A Good Day for Silver on Tuesday

28 August 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much of anything until 1 p.m. China Standard Time on their Tuesday afternoon.  It then rallied a bit until the low in the dollar index occurred around 8:50 a.m in London.  From that point it edged mostly quietly lower until around 9:15 a.m. in New York.  It began to head higher from that juncture until the price was capped and turned quietly lower around 12:20 p.m. EDT.  That sell-off lasted until shortly after 3 p.m. in after-hours trading, but gained a good chunk of that back by 4 p.m., before trading quietly sideways until the market closed at 5:00 p.m. EDT.

The low and high ticks were reported as $1,529.20 and $1,548.20 in the October contract — and $1,535.30 and $1,554.50 in December.

Gold was closed in New York on Tuesday at $1,542.50 spot, up $15.90 from Monday.  Net volume was, not surprisingly, very heavy at a bit over 321,500 contracts — and there appeared to be no roll-over/switch volume worthy of the name.  But open interest in October and December combined blew out by almost 24,500 contracts.

The silver price also didn’t do much in Far East trading yesterday…until 1 p.m. CST, that is.  It began to crawl quietly and unevenly higher — and the rally in the dollar index that began at 8:50 a.m. in London, had no effect on the price at all.  The rally became far more serious at, or just after, the noon BST silver fix — and it too was capped around 1:20 p.m. in COMEX trading in New York.  It was sold down a few pennies from there — and the proceeded to wander quietly sideways for the remainder of the Tuesday session, but wasn’t allowed to trade above $18.18 spot.

The low and high ticks in this precious metal were recorded by the CME Group as $17.61 and $18.185 in the September contract.

Silver was closed at $18.165 spot, up 53 cents from Monday.  Net volume was pretty quiet at a hair under 30,000 contracts and, for the third or fourth day running, roll-over/switch volume out of September and into future months was ginormous, at a bit over 78,000 contracts.

I’ve seen heavy roll-over volumes in silver before, but nothing quite like this — and there are still two more days of this sort of activity remaining before First Day Notice.

Platinum was up 3 or 4 dollars by 2:30 p.m. China Standard Time on their Tuesday afternoon, which was thirty minutes before the Zurich open.  From that point it was sold back to unchanged by minutes before 11 a.m. CEST — and it began to creep unevenly higher from there.  It was sold down a bit at the afternoon gold fix in London, but then went on a bit of a tear to the upside.  But, like in gold and silver, its rally was capped and turned lower around 1:20 p.m. in New York.  From 1 p.m. EDT onwards, it didn’t do much — and finished the Tuesday session at $864 spot, up 10 bucks from Monday.

The palladium price didn’t do much of anything in Far East trading yesterday.  But that tranquility ended abruptly at around 9:30 a.m. in Zurich, when a violent up/down/up move transpired.  At that point, according to Kitco, the spot price jumped up to $1,494 — and then crashed to $1,432 spot — and then back to unchanged…all in the space of about twenty minutes.  [Violent price moves, both up and down, are very common in this precious metal, as the market is so tiny and illiquid…where 50 contracts bid or offered, can really move it — and it does.]  After that kerfuffle, the price edged quietly higher until it was capped and turned lower during the New York lunch hour. That quiet sell-off lasted until a few minutes before 4 p.m. in the very thinly-traded after-hours market — and then jumped up a few dollars going into the 5:00 p.m. EDT close.  Palladium was closed at $1,464 spot, up 5 dollars on the day.

The dollar index closed very late on Monday afternoon in New York at 98.08 — and opened down about 4 basis points once trading commenced at 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. on Tuesday morning China Standard Time.  It crept quietly lower until around 2:25 p.m. CST — and then really began to slide.  The 97.86 low tick was set around 8:45 a.m. in London — and it began to head very unevenly and very unsteadily higher until the 98.05 high tick [such as it was] was set somewhere around 4:20 p.m. in New York.  It shed a few basis points from there going into the 5:30 p.m. EDT close.  The dollar index finished the Tuesday session at 98.00…down 8 basis points from Monday.

If there was any correlation between what the currencies and precious metals were doing on Tuesday, I didn’t see it.

Here’s the DXY chart, courtesy of Bloomberg — and I’ve set the cursor on its London low of the day.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart…courtesy of the good folks over at the stockcharts.com Internet site.  The delta between its close…97.91…and the close on the DXY chart above, was 9 basis points on Tuesday.  Click to enlarge as well.

The gold stocks rallied for a bit at the open on Tuesday morning — and then traded flat until shortly before 11 a.m. in New York.  A rally of some size developed at that juncture — and all the gains that mattered were in by minutes before the 1:30 p.m. COMEX close…about the time that the gold price was capped and turned lower.  They traded quietly but very unevenly sideways-to-lower until the markets closed at 4:00 p.m. EDT.  The HUI finished the day up a respectable 3.79…but would have obviously closed at an even more respectable number if the gold price had been allowed to trade freely after the COMEX close.

In all respects that mattered, the silver equities followed a very similar price path as the gold shares, except their gains were more impressive.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 5.08 percent…with most of the junior silver producers gaining far more than that.  Click to enlarge if necessary.

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

Once again Nick’s Silver Sentiment/Silver 7 Index was held back by the price performances of Compañía de Minas Buenaventura and Peñoles.  The former was up only 2.82 percent — and the latter by 1.78 percent.


The CME Daily Delivery Report showed that 31 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, the two short/issuers were Advantage and ADM, with 16 and 15 contracts out of their respective client accounts.  The only long/stopper that mattered was the CME Group.  They stopped 29 contracts, which they immediately reissued as 10×29=290 of those ten-ounce mini COMEX gold contracts.  ADM stopped 209 — and Advantage picked up the other 81…all for their respective client accounts.

In silver, the sole short/issuer of those 2 contracts was Advantage — and the sole long/stoppers was ADM.

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

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in August declined by 276 contracts, leaving 75 still open, minus the 31 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 263 gold contracts were actually posted for delivery today, so that means that 276-263=13 gold contracts disappeared from the August Delivery month.  Silver o.i. in August remained unchanged at 2 contracts still around, minus the 2 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 2 silver contracts were actually posted for delivery today, so that means that 2+2=4 more silver contracts just got added to August.


There was a very decent deposit into GLD on Tuesday, as an authorized participant added 433,737 troy ounces.  There were no reported changes in SLV.

Ted said that the volume in SLV was very heavy yesterday — and very decent on Monday as well…so it’s a good bet that this ETF is owed lots more physical silver…not to mention every other silver ETF and mutual fund on Planet Earth as well.  It will, as he also stated, be interesting to see how long it takes for all this silver to show up — and if in short order, will JPMorgan be the entity supplying it yet again?

There was a smallish sales report from the U.S. Mint on Tuesday.  They sold 500 one-ounce 24K gold buffaloes — and 138,000 silver eagles.

There was some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday, as Loomis International picked up 17,682.907 troy ounces/550 kilobars [SGE kilobar weight].  Nothing was reported shipped out.  There was a paper transfer of 1,202 troy ounces from the Eligible category — and into Registered over at Delaware.  The link to all this is here.

There was a fair amount of movement in silver yesterday.  One truckload…600,678 troy ounces…was dropped off at CNT — and that was all of the ‘in’ activity there was.  There was also a total of 851,143 troy ounces shipped out — and that movement involved five different depositories.  The largest of which was one truckload…622,678 troy ounces…that departed CNT.  In second and third spots were HSBC USA and Loomis International, as they parted with 129,354 and 80,553 troy ounces respectively.  If you want to see the rest…the link is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving 1,524 of them.  Of that amount, there was 1,090 received at Brink’s, Inc. — and the remaining amount…434 kilobars…was dropped off at Loomis International.   There were a total of 65 bars shipped out — and that occurred at Brink’s, Inc.  The link to all this is here.


Here are two charts that I picked up off of Nick’s website on Tuesday afternoon.  These are the daily 2-year charts of all the gold and silver held in all known depositories, mutual funds and ETFs as of the close of business on TuesdayClick to enlarge for both.

After posting a lot of stories in my Tuesday column, I have very little for you today.


CRITICAL READS

What to Expect as World Trade Slows and Bonds Signal Recession — Bill Bonner

Stocks are still near all-time highs. Unemployment is at record lows. The expansion, which began 10 years ago, is now the longest on record.

A prudent investor should expect these conditions to change.

World trade is slowing. Bonds are signaling a recession ahead.

The entire spectrum of U.S. Treasury bonds is now trading below 2% yields, with $17 trillion of bonds worldwide with yields below zero.

No one knows what that means, but it appears to be the largest bond bubble since the 15th century. (High bond prices = low yields.)

In the stock market, volatility has increased; each headline or tweet about the trade war with China seems to bring on a twitch.

Here at the Diary, we believe that Mr. Trump wants to settle up with the Chinese, proclaim victory, and win reelection in 2020.

But wars can take on a life of their own; Mr. Xi may not want to play along.

This commentary from Bill put in an appearance on the bonnerandpartners.com Internet site early on Tuesday morning EDT — and another link to it is hereGregory Mannarino‘s 17-minute rant at the market close yesterday is headlined “Danger Zone..There Is A BIG FAT UGLY Air Pocket Under This Market” — and is linked here.


Operation “Detachment” — Andrei Martyanov

This “operation” is combined West’s crude attempt to woo Russia into useless Western “fold” by “detaching” her from China. Of course if one wanted this operation to fail, no better candidacy for this operation’s handler could be found than Emmanuel  Macron, who would fit the bill perfectly. In a moment of, possible, sincerity Macron waxed Huntingtonian and concluded this:

PARIS (AP) — French President Emmanuel Macron says it’s time for Europe to reach out to Russia — to keep it in the Western fold, check its global ambitions and avoid being caught in the middle of a new Cold War. Macron didn’t say outright whether he wants to lift E.U. sanctions imposed over Russia’s annexation of Crimea from Ukraine, the heart of East-West tensions for the past five years. But he said new sanctions “are not in our interest.” In a sweeping diplomatic speech Tuesday after hosting the G-7 summit , Macron sketched out a role for France as a “balancing power” — between Russia and its rivals, between the U.S. and Iran, between rich and poor countries. “Pushing Russia from Europe is a profound strategic error,” Macron said. Europe’s “weaknesses and mistakes” have helped lead Russia to boost its alliance with China and revive its influence in Syria, Libya and around Africa.

Macron makes one mistake here. Well, several mistakes, actually. For starters “Pushing Russia from Europe” was not a “strategic mistake“–that was the plan and main objective of Washington, headed then by Obama and being continuously implemented now by Trump Administration. Moreover, “pushing Russia” out is not just about Russia, but by implication about Europe itself. Europe as it exists today is of no interest to Russia in any metaphysical sense, except for purely economic interest as a market, but majority of Russians are counting their blessings now because of this “pushing out” largely succeeding. Europe, meanwhile, is a sacrificial lamb for the United States, which, in a desperate attempt to save herself, will demolish Europe economically because European elites are a pathetic parody on a required political leadership, some of them are outright imbeciles, not to mention that vast swathes of them are effectively products of the American selection. So, no–let Europe deal with the U.S., or vice-versa, and keep Russia out of it.

This very short, but very worthwhile commentary by Andrei, was posted on his Internet site on Monday sometime — and it’s the first of two in a row from Larry Galearis.  Another link to it is here.


Lebanon, Iraq, Iran call out Israel’s ‘declaration of war’ after it bombs 3 countries in one weekend

Lebanon, Iraq and Iran have declared recent Israeli aggression as an act of war after attacks on Lebanon, Syria, and Iraq over the weekend, promising devastating retaliation if the violence continues.

A pair of kamikaze drone attacks on Beirut’s southern suburbs on Sunday and a drone strike on Palestinian militia in the Bekaa Valley early on Monday morning were akin to “a declaration of war,” Lebanese President Michel Aoun told the United Nations Special Coordinator on Monday, adding that the aggression “allows us to resort to our right to defending our sovereignty.”

The international community must reject Israel’s “blatant violation” of U.N. Security Council Resolution 1701, which ended the 2006 war between Lebanon and Israel, P.M. Saad al-Hariri implored ambassadors from the U.N. Security Council’s permanent members. “Any escalation could develop into a regional cycle of violence that nobody can predict the extent of.”

And any Israeli drones overflying Lebanon will be shot out of the sky, Hezbollah Secretary-General Seyyed Hassan Nasrallah warned Tel Aviv. “Hezbollah will tolerate no more Israeli drones penetrating Lebanese airspace,” he declared on Sunday after an explosive-laden drone took out Hezbollah’s media center in Beirut.

Nor was Lebanon the only nation to draw the line at the eruption of Israeli aggression over the weekend. A powerful bloc in Iraq’s parliament has demanded U.S. troops leave the country after a series of Israeli airstrikes targeting Iran-allied Shiite militias known as Popular Mobilization Units over the past week.

The Fatah Coalition holds the U.S. “fully responsible” for the Israeli attacks, “which we consider to be a declaration of war on Iraq and its people,” it said in a statement on Monday after yet another drone strike killed a PMU commander in the western town of al-Qaim. U.S. troops, the coalition insists, are “no longer needed” in Iraq.

This rt.com new item showed up on their Internet site at 3:36 a.m. Moscow time on their Tuesday morning, which as 8:36 p.m. in Washington on Monday evening — EDT plus 7 hours.  I thank Larry Galearis for pointing it out — and another link to it is here.


Will Bibi’s War Become America’s War? — Patrick Buchanan

President Donald Trump, who canceled a missile strike on Iran, after the shoot-down of a U.S. Predator drone, to avoid killing Iranians, may not want a U.S. war with Iran. But the same cannot be said of Bibi Netanyahu.

Saturday, Israel launched a night attack on a village south of Damascus to abort what Israel claims was a plot by Iran’s Revolutionary Guards’ Quds Force to fly “killer drones” into Israel, an act of war.

Sunday, two Israeli drones crashed outside the media offices of Hezbollah in Beirut. Israel then attacked a base camp of the Popular Front for the Liberation of Palestine-General Command in north Lebanon.

Monday, Israel admitted to a strike on Iranian-backed militias of the Popular Mobilization Forces in Iraq. And Israel does not deny responsibility for last month’s attacks on munitions dumps and bases of pro-Iran militias in Iraq.

Israel has also confirmed that, during Syria’s civil war, it conducted hundreds of strikes against pro-Iranian militias and ammunition depots to prevent the transfer of missiles to Hezbollah in Lebanon.

Understandably, Israel’s weekend actions have brought threats of retaliation. Hezbollah Secretary-General Hassan Nasrallah has warned of vengeance for the death of his people in the Syria strike.

This interesting and worthwhile commentary from Pat was posted on his website on Monday sometime — and I found it in a Zero Hedge article that Brad Robertson sent my way yesterday.  Another link to it is here.


Central Banks Just Love Gold and It’s Going to Stay That Way

A major gold-buying spree by central banks is likely to persist in the coming years, according to Australia & New Zealand Banking Group Ltd., which flagged the potential for further purchases by nations including China.

In the current environment, where uncertainty in emerging-market currencies is high, we see good reason for countries like Russia, Turkey, Kazakhstan and China to continue to diversify their portfolios,” ANZ said in a note on Tuesday. Net buying by the sector is likely to stay above 650 tonnes, it said.

Central-bank accumulation of bullion has emerged as a increasingly important trend in the global market, offering additional support for prices that have rallied to the highest level since 2013 on rising demand. Authorities have been adding to reserves as growth slows, trade and geopolitical tensions rise, and some nations seek to diversify away from the dollar. Official purchases now account for about 10% of worldwide consumption, according to ANZ.

The People’s Bank of China holds nearly 1,936 tons of gold, which equates to only 3% of its total foreign reserve holdings, giving the country plenty of room to increase its allocation,” ANZ said. China’s central bank expanded bullion reserves again in July, pressing on with a run that stretches back to December.

This brief 1-chart Bloomberg article appeared on their Internet site at 8:48 p.m. PDT on Monday evening — and was updated about four and a half hours later.  I found it it a GATA dispatch yesterday — and another link to it is here.


Perth Mint Silver Bullion Sales Surge in July

Australian gold and silver bullion products saw solid to very sharp gains in July, the latest figures from The Perth Mint of Australia show. The Mint’s gold sales were the strongest in four months and its silver sales were the highest in nine months.

The Perth Mint sold 21,518 ounces in gold coins and gold bars last month, logging mixed results as they rose 10.6% from June yet dropped 28.1% from July 2018. Still, it was the most for a month since March.

Year-to-date gold sales at 155,218 ounces are 8.8% lower than the 170,259 sold in the first seven months of last year.

July sales of the Mint’s silver coins and silver bars jumped by 987,040 ounces, marking gains of 186.5% from June and 102.8% from July of last year. The monthly level was the best since October.

Perth Mint silver sales for the year at 5,268,298 ounces are 10.5% higher than the 4,768,112 ounces sold through the same months in 2018.

This rather brief precious metals-related new item was posted on the coinnews.net website on Tuesday sometime — and I found it on Sharps Pixley.  Another link to it is here.


The PHOTOS and the FUNNIES

After shooting those mule deer photos that appeared in yesterday’s column — and driving around Penticton for a bit more, I took this photo of the Penticton–Ikeda Japanese Garden, just steps from the south end of Okanagan Lake…which you can just get a glimpse of in the center of this shot.  After a cold IPA at a nearby resort hotel, we headed south towards Okanagan Falls along the highway on the east side of Skaha Lake…which borders Penticton at its southern limits.  The second shot was taken from along the edge of that highway, with cars whizzing by.  The third shot was a small side trip off the highway…looking over the local orchards and vineyards in a generally south southwest direction across the lake — and about 10 kilometers/6 miles from Okanagan Falls.  Click to enlarge.


The WRAP

I’m not sure exactly what should be read into Tuesday’s price action…particularly in silver…although I was happy to see such positive activity nonetheless.  There certainly wasn’t much going on when I went to bed around 7 a.m. EDT on Tuesday morning — and I was somewhat surprised with the sight that greeted me when I switched my computer on around 12:30 p.m. EDT on Tuesday afternoon.

There’s no sign that ‘da boyz’ turning tail and running…particularly in gold, as the jump in total open interest on the CME’s website at midnight last night EDT did not make for happy reading.  It was a lot better in silver, but I’m still very much on the lookout for JPMorgan et al. to do the dirty at some point.

But whether or not we’re in for another of ‘da boyz’ patented ‘wash, rinse, spin — and repeat’ cycles is an open question at the moment.  As Ted also mentioned on the phone yesterday, one of these days it won’t turn out that way.

Here are the 6-month charts for the Big 6 commodities, also courtesy of the stockcharts.com Internet site  — and the big jump in silver should be noted.  Both copper and WTIC were up a bit as well.  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 didn’t do much in Far East trading until shortly before 9 a.m. China Standard Time on their Wednesday morning. It was all down hill from there for the next two hours. It headed unsteadily higher from there going into the 2:15 p.m. afternoon gold fix in Shanghai — and was sold lower at that juncture. It’s currently down $4.60 the ounce as London opens. Silver was up 14 cents at its 10 a.m. high in Far East trading — and after that, its price path was very similar to gold’s- except its still up 9 cents at the moment. Platinum has been creeping quietly but unsteadily higher in Far East trading — and is up 4 dollars. Palladium was sold a bit lower in early Far East trading — and hasn’t done much since. It’s down 4 bucks as Zurich opens.

Net HFT gold volume is already huge at 87,500 contracts or so — and there is about 5,200 contracts worth of roll-over/switch volume on top of that, but far less if you remove the 2,410 contracts in October. Net HFT silver volume is piddling at maybe 500 contracts — and there’s already about 21,000 contracts worth of roll-over/switch volume out of that precious metal and into future months…mostly December.

The dollar index opened unchanged once trading commenced around 7:45 p.m. EDT in New York on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning. It began to creep unevenly higher, with the current 98.09 high tick [such as it is] coming around 12:10 p.m. in Shanghai. It fell a bit from there, but has edged a hair higher since — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the dollar index is higher by 7 basis points.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and it’s an easy call in both gold and silver.  There is no question in my mind that the commercial net short position in gold will be the biggest in history…going all the way back to when the futures market was started in gold on January 1, 1973…more than 46 years ago.  And with silver up over a dollar in the last three trading days, it’s a near certainty that there will be a big increase in the commercial net short position in that precious metal as well.  There may have been some short covering going on in silver as well, so what the number will be is anyone’s guess.

Ted has his mid-week commentary to his paying subscribers later this afternoon — and I’m sure he’ll have something to say about all this.  With his permission, I’ll borrow a couple of sentences for my Friday missive.

Today is also the day where the remaining large traders in September futures that aren’t standing for delivery, have to either roll or sell — and this normally turns out to be the heaviest volume day of the month, although we could have seen that on Tuesday.  And as I also mentioned in my column yesterday, the rest of the traders that aren’t standing for September delivery in silver, have to be out by the close of trading on Thursday.  First Day Notice numbers will show up on the CME’s website around 10 p.m. EDT that evening — and I’ll have them for you in my Friday column.


And as I post today’s commentary on the website at 4:03 a.m. EDT, I note that gold and silver prices have crept a bit higher during the first hour of London trading. Gold is down only $1.50 the ounce currently — and silver is now up 11 cents. Platinum is now up 6 bucks — and palladium is down 5.

Gross gold volume in October and December combined is way up there at around 113,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is 107,500 contracts. Net HFT silver volume about 1,000 contracts…now in December and future months — and there’s 24,500 contracts worth of roll-over/switch volume out of September.

The dollar index has dropped a few basis points during the last hour of trading — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the index is up only 2 basis points.

That’s all I have for today — and I’ll see you here tomorrow.

Ed