29 August 2019 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was up a dollar and small change by shortly before 9 a.m. China Standard Time on their Wednesday morning — and then gave all that back and a tad more by 10 a.m. CST. It was kicked downstairs to its low tick of the day starting at that time, which came shortly before 11 a.m. CST. From there it picked its way quietly higher until it ran into ‘something’ a minute or two after 1 p.m. in London — and it was sold down into the afternoon gold fix over there. It edged very unevenly higher until it looked like it was about to break above unchanged on the day…however someone was there to make sure that it didn’t.
Gold traded within a one percent price range for the entire Wednesday trading session, so I’ll dispense with the low and high ticks in this precious metal.
Gold was closed in New York on Wednesday at $1,538.70 spot, down $3.80 from Tuesday. Net volume in October and December combined was very heavy once again at 371,500 contracts — and there was a bit over 10,500 contracts worth of roll-over/switch volume on top of that. On this particular day of the month I would take these volume numbers with a big grain of salt, as both could be out by a lot.
And as is almost always the case, the silver price received the same treatment as gold — and that lasted until the afternoon gold fix in London. It crept a bit higher into the 1:30 p.m. EDT COMEX close — and didn’t do a thing after that.
The low and high ticks in this precious metal were recorded by the CME Group as $18.025 and $18.475 in the September contract.
Silver was closed at $18.315 spot, up 15 cents from Tuesday. Net volume…now all in December or future months…was minuscule at around 5,700 contracts — but roll-over/switch volume out of September and into future months was the biggest number I’ve ever seen…98,000 contracts.
The platinum price crept very quietly and evenly higher until about thirty minutes after the Zurich open on Wednesday — and then did precisely nothing until the 8:20 a.m. EDT COMEX open. Then away it went to the upside. That eye-opening rally…short covering, perhaps…got capped and turned lower a few minutes either side of the COMEX close. But it managed to creep back above the $900 spot mark by the time trading ended at 5:00 p.m. EDT in New York. Platinum finished the Wednesday session at $901 spot, up an astonishing $37 from its close on Tuesday.
The palladium price was down 4 bucks by the Zurich open — and then didn’t do much until shortly before 12 o’clock noon CEST. It was sold lower until shortly before the afternoon gold fix in London — and then crawled unevenly higher until that rally was capped at 2 p.m. in the thinly-traded after-hours market. It was sold a few dollars lower into the 5:00 p.m. close from there. Palladium was closed at $1,451 spot, down 13 dollars on the day.
The dollar index closed very late on Tuesday afternoon in New York at 98.00 — and opened unchanged once trading commenced around 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning. It rose and fell around 8 basis points points between then — and five minutes before the London open. A very choppy ‘rally’ commenced at that juncture — and the 98.26 high tick was set around 3:55 p.m. in New York. It drifted lower into the 5:30 p.m. close from there. The dollar index finished the Wednesday session at 98.21…up 21 basis points from Tuesday.
It was yet another day where gold and silver price activity bore little or not relation to what was happening in the currency market.
Here’s the DXY chart, courtesy of Bloomberg — and I’ve set the cursor on the low tick of the day…about five minutes before the London open. Click 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…98.12…and the close on the DXY chart above, was 9 basis points on Wednesday. Click to enlarge as well.
The gold stocks took off higher the moment trading began at 9:30 a.m. in New York on Wednesday morning, but ran into a wall of selling that ended at 10 a.m. EDT afternoon gold fix in London. They then proceeded to creep quietly and somewhat unevenly higher until around 2:35 p.m. EDT. But when the gold price was turned lower at that point, the shares followed — and the HUI closed up only 0.31 percent.
The silver equities were forced to trade in a similar price pattern as the gold stocks at the open in New York yesterday morning — and were also sold a bit lower starting at 2:35 p.m. EDT. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 0.64 percent. Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Wednesday’s doji. Click to enlarge as well.
The CME Daily Delivery Report showed that 34 gold and 4 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.
In gold, the three short/issuers were Advantage, International F.C. Stone and Morgan Stanley, with 22, 7 and 5 contracts…all from their respective client accounts. The two long/stoppers were ADM with 2 contracts for its client account — and the CME Group with 32 contracts for its own account…which it immediately reissued as 10×32=320 ten-ounce COMEX gold mini contracts. ADM picked up 318 of those — and Advantage the remaining 2…all for their respective client accounts.
In silver, the lone short/issuer was Advantage. Australia’s Macquarie Futures picked up 2 of those for its own account — and Morgan Stanley and ADM picked up 1 each for their respective client accounts.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in August fell by 41 contracts leaving 34 still open, minus the 34 mentioned a few short paragraphs ago. Tuesday’s Daily Delivery Report showed that 31 gold contracts were actually posted for delivery today, so that means that 41-31=10 gold contracts disappeared from the August delivery month. Silver o.i. in August rose by 2 contracts, leaving 4 contracts still around, minus the 4 mentioned a few paragraphs ago. Tuesday’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.
Gold open interest in September declined by 823 contracts, leaving only 1,466 left. Silver o.i. in September got cut in half yesterday, cratering by 14,952 contracts, leaving 14,877 still around. The remaining open interest in both will decline even further in Thursday’s Preliminary Report, as the remaining traders that aren’t standing for delivery in September, have to be out by the close of COMEX trading in New York this afternoon.
There was another decent-sized deposit into GLD on Wednesday, as an authorized participant added 292,298 troy ounces. Once again, there were no reported changes in SLV.
There hasn’t been a deposit into SLV since last Friday — and as Ted mentioned in his mid-week commentary to his paying subscribers on Wednesday, he figures that they’re owed as much as 10 million troy ounces. Of course that amount doesn’t include what’s owed to the myriad of other silver ETFs, depositories and mutual funds that are out there.
In other world gold depositories on Wednesday, there was a net 41,995 troy ounces added over and above GLD…but not one ounce of silver was added anywhere. There was actually 22,500 ounces of silver withdrawn. That’s most likely because there’s no physical metal to be had unless, as Ted Butler says, JPMorgan is prepared to provide it, either as a direct sale…or lease. If not, then a critical shortage in good delivery bars has suddenly materialized this week. Click to enlarge.
There was no sales report from the U.S. Mint on Wednesday.
There was a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday. there was 3,086.471 troy ounces/96 kilobars [SGE kilobar weight] received at Loomis International — and that’s all the ‘in’ activity there was. All the ‘out’ activity was 225.057 troy ounces/7 kilobars [SGE kilobar weight] that departed Brink’s, Inc. There was also a small paper transfer from the Eligible category — and into Registered over Delaware…486 troy ounces. I won’t bother linking these small amounts.
There was very little going on in silver. Nothing was reported received — and only one good delivery bar…1,002 troy ounces…was shipped out of Delaware. There were a lot of paper transfers in silver. There was 1,198,496 troy ounces transferred from Registered — and back into Eligible over Canada’s Scotiabank…rather counterintuitive activity going into a major delivery month for silver. It was the same thing over at JPMorgan, as 407,053 troy ounces made that same move. The remaining paper transfer was 74,566 troy ounces that was moved from the Eligible category and into Registered — and that activity took place at Delaware. The link to all this is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. There were 1,000 kilobars received — and only 10 were shipped out. This occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.
Mint: Rome Material: Silver Full Weight: 3.47 grams. Value: €225.00/US$250
It was another fairly quiet news day.
Something has dramatically changed in the establishment’s view of central banking… and of the future.
As we reported earlier this week, recently we have observed a surprising spike in criticism of central banks by establishment figures, in some cases central bankers themselves, most notably Mark Carney who last Friday remarkably admitted that very low interest rates tend “to coincide with high risk events such as wars, financial crises, and breaks in the monetary regime” when he also urged an end to the dollar’s status as world reserve currency. This continued when 7 months after it praised negative rates, the San Francisco Fed pulled a U-turn and warned that the “Japanese experience“, where negative rates dragged down inflation expectations even more, is ground for NIRP caution.
Meanwhile, as the FT concluded in its summary of last week’s Wyoming outing, “there was a sense that things will never be the same again” and quoted St Louis Fed President James Bullard, who wrote that “the developed world had experienced a “regime shift” in economic conditions: “Something is going on, and that’s causing I think a total rethink of central banking and all our cherished notions about what we think we’re doing,” Bullard admitted. “We just have to stop thinking that next year things are going to be normal.”
Tying it all together was Bank of America, which in a report meant to recommend buying gold, lashed out at the Fed, warning that “ultra-easy monetary policies have led to distortions across various asset classes“; worse – and these are not our words, but of Bank of America – “it also stopped normal economic adjustment/renewal mechanisms by for instance sustaining economic participants that would normally have gone out of business“, i.e. a record number of zombie corporations. In addition, as everyone knows, debt levels have continued to increase, making it more difficult for central banks to normalize monetary policy as 2018 showed so vividly (and for Powell, painfully). Which brought us to BofA’s conclusion:
“We fear that this dynamic could ultimately lead to “quantitative failure”, under which markets refocus on those elevated liabilities and the lack of global growth, which would in all likelihood lead to a material increase in volatility.”
All of which brings us to Wednesday’s highlight which was the latest scathing essay published by Bridgewater’s billionaire Chairman, Ray Dalio, titled “The Three Big Issues and the 1930s Analogue” in which he joins the pile up of Fed criticism, and echoes what BofA said, warning that central banks’ ability to reverse an economic downturn is coming to an end as the global economy enters what he says are the late stages of the long-term debt cycle.
The outcome could be nothing short of a global conflict (just as Carney hinted last Friday).
This longish but worthwhile commentary was posted on the Zero Hedge website at 5:00 p.m. EDT on Wednesday afternoon — and another link to it is here. Gregory Mannarino‘s 14-minute post market close rant on Wednesday is linked here — and I thank Roy Stephens for sending it along.
U.S. President Donald Trump’s trade war with China keeps undermining the confidence of businesses and consumers, worsening the economic outlook. This manufactured disaster-in-the-making presents the Federal Reserve with a dilemma: Should it mitigate the damage by providing offsetting stimulus, or refuse to play along?
If the ultimate goal is a healthy economy, the Fed should seriously consider the latter approach.
The Fed’s monetary policy makers typically take what happens outside their realm as a given, and then make the adjustments needed to pursue their goals of stable prices and maximum employment. They place little weight on how their actions will affect decisions in other areas, such as government spending or trade policy. The Fed, for example, wouldn’t hold back on interest-rate cuts to compel Congress to provide fiscal stimulus instead. Staying above the political fray helps the central bank maintain its independence.
So, according to conventional wisdom, if Trump’s trade war with China hurts the U.S. economic outlook, the Fed should respond by adjusting monetary policy accordingly — in this case by cutting interest rates. But what if the Fed’s accommodation encourages the president to escalate the trade war further, increasing the risk of a recession? The central bank’s efforts to cushion the blow might not be merely ineffectual. They might actually make things worse.
This rather brief opinion piece is by Bill Dudley…”who served as president of the Federal Reserve Bank of New York from 2009 to 2018, and as vice chairman of the Federal Open Market Committee. He was previously chief U.S. economist at Goldman Sachs.” I found this Bloomberg opinion piece in the Wednesday edition of the King Report — and here’s what Bill had to say about it…”Dudley’s shocking confession evinces how committed elites and the establishment are to globalism and elitism. B-Dud destroyed the concept of an independent Fed and showed that coastal elites still ‘don’t get it’ as to why DJT was elected. The fact that B-Dud felt the need to publish such an incendiary and incriminating op-ed implies that globalists, the establishment and coastal elitists are petrified of Trump.” Another link to it is here. The longish Zero Hedge spin on this is here.
The summer squall over a suggestion that the Federal Reserve join the resistance against President Trump is certainly music to our ears. That’s because the specter of a self-financed agency of the American government running a campaign to defy the voters will help put the debate over monetary reform into sharp relief. And none too soon, in the view of The New York Sun.
This contretemps was touched off by a former president of the New York Fed, William Dudley. Writing for Bloomberg, Mr. Dudley suggests the central bank should “refuse to play along” with “President Donald Trump’s trade war” with Communist China. “There’s even an argument,” he writes, “that the election itself falls within the Fed’s purview.” He wants the Fed to explicitly oppose Mr. Trump in 2020.
The Wall Street Journal is all over it this morning with an editorial nailing the contrast with the usual calls for the Fed to stay out of politics for to guard its independence. “Perhaps Mr. Dudley is angling to become the next Fed Chair if Mr. Trump is defeated,” the Journal writes. It goes on to suggest that “his partisan, reckless op-ed should disqualify him from any consideration.”
What is so horrifying about Mr. Dudley’s demarche, at least in our view, is not that he is suggesting the politicization of monetary policy. Our view is that monetary policy is inherently political, a view that has been articulated by Mr. Trump’s prospective Fed nominee, Judy Shelton. No, what’s so horrifying about Mr. Dudley’s idea is that it is so contrary to the Constitution.
That parchment doesn’t grant any monetary powers to the Fed. The central bank didn’t exist when the Constitution was framed. When it was framed, it granted all of America’s monetary powers — to tax, spend, borrow on the credit of the United States, coin money, regulate its value and that of foreign coin, and fix the standard of weights and measures — to the Congress.
This rather brief editorial put in an appearance on the nysun.com Internet site on Wednesday sometime — and I found it embedded in a GATA dispatch. Another link to it is here.
Meanwhile, the bubble in bonds gets bigger as yields continue to sink to epic lows. John Authers, senior editor at Bloomberg, tweets:
“This is getting surreal. As of now, the dividend yield on the S&P 500 exceeds the 30-year Treasury yield. Last and only time that happened in the last 40 years was during the crisis. So, buy stocks for the dividends???”
The U.S. 10-year yield, the most stable “risk-free” credit in the entire world, has been cut in half in the last 10 months. It has fallen from 3.2% to just 1.6%.
The whole earth trembles. Something big is afoot. Surely, some revelation is at hand…
Some rough beast slouches toward Bethlehem. But what?
In these pages, we have seen how the flower of U.S. capitalism – the Dow 30 stocks – is worth less than half (in gold terms) what it was worth 20 years ago.
That, and a myriad of other indicators, suggests that America’s long walk on the sunny side of the street ended when the 21st century began.
This commentary from Bill was posted on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.
British Queen Elizabeth II agreed Wednesday to shut down Parliament for five weeks at Prime Minister Boris Johnson’s request, drawing backlash from lawmakers working to strike a deal with the European Union before Britain leaves in two months.
Johnson asked the queen to temporarily suspend Parliament from early September to Oct. 14, saying the move will allow him to better pursue his domestic policies. Opponents say he’s trying to ward off interference from lawmakers hoping to block an exit without an E.U. agreement.
Johnson has previously vowed Britain will have departed the 28-nation alliance by Nov. 1, with or without an E.U. agreement. He also said a reason for the move is because the present session has gone on for too long.
Johnson denied the move had anything to do with Britain’s E.U. exit, and said there will be “ample time” for lawmakers to debate before a key summit of E.U. leaders in Belgium Oct. 17.
This UPI news item put in an appearance on their Internet site at 7:21 a.m. EDT on Wednesday morning — and was updated about six and a half hours later. I thank Roy Stephens for pointing it out — and another link to it is here.
A forgery crisis is quietly roiling the world’s gold industry.
Gold bars fraudulently stamped with the logos of major refineries are being inserted into the global market to launder smuggled or illegal gold, refining and banking executives tell Reuters. The fakes are hard to detect, making them an ideal fund-runner for narcotics dealers or warlords.
In the last three years, bars worth at least $50 million stamped with Swiss refinery logos, but not actually produced by those facilities, have been identified by all four of Switzerland’s leading gold refiners and found in the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the market in bullion, said senior executives at gold refineries, banks and other industry sources.
Four of the executives said at least 1,000 of the bars, of a standard size known as a kilobar for their weight, have been found. That is a small share of output from the gold industry, which produces roughly 2 million to 2.5 million such bars each year. But the forgeries are sophisticated, so thousands more may have gone undetected, according to the head of Switzerland’s biggest refinery.
“The latest fake bars … are highly professionally done,” said Michael Mesaric, the chief executive of refinery Valcambi. He said maybe a couple of thousand have been found, but the likelihood is that there are “way, way, way more still in circulation. And it still exists, and it still works.”
This gold-related Reuters story, filed from London, showed up on their website at 10:09 p.m. EDT on Tuesday night — and I thank both Eloy Rietveld and Rick Cordes for pointing it out. Another link to it is here. The Zero Hedge spin on this is headlined “Global Gold Industry Hit by “Forgery Crisis” as Fake Kilobars Flood the Physical Market“.
Russian state lender Promsvyazbank (PSB) has stepped up gold purchases in the market, Deputy Finance Minister Alexei Moiseev said on Tuesday.
His comments follow reports by Russia’s business daily Kommersant which cited a PSB earnings report last week that the bank’s precious metals purchases jumped to 23.9 billion roubles ($362.15 million) from 0.8 billion roubles in the first half of the year.
Based on the central bank’s gold purchase prices, the precious metals purchases were the equivalent of more than 8 tonnes of gold, the paper said.
The PSB report, however, was later deleted and the bank republished it without the precious metals report.
Asked about the jump in the precious metals purchases, Moiseev confirmed Kommersant’s report that PSB was buying gold but did not comment on specific figures cited by the paper.
This Reuters article, filed from Moscow, appeared on their Internet site on Tuesday — and I found it on the Sharps Pixley website. Another link to it is here.
A millennium-old tax scam has been revealed with the discovery of thousands of coins in a muddy field that together make up the largest hoard to be unearthed from the immediate post-Norman conquest period.
The British Museum announced the discovery of the coins from a pivotal moment in English history on Wednesday. Some depict Harold II, the last crowned Anglo-Saxon king of England, and an almost equal amount show the man who replaced him after the Battle of Hastings in 1066, William the Conqueror, the first Norman king of England. Click to enlarge.
Gareth Williams, the museum’s curator of early medieval coinage, said the hoard of 2,528 coins was unusually large and “massively important” in shining light on the history of the period.
“One of the big debates amongst historians is the extent to which there was continuity or change, both in the years immediately after the conquest and across a longer period,” he said. “The coins help us understand how changes under Norman rule impacted on society as a whole.”
Three of the coins have been identified as “mules”, a combination of two types of coin – essentially an early form of tax-dodging by the moneyer, the person who made them.
This interesting story from theguardian.com Internet site on Wednesday was sent to us by Kae Lewis — and another link to it is here. There was also a story about this on the bbc.com Internet site. It’s headlined “Detectorists find huge Chew Valley Norman coin hoard” — and comes to us courtesy of Paul Pople.
The PHOTOS and the FUNNIES
Here are the last three photos from our quick trip from Penticton to Okanagan Falls and back on June2 that I highlighted in yesterday’s column. The first is from the shore line on the east side of Skaha Lake…looking generally north back towards the city of Penticton. The second is from the west short of Skaha Lake looking generally NNE — and down on the city. Skaha lake is the southern boundary of the city — and in the distance is the northern boundary…Okanagan Lake. The runway for the local airport [YYF] is visible in the center left of the shot. The last photo was taken overlooking Okanagan Lake, looking south on our way back to Merritt. Click to enlarge.
The rallies in both silver and gold during the late afternoon trading session in the Far East — and most of London trading, obviously ran into ‘da boyz’ at 1:01 p.m. BST in London/8:01 a.m. EDT in New York on Wednesday. The sell-off in both after that, ended at the afternoon gold fix — and both rallied a bit into the COMEX close from there. It was a highly synchronized price management sort of day — and had zero to to with what was happening with the currencies.
Platinum was an altogether different story — and whether that was a new buyer showing up…or short covering of some sort, won’t be known until the COT Report and Bank Participation Reports that comes out on Friday, September 6. Palladium was also sold lower into the afternoon gold fix in London.
Here are the 6-month charts for the four precious metals, plus copper and WTIC. Gold is still in overbought territory — and silver just entered that realm after the price run-up over the last four trading days. Platinum just touched that mark after yesterday’s massive rally — and there’s nothing to see in palladium. Copper finished a hair higher, but still below both its 50 and 200-day moving averages — and WTIC had a wild ride yesterday. Click to enlarge for all.
And as I type this paragraph, the London open is less than a minute away — and I note that the gold price didn’t do much of anything until 9 a.m. China Standard Time on their Thursday morning — and then proceeded to rally very unevenly higher from there — and as London opens, gold is up $10.80 the ounce. The silver price was up 8 cents or so by around 1:40 p.m. CST on their Thursday afternoon and, like gold, jumped up going into the 2:15 p.m. afternoon gold fix in Shanghai — and it’s up 29 cents currently. Platinum was sold down a bit until around 8:30 a.m. CST — and has been creeping ever higher since — and is up 11 bucks at the moment. Palladium has been edging higher as well — and as Zurich opens, it’s up 7 dollars.
Net HFT gold volume in October and December combined is around 63,500 contracts — and roll-over/switch volume is only 300 contracts. Net HFT silver volume, which is now mostly in December and future months, is a bit over 17,500 contracts — and there’s 2,155 contracts worth of roll-over/switch volume out of September and into future months.
The dollar index opened down 3 basis points once trading commenced around 7:45 p.m. EDT in New York on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning. It has done very little since then — and is down 2 basis point as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.
All the large traders that weren’t standing for physical delivery of silver in September, had to sell or roll their September contracts by the close of COMEX trading yesterday…hence the gargantuan roll-over/switch volume out of September and into future months. The rest of the traders that aren’t standing for September delivery have to be out by the close of COMEX trading today — and deliveries for First Day Notice will be posted on the CME’s website around 10 p.m. EDT this evening — and I’ll have all that data in Friday’s column.
It’s been a very strange end to the month in the precious metals — and I’m not sure what should be read into it, if anything. There’s nothing in the price activity that suggests that the ‘da boyz’ are about to get over run. It looks like ‘business as usual’ despite the fact that the Big 8 traders…sans JPMorgan…are sitting on record high unrealized losses, as the margin calls continue to pile up…a fact that Ted has been talking about for the last week or so.
But as Ted also pointed out, these overbought conditions in both gold and silver must be resolved one way or another…either by a coordinated engineered price smash to the downside one more time…or one or more of the smaller commercial traders can’t take any more financial pain — and are forced to cover and prices explode to the upside. There’s no third option.
I suppose in an act of pure desperation/panic, they could close the COMEX. But doing that would be such an extreme event that I’m not prepared to give it serious thought…although I must admit that this scenario has crossed my mind from time to time. Like now, for instance.
So we wait some more.
And as I post today’s offering on the website at 4:02 a.m. EDT, I see that both gold and silver were hit pretty hard right at the London open…especially gold. Gold is up only $1.80 now — and silver by 18 cents as the first hour of London trading ends. Platinum is now up 11 dollars — and palladium by 15 as the first hour of trading in Zurich draws to a close.
Gross gold volume is around 101,500 contracts — and minus what little roll-over/switch volume there is [net of October and December combined] net HFT gold volume is a bit under 101,000 contracts. Net HFT silver volume is pretty heavy as well, at about 24,000 contracts, mostly in the new front month, which is December — and there’s only 3,652 contracts worth of roll-over/switch volume, mostly out of September.
Of course we had the obligatory spike higher in the dollar index at the London open, but it didn’t amount to much — and the index is up 6 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich. But that didn’t stop ‘da boyz’ from using it as cover to bash silver and gold at the London open.
That’s it for yet another day — and I’ll see you here again tomorrow.