Wednesday: A Foreshock of Things to Come?

20 June 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much in Far East or London trading on their respective Wednesday’s — and was a few dimes below unchanged when ‘The Word’ came down from the Fed at 2 p.m. EDT yesterday.  It shot higher by about ten bucks, but that spike rally was summarily capped — and the gold price traded sideways until the equity markets closed at 4:00 p.m. in New York.  Then away it went to the upside with some real authority — and it was up ten bucks in short order before ‘da boyz’ stepped in and tapped it a bit lower around 4:20 p.m. in the thinly-traded after-hours market.  It didn’t do much after that.

The low and highs in gold yesterday were reported as $1,344.80 and $1,366.60 in the August contract.

Gold finished the Wednesday session in New York at $1,359.90 spot, up $14.00 on the day.  Net volume was enormous once again at just under 322,500 contracts — and there was a bit over 10,500 contracts worth of roll-over/switch volume on top of that.

The silver price didn’t do much in Far East trading yesterday, but the price began to edge quietly lower starting minutes after the London open.  That lasted until 1 p.m. BST/8 a.m. EDT — and it was back at unchanged an hour later.  From there it traded pretty flat until Powell spoke — and it was traded in a similar price pattern as gold for the remainder of the New York session…including a quick rally at 4:00 p.m. EDT.

The low and high ticks were recorded by the CME Group as $14.905 and $15.085 in the July contract.

Silver finished the day at $15.13 spot, up 17 cents from Tuesday’s close.  Net volume was very decent, but not huge, at just over 66,000 contracts — and there was 22,500 contracts worth of roll-over/switch volume out of July and into future months.

The platinum price chopped aimlessly sideways in Far East trading on their Wednesday — and was back at unchanged by the Zurich open.  From there it inched lower…like both gold and silver…until 2 p.m. in Zurich/8 a.m. in New York.  It jumped up a bit at that juncture — and back above unchanged within the next thirty minutes.  An hour later it was edging quietly higher.  That rally lasted until just before the market closed at 5:00 p.m. EDT.  Palladium finished the Wednesday session at $810 spot, up 8 bucks from Tuesday.

Palladium was up 4 dollars by the Zurich open — and then jumped up a bunch more at that point — and from there it crept quietly and unevenly higher until 4 p.m. in the thinly-traded after-hours in New York.  It traded flat into the close from there.  Palladium ended the day up another 24 dollars at $1,484 spot.

The dollar index closed very late on Tuesday afternoon in New York at 97.64 — and opened unchanged once trading commenced at 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning.  It didn’t do a thing until 12:55 p.m. CST — and at that point began to slowly fade.  That uneven decline ended abruptly a few minutes before the the Fed news broke — and then it cratered.  The usual ‘gentle hands’ had their work cut out for them at the juncture — and it took about an hour and twenty minutes to stabilize it.  The index didn’t do much after that.  The dollar index finished the Wednesday session at  97.12…down 52 basis points from its close on Thursday.  But that’s not what the DXY chart below actually shows — and why the big discrepancy, is unknown.

And it should be carefully pointed that there was absolutely no currency movements whatsoever at 4:00 p.m. EDT when both silver and gold took off higher.  That was strictly a COMEX paper affair.

Here’s the DXY chart courtesy of BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the good folks over at the stockcharts.com Internet site once again.  The delta between its close…97.15…and the close on the DXY chart above, was +3 basis points on Wednesday.  Normally this discrepancy is a negative number. It was -50 basis points on Tuesday.  Click to enlarge as well.

The gold stocks opened down a percent and change once trading commenced at 9:30 a.m. EDT in New York yesterday morning — and then crept a bit higher going into the Fed news.  They took off at that point — and back into positive territory by a bit.  They followed the gold price almost tick for tick after that — and they ended up closing on their respective highs of the day, as the HUI closed up 1.48 percent.

The silver equities behaved in an almost identical manner as their golden brethren during the Wednesday trading session — and Nick’s Silver Sentiment/Silver 7 Index higher by 1.16 percent.  Click to enlarge if necessary.

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

Of course, indications of the big rallies in gold and silver that commenced the moment the markets closed at 4:00 p.m. yesterday afternoon in New York, are nowhere to be found on the above charts — but will certainly be reflected in Thursday’s trading action.


The CME Daily Delivery Report showed that 85 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, there were four short/issuers in total, with the two largest being Advantage and Morgan Stanley with 49 and 26 contracts.  There were three long/stoppers…Advantage picking up 42…JPMorgan stopping 36 — and Bank of America Securities taking the other 7.  All contracts, both issued and stopped, involved their respective client accounts.

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

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in June rose by 103 contracts, leaving 298 still around, minus the 85 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 19 gold contracts were actually posted for delivery today, so that means that 103+19=122 more gold contracts were just added to the June delivery month.  Silver o.i. in June declined by 38 contracts, leaving 33 still open.  Tuesday’s Daily Delivery Report showed that 38 silver contracts were actually posted for delivery today, so the change in open interest and deliveries match.


There were no reported changes in either GLD or SLV on Wednesday — and I would suspect that both are still owed a goodly amount of physical metal.

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

There was a tiny bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.  Nothing was reported received — and 295 troy ounces was shipped out.  That activity was at Brink’s, Inc. — and I won’t bother linking it.

it was a different story in silver, as 1,131,756 troy ounces was reported received — and 684,770 troy ounces were shipped out.  In the ‘in’ category, there was one truckload…598,238 troy ounces…received at CNT — and the other smallish truckload…533,517 troy ounces…was dropped off at JPMorgan.  In the ‘out’ category, there was one truckload…597,810 troy ounces…shipped out of CNT.  The remaining amounts were shipped out of Loomis International and Brink’s, Inc…80,017 troy ounces and 6,942 troy ounces respectively.  The link to all this activity is here.

That deposit into JPMorgan brings their total COMEX silver stash up to the 152.9 million troy ounce mark — and here’s the chart from Nick Laird that shows the current situation.  They’re almost back at their old high inventory mark they held in November of 2018.  But can their silver vault hold any more than that? Click to enlarge.

There was no in/out movement recorded over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.


The Ringlemere Gold Cup is a Bronze Age vessel found in the Ringlemere barrow near Sandwich in the English county of Kent in 2001.

The body of the cup was created by hammering a single piece of gold, with the handle cut from a flat strip of gold and attached by rivets. Although badly crushed by recent plough damage it can be seen to have been 14 cm/5.5 inches high with corrugated sides. The cup resembles a late Neolithic (approximately 2300 B.C.) ceramic beaker with Corded Ware decoration, but dates to a much later period.

It is thought that the cup was not a grave good, but a votive offering independent of any inhumation, which was placed at the centre of the barrow in about 1700–1500 BC.

The cup was discovered by metal detectorist Cliff Bradshaw on 4 November 2001. He reported the find to the local coroner’s office, and through the Portable Antiquities Scheme and the Treasure Act 1996 the cup was recorded and declared to be treasure in 2002. It was bought by the British Museum for £270,000 (then roughly US$520,000), with the money paid split between Bradshaw and the Smith family who own Ringlemere Farm. The money to secure the cup for the nation was raised through donations by the Heritage Lottery Fund, the National Art Collections Fund and The British Museum Friends.  Click to enlarge.

Except for the Fed announcement yesterday, it was a pretty quiet news day.


CRITICAL READS

No, Rate Cuts Were Not Discussed: ECB Insiders Out Draghi as Fabricator & Schemer, and Talk to Reuters Wolf Richter

Draghi’s shenanigans get hilarious, months before his term ends.

So here’s ECB President Mario Draghi, whose term ends in October, and he’s at the ECB Forum in Portugal, and in a speech on Tuesday titled innocuously, “Twenty Years of the ECB’s monetary policy” – so this wasn’t a press conference after an ECB policy meeting or anything, but a speech on history at an ECB Forum – he suddenly threw out a whole bunch of stuff…

How, “in the absence of improvement” of inflation, “additional stimulus will be required,” in form of “further cuts in policy interest rates” and additional bond purchases, and how “in the coming weeks, the Governing Council will deliberate how our instruments can be adapted commensurate to the severity of the risk to price stability,” and that “all these options were raised and discussed at our last meeting.”

Whoa! Wait a minute, said the good folks who were part of the ECB’s June meeting. These options were not discussed, they told Reuters on Tuesday.

Draghi had ventured out there on his own – apparently trying to push his colleagues into a corner single-handedly as his last hurrah.

This worthwhile commentary from Wolf appeared on the wolfstreet.com Internet site on Monday — and I thank Richard Saler for sharing it with us.  Another link to it is here.


Trump moves from trade war toward currency war

President Donald Trump has already given the global economy trade wars. Now there are signs he may be gearing up for a currency war too.

With a series of tweets on Tuesday aimed at the European Central Bank and an announcement by Mario Draghi, its president, that he was prepared to cut interest rates further below zero in response to Europe’s slowing growth, Trump made a rare American presidential intervention into another economy’s monetary policy.

Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others,” he tweeted. Later, he added: “German DAX way up due to stimulus remarks from Mario Draghi. Very unfair to the United States!

It was not the first time Trump has blamed currency manipulation overseas for a strong dollar that raises the cost of U.S. exports. He has already become unique among recent American presidents in a shift away from the “strong dollar’’ policy of his predecessors.

By targeting Draghi directly and responding in real time to an overseas central bankers’ policy pronouncement, Trump was dialing up the heat — just as his own Federal Reserve was gathering in Washington to decide on rates in a decision expected Wednesday. Coming just days ahead of a summit with other Group of 20 leaders in Japan, the salvo served to highlight his administration’s increasingly aggressive currency policies and the place he sees for them in his trade arsenal.

This Bloomberg article showed up on their Internet site at 11:48 p.m. PDT on Tuesday night — and I found it in a GATA dispatch yesterday.  Another link to it is here.


The Fed Prepares for Mistake #3 — Bill Bonner

Since then, GDP growth rates have gone down; real incomes for real people – in America – have declined. And a large part of the public has shifted from looking forward to the future to looking backward to the good ol’ days. From a positive-sum, win-win world… it ebbed back to a zero-sum, win-lose world.

From Greed to Fear, that is.

That’s what we’re calling the big moves in our Dow-to-Gold gauge. It peaked out in 1999 at over 40 (it took more than 40 ounces of gold to buy the Dow). Today, it’s around 20.

Three times in the last century, the gauge went below 5. Our guess is that it would have reached its rendezvous with destiny again – below 5 ounces of gold to the Dow – in 2009, had the Fed not intervened.

But the Fed panicked. It then disguised, delayed, and denied the truth of this tidal shift by falsifying the most important price signal in capitalism – the price of capital itself.

Mispricing capital – by setting artificially low interest rates – made the downtrend worse. Growth slowed further. The Swamp deepened. The empire grew bigger and more corrupt.

This interesting and worthwhile commentary from Bill, filed from Dubai yesterday, showed up on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.


Dollar, Bond Yields, & Bank Stocks Tumble After ‘Dovish’ Fed Statement

Not priced in…

The Fed shifted its dot plot notably lower – though 2019 median remains unchanged — and that has sent bond yields and the dollar careening lower….

Dollar dumped to one-week lows… Click to enlarge.

10Y Yields plunged to yesterday’s intraday spike lows…

The major stock indices are higher but not holding knee-jerk gains…

And bank stocks have turned red…

As rate-cut expectations for 2019 accelerated…

And July rate-cut expectations are now at 100%!!

Not mentioned in this article is the fact that silver and gold prices also rallied on the news, but were capped within minutes.  This brief chart-filled article was posted on their website at 2:19 p.m. on Wednesday afternoon EDT — and I thank Brad Robertson for passing it along. Another link to it is here.


Currency war is the next phase of global conflict and Europe, the chief parasite, is defenceless — Ambrose Evans-Pritchard

Europe has been warned. Any use of monetary levers to hold down the euro exchange rate will be deemed a provocation by the Trump administration.

Further cuts in interest rates to minus 0.5 percent or beyond will be scrutinized for currency manipulation. A revival of quantitative easing will be considered a devaluation policy in disguise, as indeed it is, since the money leaks out into global securities and depresses the euro.

The Bank for International Settlements says €300 billion of Europe’s QE funding reached London alone between 2014 and 2017.

If the ECB copies the Swiss National Bank and starts to amass foreign assets directly to cap currency strength Europe will face certain retaliation.

Whether the Swiss can get away with their policy for much longer is an open question. The SNB has foreign holdings of $760 billion — near 120 percent of GDP — and owns slices of Apple, Microsoft, Amazon, Facebook, and Exxon.

As the global economy falters we are entering the next phase of currency warfare. There is going to be an ugly fight for scar[c]e global demand.

Wow!  What a headline!  Ambrose really has his knickers in a twist…calling out poor Mario Draghi like that.  His entire commentary, which was posted late last night BST on the telegraph.co.uk Internet site, certainly falls into the absolute must read category.  It was posted in the clear in its entirety on the gata.org Internet site yesterday evening — and another link to it is here.


Russia Chips Away at U.S. Debt Holdings, Dumping Another $1.6 Bln in Treasuries

The targeted selloff brings Russian holdings of U.S. Treasuries to a 12-year-low; total holdings have fallen by over $150 billion over the last decade.

The Russian Central Bank dumped $1.58 billion in U.S. Treasuries in April, freshly released data from the US Treasury indicate.

According to the figures, Russia’s Treasury holdings dropped from $13.716 billion in March to $12.136 billion in April. The sell-off brought Russia’s US debt holdings to their lowest level since mid-2007.

Russia, once one of the most dependable investors in T-bills, has gradually shaved its holdings amid a worsening in relations with the U.S., dropping out of the top 33 holders last year in a sell-off worth tens of billions of dollars. Less than two years ago, in late 2017, Russian Treasuries holdings stood at over $92 billion. In 2010, when bilateral relations were better, Russia owned over $170 billion in U.S. Treasuries.

The April data also showed that China and Japan dropped some of their (much more sizable) Treasury holdings. China dropped its investment by some $8 billion, from$1.121 trillion in March to $1.113 trillion in April, with the figure Beijing’s lowest in nearly two years.

Japan, the second-largest holder of U.S. debt after China, similarly reduced its T-bill holdings, from $1.078 trillion in February to $1.064 in April, indicating a drop of $13 billion.

This story showed up on the sputnik news.com Internet site at 2:09 p.m. Moscow time on their Tuesday afternoon, which was 7:09 a.m. in Washington — EDT plus 7 hours.  I found it on the Sharps Pixley website — and another link to it is here.


8 Reasons a Huge Gold Mania Is About to Begin — Nick Giambruno

An epic gold bull market is on the menu for 2019.

I’m not talking about a garden-variety cyclical gold bull market, but rather one of the biggest gold manias in history.

This gold mania will be riding the wave of an incredibly powerful trend… the re-monetization of gold.

The last time the international monetary system experienced a paradigm shift of this magnitude was in 1971.

Then, the dollar price of gold skyrocketed over 2,300%.

It shot from $35 per ounce to a high of $850 in 1980. Gold mining stocks did even better.

Today, gold is still bouncing around its lows. Gold mining stocks are still very cheap. I expect returns to be at least as great as they were during the last paradigm shift.

So let’s get right into it, starting with the first four catalysts that will send gold prices higher…

This gold-related news item is from last week — and I didn’t post it because I’ve already covered everything that Nick talks about in my column on numerous occasions, as reader George Whyte kindly pointed out to me in an e-mail yesterday evening.  But because of the current circumstances, I though it worth posting now — and I thank Larry Galearis for sending it along.  Another link to it is here.  Nick also had a follow-on to this article on the internationalman.com Internet site — and it’s headlined “Why an Epic Bull Market in Gold Is About to Begin“.  Of course how high this rally is allowed to go is still entirely dependent on JPMorgan et al…and they’re showing no signs of backing down as they are selling short against all comers currently…a point that Nick would never point out, even though I’ve explained it to him chapter and verse — and in person.


The PHOTOS and the FUNNIES

After our brief visit to Naramata on the east side of Okanagan Lake, we headed back to Merritt north on B.C. Highway 97 on the west side of the lake…stopping briefly to take these photos, plus a couple more.  The firsts two are just general shots of the shoreline — and looking across the lake.  The last shot shows the town/settlement of Naramata on the other side.  As you can tell, it ain’t much of a place, as there’s almost no sign of it.  The yellowish/green weeping willows along the shoreline was where I took the beach scene that appeared in Wednesday’s column.  It’s the town’s major public park.  Click to enlarge.


The WRAP

Fascism is the stage reached after communism has proved an illusion.” — Friedrich Hayek


All the precious metal price action came at, or after the Fed news — and the spike up that came the moment that the equity markets closed in New York on Wednesday, was the surprise of the day.  Ditto for silver.  I highly suspect that this was short covering in the COMEX futures market, as the currencies weren’t doing a thing at the time.  And I certainly think that was the case in the Far East in early Thursday morning trading over there.

And it should be noted that these suspected short covering rallies only occurred in gold and silver, as platinum and palladium showed no activity worthy of the name during both those same time periods.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and since all these moves came after the COMEX close, there’s no sign of them in the Wednesday dojis on the 6-month charts below.  That price action, plus what happens up to and including the COMEX close today, will show up on the 6-month charts later in the afternoon EDT — and will appear in this spot in tomorrow’s column.  Platinum closed higher for the second day in a row — and palladium continue to march ever higher.  Click to enlarge.

And as I type this paragraph, the London open is a minute or so away — and I note that there certainly has been price activity in the Far East on their Thursday morning.  ‘Da boyz’ capped the price shortly after 9 a.m. CST — and again at, or just after, the 2:15 p.m. afternoon gold fix in Shanghai.  Gold is currently up $22.10 the ounce.  ‘Da boyz’ have handled the silver price in similar fashion — and it’s up 17 cents at the moment.  Platinum is up 4 bucks — and palladium by 14 — and at the moment it certainly appears that their prices were capped shortly after the Shanghai afternoon gold fix as well.

Not surprisingly, net volume in gold is an absolutely astronomical 154,000 contracts — and there’s 5,700 contracts worth of roll-over/switch volume on top of that.  Silver’s net volume is already a knee-wobbling 47,500 contracts — and there’s a bit over 7,000 contracts worth of roll-over/switch volume out of July and into future months.  It’s obvious that JPMorgan et al are fighting these rallies with every short contract that they can muster.  As I said before, the rally that began last week — and that has continued into this week has been met with all guns blazing.

The dollar index opened up 6 basis points once trading commenced at 7:45 p.m. EDT/7:45 a.m. CST — and has been trending lower ever since, with the current low tick coming at the 2:15 p.m. afternoon gold fix in Shanghai.  It has ‘rallied’ off that low by a bit — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is down 27 basis points.

Although the dollar index is declining, that’s not what’s driving this rally, although it is a factor.  It’s Managed Money traders covering short positions and going long en masse — and JPMorgan et al standing there taking the other side of those trades.  If ‘da boyz’ weren’t there, the price of gold would be hundreds of dollars higher by now — and silver would be some unbelievable price already.


Well, the fight is certainly on between all things paper — and all things physical…especially the precious metals.  Volumes have been sky high all week long — and in Far East trading this morning, as well.  So the powers-that-be, led by JPMorgan et al, are showing no signs of backing down as short sellers of now what appears to be first resort.

The question then becomes…will they get over run, or will these rallies end the same way as they always have?  As has been said by both Ted and myself on too many occasions to count, this price management scheme in the precious metals is getting very long in the tooth, as it’s been around for 46 years…ever since the gold began trading in the COMEX futures market back in January of 1973.

All we can do is sit here and watch as the battle unfolds.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that all four precious metals were sold lower until the London/Zurich opens — and none have been allowed to do much since. Gold is currently up $21.50 an ounce — and silver is up 20 cents. Platinum is higher by 6 bucks. Palladium’s price was capped right at the $1,500 spot mark — and rallied above it briefly when Zurich opened, but it was sold right back to that price — and is up 15 dollars the ounce [at $1,499 spot] as the first hour of Zurich trading ends.

Net HFT gold volume is now up to an eye-watering 185,000 contracts — and there is a bit over 6,000 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is an unbelievable 54,000 contracts — and there’s just under 8,000 contracts worth of roll-over/switch volume out of July and into future months. These net volumes in both precious metals are just close guesses, as they are rising so fast that I just can’t keep up.

I’ve seen whole days where net volume in these two precious metals hasn’t been this high — and we’re barely into the London trading session — and heaven only knows what’s in store for them when New York opens.

The dollar index ‘rallied’ until around 8:10 a.m. in London — and then turned lower. It’s down 40 basis points — and at its low tick of the day as of 8:45 a.m. BST in London/9:45 a.m. CEST in Zurich.

That’s it for another day — and it nearly goes without saying that it could be a wild one in New York when COMEX trading begins at 8:20 a.m. EDT.

See you here tomorrow.

Ed