An “In-Your-Face” COMEX Affair

06 September 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The price pressure in gold began at the 8 a.m. China Standard Time open on their Thursday morning — and it wandered unevenly lower until a few minutes after the equity markets opened in New York at 9:30 a.m. ‘Da boyz’ went to work at that moment, with the low tick of the day coming around 10:25 a.m. EDT.  It was allowed to rally a bit after that, but that ended around 11:30 a.m. — and the price chopped quietly sideways until trading ended at 5:00 p.m. EDT.

The high and low ticks in gold were reported by the CME Group as $1,555.50 and $1,508.20 in the October contract — and $1,561.90 and $1,514.30 in December.

Gold was closed on New York on Thursday at $1,518.70 spot, down $33.30 on the day.  Net volume was a knee-wobbling 581,500 contracts — and there was just under 26,000 contracts worth of roll-over/switch volume in this precious metal.

JPMorgan et al. guided silver’s price in a similar manner throughout the entire Thursday trading session, complete with the same price inflection points, so I’ll spare you the play-by-play.

The high and low in silver were recorded as $19.675 and $18.57 in the December contract…an intraday move of $1.10…over five percent…an outrage if there ever was one.

Silver was closed on Thursday at $18.635 spot, down 93.5 cents from Wednesday.  Net volume was the highest in COMEX history at a bit over 189,000 contracts — and there was 6,500 contracts worth of roll-over/switch volume on top of that.

With some minor variations not worth mentioning, ‘da boyz’ guided platinum’s price in a very similar manner — and they closed it at $958 spot, down 26 bucks on the day.

The palladium price traded unevenly sideways throughout all of the Far East trading session — and most of the Zurich session as well.  It caught a bit of a bid at the COMEX open, but was also sold down along with the other three precious metals starting around 9:35 a.m. in New York.  It crawled higher from there — and back above the unchanged mark until 1 p.m. EDT — and it was sold a few dollars lower until trading ended at 5:00 p.m.  Palladium finished the Thursday session at $1,542 spot, up 3 dollars from Wednesday’s close.

The dollar index closed very late on Wednesday afternoon in New York at 98.45 — and opened down about 5 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.  It crept about ten basis points higher until a very few minutes after 8 a.m. in London — and its long, uneven slide to its 98.09 low tick began.  That was set at the morning gold fix in London, about twenty-five minutes after ‘da boyz’ began to hammer the four precious metals lower.  The ‘rally’ that commenced at that juncture topped out about 2:55 p.m. EDT — and it crawled a few basis points lower into the 5:30 p.m. close.  The dollar index finished the Thursday session at 98.41…down 4 basis points from Wednesday’s close.

Although the dollar index declined over 45 basis points from its high tick to its low…this certainly wasn’t allowed to be reflected in precious metal prices.  Couple that with the fact that JPMorgan et al. bombed the precious metals starting about twenty-five minutes before the dollar index began to ‘rally’ — and it’s obvious the the engineered price decline had zero to do with what the currencies were doing — and it was strictly an “in-your-face” COMEX affair.

Here’s the DXY chart, courtesy of Bloomberg as usual — and I’ve set the cursor at the low tick of the day — and the time…9:58 a.m. EDT…should be noted. 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…98.38…and the close on the DXY above, was 3 basis points on Thursday.  Click to enlarge as well.

The gold stocks gapped down a bit at the open — and continued lower until shortly after 11 a.m. in New York trading…long after the gold price had bottomed and turned higher.  They recovered a bit of their losses by around 2:30 p.m. EDT, but then sank a bit going into the 4:00 p.m. close.  The HUI closed down 4.89 percent.

The price path for the silver equities was virtually the same as it was for the gold shares, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index got clocked by 5.55 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.

And don’t forget that despite these ‘losses’…there were strong hands with open arms buying everything that was offered for sale.


The CME Daily Delivery Report for Day 5 of September deliveries showed that 13 gold and 276 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the two short/issuers were ADM and Advantage, with 9 and 4 contracts out of their respective client accounts.  JPMorgan an Macquarie Futures stopped 8 and 2 contracts for their respective in-house/proprietary trading accounts — and Advantage stopped the other 3 contracts for its client account.

In silver, of the five short/issuers in total, the only three that mattered were ABN Amro, JPMorgan and Advantage, with 164, 60 and 45 contracts out of their respective client accounts.  Of the nine long/stoppers in total, it was JPMorgan leading the pack as usual with 79 in total…43 for clients, plus another 36 for its own account.  ABN Amro was second with 69 contracts for its client account — and in third spot was Australia’s Macquarie Futures with 45 contracts for its own account.  In fourth place was Advantage, with 43 contracts for its client account.

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 September rose by 8 contracts, leaving 64 still around, minus the 13 contracts mentioned a couple of paragraphs ago.  Wednesday’s Daily Delivery Report showed that 17 gold contracts were actually posted for delivery today, so that means that 8+17=25 more gold contracts were just added to September.  Silver o.i. in September declined by 282 contracts, leaving 1,100 still open, minus the 276 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 378 silver contracts were actually posted for delivery today, so that means that 378-282=96 more silver contracts just got added to the September delivery month.


There were withdrawals from both GLD and SLV on Thursday.  In GLD, an authorized participant removed 197,629 troy ounces — and from SLV, that number was 841,933 troy ounces.

In other silver depositories on Thursday, there was 134,146 troy ounces added to SIVR — and 73,384 troy ounces to Sprott’s PSLV.

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

There was a tiny 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 1,060.967 troy ounces/33 kilobars were shipped out…17 kilobars from Brink’s, Inc…11 from Manfra, Tordella & Brookes, Inc…and 5 kilobars from Canada’s Scotiabank.  The link to that is here.

There was a very reasonable amount of activity in silver, as 610,081 troy ounce was reported received — and another 1,088,381 troy ounces was shipped out.  All of the ‘in’ activity…one truckload…was dropped off at CNT.  In the ‘out’ category, there was 675,327 troy ounces that departed Canada’s Scotiabank — and 407,053 troy ounces was shipped out of JPMorgan.  The remaining 6,001 troy ounces left the Delaware Depository.  There were also some paper transfers from the Eligible category and into Registered…695,781 troy ounces at CNT — and the remaining 83,383 troy ounces was at Delaware…all destined for September delivery, no doubt.  The link to all this is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  There were 284 kilobars received at Loomis International — and all the ‘out’ activity…1,140 kilobars…departed Brink’s, Inc.  The link to this, in troy ounces, is here.


Here are two more charts that Nick passed around on Tuesday.  They show gold and silver imports into Turkey going back to 1995.  For the current year-to-date…to the end of July…that country has imported 71.2 tonnes of gold — and 174.2 tonnes of silver/5.6 million troy ounces.  Click to enlarge for both.

I only have a small handful of stories for you today.


CRITICAL READS

Monetary Policy Won’t Preserve Economic Expansion — Bill Bonner

We have never met Eddy Elfenbein. Describing himself as an “aesthete… raconteur,” we are sure we would like him.

On Monday, he sent this tweet:

The Dow Jones Industrial Average peaked 90 years ago today at 381.17. By July 8, 1932, it had fallen to 41.22 — a drop of 89%. The index wouldn’t close at a new high until November 23, 1954 — more than 25 years after the peak.

Thank you, Mr. Elfenbien, for reminding us. Financial cycles can be long, unrelenting, and unforgiving.

Of course, that was back then. This is now.

With the internet running hot… and central bankers on the loose… it took only six years for the Dow to recover after the dot-com bust of 2000… and only three years following the financial crisis of ’08-’09.

And now, the authorities are hoping to recover from the next crisis before it even begins!

This worthwhile commentary from Bill was posted on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is hereGregory Mannarino‘s daily post market-closing rant on Thursday is linked here — and I thank Roy Stephens for that.


Blackrock CIO: The Endgame is Coming and Central Banks Will Debase Everything to Spark Inflation

Investment implications

How should one position for such an endgame? As is probably evident, any nominal instrument will be devalued in real terms, so the solution is to hold an asset that maintains its real value – an asset that cannot be printed. We would include stocks (dividend yields are set on payout ratios, companies have some degree of pricing power, and shares outstanding are limited in number), real estate (it is difficult and expensive to expand the stock of real estate), and even commodity currencies, like gold (again, limited supply and expensive to extract). By definition, the worst asset to hold would be a sovereign bond with a negative yield, closely followed by paper money at zero yield, both with a theoretically infinite supply.

Unfortunately, such extreme devaluations in currencies could not only inflate the prices of real assets but could also push Gini coefficients to historically wide levels (a measure of the rich/poor divide) and may well fuel a continued rise in populist politics. Ultimately, this could have a real influence on central banking as we know it today, and/or the value of fiat currency. All of this is very difficult to anticipate in terms of the breadth and influence of these types of actions and ultimate reactions in terms of how prices, markets, investors, and central banks consequently adjust.

Coming back from these extreme policies is very difficult, particularly as the aging demographic and concurrent potential growth trends embedded in the system provide a ceiling on above-trend growth, which otherwise could aid the economy in soft-landing from these policies. And, potentially more importantly, extremely low rates can and will encourage fiscal actors to add more, and potentially dramatically more, debt to an already historically-levered set of economies (e.g. the increased discussion of MMT). Hence, all of this leads one today to consider assets that can participate in an inherent devaluation of the local currency, which is to say: equities, real estate, and even hard assets that have historic value-relevance, such as gold.

This longish commentary, which is definitely worth reading, put in an appearance on the Zero Hedge website at 6:25 p.m. EDT on Thursday evening — and another link to it is here.


German Factory Orders Sink, Raising Risk of Recession

German factory orders fell in July, aggravating an industrial slump that has pushed Europe’s largest economy to the brink of recession.

Demand fell 2.7% from June, when it rose at the same pace, as orders from outside the euro region plunged. The economy ministry said “in light of ongoing international trade conflicts and modest business expectations in manufacturing, no fundamental improvement in momentum is in sight for the coming months.”  Click to enlarge.

Economic prospects for export-reliant Germany remain uncertain amid increased risks of a no-deal Brexit that would plunge the U.K. deep into crisis, and the intensifying trade war. The U.S. and China hit each other with a new round of import tariffs this month — measures that will have ripple effects around the world — and U.S. President Donald Trump has repeatedly accused Europe of unfair trade.

Purchasing managers’ indexes for Germany indicated further declines in manufacturing in August, and signs are increasing that services providers are starting to feel the brunt.

Weakness is also spreading to other parts of the euro area. Factories in Spain and Ireland have seen output shrinking for the past three months, and with Italy deep in a political crisis the European Central Bank predicts the region’s subdued pace of growth will continue for now.

This news item appeared on the bloomberg.com Internet site at 11:05 p.m. Pacific Daylight Time on Wednesday night — and was updated about thirteen hours later.  I thank Swedish reader Patrik Ekdahl for sharing it with us — and another link to it is here.


Iran tanker: U.S. offers captain millions to hand over ship

The U.S. state department has confirmed it offered millions of dollars to the captain of an Iranian oil tanker which is at the centre of a diplomatic row.

Brian Hook, head of the department’s Iran Action Group, emailed the captain of the Adrian Darya 1 about sailing it somewhere the U.S. could seize it.

The vessel was suspected of moving oil to Syria, and was temporarily impounded by U.K. authorities in Gibraltar in July.

It was released last month after Iran gave assurances about its destination.

The U.S. justice department, which had tried to block the release, then issued a warrant to seize the tanker.

Reports of the cash offer first appeared in the Financial Times on Wednesday and have been confirmed by the state department.

We have conducted extensive outreach to several ship captains as well as shipping companies,” a spokeswoman told AFP news agency.

This news item showed up on the bbc.com Internet site on Thursday sometime — and comes to us courtesy of Roy Stephens.  Another link to it is here.


I didn’t find any precious metals-related news items that I thought worth posting.  Everything I saw suggested that it was the new trade talks in October between China and the U.S…or the ISM’s survey rebounded in August, despite the fact that 60 percent of the components in that report were weaker.  And the ADP employment report came out an hour before ‘da boyz appeared.  None even whispered the fact that this was a giant bear raid by the Big 8 traders…the real reason.


The PHOTOS and the FUNNIES

Continuing on our trip down Agate Bay Road east of Barriere, B.C. on June 16…the first shot is more of the disgusting scenery along the way.  The second photo is of the settlement at the end of the paved road at Skwaam Bay…with Adams Lake attached.  From there it was dirt and gravel for about 20 kilometers, before hitting pavement back in ‘civilization’ again.  The third shot is of the same settlement and bay, but take from on high from the dirt road on the mountain just southeast of it.  Paved Agate Bay Road can be seen leading up to it.  Click to enlarge.


The WRAP

I certainly hope you weren’t surprised by yesterday’s engineered price declines in three of the four precious metals.  Disappointed, yes…as was I…but not surprised.

But despite all their huffing and puffing yesterday, no moving averages of any kind were broken to the downside on Thursday, so although there was some Managed Money selling, Thursday’s Preliminary Report indicates that it wasn’t that much.

As to whether this is the beginning of a major engineered sell-off by JPMorgan et al. remains to be seen.  From what I see ahead of us regarding the Fed Funds Rate, the U.S. dollar and the rush to zero-bound interest rates in all fiat currencies…yesterday’s price action was but a speed bump on the way to much higher prices.  And that opinion is independent of any further down-side price action over the next few days and/or weeks.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  The damage in three of the four precious metals should be noted, but ‘da boyz’ didn’t push it with palladium for whatever reason.  I note that copper closed above its 50-day moving average by a hair yesterday, so it appears most likely that the commercial traders [not banks in this metal] are in the process of ringing the cash register on the Managed Money traders.  It will take a few more trading days to confirm that it is, in fact, happening.  And WTIC closed right between its 50 and 200-day moving averages yesterday…which are only 21 cents apart.  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 began to creep quietly lower starting shortly after 8 a.m. China Standard Time on their Friday morning — and that lasted until about 11:20 a.m. over there. It began to creep higher at that juncture, but ran into ‘something’ the moment it hit the unchanged mark around 1 p.m. CST. It was was turned lower hard from there — and is currently down $12.40 the ounce. The silver price wasn’t sent lower until shortly after 9 a.m. CST – and it should come as no surprise that its current low tick was set at the same time as gold’s. It didn’t recover much from there, but was also turned quietly lower at 1 p.m. — and then was totally bombed about five minutes before the London open — and is now down 30 cents. Platinum was forced to follow the gold price — and ‘da boyz’ already have it lower by 24 dollars. Palladium was also sold lower until late in the morning in Shanghai — and then recovered a decent chunk of that loss, but was then hammered lower starting shortly after 2 p.m. CST — and is down 12 bucks as Zurich opens.

Net HFT gold volume is a bit over 75,000 contracts already — and there’s only 1,360 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is way up there as well at just under 29,500 contracts — and there’s only a tiny 725 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened about unchanged 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 was up about 14 basis points or so by around 10 a.m. CST, but started to fade after that — and is currently down 9 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 weekly Commitment of Traders and the companion monthly Bank Participation Reports — and in most respects that matter, they’re pretty much “yesterday’s news” after the pounding the precious metals took yesterday — and so far today in the very thinly-traded Far East trading session.  But regardless of that fact, I’ll duly report what’s in the both in my Saturday missive.

But as a preview as to what might be in today’s COT Report, silver analyst Ted Butler had this to say in to his paying subscribers in his mid-week commentary on Wednesday…”As far as what to expect in this week’s Commitments of Traders and the monthly Bank Participation reports, yesterday’s sharp rally on the cutoff day resulted in a big increase in total open interest for the day in both COMEX gold and silver futures, but not for the week. I’m more inclined to review the COT data than predict it this week, but would note that silver added nearly a dollar for the reporting week while gold was only up by a few dollars, implying managed money buying and commercial selling in silver.”

But the first thing out of the gate this morning in Washington is the monthly jobs number that will be released at 8:30 a.m. EDT.  Don’t be at all that surprised if the Big 8 show up in force to do the dirty at that time, regardless of what the number is.  Of course I’d be ecstatic to be proven spectacularly wrong about this.


And as I post today’s efforts on the website at 4:02 a.m. EDT, I note that all four precious metals hit their current low ticks at, or minutes before, the 8 a.m. London/9 a.m. Zurich opens, which was about ten minutes or so after the dollar index began to head higher. The prices of all four bounced at a bit at that point, but have all been turned lower since. At the moment, gold is down $10.40 the ounce — and silver is now down 34 cents. Platinum and palladium are lower by 21 and 12 dollars respectively as the first hour of trading in London and Zurich comes to a close.

Gross gold volume is already up to a bit over 117,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is just under 112,500 contracts. Net HFT silver volume is up to a very chunky 41,500 contracts or so — and there’s only 960 contracts worth of roll-over/switch volume in this precious metal.

The dollar index hit a low about ten minutes before the London/Zurich opens, but after a brief up/down move is down 10 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

That’s it for yet another day.  Enjoy your weekend — and I’ll see here tomorrow.

Ed