12 June 2019 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t really do much of anything in most of Far East trading on their Tuesday. That all ended once the 2:15 p.m. China Standard Time afternoon gold fix was done for the day in Shanghai. It was then sold quietly lower until minutes before 1 p.m. in London…the time of its Monday low tick as well. From that juncture, it crept quietly higher until 1 p.m. in New York, shortly after it broke above unchanged on the day — and someone was there to cap it, and then guide it a few dollars lower into the 5:00 p.m. EDT close.
The high and low ticks certainly aren’t worth looking up.
Gold finished the Tuesday session in New York at $1,326.30 spot, down $1.10 from Monday’s close. Net volume was nothing special at a bit over 204,000 contracts — and there was just under 12,500 contracts worth of roll-over/switch volume in this precious metal.
Silver’s price path on Tuesday was guided in a similar fashion to gold’s…so I’ll spare you the play-by-play on it…except to point it that it was allowed to close higher by a bit on the day.
And also like for gold, the high and low ticks aren’t worth looking up, either.
Silver was closed at $14.715 spot, up 5 cents from Monday. Net volume was a bit elevated at a hair under 59,000 contracts — and there was a bit under 23,000 contracts worth of roll-over/switch volume out of July and into future months.
The platinum price traded unevenly sideways about five dollars or so either side of unchanged, right up until shortly before the COMEX open in New York on Tuesday morning. It began to rally from there but, like on Monday, it obviously ran into some ‘resistance’ going into the afternoon gold fix in London — and really didn’t do much of anything after that. Platinum finished the Tuesday session at $815 spot, up an even 10 bucks from Monday’s close.
After a quiet 8 dollar up/down move between the 6:00 p.m. open in New York on Monday evening — and 1 p.m. CST on their Tuesday afternoon, the palladium price began to edge unevenly higher. It attempted to rally further shortly after the COMEX open but, like palladium, appeared to run into ‘something’ in very short order — and it chopped unevenly sideways for the remainder of the day. Palladium was closed at $1,375 spot, up 15 dollars from Monday. But, like platinum, it would have closed materially higher, if allowed.
The dollar index closed very late on Monday afternoon in New York at 96.76 — and opened down about two basis points once trading commenced at 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning. From that point it chopped mostly quietly and unevenly sideways until around 11:50 a.m. in New York. It was sold a bit lower from there — and the 96.64 low tick…such as it was…came around 2:35 p.m. EDT. It edged a bit higher into the 5:30 p.m. close. The dollar index finished the Tuesday session at 96.69, down 7 basis points from Monday’s close.
Here’s the DXY chart, courtesy of Bloomberg, as always. 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…96.64…and the close on the DXY chart above, was 5 basis points on Tuesday. Click to enlarge as well.
The gold shares opened about unchanged — and began to head lower starting a few minutes before 10 a.m. EDT in New York trading. Their respective lows came around 10:20 a.m. — and they headed higher until around 11:40 a.m. EDT. From that juncture they chopped unevenly sideways for the remainder of the Tuesday trading session. The HUI closed higher by 0.69 percent.
For technical reasons that Nick didn’t explain all too well, I don’t have a Silver Sentiment/Silver 7 Index chart, nor the 1-year Silver Sentiment/Silver 7 chart, either. Hopefully he’ll have this sorted out for tomorrow’s column.
The CME Daily Delivery Report showed that 58 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.
In gold, there were four short/issuers in total — and the three largest were International F.C. Stone, Marex Spectron and Advantage, with 20, 19 and 18 contracts from their respective client accounts. There were six long/stoppers in total. The largest was JPMorgan with 25 contracts for it client account — and in second spot was Advantage with 13 for its client account. HSBC USA picked up 7 contracts for its own account. 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 fell by 869 contracts, leaving 291 left, minus the 58 contracts mentioned two paragraphs ago. Monday’s Daily Delivery Report showed that 920 gold contracts were actually posted for delivery today, so that means that 920-869=51 more gold contracts just got added to the June delivery month. Silver o.i. in June declined by 1 contract, leaving just 2 left. Monday’s Daily Delivery Report showed that 1 silver contract was actually posted for delivery today, so the change in open interest and deliveries match.
There was a tiny withdrawal from GLD on Tuesday, as an authorized participant took out 7,816 troy ounces — and an amount this size would certainly represent a fee payment of some kind. There were no reported changes in SLV.
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, June 7 — and this is what they had to report. During the business week just past, they added 16,172 troy ounces of gold — and 62,212 troy ounces of silver.
There was a tiny sales report from the U.S. Mint yesterday. They sold 2,000 troy ounces of gold eagles — and 326,500 silver eagles.
The only in/out movement in gold over at the COMEX-approved gold depositories on Monday, was 798 troy ounces that was shipped out of Canada’s Scotiabank. I won’t bother linking this activity.
It was much busier in silver, as 1,402,221 troy ounces were reported received — and 1,670,161 troy ounces were shipped out. In the ‘in’ category, there was one truckload…604,944 troy ounces…that was dropped off at CNT — and of the remaining amount, there was 377,243 troy ounces and 420,033 troy ounces that arrived at HSBC USA and Scotiabank respectively. In the ‘out’ category, there was one big truckload…656,539 troy ounces that departed Loomis International — and the other truckload…605,649 troy ounces…left the vault over at CNT. The remaining amount…387,757 troy ounces and 20,214 troy ounces, was shipped out of Brink’s, Inc. and HSBC USA respectively. The link to that activity is here.
There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday. They reported receiving 300 of them — and shipped out 150. All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Here are two charts that Nick Laird passed around very early on Tuesday evening EDT. They show gold and silver imports into India, updated with March’s data. They’re always a month or two behind everyone else in reporting their imports. But I do have a Bloomberg story in The Wrap about India’s gold imports in both April and May. During February, India imported 78.26 tonnes of gold — and 221.9 tonnes of silver during February. Click to enlarge for both.
I don’t have much in the way of stories/article for you today.
Core Producer Price inflation has slowed for six straight months to +2.3% YoY but the headline (NSA) data slowed to just 1.8% YoY (notably below the +2.0% expectation).
This is the weakest headline Producer Price inflation print since Jan 2017. Click to enlarge.
Final Demand Goods prices shrank 0.2% in May as Services prices rose 0.3%…
Notably, nearly 80 percent of the May advance in the index for final demand services is attributable to prices for guestroom rental, which jumped 10.1 percent. This is a record surge in guestroom rental prices on a non-seasonally-adjusted basis…
This headline print below the 2.0% Maginot Line, surely gives The Fed more ammo for its pre-crime “insurance cut”? However, the PPI (ex Food, Energy, and Trade Services) rose to +2.3% YoY.
This brief 2-chart Zero Hedge article was posted on their website at 8:36 a.m. on Tuesday morning EDT — and I thank Brad Robertson for sending it along. Another link to it is here.
With less than a week to go before the Fed begins its next two-day policy meeting, President Trump is again lambasting the Powell-led central bank for having the temerity to raise interest rates and attempt to start unwinding its balance sheet.
This time, it was a tweet from Bloomberg Opinion about Europe’s difficulty in dissuading foreign tourists from visiting its popular landmarks (like, you know, the Cathedral of Notre Dame) that set Trump off. In a tweet, he accused the Europeans of manipulating the euro (and noted that other countries are doing the same to their currencies).
“This is because the Euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage. The Fed Interest rate way to high, added to ridiculous quantitative tightening! They don’t have a clue!” — Donald J. Trump (@realDonaldTrump) June 11, 2019
Though the Treasury added a few countries to its ‘watch list’ released last month, it declined to name any countries to its list of currency manipulators.
Meanwhile, Trump also bashed the Fed over its insistence on targeting higher inflation, saying (as most ‘normal‘ people, i.e. non-bankers and members of the 1%, would agree) that nobody wants higher prices.
Though in a sign that the markets aren’t taking Trump’s jawboning seriously after that Treasury report showed the U.S. once again decided to pull its punches, the euro’s reaction was muted.
This short article put in an appearance on the Zero Hedge Internet site at 8:24 a.m. EDT on Tuesday morning — and it’s the second contribution in a row from Brad Robertson. Another link to it is here. There was a parallel story to this on the marketwatch.com Internet site headlined “Why Trump’s tweets about the U.S. dollar might soon pack a lot more punch” — and it comes to us courtesy of a GATA dispatch yesterday evening.
It’s coming. It’s happening.
Our dark fears and midnight tremors are coming to life. In the broad daylight.
The Bolsheviks are invading the suburbs and cities… and even the Corn Belt… all across America.
Both Democrats and Republicans are turning to three-part programs – one part Soviet economic claptrap, one part Mussolini’s political bamboozle, and one part pure American jackassery.
Today, we begin the hard work of giving them the mockery they deserve. We only worry that we will run out of scorn and sarcasm before we are finished.
Politics is always and everywhere the enemy of civilization. It is the enemy, too, of economic progress. Most important, it is the enemy of dignity and clear thinking.
And now, from cannon in front of us… from cannon to the left of us and cannon to the right… from all directions, politics thunders in all its sordid glory.
This interesting commentary from Bill appeared on the bonnerandpartners.com Internet site early on Tuesday morning EDT — and another link to it is here.
What are the three elements of the perfect political and market storm I see coming together this fall?
The first is an effort by the Democratic House of Representatives to impeach President Trump. The second is the socialist-progressive tilt in the 2020 presidential election field. The third is the fallout from the Mueller report and the Russia collusion hoax — what I and others called “Spygate.”
These components are independent of each other but are at high risk of convergence in the coming months. Let’s look more closely at the individual elements of impeachment, electoral chaos and Spygate that comprise this new storm with no name.
The first storm is impeachment. Impeachment of a president by the House of Representatives is just the first step in removing a president from office. The second step is a trial in the Senate requiring a two-thirds majority (67 votes) to remove the president. Two presidents have been impeached, but neither was removed. Nixon resigned before he could be impeached.
If the House impeaches Trump, the outcome will be the same. The Senate is firmly under Republican control (53 votes) and there’s no way Democrats can get 20 Republicans to defect to get the needed 67 votes needed. So House impeachment proceedings are just for show.
This commentary from Jim, datelined Monday, showed up on the dailyreckoning.com Internet site on Tuesday sometime — and another link to it is here. A parallel commentary from Jim on this issue is headlined “Rickards: “Perfect Storm” Is Coming” — and that’s form the Daily Reckoning website as well.
A leading Australian business survey has concluded that the continent’s retail sector is “clearly in recession“.
New data from NAB shows Australia’s “Index of Business Conditions” falling by 2 points in May, putting it well below its long run average. The data comes a week after Australia’s Reserve Bank was forced to cut interest rates to its lowest level in history and additional data from the Australian Bureau of Statistics showed the economy had slowed to its weakest level since the 2009 financial crisis.
Alan Oster, NAB Group Chief Economist said on the NAB Economics podcast:
“Business confidence saw a sharp increase in the month following the Federal election and a confirmation from the RBA that rates would be cut in June. We think this will be a short-term spike given other forward-looking indicators saw further deterioration in the month. Forward orders declined further and in addition to being well below average are negative. Capacity utilisation has also pulled back in 2019 to date and is now a touch below average”.
Business conditions declined across all states except Queensland. The NAB survey’s measure of trading, or sale, also fell, down by 5 points. Forward orders also slipped a point.
Oster said that Australians are now reluctant to spend and that the recently elected government would need to deliver on tax cuts to stimulate the economy.
He concluded by saying he did not want to “overemphasise” the doom and gloom in the sector, but said “readings of -27, which we’ve got in retail, [are] so grim”.
This news item showed up on the Zero Hedge website at 8:05 p.m. on Tuesday evening EDT — and another link to it is here.
High prices of gold has failed to dent the buying spirit of customers as the sale of yellow metal surged during Eid Al Fitr and the holy month of Ramadan. Sales of gold jewellery in the country surged by up to 25 percent during Eid holidays and Ramadan.
‘We witnessed around 20-25 percent increase in the sale of gold jewellery during the holy month of Ramadan. One of the main factors behind high sale was upcoming vacation period. Expatriates tend to buy gold before going to their home country during Eid holidays and summer vacation, Santosh TV, Regional Head, Malabar Gold and Diamond, Qatar told The Peninsula.
‘Another supporting factor was an Indian festival ‘Akshaya Tritiya’ which was celebrated in the first week of May. We witnessed high sale because Indians buy gold during Akshaya Tritiya, he added.
Akshaya Tritiya is an Indian festival during which they consider it as auspicious to buy gold jewellery, coins and bars. Gold has become dearer during the last two weeks as prices of the yellow metal have risen due to high demand and other global factors. A gram of 22 carat gold was trading yesterday at QR156 while it was trading at around QR145 per gram two weeks back.
‘Eid is always a busy time for jewellers and we were expecting this kind of response because this is an annual phenomenon.
This gold-related news item was posted on the menafn.com Internet site on Monday sometime — and it’s the first of three stories that I found on the Sharps Pixley website yesterday. Another link to it is here.
Gold imports by India grew 36% in May from a year earlier as jewelers and customers rushed to buy after prices declined to the lowest level this year.
Overseas purchases rose to 105.8 tons last month from 77.6 tons a year earlier, according to a person familiar with the data, who asked not to be identified as the information isn’t public. Combined shipments during April-May were 226.6 tons, up about 74% from the year-ago period. Finance Ministry spokesman D.S. Malik wasn’t immediately available for comment.
Prime Minister Narendra Modi’s election victory last month trengthened the local currency just as benchmark gold futures in India dipped to their lowest level this year. The South Asian nation, the world’s second-biggest consumer of gold, imports almost all the metal it consumes and a stronger rupee makes it cheaper for local buyers. A key auspicious gold buying day — Akshaya Tritiya — as well as the wedding season also boosted sales in May.
“Sales were amazing last month, with huge demand seen during Akshaya Tritiya. The drop in prices has really complemented that trend,” said G.V. Sreedhar, managing director of Sree Rama Jewels and a former chairman of the All India Gem & Jewellery Domestic Council. Purchases for weddings were also good when compared to last year and sales are expected to be robust this month as well, he said.
The industry is keeping an eye on the progress of the monsoon, as it could affect rural demand, he said. India’s southwest monsoon, which waters more than half of the country’s farmland and is crucial for economic growth, is expected to be normal this year but has been delayed by more than a week.
This Bloomberg story appeared on their website last Thursday — and as the story notes, these gold import figures are not “official“…but will most likely prove to be true when the Indian government gets around to releasing them in July and August. I thank Brad Robertson for this one — and another link to it is here.
May gold withdrawals from the Shanghai Gold Exchange will have disappointed gold bull yet again. They came in below the withdrawal levels for the same month in both 2018 and 2017 and the cumulative year to date figures are now than they were for the first five months of 2018 and 2017 too. Indeed they are down nearly 10% on the 2018 five month total.
The latest figures should really not come as a surprise. Chinese growth appears to be slipping in comparison with previous years and President Trump’s tariff impositions are also likely to be having a negative effect on Chinese exports. No doubt the U.S. President will see this as a victory for his policies, but he is likely to ignore the adverse effects these policies may be having on U.S. domestic prices. Trade wars seldom do anyone any good and, as we have stated here before, the U.S. is paying the price for its many years of dollar dominance in global trade and in its position as the world’ principal reserve currency with all the other positive effects these position have afforded the U.S. in international business.
We have, controversially perhaps, tended to equate SGE gold withdrawals with China’s true gold demand and gold flows. This is because the cumulative SGE withdrawal figures work out as being close to China’s known recorded gold imports, plus the country’s own gold production from its mines and smelting/refining plants plus an allowance for unknown imports and scrap conversion. Indeed China’s own gold yearbook has equated China’s total gold demand to the SGE withdrawal figures, although the principal Western-based gold consultancies tend to disagree with this assessment. But in part we suspect that this is because of a strict adherence to what they define as demand/consumption which seems to ignore gold going into the banks and financial institutions which we rate as an integral part of China’s gold demand. It certainly is a representation of total gold usage by the Chinese.
Extrapolating the latest Chinese figures for the full year the country could well be headed for the first sub-2,000 tonne year since 2012. However any potential shortfall in global gold demand should be countered by the high levels of gold accumulations by the world’s central banks which seems to be remaining at a high level. Because of this factor, coupled with global gold production only growing marginally – if at all – then the yellow metals supply/demand fundamentals remain pretty much in balance. No cause for a gold bull panic yet!
This commentary by Lawrie appeared on the Sharps Pixley website early on Tuesday morning BST — and another link to it is here. Lawrie had another commentary on the sharpspixley.com Internet site yesterday — and it’s headlined “China upping the ante in gold reserves“. It’s worth reading.
The PHOTOS and the FUNNIES
Shortly after leaving Lillooet we plunged into some of the most convoluted and beautiful scenery along this particular stretch of B.C. Highway 99. The first shot is looking down into the Fraser River gorge. The CNR tracks [ex B.C. Rail] are visible on the right. I had to crop this shot pretty tight in order to cut out some rather ugly over-head power lines. The next two shots were further down the highway — and taken from the same spot. I put the CNR tracks in the foreground of the last shot for effect reasons, as it changes the dynamics of the photo. Click to enlarge for all.
It was a relatively quiet day in the precious metals on Tuesday. But despite that fact, the prices of all four were obviously being managed very discretely, as I’ve already pointed out in my commentary about them at the top of today’s column.
None of yesterday’s price machinations had anything to do with what was happening in the currency market…although in a free market in both, price fluctuations based on currency moves would be the norm. For the last couple of generations, these prices have all been controlled in the futures markets.
Here are the 6-month charts for the four precious metals, plus copper and WTIC — and there’s not much to see. Click to enlarge.
And as I type this paragraph, the London open is a minute or so away — and I note that gold traded pretty flat until shortly after 9 a.m. China Standard Time on their Wednesday morning — and a rally began at that point that lasted until 11 a.m. CST. From that juncture it didn’t do anything until around 1:30 p.m. over there — and then rallied quickly to its current high tick, which came at the 2:15 p.m. afternoon gold fix in Shanghai. It has backed off that high by a bit — and is up $7.70 the ounce as London opens. The price path for silver was virtually the same — and it’s up 8 cents at the moment. Platinum hasn’t done much…creeping a bit higher in morning trading in the Far East — and it’s now moving sideways — and is up a buck. It was the precise same pattern for palladium as it was for platinum….at least up until the afternoon gold fix in Shanghai. It has been sold sharply lower since — and is down 6 dollars as Zurich opens.
Net HFT gold volume is a hair under 50,000 contracts already — and there’s a bit over 4,500 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is way up there at a bit over 13,000 contracts — and there’s only 263 contracts worth of roll-over/switch volume out of July and into future months. These rallies, especially in silver, are not going unopposed.
The dollar index opened up two basis points once trading commenced at 7:45 p.m. EDT in New York on Tuesday evening, which was 7:45 a.m. CST on their Wednesday morning. It did very little from there, but turned sharply lower around 1:45 p.m. CST on their Wednesday afternoon, with its currently low tick coming at 2:30 p.m. CST/7:30 a.m. BST. And as of 7:45 a.m. in London/8:45 a.m. in Zurich, the dollar index is down 3 basis points. So the current price action has zero to do with what’s going on in the currency market…it’s strictly paper trading in the futures market.
Looking at the last five dojis in both gold and silver on the 6-month charts above, I’m not sure what to expect in gold, although if forced to bet the proverbial ten dollar bill, I’d suspect that we might see further increases in the commercial net short positions in both. The reason I say that is because the volumes on the way down in gold and silver, was not nearly as heavy as the volume involved in the rally the preceded their highs of late last week…even though their current prices are lower now than they were at the cut-off last Tuesday.
Ted has his mid-week commentary to his paying subscribers this afternoon — and it’s a certainty that he’ll have something to say about it — and I’ll ‘borrow’ a few paragraphs for my Friday missive.
And as I post today’s efforts on the website at 4:02 a.m. EDT, I see that the gold price has been ticking ever so quietly higher during the first hour of London trading — and is now up $10.70 the ounce at the moment. Silver is struggling to break higher — and is up 13 cents. Platinum is up 5 dollars now — and palladium is now back at unchanged.
Gross gold volume is coming up on 70,000 contracts — and minus roll-over/switch volume, net HFT gold volume is just under 60,500 contracts. Net HFT silver volume is just under 16,000 contracts — and there’s now 984 contracts worth of roll-over/switch volume on top of that.
The dollar index has been chopping quietly sideways during the last hour — and is currently down 6 basis points as of 8:45 a.m. BST in London/9:45 a.m. CEST in Zurich.
It could certainly be an interesting trading session in New York later this morning.
That’s it for another day — and I’ll see you here tomorrow.