Mind-Boggling Physical Silver Flows Into ETFs — Ted Butler

30 July 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price ticked higher the moment that trading began at 6:00 p.m. in New York on Sunday evening, but that wasn’t allow to get far.  It began to really anew starting shortly after 8 a.m. China Standard Time on their Monday morning — and that rally attempt was capped around 9:15 a.m. CST.  It was sold quietly lower from that juncture until around 9:30 a.m. in London — and from there it edged higher until the COMEX close at 1:30 p.m. in New York.  Then the rally got far more intense…so much so that ‘someone’ had to step in around 3:15 p.m. in after-hours trading to put out that fire, as the market was about to go ‘no ask’.  It was sold down a few dollars into the 5:00 p.m. close of trading from there.

The gold price traded in about a ten dollar price range on Monday, so the low and high ticks aren’t worth looking up.

Gold was closed in New York at $1,426.10 spot, up $7.80 on the day.  Net volume was fumes and vapours at around 29,500 contracts, but roll-over/switch volume out of August and into future months was gargantuan at 186,000 contracts, as all the large traders that weren’t standing for delivery next month had to roll or sell their positions before the close of COMEX trading yesterday.

Silver’s price path was a virtual carbon copy of gold’s, except its low tick [that mattered] came at the 2:15 p.m. afternoon gold fix in Shanghai.  Its rally that began around 3 p.m. in the thinly-traded after-hours market wasn’t allowed to get far — and from that point it didn’t do much for the remainder of the Monday session.

Silver only traded in a 14 cent range in the September contract, so I’ll pass on the low and high ticks in this precious metal as well.

Silver was closed at $16.425 spot, up 7.5 cents from Friday.  Net volume was nothing really out of the ordinary, if that means anything these days, at just under 56,000 contracts — and roll-over/switch volume was a tiny bit under 5,000 contracts.

The platinum price traded a small handful of dollars above unchanged until noon in Zurich — and then a rally of some substance materialized.  That was tapped lower shortly before the Zurich close, but by 1 p.m. in New York it was crawling higher once again.  It wasn’t allowed above the $880 spot mark — and was closed at $879 spot, up 16 bucks from Friday.

The palladium price edged very unevenly sideways in Far East trading on their Monday, but at 12:30 p.m. in Zurich, it was hammered back below $1,500 spot ever-so-briefly, but recovered immediately — and began to chop higher from there.  The price really began to sail shortly before the Zurich close — and it was capped shortly thereafter.  The high tick came a few minutes before 1 p.m. in New York — and it was sold a small handful of dollars lower once the COMEX closed at 1:30 p.m. EDT.  Palladium was closed at $1,534 spot, up 23 dollars on the day.

The dollar index closed very late on Friday afternoon in New York at 98.01 — and opened down 2 basis points once trading commenced around 6:30 p.m. EDT on Sunday evening.  About ninety minutes later it edged lower to its 97.90 low tick, which came at 9:30 a.m. CST in Far East trading.  It then proceeded to crawl very quietly and somewhat evenly higher until the 96.17 high tick was set minutes after 11:15 a.m. in New York.  It crept quietly lower from that juncture — and touched the unchanged mark around 3:45 p.m. EDT — and it tacked on a few basis points going into the 5:30 p.m. close.  The dollar index finished the Monday session at 09.04…up 3 basis points from Friday.

It was pretty obvious that there was zero correlation between precious metal prices were doing — and what was happening in the currency market.

Here’s the usual DXY chart from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…97.75…and the close on the DXY above, was 29 basis points on Monday.  Click to enlarge as well.

The gold stocks had a brief fifteen minute up/down move at the opening of trading in New York at 9:30 a.m. EDT on Monday morning — and then they crept higher and back into positive territory by a bit.  From a few minute before 11 a.m. EDT onwards, they chopped quietly sideways until the gold price made its move around 2:50 p.m. in after-hours trading.  They rallied for the next fifteen minutes, before trading sideways into the close.  The HUI finished higher by 1.24 percent.

The silver equities had the same up/down move at the open in New York yesterday, except the ‘down’ move was particularly vicious — and they struggled unevenly higher until the same up-move occurred in silver around 2:40 p.m. in after-hours trading.  That popped the silver shares back above unchanged by a bit, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 0.77 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that zero gold — and 56 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In silver, the three short/issuers were Advantage, JPMorgan and ADM, with 45, 6 and 5 contracts…all out of their respective client accounts.  The three long/stoppers were ABN Amro, Morgan Stanley and ADM, with 48, 6 and 2 contracts…also for their respective client accounts.

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

The CME Preliminary Report for the Monday trading session showed that gold open interest in July dropped by 5 contracts, leaving zero left.  Friday’s Daily Delivery Report showed that 5 gold contracts were actually posted for delivery today, so July gold deliveries are done.  Silver o.i. in July rose by 34 contracts, leaving 56 still open, minus the 56 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 22 silver contracts were actually posted for delivery today, so that means that 34+22=56 more silver contracts were added to the July delivery month — and those are the same contracts that are out for delivery tomorrow.

Gold open interest in August crashed by 52,285 contracts, leaving 43,294 left — and that number will crater even more in this evening’s report, as the remainder of the COMEX futures contract holders that aren’t standing for delivery in August, have to roll or sell by the close of COMEX trading today.  Silver o.i. in August fell by only 90 contracts, leaving 1,005 still open.  I expect a further tiny decline in silver o.i. in this evening’s report — and for the same reasons mentioned for gold.


After four consecutive days of withdrawals, there was a deposit of some size into GLD yesterday, as an authorized participant added 216,932 troy ounces. For the third day in a row, there was a withdrawal from SLV, as an a.p. took out 467,981 troy ounces.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on insider their gold and silver ETFs as of the close of business on Friday, July 26 — and this is what they had to report.  They added 7,649 troy ounces of gold — and 224,412 troy ounces of silver.

There was a bit of a pick-up in sales at the U.S. Mint on Monday…at least compared to what’s been happening lately.  They sold 1,000 troy ounces of gold eagles — 740,000 silver eagles — plus 57,000 of those 5-ounce ‘America the Beautiful’ silver coins, which nets out to 285,000 troy ounces of silver.

There was no in-out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.

There was very little movement in silver.  Only 9,959 troy ounces was received at CNT — and nothing was shipped out.  I won’t bother linking this.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They reported receiving 1,800 of them — and shipped out 58.   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 are more than familiar with, that Nick Laird passed around on the weekend.  They show the all the physical gold and silver held by all the known precious metal depositories, mutual funds and ETFs, as of the close of business on Friday, July 26.  During that business week, they sold off a net 125,000 troy ounces of gold, but added a staggering 18,727,000 troy ounces of silverClick to enlarge.

I have a very decent number of stories/articles for you today.


CRITICAL READS

Trump Slams Fed: “QT Was a Big Mistake” and “A Small Rate Cut Isn’t Enough

Update: President Trump simply won’t back down from bashing the Fed on Monday. In a series of two tweets sent just before the open, Trump alleged that the central bank “raised way too early and way too much” and that their “quantitative tightening” was “another big mistake.”

And while the U.S. is “doing very well” in terms of wealth creation, we could have done much better if the Fed hadn’t rushed to keep hiking rates.

Unfortunately, slashing rates by 25 bp simply isn’t enough. “The Fed has made all of the wrong moves…a small rate cut isn’t enough, but we will win anyway!

But will the Fed listen? Markets are increasingly doubting the prospects for a 50 bp cut on Wednesday.

With one day left until the FOMC begins its two-day monetary policy meeting – said to be the most important policy meeting since the days that immediately followed the financial crisis – President Trump once again slammed the Fed in a tweet, echoing a criticism that he has repeatedly used over the past few weeks….which is: That the Fed has failed to cut interest rates to get out ahead of central banks in Europe and China, despite the fact that stubbornly low inflation has left the Fed with every excuse to cut. The PBOC and the ECB will benefit from “pumping money into their systems, making it much easier for their manufacturers to sell product.”

This news item showed up on the Zero Hedge website at 5:11 p.m. EDT on Monday afternoon — and I thank Brad Robertson for sharing it with us. Another link to it is here.  A somewhat related ZH story from 4:45 p.m. EDT is headlined “U.S. Treasury Now Expects to Borrow Over $800 Billion in Debt in Two Quarters” — and that one comes courtesy of Brad as well.


The Wolf Street Report: The Giant Sucking Sound of Financial Repression

This interesting and worthwhile 10-minute audio commentary by Wolf was posted on his Internet site on Sunday sometime — and I thank Richard Saler for sending it our way.


Will They Take All Your Money? — Jeff Thomas

Why not? It’s not yours.

Most people assume that, if they have money on deposit in a bank, they own that money. That’s not necessarily the case. Decades ago, some of the world’s most powerful countries began to pass legislation that, if you deposit money in the bank, it becomes the property of the bank. In those countries, if you open a bank account and make a deposit, you sign off legal title to that cash. It becomes an asset of the bank.

The reason they got away with this obvious “theft through legislation” was that the banks were required to henceforth regard your deposit as a debt in your favour. So, technically, you were still owed the money as a bank liability, even though it was no longer truly yours.

On the surface, the change of ownership may seem to be a moot point, as, surely any bank would allow you to withdraw whatever you have deposited, or there would be a run on the bank and the bank would fail.

Well, that’s a definite “maybe.”

This very interesting commentary from Jeff is definitely worth your time.  It appeared on the internationalman.com Internet site on Monday morning EDT — and another link to it is here.


Overdosing on Crazy Pills — Chris Martenson

Sometimes an otherwise-forgettable movie will be lifted up out of obscurity by the internet and made into a useful meme.

In the movie Zoolander, Will Ferrell’s character, ‘Jacobim Mugatu,’ screams the line “I feel like I’m taking crazy pills!” because it seems nobody else sees what he does.

I have that feeling nearly every day now. And it’s getting more frequent and intense.

To the point where, some days, it feels like I’m in danger of overdosing on crazy pills.

Financial bubbles happen. History is full of them.  It’s just that they’re just not supposed to happen more than once a generation.

How can so many people have completely forgotten the painful lessons of not one, but two, recent bubbles?

This Part 1 of his commentary was posted on the peakprosperity.com Internet site on Friday evening PDT — and I’m sorry that I didn’t have it for my Saturday column, as it would have fit right in with the rest of the insanity in that missive.  Part 1 is in the clear, but if you want to listen to Part 2…you have to ‘register’.  I thank Larry Galearis for sending this our way on Saturday — and another link to it is here.


Boris Johnson Issues Ultimatum to E.U. Over Brexit Talks as Pound Slumps

Prime Minister Boris Johnson will not start talks with European Union leaders over Brexit unless they first agree to his demand to reopen the divorce deal they struck with his predecessor, Theresa May, his office warned Monday. So far, E.U. leaders have refused.

The pound fell to its lowest in two years on growing fears the new premier will steer Britain into an economically damaging no-deal split. Johnson stepped up the government’s preparations for leaving the E.U. without an agreement as his senior officials warned that the country will have no choice, if the bloc does not change its approach to further negotiations.

With fewer than 100 days left until the U.K. is due to exit the 28-member bloc on the deadline of Oct. 31, Johnson is tearing up the way Britain’s government operates to ready the country for the potential impact of a no-deal breakup. More money is being made available for contingency planning, and a mass public information campaign will launch in the weeks ahead to advise businesses and citizens how to prepare.

Johnson has packed his cabinet with pro-Brexit ministers and officials who led the 2016 Vote Leave campaign with him, to ensure every part of the state is geared toward exit day on Halloween.

The prime minister still says he wants a deal with the E.U. but has two key conditions: the bloc must re-open the Withdrawal Agreement it negotiated last year, and it must agree to scrap the so-called backstop guarantee for the Irish border — the provision intended to ensure there’s no need for checks on goods crossing the land border with Ireland.

This Bloomberg article appeared on their Internet site at 9:48 a.m. PDT on Monday morning — and was updated about five hours later.  I found it in this morning’s edition of the King Report — and another link to it is here.


ECB Purchases of Equity Would Be a Dangerous Step — Financial Times of London

This week BlackRock executive Rick Rieder urged the European Central Bank to stimulate the eurozone economy by printing money and using it to buy equities.

This idea has attracted rather less comment than it should have, even though it’s not a new idea. The Bank of Japan has been buying domestic equities for years: it owns about 75 per cent of the country’s exchange traded fund market and is a top 10 shareholder in 40 per cent of Japan’s listed companies.

The ECB has also long been incredibly dovish: it has provided more than €2tn of quantitative easing, negative interest rates, endless cheap loans and lots of forward guidance making it clear that this will go on and on and on.

The market has become used to the idea that it somehow makes sense to pay 0.3 per cent or more a year to lend money to the German government for a decade. Thursday’s ECB meeting told us that interest rates are expected to remain “at their present or lower levels” at least through the first half of 2020. The language also suggested that a new package of measures is coming — with discussion under way about “options for the size and composition of potential new net asset purchases.”

Investors expect more rate cuts and a bit more QE to come in September. But everyone also knows that further QE isn’t as simple as it looks. Germany is running out of Bunds, thanks to running a budget surplus, and ECB buying has to be proportional to the size of its constituent countries. So Germany needs to run a deficit to sell Bunds to the ECB or allow the development of eurobonds guaranteed by Germany. If it won’t, the ECB has to get seriously creative.

Buying equities with new money is therefore a possible solution. Brian Pellegrini of Intertemporal Economics explains that it would “respect the capital key” (the relative national shareholdings in the ECB) by buying German assets while also helping to weaken the euro.

This item showed up on the ft.com Internet site on Friday sometime — and it’s posted in the clear in its entirety on the gata.org website with the headline “Even the Financial Times starts to notice how crazy central banking has gotten” — and another link to it is here.


Canadian gold mine CEO: ‘Gold blossoms’ in a low-interest rate economy

Gold is trading at levels it has not seen in years and could be on its way to reaching all-time highs in the near future, the CEO of a Canadian miner told CNBC Monday.

Sean Boyd, the vice chairman and CEO of Agnico Eagle Mines, said the current state of interest and inflation rates creates a perfect environment for the industry. The price of gold broke above the $1,400 level last month for the first time since 2013 and is currently hovering in the $1,420 range.

We’re in a period now where gold blossoms when you have low real interest rates … gold does well,” Boyd said in an interview with “Mad Money’s” Jim Cramer. “And then the inability of the industry to respond to a higher gold price is, I think, the key to get it going forward.”

Agnico Eagle’s share price, too, has reached its highest level in recent years. The stock, which bottomed out at about $32 in September, rose more than 1% to $71.54 on Monday. Gold traded below $1,200 in September, while the market was reaching record highs before a brutal sell-off kicked in.

”[Gold] will hit the all time highs of $1,900 to $2,000 because we’re starting from a higher base than we did back in the late ’90s,” Boyd said.

This gold-related story was posted on the cnbc.com Internet site on Monday sometime — and I found it on the gata.org Internet site.  There’s also a 4:15 minute video interview embedded in the story.  Another link to it is here.


Gold Fever Breaks Out in New ‘Bubble Game’ as Fed Preps a Cut

A top-ranked strategist at Societe Generale SA has a plan for clients fretting that a fresh wave of monetary easing will fan a bubble across assets.

Ride the bull until 2020 — when a U.S. recession and a debased dollar will make gold the perfect doomsday hedge, says Alain Bokobza. It’s the latest warning for investors betting that the Federal Reserve will help extend the business cycle with stimulus this week, and a sign of how gold fever is breaking out from London to New York.

Gold is the perfect response if you’re entering the bubble game,” the head of global asset allocation said in an interview in London. “Every time you have such a situation, gold has soared,” said Bokobza. His team ranks first among multi-asset strategists in the 2019 Extel survey.

Worrywarts have long clung to bullion as the ultimate store of value in a low-rate world, but the sentiment is growing as the global pile of negative-yielding debt sits near $14 trillion and central banks shift to dovish mode. Exchange-traded funds holding precious metals have taken in around $4 billion this year, while hedge fund Crescat Capital is starting a long-only strategy focused on mining stocks.

This gold-related Bloomberg news item put in an appearance on their website at 5:19 a.m. PDT [Pacific Daylight Time] on Monday morning — and I found it embedded in a GATA dispatch.  Another link to it is here.  There was also an interesting 4:04 minute Bloomberg video from last Friday headlined “Louise Yamada Sees Gold Surging to New Highs” — and I thank Richard Saler for that one.


Mind-Boggling Physical Silver Flows Into ETFs — Ted Butler

What “whale” is behind the recent unprecedented buying of silver futures to build a record concentrated position? This massive hedge has spurred feverish speculation that it reveals pre-positioning by a huge player in anticipation of a major wave of physical silver buying that could drive the price vastly higher.

Now, a new revelation of “mind-boggling” recent accumulation of physical silver in response to cash inflows into ETFs begs the question of whether we are witnessing the fulfillment of the anticipated bullion grab. Are these separate events really connected as phases of a master plan?

Silver market analyst Ted Butler of ButlerResearch.com returns to Reluctant Preppers to report a new development in this unprecedented mystery. Butler declares that the “whale” is more likely to be an insurance or hedge fund converting COMEX futures contracts into physical silver via ETFs.

This 42-minute audio interview, which is a must listen, actually starts at the 2:00 minute mark, was posted on the youtube.com Internet site on Sunday sometime — and I must admit that I haven’t had time to listen to it yet, but will today.  But I’m sure that I already know what it contains from my conversations with Ted — and his commentaries over the last few weeks.   It’s definitely worth your time — and another link to it is here.


The biggest find we have ever seen“: Massive 2kg gold nugget worth hundreds of thousands of dollars is discovered by a lucky digger

The incredible find was made in the outskirts of Ballarat in Victoria on Friday.

Mark Day, a prospecting gear supplier from Gold Ballarat, said it was the biggest nugget he’d heard of in decades.

I’ve been in this business for 25 years and this is the biggest find we have seen by one of our customers — that they’ve told me about anyway,” he said.  Click to enlarge.

The man had been searching in old pastureland with a detector when the buzzer went off.

After he discovered a .22 lead bullet, he was about to give up when the buzzer continued to beep.

He kept digging further and uncovered the gold about a metre into the dirt.

This eye-candy type news item was posted on the dailymail.co.uk Internet site on Monday around 4 p.m. BST, which was 11 a.m. in New York — EDT plus 5 hours.   I think Jim Gullo for pointing this out — and another link to it is here.


The PHOTOS and the FUNNIES

On May 25 we headed east and a bit north of Kamloops on Paul Lake Road.  There are a number of lakes along this rural highway — and the photo of the Canada geese was one I took at Paul Lake.  The other three shots are of the scenery along the route.  At this elevation, spring is late in coming.  The small and somewhat distant herd of cattle in the third shot, appear in the fourth picture.  It’s the same pasture, but taken from a different angle…with the farm/ranch building in the last photo.  Click to enlarge.


The WRAP

Not much was allowed to happen in either silver or gold on Monday — and that was particularly the case in early morning trading in the Far East, where the rallies in both precious metals were handled in the usual manner.  But it was the price activity after the 1:30 p.m. COMEX close in New York that caught my eye…particularly in gold — and I’m not sure what should be made of it, if anything.  But it was unusual, especially at this time of month.

Platinum and palladium were doing their own thing, but under obvious ‘supervision’ when the price action got too perky.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and it should be noted right off that bat that all the price activity that occurred after the COMEX close in New York yesterday, doesn’t show up on the Monday dojis on the charts below — and won’t until today’s close, as the cut-off on these charts are as of the COMEX close.  All of the ‘Big 6’ closed up on the day.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price was sold quietly and unevenly lower until around 9:40 a.m. China Standard Time on their Tuesday morning. It has edged just as unevenly higher since, going into the afternoon gold fix in Shanghai — and is down $1.00 the ounce at the moment. Silver price path was guided in a similar manner — and it’s now back at unchanged. Platinum’s current low tick came about 9:30 a.m. CST — and it has crept a bit higher since — and is sitting back at unchanged as well. Palladium was also sold lower until the same time as palladium — and it hasn’t done much of anything since — and as Zurich opens, it’s down 6 dollars an ounce.

Net HFT gold volume in October and December combined is a bit over 41,000 contracts — and there’s around 9,100 contracts worth of roll-over/switch volume out of August and mostly into the new front-month for gold, which is December…gasp! Net HFT silver volume is 7,600 contracts — and there’s only 469 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened up 4 basis points once trading commenced at 7:45 p.m. in New York on Monday evening, which was 7:45 a.m. in Shanghai on their Tuesday morning…EDT plus 12 hours. It chopped quietly and unsteadily higher until the current 98.21 high tick was set at 2 p.m. CST. It has edged a bit lower since — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, its up 13 basis points.


July goes off the board at the COMEX close today — and all contract holders that aren’t standing for August delivery in any commodity, have to roll or sell their positions before that time.  And as I mentioned in yesterday’s missive, First Day Notice numbers for delivery in August gold will be posted on the CME’s website around 10 p.m. EDT tonight.  I’ll have those numbers in tomorrow’s column.


And as I post today’s efforts on the website at 4:02 a.m. EDT, I note that the gold price hasn’t done much since the London open — and is down 80 cents at the moment. Silver made it a penny or so above unchanged around the London open — and it’s still up a penny at the moment. Platinum was also up a dollar or so shortly after the Zurich open, but is back at unchanged again. Palladium has ticked higher in the last hour, but was then sold lower by a bit — and is down 4 dollars as the first hour of Zurich trading ends.

Gross gold volume in October and December combined is just under 62,000 contracts — and minus roll-over/switch volume, net HFT gold volume in those two months is a bit over 51,000 contracts. October used to be a delivery month a couple of decades ago — and despite that fact that it ceased back then, there’s still a fair amount of delivery activity in that month. Net HFT silver volume is 9,100 contracts — and there’s still only 508 contracts worth of roll-over/switch volume on top of that.

The dollar index began to creep quietly lower starting at the 8:00 a.m. BST London open — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up 8 basis points.

Today is the start of the much-anticipated FOMC meeting.  The odds-on bet is that Fed won’t cut more than 25 basis points — and I for one will be amazed if they do more than that.  But if they do, it will be a sign that they, a] have caved into Trump and Wall Street, or b] the financial/economic/monetary situation both at home and abroad is far worse than even I imagined.

See you here tomorrow.

Ed