More Silver Into SLV

16 August 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price wandered around five bucks either side of unchanged in Far East and London trading on their respective Thursday’s — and the only rally that amounted to much began shortly after 9 a.m. in New York.  It crept quietly and unevenly higher from there until trading ended at 5:00 p.m. EDT.

The low and high ticks aren’t worth looking up.

Gold finished the Thursday session in New York at $1,522.90 spot, up $6.80 on the day.  Net volume in October and December combined was around 436,500 contracts — and there was 9,000 contracts worth of roll-over/switch volume on top of that.

The price pattern in silver was virtually identical — and even more subdued than it was for gold, so I won’t bother with the blow-by-blow in this precious metal.

The high and low ticks in silver certainly aren’t worth looking up, either.

Silver finished the day at $17.23 spot, up 5 cents from Wednesday’s close.  Net volume was a bit under 81,000 contracts — and there was a hair under 16,000 contracts worth of roll-over/switch volume out of September and into future months.

The platinum price also chopped quietly sideways, but that only lasted until 2 p.m. China Standard Time on their Thursday afternoon.  The selling pressure appeared at that juncture — and the low tick was set shortly after the equity markets opened in New York on Thursday morning.  It rallied rather sharply from there, but that was halted in its tracks shortly after 12 o’clock noon in New York.  From there it didn’t do much until shortly before 3 p.m. in the thinly-traded after-hours market — and it tacked on a couple of bucks going into the 5:00 p.m. close.  Platinum was closed at $837 spot, down 5 dollars from Wednesday.

Palladium was up about 10 dollars by around 10:30 a.m. CST on their Thursday morning — and from that point traded pretty flat until Zurich opened.  Selling pressure appeared at that point — and the low tick was set very shortly before noon CEST.  From there it chopped quietly higher until Zurich closed — and didn’t do much of anything after that.  Palladium finished the Thursday session at $1,428 spot, up 20 dollars from Wednesday.

The dollar index closed very late on Wednesday afternoon in New York at 97.99 — and opened down 4 basis points once once trading commenced at 7:45 p.m. EDT on Wednesday evening.  It began to creep unevenly lower starting a few hours after that — and the 97.82 low tick was set around 12:30 a.m. in London.  The rally that commenced at that juncture ran out of gas around 10:45 a.m. in New York — and it crawled very quietly and unevenly lower until trading ended at 5:30 p.m. EDT.  The dollar index finished the Thursday session at 98.14…up 15 basis points from Wednesday.

It was yet another day where there was virtually no correlation between what was happening in the currency market — and in the precious metals.

Here’s the DXY chart, courtesy of BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…98.00…and the close on the DXY chart above, was 14 basis points on Thursday.  Click to enlarge as well.

The gold stocks dipped a bit at the open — and then began to wander quietly higher, with each dip being well bought.  Their respective highs came around 2:40 p.m. in New York trading — and then they faded a bit into the 4:00 p.m. close from there.  The HUI closed up 1.26 percent on the day.

The silver equities opened about unchanged — and then began to head higher at, or minutes after, the afternoon gold fix in London.  Their respective highs came about 10:50 a.m. EDT — and then they proceeded to fall to their respective lows around 11:45 a.m. in New York trading.  They chopped rather broadly higher from there, with a quick spurt upwards a minute before the close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 1.00 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 28 gold and 47 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the three short/issuers were Marex Spectron, Advantage and International F.C. Stone with 14, 10 and 4 contracts out of their respective client accounts.  Of the five long/stoppers in total, the three biggest were JPMorgan with 13 contracts for its client account — and Macquarie Futures and Citigroup with 6 and 5 contracts for their respective in-house/proprietary trading accounts.

In silver, the sole short/issuer was Advantage — and the sole long/stopper was JPMorgan.  Both transactions involved their respective client accounts.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in August fell a very chunky 730 contracts, leaving only 1,101 left, minus the 28 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 749 gold contracts were actually posted for delivery today, so that means that 749-730=19 gold contracts were just added to August.  Silver o.i. in August dropped by 91 contracts, leaving just 49 still open, minus the 47 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 138 silver contracts were actually posted for delivery today, so that means that 138-91=47 more silver contracts just got added to the August delivery month — and it’s a safe bet that those are the same 47 silver contracts that are out for delivery on Monday.


There were no reported changes in GLD yesterday, but an authorized participant added another 3,976,785 troy ounces of silver to SLV.

During the last three business days, there have been 14.6 million troy ounces of silver added to SLV.

There were no other deposits worth mentioning in any of the other silver ETFs on Thursday.

There was a tiny sales report from the U.S. Mint on Thursday.  They sold 160,000 silver eagles — and that was it.

There was no physical movement in gold over at the COMEX-approved gold depositories on the U.S. east coast on Wednesday.  There was a paper transfer involving 72,255 troy ounces that was transferred from the Eligible category — and into Registered, with virtually all of that amount happening at HSBC USA.  I won’t bother linking this.

There was some activity in silver.  Once truckload…606,243 troy ounces…was received at CNT — and that was all the ‘in’ activity there was.  There was 51,748 troy ounces shipped out, with most of that…49,805 troy ounces…from CNT as well.  The remaining 1,943 troy ounces departed Brink’s, Inc.  The link to this is here.

There was a tiny bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  Nothing was reported received — and 100 were shipped out.  This occurred at Brink’s, Inc. of course — and I won’t bother linking this, either.


The Wickham Market Hoard is a hoard of 840 Iron Age gold staters found in a field at Dallinghoo near Wickham Market, Suffolk, England in March 2008 by car mechanic, Michael Dark using a metal detector. After excavation of the site, a total of 825 coins were found, and by the time the hoard was declared treasure trove, 840 coins had been discovered. The coins date from 40 B.C. to 15 A.D.

The hoard was described as “the largest hoard of British Iron Age gold coins to be studied in its entirety“, and was also significant in providing “a lot of new information about the Iron Age, and particularly East Anglia in the late Iron Age“. It was the largest hoard of staters to be found since the Whaddon Chase Iron Age hoard in 1849.

In June 2011, the hoard was purchased by Ipswich Museum for the sum of £316,000.  Click to enlarge.

I only have a tiny handful of articles and stories for you today.


CRITICAL READS

Inverted Yield Curve Signals Coming Recession — Bill Bonner

Is our Crash Alert flag still flying? We hope so. It’s been up the pole for so long, waiting patiently for the stock market to fall, we’d hate to miss it when it finally happens.

Stocks sold off yesterday, after the 30-year Treasury bond hit a record high and the yield curve well and truly inverted. The Dow ended the day 800 points lower, with the Dow-to-Gold ratio sinking below 17.

The index measures the fundamental inclination of the economy, by comparing gold to stock prices.

When the economy is healthy and growing, people buy stocks and the index generally goes up.

When it is fearful and correcting its mistakes, they buy gold and the index goes down.

It now takes 16.8 ounces of gold to buy the Dow stocks… down from 40 in 1999 and 22 in 2018.

Our guess is that it will continue going down until you can buy the Dow stocks for less than 5 ounces of gold.

A further guess is that this long decline in the Dow-to-Gold ratio (aka the Greed/Fear gauge) over the last 20 years marks not only the decline of America’s leading companies, but of America itself…

This worthwhile commentary from Bill, filed from Poitou in France, showed up on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is here.  The Gregory Mannarino rant after the closing bell on Thursday is linked here.


The U.S. Treasury is about to flood the market with debt to fund a $1 trillion deficit. Here’s why that is a worry

There may be some limitations to the U.S. government’s borrowing after all.

An anticipated surge of U.S. borrowing in the global debt markets in the second half of this year is starting to create concern as Treasury is expected to ramp up its issuance of bills, notes and bonds to fund a soaring $1 trillion budget deficit.

The U.S. government’s budget gap has widened 27% compared to the first 10 months of fiscal 2018, as spending has risen 8% and receipts have grown by 3%. The federal fiscal year runs October through September. The Trump administration recently forecast a $1 trillion full-year shortfall, while the Congressional Budget Office is slightly more conservative, putting it at $896 billion.

Last month the U.S. Treasury laid out its plans to borrow $814 billion between July and December, after the Trump administration and Congress agreed to a two-year postponement of the U.S. debt ceiling, ensuring no government shutdown or a federal default.
Not only does the Treasury needs to borrow to cover the fiscal deficit created by Trump’s 2017 tax cuts and the inability of Congress to agree on spending cuts, but Treasury needs to rebuild its cash balance which was run down to pay the governments bills when the debt ceiling was hit in May.

The coming deluge of Treasury issuance has stoked worries on Wall Street about whether there is enough liquidity in the system in the short term to meet the supply without pushing up short-term borrowing costs and inverting the yield curve even further.

I had a news item on this subject in my Friday column from the Zero Hedge website, but it was a little on the ‘thick’ side.  Here’s a marketwatch.com story that is somewhat more ‘user friendly’.  I thank George Whyte for pointing it out — and another link to it is here.


U.S. Manufacturing Slumps Back Into Contraction

After this morning’s good news (regional Fed surveys and retail sales), macro data reality just hit with U.S. Industrial Production tumbling 0.2% MoM (notably worse than the +0.1% MoM) as manufacturing plunged.  Click to enlarge.

Manufacturing output slumped 0.4% MoM

It gets worse though as, on a year-over-year basis, Industrial production is barely growing (weakest since Feb 2017) and Manufacturing is back in contraction…Click to enlarge.

Mining was the biggest driver of the slowdown, falling 1.8% in July, “as Hurricane Barry caused a sharp but temporary decline in oil extraction in the Gulf of Mexico,” according to the report, but Machinery and Autos also declined.

This brief 3-chart Zero Hedge article put in an appearance on their Internet site at 9:25 a.m. on Thursday morning EDT — and another link to it is here. Another Zero Hedge article from an hour before that one has a conflicting and ‘positive’ headline that reads “Philly, Empire Fed Beat Expectations, Confirming Economic Rebound


It’s time to get Serious About Silver — David Smith

The World Silver Survey 2019 Review, the institute’s annual World Silver Survey said that global silver demand hit a three-year high in 2018, surpassing more than one billion ounces, an increase of 4% from 2017.

At the same time, global silver mine production fell for the third straight year, dropping 2% in 2018 to 855.7 million ounces.

The top 10 silver producing countries are: Peru, Bolivia, Australia, Argentina, Mexico, Chile, Poland, China, Russia and Guatemala.

And get this… in every one of these countries, silver production has been falling for the last 4 consecutive years!

  • Supply from scrap sources is at a 20-year low.
  • Silver fabrication (manufacturing) demand is just below record levels.
  • Silver demand for solar panels has risen for six consecutive years – and is expected to set a new record in 2019

This interesting commentary from David was posted on the fxstreet.com Internet site on Wednesday at 2:24 p.m. BST, which was 9:24 a.m. in New York — EDT plus 5 hours.  I found it on the Sharps Pixley website — and another link to it is here.


The PHOTOS and the FUNNIES

Still in Hope, B.C. on May 27, the first shot is of Kawkawa Lake taken from on high…looking across it at some of the ‘chicken shacks’ on the opposite shore.  In the second one, my daughter spotted this land snail on a plant by the shore of the Coquihalla River close to where it empties into the Fraser.  I’d never seen one before — and of course a photo was necessary.  The last picture is of Pacific dogwood flowers growing on a rather smallish tree beside a school in the town.  Click to enlarge.


The WRAP

@StockCats: “Thank you for calling the Plunge Protection Team. We are currently experiencing unusually heavy call volume, but your call is important to us…” — Thursday morning’s King Report…the day after Wednesday’s melt-down.


It was a pretty quiet trading day for both gold and silver on Thursday.  ‘Da Boyz’ were still around, if you knew where to look…with the most obvious time coming just after the COMEX close in New York — and also in early morning trading in the Far East.

Gold is still wildly overbought — and silver is very close to that mark as well.  That big engineered price decline on Tuesday did not make one whit of difference to either of these overbought conditions, because both silver and gold recovered strongly after the afternoon gold fix in London on that day.  At this juncture, one has to wonder whether that effort was the best they could do, or whether or not more attempts will be made.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  The overbought situation in gold in particular, should be noted.  It should also be noted that gold closed at a new high for this move up — and silver is not far behind.  Platinum was closed at a new low for its current engineered price decline — and palladium is being forced to mark time.  And after the price activity in WTIC over the last two days, it was closed back below both its 50 and 200-day moving averages for the second day in a row on Thursday.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that, like in early morning trading in the Far East on Thursday morning, the smallish rally that developed in early trading on Friday in the Far East was turned lower as well — and at the moment, ‘da boyz’ have the gold price down $7.90 the ounce. Silver’s price was guided in a similar manner — and it’s down 7 cents. The platinum price has been inching lower ever since trading began at 6:00 p.m. in New York on Thursday evening — and it’s down 5 bucks currently. Palladium has been chopping very unevenly sideways during the same period of time — but it’s up 2 dollars as Zurich opens.

Net HFT gold volume is about 75,000 contracts — and there’s only 534 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is around 13,100 contracts — and there’s 1,816 contracts worth of roll-over/switch volume out of September and into future months.

The dollar index opened basically unchanged once trading commenced at 7:45 p.m. EDT on Thursday evening. Its current 98.25 high tick was set at 10:30 a.m. China Standard Time on their Friday morning, but has given up almost all of that since — and is up only 2 basis points as of 7:45 p.m. BST in London/8:45 a.m. CEST in Zurich.


Today, around 3:30 p.m. EDT, we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  I mentioned in previous commentary on Wednesday that I wasn’t about to hazard a guess as to what the changes might be, considering the wild price swings during the reporting week — and this is what silver analyst Ted Butler had to say about the situation in this mid-week commentary to his paying subscribers on Wednesday…

Tuesday’s extreme price volatility and high trading volume makes it a ‘pick ‘em’ as far as this week’s new Commitments of Traders report on Friday. Up until Tuesday’s cutoff, we were likely looking at a big increase in managed money buying and commercial selling, mostly as a result of last Wednesday’s sharp rally in gold and silver. But there were already enough undercurrents of change, mostly on JPMorgan’s side in last week’s reports, as well as the surprise heavy selling by the managed money traders in silver in the prior reporting week, that I’m fully prepared to observe and analyze the numbers, rather than handicap them this week.”


And as I post today’s efforts on the website at 4:02 a.m. EDT, I note that gold and silver prices haven’t done much as the first hour of London trading draws to a close. Gold is down $8.30 the ounce — and silver is now down 8 cents. Platinum is still down 3 dollars — but palladium is now higher by 7 bucks as the first hour of trading in Zurich ends.

Gross gold volume is coming up on 90,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit over 88,500 contracts. Net HFT silver volume is a bit over 16,000 contracts — and there’s 2,687 contracts worth of roll-over/switch volume out of September and into future months.

The dollar index has shot a bit higher starting around 8:05 a.m. BST — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up 11 basis points.

That’s all I have for today, which wasn’t all that much.

Have a good weekend — and I’ll see you here on Saturday.

Ed