5 for its client account — and the other 3 for its own account.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday and Tuesday trading sessions combined showed that gold open interest in May dropped by 8 contracts, leaving 49 still around. Friday’s Daily Delivery Report showed that 8 gold contracts were actually posted for deliver today, so the change in open interest and the deliveries match. Silver o.i. in May declined by 25 contracts, leaving 194 still open, minus the 77 mentioned just above. Friday’s Daily Delivery Report showed that 40 silver contracts were actually posted for delivery today, so that means that 40-25=15 more silver contracts were added to the May delivery month.
There was a withdrawal from GLD on Tuesday, as an authorized participant took out 47,190 troy ounces. There were no reported changes in SLV.
There was a small sales report from the U.S. Mint on Tuesday. They sold 1,000 troy ounces of gold eagles — and 140,000 silver eagles.
There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.
There was very little activity in silver. Nothing was reported received — and only 28,063 troy ounces were shipped out. Of that amount, there was 14,918 troy ounces that left the CNT depository — and the remaining 13,145 troy ounces departed HSBC USA. There was also a paper transfer of 124,114 troy ounces from the Eligible category and into Registered. I suspect that’s for delivery in May…and if not that month, then June for sure. The link to this is here.
It was very quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday. Nothing was reported received — and only 207 kilobars were shipped out. This activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.
On 7 July 2000, Michael Rutland and Gordon Heritage were metal detecting in a field at the invitation of local archaeologists who were closing a nearby dig, when they discovered the hoard. They immediately informed the archaeologists (Brian Giggins and Paul and Charmian Woodfield) – an action which was later cited as imperative in preserving the historical context of the find. Hayley Bullock of the British Museum was also praised for acting quickly to preserve the site and expedite excavation. The metal detectorists who found the hoard were rewarded with 60% of the value after the authorities decided that the landowners’ claim that the finders had searched without permission was unfounded.
The hoard consisted of two torcs, three bracelets, and a fragment of bronze rod contained in a pottery vessel. The inclusion of pottery in the find enabled it to be dated to around 1150–800 B.C.
Weighing in at 2.020 kg (4.45 lb), the hoard was described by the British Museum as “one of the biggest concentrations of Bronze Age gold known from Great Britain” and “important for providing a social and economic picture for the period“. The hoard was valued at £290,000 and now resides at the British Museum. The ‘click to enlarge‘ feature only helps with the first photo.
I only have a tiny number of stories/articles for you today…as there wasn’t much going on.
If there were some concerns about a Chinese boycott in recent Treasury sales, these were all gone after today’s spectacular auction of $40 billion in 2-Year paper. The yield stopped out at a yield of 2.125%, the lowest since January 2018, and stopped through the When Issued 2.135% by 1 basis point.
The internals were impressive from top to bottom as well: starting with the bid to cover, which surged from 2.51 last month to 2.745, well above the 2.52 six auction average, and the highest since August 2018. The closely watched Indirects category, which traditionally captures foreign investor demand – including that of China – was virtually unchanged, dipping to 46.6% from 47.7% last month, and just below the 48.3% recent average. At the same time, Dealers tumbled to 26.2% from 36.5%. The reason: a surge in Direct demand, which nearly doubled from 15.8% last month to 27.2%, the highest since May 2016.
Overall, a spectacular auction with clear foreign demand, which in turn has sent the entire curve lower, pushing the 10Y yield to new intraday lows of 2.26%, and slamming the 3M-10Y to new cycle lows.
This brief 1-chart Zero Hedge article appeared on their website at 11:52 a.m. EDT — and I thank Brad Robertson for this one. Another link to it is here. A parallel ZH story from yesterday afternoon is headlined “Yield Curve Flashing Biggest Recession Signal Yet: Shilling Thinks It Started!“.
Back in the summer of 2012, a historic if largely under-reported change took place at the New York Fed, when Brian Sack, the former head of the Fed’s Markets group, also known as the Plunge Protection Team’s trading arm, was replaced by former UCLA economist, Simon Potter.
Potter’s arrival was most notable for not only taking over the Fed’s QE baton from Sack, currently a director at quant trading giant DE Shaw, but because his arrival also marked the start of a multi-year crash in the VIX future, which collapsed the month Potter took over and has hit ever steeper lows ever since (with the exception of the occasional VIX explosion). Click to enlarge.
Several years later, it was Zero Hedge that also first reported on the practical implications of Potter’s apparent market intervention, when just a few months later, during the October 22-24, 2012 FOMC meeting, now Fed Chair Jerome Powell made the following striking remarks (which was disclosed last year as part of the Fed’s declassification of its FOMC transcripts):
“[W]hen it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it’s not so much the sale, the duration; it’s also unloading our short volatility position.”
Fed’s VIX trading aside, this was the most fascinating part of Powell’s speech, one which contained some truly unprecedented – for a future Fed chairman – admissions:
“I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.”
We bring all this up because moments ago, the New York Fed announced that Simon Potter, the chief operating officer of the Markets Group, and the man who single-handedly implemented the Fed’s short volatility position, will be retiring and not only that, but he will be taking with him the second most important person at the NY Fed’s “Plunge Protection Team“, the head of the Financial Services Group.
This longish, but very interesting Zero Hedge article showed up on their Internet site at 1:08 p.m. on Tuesday afternoon EDT — and another link to it is here.
The CDU’s abysmal showing in last week’s EU Parliamentary election marked the party’s worst result ever in a national election. And apparently, the the loss of the CDU/CSU’s position as the largest party in the bloc’s largest legislative body was the last straw for Chancellor Angela Merkel, who reportedly regrets her decision to step aside as party leader last year – a decision she made to clear the way for her chosen successor, Annegret Kramp-Karrenbauer, or AKK.
According to media reports, Merkel is so frustrated with AKK over a series of missteps by the new CDU party leader that the chancellor has decided to withdraw her political support, throwing her well-laid succession plans into disarray.
Merkel’s determination that AKK is not ‘up to the job’ of being chancellor comes as AKK and others within the CDU have pressured Merkel to step down early to give AKK a better shot at securing a full term in 2021.
Though her ability to influence the party is limited now that she has handed over control of the party’s machinery, Merkel can still throw a massive wrench in the works by deciding to spend no more political capital helping AKK, whose chances of winning the chancellorship are fading.
Merkel’s decision to withdraw support for her erstwhile protege is the latest sign that the longtime German leader is determined to stay on as Chancellor at least until her term ends in 2021, despite growing pressure from AKK and others within the party to step aside before the vote. The latest conflict between the two women erupted after AKK called an impromptu party conference next week to examine the CDU’s poor showing in the EU vote, a meeting that’ sure to produce some awkward encounters between Merkel and AKK.
This Zero Hedge article put in an appearance on their Internet site at 7:12 a.m. on Tuesday morning EDT — and it’s the the second offering of the day from Brad Robertson. Another link to it is here.
Indians lead the top 10 nationalities investing in Dubai’s gold sector followed by the citizens of Pakistan, Britain, Saudi Arabia, Switzerland, Oman, Jordan, Belgium, Yemen and Canada, according to a new report.
As many as 4,086 companies operate in the gold sector in Dubai and the number of investors stands at 62,125 including 60,012 businessmen and 2,113 businesswomen, the Business Registration and Licensing (BRL) sector in the Department of Economic Development (DED) said in its new report.
The report includes statistics on the number of companies operating in Dubai, the activities of the gold market sector and the distribution of the companies across the emirate.
The total gold, jewellery and diamond sales, reached 274 billion dirhams last year, an increase of about three per cent compared to 2017, according to the Dubai Gold and Jewellery Group.
The UAE’s trade in gold and precious stones has also grown significantly in recent years and its foreign trade in this sector is estimated at about 400 billion dirhams annually.
This gold-related news item, filed from Dubai, appeared on the livemint.com Internet site on Monday sometime — and I found it on the Sharps Pixley website. Another link to it is here.
The PHOTOS and the FUNNIES
Here’s another shot of Chase, B.C. from on high…looking due east, with Little Shuswap Lake in the background, which feeds into the South Thompson River. The second photo is from the exact same spot, except looking due south. After we had a glass of wine and a bite to eat in Chase, we headed back home on the Trans-Canada Highway on the south side of the river, with a slight detour up the side of the mountain in photo 2 — and I took this photo as evening descended looking west-southwest down the river in the direction of Kamloops. Click to enlarge.
“The turnover or physical movement of metal either brought into or removed from the COMEX-approved silver warehouses surged this [past] week to 7.3 million oz, as total COMEX inventories rose by 0.8 million oz to 306.1 million oz. This is still close to the record highs set a month ago, but the real story, at least to me, is the physical movement. This week’s movement, on an annualized basis, comes to 380 million oz and I am also shell shocked by no one commenting on such incredibly large and unique to silver physical movement. More than 2 billion ounces of physical silver (in 1000 oz bar form) have been moved in and out from the COMEX warehouse over the past 8 years and I’ve yet to read outside commentary trying to explain the movement, or even noting it. Go figure.” — Silver analyst Ted Butler: 25 May 2019
I must admit that I was rather surprised to see that ‘da boyz’ could do this much more damage in silver, considering how much damage they’d already done since the high of mid February. But, as Ted said on the phone yesterday, they can do pretty much whatever they want, as the CFTC, the DoJ — and the miners aren’t going to do a thing about it.
It certainly appeared that yesterday’s down move in silver was one of Ted’s “scams within a scam“. The Managed Money traders had their faces ripped off by the commercials on that sharp rally on Thursday…covering short positions at a loss — and putting on new longs…only to have all their new long positions put on that day, sold at a loss on Tuesday…plus more.
They weren’t quite as successful in gold.
And as I mentioned at the top of today’s column, there was a new low close in platinum for this move down as well.
Here are the 6-month charts for all four precious metals, plus copper and WTIC — and the new lows in both those precious metals should be noted. Click to enlarge.
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 until around noon China Standard Time on their Wednesday. It began to edge higher from there — and is currently up $4.60 an ounce. Silver traded flat until noon CST as well — and has crept a bit higher since — and is up 5 cents at the moment. Platinum has been chopping very quietly sideways-to-down-a-bit in Far East trading — and is lower by 2 bucks. Palladium has been trading quietly and very erratically higher — and is up 4 dollars as Zurich opens.
Net HFT gold volume is virtually non-existent at 2,700 contracts, but roll-over/switch volume out of June and into future months…mostly August, the new front month for gold…is pretty heavy at just under 29,000 contracts. Net HFT silver volume is very decent at just under 11,700 contracts — and there’s only 579 contracts worth of roll-over/switch volume in this precious metal.
The dollar index opened down 3 basis points once trading commenced in New York at 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning. It has been chopping very quietly and unevenly sideways since then — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, it’s down 3 basis point.
The remaining large traders that aren’t standing for June delivery in gold, have to sell or roll those positions by the close of COMEX trading today. That goes for the other commodities as well, including silver. However, there are currently only 462 contracts of open interest left in that precious metal — and that will surely decline by a bit more today and Thursday.
The rest of the traders have to be out by the close of COMEX trading on Thursday. First Day Notice numbers for June gold deliveries will be posted on the CME’s website around 10 p.m. EDT that evening — and I’ll have all of that for you in Friday’s missive.
And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price has ticked a bit higher in the first hour of London trading — and it’s up $5.60 the ounce — and silver is now up 7 cents. The other two white metals haven’t done much in the first hour of Zurich trading. Platinum is down 2 bucks, but palladium is now down 2 dollars. It was up 4 dollars an hour ago.
Gross gold volume is about 89,500 contracts — and minus the very heavy roll-over/switch volume out of June, net HFT gold volume is only about 500 contracts. Net HFT silver volume is a bit over 15,200 contracts — and there’s still only 602 contracts worth of roll-over/switch volume on top of that.
The dollar index popped above the unchanged mark by a tiny bit during the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s now up 4 basis points.
Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report. Looking at the last five dojis for gold on the 6-month charts above, I’m not going to stick my neck out on that precious metal, but I suspect that there will be further improvement in the commercial net short position in silver…not that we really need any more.
Ted will certainly have something to say about this in his mid-week review this afternoon — and I’ll ‘borrow’ a few sentences for my Friday column.
That’s all I have for today — and I’ll see you here tomorrow.