The ‘Big 7’ Traders Escape With Their Skins Intact

17 March 2020 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


To no one’s surprise I’m sure, the gold price blasted higher the moment that trading began at 6:00 p.m. EDT in New York on Sunday evening.  But JPMorgan et al. put in an appearance almost right way — and it took over three hours to take away all those gains.  It then began to drift a bit higher until around noon in Shanghai on their Monday — and then edged unevenly lower until 9:30 a.m. in London…which may or may not have coincided with their morning gold fix, as I’m not sure how their schedule work in this regard in this three week period when the U.K. is still on GMT — and the U.S. is on DST.

I suppose it doesn’t matter, but at the time mentioned, ‘da boyz’ got to business — and the $1,446.00 low tick was set very shortly after 1 p.m. GMT, which was minutes after 9 a.m. in New York.  The subsequent rally ran into ‘something’ around 11:30 a.m. EDT — and it was forced to chop very unevenly sideways until trading ended at 5:00 p.m.

The high and low ticks in gold were reported by the CME Group as $1,574.80 and $1,450.90 in the April contract, which was an intraday move of $123.90 spot…7.9 percent.

Gold was closed in New York yesterday at $1,509.50 spot, down ‘only’ $20.40 from Friday — and $63.50 off its Kitco-recorded low tick of the day.  It was also closed below its 200-day moving average…a feat that I didn’t think possible.  But as Ted has pointed out on numerous occasions, one should never underestimate the treachery of JPMorgan et al.  Net volume was ginormous, but not as ginormous as one might expect on such an obviously engineered price decline…at a bit over 478,000 contracts — and there was a bit over 89,500 contracts worth of roll-over/switch volume out of April and into future months.

Silver’s rather tepid rally at the New York open on Sunday evening met with a similar response from the Big 8 traders — and from there it crept sideways to a bit lower until shortly after 3 p.m. China Standard Time on their  Monday afternoon.  JPMorgan et al. set its $11.70 spot low tick around 11:45 a.m. in London/7:45 a.m. in New York.  It rallied sharply from there, but obviously ran into the same ‘something’ that gold did — and around 11:30 a.m. EDT, it was capped for the final time — and turned quietly and unevenly lower until the market closed at 5:00 p.m. in New York.

The high and low ticks in silver were recorded as $15.245 and $11.77 in the May contract…an eye-watering intraday move of $3.475…22.8 percent.

Silver was closed at $12.915 spot, down $1.77 from Friday, but $1.215 off its Kitco-recorded low tick of the day.  Net volume was very heavy at a bit under 132,500 contracts — and there was a bit under 19,000 contracts worth of roll-over/switch volume in this precious metal.

After a brief down/up dip during the first couple of hours of New York trading on Sunday evening, the platinum price crept sideways with a slight positive bias until a few minutes after 3 p.m. CST on their Monday afternoon.  Both platinum and silver began their engineered price declines at the same moment, but the sell-off in platinum was far more substantial and severe — and a waterfall decline I’ve only seen in gold and silver in the past.  The $564 spot low tick was set around 11:25 a.m. CET in Zurich on their Monday morning — and its subsequent rally attempts were turned back on multiple occasions until minutes after 10:30 a.m. in New York.  From that juncture, it had a smallish down/up from there until trading ended at 5:00 p.m. EDT.

Platinum was closed at $670 spot, down 95 bucks on the day, but $106 off its Kitco-recorded low tick of the day in Zurich trading.  According to Kitco, platinum had an unheard of intraday move of $213 bucks.

Palladium was sold down a whole bunch of dollars starting the moment that trading began at 6:00 p.m. EDT in new York on Sunday evening.  It crawled quietly and unevenly higher until the 2:15 p.m. afternoon gold fix in Shanghai — and then blew higher by a bunch…with its Kitco-recorded $1,949 high tick set about thirty or so minutes later.  It was pretty much all down hill from there until the $1,395 spot low tick was printed around 9:50 a.m. in New York.  Like platinum, any and all rallies, were summarily dealt with — and from 1 p.m. EDT onwards it was sold a bit lower until the market closed at 5:00 p.m.

Palladium was closed at $1,492 spot, down $206 from its Friday close, but 97 dollars off its Kitco-recorded low tick.  Palladium was closed below its 200-day moving average for the second day in a row.

I’ll certainly have more to say about “all of the above” in The Wrap.


The dollar index was closed very late on Friday afternoon at 98.75 — and opened down a whopping 104 basis points once trading commenced at 6:30 p.m. EDT in New York on Sunday evening, which was 6:30 a.m. China Standard Time on their Monday morning.  It dipped a bit until 7:42 a.m. CET — and a ‘rally’ commenced at that juncture which ran out of gas at 10:50 a.m. CST.  It was all down hill from there until the 97.45 low tick was set around 9:15 a.m. in London.  It appeared to get rescued at that point — and the ‘rally’ that began from there lasted until 11 a.m. in New York.  It sold off a bit until 12:15 p.m. — and then chopped quietly sideways until trading ended at 5:30 p.m. EDT.

The dollar index was marked-to-close at 98.07…down precisely 68.00  basis points from its close on Friday.

One has to suspect that the price ‘action’ in the currencies was being very well managed on Monday.

Here’s the DXY chart for Monday, courtesy of Bloomberg — and you can read into it whatever you wish.  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…98.15…and the close on the DXY chart above, was 8 basis points on Monday — and above the spot close for the third day in a row.  This, like everything else that’s been going on, is unprecedented.  Click to enlarge as well.

Not surprisingly, the gold shares gapped down huge at the 9:30 open in New York on Monday morning, but the usual strong hands were there buying up everything that was being sold in a panic, plus a whole bunch more.  At its high of the day, the HUI was up around 13 percent, but I suspect that day traders taking profits were responsible for the decline going into the 4:00 p.m. close.  The HUI finished higher by 8.33 percent.

The price path was similar for the silver equities, but because silver was down so much on the day, their respective rallies off their low ticks weren’t anywhere near as impressive.  But they managed to close in positive territory regardless, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 3.11 percent on the day.

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

As far as the silver equities were concerned, the star of the day was First Majestic Silver, closing higher by 9.80 percent — and the dog was Peñoles…down 4.14 percent.  The shares of the other five of Nick’s Silver Sentiment Index all closed in the green.

Reader Gordon Foreman had these comments about yesterday’s price action in the precious metal stocks:  “By the end of trading today the mining stocks that I evaluated (GOLD, AUY, NEM, WPM, FSM, HL, PAAS, FNV, and GDX) were up on average about 7.4% from Friday’s close (and all were positive), and up an average of a full 31% from their low tick this morning. This is on a day when gold was down about 2%…and silver down around 12% — and the general stock market was down over 10%.

At the open this morning I thought the mining stocks were going to suffer an absolute bloodbath, but they staged the greatest turnaround I have ever seen in a single day. As you often comment, these stocks are in much stronger hands now. I also consider this strong evidence that someone on the inside knows that gold and silver prices are going to be moving sharply higher very soon.”

He would be right about that.

As has been the case ever since the Big 8 traders began these engineered price declines, not only are they buying every long contract that they can get their hands on in the COMEX futures market, they are also buying precious metal mining shares hand over fist — and that was more than obvious on Monday.  I would suggest, as I did on Saturday,  that the bullion banks and their ilk in the deep state own a sizeable percentage of every major precious metal producer out there.

Yesterday’s price action in the precious metals and their associated equities certainly looked like the bottom is in for all four, although the jury might still be out on gold.  Although I never asked Ted about it when I was talking to him on the phone yesterday, I would suspect that Big 7 traders managed to get out with their skins intact [or mostly intact] by the close of COMEX trading on Monday.


The CME Daily Delivery Report showed that 60 gold and 24 silver contacts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, there were five short/issuers in total — and the three biggest were Scotia Capital/Scotiabank, Advantage and Morgan Stanley, with 28, 13 and 9 contracts.  Scotia Capital from its own account — and the rest from their respective client accounts.  There were five long/stoppers in total as well — and the three largest there were Australia’s Macquarie Futures with 21 contracts for its own account…Advantage and ADM came in second and third, with 18 and 17 contracts for their respective client accounts.

In silver, there were two short/issuers…S.G. Americas and Advantage, with 18 and 6 contracts out of their respective client accounts.  There were six long/stoppers — and the two biggest were ADM and JPMorgan, with 9 and 6 contracts…also for their respective client accounts.

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

The CME Preliminary Report for the Monday trading session showed that gold open interest in March rose by 13 contracts, leaving 64 still around, minus the 60 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 43 gold contracts were actually posted for delivery today, so that means that 43+13=56 more gold contracts were just added to the March delivery month.  Silver o.i. in March dropped by 285 contracts, leaving 375 still open, minus the 24 silver contracts mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 303 silver contracts were actually posted for delivery today, so that means that 303-285=18 more silver contracts just got added to March.

Total open interest in gold in Monday’s Preliminary Report only fell by 8,763 contracts.  One would have normally expected a bigger number than that.  But that number would be the net amount of long gold contacts liquidated – and the amount that were shorted.  In silver, total o.i. fell by 2,610 contracts — and the reason that number is as small as it is, is the same reason that I gave for gold.  In reality, we won’t know the real lay of the land in this regard until the COT Report shows up on the CME’s website on Friday.


There was another withdrawal from GLD, as an authorized participant took out 56,449 troy ounces on Monday.  There was another huge withdrawal from SLV, as an a.p. removed 3,731,936 troy ounces.  I would suspect that this was a “plain vanilla” withdrawal because of the price action — and it’s pretty much a given that JPMorgan owns it now — and maybe the gold too.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, March 13 — and this is what they had to report.  They added 12,800 troy ounces of gold, but there was 341,058 troy ounces of silver removed.

In other gold and silver ETFs on Planet Earth on Monday…net of any and all COMEX, ZKB and GLD & SLV activity…there was a net 135,568 troy ounces of gold added — and 439,623 troy ounces of silver was added as well.


U.S. Mint sales exploded yesterday, as they reported selling 40,000 troy ounces of gold eagles — 9,500 one-ounce 24K gold buffaloes — and 747,500 silver eagles.

There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.

There was very little activity in silver.  Only 97,401 troy ounces was received — and that all ended up at CNT.  There was only 86,988 troy ounces shipped out.   Of that amount, there was 50,166 troy ounces that departed CNT — and the remaining 36,822 troy ounces left the International Depository Services of Delaware.  I won’t bother linking this amount.

There wasn’t much activity over at the COMEX-approved gold kilobar depository in Hong Kong on their Friday.  They reported receiving 270 of them — and shipped out 504.  Of the ‘out’ amount, there was 500 kilobars shipped out of Loomis International — and the remaining in/out activity was at Brink’s, Inc.  The link to this, in troy ounces, is here.


Saxony, Christian I, 1586-1591, Reichsthaler 1591

Origin: Roman German Empire   Mint: Dresden   Material: Silver   Full Weight: 29.02 grams   Value: €1,495.00/US$1,670

I have a lot of stories/articles for you today.


CRITICAL READS

The plumbing behind world’s financial markets is creaking. Loudly

The coronavirus panic is jolting stock markets, with steep drops in major indexes grabbing the public’s attention. But behind the scenes, there is less understood and potentially more worrying evidence that stress is building to dangerous levels in crucial arteries of the financial system.

Bankers, companies and individual investors are dashing to stock up on cash and other assets considered safe in a downturn to ride out the chaos. This sudden flight to safety is causing havoc in markets for bonds, currency and loans to a degree that hasn’t been seen since the financial crisis of a dozen years ago.

The key concern now, as in 2008, is liquidity: the ready availability of cash and other easily traded financial instruments – and of buyers and sellers who feel secure enough to do deals.

Investors are having trouble buying and selling U.S. Treasuries, considered the safest of all assets. It’s a highly unusual occurrence for one of the world’s most readily tradeable financial instruments.

Funding in U.S. dollars, the world’s most traded currency, is getting harder to obtain outside the United States.

The cost of funding for money that companies use to make payrolls and other essential short-term needs is rising for weaker-rated firms in the United States. The premium investors pay to buy insurance on junk bonds is increasing. Banks are charging each other more for overnight loans, and companies are drawing down their lines of credit, in case they dry up later.

Francesco Papadia, who oversaw the European Central Bank’s market operations during the region’s debt crisis a decade ago, said his biggest fear is that the “illiquidity of markets, generated by extreme uncertainty and panic reaction” could “lead to markets freezing, which is an economic life-threatening event.”

This Reuters article showed up on their Internet site at 6:16 a.m. EST on Sunday morning — and was updated about twenty-four hours later.  I found it embedded in a GATA dispatch — and another link to it is hereGregory Mannarino‘s post market close rant for Monday is linked here.


Fed Cuts Main Interest Rate to Near Zero, Vows Massive Bond-Buying Program

The Fed pulled out some of the biggest weapons in its arsenal. It’s key rate is now zero to 0.25%, matching the record low level it hit during the 2008 financial crisis and where it was held until December 2015.

The central bank also announced several other actions, including letting banks borrow from the discount window for as long as 90 days and reducing reserve requirement ratios to zero percent.

In addition, it united with five other central banks to ensure dollars are available around the world via swap lines. Powell said that he did not think negative rates, which have been used in Europe and Japan, would be appropriate policy in the U.S.

President Donald Trump, who as recently as Saturday attacked the Fed for not lowering rates faster and further, quickly expressed support for the move

It makes me very happy and I want to congratulate the Federal Reserve,” he said. “That’s a big step and I’m very happy they did it.”

This news story showed up on Bloomberg late on Sunday afternoon EDT — and this iteration was picked up by the ca.finance.yahoo.com Internet site — and I found it posted in a GATA dispatch.  Another link to it is here.  The Zero Hedge spin on this is headlined “Fed Panics: Powell Cuts Rates to Zero, Announces $700BN QE5, Unveils Enhanced Global Swap Lines


Emergency Fed Repo Fiasco: Funding Markets Remain Frozen After Dealers Balk at $500BN Operation

Less than an hour ago, when previewing today’s emergency repo operation which the fed announced ad hoc on Monday morning in response to the latest credit market turmoil, this time affecting the GC repo rate, we said that “we don’t even need to wait until 1:45pm to tell you what will happen: uptake on today’s half a trillion repo will be tiny, probably around $15BN-$20BN.”

The result? $19.4BN, precisely as we expected – a non-existent uptake of an overnight operation that allowed as much as half a trillion dollars in securities to be tendered to the Fed.

We also said that today’s repo operation “will do absolutely nothing to fix the broken credit and funding markets“, because the Fed no longer knows what is and what isn’t broken, and merely is throwing trillions in liquidity at anything that vaguely looks like a crisis. In some ways we sympathize – as we explained earlier, every day something new breaks.

As we further said, “what the Fed needs is the monetary equivalent of Dr. House: someone who can diagnose what is actually wrong with the monetary plumbing, instead of using the same old shotgun approach of shoveling trillions in blunt liquidity into the market, which clearly is not working anymore.”

And sure enough that’s precisely what happened, because after the massive, $500BN facility came and went, the GC repo rate actually rose from 0.30% to 0.425% after the operation, the Global Basis Swap explosion continues…Click to enlarge.

… as nothing the Fed has done so far – not the rate cuts, not the QE, not the $5TN in repos, not the enhanced FX swap lines – has succeeded in unlocking any of the liquidity that remains frozen deep inside America’s increasingly broken financial system.

This news item showed up on the Zero Hedge website at 2:08 p.m. on Monday afternoon EDT — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Jay Powell Shows New Fed printing strategy if QE doesn’t work — Richard Saler

They’re printing future toilet paper anyway, so they might as well print the real thing, as there’s a fortune to be made in this commodity right now.  “The Fed’s Fluffy Fiat“…in the paper business since 1913.  Kind of catchy, don’t you think?


Key Source of Corporate Cash Seizing Up Amid Credit Market Rout

A corner of the financial system that provides corporate America with short-term IOUs to buy inventory or make payrolls is seizing up, triggering a scramble for cash elsewhere and fueling speculation that the Federal Reserve will intervene.

In the $1.13 trillion commercial paper market, yields over risk-free rates have surged to levels last seen during the 2008 financial crisis. The strains are causing companies to draw down on backup credit lines, according to people with knowledge of the situation.

The longer the commercial paper market remains stressed, the more companies will look to tap credit lines, increasing the risk that banks will need to raise funds themselves, Bank of America Corp. strategists Mark Cabana and Olivia Lima wrote in a March 13 note. Cabana said the Fed needs to start buying commercial paper to unclog the market.

It’s prudent for everyone to try and raise liquidity, and the Fed needs to facilitate this,” he said. If not contained, the turmoil could increase risks for money-market funds that hold the debt, he said.

This Bloomberg article is one I found on the gata.org Internet site.  It was filed on their website at 12:02 p.m. on Sunday afternoon PDT…but was updated about eighteen hours later on Monday morning at 6:06 a.m. PDT.   Another link to it is here.


Liquidity Panic Reaches Staples: Kraft Heinz to Fully Draw Down $4 Billion Revolver

Last week investors were shocked when a barrage of major U.S. corporations – including Boeing, Hilton, Wynn and a handful of PE portfolio companies – announced their decision to fully draw down on their existing credit lines. That said, for all the ominous banking crisis undertones – many still remember that one of the early symptoms of the global financial crisis was countless companies whose revolvers were pulled by a panicking banking sector – there was a common theme linking all these companies: they were all in sectors (airlines, casinos, lodging, energy) that were directly impacted by either the coronavirus pandemic or the recent oil price war.

Today, that changed when food giant Kraft Heinz – which should be benefiting generously from the recent food hoarding panic – was set to also draw down on its credit facility of as much as $4 billion, even though it faced none of the same coronavirus/oil headwinds as so many other companies that jumped the gun to boost their liquidity while they still could.

We maintain our $4.0 billion senior credit facility, and subject to certain conditions, we may increase the amount of revolving commitments and/or add additional tranches of term loans in a combined aggregate amount of up to$1.0 billion,” the company said.

Speaking to Bloomberg, which first reported the draw-down of the Buffett-owned company, a Kraft Heinz spokesman said that “the demand for our brands, our cash flow and our balance sheet remain strong,” which is a rather bizarre explanation why it would need billions more in liquidity. “As a matter of practice, we typically maintain a conservative liquidity posture, which is even that much more important as we focus on making sure all our products remain available to the public during these challenging times.”

This Zero Hedge article put in an appearance on their Internet site at 4:44 p.m. EDT on Monday afternoon — and another link to it is here.


Goldman Takes Out the Chainsaw: Cuts U.S. Q2 GDP to  Negative 5%; Says Recession Has Begun

While it will probably not come as a surprise to anyone who read our earlier post to “Brace For A Record Decline in GDP“, but moments ago Goldman – which last week called the bear market just hours before it officially materialized, and cut its year-end S&P price target to 2,450 which the S&P almost hit late on Thursday – finally capitulated on its optimistic take for the U.S. economy, and in a note published moments ago by its chief economist Jan Hatzius, Goldman said that it expects U.S. economic activity “to contract sharply in the remainder of March and throughout April as virus fears lead consumers and businesses to continue to cut back on spending such as travel, entertainment, and restaurant meals. Emerging supply chain disruptions and the recent tightening in financial conditions will likely add to the growth hit.”

As a result, the bank is now expecting Q2 GDP to crater -5%, down from its prior forecast of 0%, and the biggest quarterly GDP contraction since the peak of the financial crisis when GDP cratered by 8.4%.  Click to enlarge.

Naturally, this being Goldman, the bank just has to error on the side of optimism, and so it does, noting that its baseline assumption is that “activity will start to recover after April and that H2 will see strong sequential growth, but the specifics depend on a number of important questions. Some are medical, including the extent to which social distancing and seasonally higher temperatures will reduce infections as well as whether good treatments will emerge. Others are behavioral and economic, including how quickly reduced infections will bring back everyday activities and how effective easier monetary and fiscal policy will be in providing support.”

And just to confirm it really has no idea, or visibility about what happens in the period it expects a super surge in GDP, Hatzius caveats that “the uncertainty around all of these numbers is much greater than normal.”

In short, while Goldman has no idea if and how the V-shaped recovery will take place, it is certain it will, and it now sees Q3 GDP surging +3%, up from +1%, and even higher, or +4% in Q4, from +2¼%, with further strong gains in early 2021.

One shudders to think what the real GDP will be at the end of the year, when Goldman’s V-shaped recovery never materializes, and instead the far more probably L-shaped “recovery” emerges.

This Zero Hedge story put in an appearance on their website at 4:10 p.m. EDT on Sunday afternoon — and another link to it is here.


Scandinavian Airline SAS Temporarily Lays Off 90% of Workforce, Affecting 10,000 Jobs

Scandinavian airline SAS AB will temporarily lay off up to 10,000 employees, or 90% of its workforce, in response to the fallout from the coronavirus and related measures from authorities that have restricted international air travel.

It is important to say that we do not intend this to lead to permanent layoffs,” said the company’s chief executive officer Rickard Gustafson at a press conference in Stockholm on Sunday. The reductions will be implemented through all parts of the organization and in accordance with national regulations.

The airline will also cancel most of its flights from March 16, according to a statement on Sunday. SAS said it will maintain certain routes in order to enable flights to return from various destinations. The company will be at the disposal of authorities to take home stranded citizens or maintain infrastructure that’s important to society, it said.

On Saturday Sweden’s foreign ministry said non-essential travel should be avoided because of the vast spread of the novel coronavirus and the “rapidly changing and uncertain situation.” This recommendation covers the period through April 14.

The above four paragraphs are all there is to this brief story that was posted on the Bloomberg website at 10:17 a.m. PDT on Sunday morning — and it’s the first of two contributions from Swedish reader Patrik Ekdahl.  Another link to the hard copy is here.  An interesting story from Zero Hedge in a slightly related vein is headlined “Boeing, Which Repurchased Over $100BN in Stock, is Downgraded to BBB, Seeks “Short-Term” Bailout“.


Italy’s Fragile Finances Have a $2.4 Trillion Virus Problem

Investors are turning their attention to one of Europe’s biggest time-bombs: Italy’s stressed financial system.

The coronavirus outbreak and the resulting lock-down will have a significant impact on gross domestic product, and Italy plans to spend as much as €25 billion ($30 billion) to blunt the damage of a nationwide lock-down to businesses and individuals.

That means Europe’s most dangerous stock of public borrowing—some €2.4 trillion mainly on the balance sheets of banks across the European Union—is going to get bigger.

European banks are holding more than €446 billion of sovereign and private Italian debt, based on a Bloomberg analysis of European Banking Authority data. As the coronavirus outbreak spreads to other countries, the Italian debt will be a double burden to financial systems dealing with economic pressure at home.

French banks are the most exposed among non-Italian lenders if a sell-off in Italy starts to spread through Europe’s financial system. The country’s two largest banks, BNP Paribas SA and Credit Agricole SA own retail units in Italy. Bank of France Governor Francois Villeroy de Galhau will propose changing capital rules for banks at a meeting of France’s stability council next week.

The Italian government has to sell more than €400 billion a year to keep its debt in check, which forces domestic banks to buy even more debt, a situation known as a doom loop, where a weak economy and weak banks feed into each other.

Fallout from the coronavirus outbreak  could undo years of painful restructuring by Italian banks. A prolonged lock-down in Italy may boost bad loans that banks have worked for years to reduce and revive the specter of bailouts, sending the whole sector into a crisis.

This rather brief 3-chart new item put in an appearance on the bloomberg.com Internet site at 9:00 p.m. PDT on Sunday evening — and I thank Swedish reader Patrik Ekdahl for sending it along.  Another link to it is here.  Then there’s this Italy-related ZH story from yesterday morning…”Italian Government Re-Nationalizes Bankrupt Alitalia


IMF says it’s ready to mobilize its $1 trillion lending capacity to fight coronavirus

The International Monetary Fund on Monday said it “stands ready” to use its $1 trillion lending capacity to help countries around the world that are struggling with the humanitarian and economic impact of the novel coronavirus.

As a first line of defense, the Fund can deploy its flexible and rapid-disbursing emergency response toolkit to help countries with urgent balance-of-payment needs,” IMF managing director Kristalina Georgieva said in a statement.

The Fund already has 40 ongoing arrangements — both disbursing and precautionary — with combined commitments of about $200 billion,” she added. “In many cases, these arrangements can provide another vehicle for the rapid disbursement of crisis financing.”

Georgieva wrote on the IMF’s website that the lending could be used to aid its members, especially emerging and developing countries.

She said the Fund’s Catastrophe Containment and Relief Trust “can help the poorest countries with immediate debt relief, which will free up vital resources for health spending, containment, and mitigation.”

This story appeared on the cnbc.com Internet site at 8:10 a.m. EDT on Monday morning — and I thank Swedish reader Patrik Ekdahl for pointing it out.  Another link to it is here.


February China Economic Data Collapses Massively More Than Expected

While it may not be a surprise to too many people in the real world that Chinese macro-economic data for February was a disaster, it appears it was a massive shock to analysts and economists who forecast this data.

  • Chinese Retail Sales crashed 20.5% YTD YoY – the first annual drop on record and four times worse than the -4.0% expectation
  • Chinese Industrial Production collapsed 13.5% YTD YOY – the first annual drop on record and more than four times worse than the -3.0% expectation
  • Fixed Asset Investment plunged 24.5% YTD YoY – the first annual drop and more than twelve times worse than the expected 2.% contraction.

And to go with those stunning numbers, Property Investment puked 16.3% YTD YoY and the Surveyed Jobless Rate exploded to a record 6.2%.  Click to enlarge.

The retail collapse was across the board – restaurants and catering down 43.1%, clothing down 30.9%, jewelry down 41.1% are some of the bigger drops.

As HSBC’s Julien Zhu told Bloomberg Television, this is “unprecedented” adding that the recovery is pretty cautious so far, warning “it will be a Herculean task to completely reverse everything this month.”

This Zero Hedge news item was posted on their Internet site at 10:21 p.m. EDT on Sunday night — and another link to it is here.


The Demise of the Financial System is Imminent

The next five years is not about winning but surviving.” This is the headline of an article I wrote in early August 2019. At that point I was primarily thinking of economic survival. But now the world is facing multiple threats and multiple failures. As I have already stated, the Coronavirus is not the cause of global market crashes but the catalyst.

But even if I have been totally certain that the world will see an economic collapse greater than any crisis for 100s of years, this is the worst catalyst that anyone could have expected. Yes, a global virus was always one of the potential risks but of all triggers, this one was certainly the most unwelcome and horrible.

Just to summarise that my market views haven’t changed. Stocks will go down by at least 90% from here and gold will surge to levels that few can imagine.

This very long commentary from Egon was posted on the goldswitzerland.com Internet site early on Monday morning CET — and another link to it is here.


Nine Meals from Anarchy — Jeff Thomas

In 1906, Alfred Henry Lewis stated, “There are only nine meals between mankind and anarchy.” Since then, his observation has been echoed by people as disparate as Robert Heinlein and Leon Trotsky.

The key here is that, unlike all other commodities, food is the one essential that cannot be postponed. If there were a shortage of, say, shoes, we could make do for months or even years. A shortage of gasoline would be worse, but we could survive it, through mass transport or even walking, if necessary.

But food is different. If there were an interruption in the supply of food, fear would set in immediately. And, if the resumption of the food supply were uncertain, the fear would become pronounced. After only nine missed meals, it’s not unlikely that we’d panic and be prepared to commit a crime to acquire food. If we were to see our neighbour with a loaf of bread, and we owned a gun, we might well say, “I’m sorry, you’re a good neighbour and we’ve been friends for years, but my children haven’t eaten today – I have to have that bread – even if I have to shoot you.

But surely, there’s no need to speculate on this concern. There’s nothing on the evening news to suggest that such a problem even might be on the horizon. So, let’s have a closer look at the actual food distribution industry, compare it to the present direction of the economy, and see whether there might be reason for concern.

This interesting commentary from Jeff put in an appearance on the internationalman.com Internet site on Monday sometime — and another link to it is here.  Then there’s this related story from the Zero Hedge website yesterday evening headlined “U.S. Food Industry Scrambles to Resupply Stores Amid Apocalyptic Surge in Demand


Customers return to Hong Kong’s protest-hit jewellery shops to sell their gold as coronavirus pushes prices sky high

Hong Kong’s jewellers, who took a big hit from months of anti-government protests, have found their shops busy again this year.

But the new wave of customers are not shopping for bracelets, wedding rings or earrings. They are there to sell their gold jewellery.

Sellers are taking advantage of the gold price, which has climbed almost 10 per cent this year to reach a seven-year high early last week. The rapid spread of coronavirus has dampened stock markets globally, and investors have been rushing to buy the yellow metal, long known as a safe haven.

The local gold price had risen 9.8 per cent as of March 9 to HK$15,540 (US$1,998) per tael, or 37.9 grams, before falling back to HK$14,670 by last Friday’s close. International gold also rose, jumping 1.5 per cent to US$1,703 per ounce on March 9, when global stock markets slumped amid fears about the outbreak and an oil-price war between Russia and Saudi Arabia.

I am thinking of taking my gold jewellery to sell as the gold price has reached such a high level,” said a potential seller who only wanted to be identified as Sandy. “I bought my gold jewellery some years ago when the price was almost 30 per cent lower than current levels.

I can take the profit now and buy them back when the price goes down. I am worried about the [coronavirus] outbreak, but then I think wearing a mask to go to the shop will [protect me].”

Fook Tai Jewellery Group, which has seven shops in Hong Kong, is one of many that have seen people rushing to sell their gold. In January and February, it saw a 50 per cent year-on-year increase in customers coming to sell their gold jewellery, bars or coins, according to Anita Lee, product manager at the company.

Whenever the gold prices rise to a high level, customers tend to come here to sell their gold jewellery. They are very price-sensitive,” she said.

This gold-related news item appeared on the South China Morning Post website at 3:30 p.m. Hong Kong Time on their  Sunday afternoon, which was 3:30 a.m. in New York — EDT plus 12 hours.  I found it on the gata.org Internet site — and another link to it is here.


The PHOTOS and the FUNNIES

Continuing east down Highway 16/The Yellowhead towards McBride on September 1…we stopped at a small park, Purden Lake Provincial Park, just off the highway a few kilometers.  The first shot was taken along the highway beside the park — and the second of the stream that flowed out of the lake — and third of the lake itself, looking southwest — and into the afternoon brightness.  As I’ve stated before, except for special effect purposes, I never like shooting directly into the light source, as you lose almost all the colour that may be in the photo.  Click to enlarge.


The WRAP

Well, the commercial traders were busy boys and girls yesterday.  Not only were they buying up every COMEX long contract being offered up by the non-commercial and small traders, they were also buying every precious metal-related equity that was being sold out of necessity, or panic — and then some.

As for these [non-commercial] Managed Money, Other Reportables — and Nonreportable/small traders, they were puking up long positions by the truckload on one hand — and going short with the other.

‘Da boyz’ blew the gold price down through its 200-day moving average like a hot knife through soft butter by almost 50 bucks intraday — and they also closed gold below it as well.  As I said earlier, Ted said that one should never underestimate the treachery of the Big 8 shorts when their financial backs were against the wall.  He was right about that, as he is about most things.

And silver, from its almost $19 high on February 24, they had it down $7+ from that mark intraday on Monday — and closed it well over four bucks below both its 50 and 200-day moving averages.  I can absolutely guarantee you that there’s not a single solitary technically-oriented Managed Money long position left.  The only Managed Money traders still long will be the non-technical types — and we’ll get a look at what’s left of them in Friday’s COT Report.

Platinum…wow!  It hit the $1,050 mark intraday in mid-January — and by intraday yesterday, they’d cut the price virtually in half since that high…somewhere around the $560 mark.  ‘Da Boyz’ closed platinum on Monday almost $250 below its 200-day moving average — and almost $300 below its 50-day moving average.  Every category of trader was mega net long against the Big 8 in platinum — and had been for years.  Friday’s COT Report will show us whether the Big 8 were able to turn the tables completely in this precious metal or not.

In palladium, JPMorgan et al. did cut its price in half intraday yesterday from its $2,800 spike high around the end of February — and closed it below it well below its 200-day moving average for the second day in a row.

And the crooks running the CFTC and the CME Group aided and abetted JPMorgan et al. all the way down.  The precious metals mining company executives didn’t utter a peep, as their industry, their companies — and us their stockholders got beaten bloody.  The World Gold Council and Silver Institute should all be held in utter contempt.  They can leave their resignations [and their stock options] on their desks on their way out the door.

Here are the six month charts for all four precious metals, plus copper and WTIC.  I was thinking of posting the 5-year charts for the four precious metals, but I just don’t have time tonight so, hopefully, I’ll remember tomorrow.  I also note that they hammered copper to a new intraday and closing low for this move down on Monday — and ditto for WTIC.  Click to enlarge.

I read the following in the Monday edition of the King Report late on Sunday night…”On Sunday, the Fed panicked again, cutting fed funds to ZERO to 0.25% and doing $700B more QE!!!  The Fed also said it will increase dollar SWAP lines.  This means Europe has a systemic problem.”

I’m sure the systemic problems start at Deutsche Bank — and most likely Commerzbank as well.  Both these German hedge funds masquerading as banks are “shovel ready”…to be buried, that is.  Both closed down about ten percent yesterday — and both at new all-time lows.

And more from Monday’s King Report…”This is option and futures’ expiry week, which will exacerbate market moves.  It is difficult to forecast futures & options’ expiry because institutions are big players in futures.  Will institutions roll over March contracts into June?  Will institutions replace expiring March contracts with stocks on the expiry open this Friday or will they let the contracts expire and decrease equity exposure?

The monumental risk is stocks tumble on fear that a severe recession is ordained and a depression is possible.  Traders, investors and pundits will be petrified that the Fed has spent its heavy weaponry for nothing and there is little the Fed can do, except to monetize everything and go Weimar.   Fed officials are scared Schiffless now.  If stocks continue to decline in coming days, they will need grief counselors.  If the credit markets become unruly in coming days, the Fed will need divine intervention.”…”The $ is plunging on the Fed’s panic and possible attempt to bailout Europe.”

As I stated in The Wrap in Saturday’s column: “We are done for — and there is no escape.  All we can do now is watch the central banks of the world’s attempt to salvage the unsalvageable.”

Nothing has changed since then — and now matters are worse.

Today, at the close of COMEX trading at 1:30 p.m. EDT, is the cut-off for this Friday’s Commitment of Traders Report and, without a shadow of a doubt, it will be one for the history books.  The changes will be massive — and that’s most likely understating it.  I’m sure that Ted will have more a little something to say about it in his mid-week commentary tomorrow — and I will steal the most salient bits for my Friday missive.


And as I post today’s column on the website at 4:02 a.m. EDT, the London/Zurich opens are less than a minute away — and I note that gold opened down about ten bucks the moment that trading began at 6:00 p.m. EDT on Monday evening in New York. It crawled unevenly higher until 9 a.m. China Standard Time on their Tuesday morning — and was up a few dollars at that juncture. But that was as high as it was allowed to get — and it has been sold very unevenly lower since — and is currently down $22.40 the ounce. Silver was forced to follow the same general price path as gold — and is down 15 cents as London opens. Platinum also rallied — and that ended around 9:35 a.m. CST. It has been wandering around a whole bunch of dollars either side of unchanged since then — and is lower by 9 bucks. Ditto for palladium, except it has been trading mostly on the plus side of the ledger during Far East trading — however it’s been smacked lower in the last few minutes — and is now down 2 bucks as Zurich opens.

Gross gold volume is pretty hefty already at around 111,000 contracts — and minus current roll-over/switch volume out of April and into future months, net HFT gold volume is about 86,000 contracts. Net HFT silver volume isn’t exactly light either…coming up on 22,000 contracts — and there’s 2,265 contracts worth of roll-over/switch volume in this precious metal.

The dollar index closed very late on Monday afternoon in New York at 98.07 — and opened up about 7 basis points once trading commenced around 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning. After a bit of an up/down move that took it to its current 97.98 low tick at 10:50 a.m. CST, it began to chop quietly higher. The ‘rally’ accelerated at that point — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the dollar index is higher by 30 basis points.


With every one of the Big 6 commodities now engineered in price well below their respective 200-day moving averages, all we can do is await their next rallies.  That will occur when the powers-that-be allow it — and not a moment before.

What JPMorgan et al. have in store for us, I don’t know.  But with the non-commercial and small traders most likely blown out of their net long positions — and most likely now massively short, the stage has never been more carefully set for some sort of sea change in the world’s financial system.  It’s Ted’s of the opinion that the Big 8 traders will be no-shows when the next rally commences  in the Big 6 commodities — and the traders holding short positions will blow the price sky high in what will immediately evolve into a ‘no ask’ market.  Then we’ll see upside price moves that will take your breath away.

The reason that’s possible is because there are no daily trading limits in gold and silver in the COMEX futures market currently…none, zero, nada.  So it can rise any amount on any given day — and most likely will.

So we wait some more.

The FOMC meeting begins today — and the proverbial smoke goes up the chimney at 2 p.m. EDT on Wednesday.  They certainly have their work cut out for them, but even they realize that the situation is beyond salvaging — and I await with great interest Jay Powell’s pronouncements at that time.

That’s all I have for today, which is more than enough — and I’ll see you here tomorrow.

Ed