Gold Rallies Sharply as the Yuan is ‘Revalued’

06 August 2019 — Tuesday


The gold price didn’t do much of anything for the first two hours in New York on Sunday evening.  But starting at 8 a.m. in Shanghai on their Monday morning it began to head unevenly higher.  The price was capped and turned a bit lower starting at 10:45 a.m. in New York when things looked like they were going to get too frisky to the upside — and then they hit the price for another ten or eleven bucks the moment that London closed at 11 a.m. EDT.  It resumed its rally about fifteen minutes later, but got tapped lower around 3:15 p.m. in after-hours trading.  It recovered a bit from there going into the 5:00 p.m. close.

The low and high ticks were reported by the CME Group as $1,443.00 and $1,475.90 in the October contract — and $1,448.80 and $1,481.80 in December.

Gold finished the Monday session at $1,463.40 spot, up $23.40 on the day, but would have obviously closed considerably higher than that, if allowed.  Net volume in October and December combined was  beyond monstrous at 534,000 contracts — and roll-over/switch volume was 14,500 contracts.

Silver also attempted to rally at 8 a.m. in Shanghai on their Monday morning, but was sold down to its low of the day a bit over an hour later.  Then around 10:30 a.m. CST it jumped up a bunch — and the high tick of the day came at the London open.  The silver price was sold unevenly lower until, like gold, it ran into ‘something’ at 10:45 a.m. in New York and was also hammered lower once London closed.  It crawled a bit higher from there, but also got sold lower at 3:15 p.m. in after-hours trading — and it didn’t do much after that.

The low and high ticks in silver were recorded as $16.135 and $16.59 in the September contract.

Silver was closed at $16.355 spot, up 17 cents from Friday.  Net volume was enormous at a bit under 108,000 contracts — and there was a hair over 8,500 contracts worth of roll-over/switch volume in this precious metal.

Platinum followed silver’s price path up until around noon China Standard Time on their Monday — and then it chopped unevenly sideways until shortly after 11 a.m. in Zurich.  It edged a bit higher before getting hit at: 1] the COMEX open, 2] shortly after 9 a.m. EDT — and then, like silver and gold…10:45 a.m. in New York — and fifteen minutes later at the Zurich close.  I rallied from there until shortly after 2 p.m. in after-hours trading — and was then sold a bit lower until trading ended at 5:00 p.m. EDT.  Platinum was closed at $853 spot, up 10 bucks on the day.

The palladium price traded very unevenly sideways up until around 1:30 p.m. in Zurich, which was 7:30 a.m. in New York.  A rally of some merit developed at that point, but was capped and sold lower shortly after trading on the COMEX began at 8:20 a.m. EDT.  That uneven engineered price decline lasted until around 2:20 p.m. in after-hours trading — and it traded sideways into the close from there.  Palladium was closed at $1,401 spot, up 9 dollars from its close on Friday…but was up over 40 bucks at its high.

One has to wonder what the true free-market price of any of these four precious metals would be if they were allowed to trade freely.

The dollar index closed very late on Friday afternoon in New York at 98.07 — and then opened up 4 basis points once trading commenced at 6:30 p.m. EDT on Sunday evening, which was 6:30 a.m. China Standard Time on their Monday morning.  It then dropped at bit starting at 8 a.m. in Shanghai — and then crept a bit higher starting around 9:40 a.m. CST.  That lasted until a couple of minutes after the London open — and then down it went, with the low tick of the day coming at 1 p.m. in New York.  It crept unevenly higher from there until trading ended at 5:30 p.m.  The dollar index finished the Monday session at 97.52…down 55 basis points from Friday’s close.

With Jim Rickard’s ‘Currency Wars’ now on in earnest, it will be interesting to watch how the gold price reacts…or is allowed to react…to any changes in the currency market.  The situation is very dynamic — and very fluid, as we’re in uncharted territory now.

Here is the DXY chart, courtesy of Bloomberg as usual…Click to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the Internet site.  The delta between its close…97.31…and the close on the DXY chart above, was 21 basis points on Monday.  Click to enlarge as well.

The gold stocks gapped up over two percent at the open — and hit their respective highs at 10:45 a.m. when ‘da boyz’ capped the gold price — and then drove it lower when London closed fifteen minutes later.  It recovered all of that by 1:15 p.m. — and then were sold lower when JPMorgan et al. appeared at 2:15 p.m.  They recovered a hair in the last twenty minutes of trading.  The HUI closed higher by 4.30 percent and, like the gold price itself, would have closed a lot higher.

The silver equities also hit their respective highs at 10:45 when ‘da boyz’ showed up, but their recovery only lasted until shortly after 12 o’clock noon in New York trading.  It was mostly quietly down hill from there, with the final insult coming at 2:15 p.m. EDT…just like happened with the gold stocks.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 3.45 percent — and far off its high tick of the day.  Click to enlarge.

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 for Day 5 of August deliveries showed that 92 gold and 51 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, of the four short/issuers in total, the three largest were International F.C. Stone, Advantage — and ABN Amro…with 39, 27 and 19 contracts out of their respective client accounts.  There were seven long/stoppers in total.  The three biggest were JPMorgan, Citigroup and Australia’s Macquarie Futures.  JPMorgan stopped 35 for its client account — and Citigroup and MacQuarie picked up 26 and 17 contracts for their respective in-house/proprietary trading accounts.

In silver, the three short/issuers were ADM with 33…ABN Amro with 18 — and Advantage with 10 contracts.  All came from their respective client accounts.  The four long/stoppers were JPMorgan, ABN Amro, Advantage and Macquarie Futures.  The first three of those four picked up 21, 17 and 11 contracts for their respective client accounts.  The 12 that Macquarie Futures stopped was for their own account.

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 August fell by 475 contracts, leaving 2,898 still around, minus the 92 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 495 gold contracts were actually posted for delivery today.  This means that 495-475=20 more gold contracts were just added to the August delivery month.  Silver o.i. in August declined by 11 contracts, leaving 414 still open, minus the 51 contracts mentioned a few paragraphs earlier.  Friday’s Daily Delivery Report showed that 66 silver contracts were actually posted for delivery today, so that means that 66-11=55 more silver contracts were just added to August.

There were deposits in both GLD and SLV on Monday.  An authorized participant added 141,468 troy ounces to GLD — and in SLV, an a.p. added 2,339,655 troy ounces.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, August 2…and this is what they had to report.  They added 21,058 troy ounces of gold — and 306,011 troy ounces of silver.

There was no sales report from the U.S. Mint yesterday.

The only activity in/out gold over at the COMEX-approved depositories on the U.S. east coast on Friday, was 1,199 troy ounces that was shipped out of HSBC USA — and I won’t bother linking it.

There was some decent activity in silver, as 1,200,680 troy ounces was reported received, but only 49,086 troy ounces was shipped out.  In the ‘in’ category, one truckload…600,025 troy ounces…ended up at CNT — and the other truckload…600,654 troy ounces…was dropped off at HSBC USA.  All of the ‘out’ activity was at Canada’s Scotiabank.  There was also a paper transfer of 284,387 troy ounces from the Registered category — and back into Eligible.  I’m sure that Ted would surmise that this silver is now owned by JPMorgan’s clients — and the transfer was done to save on storage charges.  The link to all his is here.

There was no in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.

Here are two of the usual charts that Nick passes around on the weekend, which you’re now more than familiar with.  They show the total gold and silver holdings of all know depositories, mutual funds and ETFs, as of the close of business on Friday, August 2.

During that reporting week, there was 1,067,000 troy ounces of gold added — and in silver, that number was another eye-watering amount…14,820,000 troy ouncesClick to enlarge for both.

I have a lot of stories/articles for you today.


Currency war begins as China hurls devaluation back in Trump’s face — Ambrose Evans-Pritchard

China has hit back against the Trump administration with a drastic exchange rate devaluation, almost guaranteeing a superpower showdown and a lurch towards full trade war.

The yuan blew through the symbolic line of seven to the dollar for the first time since the global financial crisis, with the offshore rate in Hong Kong spiking to 7.07 in moves that stunned seasoned traders.

The calculated action by the People’s Bank (PBoC) threatens to unleash a wave of deflation across the world and risks pushing East Asia and much of Europe into recession. It is certain to provoke a ferocious response from the White House.

Capital Economics said Beijing has taken the fateful step of “weaponising” its exchange rate and is digging in for a long struggle: “The fact that they have now stopped defending 7.00 against the dollar suggests that they have all but abandoned hopes for a trade deal with the U.S.

Commerzbank said China’s decision to engineer such a sudden move in its tightly managed currency has far-reaching implications for the whole international system. “It looks like a tsunami is coming.”

Most of this commentary, but not all, is posted in the clear on the Internet site — and it’s definitely worth reading.  It appeared on the Internet site on Monday at 12:37 p.m. BST, which was 7:37 a.m. in Washington — EDT plus 5 hours.  Another link to the GATA dispatch is here — and the article itself at The Telegraph is linked here.  Here’s a companion/follow-on story to this from the Internet site as well — and it’s headlined “Pot calls kettle black as U.S. labels China a currency manipulator

China Retaliation Is ‘11’ on Scale of 1 to 10, Wall Street Warns

Agriculture equipment makers Deere & Co. and AGCO Corp. tumbled as China suspended imports of U.S. agricultural products. The escalating trade tensions are also a major risk for the U.S. automotive industry, which has a significant exposure to the country. According to UBS’s Global Wealth Management Chief Investment Officer Mark Haefele, the latest spat raises the possibility that “tariffs could also be placed on auto imports.”

President Donald Trump tweeted about China and the Fed on Monday morning, saying: “China dropped the price of their currency to an almost a historic low. It’s called ‘currency manipulation.’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!

Krueger called China’s retaliation “massive,” adding that “on a scale of 1-10, it’s an 11.” He cited the Chinese government calling on state buyers to halt U.S. agricultural purchases, while there’s “increased anecdotal evidence that the Chinese government is tightening its overview of foreign firms.”

While there were measures that could have been chosen with larger direct effects on supply chains, the announcements from Beijing represent a direct shot at the White House and seem designed for maximum political impact,” Krueger said. “ We expect a quick (and possibly intemperate) response from the White House, and consequently expect a more rapid escalation of trade tensions.”

There now will be increased expectations that the Fed will cut again in September to offset the drag caused by this escalation in the trade war,” he added. “Such moves will only be a partial, lagged offset to the recessionary headwinds a cycle of retaliation would cause.”

This Bloomberg article put in an appearance on their website at 5:31 a.m. PDT [Pacific Daylight Time] on Monday morning — and was updated about seven hours later.  I thank Swedish reader Patrik Ekdahl for sending it our way — and another link to it is here.  Here’s a companion story to this from Reuters headlined “China yuan’s slide past 7/dollar had policymakers’ blessing: sources” — and I plucked that from another GATA dispatch.

Is the dollar’s “exorbitant privilege” coming to an end? — J.P. Morgan/Private Bank

The U.S. dollar (USD) has been the world’s dominant reserve currency for almost a century. As such, many investors today, even outside the United States, have built and become comfortable with sizable USD overweights in their portfolios. However, we believe the dollar could lose its status as the world’s dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments.

As such, diversifying dollar exposure by placing a higher weighting on other currencies in developed markets and in Asia, as well as precious metals makes sense today. This diversification can be achieved with a strategy that maintains the underlying assets in an investment portfolio, but changes the mix of currencies within that portfolio. This is a completely bespoke approach that can be customized to meet the unique needs of individual clients.

It is commonly perceived that the U.S. dollar overtook the Great British Pound (GBP) as the world’s international reserve currency with the signing of the Bretton Woods Agreements after World War II. The reality is that sterling’s value was eroded for many decades prior to Bretton Woods. The dollar’s rise to international prominence was fueled by the establishment of the Federal Reserve System a little over a century ago and U.S. economic emergence after World War I. The Federal Reserve System aided in the establishment of more mature capital markets and a nationally coordinated monetary policy, two important pillars of reserve-currency countries. Being the world’s unit of account has given the United States what former French Finance Minister Valery d’Estaing called an “exorbitant privilege” by being able to purchase imports and issue debt in its own currency and run persistent deficits seemingly without consequence.

There is nothing to suggest that the dollar dominance should remain in perpetuity. In fact, the dominant international currency has changed many times throughout history going back thousands of years as the world’s economic center has shifted.

This interesting commentary from Craig Cohen an FX, Commodities and Rates Strategist over at JPMorgan private banking was posted on the Internet site back on July 10, 2019 — and I thank Judy Sturgis for pointing it out.  Another link to it is here.

Buffett Steers Clear of Buying Stocks; Berkshire’s Cash Pile Hits a Record

Warren Buffett’s distaste for overpaying is winning out over his frustration with sitting on a lot of cash.

With stocks at record highs, Berkshire Hathaway Inc. sold $1 billion more worth of stocks than it bought last quarter, its biggest net selling since the end of 2017. Buffett spent last year building a massive stake in Apple Inc. and pouring billions into investments in the biggest U.S. banks. This year’s rally hasn’t drawn him in.

Buffett has previously dealt with the issue of cash piling up as he waits to strike, but never at this size. He hasn’t had a major acquisition in several years and has even pulled back on one of his newer ways to deploy cash, slowing down repurchases of Berkshire’s own stock in the second quarter. The result was that the company’s cash hoard — a major focus for investors in recent years — surged to a record $122 billion.

It would be hard to look at the cash balance and their uses of cash in recent quarters and not be disappointed that they haven’t bought any companies, they haven’t bought much stock, and they haven’t bought back a lot of their own stock,” Jim Shanahan, an analyst at Edward Jones, said in a phone interview Saturday.

The growing cash pile is a reflection of the strength of the operating businesses that Buffett has assembled under one roof, and allows the billionaire investor flexibility to move quickly when big deals emerge. But he has acknowledged that having more than $100 billion earn little return for several years weighs on the company’s growth.

This Bloomberg article showed up on their website on Saturday morning — and was updated about a day later.  I thank Swedish reader Patrik Ekdahl for finding it for us — and another link to it is here.

Meanwhile, Inside The Plunge Protection Team: Chaos

It was almost ten years ago that we first profiled the most important trading desk in the world: not one situated in any of the (increasingly empty) massive trading floors of the world’s commercial banks located in either the financial district, midtown or Connecticut, but the one inside the 9th floor of 33 Liberty Street, the home New York Fed, the one which is also known in trader folklore as the “Plunge Protection Team.”

This is what we said back then:

“Mr. Sack, 39 years old, is an economist who runs the markets group at the Federal Reserve Bank of New York. The group runs the Fed’s trading, making it the bridge between the marble corridors of the Federal Reserve in Washington and the bustling trading floors of Wall Street.

The markets group grew enormously during the crisis, from about 225 employees to 400 people who monitor the markets for the Fed, manage its portfolio and run the many new trading programs it has started. The Fed holds more than 20,000 individual securities.”

Of course, back then said “most important trading desk” was controlled by one Brian Sack, then only 39-year-old, who has since moved on to the far more lucrative pastures of DE Shaw. Sack was replaced in the summer of 2012, by the levitating market wizard, Simon Potter, who promptly realized that to crush the bears one simply had to crush the VIX specs, and the rest would promptly follow.

Then, in the end of May 2019, something unexpected happened: Simon Potter, arguably the most important trader in the world, manning the world’s most important trading desk, unexpectedly announced his “resignation.” Not only that, but Potter took with him the second most important person at the N.Y. Fed’s “Plunge Protection Team“, the head of the Financial Services Group, Richard Dzina.

What was odd, as we briefly noted two months ago, was the sudden and unexpected nature of this departure: it came from nowhere, and prompted some very delicate and substantial questions about continuity at the desk that has so far managed to keep the U.S. stock market from entering a bear market since the global financial crisis over a decade ago.

This long, but very worthwhile Zero Hedge article appeared on their Internet site at 4:41 a.m. EDT on Monday morning.  Embedded in it is another must read Bloomberg report on this story.  I thank Jim Gullo for sending it our way — and as I’ve already said, it’s definitely worth your while.  Another link to it is here.

Trump imposes total U.S. freeze on Venezuelan government assets

U.S. President Donald Trump imposed a freeze on all Venezuelan government assets in the United States on Monday, sharply escalating a diplomatic and sanctions drive aimed at removing socialist President Nicolas Maduro from power.

The executive order signed by Trump goes well beyond the sanctions imposed in recent months against Venezuela’s state-run oil company PDVSA and the country’s financial sector, as well as measures against dozens of Venezuelan officials.

All property and interests in property of the Government of Venezuela that are in the United States … are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in,” according to the executive order released by the White House.

The scope of the announcement came as a surprise even to some Trump administration allies. “This is big,” said Ana Quintana, senior policy analyst with the Heritage Foundation, a conservative Washington think tank.

Quintana said it appeared the order would be a sweeping embargo on doing business with Venezuela…

This Reuters article, filed from Washington was posted on their website at 6:20 p.m. EDT on Monday evening — and updated about an hour later.  I found this embedded in a GATA dispatch — and another link to it is here.

When Idiocy Becomes Hardwired — Jeff Thomas

At this point, virtually all of us over the age of forty have encountered enough “snowflakes” (those Millennials who have a meltdown if anything they say or believe is challenged) to understand that, increasingly, young people are being systemically coddled to the point that they cannot cope with their “reality” being questioned.

The post-war baby boomers were the first “spoiled” generation, with tens of millions of children raised under the concept that, “I don’t want my children to have to experience the hardships that I faced growing up.”

Those jurisdictions that prospered most (the E.U., U.S., Canada, etc.) were, not coincidentally, the ones where this form of child rearing became most prevalent.

The net result was the ’60s generation – young adults who could be praised for their idealism in pursuing the peace movement, the civil rights movement, and equal rights for women. But those same young adults were spoiled to the degree that many felt that it made perfect sense that they should attend expensive colleges but spend much of their study time pursuing sex, drugs, and rock and roll.

Flunking out or dropping out was not seen as a major issue and very few of them felt any particular guilt about having squandered their parents’ life savings in the process.

When I first started reading this commentary, I wondered where Jeff was going with it…until I got to the end.  Then it made perfect sense.  It was posted on the Internet site early on Monday morning EDT — and it’s certainly worth reading — and another link to it is here.

HSBC boss in shock exit as bank warns of ‘challenging‘ times

HSBC on Monday announced the shock exit of chief executive John Flint, but denied talk of a management split as it also axed 4,000 jobs and warned of dark clouds on the horizon.

The London-headquartered lender gave no reason for Flint’s sudden departure after just 18 months in the job, but said there was “no personal clash“, adding it needed a change at the top.
Asia-focused HSBC also revealed it would axe two percent of its global workforce, or roughly 4,000 mostly management jobs, in a new restructuring aimed at weathering global turmoil.

HSBC Holdings plc announces that John Flint has today stepped down as Group Chief Executive and as a director by mutual agreement with the board,” read a statement.

The exact amount Flint will get as a payoff remains unknown until he leaves.

This AFP news story was posted on their Internet site on Monday morning CEST — and it’s the final offering of the day from Patrik Ekdahl.  Another link to it is here.  The chart-filled Zero Hedge spin on this is headlined “Hong Kong Riots Reveal a Looming Crisis at the World’s 6th Largest Bank

Putin’s pledge to ditch the dollar is slowly being fulfilled

Russia is acting on a pledge by President Vladimir Putin to shrink the role of dollar in international trade as tensions sour between Washington and Moscow.

The shift is part of a strategy to “de-dollarize” the Russian economy and lower its vulnerability to U.S. sanctions. But while the central bank was able to quickly dump half of its dollar holdings last year, progress in trade has been slow due to ingrained use of the greenback for many transactions.

The share of euros in Russian exports increased for a fourth straight quarter at the expense of the U.S. currency, according to central bank data. The common currency has almost overtaken the dollar in trade with the European Union and China and trade in rubles with India surged. The dollar’s share in import transactions remained unchanged at about a third.

There’s been a strong incentive to change, not just for Russia but for its trading partners too,” said Dmitry Dolgin, an economist at ING Bank in Moscow. “The European Union is also now facing trade pressure from the U.S.” pushing them to try to reduce dependence on the dollar, he said.

This Bloomberg article appeared on their website at 8:00 p.m. PDT on Saturday evening — and was updated about twenty-eight hours later.  I found this in a GATA dispatch on the weekend — and another link to it is here.  A mostly parallel article on this subject was posted on the Internet site yesterday — and it’s headlined “Russia undermines U.S. dollar dominance by shifting trade to local currencies“.  I thank George Whyte for that one.

Kashmir on Lock-down: India Strips Muslim-Majority Region of Autonomy, Troops Move In

In a dramatic escalation following a worsening crisis, which over the weekend saw intensive shelling along the Line of Control (LoC) that separates Indian-controlled and Pakistani-controlled parts of Kashmir, New Delhi has revoked the key constitutional article which gives Indian-administered Kashmir special status.

The unprecedented move signals India is willing to take greater military action in the disputed border region, which is virtually guaranteed to not only spark severe local unrest, but put India and Pakistan on a direct collision course for war. Specifically, Article 370 is legally and historically what assured a high degree autonomy for Indian administered Muslim-majority state, enshrined in the constitution, which the majority of inhabitants there see as justifying remaining part of India.

The Indian administered side of Kashmir, called Jammu and Kashmir (J&K), was granted its status in the 1950s, which included maintaining its own state constitution, as well as law making bodies, making it the most independent of all Indian states. But starting Monday this will all be revoked, following a resolution introduced on Monday by Home Minister Amit Shah and quickly put into law by President Ram Nath Kovind.

Ultimately, as the BBC reports, “the BJP [the Hindu nationalist Bharatiya Janata, India’s largest political party] has irrevocably changed Delhi’s relationship with the region.” Currently, there’s reported to be a lockdown across J&K, with some phone and internet services reported cut.

This rather disturbing story appeared on the Zero Hedge website at 12:10 a.m. on Monday morning EDT — and I thank Richard Saler for pointing it out.  Another link to it is here.  A companion piece to this story is head lined “India Will Come to Regret Today’s Annexation of Jammu And Kashmir” — and that’s from the Internet site.  I thank Larry Galearis for that one.

Kyle Bass Warns Yuan Could Sink Another 40% if PBOC Pulls Support

Too bad Kyle Bass closed his yuan short earlier this year. If he had held that position, he would have made a killing on Monday, when the Chinese currency broke below 7 to the dollar and continued to tumble as the currency war between the world’s two largest economies officially began.

Though Bass insists that the HKD, against which he has taken a large position betting that its more than 30-year-old peg against the dollar will soon break, won’t be far behind the yuan now that Beijing has seemingly stopped supporting the formerly tightly controlled yuan, the hedge fund manager, who still probably profited off his short positions against the currencies of several regional rivals, appeared on CNBC‘s “the Closing Bell‘ Monday afternoon to talk China.

Inviting Bass to speak made sense: He’s established himself as one of the most prominent China bears in the West, even joining with Steve Bannon to warn investors and ordinary people of the dangers of China’s constant manipulation of the U.S. And during Friday’s interview, which came as U.S. stocks locked in their worst daily performance of the year.

As Bass explained, President Trump’s claim that Beijing manipulates its currency is accurate.

What’s happening in China is they have to have dollars to sell to buy their own currency to hold it up. If they were to ever free float their currency, I think it would drop 30% or 40%,” Bass told CNBC’s “Closing Bell.”

And the reason is they claim to be 15% of global GDP in dollar terms, but less than 1% of global transactions settled in their own currency,” Bass added. “And so, they prop their currency up…everyone calling them a currency manipulator – they are trying to hold this whole thing together.”

Bass has warned American corporations not to pressure the Trump Administration to strike a deal with China. He added that Beijing has a history of never living up to its promises re: trade since joining the WTO since 2001.

This Zero Hedge story, with a 4:43 minute video clip embedded, put in an appearance on their website at 6:50 p.m. on Monday evening EDT — and another link to it is here.  Then there’s this Bloomberg story from very late Monday afternoon EDT headlined “China limits yuan’s fall after being labeled currency manipulator” — and that came from the Internet site.

Why We’re Raising Our “Crash Alert” Flag — Bill Bonner

Watch out, Dear Reader, this could be a tough week for investors.

Investor’s Business Daily reports:

Dow Jones futures sold off sharply Sunday night, along with S&P 500 futures and NASDAQ futures, as China’s yuan tumbled to a record low. That follows a tough week for the current stock market rally as new Trump tariffs escalated the China trade war.”

So far, the big, fat, ugly Dow has sat on the wall and stubbornly refused to tumble. But last week, Donald J. Trump gave Humpty a shove.

He turned up the Trade War Dial, from 1/2 retard to 3/4 retard. China retaliated with its own version of retard, cutting agricultural purchases from the U.S. and letting the yuan fall.

China, like the U.S., is in an Inflate-or-Die trap. Its economy is even more grotesque and distorted than the U.S.’

It has millions of empty apartments… silent factories… roads to nowhere… bridges that connect nothing to nobody… and whole ghost towns, put up to satisfy a demand that wasn’t really there. It has excess capacity in almost every sector.

Now, it can’t just sit back and let Mr. Market correct Mr. Party Functionary’s mistakes. It must keep the money flowing, or the economy may collapse… and drag its communist rulers down with it. A weaker yuan helps it inflate domestic prices… while making its exports even harder to resist.

Almost all major countries are stuck. They’ve all built their economies on fake money and phony interest rates. Soon, they’ll all be competing to debase their currencies to keep the fake money flowing and the whole fandango going.

This worthwhile commentary from Bill put in an appearance on the Internet site early on Monday morning EDT — and another link to it is here.  And also is another classic must watch rant from Gregory Mannarino.  This one runs for 23 minutes.  Roy Stephens sent it to me late last night — and it’s linked here.

India’s July gold imports hit 3-year low on record prices — government source

India’s gold imports in July plunged 55% from a year ago to the lowest level in three years as a rally in local prices to a record high and a hike in import taxes curtailed demand, a government source said on Monday.

Lower purchases by the world’s second biggest consumer could cap gains in global prices that jumped to the highest level in over 6-years on Monday, but help the south Asian country in bringing down the trade deficit and supporting rupee.

India imported 39.66 tonnes of gold in July, down from 88.16 tonnes a year ago, the source said, who was not allowed to speak to the media. In value terms, the country’s imports in the month fell 42% to $1.71 billion, he said.

Local gold prices jumped to record high last month tracking gains in overseas market and as New Delhi raised import taxes on the precious metal to 12.5% from 10% earlier.

The surprise hike in the import tax and price rise badly affected demand last month, said Mukesh Kothari, director at dealer RiddiSiddhi Bullions in Mumbai.

Even in August, imports would be much lower than last year. Demand is not improving,” he said.

This gold-related Reuters article, co-filed from New Delhi and Mumbai, showed up on their Internet site at 6:33 a.m. on Monday morning EDT — and it’s the first of several stories that I picked up off of the Sharps Pixley website.  Another link to it is here.  A related story headlined “China’s consumption of gold dropped in H1/19” was posted on the website on Sunday — and it’s also from Sharps Pixley.

Perth Mint’s July gold sales rise, silver sales nearly triple

The Perth Mint’s gold product sales in July rose 10.6% from the previous month, the refiner said on Monday.

Sales of gold coins and minted bars in July climbed to 21,518 ounces from 19,449 ounces in June, the mint said in a blog post.

Meanwhile, silver sales in July leaped 186.5% to 987,040 ounces. This would be its highest monthly sales since Oct. 2018.

The above three paragraphs are about all there is to this tiny Reuters story, which showed up on the Internet site on Monday at 6:59 a.m. BST.  I found it on the Sharps Pixley website — and another link to the hard copy is here.


Still on the back/dirt road east of Kamloops on May 25 — and en route to Chase, this tiny slough yielded three shots of this yellow-headed blackbird.  Their territorial call [third photo] sounds like that of a blackbird with bad case of laryngitis.  The last photo is another along the dirt/gravel road [looking east] that we were on.  Click to enlarge.


The news of the ‘devaluation’ of the Chinese yuan came as no surprise to me…as it was inevitable at some point.  But the markets had an apoplectic fit — and the precious metals were the beneficiaries yesterday.

But as wonderful as it was, JPMorgan et al. were there going short against all comers in all four precious metals in the COMEX futures market yesterday.  They’ve shown no signs of giving up.  However, as Ted has been pointing out for the last few weeks, the paper loses of the smaller banks and investment houses in the Big 8 category are starting to get up there — and are markedly worse after Monday’s price activity…particularly in gold.

Here are the 6-month charts for the four precious metals, plus copper and WTIC…courtesy of  Gold is back in overbought territory once again…by a bit — and silver’s price yesterday was certainly well managed.  It’s also obvious that both platinum and palladium were kept on very short leashes as well.  Copper was closed at a new low for this move down — and WTIC closed lower as well.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that gold’s rally attempts since the 6:00 p.m. EDT open in New York on Monday evening have all been thwarted — and ‘da boyz’ now have gold down $1.50 on the day.  It was up 12 or 13 bucks in early morning trading in Shanghai.  Silver was up 11 cents at 9 a.m. China Standard Time on their Tuesday morning, but is now up only 2 cents.  Platinum’s high was also at 9 a.m. CST — and JPMorgan et al. have the price down a dollar on the day.  Palladium has bucked the trend — and is up 5 dollars as Zurich opens — but well of its 2 p.m. CST high.

Net HFT gold volume in October and December combined is already an eye-popping 131,000 contracts — and there’s around 3,700 contracts worth of roll-over/switch volume on top of that.  Net HFT silver volume is a bit over 21,000 contracts already — and there’s 1,717 contracts worth of roll-over/switch volume out of September and into future months.

The dollar index opened down a whopping 28 basis points once trading commenced at 7:45 p.m. in New York on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning.  It ‘rallied’ back above unchanged by 16 basis points by around 12:10 p.m. CST — and has been edging quietly and unevenly lower since — and is up only 4 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.

Today, at the close of COMEX trading in New York is the cut-off for this Friday’s Commitment of Traders Report.  And regardless of what happens during Tuesday’s trading session, I’m already bracing myself for a big increase in the commercial net short position in gold — and maybe a smallish decrease in the Commercial net short position in silver.

But Ted is the real authority on the COT Report — and he’ll certainly have something to say about what it might contain in his mid-week commentary to his paying subscribers tomorrow.

And as I post today’s efforts on the website at 4:02 a.m. EDT, I note that the price pressure on gold has it down $2.40 the ounce as the first hour of London trading draws to a close — and they now have silver down 2 cents on the day. But platinum is now up 2 dollars — and palladium is up 14 bucks as the first hour of Zurich trading ends.

Gross gold volume in October and December combined is about 157,000 contracts — and minus the roll-over/switch volume, net HFT gold volume is around 149,500 contracts. Net HFT silver volume is about 23,400 contracts — and there’s 1,831 contracts worth of roll-over/switch volume on top of that.

The dollar index has turned a bit lower in the last hour of trading — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the index is down 7 basis points.

With gloves now off in a budding currency war, it’s certainly going to make for volatile trading action in just about all markets…most of which will not be of the free-market variety.  Because as Chris Powell stated eleven years ago now…”There are no markets anymore, only interventions“.  That statement is even more true today than it was back then.

See you here tomorrow.