18 July 2019 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price traded quietly sideways until around 8:40 a.m. in London– and then dipped to its low tick of the day at the 10:30 a.m. BST morning gold fix over there. The rally commenced at that point — and it was obvious that ‘da boyz’ stepped in at the 11:00 a.m. EDT London close. The price was capped and turned a bit lower a few minutes after the 12 o’clock noon in New York. Things got a little friskier about thirty minutes after the 1:30 p.m. COMEX close — and the gold price managed to close on its high tick of the day by the time trading ended at 5:00 p.m. EDT.
The low and high ticks were reported as $1,401.30 and $1,428.40 in the August contract.
Gold finished the Wednesday session at $1,426.20 spot, up $20.60 on the day. Net volume was monstrous once again at 323,000 contracts, even larger than it was on Tuesday. Roll-over/switch volume out of August and into future months was a bit under 35,500 contracts.
With the odd variation, the price action in silver was the same as it was for gold. The most notable exception was the fact that the silver price was prevented from rising above $16 spot at its 2:01 p.m. EDT high tick. It was sold a few pennies lower from there — and then traded ruler flat until the market closed at 5:00 p.m. EDT.
The low and high ticks in this precious metal were recorded by the CME Group as $15.555 and $16.03 in the September contract.
Silver was closed at $15.935 spot, up an even 40 cents on the day. Net volume was very heavy once again at 105,500 contracts — but wasn’t quite as heavy as it was on Tuesday. Roll-over/switch volume was a bit over 6,300 contracts.
The platinum price traded quietly and unevenly sideways in Far East trading on their Wednesday — and that state of affairs lasted until 1 p.m. CST. It was sold quietly lower until shortly before noon in Zurich. It began to creep higher from that juncture until a few minutes after the equity markets opened in New York on Wednesday morning — and then the rally became far more serious. Like for gold and silver, ‘da boyz’ stepped on the price a few minutes after 12 o’clock noon EDT — and it was sold lower until shortly after 1 p.m. It wasn’t allowed to do much after that, as it chopped unevenly sideways for the remainder of the day. Platinum was closed at $843 spot, up 4 bucks on the day.
Palladium was sold down about five bucks or so in the first hour of trading once it commenced at 6:00 p.m. EDT on Tuesday evening in New York. From that point it traded flat until around 12:15 p.m. in Shanghai on their Wednesday afternoon — and then it crept quietly lower until 11 a.m. in Zurich. It then traded very quietly sideways until the price erupted higher at the 8:20 a.m. COMEX open in New York. ‘Da boyz’ stepped in minutes before 9 a.m. EST, as the market looked like it was about to go ‘no ask’. From that juncture it was sold quietly and unevenly lower until trading ended at 5:00 p.m. EDT. Palladium was closed at $1,516 spot, up 8 dollars on the day.
It was yet another day where palladium would have closed at heaven-only-knows what price if it had been allowed to trade freely.
The dollar index closed very late on Tuesday afternoon in New York at 97.40 — and opened down 3 basis points 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. And with the exception of an odd minor bump higher in price here and there, chopped very quietly lower until the sell-off became more serious staring at 8:45 a.m. in New York. Most of the decline that mattered was in by around 11:50 a.m. EDT…but the 97.16 low tick was set around 2:05 p.m. It rallied a bit for exactly an hour — and then rolled over going into the 5:00 p.m. EDT close. The dollar index finished the day at 97.22…down 18 basis points from Tuesday’s close.
I highly doubt that the rather insignificant price activity in the currencies had much to do with what was happening in the precious metals market…particularly silver and gold. But I certainly do acknowledge the fact that there appeared to be some relationship, however small.
Here’s the DXY chart from Bloomberg as always…click 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. The delta between its close…96.85…and the close on the DXY chart, was 37 basis points on Wednesday. Click to enlarge as well.
The gold shares began to head higher right out of the gate at the 9:30 open of the U.S. equity markets in New York on Wednesday morning. The rally tapered off starting shortly after 12 o’clock noon EDT — and the gold stocks then traded flat until the gold price became ‘friskier’ starting at 2 p.m. They then rallied a bit more into the close from there. The HUI closed up a respectable 3.52 percent.
In almost all respects that mattered, the silver equities followed a similar price pattern as their golden brethren…but the gains were far more substantial. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up an impressive 6.27 percent. But the junior producers did far, far better than that. 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.
Just for fun — and a few days early, I thought I’d toss in Nick’s month-to-date and year-to-date charts for the four precious metals, plus their associated indexes as a bit of a pick-me-up. Click to enlarge for both.
The CME Daily Delivery Report showed that 6 gold and 147 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.
In gold, the two short/issuers were ABN Amro and Advantage, with 5 and 1 contracts. The two long/stoppers were Advantage and JPMorgan, picking up 5 and 1 contracts. All contracts, both issued and stopped, were from and for their respective client accounts.
In silver, of the three short/issuers in total, the only two that mattered were ABN Amro and ADM, with 104 and 35 contracts out of their respective client accounts. There were four long/stoppers in total…Advantage, Morgan Stanley and JPMorgan, with 46, 35 and 30 contracts for their respective client accounts. And then there was HSBC USA, with 36 contracts — and they stopped those for their in-house/proprietary trading account.
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 July fell by 1 contract, leaving 16 still around, minus the 6 contracts mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that 6 gold contracts were actually posted for delivery today, so that means that 6-1=5 more gold contracts were added to the July delivery month. Silver o.i. in July dropped by 10 contracts, leaving 404 still open, minus the 147 mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that 23 silver contracts were actually posted for delivery today, so that means that 23-10=13 more silver contracts were added to July.
There was a fairly hefty deposit into GLD yesterday, as an authorized participant added 122,630 troy ounces of gold. But that deposit into GLD paled into insignificance when compared to the amount of silver deposited in SLV yesterday…8,518,273 troy ounces…14 truck loads! There was also 298,169 troy ounces of silver added to Deutsche Bank’s XAD6 physical silver fund on Wednesday as well.
On top of that — and as Ted pointed out on the phone yesterday, there was also 1,769,532 troy ounces of silver added to SIVR on Tuesday.
Needless to say, that after the last couple of days, even more physical metal will have to be added to various silver ETFs, depositories and mutual funds. But what I’m most relieved to see is that the authorized participants are adding physical metal, rather than shorting the shares in lieu of…like they’ve done in the past. That fact alone has my Spidey-senses tingling.
There was another tiny sales report from the U.S. Mint yesterday. They sold 1,000 troy ounces of gold eagles — and that was all.
There was some activity in gold over at the COMEX-approved depositories on Tuesday, as Canada’s Scotiabank reported receiving 50,299 troy ounces. Nothing was shipped out — and the link to that activity is here.
There was a bit more activity in silver. Nothing was reported received — and 639,559 troy ounces was shipped out. There was 508,936 troy ounces that departed HSBC USA…another 120,884 troy ounces left Loomis International — and the remaining 9,739 troy ounces was shipped out of the International Depository Services of Delaware. The link to this is here.
The only in/out activity over at the COMEX-approved gold kilobar depository in Hong Kong on their Tuesday was one 1 lone kilobar that was shipped out of Brink’s, Inc. Needless to say, I shan’t bother linking this amount.
The hoard consists of metal, jet and over 150 gold/silver/copper alloy torc fragments, over 70 of which form complete torcs, dating from B.C. 70. Probably the most famous item from the hoard is the Great Torc from Snettisham, which is now held by the British Museum. Though the origins are unknown, it is of a high enough quality to have been royal treasure of the Iceni.
Recent electron microscopy research by the British Museum reveal the wear patterns in the torcs, the chemical composition of the metal, and the cut marks which reduced many of the torcs into fragments. One hypothesis suggests the deliberate destruction of valuable items was a form of votive offering.
The finds are deposited in Norwich Castle Museum and the British Museum. The hoard was ranked as number 4 in the list of British archaeological finds selected by experts at the British Museum for the 2003 BBC Television documentary, Our Top Ten Treasures. Click to enlarge.
It was a fairly quiet news day — and I don’t have much for you…although there’s a very long Ray Dalio piece that’s worth your while
“The FOMC [Federal Open Market Committee] has been navigating between the shoals of overheating and premature tightening with only a hazy view of what seem to be shifting navigational guides…” – Jerome Powell, Chair of the Federal Reserve
YOUGHAL, IRELAND – The Fed has a less than “hazy” view of its “navigational guides.” It is lost at sea. It has no idea what is north or south… up or down… right or left.
The U.S. economy, says Powell, is in a “good place.” The president, meanwhile, says it is in a great place, that it’s “the greatest economy ever.”
But according to both Powell and Trump, it got to this good place – even by sailing in the wrong direction.
If the economy is in such a “good place,” why does it need a key lending rate suitable for an emergency?
If “the greatest economy ever” has already knocked unemployment down to rock-bottom levels, for whom is the Fed creating more jobs?
And how did our fathers’ economy – of the 1970s, 1980s, and 1990s – function with the Fed’s interest rate more than twice what it is today and still produce growth rates twice as high?
This commentary from Bill showed up on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.
After weak home sales data and re-weakening in mortgage applications (but a modest recovery in homebuilder sentiment), expectations were for a slowdown in starts and permits but the June prints were shockingly bad.
Housing Starts dropped 0.9% MoM (worse than the 0.7% expected) but Building Permits plunged 6.1% MoM – the worst drop since March 2016. Click to enlarge.
This occurred despite a collapse in mortgage rates during the reporting period.
This is the 6th month in a row of YoY declines in Building Permits…
Under the surface, multi-family starts tumbled 9.4% MoM as single-family jumped 3.5% from 818K to 847K — and multi-family permits collapsed 20.7%, from 454K to 360K, the lowest since Feb 2017.
Two of four regions posted an increase in housing starts last month, led by a 31.3% rise in the Northeast and a 27.1% advance in the Midwest. New construction declined 9.2% in the South and 4.9% in the West.
Get back to work Mr. Powell!!
This news story was posted on the Zero Hedge website at 8:38 a.m. on Wednesday morning EDT. I thank Brad Robertson for sending it our way — and another link to it is here.
The International Monetary Fund said on Wednesday the U.S. dollar was overvalued by 6% to 12%, based on near-term economic fundamentals, while the euro, the Japanese yen and China’s yuan were seen as broadly in line with fundamentals.
The IMF has been at odds with U.S. President Donald Trump over his use of tariffs to resolve trade imbalances, but its assessment that the dollar is overvalued is likely to give Trump more fodder for his frequent complaints that dollar strength is hampering U.S. exports.
Trump has railed against European and Chinese policies that lead to what he calls a devaluation of the euro and other currencies against the dollar.
The Fund’s External Sector Report – an annual assessment of currencies and external surpluses and deficits of major economies – showed that current account surpluses remained centered in the euro area and other advanced economies such as Singapore, while deficits remained persistent in the United States, Britain and some emerging market economies.
This Reuters news story, filed from Washington, put in an appearance on their Internet site at 6:40 a.m. EDT on Wednesday morning — and it was updated around 2 p.m. EDT. I found it in a GATA dispatch — and another link to it is here.
Currency traders are contemplating the “I” word.
While still seen as a long shot — Goldman Sachs described it last week as a “low but rising risk” — a growing number of analysts are warning that President Donald Trump’s longstanding frustration with the U.S. dollar’s relative strength versus major rivals could eventually lead to U.S. government to intervene in the currency market in an effort to weaken the greenback.
Last week, Bloomberg News reported that Trump has asked aides to look for ways to weaken the dollar and asked about the currency in job interviews with the candidates he’s selected for seats on the Federal Reserve’s board.
Here’s a guide to how intervention works and what it would mean for the market.
… What is intervention?
Intervention occurs when a central bank buys or sells its own currency in an effort to influence the exchange rate.
This article showed up on the marketwatch.com Internet site on Wednesday sometime — and it’s posted in the clear on that gata.org Internet site. Another link to it is here.
Here at Zero Hedge, we’ve dedicated plenty of attention to signs of “Japanification” in European bond markets…with the issue taking on even more urgency now that we have influential bond strategists earnestly advocating the purchase of equities by the ECB, and the Fed in the middle of a policy U-turn that has prompted the market to price in at least three interest rate cuts by the end of the year.
[So] previously “conspiratorial” ideas like the Fed buying equities to turbocharge its stimulus program are beginning to look eminently plausible.
For readers who are unfamiliar with the term, “Japanification”, also known as Albert Edwards “Ice Age” concept, it involves the dawn of a new economic paradigm characterized by stagnant growth and pervasive deflation, where central bank debt monetization is needed to finance public spending to keep economies from sliding into contraction.
Already, there’s reason to believe that both the US and Europe are heading for the same monetary policy trap as Japan. Case in point: the neutral rate – or r*, as the economists at the Fed like to call it – has failed to revert back to its pre-crisis level.
And with the Fed likely to cut rates later this month and global bond yields tumbling to levels not seen in years, if ever, hedge fund manager Kyle Bass has revealed his latest trade in an interview with the Financial Times: Bass is betting that the Fed will slash interest rates to just above zero next year as the US economy slides into a recession, forcing the Fed to restart QE, and possibly even consider more radical alternatives like buying equities.
Though economic data in recent weeks has staged a mild recovery (which ended with Wednesday’s home-sales data), the general trend remains clear: As Powell reminded us last week, all signs point to a slower economy ahead.
If you doubt why ‘all of the above’ is the case, please read/reread Doug Noland Saturday commentary. This very worthwhile and chart-filled article appeared on the Zero Hedge website at 6:15 p.m. EDT on Wednesday evening — and it’s definitely worth reading. I thank Jim Gullo for pointing it out — and another link to it is here.
European car registrations fell sharply in June, resuming a downward spiral that adds to the industry’s litany of woes.
After a profit warning last week from German manufacturer Daimler AG, Europe’s industry body reported a 7.9% year-on-year drop in sales for June. That’s the biggest decline this year, and the ninth in the last 10 months. Click to enlarge.
The weakening automotive market may partly reflect growing nervousness among European households about committing to a big-ticket purchase. If consumers continue to rein in spending, that’s another problem for the region’s economy, where manufacturing is already under pressure from cooling global demand.
Raging trade wars have already put factory confidence under pressure and top exporter Germany is at risk of a recession. The rising potential for a hard Brexit dragged the U.K.’s pound to its lowest level this week since 2017.
The European Automobile Manufacturers’ Association, or ACEA, blamed the June drop in car sales on fewer working days during the month. The year-to-date decline is now at 3.1%, with headwinds ranging from new regulations to the lingering effects of emissions-cheating probes which have hurt sales of diesel cars. The Chinese market, the world’s biggest, is under strain partly due to the stand-off over trade with the U.S.
This Bloomberg story was posted on their Internet site at 11:00 p.m. PST on their Tuesday evening — and was updated about nine hours later. I found it in this morning’s edition of the King Report — and another link to it is here.
Hedge fund kingpin Ray Dalio is seeing a case for gold as central banks get more aggressive with policies that devalue currencies and are about to cause a “paradigm shift” in investing.
Dalio, founder of the world’s largest hedge fund, wrote in a LinkedIn post that investors have been pushed into stocks and other assets that have equity-like returns. As a result, too many people are holding these types of securities and likely to face diminishing returns.
“I think these are unlikely to be good real returning investments and that those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold,” the Bridgewater Associates leader said.
“Additionally, for reasons I will explain in the near future, most investors are underweighted in such assets, meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more of this sort of asset. For this reason, I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one’s portfolio. I will soon send out an explanation of why I believe that gold is an effective portfolio diversifier.”
This cnbc.com news item appeared on their website at 11:06 a.m. EDT on Wednesday morning. The link to Dalio’s very long chart-filled commentary is in the text above — and if you don’t have the time to read it all, I suggest you scroll down to the heading that reads “The Coming Paradigm Shift“…which is pretty close to the end. I thank readers Neil West and Richard Saler for pointing this out — and another link to “all of the above” is here.
The PHOTOS and the FUNNIES
On May 19 we retraced part of our trip to Princeton via the back roads — and came across the same pair of killdeers by the same pond we saw last time. Here he/she is with same old ‘broken wing’ trick that was used on our car last time we drove by. The other half of the pair watched from a distance. We also spotted this drake green-winged teal in full breeding plumage. Too bad it was cloudy. Click to enlarge.
“The envious are more likely to be mollified by seeing others deprived of some advantage than by gaining it for themselves. It is not what they lack that chiefly troubles them, but what others have.” — Henry Hazlitt
The rallies in both silver and gold on Wednesday began once the 10:30 a.m. morning gold fix in London was put to bed on their Wednesday morning — and both got capped a minute or so after 12 o’clock noon in New York. Gold added a few more dollars in after-hours trading, but the silver price flat-lined after that. Platinum’s rally yesterday was stopped cold at the $850 spot mark for the second day in a row — and the price capping is continuing at that price in morning trading in the Far East on their Thursday. Palladium’s almost-no-ask rally in early COMEX trading in New York got capped at 9 p.m. So make no mistake about it, ‘da boyz’ are still there.
Here are the 6-month charts for the four precious metals, plus copper and WTIC. Gold got closed at its highest price since this rally began, albeit not by much — and silver’s at its highest price since late February. Copper closed up a bit — and WTIC was closed below both its 50 and 200-day moving averages for the second day in a row. Click to enlarge for all.
And as I type this paragraph, the London/Zurich opens are less than a minute away — and I see that the gold price spiked up a bit as soon as trading began at 6:00 p.m. EDT in New York on Wednesday evening. But that was summarily dealt with — and it was sold quietly lower until shortly after 10 a.m. China Standard Time on their Thursday morning. It then crept quietly and unevenly sideways until the afternoon gold fix in Shanghai — and was then sold lower. It’s down $6.60 the ounce currently. Silver’s rally that began a few minutes before 9 a.m. CST, ran into ‘something’ almost right away — and the price wasn’t allowed over $16.10 spot. Then starting around 11:30 a.m. CST, the silver price was sold quietly lower — and is up only 1 cent on the day — and back below $16.00 spot. Platinum’s rally in morning trading in Shanghai ran into the same $850 spot price ceiling it has for the last three days running — and is up 5 dollars. Palladium stair-stepped its way quietly higher in Far East trading on their Thursday, but got smacked lower about thirty minutes before the Zurich open — and is up only 6 bucks.
Net HFT gold volume is enormous already…coming up on 74,000 contracts — and there’s 5,000 contracts worth of roll-over/switch volume out of August and into future months. Net HFT silver volume is sky high as well at around 34,000 contracts — and there’s 2,238 contracts worth of roll-over/switch volume on top of that. JPMorgan et al are throwing everything they have at these rallies.
The dollar index opened down 3 basis points once trading commenced at 7:45 p.m. in New York on Thursday evening, which was 7:45 a.m. China Standard Time on their Thursday morning. It has been heading mostly lower…in fits and starts…and is off its current low tick by a bit, which came right at the 2:15 p.m. CST afternoon gold fix in Shanghai. As of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the dollar index is down 12 basis points.
‘Da boyz’ are continuing to go short these rallies in both silver and gold, so they haven’t given up just yet. And as Ted mentioned in his mid-week commentary yesterday, it remains to be seen if they get overrun this time, or we will get the same old ‘wash, rinse, spin…repeat’ cycle once again at some point down the road.
His main concern, as it always is, is how much of a participant JPMorgan is in shorting these rallies. Are they in there like the proverbial dirty shirts…or are the setting up the other commercials for big losses? That’s what he’ll be on the look-out for in tomorrow’s COT Report — and rightly so, as JPMorgan is the king pin in all this.
And talking about Friday’s COT Report, yesterday’s price and volume action won’t be in it, as it occurred the day after the cut-off.
And as I post today’s efforts on the website at 4:04 a.m. EDT, I note that gold is down $6.30 an ounce — and silver is up 6 cents — and off its current low tick — and sitting right at $16 spot once again. Platinum and palladium are lower by a bit — and up by 5 and 2 dollars respectively.
Volumes are still climbing skyward during the first hour of London trading. Gross gold volume is coming up on 99,500 contracts — and minus the roll-over/switch volume out of August and into future months, net gold volume is about 86,500 contracts. Net HFT silver volume is around 38,500 contracts — and there’s 2,348 contracts worth of roll-over/switch volume in this precious metal.
The dollar index is down a bit during the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the dollar index is down 15 basis points.
That’s it for another day — and I’m already wondering what sort of price action we will have during the COMEX trading session in New York later this morning.
See you here tomorrow.