07 June 2019 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t do much of anything until around 1 p.m. China Standard Time on their Thursday afternoon. It edged a bit higher from that point until shortly before 10 a.m. in London. From that juncture, it crept unevenly sideways…with a slightly positive bias in COMEX trading…until around 1 p.m. in New York — and it was sold quietly and equally unevenly lower after that.
Gold traded within a one percent price range on Thursday, so I shan’t bother with the low and high ticks.
Gold was closed at $1,334.80 spot, up $5.00 from Wednesday. Net volume was very decent at a bit over 257,000 contracts — and there was a hair over 7,000 contracts worth of roll-over/switch volume in this precious metal.
Like in gold, silver was sold quietly down to its low tick of the day by shortly after 9 a.m. in Shanghai on their Thursday morning. It crept back to unchanged by shortly after 11 a.m. CST — and then traded flat until the London open. It edged quietly and unevenly higher from that point until the high tick of the day…half a cent below $15 bucks in the July contract…came at the COMEX open. ‘Da Boyz’ sold it quietly lower until 2:45 p.m. in the thinly-traded after-hours market — and it crept sideways into the 5:00 p.m. EDT close from there.
The low and high ticks in silver were reported by the CME Group as $14.73 and $14.995 in the July contract.
Silver was closed in New York on Thursday at $14.87 spot, up 8.5 cents from Wednesday. Net volume was very decent as well, at a bit over 71,000 contracts — and there was just under 11,0000 contracts worth of roll-over/switch volume on top of that.
Platinum was up 3 bucks by shortly after 8 a.m. in Shanghai on their Thursday morning — and then traded very quietly sideways until the COMEX open. It edged unevenly lower from there until the COMEX close — and was down two dollars on the day at that juncture, but gained that back just before trading ended at 5:00 p.m. in New York. Platinum finished the day unchanged from Wednesday at $802 spot.
The palladium price was up four dollars by 11 a.m. China Standard Time on their Thursday morning — and then traded quietly and unevenly sideways until the equity markets opened in New York yesterday morning. It chopped higher from that point, culminating in a price spike that was capped and turned sharply lower at 1 p.m. EDT. From there it edged erratically sideways for the remainder of the New York session. Palladium finished the day at $1,332 spot, up 17 dollars from Wednesday’s close.
The dollar index closed very late on Wednesday afternoon in New York at 97.32 — and opened down 3 basis points once trading commenced at 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning. It crept back above unchanged by a bit shortly after that, before crawling unevenly lower until around 9:45 a.m. in London — and then crept back to the unchanged mark by 12:42 a.m. BST. It began to head for the abyss at that juncture, but the usual ‘gentle hands’ were there to catch that proverbial falling knife at the 96.78 mark at 8:50 a.m. in New York. It rallied a bunch for the next hour, before rolling over hard again. This time it was saved at the 96.82 mark around 11:45 a.m. EDT. It ‘rallied’ unsteadily from there until 4:25 p.m. — and then faded a bit into the close. The dollar index finished the day at 97.04…down 28 basis points from Wednesday.
There was no reaction from the precious metals to that waterfall decline that began about 7:45 a.m. in New York, or any other changes in the dollar index on Thursday.
Here’s the DXY chart for Thursday, courtesy of Bloomberg. 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…97.00…and the close on the DXY chart above, was 4 basis points on Thursday. Click to enlarge as well.
The gold stocks edged higher at the open, but rolled over starting at the afternoon gold fix in London…10 a.m. EDT. Their respective low ticks came at precisely 11:00 a.m. EDT…the London close…and they crept higher from there until shortly after 2 p.m. — and faded quietly and unsteadily into the close from there. The HUI closed higher by 1.16 percent.
The price path for the silver equities was similar in most respects to their golden brethren, except their lows didn’t come until around noon in New York trading. From that juncture they rallied quietly and very unsteadily higher until trading ended at 4:00 p.m. EDT. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 1.08 percent. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index, updated with Thursday’s doji. Click to enlarge as well.
The CME Daily Delivery Report showed that 9 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.
In gold, the two short/issuers were International F.C. Stone and Advantage, with 6 and 3 contracts out of their respective client accounts. There were only three long/stoppers — and the two largest were HSBC USA, with 6 contracts for its own account — and JPMorgan with 2 contracts for its client account.
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 June declined by 55 contracts, leaving 1,282 still open, minus the 9 mentioned a couple of paragraphs ago. Wednesday’s Daily Delivery Report showed that 28 gold contracts were actually posted for delivery today, so that means that 55-28=27 more gold contracts disappeared from the June delivery month. Silver o.i. in June fell by 45 contracts, leaving just 5 left. Wednesday’s Daily Delivery Report showed that 46 silver contracts were posted for delivery today, so that means that 46-45=1 more silver contract was just added to June.
There were no reported changes in GLD yesterday, which was rather counterintuitive once again. But there was a deposit in SLV, as an authorized participant added another 1,217,567 troy ounces.
In our phone conversation yesterday, it was Ted’s opinion that both GLD and SLV are owed physical metal — and I’m sure that he’ll have something to say about that in his weekly review on Saturday.
There was no sales report from the U.S. Mint again yesterday.
There was a tiny bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday. HSBC USA reported receiving 2,900 troy ounces — and that was all the activity there was, as nothing was shipped out. I won’t bother linking this amount.
There was more movement in silver of course. Only 20,058 troy ounces were received — and all of that went into Loomis International. There was also 1,418,369 troy ounces shipped out, with the lion’s share of that…two very large truckloads…1,316,008 troy ounces, departed Loomis International as well. The remaining amount came out of CNT and Delaware…99,475 troy ounces — and 2,885 troy ounces respectively. The link to all this activity is here.
There wasn’t much happening over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday. There was nothing reported received — and only 38 were shipped out of Brink’s, Inc. — and I shan’t bother linking this, either.
The Penrith Hoard is a dispersed hoard of 10th century silver penannular brooches found at Flusco Pike, Newbiggin Moor, Near Penrith in Cumbria, and now in the British Museum in London. The largest “thistle brooch” was discovered in 1785 and another in 1830, with the bulk of items being recovered in two groups close to each other by archaeologists in 1989. Whether all the finds made close to each other were originally deposited at the same time remains uncertain, but it is thought likely that at least the brooches were. The brooches are thought to have been deposited in about 930 A.D.
The large thistle brooch soon passed to the Leverian Museum, a private museum in Leicester Square in London. In 1787 a print of it was published, claiming that it was the insignia of the Knights Templar.
The earliest surviving finds were discovered in what was already called the “Silver Field” on Newbiggin Moor by a small boy in 1785, the name suggesting that earlier finds, now lost, had been made. In 1830 another smaller thistle brooch was found. Although the exact find spot is not known, this brooch is strongly suspected to have also come from the “Silver Field”. The usual reason for a hoard being “disbursed” is that routine farming operations like ploughing can move some items of a single hoard before they are discovered.
Later archaeological investigations in 1989 at the same spot revealed other silver items that confirmed that this was a dispersed hoard and not a solitary loss of one brooch. Two groups of items were found in nearby fields: one consisted of five Viking brooches, with fragments of two more, and the other of more than fifty items comprising coins, ingots, jewellery and hacksilver (jewellery and other silver pieces chopped up) of a very similar date. The brooches were declared to be “treasure trove” at an inquest held in Penrith on 23 July 1990, and entered the British Museum in 1991, joined by the other hoard in 2009. Click to enlarge.
I have an average number of stories for you today.
A bloated backlog of Class 8 orders as a result of a euphoric mid-2018 continues to weigh on heavy duty truck orders in 2019.
Preliminary North America Class 8 net order data from ACT Research shows that the industry booked just 10,800 units in May, down 27% sequentially, but also lower by an astonishing 70% year-over-year. YTD orders are down 64% compared to the first five months of 2018.
This chart shows the stunning difference between 2018 orders (black bars) and 2019 orders (red bars). Click to enlarge.
Class 8 trucks, which are made by Daimler (Freightliner, Western Star), Paccar (Peterbuilt, Kenworth), Navistar International, and Volvo Group (Mack Trucks, Volvo Trucks), are one of the more common heavy trucks on the road, used for transport, logistics and occasionally (some dump trucks) for industrial purposes. Typical 18 wheelers on the road are generally all Class 8 vehicles, and traditionally are seen as an accurate coincident indicator of trade and logistics trends in the economy.
Kenny Vieth, ACT’s President and Senior Analyst said: “Fraying freight market and rate conditions along with a still-large Class 8 order backlog contributed to the worst NA Class 8 net order performance since July of 2016. May saw NA Class 8 orders fall below the 15,900 units averaged through the year’s first trimester, and year-to-date Class 8 net orders have contracted 64% compared to the first five months of 2018.”
This news item put in an appearance on the Zero Hedge website at 12:26 p.m. EDT on Thursday afternoon — and I thank Brad Robertson for pointing it out. Another link to it is here.
Stocks went up on Tuesday and Wednesday – a total gain of 207 points for the Dow. Futures markets are predicting another up day today.
But the economy continues to sink. The longest expansion in U.S. history seems to be approaching its end. Here’s CNBC:
Job creation skidded to a near-halt in May in another sign that the U.S. economic momentum is slowing.
Companies added just 27,000 new positions during the month, according to a report Wednesday from payroll processing firm ADP and Moody’s Analytics that was well below Dow Jones estimates of 173,000.
The reading was the worst since around the time the economic expansion began and the jobs market bottomed in March 2010 with a loss of 113,000. Since then, the private payrolls count has increased by 21.3 million.
Another key indicator is the decline in bond yields (yields decline as demand drives bond prices higher). Economist Richard Duncan explains:
The flight to quality out of stocks and into bonds occurred because the outlook for corporate earnings is deteriorating rapidly due to the US-China trade war. The earnings outlook is deteriorating for two main reasons. First, there is a real possibility that China will take steps that sharply reduce the earnings of U.S. corporations doing business in China. And second, the global economy is slowing quickly and may soon be in recession.
Why, then, would investors buy stocks now? A recession will cut into sales and profits. Stocks should be worth less, not more.
This commentary from Bill, filed from Dublin, showed up on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is here.
Update (1930ET): While Mexico’s Foreign Minister Marcelo Ebrard confirmed no deal had been reached, he confirmed that Mexico has proposed to send about 6,000 national guard troops to its southern border with Guatemala to help stem migration.
“Tomorrow we are going to maintain these conversations, we don’t have yet an agreement but we are advancing in order to reach an agreement,” Ebrard says
So, for all those establishment types so full of sound and fury at Trump’s tariff plan, it would appear it is working.
Update (1700ET): Vice President Mike Pence has confirmed that no deal with Mexico has been reached, noting that while talks are continuing, the Trump administration has asked Mexico to “significantly more,” and “at this point, tariffs will be imposed on Monday.”
White House spokeswoman Sarah Sanders says in statement that the administration’s “position has on a Monday deadline has not changed. We are still moving forward with tariffs at this time.”
This follows reports from Bloomberg claiming that the Trump administration was considering delays in implementing the tariffs.
This constantly changing news item [and headline] put in an appearance on the Zero Hedge website at 7:36 p.m. EDT on Thursday evening — and another link to it is here.
With Draghi having already disappointed markets by failing to deliver a “big bang” announcement, and instead extending the lower for longer period until the first half of 2020 as was already priced in by the market, and unveiling less generous TLTRO III terms that left much to be desired, during today’s press conference Draghi also unveiled the ECB’s latest economic forecasts, which also confirmed that Europe is nowhere near ending its long-running economic malaise.
To wit, while the ECB revised up forecasts for 2019 euro-area growth and inflation by 0.1 percentage points in its new projections, it trimmed its 2020 and 2021 GDP forecasts from the March forecast, by 0.2% and 0.1%, respectively…
Not helping is that Draghi also said that “risks to the euro area are tilted to the downside.”
This rather brief 1-chart Zero Hedge article was posted on their Internet site at 8:56 a.m. on Thursday morning EDT — and it comes courtesy of Brad Robertson as well. Another link to it is here.
Futures markets in the eurozone are flashing the most serious deflation warning since the creation of the single currency, dismissing stimulus measures and dovish rhetoric from the European Central Bank as thin gruel in the face of mounting recession risks.
A closely watched gauge of inflation expectations — 5-year/5-year forward swap contracts — crashed to a record low of 1.23 percent today despite pledges from the ECB that it would hold interest rates at deeply negative levels far into 2020, and despite hints of more quantitative easing to head off a Japanese-style trap.
ECB president Mario Draghi said the bank is “determined to act in case of adverse contingencies” and will use all instruments in the toolbox — code for emergency stimulus if the slump in world trade deepens and a global economic downturn takes root.
Analysts say the policy shift comes too late, and is too tentative, to assuage worried investors. Pricing in futures contracts shows that markets do not believe the ECB will come close to meeting its 2pc inflation target over the next decade. This is an emphatic verdict of no confidence in the monetary management of the institution, but it also has dangerous macroeconomic consequences.
Peter Schaffrik at RBC said markets increasingly fear that the ECB has “fallen behind the curve” as prices tumble across the commodity nexus and returns on German government bonds hit historic lows. This is allowing a corrosive dynamic to take hold.
This AE-P commentary, posted in the clear on the gata.org Internet site yesterday evening EDT, is definitely worth reading. Another link to it is here.
The European Commission recommended Wednesday that legal action be launched against Italy because it failed to respect E.U. debt rules last year and is likely to do so again in 2019 and 2020, setting up a new confrontation with its populist government.
In coming weeks, E.U. member states must assess whether an “excessive deficit procedure” should be launched against Italy and the extent of any penalties. It could face billions of euros (dollars) in fines.
According to a new commission report, Italy’s public debt stood at 132.2% of GDP in 2018, far above the E.U.’s 60% limit.
“Moreover, Italy is not projected to comply with the debt reduction benchmark in either 2019 or 2020 based on both the government plans and the commission 2019 spring forecast,” the report said. Debt is forecast to rise to 135%.
E.U. Commission Vice-President Valdis Dombrovskis told reporters that “Italy pays as much in debt servicing as for the entire education system. In 2018, Italy’s debt represented an average burden of 38,400 euros ($43,251) per inhabitant, and in addition the average debt servicing cost was around 1,000 euros ($1,126).”
He added that Italian economic “growth has come to almost a halt.”
This new story, from the france24.com Internet site, put in an appearance there at 2:55 p.m. CEST [Central European Summer Time] on Wednesday afternoon — and I thank Roy Stephens for sharing it with us. Another link to it is here.
In the escalating war of words between the U.S. and China, overnight President Trump threatened to hit China with tariffs on “at least” another $300 billion worth of Chinese goods, although he thought both China and Mexico wanted to make deals in their trade disputes with the United States.
“Our talks with China, a lot of interesting things are happening. We’ll see what happens… I could go up another at least $300 billion and I’ll do that at the right time,” Trump told reporters before boarding Air Force One at the Irish airport of Shannon on his way to France for D-Day commemorations. He added that he thinks “China wants to make a deal and I think Mexico wants to make a deal badly.”
In Beijing, China’s Commerce Ministry struck a defiant tone. “If the United States wilfully decides to escalate tensions, we’ll fight to the end,” ministry spokesman Gao Feng told a regular news briefing. “China does not want to fight a trade war, but also is not afraid of one. If the United States wilfully decides to escalate trade tensions, we’ll adopt necessary countermeasures and resolutely safeguard the interests of China and its people.”
As Reuters reported, China’s Commerce Ministry also issued a report on how the United States has benefited from years of economic and trade cooperation with China, saying U.S. claims that China has taken advantage in bilateral trade were groundless.
“Since the new U.S. administration took office, it has disregarded the mutually beneficial and win-win nature of China-U.S. economic and trade cooperation, and has advocated the theory that the United States has ‘lost out’ to China on trade,” the ministry said in a research report.
“It has also taken the trade deficit issue as an excuse to provoke economic and trade frictions.”
Just as ominous for those who still hope a prompt resolution to trade tensions is coming, while Trump said on Thursday that talks with China were ongoing, no face-to-face meetings have been held since May 10, the day the U.S. increased tariffs on a $200 billion list of Chinese goods to 25%, prompting Beijing to retaliate.
This Zero Hedge article, also courtesy of Brad Robertson, appeared on their website at 8:27 a.m. on Thursday morning EDT — and another link to it is here.
I was frustrated. I need solid, safe income. The bank bailouts will eventually cause high inflation.
Interest rates were not keeping up. Investors, desperate for income, had few choices and the stock market was setting records. How do you invest, earn safe income while protecting your capital and buying power all at the same time?
I asked that question in every booth I visited at the Money Show. No one addressed my concerns – they just hawked their particular investment products as the magic pill.
When I asked, “What about gold?” I generally heard, “It provides no income” or, “It’s too risky!”
Brokers don’t want you investing in gold, they can’t earn fees from it. When I asked about gold stocks, they looked at me like an escapee from a leper colony.
With historic government debt and unfunded liabilities, there is no way the government can tax or grow their way out of debt. No wonder readers are concerned about inflation.
This interesting gold-related commentary from Dennis was posted on his Internet site on Thursday morning sometime — and another link to it is here.
If push comes to shove, one of the world’s largest gold miners is prepared to do an end run around the U.S. should President Donald Trump’s threatened tariffs on Mexican goods bite.
Agnico Eagle Mines Ltd. currently produces about 300,000 ounces of gold in Mexico that it refines in the U.S., all of which would likely be subject to the proposed tariffs, Chief Executive Officer Sean Boyd said Wednesday. But he already knows how he’d respond to potential levies.
“It’s not expensive to fly a bar of gold,” Boyd said in an interview at Bloomberg’s Toronto bureau. “We would just refine it somewhere else. We could easily bring it to Canada.”
Meanwhile, the Toronto-based company, Canada’s second-largest gold miner, is reaping some benefits from U.S. isolationism. Global trade jitters have strengthened the U.S. dollar at the expense of the Mexican and Canadian currencies, significantly reducing Agnico’s costs, he said.
In the hour-long interview, Boyd discussed a wide range of issues, from consolidation in the gold industry to the succession plan for a company he has helmed for more than 20 years.
This gold-related Bloomberg article showed up on their Internet site at 2:00 a.m. PDT on Thursday morning — and I found it embedded in a GATA dispatch yesterday morning. Another link to it is here.
The PHOTOS and the FUNNIES
Today’s first photo was taken as we climbed out of the valley between Seton Lake — and Lillooet on the Fraser River, looking down on the area where we had taken photos from that appeared in Thursday’s column. We were on B.C. Highway 99 — and if we’d kept on going, we would have been in Whistler in a few hours — and Vancouver an hour and change after that. We ran into a small herd of mule deer — and I took this shot while still sitting in the driver’s seat. No telephoto needed for this! The last picture was taken a handful of kilometers north of Lillooet on B.C. Highway 40 — and on the west side of the river looking north. Click to enlarge.
After the brutal price capping by ‘da boyz’ on Wednesday, the precious metal market was certainly quieter on Thursday, although the volumes in both silver and gold were higher than than I wanted to see.
Gold is up a bit over 70 bucks from its low in the third week of May — and now in overbought territory by a bit. What it’s allowed to do from here regarding price, is anyone’s guess. But after Wednesday’s price action, it’s obvious that ‘da boyz’ are still very much in control of the price.
Silver traded above both big moving averages again on Thursday — and was closed above its 50-day — and two cents below its 200-day. The RSI trace is showing ‘market neutral’ at the moment.
Platinum wasn’t allowed to do much, although palladium rallied by a decent amount before it was capped. Both copper and WTIC closed a bit higher on Thursday.
Here are the 6-month charts for the Big 6 commodities, so you can see these changes for yourself. Click to enlarge.
And as I type this paragraph, the London/Zurich opens are just a minute away — and I see that the gold price has been stair-stepped lower almost since trading began in New York on Thursday evening — and is currently down $4.20 an ounce. The silver price has been wandering very quietly sideways, but is down 2 cents at the moment. It’s been the same price pattern for platinum as for silver — and it’s down 2 dollars. Ditto for platinum, as it’s also down 2 bucks as Zurich opens.
Net HFT gold volume is pretty quiet at a bit over 31,000 contracts — and there’s only 311 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is a piddling 5,800 contracts — and there’s a minuscule 22 contracts worth of roll-over/switch volume in that precious metal.
The dollar index opened down 3 basis points once trading commenced at 7:45 p.m. EDT in New York on Thursday evening., It has been creeping quietly higher since — and is up 5 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.
Today, around 3:30 p.m. EDT, we get the latest Commitment of Traders Report, plus the companion Bank Participation Report — and I’m already on record as saying that the report for both gold and silver won’t make for happy reading…particularly gold.
Ted had this to say about what the COT Report might show for gold in his mid-week commentary on Wednesday…”considering gold’s strong price advance through yesterday’s cutoff for the COT report to be issued Friday, I would be quite surprised if we didn’t witness one of the largest weekly increases in managed money buying and commercial selling, along the lines of 50,000 to 60,000 net contracts, maybe more.” And in silver…”I’m not at all sure what to expect in Friday’s COT report. In fact, I’m less sure about this coming COT report than I can recall. Yes, the [silver price] advanced every single trading day on much heavier than usual trading volume, and was up more than 50 cents for the reporting week at the highs. This argues for a substantial amount of managed money buying, perhaps on the order of 10,000 contracts or more (hopefully, not more than 20,000 contracts)”
Ted went on to mention the fact that silver didn’t break above its 50, 100 or 200-day moving averages during the reporting week — and that silver’s open interest for the week was “little changed“. That’s why he’s “less sure” about silver than he is about gold.
And as I post today’s missive on the website at 4:02 a.m. EDT, I note that all four precious metals are higher as the first hour of London/Zurich trading ends. Gold is back at unchanged — and silver is now up 4 cents. Platinum and palladium are both up a dollar.
Gross gold volume is coming up on 43,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is 42,000 contracts. Net HFT silver volume is 7,700 contracts — and there’s still only 63 contracts worth of roll-over/switch volume out of July and into future months.
The dollar index is off its earlier high of an hour or so ago — and of of 8:45 a.m. in London/9:45 a.m. in Zurich, the dollar index is back at unchanged on the day.
This morning at 8:30 a.m. EDT in Washington, we get the latest jobs report — and I wouldn’t be surprised to see some rather significant price activity in silver and gold at that point — and the dollar index as well. Which way — and by how much, remains to be seen.
That’s all I have for today. Have a good weekend — and I’ll see you here on Saturday with all of the above data…warts and all!