Another Record High Close For Palladium

15 January 2020 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


‘Da boyz’ showed about forty-five minutes after the 6:00 p.m. open in New York on Monday evening — and had the price down about 11 dollars by 9:15 a.m. China Standard Time on their Tuesday morning.  From there it traded unevenly sideways until the low tick of the day was set around 1:40 p.m. CST.  The price crept a bit higher until shortly before 9 a.m. in London — and chopped quietly sideways for the rest of the day.  But it should be noted that the tiny rally in after-hours trading in New York had to be capped, or gold would have closed up on the day.

The high and low ticks aren’t worth looking up, but here they are anyway…$1,552.10 and $1,539.60 in the February contract.

Gold was closed in New York yesterday at $1,546.10 spot, down $1.30 from Monday.  Net volume pretty heavy at a bit under 286,500 contracts — and there was 64,000 contracts worth of roll-over/switch volume on top of that.

I thought I’d throw in the New York Spot Gold [Bid] chart so you could see the price activity an hour either side of the 1:30 p.m. EST COMEX close yesterday.  As I just pointed out, gold would have closed in positive territory if ‘da boyz’ hadn’t been there as short sellers of last resort.

Silver’s price path was similar up until the low tick of the day was set at the 2:15 p.m. afternoon gold fix in Shanghai.  From that juncture it trended generally higher until precisely 10:00 a.m. EST…the afternoon gold fix in London.  It was sold lower at the point [as was gold]…but began to head higher shortly after that — and its tiny rally in after-hours trading New York, also had to be capped — and from around 2:10 p.m. EST onwards, it traded flat until the market closed at 5:00 p.m.

The high and low ticks in silver were recorded by the CME Group as $17.985 and $17.69 in the March contract.

Silver was closed in New York on Tuesday at $17.75 spot, down 16.5 cents from Monday.  Net volume was pretty healthy at a bit under 76,500 contracts — and there was a bit under 9,500 contracts worth of roll-over/switch volume in this precious metal.

Platinum was also sold lower starting about forty-five minutes after New York opened on Monday evening as well — and from about 9:20 a.m. CST onwards it chopped unevenly sideways until the low tick of the day was set around 8:30 a.m. in New York.  Then away it went to the upside…running into more and more resistance as the price rose.  It made it up to the $982 spot mark by around 2:20 p.m. in after-hours trading — and wasn’t allowed to do much after that.  Platinum was closed at $981 spot, up 9 bucks on the day.

Palladium was also sold lower shortly after trading began at 6:00 p.m. EST in New York on Monday evening — and from there it traded unevenly sideways until about 1:30 p.m. China Standard Time on their Tuesday afternoon.  It began to crawl quietly higher from that point, but got sold quietly lower in morning trading in New York.  Shortly before 11:30 a.m. EST it began to rally hard — and that was capped and turned lower starting at 2 p.m. in the very thinly-traded after-hours market.  About ninety minutes later it turned higher once more — and closed on its high tick of the day at $2,154 spot, up 45 dollars from Monday.

With rhodium pushing $10,000 the ounce — and trading free of all COMEX price shackles, it’s obvious that palladium would also soar to great heights, if allowed…which it obviously isn’t.  It’s a very controlled rally.


The dollar index closed very late on Monday afternoon in New York at 97.35 — and opened up about 1 basis point once trading commenced around 7:45 p.m. EST on Tuesday evening, which was 8:45 a.m. China Standard Time on their Tuesday morning.  It ticked a handful of basis points higher for the next hour before chopping quietly and somewhat unevenly sideways until around 11:45 a.m. in London.  It began to head higher from there — and the 97.56 high tick was set around 8:22 a.m. in New York.  About an hour later it was headed lower…touching the unchanged mark about ten minutes after the 1:30 p.m. COMEX close.  Around an hour later it began to tick higher — and the dollar index finished the Tuesday session at 97.37…up 2 basis points from Monday’s close.

There was absolutely no correlation between the currencies and the precious metals again on Tuesday.

Here’s the DXY chart for Tuesday from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…97.09…and the close on the DXY chart above, was 28 basis points on Tuesday.  Click to enlarge as well.

The gold shares had a down/up move in the first thirty minutes of trading in New York on Tuesday morning — and after that they headed unevenly higher for the remainder of the day, closing almost on their high ticks.  The HUI closed up 1.43 percent.

The down/up move in the silver equities at the New York open yesterday was a bit more impressive — and they chopped very unevenly higher from that juncture for the remainder of the Tuesday session.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished higher by 1.76 percent…gaining back everything it lost on Monday, plus a hair more.  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.

I must admit that I was rather impressed with the performance of the precious metal equities yesterday…especially the silver stocks.  They actually did better than the Silver 7 Index chart indicates, because Peñoles didn’t trade yesterday under the ticker symbol that Nick uses — and that dragged the index down.


The CME Daily Delivery Report showed that 1 gold and 20 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, the lone short/issuer was Advantage — and Morgan Stanley stopped it.  Both transaction involved their respective client accounts.

In silver, the two short/issuers were JPMorgan and Advantage, with 17 and 3 contracts from their respective client accounts.  The three long/stoppers were Scotia Capital/Scotiabank with 10 contracts for its own account…followed by Advantage and Morgan Stanley with 6 and 4 contracts for their respective client accounts.

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 dropped by 1 contract, leaving 29 still around, minus the 1 contract mentioned a few short paragraphs ago.  Monday’s Daily Delivery Report showed that 2 gold contracts were actually posted for delivery, so that means that 2-1=1 more gold contract was added to January deliveries.  Silver o.i. in January rose by 13 contacts, leaving 23 still open, minus the 20 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 2 silver contracts were posted for delivery today, so that means that 13+2=15 more silver contracts just got added to the January delivery month.


There were no reported changes in either GLD or SLV on Tuesday.

In other gold and silver ETFs on Planet Earth on Tuesday…net of COMEX, GLD & SLV activity…there was a net 117,177 troy ounces of gold withdrawn — and the biggest chunk of that was 113,496 troy ounces that was taken out of the three ETF Securities funds.  In silver, there was a net 213,006 troy ounces withdrawn — and that was because of chunky 268,352 troy ounces that was removed from Deutsche Bank.

And nothing from the U.S. Mint.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday was 2,200 troy ounces that was received at HSBC USA.  I won’t bother linking this.

There was a bit of activity in silver.  There was 299,184 troy ounces received — and that all ended up at Brink’s, Inc.  There was 36,907 troy ounces shipped out…20,009 from HSBC USA — and 16,898 from Delaware.  The link to that is here.

There was a tiny bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They received 129 of them — and shipped out 80.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here’s are two charts that Nick Laird passed around late on Tuesday afternoon PST.   The first shows the amount of gold withdrawn from the Shanghai Gold Exchange…updated with December’s data.  For that month there was 158.50 metric tonnes withdrawn.  Click to enlarge.

This second chart shows the amount of gold withdrawn from the Shanghai Gold Exchange for each year going back to 2008.  As you can tell, the withdrawals for the 2019 calendar year…totalling 1,642 metric tonnes…are the lowest since 2012.  Click to enlarge.

I don’t have all that many stories/articles for you today.


CRITICAL READS

Shopping Mall Vacancies Hit Two-Decade High

Shopping malls across the country are under severe financial distress, with vacancy rates hitting two-decade highs in 2019, reported the Financial Times, citing a new report from Reis Moody’s Analytics.

U.S. retailers announced 9,300 store closings in 2019, according to Coresight, indicating that the retail apocalypse and a massacre of malls are far from over.

Mall operators saw a surge of store closures in 2H19 and ahead of Christmas despite a relatively stable consumer that has been leveraging up via the use of credit cards.

Barbara Denham, a senior economist at Reis, said one notable trend during the 2019 holiday season was the shift in spending habits from brick and mortar stores to online.

Denham said recent vacancy statistics paint a disastrous picture for shopping malls as vacancy rates have surged to a record high of 9.7%.

The latest trend of record-high mall vacancies could be a warning to investors who own retail REITs that are exposed to regional malls and outlet centers.

The death of American malls is real, and it’s not being overstated, the worse has yet to come as more stores are expected to close in 2020.

This Zero Hedge news item shouldn’t come as much of a surprise to anyone.  It appeared on their Internet site at 5:25 p.m. on Tuesday afternoon EST — and I thank Brad Robertson for pointing it out.  Another link to it is here.


Fed Injects $82BN in Liquidity as Term Repo is Most Oversubscribed in One Month

It was supposed to be a one-time, year-end “liquidity event.” Instead, it has transformed into the latest liquidity addiction within the financial community.

Just days after we reported that yet another disturbance appears to be brewing below the calm surface of the repo market again, we got another indication just how strong the market’s addition to the Fed’s easy repo money has become, when moments ago the Fed announced that its latest 2-week term repo operation was also the most oversubscribed since December 16, as $34.3BN in securities ($27.65BN in TSYs, $15.5BN in MBS) were submitted for today’s $35 billion operation, as dealers continue to scramble to the Fed for liquidity which they are no longer using for “regulatory” year-end purposes (since it is no longer year-end obviously), but are instead using it to pump markets directly.

Today’s operation, which was the most oversubscribed in 2020, also saw the most submissions since Dec 16, and suggests that as repos are now maturing at a rapid burst (as we noted in “Mark Your Calendar: Next Week The Fed’s Liquidity Drain Begins”), dealers remain as desperate as ever to roll this liquidity into newer term operations.  Click to enlarge.

And just in case there was any doubt that the liquidity shortage isn’t getting better, moments later the Fed announced that in its daily Overnight repo operation, it also accepted $47BN in securities ($22.5BN TSYs, $24.5BN in MBS) for a total liquidity injection of $82 billion.

In short, just as the market got addicted to QE and the result was a 20% drop in the S&P in late 2018 when markets freaked out about Quantitative Tightening, the Fed’s shrinking balance sheet, and declining liquidity, Skyrm cautions that “it will take pain to wean the Repo market off of cheap Fed cash” since “it’s a circle” which can be described as follows:

For the Fed to end daily RP ops, they need outside cash to come back into the Repo market. For the Repo market to attract cash, Repo rates need to move higher. For rates to move higher, the Fed needs to stop RP ops.”

The problem is that stopping RP ops could spark another repo market crisis, especially with $259BN in liquidity pumped currently – more than at year end – via Repo. It also means that the Fed is now unilaterally blowing a market bubble with its repo and “NOT QE” injections, and yet the longer it does so the more impossible it becomes for the Fed to extricate itself from the liquidity pathway without causing a crash.

Yep…Print or die it is.  This Zero Hedge article showed up on their website at 9:58 a.m. EST on Tuesday morning — and it’s the first offering of the day from Brad Robertson.  Another link to it is here.


The End of the Longest Economic Expansion in History — Bill Bonner

War, inflation, bull markets, bad marriages, eating binges, and benders – all are more fun at the beginning than at the end. And none goes on forever.

Yes, Dear Reader. The music is still playing. The dancers are still on the floor. And the barmen at the Federal Reserve are still refilling glasses as fast as they can.

But feet are getting sore… drunks are babbling… and the band is getting tired.

The recovery began in the first quarter of 2009. And the stock market bottomed out in March 2009. We’re now in the longest business expansion… and the longest bull market… ever.

And if the boom ends tomorrow, investors will have no cause for complaint. All they had to do was sit tight in an index fund and they would have more than tripled their money.

The recovery in the economy has added about $7 trillion to GDP, bringing it to nearly $21 trillion. So, it’s been a great party.

We know what the beginning was like. We saw that movie. But how about the end? That’s what’s coming up next…

This worthwhile commentary from Bill put in an appearance on the bonnerandpartners.com Internet site early on Tuesday morning — and another link to it is hereGregory Mannarino‘s semi ‘R‘ rated market close rant for Tuesday is linked here.


Last Hurrah” for Central Bankers — Jim Rickards

We’ve all seen zombie movies where the good guys shoot the zombies but the zombies just keep coming because… they’re zombies!

Market observers can’t be blamed for feeling the same way about former Fed Chair Ben Bernanke.

Bernanke was Fed chair from 2006–2014 before handing over the gavel to Janet Yellen. After his term, Bernanke did not return to academia (he had been a professor at Princeton) but became affiliated with the center-left Brookings Institution in Washington, D.C.

Bernanke is proof that Washington has a strange pull on people. They come from all over, but most of them never leave. It gets more like Imperial Rome every day.

But just when we thought that Bernanke might be buried in the D.C. swamp, never to be heard from again… like a zombie, he’s baaack!

This very interesting and rather brief commentary from Jim was posted on the dailyreckoning.com Internet site on Monday — and another link to it is here.


How the U.S. Runs Iraq — Eric Margolis

What ever happened to Iraq? Is it not an independent country with a democratic government thanks to the 2003 U.S. invasion?  So says Washington.

The murder of senior Iranian military commander Qassem Soleimani suddenly shone a strobe light on ‘independent’ Iraq, and what we saw was not pretty.

Welcome to the new Imperialism 101.

Iraq’s population is estimated around 39 million. The pre-war Iraq of 2003 was broken into three parts by the U.S.-British invasion: the Shia majority; Kurds in the north; and Sunnis, with scatterings of other ethnicities. Iraq remains fragmented into hostile groups.

Its Shia are confusingly allied to the U.S. and Iran. The killing of Maj. Gen. Soleimani by the Americans has thrown this alliance of convenience into confusion. Iraqi Kurds are close to the CIA and Israel’s Mossad intelligence. The Sunnis are left adrift, without any foreign patrons except for other feeble Arab states.

The U.S. maintains a modest garrison of 5,000 infantry in Iraq and 3-5 air bases, as well as the gigantic fortified U.S. Embassy in Baghdad’s heavily guarded Green Zone which contains one of the world’s largest CIA bases. Angry mobs demonstrating in front of the embassy triggered off the chain of events that led to Trump’s murder of Gen. Soleimani. That an impeached president should be murdering foreign figures is a question that Congress must ask.

This rather brief commentary form Eric put in an appearance on the unz.com Internet site on Saturday — and I thank Larry Galearis for sending it along.  Another link to it is here.


German Government Escalates its War on Gold

In the run up to the end of the year during December, a remarkable sight emerged across Germany – long lines of customers queuing up outside the country’s precious metals shops and gold dealer showrooms.

Was it seasonal gift buying by Germany’s citizens, a population well-known for its love of physical precious metals? Or perhaps the onset of panic about negative interest rates in Europe’s largest economy?

As it turns out, panic it was, but of a different type, with the long lines triggered by the realization that from 1 January 2020, new national legislation was to take effect that would dramatically reduce the threshold on anonymous buying of precious metals from the existing €10,000 limit to a far lower limit of €2000, all under the guise of money laundering prevention.

With a staggering 9,000 tonnes of gold held by the German population, 55% of which is in the form of physical gold bars and gold coins and the rest in gold jewelry, Germany’s citizens are savvy about gold and are active savers and investors in the yellow precious metal. Add to this the fact that the German bullion market is one of the most sophisticated and developed in the world, supporting an extensive set of industry participants from banks and gold refineries, to nationwide gold dealers and distributors, to smaller regional and local bullion retailers.

So when the German government throws up restrictions on such a fundamental right as anonymous buying of gold and other precious metals, Germany’s citizens were going to sit up and take notice and do what any rationale economic actor would do in the circumstances – buy as much gold as they can get their hands on before the 1 January deadline. Hence the queues and long lines outside the gold shops including some of Germany’s biggest gold dealers such as Degussa and Pro Aurum.

This very long commentary appeared on the bullionstar.com Internet site on Monday — and I found it embedded in a GATA dispatch on Tuesday.  Another link to it is here.


Yes, China is a Currency Manipulator – and the U.S. Banking System is a Metals Manipulator

The U.S. Treasury Department announced Monday that China is no longer on a list of countries deemed to be “currency manipulators.” The timing was awfully convenient, coming just ahead of an expected Phase One trade deal between the two powers.

Nobody actually believes China has stopped manipulating the value of its yuan versus the U.S. dollar.

But the Trump administration is apparently willing to accept a certain degree of currency rigging in exchange for other concessions on trade.

It’s not as if the U.S. government has a stellar record when it comes to heeding principles of free and fair currency markets. It (through the Exchange Stabilization Fund and other vehicles) is constantly trying to manage the value of the dollar versus the currencies of trading partners, too.

It’s not as if equity markets, interest rate markets, and precious metals futures markets are free from manipulation, either. Price rigging schemes of various sorts – ranging from small-scale “spoofing” to large-scale suppression – occur practically around the clock.

This interesting commentary from Stefan Gleason showed up on the moneymetals.com Internet site yesterday — and I found it on the gata.org Internet site.  Another link to it is here.


China gold demand 20% down y-o-y — Lawrie Williams

Somewhat delayed by the Christmas holiday – which even affects the Shanghai Gold Exchange (SGE) – the exchange has at last released the figures on gold withdrawals in December, and even though they were at the highest level since March when some 218 tonnes were withdrawn, the December figure at 158.5 tonnes was still almost 11% lower than a year earlier and 14% down on the 2017 figure.  December withdrawals tend to be one of the highest months coming, as it does, ahead of the Chinese New Year when dealers and fabricators stock up ahead of increased demand resulting from the New Year celebrations.  This year the Chinese (lunar) New year falls on January 25th.

As we noted a month ago, SGE gold withdrawals this year were running around 20% lower than in 2018, which was confirmed by the latest figures.  The annual total came out at 1,642 tonnes – some 412.5 tonnes (or 20.08%) down on the 2018 figure, and the first sub-2,000 tonne total in 7 years.  We have consistently equated the SGE gold withdrawal level to total Chinese gold demand as it reasonably closely approximates to the sum of known gold imports from countries which publish detailed export figures, plus China’s own gold output from official figures, plus an allowance for scrap gold recovery plus a small amount of unknown gold imports from countries which do not break down detailed figures.

Perhaps luckily for those who follow gold’s supply/demand fundamentals for their investment decisions, the fall-off in Chinese demand this year, coupled with a rather smaller downturn in demand from No. 2 gold consumer India has been counterbalanced by increased demand in Europe and, most importantly, positive inflows into global gold ETFs and a strong level of gold buying from central banks…with Russia taking the lead as it has done for the past several years.

This worthwhile commentary from Lawrie was posted on the Sharps Pixley website on Tuesday sometime — and another link to it is here.


The PHOTOS and the FUNNIES

Just as we were about to walk back to the car at Three Valley Gap Lake on August 4, my daughter spotted this common loon in full breeding plumage.  The 400mm lens came in handy here.  But even with that glass strapped to the camera, it was a bit further away than I would have liked…so I had to do some rather severe cropping to get them even close to right.  Click to enlarge.


The WRAP

Another new intraday low for this move down was set in both silver and gold during the very thinly-traded morning session in the Far East on their Tuesday…but both recovered nicely from there.  But as I pointed out in my discussion on each at the top of today’s column, they weren’t allowed to close above unchanged on the day.  However, both got sold off a bit at the 10 a.m. EST afternoon gold fix in London, so that was a price hole that both had to overcome as the Tuesday trading session moved along.

It started out similarly in both platinum and palladium, but both rallied rather smartly starting at, or shortly after, the COMEX open in New York on Tuesday morning.  Platinum closed higher — and palladium closed at a new record high price once again.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  The changes in the precious metals should be noted — and palladium is hugely overbought now.  A pull-back in price in this precious metal, either market-related or engineered, is something that I’ve been expecting for a while now — and I’m just waiting for the axe to fall.  Copper close up a penny and a bit — and WTIC broke through its 200-day moving average to the downside intraday yesterday, but managed to close higher by 15 cents.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I note that gold and silver prices have been rising in fits and starts in Far East trading on their Wednesday. Gold is up $6.30 — and silver by 9 cents as London opens. Platinum rallied until shortly before 11 a.m. China Standard Time on their Wednesday morning, but was capped at the $990 spot mark — and hasn’t done much since. It’s currently up 7 dollars. Like the other three precious metals, palladium rallied starting right at the 6:00 p.m. EST open in New York on Tuesday evening, but wasn’t allowed to get far before it was capped and turned lower. It traded very unevenly sideways until around 3:45 p.m. in Shanghai — and has shot higher since. And as Zurich opens, palladium is up 21 bucks the ounce.

Net HFT gold volume is very decent already at around 58,500 contracts — and there’s around 11,300 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is getting up there as well at a bit over 16,500 contracts — and there’s a piddling 212 contracts worth of roll-over/switch volume on top of that.

The dollar index opened about unchanged at 97.38 once trading commenced around 7:45 p.m. EST on Tuesday evening, which was 8:45 a.m. China Standard Time on their Wednesday morning. It ticked higher over the next forty-five minutes — and has chopped very quietly lower since, but jumped up a bit starting around 3:25 p.m. CST — and is currently back at a hair below unchanged as of 7:45 a.m. GMT in London/8:45 a.m. in Zurich.


Yesterday, at the close of COMEX trading session, was the cut-off for this Friday’s Commitment of Traders Report.  And now that I have five dojis for the reporting week to look at it, it’s pretty much a slam-dunk that we’ll see decent-sized improvements in the commercial net short positions in both silver and gold in that report.  The only thing not known is how big these improvements will be, but I’m hoping/expecting that they’ll be sizeable.

Ted will certainly be writing about it in his mid-week commentary this afternoon — and since he’s the only real authority on this, I’ll be happy to ‘borrow’ a few sentences for my Friday column.


And as I post today’s efforts on the website at 4:03 a.m. EST, I see that gold and silver have edged a bit higher in the first hour of trading. Gold is up $7.10 and silver is up 10 cents as the first hour of London trading draws to a close. Platinum has shot higher — and is now up 22 bucks the ounce. Palladium got smacked at the Zurich open, but has rallied back since — and as the first hour of Zurich trading ends, palladium is up 20 dollars.

Gross gold volume is a bit over 89,000 contracts — and minus current roll-over/switch volume, net HFT gold volume is around 66,000 contracts. Net HFT silver volume is a bit under 18,000 contracts — and there’s 431 contracts worth of roll-over/switch volume in this precious metal.

The dollar index jumped a bit higher starting about thirty-five minutes before the London open — and is up 4 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich. Despite this jumping around, the dollar index isn’t doing much of anything right now.

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

Ed