Author Archives: Ed Steer

Ted Butler: Serious Inroads, But Still Unfinished Business

20 September 2019 —  Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold quietly lower once trading began at 6:00 p.m. EDT in New York on Wednesday evening — and its low tick of the day was set a few minutes before 9 a.m. China Standard Time on their Thursday morning.  It crawled very unevenly higher from there until the COMEX open at 8:20 a.m. EDT — and that was pretty much as high in price as it was allowed to get…a few dollars above $1,500 spot.  Once the 10 a.m. EDT afternoon gold fix was done in London, it was stair-stepped quietly lower — and back below $1,500 spot, until trading ended at 5:00 p.m. in New York.

The low and high ticks aren’t worth looking up.

Gold was closed on Thursday at $1,498.70 spot, up $4.80 from Wednesday.  Net volume was on the heavier side at a bit under 281,000 contracts — and there was 11,000 contracts worth of roll-over/switch volume on top of that.

Silver’s low of the day was set a few minutes after gold’s in morning trading in the Far East — and from that juncture it had a very unsteady up/down move that ended around 11:45 a.m. in London, which may or may not have coincided with an earlier than normal silver fix.  It rallied quietly from that juncture until around 9:10 a.m. in New York — and then crept quietly and unevenly lower until a down/up spike occurred a few minutes before 4 p.m. in the thinly-traded after-hours market.  It didn’t do much after that.

The low and high ticks in silver were recorded by the CME Group as $17.655 and $18.015 in the December contract.

Silver was closed at $17.75 spot, up 2.5 cents from Wednesday.  Net volume was somewhat elevated at a bit over 64,000 contracts — and there was a hair over 2,000 contracts worth of roll-over/switch volume in this precious metal.

Platinum was sold down to its low of the day by 8 a.m. CST — and it chopped very quietly and unevenly higher until 1 p.m. CEST in Zurich.  The rally became somewhat more focused at that point — and the high of the day was set about twenty-five minutes after the COMEX close.  But an hour later, someone came along in the very thinly-traded after-hours market — and tapped it five dollars lower.  Platinum was closed at $935 spot, up 6 bucks on the day.

The palladium price traded somewhat unevenly sideways in the Far East on Thursday morning, before catching a bid at the COMEX open.  That rally came to an end at the $1,600 spot mark about fifteen minutes before the Zurich close — and it traded very flat from there.  But, like in platinum, some kind soul appeared minutes before 2 p.m. and also took away five dollars of those gains.  Palladium was closed at $1,595 spot, up 29 bucks on the day, but was up over 35 dollars at its high tick.

The dollar index closed very late on Wednesday afternoon in New York at 98.56 — and opened up 1 basis point once trading commenced at around 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  Its 98.62 high tick was set around 8:55 a.m. CST — and it was all unevenly down hill until 9:15 a.m. in New York.  At that point it began to head higher — and that counter-trend rally lasted until minutes before 12:30 p.m. EDT.  It was down hill from that point until 2:00 p.m…but managed to gain most of that back by 3:30.  It traded sideways into the close from there.  The dollar index finished the Thursday session in New York at 98.27…down 29 basis points from its close on Wednesday.

Here’s the DXY chart, courtesy of BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…97.85…and the close on the DXY chart above, was 43 basis points on Thursday.  Click to enlarge as well.

The gold shares gapped up about a percent at the open — and the continued to crawl quietly and unevenly higher from that juncture.  That lasted until shortly before 2 p.m. in New York trading — and they crept a bit lower into the 4:00 p.m. EDT close from there.  The HUI finished higher by a very respectable 2.31 percent.

In all respects that counted for anything, the silver equities trading in a mostly similar manner as their golden brethren — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up by 2.07 percent.  Click to enlarge if necessary.

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

And of the three usual laggards, only Hecla finished down on the day — and only by a hair.  The other two, Buenaventura and Peñoles finished up respectable amounts.


The CME Daily Delivery Report showed that 3 gold and 166 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the two short/issuers were Advantage and ADM, with 2 and 1 contracts.  The two stoppers were Advantage and Morgan Stanley, with 2 and 1 contracts.  These transactions involved their respective client accounts.

In silver, there were three short/issuers…ABN Amro, Advantage and ADM, with 120, 25 and 21 contracts…all from their respective client accounts.  The two long/stoppers were JPMorgan and the CME Group, picking up 86 and 80 contracts…JPMorgan for its client account — and the CME Group for its own account.  They immediately reissued those contracts as 5×80=400 one-thousand ounce COMEX silver mini contracts.  Of that amount, ADM picked up 349 — and Advantage, the remaining 51.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in September fell by 5 contracts, leaving just 20 left, minus the 3 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 5 gold contracts were actually posted for delivery today, so that means that the change in open interest and deliveries match.  Silver o.i. in September rose by 27 contracts, leaving 195 still around, minus the 166 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that only 3 silver contracts were actually posted for delivery today, so that means that 27+3=30 more silver contracts just got added to the September delivery month.


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

In ETFs and mutual funds other than the changes in GLD, SLV and the COMEX warehouse stocks on Thursday, there was a net 39,279 troy ounces of gold added — and that number in silver was in the plus column by 376,478 troy ounces…most of which went into Deutsche Bank’s XAD6 ETF.

For the second day in a row, there were no reported changes in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.

There wasn’t much activity in silver.  Only 133,683 troy ounces was reported received — and all of that amount ended up at Brink’s, Inc.  There was only 50,374 troy ounce shipped out…30,363 troy ounces out of CNT — and the remaining 20,011 troy ounces departed Canada’s Scotiabank.  The link to that is here.

There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They reported receiving 1,631 of them — and shipped out another 1,181.  All this occurred at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

Bavaria, Maximilian II Emanuel, 1679-1726, Max d’or 1715

Material:  Gold     Full weight:  6.15 grams     Price: €2,690.00/USD$2,970

I have an average number of stories/articles for you today.


CRITICAL READS

Liquidity Shortage Getting Worse: Fed’s Repo Over-subcribed Even More as Funding Demand Jumps

For those hoping that the dollar shortage and overnight funding crunch would ease on the third day after the G/C repo rate exploded as high as 10%, we have bad news: it has not.

As we warned earlier today, when we previewed the result of today’s repo outcome, the only question would be whether the amount of bids submitted into today’s operation would be higher or lower than yesterday’s $80.05BN to get a sense of whether the funding pressure is easing. The answer: with $83.875BN in total bids submitted, not only was the $75BN operation oversubscribed again, but the total liquidity shortfall rose by almost $4 billion compared to Wednesday morning.

Furthermore, the fact that the operation was again oversubscribed means that once again there was one or more participants who did not get up to €9 billion in the critical liquidity they needed, and that the Fed will see a chorus of demands by everyone (because just like with the discount window “stigma”, nobody will dare to be singled out as the party seeking repo funds) to either expand the size of its operations, implement a fixed operation and/or transition to permanent open market operations, i.e. QE, as Powell hinted he may do yesterday.

The market will be looking at the amount of repos tendered to the Fed and whether the operation will again be oversubscribed; as a reminder, on Tuesday the repo received $53BN in bids, which jumped 50% on Wednesday to just over $80BN, while the operation remains capped at $75BN. Should the total notional remain in this ballpark it will suggest that funding stress remains.

This Zero Hedge article was posted on their Internet site at 1:33 p.m. EDT on Thursday afternoon — and another link to it is here.


Fiat money may not survive this recession — Peter Schiff

This 7:31 minute video interview with Peter showed up on the rt.com Internet site on Tuesday — and was posted on the youtube.com Internet site the following day.


Former Overstock CEO Byrne Dumps $90 Million Stock Gains Into Gold, Silver, Crypto “Out of Reach of the Deep State

After falling out of favor with shareholders over his company’s poor stock performance, comments about the “deep state” and his alleged relationship with Russian honeypot Marina Butina, Overstock CEO Patrick Byrne announced his resignation weeks ago.

And now, it looks like Byrne has finally checked out completely: on Wednesday after hours, he filed a Form 4 showing that he had sold his entire ~$90 million stake in the company into the stock’s recent squeeze as lending desks struggled to figure out how to handle the company’s recently proposed “digital dividend“.

His Form 4 showed that he sold about 4.8 million shares over the course of the past three trading sessions. His remaining 87,000 shares were given as a gift to an undisclosed recipient.

Then, in a blog post on his site Deep Capture, Byrne blamed the SEC, who he called “the Deep State’s pets“, according to MarketWatch.

Byrne said the assertion that he sold his shares due to lack of confidence in the company was “wrong” and said he would be using his newfound riches to invest in gold, silver and two unnamed cryptocurrencies as a “hedge” against the economy failing.

I borrowed the headline and the above commentary from a Zero Hedge story on this that Brad Robertson sent my way, but the link to the actual letter is one I picked up from my friend Peter Spina’s website…goldseek.com.  It’s an interesting read — and another link to it is here.


Democracy Doomed the Money System — Bill Bonner

The president, in his own words, is a “low interest guy” and “the king of debt.” He’s seen what lower interest rates can do for a leveraged real estate speculator.

Without lower rates, and a willingness on the part of the banks (or other big lenders) to refinance his projects, he probably would have gone broke in the ’90s.

But at least Mr. Trump was speculating on investment properties. Hotels, casinos, and apartment houses generate income. Bought wisely and managed correctly, they can pay off the debt.

But most of America’s $72 trillion in debt cannot be repaid. It was used to buy consumer items – tuna sandwiches, vacations, automobiles, pills – and to pay for the feds’ many boondoggles – drones, surveillance, and giveaways.

There is no investment return from this kind of spending. And even business borrowing has been focused on share buyback schemes rather than investment in productive assets.

It was this explosion in debt that engendered and nurtured the expansion of the last 10 years. Now, that expansion is the oldest on record, and the weakest ever too.

And since it was a consumer-based expansion rather than a capital investment boom, there will be no stream of income flowing from it to pay off the debt.

Instead, it’s either Inflate or Die. Either inflation and debt increase… or the boom collapses.

This worthwhile commentary from Bill appeared on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is hereGregory Mannarino‘s post market closing rant is linked here — and I thank Roy Stephens for that.


OECD Slashes Global Growth Outlook, Warns Germany Already In Recession

In one of the most downbeat forecasts on the global economy that we’ve seen so far this year, the Paris-based organization of wealthy nations known as the OECD – the Organization for Economic Cooperation and Development – warned that the global economy is heading toward a recession, and that governments aren’t doing enough in terms of fiscal stimulus to try and boost the economy.

Escalating trade policy tensions are taking an increasing toll on confidence and investment, adding to policy uncertainty, weighing on risk sentiment in financial markets, and endangering future growth prospects,” the OECD said.

The advocacy for fiscal stimulus follows reports that Germany is considering a “shadow budget” to bolster public investment as Europe’s economy slides.

Our fear is that we are entering an era where growth is stuck at a very low level,” said OECD Chief Economist Laurence Boone said. “Governments should absolutely take advantage of low rates to invest in the future now so that this sluggish growth doesn’t become the new normal.”

Of course, a report about global growth wouldn’t be complete without some Brexit  fearmongering, and the OECD is no exception. If the U.K. leaves without a deal, as is widely expected across Europe, its economy will be 2% lower than otherwise in 2020-2021, even if the exit is relatively smooth.

It’s a point central bankers have made for months. Following the ECB’s latest monetary stimulus push, outgoing President Mario Draghi said it’s “high time” for fiscal policy to take charge, signaling there’s not much more the ECB can do. “The takeaway for the euro zone today is do not rely on monetary policy to do the job alone,” Boone said. “Start investing to do the structural reforms that need to be done for more sustainable growth, and do it now.”

This news item showed up on the Zero Hedge website at 2:45 a.m. EDT on Friday morning — and another link to it is here.


Ruling elite in ‘state of panic’ over Brexit – George Galloway

The U.K. Supreme court has opened to hear the case surrounding Brexit, as lawyers urge Britain’s judges to rule that Prime Minister Boris Johnson’s suspension of Parliament was unlawful. Former MP George Galloway talks more on this ongoing drama.

This brilliant and spot on 7:23 minute video interview with the folks over at the rt.com Internet site is certainly worth your while…if you have the interest that is.  It was posted on their website on Tuesday sometime.


Banks Don’t Want Draghi’s Free Money as ECB Loans Fall Flat

The European Central Bank’s latest offer of free cash to lenders attracted little interest on Thursday, in a sign of just how much liquidity is already sloshing around the financial system.

An offer for three-year loans — at a rate that starts at zero and could fall as low as the deposit rate, currently minus 0.5% — was taken up by 28 banks for a total of just €3.4 billion ($3.8 billion), well below predictions of €20-100 billion.

The loans are part of a stimulus package by the ECB president to boost economic growth and inflation. But European lenders have little trouble accessing funds following years of loose monetary policy and some are even keen to turn away deposits to avoid charges from the ECB’s negative interest rates, which Draghi pushed even further below zero this month.

His package prompted unprecedented opposition inside the ECB, with the euro region’s biggest economies criticizing a plan to resume bond purchases. Negative rates have also been contentious, with top finance executives warning of damage to the financial system in the long run. Banks have said they want to see higher rates to increase the profitability of their lending businesses, but that’s a distant prospect given Europe’s ailing economy.

This Bloomberg news item put in an appearance on their website at 2:36 a.m. Pacific Daylight Time on Thursday morning — and was updated less than three hours later.  I thank Swedish reader Patrik Ekdahl for sharing it with us — and another link to it is here.


Zarif Warns of “All-Out War” If U.S. or Saudis Strike Iran

Iran’s foreign minister warned that any U.S. or Saudi strike on his country in response to the attacks on the kingdom’s critical oil facilities would lead to “all-out war.”

In an interview with CNN, Javad Zarif reiterated that Iran wasn’t involved in the weekend attacks and hoped to avoid a conflict. He said Yemen’s Iran-backed Houthi rebels, who have been fighting a Saudi-led coalition for four years and claimed responsibility, had the capability to carry out such a sophisticated operation.

I cannot have any confidence that they did it because we just heard their statement,” Zarif said. “I know that we didn’t do it. I know that the Houthis made a statement that they did it.”

Saudi and U.S. officials have said that the drones and missiles used were made by Iran, had never before been deployed by Iranian proxy groups, and came from a northerly direction, ruling out Yemen as a launch site. But they stopped short of saying the strikes were launched directly from or by the Islamic Republic, claims that could have propelled a drift toward war. The attacks caused an unprecedented surge in oil prices.

This is another Bloomberg story from Patrik Ekdahl.  This one showed up on their Internet site at 4:34 a.m. PDT on Thursday morning — and was updated seven hours later.  Another link to it is here.  Then there’s this commentary on this issue from Pepe Escobar that’s headlined “How the Houthis Overturned the Chessboard“.


Ted Butler: Serious Inroads, But Still Unfinished Business

By now, it would have been hard not to have read about the Justice Department’s landmark criminal indictments against three additional precious metals traders from JPMorgan. Two of the traders charged are current employees and include the head of global metals trading. The charges involve spoofing and market manipulation that extend back for nearly a decade. In a very serious turn, the Justice Department invoked the Racketeering and Corrupt Organization Act (RICO) and referred to the pattern of wrongdoing at JPMorgan as that of a criminal enterprise. I am grateful that the new charges validate virtually everything I have alleged about JPMorgan for more than ten years to the point where a subscriber quipped that the DOJ was plagiarizing my work.

Simply put, the Justice Department leveled the most serious (and deserved) charges against traders of JPMorgan possible, but stopped short of stepping over the critical line of charging the bank itself. This is not a knock on the Justice Department, whose case has been near flawless to this point. As much as I am convinced that JPMorgan has been the prime precious metals manipulator since 2008, indicting the bank for that would likely be a death sentence for JPMorgan with incomprehensible collateral damage to the financial system and society in general.

Another line that the Justice Department went right up to but didn’t cross was in not acknowledging the real crimes that JPMorgan has committed since it acquired Bear Stearns in 2008, and particularly since 2011. Sure, the many instances of spoofing cited – the entry of orders that are immediately cancelled and are solely intended to artificially move prices in a direction beneficial to the spoofer – are devoid of legitimacy and should be cracked down on. And there can be no question that the traders at JPMorgan raised the practice of spoofing to an art form unrivaled elsewhere. Even though spoofing came to be largely embedded in JPMorgan’s culture as a result of it taking over Bear Stearns (according to the DOJ), to focus exclusively on spoofing would be to miss the big picture.

This must read commentary from Ted showed up on the silverseek.com Internet site at 10:27 a.m. MST on Thursday morning — and another link to it is here.


The PHOTOS and the FUNNIES

This first shot is of Lillooet from considerably higher up on the road to the golf course.  This shot is looking mostly north-northwest.  The Fraser River — and the town on the west side of it, are laid out before you.  Arriving at the golf course, which we thought was a farm at first, we discovered that the local golfers use sheep to keep the fairway grass at a respectable length.  The owner of these animals/shepherd shows up every day and gives a special whistle — and they all come running, as they get some sort of food treat once their back in the corral/barn yard…which you can see in the last shot.  The ‘clubhouse’…such as it is…is the rust-coloured building just to the left of the barn. If you continue down the golf course road, you eventually end up back at Lytton, via the river ferry that I showed a few days ago.  We took that road during the summer — and as I said earlier, that’s a trip for another day.  Click to enlarge for all.


The WRAP

I was certainly happy to see the precious metal complex higher on the day when I got out of bed late yesterday morning.  However, it was just as obvious that there was quiet price management going on in all of them…either during the COMEX trading session, or in the thinly-traded after-hours market.

The jury is still out on whether or not we’re going to get a continuation of this engineered price decline that began at the very beginning of September.  In our daily telephone conversation with Ted yesterday, he said not to get my hopes up.  But the fact of the matter is that neither Ted, me…or anyone else knows where precious metal price are going from here.  And absent a black swan out of left field, their respective prices are still very much in the hands of JPMorgan et al.

Here are the 6-month charts for all four, plus copper and WTIC.  In the precious metals, there’s not much to see, except for palladium’s big rally yesterday — and even its price was being actively managed once it hit the $1,600 spot mark.  Copper was closed below its 50-day moving average for the fourth day in a row — and WTIC has given up more than half its gains since the bombings in Saudi Arabia on the weekend.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price began to crawl higher starting about twenty minutes or so before 8 a.m. China Standard Time on their Friday morning — and reached its current high tick at the 2:15 p.m. afternoon gold fix in Shanghai. At the moment, gold is up only $5.00 an ounce now. Silver’s price path was similar, albeit a bit more tortuous. It’s also off its Shanghai gold fix high — and up 13 cents as London opens. Platinum has been quietly stair-stepping its way higher in Far East trading — and it’s up 5 bucks. It has been the same for palladium as platinum, except it’s now up only 16 dollars as Zurich opens. And, like silver and gold, both these white metals were turned lower after the afternoon gold fix in Shanghai.

Net HFT gold volume is reasonably light at a bit over 42,000 contracts — and there’s a tiny 448 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is 8,500 contracts — and there’s a piddling 93 contracts worth of roll-over/switch volume on top of that.

The dollar index opened up 7 basis points once trading commenced at around 7:45 p.m. EDT in New York on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning. It has been ticking quietly and somewhat unevenly lower since — and is down 8 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Today, around 3:30 p.m. EDT, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  And as I pointed out in my Thursday missive, the data in it will be pretty much yesterday news…but it’s certainly within the realm of possibility that there could be a big surprise in it as well…something Ted pointed out last Saturday — and again in his Wednesday missive.

As I mentioned in my Thursday column, I wasn’t about to stick my neck out as to what might be in today’s COT Report, after being wildly optimistic this time last week.  Silver analyst Ted Butler had this to say about it in his mid-week commentary to his paying subscribers on Wednesday…”As far what to expect in this Friday’s COT report, after my epic miss last week in silver, I’ll take a pass on predictions this week, thank you very much. But should there be a massive improvement along the lines of what I expected last week, my suspicions will be raised about misreporting in last week’s report.


And as I post today’s efforts on the website at 4:02 a.m. EDT, I note that…withe dollar index now on a tear, gold is up only $4.30 the ounce — and silver is up only 12 cents. But platinum and palladium are both a bit higher as the first hour of Zurich trading draws to a close….with the former up 7 dollars — and the latter by 19.

Gross gold volume is now up to a bit over 54,000 contracts — and minus the tiny amount of roll-over/switch volume that there is, net HFT gold volume is a bit under 53,500 contracts. Net HFT silver volume is now up to around 10,600 contracts — and there’s still only 137 contracts worth of roll-over/switch volume on top of that.

The dollar index continued to creep quietly lower until 8:20 a.m. BST in London — and has jumped higher since. As of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s down only 1 basis point now.

That’s it for this column.  Have a good weekend as we usher in fall here in the northern hemisphere — and it will be the first day of spring ‘down under’.

I wish I was there.

Ed

‘Da Boyz’ Show Up On the Fed News

19 September 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price traded mostly sideways in Far East trading on their Wednesday — and began to head higher around 1 p.m. in London/8 a.m. in New York.  That rally was capped and turned quietly lower starting at 11:40 a.m. EDT.  That lasted until ‘The Word’ came out — and ‘da boyz’ were there to smack precious metal prices lower — and ramp the dollar index in the process.  The low tick was set at 2:45 p.m. in after-hours trading– and it recovered a decent amount of that engineered price declined by 4 p.m. — and the gold price didn’t do a thing after that.

The high and low ticks were reported by the CME Group as $1,512.70 and $1,498.20 in the October contract — and $1,519.50 and $1,505.00 in December.

Gold was closed in New York yesterday afternoon at $1,493.90 spot, down $7.00 from Tuesday.  Net volume was very heavy at a bit over 346,000 contracts — and there was a bit over 19,000 contracts worth of roll-over/switch volume on top of that.

The silver price was hit at 9 a.m. China Standard Time on their Wednesday morning — and after trading flat for a while after that, began to head lower starting shortly before 2 p.m. CST.  That lasted until shortly after 9 a.m. in London and, like gold, didn’t do much until a few minutes before 1 p.m. BST/8 a.m. EDT.  Its subsequent rally got capped and turned lower about noon in New York — and it was also sold down some more starting about thirty five minutes later.  It then proceeded to rally until ‘The Word’ came down at 2 p.m. from the Fed — and you know the rest.

The high and low ticks in silver were recorded as $18.12 and $17.65 in the December contract.

Silver was closed on Wednesday at $17.725 spot, down 28 cents from Tuesday.  Net volume was pretty heavy at 99,000 contracts, but not nearly as heavy as I was expecting — and there was 1,923 contracts worth of roll-over/switch volume on top of that.

The platinum price didn’t do much in Far East trading on their Wednesday — and was up a couple of dollars by the Zurich open.  It was sold quietly, but very unevenly lower until 2 p.m. in after-hours trading in New York — and also got smacked by ‘da boyz’ on the Fed news.  Then, like gold and silver, it came roaring back by a bunch before getting capped once again just minutes before 4 p.m. EDT.  Platinum was closed at $929 spot, down 9 bucks from Tuesday.

Palladium was sold down to its Far East low by noon in Shanghai on their Wednesday.  It rallied very decently after that — and was up a small handful of dollars by minutes before the Zurich open.  It ran into ‘something’ at that point — and then was sold quietly lower until the 10 a.m. EDT afternoon gold fix in London.  The bids were pulled — and it was down $20+ in seconds.  It recovered most of that by 2 p.m. in after-hours trading, but was sold lower on the Fed news.  It recovered almost all of that by the time trading ended at 5:00 p.m. EDT in New York.  Palladium was closed at $1,566 spot, down 10 dollars on the day.

Despite the fact that the precious metals were all sold lower on ‘The Word’ from Powell, there was no question in my mind that all would have closed higher if they’d been allowed to trade freely in the after-hours market.


The dollar index closed very late on Tuesday afternoon in New York at 98.26 — and was opened down about 5 basis points once trading commenced around 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning.  From that point, the index worked its way quietly higher until around 10:20 a.m. in London — and then sold off equally quietly until Jay Powell opened his pie hole at 2:00 p.m. in New York.  The dollar index got the expected ramp job from the usual ‘not-so-gentle hands’ — and the high tick of the day was set around 2:45 p.m. EDT.  It chopped very unevenly lower from there — and finished the Wednesday session at 98.56…up 30 basis points from Tuesday’s close.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…98.13…and the close on the DXY chart above, was 43 basis points on Wednesday.  Click to enlarge as well.

The gold shares opened unchanged, but dipped slightly right away — and then traded quietly sideways just below the unchanged mark until ‘The Word’ came down at 2:00 p.m. EDT.  Their low ticks came around 2:50 p.m. and, along with the gold price, they rallied a bunch from there going into the 4:00 p.m. close.  The HUI closed down 2.01 percent.

It was almost precisely the same price pattern in the silver equities, so I shan’t bother with the play-by-play on them, except to note that despite the hammering that the underlying metal took, Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down only 1.54 percent.  Judging by that, I’d guess that there was some pretty heavy-duty bottom fishing going on.

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

Considering the hit that ‘da boyz’ laid on gold and silver yesterday…particularly silver…I was more than impressed by how well their equities behaved — and that’s particularly true of the silver stocks.


The CME Daily Delivery Report showed that only 5 gold and 3 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the two short/issuers were ADM and Advantage, with 3 and 2 contracts — and the three long/stoppers were Advantage, Morgan Stanley and JPMorgan, with 2, 2 and 1 contacts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the two short/issuers were ADM and Advantage, with 2 and 1 contracts from their respective client accounts.  The lone long/stopper was the CME Group, which immediately reissued them as 3×5=15 one-thousand ounce mini silver contracts.  ADM stopped 9 of those — and Advantage picked up the other 6.

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

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in September rose by 2 more contracts, leaving 25 still around, minus the 5 contracts mentioned a few short paragraphs ago.  Tuesday’s Daily Delivery Report showed that 3 gold contracts were actually posted for delivery today, so that means that 2+3=5 more gold contracts were just added to September.  Silver o.i. in September fell by 94 contracts, leaving 168 still open, minus the 3 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 94 silver contracts were actually posted for delivery today, so the change in open interest and deliveries match.


There was another decent deposit into GLD yesterday, as an authorized participant added 103,694 troy ounces of gold.  But over at SLV, an a.p. removed 1,028,828 troy ounces.

In the rest of the world’s ETFs and mutual funds, there was 40,000 troy ounces of gold added on a net basis on Wednesday.  And net of what happened in the COMEX warehouse stocks and SLV yesterday…there was an additional 467,000 troy ounces of silver added as well.

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

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

The only activity in silver was one truckload…579,489 troy ounces…that was received at Brink’s, Inc.  The link to that is here.

It was also all zeros over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.


Here are four charts that I haven’t posted for many a moon.  They show all the physical gold, silver, platinum and palladium held in all known depositories, ETFs and mutual funds as of the close of business on Wednesday…over a 20-year time period — and, with the exception of palladium, the amount of precious metals flowing into these depositories continues unabated…albeit with the odd bump here and there.  Click to enlarge for all.

The drain on palladium shows just how serious the supply situation is in this precious metal, as the users have drained these funds because they needed it desperately.

I have an average number of stories/article for you today.


CRITICAL READS

N.Y. Fed Announces Third Consecutive Repo Operation on Thursday at 8:15 a.m. EDT

The Fed may or may not launch QE4 at some point in the near future, even though Powell said that growing the balance sheet is “certainly possible“, but for now the Fed is stuck with the only liquidity-injecting operation in its arsenal, namely repo, and after two consecutive days of repos, one for $53BN on Tuesday, and another for the full $75BN allotment today, moments ago the NY Fed announce that a third consecutive repo would take place on Thursday between 8:15am and 8:30am ET, “in  order to help maintain the federal funds rate within the target range of 1-3/4 to 2 percent.”

As a reminder, today for the first time in a decade, the Effective Fed Funds rate was fixed at 2.30%, 5bps above the top range of the fed funds range.  Click to enlarge.

The Thursday overnight repo op will be the same size as the previous two, or $75 billion, which means that once again investors will be watching if the offering will be oversubscribed as it was today, when over $5 billion in Primary Dealer bids did not find the liquidity they needed.

The question of course is whether the market will be satisfied by this option, or will de boycott the continued use of band-aid solutions such as repos, and overnight repo rates will soar, making it clear that the repo market freeze will continue until the Fed finally launches QE.

Those wondering what tomorrow’s general collateral repo rate will be, it will be revealed on Thursday morning shortly before 8am, or minutes before the repo is set to take place. If the rate soars again as it did on Tuesday, expect more “technical difficulties” and more delays, as the market makes its displeasure clear to Powell.

This rather unsurprising news item was posted on the Zero Hedge website at 4:24 p.m. on Wednesday afternoon EDT — and another link to it is here.  The Bloomberg article on this is headlined “Fed Injects Liquidity Into Markets as Key Rate Busts Through Cap” — and I thank Swedish reader Patrik Ekdahl for that one.


Very Divided FOMC Cuts Rates As Expected, Fails to Address Liquidity Crisis, Sees No More 2019 Cuts

Summary: The following critical things stand out:

  • Fed cuts both the fed funds (by 25bps to 1.75%-2.00%) and IOER (by 30bps to 1.8%) rates as expected, but does not expect any more rate cuts in 2019; the terminal rate was kept unchanged at 2.5%.
  • The Fed has never been more divided: 7-3 vote to cut; Esther L. George and Eric S. Rosengren voted to keep rates unchanged; Bullard voted for a 50bps rate cut (guaranteeing him the job over Kashkari when Trump fires Powell); 7 FOMC members predicted another cut this year, while 10 say hold or raise.
  • Hawkish: even among the dissenters, not a single FOMC member expected more than 1 rate cut any time in the future.
  • No mention of POMO or permanent repo ops: with consensus shifting rapidly to expect some major liquidity injections from the Fed namely POMO, watch overnight repo rates explode overnight as Powell failed to provide any repo support; what the Fed did do is announce it would lower the offering rate for overnight repos to 1.70%, 5bps below the bottom of the EFFR – this will hardly be sufficient for the market.
  • In summary, Powell has dismissed the significance of funding volatility and sounds hawkish to those that saw these issues as requiring the Fed to restart POMO and grow the balance sheet again.

Not surprisingly, Trump was not amused.  This long, chart-filled Zero Hedge commentary appeared on their website at 2:07 p.m. on Wednesday afternoon EDT — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Powell Confirms QE4 Is Coming, Just Not Today

For all those who were wondering why Powell would leave the market – which had made its expectation for some sort of POMO announcement today very clear – hanging so badly, sending risk assets and gold tumbling and the dollar surging, Powell finally felt some pity for the world’s liquidity addicts when he hinted that QE is indeed coming, just not today. To wit:

It is certainly possible that we’ll need to resume the organic growth of the balance sheet sooner than we thought.”

And just in case that was confusing, Powell also said that the Fed would revisit the question of returning to “organic growth” in the intermeeting period.

It wasn’t clear how the Fed injecting liquidity equates to “organic growth” of the balance sheet, but we’ll leave that for the pedants.

The moments Powell confirmed that QE4 is indeed on the way, around 2:50pm ET, stocks spiked, and the dollar slumped.

And so with expectations thus set, the thing that will be necessary for Powell to launch QE4 – i.e., the “Fed needs another Lehman” moment we predicted yesterday…is another repo market crisis, and/or a plunge in stocks, or maybe both just to be sure. And since the “QE4” outcome is precisely the one that Trump also wants, expect fireworks in repo as soon as tonight.

As for Powell’s promise to cut rates more should the economy worsen, we expect that Trump already knows the rules of the game, and will announce some major escalation in the trade war with China in the coming days if not hours.

This rather interesting news story showed up on the Zero Hedge website at 3:33 p.m. EDT on Wednesday afternoon — and another link to it is hereGregory Mannarino‘s  10-minute Wednesday “after-the-market-close” rant is linked here — and it’s definitely worth your while.  I thank ‘Mac P’ for reminding me to post it.


WeWork Troubles Expose Deeper Problems With Our Money System — Bill Bonner

What’s that sound?

They say they don’t ring a bell at the top of a bull market… but we hear something ringing.
From the tech sector, for example, came peals worthy of Notre Dame on Easter Sunday. But they weren’t celebrating life everlasting.

Instead, they sounded more like a funeral dirge… slow and deathly. They marked the demise of WeWork, and maybe the whole herd of unicorns that has been destroying American capital by the hundreds of billions of dollars per year.

WeWork, as we warned Dear Readers last month, wasn’t worth a fraction of its intended $47 billion IPO price tag. In the last few days alone it has been marked down by $37 billion, which is a lot of money, even for tech companies.

One of our associates rents space from the company in Dublin. And when we went for a visit, it took only five minutes to see that the company was doomed.

There was nothing unusual about the office or about the people working in it. What was unusual was the business model.  WeWork rents offices… loses $5,000 per customer… and hopes to make it up on volume.

This very interesting — and very worthwhile commentary from Bill put in an appearance on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.


Europe’s banks may be at risk of failing if negative rates continue: EIU

Large banking institutions face the risk of failure if interest rates in Europe continue to stay negative, an economist told CNBC after the European Central Bank cut rates last week.

I think there are big questions to banking sector profitability,” global chief economist of the Economist Intelligence Unit, Simon Baptist, said Friday.

The ECB on Friday cut its main deposit rate by 10 basis points to -0.5% — an all-time low.

European banks have struggled for years in a persistently low interest rate environment. Rates in the Euro zone first hit zero in 2012 and turned negative in 2014. Low interest rates hurt lenders’ profits as they narrow the margin that banks can earn.

If interest rates stay below zero, they’re certainly not all going to be able to be profitable, running as they are today, in 10 years’ time,” Baptist said on CNBC’s “Street Signs.”

There’s either going to have to be consolidation … maybe some bank failures, or some really radical changes in business models,” he said.

This cnbc.com article was posted on their website at 10:31 p.m. on Tuesday evening EDT — and was updated about an hour later.  I thank Jim Gullo for pointing it out — and another link to it is here.


Russia refuses to play musical chairs with America’s debt, continues to dump U.S. Treasuries

Moscow has continued to sell off U.S. Treasury securities, cutting its stockpile by $2.35 billion in July, according to the latest U.S. Department of the Treasury data released on Tuesday.
Russia’s holdings of U.S. state debt amounted to $8.5 billion in July, with long-term U.S. Treasury securities standing at $6.2 billion and short-term at $2.2 billion. In June, Russian investment in Treasury bills was around $10.8 billion.

Japan remains the biggest holder of U.S. Treasury securities for the second month in a row. In June, Tokyo held Treasury bills worth of $1.13 trillion, around 8 billion more than it had a month earlier. Japan is followed by China with $1.11 trillion.

Russia used to be one of the major holders of U.S. Treasuries, but since last year it has been steadily cutting the investment in U.S. debt in line with the nation’s de-dollarization policy. Russia is now on par with countries like Oman and New Zealand, which are at the bottom of the list of U.S. Treasury holders.

As a matter of state policy, Moscow has also been diversifying its reserves, increasing bullion purchases to record levels and earning the title of the world’s most committed purchaser of gold. As of September, Russia held the fourth largest gold reserves in the world worth $109.5 billion, according to the country’s central bank.

The above four paragraphs are all there is to this brief news item that showed up on the rt.com Internet site at 9:58 a.m. Moscow time on their Wednesday morning, which was 2:58 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for bringing it to our attention — and another link to the hard copy is here.


Aramco Attacks an “Act of War” By Iran: Pompeo After Arriving in Jeddah

What’s the end game here? Secretary of State Mike Pompeo has just arrived in Jeddah for talks with Saudi leaders over a response to the weekend attacks on two of the kingdom’s major oil facilities.

After a prior press conference by the Saudi Defense Ministry where it for the first time assigned public blame on Iran for the attacks which initially knocked out half of the kingdom’s daily oil output, saying the air attacks “unquestionably” had Iranian state sponsorship, Pompeo has announced the Aramco attacks constitute an “act of war” by Iran.

And President Trump himself said Wednesday from the White House that it looks like Iran did it but that he still hopes to avoid war.

He announced via a statement on Twitter that, “I have just instructed the Secretary of the Treasury to substantially increase Sanctions on the country of Iran!” — in what appears an alternative to launching a military response.

I’m not looking to get into new conflict, but sometimes you have to,” Trump told reporters Wednesday.

Pompeo’s new “act of war” declaration indeed takes the potential for escalation right back to boiling point.

This news story showed up on the Zero Hedge website at 1:10 p.m. EDT on Wednesday afternoon — and another link to it is here.  Then there’s this rather conflicting ZH story from 9:25 a.m. EDT on Wednesday morning headlined “War Averted? Trump Announces New Iran Sanctions Instead” — and I thank Brad Robertson for that one.


Silver faces this big misconception and why triple digits makes sense — Keith Neumeyer

Silver faces serious supply constraints, and although most people may not realize, it is a very rare metal that should be trading in the triple digits in price, this according to Keith Neumeyer, CEO of First Majestic Silver.

We’re mining eight to one, so for every one ounce of gold that’s being mined worldwide, we’re only mining eight ounces of silver. Silver is extremely rare and people don’t get it,” Neumeyer told Kitco News on the sidelines of the Denver Gold Forum. “People think silver is in abundance, but it’s not.”

Of course neither party involved in this interview breathed a word as to why the silver price isn’t triple digits already.  That’s a big ‘no-no’ on any occasion, especially at the Denver Gold Forum…where us great unwashed are held at bay lest we speak the truth to all these silent co-conspirators that are keeping precious metal prices where they are.  This 12-minute interview with Keith put in an appearance on the youtube.com Internet site on Tuesday sometime — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Mexico’s Second Largest Silver Mine Shuts Down, Reopens & Shuts Down Again

In the past five months, Mexico’s second-largest silver mine was shut down, reopened and the recently shut down once again.  Due to a new blockade at Newmont-Goldcorp’s Peñasquito Mine, stemming from issues with a local trucking contractor, the company has temporarily ceased operations.

Unfortunately for Newmont-Goldcorp, 2019 was supposed to be a banner year for gold and silver production at the Peñasquito Mine.  Newmont which recently merged with Goldcorp, is now the owner of the Peñasquito Mine, one of the largest gold-silver polymetallic mines in North America.
I wrote about the Peñasquito in my article, THE MASSIVE 46 STORY TALL STRUCTURE: The Peñasquito Mine Tailings Dam.

Currently, the Peñasquito Mine Tailings Dam is 280 feet tall (approximately 28 stories) and will grow another 180 feet over the next ten years to a total of 460 feet tall.  This is the curse when producing gold and silver at very low ore grades… you have to put the millions of tons of the waste somewhere.

Now, besides the issues with the local trucking contractor, the locals have also been protesting about the massive water consumption that is needed to process millions of tons of ore per annually at the gigantic low-grade open-pit mine.  Regardless, Peñasquito continues to be plagued by these issues as it tries to access the higher-grade gold and silver ores in the undeveloped areas in the mine.

This interesting silver-related news item showed up on the srsroccoreport.com Internet site on Wednesday sometime — and I thank Brad Robertson for bringing it to my attention — and now to yours.  Another link to it is here.


JP Morgan gold and silver spoofing defined as ‘racketeering’ by U.S. Prosecutors — Lawrie Williams

Probably yesterday’s biggest precious metals story was not only the indictment of JP Morgan’s precious metals trading desk on ‘spoofing’ in the markets, but the extremely serious nature of the charges being brought against the U.S.’s biggest bank.  For years there have been arguments and counter arguments against whether there has been price manipulation in the precious metals markets by the big banks.  This latest prosecution suggests strongly that there is as ‘spoofing’ is a key weapon in the manipulators’ arsenal and JP Morgan is no small regional bank but perhaps the U.S.’s biggest which appears to have made millions, if not billions, of dollars from these alleged activities.

‘Spoofing’ is the practice of making huge buy and sell orders on the futures markets, thus substantially influencing prices, but then cancelling the orders before they are executed.  Prosecutors seem to be suggesting that such manipulative activities were inherited from the practices of Bear Stearns, which was taken over by JP Morgan back in 2008, and have been going on ever since – probably at an enhanced level – but without mentioning the names of the banks concerned.  However it is two JP Morgan traders and their department head who have been indicted.

According to a Bloomberg report, the JPMorgan investigation grew out of a multi-bank U.S. crackdown on manipulation of commodities markets using techniques including spoofing. The Justice Department had already brought criminal charges against 16 people, including traders who worked for Deutsche Bank and UBS. Seven pleaded guilty, one was convicted at trial and another was acquitted.  The latest indictments may thus be only the ‘tip of the iceberg’ in terms of large scale manipulations of all kinds of markets.

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


Regulators Expand Already Massive Precious Metals Manipulation Probe to Other Markets

Just two days after the DOJ took the unprecedented step of designating the JPMorgan precious metals trading desk as a “criminal enterprise” using unusually aggressive language which reminded legal experts of indictments utilizing the RICO Act, and which hopefully ended years of precious metal manipulation by the group formerly headed by Blythe Masters, CNBC now reports that the probe is set to spread significantly as Federal prosecutors and regulators “are expanding their already aggressive investigations of fraudulent precious metals trades at J.P. Morgan Chase to other U.S. markets and financial firms.”

The inquiry into market manipulation of all kinds comes amid a spike in criminal prosecutions and civil actions in the past year involving so-called “spoofing” in the precious metals markets, which we now find had been taking place with reckless abandon for years at JPMorgan and virtually all other major banks.

The prosecutors broadened their investigation thanks to information received from traders questioned for spoofing-related charges, and as in most RICO cases, the information obtained from those traders has led to criminal charges against other individuals.

In short: what we for many years said was blatant manipulation of precious metals was precisely that, and now the participants in said manipulating cabal are being treated as a mafia syndicate by the DOJ.

The widening inquiry is being led by the Justice Department and the U.S. Commodity Futures Trading Commission as they continue their pursuit of individuals and firms for manipulating U.S. markets.

The crackdown may result in one of the biggest conviction rings for the DOJ since the financial crisis, with CNBC adding that the scope of the investigations has grown to the point where the criminal fraud division of the Justice Department expects to add personnel to the existing team to assist with the investigations and prosecutions of cases.

According to CNBC source, prosecutors now have an easier time identifying suspected spoofing due to advancements in the way the Department collects and analyzes trade data internally. Of course, they could have merely come to this site any time between 2009 and 2018 and observed the countless cases of blatant intraday gold and silver manipulation/spoofing which we pointed out, week after week.

Better late than never, one supposes.  Ted has only been screaming about this very thing for the last 10 years or so.  This story was posted on the Zero Hedge website at 1:54 p.m. EDT on Wednesday afternoon — and I thank Larry Galearis for pointing it out.  Another link to this very worthwhile article is here.  The CNBC news item that this ZH piece is based is linked here — and I lifted it from Ted’s mid-week commentary to his paying subscribers yesterday afternoon.


The PHOTOS and the FUNNIES

Arriving in Lillooet in mid afternoon on June 26, we headed up golf course road — and on the way up I took these three shots.  The first — and from the lowest elevation [looking mostly north] is of the town itself…spread out on both sides of the Fraser River…with most of it on the west bank…the portion you can see here.  The river itself is right in the centre of the photo.  The second photo [looking west] is of the Seton canal that joins Seton Lake to the Seton power station situated just above the river.  The third shot is from a little higher up, also looking west.  There’s a CN train pulling out of the Lillooet rail yard — and the smallish earth dam [18m/59ft] that raised Seton Lake by about 3 metres/10 feet, is right in the centre of the shot.  Click to enlarge.


The WRAP

With the interest rate cut the expected 25 basis points, ‘da boyz’…with or without JPMorgan’s help…pulled their bids — and were able to cover some of their short positions.  But if JPMorgan wasn’t involved in helping out as precious metal prices were driven lower, they were certainly using that opportunity to cover as many short positions as possible — and add to long positions as well.

Despite the battering the both silver and gold took after the Fed news, their respective 50-day moving averages were not broken to the downside.  Those events may or may not be in out future.  But, if ‘da boyz’ do go after them, it will be as Ted Butler says, the only reason they’ll go lower in price.

There were no free markets in anything yesterday — and the big rally in the Dow, along with the sell-off in the dollar index that began around 2:50 p.m. EDT on Wednesday, has been attributed to the words that Powell spoke at that moment…“It is certainly possible that we’ll need to resume the organic growth of the balance sheet sooner than we thought.”  Then the algos kicked in — and instead of closing for big losses, both the Dow and S&P closed in the green.  I suspect that the PPT were there to give them a helping hand.

Powell also went on to say that this about negative interest rates…”We looked at them; they worked reasonably well elsewhere; we do not look to employ NIRP; we would use large scale asset purchases.”  Freely translated it means that massive QE is on the way at some point — and most likely sooner rather than later.

The bellwether for that would be warning about earnings that came from FedEx yesterday, which is a real company that’s wired directly all the world’s economies.  It got clobbered for a 13 percent loss, despite what the rest of the equities were doing.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  Let me point out immediately that all that price action in the four precious metals on the Fed news, took place after the COMEX close — and doesn’t show up on Wednesday’s dojis on the charts below.  I think that would apply to copper and WTIC as well, so these charts should be viewed for their entertainment value only.  All of the pertinent data from after the 2 p.m. Fed news will be updated at the close of COMEX trading today — and I’ll have them in tomorrow’s column.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price was sold quietly lower until shortly before 9 a.m. China Standard Time on their Thursday morning, which was the current high tick in the dollar index. It then crept quietly higher from there — and is up $1.70 the ounce currently. The silver price action was the same — except it’s down 4 cents as London opens. Ditto for platinum, except its current low tick was set at 8 a.m. CST. It was back at unchanged by the fix — and was turned lower at that juncture — and is down 2 dollars. The palladium price has been trading very unevenly sideways in the Far East, but it’s still up 2 bucks as Zurich opens.

Net HFT gold volume is very chunky already at around 65,00 contracts — and there’s a tiny 799 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is getting up there as well, at a bit under 14,000 contracts — and there’s a piddling 197 contracts worth of roll-over/switch volume on top of that.

The dollar index opened up 1 basis point once trading commenced around 7:45 p.m. EDT in New York on Wednesday evening. It ticked higher by a few basis points, but began to head quietly lower starting around 8:55 a.m. CST on their Thursday morning. And as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is down 15 basis points.


Of course none of yesterday’s price/volume action will be in tomorrow’s Commitment of Traders Report, as it occurred the day after the cut-off.  So, in most respects that matter, Friday’s COT Report is already ‘yesterday’s news’.  But, having said that, there’s always the possibility of a surprise in tomorrow’s COT Report…something that I’d only thought about, but Ted mentioned in passing in his mid-week commentary to his paying subscribers yesterday.

Today ‘The Word’ comes down from both the Bank of Japan and the Bank of England regarding what their intentions are regarding their own interest rates.  But as I read in this morning’s edition of the King Report…nothing much is expected to happen with either bank.

But still front and centre for the moment is the ongoing liquidity issue in the repo market — and that isn’t about to go away any time soon — and Powell’s comments on that situation at the FOMC soirée yesterday offered no help worthy of the name.


And as I post today’s missive on the website at 4:02 a.m. EDT, I note that the gold price was turned a bit lower shortly after the London open — and it’s only up 40 cents an ounce at the moment. The silver price was capped at that afternoon gold fix in Shanghai — and then turned a bit lower then — and again shortly after London opened — and it’s down 7 cents as the first hour of London trading ends. It was almost the same for platinum as it was for silver — and it’s down 3 bucks currently. Palladium continues to struggle higher after its tap-down at the Shanghai gold fix — and it’s still up 2 dollars as the first hour of trading in Zurich draws to a close.

Gross gold volume is coming up on 84,500 contracts — and minus the tiny amount of roll-over/switch volume, net HFT gold volume is a bit over 81,500 contracts. Net HFT silver volume is really getting up there now at around 16,500 contracts — and there’s still only 215 contracts worth of roll-over/switch volume in this precious metal.

The dollar index hit its current low tick [98.39] around 7:45 a.m. in London — and has had an up/down move since — and is down 14 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

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

Ed

The World Awaits ‘The Word’ From Jerome Powell

18 September 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much of anything in Far East trading on their Tuesday until a few minutes before 2 p.m. China Standard Time.  It then dipped to its low tick of the day, which came a very few minutes before the London open.  From there it crept quietly and unevenly higher until around 1:15 p.m. in New York, but was sold lower from that juncture until trading ended at 5:00 p.m. EDT.

The low and high ticks are barely worth looking up, but were reported as $1,494.60 and $1,508.40 in the October contract — and $1,500.90 and $1,515.00 in December.

Gold was closed in Tuesday in New at $1,500.90 spot, up $3.00 dollars on the day — and well of its high.  Net volume was about 315,500 contracts — and there was around 21,500 contracts worth of roll-over/switch volume in this precious metal.

The price path for silver was similar to gold’s up to and including its pre-London open low tick.  It rallied a bit from there until around 9:30 a.m. BST — and the traded quietly sideways until the dollar index rolled over at 9:40 a.m. in New York, when a real rally commenced.  That lasted until the 1:30 p.m. EDT COMEX close — and it was sold a bit lower until around 2:30 p.m.  It chopped quietly sideways from that point until trading ended at 5:00 p.m. EDT.

The low and high ticks in silver were recorded by the CME Group as $17.82 and $18.17 in the December contract.

Silver was closed on Tuesday afternoon in New York at $18.005 spot, up 18 cents from Monday.  Net volume was very decent at just under 86,000 contracts — and there was a hair over 3,000 contracts worth of roll-over/switch volume on top of that.

Platinum traded flat in Shanghai until 2 p.m. CST on their Tuesday afternoon — and it was then sold lower until 11 a.m. in Zurich trading.  The price began to chop rather nervously higher from there — but was sold down hard to its low tick of the day which came at, or shortly before, the afternoon gold fix in London.  It recovered sharply from there — and rallied until the COMEX close.  Then, like silver, it was sold quietly lower until around 4 p.m. in the very thinly-traded after-hours market — and didn’t do a thing after that.  Platinum was closed at $938 spot, up 3 bucks from Monday.

Palladium was up 11 dollars or so by shortly after 8 a.m. CST on their Tuesday morning — and the selling in this precious metal didn’t start until 1 p.m. CST.  It did a lot of jumping around shortly after the COMEX open in New York, but then quietly began to tick higher in price once the afternoon gold fix was put to bed at 10 a.m. EDT.  That lasted until shortly before 1 p.m. — and it traded flat until shortly after 3 p.m.  It was up a dollar or so at that juncture, but that wasn’t allowed to last — and it was sold down hard over the next hour, before trading flat into the 5:00 p.m. EDT close.  Platinum was closed at $1,576 spot, down 8 dollars on the day.

As I’ve pointed out many times…palladium is a very thinly-traded market, even in New York, so huge price moves in either direction are the norm in illiquid markets such as this one.


The dollar index closed very late on Monday afternoon in New York at 98.61 — and opened up 4 basis points once trading commenced around 7:45 p.m. EDT on Monday evening.  It then proceeded to chop quietly but unevenly sideways a handful of basis points either side of unchanged until 9:40 a.m. in New York.  The slight negative bias in the index, which was already apparent by that time, became far more pronounced — and the 98.74 low tick was set a minute or so after the 1:30 p.m. EDT COMEX close.  It ticked higher by a handful of basis points until 3:00 p.m…before giving it all back by the 5:30 p.m. close.  The dollar index finished the Tuesday session at 98.23…down 38 basis points from its close on Monday.

There was some price correlation between the dollar index and the precious metal price action, on that decline in New York trading, but it was the least evident in gold.

Here’s the DXY chart, courtesy of 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…97.82…and the close on the DXY chart above, was 41 basis points on Tuesday.  Click to enlarge as well.

The gold stocks began to head higher the moment that trading began at 9:30 a.m. in New York on Tuesday morning — and their high ticks came shortly after 11 a.m. EDT.  They sold off a bit until noon — and then crept quietly higher right into the 4:00 p.m. close.  The HUI finished higher by a very respectable 3.04 percent.

The silver equities followed a virtually identical price path as the gold shares, but despite silver’s nice gains, his Intraday Silver Sentiment/Silver 7 Index closed higher by only 1.95 percent.  Click to enlarge if necessary.

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

I was particularly impressed by the fact that the precious metal equities continue to creep quietly higher, even though both silver and gold were sold lower at, or just before, the 1:30 p.m. COMEX close.  It appeared that there was a quiet ‘buy’ program running underneath the market from noon EDT onwards.


The CME Daily Delivery Report showed that 3 gold and 94 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, the sole short/issuer was Advantage.  They also stopped 2 of them — and JPMorgan picked up the other one.  All transactions involved their respective client accounts.

In silver, the two short/issuers were Advantage and ADM…with 92 and 2 contracts — and the two long/stoppers were JPMorgan and Advantage, with 90 and 4 contracts.  Like in gold, all these contracts…both issued and stopped…involved 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 September fell by 6 contracts leaving 23 still around, minus the 3 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 6 gold contracts were actually posted for delivery today, so that means that the change in open interest and deliveries match…for the second day in a row.  Silver o.i. in September dropped by 53 contracts, leaving 262 still open, minus the 94 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 147 contracts were actually posted for delivery today, so that means that 147-53=94 silver contracts just got added to the September delivery month and, I would suspect, that those are the same 94 contracts that are out for delivery on Thursday.


There was a decent amount of gold added to GLD yesterday, as an authorized participant put in 188,537 troy ounces.  There were no reported changes in SLV.

Other than the changes in warehouse stocks and GLD, there was very little in/out activity in the other gold and silver ETFs and mutual funds yesterday.

There was a tiny sales report from the U.S. Mint on Tuesday.  They sold 25,000 silver eagles — and that was all.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday was 96.453 troy ounces/3 kilobars [SGE kilobar weight] that were taken out of Brink’s, Inc.  I won’t bother linking this for obvious reasons.

It was a pretty busy day in silver, as 1,199,415 troy ounces was reported received — and 783,746 troy ounces was shipped out.  There was one truck-load…599,538 troy ounces…received at Brink’s, Inc. — and the other truckload…599,877 troy ounces…was dropped off at CNT.  In the ‘out’ category, there was a truckload…600,373 troy ounces…that departed Canada’s Scotiabank.  Another 123,313 troy ounces was shipped out of HSBC USA — and the remaining 60,058 troy ounces left the Loomis International depository.  In the paper category, there was 1,249,070 troy ounces adjusted out of existence in the Eligible category over at Brink’s, Inc. — and one has to wonder what that was all about.  There was also a transfer out of the Registered category and back into Eligible over at CNT — and I suspect that it was JPMorgan-related transfer to save on storage costs of silver that they’ve taken delivery of in September…either for clients, or their own account.  The link to all this is here.

For the second day in a row, there was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, as 1,020 were reported received — and 2,816 were shipped out the door.  All of this occurred at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

Saxe-Gotha-Altenburg, Ernest I, 1640-1675, Reichsthaler 1675

Origin: Roman German Empire     Mint: Gotha     Full Weight: 28.82 grams  Price: €3,950.00/US$4,385

I have an average number of stories/articles for you today.


CRITICAL READS

$53.2 Billion in QE Lite: Fed Concludes First Repo in a Decade Amid Liquidity Panic

[A]fter a torrid 30 minutes in which the New York Fed first announced a repo operation, then announced the repo was canceled due to technical difficulties, then mysterious the difficulties went away just minutes later, at precisely 10:10 a.m., the Fed concluded its first repo operation in a decade, which while not topping out at the $75 billion max, was nonetheless a significant $53.15 billion…

While the Fed did not disclose how many banks participated in the operation, it is safe to say it was a sizable number. Worse, the result from today’s unexpected repo operation, we can now conclude that in addition to $1.3 trillion in ‘excess reserves’, a Fed which is now cutting rates and will cut rates by 25bps tomorrow, the U.S. financial system somehow found itself with a liquidity shortfall of $53 billion that almost paralyzed the inter-bank funding market.

Oh, and for those wondering why the Fed did a repo, the answer is simple: it did not want to launch QE just yet. But make no mistake, once repo is insufficient, the Fed will have no choice but to escalate to the next step which is open market purchases.

Which brings us to the bigger question of how long such overnight repos will satisfy the market, and how long before the next repo rate spike prompts the Fed to do the inevitable, and restart QE.

At least president Trump will be delighted.

This very long chart-filled Zero Hedge story, which had been updated four times during the Tuesday trading session, was posted on their Internet site at 9:32 a.m. EDT on Tuesday morning — and I thank Brad Robertson for sending it.  Another link to it is here.  Then there’s this Bloomberg story from 8:35 p.m. EDT yesterday evening that Patrik Ekdahl sent me at 3:00 a.m. EDT this morning…”Fed Preps Second $75 Billion Blast With Repo Market Still on Edge


Wall Street May Get $40 Billion Reprieve From Trump Regulators

Wall Street could soon get one of its most consequential wins of the Trump era as regulators are considering ripping up a rule that’s forced banks to set aside billions of dollars for swaps trades, according to people familiar with the matter.

At issue is a requirement approved during the Obama administration that’s made lenders post tens of billions in margin when engaging in derivatives transactions with their own affiliates. Industry lobbyists have long argued that the demand, which came out of the 2010 Dodd-Frank Act, is redundant and puts U.S. banks at a competitive disadvantage to overseas rivals.

Banks now appear poised to get their way. The Federal Deposit Insurance Corp. will hold a public meeting Tuesday to propose eliminating the margin requirement, said two people briefed on the plan. Other agencies, including the Federal Reserve and the Office of the Comptroller of the Currency, are also expected to recommend scrapping the rule, said the people who asked not to be named the proposal hasn’t been publicly disclosed.

The FDIC announced last week that its board would meet Sept. 17 to vote on a swap margin proposal without providing any further details.

Leash Loosened

The move is the latest sign of how, bit by bit, watchdogs appointed by President Donald Trump are loosening the leash put on banks after the 2008 financial crisis. Regulators have already made headway softening stress-testing requirements and overhauling the Volcker Rule, a landmark constraint that restricted banks from making dangerous market bets with their own capital.

This Bloomberg story from Monday was picked up by the news.yahoo.com Internet site on Tuesday — and it was sent to us by Brad Robertson.  Another link to it is here.


Democracy Is a Scam — Bill Bonner

The news this week, so far, has focused on Saudi Arabia and the oil market.

Somebody launched an assault on a refinery. Immediately, a group called the “Houthis” claimed responsibility. And immediately, too, U.S. Secretary of State Mike Pompeo announced that it was the fault of Iran…and U.S. President Trump said he was locked and loaded for a retaliation against someone.

Swamp Games

We bring this up only to show why democracy can’t work. And we mention it only to show why we are doomed.

The average American has too much sense to worry much about the politics of the Levant or the shifting sands of Mesopotamia. He knows he could devote his whole life to them and still have only a faint idea of what was going on.

He knows, too, that it’s none of his concern.

So he naturally defers to his elites, believing that they are on his team.

Alas, they are not. They are playing their own game…

In the case of foreign policy, the elites pretend that almost everything is a matter of grave national security… and that the credibility, power, and safety of the USA are at stake in every dust-up in every godforsaken corner of the earth.

This leads to trillions in appropriations, contracts, and consulting gigs… medals and “thank you for your service”… and the glory of empire and the raw pleasure of just being able to boss other people around.

This very interesting commentary from Bill showed up on the bonnerandpartners.com Internet site early on Tuesday morning EDT — and another link to it is here.


Questions, Not Answers, Surround U.S. Push To War With Iran — Tom Luongo

When President Trump fired National Security Adviser John Bolton last week rational people the world over cheered.

When there was news that Trump would meet [Iran] on the sidelines of the U.N. General Assembly in a few weeks there were sighs of relief.

When Benjamin Netanyahu goes to Moscow to get Vladimir Putin’s blessing to continue airstrikes in Syria was told no, the world said, “Finally! Enough is enough.”

The problem is that there were also very powerful people who were not happy about these things.

Moreover, there are a lot of nervous people out there worried that Tuesday’s election in Israel will not go the way they want it.

A lot of people have invested a lot of time and money in ensuring Netanyahu stays in power. And I don’t just mean Bibi himself, who will likely go to jail on corruption charges if he doesn’t win.

I mean a lot of people in the U.S., Saudi Arabia, the U.K. and in Europe, all of the places where anti-Russian, anti-Iranian and pro-Israeli sentiments abound.

And this brings up the main question I always have in the wake of one of these major escalations of tensions with the country currently catching the Twin Eyes of Sauron in D.C. and Tel Aviv.

Why do they always seem to occur right after moments of de-escalation and there’s the threat of peace breaking out somewhere?

It does always seem to happen that way, doesn’t it?  This very worthwhile commentary from Tom put in an appearance on the Zero Hedge website at 9:59 a.m. on Tuesday morning EDT — and it’s the second offering of the day from Brad Robertson.  Another link to it is here.


Draghi Leaves It to Lagarde to Pick Up the Pieces

It is not easy being in Christine Lagarde’s shoes. The incoming president of the European Central Bank has not yet presided over her first Governing Council meeting, but she will have to face down a revolt over the central bank’s decision to restart quantitative easing before she even starts.

Lagarde may want to thank Mario Draghi for pushing through such a momentous decision in the face of widespread opposition. But the former managing director of the International Monetary Fund will now need all her political skills to ensure that the ECB does not become unmanageable from the very beginning of her term.

The intellectual case for pushing through such a comprehensive package — which also included a rate cut and easier lending terms to banks — was compelling. The euro-zone economy is slowing and inflation is widely off the central bank target of just below 2%. As Draghi said, it would be a lot better if governments with fiscal space — such as Germany and the Netherlands — took the lead in spurring a recovery by increasing investment spending or cutting taxes. But in the absence of a sustained fiscal stimulus, the ECB has no option but to unleash its monetary might.

Still, the decision came at an awkward time and was overshadowed by disagreements. On Oct. 31, Draghi will step down at the end of his eight-year presidency to make way for Lagarde. The decision to restart quantitative easing reportedly faced opposition from the governors of the central banks of Germany, France and the Netherlands, and from executive board members including Benoit Coeure. The head of the Dutch central bank, Klaas Knot, took the unusual step of criticizing the decision in an official statement.

Lagarde will have to deal with the inevitable fallout. At a hearing at the European Parliament this month, she pledged to act with “agility” and to continue with Draghi’s loose monetary stance for a “prolonged period of time.” These comments suggest she’s probably comfortable with the actions the ECB took last week. But it will be far harder to defend the new scheme of net asset purchases when she takes the central bank’s top seat in November. To make things worse, the rebellion at the central bank is far larger than anything Draghi has had to deal with before.

This opinion piece by Ferdinando Giugliano was posted on the Bloomberg website at 10:00 p.m. Pacific Daylight time on Monday night — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.


Russia & Iran to switch to SWIFT-free banking system

Russia and Iran will transfer payments using an alternative system to the internationally recognized SWIFT money transfer network, the governor of the Iranian central bank, Abdolnaser Hemmati, announced.

Instead of SWIFT, a system that facilitates cross-border payments between 11,000 financial institutions in more than 200 countries worldwide, the two countries will use their own domestically developed financial messaging systems – Iran’s SEPAM and Russia’s SPFS.

Using this system for trade and business exchanges between EAEU [Eurasian Economic Union] member states can help develop and expand trade exchanges between the member states as well,” Abdolnaser Hemmati said, as cited by Mehr News Agency on Tuesday.

Tehran is set to officially join the Russia-led free-trade zone, the EAEU, next month. The document on Iran’s participation was ratified in June by the nation’s parliament (Majlis) and President Hassan Rouhani has already ordered that the free trade zone agreement be implemented.

Russia began development of SPFS in 2014 amid Washington’s threats to disconnect the country from SWIFT.

The first transaction on the SPFS network involving a non-bank enterprise was made in December 2017. Around 500 participants, including major Russian financial institutions and companies, have already joined the payment channel, while some foreign banks have shown interest in joining.

This news item appeared on the rt.com Internet site at 2:58 p.m. Moscow time on their Tuesday afternoon, which was 7:58 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for pointing it out — and another link to it is here.


U.S. defense failure…Why Washington has to blame Iran over Saudi attacks — Finian Cunningham

The devastating blitz on Saudi Arabia’s oil industry has led to a flurry of accusations from U.S. officials blaming Iran. The reason for the finger-pointing is simple: Washington’s spectacular failure to protect its Saudi ally.

The Trump administration needs to scapegoat Iran for the latest military assault on Saudi Arabia because to acknowledge that the Houthi rebels mounted such an audacious assault on the oil kingdom’s heartland would be an admission of American inadequacy.

Saudi Arabia has spent billions of dollars in recent years purchasing U.S. Patriot missile defense systems and supposedly cutting-edge radar technology from the Pentagon. If the Yemeni rebels can fly combat drones up to 1,000 kilometers into Saudi territory and knock out the linchpin production sites in the kingdom’s oil industry, then that should be a matter of huge embarrassment for U.S. “protectors.”

American defense of Saudi Arabia is germane to their historical relationship. Saudi oil exports nominated in dollars for trade – the biggest on the planet – are vital for maintaining the petrodollar global market, which is in turn crucial for American economic power. In return, the U.S. is obligated to be a protector of the Saudi monarchy, which comes with the lucrative added benefit of selling the kingdom weapons worth billions of dollars every year.

According to the Stockholm International Peace Research Institute, Saudi Arabia has the world’s third biggest military budget, behind the U.S. and China. With an annual spend of around $68 billion, it is the world’s number one in terms of percentage of gross domestic product (8.8 per cent). Most of the Saudi arms are sourced from the U.S., with Patriot missile systems in particular being a recent big-ticket item.

Yet for all that financial largesse and the finest American military technology, the oil kingdom just witnessed a potentially crippling wave of air assaults on its vital oil industry. Saudi oil production at its mammoth refinery complex at Abqaiq, 205 miles (330 kms) east of the capital Riyadh, was down 50 per cent after it was engulfed by flames following air strikes. One of the Saudi’s biggest oilfields, at Khurais, also in the Eastern Province, was also partially closed.

There are credible reports that the damage is much more serious than the Saudi officials are conceding. These key industrial sites may take weeks to repair.

This longish, but worthwhile commentary from Finian was posted on the rt.com Internet site at 4:04 p.m. Moscow time on their Monday afternoon, which was 9:06 a.m. in Washington — EDT plus 7 hours.  I thank Larry Galearis for pointing it out — and another link to it is here.  A parallel story to this, from the moonofalabama.org Internet site, headlined “How Russian And Iran Beat Their Opponents’ Strategies“…is linked here.  I thank Larry for that one as well.


LBMA Board Member & JP Morgan Managing Director Charged with Rigging Precious Metals

Michael Nowak, JP Morgan Chase managing director and head of the bank’s global precious metals desk, who is also a Board member of the London Bullion Market Association (LBMA), has just been indicted and charged by the U.S. Department of Justice (DoJ) with manipulating the prices of precious metals-futures contracts over an 8 year period.

The DoJ charges against Nowak following the DoJ – FBI and CFTC investigation now mean that a Board member of the London Bullion Market Association (LBMA), a board which sits at the very top of the LBMA’s governance structure, has now been charged by U.S. federal prosecutors with participating in a multi-year racketeering conspiracy to manipulate precious metals markets and defraud customers.

According to the LBMA website, the LBMA Board brings “independence” and “decision making capability” as well as “promotes and evidences LBMA’s core values of leadership, trust and integrity“.

The ball is now in the LBMA’s court. Will the LBMA do the decent thing and explain to the global gold market how one its Board of Directors is now accused of a ‘racketeering’ conspiracy and other federal crimes in connection with the manipulation of the precious metals markets (gold, silver, platinum and palladium) spanning more than eight years and involving thousands of unlawful trading sequences?

Will the LBMA remove Nowak from its Board of Directors? Will the LBMA reprimand or expel JP Morgan from its membership list? Or will the LBMA try to cover this up by deleting the offending pages from its website? The LBMA Board member page as of today has been saved here.

By supporting a fraudulent market structure, by protecting its member bullion banks and by fighting against transparency, the LBMA is doing nothing to disprove that it is not central to the giant paper gold and silver markets, the biggest financial crime in the history of the world.

Somehow managing to implant itself as the self-appointed referee to the physical gold market, this latest scandal is further evidence and ammunition that the LBMA and its bullion bank members cannot be anything but working against the physical market with full force, that LBMA is the proverbial fox in the hen house, and that the LBMA is an integral part of the scheme to keep the price of gold subdued.

Very well put!  This long, drawn-out commentary by Ronan appeared on the bullionstar.com Internet site at 7:17 a.m. Singapore time on their Tuesday morning, which was 7:17 p.m. in New York on Monday evening — EDT plus 12 hours.  But all you really need to know is in the above seven paragraphs that I’ve cut and paste from it.  But if you wish to read the rest, which is a slog, I found it embedded in a GATA dispatch — and another link to it is here.


The PHOTOS and the FUNNIES

Here’s a closer look at that ferry on the Fraser River a kilometer or so west of Lytton that I featured in the last photo in Tuesday’s column.  This thing works on the power of the current, using its pontoons in water, as ‘sails’ would work in the air.  Very ingenious.  All three river ferries that we’ve been on in B.C. have been of this type.  The next two shots were taken an hour or so later on our way to Lillooet via B.C. Highway 12 from Lytton.  It’s scenery on a grand scale.  The coastal mountain range of British Columbia are on the left side of the photos.  Click to enlarge.


The WRAP

I’m not prepared to read too much into Tuesday’s price action.  I was somewhat surprised that ‘da boyz’ allowed gold and silver to close above $1,500 and $18 spot, respectively.  However, having said that, they didn’t close above those numbers by much.

Here are the 6-month charts for the Big 6 commodities — and there’s not much to see in the four precious metals.  Copper was closed right on its 50-day moving average — and WTIC gave up about half of its Monday gains.  Click to enlarge for all.

And as I type this paragraph, the London open is less than a minute away — and I note that after trading flat for about four hours, the gold price edged higher by a dollar or so in late morning trading in the Far East on their Wednesday, but began to slide around noon in Shanghai. At the moment, the gold price is up 30 cents the ounce. Silver didn’t do much until 9 a.m. CST — and at that juncture it was sold down about 8 cents withing the next half-hour or so. It then traded pretty flat until shortly before 2 p.m. CST — and at that point it began to tick lower — and is down 12 cents as London opens. Platinum has been trading sideways a few dollars either side of unchanged since it began at 6:00 p.m. EDT in New York on Tuesday evening — and is up a dollar currently. Palladium was sold quietly lower until noon in Shanghai — and has been on the upswing ever since — and is up 2 dollars as Zurich opens — and off its high tick of a few minutes prior, when it was up 6 bucks.

Net HFT gold volume is pretty quiet at only 35,500 contracts — and there is 1,168 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is fairly decent already at around 10,100 contracts — and there’s a piddling 83 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down about 5 basis points once trading commenced around 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning. It has been crawling quietly and rather unevenly higher since — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, it’s up 4 basis points.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and after last week’s big misses, I’m not going to hazard a guess as to what might be in this week’s report.  Ted may have a sentence or two about it in his mid-week commentary to his his paying subscribers this afternoon — and I will most likely borrow them for my Friday missive.

Also today, at 2:00 p.m. EDT…’The Word’ comes down from the Eccles Building.  The talk on the Internet is that we’ll only see a 25 basis point drop…but it’s not an outcome that I would be prepared to be the proverbial ten dollars on…especially with all the ‘stuff’ that’s going on in the U.S. and abroad these days.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price hasn’t done much during the last hour — and is up 30 cents the ounce. Silver is now down 17 cents as the first hour of London trading ends. The platinum price got hit a minute or so before the Zurich open — and it’s now down 4 dollars. Palladium got hit at the same time — and is now back at unchanged as the first hour of Zurich trading draws to a close.

Gross gold volume is still pretty quiet at about 43,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit over 40,500 contracts. Net HFT silver volume is now up to a bit over 11,500 contracts — and there’s still the same 83 contracts worth of roll-over/switch volume that was shown an hour earlier.

The dollar index has been chopping erratically sideways-to-upwards during the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up 9 basis points.


I expect that the markets will move on the word from the Fed…but which way — and by how much, remains to be seen.

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

Ed

Zero-Bound or Worse Along the Road to Perdition

14 September 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold off a few dollars once trading began at 6:00 p.m. EDT in New York on Thursday evening — and from that point it crawled quietly and unevenly sideways until 2 p.m. China Standard Time on their Friday afternoon.  It began to head higher at that juncture, but ran into obvious resistance once London opened — and it crawled higher until 1 p.m. BST/8 a.m. EDT, which was its high tick of the day.  ‘Da boyz’ showed up at the point, or very shortly after — and the low tick was set at 3:00 p.m. EDT in after-hours trading in New York.  It edged a few dollars higher from there going into the 5:00 p.m. close.

The high and low ticks in gold were reported as $1,509.80 and $1,486.70 in the October contract…and $1,516.60 and $1,493.10 in December.

Gold was closed on Friday in New York at $1,487.90 spot, down $10.90 from Thursday.  Net volume was way up there at a bit under 352,000 contracts — and there was around 13,500 contracts worth of roll-over/switch volume in this precious metal.

Silver was sold down about a nickel starting at the open of trading on Thursday evening EDT.  It crept higher by about a dime starting shortly after 1 p.m. CST — and from the London open onwards, wasn’t allowed to do much.  It was started on its downward price path the same time as it was for gold…1 p.m. BST/8 a.m. EDT — and the low tick was set a couple of minutes before 3 p.m. in after-hours trading in New York.  It recovered a dime or so from there, but half of that tiny gain was gone by the 5:00 p.m. EDT close.

The high and low ticks in silver were recorded by the CME Group as $18.265 and $17.47 in the December contract…an 80 cent intraday move.

Silver was closed on Friday at $17.415 spot, down 64.5 cents from Thursday.  Net volume was very heavy, but not as heavy as you might expect…all things considered…at just under 96,500 contracts — and there was a bit over 11,000 contracts worth of roll-over/switch volume on top of that.

The platinum price was sold very quietly lower until around 11:30 a.m. CST on their Friday morning — and it didn’t do much from there until the dollar index took a header at 2 p.m. China Standard Time.  It began to head higher from there, but ran into ‘resistance’ once Zurich opened — and it crawled quietly higher until the COMEX open in New York.  It was sold down a bit from there, until shortly before 9 a.m. EDT — and then began to head sharply higher.  That rally was capped and turned lower at, or minutes before, the 10 a.m. EDT afternoon gold fix in London — and it was sold back below unchanged by a few dollars by a minute or so after 1 p.m. in COMEX trading.  Its rally attempts back above the unchanged market were all turned aside — and platinum was closed at $946 spot, down 3 dollars from Thursday.

The palladium price was down 15 bucks or so by 10 a.m. CST on their Friday morning — and then didn’t do much until around 2 p.m. CST.  It made it back to the unchanged mark by the Zurich open, but that was as high as it was allowed to get.  From there it was sold quietly and rather unevenly lower until shortly before 12 o’clock noon in New York.  It crept a bit higher until shortly before 2 p.m. EDT — and traded pretty flat from there into the 5:00 p.m. close.  Palladium was closed at $1,590 spot, down 10 dollars on the day.

The dollar index closed very late on Thursday afternoon in New York at 98.31 — and then opened 10 basis points higher once trading commenced around 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It crept very quietly lower from there until a very few minutes after 2 p.m. CST on their Friday afternoon — and then proceeded to head rather sharply lower.  It had one bounce on the way to the 98.00 mark — which occurred around 9:35 a.m. in London.  From that juncture it was bounced off that price mark a few times, until it began to ‘rally’ starting around 12:55 p.m. in London…7:55 a.m. in New York.  That lasted until 10:15 a.m. EDT — and it began to head quietly lower from there, but then took a real header from that juncture [at least according to the DXY chart below] — and it closed at 97.95.  The dollar index was adjusted higher — and it was officially closed at 98.26…down 5 basis points from Thursday.

It’s almost unnecessary to point out that the goings-on in the currency market had zero to do with what was happening in the precious metal price arena, as that was strictly a paper affair in the COMEX futures market.

Here’s the DXY chart for Friday, courtesy of Bloomberg as always.  Click to enlarge.

And here’s the 5-year U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…97.83…and the close on the DXY chart above, was 43 basis points on Friday.  Click to enlarge as well.

The gold stocks gapped up a bit at the open — and hung in there until JPMorgan et al. began to lean on the gold price around 10:15 a.m.  That sell-off lasted for about thirty-five minutes — and the shares chopped quietly sideways until 2 p.m. in New York trading.  They were sold off a bit more going into the 4:00 p.m. EDT close — and the HUI closed lower by 1.99 percent.

The silver equities performed in an identical manner as their golden brethren, expect their sell-off…not surprisingly…was a bit more severe.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 3.38 percent.  Click to enlarge if necessary.

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

Considering the severity of the sell-offs in both gold and silver…particularly silver…I though that the precious metal equities weren’t too badly beaten up.  And remember that there was a buyer for every share sold — and it’s a given that they hands that hold them now, are much, much stronger than the ones that sold them.


Here are the usual three charts from Nick that show what’s been happening for the week, month — and year-to-date. The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI and the Silver 7 Index.

Here’s the weekly chart — and except for palladium, it’s a sea of red.  All of this week’s losses occurred on Monday, Thursday and Friday…mostly Friday, as ‘da boyz’ really worked over the precious metals yesterday.  Click to enlarge.

Here’s the month-to-date chart — and the big sell-offs in both gold and silver on Thursday and Friday after the long weekend [on record volumes] took their tolls on the performance of everything over that time period, plus what was added during the current week.  It’s pretty ugly — and the continuing suppression of the silver price, plus the ongoing underperformance of Buenaventura, Peñoles and Hecla Mining is certainly not helping the Silver 7 Index. Click to enlarge.

Here’s the year-to-date chart — and it’s still all green by a very decent amount, so all is not lost.  JPMorgan et al.’s continuing near death grip on the silver price is readily apparent in its lack-lustre price gains relative to gold — and in the underlying values of their associated stocks as well…notably the dismal year-to-date performance of the three silver stocks mentioned above. Click to enlarge.

It certainly appears that we’re at the start of another ‘wash, rinse, spin…repeat’ cycle.  However, I very much doubt that this current engineered price decline will last all that long although, as I’ve said before, it could be ugly…albeit brief.  It’s not a given that we’ll get a rate cut from the Fed on Tuesday, but I’ll be one of many that will be shocked if we don’t.  But this rush to zero-bound in interest rates is a headwind that JPMorgan et al. are fighting with increasing desperation with each passing week — and it will be all that much worse by next Saturday.


The CME Daily Delivery Report showed that 1 gold and 98 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

The lone gold contract was issued by Advantage — and stopped by Morgan Stanley.  Both transactions involved their respective client accounts.

In silver, the two short/issuers were Advantage and ABN Amro, with 74 and 21 contracts out of their respective client accounts.  The largest long/stopper was JPMorgan, picking up 43 contracts in total…42 for its client account — and 1 for its own account.  In second spot was Advantage, with 41 for its client account — and in very distant third place was Morgan Stanley, picking up 7 contracts for its client account as well.

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

So far in September, there have been 1,724 gold contracts issued/reissued and stopped — and that number in silver is a pretty chunky 8,197.

The CME Preliminary Report for the Friday trading session showed that gold open interest in September fell by 6 contracts, leaving 25 still open, minus the 1 lone contract mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 6 gold contracts were posted for delivery on Monday, so the change in open interest and deliveries match for a change.  Silver o.i. in September declined by 136 contracts, leaving 389 still around, minus the 98 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 231 silver contracts were actually posted for delivery on Monday, so that means that 231-136=95 more silver contracts just got added to the September delivery month.


There was a decent-sized withdrawal from GLD on Friday, as an authorized participant removed 188,545 troy ounces.  And, for the third day in a row, there were no reported changes in SLV.

In other gold ETFs on Friday, there was a net inflow of around 89,000 troy ounces…even through there were huge withdrawals from both GLD and the COMEX depositories.  In the silver ETFs, there was a net 931,000 troy ounces taken out yesterday…and that was mostly because of two big withdrawals from Deutsche Bank and Julius Baer.  Here’s the daily silver numbers from Nick’s website so you can see all this for yourself.  Click to enlarge.

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

Month-to-date the mint has sold 4,000 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — and 686,000 silver eagles.

There was a tiny bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  Nothing was reported received — and only 64.302 troy ounces/2 kilobars [SGE kilobar weight] were shipped out.  For obvious reasons, I won’t bother linking this amount.

There was some activity in silver, as 856,324 troy ounces was received — and only 6,999 troy ounces were shipped out.  In the ‘in’ category, there was a small truckload…555,991 troy ounces…dropped off at CNT — and the remaining 300,333 troy ounces was deposited at Brink’s, Inc.  In the ‘out’ category, there was 5,981 troy ounces that departed CNT — and the remaining 1,018 troy ounces…one good delivery bar…was shipped out of Delaware.  The link to all this is here.

It was a very busy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  There were 500 kilobars received — and 4,550 shipped out.  All of this activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

Memmingen, City, Ducat 1730…..Bicentennial of the Augsburg Confession

Origin: Roman German Empire     Material: Gold     Full weight: 3.49 grams

Price: €3,665.00/USD$4,032


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, September 10, certainly was nowhere near close to what Ted was hoping/expecting.  There was no change in Commercial net short position in silver at all — and not anywhere near as much as he was forecasting in gold.

In silver, the Commercial net short position increased by a piddling 90 contracts, which is no change at all.

They arrived at that number by reducing their long position by 2,217 contracts — and they also reduced their short position by 2,127 contracts.  It’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, there wasn’t much change in any of the categories.  The Managed Money traders reduced their long position by 2,728 contracts — and also reduced their short position by 1,432 contracts.  It’s the difference between those two numbers…1,296 contracts…that represents their change for the reporting week.  The other categories also had changes of similar sizes.  Nothing to see here folks.

Looking in the Producer/Merchant category in the Commercial category, where JPMorgan hides out, they increased their net short position by 1,590 contracts…so JPMorgan may or may not have increased their short position by 1,000 contracts.  So that puts JPMorgan’s short position in the COMEX futures market in the 25-26,000 contracts…which is basically unchanged from last week.

Ted pointed out that the traders in the Swap Dealers category of the Commercial traders, did cover 3,760 short contracts, which they did so at a loss.

The Commercial net short position in silver remains unchanged from the prior week at 423.8 million troy ounces.

So despite the record volume levels in silver last week, it ended up being about 99.5 percent computer driven day trading, with no real positioning changes at all…as Ted mentioned yesterday afternoon in our usual Friday telecon.

Of course there were no moving averages broken during the big engineered price declines on Thursday and Friday of last week, so that may partially explain why the Managed Money traders stood their ground.

Here’s Nick’s 3-year COT chart for silver — and there’s nothing much to see.  Click to enlarge.

Silver’s configuration from a COT perspective is still bearish, but not as bad as gold — and yesterday’s price action may signal a more significant engineered price decline lies ahead.  But, as Ted also pointed out, it’s the only bearish factor for silver right now.


In gold, The commercial net short position fell by 32,130 contracts, or 3.21 million troy ounces of paper gold.

They arrived at that number by adding 8,344 long contracts — and they also reduced their short position by 23,786 contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was only partly the Managed Money traders that made up the difference, as all three categories reduced their net long positions during the reporting week.  The Managed Money traders reduced their long position by 25,700 contracts — and also reduced their short position by 255 contracts.  It’s the difference between those two numbers…25,445 contracts…that represents their change for the reporting week.

As it must be, the difference between that number — and the commercial net short position…32,130 minus 25,445 equals 6,685 contracts.  That was made up by the traders in the other two categories, as the ‘Other Reportables’ reduced their net long position by 5,377 contracts — and the traders in the ‘Nonreportable’/small trader category reduced their net long position by 1,308 contracts.

In the commercial category, both the Producer/Merchants and the Swap Dealers covered short positions during the week…the former category by only 1,479 contracts — and the latter by a chunky 19,976 contracts.  Ted’s of the opinion that, like in silver, these contracts were closed out at a loss.

The commercial net short position in gold is now down to 30.56 million troy ounces.

Here’s the 3-year COT chart for gold — and the rather minor improvement should be noted.  Click to enlarge.

Like in silver, there were no critical moving averages broken during the reporting week.  So why the Managed Money traders were reducing their long positions in gold is a mystery…a mystery only equaled by the fact that there was no change at all in silver.  Why the dichotomy you ask???  Ted and I discussed this — and neither one of us had a satisfactory explanation.  However, he may have come up with one by the time he posts his weekly commentary on his website this afternoon.

But no matter how you slice or dice this…the Managed Money traders are set up to be fleeced by the commercial traders once again.  And as I said about silver, that process may have begun yesterday.

In the other metals, the Manged Money traders in palladium increased their net long position by a further 337 contracts — and as I mentioned last week, there are never big position changes in palladium.  The Managed Money traders are now net long the palladium market by 12,162 contracts…about 58 percent of the total open interest, which is grotesque.  Total open interest in palladium is 21,038 COMEX contracts.  In platinum, the Managed Money traders increased their net long position by another very big amount…5,128 contracts during the reporting week…the second big weekly increase in a row.  The Managed Money traders are now net long the platinum market by 25,735 COMEX contracts…a bit over 27 percent of the total open interest.  The traders in the other two categories are still net long platinum big time as well.  In copper, the Managed Money traders decreased their net short position in that metal by a whopping 18,824 COMEX contracts during the reporting week — and are net short the COMEX futures market by ‘only’ 52,090 contracts, or 1.30 billion pounds of the stuff. That’s a bit under 22 percent of total open interest…a huge amount.


Here’s Nick Laird’s “Days to Cover” chart updated with the COT data for positions held at the close of COMEX trading on Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 146 days of world silver production, which is up 1 day from last week’s report — and the ‘5 through 8’ large traders are short an additional 73 days of world silver production, unchanged from last week’s report — for a total of 219 days that the Big 8 are short, which is a bit over seven months of world silver production, or about 511 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were also short 218 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 424 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 511 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by 511-424=87 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 31-odd small commercial traders other than the Big 8, are net long that amount.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 25-26,000 COMEX silver contracts…basically unchanged from last week’s COT Report.

25,000 COMEX contracts is 125 million troy ounces of paper silver, which works out to around 53 days of world silver production, unchanged last week’s COT Report.  As of Tuesday’s cut-off, JPMorgan is still by far the biggest silver short on the COMEX futures market.  Citigroup is in second place — and not that far behind.

The Big 4 traders in silver are short, on average, about…146 divided by 4 equals…36.5 days of world silver production each.  The four traders in the ‘5 through 8’ category are short 73 days of world silver production in total, which is 18.25 days of world silver production each, on average.

The Big 8 commercial traders are short 47.1 percent of the entire open interest in silver in the COMEX futures market, which is a bit of an increase from the 45.2 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be something over the 50 percent mark.  In gold, it’s now 43.1 percent of the total COMEX open interest that the Big 8 are short, up a hair from the 42.9 percent they were short in last week’s report — and something approaching 50 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 61 days of world gold production, down 2 days from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 31 days of world production, down 1 day from what they were short last week…for a total of 92 days of world gold production held short by the Big 8…down 3 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 66 percent of the total short position held by the Big 8…unchanged from last week’s COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 67, 70 and 78 percent respectively of the short positions held by the Big 8.  Silver is unchanged from a week ago, platinum is down 3 percentage points from last week — and palladium is up 2 percentage points from a week ago.

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


CRITICAL READS

Doug Noland — Did not publish a commentary this week.  But he did have a ‘Just the Facts’ bulletin which you can skim/read if you wish — and that’s linked here.


All Major Economies Are Caught in an Inflate-or-Die Trap — Bill Bonner

We’re exploring the old adage: What goes around comes around. And what we see coming around almost everywhere is inflation.

We make haste to explain that we’re not talking about common consumer price inflation, but about inflation of the money supply, which could show up almost anywhere.

In the interest of conserving the reader’s time, here is our hypothesis: All major economies are caught in an “Inflate-or-Die” trap… and what went around Zimbabwe, Argentina, and Venezuela will be coming soon to an economy near you.

Central banks and governments are lowering rates, increasing deficits, and finding ways to dodge debt limits. The idea is always the same – to increase the amount of money in circulation. And here’s the latest. Bloomberg:

President Donald Trump said Thursday that he’s planning a tax cut directed at the middle class that will be announced in the next year.

“It will be a very substantial tax cut,” Trump told congressional Republicans at a retreat in Baltimore. He said the tax cut would be “very, very inspirational” without providing details.”

Cutting taxes without cutting spending leaves both taxpayers and the feds with more money to spend.

This worthwhile commentary from Bill was posted on the bonnerandpartners.com Internet site early on Friday morning EDT — and another link to it is hereGregory Mannarino‘s post market close rant on Friday is linked here — and it’s worth your while.


David Stockman on the Coming Financial Panic and the 2020 Election

International Man: We seem to be near the top of the “everything bubble.” Almost nothing is cheap… anywhere. What are your thoughts on where people should put their money for prudence and for profit?

David Stockman: I would recommend recognizing that the “everything bubble” is the most extreme, exaggerated, severe financial bubble in world history. It will inevitably collapse, and there will be massive losses, even greater than occurred in 2008 and 2001.

So, the first thing is to stay out of the casino. By that, I mean the financial-market stocks, bonds, and everything else.

These markets are so artificial. They’re just chasing what the central banks are doing. There’s no honest price discoveries or supply and demand; nobody’s discounting the future of economic growth, productivity, and investment. You’ve got the chart monkeys, 29-year-old day traders who are in charge of the market.

When the big correction comes, there are going to be massive losses, and the panic will be great. All correlations will go to 1—which means everything will fall: the good, the bad, and the indifferent.

There’s this old saying among traders that when the cops raid the house of ill repute, they carry out the good girls, the bad girls, and the piano player too. That’s essentially what’s going to happen.

This longish, but very worthwhile Q&A session with David, appeared on the internationalman.com Internet site on Friday sometime — and I thank Phil Manuel for pointing it out.  Another link to it is here.


Count Draghila“: A Furious Germany Reacts to Draghi’s Monetary “Horror

When it comes to Mario Draghi’s relationship with Germany’s notoriously fiscally (and monetarily) conservative public, it tends to be a love-hate affair. Actually, scrap the love part.

Back in March 2016, when the ECB cut rates and expanded its QE (in an operation that just like Thursday left market’s underwhelmed, and sent the EUR surging), Germany’s press responded not too kindly to Draghi’s monetary largesse with Handelsblatt, in an article titled “The dangerous game with the money of the German savers“, provided a metaphorical rendering of what is happening in Europe as follows:  Click to enlarge.

Fast forward three and a half years later, when Mario Draghi, one foot out of the ECB’s Frankfurt HQ on his way to retirement, doubled down in what appeared to be the final push in European monetary policy, when the central banker cut interest rates deeper into negative territory and promised bond purchases with no end-date to push borrowing costs even lower.

The fact that it was left open-ended (or until the ECB starts raising rates) was perhaps the biggest takeaway, and as Deutsche Bank’s Jim Reid noted “QE infinity is back if that’s not an oxymoron.” That said, there were some complications when Bloomberg reported that Europe’s top central bankers – the French, German and Dutch governors – all opposed more QE, as did Coeure and Lautenschlaeger and a couple of others. “So this was a contentious move and rightly so.”

But an even bigger surprise was Draghi’s veiled admission that the ECB is now out of ammo and that to boost the economy, Europe will need fiscal stimulus, i.e., issue more debt. Specifically, Draghi referred being “very concerned about the pension industry” and also suggested that the answer to speeding up positive side effects was fiscal policy. As Reid concluded, “it’s hard to therefore get away from feeling that even the ECB feel we’re nearing the end game in terms of the limits of monetary policy. Something that has been obvious to the outside world for sometime.”

And nowhere was this mood represented better than by Germany’s most popular tabloid, Bild, which on Friday accused Draghi of “sucking dry” the bank accounts of Germany’s savers, a day after the ECB cut interest rates deeper into negative territory. Next to a Dracula photomontage of Draghi, Bild’s headline read: “Count Draghila is sucking our accounts dry.”

The horror for German savers goes on and on,” Bild wrote.

This longish story was posted on the Zero Hedge website at 4:22 p.m. on Friday afternoon EDT — and another link to it is here.


Austrian 100-Year Bond Enters Bear Market as Negative Debt Collapses

For months, the world watched in stunned amazement as, alongside the relentless increase in global negative yielding debt which more than doubled in 2019 from $8 trillion to $17 trillion, the Austrian century bond due 2117 exploded higher and almost doubled in price from just above par to an all time high of 220 in late August.

What a different just a few weeks – and a smattering of good news – makes the euphoria is now officially over and as 10Y Treasury yields surge to 1.90% from a record low of 1.42% on September 3, now that downward momentum has been broken and CTAs are accelerating in the other direction, the Austrian century bond is doing what its Argentina peer did last month: it is tumbling, and as of the close of trading in Europe was down over 20%, officially entering a bear market.  Click to enlarge.

What about the amount of negative yielding debt? Well, after hitting a record high of $17 trillion in August, the stock of negative debt has tumbled by $2.5 trillion to $14.5 trillion, the biggest monthly drop in global negative-yielding debt on record.

This tiny 2-chart Zero Hedge article was posted on their website at 1:23 p.m. EDT on Friday afternoon — and another link to it is here.


Russia will only borrow in currencies other than U.S. dollar – finance minister

Russia will not take out loans in US dollars for the remainder of this year and the whole of 2020, turning instead to the yuan and euro, according to the Finance Ministry.

We will borrow in currencies other than the dollar,” Russian Finance Minister Anton Siluanov said on Thursday. He added that the country will not be taking any more loans in 2019.

This year we have no plans to borrow any more on foreign markets, we have fulfilled our program and even overfulfilled it. Next year, we’ll see. Probably it will be not only in euro but maybe in Chinese yuan,” Siluanov stated.

Back in March, Russia’s Finance Ministry issued Eurobonds worth €2.7 billion ($3 billion) with a maturity date in 2035. It also separately issued Eurobonds worth €750 million ($830 million) with a maturity date in 2025. In June, the Finance Ministry also placed additional Eurobonds worth €1.37 billion ($1.5 billion) with a maturity date in 2029, and €900,000 ($1 billion) with a maturity date in 2035.

Meanwhile, due to steadily growing gold and foreign currency reserves, Russia’s state-debt-to-GDP ratio last month turned negative for the first time since 2014, when the country’s economy was battered by Western sanctions and the oil market crash. As of August 1, Russian state debt (at federal, regional and municipal levels) amounted to 16.2 trillion rubles (around $247.3 billion). At the same time, liquid assets of federal government, regional authorities and non-budget funds stood at 17.6 trillion rubles (nearly $268.8 billion).

This brief news item showed up on the rt.com Internet site at 9:39 a.m. Moscow time on their Friday morning, which was 2:39 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for bringing it to our attention — and another link to it is here.


Stunned Silence Followed Trump’s G-7 Outburst: “Where’s My Favorite Dictator?

Oh how we wish this one were captured on video, but alas The Wall Street Journal could only vividly describe the epic moment when President Trump shouted across a crowded room, “Where’s my favorite dictator“? —while awaiting a meeting with Egypt’s president.

It apparently happened at last month’s Group of Seven summit in Biarritz, France but is only now being revealed by the paper:

Inside a room of the ornately decorated Hotel du Palais during last month’s Group of Seven summit in Biarritz, France, President Trump awaited a meeting with Egyptian President Abdel Fattah Al Sisi,” the WSJ reported Friday.

Mr. Trump looked over a gathering of American and Egyptian officials and called out in a loud voice: ‘Where’s my favorite dictator?’ Several people who were in the room at the time said they heard the question,” the newspaper reported. Onlookers described “a stunned silence” that followed.

People in the room said they were unclear if President Sisi actually heard it. The Journal commented, “Even if lighthearted, Mr. Trump’s quip drew attention to an uncomfortable facet of the U.S.-Egypt relationship.”

We might add that though uncomfortable the moment might have been for U.S.-Egypt relations, it’s one of those classic Trump moments where the president’s wild and off the cuff manner actually comically cuts straight to the reality better than anything else.

A week ago the U.S. State Department moved to waive human rights rules in order to vote through sending military aid to Egypt, totaling $1.3 billion.

With a whopping figure like that to prop up the Egyptian military ‘deep state’ headed by the Gaddafi-esque general, we’re sure Sisi will let Trump say whatever the hell he wants.

Trump’s comments were right on the money.  This Zero Hedge article was posted on their website at 6:25 p.m. EDT on Friday evening — and another link to it is here.


Zimbabwe Hikes Rates to 70% to Halt Hyperinflation 2.0

A week after the death of Robert Mugabe, and just a few months after the re-introduction of the ZimDollar, Zimbabwe faces another hyperinflation scare as inflation soars and the central bank hikes rates drastically to stall the currency’s collapse.

Just three months ago, The Reserve Bank of Zimbabwe (RBZ) issued a directive banning cash withdrawals from all Foreign Currency (FCA) Nostro Accounts following the promulgation of Statutory Instrument 142 of 2019, which reintroduced the local Zimbabwe Dollar and scrapped the multi-currency regime. Nostros/FCA holders will have to liquidate their balances to be usable in Zimbabwe. As Pindula News noted at the time, what this essentially means is that if one earns USD, deposited into their Nostro account, they can’t draw the cash but will have to get it in Zim Dollar using that day’s interbank rate.

And it hasn’t helped as the black market ZimDollar has collapsed since…Click to enlarge.

The southern African nation suffers from spiraling inflation and chronic shortages of foreign exchange, bread and electricity, prompting protests that have been brutally repressed.

Ncube reintroduced the Zimbabwe dollar, which the country had abandoned in 2009, and banned the use of foreign currency in June.

While Ncube has suspended the release of annual inflation statistics until February, economists estimate that the rate is between 230% and 570%. The nation’s 400,000 civil servants are demanding increased pay after the devaluation decimated their spending power.

This Zero Hedge news item put in an appearance on their Internet site at at 12:39 p.m. EDT on Friday afternoon — and another link to it is here.


I didn’t find any precious metal-related news items that I thought worth posting.


The PHOTOS and the FUNNIES

Less than a kilometer from where I took the shot of the train in yesterday’s column…and just down stream, there was this group of thrill-seekers riding the rapids in the Thompson River.  I suppose it would be fun — and although my camera is very water resistant, it ain’t completely waterproof.  The spot where I took yesterday’s train photos from is at the very top right-hand corner of the first photo.  Click to enlarge.


The WRAP

However the weekend is coming — and those that would seek to control the gold price have been reluctant in the past to see the yellow metal end the week above such a key psychological level as $1,500 — and we may thus see a repeat of Thursday’s price movements today, with early strength in European trading perhaps being taken back in U.S. trade later in the day.  Déjà vu all over again in the words of Yogi Berra.” — Lawrie Williams…early on Friday morning BST in London, many hours before the COMEX open in New York


Today’s pop ‘blast from the past’ comes through rather sad circumstance.  Earlier this week I read a story about the passing of Edward Joseph Mahoney…an American singer, songwriter and multi-instrumentalist who had success in the 1970s and 1980s — and was known professionally as Eddie Money.  The link to the two songs from the 1970s that brought him the most fame and fortune are linked here…and here.

Today’s classical ‘blast from the past’ dates from 1868.  Edvard Grieg was a Norwegian composer and pianist. He is widely considered one of the leading Romantic era composers, and his music is part of the standard classical repertoire worldwide.  His piano Concerto in A minor, Op. 16…composed at the tender age of 24 years…is among the most popular of all piano concertos.

Here’s the incredibly gifted and even more incredibly lovely Alice Sara Ott doing the honours with an unknown orchestra out of the Far East somewhere.  If there’s a better version of this work in the public domain, I haven’t heard it.  It’s wonderful. The link is here.


There should be little if any doubt in anyone’s mind that ‘da boyz’ in New York were gunning for the Managed Money traders in both gold and silver yesterday.

Returning to Friday’s COT Report, the net short position of the commercial traders in gold fell 32,000 contracts during the reporting week, as of the close of COMEX trading on Tuesday — and that was on a price decline in gold of around $61…using the [December] data on the 6-month gold chart below.  That was a decent decline.  But as I stated in my COT commentary on gold, no moving averages of any great importance were broken to the downside during the reporting week, so that may explain this small amount of Managed Money selling and commercial buying that accompanied that engineered price decline.

But during the same reporting period, the silver price declined by around $1.35 the ounce — and the Commercial net short position remained unchanged at the end of it all — and on massive record volume to boot!  How can that be, you ask?  I don’t know…is the answer.

On Friday, silver was down over 70 cents intraday — and no moving averages of any importance were broken, either…so how much long selling did the Managed Money traders actually do, if they didn’t do much on a $1.35 price decline during the previous reporting week?

And the even more important question is how low do JPMorgan et al. have to engineer prices in order to get the selling they need to cover their short positions?  The answer is…a lot.  But can they or will they in this environment of “Print or Die” monetary debasement that’s going on all around us in real time?

Questions with no answers at the moment — and I look forward to what Ted has to say in his weekly commentary this afternoon.

But it should never be forgotten that JPMorgan, the ring leader in the precious metal price management scheme, can walk away from it at any moment they choose, sticking it to the remaining Big 7 traders…plus all the other short holders out there.  This single fact is the tall shadow that stands over the current negative market structures in both gold and silver.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  There was some rather significant downwards price action in gold, silver and platinum after the 1:30 p.m. COMEX close on Friday — and that data is not reflected in the charts below, so keep that in mind as you’re looking them over.

Copper had a decent gain on Friday, but that was certainly because the commercial traders are continuing to ring the cash register on the Managed Money traders, as they held a record net short position a bit over a month ago…so expect this short-covering rally to continue.  WTIC was closed at a new low for this current move down — and still below its 50 and 200-day moving averages.  Click to enlarge.

Every Saturday’s Wrap section now involves the agony of trying to come up with new adjectives, superlatives, or adages to describe the ‘Everything’ bubble that now engulfs our planet — and zero-bound interest rates on the road to perdition is the best I can do this week.

It should be obvious that there is no escape from this black hole that we’re all being sucked into.  I’ve pointed this out before in prior weeks and months, but after the ECB/Draghi debacle on Thursday, there can be no doubt.

Then on Tuesday, we have the FOMC meeting — and all eyes will be on the Eccles Building at 2 p.m. EDT on Wednesday when Powell gives us ‘The Word’.  Will it be 25 basis points…50…or none?

But whether it’s death by a thousand cuts, or death by one single thrust, there is no doubt that zero percent interest rates, or lower, lie in our future.  No other option exists as we slowly spiral down to whatever fate awaits us…or is being planned for us.

This situation will continue until something blows up…or melts down…or both.  What happens after that will be, as Jim Rickards says…”chaos“.  I still fear it could be worse.

When I saw my first Star Trek TV program [in black & white] back in 1967…I had no inkling at the time…nor did anyone else for that matter…that “Boldly going where no man [or woman] has gone before.” would also come to apply to the world’s monetary and financial system at some point far down the road.

And, sadly, there will be no Scotty to “Beam us up” the day that everything finally comes unglued.

But I suspect that long before Armageddon arrives, the flight to hard assets of all kinds will be on in earnest…even more than it already is.  And despite the current shenanigans in the COMEX futures market, at some point this JP Morgan-led price management scheme will fail…either by circumstance, or design.  And when it does, it will fail spectacularly.  Because, as Ted Butler has pointed out on numerous occasions recently, that’s the only way it can end — and I agree totally.

I’m still “all in”.

And I’m also done for the day — and the week — and I’ll see you here on Tuesday.

Ed

The PPT Showed Up in Force Yesterday

13 September 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


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

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

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

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

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

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

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

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

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

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

Here’s the DXY chart from Bloomberg, as usual. Click to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  I’ve place the cursor at its high tick of the day.  The delta between its close…97.88…and the close on the DXY chart above, was 43 basis points on Thursday.  Click to enlarge as well.

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

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

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

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


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

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

In silver, there were three short/issuers in total…International F.C. Stone, ABN Amro — and Advantage, with 102, 71 and 58 contracts out of their respective client accounts.  The two largest long/stoppers by far were JPMorgan and Advantage, with 86 and 77 contracts for their respective client accounts.  In distant third and fourth place were ABN Amro, with 21 contracts for its client account — and Macquarie Futures, with 19 contracts for its own account.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in September rose by 2 contracts, leaving 31 still around, minus the 6 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 4 gold contracts were actually posted for delivery today, so that means that 2+4=6 more gold contracts were just added to September deliveries.  Silver o.i. in September declined by 171 contracts, leaving 525 still open, minus the 231 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 268 silver contracts were actually posted for delivery today, so that means that another 268-171=97  silver contracts just got added to the September delivery month.


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

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

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

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

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

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

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

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

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


CRITICAL READS

Core Consumer Prices Surge At Fastest Rate Since 2008

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

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

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

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

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

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

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


Trump Encourages Spending Ahead of Next Election — Bill Bonner

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

Yes, DJT has gone for MMT.

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

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

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

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

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

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

Why? Because there’s an election coming.

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


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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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


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

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

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

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

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

Neither Nowak nor Smith have been charged with a crime.

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

A spokesman for the Department of Justice declined to comment.

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


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

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

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

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

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

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


The PHOTOS and the FUNNIES

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


The WRAP

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

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

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

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

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

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

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

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

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

The dollar index closed very late on Thursday afternoon in New York at 98.31 — and then opened up 10 basis points once trading commenced at around 7:45 p.m. EDT on Thursday evening. It headed quietly lower until a very few minutes after 2 p.m. CST on their Friday afternoon — and that juncture, the decline became more more pronounced — and the index is down 11 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Today, around 3:30 p.m. EDT, we get the eagerly-awaited Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, September 10.  Both Ted and myself are anxious to see what’s in it after the extreme trading days of last Thursday and Friday, where new record volume levels were broken in both gold and silver…but particularly in silver.

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


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

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

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

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

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

Ed

SLV Short Position Almost Doubles in the Last Two Weeks

12 September 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was higher by seven bucks or so by around 9:30 a.m. China Standard Time on their Wednesday morning.  From that juncture it wander quietly sideways until it was sold down to its low of the day starting at 9 a.m. in New York.  From there, it crawled rather unevenly higher until 3:30 p.m. EDT in the rather thinly-traded after-hours market — and was sold two dollars lower at that point, before trading mostly sideways into the 5:00 p.m. close.

The low and high ticks really aren’t worth looking up, but here they are anyway:  $1,486.80 and $1,499.60 in the October contract — and $1,492.90 and $1,506.20 in December.

Gold was closed at $1,496.90 spot, up $11.60 from Tuesday — and it’s fairly obvious that it would have broken through the $1,500 spot mark in after-hours trading, if it had been allowed to.  Net HFT gold volume was very heavy at just under 291,000 contracts — and there was just about 19,000 contracts worth of roll-over/switch volume in this precious metal.

The silver price was up 23 cents by minutes after 2 p.m. CST on their Wednesday afternoon — and was then sold unevenly lower once the 2:15 p.m.  afternoon gold fix in Shanghai was put to bed.  Then, like gold, it was kicked downstairs a bit more starting at a few minutes after 9 a.m. in New York.  It rallied back to around the $18.10 spot mark by minutes after the London close.  It crept back to around $18 spot a few hours later, but rallied a bit from there – -and didn’t do much of anything after 3 p.m. in after hours trading.

The high and low ticks in this precious metal were recorded by the CME Group as $18.335 and $17.97 in the December contract.

Silver was closed in New York on Wednesday afternoon at $18.085 spot, up 9.5 cents from its close on Tuesday.  Net volume was a lot lighter that it has been recently, but still way up there at 79,000 contracts — and there was 6,000 contracts worth of roll-over/switch volume on top of that.

The platinum price crept quietly higher until the afternoon gold fix in Shanghai yesterday — and then chopped unevenly sideways until around 10:20 a.m. in New York.  It was sold a bit lower from there until minutes after 1 p.m. EDT — and it jumped up a decent amount in the thinly-traded after-hours market.  Platinum finished the day at $942 spot, up 14 bucks from Tuesday’s close.

The palladium price crept quietly and somewhat unevenly higher until Zurich opened, but then was sold back to about changed by a few minutes before 2 p.m. CEST/8 a.m. EDT.  It rallied rather smartly from there until at, or a minute or so after, the afternoon gold fix in London…obviously running into ‘something’ along the way.  ‘Da boyz’ showed up in force at that point — and by the time they were done with it a few minutes after 1 p.m. in COMEX trading, they had it down a handful of dollars on the day.  It jumped higher from there — and was closed on Wednesday at $1,553 spot, up 15 dollars on the day, but miles off its high.

And to give you some idea of how thinly-traded and volatile this precious metal is, Kitco recorded the high and low ticks in palladium as $1,596 and $1,513 spot…an 83 dollar intraday range.  This is what an illiquid market looks like.

Note:  The four Kitco charts above only go up to the 5:00 p.m. close in New York on Wednesday afternoon.  Kitco is still having issues — and I couldn’t retrieve the full 24-hour charts for all four on their website when I tried late last night.


The dollar index closed very late on Tuesday afternoon in New York at 98.33 — and opened up 1 basis point once trading commenced around 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning.  It then proceeded to rise and fall a handful of basis points between then — and around 12:30 p.m. CST.  It began to head higher from there — and the 98.75 high tick was printed around 10:35 a.m. in New York.  From that point, it proceeded to crawl quietly lower until around 4:35 p.m.  — and didn’t do much from that juncture until the trading day ended at 5:30 p.m. EDT.

The dollar index finished the Wednesday session in New York at 98.65…up 32 basis points from Tuesday’s close.

It was another day where the precious metal prices and the currencies, hoed their own rows.

Here’s the DXY chart, courtesy of Bloomberg — and I’ve set the cursor on the high tick of the day.  Click to enlarge.

And here’s the 6-month U.S. dollar index, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…98.63…and the close on the DXY chart above, was 2 basis points on Wednesday.  I suspect this September U.S. dollar chart will roll-over to the December contract either today or tomorrow — and the delta will blow out to around 50 basis points once again, as it’s a futures contract chart from ICE…the Intercontinental Exchange.  Click to enlarge as well.

The gold stocks began to head higher as soon as the equity markets opened in New York on Wednesday morning — and their respective high ticks came a few minutes before 12 o’clock noon in New York.  Then, for no reason that I could discern, they began to head quietly lower until around 2:40 p.m. EDT.  They crept a tad higher into the close from there.  The HUI finished up only 1.12 percent.  At its high, the HUI was up a bit over 3 percent.

With some rather minor variations, the silver equities followed an almost identical price path — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 0.75 percent.  At their highs, the silver shares were up a bit over 2 percent.  Click to enlarge if necessary.

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

I was somewhat surprised with the precious metal share price action on Wednesday…surprised by the fact that they rallied so much at the open — and equally surprised that they sold off for no reason at the time of day that they did.  I’d like to suggest that ‘darkling forces’ were out and about…but I’ve accused myself on several occasions that I was looking for black bears, in dark rooms, that aren’t there — and this may be one of those times.


The CME Daily Delivery Report showed that 4 gold and 268 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the sole short/issuer was Advantage — and JPMorgan picked up 3 of those…2 for clients — and 1 for its own account.  The last contract ended up in Morgan Stanley’s client account.

In silver, there were 4 short/issuers in total.  They were Goldman Sachs, with 136 contracts…128 from its client account — and 8 more from its in-house/proprietary trading account. Tied for second were International F.C. Stone and Advantage, with 49 contracts each — and also from their respective client accounts.  The fourth short/issuer was ABN Amro with 34 from its client account.  There were seven long/stoppers in total.  The largest was JPMorgan, stopping 106 contracts…100 for clients — and 6 for its own account.  In distant second place was Advantage, picking up 69 contracts for its client account.  And in third and fourth spots were ABN Amro and Macquarie Futures…the former stopping 41 for its client account — and the latter..31 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 Wednesday trading session showed that gold open interest in September declined by 21 contracts, leaving just 25 left, minus the 4 contracts mentions a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 22 gold contracts were actually posted for delivery today, so that means that 22-21=1 more gold contract was added to September deliveries.  Silver o.i. in September rose by another 98 contracts, leaving 696 still open, minus the 268 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 156 silver contracts were actually posted for delivery today, so that means that 98+156=254 silver contracts just got added to the September delivery month.


For the second day in a row, there was no reported change in GLD…which I found even more surprising.  And there were no reported changes in SLV, either.

As Ted predicted, the short position in SLV blew out in the current report from 11.23 million shares/troy ounces, to 21.19 million shares/troy ounces, for the two week reporting period ending on August 30.  That’s an eye-watering 88.69 percent increase…so it’s obvious that they’ve been shorting the shares, because the physical silver is just not available to deposit.  And as Ted also suspects, that engineered price decline by JPMorgan last week allowed them to cover most, if not all of that short position during those two days.

The short position in GLD fell from 1,872,000 troy ounces, down to 1,266,000 troy ounces during that same two week reporting period.  That’s a decline of 32.35 percent — and erasing just about all the increase from the report two weeks prior to this one.

On a net basis, there was 119,899 troy ounces of gold removed from all the know depositories, mutual funds and ETFs on Wednesday — and that number in silver was down 864,650 troy ounces on a net basis.


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

There was no in/out movement in gold over at the COMEX-approved depositories on Tuesday.

That certainly wasn’t the case in silver, as 1,900,131 troy ounces was reported received — and 695,929 troy ounces were shipped out.  In the ‘in’ category, there was 1,007,029 troy ounces received at Brink’s, Inc. — and one truckload…599,886 troy ounces…was dropped off at HSBC USA.  The remaining 293,215 troy ounces was unloaded at Canada’s Scotiabank — and that was the precise amount that was shipped out of HSBC USA on Monday…so I guess it took a day to get it to their vault in Toronto, from the HSBC USA vault in New York.  In the ‘out’ category, there was one truckload…615,685 troy ounces…shipped out of CNT — and the remaining 80,244 troy ounces departed the International Depository Services of Delaware.  The link to all this is here.

There was a decent amount of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They reported receiving 2,400 of them — and shipped out another 706.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Saxe-Gotha-Altenburg, Frederick I., 1680-1691, Thaler 1691

Origin: Roman German Empire     Mint: Gotha     Material: Silver     Full Weight: 29.18 grams  Price: €4,945.00/US$5,390

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


CRITICAL READS

Retail Sales Shock: BofA Card Data Shows Plunge in August Spending

With the August payrolls report widely seen as disappointing, with less than 100k private payrolls added (despite accelerate wage growth), the last data point the Fed is waiting for to cement next week’s 25bps rate cut is this Friday’s retail sales data (assuming tomorrow’s CPI report is not a shock).

Luckily for the Fed, it appears that the August retail sales number is set to be the latest evidence of America’s rapid slowdown, if only based on Bank of America credit and debit card data, which shows that after a strong month of spending in July, consumers aggressively tightened the strings of their wallets in August.

Specifically, BAC found that retail sales ex-autos fell 0.5% month-over-month, which reversed the 0.9% gain in July, and was not only the first monthly contraction since February this year, but was also the biggest monthly drop in 2019.  Click to enlarge.

As BofA details, in August, spending for only 5 out of the 14 sectors increased in the month, led by strength in cruises and airlines. This was likely boosted by summer vacations, which usually take place in August. On the flip side, spending at clothing stores saw a 1.9% mom contraction accompanied by a 1.6% drop in gas stations. Luxury and department stores also posted losses. On a % yoy basis, 7 sectors posted negative growth. Excluding spending at gas stations, which is largely impacted by gas prices, spending at department stores continue to post the biggest % yoy loss, at -4.6%.

Yet while one month does not make a trend and consumer spending may still remain strong on the year – recall that last week, Morgan Stanley said that the Only Question That Matters Now: “Will The U.S. Consumer Hold Up” – BofA advises keeping a close eye on confidence measures as they will be critical to determining the willingness of the consumer to continue to spend.

This longish chart-filled Zero Hedge news item showed up on their website at 2:23 p.m. EDT on Wednesday afternoon — and another link to it is here.


Around 4,500 truck drivers lost their jobs in August as the trucking ‘bloodbath’ rages on

Truck drivers like Chad Boblett, a Lexington, Kentucky-based owner-operator, said 2019 has been a “bloodbath.” Rates in the spot market, where loads are moved on demand rather than being facilitated through a contract, are down 15% from last year, when truckers reaped historic profits.

  • And now the federal government’s jobs report has confirmed that truckers are losing their jobs by the thousands. According to preliminary payroll numbers reported by the Bureau of Labor Statistics last week, around 4,500 trucking jobs were eliminated in the month of August.
  • It is the first time the agency reported a slash in trucking payrolls since March, when 1,200 truckers lost their jobs.
  • That’s also the biggest drop since April 2018, when some 5,500 trucking jobs were removed.

Indicators from the trucking industry have been sour in 2019. In the first half of the year, around 640 trucking companies went bankrupt, according to industry data from Broughton Capital LLC. That’s more than triple the number of bankruptcies from the same period last year — about 175.

This news item put in an appearance on the businessinsider.com Internet site early on Wednesday afternoon EDT — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Trump urges zero or negative interest rates to tackle U.S. debt

Trump, in a pair of Twitter posts, said negative rates would save the government money on its debt, which including Social Security accounts has reached a record $22 trillion on Trump’s watch. He did not address the risks or financial market tensions that central banks in Europe and Japan have confronted as a result of their negative rate policy, or the larger issue that negative rates have not secured higher growth or higher inflation for those economies.

The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term,” Trump tweeted. “We have the great currency, power, and balance sheet… The USA should always be paying the … lowest rate. No Inflation!

It is only the naïveté of (Fed Chairman) Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing,” added Trump, who has repeatedly noted that rates are negative in Germany, Europe’s trading powerhouse.

The president’s comments precede a week in which the world’s major central banks, including the Fed, are expected to lower rates or otherwise loosen monetary policy in what is widely seen as a move to protect the global economy against risks partly rising from Trump’s trade war with China.

This Reuters story, filed from Washington, showed up on their website at 3:58 a.m. EDT on Wednesday morning — and I found it embedded in a GATA dispatch.  Another link to it is here.


The Bolsheviks Are Coming! (Part I)  — Dmitry Orlov

Suppose you are an American. And suppose you spent the last 60 years laying in quiet repose in a freezer chest after expertly injecting yourself with enough glycerine to keep ice crystals from disrupting your cellular membranes. Lord only knows why the heck you did that, but that’s all past tense now. Anyhow, now it’s 2019 and for some other unfathomable reason your great-grandchildren dig you out of the freezer chest, defrost you, zap you a few times with a cattle prod to get your heart pumping, walk you around for a bit while feeding you strong black coffee and here you are again, good as new and ready for action.

Next thing you know your great-grand kids (or so they say) start telling you about life in America in 2019. They tell you that rent now eats up half of their incomes and that they can’t even dream of ever buying a house, never mind hoping to ever own it free and clear. They tell you that their college tuitions will take them a lifetime to repay and will probably eventually come out of their retirement savings (if they ever have any, which they presently don’t). They tell you that instead of leaving an inheritance their parents passed away leaving them useless, run-down property encumbered with huge medical debts for their end-of-life palliative medical care. When you wonder where all the children have gone, they patiently explain to you that it is now too expensive to have children, even with both mommy and daddy working full-time, unless mommy is a single mother, in which case the government pays her based on how many children she has with random men who aren’t allowed to live with her (and spend most of their time in jail in any case).

All of this unwelcome new information leaves you somewhat bewildered, but having been a man of the world with a wide mental outlook and a head for numbers you decide to zoom out a bit and take in the big picture, to see if you can figure out what the hell happened to your country. And you discover that the US government has gone well over $20 trillion into debt and is on course to continue taking on around $1 trillion in new debt every year just to stay solvent. You discover that something like half of that debt is owned by foreign countries that are actively arguing among themselves about the best way to unload it and stock up on gold instead. You are shocked to discover that federal, state and local governments have taken on some truly ridiculous amount of liabilities, to the tune of hundreds of trillions depending on how you estimate them, with no conceivable way of covering them.

This tongue-in-cheek/humourous commentary from Dmitri, would be hilarious if it were fiction.   Unfortunately, it’s the truth.  It appeared on the cluborlov.blogspot.com Internet site on Tuesday sometime — and it comes to us courtesy of Larry Galearis.  Another link to it is here.


Inflate-or-Die Traps Will Show up in Almost Every Economy — Bill Bonner

What goes around and comes around.

Specifically, on Monday, we were looking at how the “Inflate-or-Die” trap has moved from Germany to Zimbabwe to Venezuela… with many stops along the way… and where it will show up next.

Almost everywhere” is our guess. All the world’s major economies are now trying to inflate their economies with fake money.

Everybody’s doing it,” says the U.S. president. And since everyone is doing it – lower rates, quantitative easing, deficits, etc. – everyone HAS to do it to keep up.

Mr. Trump wants the U.S. to do more of it (more on that tomorrow). Which puts the whole world in an Inflate-or-Die trap.

Nobody wants his currency to go up – unless he’s on a vacation abroad, or shopping for investment bargains.

Nobody wants his economy to go down, either – which is why you can count on more stimulus. Barron’s: “It’s Time for Massive Government Spending to Avert a Coming Economic Crisis”.

This commentary from Bill was posted on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.   Dan Mannarino‘s post market-close rant on Wednesday [which I must give an ‘R‘ rating to] is linked here — and I thank subscriber “Mac P.” for sharing it with us.


New York Area Fire Commissioners Demand New 9/11 Investigation

September 11, 2001, was nearly 20 years ago, and after all this time, so many questions still remain about what exactly happened. It is not socially acceptable to question the official explanation that was given for the collapse of the towers and the other events of that day, but now these questions are being taken more seriously.

However, the rushed and poorly managed 9/11 commission report did not do an adequate job at investigating the crimes, which left experts in a variety of different fields with questions about the official story. Many of these professionals belong to an organization called Architects and Engineers for 9/11 Truth, who have been pushing for a new investigation into the attacks for many years.

However, the rushed and poorly managed 9/11 commission report did not do an adequate job at investigating the crimes, which left experts in a variety of different fields with questions about the official story. Many of these professionals belong to an organization called Architects and Engineers for 9/11 Truth, who have been pushing for a new investigation into the attacks for many years.

This July, they announced a major breakthrough in their fight for a proper investigation. According to a press release published on the group’s website, New York Fire Commissioners who were closely involved with the events of that day, have called for a new investigation into the 9/11 attacks.

On July 24, the Franklin Square and Munson Fire Districts voted unanimously for a new investigation, citing “overwhelming evidence” that “pre-planted explosives . . . caused the destruction of the three World Trade Center buildings.”

Commissioner Gioia said that he expects support from other districts throughout the city, and hopes that they will be passing similar resolutions in solidarity.

We were the first fire district to pass this resolution. We won’t be the last,” Gioia said.

As I said right from the outset eighteen years ago, this was an inside job by the U.S. Deep State — and my opinion about that has only grown stronger over the intervening years.  This very worthwhile article appeared on the Zero Hedge website at 12:07 p.m. on Wednesday afternoon EDT — and I thank Brad Robertson for pointing it out.  Another link to it is here.


Last Minute Hurdle Emerges in the ECB’s Attempt to “Shock and Awe” Markets

With just hours left until Mario Draghi has to “shock” markets with a bang in the ECB’s triumphant return to monetary easing, unleashing even lower rates and a new round of QE, which however as Goldman warned this morning has to be coupled with rate-tiering or else risks destabilizng Europe’s already frail banking system, the outgoing central banker may instead settle for a whimper.

Can’t wait for his retirement to begin and dump 5 years of failed monetary policy in the lap of Christine Lagarde.

As Mario Draghi approaches his Oct. 31 retirement, and prepares to welcome his replacement Christine Lagarde, who leaves the IMF’s reputation in tatters and scrambling to salvage a record loan to Argentina, the central banker has signaled plans for a massive burst of monetary stimulus to prop up a eurozone economy that is teetering on the verge of a recession with Germany’s economy already said to be contracting for two consecutive quarters.

As such most investor expect a roughly 50% chance of a 20bps rate cut to Europe’s already negative -0.40% deposit rate…coupled with a restart in roughly €30BN in corporate and sovereign bond purchases. This is, believe it or not, merely the “medium” package that the ECB will unveil according to banks, such as Goldman.

Yet for once, voices of reasons have emerged: why, if the ECB’s magic cocktail of negative rates and asset purchases, has achieved nothing for the past 5 years, will something be different this time? These same voices have also realized that by punting to the central banks for years, Europe has become crippled when it comes to providing the kind of fiscal stimulus boost that Europe truly needs.

What’s worse, these critical voices are multiplying, including a growing number from the ECB’s own 25-member rate-setting committee.

As the WSJ notes, on one hand, Draghi’s critics say the eurozone economy isn’t weak enough to warrant aggressive new measures just a year after the ECB began phasing out its €2.6-trillion bond-buying program. Borrowing costs for households, businesses and governments are so low, they argue, that easier money will have little effect. The bank’s key interest rate is already minus 0.4%.

Then there are those warning that the measures Draghi has extensively flagged – his “whatever it takes” swan song so to speak – which include further rate cuts and a new bond-buying program, risk leaving the bank with virtually no ammunition if the economy sinks further, while also exacerbating the risk of asset bubbles and damage to the region’s banks. Several eurozone governments moved in recent months to rein in excess lending, including France.

All of which makes me look at the recent headlines in Europe; the number of ECB members openly disagreeing with Draghi’s calls to further ease, or German politicians arguing against a fiscal boost for the ailing German economy. These sound very negative and orthodox.  But are we looking at a under the radar Central Banking coup in Europe?

Is it deliberate?  If the ECB can’t keep buying.. then maybe its time for Plan B?  These comments above all play into the hands of new ECB head, Christine Legarde, whose job will be to politically herd the felines of the ECB and European governments into a Fiscal Union to boost German and European fiscal spending.

It will certainly be interesting to see what Draghi does today.  But whatever action he takes, will certainly move the markets, both in Europe — and abroad.  We won’t have to wait for long now.  This very long chart-filled Zero Hedge article was posted on their Internet site at 6:25 p.m. on Wednesday evening EDT — and another link to it is here.


A Forgotten Gold-Rush Hub Is Producing More Than It Has in a Century

Deep under gum-tree lined paddocks in southern Australia that delivered a bullion bonanza in the 19th Century, the unexpected promise of a second gold rush is luring a new generation of prospectors from billionaires to global miners and weekend panhandlers.

As prices soar, production in the goldfields of Victoria state is rising again and has already climbed to the highest since 1914 as mining companies dig deeper and new technology helps to uncover once hidden and richer deposits in a region that almost rivaled the Californian gold rush and was thought to have petered out decades ago.

I’ve never seen anything like it in all my life — it’s like finding a safe underground,” David Baker, managing partner of gold investor Baker Steel Capital Managers LLP, and a visitor to mines for more than 30 years, said following a tour last month of Kirkland Lake Gold Ltd.’s Fosterville mine, the flagship for the region’s revival. “You don’t get better than that unless you can dig into Fort Knox.”

With Victoria’s state government forecasting there may be as much as another 80 million ounces buried underground in the region —about as much as was dug out during the initial gold rush from 1851 — major players are moving in, including Newmont Goldcorp Corp. and billionaire miner Gina Rinehart.

The region’s renaissance is also stoking hopes that new exploration of other historic global mining hubs could yet yield more riches.

This very interesting photo essay put in an appearance on the bloomberg.com Internet site at 12:00 p.m. PDT on Tuesday — and I thank Swedish reader Patrik Ekdahl for sending it our way.  Another link to it is here.


The PHOTOS and the FUNNIES

This photo sequence began on June 23 right off the Trans-Canada Highway a bit south of Spences Bridge, in and around a picnic/camping area called Gold Pan on the Thompson River.  What started off as a sunny day, quickly turned cloudy.  In the first shot, that’s a CNR train on the other side of the river.  The third photo shows a train on the CPR tracks on this side of the river — and the tunnels on the CNR tracks can be seen on the very left of the shot.  The river is out of sight on the left.  The last picture was taken about a hundred meters/yard from the third photo and from an elevated position — and you can just make out the river on the far left.  Click to enlarge.


The WRAP

Looking at the entire Wednesday trading session, it certainly appeared to have all the hallmarks of another ‘care and maintenance’ sort of day — and nothing much should read into yesterday’s price action in either silver or gold.

I’m still waiting for the other shoe to drop — and the engineered price decline to recommence.  But as Ted pointed out on the phone, they may have done as much damage as they can or will do.  However, the jury is still out on that — and we won’t know until we get a look at the numbers in tomorrow’s Commitment of Traders Report.  At that point, the picture should be a lot clearer.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and there’s not much to see in the precious metals.  Copper isn’t doing much, either…but WTIC got hammered back below — and was closed below both its 50 and 200-day moving averages by a hair yesterday.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price didn’t do much until shortly after 7 p.m. EDT on Wednesday evening. It was sold down to its current low of the day around 9 a.m. China Standard Time on their Thursday morning, but gained all that back by the 2:15 p.m. CST afternoon gold fix in Shanghai. It sold off a bit from there, but recovered just before the London open — and is currently up $4.30 the ounce — and back above $1,500 spot by a hair. It was exactly the same price path for silver — and it’s now up 4 cents as London opens. Platinum traded quietly and unevenly sideways until shortly after 12 o’clock noon CST — and it also ticked a few dollars higher into the afternoon gold fix over there — and is now up 7 bucks. The palladium price didn’t do much of anything until just before 11 a.m. CST. It has rallied unevenly higher since — and is now up 15 dollars as Zurich opens.

Net HFT gold volume is a bit over 61,000 contracts — and there’s a minuscule 527 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is around 11,700 contracts — and there’s an equally tiny 288 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down 2 basis points once trading commenced at 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning. It has been trading quietly sideways ever since — and is back at unchanged as of 7:45 BST in London/8:45 a.m. CEST in Zurich.


Yesterday evening ‘the word’ came out from President Trump that there was some sort of temporary trade truce between the U.S. and China.   The Zero Hedge spin on this [at 7:53 p.m. EDT] is headlined “Trump Delays Increase in China Tariffs Until October 15; Futures Surge” — and I thank Brad Robertson for that one.  Gregory Mannarino has a 2:45 minute rant on this from yesterday evening — and it’s linked here.  That’s from Brad as well.

The U.S. futures market is being spun higher as the headline states, but are currently well off their high, so it could be a wild one in New York later this morning.

It will be interesting to see if this development has any effect on what Draghi and the ECB do with their interest rates this morning.  If it does make a difference, it probably won’t be mentioned.

But the real question will be as to what difference it will make at the FOMC meeting next week in Washington.

Both gold and silver got tapped lower shortly after 7 p.m. EDT on Wednesday evening — and whether or not that coincided with the above story is hard to tell.  I expect that it was, although the ‘reaction’ of both gold and silver occurred a bit later.  However, it was rather short-lived, as silver is now up a penny — and gold is only down a few dimes going into the afternoon gold fix in Shanghai.


And as I post today’s column on the website at 4:02 a.m. EDT, I note that gold jumped a bit higher at the London open, but is off its current high by a bit. It’s up $5.70 the ounce at the moment. Ditto for silver — and it’s up 6 cents as the first hour of London trading ends. Platinum is also higher, but hit a $950 the ounce price ceiling — and is up 8 bucks. Palladium is now up 21 dollars and off its current high tick as well, but only by a hair…as the first hour of Zurich trading draws to a close.

Gross gold volume has shot up to about 88,000 contracts — and minus what little roll-over/switch volume there was, net HFT gold volume is a bit under 86,000 contracts. Net HFT silver volume is now way up there as well, at a bit over 16,000 contracts — and there’s still only 565 contracts worth of roll-over/switch volume on top of that. It’s obvious that these rather modest rallies are not going unopposed.

The dollar index had a tiny, but sharp up/down move that began at 2:35 p.m. CST in Shanghai — and ended forty-five minutes later at 8:20 a.m. in London. It’s off that low by a bit — and down 3 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

It will certainly be interesting trading session in just about everything in New York today — and it remains to be seen how the precious metals make out when COMEX trading begins at 8:20 a.m. EDT.

See you here tomorrow.

Ed

Ted Butler: The Shorts Getting Smoked

10 September 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price had a six dollar up/down move between the 6:00 p.m. open in New York on Sunday evening and a minute or so after 9 a.m. in London.  It crept quietly higher from that point until exactly 9:00 a.m. in New York — and then ‘da boyz’ showed up.  The low tick of the day was set at the 11 a.m. EDT London close — and it crept higher from there until around 12:20 p.m. in New York.  It was sold quietly lower from that juncture until trading ended at 5:00 p.m. EDT.

The high and low ticks, both of which occurred during the COMEX trading session in New York, were recorded by the CME Group as $1,517.10 and $1,499.10 in the October contract — and $1,523.80 and $1,505.50 in December.

Gold was closed in on Monday at $1,498.60 spot, down $7.90 from Friday.  Net volume was very heavy at a hair under 300,000 contracts — and there was around 18,500 contracts worth of roll-over/switch volume on top of that.

The silver price was forced to follow a very erratic price path on Monday…trading just above the $18.20 spot mark — and just below the $18.00.  Of course it was closed at the bottom end of that price range…as JPMorgan made sure of that in COMEX trading in New York.

The high and low ticks were reported as $18.40 and $18.015 in the December contract.

Silver was closed yesterday at $17.995 spot, down 22.5 cents from Friday.  Net volume was sky high once again at just under 128,500 contracts — and there was around 7,800 contracts worth of roll-over/switch volume on top of that.

The platinum price wandered unevenly sideways until shortly before 11 a.m. in Zurich on their Monday morning — and from there proceeded to rally a bit until it ran into ‘da boyz’ shortly before 9 a.m. in New York.  It’s low tick was set around 12:20 p.m. EDT — and its tick higher after that was mostly taken away by the 5:00 p.m. close.  Platinum was closed at $944 spot, down 4 bucks on the day.

Palladium was sold down about 13 dollars in the first hour, once trading began at 6:00 p.m. EDT in New York on Sunday evening, but was back at unchanged by around 9:35 a.m. China Standard Time on their Monday morning.  It didn’t do much of anything after that until the Zurich open — and then it began to tick unevenly higher until the high was set shortly after 8:30 a.m. in New York.  About thirty minutes later it was headed lower — and most of the damage was done by the 1:30 p.m. EDT COMEX close.  It didn’t do a thing after that.  Palladium was closed at $1,524 spot, up 2 dollars from Friday.

The dollar index closed very late on Friday afternoon in New York at 98.39 — and opened up 3 basis points once trading commenced around 6:40 p.m. EDT on Sunday evening.  It crept up to its 98.51 high tick at 8:50 a.m. China Standard Time on their Monday morning — and was back to about unchanged an hour later.  It crept sideways from there until about fifteen minutes after the afternoon gold fix in Shanghai — and then began its long, slow and very uneven decline to its 98.14 low tick, which came at 12:30 p.m. in New York.  I suspect that the usual ‘gentle hands’ rescued it at that point — and it crawled unevenly higher until around 4:55 p.m.  It gave up a handful of basis points from there going into the 5:30 p.m. close.  The dollar index finished the Monday session in New York at 98.28…down 11 basis points from Friday’s close.

Once again, there was no correlation worthy of the name between the dollar index and what the precious metal prices were doing.

Here’s the DXY chart from Bloomberg, as usual.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…98.25…and the close on the DXY chart above, was 3 basis points on Monday.  Click to enlarge as well.

The gold stocks opened unchanged — and ticked a bit higher for the first few minutes of trading, until the sellers showed up.  The low was set a minute or so after the 11 a.m. EDT London close…which coincided with the low tick in gold.  They continued to follow the gold price closely after that until the equity markets close at 4:00 p.m. in New York.  The HUI closed down 3.07 percent.

Except for the odd minor variation, the silver equities more or less followed the same price path as the gold shares and, would have most likely closed up on the day until ‘da boyz’ began to lean on the silver price once again around 12:30 p.m. EDT.  The silver shares also closed down on the day, but not to the same extent as the gold stocks.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 2.22 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 51 gold and 458 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, of the three short/issuers in total, the only two that mattered were International F.C. Stone, with 38 contracts from its client account — and in second spot was ADM, with 10 from its client account as well.  Of the 3 long/stoppers in total, the only one that mattered was JPMorgan, with 42 contracts in total…25 for clients, plus 17 for its own account.

In silver, there were six short/issuers in total.  The three largest were Goldman Sachs, International F.C. Stone — and S.G. Americas, with 157, 129 and 80 out of their respective client accounts.  Tied for fourth spot were ABN Amro and Advantage, with 44 contracts each — and from their client accounts as well.  There ten long stoppers in total — and the largest this time was Australia’s Macquarie Futures, with 119 for its own account.  In second spot was JPMorgan, with 105 contracts in total…69 for clients — and another 36 contracts for its own account.  In third and fourth place came ABN Amro and Advantage, with 93 and 85 contracts 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 September rose by another 31 contracts, leaving 96 still around, minus the 51 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 14 gold contracts were actually posted for delivery today, so that means that 31+14=45 more gold contracts just got added to September.  Silver o.i. in September also rose…by 34 contracts, leaving 918 still open, minus the 458 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 203 silver contracts were actually posted for delivery today, so that means that 34+203=237 more silver contracts were added to the September delivery month.


There was a big withdrawal from GLD — and a monster withdrawal from SLV on Monday.  In GLD, an authorized participant removed 235,692 troy ounces.  In SLV, that number was 5,425,557 troy ounces.  I’m not sure whether that was a conversion of shares for physical metal, or a completely legitimate withdrawal.  But it doesn’t really matter, as I would suspect that JPMorgan owns it now, regardless.

In other gold and silver ETFs, there was 36,345 troy ounce of gold added to the iShares IAU ETF — and 10,011 troy ounces of gold was removed from Deutsche Banks’ XAD5, along with 187,391 troy ounces of silver from their XAD6 silver ETF.

There was a sales report from the U.S. Mint to start off the week.  They sold 1,500 troy ounces of gold eagles — 442,000 silver eagles — and 82,500 of those ‘America the Beautiful’ 5-ounce silver coins…which nets out at 82,500×5=412,500 troy ounces of silver.

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  There was 8,037.500 troy ounces/250 kilobars [U.K./U.S. kilobar weight] deposited at Loomis International.  Nothing was reported shipped out.  The link to this is here.

It was busier in silver, as 677,659 troy ounces was reported received, but only 3,897 troy ounces were shipped out.  Most of the ‘in’ activity was at CNT, as they picked up one truckload…601,318 troy ounces.  Most of the rest…75,350 troy ounces…was deposited at Brink’s, Inc. — and the remaining good delivery bar…990 troy ounces…found a home over at Delaware,  The ‘out’ activity…2,904 and 993 troy ounces…happened at Brink’s, Inc. and Delaware respectively. There was also a counterintuitive paper transfer from the Registered category and back into Eligible at Brink’s, Inc — and it was certainly Ted’s opinion that this silver belonged to JPMorgan, or its clients.  It was being transferred to save on storage charges.  The link to all this is here.

There was a very tiny bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They didn’t receive any — and only shipped out 6 of them.  This occurred at Brink’s, Inc. — and I won’t bother linking it.


Here are the usual two charts from Nick that he passes around on the weekend.  They show the amount of gold and silver deposited/removed from all the world’s transparent gold and silver depositories as of the close of trading on Friday, September 6.  For that reporting week, there was 465,000 troy ounces of gold deposited on a net basis and, for the first time in about three months, there was a net 1,041,000 troy ounces removed from all the known silver depositories, mutual funds and ETFs last week.  Click to enlarge for both.

I have a very decent number of stories/articles for you today.


CRITICAL READS

Class 8 Heavy Duty Truck Orders Plunge 79% in August Marking 10th Straight Month of Declines

Every month, analysts are hopeful that Class 8 orders are on the verge of rebounding and every month so far in 2019, orders have continued to crash. Such was the case again in August, according to data supplied by Bloomberg and ACT Research.

According to Buckingham analyst Neil Frohnapple, preliminary Class 8 truck orders were down 79% in August to 10,900 units.  Total Class 5-7 orders were 18,800 units for the period, marking a fall of 22% Y/Y, he also noted.

Frohnapple wrote in a note to clients: “Overall, Class 8 net orders were slightly below our expectations as we were anticipating net orders in the low- to mid-teen unit range for the month of August.”

He also noted that August marked the tenth consecutive month of Y/Y declines after orders exceeded expectations in the seasonally weak third quarter last year. The robust demand last year was a result of fleets and dealers placing orders earlier than normal to secure build slots for 2019, he said.

Continuing declines for Class 8 orders in 2019 are a result of weaker freight indicators – traditionally seen as a good gauge of the overall U.S. economy – and declining used Class 8 truck prices.

Frohnapple’s outlook for September is also grim. He continued: “We anticipate that Class 8 net orders will remain depressed and in the low- to mid-teen range for the month of September as the market continues to correct.”

In early July we reported that Class 8 orders fell a stunning 70% in June to 13,000 units, according to FTR data. This followed a 71% decimation in May.

The industry continues to deal with bloated backlogs as a result of aggressive ordering in 2018, coupled with headwinds from the ongoing trade war and the onset of a recession.

This Zero Hedge story put in an appearance on their Internet site at 9:00 p.m. EDT on Sunday evening — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Crashing Angel: Moody’s Downgrades Ford, and Its $84 Billion in Debt, to Junk

With pundits warning for years about the threat of “fallen angels”, or low-rated investment grade names downgraded to junk, the market first paid attention to, then learned to ignore the warnings as credit continued to tighten, helped in no small part by trillions in negative yielding sovereign debt – despite the ongoing threat of deteriorating fundamentals.

That however may suddenly change as the universe of (split) junk bond names is about to become bigger by almost $100 billion when moments ago Moody’s downgraded Ford’s senior debt rating from investment grade Baa3 to junk Ba1 (stable outlook), in the biggest shot across the fallen angel bow in years.

According to Bloomberg, no less than $84 billion in debt is affected, making Ford the single biggest fallen angel in the U.S. bond market.

This longish news item showed up on the Zero Hedge website at 4:25 p.m. on Monday afternoon EDT — and I thank Brad Robertson for sharing it with us.  Another link to it is here.


Consumer Credit Card Debt Explodes in July Despite Rates at 18-Year Highs

Something is not quite right here.

Despite The Fed signaling rate-cuts as far as the eye can see, U.S. credit-card interest rates have soared to the highest since 2001.

And despite credit card rates being at 18-year highs, U.S. revolving debt (largely made up of credit card debt) has exploded in July to its highest on record.  Click to enlarge.

This was the biggest MoM jump in revolving debt since Nov 2017…

Is the American consumer really that healthy? The recent exuberance over retail sales gains seems to be largely predicated on the back of an average Joe who is forced to use his high-cost credit card to cover everyday expenses.

This tiny 2-chart Zero Hedge article is certainly worth quick look — and it’s another offering from Brad Robertson — and another link to it is here.


The U.S. Economy Is Just Waiting to Crash — Bill Bonner

Remember, corporations can do all the buybacks, mergers, and acquisitions they want. But unless they’re shipping the goods, the “boom” is phony.

That’s why we watch the Dow Jones Transportation Index. It hit a high in October 2018. Since then, despite all the stimulus, Fed talk, and speculative hype, it still has not moved higher.

That leaves our hypothesis – that the stock market topped out a year ago – still standing. And if it is correct, it means the Dow is a dead man walking… waiting to fall over.

And now, when we look at jobs in the shipping sector – trains, planes, and trucks – we see that hours spent on the job are falling fast.

Six months ago, the number of hours worked in transportation and warehousing was rising at a 5% annual rate. Now, it is rising at less than 1%.

And the Cass Freight Index – which measures monthly freight activity in North America – has been signaling a transportation recession for eight straight months. The index is now nearly 6% below where it was a year ago.

This very worthwhile commentary from Bill appeared on the bonnerandpartners.com Internet site early on Monday morning EDT — and another link to it is hereGregory Mannarino‘s post mark closing rant on Monday is linked here — and I thank Roy Stephens for that one.


Ron Paul Exposes Bill Dudley’s Noble Lie

Former Federal Reserve official Bill Dudley’s recent op-ed calling for the Federal Reserve to implement policies that will damage President Trump’s reelection campaign states that such action would be unprecedented. Dudley claims the Federal Reserve bases its policies solely on an objective evaluation of economic conditions.

This is an example of a so-called noble lie – a fiction told by elites to the masses supposedly for the people’s own good, but really designed to maintain popular support for policies that benefit the elites.

Dudley’s noble lie is designed to bolster a rapidly (and deservedly) eroding trust in the Federal Reserve.

Presidents have always tried to influence the Fed — usually pushing for lower rates to (temporally) boost the economy. President Richard Nixon was recorded joking with then-Fed Chair Arthur Burns about Fed independence. President Lyndon Johnson shoved Fed Chair William Martin against a wall after an interest rate increase. Johnson’s frustration may have been because he realized that the success or failure of his guns and butter policies was largely out of Johnson’s control. The success or failure of presidents’ agendas is often determined by a secretive central bank’s manipulations of the money supply. No wonder presidents spend so much time trying to influence the Fed.

The Fed’s history of influencing, and being influenced by, presidents is one more reason why Congress should pass the Audit the Fed bill. Auditing the Fed is supported by almost 75 percent of Americans across the political spectrum, including such leading progressives as Bernie Sanders and Tulsi Gabbard.

My Campaign for Liberty is leading a major push to get a majority of Congress members to cosponsor Audit the Fed in order to pressure House and Senate leadership to hold a vote on the bill. The American people have had enough of noble lies about the Federal Reserve. It is time for truth; it is time to audit the Fed.

This commentary from Ron was posted on the Zero Hedge website at 2:51 p.m. on Monday morning EDT — and it’s also from Brad Robertson.  Another link to it is here.


Brothers in Arms — Jeff Thomas

Mayer Amschel Rothschild died in 1812, so he could hardly be referred to as a pal of Xi Jinping, but the two have a great deal in common.

In the late eighteenth and early nineteenth centuries, Mr. Rothschild discovered that, as a major banker in Germany, he could control the country to a greater degree than its political leaders if he could find a way to control it economically. This he did through a series of loans, for which he wished never to be repaid. He instead presented his chits for collection at times when the German government was strapped for cash. By doing so, he was able to extend the loans, renegotiated to his advantage, and increase his control over both the political leaders and the government as a whole.

As he said at the time, “Let me issue and control a nation’s money and I care not who writes its laws.”

This was not a passing comment, but a basic principal through which he expanded his power. He sent each of his sons forth – to Naples, Paris, Vienna, Frankfurt, and most notably, London, where his son Nathan repeated his father’s postulate, saying, “I care not what puppet is placed upon the throne of England to rule the empire on which the sun never sets. The man who controls Britain’s money supply controls the British Empire and I control the British money supply.”

Each of his sons came to dominate a European country’s power, through banking, but Nathan was to create the world’s foremost bank – the Bank of England – in London. To this day, the Rothschild family control the majority of the world’s wealth.

This very interesting and worthwhile commentary from Jeff was posted on the internationalman.com Internet site on Monday afternoon EDT — and another link to it is here.


Draghi Primes ECB Easing That Will Test Global Currency Defenses

European Central Bank President Mario Draghi will test the composure of global policy makers this week as he unleashes a barrage of stimulus to shore up economic growth.

The monetary easing will probably feature the centerpiece of an interest-rate cut that widens the difference between borrowing costs in the euro area and elsewhere. That will potentially affect foreign exchange markets — and risk the ire of critics such as Donald Trump.

While Draghi has a mantra ready that his institution strives for price stability and doesn’t target the euro, that won’t stop the U.S. president or others from accusing the ECB of fighting a “currency war,” a term coined by former Brazilian finance minister Guido Mantega. Trump has a history of citing the weakness of the euro when piling pressure on the U.S. Federal Reserve to cut its own rates.  Click to enlarge.

The timing of Draghi’s action won’t help blunt such calls either, coming a week before the Fed determines its own response to a slowing economy impaired by global trade tensions. Meetings of the Bank of Japan and Swiss National Bank are also due then.

Draghi is pressing for something significant,” said Kit Juckes, chief global FX strategist at Societe Generale SA, who expects at least a rate cut. “I don’t know that it’ll trigger a big FX response, but the more it does, the more likely it is to elicit a response from the president.”

This Bloomberg article showed up on their Internet site at 9:00 p.m. PDT [Pacific Daylight Time] on Sunday evening — and was updated about four hours later.  I thank Swedish reader Patrik Ekdahl for sending it our way.  Another link to it is here.  There was a parallel opinion piece on this from Bloomberg by bond king Mohaned A. El-Erian.  It’s headlined “Fed and ECB Are Stuck in a Shrinking Corner” — and I found that in this morning’s edition of the King Report.


Germany considers ‘shadow budget’ to circumvent national debt rules — sources

Germany is considering setting up independent public agencies that could take on new debt to invest in the country’s flagging economy, without falling foul of strict national spending rules, three people familiar with talks about the plan told Reuters.

The creation of new investment agencies would let Germany take advantage of historically low borrowing costs to spend more on infrastructure and climate protection, over and above debt limits enshrined in the constitution, the sources said.

Germany’s debt brake allows a federal budget deficit of up to 0.35% of gross domestic product (GDP). That’s equivalent to about €12 billion a year but once factors such as growth rates have been taken into account, Berlin only has the scope to increase new debt by 5 billion next year.

Europe’s largest economy is teetering on the brink of recession and pent-up demand for public investment from towns and cities across the country is estimated at €138 billion by state-owned development bank KfW.

Under the “shadow budget” plan being considered by government officials, new debt taken on by the public investment agencies would not be accounted for under the federal budget, said the sources, who declined to be named.

Germany too!  Now they’re all on the slippery slope.  This news story put in an appearance on the uk.reuters.com Internet site at 5:49 a.m. EDT on Monday morning — and I found it in yesterday’s edition of the King Report.  Another link to it is here.


Who Is Holding Back the Russian Economy? — Tom Luongo

Russia’s economy has been a sore spot for more than two years now. Since the ruble crisis of late 2014 the role of the Bank of Russia has been to apply IMF-style counter-cyclical tightening to stabilize the situation in the wake of the decision to allow the ruble to float freely on the open market.

That was the right decision then. It was the move the US did not expect President Vladimir Putin to make. It was expected Putin would hold to his natural conservatism and keep the ruble trading in the 30’s versus the U.S. dollar as opposed to risking a collapse in exchange rate in the face of an historic drop in oil prices over the eighteen months between July 2014 and the low made in late January 2016.

Oil dropped from $120+ per barrels to around $28 during that period. And if Putin hadn’t proactively allowed the ruble to fall from RUB32 to a high of RUB85 in early 2016 Russia would have been bankrupted completely.

During that time Bank of Russia President Elvira Nabullina raised the benchmark lending rate to 17.00% and Russia began the slow, painful process of de-dollarizing its economy.

It’s been five years since those dramatic times. But a lot of damage was done, not just to the Russian people and their savings but also to the mindset of those in charge at the Bank of Russia.

Nabullina has always been a controversial figure because she is western trained and because the banking system in Russia is still staffed by those who operate along IMF prescriptions on how to deal with crises.

If you have the time — and the interest, this article by Tom is definitely worth your while.  It put in an appearance on the lewrockwell.com Internet site on Monday sometime — and I thank Brad Robertson for pointing it out.  Another link to it is here.


Erdogan Says Turkey to Soon Cut Interest Rates to Single Digits

President Recep Tayyip Erdogan said Turkey will lower interest rates to single digits soon and inflation will follow suit.

We are lowering and will lower interest rates to single digits in the shortest period,” Erdogan said in a televised speech on Sunday. “After it falls to single digits, inflation will also slow to single digits.”

The drop in inflation after rate cuts is an apparent reference to Erdogan’s personal belief that price gains slow when the cost of borrowing is reduced. Most economists think the opposite is true.

Erdogan’s comments come a day after he said he believes the central bank will lower interest rates when its monetary policy committee meets on Thursday. The president sacked the central bank governor in July for failing to live up to his expectations for rapid cuts to interest rates. The new governor delivered a 425 basis-point cut to the benchmark rate in the first meeting he chaired. The rate now stands at 19.75%.

The lira jumped 2.1% in the five days through Sept. 6, its first weekly gain since Aug. 9.

Et tu Turkey?  The above five paragraphs are all there is to this brief Bloomberg article…the second of the day from Patrik Ekdahl.  It was posted on their Internet site at 7:57 p.m. PDT — and another link to it is here.


Gold is the way to go’ as interest rates fall, says Mark Mobius

Veteran investor Mark Mobius is bullish on gold as central banks around the world cut interest rates.

Physical gold is the way to go, in my view, because of the incredible increase in money supply,” said Mobius, the founding partner of Mobius Capital Partners.

All the central banks are trying to get interest rates down, they are pumping money into the system. Then, you have all of the cryptocurrencies coming in, so nobody really knows how much currency is out there,” he told CNBC’s “Street Signs” on Friday.

Amid expectations of slowing global growth, central banks around the world have been lowering interest rates, as they seek to boost money supply in the economy, stoke demand and provide an impetus to growth.

Mobius recommends that investors hold 10% of their portfolios in physical gold, with the rest invested in dividend yielding equities. That’s especially if the dollar gets weaker.

In his view, “the U.S. government, the Trump White House, does not want a strong dollar.”

People are going to finally realize that you got to have gold, because all the currencies will be losing value,” he added.

He would be right about that, dear reader…and that includes silver, plus all precious metal equities…a fact he failed to mention.  This gold-related news item appeared on the cnbc.com Internet site at 10:28 a.m. EDT on Sunday morning — and was updated about twenty hours later.  I thank Patrik Ekdahl for sending it our way — and another link to it is here.


Golden rule: Russia brings bullion & foreign currency reserves to new highs

Russia’s gold bullion holdings have reached $109.5 billion as the nation continues to shift its growing international reserves away from the U.S. dollar, according to the latest data released by the country’s central bank.

Russia has increased its stockpile of the precious metal by more than $7.5 billion in one month, figures released by the Central Bank of Russia (CBR) on Friday show. Thus, the share of gold in the nation’s reserves has set a new record, jumping to 20.7 percent from the previous 19.6 percent.

At the same time the country continues to boost its international reserves, which have reached record highs not seen since February 2013. The foreign exchange reserves rose around $9.2 billion or 1.8 percent in one month to reach $529.083 billion on September 1.

Russia has been consistently stockpiling gold bullion in recent years to cut reliance of the economy on the greenback. Thanks to the massive purchases of the precious metal, Russia was crowned  the world’s largest purchaser of gold last year.

As of the end of July, Russia’s gold holdings amounted to around 2,217.68 tonnes after it added another 9 tonnes of the yellow metal to its coffers in one month. Since the beginning of the year, the central bank has increased its bullion holdings by a total of 106 tonnes.

This gold-related news item, showed up on the rt.com Internet site on Saturday afternoon Moscow time — and I thank Jack Watt for sharing it with us.  Another link to it it here.  A parallel Bloomberg story to this was posted on the finance.yahoo.com Internet site on Sunday.  It’s headlined “Russia’s Huge Gold Stash is Now Worth More Than $100 Billion” — and I thank reader ‘Giff G.’ for that one.


China Has Added Nearly 100 Tonnes of Gold to Its Reserves

China has added almost 100 tons of gold to its reserves since it resumed buying in December, with the consistent run of accumulation coming amid a rally in prices and the drag of the trade war with Washington.

The People’s Bank of China raised bullion holdings to 62.45 million ounces in August from 62.26 million a month earlier, according to data on its website at the weekend. In tonnage terms, August’s inflow was 5.91 tons, following the addition of about 94 tonnes in the previous eight months.

Bullion is near a six-year high as central banks including the Federal Reserve cut interest rates as signs of a slowdown mount amid the U.S.-China trade war. Central-bank purchases have been another key support for prices as authorities from China to Russia accumulate significant quantities of bullion to help diversify their reserves. That buying spree likely to persist in the coming years, according to Australia & New Zealand Banking Group Ltd.

Trade war restrictions, in the case of China, or sanctions, as with Russia, give “an incentive for these central banks to diversify,” John Sharma, an economist at National Australia Bank Ltd., said in an email. “Also, with increasing political and economic uncertainty prevailing, gold provides an ideal hedge, and will therefore be sought after by central banks globally.”

China has previously gone long periods without revealing increases in gold holdings. When the central bank announced a 57% jump in reserves to 53.3 million ounces in mid-2015, it was the first update in six years.

As I keep repeating, yes China is always buying gold, but it has thousands of tonnes squirreled away on its books that it has yet to report.  So these monthly “purchases” they’ve been reporting are pretty much meaningless in the grand scheme of things.  This Bloomberg article appeared on their website at 7:49 p.m. PDT on Sunday evening — and it’s the final contribution of the day from Patrik Ekdahl.  Another link to it is here.


Ted Butler: Shorts Getting Smoked — Silver $19.50 is only the beginning

This 38-minute audio interview with Ted occurred last Wednesday before JPMorgan showed up in the futures market on Wednesday evening/Thursday morning…but that fact does not diminish what Ted has to say one iota.

Ted sent me the link for this, buried in another e-mail he sent me late last week — and I missed it entirely until Brad Robertson jogged my memory on Monday morning.

It’s definitely worth your time — and it was hosted by the Wealth Research Group — and posted on the youtube.com Internet site on September 4th.


The PHOTOS and the FUNNIES

After lunch at the Talking Rock Golf Course on June 16, we spent some time along the shore of Little Shuswap Lake…whose photos graced my Saturday column.  Besides the usual view shots, I got a couple of tiny critters as well…the first one being some variety of cicada — and certainly much smaller than the kind I’ve seen on the prairies, as this one was only about 30mm long.  It was too far to walk back to the car and get the extension tube for a real good close-up, so I did the best I could with my ‘walk around’ lens.  The second shot is of a butterfly that landed on the sand.  This was the only photo I got before it flew off.  It was about 50mm/2 inches and a bit, across. The third photo is of a bunch of horsetails, which grew in profusion higher up along the shore.  That last picture is of some sort of daisy.  I only took it because it was the only non-white one that I’d seen.  Note the profusion of horsetails around it.  Click to enlarge.


The WRAP

The state is that great fiction by which everyone tries to live at the expense of everyone else..” – Frederic Bastiat


Gold set a new intraday low price tick — and was also closed at a new low for this move down.  Although silver closed down 22.5 cents in the spot month according to the Kitco chart near the top of today’s column, it actually close up a nickel in the December contract…which I found rather interesting.  That’s reflected in the doji for silver in the chart below.  Platinum, palladium and copper were closed a bit lower as well.  However, WTIC rallied above — and then closed above both its 50 and 200-day moving averages.

Here are the 6-month charts for the Big 6 commodities.  Click to enlarge for all.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price was engineered lower starting almost the moment that trading began at 6:00 p.m. EDT in New York on their Monday evening. The current low tick was set just before 9:30 a.m. China Standard Time on their Tuesday. It came off that low by a bit right away — and has been edging quietly sideways since — and is currently down $8.00 an ounce. Silver followed an almost identical price path right up until the 2:15 p.m. CST afternoon gold fix in Shanghai. It spiked lower at that point, but has jumped a bit from there — and is down 9 only cents the ounce as London opens. Platinum price path has been almost the same as silver’s — and it has jumped up a bit in the last hour as well — and is down only 5 dollars. The palladium price has been wandering sideways-to-down throughout all of Far East trading, but has jumped higher in the last hour and change — and is now up 4 bucks as Zurich opens.

Net HFT gold volume is already up to around 93,500 contracts — and there’s 3,100 contracts worth of roll-over/switch volume in this precious metal. Silver o.i. is pretty heavy as well, at about 25,500 contracts — and there’s only 755 contracts worth of roll-over/switch volume on top of that.

The dollar index opened up 5 basis points once trading commenced around 7:45 p.m. in New York on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning. It crawled to its current 98.40 high tick, which came around 9:10 a.m. CST — and has been creeping ever-so-quietly lower since. But starting around 2:25 p.m. CST, it began to head lower a bit faster — and is up only 4 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Because of the eye-opening and record volumes in silver and gold on Thursday and Friday of last week, I mentioned in Saturday’s missive that I was really looking forward to what silver analyst Ted Butler had to say in his weekly column on Saturday afternoon…and here it is in a nutshell:

1. There was record two day trading volume in COMEX gold and silver (and in SLV) on the sharp sell-off Thursday and Friday.

2. On every big price drop in history, the managed money traders have always sold big and the commercials have always bought big.

3. If that occurred this time, as appears likely, because the managed money traders sold way above their average purchase price — and well above the key moving averages, any sales were closed out with big realized profits. Likewise, any commercial buy backs involved the booking of large realized losses.  Both occurrences would be unprecedented.

4. If the managed money traders did sell as expected, the most dominant commercial buyer was likely JPMorgan, which was the only commercial short seller into the very top of the price move. It’s possible JPM bought back its entire COMEX gold and silver short position — an event that Ted feels is beyond bullish and would cap off JPM’s double cross of the other commercial shorts.

5. JPMorgan appears to have done the same in SLV — shorting as many as 15 to 20 million shares into the price top — and then buying back all those short sales on the two day price drop…eliminating the need to deposit metal that was “owed” to the trust.

6. We should know a lot more in this Friday’s COT report — and the cut-off for that will occur at the close of COMEX trading at 1:30 p.m. EDT this afternoon.

In other news, Mario, “Whatever It Takes” Draghi, in his last act as the grand poo-bah of the ECB, will diddle with interest rates once again on Thursday — and it’s expected that he will lower them again…further into negative territory.   That will certain draw a Tweet-storm from Trump.

Then next week we have the FOMC meeting, plus both Japan and Switzerland’s central banks will meet and do whatever to their respective interest rates — and Germany is now signalling that it will provide fiscal stimulus as well.

The next week or so are going to be very interesting.


And as I post today’s column on the website at 4:02 a.m. EDT, I note that the gold price has been edging a bit higher since the 2:15 p.m. afternoon gold fix in Shanghai — and is only down $4.90 currently. Silver is down 6 cents as the first hour of London trading draws to a close. Platinum’s price was capped at the Zurich open — and it’s down 8 bucks. All of palladium’s earlier gains are now gone,plus more — and it’s down 3 dollars as the first hour of Zurich trading ends.

Gross gold volume is around 117,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit under 110,000 contracts. Net HFT silver volume is about 29,300 contracts — and there’s only 815 contracts worth of roll-over/switch volume in this precious metal.

The dollar index was down about 3 basis points by 8:10 a.m. in London…its current low tick of the day. It has bounced off that rather sharply– and is now up 13 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

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

Ed

Another Brazen Attack on All Four Precious Metals

07 September 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crawled a bit lower until around 11 a.m. China Standard Time on their Friday morning, but was back at the unchanged mark shortly after 1 p.m. CST.  Once the afternoon gold fix in Shanghai was put to bed around 2:15 p.m. over there, it was mostly down hill into the COMEX open — and the 8:30 a.m. jobs report in Washington.  It took off higher from there, but was capped and turned lower at 9:45 a.m. in New York….then didn’t do much of anything until 12:45 p.m.  “Da boyz’ showed up in force at that juncture — and it was sold down hard into the 1:30 p.m. EDT COMEX close.  It drifted a bit lower in after-hours trading until a minute or so after 3:30 p.m. — and the gold price didn’t do much after that.

The low and high ticks were recorded as $1,504.50 and $1,529.60 in the October contract — and $1,510.70 and $1,536.20 in December.

Gold was closed at $1,506.50 spot, down another $12.20 on the day.  Net volume was beyond Mars at around 515,000 contracts — and there was a hair under 31,000 contract worth of roll-over/switch volume in this precious metal.

Silver’s price path was directed in a similar fashion as gold’s…with some inconsequential variations.  It was bounced off the $18 spot mark on at least four occasions that one can spot on the Kitco chart below, although Kitco recorded the low spot price as $17.92.

The high and low ticks in this precious metal were reported by the CME Group as $18.89 and $18.06 in the December contract…an intraday move of over 4 percent, the second outrageous intraday move in a row.

Silver was closed on Friday at $18.22 spot, down 41.5 cents on the day.  Net volume set another new record high…the second one in as many days — and by a huge amount…just under 216,500 contracts.  Thursday’s ‘old’ record high was a bit over 189,000 contracts.  There was only 6,300 contracts worth of roll-over/switch volume on top of that.

In most respects that really mattered, the price pattern in silver was guided through the Friday session in a similar manner as both silver and gold.  Its attempt to break above unchanged during morning trading  in New York was capped as well — and its fate was also sealed at 12:45 p.m. EDT.  Platinum was closed at $948 spot, down 10 bucks on the day.

The major difference in palladium’s price path was that it was beaten lower in price for an hour and change before trading began on the COMEX in New York.  Its sharp rally after that was capped at, or just before, the afternoon gold fix in London — and the rest is just the same as the other three precious metals.

The dollar index closed very late on Thursday afternoon at 98.41 — and opened unchanged once trading commenced around 7:45 p.m. EDT in New York on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It was up a tiny handful of basis points by 10 a.m. CST — and then it began to quietly slide from that juncture until around 8:45 a.m. in London.  A ‘rally’ commenced at that point — and the 98.52 high tick was set around 12:40 p.m. BST.  It was all down hill until 9:45 a.m. in New York and then it, like the precious metals, turned on a dime and headed higher.  That choppy ‘rally’ came to an abrupt end at 4:55 p.m. in after-hours trading — and it crashed to its 98.01 low tick at the 5:30 p.m. close.  Although the DXY chart below showed it finishing the day at 98.11…it was marked up to 98.39 after the close so, officially, the dollar index finished down only 2 basis points on the day.  It will be interesting to see what it opens at on Sunday evening in New York.

It was the second day in a row where there was zero correlation between the currencies and what precious metal prices were doing.  In fact, the dollar index and the precious metals rallied together for a while shortly after the job numbers came out…at least until ‘da boyz’ appeared.

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

And here’s the 5-year U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…98.36…and the close on the DXY chart above, was 3 basis points on Friday.  Click to enlarge as well.

The gold stocks opened unchanged at 9:30 a.m. in New York on Friday morning — and were up over a percent about fifteen minutes later.  But when JPMorgan et al. showed up, the selling pressure was relentless for the remainder of the day — and the gold shares closed right on their lows.  The HUI closed down 3.27 percent.

The silver equities also opened unchanged — and popped one percent right away. After that they chopped quietly and unevenly sideways…mostly above unchanged, until ‘da boyz’ torpedoed all the precious metals at 12:45 p.m. EDT.  The silver stocks headed lower from there — and they also closed on their absolute low ticks of the day.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index chart closed down 2.90 percent.  Click to enlarge if necessary.

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

As I said in Friday’s column — and it’s worth repeat again here now…for every seller, there is a buyer — and it’s a given that the buyers on Friday…like the ones on Thursday…were the strongest hands of all, as John Q. Public is nowhere in sight.


Here are the usual three charts from Nick that show what’s been happening for the week, month — and year-to-date. The first one shows the changes in gold, silver, platinum and palladium for the past trading week, in both percent and dollar and cents terms, as of their Friday closes in New York — along with the changes in the HUI and the Silver 7 Index.

I’m not including the weekly chart this time, because it’s the same as the month-to-date chart.  The weekly chart will be back in its usual spot in next Saturday’s column.

Here’s the month-to-date chart, which is the same thing as the weekly chart as I just stated — and the big sell-offs in both gold and silver on Thursday and Friday took their tolls on the performance of everything over this time period.  It’s pretty ugly — and the continuing suppression of the silver price, plus the ongoing underperformance of Buenaventura, Peñoles and Hecla Mining is certainly not helping the Silver 7 Index. Click to enlarge.

Here’s the year-to-date chart — and JPMorgan et al.’s near death grip on the silver price is readily apparent in its lack-lustre price gains relative to gold — and in the underlying values of the associated stocks as well…notably the dismal year-to-date performance of the three silver stocks mentioned above.  That will certainly change at some point — and when it does, it will happen in a hurry.  Click to enlarge.

It remains to be seen if JPMorgan et al. can pull off another round of engineered price declines in both silver and gold, especially considering the current financial and monetary environment that they’re facing…along with a pending series of interest rate cuts from the Fed.  They have two days worth under their belts as of Friday’s close — and we’ll have to see what transpires next week.  But the amount of physical gold that’s disappearing into all the world’s ETFs and mutual funds continues unabated, regardless.


The CME Daily Delivery Report for Day 6 of September deliveries showed that 14 gold and 203 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, the two short/issuers were ADM and Advantage, with 11 and 3 contracts out of their respective client accounts.  The three long stoppers were JPMorgan, Australia’s Macquarie Futures — and Advantage.  The first two stopped 9 and 2 contracts for their respective in-house/proprietary trading accounts — and the third with 3 contracts for its client account.

In silver, of the four short/issuers in total, the three largest were International F.C. Stone, ABN Amro and Advantage, with 120, 44 and 38 contracts out of their respective client accounts.  Of the nine long/stoppers in total, JPMorgan was the biggest as always, picking 52 contracts in total…29 for its client account and 23 contracts for its own account.  The next three biggest were ABN Amro, Advantage and Macquarie Futures, with 52, 39 and 32 contracts respectively.  Macquarie Future stopped their contracts for their own account — and the other two stopped them for their respective client accounts.

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

During the first six days of the September delivery month, there have been 1,640 gold contracts issued/reissued and stopped.  Ted says that is a record number of deliveries for an unscheduled delivery month in gold.  In silver, there have already been 6,989 contracts issued/reissued and stopped so far this month — and August was also a record for deliveries for an unscheduled delivery month for silver.  This is unprecedented demand — and I’m not sure what should be read into it…but something is cooking behind the scenes, there can be no doubt about that.

The CME Preliminary Report for the Friday trading session showed that gold open interest in September rose by 3 contracts, leaving 67 still around, minus the 14 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 13 gold contracts were actually posted for delivery on Monday, so that means that 3+13=16 more gold contracts were added to September.  Silver o.i. in September declined by 209 contracts, leaving 885 still open, minus the 203 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 276 silver contracts were actually posted for delivery on Monday, so that means that 276-209=67 more silver contracts were added to the September delivery month.


There were no reported changes in either GLD or SLV on Friday — and Ted mentioned on the phone yesterday afternoon that volumes in both were extremely heavy on Friday.

In the other silver ETFs, there was 483,788 troy ounces deposited in SIVR — and another 495,560 troy ounces found its way into Sprott’s PSLV.  On the withdrawal side, there was 118,352 troy ounces removed from Deutsche Bank’s XAD6 silver ETF.  In the gold ETFs, there was a net 84,410 troy ounces deposited on Friday.

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

Month-to-date…four business days…the mint has sold 2,000 troy ounces of gold eagles — 500 one ounce 24K gold buffaloes — and 11,000 silver eagles.  How pathetic is that?

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

It was certainly busier in silver, as 1,440,733 troy ounces was reported received — and zero ounces was shipped out.  In the ‘in’ category, there was one truckload…599,079 troy ounces…received at Canada’s Scotiabank.  The other truckload…598,485 troy ounces…was dropped off at CNT.  The remaining 243,168 troy ounces found a home over at Brink’s, Inc.  There was also a paper transfer over at Brink’s, Inc…as 99,499 troy ounces was transferred from the Registered category — and back into Eligible, which is rather a counterintuitive move during a big delivery month in silver.  Normally the transfer is in the other direction.  The link to all this is here.

There wasn’t much movement over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  Nothing was reported received — and only 115 kilobars were shipped out.  This activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

With India and Turkey’s gold import figures now in hand, Nick was able to update the Silk Road Gold Demand chart with July’s dataDuring that month, the four major ‘silk road’ countries added 190.0 tonnes to their reserves, which wasn’t a lot.  If you look at the lower insert chart, you’ll see that gold imports/purchases by these four countries has been in slow decline going back to mid-2015.  Click to enlarge.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, September 3, showed smallish increases in the commercial net short positions in both gold and silver during the reporting week.

But as I pointed out in my Friday column, this report — and the companion Bank Participation Report…are hopelessly out of date after Thursday’s price action, plus what happened on Friday.  I’m just going to hit the highlights in both of these reports, as delving into them in depth is a total waste of my time writing it — and yours, in reading it.

In silver, the Commercial net short position only increased by 3,935 contracts, which was a big positive surprise for both Ted and myself, as Ted was expecting far worse.

They arrived at that number by reducing their long position by 5,322 contracts, but they also reduced their short position by 2,325 contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report it was all Managed Money traders plus a bunch more, as they increased their long position by 1,897 contracts — and they reduced their short position by 3,197 contracts as well.  It’s the sum of those two numbers…5,094 contracts…that represents their change for the reporting week.

With the new Bank Participation Report in hand, Ted calculates JPMorgan’s short position at round 25,000 contracts…up 5,000 from last week’s COT Report.

The Commercial net short position in silver, as of Tuesday’s cut-off, now sits at 84,678 COMEX contracts, or 423.3 million troy ounces of paper silver.

Here’s Nick’s 3-year COT chart for silverClick to enlarge.

As I’ve already pointed out, this silver data is now irrelevant.


In gold, the commercial net short position increased by only 3,935 contracts, or 393,500 troy ounces of paper gold, which is hardly anything.

They arrived at that number by reducing their long position by 1,149 contracts — and they increased their short position by 2,786 contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

In the Disaggregated COT Report, it was all Managed Money traders, plus a bit more, as they increased their long position by 6,906 contracts — and they also increased their short position by 1,996 contracts.  It’s the difference between those two numbers…4,910 contracts…that represents their change for the reporting week.

The commercial net short position in gold is back up to 33.77 million troy ounces…wildly bearish on its face.

Here’s Nick’s 3-year COT chart for gold — and it hasn’t changed much over the last two weeks, even though the price has risen a lot during that period.  Click to enlarge.

Like with the COT Report for silver, this report for gold is ancient history as well.

In the other metals, the Manged Money traders in palladium increased their net long by a further 1,059 contracts — and as I mentioned last week, there are never big position changes in palladium.  The Managed Money traders are now net long the palladium market by 11,825 contracts…about 58 percent of the total open interest, which is grotesque.  Total open interest in palladium is 20,518 COMEX contracts.  In platinum, the Managed Money traders increased their net long position by by an as expected very chunky 13,134 contracts during the reporting week.  The Managed Money traders are now net long the platinum market by 20,607 COMEX contracts…23 percent of the total open interest, a huge increase from last week.  The traders in the other two categories are net long platinum big time as well.  In copper, the Managed Money traders increased their net short position in that metal by a tiny 393 COMEX contracts during the reporting week — and are now net short the COMEX futures market by a eye-watering 70,914 contracts, or 1.77 billion pounds of the stuff…a hair under their record short position from a month ago. That’s 27 percent of total open interest…a huge percentage.


Here’s Nick Laird’s “Days to Cover” chart updated with the COT data for positions held at the close of COMEX trading on Tuesday. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 145 days of world silver production, which is down 3 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 73 days of world silver production, up 3 days from last week’s report — for a total of 218 days that the Big 8 are short, which is a bit over seven months of world silver production, or about 508 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were also short 218 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 423 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 508 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by 508 minus 423 equals 85 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 30-odd small commercial traders other than the Big 8, are net long that amount.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 25,000 COMEX silver contracts…up 5,000 from the prior week’s COT Report.

25,000 COMEX contracts is 125 million troy ounces of paper silver, which works out to around 53 days of world silver production, up from the 45 days they were short in last week’s COT Report.  As of Tuesday’s cut-off, JPMorgan was by far the biggest silver short on the COMEX futures market.  Citigroup is in second place — and not that far behind.

The Big 4 traders in silver are short, on average, about…146 divided by 4 equals…36.5 days of world silver production each.  The four traders in the ‘5 through 8’ category are short 72 days of world silver production in total, which is 18 days of world silver production each, on average.

The Big 8 commercial traders are short 45.2 percent of the entire open interest in silver in the COMEX futures market, which is a bit of an increase from the 42.4 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be a bit over the 50 percent mark.  In gold, it’s now 42.9 percent of the total COMEX open interest that the Big 8 are short, up a hair from the 42.0 percent they were short in last week’s report — and something approaching 50 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 63 days of world gold production, up 2 days from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 32 days of world production, unchanged from what they were short last week…for a total of 95 days of world gold production held short by the Big 8…up 2 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 66 percent of the total short position held by the Big 8…up 1 percentage point from last week’s COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 67, 73 and 76 percent respectively of the short positions held by the Big 8.  Silver is down 1 percentage point from a week ago, platinum is up 4 percentage points from last week — and palladium is up 1 percentage points from a week ago.

All the data above is also ancient history because of the price action on Thursday and Friday, but it does put a stake in the ground for the highs before the engineered price decline began.


The September Bank Participation Report [BPR] data is extracted directly from the data in yesterday’s Commitment of Traders Report.  It shows the number of futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday’s cut-off in all COMEX-traded products.  For this one day a month we get to see what the world’s banks are up to in the precious metals —and they’re usually up to quite a bit.

[The September Bank Participation Report covers the time period from August 7 to September 3 inclusive.]

In gold, 5 U.S. banks are net short 105,713 COMEX contracts in the September’s BPR.  In August’s Bank Participation Report [BPR] these same 5 U.S. banks were net short 82,387 contracts, so there was a sharp increase of 23,326 COMEX contracts from a month ago.

JPMorgan, Citigroup and HSBC USA would hold the lion’s share of this short position.  But as to who other two U.S. banks might be that are short in this BPR, I haven’t a clue, but it’s a given that their short positions would not be material.

Also in gold, 30 non-U.S. banks are net short 114,958 COMEX gold contracts.  In the August’s BPR, 29 non-U.S. banks were net short 132,469 COMEX contracts…so the month-over-month change shows a reduction of 17,511 contracts.

However, as I always say at this point, I suspect that there’s at least two large non-U.S. bank in this group, one of which would include Scotiabank.  It’s certainly possible that it could be the BIS in the No. 1 spot.  But regardless of who this second non-U.S. bank is, the short positions in gold held by the remaining 28 non-U.S. banks are immaterial.

At the low back in the August 2018 BPR [for July]…these same non-U.S. banks held a net short position in gold of only 1,960 contacts!

As of this Bank Participation Report, 35 banks [both U.S. and foreign] are net short 34.8 percent of the entire open interest in gold in the COMEX futures market, which is down a bit from the 35.8 percent they were short in the August BPR. This is rather amazing considering how much the gold price rose during this BPR reporting period…August.  But it does point out clearly that this price management scheme is centered around the U.S. bullion banks…and quite likely the BIS.

Here’s Nick’s BPR chart for gold going back to 2000.  Charts #4 and #5 are the key ones here.  Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX short position was outed by the CFTC in October of 2012.  Click to enlarge.

In silver, 5 U.S. banks are net short 37,706 COMEX contracts in September’s BPR.  In August’s BPR, the net short position of 4 U.S. banks was 32,314 contracts, so the short position of the U.S. banks is up another 5,392 contracts month-over-month — and most assuredly that increase comes courtesy of JPMorgan.  Ted says that of that September number, JPMorgan is short about 25,000 contracts of that amount.

As in gold, the three biggest short holders in silver of the five U.S. banks in total, would be JPMorgan, Citigroup and HSBC USA.  Whoever the remaining two U.S. bank may be, their short positions, like the short positions of the two smallest U.S. banks in gold, would be immaterial in the grand scheme of things.

Also in silver, 23 non-U.S. banks are net short 41,450 COMEX contracts in the September BPR…which is down from the 43,142 contracts that 23 non-U.S. banks were short in the August BPR.  I would suspect that Canada’s Scotiabank [and maybe one other, the BIS perhaps] holds a goodly chunk of the short position of these non-U.S. banks.  I believe that a number of the remaining 21 non-U.S. banks may actually net long the COMEX futures market in silver.  But even if they aren’t, the remaining short positions divided up between these other 21 non-U.S. banks are immaterial — and have always been so.  This is a JPMorgan-run operation…end of story.

As of September’s Bank Participation Report, 28 banks [both U.S. and foreign] are net short 35.1 percent of the entire open interest in the COMEX futures market in silver—which is up a bit from the 31.6 percent that they were net short in the August BPR — with much, much more than the lion’s share of that held by JPMorgan, Citigroup, HSBC USA, Scotiabank — and maybe one other non-U.S. bank, which I suspect may be the BIS.

Here’s the BPR chart for silver.  Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold.  Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns—the red bars.  It’s very noticeable in Chart #4—and really stands out like the proverbial sore thumb it is in chart #5.  Click to enlarge.

In platinum, 5 U.S. banks are net short 20,670 COMEX contracts in the September Bank Participation Report.  In the August BPR, these same banks were net short 15,202 COMEX contracts…so there’s been another increase month-over-month…5,468 contracts worth.

At the ‘low’ back in July of 2018, these same five U.S. banks were actually net long the platinum market by 2,573 contracts. That’s quite a change for the worse since then.

Also in platinum, 19 non-U.S. banks are net short 16,647 COMEX contracts in the September BPR, which is up another 19 percent from the 14,013 COMEX contracts that these same 19 non-U.S. banks were net short in the August BPR.  [Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts.]

It’s obvious that these banks, both U.S. and foreign, have been going short against the Managed Money trader during this big rally in platinum…which may have ended on Wednesday.

And as of September’s Bank Participation Report, 24 banks [both U.S. and foreign] are net short 42.1 percent of platinum’s total open interest in the COMEX futures market, which is up a very decent amount from the 38.7 percent they were net short in August’s BPR.

Here’s the Bank Participation Report chart for platinumClick to enlarge.

In palladium, 4 U.S. banks are net short 6,682 COMEX contracts in the September BPR, which is up a tiny amount from the 6,539 contracts that these same 4 U.S. banks held net short in the August BPR.

Also in palladium, 13 non-U.S. banks are net short 1,965 COMEX contracts—which is up a bit from the 1,576 COMEX contracts that 15 non-U.S. banks were short in the August BPR.

But when you divide up the short positions of these non-U.S. banks more or less equally, they’re completely immaterial…especially when compared to the positions held by the 4 U.S. banks.

As of this Bank Participation Report, 17 banks [both U.S. and foreign] are net short 42.1 percent of the entire COMEX open interest in palladium.  In August’s BPR, the world’s banks were net short 33.8 percent of total open interest…a big increase from a month ago.

Here’s the palladium BPR chart.  And as I point out every month, you should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this precious metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013 — and are even more so today.  Click to enlarge.

Of course all the above data belongs in the scrap heap along with the COT data from this week as well.  But as I said in Friday’s commentary, I was going to report on it regardless.

It remains to be seen if the price action on both Thursday and Friday is the beginning of another ‘wash, rinse, spin…repeat’ cycle this time around…as JPMorgan et al. are facing some rather serious and long-term headwinds…not only in the currencies, but in foreign bank and ETF gold purchases.  These headwinds are becoming ever more pronounced with each passing week.

However, it’s obvious that JPMorgan is still the short seller of last resort — and sometimes first resort as well, in order to keep a lid on precious metal prices.

But, as always, they are in a position to stick it to the rest of the short holders in both silver and gold if they so choose — and whether they will they or they won’t, remains to be seen.  I also get the impression that the engineered price decline that began on Thursday did not involve JPMorgan.  It was one or all of the other Big 7 commercial shorts.  But as Ted pointed out on the phone yesterday, JPMorgan was certainly in the thick of it covering every short contract they could — and going long hand over fist at the same time.

I have a decent number of stories/articles for you today, including a few that I’ve been saving for my Saturday column for length and/or content reasons.


CRITICAL READS

Looks Like a Stagflation Report“: August Private Payrolls Miss Huge, But Hourly Earnings Jump

In our preview of the August jobs report we warned that while census hiring was a potential positive wildcard to today’s print, it was the seasonals that were a major negative risk, with August jobs missing consensus in 8 of the past 10 annual prints.  Click to enlarge.

Well, make that 9 of the past 11 and even with census hiring, because moments ago the BLS reported that in August, a total of just 130K payrolls were added, with hiring for census accounting for 25,000 of the total, sharply below the 160k expected. Oddly, the picture presented by the Household Survey was vastly different, with the number of employed workers surging by 590K, to 157.878 million as the labor force soared by 571K, suggesting the U.S. has a way to go before hitting full employment.

On a year-over-year basis, the rate of growth payroll growth was just 1.4%, the lowest since August 2011.

However, it was the private payroll subset that was especially disappointing with the 96K print far below the 150K expected, and far below last month’s downward revised 131K. Worse, on a YTD basis, the number of private jobs created in 2019 is the worst going back at least 6 years.  Click to enlarge.

Additionally, as Bloomberg notes the one-month diffusion index, which shows the breadth of hiring, slumped to 53.5 in August for private employers. “That’s the weakest since May 2016 and not a good sign for the job market.”

This Zero Hedge story put in an appearance on their website at 8:40 a.m. on Friday morning EDT — and it comes to us courtesy of Brad Robertson.  Another link to it is here.  There was also another ZH story on this issue headlined “Where the August Jobs Were: Who is Hiring and Who Isn’t…and the Retail Apocalypse” — and that’s from Brad as well.


Doug Noland: $150 Billion Global Corporate Bond Binge

It’s difficult to envisage a more manic bond market environment – at home or abroad. In Europe, it’s tulip mania reincarnated, with a third of European investment-grade bonds now trading with negative yields. Draghi had best not disappoint the markets next Thursday. And when he comes through, markets will raise the stakes even higher for next month. From the Financial Times (Robert Smith): “JPMorgan’s analysts say September is shaping up to be the ‘first issuance window where negative yielding bonds are a common feature, rather than an occasional oddity’. ‘In our view, investors still have cash to deploy, and few other alternatives to buy,’ they say.

In theory, it would be prudent to push hard for less Washington monopolization of mortgage Credit. But at this point, the idea of “privatizing” Fannie and Freddie would simply be a return to the disastrous system of privatizing profits while nationalizing risk. There is simply no mechanism to effectively privatize this risk, as markets will invariably recognize these bigger than ever colossal institutions as much too big to fail.

Confident in the Washington backstop, GSE securities will continue to trade with meager risk premiums. This distortion creates extraordinarily attractive profit opportunities for equity investors clamoring for a so-called “privatization.” As before, cheap financing costs and the gross under-reserving for future losses would create the illusion of sound and highly profitable institutions. These “private” companies would surely reward investors with strong earnings growth and dividends, ensuring a hopelessly insufficient capital base for the downside of the cycle.

The Trump administration punted. Yet I would prefer to see these institutions remain under the Treasury umbrella rather than be part of some sham “privatization.” The administration should, however, at the very minimum demand a moratorium on expansion. It would take years, but Fannie and Freddie exposures could be meaningfully reduced. I won’t hold my breath. Cheap mortgage Credit has been a staple for U.S. economic and financial systems now going on three decades. One of many historic market distortions that these days passes as normal and sustainable.

Doug Noland’s weekly commentary was posted on his Internet site very early on Saturday morning EDT — and another link to it is here.


David Stockman on an Unprecedented Collapse of the Global Financial System

Here we are in month 121 of the longest business expansion in history—albeit the weakest one. The unemployment rate is at 3.7%, and they’ve already thrown in the towel and have cut the rates. This morning the federal funds rate is 2.12%.

They’ve got no room left to go. Now, people say they could go negative. They will not go negative in the United States. If they actually tried to drive interest rates in the short end of the market into negative territory—and finally crush whatever life is left in the savers and retirees of America—people would be descending on Washington with pitchforks and torches. So that won’t happen.

So, they basically have this huge balance sheet in conjunction with the other central banks of the world. Collectively, they have driven bond yields to rock bottom. I would say we’re now in the mother of all bond bubbles in history.

They’ve practically destroyed the bond market in terms of any meaningful price discovery and any meaningful economic content of the yields. You have $16 trillion of investment-grade sovereign debt trading at negative yields. You have even the entire US yield curve as the only bond market left with a positive number in front of the yield, and now we’re under 2%. They’re close to destroying the bond market completely.

So, if they try to go big time with a new round of QE, that will blow up the bond market. There’s no doubt about it.

I think that will be a calamity and will generate an unprecedented collapse of the entire global financial system.

David is never at a loss for words — and this Q&A between David and Doug Casey was posted on the internationalman.com Internet site on Friday sometime — and another link to it is hereGregory Mannarino‘s post market-closing rant on Friday is linked here.


Is the Fed Preparing to Topple the U.S. Dollar? — F. William Engdahl

The about-to-retire head of the very special Bank of England, Mark Carney, delivered a remarkable speech at the recent annual meeting of central bankers and finance elites at Jackson Hole Wyoming on August 23. The 23-page address to fellow central bankers and financial insiders is clearly a major signal of where the Powers That Be who run world central banks plan to take the world.

Carney addresses obvious flaws with the post-1944 dollar reserve system, noting that, “…a destabilising asymmetry at the heart of the IMFS (International Monetary and Financial System) is growing. While the world economy is being reordered, the US dollar remains as important as when Bretton Woods collapsed.” He states bluntly, “…In the longer term, we need to change the game…Risks are building, and they are structural.” What he then goes on to outline is a remarkably detailed blueprint for global central bank transformation of the dollar order, a revolutionary shift.

Carney discusses the fact that China as the world leading trading nation is the obvious candidate to replace the dollar as leading reserve, however, he notes, “…for the Renminbi to become a truly global currency, much more is required. Moreover, history teaches that the transition to a new global reserve currency may not proceed smoothly.” He indicates that means it often needs wars or depressions, as he cites the role of World War I forcing out sterling in favor of the U.S. dollar. What Carney finds more immediate is a new IMF-based monetary system to replace the dominant role of the dollar. Carney declares, “While the rise of the Renminbi may over time provide a second best solution to the current problems with the IMFS, first best would be to build a multipolar system. The main advantage of a multipolar IMFS is diversification… “ He adds, “… When change comes, it shouldn’t be to swap one currency hegemon for another. Any unipolar system is unsuited to a multi-polar world“… In other words he says, “Sorry, Beijing, you must wait.”

The Bank of England Governor proposes in effect that the IMF, with its multi-currency Special Drawing Rights (SDR), a basket of five currencies—dollar, Pound, Yen, Euro and now Renminbi—should play the central role creating a new monetary system: “The IMF should play a central role in informing both domestic and cross border policies. … Pooling resources at the IMF, and thereby distributing the costs across all 189 member countries…” For that to work he proposes raising the IMF SDR funds triple to $3 trillions as the core of a new monetary system.

This very worthwhile commentary from William appeared on the journal-neo.org Internet site last weekend — and I thank Jim Gullo for sending it our way.  Another link to it is here.


Major University Study Finds “Fire Did Not Bring Down Tower 7 On 9/11

On September 11, 2001, at 5:20 PM, the 47-story World Trade Center Building 7 collapsed into its footprint, falling more than 100 feet at the rate of gravity for 2.5 seconds of its seven-second destruction.

Despite calls for the evidence to be preserved, New York City officials had the building’s debris removed and destroyed in the ensuing weeks and months, preventing a proper forensic investigation from ever taking place. Seven years later, federal investigators concluded that WTC 7 was the first steel-framed high-rise ever to have collapsed solely as a result of normal office fires.

Today, we at Architects & Engineers for 9/11 Truth are pleased to partner with the University of Alaska Fairbanks (UAF) in releasing the draft report of a four-year computer modeling study of WTC 7’s collapse conducted by researchers in the university’s Department of Civil and Environmental Engineering. The UAF WTC 7 report concludes that the collapse of WTC 7 on 9/11 was caused not by fire but rather by the near-simultaneous failure of every column in the building.

[F]or the first time since 9/11 the federal government is taking steps to hear evidence that explosives may have been used to destroy the world trade centers.

The Lawyers’ Committee for 9/11 Inquiry successfully submitted a petition to the federal government demanding that the U.S. Attorney present to a Special Grand Jury extensive evidence of yet-to-be-prosecuted federal crimes relating to the destruction of three World Trade Center Towers on 9/11 (WTC1, WTC2 and WTC7).

After waiting months for the reply, the U.S. Attorney responded in a letter, noting that they will comply with the law.

Finally, after nearly two decades of ridicule, dismissal, and outright intolerance of information contrary to the “official story” of what happened on 9/11, the public may finally learn the truth of what happened and who was behind it.

I doubt that the Deep State will ever allow the truth to come out, as they haven’t allowed it with either Kennedy or Pearl Harbor yet, but it’s certainly worth a try. This very worthwhile article put in an appearance on the Zero Hedge website at 9:10 a.m. EDT on Friday morning — and I thank Brad Robertson for sharing it with us.  Another link to it is here.


Brexit Drama Reaches Its Final Act — Tom Luongo

It’s been a wild week in Westminster as U.K. Prime Minister Boris Johnson and Opposition Leader Jeremy Corbyn made dubious history. Johnson became the first Prime Minister in history to lose his first four votes in Parliament and Corbyn became the first Opposition Leader to turn down a general election.

If you think the Brits have lost their minds over Brexit, you would be wrong. Everyone involved is acting with complete rationality, playing the cards they are dealt.

These political machinations may seem obtuse but they will have enormous effects on the economic futures of the U.K. and the EU. Investors need to understand what is really happening to position themselves properly.

Johnson had no clear mandate to govern and is only Prime Minister because Corbyn refused to call a general election when he had the chance back in June. He didn’t do this because while he may be a pathetic Marxist, he’s not a complete fool.

The European election results were clear to everyone that if a General Election occurred, Nigel Farage’s Brexit Party and the Conservatives would command an unassailable majority in the House of Commons and Brexit on British terms would commence.

That dynamic is still in play today, and that’s why Corbyn’s Labour Party abstained from Johnson’s call for a General Election.

If you’re into politics in the U.K…this commentary by Tom Luongo is worth reading.  It was posted on the moneyandmarkets.com Internet site on Friday sometime — and it comes to us courtesy of Judy Sturgis.  Another link to it is here.


Draghi Seen Overriding Opposition With QE as Gloom Deepens

Mario Draghi is expected to go big in a final stimulus push as European Central Bank president, overriding protests from among his ranks that tools such as bond purchases aren’t yet needed.

More than 80% of economists surveyed by Bloomberg predict officials will announce more quantitative easing next week. They see the ECB’s deposit rate being reduced by 10 basis points to a record-low minus 0.5% in September, and expect a second cut of the same magnitude in December.

Draghi, who leaves his post in October and is set to be replaced by outgoing IMF chief Christine Lagarde, argued in July before the ECB’s summer break that the “outlook is getting worse and worse.” Since committing to reviewing a swathe of policy options, indicators haven’t signaled that a turning point is in sight. Yet some decision makers have argued that an aggressive package isn’t warranted, pushing back against market expectations they say have gone too far.

By easing, the ECB would join a wave of policy-loosening by central banks as the global economy cools because of protectionism and geopolitical tensions. The U.S. Federal Reserve might follow a week later with its second rate cut of the year, and the Swiss National Bank is seen as likely to reduce its key rate further below zero if the ECB acts.

This Bloomberg news item showed up on their Internet site at 9:00 p.m. PDT on Thursday evening — and was updated about sixteen hours later.  I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to it is here.


Maersk Halts Asia-Europe Loop Amid Global Slowdown

Growth in the world continues to collapse into late summer, so much so that Maersk and Mediterranean Shipping Company (MSC) had to “temporarily suspend” their AE2/Swan Asia to North Europe loop until mid-November, removing 20,000 twenty-foot equivalent unit (TEU) a week from trade, reported The LoadstarClick to enlarge.

Collapsing demand and plunging shipping container rates have led to pain for carriers who sail their vessels along the route. This is the second time Maersk and MSC have suspended the circuit, and the last time this happened was last fall.

Maersk and MSC said it’s working hard to “balance its network to match reduced market demand for the upcoming [Chinese factory shutdown] Golden Week” — and “help us to match capacity with the expected weaker demand for shipping services” from Asia to Europe.

Maersk and MSC said the service would resume “in line with demand pickup,” suggesting the suspension could be extended into 1H20 as global trade isn’t expected to pick up for the next six to eight months.

Maersk and MSC adopted a similar strategy last year, suspending AE2/Swan Asia to North Europe loop from September to December, this was right around the time when stock markets across the world crashed from October to December, on fears the world economy was slowing. It just so happens that the global synchronized slowdown is much worse this year, likely the world has entered a manufacturing/trade recession in late summer 2019.

This interesting article, at least for me it was, showed up on the Zero Hedge Internet site at 4:15 a.m. EDT on Friday morning — and it’s another offering from Brad Robertson.  Another link to it is here.


U.S. Army Major (Ret.): We Are Living in the Wreckage of the War on Terror

It has taken me years to tell these stories. The emotional and moral wounds of the Afghan War have just felt too recent, too raw. After all, I could hardly write a thing down about my Iraq War experience for nearly ten years, when, by accident, I churned out a book on the subject. Now, as the American war in Afghanistan – hopefully – winds to something approaching a close, it’s finally time to impart some tales of the madness. In this new, recurring, semi-regular series, the reader won’t find many worn out sagas of heroism, brotherhood, and love of country. Not that this author doesn’t have such stories, of course. But one can find those sorts of tales in countless books and numerous trite, platitudinal Hollywood yarns.

With that in mind, I propose to tell a number of very different sorts of stories – profiles, so to speak, in absurdity. That’s what war is, at root, an exercise in absurdity, and America’s hopeless post-9/11 wars are stranger than most. My own 18-year long quest to find some meaning in all the combat, to protect my troops from danger, push back against the madness, and dissent from within the army proved Kafkaesque in the extreme.

American soldiers fight and die at the whims of career-obsessed officers as much they do so at the behest of king and country. Sometimes its their own leaders – as much as the ostensible “enemy” – that tries to get them killed. The plentiful sociopaths running these wars at the upper and even middle-management levels are often far less concerned with long-term, meaningful “victory” in places like Afghanistan, than in crafting – on the backs of their soldiers sacrifices – the illusion of progress, just enough measurable “success” in their one year tour to warrant a stellar evaluation and, thus, the next promotion. Not all leaders are like this. I, for one, once worked for a man for whom I – and all my peers – would run through walls for, a (then) colonel that loved his hundreds of soldiers like they were his own children. But he was the exception that proved the rule.

The madness, irrationality, and absurdity of my colonel was nothing less than a microcosm of America’s entire hopeless adventure in Afghanistan. The war was never rational, winnable, or meaningful. It was from the first, and will end as, an exercise in futility. It was, and is, one grand patrol to my own unnecessary outpost, undertaken at the wrong time and place. It was a collection of sociopaths and imbeciles – both Afghan and American – tilting at windmills and ultimately dying for nothing at all. Yet the young men in the proverbial trenches never flinched, never refused. They did their absurd duty because they were acculturated to the military system, and because they were embarrassed not to.

After all, lower caters to higher…

This depressing, but not at all surprising first-hand account from a member of the U.S. armed forces stationed in Afghanistan, was taken from the AntiWar.com Internet site — and it appeared on Zero Hedge at five minutes to midnight on Friday night EDT.  Another link to it is here.


China Cuts Required Reserve Ratio Releasing $126BN in Liquidity; Yuan Surges

As had been widely previewed in China’s official financial press in recent days, on Friday the PBOC announced it would cut the required reserve ratio (RRR) for all banks by 0.5% effective Sept. 16 (and by 1% for some city commercial banks, to take effect in two steps on Oct. 15 and Nov. 15), releasing 900 billion yuan ($126 billion) of liquidity in the PBOC’s first broad and targeted RRR cut since 2015, helping to offset the tightening impact of upcoming tax payments.

While today’s rate cut – which was expected following the State Council meeting and ahead of the Oct.1 National Day Chinese holiday – was more than the previous cuts in January and May, which released 800 billion yuan and 280 billion yuan, respectively, the PBOC stated that “China won’t adopt flood-like monetary stimulus” and that they will continue “prudent” monetary policy to “keep liquidity at (a) reasonably ample level” and will “strengthen the counter-cyclical adjustment” which is basically gibberish for it will do whatever it sees appropriate.  Click to enlarge.

With the Chinese economy slowing drastically in recent months, with various economic indicators at multi-decade lows, the RRR cut was aimed at supporting demand by funneling credit to small firms and echoes the earlier cuts this year. Indeed, as Bloomberg notes, China’s economy softened substantially in August after poor results in July, and will likely deteriorate further in the remainder of the year. Trade tension between China and the U.S. expanded onto the financial front recently after China allowed the currency to decline below 7 a dollar, prompting the U.S. to name it a currency manipulator.

This news item put in an appearance on the Zero Hedge website at 7:02 a.m. on Friday morning EDT — and it’s yet another contribution from Brad Robertson.  Another link to it is here.


Greenspan: Rising Gold Price Shows Investors Want Hard Assets That Will Increase in Value

During a CNBC interview, former Federal Reserve Chairman Alan Greenspan said gold prices are surging because investors are looking for hard assets that they know will have value in 20 or 30 years.

Gold is up more than 21% on the year and is trading at levels not seen since 2013.

During the interview, Greenspan focused on an interesting fundamental he thinks is driving both the bond and gold markets – the aging population. He said there has been a shift in time preferences as people recognize they will likely live longer and they will need to finance those longer lives. This, he says, is increasing the demand for hard assets like gold.

One of the reasons that the gold price is rising as fast as it is … that’s telling us essentially that people are hard resources which they know are going to have a value 20 years from now, or 30 years from now as they age, and they want to make sure they have the resources to keep themselves in place. That is a clearly fundamental force that is driving this.”

Historically, gold has served as an inflation hedge and a wealth preserver. It makes sense that investors concerned about maintaining their savings well into the future would turn to gold. This is especially true given the likelihood of increasing inflation as the Federal Reserve continues to try to prop up the economy with low interest rates and quantitative easing.

This article from the SchiffGold.com Internet site was picked up by Zero Hedge at 12:14 p.m. on Friday afternoon EDT — and I thank Brad Robertson for sending it our way.  Another link to it is here.


The PHOTOS and the FUNNIES

Continuing along the dirt/gravel road high above Adams Lake…the first photo shows the road, which was very decent for being out in the middle of nowhere, but I wouldn’t want to be on it if it had been pouring rain for a few days.  The second photo is looking down the southern arm of the lake, where it flows into the world famous Adams River.  Once back in civilization about 30 kilometers later, we dropped into the Talking Rock Golf Course for a bite to eat…our second visit there.  The course is situated on Little Shuswap Lake.  The town of Chase, B.C. is on the tiny peninsula of land in the center of Photo 3 — and that’s where the South Thompson River begins its journey to Kamloops and, ultimately empties into the Fraser River at LyttonClick to enlarge for all.


The WRAP

When a managed economy begins to fail, the only direction is to manage it more and more.  It’s how ‘democratic socialism’ leads to repression.” – Garry Kasparov


Today’s pop ‘blast from the past’ is one I’ve feature before, but it’s been ages, so here it is again. They weren’t exactly one-hit wonders, but this tune was their most famous.  It made it to No. 8 on Billboard’s Year-End 100 Singles of 1967.  The link is here.

Today’s classical ‘blast from the past’ is one I’ve also featured before and, like the pop ‘blast from past’…it’s been a while.  Spanish virtuoso violinist Pablo de Sarasate had a lot of virtuoso violin piece dedicated to him — and I’ve featured several of them over the last month.  But he did write one of his own…Zigeunerweisen (Gypsy Airs), Op. 20…for violin and orchestra, which he composed in 1878 — and was premiered the same year in Leipzig, Germany.  It’s a breathless encore piece that thrills every crowd.  Here’s the incredibly gifted and luscious Sarah Chang doing the honours — and the link is here.


Yesterday’s price action in all the precious metals was something I’d never seen before — and the word ‘unprecedented’ comes to mind.  The engineered price declines into the jobs numbers did not turn out according to Hoyle moments after that — and the Big 8 commercial traders…with or without JPMorgan in attendance… had to step in even before the afternoon gold fix in London to prevent them from soaring to the upside.  Then ‘da boyz’ stepped in at precisely 12:45 p.m. in COMEX trading in the early afternoon.  And it wasn’t just gold and silver they were after, as all four precious metals got sold sharply lower at that instant.  This looked like desperate moves by desperate men.  I’m just speculating here, but those waterfall declines certain had all the hallmarks of a spoofing operation.

Looking at the Friday’s Preliminary Report yesterday evening, there was very little change in open interest in either silver or gold but, as I’ve learned the hard way via Ted Butler, those numbers can be deceiving.

With two record-setting volume days in silver, with gold volumes not that far behind, there was something going on out of sight that we probably won’t be privy to until next Friday’s COT Report.  I know that Ted will have a lot to say about this, amongst other things, in his weekly review to his paying subscribers this afternoon — and I’m eagerly looking forward to reading his latest.

Setting that aside for the moment, it’s impossible to tell how far along we are on this current ‘wash, rinse, spin…repeat’ cycle that we’re all too familiar with.  It was hard to get a hint from yesterday’s price action, as it was totally out of line with any other such engineered price decline.  All we can do is wait some more — and I doubt that we’ll have to wait for long.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and the changes in the four precious metals should be noted.  Click to enlarge.

I’ll turn 71 years young next month — and never in my lifetime have I witnessed a financial world that has floated so far off the rails as the one we’re living through now.  The ‘everything bubble’ is growing larger and more dangerous by the week — and to say that it will end badly is understating the situation.

It is, as Doug Noland so succinctly put it in his commentary in the Critical Reads section above…”tulip mania reincarnated in Europe.”

There is no price discovery in anything any more and, as Chris Powell said back in 2008…which is now 11 years ago…”there are no markets anymore, only interventions“.  Gary Kasperov’s quote above is a more modern version of that…“When a managed economy begins to fail, the only direction is to manage it more and more.  It’s how ‘democratic socialism’ leads to repression.”

It’s impossible to put today’s economic, financial and monetary situation in some sort of human context, because there is nobody alive today that has lived through such times as existed in 1929 before the crash.  Our generation is flying by the seat of its pants, hoping that the algorithms, market interventions — and the world’s central banks can keep this up indefinitely.

But anyone of a certain vintage, including this writer, knows perfectly well that a brick wall lies somewhere in our future.  The two commentaries that appeared on the Internet during the last week or so…one by Bank of England governor Mark Carney from Jackson Hole discussing a new currency regime no longer based on the U.S. dollar — and former president of the New York Fed, Bill Dudley comments that “There’s even an argument that the election itself falls within the Fed’s purview. If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.”  These are thinly disguised messages that big changes are coming.

These two straws in the wind, along with JPMorgan plus others scooping up all the physical gold and silver they can get their hands on, are indications that some sort of paradigm shift is headed our way.  The only thing that is not know is the timing.

But it draws closer at an ever-accelerating rate, with all interest rates world wide now zero-bound, or worse within the next six months or less.  No fractional reserve banking system can survive this — and the resulting inflation/hyperinflation of various world currencies is not far off.  Not even the almighty U.S. dollar will escape this monetary black hole that it is now in orbit around.  It will be a race to see what blows up first…the bond market, world currencies…or the various and sundry stock markets.  There is no escape now that the spiral downward has begun…none.

But as I and lots of others have said over the last year or so, this out of control financial and monetary system based on the U.S. dollar, is certainly on its last legs.  And as I keep repeating just about every week now, when this whole ‘Everything Bubble’ final does find its theoretical pin, it will come by design, rather than circumstance.

Despite the rather horrid setbacks in the precious metals — and their associated equities these last few days, the fact that Alan Greenspan, still a gold standard-bearer on the inside, would come out and say what he did on Friday, is the final straw in the wind that makes me content with my “all in” position in the precious metals.

And in the face of what’s coming down the pipe in the next six months, it’s a certainty that the price management scheme that currently exists in the all four precious metals will come to an abrupt end sometime in the next six months.

Ted is of the opinion — and I’m certainly not disagreeing with him this time, that this engineered price decline will be the last one before we blast higher, so I’m more than prepared to bear the pain in the short term.

Because, as the ancient Persian adage goes…”This too, shall pass.”

I’m done for the day — and the week — and I’ll see you here on Tuesday.

Ed

An “In-Your-Face” COMEX Affair

06 September 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The price pressure in gold began at the 8 a.m. China Standard Time open on their Thursday morning — and it wandered unevenly lower until a few minutes after the equity markets opened in New York at 9:30 a.m. ‘Da boyz’ went to work at that moment, with the low tick of the day coming around 10:25 a.m. EDT.  It was allowed to rally a bit after that, but that ended around 11:30 a.m. — and the price chopped quietly sideways until trading ended at 5:00 p.m. EDT.

The high and low ticks in gold were reported by the CME Group as $1,555.50 and $1,508.20 in the October contract — and $1,561.90 and $1,514.30 in December.

Gold was closed on New York on Thursday at $1,518.70 spot, down $33.30 on the day.  Net volume was a knee-wobbling 581,500 contracts — and there was just under 26,000 contracts worth of roll-over/switch volume in this precious metal.

JPMorgan et al. guided silver’s price in a similar manner throughout the entire Thursday trading session, complete with the same price inflection points, so I’ll spare you the play-by-play.

The high and low in silver were recorded as $19.675 and $18.57 in the December contract…an intraday move of $1.10…over five percent…an outrage if there ever was one.

Silver was closed on Thursday at $18.635 spot, down 93.5 cents from Wednesday.  Net volume was the highest in COMEX history at a bit over 189,000 contracts — and there was 6,500 contracts worth of roll-over/switch volume on top of that.

With some minor variations not worth mentioning, ‘da boyz’ guided platinum’s price in a very similar manner — and they closed it at $958 spot, down 26 bucks on the day.

The palladium price traded unevenly sideways throughout all of the Far East trading session — and most of the Zurich session as well.  It caught a bit of a bid at the COMEX open, but was also sold down along with the other three precious metals starting around 9:35 a.m. in New York.  It crawled higher from there — and back above the unchanged mark until 1 p.m. EDT — and it was sold a few dollars lower until trading ended at 5:00 p.m.  Palladium finished the Thursday session at $1,542 spot, up 3 dollars from Wednesday’s close.

The dollar index closed very late on Wednesday afternoon in New York at 98.45 — and opened down about 5 basis points once trading commenced around 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  It crept about ten basis points higher until a very few minutes after 8 a.m. in London — and its long, uneven slide to its 98.09 low tick began.  That was set at the morning gold fix in London, about twenty-five minutes after ‘da boyz’ began to hammer the four precious metals lower.  The ‘rally’ that commenced at that juncture topped out about 2:55 p.m. EDT — and it crawled a few basis points lower into the 5:30 p.m. close.  The dollar index finished the Thursday session at 98.41…down 4 basis points from Wednesday’s close.

Although the dollar index declined over 45 basis points from its high tick to its low…this certainly wasn’t allowed to be reflected in precious metal prices.  Couple that with the fact that JPMorgan et al. bombed the precious metals starting about twenty-five minutes before the dollar index began to ‘rally’ — and it’s obvious the the engineered price decline had zero to do with what the currencies were doing — and it was strictly an “in-your-face” COMEX affair.

Here’s the DXY chart, courtesy of Bloomberg as usual — and I’ve set the cursor at the low tick of the day — and the time…9:58 a.m. EDT…should be noted. 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…98.38…and the close on the DXY above, was 3 basis points on Thursday.  Click to enlarge as well.

The gold stocks gapped down a bit at the open — and continued lower until shortly after 11 a.m. in New York trading…long after the gold price had bottomed and turned higher.  They recovered a bit of their losses by around 2:30 p.m. EDT, but then sank a bit going into the 4:00 p.m. close.  The HUI closed down 4.89 percent.

The price path for the silver equities was virtually the same as it was for the gold shares, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index got clocked by 5.55 percent.  Click to enlarge if necessary.

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

And don’t forget that despite these ‘losses’…there were strong hands with open arms buying everything that was offered for sale.


The CME Daily Delivery Report for Day 5 of September deliveries showed that 13 gold and 276 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the two short/issuers were ADM and Advantage, with 9 and 4 contracts out of their respective client accounts.  JPMorgan an Macquarie Futures stopped 8 and 2 contracts for their respective in-house/proprietary trading accounts — and Advantage stopped the other 3 contracts for its client account.

In silver, of the five short/issuers in total, the only three that mattered were ABN Amro, JPMorgan and Advantage, with 164, 60 and 45 contracts out of their respective client accounts.  Of the nine long/stoppers in total, it was JPMorgan leading the pack as usual with 79 in total…43 for clients, plus another 36 for its own account.  ABN Amro was second with 69 contracts for its client account — and in third spot was Australia’s Macquarie Futures with 45 contracts for its own account.  In fourth place was Advantage, with 43 contracts for its client account.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in September rose by 8 contracts, leaving 64 still around, minus the 13 contracts mentioned a couple of paragraphs ago.  Wednesday’s Daily Delivery Report showed that 17 gold contracts were actually posted for delivery today, so that means that 8+17=25 more gold contracts were just added to September.  Silver o.i. in September declined by 282 contracts, leaving 1,100 still open, minus the 276 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 378 silver contracts were actually posted for delivery today, so that means that 378-282=96 more silver contracts just got added to the September delivery month.


There were withdrawals from both GLD and SLV on Thursday.  In GLD, an authorized participant removed 197,629 troy ounces — and from SLV, that number was 841,933 troy ounces.

In other silver depositories on Thursday, there was 134,146 troy ounces added to SIVR — and 73,384 troy ounces to Sprott’s PSLV.

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

There was a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  Nothing was reported received — and only 1,060.967 troy ounces/33 kilobars were shipped out…17 kilobars from Brink’s, Inc…11 from Manfra, Tordella & Brookes, Inc…and 5 kilobars from Canada’s Scotiabank.  The link to that is here.

There was a very reasonable amount of activity in silver, as 610,081 troy ounce was reported received — and another 1,088,381 troy ounces was shipped out.  All of the ‘in’ activity…one truckload…was dropped off at CNT.  In the ‘out’ category, there was 675,327 troy ounces that departed Canada’s Scotiabank — and 407,053 troy ounces was shipped out of JPMorgan.  The remaining 6,001 troy ounces left the Delaware Depository.  There were also some paper transfers from the Eligible category and into Registered…695,781 troy ounces at CNT — and the remaining 83,383 troy ounces was at Delaware…all destined for September delivery, no doubt.  The link to all this is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  There were 284 kilobars received at Loomis International — and all the ‘out’ activity…1,140 kilobars…departed Brink’s, Inc.  The link to this, in troy ounces, is here.


Here are two more charts that Nick passed around on Tuesday.  They show gold and silver imports into Turkey going back to 1995.  For the current year-to-date…to the end of July…that country has imported 71.2 tonnes of gold — and 174.2 tonnes of silver/5.6 million troy ounces.  Click to enlarge for both.

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


CRITICAL READS

Monetary Policy Won’t Preserve Economic Expansion — Bill Bonner

We have never met Eddy Elfenbein. Describing himself as an “aesthete… raconteur,” we are sure we would like him.

On Monday, he sent this tweet:

The Dow Jones Industrial Average peaked 90 years ago today at 381.17. By July 8, 1932, it had fallen to 41.22 — a drop of 89%. The index wouldn’t close at a new high until November 23, 1954 — more than 25 years after the peak.

Thank you, Mr. Elfenbien, for reminding us. Financial cycles can be long, unrelenting, and unforgiving.

Of course, that was back then. This is now.

With the internet running hot… and central bankers on the loose… it took only six years for the Dow to recover after the dot-com bust of 2000… and only three years following the financial crisis of ’08-’09.

And now, the authorities are hoping to recover from the next crisis before it even begins!

This worthwhile commentary from Bill was posted on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is hereGregory Mannarino‘s daily post market-closing rant on Thursday is linked here — and I thank Roy Stephens for that.


Blackrock CIO: The Endgame is Coming and Central Banks Will Debase Everything to Spark Inflation

Investment implications

How should one position for such an endgame? As is probably evident, any nominal instrument will be devalued in real terms, so the solution is to hold an asset that maintains its real value – an asset that cannot be printed. We would include stocks (dividend yields are set on payout ratios, companies have some degree of pricing power, and shares outstanding are limited in number), real estate (it is difficult and expensive to expand the stock of real estate), and even commodity currencies, like gold (again, limited supply and expensive to extract). By definition, the worst asset to hold would be a sovereign bond with a negative yield, closely followed by paper money at zero yield, both with a theoretically infinite supply.

Unfortunately, such extreme devaluations in currencies could not only inflate the prices of real assets but could also push Gini coefficients to historically wide levels (a measure of the rich/poor divide) and may well fuel a continued rise in populist politics. Ultimately, this could have a real influence on central banking as we know it today, and/or the value of fiat currency. All of this is very difficult to anticipate in terms of the breadth and influence of these types of actions and ultimate reactions in terms of how prices, markets, investors, and central banks consequently adjust.

Coming back from these extreme policies is very difficult, particularly as the aging demographic and concurrent potential growth trends embedded in the system provide a ceiling on above-trend growth, which otherwise could aid the economy in soft-landing from these policies. And, potentially more importantly, extremely low rates can and will encourage fiscal actors to add more, and potentially dramatically more, debt to an already historically-levered set of economies (e.g. the increased discussion of MMT). Hence, all of this leads one today to consider assets that can participate in an inherent devaluation of the local currency, which is to say: equities, real estate, and even hard assets that have historic value-relevance, such as gold.

This longish commentary, which is definitely worth reading, put in an appearance on the Zero Hedge website at 6:25 p.m. EDT on Thursday evening — and another link to it is here.


German Factory Orders Sink, Raising Risk of Recession

German factory orders fell in July, aggravating an industrial slump that has pushed Europe’s largest economy to the brink of recession.

Demand fell 2.7% from June, when it rose at the same pace, as orders from outside the euro region plunged. The economy ministry said “in light of ongoing international trade conflicts and modest business expectations in manufacturing, no fundamental improvement in momentum is in sight for the coming months.”  Click to enlarge.

Economic prospects for export-reliant Germany remain uncertain amid increased risks of a no-deal Brexit that would plunge the U.K. deep into crisis, and the intensifying trade war. The U.S. and China hit each other with a new round of import tariffs this month — measures that will have ripple effects around the world — and U.S. President Donald Trump has repeatedly accused Europe of unfair trade.

Purchasing managers’ indexes for Germany indicated further declines in manufacturing in August, and signs are increasing that services providers are starting to feel the brunt.

Weakness is also spreading to other parts of the euro area. Factories in Spain and Ireland have seen output shrinking for the past three months, and with Italy deep in a political crisis the European Central Bank predicts the region’s subdued pace of growth will continue for now.

This news item appeared on the bloomberg.com Internet site at 11:05 p.m. Pacific Daylight Time on Wednesday night — and was updated about thirteen hours later.  I thank Swedish reader Patrik Ekdahl for sharing it with us — and another link to it is here.


Iran tanker: U.S. offers captain millions to hand over ship

The U.S. state department has confirmed it offered millions of dollars to the captain of an Iranian oil tanker which is at the centre of a diplomatic row.

Brian Hook, head of the department’s Iran Action Group, emailed the captain of the Adrian Darya 1 about sailing it somewhere the U.S. could seize it.

The vessel was suspected of moving oil to Syria, and was temporarily impounded by U.K. authorities in Gibraltar in July.

It was released last month after Iran gave assurances about its destination.

The U.S. justice department, which had tried to block the release, then issued a warrant to seize the tanker.

Reports of the cash offer first appeared in the Financial Times on Wednesday and have been confirmed by the state department.

We have conducted extensive outreach to several ship captains as well as shipping companies,” a spokeswoman told AFP news agency.

This news item showed up on the bbc.com Internet site on Thursday sometime — and comes to us courtesy of Roy Stephens.  Another link to it is here.


I didn’t find any precious metals-related news items that I thought worth posting.  Everything I saw suggested that it was the new trade talks in October between China and the U.S…or the ISM’s survey rebounded in August, despite the fact that 60 percent of the components in that report were weaker.  And the ADP employment report came out an hour before ‘da boyz appeared.  None even whispered the fact that this was a giant bear raid by the Big 8 traders…the real reason.


The PHOTOS and the FUNNIES

Continuing on our trip down Agate Bay Road east of Barriere, B.C. on June 16…the first shot is more of the disgusting scenery along the way.  The second photo is of the settlement at the end of the paved road at Skwaam Bay…with Adams Lake attached.  From there it was dirt and gravel for about 20 kilometers, before hitting pavement back in ‘civilization’ again.  The third shot is of the same settlement and bay, but take from on high from the dirt road on the mountain just southeast of it.  Paved Agate Bay Road can be seen leading up to it.  Click to enlarge.


The WRAP

I certainly hope you weren’t surprised by yesterday’s engineered price declines in three of the four precious metals.  Disappointed, yes…as was I…but not surprised.

But despite all their huffing and puffing yesterday, no moving averages of any kind were broken to the downside on Thursday, so although there was some Managed Money selling, Thursday’s Preliminary Report indicates that it wasn’t that much.

As to whether this is the beginning of a major engineered sell-off by JPMorgan et al. remains to be seen.  From what I see ahead of us regarding the Fed Funds Rate, the U.S. dollar and the rush to zero-bound interest rates in all fiat currencies…yesterday’s price action was but a speed bump on the way to much higher prices.  And that opinion is independent of any further down-side price action over the next few days and/or weeks.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  The damage in three of the four precious metals should be noted, but ‘da boyz’ didn’t push it with palladium for whatever reason.  I note that copper closed above its 50-day moving average by a hair yesterday, so it appears most likely that the commercial traders [not banks in this metal] are in the process of ringing the cash register on the Managed Money traders.  It will take a few more trading days to confirm that it is, in fact, happening.  And WTIC closed right between its 50 and 200-day moving averages yesterday…which are only 21 cents apart.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price began to creep quietly lower starting shortly after 8 a.m. China Standard Time on their Friday morning — and that lasted until about 11:20 a.m. over there. It began to creep higher at that juncture, but ran into ‘something’ the moment it hit the unchanged mark around 1 p.m. CST. It was was turned lower hard from there — and is currently down $12.40 the ounce. The silver price wasn’t sent lower until shortly after 9 a.m. CST – and it should come as no surprise that its current low tick was set at the same time as gold’s. It didn’t recover much from there, but was also turned quietly lower at 1 p.m. — and then was totally bombed about five minutes before the London open — and is now down 30 cents. Platinum was forced to follow the gold price — and ‘da boyz’ already have it lower by 24 dollars. Palladium was also sold lower until late in the morning in Shanghai — and then recovered a decent chunk of that loss, but was then hammered lower starting shortly after 2 p.m. CST — and is down 12 bucks as Zurich opens.

Net HFT gold volume is a bit over 75,000 contracts already — and there’s only 1,360 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is way up there as well at just under 29,500 contracts — and there’s only a tiny 725 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened about unchanged around 7:45 p.m. EDT in New York on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning. It was up about 14 basis points or so by around 10 a.m. CST, but started to fade after that — and is currently down 9 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Today, around 3:30 p.m. EDT, we get the latest and greatest weekly Commitment of Traders and the companion monthly Bank Participation Reports — and in most respects that matter, they’re pretty much “yesterday’s news” after the pounding the precious metals took yesterday — and so far today in the very thinly-traded Far East trading session.  But regardless of that fact, I’ll duly report what’s in the both in my Saturday missive.

But as a preview as to what might be in today’s COT Report, silver analyst Ted Butler had this to say in to his paying subscribers in his mid-week commentary on Wednesday…”As far as what to expect in this week’s Commitments of Traders and the monthly Bank Participation reports, yesterday’s sharp rally on the cutoff day resulted in a big increase in total open interest for the day in both COMEX gold and silver futures, but not for the week. I’m more inclined to review the COT data than predict it this week, but would note that silver added nearly a dollar for the reporting week while gold was only up by a few dollars, implying managed money buying and commercial selling in silver.”

But the first thing out of the gate this morning in Washington is the monthly jobs number that will be released at 8:30 a.m. EDT.  Don’t be at all that surprised if the Big 8 show up in force to do the dirty at that time, regardless of what the number is.  Of course I’d be ecstatic to be proven spectacularly wrong about this.


And as I post today’s efforts on the website at 4:02 a.m. EDT, I note that all four precious metals hit their current low ticks at, or minutes before, the 8 a.m. London/9 a.m. Zurich opens, which was about ten minutes or so after the dollar index began to head higher. The prices of all four bounced at a bit at that point, but have all been turned lower since. At the moment, gold is down $10.40 the ounce — and silver is now down 34 cents. Platinum and palladium are lower by 21 and 12 dollars respectively as the first hour of trading in London and Zurich comes to a close.

Gross gold volume is already up to a bit over 117,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is just under 112,500 contracts. Net HFT silver volume is up to a very chunky 41,500 contracts or so — and there’s only 960 contracts worth of roll-over/switch volume in this precious metal.

The dollar index hit a low about ten minutes before the London/Zurich opens, but after a brief up/down move is down 10 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

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

Ed

“Gold will be explosive, unlike anything we’ve seen” — Frank Giustra

05 September 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold quietly and unevenly lower starting at the 8 a.m. open in Shanghai on their Wednesday morning — and the low tick of the day was set shortly after 11:30 a.m. in London.  It then headed higher until at, of just shortly after, the afternoon gold fix — and then traded sideways until shortly after 1 p.m. in New York.  It jumped up a few more dollars at that point until a few minutes before 2 p.m. EDT — and crept quietly lower into the 5:00 p.m. close from there.

The low and high ticks were reported by the CME Group as $1,536.50 and $1,559.80 in the October contract — and $1,542.60 and $1,566.20 in December.

Gold finished the Wednesday session at $1,552.00 spot, up $5.30 from Tuesday’s close.  Net volume was enormous at around 390,000 contracts — and there was a bit under 24,000 contracts worth of roll-over/switch volume in this precious metal.

Silver was up about 32 cents by around 8:20 a.m. in Far East trading on their Wednesday — and all of that was gone, plus a few pennies more, by 9 a.m. in London.  It then had about a ten cent up/down move between that time — and around 12:40 a.m. BST and, like gold at that time, began to head higher quietly and unevenly higher.  That lasted until the price was quietly capped and turned lower around 4:30 p.m. in after-hours trading in New York — and it didn’t do a thing after that.

The low and high ticks in silver were reported as $19.28 and $19.75 in the December contract.

Silver was closed at $19.57 spot, up 34.5 cents from Wednesday.  Net volume was past Saturn at around 152,500 contracts — and there was about 5,100 contracts worth of roll-over/switch volume in this precious metal.

The platinum price crept very quietly and unevenly sideways with a slight positive bias until 10 a.m. in Zurich.  A rather spirited rally commenced at that point, which was capped and sold lower starting about fifteen minutes before the Zurich close…10:45 a.m. in New York.  That sell-off lasted until a few minutes before the COMEX close — and it edged a bit higher in the thinly-traded after-hours market.  Platinum finished the day at $984 spot, up 27 bucks from Tuesday.  The Managed Money traders have gone from short the COMEX futures market in platinum, to massively long, in just two short weeks…a fact that will be born out in tomorrow’s COT Report.

The palladium price was higher by seven dollars by shortly before 8 a.m. CST on their Wednesday morning.  But that gain was all gone, plus a few dollars more by a few minutes before 2 p.m. CEST/8 a.m. EDT.  It stair-stepped its way higher in price from there, before finally getting capped and turned lower at the afternoon gold fix in London.  From that point onwards, the price did next to nothing.  Palladium finished the day at $1,539 spot, up 14 dollars from Tuesday’s close.

The dollar index closed very late on Tuesday afternoon in New York at 96.0000 — and opened down about 3 basis points once trading commenced around 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning.  From that juncture it chopped very quietly sideways until a very few minutes after 2 p.m. CST on their Wednesday afternoon.  It then began its descent to its 98.39 low tick of the day, which came at 3 p.m. in New York — and it didn’t do much of anything after that.

The dollar index finished the Wednesday session at 98.45 down 55 basis points from Tuesday’s close.

With the dollar index down a fairly large amount yesterday, one would have thought that silver and gold prices would have responded in more dynamic fashion to the upside…but that didn’t happen.  I don’t know why, but I’m not overly concerned about it, as other forces besides the currencies are now driving precious metal prices.

Here’s the DXY chart, courtesy of BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…98.39…and the close on the DXY chart above, was 6 basis points on Wednesday.  Click to enlarge as well.

The gold shares opened unchanged — and then chopped quietly sideways until around 11:20 a.m. in New York trading.  They began to head unevenly higher from there — and  closed on their respective highs of the day, as the HUI closed up by 1.93 percent.

The silver equities also opened about unchanged, but soared to their highs of the day by around 11:25 a.m. EDT.  But two hours later they were almost back at unchanged.  Another sharp rally began shortly after 1 p.m. — and the silver stocks revisited their previous high shortly before 2 p.m. EDT.  They gave a bit of those gains back before the markets closed at 4:00 p.m.  Nick Laird’s Intraday Silver Sentiment/Silver 7 index closed up only 1.52 percent.  Click to enlarge if necessary.

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

I was surprised at the share price action in the silver equities yesterday.  Even though the Silver 7 Index was up 1.52 percent on Wednesday — and should have been up more, my portfolio of silver equities barely finished above unchanged.  But on Tuesday, they wildly outperformed Nick’s Index.  I don’t have an answer for you as to why that is.  I’m just making an observation.


The CME Daily Delivery Report for Day 4 of the September delivery month showed that 17 gold and 378 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the two short/issuers were Advantage and S.G. Americas, with 15 and 2 contracts out of their respective client accounts.  There four long/stoppers…JPMorgan and Macquarie Futures with 7 and 4 contracts for their in-house/proprietary trading accounts — and Advantage and ADM with 4 and 2 contracts for their respective client accounts.

In silver, there were six short/issuers in total — and the three largest were ABN Amro, JPMorgan and Advantage, with 193, 60 and 52 contracts out of their respective client accounts.  The largest long/stopper as always was JPMorgan, picking up 119 contracts…65 for its client account, plus another 54 for its own account.  In second, third and fourth place were ABN Amro, Macquarie Futures — and Advantage…stopping 82, 68 and 45 contracts…Macquarie for its own account — and the other two for their client accounts.

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

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in September fell by 61 contracts, leaving only 56 still open, minus the 17 mentioned in the previous paragraph.  Tuesday’s Daily Delivery Report showed that 75 gold contracts were actually posted for delivery today, so that means that 75-61=14 more gold contracts were added to the September delivery month.  Silver o.i. in September dropped by 385 contracts, leaving 1,382 still around, minus the 378 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 651 silver contracts were actually posted for delivery today, so that means that another 651-385=266 silver contracts were added to September.

So far, after four days worth of deliveries in September, there have been 1,613 gold contracts issued/reissued and stopped, which is a huge number for a unscheduled delivery month — and that number in silver is already an eye-watering 6,510 contracts…32.55 million troy ounces of the stuff.


There was another decent sized deposit into GLD yesterday, as an authorized participant added 188,566 troy ounces.  But the big surprise was in SLV, as an a.p…assume JPMorgan…took out 707,584 troy ounces in what was most likely a conversion of shares for physical metal.

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

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday was 8,037.750 troy ounces/250 kilobars [SGE kilobar weight] that was shipped out of Brink’s, Inc.  Nothing was reported received.  The link to this is here.

As I’ve pointed out before, any and all kilobars shipped out of Brink’s, Inc. are now being reported as the SGE kilobar weight, rather than the U.K./U.S. kilobar weight…32.151 troy ounces vs. 32.150 troy ounces.  And as I’ve also mentioned before, I expect the rest of the world’s gold depositories to follow suit at some point.

In silver, the only ‘in’ activity was 7,710 troy ounces that was received at CNT.  The ‘out’ activity amounted to 644,673 troy ounces, with the lion’s share of that…one truckload…599,976 troy ounces…shipped out of Canada’s Scotiabank.  The rest was shipped out of the International Depository Services of Delaware and CNT…43,729 and 967 troy ounces respectively.  There was also some paper transfers from the Eligible category and into Registered…1,371,293 troy ounces at CNT — and 318,501 troy ounces from the Delaware.  Without doubt, this is all slated for delivery in September.  The link to all this is here.

There was very decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They received 1,830 of them — and shipped out 366.  All of this occurred at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


Here are two more charts that Nick Laird passed around on Tuesday that I just didn’t have the space for in Wednesday’s column…so here they are now.  They show gold and silver imports into India, updated with July‘s data…not August’s.  They’re always a month behind everyone else.

During that month they imported 37.75 metric tonnes of gold — and an eye-watering 1,040 tonnes of silver…33.46 million troy ounces.  Click to enlarge.  There was a rather breathless story about this on the srsroccoreport.com Internet site headlined “India Silver Imports Tripled In July As Prices Rise” — and I thank Brad Robertson for that one.

I have an average number of stories/articles/interviews again for you today.


CRITICAL READS

“Big Short” Investor Michael Burry Explains How Index Funds Will Trigger the Next Crash

After years of radio silence, Dr. Michael Burry – the small-time stock picker who rose to fame for his bets against subprime mortgage bonds featured in the book (and later film) “The Big Short” – is once again doing the media rounds, talking about his latest equity plays and sharing his thoughts about the next big market blowups.

And in an interview with Bloomberg, Burry doesn’t disappoint. At one point, he shares his skepticism about passive investing, and the flood of money that has poured into index funds since the financial crisis. Burry sees similarities between these funds and the CDOs that nearly brought down the financial system in the run-up to the crisis.

Burry, who made a fortune betting against the CDOs, argued that these passive flows are distorting prices for stocks and bonds in much the same way that CDOs did for subprime mortgages. Eventually, the flows will reverse at some point, and when they do, “it will be ugly.”

Like most bubbles, the longer it goes on, the worse the crash will be,” Burry, who oversees about $340 million AUM at Scion Asset Management in Cupertino, said.

This very interesting item was posted on the Zero Hedge website at 2:25 p.m. EDT on Wednesday afternoon — and another link to it is here.


Negative Interest Rates Threaten the Financial System — Jim Bianco

Former Federal Reserve Chairman Alan Greenspan recently said he wouldn’t be surprised if yields on U.S. bonds turned negative and if they do, it wouldn’t be “that big a of a deal.” That seems to be a sentiment widely held in central banking circles these days, but it’s wrong. Negative interest rates represent a threat to the financial system.

To understand why, let’s start with the existing fractional reserve banking system, which is more than a century old. For every dollar that goes into a bank, some set amount (usually about 10%) must go into a reserve account to be overseen by the central bank. The rest is either lent out or used to buy securities.

In other words, the fractional reserve banking system is leveraged to interest rates. This works when rates are positive. Loans are made and securities bought because they will generate income for the bank. In a negative rate environment, the bank must pay to hold loans and securities. In other words, banks would be punished for providing credit, which is the lifeblood of an economy. As German bankers recently explained to the European Central Bank:

We already have a devastating interest rate situation today, the end of which is unforeseeable,” Peter Schneider, who represents public-sector savings banks in the southern German state of Baden-Wuerttemberg, said on Wednesday. “If the ECB aggravates this course, that would hit not only the entire financial sector hard, but especially savers.”

And to make matters worse, the German government is considering outlawing negative deposit rates. In a negative rate world, forcing rates on short-dated debt to zero would keep the yield curve permanently inverted. The fractional reserve banking system cannot operate properly in this environment.

This worthwhile opinion piece was posted on the Bloomberg website at 2:00 a.m. PDT on Tuesday morning — and I found it in a Zero Hedge article that Brad Robertson sent our way.  Another link to it is hereGregory Mannarino‘s post-market close wrap-up from Wednesday is linked here — and I thank Roy Stephens for that.


Jay Taylor interviews David Stockman

This 23-minute audio interview with host Jay Taylor begins at the 36:15 minute mark — and I must admit that I haven’t had the time to listen to it yet, so you’re on your own with this one.  But David is never lost for words.


The Internet Age Distorted the Meaning of Wealth — Bill Bonner

Last week, we explained that we knew next to nothing about economics when we began writing this Diary 20 years ago. We discovered the economic world along with our long-suffering Dear Readers, dot by dot, error by error, claptrap by claptrap.

Now, we know a little more than next to nothing. But what we know most of all… and are absolutely confident about… is that next to nothing is about as good as it gets.

Neither we nor anybody else will ever know, in detail, how an economy actually functions.

An economy is a natural thing, evolved, not designed.

It responds to billions of inputs… past, present, and future… far too numerous, ambiguous, and subtle for any person, group, or computer algorithm to master… aggregating the desires, fantasies, and desperate midnight terrors of billions of people, each with his own “information.”

Any attempt by a few people to impose their own vision on it only distorts it, subverts it, and corrupts it.

That’s why central planning – either the hard version of the Bolsheviks… or the light version of Republicans and Democrats… or the bizarro version of Donald Trump – always retards growth and reduces satisfaction.

This worthwhile commentary from Bill showed up on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.


British MPs defeat Boris Johnson on Brexit, election looms

A cross-party alliance defeated Boris Johnson in parliament on Tuesday in a bid to prevent him taking Britain out of the E.U. without a divorce agreement – prompting the prime minister to announce that he would immediately push for a snap election.

Lawmakers voted by 328 to 301 for a motion put forward by opposition parties and rebel lawmakers in Johnson’s party – who had been warned they would be kicked out of the Conservative Party if they defied the government.

More than three years after the United Kingdom voted in a referendum to leave the European Union, the defeat leaves the course of Brexit unresolved, with possible outcomes still ranging from a turbulent ‘no-deal’ exit to abandoning the whole endeavour.

Tuesday’s victory is the first hurdle for lawmakers who, having succeeded in taking control of parliamentary business, will on Wednesday seek to pass a law forcing Johnson to ask the EU to delay Brexit until Jan. 31 unless he has a deal approved by parliament beforehand on the terms and manner of the exit.

This story was posted on the france24.com Internet site at 11:35 p.m. CEST on Tuesday night — and was updated about ten hours later.  I thank Roy Stephens for sending it — and another link to it is here.  There was a Russia Today item on this headlined “‘Chaos unseen since WWII’: U.K. parliament subverts democracy, leaves pre-Brexit Britain ungoverned” — and that comes to us courtesy of Roy as well.  The Zero Hedge spin on all this is headlined “Cable Climbs as Parliament Rejects Johnson’s Election Request” — and the link to that is here.


Iran will give Europe two months to save nuclear deal — Rouhani

Europe has two months to negotiate sanctions relief for Tehran, otherwise the country will initiate ‘phase three’ in its rollback of commitments under the 2015 nuclear deal, Iranian President Hassan Rouhani has said.

Europe has another two-month deadline for negotiations, agreement, and a return to its commitments,” Rouhani warned at a cabinet meeting on Wednesday.

Tehran has been calling on the E.U. to provide relief from the sweeping sanctions that were imposed by Washington after the U.S. unilaterally left the 2015 deal, known as the JCPOA. Iranian officials have warned that they will gradually reduce their commitments under the agreement if this does not happen.

In early July, Iran activated the ‘first phase’ of this strategy by increasing its stockpile of enriched uranium beyond the 300kg limit imposed by the JCPOA. The ‘second phase’ – enriching uranium beyond 3.67 percent – was effected shortly afterwards.

Rouhani didn’t specify what the next step would be, but he hinted that it would play an important part in transforming the nation’s nuclear program.

This news story put in an appearance on the rt.com Internet site at 7:17 a.m. Moscow time on their Wednesday morning, which was 12:17 a.m. in Washington — EDT plus 7 hours.  I thank Larry Galearis for sending it our way — and another link to it is here.


U.S. Announces $15M Reward To Disrupt Iran’s IRGC’s “Sprawling Petroleum Shipping Network

At a moment the Iran-flagged tanker Adrian Darya has “gone dark” – turning off its transponder signal as it waits off the Syrian coast in what is believed the precursor to an imminent offloading of its 2.1 million barrels of Iranian crude, the U.S. Treasury has rolled out new sanctions covering 40 Iran-linked companies, individuals and vessels in what is the most far-reaching attempt to disrupt Iran’s oil trade on the high seas yet.

A senior administration official announced Wednesday the U.S. is targeting a “sprawling petroleum shipping network” spearheaded by former Islamic Revolutionary Guard Corps (IRGC) commanders and their proxies such as Hezbollah.

The official charged that Iran’s oil continued in “funding” global terrorism. The senior official further called on the international community to “reject oil from Iran” and further took the unprecedented step of offering a substantial reward to anyone that helps to “disrupt an [Iranian] government operation“.

Specifically, the U.S. is now offering for the first time ever a reward up to $15 million to help disrupt petroleum operations of the IRGC and its Quds force, citing “hundreds of millions of dollars” in oil moved “over the past year through this network“.

The State Department is offering the massive sum through its Rewards for Justice program, which includes giving information which uncovers the sources of IRGC funding.

From one outrage to another.  This news item put in an appearance on the Zero Hedge Internet site at 2:25 p.m. on Wednesday afternoon EDT — and another link to it is here.


Hong Kong leader fully withdraws contentious extradition bill

After it led to months of often violent protests, Hong Kong’s contentious extradition bill was finally withdrawn Wednesday by leader Carrie Lam.

Officially withdrawing the legislation, which proposed allowing China to extradite fugitives from the territory for trial, meets one of the five demands made by the protesters. The others include setting up a government inquiry into police conduct, granting amnesty to those arrested in the protests, refraining from characterizing the protests as riots and resuming political reforms.

Lam announced plans to investigate the causes of the social unrest and suggest solutions, but stopped short of the full-fledged inquiry demanded by protesters.

Lam’s capitulation follows one of the most violent weekends of protests all summer, when numerous protesters were arrested for tossing gas bombs at police headquarters and government buildings. The demonstration was considered illegal because the government had rejected a permit to assemble.

Hong Kong lawmaker Michael Tien, who had been a proponent of the extradition bill, said the withdrawal was the right thing to do but it may not satisfy the opponents.

The focus since the beginning of July has completely shifted now to the confrontation between police and rioters, and how the public perceives it,” Tien said. “The public is totally polarized, but it is no longer about the extradition bill.”

This news item was posted on the upi.com Internet site at 7:23 a.m. EDT on Wednesday morning — and I thank Roy Stephens for bringing it to my attention — and now to yours.  Another link to it is here.


LME’s gold, silver contracts in doubt as Société Générale pulls out

The London Metal Exchange’s gold and silver futures are being thrown into doubt, with the imminent resignation of Societe Generale as a market maker threatening to deepen a decline in trading activity, three sources said.

SocGen, one of five lenders that partnered with the LME to launch the contracts in 2017, is expected to resign shortly as a market maker, taking the number of banks committed to offering tradeable prices to two — Goldman Sachs and Morgan Stanley, the sources said.

That has triggered a discussion over the contracts’ future.

There’s still commitment,” said one of the sources. But if volumes remain low, they added, “we’ll have to sit down and decide what is the next stage — exit, restructuring, or something else.”

Another rat leaving a sinking ship, perhaps?  This Reuters article, filed from London, showed up on their Internet site at 10:23 a.m. EDT on Wednesday morning — and the first reader through the door with it was Jim Gullo.  Another link to it is here.


I wouldn’t be surprised to see $3,000 gold: David Rosenberg

This 6:38 minute National Post video interview appeared on the youtube.com Internet site back on August 28 — and I thank Swedish reader Patrik Ekdahl for sending it along.


Gold will be explosive, unlike anything we’ve seen says Canada’s billionaire Frank Giustra

We’re currently in the last phase of a gold bull rally that began back in 2001 — and this phase will see the most upside action, this according to Frank Giustra, chairman of Leagold.

This 20-minute video interview appeared on the kitco.com Internet site on Tuesday sometime — and Roy Stephens was the first person through the door with this one.  I’ve watched the first nine minutes of it — and it’s definitely worth your time.


The PHOTOS and the FUNNIES

Continuing on our trip down Agate Bay Road east of Barriere, B.C….I saw this small herd of horses under a tree by an old abandoned house — and though it would make a good photo.  The second is of a hay field in the valley that the road goes through.  The third is the local variety of the Columbian ground squirrel — and the last shot is the piece of pasture that the critter and family members called home.  Click to enlarge.


The WRAP

Despite the sell-offs in both gold and silver in Far East and early morning trading in London, they both managed to recover and close higher on the day, but I doubt that this will the last attempt by the bullion banks to run the Managed Money traders off their massive long positions.   As Ted says, they either engineer a price decline so they can cover some or all of their massive short positions…or they get over run.

Platinum had another huge upside day on Wednesday — and that is strictly a short covering rally which, as I pointed out in yesterday’s missive, will be fully evident in tomorrow’s Commitment of Traders Report.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and the changes in all should be noted.  I will point out that both copper and WTIC managed to rally yesterday, but it’s way too soon to call this the start of anything.  The Managed Money traders hold massive short positions in both these critical commodities as well.  That’s why their respective prices are as low as they are.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price traded down a dollar or so going into the 8 a.m. open in Shanghai on their Thursday morning. But, like on their Wednesday morning, was kicked down to its current low by shortly after 10 a.m. CST. It recovered a bit after that — and has been trading mostly sideways since, but has ticked up a bit in the last few minutes — and is down $4.40 as London opens. It was mostly the same for silver, without the tick up like gold had — and it’s down 13 cents currently. Platinum has been wandering around a few dollars either side of unchanged during Far East trading on their Thursday — and is down a dollar. Ditto for palladium — and it’s down a dollar as well as Zurich opens.

Net HFT gold volume is already immense at about 92,000 contracts — and there’s around 2,600 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is getting up there was well at just under 29,000 contracts — and there’s 847 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down about 5 basis points once trading commenced at around 7:45 p.m. EDT in New York on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning. It set its current low tick moments later — and has been chopping very quietly and unevenly higher since. As of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is up 7 basis points.


Looking ahead at what might be in tomorrow’s Commitment of Traders Report, I’m not going to stick my neck out in gold, but I would suspect that there will be further deterioration in the commercial net short position in silver.

Ted had something to say about this in his mid-week commentary for his paying subscribers in his mid-week commentary yesterday — and I’ll borrow a few sentences for my Friday column.


And as I post today’s missive on the website at 4:02 a.m. EDT…I note that the tiny gold rally going into the London open was turned sharply lower shortly after that — and it’s currently down $11.00 an ounce. Ditto for silver — and it’s down 27 cents as the first hour of London trading ends. Platinum is now down 5 bucks — and palladium is back at unchanged as the first hour of Zurich trading draws to a close.

Gross gold volume is now up to 115,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 109,000 contracts. Net HFT silver volume is just under 34,000 contracts — and there’s 940 contracts worth of roll-over/switch volume on top of that.

The dollar index topped out around 2:45 p.m. CST/7:45 a.m. BST — and has been sold lower since –and is now down 10 basis point as of 8:45 a.m. in London/9:45 a.m. in Zurich.

That’s all I have for today — and on Friday we get the latest jobs report, so I expect some ‘reaction’ from both gold and silver at that time.

See you here tomorrow.

Ed