A Record Volume Day in COMEX Gold Futures

26 June 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to edge higher as soon as trading commenced at 6:00 p.m. EDT in New York on Monday evening, but really caught a bid around 11 a.m. China Standard Time on their Tuesday morning.  That really was capped and turned lower starting a few minutes after 12 o’clock noon in Shanghai.  It was sold quietly and unevenly lower until a few minutes after 12:30 a.m. in New York — and then was sold lower pretty hard.  That was the time that the dollar index jumped higher.  Shortly after the COMEX close, the price recovered somewhat, before trading sideways until the market closed at 5:00 p.m. EDT.

The high and low ticks were reported by the CME Group as $1,442.90 and $1,415.10 in the August contract.

Gold was closed in New York on Tuesday at $1,423.00 spot, up only $3.80 on the day.  Net volume was the highest number I have ever seen at a gargantuan 621,000 contracts — and there was only around 24,500 contracts worth of roll-over/switch volume on top of that.

The silver price action was mostly similar to gold’s, although far more subdued — and agitated…but all the major inflection points were the same in most respects.  Silver wasn’t allowed above the $15.47 spot mark — and its low of the day also came at or about the 1:30 p.m. EDT COMEX close in New York.

The high and lows in silver were recorded as $15.505 and $15.255 in the July contract.

Silver was closed yesterday at $15.33 spot, down 7.5 cents from Monday.  Net volume was pretty light at just under 43,500 contracts, but roll-over/switch volume was as beyond enormous as I expected, at a bit over 99,500 contracts.

The platinum price chopped unevenly sideways in both Far East and Zurich trading on their respective Tuesday’s, then took off to the upside around 9:30 a.m. in New York.  The price was capped at the afternoon gold fix in London — and about twenty minutes later the engineered price decline began — and the low tick of the day was printed at 4 p.m. in the thinly-traded after-hours market in New York.  It recovered a bit going into the 5:00 p.m. EDT close, but was finished down 4 bucks on the day at $808 spot.

Palladium was up 7 dollars by shortly before 8 a.m. CST on their Tuesday morning, but that wasn’t allowed to last — and around 12:30 p.m. in Shanghai, it was sold down hard until shortly before 2 p.m. CST.  It recovered a bunch of that by 10 a.m. in Zurich trading, but the price pressure reappeared — and the low tick of the day was set around 1:30 p.m. CEST.  A strong rally commenced at that juncture, but that was capped and turned lower shortly after the Zurich close — and once the COMEX closed in New York, it didn’t do much after that.  Palladium was closed on Tuesday at $1,510 spot, down 8 dollars from Monday.

The dollar index closed very late on Monday afternoon in New York at 95.98 — and opened up a couple of basis points once trading commenced at 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning.  It edged a bit lower from that point — and the 95.84 low tick was set around 12:55 p.m. CST.  It rallied back to a bit above unchanged by around 10:50 a.m. in London — and then didn’t do much of anything until it blasted higher starting around 12:35 p.m. in New York.  The 96.36 high tick was set five minutes before the 1:30 p.m. COMEX close — and gave back a bunch of that in very short order.  From there it crawled quietly higher until trading ended at 5:30 p.m. EDT.  The dollar index finished the day at 96.14…up 16 basis points from Monday’s close.

Here’s the DXY chart from BloombergClick 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…95.65…and the close on the DXY chart above, was 51 basis points on Tuesday.  Click to enlarge as well.

The gold shares opened up a bit, but were soon headed lower.  They began to crawl a bit higher staring around 10:50 a.m. in New York trading — and that quiet rally lasted until the dollar index spiked higher at 12:35 p.m. EDT. The gold price got hit, as the did the gold stocks…although they gained a bit of that back by around 2 p.m. as the dollar index fell.  From that juncture they traded sideways until the markets closed at 4:00 p.m. EDT.  The HUI closed down 1.78 percent.

The action in the silver equities was almost the same as it was for the gold stocks — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.61 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.

The CME Daily Delivery Report showed that 36 gold and zero silver contracts were posted for delivery on Thursday within the COMEX-approved depositories.

In gold, of the four short/issuers in total, the only two that mattered were ADM and Advantage with 24 and 10 contracts out of their respective client accounts.  There were five long/stoppers in total — and the only one that mattered there was the CME Group, as they picked up 25 contracts for their own account, which the immediately reissued as 25×10=250 ten-ounce mini COMEX gold contracts.  ADM picked up 134 of those — and Advantage 115.

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 declined by 50 contracts, leaving 146 still around, minus the 36 contracts mentioned just above.  Monday’s Daily Delivery Report showed that 61 gold contracts were posted for delivery today, so that means the 61-50=11 more gold contracts were just added to the June delivery month.  Silver o.i. in June dropped by 4 contracts leaving zero left — and those 4 contracts are out for delivery today…so June deliveries in silver are done.


There was a withdrawal from GLD yesterday, as an authorized participant took out 75,483 troy ounces.  That certainly seems counterintuitive at the moment — and I’m wondering  if that’s a redemption of shares for physical metal, that Ted speaks of from time to time.  There were no reported changes in SLV.

For the second day in row there was a small sales report from the U.S. Mint.  They sold 145,000 silver eagles on Tuesday — and that was all.

The only activity in gold over at the COMEX-approved depositories on Monday was 2,025.450 troy ounces/63 kilobars [U.K./U.S. kilobar weight] that was shipped out of Canada’s Scotiabank.  The link to that is here.

There was a fair amount of activity in silver, as 1,569,808 troy ounces was reported received — and 632,129 troy ounces was shipped out.  In the ‘in’ category, there were two truckloads…1,195,635 troy ounces…dropped off at CNT — and the remaining 374,172 troy ounces was left at JPMorgan.  In the ‘out’ category, there was one truckload…600,197 troy ounces…shipped out of HSBC USA.  The remaining 29,215 troy ounces and 2,716 troy ounces departed the International Depository Services of Delaware — and Delaware, respectively.  The link to that is here.

There was no reported activity, either in or out, over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.


Here are three charts that Nick passed around yesterday, which I didn’t have space for in yesterday’s missive, so here they are today.  The first chart shows Swiss gold imports and exports, updated with May’s data.  During that month they imported 113.4 tonnes — and exported 102.3 tonnes.  Click to enlarge.

These next two charts shows the countries and tonnage they received gold from — and the second chart shows the countries they exported to…and the tonnages involved. Click to enlarge for both.

I don’t have all that many stories for you today.


CRITICAL READS

Consumer Confidence Collapses to 2-Year Lows

After a hope-filled bounce in May, The Conference Board’s Consumer Confidence index plunged in June from a revised 131.3 to 121.5 (well below expectations of a modest drop to 131.0).

This is the weakest confidence print since July 2017…Click to enlarge.

Finally, we note that the gap between current and future confidence (DoubleLine’s Jeff Gundlach’s favorite recession indicator) is flashing big red recessionary signals…Click to enlarge.

The spread between savings and confidence is turning back down also – just as it did in 2007 and 2000…

You can only dis-save to spend (and juice confidence) for so long!

This brief 3-chart news item was posted on the Zero Hedge website at 10:17 a.m. on Tuesday morning EDT — and I thank Brad Robertson for this one.  Another link to it is here.


New Home Sales Crash in May to Weakest Since 2018

After existing-home-sales rebounded modestly in May, hope was high that lower mortgage rates would spark a renaissance in the U.S. housing market… but a shocking 7.8% crash in new home sales in May has blown that narrative out of the water.

Against expectations of a 1.6% MoM rise, new home sales plunged 7.8% in May to 626k, the weakest level since Dec 2018…Click to enlarge.

Purchases of new homes fell in the Northeast and the West, where they dropped the most since 2010. Sales rose in the South and Midwest.

Along with the disappointing data from Case-Shiller, the rebound – on low rates – in U.S. housing appears to be another dead cat bounce, not a phoenix.

This is another brief 4-chart Zero Hedge article from 10:07 a.m. EDT on Tuesday morning — and that comes courtesy of Brad Robertson as well.  Another link to it is here.


Trump thinks dollar is too strong, blames Fed policy: official

President Donald Trump believes the U.S. dollar is too strong, and the euro is too weak, and feels the situation could be eased if the Federal Reserve lowered interest rates, a senior administration official said on Tuesday.

The official also said the White House had no plans to demote Fed Chairman Jerome Powell, adding that there were different views within the White House counsel’s office regarding the president’s authority to do so.

Trump, who is expected to underline U.S. economic gains in his 2020 re-election bid, has frequently blasted Fed policy and said other countries are using monetary polity to manipulate their currency and gain advantage in the global markets.

The Republican president had tapped Powell to lead the U.S. central bank, but has repeatedly and publicly criticized him and sought to remove him from his post.

Well, there’s nothing really new here, but a weaker U.S. dollar will certainly continue gold’s current rally as time goes along.  This Reuters story, filed from Washington, showed up on their Internet site  at 11:00 a.m. EDT on Tuesday morning — and I thank Swedish reader Patrik Ekdahl for sending it along.  Another link to it is here.


Powell Says Fed Will Act as Appropriate to Sustain Economic Expansion

Federal Reserve Chairman Jerome Powell delivers remarks about the state of the U.S. economy and Fed monetary policy at the Council on Foreign Relations in New York.

This 1:32 minute video clip appeared on the bloomberg.com website at 11:10 a.m. EDT on Tuesday morning — and it’s the second offering in a row from Patrik Ekdahl.  There was an item from Mike Shedlock via the Zero Hedge website about this video clip — and it’s headlined “Trickle Down Theory: Powell Trashes Trump, Praises Himself“.


The Markets Have Been Censored By the Feds — Bill Bonner

Yesterday, like a benumbed climber on Everest, the Dow once again made an assault on the summit. This was its fourth attempt at getting beyond the peak set back in October 2018. And once again, it failed.

According to Dow Theory, if the market stalls before passing its previous high, it is exhausted… and ready to tumble back down the mountain.

But who knows?

The Dow is supposed to tell us what America’s biggest and most successful industries are worth. But what if the Dow has been suborned, bribed… paid off… or censored?

Why? In a word or two: The markets have been censored by the feds. They have been forbidden from telling the truth.

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


Gold is the secret knowledge of the financial universe, GATA secretary says

CG: Why did you decide to focus on the gold market? What attracted you to the topic in the first place?

CP: GATA focused on the rigging of the gold market because it was the first comprehensive market rigging that the organization’s founders stumbled upon, and because, after some research, we determined that rigging the gold market was the prerequisite for rigging all other markets.

CG: Arguably, one of the most blatant and overt examples of gold manipulation was that of the London Gold Pool. Could you summarize the case for us and explain its implications?

CP: The London Gold Pool was a mechanism created in 1961 by the United States and seven of its European allies to enforce the valuation of the U.S. dollar at $35 per ounce of gold. The pool members dishoarded gold from their reserves as necessary to maintain the dollar’s value and its status as the world reserve currency. This was done in the open and there was no disputing that the gold price was controlled by the gold pool’s members.

This dishoarding prevented gold’s return as the reserve currency. The pool collapsed in 1968 under the pressure of extreme off-take from the pool as governments and investors realized that the U.S. dollar was being inflated too much and that, as a result, gold was substantially undervalued. The gold-rigging governments had to devise another mechanism for controlling the gold price. After a few years, they settled on futures markets, which allowed the price to be rigged without a lot of dishoarding of national gold reserves.

This Q&A session with Chris Powell — with Claudio Grass as host, showed up on the German Internet site newsroom.proaurum.de on Monday sometime — and another link to it is here.


Merrill Lynch fined by DoJ, CFTC for ‘spoofing’ in precious metals futures

Merrill Lynch’s global commodities trading business agreed to pay $25 million and enter into a non-prosecution agreement with the Department of Justice on Tuesday to settle charges regarding a multi-year scheme by its precious metals traders to mislead the market for precious metals futures contracts traded on the Commodity Exchange Inc.

Merrill Lynch admitted to the allegations that beginning by at least 2008 and continuing through 2014, its precious metals traders schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market by placing fraudulent “spoof” orders for precious metals futures contracts that, at the time the traders placed thousands of fraudulent orders, they intended to cancel before execution.

The intention was to manipulate the market by creating the false impression of increased supply or demand and, in turn, to fraudulently induce other market participants to buy and to sell futures contracts at quantities, prices and times that they otherwise likely would not have done so.

MLCI and its parent company, Bank of America Corporation also agreed to cooperate with the government’s ongoing investigation of individuals and to report to the government evidence or allegations of criminal violations. The DOJ also obtained an indictment against Edward Bases and John Pacilio, two former MLCI precious metals traders, in July 2018 related to this investigation. Those charges are pending. The Commodity Futures Trading Commission also settled charges with MLCI on Tuesday for related, parallel proceedings where MLCI agreed to pay a civil monetary penalty of $11.5 million.

Everybody but JPMorgan.  This story put in an appearance on the marketwatch.com Internet site at 5:10 p.m. EDT on Tuesday afternoon EDT — and I thank First Majestic Silver’s Todd Anthony for pointing it out to me yesterday afternoon.  Another link to it is here.  The Zero Hedge spin on this is headlined “Merrill Lynch Caught Criminally Manipulating Precious Metals Market “Thousands of Times” Over 6 Years” — and I thank Richard Saler for that one.


Russia may cancel VAT on gold investments from 2020

Russia, one of the world’s largest gold producers, is considering a bill to cancel value-added tax (VAT) on gold investments, a project its officials have been considering for years, starting from 2020.

* A group of Russian lawmakers have submitted the draft bill to the Duma, the lower house of parliament, proposing cancelling the VAT starting from Jan. 1, 2020, the official website for draft bills showed on Tuesday.

* The plan, part of a broader Russian programme to support domestic gold demand, was a matter of debate among Russian officials for years due to concerns over potential budget losses.

* In February, they agreed on the need to go ahead with the project.

They keep talking about this, but so far…nothing.  I’ll believe it when it happens, but wish it were so as of right now.  The above four paragraphs are all there is to this brief Reuters article that was filed from Moscow at 7:45 a.m. EDT on Tuesday morning.  I found it on the Sharps Pixley website, but also thank Richard Saler for making aware of this upcoming story a few hours before that, as news of it was posted on Twitter just before midnight on Monday EDT.  Another link to the hard copy is here.


The PHOTOS and the FUNNIES

On May 5, the day after we did our Wells Gray Provincial Park trip, we were off to Princeton by the back roads — and it turned into my best nature photography day since I moved to Merritt back in mid-October of 2018.  Here are two shots of a killdeer, a member of the plover family.  The first shot of it looking normal — and the second using the old broken wing trick…an attempt to lure us away from its nest close by the road.  I didn’t even get out of the car for these shots, as I took them from the comfort of the driver’s seat.  Click to enlarge.


The WRAP

Never have the powers-that-be been as overbearing in the gold market as they were yesterday.  Except for the night that Trump was elected president, there has never been a day like we had in the COMEX futures market in gold on Tuesday.  I don’t have any records, but it was most likely the biggest volume day in gold in the CME Group’s history.  It was massive, in-your-face intervention of the highest order.  It was meant for one reason only — and that was to break the back of the big rally that had developed over the last few weeks.

Whether it has succeeded or not, remains to be seen.  But as I’ve said before, they can huff and puff all they want, but this current setback will be shown to be temporary when we look back at it later.  This precious metals bull market still has a long way to run.

But what happened should have come as no surprise, as both Ted and I have been watching the build-up in the commercial net short position in gold with more than some concern.  And as I mentioned again in yesterday’s missive, the danger flags were snapping in an ever-increasing COMEX wind.  But the ferocity of the attack yesterday surprised even me.

Here are the 6-month charts for the Big 6 commodities — and the monstrously overbought situation in gold is something that I’ve pointed out on several occasions since late last week.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are about a minute away — and I note that JPMorgan et al wasted no time and began to work over gold and silver the moment that trading commenced at 6:00 p.m. EDT in New York on Tuesday evening.  At the moment, gold is off its noon CST low, but once the 2:15 p.m. afternoon gold fix in Shanghai was put to bed, all four precious metals were sold lower once again.  Gold is now down $18.10 the ounce — and silver is down 18 cents.  Platinum is down 6 — and palladium by 9 as Zurich opens.

Net gold volume is enormous already at around 113,000 contracts — and there’s only 2,223 contracts worth of roll-over/switch volume in that precious metal.  Net HFT silver volume is nothing out of the ordinary at around 9,100 contracts.  Although, as expected, roll-over/switch volume out of July and into future months is very heavy at a bit over 15,500 contracts, as all the large traders that aren’t standing for delivery next month have to be out by the close of COMEX trading today.

The dollar index struggled a bit higher once trading commenced at 7:45 p.m. EDT in New York on Tuesday evening, which was 7:45 a.m. CST in Shanghai on their Wednesday morning.  Its current high tick came about 12:45 p.m. CST — and it has edged a bit lower since.  As of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is up only 10 basis points.


OCC Report: JPMorgan Chase and Citibank Control 76 Percent of all Precious Metals Contracts at 5,362 Federally-Insured Banks

This is a story that I posted in yesterday’s column — and was widely distributed on the Internet as well, but it does contain some factual errors.

First of all — and as Ted correctly pointed out on the phone yesterday, many years ago the powers-that-be began to report gold derivatives in with their foreign exchange holdings — and that data disappeared from the Table 9 of the OCC Report mentioned in the above commentary.  It now appears in Table 8…all lumped together in one category…Interest Rate, FX and Gold.  It’s impossible to know what the derivatives position are in gold each bank in this report.

The moment that occurred, I stopped reporting this derivatives data as it was incomplete without the gold data in it.  Table 9 is not only next to useless, it’s also wildly misleading.  It was for that reason that I abandoned this report — and haven’t referred to it since.

What Table 9 shows is the derivatives position of the white metals…silver, platinum and palladium only — and as Ted also pointed out…correctly…about 99 percent of those derivative positions are in silver — and mostly on the short side, although that’s not known with any precision either, as Table 9 only shows the total positions.  It doesn’t break it down into long or short positions.

But, having said all that, one thing is for sure, in the 15-odd years I’ve been aware of this report, it has always been JPMorgan as the No. 1 derivatives holder in anything regarding precious metals — and just about anything else for that matter.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and as bad as I thought it was going to be when I wrote yesterday’s column, it’s going to be far worse than even I imagined.  Ted is the real authority on this report — and I look forward to what he has to say about the current situation in his mid-week commentary to his paying subscribers this afternoon.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that all four precious metals rallied a bit once trading began in London and Zurich an hour ago. Gold is down $13.50 — and silver is lower by 8 cents. Platinum and palladium are off their Zurich open lows as well, with platinum down 4 bucks, but palladium is up 4 dollars.

Gross gold volume is jumping higher in leaps and bounds and sits at around 141,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is 135,000 contracts. Net HFT silver volume is now up to a bit over 10,000 contracts — and there’s 20,000 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index has continued to tick quietly lower, but has bounced a bit in the last ten minutes — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up 10 basis points.

That’s it for another day — and I’ll see you here tomorrow.

Ed