A Quiet Day in Silver & Gold on Tuesday

05 June 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Every rally in the gold price on Tuesday, no matter how insignificant it appeared to be, ran into a willing seller on numerous occasions — and each was sold quietly lower.  The ‘high’ of the day came a bit after 9 a.m. in London — and the low, at the COMEX open.  Neither is worth looking up.

Gold was closed on Tuesday afternoon in New York at $1,325.10 spot, up 30 cents from Monday.  Net volume was very heavy once again at a bit under 312,000 contracts — and there was 9,300 contracts worth of roll-over/switch volume on top of that.

The price pattern in silver was slightly different — and much fore erratic.  It followed the same price path as gold until around 9:45 a.m. in London — and then was sold down pretty hard until the low tick of the day, which came at the COMEX open as well.  It rallied fairly sharply from that point until shortly after the afternoon gold fix in London, before getting sold lower until around 11:30 a.m. in New York.  It edged higher from there — and had a bit of a price spike shortly before 4 p.m….which wasn’t allowed to last more than a minute or so.  It didn’t do a thing from there until trading ended at 5:00 p.m. EDT.

The low and high ticks were reported by the CME Group as $14.645 and $14.825 in the July contract.

Silver was closed on Tuesday at $14.80 spot, up 3.5 cents on the day.  Net volume was way up there once again at a bit under 85,500 contracts — and there was a bit under 12,500 contracts worth of roll-over/switch volume out of July and into future months.

The platinum price traded quietly and unevenly sideways everywhere on Planet Earth yesterday — and it finished the Tuesday session at $819 spot, down a dollar on the day.

After a brief tick up in early morning trading in the Far East, the palladium price was sold lower until shortly before the Zurich open.  As soon as trading began in Zurich, it jumped back to almost unchanged — and then didn’t do much until shortly after 1:30 p.m. CEST.  It blasted higher until minutes after 8 a.m. in New York — and then chopped nervously higher until the afternoon gold fix in London.  It was sold down about 15 bucks shortly after that, but gained some it back going into the 5:00 p.m. close.  Palladium was closed at $1,328 spot, up 19 dollars on the day, but obviously would have closed higher, if allowed.

The dollar index closed very late in New York on Monday afternoon at 97.14 — and opened up 7 basis points once trading commenced at 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. CST in Far East trading on their Tuesday morning.  From that juncture it chopped and flopped around about ten or fifteen basis points either side of unchanged.  It was up about 15 basis points by noon in New York, but gave all of that back, plus a bit more by around 2:10 p.m. EDT — and it crept quietly higher into the close from there.  The dollar index closed on Tuesday at 97.07…down 7 basis points from Monday.

However, I do get the impression from looking at the DXY chart below, that the usual ‘gentle hands’ were there a very few minutes after the London open yesterday morning, as it would have certainly sliced below the 97.00 mark if they hadn’t.  And I also feel the same about the dips in afternoon trading in New York.

Here’s the DXY chart from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of stockcharts.com — and the delta between its close…97.00…and the close on the DXY chart above, was 7 basis points on Tuesday.  Click to enlarge as well.

The gold stocks gapped down a percent and change at the 9:30 open in New York on Tuesday morning, but began to rally quietly and very unevenly higher for the remainder of day.  The HUI closed higher by 1.21 percent.

It was about the same for the silver equities, except they chopped quietly and unevenly sideways either side of unchanged on Tuesday in New York — and only a quick spike up at the close prevented them from finishing down slightly on the day.  As it was, Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 0.68 percent.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index, updated with Tuesday’s doji.  Click to enlarge as well.

The CME Daily Delivery Report for Day 4 of the June delivery month in gold showed that 52 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, there were five short/issuers in total — and the only three that mattered were International F.C. Stone, Advantage — and Marex Spector…as they issued 22, 19 and 7 contracts from their respective client accounts.  Of the eight long/stoppers in total, by far the largest was HSBC USA, picking up 30 contracts for its in-house/proprietary trading account.  In very distant second and third place were JPMorgan and International F.C. Stone, with 8 and 6 contracts for their respective client accounts.

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

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in June declined by 396 contracts, leaving 1,366 open, minus the 52 contracts mentioned a couple of paragraphs ago.  Monday’s Daily Delivery Report showed that 358 gold contracts were actually posted for delivery today, so that means that 396-358=38 more gold contracts vanished from the June delivery month.  Silver o.i. in June fell by 1 contract, leaving just 4 left.  Monday’s Daily Delivery Report showed that only 1 silver contract was posted for delivery today, so the change in open interest and the deliveries match.


There were no reported changes in GLD yesterday, but there was a small withdrawal from SLV, as an authorized participant took out 128,696 troy ounces.  A smallish amount like that would certainly represent a fee payment of some kind.

There was no sales report from the U.S. Mint on Tuesday.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday was 4,983.405 troy ounces/155 kilobars [SGE kilobar weight] that was shipped out of Brink’s, Inc.  There other activity involved a paper transfer of 34,970 troy ounces from the Eligible category — and into Registered.  That’s certainly gold that is about to be delivered in the June contract.  The link to this is here.

There was some activity in silver, as 601,406 troy ounces were received — and 621,540 troy ounces were shipped out.  In the ‘in’ category, there was one truckload…600,435 troy ounces received at CNT — and the remaining 971 troy ounces…one good delivery bar…was dropped off at Delaware.  In the ‘out’ category, there was one truckload…601,482 troy ounces…shipped out of CNT — and the remaining 20,058 troy ounces departed HSBC USA.  The link to this is here.

There was also some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They received 1,030 of them — and didn’t ship any out.  All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two more charts that Nick passed around last Friday — and that had to wait for today’s column because of space issues.  The first show gold imports and exports into and out of the European Union, updated with March’s data.  During that month they imported 93.4 tonnes — and shipped out 64.0 tonnes. Click to enlarge.

These next two charts show the countries and amounts that imported gold into the E.U. countries — and the second chart shows the countries and tonnage that the E.U. countries shipped gold to.  It should be noted that the U.K. stood out head and shoulder above all other in the import/export categories, as they are the largest physical bullion market in the world.  Click to enlarge for both.

I have a very decent number of stories for you today.


CRITICAL READS

Global Manufacturing PMI Contracts To 7-Year Low

While Morgan Stanley signaled that the probability of a U.S. recession in one year is now 60%, the highest it has been since the global financial crisis, judging by JPMorgan’s global manufacturing PMI, we may already be there.

Trade tensions have re-emerged at a critical moment in the global cycle. Corporate  confidence is weak, and we argue that the outcome of trade talks will be key to the global growth outlook.”

JPMorgan piled on, saying the probability of a U.S. recession in the second half of this year has risen to 40% from 25% a month ago, while Barclays now expects a worst case scenario of a recession in 9 months.

All of which is a major problem for global manufacturing as Markit reports that Global PMI surveys, led by the U.S. plunge, signaled that manufacturing downshifted into contraction during May, down an unprecedented 13 straight months.

The downshift in growth in the U.S. was the main driver of the slowdown in global manufacturing, as the U.S. PMI slipped to its lowest level in almost a decade (September 2009).

… and all of this happened before President Trump re-launched the trade war.

None of which bodes well for global stocks…

This story showed up on the Zero Hedge website at 10:45 a.m. EDT on Tuesday morning — and it’s the first of several that come to us courtesy of Brad Robertson.  Another link to it is here.  A related ZH story is headlined “U.S. Factory Orders Slowest Growth Since Trump Elected” — and that’s from Brad as well.  Plus this ZH story from late last night “China Services PMI Plunges As Output Expectations Hit 7 Year Lows“.


Stocks Have a Rendezvous With Destiny — Bill Bonner

Stocks couldn’t decide where to go yesterday. Up? Down? So, they went nowhere.

Nowhere is about as good as it gets in this market. Because signs of an impending slowdown are arriving in the news every day.

The latest item was a sharp drop in the Purchasing Managers’ Index (PMI), which measures the vitality of the industrial sector. The April PMI dropped back to levels not seen in nearly 10 years, with the first falloff in new orders since August 2009.
This comes as Treasury yields – another sign of a weakening economy – continue to slump.

But this approaching recession has been approaching for a long time… and it never seems to arrive. So, we will just let it take its time as we return to the bigger picture.

And the big picture shows the average American slipping and sliding for the last 20 years.

The only reason this has not been more obvious to everyone is thanks to the Chinese and other low-cost producers, whose “Everyday Low Prices” have helped Americans continue to live in the style to which they had become accustomed… even as their real incomes fell.

This commentary from Jim, filed form Dublin, was posted on the bonnerandpartners.com Internet site on Tuesday morning EDT — and another link to it is here.


Druckenmiller Dumps All His Stocks, Piles Into Treasuries Expecting Rates to Hit Zero

Somewhere, Albert Edwards is doing a victory lap. Little by little, the SocGen strategist’s “IceAge” thesis, which sees U.S. 10Y Treasury rates eventually catching down to Bunds and JGBs by hitting 0% and going negative thereafter as a deflationary singularity grips the entire world, is materializing.

On Monday, the market found a newfound appreciation for Edwards’ gloomy perspective, as September eurodollars soared 14.5 ticks following Bullard comments green-lighting a Fed rate cut. The EDM9-EDZ9 has plunged, more than doubling in just a few days as low as -0.485 bps today, in a move that shocked rates traders and left them speechless as the market is now pricing in a 60% chance of two cuts or more by September.

But it’s no longer just Albert who sees a deflationary tsunami flooding over the U.S. The grouchy perma-bear was joined by billionaire Stan Druckenmiller, who said he could see the Fed funds rate going to zero in the next 18 months if the economy softens, and that he recently piled into Treasuries as the U.S. trade war with China escalated.

When the Trump tweet went out, I went from 93% invested to net flat, and bought a bunch of Treasuries,” Druckenmiller said Monday evening quoted by Bloomberg, referring to the May 5 tweet from Trump which threatened an increase in tariffs on China and which sparked the most vicious bout of trade-war related selling yet. Explaining his decision, Druck said that it’s “not because I’m trying to make money, I just don’t want to play in this environment.”

Incidentally, for those confused what going from 93% invested to flat means, the answer is he liquidated his entire equity book.

This very worthwhile commentary was posted on the Zero Hedge website at 9:25 a.m. on Tuesday morning EDT — and it’s another contribution from Brad Robertson.  Another link to it is here.


Wall Street and the New Cold War — Jim Rickards

The stock market seems to rise or fall almost daily based on the latest news from the front lines of the trade wars.

When Trump threatens new tariffs and China threatens to retaliate in kind, stocks fall. When Trump delays the tariffs and China agrees to resume negotiations, stocks rise. And so it goes. It has been this way since January 2018 when the trade war began.

The latest dust-up came late last week when Trump threatened tariffs against Mexico if it doesn’t do more to curb illegal immigration to the U.S. Markets sold off on Friday as a result, bringing a terrible May to an end. Largely due to the trade war, the stock market had its worst May in seven years.

From the start, Wall Street underestimated the impact of the trade war. First they said Trump was bluffing. Then the analysts said that Trump and Xi would put their differences aside and make an historic deal.

All of these analyses were wrong. The trade war was problematic from the start and is growing worse today.

This commentary from Jim put in an appearance on the dailyreckoning.com Internet site on Tuesday sometime, even though it’s datelined Monday — and another link to it is here.


Do Trump’s Hawks Speak for Trump? — Patrick J. Buchanan

For a president who won his office by denouncing the Middle East wars into which George W. Bush and Barack Obama plunged the nation, Donald Trump has assembled the most unabashedly hawkish conclave of foreign policy advisers in memory. And he himself seems to concede the point.

If foreign policy were decided by my security adviser John Bolton, the president confided recently, “We’d be in four wars by now.”

It was Bolton who ordered the Abraham Lincoln carrier group and B-52s to the Gulf and told the Pentagon to draw up plans to send 120,000 U.S. troops. It is Bolton who is charging Iran with using mines to sabotage four oil tankers outside the Strait of Hormuz.

Asked for evidence, Bolton barked back at reporters: “Who else would you think is doing it? Somebody from Nepal?

But if Bolton is first hawk, he is not without rivals in the inner circle of the commander in chief.

At West Point last week, Vice President Mike Pence, after hailing the diversity of a class with the highest number of Hispanic and black women graduates ever, laid out what the future holds in store for them.

You will fight on a battlefield for America … You will lead soldiers in combat. It will happen.”

This worthwhile commentary from Pat showed up on his Internet site on Monday sometime — and I thank Phil Manuel for sending it our way.  Another link to it is here.


The Limits of American Destructiveness — Dmitry Orlov

U.S. foreign policy has always been directed at wrecking anything that wasn’t deemed sufficiently American and replacing it with something more acceptable—especially if that something allowed wealth to flow into the U.S. from the outside. Compromises were reserved for the USSR, but even there the Americans constantly tried to cheat. For everyone else there was just submission, which was usually tactfully disguised as a positive—a seat at the big table which offered better chances for peace, prosperity and economic and social development.

Of course, it was a simple enough matter to pierce this veil of hypocritical politeness and to point out that the U.S., living far beyond its means, has only managed to survive by looting the rest of the world, but anyone who dared to do so would be ostracized, sanctioned, regime-changed, invaded and destroyed—whatever it took.

The U.S. establishment has lavished its wrath on anyone who dared to oppose it ideologically, but it reserved its most extreme forms of malice for those who dared commit the cardinal sin of attempting to sell oil for anything other than U.S. dollars. Iraq was destroyed for this very reason, then Libya. With Syria the juggernaut bogged down and stalled out; with Iran it is unlikely to ever get started.

Even the spineless European politicians are now forced to admit that U.S. policies are designed to enrich certain American interests at the expense of their constituents; they understand by now that further denial would cause them further harm at the polls. Most insultingly to the American ego, U.S. attempts at making Russia and China submit are being greeted with shrugs, titters and eye rolls. And now anybody who wants to can openly criticize the U.S. and scheme behind its back.

This very worthwhile and right-on-the-money commentary from Dmitry, was posted on the cluborlov.blogspot.com Internet site last Wednesday — and I thank Larry Galearis for pointing it out.  Another link to it is here.


U.K. Retail Sales Crash By Most on Record

The risk of further job losses and store closures will only increase,” warned Helen Dickinson, chief executive of the British Retail Consortium (BRC), after reporting U.K. retail sales declined by the most on record in May, with sluggish growth in online sales and Brexit-related uncertainty taking a toll.

Bloomberg reports that total sales fell by 2.7%, the biggest drop since at least 1995 when excluding any distortions caused by the timing of Easter.

While some of the drop can be accounted for by comparing to last year — when sales were boosted by sunshine, the World Cup and a royal wedding — political and economic uncertainty played a significant role, the British Retail Consortium and KPMG said.

On a like-for-like basis, sales decreased by 3% from a year earlier, and online sales of products apart from food grew just 1.5%, an all-time low, the BRC reported.

So while Corbyn and the conservatives continue to battle (with Farage adding his own flavor to the mix), and the central bank backing away from discussions of rate-hikes (to temper any no-deal Brexit-fueled inflation), the nation’s core is collapsing.

I saw this story on Zero Hedge shortly after I’d filed Tuesday’s column in the wee hours of yesterday morning — and another link to it is here.


Gold Sees Biggest Inflow Since Brexit as Investor Exodus Contagion Spreads to Credit

Last week we highlighted a shocking Deutsche Bank report that showed global equity fund outflows over the last 6 months in dollar terms have now been larger than over any prior 6-month period.

As a percentage of AUM…Assets Under Management…the latest half-year outflows were only exceeded by those seen around the 2008-09 recession and the European financial crisis.

That investor exodus recently spread to the credit markets, with HY funds seeing huge outflows as prices plunged ominously.

And now that investor exodus has spread to other segments of the credit markets.

As Bloomberg reports, the biggest leveraged loan ETF, BKLN, had its largest ever daily outflow in the most recent session for which Bloomberg has data.  Additionally, State Street’s High-Yield Muni ETF, HYMB, also saw a record daily outflow on June 3…

While we’re working through this dual threat of new worries around trade and the re-rating at the front end of the curve, you want to be cautious for credit assets,” Rob Waldner, chief fixed income strategist at Invesco Ltd. said on Bloomberg TV Tuesday.

This very interesting chart-filled Zero Hedge article appeared on their website at 1:35 p.m. on Tuesday afternoon EDT — and I thank Brad Robertson for sending it along.  Another link to it is here.


Venezuela Defaults on $750 Million Gold-Backed Swap With Deutsche Bank

Somewhere Hugo Chavez, who several years ago successfully repatriated much of Venezuela’s gold, is spinning in his grave.

It started in March, when Venezuela’s embattled leader Nicolas Maduro defaulted on a $1.1 billion gold-backed loan with Citi, in the process losing several tonnes of gold placed as collateral by Venezuela’s central bank after the deadline for repurchasing them expired. Now, Bloomberg reports that Venezuela has also defaulted on a gold swap agreement valued at $750 million with Deutsche Bank, prompting the German bank to seize the precious metal which was used as collateral, and close out the contract.

As part of a financing agreement signed in 2016 which we profiled here, Venezuela received a cash loan from Deutsche Bank and put up 20 tonnes of gold as collateral. The agreement, which was set to expire in 2021, was settled early due to missed interest payments as Venezuela has now effectively run out of foreign reserves.

It was the second time this year that the Maduro’s regime has failed to make good on financing agreements which have resulted in losses at a time when gold reserves are already at a record low. As we have noted previously, Venezuela’s dwindling gold holdings had become one of Maduro’s last remaining sources of cash keeping his regime afloat and his military forces loyal. Before the central bank missed the above-mentioned March deadline to buy back gold from Citigroup for nearly $1.1 billion, the Bank of England refused to give back $1.2 billion worth of Venezuelan gold.

This Zero Hedge news item appeared on their Internet site at 7:05 p.m. on Tuesday evening EDT — and another link to it is here.


Dollar beware: Serbia & Philippines join global gold hunt

Two more nations, Serbia and the Philippines, [will boost] their national gold reserves. They follow a global trend of other central banks accumulating bullion in a move seen as a shift away from the U.S. dollar standard.

Belgrade will increase its gold reserves from 20 to 30 tons by the end of this year, according to Serbian media company Vecernje Novosti. It said the country plans to boost its holding to 50 tons by the end of 2020 as a safety measure. Statistics from the National Bank of Serbia show foreign exchange reserves are currently worth €11 billion.

The decision to beef up bullion reserves was reportedly made following this month’s meeting of Serbian President Aleksandar Vučić with an IMF delegation. The fund’s representatives told the president they’d approve of Belgrade’s gold-buying if it fits into Serbia’s strategy of increasing foreign exchange reserves.

Last Wednesday the Central Bank of the Philippines announced that a law has been passed exempting gold sales by small-scale miners to the bank from excise duties and income taxes. The move was explained as a way to boost the country’s foreign exchange reserves and to prevent smuggling.

According to Reuters, small miners have found a way to circumvent taxes introduced back in 2011 by selling gold on the black market. The law entitles them to sell all produced gold to the country’s central bank at world market prices. The Philippines’ gold reserves remained unchanged at roughly 198 tons in both the first quarter of 2019 and the fourth quarter of 2018. Gold accounted for nearly ten percent of the country’s gross international reserves of $83.96 billion at the end of April.

This is not ‘new’ news, as I’ve posted stories about this already…but this rt.com story puts it all in one short article.  I thank Swedish reader Patrik Ekdahl for sending it our way — and another link to it is here.


Russian banks consider exporting more gold

Russian banks are considering increasing gold exports after the central bank said it would only buy at a discount, a move that could potentially pressure global bullion prices.

The Bank of Russia made the change to its pricing policy this year, saying it would buy from dealers at a level slightly below the benchmark London gold price. It’s part of a broader policy push to stimulate growth in the market for gold as a financial investment, namely bars and coins, rather than foreign currencies or assets priced in U.S. dollars.

However, gold as an investment option in Russia doesn’t have the same cachet as in other countries, like China or the U.S., and demand for the metal has been stagnant. Given the new discount, some dealers may be reluctant to sell to the central bank, said Oleg Petropavlovskiy, a BCS Global Market analyst.

Executives at some of the Russia’s biggest banks and mining companies are evaluating their options for selling gold, including getting a license to sell overseas or increasing exports, according to people familiar with the matter, who asked not to be identified as the talks are private.

This is an interesting turn of events.  I suspect that this might be the end of Russia Central bank adding to its gold reserves for the moment.  We’ll just have to watch and see as the months unfold.  This Bloomberg story, that I found on the gata.org Internet site, appeared on their website at 4:13 a.m. PDT on Tuesday morning — and another link to it is here.


India’s May gold imports jump 49% on festive demand — government source

India’s gold imports in May jumped 49% from a year earlier to 116 tonnes as a correction in local prices during a key festival boosted retail demand, a government source said on Tuesday.

Higher gold imports by India, the world’s second-biggest consumer of the precious metal, could support global prices that are trading near their highest level in three months, but could widen the country’s trade deficit and put pressure on rupee.

The country’s gold imports in value terms rose to $4.78 billion in May from $3.48 billion a year ago, the government official said, who was not allowed to speak to the media.

The above three paragraphs are about all there is to this Reuters story, co-filed from New Delhi and Mumbai early on Tuesday morning EDT.  I found it it a GATA dispatch yesterday evening — and another link to it is here.


[Silver] Rocket Fuel — Jim Cook

According to silver analyst Theodore Butler, various hedge funds are currently short 440 million ounces of silver on the COMEX futures market. That’s over half the silver that’s mined in a year. These funds manage money for big investors and they rely on computerized trading programs. Human judgments and emotions don’t enter into trading decisions. Their foremost trading strategy is to buy or sell when moving averages are penetrated. If the price of silver or gold moves upward to the point it goes through the average of prices over the past 50 days, it causes some short selling programs to buy and close out their short position. A penetration of the more important 200 day moving average sparks major buying and can lift the price significantly.

Ted Butler has always called the big short position “rocket fuel.” When prices penetrate the moving averages to the upside, the programmed buying reinforces the price rise. The fact that the current short position is historically huge suggests greater price fireworks to come. We know that will happen again because it’s happened many times in the past. Moving averages inevitably get penetrated by prices moving up or down. In the case of silver the short sellers can’t possibly deliver that much silver so they will have to buy back the futures contracts they have sold short.

Here’s where JPMorgan comes in. If they sell when the hedge funds are buying back their shorts it takes the steam out of the price rise. On numerous occasions over the past eight years JPMorgan has built up its own short position to quell a substantive gain in silver. Will they do it again? We know that higher silver prices would be hugely profitable for them because while they have acted to keep the price down in the futures market, they accumulated a gargantuan hoard of physical silver. Ultimately, they want silver to rise in price. Furthermore, for the first time they do not have a short position in COMEX silver. In fact, they are long silver futures to the tune of 25 million ounces. Mr. Butler thinks the timing is right for JPMorgan to stop sitting on the price and let it go. If so, he claims the price rise will take your breath away.

The above three paragraphs are all there is to this brief commentary from Jim Cook, the President of Investment Rarities Incorporated out of Bloomington, Minnesota.  It was posted on the silverseek.com Internet site on Tuesday afternoon sometime — and another link to the hard copy is here.


The PHOTOS and the FUNNIES

Continuing down B.C. Highway 12 bound for Lilloeet, there are lots of scenic spots in the Fraser River canyon/valley that are worth taking a photo of.  The biggest problem is that large portions of this highway are not for the faint of heart — and there’s no place to pull over. Any place that is flat enough is put in pasture, as this is cattle country — and these three shots reflect that.  The first shot is looking across the valley at a small ranch — and the next two photos are of a small piece of pasture on this side of the river that had five mule deer grazing on it.  The first was taken with my walk-around lens to give some context — and the second with the 400mm lens — and I could only fit four of the five in the shot at that distance.  All this pasture is irrigated, as only sagebrush and other plants of a semi-arid climate would grown on it otherwise, as they’re in the rain shadow of the coastal mountain range that you can see in the first photo.  Click to enlarge for all.


The WRAP

The answer to why silver has been so punk relative to gold lies in the same reason why a whole host of really important world commodities, from crude oil to copper to corn and soybeans have had major prices moves of late.

That reason, of course, is the extreme buying and selling by the two major counterparties in futures trading – the managed money technical funds and the commercials which take opposite sides of each other. When prices move sufficiently (usually by commercial instigation), and the managed money traders get to buying or selling big, stand back – because that’s what moves prices. It’s important to recognize that managed money buying and selling is what moves prices and such buying and selling is not just coincidental to the price moves. It is causal, not coincidental. And even though it is managed money buying and selling that drives prices, the commercials on the other side are who actually then set the price. Once you see this, everything makes sense.” — Silver analyst Ted Butler: 01 June 2019


Despite the lack of any big price activity in silver and gold on Tuesday, the price traces on the Kitco charts below certainly indicates that ‘da boyz’ were still out and about.

And as I also pointed out earlier, it certainly appeared obvious that they were there to prevent the dollar index from cratering shortly after the London open yesterday morning — and also in afternoon trading in New York as well.

The RSI trace in gold is still sitting on the edge of overbought — and silver’s rally was stopped just under both its 50 and 200 day moving averages on Tuesday.  WTIC set a new intraday low yesterday, but manged to close up on the day by a hair.

Here are the 6-month charts for the Big 6 commodities — and there’s not a lot to see, except for what I’ve noted above.  Click to enlarge.

And as I type this paragraph, the London open is a minute or so away — and I note that the gold price didn’t do much of anything in Far East trading on their Wednesday morning, but began to edge higher starting around 1 p.m. China Standard Time. It began to head sharply higher starting at 2 p.m. CST — and is currently up $7.90 an ounce. The silver price was down a few pennies by 1 p.m. CST — and then followed the same upwards price path as gold, but was capped and turned lower on its price spike — and it’s only up 3 cents currently. Platinum has been creeping a dollar higher here and there in Far East trading — and is up 3 bucks at the moment. The long knives appear to be out for palladium once again, as it’s down 9 dollars as Zurich opens.

Net HFT gold volume, which exploded on that price spike, is something over 59,000 contracts — and there’s 1,144 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is already around 16,200 contracts — and there’s only 165 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened up 5 basis points once trading commenced at 7:45 p.m. EDT in New York on Tuesday evening — and it has been edging unevenly lower since, with its current 96.96 low tick coming at 2:18 p.m. CST…the afternoon gold fix in Shanghai. It’s off that low, as the usual ‘gentle hands’ obviously appeared — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is down only 3 basis points now.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report and companion Bank Participation Report.  Both gold and silver rallied on every day during the reporting week — and I must admit that I’m expecting a rather large increase in the commercial net short position in gold, but somewhat less in silver, as no moving averages were broken in that precious metal…although volumes were very heavy during the entire reporting week in both.

Ted will certainly have something to say about this in his mid-week commentary for his paying subscribers this afternoon and, as usual, I’ll borrow a few sentences for my Friday column.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price struggled a bit higher until a few minutes after the London open. It has been sold a bit lower since then — and is up $8.10 the ounce. It’s the same struggle in silver — and it’s up 4 cents. Platinum is now up 6 bucks — and palladium has roared higher — and is back at unchanged as the first hour of trading ends in Zurich.

Gross gold volume is very chunky at a bit over 89,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 86,700 contracts. Net HFT silver volume is now up to a whopping 22,500 contracts — and there’s still only 324 contracts worth of roll-over/switch volume on top of that. It’s obvious that the rallies in both gold and silver are not going unopposed, as ‘da boyz’ are throwing everything they have at them, including the kitchen sink.

The dollar index was back at the unchanged mark by a few minutes before the 8:00 a.m. London open — and has been doing nothing since — and is basically unchanged as of 8:45 a.m. in London/9:45 a.m. in Zurich.

That’s it for yet another day — and I’ll see you here tomorrow.

Ed