The PPT Showed Up in Force Yesterday

13 September 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold quietly lower starting shortly after 7 p.m. in New York on Wednesday evening — and the low tick was set at 9 a.m. in Far East trading on their Thursday morning.  It began to edge unevenly higher immediately after that — and really took flight on the Draghi/ECB press release shortly before 2 p.m. Central European Summer Time [CEST].  The powers-that-be showed up around 8:40 a.m. in New York when gold was up almost 27 bucks, but drove it back to just above unchanged on the day — and back below $1,500 spot, by around 12:45 p.m. in COMEX trading.  The price didn’t do much after that.

The low and high ticks were reported by the CME Group as $1,490.50 and $1,525.40 in the October contract — and $1,496.80 and $1,532.20 in December.

Gold was closed in New York on Thursday at $1,498.80 spot, up $1.90 from Wednesday.  Net volume was monstrous yet again at 479,000 contracts — and there was a bit over 13,000 contracts worth of roll-over/switch volume in this precious metal.

The price pattern that silver was forced to follow was similar in most respects to the gold price action, so I’ll spare you the play-by-play.  They managed to get it below $18 spot at its 1:05 p.m. EDT low tick, but it rallied a bit from there –and closed above it by a few pennies.

The high and low ticks were reported as $18.555 and $18.085 in the December contract.  Both were set during COMEX trading in New York yesterday.

Silver was closed at $18.06 spot, down 2.5 cents from Wednesday.  Net volume was very heavy at just under 92,500 contracts — and there was 7,500 contracts worth of roll-over/switch volume in this precious metal.

The platinum price crawled very unevenly sideways until shortly after 12 o’clock noon CST on their Thursday morning — and then began to head higher from that juncture.  That rally was capped and turned lower at 2 p.m. CEST/8 a.m. EDT — and the New York low was set around 9:30 a.m.  It rallied to its high of the day by around 11:35 a.m. EDT, but was sold lower once again until 1 p.m. — and wasn’t allowed to do much after that.  Platinum was closed at $948 spot, up 6 bucks on the day.

The palladium price traded sideways until around 10:30 a.m. China Standard Time on their Thursday morning — and began to edge quietly higher from that point.  It ran into some resistance a the $1,580 spot mark — and was turned quietly lower starting at noon in Zurich.  That tiny sell-off lasted until a few minutes after the COMEX open in New York — and at that juncture it made an assault on the $1,600 spot mark.  There was obviously a ‘Do Not Pass’ sign at that price — and it chopped unevenly sideways once it reached that price, until trading ended at 5:00 p.m. EDT.  Palladium was closed at $1,599 spot, up 46 dollars on the day.

The dollar index closed very late on Wednesday afternoon in New York at 98.65 — and opened down a couple of basis points once trading commenced at around 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  It traded ruler flat until around 2:35 p.m. CST — and then it began to creep quietly lower.  That lasted until the Draghi memo hit the Internet — and it blasted higher from there.  The index was capped and hammered lower starting around 8:45 a.m. in New York — and the high tick of the day…99.10…was set at that point.  The index was sold lower until the 98.19 low tick was set about fifteen minutes before the COMEX close.  It crept higher until 3:15 p.m. EDT — and traded flat into the 5:30 p.m. close from there.  The dollar index finished the Thursday session at 98.31…down 34 basis points from Wednesday.

It was obvious that those ‘gentle hands’ were all over the currencies yesterday, as ‘da boyz’ did the dirty in the precious metals.  I suspect that those ‘gentle hands’ and ‘da boyz’ are one in the same.

Here’s the DXY chart from Bloomberg, as usual. 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.  I’ve place the cursor at its high tick of the day.  The delta between its close…97.88…and the close on the DXY chart above, was 43 basis points on Thursday.  Click to enlarge as well.

The gold shares gapped up almost four percent at the open, but ran into willing sellers right away — and the Index was turned lower shortly after the afternoon gold fix in London.  From there, they were sold quietly and unevenly lower for the remainder of the Thursday session.  The HUI closed almost on its low tick of the day…down 1.41 percent.

It was mostly the same for the silver equities, although their opens weren’t quite as enthusiast as it was for the gold stocks.  The silver share prices topped out a very few minutes after 11 a.m. — and were sold lower until around 12:40 p.m.  Then, like their golden brethren, they had a bit of a respite until around 2:30 p.m. — and from there they were sold quietly lower until trading ended at 4:00 p.m. in New York.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 2.71 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.

What turned out as a promising trading session for the precious metal stocks, came to an abrupt end as JPMorgan et al. engineered silver and gold lower as the COMEX trading session unfolded in New York yesterday.


The CME Daily Delivery Report showed that 6 gold and 231 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold the sole short/issuer was ADM with 6 contracts out of its client account.  The three long/stoppers were Advantage, Morgan Stanley and JPMorgan, with 3, 2 and 1 contracts for their respective client accounts.

In silver, there were three short/issuers in total…International F.C. Stone, ABN Amro — and Advantage, with 102, 71 and 58 contracts out of their respective client accounts.  The two largest long/stoppers by far were JPMorgan and Advantage, with 86 and 77 contracts for their respective client accounts.  In distant third and fourth place were ABN Amro, with 21 contracts for its client account — and Macquarie Futures, with 19 contracts for its own 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 2 contracts, leaving 31 still around, minus the 6 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 4 gold contracts were actually posted for delivery today, so that means that 2+4=6 more gold contracts were just added to September deliveries.  Silver o.i. in September declined by 171 contracts, leaving 525 still open, minus the 231 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 268 silver contracts were actually posted for delivery today, so that means that another 268-171=97  silver contracts just got added to the September delivery month.


After two days of no activity, there was a withdrawal from GLD on Thursday, as an authorized participant took out 65,992 troy ounces.  There were no reported changes in SLV for the second day in a row.

Outside of the activity in the COMEX warehouses and GLD, there was very little in/out activity in any other of the world’s gold and silver ETFs on Thursday.

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

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday was 707.300 troy ounces/22 kilobars [U.K./U.S. kilobar weight] that was withdrawn from Manfra, Tordella & Brookes, Inc.  Nothing was reported received.  I wont’ bother linking this activity.

There was very decent activity in silver once again, as 1,198,180 troy ounces was reported received — and only 135,987 troy ounces were shipped out.  In the ‘in’ category, there was 599,660 troy ounces…one truckload…deposited at Canada’s Scotiabank.  The other truckload…598,520 troy ounces…found a home over at Brink’s, Inc.  The ‘out’ activity was divided up amongst three different depositories, which I won’t bother itemizing.  But if you wish to see for yourself, the link to all this is here.

It was a pretty busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They reported receiving 3,555 of them — but shipped out only 50.  All this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Bavaria, Maximilian II Emanuel, 1679-1726, Reichsthaler 1694

Material: Silver     Full weight:  28.91 grams    Price: €950.00/US$1,045

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


CRITICAL READS

Core Consumer Prices Surge At Fastest Rate Since 2008

After a hotter-than-expected producer price print yesterday, consumer prices were more mixed with headline CPI rising less than expected and core CPI rising more than expected.

In fact, core CPI rose 2.4% YoY (2.3% exp) – which is the hottest since September 2008…Click to enlarge.

Energy prices weighed the index down as commodity prices rose. The core reading reflected the biggest monthly rise in medical-care costs since 2016. Also driving the core inflation gain were used-car prices, up 1.1% for a third straight increase, while new-vehicle costs dropped for a second month.

The surge in inflation was led by a jump in Goods prices…

Inflation may pick up further this month following the latest escalation in the tariff battle, as President Donald Trump’s levies on a range of consumer goods from China took effect Sept. 1.

So hotter-than-expected CPI and PPI must be transitory, right? Or Powell won’t be able to deliver what Trump and the market demand?

This 3-chart Zero Hedge story was posted on their Internet site at 8:38 a.m. EDT on Thursday morning — and it’s the first offering of the day from Brad Robertson.  Another link to it is here.


Trump Encourages Spending Ahead of Next Election — Bill Bonner

[W]e note that another of our predictions has been fulfilled: We’re all boneheads now!

Yes, DJT has gone for MMT.

We predicted that President Donald J. Trump would never go Full Retard in his trade war. And we still think he’ll try to save face, make up with the Chinese, and claim victory.

On the other hand, we also predicted that he would go Full Retard in the Inflate-or-Die war… fully embracing MMT (Modern Monetary Theory)… along with Bernie, Liz, and AOC. Here’s the latest from the Oval Office:

The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet… The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads.”

According to MMT, the politicians can and should spend all the money they want, until consumer prices rise.

No Inflation,” says POTUS. So, the coast is clear. The once-in-a-lifetime opportunity is for the boneheads at the Fed to enable the boneheads in the White House and Congress to spend more money we don’t have on more boondoggles we’re not willing to fund honestly.

The real message: Spend, spend, spend… inflate, inflate, inflate.

Why? Because there’s an election coming.

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


U.S. Budget Deficit Hits $1 Trillion With One More Month Left in the Fiscal Year

The fiscal year that started on Oct 1, 2018, is now in its final month, and yet according to the US Treasury, in the first 11 months of the fiscal year, the U.S. Treasury has already accumulated a more than $1 trillion budget deficit.

According to the latest budget data, In August, receipts rose 4% y/y to $228.0b in Aug, which however were dwarfed by $428.3 billion in outlays (a 1.1% drop Y/Y). The result was that the August monthly deficit was $200.3 billion, in line with expectations, if fractionally smaller than the $214.1 billion deficit posted in August 2018.

The biggest source of income, at $106 billion was income tax, with social insurance second at $96 billion. On the outlays side, the government spent the most money on entitlements such as Social Security ($88BN) and Medicare ($85BN). It may come as a surprise to some that National Defense was only third at $64BN.

However, more concerning is that on a YTD basis, i.e., the first 11 months of the year, the deficit surged 19% to at $1067.2BN, up 19% compared to $898.1BN last year, with YTD receipts in 2019 up 3.5%, while outlays rose double that, or 7.0%. The August deficit surged despite the gentle nudge from customs duties, which jumped to $64 billion in the fiscal year-to-date from $36.7 billion a year earlier, reflecting the Trump administration’s tariffs on Chinese imports, steel and other goods. Even still, income from duties represents a small share of overall federal revenue.

It’s not the end of the world yet though, September, the last month of the fiscal year, typically produces a surplus because quarterly tax payments are due.

This 3-chart Zero Hedge news item appeared on their website at 2:37 p.m. EDT on Thursday afternoon — and another link to it is here.


Draghi Goes All Out: ECB Cuts Rates, Restarts Open-Ended QE, Changes Forward Guidance, Eases TLTRO, Introduces Tiering

With the market worried that Mario Draghi could surprise hawkishly in his parting announcement…that is how the market initially interpreted today’s ECB press release, which cut already negative deposit rates for the first time since 2016 to stimulate the sagging European economy, but by a smaller than expected 10bps to -0.50% while restarting QE but by “only” €20 billion, less than the €30 billion baseline.

However, there was more than enough offsetting dovish bells and whistles, because while the restarted QE (or the Asset Purchase Program) was smaller than expected, it will be open-ended, and the ECB will run it “for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.” Of course, the question here is how long can a safe-asset constrained Europe run an “open-ended” QE, and the answer is it depends on what the issuer limit by nation is, with Frederik Ducrozet observing that “at €20bn/month, assuming up to €5bn in corporate bonds, QE can run for ~9 months under current limits… and for more than 7 years if limits are raised to 50%!” So look for more information on that angle.

Additionally, the ECB dropped calendar-based forward guidance and replaced it with inflation-linked guidance, noting that key ECB interest rates will “remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon.” Furthermore, the ECB eased TLTRO terms, with banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III operations will be lower, and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation; additionally, the maturity of the operations will be extended from two to three years.

Finally, as many expected, the ECB will introduce a two-tier system for reserve remuneration in which part of banks’ holdings of excess liquidity will be exempt from the negative deposit facility rate, in an attempt to mitigate the adverse impact to banks.

In short: a somewhat hawkish read on the rate cut and QE amount, but dovish on every other aspect, from the changed forward-guidance, to the open-ended QE, to the easing in TLTRO terms and to the introduction of a two-tier deposit system.

The irony, of course, is that the ECB is merely doing more of the same that it did before and got it to the current predicament. Also ironic: the ECB couldn’t even last a full 9 months without QE.

And now we prepare for the ECB press conference in 30 minutes, but that will be nothing compared to the angry twitter tirade we expect by president Trump who will demand that Powell immediately match everything that Powell has done.

This Zero Hedge commentary put in an appearance on their website at 8:00 a.m. EDT on Thursday morning — and I thank Brad Robertson for sending it along.  Another link to it is here.  A Bloomberg story on this is headlined “ECB Cuts Rates, Revives QE to Lift Growth as Draghi Era Ends” — and I thank Swedish reader Patrik Ekdahl for this one.  Another ZH story on this from 8:20 a.m. EDT yesterday morning reads “Trump Praises ECB For “Depreciating the Euro”, Slams the Fed For Doing Nothing” — and that’s from Brad as well.  Then there’s this ZH piece an hour or so later…”Draghi Shoots a Dud – Euro, Bunds Reverse All ECB Moves


Two JPMorgan metals executives put on leave amid U.S. probe – source

Two JPMorgan Chase & Co employees, including a top metals trading executive, have been placed on leave in response to a U.S. criminal investigation into the bank’s metals trading practices, according to a source familiar with the matter.

Michael Nowak and Gregg Smith are on leave, the source said on Thursday, making them the third and fourth JPMorgan employees to be connected to the criminal investigation that has resulted in guilty pleas from two former JPMorgan metals traders.

Nowak is a managing director and global head of base and precious metals trading in New York for the bank, according to his LinkedIn profile. Smith’s title could not be learned.

Nowak was placed on leave around late August, the source said.

Neither Nowak nor Smith have been charged with a crime.

Attorneys for Nowak did not respond to a request for comment. A call to Smith’s number at the bank was answered by an employee at the metals desk who directed questions to the bank’s public relations department. Reuters could not learn the identity of his lawyer.

A spokesman for the Department of Justice declined to comment.

This interesting Reuters story, co-filed from London and New York, showed up on their Internet site at 11:41 a.m. EDT on Thursday morning — and was updated about four hours later.  I thank Ted Butler for pointing it out — and another link to it is here.


Jim Cook Interviews Ted Butler: The case for a silver price explosion has never been stronger

Q: For a number of years, you have been insisting that silver would experience dramatic price gains. Any change in your thinking these days?
A: Not only has there been no change in my thinking, the case for a silver price explosion has never been stronger.

Q: In what way?
A: Well for starters, there is now more buying power in the world and less silver than ever. Every asset class has risen to all-time highs, while silver has gotten cheaper. The slightest switch from more expensive assets to dirt cheap silver will light a rocket under the price of silver.

Q: What else?
A: Interest rates. While we’ve yet to see negative interest rates in the U.S., they are a fact of life in Europe. Getting nothing on a deposit should spur people to buy asserts that are cheap and capable of rising in price.

Q: What about the possibility of more quantitative easing?
A: Yes, I think concerns about monetary policies have caused some big investors and institutions to acquire gold or silver lately.

Silver market analyst Ted Butler, interviewed by Jim Cook of Investment Rarities, argues that the case for an explosion in the price of silver is stronger than ever. It appeared on the silverseek.com Internet site on Wednesday sometime — and I found it embedded in a GATA dispatch yesterday evening.  It’s definitely worth your time — and another link to it is here.


The PHOTOS and the FUNNIES

Still driving south on the Trans-Canada Highway on June 23, with the river, the highway — and two railroads squashed into the Thompson River canyon.  CP Rail and the river are on the left in the first shot.  Along the way we stopped to photograph this CNR train loaded with Far East/Chinese manufactured good for us here in Canada. The CPR tracks are on the other side of of the river — and you’ll see more of those rapids in photo number 2 in tomorrow’s photo sequence.  Click to enlarge.


The WRAP

Make no mistake about it, there were no free markets worthy of the name anywhere yesterday.  The Draghi/ECB news lit a fire under the dollar index — and three of the four precious metal prices.

Then, shortly after that, the powers-that-be went to work.

Platinum’s tiny rally on that news was turned lower at 2 p.m. in Zurich/8 a.m. in New York…silver at the 8:20 a.m. EDT COMEX open — and gold around 8:40 a.m. EDT…which was the exact moment that a rapidly rising dollar index was also capped and driven lower.  The engineered price declines ceased the moment the dollar index hit its low tick of the day at 1:15 p.m. EDT…fifteen minutes before the COMEX close.

As you can tell, ‘da boyz’/PPT are no longer shy about who sees their handiwork, or what we think about it when they do appear.  These markets…the precious metals and the currencies, plus the equity markets…are only doing what they’re doing because of massive 24/7 interventions.

It wouldn’t take much…a few hours of inattention, deliberate or otherwise…to start the great unwind in all things paper — and the rush to hard or so-called ‘safe’ assets, would be on in earnest.  That’s what we were witness to yesterday morning, before JPMorgan et al. put in an appearance.

And as far as the U.S. equity markets were concerned, Bill King of King Report fame had this to say about it in his Friday morning blog:  When ESZs headed south on profit taking after Draghi, Team Trump saved stocks…@realDonaldTrump: European Central Bank, acting quickly, Cuts Rates 10 Basis Points. They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports…. And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  Besides the obvious price capping in gold, silver and platinum…the rally in palladium during the COMEX trading session in New York was allowed to continue, but then was obviously capped at the $1,600 spot mark.  I also note that WTIC was closed back below both its 50 and 200-day moving averages after a somewhat wild trading session in that member of the Big 6 commodities.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I note that the gold price was sold down a few dollars once trading began at 6:00 p.m. EDT in New York on Thursday evening — and it then crept quietly sideways until it ticked strongly higher starting at 2 p.m. CST. It’s now up $6.50 currently. Silver was sold a bit lower as well at the open in New York — and its current low tick came shortly after 9 a.m. CST. It has edged unevenly higher since then, but also jumped up a bit at 2 p.m. CST — and is up 5 cents as London opens. Platinum also had a quiet down/up move in Far East trading on their Friday — and is now up 3 dollars. Palladium’s price activity was about the same as platinum’s, but it was sold far lower in price, but it has recovered smartly as well — and is now down only 2 bucks as Zurich opens.

Net HFT gold volume is pretty quiet…almost the old ‘normal’ for this time of day…at just under 40,000 contracts — and there’s only 810 contracts worth of roll-over/switch volume on top of that. It was far lower than that before this current rally began. Net HFT silver volume is a bit over 8,000 contracts — and there’s 745 contracts worth of roll-over/switch volume in this precious metal.

The dollar index closed very late on Thursday afternoon in New York at 98.31 — and then opened up 10 basis points once trading commenced at around 7:45 p.m. EDT on Thursday evening. It headed quietly lower until a very few minutes after 2 p.m. CST on their Friday afternoon — and that juncture, the decline became more more pronounced — and the index is down 11 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 eagerly-awaited Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, September 10.  Both Ted and myself are anxious to see what’s in it after the extreme trading days of last Thursday and Friday, where new record volume levels were broken in both gold and silver…but particularly in silver.

Despite the wild volumes in both metals, there were no moving averages of any importance broken during those two trading days. But, as Ted correctly pointed out, the commercial traders are always buyers on these engineered price declines, so the Managed Money traders had to be the sellers.  But why would they sell if no moving averages were broken?  This is just one of the $64,000 questions that he hopes/prays is answered in today’s report.


And as I post today’s column on the website at 4:03 a.m. EDT, I see that all four precious metals ran into some turbulence the moment that London and Zurich opened, but two of the four are once again ticking higher. Gold is up $5.00 the ounce now — and silver is up 7 cents. Platinum is up only 3 bucks now — and palladium is down 8 dollars the ounce as the first hour of Zurich trading ends.

Gross gold volume is now up to around 57,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is about 55,000. Net HFT silver volume is about 11,000 contracts — and there’s 761 contracts worth of roll-over/switch volume on top of that.

The dollar index has continued to head sharply lower, but is off its 8:15 a.m. BST current low tick by a hair — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s now down 19 basis points.

As I said in my closing comments in yesterday’s column, I was expecting the New York trading session to be a wild one on Thursday…but it wasn’t quite what I had in mind.  You neither, I presume.

Have a good weekend — and I’ll see you here tomorrow.

Ed