JPMorgan et al: All Guns Blazing Once Again

19 June 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crept higher in Far East trading on their Tuesday morning — and that lasted until shortly before 2 p.m. China Standard Time.  It shot higher into the 2:15 p.m. CST afternoon gold fix in Shanghai — and from that juncture chopped quietly sideways until the noon silver fix in London. It began to head higher from there with renewed vigor, only to run into ‘something’ a minute or so after 8:30 a.m. EDT.  The gold price edged sideways from there until, like on Monday, got hammered lower starting about ten minutes after the equity markets opened in New York.  The low tick of the New York session came at the 10 a.m. EDT afternoon gold fix in London.  From that point it rallied until shortly before 11:30 a.m.  That rally was capped — and turned a bit lower by noon EDT — and the price didn’t do much after that.

The low and high and high ticks were reported by the CME Group as $1,342.10 and $1,358.50 in the August contract.

Gold was closed in New York yesterday at $1,345.90 spot, up $7.00 on the day.  Net volume was humongous once again at just over 367,500 contracts, as JPMorgan et al were at battle stations almost all day long as short sellers of both first and last resort.  There was a bit over 10,500 contracts worth of roll-over/switch volume on top of that.

The silver price was handled in the exact same manner as the gold price on Tuesday, almost to the tick and, like the preceding two days of price activity, I’ll skip the play-by-play…as you read it in the gold commentary already.  But I will mention that silver’s time above $15 spot yesterday, wasn’t allowed to last long.

The low and high ticks in this precious metal were recorded as $14.80 and $15.08 in the July contract.

Silver was closed on Tuesday at $14.96 spot, up 14.5 cents on the day.  Net volume was pretty heavy at a hair under 81,500 contracts — and there was just under 25,500 contracts worth of roll-over/switch volume out of July and into future months.

The platinum price was sold lower until just after the 10:15 a.m. morning gold fix in Shanghai on their Tuesday — and from there it didn’t do much until, like gold and silver, began to head sharply higher shortly before 2 p.m. CST.  The rest is about the same as it was for the previous two precious metals, except that after the afternoon gold fix in London, it rallied quietly higher until around 2:30 p.m. in the thinly-traded after-hours session.  From there it traded flat until the market closed at 5:00 p.m. EDT.  Platinum was closed back above the $800 mark at $802 spot, up 9 bucks from Monday.

The palladium price was up 6 dollars by 2 p.m. CST on their Tuesday afternoon — and its price really began to sail at that juncture.  The price was capped a few minutes before the Zurich open — and after getting sold lower by a bit, it crawled quietly higher until the 11 a.m. EDT Zurich close.  From that point it was sold lower until around 12:20 p.m. in New York trading — and it didn’t do anything after that.  Palladium was closed at $1,459 spot, up 23 dollars on the day.

The dollar index closed very late in New York on Monday afternoon at 97.56 — and then opened down 3 basis points once trading commenced at 7:45 p.m. EDT on Monday evening…7:45 a.m. CST in Shanghai on their Tuesday morning.  It began to creep quietly lower from there, with the 97.37 low tick coming at 3:30 p.m. CST on their Tuesday afternoon, which was thirty minutes before the London open.  It crept a bit higher from there — and then Draghi spoke in Portugal a few minutes before the 8:00 a.m. London open.  All the gains that mattered were in by 8:40 a.m. BST — and it began to chop very unevenly lower from there, although the 97.77 high tick came at 10:20 a.m. in New York.  That quiet and uneven decline ended shortly after 4 p.m. EDT — and it didn’t do much of anything going into the 5:30 p.m. close.  The dollar index finished the Tuesday session at 97.64…up 8 basis points from Monday’s close.

It should be pretty clear, except to the willfully blind, that the precious metal price action yesterday had zero to do with what was going on in the currency market.

Here’s the usual DXY chart from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart from the folk over at the stockcharts.com Internet site.  The delta between its close…97.15…and the close on the DXY chart above, was 49 basis points on Tuesday.  Click to enlarge as well.

The gold stocks gapped up at the open, but ran into sharp selling almost immediately — and were back below unchanged by 10:30 a.m. in New York trading, with their respective low ticks coming about ten minutes later.  They rallied back above unchanged in very short order — and that lasted until around 12:40 p.m. EDT.  At that point they were sold quietly lower until around 2:30 p.m. — and crept higher into the 4:00 p.m. close from there.  The HUI finished higher by 1.02 percent.

The silver equities were up about 2.5% within the first fifteen minutes of trading in New York yesterday morning,but were then sold even more violently lower then the gold shares at that juncture. Although they were back above unchanged by shortly after 11 a.m. EDT, they didn’t do much after that.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index, which is now back to normal, actually finished down 0.40 percent.  Click to enlarge if necessary.

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

I highly suspect that ‘da boyz’ were in there shorting whatever amount of precious metal shares necessary to prevent them from blasting skyward.  But that short interest data won’t be made public for another three weeks, because it occurred after the June 15 cut-off for next week’s report.


The CME Daily Delivery Report showed that 19 gold and 38 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, Advantage issued all 19 — and the three long/stoppers were JPMorgan, Bank of American Securities and Advantage…with 8, 7 and 4 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the only short/issuer that mattered was Goldman, delivering 37 contracts from its client account.  The only two long/stoppers were HSBC USA and JPMorgan…HSBC picking up 32 contracts for its own account — and JPMorgan the other 6 for its client 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 274 contracts, leaving 195 still open, minus the 19 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 301 gold contracts were actually posted for delivery today, so that means that 301-274=27 more gold contracts were just added to the June delivery month.  Silver o.i. in June rose by 35 contracts, leaving 239 still around, minus the 38 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that only 3 silver contracts were posted for delivery today, so that means that 3+35=38 more silver contracts were just added to June — and I suspect that those are the same 38 contracts that are out for delivery on Thursday.


There were no reported changes in either GLD or SLV on Tuesday.

There was some activity in gold over at the COMEX-approved depositories on Monday, as 22,505.000 troy ounces/700 kilobars [U.K./U.S. kilobar weight] were received at Canada’s Scotiabank.  Nothing was reported shipped out.  The link to that is here.

But it was busier in silver, as it almost always is.  There was 597,102 troy ounces reported received — and that all ended up at JPMorgan.  There was also a total of 155,075 troy ounces shipped out…98,733 troy ounces from Scotiabank…39,896 troy ounces from CNT — and 26,445 troy ounces from the International Depository Services of Delaware.  The link to all this activity is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  Nothing was reported received — and only 260 kilobars were shipped out.   All of that activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Rillaton Gold Cup is a biconical gold vessel, about 90mm/3.5 inches high, with a handle attached with rivets. The cup resembles a late Neolithic (approx 2300 BC) ceramic beaker with corded decoration — and until 2007 was thought to date to a much later period of c. 1650-1400 B.C. In 2001 the similar Ringlemere Cup was found which has a similar corded style termed grooved ware, though it was (and remains) crushed nearly flat. Subsequent theories that it might have been deposited as a votive offering have now been abandoned in favour of it being part of the original grave goods in the Ringlemere barrow.

After their discovery in 1837 the finds were sent as Duchy Treasure trove to King William IV, and remained in the royal household. After the death of King George V in 1936 the importance of the cup and associated dagger came to be appreciated, leading to their loan to the British Museum, where the cup remains on show next to the similar Ringlemere Cup, though still belonging to the Royal Collection. The other objects found with the cup have now disappeared, and “no useful descriptions or depictions are known“.  Click to enlarge.

I only have a small handful of stories/articles for you today.


CRITICAL READS

Jim Grant: Fed Will Cut [Today]

Grant’s Interest Rate Observer founder and editor, Jim Grant, recently spoke with CNBC and shared his belief that the Fed will cut rates on June 19th, far sooner than the markets are expecting.

I think this is becoming less about Keynes and more about Pavlov. The market has been condition to demand a rate cut when it feels a little weak in the knees.”

I think (the desire for cuts) is based in some part of the shape of the yield curve, which is everyone’s favorite data now. Indeed, it looks as if the Fed were too tight. My question is, take a longer view: We had a tech problem in 2001. The Fed accommodated that with a 1% funds rate in the hopes of levitating home prices to compensate for the decline in stock prices. They succeeded. In the wake of the mortgage difficulties of 2008, the Fed has given us approximately a decade worth of very concessionary monetary policy. Now…, I think they are going to cut in June (tomorrow). But you wonder where it ends… That is my view, that they will cut preemptively in June… I think they will cut more than once this year and they will start in June.”

I (asked John Williams at the Council of Foreign Relations)… given the well known tendency of very low rates to incite speculation and the misallocation of resources, and given the well observed tendency of the Fed to intervene to squash difficulties in the market, is not the Fed now operating on the de-facto dual mandate of arsonist and fireman?

This very worthwhile 5:52 minute CNBC video interview is embedded in an article over at thesoundlingline.com Internet site on Tuesday, June 18.  I thank Brad Robertson for pointing it out — and another link to it is here.


Housing Starts Slide In May, Despite Plunging Rates

Despite the hype of soaring mortgage applications (refis, not purchases) and home builder stocks, housing starts tumbled 0.9% MoM in May (drastically missing expectations for a 0.3% rise), and while permits rose a better than expected 0.3% MoM, it remains very flat for the last six months.  Click to enlarge.

Multi-family permits fell in May (to 820k) as single-family rose modestly (to 449k)…

The better than expected print for overall starts (at 1.294mm), was thanks to a massive spike in rental units…

Breakdown:

  • Housing Starts 1-Unit: -6.4%, from 876K, to 820K
  • Housing Starts Multi Unit: +13.8%, from 383K to 436K

Not exactly a picture of health for the future of millennial home ownership as rental nation remains front and center, despite plunging mortgage rates.

This brief 4-chart Zero Hedge story showed up on their Internet site at 8:38 a.m. EDT on Tuesday morning — and I thank Brad Robertson for this one.  Another link to it is here.


Euro, Bund Yields Slide, Stocks Rebound as Draghi Clears Way For More Stimulus

We’re amazed that anybody could still be surprised that the European Central Bank might be heading toward more stimulus, particularly after Mario Draghi’s “whatever it takes 2.0” comment earlier this year, but nevertheless, the euro sank and markets shifted into a decidedly more risk-on mode after the outgoing central bank president said during the ECB’s annual conference in Sintra, Portugal that interest-rate cuts are part of the central bank’s “toolkit,” and asset purchases are also an option.

Italian bonds extended gains, outperforming other peripheral peers, while the yield on the 10-year German bund fell to a fresh all-time low, in response to Draghi’s remarks. The European Stoxx 600 Index erased earlier declines of as much as 0.5% to rise 0.4%, and the euro erased earlier gains. S&P 500 futures extend gains to a session high at 0.3%, tracking European shares.

Draghi said risks from geopolitical factors, protectionism and vulnerabilities in emerging markets have not dissipated and are weighing on the Continent’s manufacturing industry. Major central banks around the world have taken a dovish turn since the start of the year, with many blaming the drop in global trade. Later this week, both the Fed and BoJ will meet, and, with markets pricing in ever-greater chances of a Fed rate cut that some believe could arrive as soon as Wednesday.

To underscore Draghi’s point, Germany’s ZEW investor expectations index tumbled to -21.1, far below the estimate of -5.6, a sign that sentiment continues to deteriorate.

The continuing race to the bottom.  This Zero Hedge news item appeared on their website at 5:23 a.m. EDT on Tuesday morning — and it comes to us courtesy of Brad Robertson.  Another link to it is here.  There was a follow-on ZH article a few hours later headlined “Draghi Unleashes Global Chaos With Preview of More Stimulus, Prompts Angry Response From Trump” — and I thank Brad for that one as well.


Iran at the center of the Eurasian riddle — Pepe Escobar

With the dogs of war on full alert, something extraordinary happened at the 19th summit of the Shanghai Cooperation Organization (SCO) late last week in Bishkek, Kyrgyzstan.

Virtually unknown across the West, the SCO is the foremost Eurasian political, economic and security alliance. It’s not a Eurasian NATO. It’s not planning any humanitarian imperialist adventures. A single picture in Bishkek tells a quite significant story, as we see China’s Xi, Russia’s Putin, India’s Modi and Pakistan’s Imran Khan aligned with the leaders of four Central Asian “stans”.

These leaders represent the current eight members of the SCO. Then there are four observer states – Afghanistan, Belarus, Mongolia and, crucially, Iran – plus six dialogue partners: Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and, crucially, Turkey.

The SCO is bound to significantly expand by 2020, with possible full membership for both Turkey and Iran. It will then feature all major players of Eurasia integration. Considering the current incandescence in the geopolitical chessboard, it’s hardly an accident a crucial protagonist in Bishkek was the ‘observer’ state Iran.

Iranian President Hassan Rouhani played his cards masterfully. Rouhani speaking directly to Putin, Xi, Modi and Imran, at the same table, is something to be taken very seriously. He blasted the U.S. under Trump as “a serious risk to stability in the region and the world”. Then he diplomatically offered preferential treatment for all companies and entrepreneurs from SCO member nations committed to investing in the Iranian market.

This longish commentary by Pepe, is certainly worth reading if you have the interest.  Normally I would save a piece like this for Saturday, but it was a slow news day yesterday, so I though I’d include it.  I thank Larry Galearis for sending it our way.  It was posted on the asiatimes.com Internet site on Sunday — and another link to it is here.


How 7.4 tonnes of Venezuela’s gold landed in Africa — and then vanished

The government of Venezuelan President Nicols Maduro is selling off his country’s gold reserves. Some of it has passed through a secretive operation in East Africa, a gambit that evades U.S. sanctions.

On two early-March flights, at least 7.4 tons of gold with a market value over $300 million moved from Venezuela to a refinery in Uganda, say officials in Venezuela and Uganda, a foreign diplomat, and Venezuelan opposition lawmakers, who have concluded Mr. Maduro’s government exported the ingots.

The gold arrived on a Russian charter jetliner in two shipments at the international airport in Entebbe, says Ugandan national-police spokesman Fred Enanga. The accompanying paperwork identified the ingots, some with stamped labels partially scratched off, as Venezuelan central-bank property, says a senior Ugandan police officer who saw the bars and documents. Flight records show the trips originated in Caracas, Venezuela.

The shipments expose one link in a global underground economy many suspect is helping Mr. Maduro cling to power by bypassing the U.S.-dominated international finance system. Washington has recognized opposition leader Juan Guaido as Venezuela’s legitimate president, slapped financial and other sanctions on Venezuelan officials and institutions, and threatened penalties for others doing business with the regime.

The above four paragraphs are all there is of this Wall Street Journal article…filed from Entebbe, Uganda…that was posted in the clear on their Internet site at 10:23 a.m. EDT on Tuesday morning.  The rest is hidden behind their subscription wall.  I found this in a GATA dispatch late last night — and another link to it is here.


The PHOTOS and the FUNNIES

After a cloudy and rainy visit to Salmon Arm the week prior, we were off to Penticton on April 28 under sunny skies and very warm temperatures…too warm for me.  The first two photos were taken on the east side of Okanagan Lake just north of Penticton en route to a town called Naramata…in wine-producing country. The topography is reminiscent of a blend of Southern California and Southern Italy.  Across the lake in the first shot, is the town of Summerland…soft fruit and more wine country over there.  The third photo was taken along the beach in the Naramata…as it’s more a collection of houses than anything else.  The weeping willow trees were leafing out — and there was the odd fruit blossom here and there, but very little signs of life in most of the vineyards we drove past.  Click to enlarge.


The WRAP

One of the greatest delusions in the world is the hope that the evils in this world are to be cured by legislation.” — Thomas Reed


It was yet another day where the powers-that-be were at the ramparts almost all day long to prevent a rush to precious metals that would doom the paper monster that they’ve created since Nixon “temporarily” took the U.S. off the gold standard forty-eight years ago.

They used whatever paper it took to tame the beast yesterday, but in the end it is a battle that they simply cannot win.  However, they obviously aren’t going to go down without a fight.  But it will be a fight in the paper markets mostly, as physical metal in quantity is almost impossible to come by, unless some central bank in the world is prepared to open their vaults and sell it at today’s price in the current economic, financial and monetary nightmare that the world faces today.  Good luck with that, as it ain’t going to happen!

Here’s a chart that I plucked out of a commentary on the dailyreckoning.com Internet on Monday — and today’s column is the perfect place to post it.  They say that “a picture is worth a thousand words” — and this one speaks volumes.  No other comments are required — and the ‘click to enlarge’ feature does not help.

Here are the 6-month charts for the Big 6 commodities once again.  The only things worth noting was that silver closed above its 200-day moving average again yesterday, palladium continues to rally — and WTIC caught a bid.  Click to enlarge for all.

And as I type this paragraph, the London open is a minute or two away — and I see that gold, silver and platinum prices have been trading quietly sideways-to-down a bit in Far East trading on their Wednesday. Gold is down 90 cents currently — and silver is lower by 1 cent. Platinum is back at unchanged now — and palladium, as usual, is bucking that trend — and up 5 dollars as Zurich opens.

Net HFT gold volume is coming up on 49,500 contracts — and there’s only 925 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is around 12,200 contracts — and there’s 1,079 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened unchanged once trading commenced at 7:45 p.m. EDT in New York on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning. It has been chopping quietly sideways since — and is down 2 basis points as of 7:45 a.m. in London/8:45 a.m. in Zurich.


If there was a more eagerly anticipated outcome to a Fed meeting, I can’t remember when it was…if ever.  Will they or won’t they?  If they don’t, they’ll do the deed in July — and the result will be the same…a much lower dollar and much higher precious metal prices.  All the’re doing is putting off the inevitable, especially considering what Mario Draghi had to say when he opened his pie hole in Portugal early yesterday morning.  Trump was not amused — and I’m sure that Mr. Powell wasn’t, either.

Yesterday, at the close of COMEX trading, was also the cut-off for this Friday’s Commitment of Traders Report — and I don’t even have to look at the 6-month charts in both gold and silver to know that it will be butt-ass ugly for the second week in a row.  Ted will certainly have his guesstimates in his mid-week commentary this afternoon — and I’ll borrow a few sentences for my Friday missive.


And as I post today’s efforts on the website at 4:02 a.m. EDT, I note that the gold price is still chopping quietly sideways, but has slid a bit during the first hour of London trading — and is now down $2.60 the ounce. Silver is now lower by 4 cents — and platinum by 2. But palladium spiked higher right at the Zurich open — and got capped immediately — and driven lower by a bit, but is now up 9 dollars as the first hour of Zurich trading draws to a close.

Net HFT gold volume is now up to just under 60,000 contracts — and there’s still only 1,024 contracts worth or roll-over/switch volume on top of that. Net HFT silver volume is up to 14,800 contracts — and there’s 1,404 contracts worth or roll-over/switch volume in that precious metal.

The dollar index hasn’t done a thing during the last hour — and as of 8:45 BST in London/9:45 a.m. CEST in Zurich, it’s down 2 basis points.

That’s it for today.  We’ll get ‘The Word’ at 2:00 p.m. EDT — and it’s a given that there will be big price activity in both gold and silver.  And it’s also a given that JPMorgan et al will be there with bells on — and all guns blazing once again.

See you tomorrow.

Ed