Another Gargantuan Volume Day in Silver & Gold

19 July 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to drift very quietly lower once trading began at 6:00 p.m. EDT in New York on Wednesday evening.  The low tick of the day was set around 8:45 a.m. in New York on Thursday morning — and began to crawl higher from there.  That rally ended just minutes after 12 o’clock noon EDT — and it crept a bit lower until a few minutes after the 1:30 p.m. COMEX close.  Then the real price action began — and that was capped around 3:40 p.m. in after-hours trading — and it sold off a hair from there into the 5:00 p.m. EDT close.

The low and high ticks were reported by the CME Group as $1,415.60 and $1,437.20 in the August contract.

Gold finished the Thursday session at $1,445.50 spot, up $19.30 from Wednesday’s close.  Net volume was past the orbit of Mars at 427,500 contracts — and there was 54,500 contracts worth of roll-over/switch volume out of August and into future months on top of that.

The silver price was up a nickel or so by shortly after 9 a.m. China Standard Time on their Thursday morning — and it then proceeded to drift very unevenly sideways until the 11 a.m.  EDT London close.  It rallied a bit until a minute or so after 12 o’clock noon in New York — and then, like gold was sold down a bit.  Then also like gold, there was more upside price action in after-hours trading — and its price path was very similar to gold’s, except it managed to close on its absolute high tick of the day.

The low and high ticks in this precious metal were recorded as $15.96 and $16.25 in the September contract.

Silver finished the Thursday session at $16.315 spot, up 38 cents from Wednesday.  Net volume was eye-watering, at a bit over 141,500 contracts — and there was a hair under 7,900 contracts worth of roll-over/switch volume in this precious metal.  Wow!

The platinum price began to head higher shortly after 8 a.m. CST on their Thursday morning — and ran into that $850 spot price barrier around 11:20 a.m. over there.  It then traded sideways until the COMEX open in New York — and it was sold unevenly lower until the market closed in Zurich at 11 a.m. EDT.  It chopped higher from there…managing to break above the $850 spot price ceiling, though not by much.  Platinum was closed at $851 spot, up 8 bucks from Wednesday.

The palladium price stair-stepped its way quietly higher until a few minutes after the 2:15 p.m. CST afternoon gold fix in Shanghai — and at that juncture the selling pressure began.  The low tick was set at precisely noon in New York — and it rallied a decent amount until shortly after 4 p.m. in the very thinly-traded after-hours market.  It didn’t do much after that.  Platinum was closed at $1,509 spot, down 7 dollars on the day — and it was yet another day where the price would have closed measurably higher, if allowed.

The dollar index closed very late on the Wednesday afternoon in New York at 97.22 — and then opened down 3 basis points once trading commenced at 7:45 p.m. EDT on Wednesday evening.  It began to head quietly lower from there — and that tiny decline ended at 11:30 a.m. in London.  It then jumped back to unchanged — and traded quietly and unevenly sideways until about ten minutes before the morning gold fix in London.  A decline commenced at that point, that picked up more steam at the 1:30 p.m. COMEX close.  The 96.67 low tick was set at around 3:50 p.m. EDT — and it didn’t do much of anything after that.  The dollar index finished the Thursday session at 97.79…down 43 basis points from Wednesday’s close — and about 10 basis points higher than the DXY chart [below] indicates.

It certainly appeared that there was a very close correlation between the dollar index and what the gold price did yesterday.

Here’s the DXY chart, courtesy of Bloomberg as always.  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…96.45…and the close on the DXY chart above, was 34 basis points on Thursday.  Click to enlarge as well.

The gold stocks opened unchanged…dipped a bit — and then began to head higher about 9:55 a.m. in New York trading.  That rally lasted until the gold price was sold off a bit starting a few minutes after 12 o’clock noon in New York, but then certainly perked up again as the dollar index cratered — and the gold price began to head sharply higher around 1:50 p.m. EDT.  Their respective highs came about twenty minutes or so before the low tick in the dollar index — and they sold off a hair into the close from there.  The HUI finished up 3.23 percent on the day.

The price activity was generally the same for the silver equities, although they were far less enthusiastic — and had some difficulty staying in positive territory.  But, like the gold shares, that all changed at 1:50 p.m. — and they followed their golden brethren like the proverbial shadow after that.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index close up only 3.04 percent.  Why it didn’t close higher than that is beyond me, as it should have considering the price action in the underlying metal itself.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Thursday’s doji — and we’re now back at highs we haven’t seen since mid August of 2018.  Click to enlarge as well.

Here, for the second day in a row, are Nick’s month-to-date and year-to-date charts for the four precious metals, plus their associated indexesClick to enlarge for both.

The CME Daily Delivery Report showed that 51 gold and 15 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, there were four short/issuers in total — and the three largest were Advantage, Morgan Stanley and ADM with 20, 19 an 10 contracts.  The two long/stoppers were JPMorgan and Advantage, with 27 and 24 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the two short/issuers were Advantage and ADM, with 9 and 6 contracts — and the three long/stoppers were Advantage, JPMorgan and Morgan Stanley, as they picked up 6, 6 and 3 contracts.  As in gold, all contracts…both issued and stopped…involved their respective client accounts.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in July rose by 57 contracts, leaving 73 still open, minus the 51 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 6 gold contracts were actually posted for delivery today, so that means that 57-6=51 gold contracts were just added to the July delivery month and, without doubt, those are the same 51 contracts that are out for delivery on Monday.  Silver o.i. in July declined by 128 contracts, leaving 276 still around, minus the 15 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 147 silver contracts were actually posted for delivery today, so that means that 147-128=19 more silver contracts were added to July.


There were more additions to both big ETFs yesterday, as an authorized participant added 367,885 troy ounces to GLD — and an a.p. added another 2,667,788 troy ounces to SLV.

There was another tiny sales report from the U.S. Mint on Thursday.  They sold 500 troy ounces  of gold eagles — and 500 one-ounce 24K gold buffaloes…the first buffalo sales of the month.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday was 201 troy ounces that was received at Delaware — and I won’t bother linking this.

It was far busier in silver, as 1,134,863 troy ounces was received — and 301,895 troy ounces were shipped out.  In the ‘in’ category, there was one truckload…597,997 troy ounces…received at CNT — and another truckload…529,812 troy ounces…was dropped off at Canada’s Scotiabank.  The remaining 7,053 troy ounces ended up at Delaware.  In the ‘out’ category, there was 300,882 troy ounces that departed Scotiabank — and the remaining 1,013 troy ounces…one good delivery bar…was shipped out of CNT.  There was also a paper transfer of 517,608 troy ounces from the Eligible category — and into Registered — and that took place over at CNT as well.  The link to all this activity is here.

There was some action over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, as 200 were received — and 742 were shipped out.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


I was snooping around on Nick Laird’s website on Wednesday evening — and dug up four charts for you…two of which you’ve seen before on a fairly regular basis.  These are the 20-year charts that show all the gold, silver, platinum and palladium held by all the known depositories, mutual funds and ETFs — and each has their own story to tell.  Click to enlarge for all.

I have even fewer story for you today than I did yesterday.


CRITICAL READS

Trump Declares War — Jim Rickards

Trump has had it!

He is apparently declaring a currency war on the rest of the world. Trump resents China and Europe cheapening the yuan and the euro against the dollar in order to help their exports and hurt ours.
He says it’s time for the U.S. to cheapen the dollar also. Trump has a point. If you put a 25% tariff on many Chinese exports to the U.S. (as Trump has done) or a 25% tariff on German cars exported to the U.S. (as Trump has threatened to do), it can be a powerful way to reduce the U.S. trade deficit and generate revenue for the U.S. Treasury.

But a trading partner can undo the effect of the tariff just by cheapening its currency.

There’s only one problem with Trump’s currency war plan. There’s nothing new about it. The currency wars started in 2010 as described in my 2011 book, Currency Wars.

As soon as one country devalues, its trading partners devalue in retaliation and nothing is gained. It’s been described as a “race to the bottom.” Currency wars produce no winners, just continual devaluation until they are followed by trade wars.

This commentary from Jim appeared on the dailyreckoning.com Internet site sometime on Thursday — and another link to it is here.


Two Reasons the Feds Can’t Sit Still — Bill Bonner

Once again, a beautiful summer day here in Ireland.

But we have no time to smell the flowers. It’s Inflate or Die, the new era that began, more or less officially, in May of this year. It was then that the Fed abandoned any pretense of sensible monetary policy and looked for a reason to slash rates to keep the fake boom alive.

In the Inflate or Die era, the feds have only two choices…

They can add to the supply of fake money (they have no real money) with lower interest rates, tax rebates, quantitative easing (QE), zero interest-rate policy (ZIRP), bigger deficits, more debt, more price distortion… or whatever gimcrackery they can come up with…

…Or they can let the system deflate with recession, asset sell-offs, sad faces, bankruptcies, reputational damage, career impairment, and wealth losses.

There are no other options.

It is the lack of other options that we set out to explore today.

This commentary from Bill was posted on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is here.


Mnuchin Says No Change to U.S. Dollar Policy “As of Now

Treasury Secretary Steven Mnuchin said there is no change in the U.S.’s dollar policy “as of now” but wouldn’t rule out a shift at some stage in the future.

There has been “no change to the dollar policy,” he said during an interview Thursday following a Group of Seven finance ministers’ meeting in Chantilly, France. “This is something we could consider in the future but as of now there’s no change to the dollar policy.”

The Trump administration has softened the long-held U.S. stance of supporting a strong dollar, favoring a stable exchange rate instead as it battles China in a trade war and threatens tariffs on other countries. Mnuchin has also signaled a preference for letting markets determine a currency’s value. “These are very, very large, liquid markets,” he said in the interview.

Mnuchin declined to comment on the levels of the U.S. currency.

This Bloomberg story was posted on their Internet site at 4:42 a.m. PDT on Thursday morning — and I found it on the gata.org Internet site.  Another link to it is here.


‘Just Kidding’ – Fed Desperately Walks Back Williams’ ZIRP Comments

What a farce.

A few short hours after New York Fed President John Williams sparked mayhem  in the markets by dropping the most dovish of hints in a speech:

First, take swift action when faced with adverse economic conditions.

Second, keep interest rates lower for longer.

And third, adapt monetary policy strategies to succeed in the context of low r-star and the ZLB.”

Signaling to the market that lower, sooner, and longer is the way forward, a Fed spokesman has issued a ‘just kidding’ statement in a desperate attempt to walk back market expectations.

After Williams spoke, bond yields tumbled along with the dollar as stocks and gold spiked and the market’s odds of a 50bps rate-cut in July spiked to over 70%!

And so a New York Fed spokesman quickly ran to the nearest reporter to explain that Williams didn’t intend to suggest Thursday that the central bank might make a large interest rate cut this month.

This rather amusing news item showed up on the Zero Hedge website at 7:45 p.m. EDT on Thursday evening — and another link to it is here.


In Major Threat to Dollar’s Reserve Status, Russia Offers to Join European SWIFT-Bypass

Three weeks after a meeting between the countries who singed the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), which was ditched by U.S., French, British and German officials said the trade mechanism which was proposed last summer – designed to circumvent both SWIFT as well as U.S. sanctions banning trade with Iran – called Instex, is now operational.

And while we await for the White House to threaten Europe with even greater tariffs unless it ends this special purpose vehicle – it already did once back in May when it warned that anyone associated with the SPV could be barred from the U.S. financial system if it goes into effect – a response from the US is now assured, because in the biggest attack on the dollar as a reserve currency to date, on Thursday, Russia signaled its willingness to join the controversial payments channel, and has called on Brussels to expand the new mechanism to cover oil exports, the FT reported.

Moscow’s involvement in the Instex channel would mark a significant step forward in attempts by the E.U. and Russia to rescue a 2015 Iran nuclear deal that has been unravelling since the Trump administration abandoned it last year.

Russia is interested in close co-ordination with the European Union on Instex,” the Russian foreign ministry told the Financial Times. “The more countries and continents involved, the more effective will the mechanism be as a whole.”

… and the more isolated the U.S. will be as a currency union meant to evade SWIFT and bypass the dollar’s reserve currency status will soon include virtually all relevant and important countries. Only China would be left outstanding; after the rest of the world’s would promptly join.

This news item appeared on the Zero Hedge website at 12:15 p.m. on Thursday afternoon EDT — and I thank Brad Robertson for sending it along.  Another link to it is here.


Towards new ‘de facto’ gold standard — Willem Middelkoop

Last year, 22 central banks, situated largely to the east of Germany, bought the largest amount of gold since 1967, the year the London Gold Pool collapsed. The gold repatriations by many European countries of the last few years are another sign that we are reaching the end of four decades of monetary calm. This could bring about the largest monetary changes since the closing of the gold window by US President Richard Nixon in 1971.

The U.S. wants its fiat dollar system to prevail for as long as possible. It has every interest in preventing a ‘rush out of dollars towards gold’, as happened in the 1970s. Since then, bankers have been trying to exercise control over the precious metal’s price. This war on gold has been ongoing for almost 100 years, but gained traction in the 1960s with the forming of the London Gold Pool – whose members included the U.S., U.K., Netherlands, Germany, France, Italy, Belgium and Switzerland.

During meetings of central bank chiefs at the Bank for International Settlements in 1961, the eight participating countries agreed to make available a gold pool worth $270m. This was focused on preventing the gold price from rising above $35 per troy ounce, as set during Bretton Woods, by selling official gold holdings from the central banks’ gold vaults.

However, in March 1968, the pool was disbanded because France would no longer co-operate. This signalled the start of a 13-year ‘bull market’ and sent gold to more than $800 per troy ounce in 1980.

Today, Washington may consider it useful to bring back gold to support the dollar. Some U.S. insiders have even been calling openly for a return to the old way of doing things. Neo-conservative Robert Zoellick, the former president of the World Bank, wrote an open letter to the Financial Times in 2010 entitled ‘Bring back the gold standard‘.

Well, dear reader, I know Willem personally — and when he’s talking, especially in a forum such as this one, you should be listening carefully.  As Chris Powell said of this article in his preamble: “This essay by gold advocate and longtime GATA supporter Willem Middelkoop, author of the 2014 book “The Big Reset,” has top position today at the internet site of the Official Monetary and Financial Institutions Forum in London, an organization catering to government and central bank officials around the world. The essay acknowledges the longstanding policy of central banks and particularly the U.S. government to suppress the price of gold in favor of the dollar. That such an organization would not just publish such an essay, but highlight it…is amazing — and an indication that the official sector is moving just as Middelkoop’s book outlines — toward a big reset of the world financial system restoring gold to its place as impartial money for a freer world.”  I found this article embedded in a GATA dispatch yesterday — and it’s definitely worth your time.  Another link to it is here.


The PHOTOS and the FUNNIES

When photographing tiny objects…flowers, insects, etc…an extension tube or a macro lens is a must.  I have both — and the first two photos of these tiny nameless flowers were shot using a 4mm extension tube — and then cropped.  The flowers in the first photo are about half the size of a dime in real life — and the flowers in the second are only very slightly bigger than a match head, with the blades of grass in the upper right giving some sense of scale.  Like with a big telephoto lens at close range, depth-of-field becomes nonexistent in the macro world as well…only millimeters and fractions thereof.  The third shot is of a female rufous hummingbird that showed up at my feeder back in mid-May.  I shot this one with my 70-300mm zoom set at 229mm.  There’s beauty everywhere…when you’re looking for it.  Click to enlarge for all.


The WRAP

It was another very interesting trading session on Thursday, as gold and silver prices continue to rally.  But as I’ve already pointed out — and as yesterday’s net volumes indicate, the Big 8 traders are shorting the hell out of these rallies to prevent their respective prices from blowing sky high…which is precisely what they would do if they weren’t.

But as Ted Butler correctly points out all the time, it’s only JPMorgan that matters — and will they or won’t they show up a short sellers of last resort to cap these rallies.  Of course there’s that chance that they already have.  And as he has pointed out for the last year or more, with around 25 million troy ounces of gold and 850 million troy ounces of silver squirreled away, they could stand back and let the other Big 7 traders burn in hell in a short-covering rally for the ages — and still make out like the crooks they are.

Which way this will end up, is still an open question — with an answer that isn’t forthcoming at the moment.  We’re merely bystanders in all of this, as the battle of the titans rages in the COMEX futures market.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  Gold’s big price move [and part of silver’s] is not visible on their respective charts, as some or most of their respective gains occurred after the COMEX close.  Copper didn’t do much, but WTIC got hammered lower for the fifth straight session, as the Managed Money traders puked up long positions — and piled further onto the short side…which is what made the price decline in the first place.  Click to enlarge.

And as I type this paragraph, the London and Zurich opens are less than a minute away — and I note that the tiny rally in gold that started the moment that trading began at 6:00 p.m. EDT in New York on Thursday evening, was hammered lower very shortly after it began. Since then, the gold price traded sideways in a very tight range, but was turned lower once the 2:15 p.m. afternoon gold fix in Shanghai was out of the way. Gold is now down $7.20 the ounce currently. It was the same price machinations for silver at the open in New York, but it managed to tick higher in early morning trading in the Far East on their Friday — and is up 7 cents at the moment. Ditto for platinum and palladium, with the former up 4 dollars — and the latter by 1 as Zurich opens.

Net HFT gold volume is already enormous at something over 94,000 contracts — and roll-over/switch volume out of August and into future months is a bit over 11,500 contracts. Net HFT silver volume is monstrous as well…coming up on 28,000 contracts — and there’s 787 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened up 2 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 crept quietly sideways until around 11:05 a.m. CST — and has been edging a bit higher since — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, it’s up 9 basis points.


Today, around 3:30 p.m. EDT, we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday — and in a lot of respects its already “yesterday’s news” because of the price action in both gold and silver since the cut-off.

But regardless of that, I’ll go through the numbers just for the record in my Saturday column.


And as I post today’s missive on the website at 4:02 a.m. EDT, I see that neither gold nor silver have done much in the first hour of trading in London. Gold is down $6.90 an ounce — and silver is up 7 cents. Platinum is up 3 bucks, but palladium was sold lower once the afternoon gold fix in Shanghai was done for the day — and it’s now down 5 bucks as the first hour of trading in Zurich draws to a close.

Gross gold volume is now up to around 142,000 contracts — and minus roll-over/switch volume out of August and into future months, net HFT gold volume is about 116,500 contracts. Net HFT silver volume is coming up on 32,000 contracts already — and there’s only 875 contracts worth of roll-over/switch volume on top of that.

The dollar index has been chopping quietly sideways for the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up 7 basis points.

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

Ed