A Surprise Rally in Gold & Silver on Tuesday

03 July 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crawled very unevenly higher in Far East trading on their Tuesday — and the high in London came shortly before 10 a.m. BST.  It crept quietly lower from that point until about 10:15 a.m. in New York — and then began to put on quite a show…stair-stepping its way higher in price until trading ended at 5:00 p.m. EDT.

The low and high ticks were recorded by the CME Group as $1,391.70 and $1,424.80 in the August contract.

Gold finished the Tuesday session at $1,418.10 spot, up $34.40 on the day — and the biggest one-day gain that I can remember.  Net volume was monstrous at 344,000 contracts — and there was a hair over 41,000 contracts worth of roll-over/switch volume out of August and into future months.

Silver was up a nickel by around 1:30 p.m. China Standard Time on their Tuesday afternoon — and then crawled very quietly lower until about ten minutes before the COMEX open in New York.  There was some interesting down-side price action that attempted to break silver below $15 spot, but that didn’t work out — and shortly before 9 a.m. EDT, it began to rally.  Like gold, it stair-stepped its way higher until shortly after 4:30 p.m. in after-hours trading — and didn’t do a thing after that.

The low and highs in this precious metal were reported as $15.07 and $15.365 in the September contract.

Silver finished the Tuesday session at $15.275 spot, up 17 cents on the day.  Net volume was on the chunky side at just under 64,500 contracts — and there was 7,400 contracts worth of roll-over/switch volume in this precious metal.

The platinum price was up seven dollars by the Zurich open, but most of that was gone by the COMEX open.  It was then sold down to its low of the day shortly before the afternoon gold fix in London — and then rallied to its New York high by 1 p.m. EDT.  It was sold a bit lower from that juncture — and finished the day at $830 spot, up a dollar from Monday’s close.

The palladium price chopped quietly sideways until 2 p.m. CST on their Tuesday afternoon — and then crept higher until 2 p.m. CEST in Zurich…twenty minutes before the COMEX open.  It was then sold back to a few dollars below unchanged within the next forty-five minutes, but began to head higher from there.  Palladium finished the Tuesday session on its high tick of the day…$1,544 spot, up 14 dollars from Monday’s close.

The dollar index closed very late on Monday afternoon in New York at 96.84 — and opened down 3 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 crept a bit higher — and back into positive territory by a hair, but began to head lower around 12:20 p.m. CST.  The decline was very choppy — and the 96.88 low tick was set a few minutes after 12:30 p.m. in New York trading.  The choppy rally that began after that topped out around 4 p.m. EDT — and it crept a bit lower into the 5:30 p.m. close from there.  The dollar index finished the day at 96.72…down 12 basis points from Monday’s close.

Obviously, the currencies had zero to do with what happened in the precious metal market on Tuesday, as this was strictly a paper affair on the COMEX.

Here’s the DXY chart from the Bloomberg, as usual.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…96.27…and the close on the DXY chart above, was 45 basis points on Tuesday.

The gold shares opened up a percent and change once trading started in New York at 9:30 a.m. on Tuesday morning.  And after dipping a bit, they began to head quietly higher — and that lasted until around 12:15 p.m. EDT.  From that point, they traded sideways until the price took off higher shortly after 3 p.m.  Once that price spike higher in gold was over with, the gold stocks traded sideways until the 4:00 p.m. close.  The HUI finished higher by 3.6 percent.

The silver equities followed an almost identical price path as their golden brethren, with the only real difference being that they came within a whisker of closing on their respective high ticks of the day.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 3.37 percent.  Click to enlarge if necessary.

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

I was somewhat surprised that the precious metal equities didn’t do better yesterday, but I’ll sure they’ll more than make up for it over the next few days if these rallied are allowed to continue.


The CME Daily Delivery Report for Day 3 of July deliveries showed that 18 gold and 21 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the two short/issuers were Advantage and ADM, with 15 and 3 contracts — and the two long/stoppers were JPMorgan and Advantage, with 11 and 7 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the two short/issuers were Advantage with 19 contracts — and R.J. O’Brien with 2 contracts.  All involved their respective client accounts.  The largest long/stopper was HSBC USA with 8 contracts for its own account — and in second and third spots were Morgan Stanley and JPMorgan…picking up 7 and 4 contracts for their respective client accounts.

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 July fell by 77 contracts, leaving 78 still around, minus the 18 mentioned a few short paragraphs ago.  Monday’s Daily Delivery Report showed that 97 gold contracts were actually posted for delivery today, so that means that 97-77=20 more gold contracts were just added to the July delivery month.  Silver o.i. in July dropped by 208 contracts, leaving 742 still open, minus the 21 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 237 silver contracts were actually posted for delivery today, so that means that 237-208=29 more silver contracts just got added to July.


There was a withdrawal from GLD, as an authorized participant took out 56,608 troy ounces.  But there was another sizeable deposit into SLV yesterday, as an a.p. added 2,821,354 troy ounces.

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

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  There was a tiny bit of paper activity, as 500 troy ounces was transferred from the Eligible category and into Registered over at Brink’s, Inc.  I won’t bother linking this.

There was some activity in silver, as 897,865 troy ounces was reported received — and 603,268 troy ounces was shipped out.  In the ‘in’ category, there was one truckload…596,982 troy ounces…deposited at CNT — and the remaining 300,882 troy ounces was left outside the door at Canada’s Scotiabank.  All of the ‘out’ activity was at CNT as well.  The link to that is here.

And for the second time in a week, there was no in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.


Here are two charts that Nick passed around on Monday.  They show gold and silver bullion coin sales from the U.S. Mint, updated with June’s data.  During that month they sold 8,000 troy ounces of gold coins [eagles and buffaloes combined]…plus 1,035,000 troy ounces of silver eagles — and that number also includes the silver weight in the 80,000 five-ounce ‘America the Beautiful’ coins that were sold during that month.  Retail bullion coin sales are in the dirt.  Click to enlarge for both.

I only have a tiny handful of stories and articles for you today.


CRITICAL READS

It’s All Part of Trump’s Plan… — Bill Bonner

Every boom that is based on inflation, rather than on real earnings, is doomed to fail. Because, as French economist Jean-Baptiste Say put it, you buy products with products, not with money.

He meant that real wealth is the ability to provide goods and services to others – ultimately, a measure of time and your productivity. Time cannot be increased. Only productivity can be improved. But it is a long, demanding process.

And it doesn’t help to hand out pieces of paper with green ink on them. Instead of stimulating growth and productivity, inflation does just the opposite. It distorts, disguises, and censors the key price information that people need to make decisions.

The result is always negative – bubbles, crises… and lower growth rates. Smooth out the growth rates – by looking at the trailing 10-year average – of the last 20 years, and you see that they are barely half of those of the previous 20 years.

And that brings us back to Richard Russell’s old dictum: “Inflate or die.” Real GDP growth is declining. A recession is coming. And the only way the feds can keep this inflationary expansion going is to inflate more.

This commentary from Bill…filed from Youghal, Ireland…put in an appearance on the bonnerandpartners.com Internet site early on Tuesday morning EDT — and another link to it is here.


IMF’s Lagarde Picked to Replace Mario Draghi as ECB President

After three days of heated wrangling, the European Council has selected its nominees for four of the bloc’s top jobs, breaking a troubling deadlock that had exposed the cracks in  the status quo’s facade. And the biggest surprise is that the consummate politician and connoisseur of Louis Vuitton handbags, Christine Lagarde, who is currently busy justifying the IMF’s crisis fighting budget, has been picked to replace Mario Draghi whose term runs out on Oct 31.

According to the prime minister of Luxembourg, the European Council has nominated Charles Michel to stand for E.U. Council president, Ursula von der Leyen to lead the E.U. Commission, Joseph Borrell as high rep for foreign affairs and Lagarde to replace Mario Draghi at the ECB.

Though it’s not a guarantee, Lagarde’s nomination means it’s incredibly likely that she will be confirmed to succeed Draghi. The new leaders of the some of the bloc’s most important bodies will officially take over on Nov. 1.

Lagarde’s nomination is a sign that the ECB is standing by its commitment to ‘diversity’ (though her background and views are extremely similar to Draghi’s). The ECB had said it wanted a woman to lead the central bank, and now it appears extremely likely that will happen.

Donald Tusk, the outgoing head of the European Council, praised Lagarde as the “perfect” ECB president, and that he’s absolutely sure about her “independence” (by that, we imagine he means her willingness to stick with Draghi’s uber-dovish policy program). Emmanuel Macron, meanwhile, praised Lagarde for her “experience” and “competence.” And we imagine he won’t be the last E.U. leader to heap praise on Lagarde.

And, for what it’s worth, Lagarde said she’s “honored” to be nominated — and that she will temporarily step aside at the IMF until she is either confirmed at the ECB, or rejected.

Tweedle Dee vs. Tweedle Dum…what does it matter.  This Zero Hedge article showed up on their Internet site at 1:05 p.m. EDT on Tuesday afternoon — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Gold Surges After Trump Nominates Gold Standard Advocate Judy Shelton to Fed Board

After several unsuccessful attempts to put his preferred candidates on the Fed’s board, moments ago Donald Trump announced that he intends to nominate Christopher Waller, who is currently the Executive VP and Director of Research, at the St. Louis Fed, to the board of the Federal Reserve. Prior to his current position, Christopher served as a professor and Chair of Economics at Notre Dame.

After several unsuccessful attempts to put his preferred candidates on the Fed’s board, moments ago Donald Trump announced that he intends to nominate Christopher Waller, who is currently the Executive VP and Director of Research, at the St. Louis Fed, to the board of the Federal Reserve. Prior to his current position, Christopher served as a professor and Chair of Economics at Notre Dame.

For those who haven’t heard of Waller before, it’s hardly a shock: it appears to be his intention to keep a low profile.

However, the reason why gold is spiking after hours, is that shortly after tweeting the Waller nomination, Trump also confirmed the previously rumored nomination of Judy Shelton to the Fed board:

I am pleased to announce that it is my intention to nominate Judy Shelton, Ph. D., U.S. Executive Dir, European Bank of Reconstruction & Development to be on the board of the Federal Reserve Judy is a Founding Member of the board of directors of Empower America and has served on the board of directors of Hilton Hotels.”

So why does Trump want Shelton on the board? Simple: she previously said that if appointed, she would lower interest rates to 0% in one to two years. That’s all markets had to known and following the news that Shelton is being nominated to the Fed board, gold spiked $10 from $1,425 to $1,435 in minutes, as Trump’s push for ZIRP (and soon after, NIRP) just took on an added urgency.

Well, dear reader, the reason that gold jumped higher higher in after-hours trading yesterday, is very much open to debate…but that’s the ZH spin on it.  This longish Zero Hedge article was posted on their website at 6:37 p.m. EDT on Tuesday evening — and I thank Brad Robertson for this one as well.  Another link to it is here.


The Precious Metals Market — Hugo Salinas Price

The prices of the precious metals – gold and silver – are under strict control by the syndicate of the International Bankers. (Incidentally, I speak of the real power exercised by the International Bankers, in a rather long article on my website, www.plata.com.mx. I do hope you will read it! Mr. Trump is finding out, from Jay Powell of the Federal Reserve, that the real power in this world is in the hands of the International Bankers.)

The time when it was necessary to prove the existence of this control, was over long ago. Today it is an unquestioned fact. However, most analysts of the precious metals market continue to bury their heads in the sand of falsity, for various personal reasons. Thus, they only comment on “market behavior“.

Why do International Bankers wish to control the prices of the precious metals?

Because their Power is based on the false money that they issue, and true market prices of the precious metals would very clearly reveal the steady loss of purchasing power of the false money they issue and thus erode their Power significantly, or even destroy it.

Now that we have the “Why” for control out of the way, let us turn to the “How” of the control…

This commentary by Hugo showed up on the plata.com.mx Internet site on Monday sometime — and I found it in a GATA dispatch.  Another link to it is here.


Perth Mint’s monthly gold sales jump 80% in June

The Perth Mint’s gold product sales in June rose 80.3% from the previous month, the refiner said on Tuesday.

Sales of gold coins and minted bars in June climbed to 19,449 ounces from 10,790 ounces in May, the mint said in a blog post. Meanwhile, silver sales last month fell 49.5% to 344,474 ounces from May.

In June, benchmark spot gold prices surged nearly 8%, recording its best monthly performance in three years, supported by expectations of easing monetary policy by major central banks, U.S.-China trade war and tensions in the Middle East.

The above three paragraphs are all there is to this brief Reuters article from Monday, that was picked up by the finance.yahoo.com Internet site on Tuesday — and I found it on the Sharps Pixley website.  Another link to the hard copy is here.


The PHOTOS and the FUNNIES

Continuing on in our tour of semi-ghost town Coalmont…on our way to Princeton…we stumbled across these mule deer grazing away.  They weren’t overly bothered by our presence, so we walked up to the fence separating us — and I took these shots with my ‘walk-around’ lens.  No telephoto of any kind needed here.  Click to enlarge.


The WRAP

So, what to make of Tuesday’s price action in both silver and gold?  To tell you the truth, I’m not exactly sure…but it’s more than obvious that both precious metals are in play.  It appears to be mostly futures positioning in the COMEX paper market, because it sure as heck had nothing to do with the currencies, or any world news that I saw, as the stories in the Critical Reads section of today’s column were rather sparse — and not of an earth-shaking variety.

So rather than presenting some wild-ass speculation, I think it’s best just to see how this plays out.

But I must admit that these rallies certainly caught me by surprise.  When I was on the phone with Ted yesterday, he offered the suggestion that the take-down at the market open at 6:00 p.m. EDT in New York on Sunday night was a bear raid by the commercial traders — and if this was the best they could do, things could get interesting going forward.  He may or may not have something to say about this in his mid-week commentary to his paying subscribers this afternoon.

Here are the 6-month charts for the Big 6 commodities — and the changes in gold, silver and palladium should be noted.  Copper was sold lower for the fifth day in a row, but WTIC got smoked…as the Managed Money traders in both are selling longs — and going further onto the short side.  That’s what’s causing their respective prices to fall…nothing else.  Click to enlarge for all.

And as I type this paragraph, the London open is about a minute away — and I see that the gold price shot higher the moment that trading commenced in New York at 6:00 p.m. EDT on Tuesday evening.  That rally ran into “all the usual suspects” within ten minutes, but after a brief pause, the rally recommenced — and ‘da boyz’ finally put the hammer down at 9:00 a.m. China Standard Time on their Wednesday morning. Gold is well off its high tick — and up only $7.80 the ounce at the moment.  It was the same price action in silver — and it’s up 2 cents as London opens.  Both platinum and palladium had tiny rallies in sympathy with what was going on in the other two precious metals, but platinum is now up only a dollar — and palladium is back at unchanged as Zurich opens.

Net HFT gold volume is sky high already at a bit over 148,000 contracts — and there’s around 7,500 contracts worth of roll-over/switch volume out of August and into future months.  Net HFT silver volume is huge as well…coming up on 25,500 contracts — and there’s 1,200 contracts worth of roll-over/switch volume on top of that.

The dollar index opened unchanged once trading began at 7:45 p.m. EDT on Tuesday evening in New York, which was 7:45 a.m. China Standard Time on their Wednesday morning.  It sank a small handful of basis points over the next few hours — and then proceeded to head higher around 9:30 a.m. CST — and is back in the plus column by 6 whole basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.

Once again, the activity in the precious metals has zero to do with what’s happening in the currencies.  It’s all paper positioning in the GLOBEX/COMEX futures market.


Yesterday, at the close of COMEX trading was the cut-off for the next COT Report and companion Bank Participation Report.  And as I stated in yesterday’s missive, because of tomorrow’s Independence Day Holiday in the U.S…these reports won’t be published on the CFTC’s website until Monday afternoon EDT.


And as I post today’s column on the website at 4:02 a.m. EDT, I note that the gold price hasn’t done much during the first hour of London trading — and is up $6.50 an ounce. ‘Da boyz’ have silver down 3 cents. Platinum is up a dollar, but palladium, which was up seven bucks at the Zurich open, is now down 2 dollars as the first hour of Zurich trading ends.

Gross gold volume is now up to around 175,000 contracts — and minus roll over/switch volume out of August and into future months, net HFT gold volume is about 160,000 contracts. Net HFT silver volume is coming up on 28,000 contracts — and there’s 1,243 contracts worth of roll-over/switch volume in that precious metal.

The dollar index ‘rally’ is continuing, but it’s off its 8:15 a.m. BST current high tick — and up only 8 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.


That’s all for today.  I will have a column tomorrow, but because the U.S. will be shut tight for Independence Day on Thursday, I most likely won’t have one on Friday…unless something blows up in the overseas markets on their respective Thursdays.

But before closing, I’d like to take this opportunity to wish all my American readers a safe and happy holiday on Wednesday — and if you’re able to stretch that into a 4-day long weekend…good on ya!

I expect that trading activity of all types will fall off rather significantly once the lunch hour rolls around in New York today, as the traders head for the Hamptons early.  And, for the same reason, I expect Friday’s volumes and trading activity to be low as well.

See you here tomorrow.

Ed