29.3 Million Troy Ounces of Silver in Four Weeks

13 July 2019 — Saturday


The gold price was up a handful of dollars by 10 a.m. China Standard Time on their Friday morning — and its high tick overseas came at the 10:30 a.m. morning gold fix in London.  From that juncture it was sold back to almost unchanged by around 8:40 a.m. in New York.  At that point, the dollar index began to head south — and the gold price began to head north.  The rally ended when the dollar index stopped falling around 2:50 p.m. in after-hours trading  — and it didn’t do much going into the 5:00 p.m. EDT close from there.

The low and high ticks aren’t worth looking up, as gold traded in a one percent price range yesterday.

Gold finished the Friday session in New York at $1,415.60 spot, up $12.40 from Thursday’s close.  Net gold volume was pretty decent at a  hair under 246,000 contracts — and there was just over 44,000 contracts worth of roll-over/switch volume out of August and into future months.

The price pattern for silver was almost the same as it was for gold, except its overseas high came around 9:15 a.m. in London — and it was sold down to a nickel or so below the unchanged mark by the time the dollar index hit its high of the day at 8:40 a.m. in New York.  After that, the silver price rallied in the same manner as gold, complete with the high tick of the day coming around 2:50 p.m. in the thinly-traded after-hours market.  It didn’t do much after that, either.

The low and high ticks in silver were reported by the CME Group as $15.07 and $15.27 in the September contract.

Silver finished the Friday session in New York at $15.20 spot, up 11 cents from Thursday’s close.  Net volume was pretty quiet at a bit over 45,000 contracts — and there was 4,329 contracts worth of roll-over/switch volume in this precious metal.

Platinum rose and fell a small handful of dollars in Far East trading on their Friday — and its European high came a few minutes after 10 a.m. CEST in Zurich.  From there, it was sold unevenly lower until shortly after 9 a.m. in New York — and then like silver and gold, rallied until very shortly before 3 p.m. in after-hours trading.  It traded flat into the 5:00 p.m. EDT close from there.

The palladium price traded a handful of dollars lower in Far East and Zurich trading.  But at around 9:30 a.m. in New York, it was sold sharply lower — and back below $1,500 spot briefly.  It recovered most of that shortly thereafter — and then edged quietly sideways until trading ended at 5:00 p.m.  Palladium was closed at $1,524 spot, down another 18 dollars, as JPMorgan et al continue their efforts to run the Managed Money traders off their huge long position.

The dollar index closed very late on Thursday afternoon in New York at 97.05 — and opened up 3 basis points once trading commenced at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It edged a few basis points higher almost immediately, but began to descend quietly lower after that.  The index began to turn higher a few minutes after 8 a.m. in London — and the 97.12 high tick was placed just a minute or so before 8:45 a.m. in New York.  It began to slide anew from there — and it stopped sliding around 2:45 p.m. EDT — and didn’t do much of anything after that.  The dollar index closed at 96.81…down 24 basis points from Thursday.

It was another day where gold and silver prices followed the action in the currencies very closely — and that was certainly the case in New York yesterday.

Here’s the DXY chart, courtesy of Bloomberg as always.  Click to enlarge.

And here’s the 5-year U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…96.42…and the close on the DXY chart above, was 39 basis points on Friday.  Click to enlarge as well.

The gold stocks opened up a bit, but then sank to their lows of the day, which came a few minutes after 11 a.m. in New York trading.  From that point they chopped quietly higher until the gold price stopped rising, as the dollar index stopped falling — and they faded a hair into the 4:00 p.m. EDT close from there.  The HUI finished higher by 1.28 percent.

The silver equities followed a virtually identical path except, for some strange reason, their rallies topped out about ten minutes before their golden brethren — and they also faded a hair into the close from there.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.35 percent.  Click to enlarge.

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

Here are the usual three charts from Nick that show what’s been happening for the week, month — and year-to-date. The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI and the Silver 7 Index.

Here’s the weekly chart — and everything is up on the week, except for palladium, as ‘da boyz’ continue in their attempts to run the Managed Money longs out of Dodge.  The gold stocks did particularly well.  Click to enlarge.

The month-to-date chart isn’t so sweet looking, as the prior week was a down week, especially after the engineered price declines that occurred the day after Independence Day in the U.S.  The silver equities continue to underperform their golden brethren — and for reasons that are already well known to you.  Click to enlarge.

Here’s the year-to-date chart — and it’s much happier looking.  And as I pointed out last week, JPMorgan’s near death grip on the silver price is more than obvious in this chart.  Platinum has managed to claw its way higher by a bit — and palladium is still the Energizer Bunny.  However, JPMorgan et al are doing everything they can to pull those batteries out.  Click to enlarge.

The precious metal complex appears to be on the move, but I’m not breaking out the party favours as of yet.  As Yoda said…”Do not underestimate the power of the dark side of The Force” — and it still remains to be seen if ‘da boyz’ can pull off another round of engineered price declines.  But regardless of that, it’s obvious from the charts above, that the gold equities are in accumulation mode, as they look to be pretty much the best performing asset class so far year-to-date.

The CME Daily Delivery Report showed that 6 gold and 4 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  I’m not going to bother dissecting these small amounts.  But if you wish to see for yourself, the link to yesterday’s Issuers and Stoppers Report is here.

So far this month there have been 839 gold contracts issued/reissued and stopped — and that number in silver is 3,641.

The CME Preliminary Report for the Friday trading session showed that gold open interest in July fell by 5 contracts, leaving just 17 left, minus the 6 mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 5 gold contracts were actually posted for delivery on Monday, so the change in open interest and deliveries match.  Silver o.i. in July declined by 17 contracts leaving 533 still open, minus the 4 contracts mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 20 contracts were posted for delivery on Monday, so that means that 20-17=3 more silver contracts were just added to the July delivery month.

For the second day in a row, there were no reported changes in either GLD or SLV.

But as Ted pointed out on the phone on Friday morning, there was a very decent amount of silver deposited into SIVR on Thursday…2,316,590 troy ounces — and Deutsche Bank’s XAD6 fund took in  795,117 troy ounces of silver as well.

There was a very tiny sales report from the U.S. Mint on Friday, they sold 97,000 silver eagles — and that was it.

Month-to-date the mint has sold 1,500 troy ounces of gold eagles — and 262,000 silver eagles.  Just pitiful.

Once again there was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  The only activity was of the paper variety, as the magnificent sum of 201 troy ounces was transferred from the Registered category — and back into Eligible.  That occurred over at HSBC USA — and for obvious reasons, I’m not going to link this.

There was some activity in silver, as 2,948 troy ounces was received — and that was dropped off at Delaware.  There was 277,563 troy ounces shipped out — and that activity was at CNT.  The link to this is here.

I haven’t posted this chart in a while.  It shows the COMEX silver stockpiles held by the six largest players in the physical silver market in North America.  Note JPMorgan’s new all-time high…compared to the other five.  Click to enlarge.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They received 363 of them — and shipped out 9.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Here are two charts that you see every week in this spot, but I thought I’d dig them up off his website now, rather than wait for him to pass them around later in the weekend.  They show the amount of gold and silver in all know depositories, mutual funds and ETFs as of the close of business on Friday.  For the week, there was a net 185,000 troy ounces of gold addedbut in silver it was another barn-burner of a week, as 9,567,000 troy ounces was added…all on pitiful price action.  Click to enlarge for both.

The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday was pretty much spot on what Ted said the numbers would be…particularly in silver.  I was disappointed, as I was hoping it would be more.  I’m glad I kept my mouth shut.

In silver, the Commercial net short position declined by 6,786 contracts, or 33.9 million troy ounces.

They arrived at that number by adding 138 long contracts — and they also reduced their short position by 6,648 contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was almost all Managed Money traders that made up that change, as they reduced their long position by 4,909 contracts — and they added 1,487 short contracts.  It’s the sum of those two numbers…6,396 contracts…that made up their change for the reporting week.

The difference between that number — and the Commercial net short position…6,786 minus 6,396 equals only 390 contracts.  That difference, as it always is, was made up by the traders in the other two categories.  And as seems to be the case most of the time, they went about it in radically different ways, as the ‘Other Reportables’ increased their net long position by 1,092 contracts — and the ‘Nonreportable’/small traders reduced their net long position by 1,482 contracts.  The difference between those two numbers is 390 contracts…which it must be.

The Commercial net short position is down to 226.4 million ounces of paper silver.

Ted figures that JPMorgan’s short position in silver in the COMEX futures market is anywhere between zero and 5,000 contracts…as it was his opinion that they covered around 5,000 contracts of whatever short position they had during this last reporting week.

Here’s Nick’s 3-year COT Report for silver — and the smallish change should be noted.  Click to enlarge.

I would certainly categorize silver as still being in bearish territory by some amount.  Unfortunately the only way to get back into wildly bullish territory is for ‘da boyz’ to force the Managed Money longs to puke up those positions and go short as well — and that only occurs with lower prices.  Will that happen?  Is the wash, rinse, spin…repeat cycle in the cards at some point for silver?  I don’t know, nor does anyone else.

In gold, the commercial net short position declined by a rather smallish 8,406 contracts, or 840,600 troy ounces of paper gold.

They arrived at that number by adding 3,673 long contracts — and they also reduced their short position by 4,733 contracts — and it’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders…plus more, as they reduced their long position by 5,885 contracts — and they also added 5,591 short contracts.  It’s the sum of those to numbers…11,476 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…11,476 minus 8,406 equals 3,070 contracts.  And, as is always the case, that difference was made up by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader category.  Like in silver, they went about it in wildly different manners.  The former decreased their net long position by 2,707 contracts — and the latter increased their net long position by a very chunky 5,777.  The difference between those two numbers is the 3,070 contracts that it must be.

The commercial net short position in gold has been reduced down to 27.84 million troy ounces of paper gold, which is really no material reduction at all.

Here’s Nick’s 3-year COT chart for gold — and you can see at a glance, this past reporting week’s change barely registers.  Click to enlarge.

Gold still remains in very bearish territory from a Commitment of Traders perspective.  The cure for that is much lower prices.  Will it happen this time?  I don’t know.  Please reread my comments on silver regarding this issue, as it’s the same for gold, palladium and a whole bunch of other commodities the the Manged Money traders are up to their necks in on the long side.

In the other metals, the Manged Money traders in palladium increased their net long position in this precious metal by a further 1,471 contracts.  The Managed Money traders are net long the palladium market by 14,312 contracts…almost 57 percent of the total open interest.  Total open interest in palladium is 25,233 COMEX contracts, up 1,142 contracts from the previous week.  And as I keep repeating, it’s a very tiny market, which Ted says is mostly a cash market now, because palladium is in such tight supply.  In platinum, the Managed Money traders increased their net short position by another 455 contracts during the reporting week.  The Managed Money traders are now net short the platinum market by 15,175 COMEX contracts…a tad over 19 percent of the total open interest.  In copper, the Managed Money traders decreased their net short position in that metal by 11,003 COMEX contracts during the reporting week — and are now net short the COMEX futures market by 56,981 contracts, or 1.42 billion pounds of the stuff…a bit over 21 percent of total open interest.

Once again, here’s Nick chart showing the tight correlation between the gold price — and what the Managed Money traders are doing…or are tricked into doing.  You don’t need a degree in mathematics to see how tight is correlation is.  Click to enlarge.

Anyone who says that its not the Managed Money traders that are the dominant factor in setting the prices of the Big 6 commodities, plus others…such as corn and cotton, should be ignored entirely.  Please be careful of what you read [and believe] on the Internet that’s free…as there’s no standard of care involved in a lot of cases.  The numbers in the weekly COT and monthly Bank Participation Reports are the facts — and they speak for themselves…as per the above chart for gold.

Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading last Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 113 days of world silver production, which is down 8 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 83 days of world silver production, which is down 1 day from last week’s report — for a total of 196 days that the Big 8 are short, which is six and a half months of world silver production, or about 457.4 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were short 205 days of world silver production.]

[And as a note of interest, this week’s COT Report is an exact reversal of the prior week’s COT Report…to the day in the Big 8 and Big 4 traders — and obviously in the total days held short as well.]

In the COT Report above, the Commercial net short position in silver was reported as 226.4 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 457.4 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 457.4 minus 226.4 equals 231.0 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 39-odd small commercial traders other than the Big 8, are net long that amount.  How ridiculous is that, you ask?  It boggles the mind.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short between zero and 5,000 COMEX contracts.

The Big 4 traders are short, on average, about…113 divided by 4 equals…28.25 days of world silver production each.  The four traders in the ‘5 through 8’ category are short 83 days of world silver production in total, which is 20.75 days of world silver production each.

The Big 8 commercial traders are short 41.9 percent of the entire open interest in silver in the COMEX futures market, which is a smallish decrease from the 43.3 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be something under the 50 percent mark.  In gold, it’s now 44.1 percent of the total COMEX open interest that the Big 8 are short, down a hair from the 44.4 percent they were short in last week’s report — and 50 percent, or a bit more, once the market-neutral spread trades are subtracted out.

This is the second week in a row that the Big 8 short position in gold has been larger than the Big 8 short position in silver — and that difference increased by a decent amount in this week’s COT Report.

In gold, the Big 4 are short 60 days of world gold production, down 2 days from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 32 days of world production, down 1 day from what they were short last week…for a total of 92 days of world gold production held short by the Big 8…down 3 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 65 percent of the total short position held by the Big 8…down 2 days from last week’s COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 58, 65 and 81 percent respectively of the short positions held by the Big 8.  Silver is down 1 percentage point from a week ago, platinum is down 1 percentage point from last week — and palladium is up 1 percentage point from a week ago…and off its record high by a bit.

I have an average number of stories for you today.


The Federal Reserve Continues to “Mend” the Economy — Bill Bonner

The week is ending as it began, with a cacophony of numskulls.

Yesterday, one of them – speaking to his empty-headed brethren – gave out more wrong-headed, confusing, and misleading information.

Bloomberg reports:

Powell told Senators that the so-called “neutral rate,” or policy rate that keeps the economy on an even keel, is lower than past estimates have put it – meaning monetary policy has been too restrictive.

“We’re learning that interest rates – that the neutral interest rate – is lower than we had thought and I think we’re learning that the natural rate of unemployment is lower than we thought,” he said. “So monetary policy hasn’t been as accommodative as we had thought.”

Fed Chief Powell no more knows what a “neutral” rate of interest is… or what it should be… than the man in the moon. Which is to say, he knows nothing at all.

This commentary from Bill, filed from Youghal in Ireland, was posted on the bonnerandpartners.com Internet site early on Friday morning EDT — and another link to it is here.

Time to Leave the Party” – Former Lehman Insider Warns “More Risk Than Reward” in Markets

There’s an art to knowing when to leave the party,” warns Pilar Gomez-Bravo, a portfolio manager at MFS Investment Management with $4.5 billion AUM, who sees eerie similarities between the current frenzy for risk and the speculative mania that made her cautious on the eve of the last bubble.

As Bloomberg reports, she’s selling junk bonds in a contrarian bet that the debt rally is on its last legs – with the potential to trap funds with billions staked in levered and often illiquid assets – cutting high-yield exposure to 10% from as high as 30% in 2016, in one of her unconstrained funds.

There’s more risk than reward right now,” she said.  “There are real end-of-cycle fears about what performs.

From her vantage point managing a slew of global credit funds, she sees the long-bemoaned opacity and leverage of junk issuers is now at a tipping point.

We’ve seen this farce before, as Bloomberg details, when Lehman went bust, the mother of four was a portfolio manager at its investment arm, but before that, in May 2007, Gomez-Bravo became cautious on U.S. risk and issued warnings on corporate health – which bear echoes with the intense hunt for yield today.

This interesting, but not entirely surprising article appeared on the Zero Hedge website at 3:30 p.m. on Friday afternoon EDT — and another link to it is here.

Year’s Biggest IPO Scrapped Due to Low Investor Demand as S&P Hits All-Time High

Something is very, very broken in the market.

On the day, the S&P levitated above 3,000 and hits a new all time high, with Dow 30,000 now within shouting distance, on Friday afternoon,  the world’s largest brewer, Anheuser-Busch InBev, scrapped plans to sell up to $9.8bn in shares in its Asian business – in what would have been the year’s biggest IPO – as a result of, wait for it, weak investor appetite at the stated price range.

In a statement from AB InBev – which had been seeking to sell a minority stake in Budweiser APAC which markets 50 brands including Budweiser and Stella Artois in China, Australia, South Korea and Vietnam – the company said that, “at this time” it was “not proceeding with this transaction” primarily due to “prevailing market conditions.”

It was unclear just what those conditions were – the S&P500 hitting the highest level in the history of mankind perhaps? What is even more bizarre is that as far back as Monday, Reuters reported that the IPO was already “very well” oversubscribed. It appears someone was lying.

Yes indeed, dear reader…”Something is very, very broken in this market.”  This article showed up on the Zero Hedge website at 3:45 p.m. on Friday afternoon EDT — and another link to it is here.

Doug Noland: Central Banker to the World

I don’t believe the primary impetus behind the global central bank swing toward additional stimulus is economic. Indeed, I see Powell, Draghi, Carney, Kuroda and the like confirming the Acute Global Financial Fragilities Thesis. This fanciful notion of “insurance” stimulus will be debated for years to come. A system suffering from risk aversion, illiquidity and Credit contraction would be expected to experience some perk from monetary stimulus. But a global financial “system” already excessively embracing risk, wallowing in liquidity abundance and generating record Credit growth will be only further destabilized by greater stimulus.

I’ve been long fascinated by how things turn “crazy” at the end of cycles. My thesis is the world is in the late stage of an extraordinary multi-decade Credit Bubble. From this perspective, we should not be surprised by phenomenal late-cycle excess.

Combine China’s historic Credit expansion with an ECB balance sheet that almost doubled to $4.75 TN in three years of QE; a Bank of Japan balance sheet that expanded $1.2 TN to $5.2 TN since the end of 2016; and U.S. Credit growth back to record levels, and one has ample fuel for global craziness. Rampant speculative leverage pushes things past the breaking point.

It’s become an acutely fragile global Bubble. The Fed, ECB and global central banks have moved to provide support, effectively throwing gas on the fire. There are conspicuous cracks, yet liquidity abundance and speculative impulses prevail. Turkey’s strongman President fires the head of the central bank for not aggressively cutting interest rates and the lira is down less than 2%. Cracks in India’s financial system widen, and the world barely notices. Italy’s 50-year bond auction is massively oversubscribed with a yield of 2.88% – with foreign “investors” accounting for 80% of the demand. Negative yields for junk issuers in the euro zone. Eastern European sovereign debt at or near negative yields. S&P500 surpasses 3,000 in the face of a deteriorating earnings outlook.

There was the “permanent plateau” shortly before the 1929 crash. Tech stocks embarked on a final speculative melt-up in Q1 2000 in the face of rapidly deteriorating industry and economy fundamentals. And “still dancing” in the summer of 2007, and so on. Monetary Disorder ensures late-cycle market detachment from reality.

This is another must read commentary from Doug — and it was posted on his Internet site sometime after 3 a.m. EDT this morning — and another link to it is here.

De-Dollarizing the American Financial Empire — Michael Hudson

Imperialism is getting something for nothing. It is a strategy to obtain other countries’ surplus without playing a productive role, but by creating an extractive rentier system. An imperialist power obliges other countries to pay tribute. Of course, America doesn’t come right out and tell other countries, “You have to pay us tribute,” like Roman emperors told the provinces they governed. U.S. diplomats simply insist that other countries invest their balance-of-payments inflows and official central-bank savings in U.S. dollars, especially U.S. Treasury IOUs. This Treasury-bill standard turns the global monetary and financial system into a tributary system. That is what pays the costs of U.S. military spending, including its 800 military bases throughout the world.

This 59-minute long audio interview with Michael, complete with a full transcript, showed up on the unz.com Internet site on July 3 apparently — and I thank U.K. reader Tariq Khan for pointing it out, although someone else sent it to me earlier in the week — and I passed on it for some inexplicable reason.  I must admit that I haven’t had time to listed to it yet — and will probably do so on the weekend.  Another link to it is here.

The Obama Ukrainian Nightmare Seems to Be Ending, at Last — Eric Zuesse

Finally, the process of ending the war in Ukraine seems to be starting in earnest. But to understand how the war can now realistically end, the basic history of how it began needs first to be acknowledged, and this history is something that will be very difficult for U.S-and-allied media to report, because it violates what their ‘news’-reports, ever since the time of the war’s start, had said was happening. So, what will be reported here (like the truth was, when it was news) will far likelier be simply ignored, than ever reported in the US and its allied countries. That’s why this news-report and analysis is being submitted to all mainstream news-media in those countries, which until now have unanimously reported, and accepted as being true, the authorized lies, which everyone in the US and allied countries has read, as if those lies were instead the history.

For one thing: This war did not start with the 16 March 2014 breakaway of Crimea from Ukraine, as Western ‘news’-media have always been claiming; but, instead, it started by what had sparked the overwhelming desire of the vast majority of Crimeans to want to break away from Ukraine. This urge had to do with the three-week-earlier February 2014 bloody coup d’etat in Ukraine, illegally overthrowing Ukraine’s democratically elected President, Viktor Yanukovych, for whom 75% of Crimeans had voted. The vast majority of Crimeans refused to accept Obama’s selected replacement-leaders and their new and US-imposed far-rightwing regime, which made clear, as soon as they took over, what they were intending to do to Crimeans.

This worthwhile commentary…if you have the interest, that is…was posted on the strategic-culture.org Internet site on Thursday sometime — and it comes to us courtesy of Roy Stephens.  Another link to it is here.

“Dangerous Game”: U.K. Deploying 2nd Warship to Protect Tankers in Gulf

Amid ongoing “tanker wars” following the U.K.’s unprecedented and aggressive seizure of a super tanker transporting Iranian oil to Syria last week, which led to an alleged thwarted counter-attempt of Iran’s IRGC to block a U.K.-flagged tanker in the Persian Gulf Wednesday, Britain says it plans to send a second warship to the region.

Currently the HMS Montrose is shadowing the B.P.-owned British Heritage tanker after it was approached by IRGC boats — this as Britain raised its threat level to British shipping in the gulf area to its highest. Per government statements, the HMS Duncan, a type 45 Destroyer, will be deployed alongside the HMS Montrose in the region for a short period.

We are concerned by this action and continue to urge the Iranian authorities to de-escalate the situation in the region,” a Downing Street spokesman had said Wednesday of the dangerous encounter with Iran’s military in the gulf earlier that day.

And on Thursday a separate U.K. official stated: “As part of our long-standing presence in the Gulf, HMS Duncan is deploying to the region to ensure we maintain a continuous maritime security presence while HMS Montrose comes off task for pre-planned maintenance and crew changeover,” according to the BBC.

This will ensure that the U.K., alongside international partners, can continue to support freedom of navigation for vessels transiting through this vital shipping lane.” At the moment the HMS Duncan is in Mediterranean waters.

The Pentagon also this week described plans to work with allies to provide military escorts to ships traversing waters near Iran, as concerns grow that any major incident would threaten global oil supplies, which would no doubt send prices soaring.

Already other international ships are reportedly waiting for military escorts prior to entering the Strait of Hormuz.

This news item put in an appearance on the Zero Hedge website at 9:26 a.m. EDT on Friday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.  Here’s the original BBC story on this headlined “Iran tanker row: U.K. to send second warship to the Gulf” — and I thank Swedish reader Patrik Ekdahl for sharing it with us.

Warning Shot to World Economy as Singapore Slumps, China Exports Drop

An unexpected contraction in Singapore’s economy and a slump in China’s exports sent a warning shot to the world economy as simmering trade tensions wilt business confidence and activity.

Gross domestic product in export-reliant Singapore shrank an annualized 3.4% in the second quarter from the previous three months, the biggest decline since 2012. China trade figures showed exports fell 1.3% in June from a year ago and imports shrank a more-than-expected 7.3%.  Click to enlarge.

Like South Korea’s economy — which already contracted in the first quarter — Singapore is often held up as a bellwether for global demand given its heavy reliance on foreign trade. China’s quarterly GDP numbers on Monday are expected to show a clear weakening in the economy.

Singapore is the canary in the coal mine, being very open and sensitive to trade,” said Chua Hak Bin, an economist at Maybank Kim Eng Research Pte in Singapore. The data “points to the risk of a deepening slowdown for the rest of Asia.”

Across Asia and Europe, factory activity shrank in June while the U.S. showed only a meager economic expansion. Asia is the world’s growth engine and contributes more than 60% of global GDP, according to the International Monetary Fund.

This news item was posted on the Bloomberg website at 5:02 p.m. PDT on Thursday afternoon — and was updated nine hours later.  I thank Patrik Ekdahl for pointing it out — and another link to it is here.

DHL Sounds Alarm on Collapsing World Trade: “Significant Downturn” Underway

A new quarterly report from logistics company DHL, measured global air and sea cargo trade volumes between March and June, found trade data continues to deteriorate in the US and China as there is still no resolution to end the trade war, reported South China Morning Post (SCMP).

Chinese imports were “losing significant momentum,” the report stated, indicating the epicenter of the slowdown was situated in basic raw materials, capital equipment and machinery, and consumer fashion goods. The loss of momentum in DHL trade data has also been confirmed in official Chinese import data releases.

The report indicated that the US trade outlook is more dangerous than China: DHL expected a “significant downturn, driven by heavy losses in exports outlook.” DHL said both air and sea freight have plunged into negative territory in 2Q19, with extreme weakness in basic raw materials, chemicals, and technology.

The declining outlook for U.S. exports indicates that, so far, the US is missing its goal of strengthening its export economy with a harsher trade course against China,” DHL said.

DHL’s Global Trade Barometer measured air and sea container freight for seven countries, which together accounted for more than 75% of world trade.

The report focused on early-cycle commodities to detect turning points in global trade flows — goods such as automobile bumpers, touch screens for smartphones, and brand labels for clothes.

This story showed up on the Zero Hedge website at 4:15 p.m. EDT on Friday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.

James Grant: The Fed could use a golden rule

Though money can’t talk, people can’t stop talking about it. With the nomination of Judy Shelton to the Federal Reserve Board, the discussion has tilted to gold.

Gold is money, or a legacy form of money, Ms. Shelton contends, and the gold standard is a reputable, even superior, form of monetary organization. The economists can hardly believe their ears. The central bankers roll their eyes. How can this obviously intelligent woman be so ignorant? Let us see about that.

America was on one metallic standard or another from the Founding until President Richard Nixon announced the suspension of the Treasury’s standing offer to foreign governments to exchange dollars for gold, or vice versa, at the unvarying rate of $35 an ounce. The date was Aug. 15, 1971.

Ever since, the dollar has been undefined in law. Its value against other currencies rises or falls, as the market, sometimes with a nudge from this government or that, determines. The dollar isn’t unusual in this respect. With few exceptions, the values of the world’s currencies oscillate.

In the long sweep of monetary history, this is a new system. Not until relatively recently did any central bank attempt to promote full employment and what is called price stability (but is really a never-ending inflation) by issuing paper money and manipulating interest rates.

This commentary by Jim put in an appearance on The Wall Street Journal website on Friday sometime — and it’s posted in the clear in its entirety on the gata.org Internet site.  Another link to it is here.

Has the Gold Market Spoken? — John Hathaway

Gold has broken out from a massive base formed over a six-year consolidation.  The breakout has left most investors on the sidelines.  The powerful rally from below $1,300 to over $1,400 and a 6 year high caught most either wrong-footed (short) or flat footed (no exposure at all.)  That is why we believe substantial further upside lies ahead. Gold’s allure (and the explanations for it) should grow as the price advances in the months and years ahead.

Prior to the breakout, analysts, opinion makers, and pundits were either negative or parked squarely on the sidelines.  Most that we monitor remain tentative or call for a pullback.  Others regard the move as unsustainable.  It would be a mistake in our opinion to make too little of this price development.  We think the breakout is a big deal. It could be an early warning that the global financial order may be headed for significant change.

It is a market maxim that price action must be respected.  Headlines will follow.  The investment arguments in favor of gold exposure that we and others have made over the past several years have been valid, but timing has been problematic. The fundamental macroeconomic analysis for higher gold price has not changed.  What is about to change is market recognition of already existing facts and forces that have been long underway.

This second quarter gold commentary from John was something that he slid into my in-box at 8:00 a.m. Pacific Daylight Time yesterday morning.  It’s now posted on the tocqueville.com Internet site — and another link to it is here.


This first photo was taken from a B.C. Highway 5/The Coquihalla overpass looking south down the Nicola valley on May 12.  The town of Merritt is just out of sight around a hill in the far centre right of this shot.  The second photo is of a wild strawberry plant in full bloom.  The place was lousy with them, but I didn’t find a single berry anywhere…green or otherwise…when I checked in late June.  The last two photos are of a western meadowlark.  It’s the first one that sat still long enough for me to get off more than one or two shots.  They’re very common in these parts.  Click to enlarge for all.


Today’s pop ‘blast from the past’ certainly dates me. I was six years young when this was a big hit — and it’s still one of the most memorable tunes to come out of the 1950s…1954 to be exact.  They were an American female popular singing quartet, usually singing a cappella.  The link to it is here — and you’ll know it instantly.  They just don’t make ’em like this anymore — and it’s a damn shame.

Today’s classical ‘blast from the past’ was something of a surprise when I stumbled on it.  It’s a piece I’ve posted before… Felix Mendelssohn’s Violin Concerto in E minor, Op. 64 featuring Hilary Hahn as soloist.  But this youtube.com video has a sheet music play-along, so you can follow along with the music as she plays it — and the orchestra when she’s not playing.  If you’ve ever played any kind of musical instrument in your life, you may find this fascinating.  I certainly did.  It’s just the first movement, but that’s enough — and the link is here.

I’m not sure if anything should be read into yesterday’s price action in either silver or gold, so I won’t bother trying…but it’s anything but the usual “summer doldrums”.

The only thing I am sure of is that ‘da boyz’ are trying to break the palladium price lower so they can ring the cash register on the Managed Money long holders.  As I said in my COT discussion further up, what they are up to is of paramount importance, not only in this precious metal…but all commodities that they have large positions in — as these Managed Money traders change positions as one single entity.  Right now these traders are long 57 percent of the entire open interest in palladium — and they’re 100 percent of the reason why the price is where it is.  It would be even higher if the banks and investment houses in the Producer/Merchant and Swap Dealer category weren’t aggressively going short against them.

But returning to gold and silver, it’s impossible to tell how successful ‘da boyz’ will be in the usual wash, rinse, spin…repeat cycle this time around.  As I’ve said on several occasions this week and last, the economic, financial and monetary headwinds they’re fighting now are a force to be reckoned with — and are growing quickly in intensity with each passing day, week and month.  Their attempts may prove in vain as, for the first time, they may get overrun by market forces that are totally beyond their control.

All we can do is watch — and wait some more.

Here are the 6-month charts for all of the Big 6 commodities — and there really isn’t a lot to see, other than what’s going on in palladium right now.  Click to enlarge.

Looking at the new highs in the Dow and S&P500 yesterday, I was wondering to myself [many hours before I read Doug Noland’s latest] if this is what the landscape looked like shortly before the crash of 1929.  Everything is beyond the absurd…Alice in Wonderland in real life…with the exception that there are more mad hatters out there than you can shake a stick at.

There’s no country on Planet Earth where the economic situation isn’t slowly sliding into recession, if not already there.  The danger signs have been apparent for a long time now — and more are appearing with each passing day…prominently feature in today’s Critical Reads section — and in a long string of others that preceded it.

An interest rate cut by the Fed is already pretty much priced into the market — and all it will do is revive the “animal spirits” in the equity markets for a very brief time, before the usual interest rate junkies are calling out for more.

And now that the world’s central banks are in full “Print, or die” mode, they are all in this together, except it ain’t the three musketeers this time.  And because of all their interferences in the free markets since the crash of 1987…it’s only a matter of time before something blows up, or melts down — and takes the whole planet with it.  The powers-that-be will be helpless to stop it this time.

The incident that starts the rapidly-approaching implosion could begin anywhere.  But, as I’ve said before, if I had to bet that theoretical ten dollar bill, I would place it on China.  As I — and others have stated in the past, they’re a country masquerading as a hedge fund.  But then again, what country, with the exception of Russia, isn’t these days.

When all this hits the fan, it’s a given that the precious metals will be the only things left standing — and not only am I still ‘all in’…I bought more silver equities yesterday.

During the last four weeks there has been a net 29,360,627 troy ounces of silver added to all the known depositories, ETFs and mutual funds — all of it on very punk price action.  And along with the 850 million troy ounces that Ted Butler says that JPMorgan and its clients own, they obviously know something that we don’t…at least not yet.

I certainly want to be fully positioned when we find out what it is.

I’m done for the day — and the week — and I’ll see you here on Tuesday.

Enjoy what’s left of your weekend.