11 September 2019 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The selling pressure in gold began shortly after trading commenced at 6:00 p.m. EDT in New York on Monday evening — and it was sold lower until around 9:35 a.m. CST on their Tuesday morning. It didn’t do much from there until 2 a.m. CST on their Tuesday afternoon — and then began to head higher. That lasted until 9:30 a.m. in London — and it was sold quietly lower into the COMEX open from there. It rallied rather sharply from that juncture until 9:40 a.m. EDT, where it was stopped dead in its tracks the moment that it broke above the $1,500 spot mark. It was unevenly down hill from there — and the low tick of the day was set about twenty minutes before trading ended at 5:00 p.m. EDT.
The high and low ticks were reported as $1,502.50 and $1,487.80 in the October contract — and $1,509.10 and $1,494.30 in December.
Gold was closed in New York on Tuesday at $1,485.30 spot, down $13.30 from Monday. Net volume was enormous, as always seems to be the case these days, at 384,000 contracts — and there was just over 14,500 contracts worth of roll-over/switch volume on top of that.
The silver price followed an almost identical path as gold, except its rally at the COMEX open took it into positive territory by a bit — and it was up 13 cents or so by shortly before 10 a.m. in New York. The price managed to stay in positive territory until around 3 p.m. EDT in after-hours trading…but was sold lower from there — and back into negative territory by a hair.
The high and lows in silver were recorded by the CME Group as $18.265 and $17.855 in the December contract.
Silver was closed at $17.99 spot, down 0.5 cents from Monday. Net volume was monstrous once again at 110,000 contracts — and there was around 7,100 contracts worth of roll-over/switch volume in this precious metal.
Platinum was sold very unevenly lower starting about an hour after trading began at 6:00 p.m. in New York on Monday evening — and its low of the day was set shortly before 1:30 p.m. China Standard Time on their Tuesday afternoon. It rallied from there into the Zurich open, but was capped at that point — and it traded mostly sideways in a fairly narrow price range until around 9:45 a.m. in New York when its high of the day was printed. From that juncture it was sold quietly lower until shortly after 3 p.m. in the thinly-traded after-hours market — and it didn’t do much after that. Platinum was closed at $928 spot, down 16 bucks from Monday.
The palladium price didn’t do much until 8 a.m. in Shanghai on their Tuesday morning — and it was sold down to its low at 10 a.m. CST. After a bit of an up/down move it began to head sharply higher a few minutes before the Zurich open. It then ran into ‘something’ minutes after the Zurich open — and it was sold down hard over the next hour and change, before beginning to tick higher once more. It had a bit of a bumpy ride in COMEX trading New York — and it bounced off the $1,543 spot mark on a number of occasions. It was sold quietly lower from noon EDT until the 1:30 p.m. COMEX close — and it traded flat until the trading day ended at 5:00 p.m. EDT. Palladium was closed at $1,538 spot, up 14 dollars on the day.
The dollar index closed very late on Monday afternoon in New York at 98.28 — and opened up five basis points once trading commenced around 7:45 p.m. EDT, which was 7:45 a.m. China Standard Time on their Tuesday morning. It crept higher from that juncture until 9:10 a.m. CST — and then proceeded to chop somewhat unevenly sideways everywhere on Planet Earth for the remainder of the Tuesday session. The dollar index finished the day at 98.33…up the same 5 basis points that it started the day at.
Once again, the price action in the precious metals had zero to do with what was happening in the currency market.
Here’s the DXY chart, courtesy of Bloomberg, as always. 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…98.31…and the close on the DXY chart above, was 2 basis points on Tuesday. Click to enlarge as well.
The gold shares gapped down over a percent at the open, but quickly rallied to their highs of the day at 10:20 a.m. in New York trading. From that point, it was quietly and unevenly down hill until trading ended at 4:00 p.m. EDT. The HUI finished the day down only 0.68 percent, which I considered to be a positive development. Click to enlarge.
The silver equities also gapped down at the open — and began to rally from there until around 12:20 p.m. They managed to hang in there until 2 p.m. before finally succumbing — and were sold very quietly lower into the 4:00 p.m. close. Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 2.17 percent. 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.
And as I just pointed out regarding the gold shares, the overall share price action in both silver and gold was very encouraging.
The CME Daily Delivery Report showed that 22 gold and 156 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.
In gold, the three short/issuers were International F.C. Stone, Advantage and ADM, with 9, 7 and 6 contracts out of their respective client accounts. The two long/stoppers were JPMorgan and Advantage, with 18 and 4 contracts. JPMorgan picked up 11 contracts for its client account, plus another 7 for its own account. Advantage stopped 4 for its client account.
In silver, there were five short/issuers in total — and the only two that mattered were Advantage and ABN Amro, with 85 and 62 contracts out of their respective client accounts. There were seven long/stoppers in total — and the two largest were Advantage and ABN Amro as well, picking up 49 and 41 contracts for their respective client accounts. In second spot was Australia’s Macquarie Futures, stopping 27 for its own account. In fourth place was JPMorgan, picking up 25 contracts in total…16 for clients — and 9 for its own account.
The link to yesterday’s Issuers and Stoppers is here.
The CME Preliminary Report for the Tuesday trading session showed that gold open interest in September fell by 50 contracts, leaving 46 still open, minus the 22 mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 51 gold contracts were actually posted for delivery today, so that means that 51-50=1 more gold contract got added to September. Silver o.i. in September declined by 320 contracts, leaving 598 still around, minus the 156 mentioned a few paragraphs ago. Monday’s Daily Delivery Report showed that 458 silver contracts were actually posted for delivery today, so that means that 458-320=138 more silver contracts just got added to the September delivery month.
There were no reported changes in GLD on Tuesday, which I found somewhat surprising. But there was another withdrawal from SLV, as an authorized participant removed 1,777,268 troy ounces.
The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on in their gold and silver ETFs as of the close of business on Friday, September 6 — and this is what they had to report: They added a smallish 1,797 troy ounces of gold, but removed 340,701 troy ounces of silver.
There was a small sales report from the U.S. Mint yesterday. They sold 500 troy ounces of gold eagles — and 233,000 silver eagles.
There was a tiny amount of gold movement over at the COMEX-approved depositories on Monday. Nothing was reported received — and only 2,123 troy ounces were shipped out. Of that amount, there was 2,025.450 troy ounces/63 kilobars [U.K./U.S. kilobar weight] shipped out of Canada’s Scotiabank — and the remaining 97 troy ounces…one good delivery bar…departed Brink’s, Inc. I won’t bother linking this amount.
There was pretty big activity in silver, as 1,199,488 troy ounces was reported received — and 344,994 troy ounces were shipped out. All of the ‘in’ activity…two truckloads…was dropped off at CNT. The ‘out’ activity was split up between three different depositories. The two largest were HSBC USA, which shipped out 293,215 troy ounces — and Canada’s Scotiabank, which parted with 48,968 troy ounces. There were a couple of paper transfers from the Eligible to the Registered category…599,828 troy ounces at CNT — and another 147,718 troy ounces at the International Depository Services of Delaware. This is undoubtedly in preparation for delivery in September. The link to all this is here.
There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday. They reported receiving 347 of them — and shipped out 1,195. All of this occurred at Brink’s, Inc, as per usual — and the link to that, in troy ounces, is here.
Below is a chart that Nick Laird passed around on Monday, that I just didn’t have space for in my Tuesday column…so here it is now. It shows the withdrawals from the Shanghai Gold Exchange, updated with August’s data. During that month they took out 107.73 tonnes…which isn’t a lot. Gold demand in China is obviously shrinking — and has been that way almost since the beginning of the year. Lawrie Williams has something to say about it in ‘The Wrap‘ section below. Click to enlarge.
I have very little in the way of stories/articles for you today.
President Trump has fired national security adviser John Bolton, the lifelong proponent of American hard power, after months of division between the men over the direction of foreign and national security policy.
Bolton responded with his own post on Twitter asserting that he had initiated the idea that he would step down, but that Trump decided to wait until the following day.
Bolton was Trump’s third national security adviser and continued the pattern of departures by advisers who proved a bad fit for a White House led by the rare president with no prior experience with the military, national security or elected office.
Deputy White House press secretary Hogan Gidley told reporters that Bolton’s deputy, Charles Kupperman, now will serve as an acting national security adviser. As a protégé of Bolton, Kupperman is unlikely to last very long in the job; Trump said he would name a new adviser next week.
The position does not require Senate confirmation so Trump can pick whoever he likes, but it was unclear on Tuesday who the White House considers to be among the potential candidates.
This news item appeared on the npr.org Internet site at 12:03 p.m. EDT on Tuesday morning — and I thank Roy Stephens for sending it along. Another link to it is here. The Zero Hedge spin on this his headlined “Trump Fires John Bolton After “Disagreeing Strongly With His Suggestions“” — and I thank Brad Robertson for that one. Tom Luongo also had something to say about this in an article headlined “Trump Thumping Bolton is a Good Start”
Jamie Dimon on the End of Trading: “The Battle is More in the Tech World Than in Having Brilliant Traders“
The world of trading, as generations of traders knew it, is over, and it took a timestamp from Jamie Dimon to make it official: “The battle is more in the tech world at this point than in having brilliant traders.”
And so, in a world in which being a better trader – i.e. outsmarting everyone else – no longer matters as the market is now hopelessly broken by central banks, and instead just speed and the ability to front-run order-flow is relevant, it is no surprise that JPMorgan was reserved in its Q3 revenue outlook, which while set to rise 10% in Q3 – only due to a base effect – will continue the recent trend of disappointing trading revenue.
“We’re not jumping for joy,” JPM CEO Jamie Dimon said Tuesday during an investor conference in New York, quoted by Bloomberg. The 10% gain is only possible because Q3 2018 was very weak; on a sequential basis, the Q3 2019 revenue will be a decline of about 10% versus the already disappointing second quarter, Dimon said.
Other banks are set to be even worse: Citi’s trading revenue is set to drop this quarter amid the brief bout of volatility that gripped markets in August, CFO Mark Mason said Monday; Bank of America’s fixed-income trading revenue will likely be down “a little bit,” while equities trading has done well, COO Tom Montag said.
Over the past decade, Wall Street trading desks have transformed into deserted ghost towns, struggling to keep up with their electronic peers amid an unprecedented shift to cheaper, more efficient passive investing; at the same time struggles among hedge funds and moves to cheaper electronic trading have made banks’ securities units less profitable. According to Bloomberg, the five biggest U.S. banks saw a collective $5 billion drop in trading revenue in the first half of the year after an 8% slide in the second quarter and a 14% decline in the first three months of the year.
This is just the start: according to Dimon, margins will continue to drop across the financial sector as more trades move to electronic platforms, and as “trading” as we once knew it, is no more.
This rather sombre, but not surprising article was posted on the Zero Hedge website at 4:45 p.m. on Tuesday afternoon EDT. The above six paragraphs are all there is to it — and another link to the hard copy is here. Gregory Mannarino‘s post market-close rant on Tuesday is linked here.
“Aftermath” is the latest addition to three previous publications by Rickards, Currency Wars (2011), The Death of Money (2014), The Road to Ruin (2016). Together, with the present offering (Aftermath, 2019), the author uses the analogy of the Four Horsemen of the Apocalypse to illustrate the themes of his four books. The latest book is thematic in its approach to the events which have taken place in the world in general and the United States in particular during this period.
Rickards had previously worked for the CIA (possibly still does – who knows?) but now seems to be a free-wheeling business executive, writer and strategic analyst. He tends to circulate outside of the usual middle-ranking semi-elite circles preferring to consort with the less observable, higher-ranking coteries of the inner-party. Moreover, he has nothing but disdain for the run-of-the-mill talking heads to be found (in abundance) in the media and academia – the outer-party.
His observations of this social stratum are unapologetic and caustic:
“History is the first casualty of media micro-second attention span. An army of pseudo-savants saturate the airways to explain that tariffs are bad, trade wars hurt growth and mercantilism … are a throwback to the 17th century. These sentiments come from mainstream liberals and conservatives and tag-along journalists trained in the orthodoxy of so-called free-trade and the false if comforting belief that trade deficits are the flip-side of capital surpluses. So, what is the problem? … The problem is that perpetual trade deficits have put the United States on a path to a crisis of the US$.”
As is apparent, his contempt is palpable.
It should be said that much of his writing and theorising is at times occasioned by a high level of sophistication, alas sadly lacking in most of his contemporaries. But for all his refinement and eloquence, that doesn’t stop him being, from Off Guardian’s perspective (and mine), on the other side – the side of the Anglo-Zionist empire.
This book review by Frank Lee put in an appearance on the off-guardian.com Internet site on Saturday sometime — and it comes to us courtesy of Roy Stephens. It’s worth reading if you have the interest — and another link to it is here.
Serbia’s plan to join a Russian-led economic union is drawing ire from the European Union, which the Balkan nation says it wants to be part of.
The E.U.’s executive commission has made clear that Serbia will have to cancel any bilateral trade agreements with other countries if and when it joins the E.U., and leaders said they’d rather see Belgrade aligning its policies more with the bloc’s. Serbian officials have ignored the criticism and will sign a deal to join the Eurasian Economic Union on Oct. 25.
The plan is “not a hindrance to European integration,” Serbian Trade Minister Rasim Ljajic said by email last week. The European Commission’s warning isn’t going to “affect Serbia’s decision to enter into this agreement in Moscow,” he said.
The E.U. has no say over which groups Serbia joins while it’s not a member, but some of its representatives indicated they would like to see greater commitment to membership, especially after an E.U. progress report earlier this year showed that Serbia was only partially aligning its foreign and security policies with the E.U.’s.
Serb leaders have said that E.U. membership is a priority, a goal they hope to achieve around the middle of next decade. At the same time, Serbia has historic and religious ties with Russia, which is helping it prevent the further recognition of Kosovo in international bodies. Additionally, Russia has donated fighter jets and tanks to Serbia and Serb leaders, including President Aleksandar Vucic, are frequent visitors to Moscow.
“You can’t be marching in several directions at the same time,” Slovak Foreign Minister Miroslav Lajcak, who spent years working in the Balkans, said last month in Helsinki. “If you’re serious about your European orientation then obviously you make political decisions that bring you closer to it. This is not one of them.”
The E.U. bulls hit never stops. This Bloomberg news item appeared on their website at 8:00 p.m. PDT on Tuesday evening — and I thank Swedish reader Patrik Ekdahl for sharing it with us. Another link to it is here.
Chinese auto sales continue to plunge deeper into recession, with the country’s China Passenger Car Association releasing preliminary data for August that in no way indicates that the trend could be slowing.
Instead, it has been a “historically prolonged slump” for the world’s largest car market, according to Bloomberg.
The CPCA reported on Monday that sales of sedans, SUVs, minivans and multipurpose vehicles in August fell 9.9% to 1.59 million units. Click to enlarge.
It has been the industry’s largest downturn in three decades and automakers are still facing headwinds as trade tensions with the U.S. continue. China has tried to roll out several stimulus measures to help the industry, including loosening car purchase restrictions, but they have done little to encourage consumption thus far.
Preliminary data from MarkLines on Japanese automakers selling in China shows Nissan and Honda posting 2.0% and 5.9% gains, respectively, while Toyota sales fell 3.8% and Mazda sales suffered the largest blow, down 20.7%. We will revisit this data toward the middle of the month, when it is updated to include additional manufacturers from around the globe.
And while China continues its struggles, other large markets, like India, are also tumbling. India posted a 41% sales drop for automobiles in August, the largest such drop on record. U.S. automakers eeked out a slight rebound in sales, but were helped along by the Labor Day weekend partially falling in August.
This Zero Hedge story was posted on their Internet site at 11:25 p.m. on Tuesday night EDT — and another link to it is here.
It has been reported that China has been restricting gold imports from April through to July and this seems to have been confirmed by a sharp fall in gold withdrawals from the Shanghai Gold Exchange (SGE) from April through to August. In the year to August withdrawals of gold from the exchange are running over 15% below those of the comparable months in 2018 when full year withdrawals totalled 2,054 tonnes and over 10% below the first eight months of 2017 when the full year total was also a little over 2,000 tonnes. Indeed the August figure of 107.73 tonnes was over 40% lower than for the same month last year. As we noted here back in June 2019 looks like being the first year since 2014 when the total of gold withdrawals out of the SGE has fallen below 2,000 tonnes for the full year. The latest figures suggest that this year’s gold withdrawals total may well come in at less than 1,800 tonnes.
It certainly looks as though the U.S.-instigated trade war is beginning to bite with the Chinese consumer. We have always measured Chinese gold demand by the reported gold withdrawal figures from the SGE. This is a consistent measure reported monthly, so does provide comparative figures direct from source rather than estimates of consumption from the major precious metals consultancies, which seem to hugely underestimate known gold flows (published gold import figures from major sources) into the Middle Kingdom plus the nation’s own production.
The latest monthly gold withdrawal figures for the past three years…would seem to confirm that Chinese gold demand this year will be substantially less than in the recent past. Indeed reports out of China have indicated the gold imports restrictions have cut deliveries of gold into China this year by perhaps close on 400 tonnes, which would serve to confirm our past analysis that SGE withdrawals bear a close correlation with Chinese gold demand as calculated from known imports from countries which report these figures, China’s own gold production plus allowances for scrap conversion and for unknown direct imports.
This gold-related news item by Lawrie showed up on the Sharps Pixley website early on Tuesday morning BST — and another link to it is here. Lawrie had another story about China and gold — and it’s headlined “China says it only adds 5.9 tonnes of gold to reserves in August“.
It was on 8 June 1708 that Spanish galleon San José erupted into flames off the coast of Cartagena, Colombia. The ship had been at battle with the British since late afternoon, and by night, the 62-cannon galleon had disappeared into the Caribbean Sea. With it, sunk nearly 600 people and up to $20bn worth of gold, silver and jewels.
For centuries, the San José galleon lay lost on the ocean floor. But the mystery surrounding the ship began to unravel in 2015, when the Colombian government announced it had officially been found.
Four years later, the galleon is still 600m deep in Colombian waters. Now, it’s at the centre of a custody dispute among parties all staking claim to the San José’s riches.
The Colombian government hasn’t revealed the exact location of the famed galleon, which is often called the “holy grail” of shipwrecks. But the San José is said to be located close to the Rosario Islands, a tropical archipelago and national park 40km from Cartagena. Throngs of small motorboats zoom over the waters as they transport beach-going tourists to the islands each day. While being carried across the sea, it’s difficult not to imagine the San José and its treasure, somewhere out there below.
The San José galleon left Panama’s port city of Portobelo in late May 1708. It was laden with gold, silver and precious stones extracted from what was then Spanish-controlled Peru, which have been estimated to be worth between $10bn and $20bn today. The riches were destined for King Philip V of Spain, who relied on resources from his colonies to finance the War of the Spanish Succession.
The galleon’s captain, Jose Fernandez de Santillan, knew that the British, who were involved in the war, might have ships waiting to attack in Cartagena; the city was only meant to be a quick stop to repair the San José before its longer journey to Havana, Cuba, and then on to Spain. But the captain pushed forward anyway. And by the evening of 8 June, a battle for the San José’s treasure had begun.
This fascinating story, which put in an appearance in the Travel section of the bbc.com Internet site on Monday, comes to us courtesy of Swedish reader Patrik Ekdahl — and another link to it is here.
The PHOTOS and the FUNNIES
From the Talking Rock Golf Course to the famous Adams River was about a five-minute drive on June 17. The first three shots are of viewing areas over the river where you can watch the salmon spawn. The sockeye salmon is the most famous because of its colour change when it enters the fresh water of the Fraser River in Vancouver. But several other species also make the run at the same time, but not in as large a numbers as the sockeye. The third photo is one I borrowed from the Internet. The 2019 salmon run is already underway — and they should be showing up in Merritt in the Nicola and Coldwater rivers in the next week or so — and in Salmon Arm a week later. 2019 is not a “dominant” year…as that was last year. The next one will be in 2022. The ones in the intervening years are not as impressive. Click to enlarge.
“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There was never a democracy yet that did not commit suicide.” – John Adams
It was another day of price management in gold…starting off in morning trading in the Far East — and continuing after the 10 a.m. EDT afternoon gold fix in London. And although the price path for silver was about the same as it was for gold, ‘da boyz’ didn’t do much more than close it unchanged on the day, after it was up in COMEX trading. Platinum got hammered again, but that should come as no surprise, as the commercial traders are ringing the cash register on the Managed Money traders after letting them run up a huge long position by the end of trading last Wednesday. That engineered price decline will certainly be apparent in Friday’s COT Report. Ditto for palladium.
Copper was closed at unchanged — and right on its 50-day moving average for the fourth consecutive day. WTIC had a minor set-back yesterday.
Here are the 6-month charts, courtesy of stockcharts.com, for the Big 6 commodities — and I’ll point out once again that all the price activity that occurred in gold, silver and platinum after the COMEX close on Tuesday, doesn’t show up on their respective dojis. All three were sold lower after that time. Click to enlarge.
And as I type this paragraph, the London open is less than a minute away — and I see that gold and silver prices stair-stepped their way higher in price until at, or just before, the 2:15 p.m. CST afternoon gold fix in Shanghai. Both ran into ‘something’ at that juncture — and both have been turned lower since. Gold is up only $6.70 currently — and silver by 14 cents. The same can be said for platinum — and it’s up 10 bucks. And almost the same can be said of palladium — and it’s up 10 dollars as well, as Zurich opens.
Net HFT gold volume is coming up on 54,500 contracts — and there’s a tiny 922 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is 15,500 contracts — and there’s only 480 contracts worth of roll-over/switch volume on top of that.
The dollar index opened up 1 basis point once trading commenced at 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 had smallish up/down move between then and around 12:30 p.m. CST — and it has been edging a bit higher since, but is off its current high tick [such as it is] by a hair. And as of 7:45 a.m. BST in London/8:45 a.m. in Zurich, the dollar index is up 4 basis points.
Well, with gold closing at a new low for this move down — and silver closing up only a dime by the 1:30 p.m. EDT COMEX close yesterday, it’s pretty much a given that the Commitment of Traders Report we see on Friday will be one for the record books.
I know that Ted is more than interested in what happened on Thursday and Friday of last week on record volumes in both gold and silver…particularly silver, as the price/volume activity was so far out in left field, it’s almost assured that this report will show unprecedented changes. Fortunately, all that data will be in it, as I was somewhat apprehensive that if there were big rallies in both metals on Monday and Tuesday, it would mask some of that price/volume activity from last week. As it turned out, that was a needless worry.
And as I post today’s missive on the website at 4:02 a.m. EDT, I note that all four precious metals were sold lower starting around 8:30 a.m. BST/9:30 a.m CEST. Gold is now only up $4.40 the ounce currently…silver is up only 7 cents — and platinum and palladium by 7 and 6 dollars respectively.
Gross gold volume is around 67,000 contracts — and minus the tiny amount of roll-over/switch volume, net HFT gold volume is 65,000 contracts. Net HFT silver volume is 18,500 contracts — and there’s still only 505 contracts worth of roll-over/switch volume in this precious metal.
Not surprisingly, the dollar index is up a bit more as well — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the index is now up 9 basis points.
Today is the 18th anniversary of 9/11. Let’s hope it passes without incident.
See you here tomorrow.