Huge Silver Deliveries in September on Day One

30 August 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much of anything until 9 a.m. China Standard Time on their Thursday morning.  It began to stair-step its way unevenly higher until around 1:40 p.m. CST on their Thursday afternoon.  At that juncture, the rally became far more aggressive, bu that ended at the 8:00 a.m. London open.  It was sold quietly lower until the noon BST silver fix was done — and then it rallied a bit until shortly after 9 a.m. in New York.  The real price pressure appeared at that point — and the low tick of the day was set around 2:15 p.m. in after-hours trading.  The gold price crawled sideways from there until 3 p.m. — and then crept a bit higher until 4 p.m. EDT — and didn’t do much of anything after that.

The high and low ticks were recorded by the CME Group as $1,553.40 and $1,527.80 in the October contract — and $1,559.80 and $1,534.90 in December.

Gold was closed on Thursday afternoon in New York at $1,527.10 spot, down $11.60 on the day.  Net volume in October and December combined was over the moon at a bit over 464,000 contracts — and there was only a bit under 8,600 contracts worth of roll-over/switch volume on top of that.

Silver was up a handful of pennies by 9 a.m. in Shanghai on their Thursday morning — and then didn’t do much until the same time as gold…1:40 p.m. CST on their Thursday afternoon.  It rallied into the London open — and was up 29 cents the ounce at that juncture.  Then, like gold, it was sold a bit lower into the noon BST silver fix — and it crept higher from there.  The high of the day came a few minutes before 9 a.m. in New York.  It was sold quietly lower until shortly after 12 o’clock noon EDT — and ‘da boyz’ showed up at that point.  Also like gold, its low was set at 2:15 p.m. in after-hours trading — and from there its price pattern was a virtual carbon copy of what happened with the gold price.

The high and low ticks in silver were reported as $18.615 and $17.985 in September — and $18.76 and $18.15 in December.

Silver was closed at $18.23 spot, down only 8.5 cents on the day — and whomever was managing the price decline in this precious metal, wasn’t able to break it below $18 spot…at least not yet.  Net volume was ginormous at a bit under 132,000 contracts, most of which was in the new front month for silver, which is December  — and there was 30,000 contracts worth of roll-over/switch volume in this precious metal.

After a brief dip in early Far East trading, the platinum price began to rise quietly and steadily throughout the rest of the Far East trading session until about noon in Zurich.  It traded flat for about three hours, before rallying to its high tick of the day, which Kitco recorded as $939 spot around 10:30 a.m. in New York.  The price was capped — and then turned a bit lower after that, before resuming its quiet crawl higher.  Then some kind soul showed up shortly before 1 p.m. — and took away over half its gains by the COMEX close.  It edged a few dollars higher until trading ended at 5:00 p.m. EDT.  Platinum was closed at $915 spot, up 14 bucks on the day, but around 25 dollars off its high of the day.

Palladium didn’t do much in early morning trading in the Far East.  But starting around 11 a.m. China Standard Time, the price began to head quietly and unevenly higher.  That state of affairs was allowed to last until the same obvious seller in platinum, showed up in palladium as well…shortly before 1 p.m. in New York.  The rest is the same.  Palladium was closed at $1,454 spot, up 3 dollars on the day — and about 17 bucks or so off its high as shown on the Kitco chart below.

The dollar index closed very late on Wednesday afternoon in New York at 98.21 — and opened down about 3 basis points once trading commenced around 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  From that juncture it traded very quietly sideways until a ‘rally’ commenced a very few minutes before the 8 a.m. BST London open.  It crept quietly and very unevenly higher from there — and the 98.55 high tick was set somewhere around 1:10 p.m. in New York. Then, after a brief and short-lived down/up move, it crawled quietly lower into the 5:30 p.m. close from there.  The dollar index finished the Thursday session at 98.51…up 30 basis points from Wednesday.

There’s no question in my mind that this so-called dollar index ‘rally’ was used by ‘da boyz’ as cover for their bear raid in both gold and silver on Thursday.  Neither platinum nor palladium wanted to follow this script, but they were dealt with later in the New York session.

Here’s the DXY chart, courtesy of Bloomberg.  I’ve set the cursor at the start of yesterday’s dollar index ‘rally’ — and I was watching it in real time the moment it developed at 3 a.m. EDT.  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…98.46…and the close on the DXY chart above, was 5 basis points on Thursday.  Click to enlarge as well.

The gold stocks began to slide the moment that trading commenced at 9:30 a.m. in New York on Thursday morning — and that quiet sell-off lasted until a few minutes before 1 p.m. EDT.  They traded quietly sideways until around 2:15 p.m. — and they crawled very quietly higher until trading ended at 4:00 p.m.  The HUI closed down 3.19 percent.

The silver equities ticked up a bit at the 9:30 open in New York yesterday morning, but were heading lower minutes later.  Their respective lows of the day came around 1:10 p.m…the low tick in the dollar index — and they began to rally unevenly from there.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down only 2.15 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 for Day 1 of September deliveries showed that 1,279 gold — and a whopping 4,862 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, of the six short/issuers in total, the only three that mattered were Australia’s Macquarie Futures…HSBC USA…and Scotia Capital [Scotiabank]…with 677, 295 and 261 contracts…all out of their respective in-house/proprietary trading accounts.  There were seven long/stoppers in total — and the largest by far was JPMorgan, picking up 889 contracts…523 for its own account, plus 366 for its client account.  In second post was Marex Spectron with 121 contracts for its client account — and in third place was ABN Amro with 100 contracts for its client account as well.  International F.C. Stone and Advantage were “also rans” with 85 and 69 contracts for their respective client accounts.

In silver, there were nine short/issuers in total — and the two biggest were HSBC USA and JPMorgan, as they issued 2,400 and 2,000 contracts…HSBC USA from its own account — and JPMorgan from its ‘client’ account.  Way down in third and fourth place were International F.C. Stone and ADM, as they issued 227 and 152 contracts from their respective client accounts.  There were sixteen long/stoppers in total — and head and shoulders above all others was JPMorgan, stopping 2,618 contracts in total…1,434 for their client account, plus another 1,184 contracts for their own account.  In distant second and third place came Goldman Sachs and ABN Amro, picking up 669 and 460 contracts for their respective client accounts.

The link to yesterday’s Issuers and Stoppers Report is here — and it’s certainly worth a look if you have the interest.

The CME Preliminary Report for the Thursday trading session showed that gold open interest in August fell by 34 contracts, leaving zero left.  Wednesday’s Daily Delivery Report showed that those 34 contracts were out for delivery today…so August deliveries in gold are done.  Silver o.i. in August declined by 4 contracts, also leaving zero left.  Wednesday’s Daily Delivery Report showed that 4 silver contracts were actually scheduled for delivery today, so that means that silver deliveries in August are done as well.

For the month of August, there were 8,730 gold contracts issued/reissued and stopped — and that number in silver was 2,005.  Those are the largest number of contracts in a non-delivery month for silver in the history of the COMEX.

Gold open interest in September fell by only 74 contracts, leaving 1,384 still open, minus the 1,279 contracts mentioned a few paragraphs ago.  Silver o.i. in September crashed by 7,390 contracts, leaving 6,743 still around, minus the 4,862 mentioned a few paragraphs ago.  Wow!  What a start to the month — and it has my “spidey senses” tingling.  I’m wondering why the rush for delivery, as I’ve never seen anything like it before.  There were very heavy deliveries in copper as well.


There was a withdrawal from GLD yesterday, as an authorized participant took out 66,002 troy ounces.  But there was finally a deposit of some size into SLV, as an authorized participant added 2,713,118 troy ounces.

In the other silver ETFs and mutual funds on Thursday, there was 1,733,664 troy ounces deposited in SIVR, plus 81,728 into Central Fund — and 17,728 into Sprott.

There was no sales report from the U.S. Mint on Thursday.

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  Nothing was reported received — and only 3,086.210 troy ounces were shipped out.  In the ‘out’ category, there was 3,054.060 troy ounces/95 kilobars that departed Brink’s, Inc. — and the other withdrawal was 32.150 troy ounces/1 kilobar that departed Manfra, Tordella & Brookes, Inc.  I won’t bother linking this.

There was some activity in silver.  There was only 1,923 troy ounces received…two good delivery bars…over at Delaware.  There was 602,895 troy ounces shipped out.  Most of that was one truckload…599,900 troy ounces…that departed CNT.  The remaining 2,000.000 troy ounces…most likely 200 of those 10-ounce gold bars…was shipped out of Delaware.  But the real shocker was in the paper category, as an eye-watering 11,258,207 net troy ounces was transferred from the Registered category and back into Eligible.  Of that amount, there was 6,870,210 troy ounces transferred at Brink’s, Inc. — and the other 4,692,001 troy ounces was transferred at CNT.   The only silver that went in the other direction…Eligible to Registered…was 304,003 troy ounces that was transferred at Canada’s Scotiabank.

For the start of a major delivery month in silver, this is entirely the opposite kind of transfer one would expect to see.  Under ‘normal’ conditions, most transfers would be from the Eligible to Registered in preparation for September deliveries.  It may in days to come, but not this day.  Ted was amazed as well — and figures that this is most likely silver that JPMorgan owns and has changed categories to save on storage charges.  I know he’ll have something to say about this in his weekly commentary tomorrow afternoon.  The link to all this, is here.

There wasn’t much activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  Nothing was reported received — and only 29 were shipped out.  This activity was at Brink’s, Inc…which I won’t bother linking, either.

Greece, Attica, Athens, 380-250 B.C., Tetradrachma

Material: Silver     Full Weight: 17.10 grams     Price: €495.00/US$550

It was another fairly quiet news day — and I don’t have much in the way of stories/articles for you again today.


CRITICAL READS

Despite “Super-Low Mortgage Rates”, July Pending Home Sales Plunge Back Into Contraction

Breaking the tie between new (down) and existing (up) home sales, pending home sales tumbled 2.5% MoM in July (notably below the expectation of 0.0%) and stumbled back into contraction year-over-year.

All regions fell in July:

  • Northeast fell 1.6%; June rose 2.7%
  • Midwest fell 2.5%; June rose 3.3%
  • South fell 2.4%; June rose 1.3%
  • West fell 3.4%; June rose 5.4%

Pending Home Sales retreated back into contraction YoY (by 0.3%)…Click to enlarge.

Source: Bloomberg

Super-low mortgage rates have not yet consistently pulled buyers back into the market,” Lawrence Yun, NAR’s chief economist, said in a statement.

Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”

Pending home sales are often considered a leading indicator of existing-home purchases and a measure of the health of the residential real estate market in coming months.

This brief 2-chart Zero Hedge news item appeared on their Internet site at 10:08 a.m. EDT on Thursday morning — and I thank Brad Robertson for pointing it out.  Another link to it is here.


Mnuchin Says U.S. Doesn’t Intend to Intervene on Dollar for Now

Treasury Secretary Steven Mnuchin said that the Trump administration doesn’t intend to intervene in the dollar market right now, but signaled he’d prefer any future move be coordinated with the Federal Reserve and global allies.

The Treasury Department has “no intention of intervention at this time. Situations could change in the future but right now we are not contemplating an intervention,” Mnuchin said Wednesday in an interview with Bloomberg News in Washington.

The Trump administration has considered measures to counter the dollar’s strength, including direct intervention. Officials said last month that intervention had been ruled out for the time being, though President Donald Trump has continued to lament the greenback’s strength.

Trump has repeatedly raised concerns about the value of the dollar relative to economic competitors — especially China, with which the president has been engaged in a trade war. With a strong dollar, U.S. manufacturers have a harder time selling their products abroad as their wares are more expensive for foreign customers. U.S. consumers, meanwhile, can afford more imports, widening trade deficits Trump has vowed to close.

Unilateral intervention would contradict a longstanding commitment that the U.S. reaffirmed in June, along with other members of the Group of 20, that actively weakening exchange rates to boost exports isn’t in anybody’s interest. The U.S. last intervened in currency markets in 2011, when it stepped in along with other nations after the yen soared in the wake of a devastating earthquake in Japan.

This Bloomberg news item put in an appearance on their Internet site at 2:26 p.m. PDT on Wednesday afternoon — and I found it in a GATA dispatch on Thursday.  Another link to it is here.


“Free” Money Destroys the U.S. Financial System — Bill Bonner

Our beat is money. And in today’s money world, truth is rare; beauty can be found only in irony and mockery.

Yesterday, for example, the president of the USA came out with this:

Our Federal Reserve cannot “mentally” keep up with the competition – other countries. At the G-7 in France, all of the other Leaders were giddy about how low their Interest Costs have gone. Germany is actually “getting paid” to borrow money – ZERO INTEREST PLUS! No Clue Fed!

The president is disturbed because the Fed is not debasing the U.S. money supply fast enough.

Everybody else is doing it,” he seems to say. “Why aren’t we?

Of course, “we” are. Our Fed is lending out fake money to member banks at a rate that is about even with consumer price inflation.

This “free” money does to the U.S. financial system about what a hurricane does to a South Florida swimming pool; it becomes a greasy swamp with an alligator in it.

But our guess is that other Leaders were not “giddy” about the storm, but puzzled. Why would investors take shelter in a 10-year Italian bond at less than a 1% yield?

This commentary by Bill showed up on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is hereGregory Mannarino‘s daily rant is linked here.


Argentine Currency Crashes to Record Low After Debt-Restructuring Plan

As we detailed last night, Argentina’s embattled government will ask its creditors including the IMF for more time to pay off $101bn of debts, as the country struggles to avoid a ninth sovereign default.

Hernán Lacunza, the finance minister, late on Wednesday, said confidently…”The government is aiming to clear the outlook for the financial programme in the short, medium and long-term horizon,”

This is due to short-term liquidity stresses and not due to problems with the solvency of the debt.”

But the currency markets suggest investors are selling first and asking questions later… The Peso just plunged above 60 per USD, a new record low…Click to enlarge.

And JPMorgan agrees, warning that pressure on Argentina’s international reserves may linger amid foreign-exchange deposits withdrawals and dollarization of peso deposits despite the government’s plans to extend debt maturities.

A political gesture of the main opposition candidate and favorite to win the elections is a necessary condition to break the prevailing vicious cycle that has taken a toll on reserves,” analysts Diego Pereira and Lucila Barbeito write in a note.

JPMorgan says the reaction of local law debt holders “is not clear,” particularly if the Congress addresses the local debt re-profiling bill only after the October election.

However, for now, judging by the collapse in the peso, traders are taking the “Fool me once, shame on you, Fool me a ninth time, shame on me!” road…

This brief article was posted on the Zero Hedge website at 9:09 a.m. on Thursday morning EDT — and it’s another offering from Brad Robertson — and another link to it is here.  A related Bloomberg story from yesterday afternoon EDT is headlined “Argentina’s Credit Rating Cut to Selective Default by S&P” — and I got that from this morning’s edition of the King Report.


The Decay and Decline of the Whole Capitalist System — Egon von Greyerz

The world is now standing before a seminal moment and virtually nobody can see it. There has not been a more critical moment in the last 50 years than what we are now facing. In 1971, the world faced a similar situation. At that time, only the Chinese understood the consequences of Nixon’s decision to close the gold window.

The People’s Daily in China said in August 1971:  “These unpopular measures reflect the seriousness of the U.S. economic crisis and the decay and decline of the entire capitalist system.” The paper went on: “mark the collapse of capitalist monetary system with the U.S. dollar as its prop”….

Nixon’s new economic policy cannot extricate the U.S. from financial and economic crisis.”…“The policy is meant to fleece the American working people and to shift the worsening of the U.S. financial and monetary economic crisis onto other countries.”

So almost 50 years ago, China predicted “the decay and decline of the entire capitalist system.”
How right the Chinese were. Half a century later, the dollar has lost 98% in real terms, which of course is against gold. And against most paper currencies the dollar has also collapsed. Against the Swiss Franc for example, the dollar has lost 80% since 1971.

U.S. debt back in 1971 was $400 billion against $22 trillion today, a “mere” 55x increase. U.S. GDP was $1.2 trillion in 1971 against $20 trillion today. So a 55x increase in U.S. debt in the last 48 years has only produced a 17x increase in GDP.

The U.S. economy is running on empty which is no wonder since massive money printing of worthless paper money cannot create any real wealth whatsoever but only inflated paper wealth.

This very worthwhile but longish commentary from Egon was posted on the goldswitzerland.com Internet site on Thursday sometime — and I thank Phil Manuel for sending it our way.  Another link to it is here.


The PHOTOS and the FUNNIES

On June 15 we took the ‘old’ B.C. Highway 5A from Merritt to Kamloops…the very scenic route.  We weren’t even 15 kilometers out of town when I pulled over to take a photo looking generally north over Nicola Lake.  I got the shot — and as I was walking back to the car, my daughter spotted this bald eagle in a Ponderosa pine.  By the time I’d worked my way into a position where I could see the whole bird — and get it framed properly, a cloud had slid over the sun.  The light was bright enough — and there were no harsh shadows…flat light…absolutely perfect.  I have quite a number of photos of bald eagles, but this one is my favourite.  The last photo was taken further down the highway.  We were just driving down from the Thompson Plateau after visiting a small lake — and I took this shot of the highway and surrounding countryside from high up, looking mostly west.  Click to enlarge.


The WRAP

It was another price management day in the precious metals, starting with gold and silver at the London open, followed by platinum and palladium during lunch hour trading in New York on Thursday afternoon.

Whether this is the start of a more serious engineered price decline remains to be seen.  Certainly the consensus out there is that everyone is expecting one, as that’s what the COT structure indicates.  But as Ted said on the phone yesterday, the set-up is still there for a double cross by JPMorgan — and the big gold and silver deliveries in August, along with the explosive start to September deliveries…with JPMorgan as the big stopper in both gold and silver in both, certainly indicates that this turn of events is possible.

It seems like we’re always waiting for something.

Here are the 6-month charts for the Big 6 commodities — and the reversals in all four precious metals should be noted…particularly platinum.  Copper continues to creep a few pennies higher — and WTIC rallied above — and then closed above both its 50 and 200-day moving averages yesterday.  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 traded pretty much ruler flat until the 8:00 a.m. open in Shanghai on their Friday morning. It was tapped a handful of dollars lower at that point — and the current low tick was set around 10:40 a.m. CST. It began to crawl higher from there — and like every other day this week, the rally developed more legs shortly before 2 p.m. Its current high tick was set at the 2:15 p.m. afternoon gold fix in Shanghai. The gold price was turned lower right after that — and they currently have it back to unchanged on the day. Silver also got hit at 8 a.m. CST — and its low tick came exactly one hour later. It rallied into the afternoon gold fix — but is up only 6 cents currently, as it’s off its current high as well. Platinum’s price path was about the same as it was for silver — and it’s up 7 dollars. Palladium has been creeping quietly higher in fits and starts throughout the Far East trading session — and it’s up 10 bucks as Zurich opens…but both have also been sold a bit lower since the afternoon gold fix in Shanghai.

Net HFT gold volume is already enormous at around 73,000 contracts — and there’s only 1,025 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is coming up on 22,500 contracts — and there’s 1,040 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down 8 basis points once trading commenced at around 7:45 p.m. EDT in New York on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning. It rallied back above unchanged by a few basis points by around 11:45 a.m. CST — and then headed lower until exactly 2:00 p.m. CST. It has jumped a bit higher since — and is up 5 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Today, around 3:30 p.m. EDT, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  I’m on record as saying that there will be a very large increase in the Commercial net short position in silver…although I’m open to a surprise in that precious metal.  Gold’s commercial net short position will be higher as well — and at a new all-time high going all the way back to January 1, 1973 when the futures market in gold first opened for business.

Here’s what silver analyst Ted Butler had to say about today’s COT Report in his mid-week commentary to his paying subscribers on Wednesday…”I will be surprised if there isn’t another significant increase in managed money buying and commercial selling in gold, given the rise to fresh six year highs and overall $35 gain through Tuesday’s cut-off. Total gold open interest rose more than 42,000 contracts during the reporting week. Since the commercial net short position was only 4,000 contracts shy of the all-time record in 2016, it’s hard to see how we don’t set a new commercial total net short record.

Silver is a bit different in that trading volume wasn’t that high (given this was a roll-over week) and total open interest increased by less than 2,000 contracts over the reporting week. Still, prices did rise by a dollar or so to 2-year highs, so it’s reasonable to expect an increase in managed money buying and commercial selling by an amount more than the 2,000 contract increase in total open interest. I’m not trying to evasive or cute in avoiding specific contract predictions; I just don’t know — and want to focus on analyzing the data when released.”


And as I said in Thursday’s column, how this enormously overbought situation resolves itself in gold and silver, will determine the short and medium term price directions in both.

And as I post today’s column on the website at 4:02 a.m. EDT, I note that the gold price has continued to slide since the afternoon gold fix in Shanghai — and is down $3.80 an ounce. But silver is now up 9 cents as the first hour of London trading ends. Platinum and palladium have crept a few dollars higher — and as the first of trading comes to a close in Zurich, platinum is up 11 bucks — and palladium by 12.

Gross gold volume is around 93,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is just over 9,000 contracts. Net HFT silver volume is about 26,500 contracts — and there’s just under 1,200 contracts worth of roll-over/switch volume in this precious metal.

The dollar index is up a few more basis points in the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the index is up 8 basis points.

That’s it for another day.  Enjoy your long weekend if you’re fortunate enough to get one — and I’ll see you here again tomorrow.

Ed