Back to “Care & Maintenance” Once Again

18 June 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price fell and rose about five dollars in Far East trading on their Monday morning.  But starting shortly before noon China Standard Time it began to drift quietly lower…with some help, one would suspect — and the low tick of the day was set at the 10:30 a.m. morning gold fix in London.  It began to head higher once noon BST silver fix was done — and the price was then capped and turned lower shortly after it broke back above the unchanged mark, which came minutes after the equity markets opened in New York.  From that point it was forced to chop quietly lower until the COMEX close — and didn’t do much after that.

The high and low ticks of the Monday session aren’t worth looking up.

Gold was closed in New York on Monday at $1,338.90 spot, down $2.20 on the day.  Net volume was elevated by a bit at a hair over 232,000 contracts — and there was about 7,700 contracts worth of roll-over/switch volume on top of that.

‘Da boyz’ guided silver’s price in a similar manner as gold’s on Monday so, once again, I shall dispense with the play-by-play in this precious metal.

The high and low ticks in silver aren’t worth looking up, either.

Silver was closed at $14.815 spot, down 2.5 cents from Friday.  Net volume was nothing out of the ordinary at just over 53,000 contracts — and there was just under 11,500 contracts worth of roll-over/switch volume out of July and into future months.

Platinum’s slight bump up in price at the 6:00 p.m. EDT open in New York on Sunday evening was taken care of an hour later — and from there it was sold quietly lower.  The sell-off culminated in a particularly vicious spike lower that ended shortly after 1 p.m. CEST in Zurich.  It edged a few dollars higher from that juncture, before chopping quietly sideways until trading ended at 5:00 p.m. EDT in New York.  Platinum was closed at $793 spot, down 9 bucks from Friday.

Palladium was taken on a roller coaster of a price ride on Monday in all markets…most of it downwards — and any and all sniffs of unchanged it got, were dealt with in the usual manner.  The final sell-off came after the Zurich close.  Palladium finished the Monday session in New York at $1,436 spot, down 12 dollars from Friday.

The dollar index closed very late on Friday afternoon in New York at 97.57 — and opened down 5 basis points once trading commenced around 6:45 p.m. EDT on Sunday evening, which was 6:45 a.m. China Standard Time on their Monday morning.  From there it crept quietly and unevenly sideways until 12:30 p.m. BST in London — and then took a bit of a header.  It certainly appeared that the usual ‘gentle hands’ appeared at the 97.34 mark at 8:30 a.m. in New York — and from that point it chopped very unevenly higher until 2:15 p.m. EDT — and didn’t do much of anything after that.  The dollar index finished the Monday session at 97.56…down 1 whole basis point from its Friday close.

After reading the stories on Zero Hedge, I discovered why the dollar index cratered — and why it was rescued.  The headline stated…”Dollar, Bond Yields Tumble as Empire Manufacturing Survey Crashes Most on Record” — and the story about that is in the Critical Reads section.

Here’s the DXY chart, courtesy of the folks over at bloomberg.comClick to enlarge.

And here’s the 6-month U.S. dollar index chart from the stockcharts.com Internet site.  The delta between its close…97.05…and the close on the DXY chart above, was 51 basis points on Monday.  Click to enlarge as well.

The gold shares opened up a bit as soon as trading commence at 9:30 a.m. EDT on Monday morning, but quietly sank into the red shortly after, with their respective low ticks coming around 10:50 a.m. in New York trading.  They rallied quietly and a bit unevenly higher for the rest of the day — and the HUI closed higher by 1.10 percent.

The silver equities began to head quietly higher the moment that trading began — and rallied very unevenly higher until around 12:15 p.m. in New York.  From that juncture they moved quietly sideways until the market closed at 4:00 p.m. EDT.  The jagged chart pattern is not normal — and I’ve asked Nick to look into it.  His Silver Sentiment/Silver 7 Index closed up 2.20 percent.  However, given the choppy nature of the Index itself, I suspect that it closed a bit higher than that.  Click to enlarge.

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

I just received the following e-mail from Nick Laird about the issue with the Silver Sentiment/Silver 7 Index — and I’ll quote it verbatim:  “Hi Ed: I found the problem stock and it is WPM – for some reason it is picking up normal quotes and then ones which are 80c different. Since this is coming from Yahoo, I am unsure as to why and I cannot change it – I only hope that Yahoo’s prices go back to steady. So we have to put up with it at the moment. Hopefully it will fix itself. Cheers, Nick


The CME Daily Delivery Report showed that 301 gold and 3 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, the biggest of the five short/issuers by far was JPMorgan, with 259 contracts.  In distant ‘also ran’ second and third spots were Advantage and ADM, with 18 and 14 contracts.  Of the four long/stoppers in total, the largest was also JPMorgan, picking up 237 contracts — and in distant second place was Advantage, stopping 61 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

With movements like this, I’m starting to wonder about JPMorgan’s ‘Client’ account, as something just doesn’t smell right about this — and it’s something I’ve mentioned before.  I believe Ted made a similar comment about their client account within the last week or so.

In silver, the two short/issuers were Advantage and ADM — and the lone long/stopper was Goldman Sachs.  All contracts…3 in total…involved their respective client accounts as well.

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

The CME Preliminary Report for the Monday trading session showed that gold open interest in June declined by 121 contracts, leaving 469 still around, minus the 301 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 119 gold contracts were actually posted for delivery today, so that means that 121-119=2 gold contracts vanished from the June delivery month.  Silver o.i. in June dropped by 37 contracts, leaving 204 still open, minus the 3 contracts mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 40 silver contracts were actually posted for delivery today, so that means that 40-37=3 more silver contracts just got added to the June delivery month.


There were no reported changed in GLD yesterday, but an authorized participant…most likely JPMorgan…added a rather substantial 2,294,371 troy ounces of silver to 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 14 — and this is what they had to report.  They added 11,669 troy ounces of gold, plus a fairly substantial 293,365 troy ounces of silver.

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

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.

There was some activity in silver.  Once truckload…599,420 troy ounces…was dropped off at Canada’s Scotiabank — and that’s all the ‘in’ activity there was.  There was 110,329 troy ounces received.  Of that amount, there was 60,420 troy ounces that left Brink’s, Inc. — and the remaining 49,909 troy ounces departed CNT.  The link to that is here.

There was a tiny amount of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They didn’t report receiving any — and only shipped 6 of them out of Brink’s, Inc.  I won’t bother linking this amount.


Here are the usual two charts that Nick Laird passes around every week.  They show the gold and silver activity in all know depositories, ETFs and mutual funds, as of the close of business on Friday, June 14.  They show that a net 609,000 troy ounces of gold was added, plus 869,000 troy ounces of silver.  Click to enlarge for both.

I don’t have all that much for you in the way of articles or stories today.


CRITICAL READS

Oil Slips as Factories, Housing Flash Latest Economic Warnings

Oil slipped further into a bear market as American factories and home builders offered the latest signs of weakening demand.  Click to enlarge.

Futures slid 1.1% in New York while London-traded Brent crude fell almost 2% as OPEC and its allies struggled to pick a meeting date to discuss supply cuts. In the U.S., the Federal Reserve found a record slowdown in June for New York State factories while sentiment among housing contractors unexpectedly dropped for the first time all year.

Commerce Secretary Wilbur Ross, meanwhile, downplayed expectations for a U.S.-China trade breakthrough at this month’s G-20 summit in Japan.

OPEC will inevitably do what it needs to do, but that can’t happen without a lag,”
Bart Melek, head of commodity strategy at Toronto’s TD Securities, said in an interview. “So the question for the market now is what happens to the demand side of the equation.”

Monday’s decline halted a two-day rally for prices that followed last week’s attacks on oil tankers in the Middle East. Swelling American stockpiles and the U.S.-China trade rift have helped drive prices into a bear market, down more than 20% since a late April peak.

The commercial traders are leading the Managed Money traders around by the nose in this Big 6 commodity as well.  Supply and demand fundamentals have zero to do with the current price of WTIC.  That goes for copper as well.  This news item was posted on the bloomberg.com Internet site at 3:42 p.m. PDT on Sunday afternoon — and was updated about twenty-one hours later.  I thank Swedish reader Patrik Ekdahl for sending it our way — and another link to it is here.


Dollar, Bond Yields Tumble as Empire Manufacturing Survey Crashes Most on Record

Against expectations of a small drop to 11.0, Empire State Manufacturing Survey collapsed – by the most on record – from +17.8 to -8.6 in June. This is the first negative print since Oct 2016.  Click to enlarge.

This was 10 sigma below expectations — and the biggest MoM drop in the survey in its history…led by a complete collapse in New Orders.

Unleash the Fed!!??

Now I understand why the dollar index got save by the usual ‘gentle hands’ yesterday morning.  This brief 6-chart Zero Hedge story showed up on their Internet site at 8:36 a.m. EDT on Monday morning — and I thank Brad Robertson for sharing it with us. Another link to it is here.


As Clear of a Global Easing Cycle as You’re Gonna Get — Ed Hyman

Evercore ISI Chairman Ed Hyman, one of the fathers of modern market research and perennially ranked as one of the most respected institutional economics advisors in the world, recently spoke with CNBC about his outlook on the economy and markets. Mr. Hyman says the economy is performing well, albeit with a negative outlook, and that low inflation means the Fed Funds rate is too high.

Some excerpts from Ed Hyman:

The yield curve would be number one (among risks). Trade would be number two, but I also think there are a lot of positives out there, but those are the biggest risks… Every time in the past (the yield curve) has worked… When oil doubles, that’s a precursor to a recession. What happens is inflation goes way up, the Fed tightens aggressively, and then long rates go below the Fed Funds rate. That’s where we are right now. So, it makes me quite uncomfortable… but it has to stay this way for another couple of months before it gives a real signal.”

“…I think they (the Fed) are going to ease in July and then ease a couple more times to try and get the yield curve positive again but also to put some insurance in the system for the trade issue.”

This 6:19 minute CNBC video interview is embedded in this commentary that was posted on thesoundingline.com Internet site on Sunday sometime — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


War Is the Health of The Deep State — Bill Bonner

There is, indeed, nothing in all this world that can match war for popularity. It is, to at least nine people out of ten, the supreme circus of circuses, the show beyond compare, it is Hollywood multiplied by ten thousand. It combines the excitements of a bullfight, a revival, a train wreck, and a lynching. It is a hunt for public enemies with a million Dillingers scattered throughout the woods. It is the dizziest, gaudiest, grandest, damnedest sort of bust that the human mind can imagine.”
-– H.L. Mencken, Peace on Earth – Why We Have Wars…Liberty Magazine, 1936

Mencken was too polite to mention the money.

But war is the ultimate win-lose enterprise. One side wins; the other loses. Overall, people die, buildings are blown up, and real wealth is destroyed.

Still, it’s entertaining for the masses… like the super-est SuperBowl.

And some people get rich.

The young grunts and GIs doing the fighting get brass and silver medals – if they survive. But the old profiteers, ideologues, and warmongers sit in comfy chairs far from the violence and danger… and go for the gold.

This very worthwhile commentary from Bill, filed from Dubai, appeared on the bonnerandpartners.com Internet site early on Monday morning EDT — and another link to it is here.


Complain But Remain — Jeff Thomas

All countries have a “shelf-life” of sorts. Generally, they begin when an old, top-heavy government collapses from its own weight. The end of the old regime is characterized by civil unrest, revolution, secession, economic collapse or some combination of these conditions.

The new country generally has minimal government and little or nothing in the way of entitlements. It’s “sink or swim” for the people, and the recovery generally begins when a portion of the population rolls up its sleeves and creates an economy based upon production.

Over time, often a century or more, the population gets better at production and the country becomes wealthier. Along the way, whatever limited government existed has done all it could to expand itself. Governments, by their very nature, are parasites, living off the productive class, and eventually that parasite has the power to dominate those who produce, by promising largesse to those on the lower levels – who are in every society, the majority of voters.

This pattern has been followed for millennia. A nation establishes its freedom; it begins a productive economy; it develops wealth; it is taken over by a parasitical government; it goes into decline; it collapses, and the cycle begins anew.

At any point in history, there are always countries at every stage of this pattern.

This worthwhile commentary from Jeff was posted on the internationalman.com Internet site on Monday morning EDT — and another link to it is here.


Foreign banks willing to join Russia’s alternative to SWIFT

Banks based in several states are planning to participate in the Russian-developed money transfer network that serves as an alternative to the traditional SWIFT system, according to the head of the Central Bank of Russia (CBR).

It is open for external connection, we are developing it for our trade partners if they want to join. This work is already ongoing and banks of several countries are going to join, test connections already exist,” Elvira Nabiullina said at the first E.U.-Russia Student Conference in Moscow on Saturday. “We think it will be developing.”

Moscow started working on its own payment service, which is dubbed the SPFS (System for Transfer of Financial Messages), amid threats that it could be disconnected from the internationally recognized SWIFT (Society for Worldwide Inter-bank Financial Telecommunication) system back in 2014.

The CBR governor said the Russian alternative network operates the same standards as SWIFT. It’s convenient for those joining it as they do not have to change their internal mechanisms. Moreover, not just banks but also large businesses can join directly and some have already done so, she added.

Meanwhile, the SPFS is being already used in Russia, where 18 percent of money transfers are going through it. Banks can therefore choose what system they want to use and “quickly switch” in case of any risks, according to Nabiullina.

Earlier this year, Russia’s central bank announced that the country’s alternative to SWIFT had made “significant progress” as it already complies with international standards and foreign players can be integrated in it. In April, the regulator said it had signed agreements with two non-residents and was holding talks with five more. Joining the network allows foreign players to bypass Western sanctions, enabling them to cooperate with Russian companies hit by the restrictions.

Domestically, some 500 participants, including major Russian financial institutions and companies, have already joined the SPFS network.

The above seven paragraphs are all there is to this news story that appeared on the rt.com Internet site at 2:53 p.m. Moscow time on their Saturday afternoon, which was 8:53 a.m. in Washington —  EDT plus 7 hours.  The story comes courtesy of Larry Galearis — and another link to it is here.


Combined Russia, China Treasury Holdings Hit 9-Year Low as Foreigners Keep Dumping U.S. Stocks

For the fifth month in a row, US total cross-border investment was an outflow (-$7.8bn) –  the longest streak of outflows since 1982…Click to enlarge.

Additionally, Foreign official institutions (central banks and reserve funds) sold Treasuries for 8th consecutive month, dumping $197BN in that time (they have also sold for 12 of the past 13 months).

After four straight months of buying, the U.K. led the Treasury selling in April, dumping $16.3bn…

Japan and Ireland also sold Treasuries, but it was China that was most notable as the resumption of selling ($7.5bn in April) took their Treasury Holdings down to lowest since May 2017…

But, the real action was away from bonds, with foreigners selling U.S. Stocks for a record 12th consecutive month…

Finally, we thought this worth noting. Combined Russia and China Treasury holdings are at their lowest since June 2010 as China and Russia’s gold holdings have soared…

This rather interesting chart-filled commentary put in an appearance on the Zero Hedge website at 4:20 p.m. on Monday afternoon EDT — and another link to it is here.


India’s Modi wades into Eurasianism

The Bishkek Declaration, issued after the summit meeting (June 14-15) of the Shanghai Cooperation Organisation devotes one sentence praising China’s Belt and Road Initiative: “The Republic of Kazakhstan, the Kyrgyz Republic, the Islamic Republic of Pakistan, the Russian Federation, the Republic of Tajikistan and the Republic of Uzbekistan reaffirm their support for China’s Belt and Road Initiative and praise the results of the Second Belt and Road Forum for International Cooperation (which was held in April 26).”

India kept aloof. Any surprises here? Not, at all. In broad daylight, India had been shouting and screaming from the roof top that the BRI was no good, that it led to ‘debt trap’. India’s condemnation of the BRI was so impolite bordering on crass rudeness in the pre-Wuhan era with then Foreign Secretary S. Jaishankar once even called Chinese President Xi Jinping by name at an international conference in New Delhi and counselled him as to how to go about executing his pet project.

But times have changed. Neither did India block the Bishkek Declaration nor did other member countries try to shove the Chinese project down the Indian throat. They didn’t even have to agree to disagree. The fact of the matter is that India’s condemnation of the BRI got toned down to criticism over time and incrementally mellowed to a deafening silence through the past year or so. PM Narendra Modi paid no attention to the BRI in his speech at the SCO summit.

Modi preferred instead to work on the “Wuhan Spirit”, conveying to Xi Jinping at their “extremely fruitful” meeting in Bishkek on June 13 that in the period since April last year, strategic communication between the two countries has “improved” at all levels and in that context only some of the long-pending issues such as Masood Azhar’s designation as global terrorist could be resolved.

This in-depth commentary/story put in an appearance on the indianpunchline.com Internet site on Monday.  It was written by former Indian diplomat M.K. Bhadrakumar — and it’s the second contribution of the day from Larry Galearis.  Another link to it is here.


Swiss refiner Metalor to stop processing artisanal gold

Switzerland’s Metalor, one of the world’s biggest gold refineries, said on Monday it would work only with gold from large industrial mines in order to reduce the risk of illegality in its supply chain.
Informal methods of gold production, known as “artisanal” or small-scale mining, have grown rapidly in recent years as demand for gold has boomed, pushing prices higher.

Artisanal mining provides a livelihood to millions of people, often in poorer countries in South America, Africa and Asia. But it often leaks chemicals into rocks, soil and rivers, working conditions can be appalling and the gold such mining yields is often smuggled or used to launder money.

Metalor said it would stop working with artisanal mines or collectors and aggregators – companies which collect and resell gold from artisanal mines – because of the difficulty of ascertaining the mines’ legality and the origin of the gold.

I’m sure other precious metal refiners, if not in Switzerland, will be more than happy to take up the slack.  This Reuters article, filed from London, put in an appearance on their Internet site at 2:06 a.m. EDT on Monday morning — and I lifted it from a GATA dispatch last night.  Another link to it is here.


The PHOTOS and the FUNNIES

Our brief trip to Salmon Arm on April 27 was spoiled somewhat by less than ideal weather, which got worse the longer we stayed.  The first photo was taken in the town looking out across one of the arms of Shuswap Lake — and as I noted in my Saturday photos, the water level is very low — and the pier at the centre of the shot is pretty close to high and dry.  The second shot was of a pair of juvenile female common mergansers that were swimming in a channel that led out to the lake.  I was just too lazy to get the telephoto out of the car — and this was the best I could do with my ‘walk around’ lens.  The third shot was taken about three miles out of town — and Mount Ida in the background might pass as Mount Doom in J.R.R. Tolkien’s ‘Lord of the Rings‘ trilogy on this particularly gloomy day. Click to enlarge.


The WRAP

After killing the precious metal rallies on Friday…particularly those in gold and silver, ‘da boyz’ had them back in ‘care and maintenance’ mode on Monday.  The Big 6 weren’t allowed to go anywhere — and all six were closed lower, or had intraday lows lower than last Friday’s closes.

For the moment, they aren’t being allowed to reflect the weakness in the U.S. dollar, or as an alternative investment class for the masses…even though the big money boys are telling the world that they’re invested there big time.

As British economist Peter Warburton said back in 2001…”On the other hand, [central banks] incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the U.S. dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely-traded market for non-financial assets.”

That would a big 10-4…good buddy — and we saw it spades on Friday — and again on Monday.

Here are the charts for the four precious metals, plus copper and WTIC from the folks over at the stockcharts.com Internet site as always — and you can see their handiwork for yourself.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I note that gold price stair-stepped its way a bit higher in Far East trading on their Tuesday. It then took off with some authority a few minutes before 2 p.m. CST, but was capped and turned lower at the 2:15 p.m. afternoon gold fix in Shanghai. It has turned higher once again in the last few minutes — and is up $6.70 an ounce at the moment. The silver price chopped quietly sideways until around 12:20 p.m. CST — and then began to head a bit higher from there…running into the same not-for-profit sellers at the Shanghai gold fix. It has ticked a penny higher in the last few minutes as well — and is up 6 cents currently. Platinum was down four bucks by around 10:30 a.m. CST, but also caught a bid just before 2 p.m. — and it’s up 6 dollars at the moment. Palladium crept very unevenly higher and was up 6 dollars by 2 p.m. China Standard Time. It took off higher from that juncture, only stopping briefly at the fix — and has blasted higher since — and is now up 26 dollars as Zurich opens.

Net HFT gold volume is a bit over 47,000 contracts — and there’s only 896 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is about 9,500 contracts — and there’s only 881 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened down 3 basis points once trading commenced 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 hit its currently low tick around 1:50 p.m. CST — and is off that low by a hair…and down 12 basis points as of 7:45 a.m. in London/8:45 a.m. in Zurich.


I received an interesting e-mail from one of my subscribers from Orlando, Florida — and he had a message for all of my U.S. subscribers.  It was this…”you may want to mention to your subscribers that their subscription to your newsletter is, in most cases, a tax-deductible business expense, if it is listed as a subscription to a resource offering guidance in economic matters (which is exactly what it is).”  Being a Canadian, living in Canada, I know zero about U.S. tax law — and this is something that best be discussed with your accountant and/or the IRS.  I’m just the messenger here.

Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and unless there’s something that changes radically during the Tuesday trading session, I’m expecting that we’ll see further increases in the commercial net short positions in both silver and gold.


And as I post today’s missive on the website at 4:02 a.m. EDT, I see that ‘da boyz’ have continued to work the gold price lower since the afternoon gold fix in Shanghai — and it’s up only $5.20 the ounce as the first hour of London trading ends. Ditto for silver — and it’s up only 3 cents now. Platinum’s rally got capped and turned lower at the Zurich open — and it’s up only 3 bucks. Palladium’s price was capped a few minutes before the Zurich open — and it’s up 24 dollars as the first hour of Zurich trading draws to a close.

Net HFT gold volume is now up to a bit over 57,000 contracts — and roll-over/switch volume is still only 966 contracts. Net HFT silver volume is about 11,700 contracts — and there’s 1,103 contracts worth of roll-over/switch volume in this precious metal.

The dollar index has assumed its descent — and as of 8:45 a.m. BST in London/9:45 a.m. CEST in Zurich, it’s down 15 basis points.

Today is the start of the FOMC meeting in Washington — and I’ll be the most surprised person in the world if they cut interest rates when the smoke goes up the proverbial chimney at the Eccles Building on Wednesday…thirty minutes after the COMEX close.  But if they do, then it’s a sure indication that the economic and financial situation is far more dire than even I imagined it to be.

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

Ed