The HUI and Silver 7 Up 50+ Percent in 2019

01 January 2020 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price traded flat until 9 a.m. China Standard Time on their Tuesday morning.  It began to head higher at that point, but ran into ‘resistance’ right away…with the high tick of the day coming shortly after 3 p.m. CST on their Tuesday afternoon.  I didn’t do much after that until two hours later in early morning trading in London — and a gradual price decline began at that juncture.  All rally attempts after that, no matter how tiny, were capped and turned lower — and the gold price continued to get sold lower once again starting shortly after 1 p.m. in New York.

Despite the rally, the low and high ticks in gold aren’t worth looking up once again.

Gold was closed on Tuesday afternoon in New York at $1,516.80 spot, up only $1.80 from Monday — and about ten bucks off its Far East high tick.  Net HFT gold volume, although fairly quiet, was pretty decent all things considered for this day of the year, at a bit under 200,500 contracts — and there was 22,000 contracts worth of roll-over/switch volume in this precious metal.

It was more or less the same in silver in Far East trading, except its high [above $18 spot] came around 12:45 p.m. in Shanghai — and the price was sold very quietly lower until it got booted downstairs [and back below $18 spot] starting at 9 a.m. in COMEX trading in New York.  The rally from that low wasn’t allowed to get far — and its price pattern was led in a similar manner as gold’s after that.

The high and low ticks in silver were recorded by the CME Group as $18.20 and $17.87 in the March contact.

Silver was closed on Tuesday afternoon at $17.82 spot, down 6.5 cents from Monday.  Net volume was slightly elevated at 57,000 contracts — and there was around 5,700 contracts worth of roll-over/switch volume on top of that.

Platinum’s rally began at 8 a.m. CST — and was capped and turned sideways around 10:40 a.m. in Shanghai — and from that juncture it didn’t do much until a minute or two before 10 a.m. in Zurich.  It was sold a few dollars lower from there for the next four hours — and then took off to the upside very shortly before 2 p.m. CET/8 a.m. EST.  That rally obviously ran into ‘da boyz’ as well — and the high tick was set around 9:35 a.m. in New York.  It then met the same fate as both silver and gold — and was sold down into the 5:00 p.m. EST close.  Platinum finished the Tuesday session at $964 spot, up 8 dollars from Monday’s close — and 23 bucks off its Kitco-recorded high tick of the day.

The palladium price stair-stepped its way quietly higher in Far East trading…but at 10 a.m. in Zurich those steps higher became somewhat more pronounced — and that trading pattern lasted for the remainder of the Tuesday trading session…including in the after-hours in New York.  Palladium finished the day at $1,923 spot, up 36 bucks from its close on Monday, but 26 dollars off its Kitco-recorded high tick.

The dollar index closed very late on Monday afternoon in New York at 96.7400 — and opened down one basis point at 96.7300 once trading commenced around 7:45 p.m. EST, which was 8:45 a.m. China Standard Time on their Tuesday morning.  After a brief down/up dip, it traded flat until ten minutes before the 8:00 a.m. GMT London open.  Then down it went until a few minutes before 9 a.m. in New York.  It flopped around from that juncture — and the 96.36 low tick was set around 11:45 a.m. EST.  It crawled higher until around 3:25 p.m. — and then didn’t do a thing after that going into the 5:30 p.m. close.  The dollar index finished the day at 96.39…down 35 basis points from Monday.

Although there was certainly some correlation between the dollar index and silver and gold prices during early morning trading in the Far East…it wasn’t a lot in late morning trading over there — and of course after that, there was absolutely no correlation at all…as the precious metals and the dollar index were sold lower together.

And combine that with another miraculous recovery in the Dow as the Tuesday trading session moved along — and you just have to know that the PPT et al. were out and about.

Here is the DXY chart, courtesy of Bloomberg as always.  Click to enlarge.

And here’s the 1-year U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…96.06…and the close on the DXY chart above, was 33 basis points on Tuesday.  Click to enlarge as well.

The gold stocks jumped a bit higher at the open, but were sold back to a hair below unchanged by 10 a.m. in New York trading.  From that point they wandered quietly and unevenly sideways until the markets closed at 4:00 p.m. EST.  The HUI finished lower by 0.19 percent.

The price pattern in the silver equities was virtually the same — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.24 percent.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index, updated with Tuesday’s doji.  Click to enlarge as well.

And here are two charts that I promised I would post when I mentioned it in Tuesday’s column.  The first shows the month-to-date chart for all of December — and the second shows the gains year-to-date for all of 2019.  It was a pretty good month and year…with better things to come, hopefully.  Click to enlarge for both.

The silver and gold equities performed about equally in comparison to their respective underlying precious metal price gains in the month-to-date chart for December.  But in the 2019 year-to-date chart, the silver equities outperformed their gold cousins both on a relative and absolute basis.  The year didn’t start out like that, but that’s the way it ended.


The CME Daily Delivery Report for Day 2 of January deliveries showed that 211 gold and 98 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, there were five short/issuers in total — and the four largest were Advantage, Marex Spectron, Morgan Stanley — and Dutch bank ABN Amro, with 124, 32, 27 and 23 contracts — and all from their respective client accounts.  There were ten long/stoppers — and the three biggest were JPMorgan and Advantage tied in first spot with 45 contracts each…and for their respective client accounts.  Next came Scotia Capital/Scotiabank with 38 contracts for its in-house/proprietary trading account [it doesn’t have a client account].  In third place was BofA Securities with 27 contracts for its client account.

In silver, the three short/issuers were JPMorgan, ADM and Advantage, with 65, 22 and 11 contracts — and all from their respective client accounts.  The three long/stoppers were Scotia Capital/Scotiabank with 65 contracts for its own account — and in second and third place were JPMorgan with 18 contracts for its own account and Advantage with 15 contract for its client account.  It’s been a long while since JPMorgan stopped any silver contracts for its in-house/proprietary trading account.

The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in January fell by 1,589 contracts, leaving 280 still around, minus the 211 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 1,755 contracts were actually posted for delivery on Thursday, so that means that 1,755-1,589=166 more gold contracts just got added to the January delivery month.  Silver o.i. in January declined by 16 contracts leaving 216 still open, minus the 98 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 84 silver contracts were actually posted for delivery on Thursday, so that means that 84-16=68 more silver contracts were added to January.

And as a further comment on this Preliminary Report, I was not amused to see that open interest in gold jumped by a further 14,326 contracts…so it’s obvious that the Managed Money traders were still piling in the long side — and the Big 7/8 commercial traders were going short against them.  This pretty much casts in stone the fact that Monday’s COT Report will show a new record high short position in gold — and also in the short positions of the Big 7/8 traders.  Preliminary silver o.i. also rose, but only by 2,889 contracts.


There were no reported changes in GLD, but an authorized participant took 1,214,156 troy ounces of of SLV.  And regardless of the reason for the withdrawal…share conversion or ‘plain vanilla’s investor selling…it’s a given that JPMorgan owns it all now.

In other gold and silver ETFs on Planet Earth on Tuesday…minus any and all activity on the COMEX, GLD & SLV…there was a net 5,932 troy ounces of gold added — and in silver, there was 21,925 troy ounces added as well.

Not surprisingly, there was no sales report from the U.S. Mint on Tuesday — and December goes into the record books as the worst sales month for bullion products in U.S. Mint history…2,000 troy ounces of gold eagles — 1,500 one-ounce 24K gold buffaloes — zero silver eagles — and 25,000 of those 5-ounce ‘America the Beautiful’ silver coins.

Year-to-date the mint sold 152,000 troy ounces of gold eagles — 61,500 one-ounce 24K gold buffaloes — 14,863,500 silver eagles — and 312,700 of those 5-ounce ‘America the Beautiful’ silver coins.

Compared to mint sales in 2018…gold eagles sales were down 38 percent…silver eagles by 5 percent — and the one-ounce 24K gold buffaloes by 49 percent.


There was a fair amount of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  They reported receiving 79,012 troy ounces — and all of that ended up at Canada’s Scotiabank.  There was 36,941 troy ounces shipped out, of which 32,118 troy ounces departed HSBC USA — and the remaining 4,822.650 troy ounces/150 kilobars [SGE kilobar weight] departed Brink’s, Inc.  There was also a big paper transfer, as 100,424 troy ounces made the trip from the Eligible category and into Registered over at Scotiabank.  Without doubt, this is scheduled for delivery in January.  The link to this is here.

There was some activity in silver as well.  One truckload…599,434 troy ounces…was dropped off at CNT — and that’s all the ‘in’ activity there was.  There was 611,601 troy ounces reported shipped out.  Of that amount, one truckload…600,810 troy ounces…departed Scotiabank, with the remaining 10,790 troy ounces shipped out of Delaware.  There was also an eye-opening amount of silver transferred from the Registered category — and back into Eligible…4,728,836 troy ounces.  All of that happened at CNT — and I would suspect that Ted thinks that somehow this is JPMorgan at work…transferring silver they or their customers already own from one category to the other  to save on storage fees.  The link to this activity is here.

There was very little going on over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  Nothing was reported received — and only 5 kilobars were shipped out.  This activity, such as it was, occurred over at Brink’s, Inc. — and I won’t bother linking it.

[A small part of the silver stash in the vaults of the Central Bank of the Russian Federation]

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


CRITICAL READS

Consumer Confidence Disappoints as Hope Fades

Following the headline decline for Conference Board Consumer Confidence in November, analysts are expecting an exuberant bounce in December as every asset class rose majestically (despite retail sales slowing).

But, despite record high stocks, the headline consumer confidence data disappointed, printing 126.5 (down from the upwardly revised 126.8) and well below the hopeful 128.5 expected.

While the Present Situation picked up modestly, the Future Outlook weakened:

  • Present situation confidence rose to 170.0 vs 166.6 last month
  • Consumer confidence expectations fell to 97.4 vs 100.3 last month

Combining for the 4th monthly headline drop in the last 5…

Interestingly, this is the 4th straight month of YoY declines in confidence…Click to enlarge.

And expectations for stock market gains also faded…

Isn’t the whole point of The Fed to pump enthusiasm up “by whatever means“?

It’s not working!

This brief 4-chart Zero Hedge article was posted on their website at 10:08 a.m. EST on Tuesday morning — and it comes to us courtesy of Brad Robertson.  Another link to it is hereGregory Mannarino‘s post market close rant — and 2020 predictions, is linked here.  I thank Roy Stephens for sending it along.


Year-End Repo “Crisis” Ends With a Whimper Amid Massive Liquidity Glut

It was supposed to usher in a market crisis that would prompt the Fed to launch QE4 according to repo guru Zoltan Pozsar. In the end, the preemptive liquidity tsunami unleashed by the Fed in mid-December which backstopped just shy of $500 billion in liquidity, proved enough to keep any latent repo market crisis at bay.

The year’s final overnight repo operation, which the Fed expanded to as much as $150 billion ended up being just 17% subscribed, as Dealers submitted only $25.6 billion in securities ($15.2BN in TSYs, $2BN in Agencies, $8.35BN in MBS) in the year, and decade’s, final overnight repo meant to bridge the financial system’s short-term funding needs into 2020.

As a result of the Fed’s massive, preemptive liquidity backstop, the overnight G/C term repo rate quickly dropped back to a subdued, and quite normal, 1.55% after starting the day north of 1.80%.

One thing is certain: last New Year’s firework, which saw the overnight G/C repo rate shoot up as high as 5% into Jan 1, 2019, will not repeat itself.

The final hint that a repo crisis would be averted came on Dec 30, when the Turn repo rate dropped another 75 basis points from 2.75% down to 2.00%, confirming that dealers had lost all fears of a year-end funding squeeze. This happened after only $8.3 billion showed up for the 15 day term operation out of a possible $35 billion On Monday. And, as Curvature’s Scott Skyrm explained yesterday, turn rates rallied and the Fed RP term operation was well undersubscribed.

And while a year-end repo crisis was averted thanks to a historic surge in the Fed’s balance sheet…Click to enlarge.

… two questions emerge: i) would this have been the outcome had Pozsar not published his report warning about a repo market fireworks had the Fed not unleashed an unprecedented $500 billion liquidity backstop, and ii) will the Fed be able to successful drain the hundreds of billions in excess liquidity it injected to avoid a funding paralysis, while sending stocks to all time highs? While we will never know the answer to the first question, the answer to #2 will be made apparent in the first weeks of 2020 when the Fed decides to either keep rolling its repo operations or end them, cold Turkey, risking another funding crisis for one simple reason: the true level of cash in the market, excluding Fed intervention, has collapsed and once again the entire financial system is living on Fed generosity.

This is another 4-chart Zero Hedge story from Brad Robertson.  This one put in an appearance on their Internet site at 9:40 a.m. on Tuesday morning EST — and another link to it is here.


Fake Wealth Exposed by Grant Williams and Egon von Greyerz

In this important discussion between Egon von Greyerz of Matterhorn Asset Management and Grant Williams of Real Vision TV, they talk about the fake prosperity we live in, facilitated by negative interest rates as well as endless money printing and the dire consequences this will have for the world.

Central banks are manufacturing money out of thin air and also making it free. So the money is worthless and so are the assets that the printed money supports.

The inevitable consequence of this is a massive implosion of the fake wealth bubble and also the debt bubble made of fake money. This will lead to tremendous wealth destruction, hardship and suffering for people around the world.

Egon argues that Central Banks shouldn’t exist since they are destroying the financial system by manipulating the laws of nature and interfering with the normal business cycle.

This 53-minute video interview was posted on the youtube.com Internet site on December 31 — and is embedded after the preamble and introduction on the goldswitzerland.com Internet site.  I must admit that I haven’t had time to listen to it, so you’re on your own with this one.  Another link to it is here.


Larry King Interviews Stephen F. Cohen

Now that Larry is not working for main stream media, he can ask the questions that he really wants — and he does so in this wide-ranging discussion on Russia, Putin, the Ukraine and the U.S. with Stephen.  It was posted on the rt.com Internet site on the day before Christmas — and I thank Larry Galearis for pointing it out.


Silver is Incredibly Undervalued – In Gold We Trust Part 8 – Mike Maloney & Ronnie Stoeferle

Many investors know that silver is undervalued relative to gold. Many also know that silver remains undervalued relative to the stock market. But check out just how undervalued silver is in this new video with Mike Maloney and Ronnie Stoeferle.

This 13-minute audio/video interview, which I haven’t had time to watch yet either, was posted on the youtube.com Internet site on Tuesday — and I thank Judy Sturgis for pointing it out.


JPMorgan Expert Issues Warning to Investors as Gold Set for Best Year in Nearly a Decade

The price of gold has just climbed to its highest level since 25 September and many investors are looking to the bullion as a safe bet for their 2020 portfolios amid falling dollar prices.

Gold prices per ounce managed to climb to $1,524.23 on 31 December as the dollar deepened to a six-month low, signifying a 19% gain in the precious metal since the start of the year – its biggest annual rise since 2010, according to Bloomberg. JPMorgan Global Market Strategist Hannah Anderson has, nevertheless, warned investors who are now positioning their portfolios for 2020 that gold is not necessarily the best option for a sound portfolio protection.

People are starting to question how much further they have to run after that stellar 2019”, Anderson told Bloomberg TV, while referring to equities gains. “Some investors are starting to wonder if gold is going to be the safety for their portfolio. Personally, I think investors probably want to rethink that consideration”.

There are very few certain environments in which gold does well, and it’s not necessarily the case that 2020 won’t be any of those”, the expert added. “But if you look at the performance of gold in market downturns, it’s really a mixed bag, there’s no sure thing when it comes to gold”.

In the next downturn, I do believe that bonds still could be defensive assets”, Anderson concluded.

One wonders if that is her personal opinion…or maybe Jamie Dimon talking through her.  I suspect the former, but I’m always on the look-out for the latter.  This gold-related news item appeared on the sputniknews.com Internet site at 4:25 p.m. Moscow time on their Tuesday afternoon, which was 8:25 a.m. in Washington — EST plus 8 hours.  I found it on the Sharps Pixley website — and another link to it is here.


The FUNNIES

The WRAP

Despite the fact that the dollar index was in decline throughout most of the Friday trading session, the quiet price pressure in gold and silver was unrelenting from the early afternoon in Far East trading…right up until the trading day ended at 5:00 p.m. in New York.

During the last four trading days, the dollar index is down about 119 basis points — and most of that decline hasn’t been allowed to manifest itself in higher silver and gold prices.  Sure, there’s been some correlation, but ‘da boyz’ have been there to blunt the really big price moves that would have otherwise occurred.

The dollar index is very oversold now — and the above two precious metals are both above or at the overbought mark when you check their respective 6-month charts below.  I’m not sure if that portends anything, but it would be negligence on my part not to point it out.

Here are the 6-month charts for the Big 6 commodities — and the changes in the four precious metals should be noted…as should the fact that both copper and WTIC were closed lower on the day.  Click to enlarge for all.

As to where we from here in the precious metals over the very short term…the next few weeks…I’m not about to venture a guess.

But as Ted has been pointing out for some time now, the current record and unprecedented Managed Money long position vs. the record short position of the Big 8 traders…sans JPMorgan… still has to be resolved one way or another.  Either it’s the same old, same old engineered price declines in silver and gold that we’re all too familiar with…or some of the smaller traders in the Big 8 category rush to cover and book big loses for the very first time.  This thought should be front and center in your mind.

They certainly are in mine.

I mentioned about six months ago that it was my opinion that this precious metals price management scheme would end by the start of the new year and decade.  That has obviously not come to pass.  But with the DoJ [amongst others] continuing to breath down everyone’s necks over at JPMorgan, one would think that this event should occur in the not-to-distant future.

And as Ted has also pointed out on too many occasions to count, JPMorgan’s short positions in both gold and silver are about the lowest they’ve ever been — and that’s in the face of the record high commercial net short position in gold — and close to a new record high Commercial net short position in silver.

And with at least 25 million ounces of gold — and 900+ million troy ounces of silver squirreled away in various and sundry depositories in the U.S. and in the U.K…the potential for a double cross of the other Big 7 short holders [and every other short holder in the COMEX futures market] by JPMorgan, still looms large.  But whether or not they’ll pull the trigger, remains to be seen.

To give you some idea how extreme these concentrated short positions in gold and silver are…the total open interest in gold was 748,737 COMEX contracts in Monday’s COT Report.  The Big 8 traders are short 40.3 percent of that amount…301,741 contracts.  The commercial net short position is 340,396 contracts.  So doing the division…the Big 8 are short 88.6 percent of the entire  commercial net short position in gold in the COMEX futures market…which is beyond preposterous.

And if you think that’s preposterous…take a look at silver…which is extreme beyond belief.  In Monday’s COT Report, the total open interest was reported as 223,046 COMEX contracts — and the Big 8 traders were short 49.1 percent of that amount…109,515 contracts.  The Commercial net short position in silver in that COT Report worked out to 85,327 contracts.  Doing the division, that means that the Big 8 traders are short 128.3 percent of the Commercial net short position in silver in the COMEX futures market — and yes, you read that right!

Yet the CFTC and the CME Group do nothing — and the mining companies we all own stock in, just sit there in total silence and take what is being dished out to them.  There’s not a gonad amongst them.  You couldn’t make this stuff up!

Against these same Big 8 commercial traders stand the record net long positions of the Managed Money traders who were most reluctant to sell on the last engineered price decline that began at the beginning of September — and are now going even more long during this recent rally over the last few weeks.  This forces the Big 8 to go even more short to prevent prices from exploding higher.

And as Ted keeps mentioning over and over again…something has got to give at some point — and he’s absolutely correct in that belief.

But standing above all is the kingpin of the price management scheme…the capo di tutti i capi in every sense of the word — and that is Jamie Dimon over at JPMorgan…at the ready to double cross all.  As I said two paragraphs ago…you couldn’t make this stuff up if you tried.

When this all blows sky high, there will someone to make a movie out of the book I just know that Ted will write at some point.

So based on all the information provided above, you can place your bets as to how things play out in the precious metals world in the weeks and months ahead.

Happy New Year!

Ed