20 July 2019 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The spike up in the gold price at the 6:00 p.m. EDT open in New York on Thursday evening was hammered lower almost immediately — and from that point it drifted quietly sideways until shortly before 2 p.m. China Standard Time on their Friday morning. It was sold very quietly lower from there until 9 a.m. in New York — and then began to head higher…but was stopped in its tracks at 9:45 a.m. Once the 10 a.m. EDT afternoon gold fix in London was done for the day, the real selling pressure appeared — and the low tick was set at 2:15 p.m. in after-hours trading. It then rallied a bit until exactly 3:30 p.m. EDT — and traded flat into the close from there.
The high and low ticks in gold were reported by the CME Group as $1,454.40 and $1,421.10 in the August contract.
Gold was closed in New York on Friday at $1,425.00 spot, down $20.50 on the day…taking all of Thursday’s gain with it…plus a dollar and small change more. Net HFT gold volume was past Jupiter at just under 466,000 contracts — and there was 64,500 contracts worth of roll-over/switch volume out of August and into future months.
Silver had the same up/down move at the New York open on Thursday evening — and then traded flat until 9 a.m. in Shanghai. It rallied about six cents or so — and then traded almost ruler flat until minutes before 10 a.m. in London. It was sold quietly lower from there until about 12:40 p.m. BST — and then a rally began that really got serious at 9 a.m. in New York. JPMorgan et al were having none of that — and capped its price at 9:45 a.m…the same time they did for gold. Once the afternoon gold fix was done, it was driven lower in price as well…with the low tick of the day coming a minute or so before noon in New York. It wandered around a bit until around 2:15 p.m. in after-hours trading, before edging a bit higher into the 5:00 p.m. EDT close.
The high and low ticks in silver were recorded as $16.625 and $16.08 in the September contract.
Silver was closed on Friday at $16.18 spot, down 13.5 cents from Thursday. Net volume was absolutely astronomical once again at just over 163,000 contracts — and there was a bit over 11,000 contracts worth of roll-over/switch volume on top of that.
It was the same up/down move in platinum at the New York open on Thursday evening and, like for silver, the price jumped higher starting at 9 a.m. CST on their Friday morning. It then traded quietly and unevenly sideways until around 11:30 a.m. in Zurich — and edged a bit higher going into the 8:20 a.m. COMEX open in New York. It was pretty much all down hill from there until trading ended at 5:00 p.m. EDT — and platinum was closed right on its low tick of the day…$844 spot…down 11 bucks.
The palladium price chopped unevenly sideways by a large handful of dollars — and the high in this precious metal came around 9 a.m. in New York. ‘Da boyz’ did the dirty at that juncture – and the low tick that mattered came shortly before noon EDT. It wasn’t allowed to do much after that. Palladium was closed at $1,488 spot, down 21 dollars on the day.
The dollar index closed very late on Thursday afternoon in New York at 96.79 — and opened up 2 basis points once trading commenced at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. CST in Far East trading. From that juncture, it didn’t do much of anything until 11:05 a.m. in Shanghai — and then it began to ‘rally’ quietly and unevenly higher, with the 97.29 high tick coming at 2:15 p.m. in New York. It gave up a bit of those gains going into the 5:30 p.m. EDT close. The dollar index finished the day at 97.15…up 36 basis points from Thursday.
Until JPMorgan et al showed up in morning trading in New York, precious metal prices were hoeing their own rows, despite what the currencies were doing — and it took massive intervention for them to get them to ‘behave’ for the remainder of the Friday session. This was as blatant an intervention as you’re likely to see.
Here’s the DXY chart, courtesy of Bloomberg. Click to enlarge.
And here’s the 5-year U.S. dollar index chart, courtesy of the good folks over at the stockcharts.com Internet site. The delta between its close…96.82…and the close on the DXY chart above, was 33 basis points on Friday. Click to enlarge as well.
The gold shares gapped down a bit at the open, but quickly bounced back into positive territory — and their respective highs came at gold’s 9:45 a.m. EDT high, when JPMorgan et al appeared on the scene. From that point, the gold stocks followed the gold price almost tick for tick — and the HUI closed down only 1.56 percent. I was impressed.
The silver equities performed in an almost similar manner as the gold shares, but the sell-off after the price was capped and turned lower at 9:45 a.m. in New York, was a bit harsher — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.67 percent, giving back virtually all of Thursday’s gains in the process. Click to enlarge if necessary.
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. So far they haven’t made much progress. The silver stocks did particularly well, but poorly considering the strong price performance of the underlying precious metal itself. But that dichotomy won’t last. Click to enlarge.
The month-to-date chart is pretty happy looking as well. The silver equities continue to underperform their golden brethren — and why that is so, I don’t know. But as I stated in my comments on the weekly chart above, that’s a situation that won’t continue in the longer term. Click to enlarge.
Here’s the year-to-date chart — and it’s pretty terrific looking as well. And as I pointed out last week, JPMorgan’s near death grip on the silver price is more than obvious in this chart. But the ratios are much more in line in both the HUI and the Silver 7…compared to the gains of their underlying precious metals. Click to enlarge.
‘Da boyz’ are still at battle stations — and there are no signs that I can see that they’re about to be overrun, so I’m not breaking out the party favours as of yet. It still remains to be seen if JPMorgan et al can pull off another round of engineered price declines in both silver and gold, considering the current financial and monetary environment that they’re facing. But regardless of that, it’s obvious from the charts above, that the gold and silver 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 19 gold and 61 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.
In gold, the three short/issuers were Advantage, ABN Amro and ADM…with 7, 6 and 6 contracts from their respective client accounts. The two long/stoppers were Advantage and JPMorgan, with 12 and 7 contracts for their respective client accounts as well.
In silver, the two short/issuers were Advantage and ADM…issuing 31 and 30 contracts — and the three largest of the four long/stoppers were JPMorgan, Advantage — and Morgan Stanley, picking up 31, 20 and 9 contracts. All contracts, both issued and stopped, involved their respective client accounts.
So far this month there have been 940 gold contracts issued/reissued and stopped — and that number in silver is 4,009.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Friday trading session showed that gold open interest in July dropped by 46 contracts, leaving 27 left, minus the 19 mentioned a few paragraphs ago. Thursday’s Daily Delivery Report showed that 51 gold contracts were actually posted for delivery on Monday, so that means that 51-46=5 more gold contracts just got added to July. Silver o.i. in July rose by 46 contracts, leaving 322 still open, minus the 61 contracts mentioned a few paragraphs ago. Thursday’s Daily Delivery Report showed that only 15 silver contracts were posted for delivery on Monday, so that means that 46+15=61 more silver contracts just got added to the July delivery month and, without doubt, those are the same 61 silver contracts that are out for delivery on Tuesday.
There was another big deposit into GLD on Friday, as an authorized participant added 188,658 troy ounces of gold. There was another very large deposit into SLV, as an a.p. added 3,276,203 troy ounces to SLV.
This week alone there has been 641,441 troy ounces of gold added to GLD — and that number in SLV is a knee-wobbling 14,462,264 troy ounces…with millions of ounces of silver going into other ETFs as well.
Speaking of which, here’s a table of numbers that I snipped from Nick’s website in the very wee hours of Saturday morning. It’s a list of all the silver depositories, showing the daily changes — and the 4-week changes, updated with Friday’s data. There was 4,993,296 troy ounces of silver added to them on a net basis yesterday — and 44.9 million over the last four weeks. Click to enlarge.
I know that Ted will have something to say about these numbers in his weekly review later today.
There was no sales report from the U.S. Mint on Friday.
Month-to-date the mint has sold 3,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and 337,000 silver eagles. This has to be almost a record low sales number for any month-to-date going back twenty years.
The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday was 2,800.000 troy ounces that was received at HSBC USA and, without doubt that was 280 ten-ounce bars that are slated for delivery in the August mini-gold contract. There is big open interest in this contract next month…currently 8,912 contracts worth. Of that total, there was 1,408 contracts added yesterday. The link to this activity is here.
There was a decent amount of activity in silver, as 316,689 troy ounces was received — and 645,382 troy ounces was shipped out. All of the ‘in’ activity was at HSBC USA. In the ‘out’ category, there was one truckload…600,634 troy ounces…shipped out of Canada’s Scotiabank — and the remainder that was removed was split up between CNT and Delaware…29,604 and 15,143 troy ounces respectively. The link to that is here.
The only activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday was one lone kilobar…32.151 troy ounces, SGE kilobar weight…that departed Brink’s, Inc. I won’t bother linking this for obvious reason.
Here are the usual charts two charts that Nick passes around every Friday evening. They’re 2-year charts that show the amount of gold and silver that has been deposited in all known depositories, ETFs and mutual funds over the last week. I normally save these for Tuesday’s column…but not this time.
During the past week there was an incredible 982,000 troy ounces of gold added on a net basis — and that number in silver was a mind-boggling 19.26 million troy ounces, which pretty much has to be a 1-week record. What is even more incredible is the fact that all the silver mined during the reporting week just past only added up to about 16.38 million troy ounces — and 90 percent of that gets used up in manufacturing. So the question that needs to be asked at this juncture is…where is all this silver coming from??? Click to enlarge for both.
Since the 20th of the month fell on a Saturday this month…today…the folks over at The Central Bank of the Russian Federation updated their website with June’s data on Friday. It showed that they added 600,000 troy ounces/18.7 metric tonnes of gold to their reserves that month.
That brings their total gold reserves up to 71.0 million troy ounces/2,208 metric tonnes. Here’s Nick’s most excellent chart, updated with that change. Click to enlarge.
I was certainly happy to see such a large deposit, because their central bank had been reducing their gold purchases every month without a break since the beginning of the year, with May’s addition only being 200,000 troy ounces. I was dreading/expecting zero for June — and was delighted that my worst fears weren’t realized.
The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, showed a slight decrease in the commercial net short position in gold — and more of an increase in the Commercial net short position in silver that Ted had estimated.
In silver, the Commercial net short position increased by a very healthy 14,080 contracts, or 70.4 million troy ounces of paper silver. Ted was hoping for no more than 10,000 contracts.
They arrived at that number by reducing their long position by 430 contracts — and they also added 13,650 short 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 mostly [but not all] Managed Money traders that made up the change for the reporting week, as they increased their long position by 2,653 contracts — and they reduced their short position by 9,584 contracts. It’s the sum of those two numbers…12,237 contracts…that represents their change for the reporting week.
The difference between that number — and the Commercial net short position…14,080 minus 12,237 equals 1,843 contracts, was made almost entirely by the ‘Nonreportable’/small trader category, as the traders in the ‘Other Reportables’ category did virtually nothing on a net basis.
The Commercial net short position in silver is back up to 296.8 million troy ounces.
Ted figures that JPMorgan waded in on the short side by a fair amount during the reporting week — and their short position now stands around 10,000 contracts, plus a bit more possibly.
Here’s the 3-year COT chart for silver — and the increase in the Commercial net short position [the blue bars] should be noted. Click to enlarge.
As I said in my Friday column, this report is very much ancient history considering the price activity since the Tuesday cut-off. But if JPMorgan jumped in on the short side as much as they did during the reporting week just past…one has to wonder just how much they’re on the short side as of the close of COMEX trading on Friday.
In gold, the commercial net short position actually declined during the reporting week, although it was by the tiniest amount…1,008 contracts, or 100,080 troy ounces of paper gold…which is not even a rounding error.
They arrived at that number by increasing their long position by 11,830 contracts, but they also increased their short position by 10,822 contracts — and its the difference between those two numbers that represents their change for the reporting week.
Under the hood in the Disaggregated COT Report, the breakdown of the numbers between the Managed Money traders and the other two categories are not worth commenting on because of the small number of contracts involved, so I’m not going to bother with the play-by-play.
For Ted, the big positive surprise was in the Producer/Merchant category, where the big U.S. banks hide out. They [JPMorgan?] increased their net long position by a decent 12,614 contracts. It was the traders in the Swap Dealer category that did most of the heavy lifting, as they increased their net short position by 11,606 contracts.
The difference between those two numbers is the change in the commercial net short position for the reporting week…net long 1,008 contracts…because these two groups of trades are the commercial category as described in the Legacy COT Report. In the Disaggregated COT report, they’re just broken down into their constituent parts. That’s the very definition of disaggregated.
The commercial net short position stands at 27.74 million troy ounces of paper gold…unchanged from last week.
Here’s the 3-year COT Report — and the lack of any change should be noted. Click to enlarge.
This COT report for gold is also very much “yesterday’s news” — and it’s a big unknown as to what next Friday’s COT Report will look like, because like in silver, there are still two more trading days left in the reporting week. However, based just on the first three trading days of next week’s report, it ain’t going to be pretty, either.
In the other metals, the Manged Money traders in palladium decreased their net long position in this precious metal by a 150 contracts — and the traders in the ‘Other Reportables’ category increased their net short position by 311 contracts. The Managed Money traders are net long the palladium market by 14,162 contracts…56 percent of the total open interest. Total open interest in palladium is 25,227 COMEX contracts, down 6 piddling contracts from the previous week. And as I keep repeating, it’s a very tiny market, as it took less than a 500 contract swing during the reporting week to make for a big change in price. In platinum, the Managed Money traders decreased their net short position by 8,992 contracts during the reporting week. The Managed Money traders are now net short the platinum market by 6,183 COMEX contracts…a huge drop from last week…which is why the price rose during the reporting week. In copper, the Managed Money traders decreased their net short position in that metal by a further 17,843 COMEX contracts during the reporting week — and are now net short the COMEX futures market by ‘only’ 39,138 contracts, or 978 million pounds of the stuff.
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 124 days of world silver production, which is up 11 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 86 days of world silver production, which is up 3 days from last week’s report — for a total of 210 days that the Big 8 are short, which is seven months of world silver production, or about 490.1 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were short 196 days of world silver production.]
In the COT Report above, the Commercial net short position in silver was reported as 296.8 million troy ounces. As mentioned in the previous paragraph, the short position of the Big 8 traders is 490.1 million troy ounces. The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 490.1 minus 296.8 equals 193.3 million troy ounces.
The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 35-odd small commercial traders other than the Big 8, are net long that amount. You couldn’t make this stuff up.
As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short is around 10,000 contracts — and possibly a bit more.
The Big 4 traders are short, on average, about…124 divided by 4 equals…31 days of world silver production each. The four traders in the ‘5 through 8’ category are short 86 days of world silver production in total, which is 21.5 days of world silver production each.
The Big 8 commercial traders are short 42.7 percent of the entire open interest in silver in the COMEX futures market, which is a smallish increase from the 41.9 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 41.3 percent of the total COMEX open interest that the Big 8 are short, down a hair from the 44.1 percent they were short in last week’s report — and a bit more than 45 percent, once the market-neutral spread trades are subtracted out.
In gold, the Big 4 are short 53 days of world gold production, down 7 days from what they were short in last week’s COT Report. The ‘5 through 8’ are short another 33 days of world production, up 1 day from what they were short last week…for a total of 86 days of world gold production held short by the Big 8…down 6 days from last week’s report. Based on these numbers, the Big 4 in gold hold about 62 percent of the total short position held by the Big 8…down 3 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 59, 69 and 79 percent respectively of the short positions held by the Big 8. Silver is up 1 percentage point from a week ago, platinum is up 4 percentage points from last week — and palladium is down 2 percentage points from a week ago.
Like on Friday, I don’t have all that much for you today.
Two senior Federal Reserve officials stressed the need to act quickly if the U.S. economy looked likely to stumble, reinforcing bets the central bank could cut interest rates by as much as half a percentage point later this month.
Fed Vice Chairman Richard Clarida and New York Fed chief John Williams buoyed stocks with their dovish remarks Thursday afternoon, in some of the final comments from central bankers before they enter their blackout period ahead of a July 30-31 policy meeting.
Equities rose in Asia on Friday along with European futures, lifted by the prospect of a more aggressive policy move by the Fed. S&P 500 Index futures also gained, building on the U.S. gains seen late on Thursday, despite the New York Fed trying to walk back the comments from Williams.
U.S. money markets priced in 41 basis points of easing in July after the two men spoke. Traders later wound that back after a New York Fed spokeswoman said that Williams’s comments had been in the context of an academic speech and were not about potential upcoming policy actions. Clarida was discussing the current economic outlook in a television interview.
“You don’t need to wait until things get so bad to have a dramatic series of rate cuts,” Clarida told Fox Business Network, citing economic research. “We need to make a decision based on where we think the economy may be heading and, importantly, where the risks to the economy are lined up.”
While the U.S. economy is “in a good place,” Clarida said recent global economic data have been softer than expected. “We’ve had mixed data, but I do think the global data has been disappointing on the downside,” he said. “Disinflationary pressures, if anything, are more intense than I thought six weeks ago.”
This Bloomberg story appeared on their Internet site at 1:23 p.m. PDT on Thursday afternoon — and was updated about fourteen hours later. I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to it is here.
It wasn’t that long ago that Fed policy stimulus operated through a mechanism of adding reserves directly into the banking system, with additional reserves working to reduce rates while encouraging borrowing and lending. Policy would act to provide a subtle change in lending conditions that over time would reverberate throughout the economy. The Federal Reserve under Alan Greenspan increasingly shifted to using the markets as the mechanism to loosen financial conditions and stimulate the economy. The 2008 crisis unleashed the policy of direct market intervention, with Bernanke later doubling-down with his “push back” comment.
The U.S.’s coupling of market-based finance with market-directed monetary stimulus created a powerful – seemingly miraculous – combination. Others wanted in on the action. It was pro-Bubble for the U.S., but nonetheless took the world by storm. It became Pro-Global Bubble, and the world today is engulfed in historic market and financial Bubbles.
I’ve been closely monitoring Bubbles going back to Japan’s late-eighties experience. It’s always the same: Everyone is happy to ignore bubbles when they’re inflating. Bubble analysis, by its nature, will appear foolish for a while. But bubbles inevitably burst. There is no doubt that China’s historic bubble will burst, and I expect this will prove the catalyst for faltering bubbles across the globe – including here in the U.S.
The obvious transmission mechanism will be through the securities markets. Global markets have become highly synchronized – across asset classes and across countries and regions. Market-focused monetary stimulus has become highly synchronized, essentially creating a singular comprehensive global bubble.
“Repo Rate on China’s Govt Bonds Briefly Hits 1,000% in Shanghai,” read an eye-catching early-Friday Bloomberg headline (picked up by ZeroHedge). Repo rates were back to normal by the end of the session, yet it sure makes one wonder… Aggressive PBOC liquidity injections have for the past several weeks calmed the Chinese money market after post Baoshang Bank government takeover (with “haircuts”) instability. The implicit Beijing guarantee of virtually the entire Chinese Credit system is now being questioned. This greatly increases the risk of Chinese money market instability – with ominous ramifications for China and the world.
With this in mind, there’s a particular circumstance that could catch global markets and policymakers by surprise: A dislocation in China’s “repo” securities lending market that reverberates throughout repo and derivatives markets in Asia, Europe and the U.S. This latent risk, in itself, could help explain this year’s global yield collapse and market expectations for aggressive concerted monetary stimulus. When Chairman Powell repeats “global risks” in his talks these days, I think first to global “repo” markets, global securities finance and global derivatives.
Markets are these days are luxuriating in impending Fed rate cuts and global rate reductions that have commenced in earnest. Liquidity abundance as far as eyes can see… What could go wrong? It’s already started going wrong. The flow of Chinese finance to the world is slowing.
Another must read commentary from Doug. This one showed up on the his website in the very wee hours of Saturday morning EDT — and another link to it is here.
Within the vast bureaucratic sprawl of the Pentagon there is a group in charge of monitoring the general state of the military-industrial complex and its continued ability to fulfill the requirements of the national defense strategy. Office for acquisition and sustainment and office for industrial policy spends some $100,000 a year producing an Annual Report to Congress. It is available to the general public. It is even available to the general public in Russia, and Russian experts had a really good time poring over it.
In fact, it filled them with optimism. You see, Russia wants peace but the U.S. seems to want war and keeps making threatening gestures against a longish list of countries that refuse to do its bidding or simply don’t share its “universal values.” But now it turns out that threats (and the increasingly toothless economic sanctions) are pretty much all that the U.S. is still capable of dishing out—this in spite of absolutely astronomical levels of defense spending. Let’s see what the US military-industrial complex looks like through a Russian lens.
It is important to note that the report’s authors were not aiming to force legislators to finance some specific project. This makes it more valuable than numerous other sources, whose authors’ main objective was to belly up to the federal feeding trough, and which therefore tend to be light on facts and heavy on hype. No doubt, politics still played a part in how various details are portrayed, but there seems to be a limit to the number of problems its authors can airbrush out of the picture and still do a reasonable job in analyzing the situation and in formulating their recommendations.
What knocked Russian analysis over with a feather is the fact that these INDPOL experts (who, like the rest of the U.S. DOD, love acronyms) evaluate the U.S. military-industrial complex from a… market-based perspective! You see, the Russian military-industrial complex is fully owned by the Russian government and works exclusively in its interests; anything else would be considered treason. But the U.S. military-industrial complex is evaluated based on its… profitability! According to INDPOL, it must not only produce products for the military but also acquire market share in the global weapons trade and, perhaps most importantly, maximize profitability for private investors. By this standard, it is doing well: for 2017 the gross margin (EBITDA) for U.S. defense contractors ranged from 15 to 17%, and some subcontractors—Transdigm, for example—managed to deliver no less than 42-45%. “Ah!” cry the Russian experts, “We’ve found the problem! The Americans have legalized war profiteering!” (This, by the way, is but one of many instances of something called systemic corruption, which is rife in the U.S.)
This longish, but very worthwhile article was posted on the cluborlov.blogspot.com Internet site on Tuesday. But for content and length reasons, I though it more suitable as Saturday reading. I thank Larry Galearis for sending it our way — and another link to it is here.
Iran seized a British tanker in the Strait of Hormuz for alleged marine violations and allowed a second one to proceed after issuing a warning, according to Iran state TV and news reports.
The actions were seen as a dramatic intensification of already fraught relations between the U.S. and Iran, and now Britain, which seized an Iranian tanker suspected of carrying oil to Syria several weeks ago.
“This is an extraordinarily brazen step here. This is taking tankers under way, then forcing them into Iranian waters, and I think it’s a highly provocative step. It’s something the Iranians tried to do before, when they tried to nab another British ship on the 10th of July but British war ships stopped them,” said Henry Rome, Iran analyst with Eurasia Group. “This is an intentional escalation from what we’ve seen by the Iranians.”
The Iranian Revolutionary Guard earlier said it seized the British-flagged tanker Stena Impero, after it failed to follow international maritime regulations. The Guard took the ship to a coastal area to be turned over to maritime authorities, according to Iran state media.
The Tasnim news service quoted regional military sources saying the Guard also stopped but released British-operated tanker Mesdar in the Strait of Hormuz.
This news story was posted on the cnbc.com Internet site at 2:02 p.m. EDT on Friday afternoon — and it’s the second offering of the day from Patrik Ekdahl. Another link to it is here. There was also a story about this on the rt.com Internet site headlined “Iran confiscates British tanker in Strait of Hormuz – IRGC” — and I thank Patrik for that one as well. Then there was this story over at Zero Hedge yesterday evening…”U.K. Warns “Robust” Response Coming if Iran Doesn’t Release Tanker as U.S. Jets Fly Over Gulf”
It looks like the gold-buying spree by central banks in the past decade will probably continue for a while yet.
In a survey of central banks conducted by the World Gold Council and YouGov, 54% of respondents expect global holdings to climb in the next 12 months amid concerns about risks in other reserve assets. Looking further ahead, two-thirds see gold’s share of reserves staying the same or rising in five years’ time.
Nations have expanded gold holdings by about 14% since 2009, with the hoard now valued at roughly $1.6 trillion. Nations from Russia to China to Poland have added to reserves as economic growth slows, trade and geopolitical tensions rise, and authorities seek to diversify away from the dollar. Bullion holdings rose by 651.5 tons last year, the most since 1971.
“This year’s survey signals another healthy year of central bank gold demand,” the WGC said in a report Thursday. “In the next 12 months, heightened economic risks in reserve currency issuing countries are seen as the main factor driving these purchases, but in the medium term structural changes in the global economy may also play a role.”
While top buyers like China and Russia have continued purchases so far this year, global reserves saw a small decline in March to May, data compiled by the International Monetary Fund show.
The WGC and YouGov received 39 eligible responses from 150 central banks contacted as of mid-June, up from 22 respondents last year.
The above five paragraphs are all there is to this brief Bloomberg article that showed up on the uk.investing.com Internet site on Friday sometime. I found it on the Sharps Pixley website — and another link to the hard copy is here. John Reade from the WGC also had an article on this topic headlined “2019 Central Bank Gold Reserves Survey signals more buying to come” — and not to be outdone, Isabelle Strauss-Kahn of the WGC posted this item headlined “Central banks return to gold“. Both of these commentaries come from the Sharps Pixley website as well.
For Australian precious metals investors 21 June was a momentous day, with the price of gold topping A$2000 per ounce for the first time ever.
The chart below plots the rise in the price of the yellow metal since since the start of the year 2000, with gold rising from under A$450/oz over this time frame. This equates to a return of more than 8% per annum to any investor astute enough to have invested at the turn of the century.
The latest rally that pushed gold beyond A$2000/oz represented the culmination (for now) of a move that began in earnest back in September 2018. The gold price has climbed approximately 25% in AUD terms over the past nine months, compared with the 20% gain we’ve seen in the USD gold price over the same time period.
And as reader Justin Newman pointed out to me in an e-mail on Friday morning, the gold price also set a new high in Canadian dollars on Thursday as well. This item put in an appearance on the gold.org Internet site on Friday I believe — and it’s another article that I found on the Sharps Pixley website. Another link to it is here.
The PHOTOS and the FUNNIES
These four photos were all from the same trip out on the forestry service roads east and southeast of Merritt on May 19. The first shot is my daughter leaning up against the biggest ponderosa pine tree that we’d ever come across…many, many hundreds of years old. The second photo is near Brookmere, a stop on the now long-defunct Kettle Valley Railway. We drove down the right-of-way for a few kilometers — and this is one of the shots from that side trip. The second-last one of this farm was taken about 20 kilometers south of Merritt in the Coldwater River valley. They babysit dairy cows from between the time they’re weened — and until they are of milk-producing age. Then they’re loaded on trucks and sent back to the dairy farms from whence they came. Interesting people — and and an interesting story that you couldn’t make it up. The cattle photo now needs no explanation. Click to enlarge.
Today’s pop ‘blast from past’ is actually a jazz ‘blast from the past’. When I was researching this Duke Ellington big-band tune, I suddenly felt very old, as it was monster hit in 1953…when I was 5 years young. For some reason I thought big-band music had died out shortly after WW2…an entirely wrong supposition, as it turned out. Reader Dale Troyer sent me this tune — and it’s him standing up at the 2:40 minute mark…wailing away on his b-flat Tenor sax, so give him a hand! You’ll know it in an instant — and the link is here.
Today’s classical ‘blast from the past’ is by Franz Liszt…composer and virtuoso pianist extraordinaire. It’s his Hungarian Rhapsody No. 2 in C-sharp minor…an obscure key if there ever was one. It was originally composed for solo piano in 1847, but that quickly led to an orchestrated version. I couldn’t decide between the two, so here are both of them. The original solo piano version is here — and don’t let the intro commercial fool you into thinking that it’s the wrong link, because it isn’t. The orchestral version is linked here.
Let there be no a shadow a doubt in your mind, dear reader, that if JPMorgan et al hadn’t been ever vigilant throughout the entire 24-hour trading session on Friday, the precious metal market would have melted up in a short-covering rally for the ages — and that was particularly the case in silver.
Although I couldn’t look into their eyes, yesterday’s engineered price declines by ‘da boyz’ had a whiff of desperation about them.
Here are the 6-month charts for the Big 6 commodities — and the iron fist of JPMorgan et al are evident in the Friday dojis for all four precious metals, along with copper and WTIC. This is obvious evidence of the end-game battle against tangible assets vs. all things paper — and that paper forest is tinder dry — and just waiting for the match that will set it ablaze. Click to enlarge.
As I’ve been mentioning on many occasions over the last few weeks, the headwinds that the powers-that-be are fighting in all markets is becoming more powerful with each passing day. The big gusts in the developing hurricane this week were…a] a recommendation by Deutsche Bank that buying gold would be a good idea…b] followed soon after by Ray Dalio’s comments in a similar vein… c] two Fed governors on consecutive days calling for a rate cut at the next FOMC meeting — and d] Trumps plaintive tweets about a lower U.S. dollar.
And there were more straws in the wind than those…starting with the three stories bunched together in today’s Critical Reads section…two of which were from top people at the World Gold Council. And not to be forgotten is that Willem Middelkoop piece in Friday’s column from the prestigious OMFIF website headlined “Towards a new ‘de facto’ gold standard“.
And not to be forgotten is the further 600,000 troy ounces of gold that Russia’s central bank squirreled away in June, plus heaven only knows how much they’ve already purchased in July. And what about the 44.9 million troy ounces of silver that have vanished into all known depositories, ETFs and mutual funds over the last four weeks — and the 1.55 million troy ounces of gold over the same time period?
Then there’s this Iran thingy…
‘Da Boyz’ have been able to prevent a price explosion in the paper precious metal market, at least for the moment…but the physical market is telling the true tale. The run to hard assets is now on in earnest.
As Ted has been pointing out for many years now, JPMorgan has now amassed enough physical silver and gold to ride out any storm — and cover whatever short positions they currently hold, plus come out of this smelling like that proverbial rose. However, that doesn’t hold true for the remaining Big 7…of which Citigroup and HSBC USA are card-carrying members — and maybe Canada’s Scotiabank as well.
But as Ted has also pointed out, his concern is for the solvency of the remaining four or so members of the Big 8 who don’t have the financial wherewithal to continue going short against all comers indefinitely. At some point, one or more of them will hit the wall and rush to cover. Then what?
To tell you the truth, I don’t know, as my imagination just doesn’t go further than that. But that’s the direction this market is heading. Another engineered price decline may be in the cards, but that won’t last. All it will do is delay the inevitable.
Then you have to ask yourself this question, dear reader…what will the powers-that-be do when they’re finally face-to-face with checkmate?
At some point in the not-very-distant future, we’re going to find out.
I’m done for the day — and the week — and I’ll see you on Tuesday.