Author Archives: Ed Steer

29.3 Million Troy Ounces of Silver in Four Weeks

13 July 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was up a handful of dollars by 10 a.m. China Standard Time on their Friday morning — and its high tick overseas came at the 10:30 a.m. morning gold fix in London.  From that juncture it was sold back to almost unchanged by around 8:40 a.m. in New York.  At that point, the dollar index began to head south — and the gold price began to head north.  The rally ended when the dollar index stopped falling around 2:50 p.m. in after-hours trading  — and it didn’t do much going into the 5:00 p.m. EDT close from there.

The low and high ticks aren’t worth looking up, as gold traded in a one percent price range yesterday.

Gold finished the Friday session in New York at $1,415.60 spot, up $12.40 from Thursday’s close.  Net gold volume was pretty decent at a  hair under 246,000 contracts — and there was just over 44,000 contracts worth of roll-over/switch volume out of August and into future months.

The price pattern for silver was almost the same as it was for gold, except its overseas high came around 9:15 a.m. in London — and it was sold down to a nickel or so below the unchanged mark by the time the dollar index hit its high of the day at 8:40 a.m. in New York.  After that, the silver price rallied in the same manner as gold, complete with the high tick of the day coming around 2:50 p.m. in the thinly-traded after-hours market.  It didn’t do much after that, either.

The low and high ticks in silver were reported by the CME Group as $15.07 and $15.27 in the September contract.

Silver finished the Friday session in New York at $15.20 spot, up 11 cents from Thursday’s close.  Net volume was pretty quiet at a bit over 45,000 contracts — and there was 4,329 contracts worth of roll-over/switch volume in this precious metal.

Platinum rose and fell a small handful of dollars in Far East trading on their Friday — and its European high came a few minutes after 10 a.m. CEST in Zurich.  From there, it was sold unevenly lower until shortly after 9 a.m. in New York — and then like silver and gold, rallied until very shortly before 3 p.m. in after-hours trading.  It traded flat into the 5:00 p.m. EDT close from there.

The palladium price traded a handful of dollars lower in Far East and Zurich trading.  But at around 9:30 a.m. in New York, it was sold sharply lower — and back below $1,500 spot briefly.  It recovered most of that shortly thereafter — and then edged quietly sideways until trading ended at 5:00 p.m.  Palladium was closed at $1,524 spot, down another 18 dollars, as JPMorgan et al continue their efforts to run the Managed Money traders off their huge long position.

The dollar index closed very late on Thursday afternoon in New York at 97.05 — and opened up 3 basis points once trading commenced at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It edged a few basis points higher almost immediately, but began to descend quietly lower after that.  The index began to turn higher a few minutes after 8 a.m. in London — and the 97.12 high tick was placed just a minute or so before 8:45 a.m. in New York.  It began to slide anew from there — and it stopped sliding around 2:45 p.m. EDT — and didn’t do much of anything after that.  The dollar index closed at 96.81…down 24 basis points from Thursday.

It was another day where gold and silver prices followed the action in the currencies very closely — and that was certainly the case in New York yesterday.

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…96.42…and the close on the DXY chart above, was 39 basis points on Friday.  Click to enlarge as well.

The gold stocks opened up a bit, but then sank to their lows of the day, which came a few minutes after 11 a.m. in New York trading.  From that point they chopped quietly higher until the gold price stopped rising, as the dollar index stopped falling — and they faded a hair into the 4:00 p.m. EDT close from there.  The HUI finished higher by 1.28 percent.

The silver equities followed a virtually identical path except, for some strange reason, their rallies topped out about ten minutes before their golden brethren — and they also faded a hair into the close from there.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.35 percent.  Click to enlarge.

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

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 everything is up on the week, except for palladium, as ‘da boyz’ continue in their attempts to run the Managed Money longs out of Dodge.  The gold stocks did particularly well.  Click to enlarge.

The month-to-date chart isn’t so sweet looking, as the prior week was a down week, especially after the engineered price declines that occurred the day after Independence Day in the U.S.  The silver equities continue to underperform their golden brethren — and for reasons that are already well known to you.  Click to enlarge.

Here’s the year-to-date chart — and it’s much happier looking.  And as I pointed out last week, JPMorgan’s near death grip on the silver price is more than obvious in this chart.  Platinum has managed to claw its way higher by a bit — and palladium is still the Energizer Bunny.  However, JPMorgan et al are doing everything they can to pull those batteries out.  Click to enlarge.

The precious metal complex appears to be on the move, but I’m not breaking out the party favours as of yet.  As Yoda said…”Do not underestimate the power of the dark side of The Force” — and it still remains to be seen if ‘da boyz’ can pull off another round of engineered price declines.  But regardless of that, it’s obvious from the charts above, that the gold equities are in accumulation mode, as they look to be pretty much the best performing asset class so far year-to-date.


The CME Daily Delivery Report showed that 6 gold and 4 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  I’m not going to bother dissecting these small amounts.  But if you wish to see for yourself, the link to yesterday’s Issuers and Stoppers Report is here.

So far this month there have been 839 gold contracts issued/reissued and stopped — and that number in silver is 3,641.

The CME Preliminary Report for the Friday trading session showed that gold open interest in July fell by 5 contracts, leaving just 17 left, minus the 6 mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 5 gold contracts were actually posted for delivery on Monday, so the change in open interest and deliveries match.  Silver o.i. in July declined by 17 contracts leaving 533 still open, minus the 4 contracts mentioned in the previous paragraph.  Thursday’s Daily Delivery Report showed that 20 contracts were posted for delivery on Monday, so that means that 20-17=3 more silver contracts were just added to the July delivery month.


For the second day in a row, there were no reported changes in either GLD or SLV.

But as Ted pointed out on the phone on Friday morning, there was a very decent amount of silver deposited into SIVR on Thursday…2,316,590 troy ounces — and Deutsche Bank’s XAD6 fund took in  795,117 troy ounces of silver as well.

There was a very tiny sales report from the U.S. Mint on Friday, they sold 97,000 silver eagles — and that was it.

Month-to-date the mint has sold 1,500 troy ounces of gold eagles — and 262,000 silver eagles.  Just pitiful.

Once again there was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  The only activity was of the paper variety, as the magnificent sum of 201 troy ounces was transferred from the Registered category — and back into Eligible.  That occurred over at HSBC USA — and for obvious reasons, I’m not going to link this.

There was some activity in silver, as 2,948 troy ounces was received — and that was dropped off at Delaware.  There was 277,563 troy ounces shipped out — and that activity was at CNT.  The link to this is here.

I haven’t posted this chart in a while.  It shows the COMEX silver stockpiles held by the six largest players in the physical silver market in North America.  Note JPMorgan’s new all-time high…compared to the other five.  Click to enlarge.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They received 363 of them — and shipped out 9.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two charts that you see every week in this spot, but I thought I’d dig them up off his website now, rather than wait for him to pass them around later in the weekend.  They show the amount of gold and silver in all know depositories, mutual funds and ETFs as of the close of business on Friday.  For the week, there was a net 185,000 troy ounces of gold addedbut in silver it was another barn-burner of a week, as 9,567,000 troy ounces was added…all on pitiful price action.  Click to enlarge for both.


The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday was pretty much spot on what Ted said the numbers would be…particularly in silver.  I was disappointed, as I was hoping it would be more.  I’m glad I kept my mouth shut.

In silver, the Commercial net short position declined by 6,786 contracts, or 33.9 million troy ounces.

They arrived at that number by adding 138 long contracts — and they also reduced their short position by 6,648 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 almost all Managed Money traders that made up that change, as they reduced their long position by 4,909 contracts — and they added 1,487 short contracts.  It’s the sum of those two numbers…6,396 contracts…that made up their change for the reporting week.

The difference between that number — and the Commercial net short position…6,786 minus 6,396 equals only 390 contracts.  That difference, as it always is, was made up by the traders in the other two categories.  And as seems to be the case most of the time, they went about it in radically different ways, as the ‘Other Reportables’ increased their net long position by 1,092 contracts — and the ‘Nonreportable’/small traders reduced their net long position by 1,482 contracts.  The difference between those two numbers is 390 contracts…which it must be.

The Commercial net short position is down to 226.4 million ounces of paper silver.

Ted figures that JPMorgan’s short position in silver in the COMEX futures market is anywhere between zero and 5,000 contracts…as it was his opinion that they covered around 5,000 contracts of whatever short position they had during this last reporting week.

Here’s Nick’s 3-year COT Report for silver — and the smallish change should be noted.  Click to enlarge.

I would certainly categorize silver as still being in bearish territory by some amount.  Unfortunately the only way to get back into wildly bullish territory is for ‘da boyz’ to force the Managed Money longs to puke up those positions and go short as well — and that only occurs with lower prices.  Will that happen?  Is the wash, rinse, spin…repeat cycle in the cards at some point for silver?  I don’t know, nor does anyone else.


In gold, the commercial net short position declined by a rather smallish 8,406 contracts, or 840,600 troy ounces of paper gold.

They arrived at that number by adding 3,673 long contracts — and they also reduced their short position by 4,733 contracts — and 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 all Managed Money traders…plus more, as they reduced their long position by 5,885 contracts — and they also added 5,591 short contracts.  It’s the sum of those to numbers…11,476 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…11,476 minus 8,406 equals 3,070 contracts.  And, as is always the case, that difference was made up by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader category.  Like in silver, they went about it in wildly different manners.  The former decreased their net long position by 2,707 contracts — and the latter increased their net long position by a very chunky 5,777.  The difference between those two numbers is the 3,070 contracts that it must be.

The commercial net short position in gold has been reduced down to 27.84 million troy ounces of paper gold, which is really no material reduction at all.

Here’s Nick’s 3-year COT chart for gold — and you can see at a glance, this past reporting week’s change barely registers.  Click to enlarge.

Gold still remains in very bearish territory from a Commitment of Traders perspective.  The cure for that is much lower prices.  Will it happen this time?  I don’t know.  Please reread my comments on silver regarding this issue, as it’s the same for gold, palladium and a whole bunch of other commodities the the Manged Money traders are up to their necks in on the long side.

In the other metals, the Manged Money traders in palladium increased their net long position in this precious metal by a further 1,471 contracts.  The Managed Money traders are net long the palladium market by 14,312 contracts…almost 57 percent of the total open interest.  Total open interest in palladium is 25,233 COMEX contracts, up 1,142 contracts from the previous week.  And as I keep repeating, it’s a very tiny market, which Ted says is mostly a cash market now, because palladium is in such tight supply.  In platinum, the Managed Money traders increased their net short position by another 455 contracts during the reporting week.  The Managed Money traders are now net short the platinum market by 15,175 COMEX contracts…a tad over 19 percent of the total open interest.  In copper, the Managed Money traders decreased their net short position in that metal by 11,003 COMEX contracts during the reporting week — and are now net short the COMEX futures market by 56,981 contracts, or 1.42 billion pounds of the stuff…a bit over 21 percent of total open interest.


Once again, here’s Nick chart showing the tight correlation between the gold price — and what the Managed Money traders are doing…or are tricked into doing.  You don’t need a degree in mathematics to see how tight is correlation is.  Click to enlarge.

Anyone who says that its not the Managed Money traders that are the dominant factor in setting the prices of the Big 6 commodities, plus others…such as corn and cotton, should be ignored entirely.  Please be careful of what you read [and believe] on the Internet that’s free…as there’s no standard of care involved in a lot of cases.  The numbers in the weekly COT and monthly Bank Participation Reports are the facts — and they speak for themselves…as per the above chart for gold.


Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading last 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 113 days of world silver production, which is down 8 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 83 days of world silver production, which is down 1 day from last week’s report — for a total of 196 days that the Big 8 are short, which is six and a half months of world silver production, or about 457.4 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were short 205 days of world silver production.]

[And as a note of interest, this week’s COT Report is an exact reversal of the prior week’s COT Report…to the day in the Big 8 and Big 4 traders — and obviously in the total days held short as well.]

In the COT Report above, the Commercial net short position in silver was reported as 226.4 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 457.4 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 457.4 minus 226.4 equals 231.0 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 39-odd small commercial traders other than the Big 8, are net long that amount.  How ridiculous is that, you ask?  It boggles the mind.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short between zero and 5,000 COMEX contracts.

The Big 4 traders are short, on average, about…113 divided by 4 equals…28.25 days of world silver production each.  The four traders in the ‘5 through 8’ category are short 83 days of world silver production in total, which is 20.75 days of world silver production each.

The Big 8 commercial traders are short 41.9 percent of the entire open interest in silver in the COMEX futures market, which is a smallish decrease from the 43.3 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be something under the 50 percent mark.  In gold, it’s now 44.1 percent of the total COMEX open interest that the Big 8 are short, down a hair from the 44.4 percent they were short in last week’s report — and 50 percent, or a bit more, once the market-neutral spread trades are subtracted out.

This is the second week in a row that the Big 8 short position in gold has been larger than the Big 8 short position in silver — and that difference increased by a decent amount in this week’s COT Report.

In gold, the Big 4 are short 60 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 32 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 65 percent of the total short position held by the Big 8…down 2 days 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 58, 65 and 81 percent respectively of the short positions held by the Big 8.  Silver is down 1 percentage point from a week ago, platinum is down 1 percentage point from last week — and palladium is up 1 percentage point from a week ago…and off its record high by a bit.

I have an average number of stories for you today.


CRITICAL READS

The Federal Reserve Continues to “Mend” the Economy — Bill Bonner

The week is ending as it began, with a cacophony of numskulls.

Yesterday, one of them – speaking to his empty-headed brethren – gave out more wrong-headed, confusing, and misleading information.

Bloomberg reports:

Powell told Senators that the so-called “neutral rate,” or policy rate that keeps the economy on an even keel, is lower than past estimates have put it – meaning monetary policy has been too restrictive.

“We’re learning that interest rates – that the neutral interest rate – is lower than we had thought and I think we’re learning that the natural rate of unemployment is lower than we thought,” he said. “So monetary policy hasn’t been as accommodative as we had thought.”

Fed Chief Powell no more knows what a “neutral” rate of interest is… or what it should be… than the man in the moon. Which is to say, he knows nothing at all.

This commentary from Bill, filed from Youghal in Ireland, was posted on the bonnerandpartners.com Internet site early on Friday morning EDT — and another link to it is here.


Time to Leave the Party” – Former Lehman Insider Warns “More Risk Than Reward” in Markets

There’s an art to knowing when to leave the party,” warns Pilar Gomez-Bravo, a portfolio manager at MFS Investment Management with $4.5 billion AUM, who sees eerie similarities between the current frenzy for risk and the speculative mania that made her cautious on the eve of the last bubble.

As Bloomberg reports, she’s selling junk bonds in a contrarian bet that the debt rally is on its last legs – with the potential to trap funds with billions staked in levered and often illiquid assets – cutting high-yield exposure to 10% from as high as 30% in 2016, in one of her unconstrained funds.

There’s more risk than reward right now,” she said.  “There are real end-of-cycle fears about what performs.

From her vantage point managing a slew of global credit funds, she sees the long-bemoaned opacity and leverage of junk issuers is now at a tipping point.

We’ve seen this farce before, as Bloomberg details, when Lehman went bust, the mother of four was a portfolio manager at its investment arm, but before that, in May 2007, Gomez-Bravo became cautious on U.S. risk and issued warnings on corporate health – which bear echoes with the intense hunt for yield today.

This interesting, but not entirely surprising article appeared on the Zero Hedge website at 3:30 p.m. on Friday afternoon EDT — and another link to it is here.


Year’s Biggest IPO Scrapped Due to Low Investor Demand as S&P Hits All-Time High

Something is very, very broken in the market.

On the day, the S&P levitated above 3,000 and hits a new all time high, with Dow 30,000 now within shouting distance, on Friday afternoon,  the world’s largest brewer, Anheuser-Busch InBev, scrapped plans to sell up to $9.8bn in shares in its Asian business – in what would have been the year’s biggest IPO – as a result of, wait for it, weak investor appetite at the stated price range.

In a statement from AB InBev – which had been seeking to sell a minority stake in Budweiser APAC which markets 50 brands including Budweiser and Stella Artois in China, Australia, South Korea and Vietnam – the company said that, “at this time” it was “not proceeding with this transaction” primarily due to “prevailing market conditions.”

It was unclear just what those conditions were – the S&P500 hitting the highest level in the history of mankind perhaps? What is even more bizarre is that as far back as Monday, Reuters reported that the IPO was already “very well” oversubscribed. It appears someone was lying.

Yes indeed, dear reader…”Something is very, very broken in this market.”  This article showed up on the Zero Hedge website at 3:45 p.m. on Friday afternoon EDT — and another link to it is here.


Doug Noland: Central Banker to the World

I don’t believe the primary impetus behind the global central bank swing toward additional stimulus is economic. Indeed, I see Powell, Draghi, Carney, Kuroda and the like confirming the Acute Global Financial Fragilities Thesis. This fanciful notion of “insurance” stimulus will be debated for years to come. A system suffering from risk aversion, illiquidity and Credit contraction would be expected to experience some perk from monetary stimulus. But a global financial “system” already excessively embracing risk, wallowing in liquidity abundance and generating record Credit growth will be only further destabilized by greater stimulus.

I’ve been long fascinated by how things turn “crazy” at the end of cycles. My thesis is the world is in the late stage of an extraordinary multi-decade Credit Bubble. From this perspective, we should not be surprised by phenomenal late-cycle excess.

Combine China’s historic Credit expansion with an ECB balance sheet that almost doubled to $4.75 TN in three years of QE; a Bank of Japan balance sheet that expanded $1.2 TN to $5.2 TN since the end of 2016; and U.S. Credit growth back to record levels, and one has ample fuel for global craziness. Rampant speculative leverage pushes things past the breaking point.

It’s become an acutely fragile global Bubble. The Fed, ECB and global central banks have moved to provide support, effectively throwing gas on the fire. There are conspicuous cracks, yet liquidity abundance and speculative impulses prevail. Turkey’s strongman President fires the head of the central bank for not aggressively cutting interest rates and the lira is down less than 2%. Cracks in India’s financial system widen, and the world barely notices. Italy’s 50-year bond auction is massively oversubscribed with a yield of 2.88% – with foreign “investors” accounting for 80% of the demand. Negative yields for junk issuers in the euro zone. Eastern European sovereign debt at or near negative yields. S&P500 surpasses 3,000 in the face of a deteriorating earnings outlook.

There was the “permanent plateau” shortly before the 1929 crash. Tech stocks embarked on a final speculative melt-up in Q1 2000 in the face of rapidly deteriorating industry and economy fundamentals. And “still dancing” in the summer of 2007, and so on. Monetary Disorder ensures late-cycle market detachment from reality.

This is another must read commentary from Doug — and it was posted on his Internet site sometime after 3 a.m. EDT this morning — and another link to it is here.


De-Dollarizing the American Financial Empire — Michael Hudson

Imperialism is getting something for nothing. It is a strategy to obtain other countries’ surplus without playing a productive role, but by creating an extractive rentier system. An imperialist power obliges other countries to pay tribute. Of course, America doesn’t come right out and tell other countries, “You have to pay us tribute,” like Roman emperors told the provinces they governed. U.S. diplomats simply insist that other countries invest their balance-of-payments inflows and official central-bank savings in U.S. dollars, especially U.S. Treasury IOUs. This Treasury-bill standard turns the global monetary and financial system into a tributary system. That is what pays the costs of U.S. military spending, including its 800 military bases throughout the world.

This 59-minute long audio interview with Michael, complete with a full transcript, showed up on the unz.com Internet site on July 3 apparently — and I thank U.K. reader Tariq Khan for pointing it out, although someone else sent it to me earlier in the week — and I passed on it for some inexplicable reason.  I must admit that I haven’t had time to listed to it yet — and will probably do so on the weekend.  Another link to it is here.


The Obama Ukrainian Nightmare Seems to Be Ending, at Last — Eric Zuesse

Finally, the process of ending the war in Ukraine seems to be starting in earnest. But to understand how the war can now realistically end, the basic history of how it began needs first to be acknowledged, and this history is something that will be very difficult for U.S-and-allied media to report, because it violates what their ‘news’-reports, ever since the time of the war’s start, had said was happening. So, what will be reported here (like the truth was, when it was news) will far likelier be simply ignored, than ever reported in the US and its allied countries. That’s why this news-report and analysis is being submitted to all mainstream news-media in those countries, which until now have unanimously reported, and accepted as being true, the authorized lies, which everyone in the US and allied countries has read, as if those lies were instead the history.

For one thing: This war did not start with the 16 March 2014 breakaway of Crimea from Ukraine, as Western ‘news’-media have always been claiming; but, instead, it started by what had sparked the overwhelming desire of the vast majority of Crimeans to want to break away from Ukraine. This urge had to do with the three-week-earlier February 2014 bloody coup d’etat in Ukraine, illegally overthrowing Ukraine’s democratically elected President, Viktor Yanukovych, for whom 75% of Crimeans had voted. The vast majority of Crimeans refused to accept Obama’s selected replacement-leaders and their new and US-imposed far-rightwing regime, which made clear, as soon as they took over, what they were intending to do to Crimeans.

This worthwhile commentary…if you have the interest, that is…was posted on the strategic-culture.org Internet site on Thursday sometime — and it comes to us courtesy of Roy Stephens.  Another link to it is here.


“Dangerous Game”: U.K. Deploying 2nd Warship to Protect Tankers in Gulf

Amid ongoing “tanker wars” following the U.K.’s unprecedented and aggressive seizure of a super tanker transporting Iranian oil to Syria last week, which led to an alleged thwarted counter-attempt of Iran’s IRGC to block a U.K.-flagged tanker in the Persian Gulf Wednesday, Britain says it plans to send a second warship to the region.

Currently the HMS Montrose is shadowing the B.P.-owned British Heritage tanker after it was approached by IRGC boats — this as Britain raised its threat level to British shipping in the gulf area to its highest. Per government statements, the HMS Duncan, a type 45 Destroyer, will be deployed alongside the HMS Montrose in the region for a short period.

We are concerned by this action and continue to urge the Iranian authorities to de-escalate the situation in the region,” a Downing Street spokesman had said Wednesday of the dangerous encounter with Iran’s military in the gulf earlier that day.

And on Thursday a separate U.K. official stated: “As part of our long-standing presence in the Gulf, HMS Duncan is deploying to the region to ensure we maintain a continuous maritime security presence while HMS Montrose comes off task for pre-planned maintenance and crew changeover,” according to the BBC.

This will ensure that the U.K., alongside international partners, can continue to support freedom of navigation for vessels transiting through this vital shipping lane.” At the moment the HMS Duncan is in Mediterranean waters.

The Pentagon also this week described plans to work with allies to provide military escorts to ships traversing waters near Iran, as concerns grow that any major incident would threaten global oil supplies, which would no doubt send prices soaring.

Already other international ships are reportedly waiting for military escorts prior to entering the Strait of Hormuz.

This news item put in an appearance on the Zero Hedge website at 9:26 a.m. EDT on Friday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.  Here’s the original BBC story on this headlined “Iran tanker row: U.K. to send second warship to the Gulf” — and I thank Swedish reader Patrik Ekdahl for sharing it with us.


Warning Shot to World Economy as Singapore Slumps, China Exports Drop

An unexpected contraction in Singapore’s economy and a slump in China’s exports sent a warning shot to the world economy as simmering trade tensions wilt business confidence and activity.

Gross domestic product in export-reliant Singapore shrank an annualized 3.4% in the second quarter from the previous three months, the biggest decline since 2012. China trade figures showed exports fell 1.3% in June from a year ago and imports shrank a more-than-expected 7.3%.  Click to enlarge.

Like South Korea’s economy — which already contracted in the first quarter — Singapore is often held up as a bellwether for global demand given its heavy reliance on foreign trade. China’s quarterly GDP numbers on Monday are expected to show a clear weakening in the economy.

Singapore is the canary in the coal mine, being very open and sensitive to trade,” said Chua Hak Bin, an economist at Maybank Kim Eng Research Pte in Singapore. The data “points to the risk of a deepening slowdown for the rest of Asia.”

Across Asia and Europe, factory activity shrank in June while the U.S. showed only a meager economic expansion. Asia is the world’s growth engine and contributes more than 60% of global GDP, according to the International Monetary Fund.

This news item was posted on the Bloomberg website at 5:02 p.m. PDT on Thursday afternoon — and was updated nine hours later.  I thank Patrik Ekdahl for pointing it out — and another link to it is here.


DHL Sounds Alarm on Collapsing World Trade: “Significant Downturn” Underway

A new quarterly report from logistics company DHL, measured global air and sea cargo trade volumes between March and June, found trade data continues to deteriorate in the US and China as there is still no resolution to end the trade war, reported South China Morning Post (SCMP).

Chinese imports were “losing significant momentum,” the report stated, indicating the epicenter of the slowdown was situated in basic raw materials, capital equipment and machinery, and consumer fashion goods. The loss of momentum in DHL trade data has also been confirmed in official Chinese import data releases.

The report indicated that the US trade outlook is more dangerous than China: DHL expected a “significant downturn, driven by heavy losses in exports outlook.” DHL said both air and sea freight have plunged into negative territory in 2Q19, with extreme weakness in basic raw materials, chemicals, and technology.

The declining outlook for U.S. exports indicates that, so far, the US is missing its goal of strengthening its export economy with a harsher trade course against China,” DHL said.

DHL’s Global Trade Barometer measured air and sea container freight for seven countries, which together accounted for more than 75% of world trade.

The report focused on early-cycle commodities to detect turning points in global trade flows — goods such as automobile bumpers, touch screens for smartphones, and brand labels for clothes.

This story showed up on the Zero Hedge website at 4:15 p.m. EDT on Friday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.


James Grant: The Fed could use a golden rule

Though money can’t talk, people can’t stop talking about it. With the nomination of Judy Shelton to the Federal Reserve Board, the discussion has tilted to gold.

Gold is money, or a legacy form of money, Ms. Shelton contends, and the gold standard is a reputable, even superior, form of monetary organization. The economists can hardly believe their ears. The central bankers roll their eyes. How can this obviously intelligent woman be so ignorant? Let us see about that.

America was on one metallic standard or another from the Founding until President Richard Nixon announced the suspension of the Treasury’s standing offer to foreign governments to exchange dollars for gold, or vice versa, at the unvarying rate of $35 an ounce. The date was Aug. 15, 1971.

Ever since, the dollar has been undefined in law. Its value against other currencies rises or falls, as the market, sometimes with a nudge from this government or that, determines. The dollar isn’t unusual in this respect. With few exceptions, the values of the world’s currencies oscillate.

In the long sweep of monetary history, this is a new system. Not until relatively recently did any central bank attempt to promote full employment and what is called price stability (but is really a never-ending inflation) by issuing paper money and manipulating interest rates.

This commentary by Jim put in an appearance on The Wall Street Journal website on Friday sometime — and it’s posted in the clear in its entirety on the gata.org Internet site.  Another link to it is here.


Has the Gold Market Spoken? — John Hathaway

Gold has broken out from a massive base formed over a six-year consolidation.  The breakout has left most investors on the sidelines.  The powerful rally from below $1,300 to over $1,400 and a 6 year high caught most either wrong-footed (short) or flat footed (no exposure at all.)  That is why we believe substantial further upside lies ahead. Gold’s allure (and the explanations for it) should grow as the price advances in the months and years ahead.

Prior to the breakout, analysts, opinion makers, and pundits were either negative or parked squarely on the sidelines.  Most that we monitor remain tentative or call for a pullback.  Others regard the move as unsustainable.  It would be a mistake in our opinion to make too little of this price development.  We think the breakout is a big deal. It could be an early warning that the global financial order may be headed for significant change.

It is a market maxim that price action must be respected.  Headlines will follow.  The investment arguments in favor of gold exposure that we and others have made over the past several years have been valid, but timing has been problematic. The fundamental macroeconomic analysis for higher gold price has not changed.  What is about to change is market recognition of already existing facts and forces that have been long underway.

This second quarter gold commentary from John was something that he slid into my in-box at 8:00 a.m. Pacific Daylight Time yesterday morning.  It’s now posted on the tocqueville.com Internet site — and another link to it is here.


The PHOTOS and the FUNNIES

This first photo was taken from a B.C. Highway 5/The Coquihalla overpass looking south down the Nicola valley on May 12.  The town of Merritt is just out of sight around a hill in the far centre right of this shot.  The second photo is of a wild strawberry plant in full bloom.  The place was lousy with them, but I didn’t find a single berry anywhere…green or otherwise…when I checked in late June.  The last two photos are of a western meadowlark.  It’s the first one that sat still long enough for me to get off more than one or two shots.  They’re very common in these parts.  Click to enlarge for all.


The WRAP

Today’s pop ‘blast from the past’ certainly dates me. I was six years young when this was a big hit — and it’s still one of the most memorable tunes to come out of the 1950s…1954 to be exact.  They were an American female popular singing quartet, usually singing a cappella.  The link to it is here — and you’ll know it instantly.  They just don’t make ’em like this anymore — and it’s a damn shame.

Today’s classical ‘blast from the past’ was something of a surprise when I stumbled on it.  It’s a piece I’ve posted before… Felix Mendelssohn’s Violin Concerto in E minor, Op. 64 featuring Hilary Hahn as soloist.  But this youtube.com video has a sheet music play-along, so you can follow along with the music as she plays it — and the orchestra when she’s not playing.  If you’ve ever played any kind of musical instrument in your life, you may find this fascinating.  I certainly did.  It’s just the first movement, but that’s enough — and the link is here.


I’m not sure if anything should be read into yesterday’s price action in either silver or gold, so I won’t bother trying…but it’s anything but the usual “summer doldrums”.

The only thing I am sure of is that ‘da boyz’ are trying to break the palladium price lower so they can ring the cash register on the Managed Money long holders.  As I said in my COT discussion further up, what they are up to is of paramount importance, not only in this precious metal…but all commodities that they have large positions in — as these Managed Money traders change positions as one single entity.  Right now these traders are long 57 percent of the entire open interest in palladium — and they’re 100 percent of the reason why the price is where it is.  It would be even higher if the banks and investment houses in the Producer/Merchant and Swap Dealer category weren’t aggressively going short against them.

But returning to gold and silver, it’s impossible to tell how successful ‘da boyz’ will be in the usual wash, rinse, spin…repeat cycle this time around.  As I’ve said on several occasions this week and last, the economic, financial and monetary headwinds they’re fighting now are a force to be reckoned with — and are growing quickly in intensity with each passing day, week and month.  Their attempts may prove in vain as, for the first time, they may get overrun by market forces that are totally beyond their control.

All we can do is watch — and wait some more.

Here are the 6-month charts for all of the Big 6 commodities — and there really isn’t a lot to see, other than what’s going on in palladium right now.  Click to enlarge.

Looking at the new highs in the Dow and S&P500 yesterday, I was wondering to myself [many hours before I read Doug Noland’s latest] if this is what the landscape looked like shortly before the crash of 1929.  Everything is beyond the absurd…Alice in Wonderland in real life…with the exception that there are more mad hatters out there than you can shake a stick at.

There’s no country on Planet Earth where the economic situation isn’t slowly sliding into recession, if not already there.  The danger signs have been apparent for a long time now — and more are appearing with each passing day…prominently feature in today’s Critical Reads section — and in a long string of others that preceded it.

An interest rate cut by the Fed is already pretty much priced into the market — and all it will do is revive the “animal spirits” in the equity markets for a very brief time, before the usual interest rate junkies are calling out for more.

And now that the world’s central banks are in full “Print, or die” mode, they are all in this together, except it ain’t the three musketeers this time.  And because of all their interferences in the free markets since the crash of 1987…it’s only a matter of time before something blows up, or melts down — and takes the whole planet with it.  The powers-that-be will be helpless to stop it this time.

The incident that starts the rapidly-approaching implosion could begin anywhere.  But, as I’ve said before, if I had to bet that theoretical ten dollar bill, I would place it on China.  As I — and others have stated in the past, they’re a country masquerading as a hedge fund.  But then again, what country, with the exception of Russia, isn’t these days.

When all this hits the fan, it’s a given that the precious metals will be the only things left standing — and not only am I still ‘all in’…I bought more silver equities yesterday.

During the last four weeks there has been a net 29,360,627 troy ounces of silver added to all the known depositories, ETFs and mutual funds — all of it on very punk price action.  And along with the 850 million troy ounces that Ted Butler says that JPMorgan and its clients own, they obviously know something that we don’t…at least not yet.

I certainly want to be fully positioned when we find out what it is.

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

Enjoy what’s left of your weekend.

Ed

Ted Butler: Deliberately Looking Away

12 July 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to creep higher the moment that trading began at 6:00 p.m. EDT in New York on Wednesday evening, but obviously ran into ‘something’ around 8:20 a.m. China Standard Time on their Thursday morning, as the dollar index was in precipitous decline at that moment.  The selling pressure continued on and off all day long in all markets — and most of the decline that mattered was in by the 1:30 p.m. COMEX close in New York.  Its rally attempt in the thinly-traded after-hours market was totally negated, plus a bit more, in the last thirty minutes of trading before the market closed at 5:00 p.m. EDT.

The high and low ticks were recorded by the CME Group as $1,429.40 and $1,402.70 in the August contract.

Gold was closed in New York on Thursday at $1,403.20 spot, down $15.20 on the day, taking back most of Wednesday’s gains in the process.  Net HFT gold volume was very heavy at a bit under 342,500 contracts — and there was 63,000 contracts worth of roll-over/switch volume out of August and into future months.

The silver price also rallied until 8:20 a.m. CST on their Thursday morning — and was capped and sold a bit lower at that juncture as well.  It then proceeded to drift unevenly sideways until the COMEX open at 8:20 a.m. in New York — and JPMorgan et al went to work at that point.  From there, the silver price was handled in an identical manner as gold’s price, even in after-hours trading.

The high and low for silver were recorded as $15.345 and $15.12 in the September contract.

Silver was closed at $15.09 spot, down 11.5 cents from Wednesday.  Volume was slightly elevated at a bit over 55,500 contracts — and there was a bit over 5,200 contracts worth of roll-over/switch volume in this precious metal.

The platinum price chopped quietly and unevenly sideways until the 9 a.m. Zurich open — and it rallied a bit in morning trading over there.  But shortly after 1 p.m. CEST the price was headed lower and, like silver and gold, the price pressure was mostly done with by the COMEX close in New York.  Platinum was closed at $822 spot, down 3 dollars from Wednesday.

Palladium didn’t so much in Far East trading and, like platinum, began to head higher about thirty minutes after Zurich opened.  A new high price was set around 10:30 a.m. CEST — and shortly after that, ‘da boyz’ put in an appearance.  The low tick of the day was set a few minutes before 1 p.m. in New York — and it rallied a few dollars into the COMEX close from there.  It didn’t do much after that.  Palladium was closed at $1,542 spot, down 33 bucks from Wednesday.

The dollar index closed very late on Wednesday afternoon in New York at 97.10 — and then opened down 4 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 continued lower from that point until those ‘gentle hands’ appeared at 11:20 a.m. CST on their Thursday morning.  It crawled a bit higher until 11:10 a.m. in London — and then rolled over.  The 96.80 low tick was set around 8 a.m. in New York.  The ensuing ‘rally’ took it to its 97.15 high tick of the day, which came fifteen minutes after the COMEX close — and it sagged a bit into the 5:30 p.m. close from there.  The dollar index finished the Thursday session at 97.05…down 5 basis points on the day.

The powers-that-be showed up in the precious metals market an hour before the dollar index bottomed out at around 11:20 a.m. in Shanghai — and it mattered little what was happening in the currency market after that.  So it’s a given that ‘da boyz’ didn’t want the precious metals to reflect that fact.

Here’s the DXY chart, courtesy of 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…96.67…and the close on the DXY chart above, was 38 basis points on Thursday.  Click to enlarge as well.

The gold stocks tried hard to rally on a couple of occasions in morning trading in New York, but finally gave up the ghost a noon EDT — and their respective low ticks came shortly before 2 p.m. when the dollar index hit its high tick of the day.  They rallied rather nicely into the close from there — and the HUI closed down 1.14 percent.

The silver equities opened down, but never came close to hitting unchanged on the day after that and, in general, followed an identical price path as their golden brethren.  However, they did rally a decent amount after the dollar index high tick that came about 1:45 p.m. in New York.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.17 percent, taking almost all of Wednesday’s gains with them.  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.

The CME Daily Delivery Report showed that 5 gold and 20 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the three short/issuers were ADM, Advantage — and ABN Amro.  Two long/stoppers were JPMorgan and Advantage, with 3 and 2 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the only short/issuer worth mentioning was Advantage, with 19 out of its client account.  HSBC USA was the biggest of the four long/stoppers, picking up 7 more contracts for its in-house/proprietary trading account.  Morgan Stanley and JPMorgan came in second and third with 6 and 4 contracts for their respective client accounts.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in July dropped by 55 contracts, leaving 22 still around, minus the 5 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 57 gold contracts were actually posted for delivery today, so that means that 57-55=2 more gold contracts just got added to July.  Silver o.i. in July rose by 9 contracts, leaving 550 still open, minus the 20 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 3 silver contracts were actually posted for delivery today, so that means that 9+3=12 more silver contracts were just added to the July delivery month.


There were no reported changes in either GLD or SLV yesterday.

And there was no sales report from the U.S. Mint, either.

The only in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday was 424 troy ounces that was shipped out Manfra, Tordella & Brookes, Inc.  I won’t bother linking this.

There wasn’t much happening in the physical market in silver, either.  Nothing was reported received — and only 16,507 troy ounces were shipped out.  It came out of two different depositories, so I’m not going to break down these amounts.  If you want to check, you can click on the link.  But there was a big paper transfer out of the Registered category — and back into Eligible over at CNT…1,382,379 troy ounces worth.  I’m sure that Ted would think this peculiar transaction was silver that JPMorgan’s clients now own from July deliveries — and was transferred back into Eligible because of the cheaper storage cost associated with that category.  The link to this activity is here.

There was a tiny bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They didn’t report receiving any — and shipped out only 40 of them.  That activity was at Brink’s, Inc. — and  I won’t bother linking this, either.


Here are two charts that I just dug up on Nick Laird’s website.  The first shows the transparent silver holdings of all known ETFs, depositories and mutual funds as of the close of business on Thursday, July 11…going back 20 years…compared to the spot price of silver over those same twenty years.  And as you can tell, we’re at a new record high…1,050,566,000 troy ounces of the stuff — and that’s despite the punk price action of the underlying precious metal since the May 1, 2011 high tick, as shown in the blue trace in the chart below.  Click to enlarge.

And here’s the same chart for gold over the same 20-year time period — and it certainly has a different look to it — and it’s also got a ways to go to get back to its old high.  Click to enlarge as well.

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


CRITICAL READS

Albert Edwards: The U.S. is About to Take Global Currency War to a Whole New Level

It is rare for Wall Street analysts to break the echo chamber of the intellectual Trump #resistance – after all, “Orange man crazy, his tweets make no sense” remains all the rage among those who are paid 7 figures for their (mostly wrong) economic insight; it wouldn’t look good if Trump, breaking through the barriers of political correctness and obfuscation, exposes “deep” economic and financial truths on twitter. For free.

One person who has no fear in defying Wall Street convention is also one of its biggest perma-bears (which it comes to equities, and the opposite for bonds), SocGen’s Albert Edwards, who in his latest letter brings attention to the barrage of recent tweets from President Trump indicating that “his tolerance for the strong dollar has just about run out.”

As we observed roughly two weeks ago, the dollar had resumed its rise even ahead of the stellar payrolls report, largely due to the prospect of yet another round of Draghi “whatever it takes” jawboning and even easier ECB policy – sending eurozone bond yields to record lows.

So as the global economy falls ever closer towards outright deflation, Edwards predicts that “the global currency war will explode into life. Countries will fight to avoid deflation in the next recession and competitive devaluation will be the tool of choice.” Indeed this was the solution Ben Bernanke suggested in his famous 2002 speech about how to avoid ending up like Japan, to wit:

Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today (ie 2002), it’s worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt’s 40% devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 % in 1932 to -5.1% in 1933 to +3.4% in 1934. The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt’s devaluation.”

While Edwards is hardly the first analyst to suggest that the U.S. will intervene directly in devaluing the dollar – BofA did so three weeks ago  – the SocGen strategist is certainly the one to present the most comprehensive case why what may be the final lap in the race to the currency bottom has just begun.

This very worthwhile article was posted on the Zero Hedge website at 3:07 p.m. EDT on Thursday afternoon — and another link to it is here.


“Disastrous” 30-Year Auction: Foreigners Flee as Bid-to-Cover, Indirects Plummet

There is just one word to describe the just concluded sale of $16 billion in 30-Year Treasury bonds: disastrous.

From top to bottom, today’s auction was a sh*t show, starting with the high yield of 2.644%, which was not only higher than last month’s 2.607%, but it was a whopping 2.6bps tail to the 2.618% When Issued, one of the biggest rails on record.

The bid to cover was also dismal, tumbling from the already low 2.316 to just 2.129, far below the 2.25% 6-auctiona average, and the lowest since November.

Finally the internals were borderline “failed”, with Indirects (foreigners) clearly sitting out today auction, and taking down just 50% of the final allotment, far below last month’s 60.8%, and the recent average of 58.9%, and more importantly the lowest since February 2015. And with Directs taking down 16.8%, or above the 14.6% recent average, it left Dealers taking down 33.2%, the most since last November.

Overall, this was as close to a failed 30Y auction as we have seen in years, and the response was instant, sending the entire curve spiraling higher, and the 10Y spiking by 2bps in a manner of milliseconds.

This brief 2-chart Zero Hedge story put in an appearance on their Internet site at 1:34 p.m. on Thursday afternoon EDT — and another link to it is here.


Deutsche Bank Facing DoJ Probe Over 1MDB After Goldman Throws it Under the Bus

When it rains inside the halls of Deutsche Bank, the flood is biblical.

Just when it seemed that the biggest (if not for long) German bank, already reeling from the biggest mass layoffs since Lehman, couldn’t possibly bear any more bad news, along comes the U.S. government with yet another potentially criminal investigation, this time over Deutsche Bank’s involvement with the sprawling, multi-billion dollar Malaysian development fraud scandal that toppled a prime minister, crippled Goldman Sachs stock and stretched from Hollywood to Wall Street.

According to the WSJ, the DOJ is investigating whether the German bank violated foreign corruption or anti-money-laundering laws in its work for the 1Malaysia Development Bhd. fund, or 1MDB, which included helping the fund raise $1.2 billion in 2014 as concerns about the fund’s management and financials had begun to circulate.

So how did Deutsche Bank get thrown into yet another scandal? It turns out that DB was snitched out by former Goldman banker, Tim Leissner, the man who was ground zero in the original 1MDB scandal, and who ended up costing Goldman billions in dollar in market cap as its stock tumbled last year as its role in the biggest Malaysian corruption scandal got exposed, and according to some, cost Lloyd Blankfein his job. As it turns out, Leissner is now cooperating with authorities, and among his “good Samaritan” duties decided to throw the one bank that has more dirt on it than Goldman: Deutsche Bank. As we have reported extensively in the past, prosecutors have been investigating similar issues at Goldman, where Leissner, a former managing director, pleaded guilty last year and admitted to earlier helping siphon off billions of dollars from the fund.

For those who are unfamiliar, a quick rundown of events: 1MDB, a sovereign wealth fund, turned into a major global scandal after billions of dollars were drained from it between 2009 and 2014, leading to multiple government investigations and the downfall of former Malaysian Prime Minister Najib Razak who was especially close with former U.S. president, Barak Obama.

This news item showed up on the Zero Hedge website at 7:21 a.m. EDT on Thursday — and I thank Brad Robertson for sending it along.  Another link to it is here.


Forget ‘Hawks” and ‘Doves.’ We Need a Level Monetary Playing Field — Judy Shelton

Judy Shelton is an economist and the author of “Money Meltdown: Restoring Order to the Global Currency System.” President Trump has announced that he plans to nominate her to the Federal Reserve Board.

More than a decade has passed since the devastating global financial meltdown. Ben Bernanke, Federal Reserve chairman at the time, described it as “the worst financial crisis in global history, including the Great Depression.” The 2008 debacle’s economic and political repercussions are still playing out, with damaging effects on social cohesion.

Given that the central bank of the United States had more influence than any other government institution over the creation of money and credit in the lead-up to the disaster, it is important to be able to include the Fed in discussions of how best to safeguard financial stability and promote productive economic growth. Questioning the Fed’s infallibility in making monetary policy decisions should not be interpreted as an attack on its “independence” but rather an honest effort to stir much-needed debate.

One major aspect of monetary policy that has not received sufficient examination is the international role of the U.S. dollar and how trade flows are affected by interest-rate policies implemented by the world’s other major central banks. Central bank actions are a powerful force driving exchange rates among leading currencies, which helps explain why financial markets obsess over every syllable in statements by central bank officials.

History can be especially informative when it comes to evaluating the relationship between optimal economic performance and monetary regimes. In the 1930s, for example, the “beggar thy neighbor” tactic of devaluing currencies against gold to gain a trade export advantage hampered a global economic recovery. Yet today little attention is focused on the role of the differential interest-rate policies pursued by central banks in causing the currency shifts that alter the terms of trade among competing producers in world markets and raise tensions among trading partners.

This worthwhile commentary/opinion piece appeared on The Washington Post‘s website at 5:02 p.m. EDT on Wednesday afternoon — and I found it in a GATA dispatch yesterday.  Another link to it is here.


Central banker with too much gold wants Treasuries instead

With trade wars and sluggish growth making goldbugs of central bankers around the world, one country wants to buck the trend.

The central Asian nation of Uzbekistan is unwinding decades of isolation, opening its economy and modernizing its markets after the death in 2016 of Islam Karimov, the country’s ruler for the previous quarter-century. Currency controls have been rolled back, the government debuted Eurobonds in February, and now central bank Governor Mamarizo Nurmuratov is looking to buy U.S. and Chinese sovereign debt as he diversifies the nation’s $26 billion of international reserves away from the yellow metal.

We want to buy U.S. paper and the debt of other countries, including China,” Nurmuratov, 59, said in an interview in St. Petersburg, Russia. “The share of gold is near 50%, but in the future it can be lower.

That’s at odds with the pattern elsewhere as policy makers from China to Poland snap up the precious metal to safeguard against the possibility of global recession and mounting geopolitical stress. While Uzbekistan currently scoops up all the gold produced locally and its holdings have been increasing in recent years, Nurmuratov’s reform plan envisages a shift to investing in the sovereign debt of other nations and a reduced share for the metal in the reserves.

Let’s see if he actually does it.  So far, it’s all talk.  This Bloomberg item was posted on their website at 1:09 a.m. PDT on Thursday morning — and was updated about three and a half hours later.  I found this story on the gata.org Internet site — and another link to it is here.


Ted Butler: Deliberately Looking Away

There are two great evolutions underway in the world of commodities that, while in full view, are misunderstood or overlooked by most observers. So important are these two developments that they threaten serious market upheaval when they are addressed, as must inevitably occur.  Most remarkably, indisputable data published by the primary federal commodities regulator, the CFTC, prove beyond a doubt both occurrences are underway, even as the agency, along with the U.S. Department of Justice, refuse to confront what is a clear violation of U.S. commodity and antitrust law.

The two developments in focus include a broad artificial pricing scheme, or manipulation, affecting a wide swath of commodity markets and a more specific price manipulation involving JPMorgan in silver and gold.  The illegal pricing schemes did not evolve overnight, but over a multi-decade period of time. That’s one of the main reasons why so many have failed to appreciate what has occurred – it has been a gradual process. So gradual that, like a frog not jumping out of a pot of water being heated slowly, market observers and regulators alike have come to accept as normal the dramatic and illegal change in the price discovery process.

Simply put, commodity prices are now set and determined by excessive speculation in derivatives contracts by a handful of large traders and not by changes in actual commodity supply and demand. Derivatives contracts are entered into by two parties, a buyer and seller, and include futures and options contracts traded on listed exchanges and contracts traded over-the-counter, where futures contracts are called swaps. In essence, derivatives contracts are simply paper bets on price in the future and only rarely involve the physical delivery of the underlying commodity.

The problem is that the derivatives bets have become so large in the aggregate and so concentrated by the small number of traders engaged in them that they have come to take control of prices away from changes in physical supply and demand. The word “derivative” means derived from and derivatives’ pricing is supposed to be derived from the underlying host physical commodity markets. It was never intended that derivatives trading would become so large and concentrated among a relative handful of speculators that derivatives trading would dictate prices to the underlying host physical markets.  That’s akin to the tail wagging the dog. Yet that’s precisely the absurd state to which commodities have evolved.

This longish commentary from Ted, which is definitely worth reading, was posted on the silverseek.com Internet site at 9:58 a.m. EDT on Thursday morning — and another link to it is here.


The PHOTOS and the FUNNIES

Here are the last three shots from my dirt road excursion into the back country about 16 kilometers/10 miles northeast of Merritt on May 12.  The first shot is of another wild flower that one finds growing in profusion around here in the spring/early summer — and that’s the wild lupin.  The second photo is of that same red barn that appeared in a photo in Thursday’s column, except this one is from much closer in — and taken from the opposite side of the valley…looking generally south — and down the valley that I’d just come from.  The third shot was taken from the exact same spot as the second one, except in this one, I’m looking southwest — and that red barn/farm is just out of frame on the left-hand side of the photo.  That’s Nicola Lake in the distant background.  Click to enlarge.


The WRAP

I think perhaps of all the things a police state can do to its citizens, distorting history is possibly the most pernicious.” — Robert A. Heinlein


It was certainly obvious, at least to me, that JPMorgan et al were bound and determined to take back as much of the gains from Wednesday as possible during the Thursday trading session — and for the most part, they were successful.  But as I’ve said before, the tide has definitely turning against them on all fronts — and at some point it won’t really matter what they do.  However, for the moment, they’re managing to keep a lid on things.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and there really isn’t a lot to see.  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 has been wandering quietly around above the unchanged mark since trading began at 6:00 p.m. EDT in New York yesterday evening, but has edged higher in the last hour — and it’s up $4.80 the ounce at the moment. It’s much the same in silver — and it’s up 2 cents. Ditto for platinum — and it’s back at unchanged currently. But ‘da boyz’ are still working on the mega-long Managed Money traders in palladium — and they have that precious metal down 7 bucks as Zurich opens.

Net HFT gold volume is a bit under 49,500 contracts — and there’s 3,7044 contracts worth of roll-over/switch volume out of August and into future months. Net HFT silver volume is nothing special at a bit over 6,100 contracts — and there’s only 208 contracts worth of roll-over/switch volume on top of that.

The dollar index opened up 3 basis points once trading commenced at 7:45 p.m. EDT on Thursday evening in New York, which was 7:45 a.m. China Standard Time on their Friday morning — and hit its current high of the day a few minutes later. It has been crawling quietly lower since then, but off its low tick by a bit at the moment — and as of 7:45 a.m. BST in London/8:45 a.m. in Zurich, the index is down 12 basis points.


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.  As I said earlier in the week, I’m expecting to see some decline in the commercial net short position in silver, but wasn’t about to hazard a guess in gold.

In his mid-week commentary on Wednesday, silver analyst Ted Butler had this to say about what we might expect: “As far as what to expect in Friday’s COT report, gold and silver prices finished moderately lower over the 4 day reporting week, with the highest volume day being Friday, July 5, when prices sold off sharply. Since silver did trade below two of its three key moving averages (the 100 and 200-day) that day and gold did not approach any of its key moving averages, I would imagine more managed money selling and commercial buying to have occurred in silver proportionately. As far as numbers of contracts, at least 5,000 in silver and, hopefully, more. As always, I’ll try to draw a bead on what the über-crooks at JPMorgan may have been up to, since this is their world.”


And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price has risen a bit more during the first hour of London trading — and is up $6.30 currently. It was up 8 dollars at one point. Silver is now up 4 cents. Platinum is now up 2 dollars — and palladium is down by 6 bucks as the first hour of Zurich trading ends.

Gross gold volume is around 75,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is about 64,500 contracts. Net HFT silver volume is around 7,900 contracts — and there’s still only 213 contracts worth of roll-over/switch volume on top of that.

The dollar index began to head a bit higher starting at 8:15 a.m. BST — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s down 8 basis points.

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

Ed

A Big Deposit Into GLD Yesterday

11 July 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold quietly and unevenly lower once trading began at 6:00 p.m. on Tuesday evening in New York — and the Far East low tick came at the 2:15 p.m. afternoon gold fix in Shanghai.  It then proceeded to crawl a bit higher until shortly after the morning gold fix in London — and then sell off until precisely 8:30 a.m. in New York when Fed chairman Powell’s comments hit the street.  The gold price blasted higher on that news, but the rally was capped a minute or so before 9 a.m. EDT — and the gold price edged quietly lower until shortly after the 11:00 a.m. EDT London close.  From that point, it began to work its way quietly higher, closing on its high tick of the day.

The low and highs in the precious metal were reported as $1,391.80 and $1,417.50 in the September contract.

Gold finished the Wednesday session at $1,418.40 spot, up $21.30 on the day.  Not surprisingly, net volume was very beefy at a bit over 380,000 contracts — and there was a hefty 68,500 contracts worth of roll-over/switch volume out of August and into future months.  And it should be carefully noted that gold is now in slight backwardation to the August contract…as the spot price closed higher than August’s high close.

Silver’s price path was the same as gold’s in virtually every respect on Wednesday, so I’ll spare you the play-by-play in this precious metal.  The only significant difference was that silver was not allowed to close on its high of the day, as it was never allowed back above its 9 a.m. EDT price after its post-London close rally.

The low and high ticks in silver were recorded by the CME Group as $15.07 and $15.315 in the September contract.

Silver was closed at $15.205 spot, up 12 cents from Tuesday.  Net volume was on the heavier side, but not quite as heavy as one might have expected…just over 67,000 contracts.  There was a bit over 7,100 contracts worth of roll-over/switch volume on top of that.

The platinum price crept unevenly lower until around the time that Zurich opened — and from there, began to head higher until around 11:30 a.m. CEST.  It traded flat from that point until the Powell news hit the tape — and it blasted skyward as well.  Its price was also capped a few minutes before 9 a.m. in New York — and after getting sold a few dollars lower into the afternoon gold fix in London, began to edge steadily higher.  Platinum’s price was capped for the last time around 11:45 p.m. EDT — and it was sold quietly lower into the COMEX close from there.  It didn’t do much after that.  Platinum was closed at $825 spot, up 15 bucks from Tuesday.

The palladium price didn’t do a thing in Far East trading until a minute or two before 2 p.m. China Standard Time on their Wednesday afternoon.  It was then sold quietly lower until a few minutes after the 9 a.m. CEST Zurich open.  It rallied quietly and unevenly higher from there until the Powell memorandum was published — and away it went to the upside…running into ‘resistance’ at every turn.  Its high of the day came shortly after 10:30 a.m. in New York — and after getting sold lower by a bit, traded unevenly sideways until the market closed at 5:00 p.m. EDT.  Palladium was closed at $1,575 spot, up 45 dollars from Tuesday.

The dollar index closed very late on Tuesday afternoon in New York at 97.49 — and opened up a couple of basis points once trading commenced at 7:45 p.m. EDT on Tuesday evening.  It added five more basis points in the next fifteen minutes, but then began to very quietly crawl lower.  There was a tiny bump higher at the 2:15 p.m. CST afternoon gold fix in Shanghai — and at that point the decline began anew — and with more intensity.  The London low came at, or minutes after, the morning gold fix over there — and it crept higher until the Powell news became public at 8:30 a.m. in New York.  It had a bit of a waterfall decline at that juncture — and most of the damage was done by 11:45 a.m. EDT — and it crawled quietly and unevenly sideways until trading ended at 5:30 p.m.  The dollar index finished the Wednesday session at 97.10…down 39 basis points from Tuesday’s close.

You could certainly make the case that the precious metals followed the price action in the dollar index yesterday — and you wouldn’t hear a peep out of me.

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…96.70…and the close on the DXY chart above, was 40 basis points on Wednesday.  Click to enlarge as well.

The gold shares gapped up a bit at the open, but were sold a bit lower almost immediately.  That sell-off lasted until around 10:20 a.m. in New York trading — and from that point they began to head quietly and steadily higher — and closed on their respective high ticks of the day.  The HUI finished up 2.79 percent.

The silver equities traded in an identical pattern as the gold stocks — and they also closed on their respective highs of the day.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 2.79 percent as well.  Click to enlarge.

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

The CME Daily Delivery Report showed that 57 gold and 3 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the three short/issuers were Advantage, ABN Amro and ADM…with 30, 20 and 7 contracts.  Of the four long/stoppers in total, the only two that mattered were JPMorgan and Advantage, with 33 and 21 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the sole short/issuer was Advantage out of its client account.  HSBC USA picked up 2 contracts for its own account — and Morgan Stanley stopped the other.

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 July rose by 27 contracts, leaving 77 still open, minus the 57 mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that 22 gold contracts were actually posted for delivery today, so that means that 27+22=49 more gold contracts just got added to the July delivery month.  Silver o.i. in July declined by 13 contracts, leaving 541 still around, minus the 3 silver contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 13 silver contracts were actually posted for delivery today, so the change in open interest…and the deliveries…match for a change.


Much to my surprise, there was a very big deposit into GLD on Wednesday, as an authorized participant added 207,543 troy ounces of gold.  There were no reported changes in SLV.

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

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

There wasn’t much activity in silver, as nothing was reported received — and only 201,587 troy ounces was shipped out in total.  Of that amount, there was 178,203 troy ounces that departed HSBC USA — and the remaining 23,383 troy ounces was shipped out of CNT.  The link to that is here.

There was no in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  That’s the third time in the last few weeks that there’s been no activity.  Things have really quieted down over there this year.


The Shrewsbury Hoard (also known as the Shropshire Hoard) is a hoard of 9,315 bronze Roman coins discovered by a metal detectorist in a field near Shrewsbury, Shropshire in August 2009. The coins were found in a large pottery storage jar that was buried in about A.D. 335.

The coins were found buried in a brown pot in a plantation next to a public bridleway by Nic Davies only a month after he had started metal detecting as a hobby, and were his first find. Davies did not have permission from the landowner to metal detect on his land, and when he located the hoard he dug up the pot himself, although he subsequently took it to show Peter Reavill, the Portable Antiquities Scheme Finds Liaison Officer for Herefordshire and Shropshire. Davies later led Reavill and Shropshire County Council archaeologists to the find site, and a small excavation was carried out. The excavation revealed that the pot had probably been placed in the ground partially full (with coins dating to about A.D. 320), and that the pot had subsequently been filled up with coins dating to A.D. 333–335 before being covered with a large marker stone. The top of the pot had broken off, and about 300 scattered coins were recovered from the area around the find spot. The total weight of the pot and the coins was approximately 32 kg (71 lb).

The coins are all bronze and silver-washed bronze nummi, and date to the period between A.D. 313 and 335, corresponding to the latter part of the reign of Constantine I and the period of joint reign of his three sons, Constantine II, Constantius II and Constans. There were also a very few radiates dating to A.D. 260–293.  Although the coins are not individually valuable, the large number of coins in the hoard makes it important.  Click to enlarge.

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


CRITICAL READS

Stocks, Bonds, & Gold Spike as Dollar Dives After Powell’s Dovish Remarks

A ‘dovish-er’ than expected set of prepared remarks from Fed Chair Powell has sparked a bid in bonds, stocks, and gold as the dollar takes a dive ahead of his testimony late this morning.

Dow futures love the bad economic news… are up 150 points on Powell’s promises…Click to enlarge.

Powell’s remarks suggest he is comfortable with market pricing of an interest rate cut at the end of July. This was an opportunity to push back against those expectations if he wanted to, and he did just the opposite. July rate-cut odds are back at 100% (from 92.5% pre-remarks).

Since the June FOMC, gold remains the biggest winner…

This chart-filled story put in an appearance on the Zero Hedge website at 8:47 a.m. EDT on Wednesday morning — and I thank Brad Robertson for pointing it out.  Another link to it is here.  A companion ZH story from Brad bears the headline “Outlook Continues to Dim” – Powell Goes Full Dove to Keep His Job“.


Trump’s Concern About Strengthening Dollar Shows Up in Fed Interviews

President Donald Trump has grown concerned that the strengthening U.S. dollar is a threat to his economic agenda and has asked aides to cast about for ways to weaken the greenback, according to people familiar with the matter.

Trump asked about the dollar in job interviews with both Judy Shelton and Christopher Waller last week, whom he’s selected for seats on the Federal Reserve’s board, the people said. He lamented that the currency’s strength could blunt an economic boom that he expects to carry him to a second term.

The president’s top economic adviser, Larry Kudlow, and Treasury Secretary Steven Mnuchin both oppose any U.S. intervention to weaken the dollar, the people said.

The president’s questioning of Waller and Shelton follows months of Trump hectoring the Fed to cut interest rates, a move that would have the effect of weakening the dollar. But beyond regular scolding of the central bank and its chairman, Jerome Powell, Trump hasn’t taken steps to reduce the greenback’s buying power.

This Bloomberg news item was posted on their website at 1:00 a.m. Pacific Daylight time on Wednesday morning — and I found it embedded in a GATA dispatch.  Another link to it is here.  The original headline to this story was “Trump Concern Over Dollar Strength Spills Into Fed Selection


Negative-Yielding Junk Bonds Have Arrived in Europe — Wolf Richter

Amid rampant market expectations of another and even bigger and grander round of QE by the ECB, which would also be buying corporate bonds and old bicycles, the total amount of bonds with negative yields has risen to nearly $13 trillion, according to Bank of America Merrill Lynch.

The perversion of negative interest rates imposed by central banks such as the ECB, the Bank of Japan, the Swiss National Bank and a slew of others, and the even bigger perversion of negative-yielding corporate debt apparently does a job on investors’ minds.

In a negative-yield environment, you can no longer buy bonds to hold them to maturity because you’d be guaranteed a loss. You’d have to buy them solely on the hopes of even more deeply negative yields in the near future that would allow you to slough off these critters to the next guy before they eat you up.

And this type of thinking has now completely wiped out whatever was left of investors’ capacity to act rationally. Once you start getting into central-bank mandated negative yields, rationality no longer applies because negative-yielding debt is irrational by definition: Why would you pay someone to borrow money from you? [Emphasis mine. – Ed]

This very worthwhile commentary from Wolf showed up on his Internet site on Tuesday sometime — and I thank Richard Saler for bringing it to our attention.  Another link to it is here.  The Zero Hedge spin on this is headlined “Redefining “High” Yield: There Are Now 14 Junk Bonds With Negative Yields” — and I thank Brad Robertson for that one.


Five armed Iranian boats attempt to storm British oil tanker in the Gulf

Five Iranian ships unsuccessfully tried to seize a British oil tanker in the Persian Gulf Wednesday – U.S. officials say.

Armed vessels from Iran’s Islamic Revolutionary Guard Corps tried to capture the British Heritage tanker while it was sailing through the Strait of Hormuz on Wednesday.

Iran’s ships reportedly ordered the British vessel to divert its course and stop in Iranian waters which it was sailing nearby.

British frigate the HMS Montrose was escorting the tanker and trained its guns on the Iranians before giving them a verbal warning to back off.

A U.S. aircraft was overhead and recorded video of the incident as the Iranian ships then fled – according to CNN.

It comes after Royal Marines seized an Iranian oil tanker off the coast of Gibraltar last week, which Britain says was violating E.U. sanctions by carrying fuel to Syria.

This news story was posted on the dailymail.co.uk Internet site at 7:40 p.m. BST on their Wednesday evening, which was 2:40 p.m. in Washington — EDT plus 5 hours.  I thank Brad Robertson for sending it along — and another link to it is here.


Fed’s Powell explains why a return to the gold standard would be so damaging to the economy

Federal Reserve Chairman Jerome Powell told Congress on Wednesday that he doesn’t think a return to the gold standard in the U.S. would be a good idea.

You’ve assigned us the job of two direct, real economy objectives: maximum employment, stable prices. If you assigned us [to] stabilize the dollar price of gold, monetary policy could do that, but the other things would fluctuate, and we wouldn’t care,” Powell said from Capitol Hill. “We wouldn’t care if unemployment went up or down. That wouldn’t be our job anymore.”

There have been plenty of times in fairly recent history where the price of gold has sent a signal that would be quite negative for either of those goals,” he said. “No other country uses it,” he added. The Fed is tasked and overseen by Congress to maximize employment and keep prices stable.

Though Powell was quick to distance himself from the Fed nomination process, his comments on the gold standard put him at odds with the writings of Judy Shelton, a current Fed nominee and advocate for monetary policy reforms.

Shelton, who was tapped last week by President Donald Trump to join the Fed’s board, has written that a return to the gold standard affords the U.S. “an opportunity to secure continued prominence in global monetary affairs.”

This interesting story appeared on the cnbc.com Internet site at 12:24 p.m. EDT on Wednesday afternoon — and I found it on the gata.org Internet site.  Another link to it is here.


Gold Smuggling to India & Japan is a Symptom of Governments’ War against Gold

Smugg[ling] gold to India and Japan has become a lucrative business for many dealers and middlemen across Asia. It is widely known that demand for physical gold by Asian populations is insatiable. From the estimated 25,000 tonnes of gold held by India’s population to the more than 20,000 tonnes of gold calculated to be held by China’s population, these two countries alone hold nearly one quarter of the world’s known above ground gold stocks.

However, beyond China and India, gold is central to almost all Asian societies and cultures. While sometimes forgotten, Japan became one of the world’s largest gold market in the 1970s and 1980s when it imported thousands of tonnes of gold to satisfy its investment boom in gold. Hong Kong’s gold market, one of Asia’s oldest, is and has been a physical gold hub for more than 100 years. Adding in South Korea, Taiwan, Singapore, and Thailand, and the Asian region then is truly the centre of the physical gold world.

But while some Asian countries’ governments, such as Singapore and Hong Kong, embrace a free-market ethos to supporting their gold markets and allowing unhindered imports and non-distorted saving and investment in gold with zero Goods and Services Tax on investment gold, other Asian economies, such as India and Japan, still throw up import barriers, taxes and penalties, distorting the free flow of gold, distorting their local gold prices, and creating what we then call gold smuggling.

The incentive for smugglers is as follows. When an economy taxes gold imports at entry, such as India, the gold import tax or gold import duty distorts the international gold price and inflates the price of gold within that country by the amount of the tax. If gold can be bought outside the country, and smuggled into the country while avoiding the import tax, it can be sold by the smuggler at the tax inclusive price and the difference earned as profit.

The same is true of the GST on gold in Japan which inflates the local gold price. If gold can be purchased outside the country at the international price, smuggled in, and sold at the local gold price, the difference can be kept by the smuggler.

This commentary by Torgny Persson showed up on the Singapore-based website bullionstar.com on Wednesday sometime — and I found it in a GATA dispatch.  Another link to it is here.


Member of Parliament urges investigation of gold-market manipulation in the U.K.

Citing a confession to gold market manipulation in the United States, a member of Parliament this week urged the British government to investigate possible manipulation of the gold market in London.

The member, Jeremy Lefroy, Conservative for Stafford, prompted a discussion of manipulation during a speech Monday in the House of Commons. Lefroy questioned the economic secretary to the U.K. Treasury, John Glen, Conservative member for Salisbury, as to whether the government was able to prevent gold market manipulation.

Glen responded that the U.K.’s Financial Conduct Authority has “the right tools” and the jurisdiction to “detect and respond” to attempts at market manipulation. But he did not directly respond to Lefroy’s request for an investigation.

Lefroy’s statement, much of which is appended, showed detailed knowledge of the gold market and the recent increase in gold reserves by various nations. Lefroy not only cited the conviction for gold market manipulation of a former trader for JPMorgan Chase in the United States but also expressed concern about the trustworthiness of gold derivatives and paper gold, as well as the possibility that impoverished commodity-producing countries are being cheated by market manipulation.

He also related the complaint of a constituent who accused Deutsche Bank of manipulating the gold and silver markets. Litigation brought by his constituent in Germany and the U.K. was unsuccessful, Lefroy said, but soon afterward Deutsche Bank confessed to such manipulation in regulatory proceedings in the United States.

This GATA dispatch, with the Lefroy presentation embedded, was posted on their website at 12:49 a.m. EDT on Thursday morning — and another link to it is here.


The PHOTOS and the FUNNIES

Here are three more photos of my trip down the dirt roads in the middle of nowhere northeast of Merritt on May 12.   The range cattle in the first photo — and the red barn in the second gives points of interests to both shots.  The last photo is of balsamorhiza sagittata — a North American species of flowering plant in the sunflower tribe of the aster family known by the common name arrowleaf balsamroot. It is widespread across western Canada and much of the western United States. The plant’s native range extends from British Columbia and Alberta in the north, southward as far as northern Arizona and the Mojave Desert of California, and as far east as the Black Hills of South Dakota. It grows in many types of habitat from mountain forests to grassland to desert scrub. It is drought tolerant.  It doesn’t grow just anywhere, but where it does, it does so in profusion.  Click to enlarge.


The WRAP

Sanctions are not diplomacy. They’re a precursor to war and an embarrassment to a country that pays lip service to free trade.” — Ron Paul


The far more ‘dovish’ than expected prepared remarks by Fed Chairman Jay Powell hit the Internet at 8:30 a.m. EDT on Wednesday morning — and that set the HFT algorithms on fire.  It was equally obvious that ‘da boyz’/’gentle hands’ were there to cap the precious metal rallies as best they could — and prevent the dollar index from collapsing.

In the precious metals, there were no moving averages of importance that were broken to the upside in either gold or silver yesterday.  But platinum broke above — and then closed above its 50-day moving average — and also touched its 200-day moving average at its high tick yesterday.  JPMorgan’s prior 3-day attempt to run the Managed Money traders out of their long positions in palladium failed spectacularly on Wednesday, as it closed at another new all-time high.

Copper rallied a bunch — and was closed right on its 50-day moving average and, without a doubt, this price move was caused by Managed Money short covering in the COMEX futures market.  And ditto for WTIC, as it blasted through — and then close well above, it’s 200-day moving average on Wednesday.

Here are the 6-month charts in the Big 6 commodities — and the above changes should be noted.  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 rally a bit as soon as trading began at 6:00 p.m. EDT on Wednesday evening in New York. That lasted until 10:20 a.m. in Shanghai on their Thursday morning — and it began to edge lower from there. At the moment, gold is only up $2.10 the ounce. The price path for silver was identical — and from being up 9 cents, its only up 4 cents as London opens, but off its current low. Platinum and palladium were both higher by 10:20 a.m. CST…but were both turned lower at the same moment as silver and gold. Platinum is up a dollar — and palladium by 2 as Zurich opens.

Net HFT gold volume is very heavy at around 84,000 contracts — and there’s 2,833 contracts worth of roll-over/switch volume out of August and into future months. Net HFT silver volume is up there as well at about 10,500 contracts — and there’s only 160 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened down down 4 basis points was trading commenced at 7:45 p.m. EDT in New York on Wednesday evening, which was 7:45 a.m. CST in the Far East. It continued to fall until 11:20 a.m. CST — and it has been crawling quietly higher since. It’s down 18 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.

It should be noted that the price capping operation in the precious metals began a full hour before the dollar index hit its current low tick of the day.


As it was stated in the lead Zero Hedge story in the Critical Reads section, the chance of a rate cut at the next FOMC meeting just went back to 100 percent.  But whether or not it will be 25 or 50 basis points, won’t be known until then.

But the world’s central banks have now turned the equity and bond markets into raving junkies…craving for their next interest rate cut ‘fix’.  And whatever interest rate cut that does materialize will have little to no effect on business or the average consumer in the U.S., as they are already overflowing with the highest debt levels in history.  The day of reckoning, when it does finally manifest itself, will be ugly.

The precious metals are responding accordingly.  And as I pointed out in a recent commentary, the headwinds that JPMorgan et al are running into are becoming more ferocious all the time.  At some point they will be overwhelmed — and the race into precious metals and their associated equities, will be on in earnest.


And as I post today’s column on the website at 4:03 a.m. EDT, I note that the gold price has edged a bit higher in the first hour of London trading — and is currently up $3.40 an ounce. Silver is up 5 cents. Platinum is up 3 dollars now — and palladium’s spike up at the Zurich open was hammered back below the unchanged mark almost right away, but it’s back in the plus column by 3 dollars as well, as the first hour of Zurich trading ends.

Gross gold volume is about 103,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit over 96,500 contracts. Net HFT silver volume is around 12,100 contracts — and there’s still only 179 contracts worth of roll-over/switch volume on top of that.

The dollar index hasn’t done much of anything over the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s down 18 basis points.

That’s all I have for today — and I’ll see you here again tomorrow.

Ed

Another Big Deposit Into SLV

10 July 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price dipped a bit in morning trading in the Far East on their Tuesday, but was back at unchanged by 1 p.m. China Standard Time on their Tuesday afternoon.  The selling pressure commenced at that point — and the low tick of the day came minutes before 10 a.m. in London.  It chopped a bit higher from there — and then spiked up five bucks or so at the 11:00 a.m. EDT London close.  It wasn’t allowed to do much after that — and was carefully closed below $1,400 spot once again.

The low and high ticks are barely worth looking up, but here they are anyway…$1,387.40 and $1,402.40 in the August contract.

Gold was closed at $1,397.10 spot, up $2.00 from Monday.  Net volume was fairly healthy at a hair over 243,000 contracts — and there was a bit over 49,000 contracts worth of roll-over/switch volume out of August and into future months.

The silver price had the same down/up move in morning trading in Shanghai, except the subsequent rally lasted until the London open.  ‘Da boyz’ swung into action at that point — and the low tick in this precious metal came a few minutes after 10 a.m. in London, just like it did for gold, which was certainly no coincidence.  The subsequent rally had a down/up dip centered around the afternoon gold fix in London — and it edged higher until the 1:30 p.m. EDT COMEX close.  Like gold, it wasn’t allowed to do much after that.

The low and high in silver were reported by the CME Group as $14.965 and $15.155 in the September contract.

Silver finished the Tuesday session at $15.085 spot, up 8 cents from Monday’s close.  For the second day in a row, net volume was pretty light at 45,000 contracts — and there was a hair under 5,500 contracts worth of roll-over/switch volume in this precious metal.

There was intermittent price pressure in platinum, starting almost the moment that trading began at 6 p.m. EDT in New York on Monday evening.  It was bounced off its low tick on several occasions in morning trading in New York on Tuesday morning, but  rallied a bit once Zurich closed at 11 a.m. EDT.  Platinum was closed at $810 spot, down 5 dollars from Monday.

Palladium fell and rose in price in Far East trading on their Tuesday — and was almost back at unchanged by the 2:15 p.m. afternoon gold fix in Shanghai.  It was sold off a bit from there — and then bids were pulled about 9:40 a.m. in Zurich — and palladium was down almost 25 bucks by 10:25 a.m. CEST.  It rallied a bit on a couple of occasions, but was then sold lower going into the afternoon gold fix in London — and once Zurich closed at 11 a.m. EDT, it didn’t do much for the remainder of the New York session.  Palladium was closed at $1,530 spot, down 15 dollars from Monday.

The dollar index closed very late on Monday afternoon in New York at 97.38 — and opened unchanged once trading commenced at 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning.  It chopped quietly sideways until around 12:50 p.m. CST — and then began to edge higher.  The 97.59 high tick came around 10:12 a.m. in London — and then it was quietly downhill from there until around 1:15 p.m. in New York…fifteen minutes before the COMEX close.  It crawled a bit higher until 3:20 p.m. EDT — and gave back a few basis points going into the 5:30 p.m. close.  The dollar index finished the Tuesday session at 97.49…up 11 basis points from Monday.

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 good folks over at the stockcharts.com Internet site.  The delta between its close…97.10…and the close on the DXY chart above, was 39 basis points on Tuesday.  Click to enlarge as well.

The gold stocks gapped down a bit at the New York open — and then edged sideways until the afternoon gold fix in London was put to bed at 10 a.m. EDT.  From that juncture they chopped quietly higher until trading ended at 4:00 p.m.  The HUI finished up 1.28 percent.

The silver equities followed the same price path as the gold shares until around 2:15 p.m. EDT.  Then some news, or some kind soul dumping a position, caused a vertical drop in the Silver 7 Index — and from that point onwards, they didn’t do much for the remainder of the New York session.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.05 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 22 gold and 13 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, the three short/issuers were Advantage, ABN Amro and ADM, with 12, 6 and 4 contracts.  The three long/stoppers were Advantage with 15, JPMorgan with 5 — and Morgan Stanley with 2 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the only short/issuer that mattered was ABN Amro with 12 contracts from its client account.  The three biggest long/stoppers were HSBC USA, with 5 contracts for its in-house/proprietary trading account, Morgan Stanley and JPMorgan came in second and third with 4 and 3 contracts for their respective client accounts.

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

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in July fell by 26 contracts, leaving 50 left, minus the 22 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 43 gold contracts were actually issued for delivery today, so that means that 43-26=17 more gold contracts were just added to the July delivery month.  Silver o.i. in July dropped by 175 contracts, leaving 554 still around, minus the 13 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 176 silver contracts were actually posted for delivery today, so that means that 176-175=1 more silver contract just got added to July.


There was yet another withdrawal from GLD…the third one in as many days…as an authorized participant removed another 55,119 troy ounces.  And, for the third day in a row, there was a decent-sized deposit into SLV, as an authorized participant added 1,076,600 troy ounces.

There was a tiny sales report from the U.S. Mint on Tuesday…the first one this month.  They sold 1,500 troy ounces of gold eagles — and 165,000 silver eagles.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday was 32.150 troy ounces/1 kilobar [U.K./U.S. kilobar weight] that was taken out of Manfra, Tordella & Brookes, Inc.  I shan’t bother linking this.

There was some activity in silver — and all of it occurred at CNT. One truckload…497,040 troy ounces…was received — and 29,934 troy ounces that was shipped out.  There was also 486,025 troy ounces transferred from the Eligible category — and into Registered.  The link to this is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, they reported receiving 1,500 of them — and shipped out 375.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Shapwick Hoard is a hoard of 9,262 Roman coins found at Shapwick, Somerset, England in September 1998. The coins dated from as early as 31–30 B.C. up until 224 A.D.  The hoard also notably contained two rare coins which had not been discovered in Britain before, and the largest number of silver denarii ever found in Britain.

The hoard was discovered by cousins Kevin and Martin Elliott, who were amateur metal detectorists, in a field at Shapwick. Excavation of the site found that it had been “buried in the corner of a room of a previously unknown Roman building” and, after further excavation and geophysical surveying, “revealed the room to be part of a courtyard villa“.

Following a treasure inquest at Taunton, the hoard was declared treasure and valued at £265,000.

Notable inclusions in the hoard were 260 coins from the reign of Mark Antony from 31–30 B.C., with over half the coins being struck in the reign of Septimius Severus (193–211). There were also two rare coins not discovered in Britain before depicting Manlia Scantilla, the wife of Didius Julianus, an emperor who was murdered four weeks after the coins were struck. Non-Roman coins included were three Lycian drachmae and one drachma of Caesarea in Cappadocia. The latest coin struck was in 224 A.D., and it is estimated that the hoard as a whole represented ten years’ pay for a Roman legionary.  Click to enlarge.

I have an average number of stories for you today.


CRITICAL READS

Why Everyone Wants More Inflation — Bill Bonner

Our little galaxy pals were scratching their juicer heads. Negative rates… financialization… backasswards time, something from nothing…

They are affronts to God and Nature… breaches of the laws of physics and the universe… and invitations to economic catastrophe.

Why would anyone believe they could stimulate an economy with fake money? Or that a small group of goofballs with PhDs in economics could manage and control a $20 trillion economy of 330 million people?

And why now, only 30 years after the Soviet Union’s magnificent experiment proving that central planning and price fixing don’t work, would they – including the president of the USA – believe they can rig the U.S. economy with phony prices and more central planning? Why would they think that more inflation could make them richer?

Only an earthling would believe such claptrap,” muttered one of the extraterrestrials before heading back towards his spacecraft.

What dumb thing will happen next, we wonder? Who will say the stupidest thing today?

Trump’s recent tweet was a strong contender:

China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!

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


Class 8 Truck Orders Crash 70% in June After a 71% Drop in May

Class 8 heavy duty truck orders were down for the eighth month in a row, falling a stunning 70% in June to 13,000 units, according to FTR data. The figure was up 20% sequentially, but still follows a 71% decimation in May. Jefferies’ Stephen Volkmann wrote in a note that the figures indicate a SAAR of ~178,000 Class 8 trucks and noted that the sequential growth compares to a sequential drop of 27% in May, when SAAR estimates were 139,000 units.  Click to enlarge.

Kenny Vieth, ACT’s President and Senior Analyst said: “Fraying freight market and rate conditions along with a still-large Class 8 order backlog contributed to the worst NA Class 8 net order performance since July of 2016. May saw NA Class 8 orders fall below the 15,900 units averaged through the year’s first trimester, and year-to-date Class 8 net orders have contracted 64% compared to the first five months of 2018.”

The industry has been dealing 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.

The good – and bad – news is that the backlog is starting to decline, and is expected to continue eroding until late summer. However, there is still downside risk for the industry in 2020 as a result of a slowing manufacturing, coupled with recessionary caveats.

This 3-chart Zero Hedge news item appeared on their Internet site at 7:05 p.m. on Tuesday evening EDT — and another link to it is here.


A Blow Against AMLO Bodes Ill for Mexico

The abrupt resignation of Mexico’s finance minister, and his reasons for doing so, are deeply damaging. Investors are right to be rattled.

After seven months of laboriously convincing the international markets that he can be trusted with the presidency of Mexico, Andres Manuel Lopez Obrador risks seeing all his work undone by tweet. The sudden resignation of Carlos Urzua as his finance minister, and the resignation letter he posted on Twitter are deeply damaging. In combination, they are almost exactly what investors were worried could happen when they sold off Mexican assets ahead of AMLO’s inauguration last December.

This is partly because of the importance of the finance minister in Mexican politics. The Finance Ministry, known as Hacienda, has a strong tradition of independence and continuity, which has remained intact over the last two decades as Mexico has gingerly embarked on democracy. It has a deep bench of economists with excellent U.S.-trained academic credentials, who usually alternate between the treasury and the central bank. Since Mexico’s last major devaluation crisis in 1994, Hacienda has maintained rigid fiscal orthodoxy. While it hasn’t managed to widen the tax base in a way that politicians of all sides have hoped, the ministry has strengthened its reputation with foreign investors. Thanks to Hacienda, Mexico’s credit has been rated investment grade since 2002, and the country is regarded as so safe that it can even launch bonds that won’t be repaid for a century.

In a country of weak institutions, then, the Finance Ministry is a vital exception. To use a popular soccer analogy, Hacienda is the goalie of Mexican politics. Other politicians slip and fall and allow all kinds of attacks to penetrate the country’s defense – but Hacienda is always there to make the save at the last minute. Mexico may not win, but it can avert disaster.

Urzua’s resignation now puts that institutional strength to the test. The president was wise to replace him immediately with his deputy, Arturo Herrera. An economist with a doctorate from New York University, Herrera has spent most of his career at the World Bank, and is thus exactly the kind of career technocrat that international investors want to see in charge of the budget.

This Bloomberg story showed up on their website at 1:53 p.m. PDT on Tuesday afternoon — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.  The Zero Hedge spin on this is headlined “Peso Plunges After Mexican FinMin Unexpectedly Resigns, Questions “Conflicts of Interest”” — and I thank Brad Robertson for that one.


SNB [Swiss National Bank] Study Finds Evidence of 1,000-Franc Banknote Hoarding

The majority of Switzerland’s high-denomination bills are effectively parked in vaults or stuffed under mattresses, according to a Swiss National Bank working paper.

In a study that has implications for officials at central banks, who must figure out how much below zero they can cut interest rates before the public begins stockpiling cash, the authors calculate that in between 80% and 90% of 1,000-franc ($1,007) notes were hoarded in 2017. For the 200-franc note the proportion was between 30% and 60%.

Our results indicate that a significant part of large-denomination banknotes is hoarded,” authors Katrin Assenmacher, Franz Seitz, Joern Tenhofen wrote.

The Swiss National Bank unveiled an updated design for its top denomination bill — one of the world’s most valuable — earlier this year, in defiance of international calls that the bills aid crime and tax evasion. The European Central Bank has stopped new issuance of its €500 note.

A spokeswoman for the SNB declined to comment on the working paper.

The above five paragraphs are all there is [plus an embedded chart] to this Bloomberg article that put in an appearance on their website at 9:34 a.m. PDT on Tuesday morning.  It’s the second offering of the day from Patrik Ekdahl — and another link to it is here.


Governments ‘aggresssively manipulating‘ all financial assets, Swiss Asia Capital’s Kiener tells Bloomberg

Bloomberg television last week let Swiss Asia Capital Managing Director Juerg Kiener mention market manipulation in the same breath with gold.

It happened on the “Bloomberg Markets: Asia” program July 4, where, asked about gold’s prospects, Kiener said, “We’ve been now in a period where we’ve been aggressively manipulating almost all financial assets.”

With bonds increasingly carrying negative interest rates, Kiener continued, gold becomes more attractive, especially since central banks have come to think that printing money and negative rates are “God’s work.”

The interview with Kiener is 7:21 minutes long — and was posted on the Bloomberg website at 12:16 a.m. PDT on Tuesday morning.  It’s certainly worth your time — and I found it in a GATA dispatch yesterday.  Another link to it is here.


Italy’s 50 Year Bonds Are 6x Oversubscribed as Investors Lose Their Minds

With over $13 trillion in global notional debt trading with a negative yield, it will hardly come as a surprise that there is a line of investors stretching around the block for even the least fundamentally sound bonds which still offer a modest positive yield, such as those which for the past 2 years were only purchased by the ECB. We are of course talking bout Italian bonds, and not just any variety, but 50-year bonds issue offered by Europe’s financial problem child.

The frenzied demand for Italian bonds that won’t be repaid in most investors’ lifetimes (they mature in 2067) – or perhaps ever, if Italy defaults on its debt – was such that they attracted demand of over €17.5 billion for the €3 billion offering, making them roughly 6x oversubscribed, despite a yield of just 2.9%, almost a full percent lower than what this paper yielded in late 2018.

To Bloomberg this represents the “latest example of the intense hunt for yield spurred by dovish monetary bets. even as the stronger-than-expected U.S. jobs report on Friday clouds the case for aggressive monetary easing.”

Meanwhile, as Italian bond yields tumble on expectations that the ECB will restart its QE in the coming months, Europe is slowly collapsing under Albert Edwards’ ice age, and the number of corporate junk bonds trading with a sub-zero handle in euros now stands at 14, compared to zero at the start of the year. Even emerging-market issuers are joining the not-so-exclusive negative yield club, while a whopping 27% of Europe’s investment grade bonds are now trading with a negative yield sign.

It’s only a matter of time before some of those money shows up on the precious metals — and I suspect that some of it already has.  This Zero Hedge story appeared on their website at 3:54 p.m. on Tuesday afternoon EDT — and I thank Brad Robertson for pointing it out.  Another link to it is here.


Reserve Bank of India Buys 5.6 tonnes gold in April

RBI adds 5.6 tonnes of gold to its reserves in April, taking the total quantum to 618.2 tonnes.

With the latest purchase, the RBI has bought 17.7 tonnes of gold from the open market since January this year. It had purchased 6.5 tonnes in January, 1.9 tonnes in February and 3.7 tonnes in March to enter the top 10 countries in terms of the quantum of gold in their RBI reserves. The share of gold in RBI’s reserves stood at 6.1 per cent. It was the same even in March, before the bank bought 5.6 tonnes, according World Gold Council data.

The RBI started purchasing gold in small quantities from December 2017 after a gap of eight years. In November 2009, it had bought 200 tonnes from the IMF. Since December 2017, the apex bank has bought a total of 60.2 tonnes. In 2018 itself it bought 42.3 tonnes. Central banks of other emerging nations, including China, Russia and Turkey are the largest buyers of gold.

Reported net purchases (so far) of a tonne or more totalled 35.8 tonnes in May, 27 per cent lower than the previous month. This brings reported net purchases year-to-date to 247.3 tonnes, 73 per cent higher than the same period last year. Several emerging market central banks—including Russia, China, Turkey and Kazakhstan—have dominated buying for a few years now, and this is still the case in 2019 with those banks the four biggest buyers so far,” said Alistair Hewitt, Director of Market Intelligence at the World Gold Council.

The above four paragraph are all there is to this brief gold-related news item that was posted on the mydigitalfc.com Internet site at 1:38 a.m. IST on their Tuesday morning, which was 4:08 p.m. on Monday afternoon in New York — EDT plus 9.5 hours.  I found it on the Sharps Pixley website — and another link to it is here.


China continues to add to its gold reserves – but at lower rate m/m — Lawrie Williams

The Chinese Central Bank has announced another addition to its gold reserves – for the seventh month in a row now – and this time of 10.26 tonnes.  Thus so far this year the Chinese Central Bank has officially added some 74 tonnes of gold to its reserves, although like all Chinese data one wonders at the veracity of these figures.  China has in the past gone for long periods claiming not to have added at all to its gold reserves, but then comes up with very substantial increases which, in reality, it must have been accumulating over a number of months, if indeed it didn’t have it already.  There are also strong suspicions that the overall total holding the country reports to the IMF substantially understates its true total holdings which some observers feel could be at least three to four times the official level of a little under 2,000 tonnes.

Germany’s Commerzbank speculates that the latest announced gold reserve increases are because of the trade dispute with the U.S. which may have prompted the nation to take in gold while reducing its U.S. dollar related holdings.

The Chinese 10.26 tonne addition to reserves in June, though, was well below its announced reserve increases in May (15.86 tonnes) and April (14.93 tonnes) which may, or may not, be significant.  The trade talks with the U.S. had broken down at the time and one wonders that if, as now they are resuming, Chinese gold purchases will pick up again this month if the Commerzbank reasoning is correct.

All in all Central Bank gold buying seems to be holding up well this year, with Poland last week making the surprise announcement that it had added 100 tonnes of gold to its reserves in the first half of 2019, almost doubling them to 228.6 tonnes.  This follows on from purchases of around 25.7 tonnes in the second half of 2018.  According to the World Gold Council, central bank gold demand is up 73% year on year for the first five months of the current year, which bodes well for the maintenance of the high central bank gold purchase levels we saw last year.

This worthwhile commentary by Lawrie appeared on the Sharps Pixley website on Tuesday morning sometime — and another link to it is here.


World Top 20 Silver producers and metal’s price prospects — Lawrie Williams

We have always been consistent in publishing tabulations of the world’s top gold miners, but not always so with the equivalent for silver, so here’s a tabulation of last year’s country-by-country silver rankings based on specialist precious metals consultancy, Metals Focus’ annual Silver Focus report released mid-June (while I was away on holiday – hence the delay in collating the figures!)
Metals Focus notes that after a 2% fall in 2017 global new mined silver, output fell again in 2018 – by around 3.4%.  Despite this the consultancy still sees global silver supply in surplus, albeit by only a small amount,  This contrasts with the findings of the other major U.K.-based precious metals consultancy, GFMS, which had estimated a small supply deficit in the past year.  But in neither case are the figures significant enough one way or the other to move the markets and both are likely to see some changes as 2019 progresses.  All in all these could be seen as neutral in effect.

Metals Focus puts the production declines down primarily to falling grades at several large primary silver mines as well as reduced byproduct output from the global copper mining sector.  According to its figures the consultancy estimates that output from primary silver producers fell by 8.4% to 7,457 tonnes, comprising 28.5% of the global total, whereas silver produced from copper mines fell by 4.3% to 5,906 tonnes, or 22.6% of the global output total. Lead-zinc-silver mines, though continue to dominate, producing some 8,416 tonnes or 32.2% of global total silver mine output.  Much of the balance will have come from byproduct output from primary gold and pgm producers.

We have recorded the principal country-by-country output figures in millions of troy ounces in the table below – with those countries which have moved up in the rankings noted by an up arrow.  A notable absentee from the list this year though is Guatemala where the country’s principal silver mine, Escobal – one of the biggest in the world in terms of production – remained closed having been shut down as the result of a dispute with locals in 2017.  This led to a year-on-year drop of 337 tonnes of silver.  Escobal had produced 302 tonnes of silver in the truncated 2017 year and 659 tonnes in 2016.  It is now owned by Pan American Silver which purchased it from Tahoe Resources, but there’s no sign as yet that the ownership change will lead to the mine being brought back into production any time soon.

Of course, as everyone knows, but not all will admit publicly, is that supply/demand factors mean nothing in the Big 6 commodities, as they’re all set between the commercial traders and those traders in the Managed Money category.  This silver commentary from Lawrie put in an appearance on the Sharps Pixley website yesterday — and another link to it is here.


The PHOTOS and the FUNNIES

Here’s a series of landscape shots that I took out in the back country/hills/inter-mountain region about 16 kilometers/10 miles northeast of Merritt on May 12.  As is usually the case when your in these parts, except for the washed-out bridge in the first photo — and the dirt road in the second shot, there’s no sign of human habitation anywhere.  It was just me — and the occasional western meadowlarkClick to enlarge.


The WRAP

The power to tax is the power to destroy.” — John Marshall


It was pretty much a nothing day in silver gold, although there certainly was price pressure in platinum and palladium…particularly palladium.  As I’ve stated on several occasions recently, that with the Managed Money traders massively long this precious metal, it certainly it appears the JPMorgan et al are trying to turn the price lower, so they can ring the cash register for fun, profit — and price management purposes.  Copper was closed at a new low for this particular move down.

Here are the 6-month charts for the five of the Big 6 commodities.  There’s no platinum chart, as the folks over at the stockcharts.com Internet site are having issues with it, as it didn’t update from Monday.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I note that the price pressure has returned in both gold and silver — and that began as soon as the market opened at 6:00 p.m. EDT in New York on Tuesday evening. At the moment, gold is down $6.60 the ounce — and silver is down 4 cents. Platinum hasn’t been spared either — and is down 3 bucks. Palladium traded flat until around 2 p.m. China Standard Time and, like the other three precious metals, was tapped lower at that point — and is also down 3 dollars as Zurich opens.

Net HFT gold volume is a bit over 49,500 contracts — and there’s 1,962 contracts worth of roll-over/switch volume out of August and into future months. Net HFT silver volume is pretty light at 6,300 contracts — and there’s only 128 contracts worth of roll-over/switch volume on top of that.

The dollar index opened up 2 basis points once trading commenced at 7:45 p.m. in New York on Sunday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning — and has chopped quietly and unevenly sideways since. It’s down 2 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report.  And after checking the 6-month gold and silver charts above, I would expect we’ll see some improvement in gold, but I’m not prepared to bet the ranch on that.  Silver is an easier call — and there will certainly be some rather decent improvement in the commercial net short position in that precious metal.  I  expect the same in both palladium and WTIC.

But Ted Butler is the real authority on all this — and I’m looking forward to what he has to say in his mid-week review later today.  I’ll most likely borrow a few sentences from his comments for my Friday missive.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that all four precious metals have edged a tiny bit higher as the first hour of London/Zurich trading ends. Gold is down $5.90 — and silver is down 4 cents. Platinum is down a buck, but palladium is now up 4 dollars.

Gross gold volume is a bit over 65,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is just under 60,500 contracts. Net HFT silver volume is a bit over 8,400 contracts — and there’s 433 contracts worth of roll-over/switch volume in this precious metal.

The dollar index hasn’t done much of anything during the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s still down 2 basis points.

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

Ed

A Pretty Ugly COT Report in Gold

09 July 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold lower just a few minutes after trading began at 6:00 p.m. EDT on Sunday evening in New York.  It began to recover about fifteen minutes later — and managed to crawl higher…back above the $1,400 spot mark.  The high tick was set a few minutes after the London open — and it didn’t do much from there until ‘da boyz’ went to work at the 8:20 a.m. EDT COMEX open on Monday morning. The low tick was set at precisely 4:00 p.m. in the thinly-traded after-hours market — and it recovered a few dollars into the 5:00 p.m. close from there.

The high and low ticks were reported by the CME Group as $1.409.90 and $1,393.80 in the August contract.

Gold was closed in New York yesterday at $1,395.10 spot, down $3.20 from Friday.  Net volume was very decent at a bit over 261,000 contracts — and roll-over/switch volume out of August and into future months was pretty healthy at a bit under 62,000 contracts.

The silver price was guided in a similar manner as gold’s, with the only real difference being that after a minor three-hour long sell-off in morning trading in London, it managed to rally to its high of the day by the COMEX open in New York.  But twenty minutes or so later, JPMorgan et al worked their magic and, like gold, was sold down to its New York low by exactly 4:00 p.m. EDT in the after-hours trading.  It rallied a few pennies into the 5:00 p.m. close from there.

The high and low ticks in silver were recorded as $15.15 and $14.985 in the September contract.

Silver was closed at $15.005 spot, up 4 cents from Friday.  Net volume was actually pretty light at a hair over 42,500 contracts — and there was just under 6,000 contracts worth of roll-over/switch volume in this precious metal.

The platinum price stair-stepped its way quietly higher until shortly after 11 a.m. in Zurich trading — and then was sold lower and back to almost unchanged by 9 a.m. in New York.  It then rallied at a pretty good clip until around 11:20 a.m. EDT…but then was sold lower until noon — and it didn’t do much of anything for the remainder of the Monday trading session.  Platinum was closed at $815 spot, up 7 bucks from Friday.

The palladium price was down about 12 dollars by shortly after the Zurich open on their Monday morning — and the big rally that followed got capped an hour later.  From that point, like platinum, it was sold very unevenly lower until around 11:20 a.m. in New York.  From that juncture it also chopped very quietly sideways into the 5:00 p.m. EDT close of trading.  Palladium was closed at $1,545 spot, down 9 dollars from Friday.

The dollar index closed very late on Friday afternoon in New York at 97.29 — and opened down 6 basis points once trading commenced around 6:35 p.m. EDT on Sunday evening.  It edged very quietly and unevenly lower from there — and the 97.16 low tick was set at 9:30 a.m. in London.  A ‘rally’ commenced at that point — and it chopped quietly higher until precisely 12:00 noon in New York.  The 97.42 high tick was set at that juncture.  It then crept unevenly sideways until trading ended at 5:30 p.m. EDT.  The dollar index finished the Monday session at 97.38…up 9 whole basis points from Friday’s close.

Here’s the usual DXY chart from 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…96.98…and the close on the DXY chart above, was 40 basis points on Monday.  Click to enlarge as well.

The gold stocks opened up a tad once trading began at 9:30 a.m. in New York on Monday morning, but were sold down to their respective low of the day by a few minutes before 11 a.m. EDT.  From there they rallied back to a bit above the unchanged mark by a few minutes after the 1:30 p.m. COMEX close — and they edged quietly lower and back below the unchanged mark by the time the markets closed at 4:00 p.m. EDT.  The HUI closed down 0.25 percent.

The silver equities followed a virtually identical price path as the gold shares, except they didn’t recover as much after their pre-11 a.m. EDT lows in New York.  Their rallies also ended at 1:35 p.m. — and fifteen minutes later they were heading lower once again.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.56 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 43 gold and 176 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, the largest of the three short/issuers was ABN Amro, with 32 — and in distant second place was Advantage with 9 contracts.  Of the four largest long/stoppers, the two biggest were Advantage with 24 — and JPMorgan with 15 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, there were four short/issuers as well, but the only two that mattered were International F.C. Stone and JPMorgan, with 143 and 28 contracts from their respective client accounts.  There were four long/stoppers:  HSBC USA with 61 for its own account…Morgan Stanley with 52 for its client account — and JPMorgan and Advantage, with 41 and 22 contracts for their respective client accounts as well.

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 July fell by 4 contracts, leaving 76 left, minus the 43 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 6 gold contracts were actually posted for delivery today, so that means that 6-4=2 more gold contracts were added to the July delivery month.  Silver o.i. in July declined by 25 contracts, leaving 729 still open, minus the 176 mentioned a few short paragraphs ago.  Friday’s Daily Delivery Report showed that 30 silver contracts were actually posted for delivery today, so that means that 30-25=5 more silver contracts just got added to July.


There was yet another withdrawal from GLD on Monday, as an authorized participant removed 37,736 troy ounces.  There was another huge deposit in SLV yesterday, as an authorized participant added 2,949,068 troy ounces…five truck loads.

There has been 19.53 million troy ounces of silver added to SLV since June 4.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, July 5 — and this is what they had to report.  Their was a fairly hefty 24,419 troy ounces of gold removed…but a chunky 288,231 troy ounces of silver was added.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday,  was the 803.750 troy ounces/25 kilobars [U.K./U.S. kilobar weight] that was deposited at Manfra, Tordella & Brookes, Inc.  Nothing was shipped out.  I won’t bother linking this amount.

It was exceedingly quiet in silver, as nothing was reported received — and only one good delivery bar…1,027 troy ounces…was shipped out of Delaware — and I won’t bother linking this, either.

The star of the day was the COMEX-approved gold kilobar depository in Hong Kong on their Friday, as they reported receiving 875 of them — and shipped out 474.  This activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.


Here are the usual two charts that Nick Laird passes around every weekend.  They show the total gold and silver holdings in all known depositories, ETFs and mutual funds as of the close of business on Friday, July 5 — and this is what they had to report that week.  They added a net 75,000 troy ounces of gold — and a monstrous net 8.866 million troy ounces of silver.  And that amount of silver doesn’t include the 2.95 million troy ounces that was deposited in SLV on Monday.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, July 2…showed a slight improvement in the Commercial net short position in silver, but a huge increase in the short position in gold.

In silver, the Commercial net short position decreased by 1,489 contracts, or 7.4 million troy ounces of paper silver.

They arrived at that number by reducing their long position by 4,473 contracts, but they reduced their short position by even more…5,962 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 just about all Managed Money traders that made up that difference, as they increased their long position by 1,438 contracts, but they also increased their short position by 2,776 contracts as well.  The difference between those two numbers…1,338 contracts…represents their change for the reporting week.

The difference between that number — and the Commercial net short position, as it always has to be, was made up by the traders in the other two categories, as the Other Reportables increased their net long position by 1,228 contracts — and the Nonreportable/small traders decreased their long position by 1,379 contracts.  The difference between those two numbers is…151 contracts.  151 plus 1,338 equals 1,489…the decrease in the commercial net short position.

Ted figures that JPMorgan didn’t change this short position in silver by much during the reporting week — and still thinks that their net short position is something under 10,000 contracts.  Certainly much less since last Tuesday’s cut-off.

The Commercial net short position in silver now stands at 260.3 million troy ounces…basically unchanged from last week.

Here’s the 3-year COT chart for silver from Nick — and the change, or lack thereof, should be noted.  Click to enlarge.

Of course, after Friday’s big sell-off, this data is very much “yesterday’s news” — and baring any further dramatic price changes after today’s COMEX close, we’ll have a more accurate picture of the current condition of silver in this coming Friday’s COT Report.


In gold, the commercial net short position blew out by another 26,672 COMEX contracts, or 2.67 million troy ounces of paper gold.

They arrived at that number by adding a piddling 54 contracts to their long position, but added a staggering 26,440 short contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

To my surprise, under the hood in the Disaggregated COT Report, the Managed Money traders made up only part of the change, as they added 9,268 long contracts — and only reduced their short position by 7,078 contracts.  It’s the sum of those two numbers…16,346 contracts…that represents their change for the reporting week.

The other surprise was in the other two categories, as both added heavily to their net long positions as well…as they had to…the Other Reportables by 6,046 contracts — and the ‘Nonreportable’/small traders by 4,280 contracts.  The sum of those two numbers…10,326 contracts…plus the 16,346 contract change in the Managed Money category…add up to the change in the commercial net short position…26,672 contracts…which they must do.

Here’s the snip from the Disaggregated COT Report for gold, so you can see these changes for yourself.  Click to enlarge.

The commercial net short position in gold is now up to 28.68 million troy ounces.

Here’s the 3-year COT chart for gold — and the further increase in the commercial net short position should be noted as well.  Click to enlarge.

Gold is very much in bearish territory according to this COT Report…the most bearish since late September of 2016 according to Ted, but it’s somewhat ancient history after the price action on both Friday — and again yesterday.  Like in silver, baring anything unforeseen after the COMEX close today, the picture will become clearer with Friday’s COT Report.

In the other metals, the Manged Money traders in palladium increased their net long position in this precious metal by a further 1,255 contracts.  The Managed Money traders are net long the palladium market by 12,841 contracts…over 50 percent of the total open interest.  Total open interest in palladium is 24,091 COMEX contracts, up 1,202 contracts from the previous week.  And as I keep repeating, it’s a very tiny market, which Ted says is mostly a cash market now, because palladium is in such tight supply.  In platinum, the Managed Money traders increased their net short position by another 7,453 contracts during the reporting week.  The Managed Money traders are now net short the platinum market by 15,630 COMEX contracts…a tad under 20 percent of the total open interest.  In copper, the Managed Money traders increased their net short position in that metal by 9,373 COMEX contracts during the reporting week — and are now net short the COMEX futures market by 45,978 contracts, or 1.15 billion pounds of the stuff…18 percent of total open interest.


Once again, here’s Nick chart showing the tight correlation between the gold price — and what the Managed Money traders are doing…or are tricked into doing.  You don’t need a degree in mathematics to see how tight is correlation is.  Click to enlarge.


Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading last 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 121 days of world silver production, which is up 8 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 84 days of world silver production, which is up 1 day from last week’s report — for a total of 205 days that the Big 8 are short, which is almost seven months of world silver production, or about 478.4 million troy ounces of paper silver held short by the Big 8. [In the prior week’s COT Report, the Big 8 were short 196 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 260.3 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 478.4 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 478.4 minus 260.3 equals 218.1 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 36-odd small commercial traders other than the Big 8, are net long that amount.  How ridiculous is that, you ask?  Very.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 10,000 contracts in silver…or maybe less.  And considerably less since the price action of last Friday.

The Big 4 traders are short, on average, about…121 divided by 4 equals…30.25 days of world silver production each.  The four traders in the ‘5 through 8’ category are short 84 days of world silver production in total, which is 21 days of world silver production each.

The Big 8 commercial traders are short 43.3 percent of the entire open interest in silver in the COMEX futures market, which is a decent increase from the 39.9 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 50 percent mark.  In gold, it’s now 44.4 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 42.9 percent they were short in last week’s report — and 50 percent, or a bit more, once the market-neutral spread trades are subtracted out.

It’s been a while since the Big 8 held a bigger short position in gold than they do in silver…at least on a percentage basis.  But this is one of the few times that they are.

In gold, the Big 4 are short 62 days of world gold production, up 4 days from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 33 days of world production, up 5 days from what they were short last week…for a total of 93 days of world gold production held short by the Big 8…up 9 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 67 percent of the total short position held by the Big 8…basically 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 59, 66 and 80 percent respectively of the short positions held by the Big 8.  Silver is up 1 percentage point from a week ago, platinum is also unchanged from last week — and so is palladium from a week ago…and off its record high by a bit.


The July 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 July Bank Participation Report covers the time period from June 4 to July 2 inclusive.]

In gold, 5 U.S. banks are net short 107,222 COMEX contracts in the July BPR.  In June’s Bank Participation Report [BPR] these same 5 U.S. banks were net short 64,906 contracts, so there was an eye-watering increase of 42,316 contracts from a month ago.

The last time that the U.S. banks were short this much gold in the COMEX futures market was back in October of 2017.  At that time they were net short 108,444 contracts.

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, 28 non-U.S. banks are net short 105,459 COMEX gold contracts, which is a bit under four thousand contracts per bank.  In the June BPR, these same 28 non-U.S. banks were net short 76,122 COMEX contracts…so the month-over-month change is up huge…29,337 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 No. 1 spot.  But regardless of who this second non-U.S. bank is, the short positions in gold held by the remaining 26 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!  So they’re back to being short big time — and now hold their largest net short position in gold, ever…and I have records going back to July 2014.

As of this Bank Participation Report, 33 banks [both U.S. and foreign] are net short 35.1 percent of the entire open interest in gold in the COMEX futures market, which is up a huge amount from the 29.3 percent they were short in the June BPR.

Here’s Nick’s chart of the Bank Participation Report 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, 4 U.S. banks are net short 27,489 COMEX contracts in July’s BPR.  In June’s BPR, the net short position of 4 U.S. banks was 7,600 contracts, so the short position of the U.S. banks is up a whopping 19,889 contracts in just one month.

As in gold, the three biggest short holders of the four  U.S. banks in total, would be Citigroup, HSBC USA — and JPMorgan, but maybe not in that particular order.  Whoever the remaining U.S. bank may be of the 4 U.S. banks in total, their short position, like the short positions of the two smallest banks in gold, is immaterial as well.

Also in silver, 26 non-U.S. banks are net short 36,928 COMEX contracts in the July BPR…which is up a decent amount from the 27,599 contracts that 21 non-U.S. banks were short in the June 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 24 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 24 non-U.S. banks are immaterial — and have always been so.

As of July’s Bank Participation Report, 30 banks [both U.S. and foreign] are net short 36.5 percent of the entire open interest in the COMEX futures market in silver—which is up a monstrous amount from the 16.3 percent that they were net short in the June BPR — with much, much more than the lion’s share of that held by Citigroup, HSBC USA, JPMorgan, Scotiabank — and certainly one other non-U.S. bank.

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 10,554 COMEX contracts in the July Bank Participation Report.  In the June BPR, these same banks were net short 10,394 COMEX contracts…so there’s been virtually no change month-over-month.  [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, 18 non-U.S. banks are net short 9,456 COMEX contracts in the July BPR, which is up a decent amount from the 7,095 COMEX contracts that 19 non-U.S. banks were net short in the June BPR.  [Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts.]

And as of July’s Bank Participation Report, 23 banks [both U.S. and foreign] are net short 24.9 percent of platinum’s total open interest in the COMEX futures market, which is up a bit from the 20.9 percent they were net short in June’s BPR.

Here’s the Bank Participation Report chart for platinumClick to enlarge.

In palladium, 4 U.S. banks are net short 7,765 COMEX contracts in the July BPR, which is up a small amount from the 7,425 contracts that these same 4 U.S. banks held net short in the June BPR.

Also in palladium, 15 non-U.S. banks are net short 2,352 COMEX contracts—which is up a very decent amount from the 923 COMEX contracts that these 15 non-U.S. banks were short in the June 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, 19 banks [U.S. and foreign] are net short 42.0 percent of the entire COMEX open interest in palladium.  In June’s BPR, the world’s banks were net short 44.6 percent of total open interest.

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.

For the second  month in a row, it wasn’t a very happy BPR in gold, as the banks have obviously been at battle stations for the last two month.  It’s mostly the same in silver, except that the big deterioration has only come over the last thirty days.

But, like this week’s COT report, from which this Bank Participation Report is derived, it’s almost yesterday’s news as well considering what’s happened to the prices of both silver and gold since last Tuesday’s cut-off…particularly silver.

It remains to be seen if we get yet 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 gold purchases.  I’m expecting these headwinds to become far more pronounced as the year progresses.

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


CRITICAL READS

Consumer Credit Hits All-Time High as Credit Card Debt Surges

Two months after an unexpectedly poor March consumer credit print, when just $10.3 billion (since revised to $10.9 billion) in revolving and non-revolving debt was created to fund another month of US purchases on credit, moments ago the Fed reported that in May, things went back to normal, as total consumer credit jumped by $17.1 billion – just shy of April’s $17.5 billion – the highest since November’s $21.6 billion, and to a new all time high in consumer credit of $4.088 trillion, which in turn was up 5.2% from a year earlier, rising roughly twice as fast as overall GDP.  Click to enlarge.

This was entirely thanks to a surge in credit card debt as the latest revolving credit print was a whopping $7.2 billion injection, up from a draw of $2 billion in March, and from $7 billion in May, and not only more than all the credit card debt issued in the first three months of the year but the highest since last October when Americans were racking up credit card debt to pay for Thanksgiving.

Meanwhile, as credit card debt soared, non-revolving credit – auto and student loans – posted a surprisingly soft print, with only $9.9 billion in new debt created. This was over $600 million below last month’s print, and the lowest since June 2018.

And while the combined April and May rebound in credit card use may ease concerns about the financial stability and propensity of the US consumer to spend, one place where there were no surprises was in the total amount of student and auto loans: here as expected, both numbers hit fresh all time highs with a record $1.6 trillion in student loans outstanding, a whopping increase of $30 billion in the quarter, while auto debt also hit a new all time high of $1.16 trillion, an increase of $8 billion in the quarter.

In other words, whether they want to or not, Americans continue to drown even deeper in debt, and enjoying every minute of it.

This Zero Hedge new story showed up on their Internet site at 3:29 p.m. EDT on Monday afternoon — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Morgan Stanley: “We Are Putting Our Money Where Our Mouth is and Downgrading Global Stocks to Sell

Authored by: Andrew Sheets, chief cross-asset strategist at Morgan Stanley

Over recent weeks, you’ve heard us discussing why we think investors should fade the optimism from the recent G20. Why we think bad data should be feared rather than cheered because it will bring more central bank easing. Why we think the market is too optimistic on 2019 earnings and is underestimating the pressure from inventories, labour costs and trade uncertainty.

The time has come to put our money where our mouth is. In light of these concerns and others, we are downgrading our allocation to global equities from equal-weight to underweight.

The most straightforward reason for this shift is simple – we project poor returns: Over the next 12 months, there is now just 1% average upside to Morgan Stanley’s price targets for the S&P 500, MSCI Europe, MSCI EM and Topix Japan (including dividends and equally weighted). If we ignore those targets and estimate returns for those same regions based on current valuations, adjusting for whether returns tend to be better or worse given current economic data, the upside is very similar (3%). There comes a point for every analyst where you need to change your forecast or change your view. We’re doing the latter.

Why are those return estimates so low, especially in light of possible central bank easing? Our economists, after all, are calling for the Federal Reserve to lower rates later this month, and the ECB to embark on a new round of quantitative easing.

Our concern is that the positives of easier policy will be offset by the negatives of weaker growth: We think a repeated lesson for stocks over the last 30 years has been that when easier policy collides with weaker growth, the latter usually matters more for returns. Easing has worked best when accompanied by improving data. If you don’t believe us, we have some European stocks from April 2015, shortly after the ECB’s first QE programme was announced, that we’d like to sell you.

That’s a courageous, but correct call.  This commentary showed up on the Zero Hedge website at 5:35 a.m. on Monday morning EDT — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Fed Sheds $38 Billion in Treasuries and MBS in June, Dumps MBS at Record Pace, Exceeding “Cap” for First Time — Wolf Richter

In June, the Fed shed Treasury securities at the slower pace announced in its new plan for QT, but it dumped Mortgage Backed Securities (MBS) at the fastest rate since the QE unwind started, breaching its “up to” cap for the first time. And it is experimenting with the opposite of its QE-era “Operation Twist” – Operation Untwist?

Total assets at the Fed fell by $34 billion in June, as of the balance sheet for the week ended July 3, released Friday afternoon. This includes $15 billion in Treasury securities and a record $23 billion in MBS, for a total of $38 billion, less some other balance-sheet activities unrelated to the QE unwind. This trimmed its total assets to $3.813 trillion, the lowest since September 2013. Since the beginning of the “balance sheet normalization” era, the Fed has shed $648 billion. Since peak-QE in January 2015, it has shed $687 billion:

The Fed doesn’t sell its Treasury holdings outright. But when securities mature, the US Treasury Department pays them off, and the Fed then doesn’t reinvest this money in new securities. Instead, it destroys this money in the reverse manner in which it created it during QE. But the Fed has announced caps — the “up to” amounts. If the amount of Treasuries that mature in a given month exceed the cap, the Fed reinvests the overage in new Treasuries. Under the Fed’s new regime, the maximum amount of Treasury securities allowed to roll off when they mature was $15 billion in June. And that’s what happened.

This 3-chart commentary from Wolf appeared on his Internet site on Saturday sometime — and I thank Richard Saler for pointing it out.  Another link to it is here.


Wall Street Dons a ‘Tinfoil Hat’ to Ponder U.S. Currency Intervention

A growing chorus of Wall Street foreign-exchange analysts is writing about the risk that U.S. President Donald Trump may move beyond words in his quest for a weaker dollar.

From ING to Canadian Imperial Bank of Commerce, more analysts in recent weeks have been openly contemplating the wild-card notion that the administration could intervene to cheapen the dollar. The research comes as Trump has intensified criticism of both the Federal Reserve and other countries’ currency practices. The U.S. leader tweeted last week that Europe and China are playing a “big currency manipulation game,” and called on the U.S. to “MATCH, or continue being the dummies.”

This article showed up on the Bloomberg website at 12:27 PDT on Monday — and was updated about thirty minutes later.  I found it in a GATA dispatch early yesterday evening — and another link to it is here.


The Debate Over the Fed Begins — Editorial

It can’t be entirely a coincidence that the first move by a major newspaper against the confirmation of Judy Shelton as a governor of the Federal Reserve should come from the Washington Post. It is, after all, the only newspaper in America to have been launched to glory by, in Eugene Meyer, a just-retired chairman of our central bank. Yet the Post gets into none of that history in its editorial this morning in respect of Ms. Shelton. It’s not hard to see why.

The Post’s beef against Ms. Shelton is not that she lacks for credentials. It calls her academic credentials “strong” and acknowledges that she has held public positions in what we would call two non-political agencies, the National Endowment for Democracy, which she chaired, and the European Bank for Reconstruction and Development, to which she is currently America’s representative. What the Post objects to, for starters, is that she’s had an “eminently political career.

It faults her for having advised the presidential campaigns of Senator Bob Dole, Ben Carson, and President Trump. Yet such Fed chairmen as G. William Miller and Alan Greenspan also advised presidential candidates (respectively, Hubert Humphrey and Richard Nixon). The Post also faults Ms. Shelton for writing op-eds. It must be the first time the publisher of one of journalism’s most distinguished op-ed pages has sought to disqualify a nominee for public service for having written for op-ed pages.

On the one hand, the Post complains about Ms. Shelton flip-flopping on interest rates, depending on the administration. On the other hand, it suggests that the “great cause of her career” has been the gold standard. It says she sees it as a “restraint on central bank currency manipulations” while opponents — “correctly,” the Post avers — see it as an “arbitrary limitation on liquidity that almost strangled the world economy to death in the 1930s.”

This editorial put in an appearance on The New York Sun‘s website on Sunday — and I found it embedded in a GATA dispatch — and another link to it is here.


Why the U.S.-Puppet-‘President’ of Venezuela is Toast

Even the corporate media are losing enthusiasm for the US government’s ploy to replace the democratically elected President Nicolás Maduro of Venezuela with the U.S.-anointed security asset Juan Guaidó. Reuters reports in a July 1 article, “Disappointed Venezuelans lose patience with Guaidó as Maduro hangs on,” that the U.S.-backed “military uprising” has “unraveled.” A critical reading of the article explains why.

Reuters correctly notes that “the 35-year old (Guaidó) had risen to prominence three months before,” though a little more background information would have been helpful. For instance, Guaidó was unknown to 81% of Venezuelans a little more than a week before he got a telephone call from U.S. Vice President Pence telling him to declare himself interim president of Venezuela, which Guaidó dutifully did the following morning at a street rally flanked with U.S. and Israeli flags. A member of a marginal far-right Venezuelan political party, Guaidó was not even in the top leadership of his own grouplet.

Reuters continues that after Maduro took office, he “has overseen an economic collapse that has left swaths of the once-wealthy country without reliable access to power, water, food, and medicines.” Not mentioned by Reuters is the economic war being waged against Venezuela by the US and its allies that has employed unilateral coercive measures – sanctions – responsible for taking the lives of some 40,000 people.

This illegal collective punishment of the Venezuelan people by the U.S. government has diverted legitimate funds of the Venezuelan government. Reuters obliquely mentions “Guaidó has gained control of some of the Venezuelan assets in the United States.” In fact, the U.S. government seized those assets, which would have gone to preventing the “economic collapse” that Reuters supposedly laments.

Reuters reports: “The opposition’s momentum has slowed since the April 30 uprising. Attendance at Guaidó’s public rallies has dropped and the opposition has held no major protests since then.” Reuters hints why Guaidó’s fortunes are eclipsing: “the opposition says it is…seeking to build a grassroots organization.” That is, the U.S. surrogate does not have a meaningful grassroots presence.

This fairly long commentary appeared on the counterpunch.org Internet site last Friday — and I pulled it from a Zero Hedge article that was posted there on Monday evening.  Another link to it is here.


Deutsche Bank CEO Slashes 18,000 Jobs in $8.3 Billion Revamp

Deutsche Bank AG unveiled a radical overhaul that will see the lender exit its equities business, post a €2.8 billion ($3.1 billion) second-quarter loss and cut the workforce by a fifth to reverse a slide in profitability.

Chief Executive Officer Christian Sewing will shelve the dividend this year and next and take restructuring charges of 7.4 billion euros through 2022 to pay for an overhaul that shrinks the German lender’s once-mighty investment bank along with its global footprint and key fixed-income business.

Deutsche Bank shares were down 0.7% in Frankfurt trading as of 12:35 p.m. after climbing as much as 4.4% earlier. The lender’s riskiest bonds also reversed earlier gains, with perpetual notes down about 0.5 euro cents to around 90 cents on the dollar and notes callable in 2022 down 0.4 cents. Analysts said that while the restructuring was broader than expected, the newly announced targets will be tough to achieve.

The scale of the revamp underscores the failure of Sewing and his recent predecessors to solve the fundamental problem: costs were too high and revenue too low. After government-brokered merger talks with Commerzbank AG collapsed in April, the CEO had few alternatives to bolster market confidence. His plan was approved by the board at a meeting Sunday.

This news item was posted on the bloomberg.com Internet site at 7:44 a.m. PDT on Sunday morning — and was updated about twenty hours later.  I thank Swedish reader Patrik Ekdahl for bringing it to our attention — and another link to it is here.


Turkey’s Erdogan Draws the Line on Rates After Shock Central Bank Ouster

Hours after unexpectedly forcing out the central bank’s governor, Turkish President Recep Tayyip Erdogan made clear that he expects both the successor and the rest of the establishment to toe the government’s line on monetary policy.

The decision to dismiss Murat Cetinkaya, whose four-year term was due to end in 2020, was announced in the early hours on Saturday following a pause in interest rates that lasted for over nine months. Deputy Governor Murat Uysal was named as a replacement. Investors weren’t impressed — the lira slid more than 3% in early Asian trading before paring losses.

During a closed meeting after the decree came out, Erdogan told lawmakers from his ruling party that politicians and bureaucrats all need to get behind his conviction that higher interest rates cause inflation, according to an official who was present. He also threatened consequences for anyone who defies the government’s economic policies, the official said.

Erdogan’s office of communication didn’t respond to calls and text messages seeking comment.

By abruptly dismissing Cetinkaya, Erdogan reminded everyone who is in charge of monetary policy,” said Piotr Matys, a London-based strategist at Rabobank.

This story showed up on the Bloomberg website at 7:34 a.m. on Sunday morning Pacific Daylight Time [PDT] — and it’s the second offering of the day from Patrik Ekdahl.  Another link to it is here.  A companion story from Bloomberg on this issue is headlined “Turkey Assets Fall as Traders Fret Over Central Bank Credibility” — and that’s from Patrik as well.


BP Oil Tanker Shelters in Persian Gulf on Fear of Iran Retaliation

An oil tanker run by BP Plc is being kept inside the Persian Gulf in fear it could be seized by Iran in a tit-for-tat response to the arrest by Gibraltar last week of a vessel hauling the Islamic Republic’s crude.

The British Heritage, able to haul about 1 million barrels of oil, was sailing toward Iraq’s Basrah terminal in the south of country when it made an abrupt u-turn on July 6. It’s now off Saudi Arabia’s coast and a person with knowledge of the matter says BP’s concern is that it could become a target if Iran seeks to retaliate for the seizure near Gibraltar — by British Royal Marines — of the tanker Grace 1 on July 4.

BP’s decision shows how rising tensions between Iran and the west are having an impact on the oil tanker industry that’s vital to the global trade in crude. Tehran’s foreign ministry said the arrest of Grace 1 was an act of piracy and a former leader of Iran’s Revolutionary Guard said on Twitter the Islamic Republic should take a British tanker in response. The U.S. accused Iran of recent attacks on tankers just outside the Persian Gulf.

No surprises here.  This news story was posted on the bloomberg.com Internet site at 2:58 a.m. PDT on Monday morning — and was updated two and a half hours later.  I extracted it from a Zero Hedge article that Brad Robertson sent our way.  Another link to it is here.


Poland joins Hungary with Huge Gold Purchase and Repatriation

With a variety of the world’s central banks going on a gold buying spree in recent years such as Russia and China, there has unsurprisingly been no shortage of news-flow in this area for the world’s financial media to comment on. But even in such an environment of abundant sovereign gold purchases, a number of buying bombshells have stood out for their intensity and ‘shock and awe’ abruptness. Particularly from nations which on the surface might seem like unlikely gold buyers.

One of these was the announcement last October by Hungary’s central bank, that after 32 years of holding unchanged gold reserves, it had rapidly increased it’s monetary gold holdings by 1,000% or 10 fold, from 3.10 tonnes to 31.5 tonnes, and also repatriated (brought home) this entire holding from London to Budapest, away from the clutches of the Bank of England. At the time we asked:

With almost all of Poland’s gold held at the Bank of England, a relevant question now is how long before Poland also sees fit to repatriate its gold in physical form away from the fractionally-backed LBMA controlled gold trading centre of London.

The answer to this question was, not long at all. For to the Hungarian bombshell we can now add Hungary’s neighbor and closest political ally Poland, which has just in it’s own way shocked the gold market and the European Union by announcing that during the first half of 2019 it has already bought 100 tonnes of monetary gold at the Bank of England, bringing it’s gold reserves to 228.6 tonnes (all stored at the Bank of England), and now plans to repatriate almost half of it’s strategic gold reserves (or at least 100 tonnes) back to the National Bank of Poland (NBP) vaults in Warsaw.

It should be obvious that all the world’s central banks are wise to the Anglo/American price management scheme in the precious metals market — and have been for years…even though they won’t breath a word of that fact in public.  It just been recently that some of them have done something about it.  More will follow — and soon.  This commentary from Ronan Manly  appeared on the bullionstar.com Internet site on Sunday sometime — and I found it on the gata.org Internet site.  Another link to it is here.


China’s Gold Hoard Swells Again in June

Central banks are going after gold in 2019, boosting holdings as economic growth slows, trade, and geopolitical tensions rise, and some authorities seek to diversify their reserves away from the dollar.

The People’s Bank of China said today it raised reserves for a seventh month in June, adding 10.3 tons, following the inflow of almost 74 tons in the six months through May. Last week Poland said it more than doubled its gold assets over this year and last, becoming the top holder in central Europe.

Aside from its attempt to diversify its holdings of dollars, owning more gold reserves is also an important strategy in China’s rise as a superpower,” Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore, said in an email. Additions are likely to continue in coming months, according to Lee.

As I’ve point out every month when this sort of story appears, China is now officially adding to its reserves, physical gold that was purchased mostly likely years ago.  But, without doubt, it’s certainly still buying gold in the open market, plus whatever it mines every year — and that will be recorded as official reserves when it suits them.  I suspect that they hold many multiples of what they are officially acknowledging…about 1,900 tonnes.  This Bloomberg article showed up on their website at 11:12 p.m. PDT on Sunday night — and was updated about five hours later.  I found it on the gata.org Internet site — and another link to it is here.


2019 H1 China gold demand lowest for five years

China has been recognised as the world’s largest consumer of gold for around the past seven years, but while the latest figures still confirm the nation as the world’s No. 1, 2019 demand looks to have been the lowest for around five years.  Indeed if the country’s buying slump continues, 2019 may prove to be the first sub 2,000 tonne total gold demand year, based on SGE gold withdrawal figures, since 2016.

June Shanghai Gold Exchange gold withdrawal data certainly seem to confirm a downturn in Chinese gold demand so far this year.  This should not really be too surprising given the apparent effects of President Trump’s tariff impositions on Chinese imports to the U.S.  This latest data may well give some advantage to the U.S. in its recently resurrected trade talks with China given that it appears the U.S. President’s tactics may be beginning to have an effect on the Chinese economy, and on disposable incomes within the Middle Kingdom.  But whether this is likely to be sufficient to stimulate concessions from the Chinese to meet U.S. demands is rather less certain.  There is face-saving on both sides to take into account in such negotiations and saving face is perhaps more important in Asian cultures than in the West!

We have been consistent over the past few years in equating Shanghai Gold Exchange gold withdrawal data with the country’s overall total gold demand – a sometimes controversial view.  This data is much closer to the known levels of China’s own domestic gold production plus known and unknown gold imports plus an allowance for scrap conversion than are other estimates of Chinese gold consumption. These latter seem to ignore gold imported by the financial sector and restrict demand estimates to industrial demand (including jewellery and artefacts) and investment.  These cumulative figures appear to fall hugely short of known Chinese gold flows.

At the half-year point, withdrawals are over 23% down on the 2018 six months figure and over 30% down on 2017.  It should also be noted that both the 2017 and 2018 full year gold withdrawal figures ended up well short of those for the record 2015 year when full year SGE total gold withdrawals came to nearly 2,600 tonnes.

This commentary from Lawrie put in an appearance on the Sharps Pixley website early on Monday morning BST — and another link to it is here.


Central bank gold purchases up 73% so far this year, says WGC

Net gold purchases by central banks totalled 35.8 t in May, 27% lower month-on-month, but net purchases in the year to date, at 247.3 t, are 73% higher year-on-year, the World Gold Council (WGC) reports.

WGC market intelligence director Alistair Hewitt on Monday pointed out that central banks in several emerging markets, including Russia, China, Turkey and Kazakhstan, continued to dominate buying, with those banks being “the four biggest buyers so far” this year.

Kazakhstan’s central bank has bought in excess of 25 t of gold over the last six years, peaking last year at 50.6 t. To date this year, the bank has bought 20.5 t of gold.

To date this year, China has bought 63.8 t of gold, while Turkey’s central bank, which started buying gold outright in May 2017, bought about 49.3 t of gold, so far this year.

Other central banks that have increased their gold purchases since 2016 include Uzbekistan, Serbia, the Kyrgyz Republic, India, Hungary, Greece, Egypt, Colombia and Belarus.

This brief news item, was posted on the miningweekly.com Internet site on Monday — and it’s another article that I lifted from the Sharps Pixley website.  Another link to it is here.


The PHOTOS and the FUNNIES

Moments after arriving in Princeton back on May 5, after a 6-hour back-roads trip from Merritt, I decided to tour the town before we had a bite to eat and headed back home via B.C. Highway 5A.  Almost right away we came across a children’s playground that backed onto a dike that protected the town from flooding during the spring run-off on the Tulameen River.  There were yellow-bellied marmots everywhere.  I had a field day with my 400mm lens, which I really didn’t need…but was too lazy to walk back to the car to get a different one.  The last photo is of the patriarch of the clan…according to a lady who lived across the street.  There are so many in the town that they are not only a nuisance, but are becoming a real problem — as they are weakening the dike with all their burrows.  Click to enlarge.


The WRAP

No nation could preserve its freedom in the midst of continual warfare.” — James Madison


Only platinum was allowed to close in positive territory on Monday.  The two primary precious metals…silver and gold…ran into initial price resistance in early morning trading in London — and then JPMorgan et al did the rest during the COMEX trading session in New York.

The barely worth mentioning activity in the currencies certainly had very little to do with precious metal prices yesterday.  Yesterday’s price action was a purely paper affair in the GLOBEX/COMEX futures market.

Here are the 6-month charts for the Big 6 commodities — and there’s not a lot to see.  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 down a bit in the first few hours of trading once it began at 6:00 p.m. EDT on Monday evening in New York — and it has been chopping quietly and unevenly sideways since — and is currently lower by $1.40 an ounce. Silver has managed to edge a bit higher since its low in early morning trading in the Far East — and is up 4 cents at the moment. Platinum and palladium have been under some selling pressure as well, with the former down 5 bucks — and the latter off its Shanghai low, but also down 5 dollars as Zurich opens.

Net HFT gold volume is already very decent at a bit over 54,000 contracts — and there’s 3,034 contracts worth of roll-over/switch volume out of August and into future months. Net HFT silver volume is nothing special at 8,400 contracts — and there’s a teeny tiny 68 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened unchanged once trading commenced at 7:45 p.m. EDT on Monday evening in New York, which was 7:45 a.m. China Standard Time on their Tuesday morning. It chopped very unevenly sideways until around 12:50 p.m. CST — and then began to edge a bit higher — and back above the unchanged mark by a bit. Its current high, such as it is, came very close to the 2:15 p.m. CST afternoon gold fix in Shanghai. It’s off that by a bit now — and up 6 basis points as of 7:45 a.m. in London…8:45 a.m. in Zurich.


Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and I’ll wait until tomorrow’s column before I express an opinion as to what it may contain.  But there should be big improvements in both…particularly in silver.

When Ted and I were in conversation yesterday, he wasn’t sure if JPMorgan et al were going to go ‘Full Monty’ on  the precious metals this time or not…or even if they were capable of doing it.  It’s  a chip shot in silver below its last moving average of importance.  But in gold it’s big dollars for both the 200 and 50-day moving averages.

So we wait some more.


And as I post today’s missive on the website at 4:02 a.m. EDT, I note that all four precious metals have been sold lower as the first hour of London and Zurich trading draws to a close. Gold is down $2.50 the ounce at the moment — and silver is now down a penny. Platinum is down 7 bucks…but ‘da boyz’ hammered palladium lower by 20 dollars as they continue their attempts to run the Managed Money traders out of their huge long position.

Gross gold volume is around 69,500 contracts — and minus roll-over/switch volume, net HFT silver volume is a bit under 63,000 contracts. Net HFT silver volume is about 10,500 contracts now — and there’s still only a tiny 93 contracts worth of roll-over/switch volume on top of that.

The dollar index has been chopping very quietly sideways during the last hour — and is up 7 basis points as of 8:45 a.m. BST in London/8:45 a.m. CEST in Zurich.

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

Ed

JPMorgan et al “Do the Dirty at 8:30”

06 July 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price popped the moment that trading began at 6:00 p.m. EDT in New York on Thursday evening…but that was summarily dealt with an hour later — and it was sold quietly and unevenly lower until the 2:15 p.m. afternoon gold fix in Shanghai on their Friday afternoon.  From that point it traded almost ruler flat until the jobs report hit the tape at 8:30 a.m. in New York.  The engineered price decline commenced at that point — and the low tick of the day was set at the 10 a.m. EDT afternoon gold fix in London.  The price chopped quietly higher from there until around 11:35 a.m. in New York — and from that point it traded flat until 2:30 p.m. in the thinly-traded after-hours market.  From that juncture it inched higher — and back above $1,400 spot.  But then an hour later, ‘da boyz’ sold it quietly and carefully back below that price — and from about 4:35 p.m. EDT onwards, it traded flat into the 5:00 p.m. close.

The high and low ticks were reported by the CME Group as $1,426.80 and $1,388.60 in the August contract.

Gold was closed in New York on Friday at $1,398.30 spot, down $16.60 from Thursday close — and $19.90 from Wednesday’s.  Net volume was over the moon at just under 430,000 contracts — and there was a bit over 31,000 contracts worth or roll-over/switch volume out of August and into future months.  Both these numbers are net of Thursday’s figures.

Silver was forced to follow the same general price path as gold, but there were some notable differences.  Firstly, it was sold unevenly lower from 9 a.m. China Standard Time on their Friday morning until the noon silver fix in London.  It then rallied a few pennies into the 8:30 jobs report in New York.  Then JPMorgan et al went to work.  But you can tell from the saw-tooth price decline that there were buyers coming into the market every so often — and it took ‘da boyz’ until around 10:45 a.m. EDT to set silver’s low tick of the day.  The silver price crawled higher until noon — and then traded flat until 2:30 p.m. in the thinly-traded after-hours market.  Then, like gold, it crawled back above a key number…$15.00 spot…an hour later — and it too was sold carefully lower and back below $15.00 spot before trading ended at 5:00 p.m. EDT.

The high and low ticks in this precious metal were recorded as $15.37 and $14.915 in the September contract.

Silver was closed at $14.965 spot, down 31 cents from Wednesday — and 28 cents from Thursday’s close.  Net volume was enormous as well at just under 87,000 contracts — and roll-over/switch volume was a hair over 7,000 contracts.  Both those numbers are net of Thursday’s numbers as well.  Silver traded below its 200-day moving average for a while on Friday, but was allowed to close above it…but not above $15.00 spot.

Platinum was a up small handful of dollars by shortly before 2 p.m. CST on their Friday afternoon — and it was sold down to a few dollars below unchanged by 10 a.m. in Zurich.  From that juncture it traded ruler flat until the jobs report showed up — and at that point, ‘da boyz’ worked their magic.  It was bounced off its $801 low tick a couple of time, but began to crawl higher starting an noon in New York — and that lasted until shortly before 4 p.m. in after-hours trading — and it then traded flat into the 5:00 p.m. close.  Platinum was closed at $808 spot, down 31 bucks from Wednesday’s close — and 24 dollars from its Thursday close — and far below any moving average that mattered.

The palladium price traded very unevenly sideways in Far East and most of Zurich trading on their respective Fridays — and then a real price fight broke out at 8:30 a.m. in New York…first up a bunch…only to be driven down hard — and then back up again.  That free-for-all lasted until around 11:30 a.m. EDT — and the price didn’t do much after that.  Palladium was closed at $1,554 spot, down a dollar from Wednesday, but up 8 bucks from Thursday.

The dollar index closed very late on Thursday afternoon in New York at 96.77 — and opened down 5 basis points once trading commenced at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It didn’t do much of anything until around 11:40 a.m. CST — and at that point it began to creep quietly higher until around 10:45 a.m. in London.  At that juncture it chopped quietly sideways until 8:30 a.m. in New York.  A rally/ramp job in the dollar index began — and the the 97.44 high tick was set a minute or so before 11:30 a.m. EDT.  It was sold quietly lower until 3:30 p.m. — and then crawled quietly sideways until trading ended at 5:30 p.m. EDT.  The dollar index finished the Friday session at 97.29…up 52 basis points from Thursday’s close.

And if you think that the currencies and the precious metals were trading freely on Friday…do I have a bridge for you.

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…96.89…and the close on the DXY chart above, was 40 basis points on Friday.  Click to enlarge as well.

The gold shares gapped down almost four percent at the 9:30 open of the equity markets in New York on Friday morning — and hit their respective low ticks [down more than 4 percent] at the afternoon gold fix in London.  They began to rally quietly and steadily from there — and almost made it back to unchanged, until someone tapped the gold price back below $1,400 spot at 3:30 p.m. EDT — and the shares followed in sympathy.  The HUI closed down only 0.89 percent.

It was the same price pattern for the silver equities, including their respective highs at 3:30 p.m. in New York trading — and the tiny sell-off into the 4:00 p.m. close from there.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.15 percent.  Click to enlarge.

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

The fact that the precious metal equities came very close to finishing the Friday session unchanged, despite the fact that their respective underlying metals were crushed yesterday, has to been see for what it was…a huge positive.  It certainly indicates, at least to me, that gold and silver stocks continue to be under serious accumulation by the strongest of hands…because everything that was sold in a panic at the 9:30 a.m. EDT open was bought…plus a whole bunch more as the Friday trading session progressed.


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 posting the weekly chart because of the Independence Day holiday on Wednesday.  Nick’s program that computes the weekly chart, grabs the data from the last five business days in New York which, because of the holiday on Thursday, takes last Friday’s data…June 28th…in lieu of that.  So the weekly data is not accurate.  This chart will be back to normal in next Saturday’s report.

The month-to-date chart shows the weekly data correctly, as the new month started on Monday.  It’s not that happy looking, as it’s been a down week, especially after Friday’s engineered price declines in gold, silver and platinum.  The silver equities underperformed their golden brethren. Click to enlarge.

Here’s the year-to-date chart — and it’s much happier looking.  JPMorgan’s near death grip on the silver price is more than obvious in this chart.  All platinum’s gains are gone after Friday’s price ‘action’ — and palladium is still the Energizer Bunny.  Click to enlarge.

The precious metal complex is certainly in play now — and it remains to be seen if ‘da boyz’ can pull it off one more time.  But regardless of that fact, very deep pockets were snapping up all the precious metal shares being offered on Friday…plus more.


The CME Daily Delivery Report showed that 6 gold and 30 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, the two short/issuers were Advantage and JPMorgan, with 5 and 1 contracts. The two long/stoppers were also Advantage and JPMorgan, with 4 and 2 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the two short/issuers were ADM and JPMorgan, with 15 contracts each from their respective client accounts.  The largest long/stopper was HSBC USA, with 11 contracts for its own account — and in second and third place were Morgan Stanley and JPMorgan, with 10 and 6 contracts for their respective client accounts.

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

So far in the July delivery month, there have been 706 gold contracts issued/reissued and stopped — and that number in silver is 3,425.

The CME Preliminary Report for the Friday trading session showed that gold open interest in July declined by 8 contracts, leaving 80 left open, minus the 6 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 21 gold contracts were actually posted for delivery on Monday, so that means that 21-8=13 more gold contracts just got added to the July delivery month.  Silver o.i. in July rose by 27 contracts, leaving 754 still around, minus the 30 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that only 2 silver contracts were actually posted for delivery on Monday, so that means that 27+2=29 more silver contracts just got added to July.


There was another withdrawal from GLD on Friday as an authorized participant removed 47,171 troy ounce.  But after Friday’s big engineered price decline, it will be interesting to see how much physical gold disappears from this ETF next week.  There were no reported changes in SLV.

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

Month-to-date the mint has sold absolutely nothing.

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

There was some activity in silver, as one truckload…617,874 troy ounces…was dropped off at HSBC USA.  There was 15,023 troy ounces shipped out — and that departed the CNT Depository.  The link to this activity is here.

There was a bit of activity over at the COMEX-approved gold kilobar depository in Hong Kong on their Wednesday.  They received 250 of them — and shipped the same number out the door.  All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are some charts that Nick Laird passed around on Wednesday — and I thought I’d include them all in today’s column, rather than wait until next Tuesday.

The first two show gold and silver imports into India, updated with April’s data.  During that month they imported 96.1 metric tonnes/3.09 million troy ounces of gold — plus 517.2 metric tonnes/16.63 million troy ounces of silver.  Click to enlarge for both.

With April’s official gold imports into India in hand, Nick updated his “Silver Road Gold Demand” chart for April 2019.  The four countries included in that chart imported at total of 277.5 metric tonnes during that month, virtually all of the gold mined world-wide during that month…as shown in the insert chart below the main one.  Click to enlarge.

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


CRITICAL READS

June Payrolls Soar by 224K, Sending Rate Cut Odds Tumbling Despite Cooling Wage Growth

So much for 50bps (or maybe even 25bps) of rate cuts in July.

With whisper numbers for the June payrolls well below the 160K consensus (perhaps as the market hoped the case for 2 rate cuts in July would be cemented), moments ago the BLS reported that last month 224K jobs were created, three times greater than the revised 72K jobs in May, and well above the 160K expected and above the highest Wall Street forecast.  Click to enlarge.

This was also the best monthly increase since January, and a number that has made 2 rate cuts at the Fed’s July meeting virtually impossible, and even setting the scene for a Fed that may in fact be “patient” in three weeks, crushing market hopes for an imminent easing cycle.

Just as notable, the Household survey was even more euphoric, rising by 247K to 157.005 million employed workers.

The change in total non-farm payroll employment for April was revised down from +224,000 to +216,000, and the change for May was revised down from +75,000 to +72,000. With these revisions, employment gains in April and May combined were 11,000 less than previously reported.

Sure enough, the market implied odds of a July rate cut slumped quickly even as the wage growth number disappointed, as the BLS reported only 0.2% increase in average hourly wages in June, below the 0.3% expected, a number which also missed on a Y/Y bases, increasing 3.1% Y/Y in June, below the 3.2% expected. That said, May’s monthly gain revised higher, suggesting workers continue to wring solid wage increases from employers.

This Zero Hedge article was posted on their website at 8:37 a.m. EDT on Friday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.  There was a companion story to this on the ZH website yesterday morning — and it’s headlined “It Wasn’t All Great News: Multiple Jobholders Soar to Record High“.  I thank Brad for that one as well.


The Myth of the Tight U.S. Labor Market — Bloomberg Opinion

As the U.S. election cycle gets underway, expect much debate over just how strong the economy really is after becoming the longest uninterrupted expansion in America’s history. After all, the jobless rate is at a half-century low and the S&P 500 Index is at a record high. The bond market, though, is signaling that the Federal Reserve will soon be forced to ease monetary policy to shore up the economy. How can that be?

A key part of the answer lies with jobs “growth,” which has been slowing much more than most probably realize. Despite the better-than-forecast jobs report for June, the fact is the labor force has contracted by more than 600,000 workers this year. And we’re not just talking about the disappointing non-farm payroll jobs numbers for April and May.

Certainly, that’s caused year-over-year payroll growth, based on the Labor Department’s Establishment Survey – a broad survey of businesses and government agencies – to decline to a 13-month low. But year-over-year job growth, as measured by the separate Household Survey – based on a Labor Department survey of actual households – that is used to calculate the unemployment rate is only a hair’s breadth from a five-and-a-half-year low. (The data in the charts below don’t reflect Friday’s employment report.)  Click to enlarge.

Growth in the Economic Cycle Research Institute’s more comprehensive U.S. Coincident Employment Index (USCEI), which includes both those figures and more, has fallen to its worst reading since late 2013. Because it subsumes data from both surveys, its verdict about overall job growth is more reliable than the others.

But there’s even more cause for concern. Months from now, the Establishment Survey will undergo its annual retrospective benchmark revision, based almost entirely on the Quarterly Census of Employment and Wages conducted by the Labor Department. That’s because the QCEW is not just a sample-based survey, but a census that counts jobs at every establishment, meaning that the data are definitive but take time to collect. Since it is retrospective, few pay any attention but the QCEW offers critical information for those wanting to verify that the job market is as strong as the headlines would lead you to believe.

This opinion piece appeared on the bloomberg.com Internet site at 6:37 a.m. PST on Friday morning, which was 9:37 a.m. in  New York — and I found it on the gata.org Internet site.  Another link to it is here.


CNBC’s full interview with Trump Fed nominee Judy Shelton

President Trump Fed nominee Judy Shelton joins “Santelli Exchange” to discuss the interest rate policy, where she stands in terms of Fed policy and the popularity in cryptocurrency and what it says about government backed currency.

This 12-minute video interview with Rick Santelli as host, appeared on the cnbc.com Internet late on Friday morning EDT — and I thank Brad Robertson for pointing it out.


Main Street Relies on Rate Cuts — Bill Bonner

The Irish got their independence from Britain in 1921. Americans went out on their own much earlier.

And it’s a good thing they didn’t wait. If a group of hot-heads tried to pull off a revolution in America today, they’d be labeled “terrorists” by Homeland Security, snooped on by the NSA, infiltrated by the FBI, given bus tickets to Philadelphia, arrested by hundreds of robo-cops, and would soon disappear into the American prison gulag.

Yesterday, Americans hung out their flags and put up their red, white, and blue bunting, proudly celebrating their deliverance.

But the promise of July 4, 1776, was always a bit of self-delusion and double-talk. All governments are controlled by smallish, insider groups who use them to exploit the outsiders.

Even at the time of the Revolution, only a third of the people were in favor of it. Another third were opposed. And the middle third, probably the wisest of the bunch, didn’t give a damn.

The third in favor of revolution got what it wanted – at great expense, even to those who didn’t want it. Then, gradually, over the next 250 years, the insiders extended their reach. The small, humble republic grew into a great world empire; Washington put on the bossy-pants… and became far more of a pest than London ever was.

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


Doug Noland — Abject Monetary Disorder

I’ve witnessed a lot of “crazy” in my three decades of closely following various Bubble markets (i.e. Japan’s Nikkei ending 1989 at 38,916 (closed Friday at 21,746); manic early-nineties buying of Mexican tesobonos; late-1993 collapsing U.S. yields and Bubble excess that portended the 1994 rout; speculative Bubbles in SE Asian securities and Russian bonds; LTCM with $2 TN notional derivatives exposures; Internet and tech stocks in 1999; and $1 TN of new subprime CDOs in 2006; etc.). Yet nothing compares to the ongoing global yield collapse.

The global bond market speculative melt-up has brought new meaning to phrase “indiscriminate buying.” I know it’s heresy to suggest as much, but we’re witnessing history’s greatest speculative Bubble go to absolutely “crazy” extremes (it will all have been obvious in hindsight).

According to Bloomberg, the amount of negative-yielding debt globally jumped Thursday to a record $13.4 TN. Rising almost $2.2 TN over the past month, “negative-yielding debt now comprises 25%” of the total investment-grade universe.

What others celebrate as a “fantastic bull market,” I see as Abject Monetary Disorder. With global bond prices spiking parabolically upward, how much systemic leverage and resulting liquidity is being created in the process? What quantity of global fixed-income has been purchased on leverage? More importantly, what is the scope of derivative-related leverage that has accumulated throughout global bond markets and fixed-income, as seller/writers of myriad strategies are forced to purchase the underling debt securities to hedge derivative contracts previously sold.

Central bankers are now faced with the predicament of having nurtured distorted markets (with aberrant signals) that will throw a frenetic tantrum if central banks don’t follow the markets’ directive. There is bold discourse aplenty these days regarding the merits of an “insurance” rate cut. Chairman Powell himself has stated “an ounce of prevention is worth a pound of cure” – a comment markets have interpreted as guaranteeing a July cut. Pundits, including former central bankers, have been speaking as if there is essentially no risk to a cut they believe would offer protection against bad outcomes. This, however, completely disregards the risks associated with adding monetary stimulus to dislocated global securities markets already in dangerous detachment from fundamental realities.

Market speculation used to be grounded in “the greater fool theory”. Who needs a fool when markets have central bankers with the wizardry of their QE tool. Bonds have been around for centuries, but we’ve finally reached the point where there is no longer a ceiling to bond prices. This is a precarious juncture for global markets, and the Fed should think twice before it feeds this beast.

This must read commentary from Doug was posted on his Internet site in the wee hours of Saturday morning EDT — and another link to it is here.


Broken markets and fragile currencies — Alasdair Macleod

There are growing signs that the global economic slowdown is for real. As was the case in 1929, the combination of the peak of the credit cycle coupled with trade protectionism in the Smoot-Hawley Tariff Act are similar conditions to those of today and potentially pose a serious economic challenge to the post-Bretton Woods fiat currency system. Therefore, we must consider the consequences if monetary policy fails to contain the developing recession and it turns into a full-blown slump. Complacency over broken markets is no longer an option, with rising prices for gold and bitcoin signalling the prospect of a new round of currency debasement to avoid market distortions unwinding. This article shows why this outcome could undermine fiat currencies entirely and looks at the alternatives of bitcoin and gold in this context.

This long commentary from Alasdair showed up on the goldmoney.com Internet site on Friday sometime — and I must admit that I’ve only read the first half-dozen paragraphs.  But what I have read was certainly worthwhile.  You’re on your own after that.  I found this in a GATA dispatch yesterday morning — and another link to it is here.


RenTech Pulls Cash From Deutsche Bank as Insider Warns of “Lehman-Style” Scene

With Deutsche Bank CEO Christian Sewing set to unveil his sweeping restructuring plan to the struggling German banking behemoth’s board on Sunday – a plan that’s expected to focus on brutal cuts to DB’s investment bank – the longtime head of that unit, Garth Ritchie, has reportedly quit, according to the Financial Times.

On Friday, DB said that Mr Ritchie would step aside “by mutual consent“, ending his more than 20-year run at the bank.

But the bank’s mass-firings of both executives and rank-and-file staff are only just beginning.

Though news of Ritchie’s departure was telegraphed well in advance (he was widely expected to depart before Sewing unveiled his turnaround plan to the bank’s board on Sunday), DB has been rocked by some unexpected news that could revive the sense of fear and panic that sent investors running for the exits back in 2016, when many believed a massive DoJ fine might sink the bank.

Echoing a mini-bank run from late 2016 when hedge funds that cleared derivatives trades with the bank started withdrawing excess cash and positions held with the lender, Renaissance Technologies, the giant hedge fund that has been one of DB’s largest prime brokerage clients, has reportedly been taking money out of its prime brokerage accounts with the German lender over the past few months, according to people familiar with the move.

According to Bloomberg, while the secretive quant fund giant remains a major client of Deutsche Bank, it has been quietly moving business to Barclays, Bank of America, and others, according to several sources who weren’t identified. Reps for both DB and RenTech declined to comment when approached by BBG reporters.

This story appeared on the Zero Hedge Internet site at 2:05 p.m. EDT on Friday afternoon — and it’s yet another offering from Brad Robertson.  Another link to it is here.


Iran condemns, U.S. applauds Britain’s seizure of Iranian oil tanker at Gibraltar

White House National Security Advisor John Bolton applauded the interception by Britain’s Gibraltar Thursday of a super tanker believed to be carrying Iranian crude oil to Syria, saying the ship was breaking international sanctions.

The Grace 1 tanker was impounded in the British territory on the southern tip of Spain after sailing around Africa, the long route from the Middle East to the mouth of the Mediterranean.

Iran’s foreign ministry summoned the British ambassador to voice “its very strong objection to the illegal and unacceptable seizure” of its ship. The diplomatic gesture lifted any doubt over Iran’s ownership of the vessel, which flies a Panama flag and is listed as managed by a company in Singapore.

In a statement sent out on Friday, Iran’s foreign ministry said that in the meeting with the British ambassador, Tehran had “called for the immediate release of the oil tanker, given that it has been seized at the request of the US, based on the information currently available“.

America and our allies will continue to prevent regimes in Tehran and Damascus from profiting off this illicit trade,” Bolton said on Twitter.

This news story was posted on the france24.com Internet site at 11:52 p.m. CEST on their Thursday night, which was 5:52 p.m. in Washington — EDT plus 6 hours.  I thank Roy Stephens for sending it along — and another link to it is here.  A parallel story to this appeared on the UPI website — and it’s headlined “Iran calls for seizure of British ship if oil tanker isn’t freed” — and I thank Roy Stephens for that one as well.  The Zero Hedge spin on all this is headlined “Iran Threatens Seizure of U.K. Oil Tankers in Response to Royal Marines Boarding Its Own” — and that’s courtesy of Brad Robertson.


Syria and Iran to Defy Sanctions by Building Railway From Tehran to Mediterranean

Iran is preparing to begin construction on a large railway that links their capital city of Tehran to the Syrian coastal city of Latakia, the Director of Syrian Railways Najib Al-Fares said on Wednesday.

According to Fares, the new railway will promote regional trade between Syria, Iraq, and Iran. The new project is expected to be funded by the Iranian government, with support from both Syria and Iraq.

The Director of the Iraqi Railway Company, Jawad Kazim, said that Iraq had previously signed contracts to implement projects with Iranian companies, but most were delayed.

For Syria, the new railway system is expected to help ease their economic issues that have derived from the U.S.-led sanctions on the Levantine nation.

During the signing of the minutes, [Iranian Deputy Minister and Chairman of Roads Maintenance and Transport Organization] Shahram Adamnejad said that the tripartite meeting resulted in positive outcomes among the three sides, affirming that the goal of the negotiations is to activate the Iranian-Iraqi-Syria load and transport corridor as a part of a wider plan for reviving the Silk Road as the three countries have an old experience in the international trade.” — Syria’s SANA

While this should be beneficial for all parties, this new railway system will face heavy criticism and possibly military attack from the U.S. and its allies, most notably Israel.

This news item showed up on the Zero Hedge website at 3:30 a.m. on Friday morning EDT — and it’s another contribution from Brad Robertson.  Another link to it is here.


India hikes gold import duty, industry fears smuggling surge

India raised the import duties on gold and other precious metals on Friday in a surprise move that industry officials say could dampen retail demand and boost smuggling in the world’s second-biggest bullion consumer.

Lower demand from India could weigh on global prices that are trading near their highest level in six years.

Jewellery trade associations have asked India’s government to reduce gold import duties, which have caused a surge in smuggling.

The government instead hiked the duty to 12.5% from 10% as policymakers try to bring down the fiscal deficit and recapitalise banks.

This is a shocking move. We were expecting reduction in the custom duty,” Anantha Padmanabhan, chairman of All India Gem and Jewellery Domestic Council (GJC) told Reuters, adding the hike has effectively raised smugglers’ margins.

This very interesting Reuters article was filed from Mumbai at 5:41 a.m. EDT on Friday morning — and it’s another article that I picked up off the gata.org Internet site.  Another link to it is here.


PHOTOS and the FUNNIES

After photographing mule deer and Stellar’s Jays in Coalmont, we managed to drive the final 14 km/8.5 miles to Princeton with only a few photo stops along the way.  The Tulameen River — and the right-of-way for the long-defunct Kettle Valley Railway…now the Trans-Canada Trail…is visible in all three shots.  This is another road that is not for the faint of heart in some spots.  Click to enlarge.


The  WRAP

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” — Ernest Hemingway


Today’s pop ‘blast from the past’ dates from 1965 — and I was in Grade 11 when this song burst on the scene.  During their nine-year run on the charts from 1963 to 1972, this American all-female vocal group charted over twenty-six hits and recorded in the styles of doo-wop, R&B, pop, blues, rock and roll — and soul.  This was one of their biggest hits — and the link is here.

Today’s classical ‘blast from the past’ is by Russian composer Sergei Rachmaninoff.  It’s his Rhapsody on a Theme of Paganini, Opus 43 which he composed over a 6-week period from July 3 to August 18, 1934.   It’s written for solo piano and symphony orchestra, closely resembling a piano concerto, albeit in a single movement.  The piece is a set of 24 variations on the twenty-fourth and last of Niccolò Paganini’s Caprices for solo violin, which has inspired works by several composers…which is also the composition by Paganini that I featured in last Saturday’s classical ‘blast from the past’.

Here’s British piano virtuoso Stephen Hough doing the honours at the BBC Proms back in 2013.  Preceding the performance, he does a wonderful 4-minute introduction to the work — and that part is definitely worth watching as well.  The link to it is here.


With a headline jobs report coming in ‘better than expected’ for some, it was a moment made in heaven for JPMorgan et al…as they hammered gold, silver and platinum prices into the dirt on the news…accompanied by the usual ‘gentle hands’ ramping the dollar index.  But they weren’t quite as successful in palladium.  However, they’re doing all they can to keep money from flowing into the precious metals — and into all things paper.  But in the end, it’s a fight they will lose — and it’s becoming more apparent with each passing week.

Despite the pounding that gold took, it’s still miles above any moving average that matters — and closed above $1,400 by a dime in the August contract.  And as I pointed out in my silver commentary earlier, its price traded below its 200-day moving average for a while in COMEX trading in New York yesterday morning, but managed to close above it by a few pennies — and at precisely $15.00 in the September contract.  ‘Da boyz’ really laid the lumber on platinum, blasting it back through both its 200 and 50-day moving averages in the process — and closing it well below both of them.  Palladium was the outlier…as always…and still in overbought territory.  It’s my opinion that the powers-that-be are trying to break the price lower and ring the cash register on the Managed Money traders, but so far it isn’t working.  They ran into some powerful buying in COMEX trading in New York yesterday, but that was the only battle they lost.

And as I also mentioned earlier, I was happy to see how well the precious metal equities performing despite the lickin’ that JPMorgan et al laid on silver and gold yesterday.  It was strong hands buying from weak hands starting a very few minutes after the equity markets opened in New York on Friday morning.

But where we go from here from a price perspective is anyone’s guess — and I’m not about to speculate.  Monday’s new COT and Bank Participation Reports would help…but in most respects they’re already yesterday’s news because of the price activity since Tuesday’s cut-off…especially Friday’s.

Here are the 6-month charts for the Big 6 commodities, but the only price action that mattered was in the precious metals, as not much happened in copper and WTIC.  Click to enlarge.

Just when one thought that the U.S. et al had pulled back from their adventures in the Middle East…both in Syria and Iran…along comes MI-6 and pulls off their caper in the Straits of Gibraltar the other day, with U.S. [and Israeli?] knowledge, encouragement — and approval, no doubt.  Some of the main stream media in the Arab world were calling it “piracy” — and that is true.  But as I pointed out in yesterday’s missive, it’s also an act of war.

Now the Iranian government is threatening to take over a U.K. oil tanker in reprisal.  Two wrongs don’t make a right, of course…but it’s a dream scenario that these three aforesaid governments would love to see happen, as that would give them the casus belli that they so desperately want.

And if the Iranian’s don’t actually carry through with their threat, then I’m sure that a suitable ‘false flag’ situation has already been dreamed up to ensure that they will be blamed…even if they didn’t do it.  I’m certainly old enough to remember the Gulf of Tonkin ‘incident’ of 1964 — and there are still big question marks hanging over the sinking of the Lusitania in 1917.

Don’t underestimate the sociopathic/psychopathic minds in the U.S./U.K. deep state — and their associated security apparatuses.   Now we wait and see what happens, if anything.

Despite all the happy-looking job numbers yesterday, that doesn’t change the fact that the U.S. — and most of the rest of the world are continuing to slide into recession…if they’re not already there.  There was terrible new order data out of Germany yesterday — and then there’s the meat cleaver hanging over Deutsche Bank. The first blow will be struck tomorrow.  And don’t even get me started on that Ponzi scheme masquerading as a country…China.

Of course when we stand back and look at the whole world — and not just China…everything and every country has become a Ponzi scheme…except for Russia and a tiny handful of others.  It’s only massive amounts of made-up-out-of-thin-air paper/electronic money that’s keeping this world-wide insanity afloat.  This can’t and won’t last.

Back in 1918, or thereabouts, Randoph Stillman Bourne coined the phrase “War is the health of the state” — and with the world’s economic, financial and monetary systems in dire peril of collapsing under its own weight, a war would be the opportunity that the deep state has been planning for, for decades.  At some point they will not be denied — and this opportunity looks tailor-made…literally and figuratively.

The impact of war on ‘society’ is even more dramatic. Bourne writes, …in general, the nation in war-time attains a uniformity of feeling, a hierarchy of values culminating at the undisputed apex of the State ideal, which could not possibly be produced through any other agency than war.” Instead of embodying its peace time principle of functioning — ‘live and let live,’ society adopts the State’s principle of “a group” acting “in its aggressive aspects.”

This is the theoretical meaning of ‘War is the Health of the State.’ In times of peace, people are largely defined by their society — and they interact with Government, giving little thought to the State. In times of war, the hierarchy and the power of these concepts is inverted. The Government virtually becomes the State, and society is subordinated to both.”

Physical gold and silver, closely held…along with a current passport…would be a very good idea under these circumstances.

Let’s hope it doesn’t come to this.

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

Ed

Just a Short One Today…

05 July 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


With the U.S. closed for the Independence Day holiday, the precious metals were all sold lower starting in afternoon trading in the Far East — and again in trading in London and Zurich.  None were allowed to close in positive territory by the time trading ended at 5:00 p.m. BST/6:00 p.m. CEST.


Gold finished the Thursday trading session at $1,414.90 spot, down $3.30 from Wednesday’s close.  Net volume was, not unexpectedly, very light at a bit over 112,500 contracts — and there was 6,200 contracts worth of roll-over/switch volume out of August and into future months.

Silver was closed at $15.245 spot, down 3 cents on the day.  Net HFT silver volume was only 15,600 contracts — and there was 551 contracts worth of roll-over/switch volume in this precious metal.

Platinum was closed at $832 spot, down 7 dollars on the day.

And palladium was closed down 9 bucks on the day at $1,546 spot.

The dollar index closed very late on Wednesday afternoon in New York at 96.77 — and opened down 5 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.  The ‘action’ on Thursday isn’t worth mentioning — and the 96.81 high tick…if you wish to dignify it with that name, came minutes after 9:30 a.m. EDT…which was minutes after 2 p.m. BST in London.  From there it sank back to a few basis points below unchanged — and that’s where it closed.  The dollar index finished the Thursday session at 96.77…unchanged from  Wednesday’s close.

Here’s the DXY chart from BloombergClick to enlarge.

With everything shut tight in New York and Washington, there are no reports on anything from anywhere.


Here are two charts that Nick Laird passed around late on Wednesday evening.

They show The Perth Mint’s gold and silver bullion coin sales, updated with June’s data.  During that month they sold 19,449 troy ounces of gold bullion coins — and 344,474 troy ounces of silver bullion coins.  Click to enlarge for both.

I only have four stories/articles for you today.


CRITICAL READS

The Founders Warned Us About the Evolution of Power — Bill Bonner

Many of the founders of the American Republic were readers and scholars. “I can’t live without books,” said Jefferson.

He, Monroe, Madison, Adams, and others were much more aware of Roman history than our leaders today. Most had studied Latin and/or Greek.

In the same year that the Declaration of Independence was adopted, Edward Gibbon published the first volume of his masterpiece, The History of the Decline and Fall of the Roman Empire.

The Founding Fathers were well aware of the transition – natural, and perhaps inevitable – from republic to empire. They had studied it in the Roman example. They had seen how it drew power into a few hands… and corrupted them.

They tried to prevent it from happening in the New World, putting in place limits… circuit breakers… and checks and balances… to keep the government from becoming too big, too ambitious, or too powerful.

Even then, they were doubtful that it would stick. “We give you a republic…” Benjamin Franklin wrote to posterity, “if you can keep it.

This commentary from Bill, which is definitely worth reading, appeared on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is here.


British Marines Seize Oil Tanker Headed For Syria In “Aggressive” Operation

A huge development Thursday regarding enforcement of Iran sanctions and the West’s economic war on both Damascus and Tehran: British Royal Marines seized an oil tanker in Gibraltar off Spain’s southern coast while it was en route to Syria in what’s being called an unprecedented and aggressive move to enforce E.U. sanctions.

As critics of the West’s sanctions policy on Syria are noting: the European Union has for years allowed advanced weaponry to flow into the hands of anti-Assad jihadists, but it will act swiftly to block vital oil access to the war-torn and starved population.

According to Reuters:

The Grace 1 tanker was impounded in the British territory at the mouth of the Mediterranean Sea, after sailing around Africa from the Gulf. Shipping data reviewed by Reuters suggests it had been loaded with Iranian oil off the coast of Iran, although its documents say the oil is from neighboring Iraq.

Reports say Gibraltar authorities (Gibraltar is a British Overseas Territory) acted on E.U. sanctions that have been in place for years against Syria; however one E.U. sanctions and legal expert told Reuters: “This is the first time that the E.U. has done something so public and so aggressive. I imagine it was also coordinated in some manner with the U.S. given that NATO member forces have been involved.”

This Zero Hedge article showed up on their website at 10:10 a.m. on Thursday morning EDT — and I thank Brad Robertson for pointing it out.  Another link to it is here.  There’s also a story about this posted on the checkpointasia.net Internet site.  It’s headlined “U.K. Now Enforcing a Naval Blockade of Syria to Starve It of Oil” — and comes courtesy of Larry Galearis.  A naval blockade is an act of war…but what does that matter in this day and age, as International law means nothing to the West now?


Russia’s central bank lowered gold purchase price to encourage exports — governor

Russia’s central bank has been buying gold on the domestic market at less than the industry benchmark to encourage Russian producers to export more of the metal, the governor told Reuters.

Russia has overtaken China to become the world’s fifth largest official sector holder of gold, as Western sanctions drove buying by its central bank to record highs in 2018.

But the central bank added a discount on May 1 to its purchase price, which was previously based on the daily London Bullion Market Association (LBMA) gold price. Market players had expected purchases to continue at last year’s pace.

We introduced discounts for the purchase of gold because we saw that vendors were selling gold mainly to the central bank,” Governor Elvira Nabiullina said in the interview, which was cleared for publication on Wednesday.

The discount aligns domestic conditions with external ones and motivates gold producers to sell to export too,” she said.

Sell gold for what???  More U.S. dollars???  I’m still more than curious as to this sudden change of heart by Russia’s central bank about adding to their gold reserves.  This is the second story on this issue in the last month…this article being the latest.  Their gold purchases have fallen ever month this year so far — and we’ll find on July 20th how much gold they purchased in June, if any.  This Reuters article, filed from Moscow, showed up on their Internet site on July 3 sometime — and it’s something I found in a GATA dispatch.   Another link to it is here.


The PHOTOS and the FUNNIES

Here are three photos of a mother greater roadrunner and her almost full-grown young one…begging to be fed.  Reader Bruce Brantley from Albuquerque sent these shots along about a week ago — and I certainly thought they were worth sharing.  Click to enlarge.


The WRAP

The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of lending institutions and moneyed incorporations.” – Thomas Jefferson


There was no reason whatsoever for the precious metals to be sold lower yesterday, as there was nothing going on in the currency markets.   And, if anything, gold and silver should have been up on the day after the seizure of that oil tanker off Gibraltar.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price roared to life the moment that trading began at 6:00 p.m. EDT in New York on Thursday evening, but was capped an hour later — and before the markets opened in the Far East on their Friday. It was sold lower for a while and, like on Thursday afternoon over there, the price pressure began anew around 1:40 p.m. China Standard Time on their Friday — and it’s currently down $1.30 the ounce. The price pattern for silver was virtually identical, complete with the 1:40 p.m. CST sell-off — and silver is down 6 cents at the moment. Platinum didn’t do much in Far East trading — and it’s up a buck. But palladium, after trading unevenly sideways for most of the Far East session, began to head higher shortly after 1 p.m. CST — and it’s now up 3 dollars an ounce as Zurich opens.

Net HFT gold volume is around 65,500 contracts — and there’s only a tiny 500 contracts worth of roll-over/switch volume out of August and into future months. These figures are net of Thursday’s numbers. Net HFT silver volume is 9,500 contracts — and there’s also only 500 contracts worth of roll-over/switch volume in this precious metal. These are net of Thursday’s numbers too.

The dollar index opened down 5 basis points once trading commenced at 7:45 p.m. in New York on Thursday evening. It has been creeping unsteadily higher since — and is up 6 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


The jobs report at 8:30 a.m. EDT this morning is some importance — and we’ll find out at that point how the precious metals react, or are allowed to react, to that news.

Further on this subject, I lifted the following from this morning’s edition of the King Report — and you can read into it whatever you wish…”The whisper number for June NFP dropped to 120k on Wednesday.  The ugly ADP Employment Change for June inflamed hopes that the Fed will be forced to cut rates in July and two more times later in 2019.

The worst aspect of the ADP Employment Change for June is small business cut 23k jobs.  Small businesses tend to be the first to act when the business and employments cycles change.

David Rosenberg @EconguyRosie: “The small business sector leads the cycle and employment here has plunged 61k in the past two months. Haven’t seen this in over 9 years; same decline we saw in Feb-March of 2008 when the consensus was calling for a soft landing.  This isn’t a repeat of 2016…

Will the BLS’s hokey Birth/Death Model (small biz jobs) still show good job growth?  112k last June.


And as I post today’s column on the website at 4:03 a.m. EDT, I note that the gold price hasn’t done much of anything during the first hour of London trading — and is currently down a $1.30 an ounce. Silver had a bit of an up/down move — and is now down 7 cents the ounce. Platinum is now down 3 dollars an ounce — and palladium is up 2 bucks as the first hour of Zurich trading ends.

Gross gold volume is about 69,000 contracts — and minus what very little roll-over/switch volume there is, net HFT gold volume is 67,700 contracts. Net HFT silver volume is around 11,800 contracts — and there’s 515 contracts worth of roll-over/switch volume on top of that. All these numbers are net of Thursday’s volumes.

The dollar index has been ticking very quietly higher in the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up 10 basis points.

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

Ed

Yet Another Morning Rally in Far East Trading Capped & Sold Lower

04 July 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price took off higher the moment that trading began at 6:00 p.m.  EDT on Tuesday evening in New York, but was capped and turned lower immediately.  It began to rally anew an hour later — and JPMorgan et al showed up with the coup de grâce at 9 a.m. China Standard Time on their Wednesday morning.  The price then drifted more or less quietly sideways until the noon silver fix in London — and it was sold down to its low of the day at the 10 a.m. EDT afternoon gold fix.  It jumped back to the unchanged mark shortly thereafter — and didn’t do much for the remainder of the New York trading session.

The high and low ticks were reported as $1,441.00 and $1,414.70 in the August contract.

Gold was closed on Wednesday at $1,418.20 spot, up one thin dime from Tuesday.  Much to my surprise, net volume was absolutely enormous at just under 393,000 contracts — and there was a bit over 26,500 contracts worth of roll-over/switch volume out of August and into future months.

For the most part, the price action in silver was almost the same as it was for gold.  The only notable difference was the fact that after the noon silver fix in London, its low tick of the day came shortly before 1 p.m. BST/8 a.m. EDT.  From there it rallied a bit until the equity markets opened in New York — and then didn’t do much of anything after that.

The high and low ticks in this precious metal were recorded by the CME Group as $15.41 and $15.24 in the September contract.

Silver was closed in New York yesterday at $15.275 spot, down half a cent from Tuesday.  Net volume was very decent at a bit over 62,000 contracts — and roll-over/switch volume was 4,900 contracts on top of that.

Platinum rallied about four dollars or so in sympathy with what was going on in silver and gold…and like them, was capped and turned lower at 9 a.m. CST on their Wednesday morning.  It was back at the unchanged mark by the Zurich open.  It had a four dollar up/down move from there until shortly after 8 a.m. in New York — and then a rally of some substance commenced.  That came to an end at the Zurich close — and an hour later it was sold down a bit into the 1:30 p.m. COMEX close in New York.  From there it traded flat until trading ended at 5:00 p.m. EDT.  Platinum finished the Wednesday session at $839 spot, up 9 bucks from Tuesday.

The palladium price traded very unevenly sideways in all of Far East and most of Zurich trading on their respective Wednesday’s.  Then shortly after 9:30 a.m. in New York, it began to head higher — and all of the gains that mattered were in by shortly before 1 p.m. EDT — and it traded flat into the 5:00 p.m. close from there.  Palladium finished the day at $1,555 spot, up another 11 dollars from Tuesday’s close.

The dollar index closed very late on Tuesday afternoon in New York at 96.73 — and opened unchanged once trading commenced at 7:45 p.m. EDT on Tuesday evening.  It sank a small handful of basis points until precisely 9 a.m. China Standard Time on their Wednesday morning, which was the exact moment that ‘da boyz’ stepped on the precious metals in Far East trading.  Coincidence you ask?  Not bloody likely.  From that juncture it chopped very quietly and unevenly higher until the 96.87 high tick was set at 8:15 a.m. in London.  It headed fitfully lower from there — and the 96.59 low tick was printed at 10:25 a.m. in New York.  It then jumped back a few basis points above unchanged by the 11 a.m. EDT London close — and edged unevenly sideways from that point until trading ended at 5:30 p.m. EDT.  The dollar index closed on Wednesday afternoon in New York at 96.77…up 4 whole basis points from Tuesday.

It was another day where the changes in the currencies were so small, that they were no influence on precious metal prices…with the glaring exception of the ‘gentle hands’ rally that began at 9:00 a.m. in Shanghai when the rallies in gold and silver were capped and turned lower.

Here’s the DXY chart from Bloomberg once again.  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…96.33…and the close on the DXY chart above, was 44 basis points on Wednesday.  Click to enlarge as well.

There was problem with the HUI feed yesterday morning from whatever exchange provides this data — and it didn’t become active until a few minutes after 12 o’clock noon in New York.  Everything before that time is missing.  But I get the impression that after opening higher, they sold off a bit in early morning trading — and then crept back into positive territory as the gold price edged higher.  The HUI finished up 0.58 percent at 1:00 p.m. EDT when the U.S. equity markets closed for the day.

There was no such issues with the Silver Sentiment Index, as Nick gets that data from elsewhere.  They rose a bit in the first few minutes of New York trading on Wednesday morning — and then sold off to their respective lows by around 10:40 a.m. EDT.  They chopped quietly higher from there, but never got a sniff of unchanged.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 0.88 percent at the 1 p.m. EDT close.  Click to enlarge if necessary.

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

I would suspect that the Silver 7 chart above would be a good proxy for the missing data in the HUI yesterday, as the chart patterns would be mostly similar.  Except the latter finished up on the day, not down.


The CME Daily Delivery Report showed that 21 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the sole short/issuer was Advantage.  The two largest long/stoppers were Advantage with 11 contracts — and JPMorgan with 9.  All contracts, issued and stopped, involved their respective client accounts.

In silver, Advantage issued both contracts — and JPMorgan and HSBC USA picked up 1 each…the former for its client account — and the latter for its own 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 July actually rose by 7 contracts, leaving 88 left, minus the 21 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 18 gold contracts were actually posted for delivery on Friday, so that means that 18+8=26 more gold contracts were just added to the July delivery month.  Silver o.i. in July declined by 15 contracts, leaving 727 still around, minus the 2 silver contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 21 gold contracts were actually posted for delivery on Friday, so that means that 21-15=6 more silver contracts just got added to July deliveries.


There were no reported changes in GLD on Wednesday, but there was another enormous deposit into SLV, as an authorized participant added 2,340,630 troy ounces.

In the last five business days, there has been 8,673,200 troy ounces of silver added to SLV.  But going back to May 30…there has been 16,875,718 troy ounces of silver added to SLV.  Ted had something to say about that in his weekly review on Saturday — and will undoubtedly have more to say on this issue in this Saturday’s review as well.

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

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

There was very little activity in silver, as only 16,945 troy ounces was received — and 15,725 troy ounces was shipped out.  All of that in/out activity was at Canada’s Scotiabank.  There was also a paper transfer of 45,807 troy ounces out of Registered — and back in to Eligible over at Brink’s, Inc.  The link to that is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They reported receiving 424 of them — and shipped out only 8.  All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Sedgeford Torc is a broken Iron Age gold torc found near the village of Sedgeford in Norfolk. The main part of the torc was found during harrowing of a field in 1965, and the missing terminal was found by Dr. Steve Hammond during fieldwork by the Sedgeford Historical and Archaeological Research Project in 2004. The torc is now displayed at the British Museum.

The torc dates from 200-50 B.C. and is made from twisted gold wires. Forty-eight 2mm wires were twisted in pairs to form 24 wires. Then three of these paired wires were twisted together in the opposite direction to make a rope (comprising six original wires). These eight thicker ropes were then twisted together to form the body of the torc. In total, 25 metres of gold wire was used to form the torc. The hollow gold terminals, in a ring shape, were cast using the lost wax method, and is decorated in the La Tène style with molded raised decoration of trumpet voids and circles, highlighted with pellets and cold hammering.

The torc was buried deliberately, and as such is considered a hoarded object. It may have been broken when it was buried, or broken at a later date by ploughing. It is thought to have been buried in about 75 B.C.  Click to enlarge.

For the second day in a row, I have very few stories/articles for you once again.


CRITICAL READS

U.S. Factory Orders Contract in May, Lowest Since Aug 2016

U.S. Factory Orders fell for the second month in a row (and down 3 of the last 4), down 0.7% MoM in May, following April’s 1.2% decline (revised lower).

However, more notably, factory orders year-over-year growth has contracted (by 1.2%) for the first time since August 2016…Click to enlarge.

The biggest driver of the drop was a plunge in defense spending and non-defense aircraft spending (Boeing!)

Get back to work, Mr.Powell.

This brief 2-chart article appeared on the Zero Hedge website at 10:11 a.m. EDT on Wednesday morning — and I thank Brad Robertson for this one.  Another link to it is here.  A companion piece to this from the ZH website is headlined “U.S. Composite PMI Hovers Near 3-Year Lows: Manufacturing Slowdown Spreads To Services” — and that comes courtesy of Brad as well.


Trump Says U.S. Should Join “Great Currency Manipulation Game” by Devaluing Dollar

President Trump has never been a fan of the strong dollar. And after beating around the bush for months by demanding a 50 bp rate cut and more QE from the Fed, it seems the president is now explicitly calling on the U.S. to artificially weaken the greenback by any means necessary.

In a tweet, Trump blasted China and Europe for playing a ‘big currency manipulation game‘ and recommended that the U.S. “MATCH” or risk being “the dummies who sit back and politely watch as other countries continue to play their games.”

Trump’s warning also comes less than two weeks after Bank of America warned that direct intervention to weaken the dollar would be possible by a few avenues, some directly involving Trump (jawboning), some involving the Treasury and the Fed (direct intervention by the NY Fed’s New York markets desk).

Whatever the administration decides, it’s becoming increasingly clear that the dollar is unsustainably overvalued compared with its long-term real effective exchange rate value. BofA’s analyst calculated that the dollar is 13% above its long-term average.

According to tradition, the dollar and its value have long been the exclusive purview of the Treasury Department. But Trump has never been one to unquestioningly adhere to precedent. And back in May, the Treasury Department declined to name any country to its list of currency manipulators, though it added some to a ‘watch list’.

Although the Fed and most central banks insist that they don’t explicitly target the exchange rate, most observers know this isn’t exactly true.

Nobody knows what the true free market value of anything is these days, including the currencies.  And, for the moment, those ‘gentle hands’ I speak of often, are there to prevent the U.S. dollar from falling too far or too fast.  This Zero Hedge article was posted on their website at 10:46 a.m. on Wednesday morning EDT — and I thank Brad Robertson for that one as well.  Another link to it is here.


Why Negative Interest Rates Don’t Stimulate the Economy — Bill Bonner

Inflation is what happens when new money is added to the system. And in today’s phony-baloney system, new money is created when people borrow. But sometimes, debtors resist – especially when they’re already drowning in it.

Here is Madame Lagarde explaining how to force their heads underwater; pay them to borrow more:

If we had not had those negative rates, we would be in a much worse place today, with inflation probably lower than where it is, with growth probably lower than where we have it. […] It was a good thing to actually implement those negative rates under the current circumstances.”

Lagarde is also on record as saying that negative interest rates “improve confidence and financial conditions in the euro area, which will further aid the recovery.”

Yes, it is a wacky world.

This rather brief but worthwhile commentary from Bill was posted on the bonnerandpartners.com Internet site early on Wednesday morning EDT — and another link to it is here.


June gold imports rise 12.6% YoY amid global price rally

India’s gold imports rose 12.6 per cent in June from a year earlier to $2.69 billion amid a jump in global prices to six-year highs, a government source said on Tuesday.

However, imports were 44 per cent lower in June from May’s $4.78 billion, the source said, who was not allowed to speak to the media.

In India, local prices jumped to a record high in June, moderating demand from retail consumers.

The drop in gold imports by India, the world’s second-biggest consumer of the precious metal, could weigh on global prices that are struggling to hold recent gains.

Of course as you already know, supply/demand fundamentals in both silver and gold mean nothing when their respective prices are controlled in the COMEX futures market by JPMorgan et al.  The above four paragraphs are all there is to this tiny article that appeared on the Economic Times of India‘s website at 2:56 p.m. IST on their Tuesday afternoon — and I found it on the Sharps Pixley website.  Another link to the hard copy is here.  By the way, these are “unofficial” import numbers, as the June numbers from the “official” sources, won’t be out until late August or early September.


Silver should be good to go — Lawrie Williams

The recent surge in the gold price has largely left silver behind, which is somewhat counter to the junior precious metal’s usual performance when its more costly sibling is on a sharp rising pattern.  As a result the gold:silver ratio – GSR — (effectively the number of ounces of silver needed to correspond price-wise to one ounce of gold) has been languishing badly and, as I write, is at around its highest level in some 25 years (a high level is bad for silver investors) at over 93. Indeed the silver price actually fell a little during amidst the stronger gold prices seen this morning, but we suspect it may play catch-up over the U.S.’s extra long holiday weekend.  Since last reaching such an elevated level, in the interim the GSR fell back to as low as 38 in 2011 when silver reached nearly $50 an ounce and gold was near $1,900.

Now just imagine what a gold:silver ratio of 38 would mean for the price of silver at today’s gold price of around $1,430 an ounce.  This level would put the silver price at no less than a little over $37.50 an ounce – way more than double the current silver price of just over $15.

Silver is more volatile in part because it is a much smaller market than gold and its futures market far more easily controlled by the big money.  Silver market specialist/analyst Ted Butler notes that the big bullion banks, led by JP Morgan Chase, hugely dominate the silver futures market and have built up huge silver metal positions in their own right.  When they see that the time is right to cash in on these positions, silver could really fly again!  Its probably a when, not if, situation and when it happens the GSR could come down hugely.  But the timing of such a move is totally unknown.  One suspects that if the gold price takes off further towards the $1,500 level, as a number of analysts are now predicting, then the bullion banks may start to lose their controlling suppressing  influence on the silver price and it could well move very strongly to the upside.  This year, next year, sometime?  Get the timing right and one could make a killing in silver!

This interesting commentary by Lawrie put in an appearance on the Sharps Pixley website on Wednesday sometime — and another link to it is here.


The PHOTOS and the FUNNIES

After shooting that mule deer sequence that appeared in yesterday’s column, we decided to do a quick tour of the three or four streets and avenues that make up the semi-ghost town of Coalmont.  In the process of doing that, we came across this Stellar’s Jay, which I had to chase down over a couple of blocks to finally get a shot of it located it in a suitable backdrop…as a power line and a pressure-treated fence post, weren’t the natural habitat photo that I had in mind.  Click to enlarge.


The WRAP

Wednesday’s price action was the third time in about the last ten days that large rallied occurred in morning trading in the Far East, or late evening trading in New York — and every time that happened, ‘da boyz’ showed up as short sellers of both first and last resort.  And there’s no way of knowing what the current price of silver and gold would be if they hadn’t.

Despite these rallies, JPMorgan et al appear, at least on the surface, to still have an iron grip on precious metal prices.  But as I’ve mentioned twice already this week…both gold and silver appear to be in play — and there’s no way to speculate on how this is all going to play out over the days and weeks ahead.  All we can do is sit on the sidelines — and watch the show.

Here are the 6-month charts for the Big 6 commodities — and the dojis for both gold and silver aren’t even close to reflecting what Wednesday’s closing prices were.  Both show decent gains, but that didn’t happen, at least not in their respective spot months.

Other than that, there’s no much to see in these charts.  Click to enlarge for all.

And as I type this paragraph, the London open is less than a minute away — and I note that the gold price traded quietly sideways until around 1:40 p.m. China Standard Time on their Wednesday afternoon. At that juncture, the selling pressure began — and as London opens, they have gold lower by $4.50 the ounce. The price path in silver was the same, along with the same 1:40 p.m. CST sell-off — and it’s down 6 cents currently. Ditto for platinum — and it’s down a dollar. The palladium price has been under patchy price pressure ever since trading began at 6:00 p.m. EDT in New York on Wednesday evening — and although off its current low by a decent amount already, it’s still down 8 bucks as Zurich opens.

Net HFT gold volume is already up to 49,500 contracts — and there’s 2,600 contracts worth of roll-over/switch volume out of August and into future months. Net HFT silver volume is around 6,100 contracts — and there’s only 295 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened down 5 basis points once trading commenced at 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 has been edging very unevenly higher since — and is just back at unchanged as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Tomorrow we get the latest jobs report — and what it shows will be another indication as to whether the Fed will be dropping interests rates at their FOMC meeting at the end of the month.  Of course, I’m also expecting some ‘reaction’ in the precious metals.  But by how much — and in which direction, remains to be seen.

And as I’ve already pointed out several times this week, there won’t be a Commitment of Traders or Bank Participation Report on Friday.  Both will be posted on the CFTC’s website around 3:30 p.m. EDT on Monday afternoon.


And as I post today’s column on the website at 4:03 a.m. EDT, I see that the gold price has been turned lower in the last half of the first hour of London trading — and is down $8.60 an ounce. Ditto for silver — and it’s now down 9 cents. Platinum is now down 3 bucks — and palladium is down 11 dollars as the first hour of Zurich trading ends.

Gross gold volume is about 65,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 54,500 contracts. Net HFT silver volume is 7,000 contracts — and there’s still only 297 contracts worth of roll-over/switch volume on top of that.

The dollar index hasn’t done much of anything in the last hour — and is still sitting at unchanged as of 8:45 a.m. in London/9:45 a.m. in Zurich.

That’s it for yet another day — and if you’re a U.S. citizen, I certainly hope that you enjoy your extended Independence Day long weekend.

And unless the ‘seas boil — and the sky falls’ in overseas trading today…I won’t have a column tomorrow.

See you on Saturday.

Ed

A Surprise Rally in Gold & Silver on Tuesday

03 July 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crawled very unevenly higher in Far East trading on their Tuesday — and the high in London came shortly before 10 a.m. BST.  It crept quietly lower from that point until about 10:15 a.m. in New York — and then began to put on quite a show…stair-stepping its way higher in price until trading ended at 5:00 p.m. EDT.

The low and high ticks were recorded by the CME Group as $1,391.70 and $1,424.80 in the August contract.

Gold finished the Tuesday session at $1,418.10 spot, up $34.40 on the day — and the biggest one-day gain that I can remember.  Net volume was monstrous at 344,000 contracts — and there was a hair over 41,000 contracts worth of roll-over/switch volume out of August and into future months.

Silver was up a nickel by around 1:30 p.m. China Standard Time on their Tuesday afternoon — and then crawled very quietly lower until about ten minutes before the COMEX open in New York.  There was some interesting down-side price action that attempted to break silver below $15 spot, but that didn’t work out — and shortly before 9 a.m. EDT, it began to rally.  Like gold, it stair-stepped its way higher until shortly after 4:30 p.m. in after-hours trading — and didn’t do a thing after that.

The low and highs in this precious metal were reported as $15.07 and $15.365 in the September contract.

Silver finished the Tuesday session at $15.275 spot, up 17 cents on the day.  Net volume was on the chunky side at just under 64,500 contracts — and there was 7,400 contracts worth of roll-over/switch volume in this precious metal.

The platinum price was up seven dollars by the Zurich open, but most of that was gone by the COMEX open.  It was then sold down to its low of the day shortly before the afternoon gold fix in London — and then rallied to its New York high by 1 p.m. EDT.  It was sold a bit lower from that juncture — and finished the day at $830 spot, up a dollar from Monday’s close.

The palladium price chopped quietly sideways until 2 p.m. CST on their Tuesday afternoon — and then crept higher until 2 p.m. CEST in Zurich…twenty minutes before the COMEX open.  It was then sold back to a few dollars below unchanged within the next forty-five minutes, but began to head higher from there.  Palladium finished the Tuesday session on its high tick of the day…$1,544 spot, up 14 dollars from Monday’s close.

The dollar index closed very late on Monday afternoon in New York at 96.84 — and opened down 3 basis points once trading commenced at 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning.  It crept a bit higher — and back into positive territory by a hair, but began to head lower around 12:20 p.m. CST.  The decline was very choppy — and the 96.88 low tick was set a few minutes after 12:30 p.m. in New York trading.  The choppy rally that began after that topped out around 4 p.m. EDT — and it crept a bit lower into the 5:30 p.m. close from there.  The dollar index finished the day at 96.72…down 12 basis points from Monday’s close.

Obviously, the currencies had zero to do with what happened in the precious metal market on Tuesday, as this was strictly a paper affair on the COMEX.

Here’s the DXY chart from the 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…96.27…and the close on the DXY chart above, was 45 basis points on Tuesday.

The gold shares opened up a percent and change once trading started in New York at 9:30 a.m. on Tuesday morning.  And after dipping a bit, they began to head quietly higher — and that lasted until around 12:15 p.m. EDT.  From that point, they traded sideways until the price took off higher shortly after 3 p.m.  Once that price spike higher in gold was over with, the gold stocks traded sideways until the 4:00 p.m. close.  The HUI finished higher by 3.6 percent.

The silver equities followed an almost identical price path as their golden brethren, with the only real difference being that they came within a whisker of closing on their respective high ticks of the day.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 3.37 percent.  Click to enlarge if necessary.

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

I was somewhat surprised that the precious metal equities didn’t do better yesterday, but I’ll sure they’ll more than make up for it over the next few days if these rallied are allowed to continue.


The CME Daily Delivery Report for Day 3 of July deliveries showed that 18 gold and 21 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the two short/issuers were Advantage and ADM, with 15 and 3 contracts — and the two long/stoppers were JPMorgan and Advantage, with 11 and 7 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

In silver, the two short/issuers were Advantage with 19 contracts — and R.J. O’Brien with 2 contracts.  All involved their respective client accounts.  The largest long/stopper was HSBC USA with 8 contracts for its own account — and in second and third spots were Morgan Stanley and JPMorgan…picking up 7 and 4 contracts for their respective client accounts.

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

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in July fell by 77 contracts, leaving 78 still around, minus the 18 mentioned a few short paragraphs ago.  Monday’s Daily Delivery Report showed that 97 gold contracts were actually posted for delivery today, so that means that 97-77=20 more gold contracts were just added to the July delivery month.  Silver o.i. in July dropped by 208 contracts, leaving 742 still open, minus the 21 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 237 silver contracts were actually posted for delivery today, so that means that 237-208=29 more silver contracts just got added to July.


There was a withdrawal from GLD, as an authorized participant took out 56,608 troy ounces.  But there was another sizeable deposit into SLV yesterday, as an a.p. added 2,821,354 troy ounces.

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

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  There was a tiny bit of paper activity, as 500 troy ounces was transferred from the Eligible category and into Registered over at Brink’s, Inc.  I won’t bother linking this.

There was some activity in silver, as 897,865 troy ounces was reported received — and 603,268 troy ounces was shipped out.  In the ‘in’ category, there was one truckload…596,982 troy ounces…deposited at CNT — and the remaining 300,882 troy ounces was left outside the door at Canada’s Scotiabank.  All of the ‘out’ activity was at CNT as well.  The link to that is here.

And for the second time in a week, there was no in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.


Here are two charts that Nick passed around on Monday.  They show gold and silver bullion coin sales from the U.S. Mint, updated with June’s data.  During that month they sold 8,000 troy ounces of gold coins [eagles and buffaloes combined]…plus 1,035,000 troy ounces of silver eagles — and that number also includes the silver weight in the 80,000 five-ounce ‘America the Beautiful’ coins that were sold during that month.  Retail bullion coin sales are in the dirt.  Click to enlarge for both.

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


CRITICAL READS

It’s All Part of Trump’s Plan… — Bill Bonner

Every boom that is based on inflation, rather than on real earnings, is doomed to fail. Because, as French economist Jean-Baptiste Say put it, you buy products with products, not with money.

He meant that real wealth is the ability to provide goods and services to others – ultimately, a measure of time and your productivity. Time cannot be increased. Only productivity can be improved. But it is a long, demanding process.

And it doesn’t help to hand out pieces of paper with green ink on them. Instead of stimulating growth and productivity, inflation does just the opposite. It distorts, disguises, and censors the key price information that people need to make decisions.

The result is always negative – bubbles, crises… and lower growth rates. Smooth out the growth rates – by looking at the trailing 10-year average – of the last 20 years, and you see that they are barely half of those of the previous 20 years.

And that brings us back to Richard Russell’s old dictum: “Inflate or die.” Real GDP growth is declining. A recession is coming. And the only way the feds can keep this inflationary expansion going is to inflate more.

This commentary from Bill…filed from Youghal, Ireland…put in an appearance on the bonnerandpartners.com Internet site early on Tuesday morning EDT — and another link to it is here.


IMF’s Lagarde Picked to Replace Mario Draghi as ECB President

After three days of heated wrangling, the European Council has selected its nominees for four of the bloc’s top jobs, breaking a troubling deadlock that had exposed the cracks in  the status quo’s facade. And the biggest surprise is that the consummate politician and connoisseur of Louis Vuitton handbags, Christine Lagarde, who is currently busy justifying the IMF’s crisis fighting budget, has been picked to replace Mario Draghi whose term runs out on Oct 31.

According to the prime minister of Luxembourg, the European Council has nominated Charles Michel to stand for E.U. Council president, Ursula von der Leyen to lead the E.U. Commission, Joseph Borrell as high rep for foreign affairs and Lagarde to replace Mario Draghi at the ECB.

Though it’s not a guarantee, Lagarde’s nomination means it’s incredibly likely that she will be confirmed to succeed Draghi. The new leaders of the some of the bloc’s most important bodies will officially take over on Nov. 1.

Lagarde’s nomination is a sign that the ECB is standing by its commitment to ‘diversity’ (though her background and views are extremely similar to Draghi’s). The ECB had said it wanted a woman to lead the central bank, and now it appears extremely likely that will happen.

Donald Tusk, the outgoing head of the European Council, praised Lagarde as the “perfect” ECB president, and that he’s absolutely sure about her “independence” (by that, we imagine he means her willingness to stick with Draghi’s uber-dovish policy program). Emmanuel Macron, meanwhile, praised Lagarde for her “experience” and “competence.” And we imagine he won’t be the last E.U. leader to heap praise on Lagarde.

And, for what it’s worth, Lagarde said she’s “honored” to be nominated — and that she will temporarily step aside at the IMF until she is either confirmed at the ECB, or rejected.

Tweedle Dee vs. Tweedle Dum…what does it matter.  This Zero Hedge article showed up on their Internet site at 1:05 p.m. EDT on Tuesday afternoon — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Gold Surges After Trump Nominates Gold Standard Advocate Judy Shelton to Fed Board

After several unsuccessful attempts to put his preferred candidates on the Fed’s board, moments ago Donald Trump announced that he intends to nominate Christopher Waller, who is currently the Executive VP and Director of Research, at the St. Louis Fed, to the board of the Federal Reserve. Prior to his current position, Christopher served as a professor and Chair of Economics at Notre Dame.

After several unsuccessful attempts to put his preferred candidates on the Fed’s board, moments ago Donald Trump announced that he intends to nominate Christopher Waller, who is currently the Executive VP and Director of Research, at the St. Louis Fed, to the board of the Federal Reserve. Prior to his current position, Christopher served as a professor and Chair of Economics at Notre Dame.

For those who haven’t heard of Waller before, it’s hardly a shock: it appears to be his intention to keep a low profile.

However, the reason why gold is spiking after hours, is that shortly after tweeting the Waller nomination, Trump also confirmed the previously rumored nomination of Judy Shelton to the Fed board:

I am pleased to announce that it is my intention to nominate Judy Shelton, Ph. D., U.S. Executive Dir, European Bank of Reconstruction & Development to be on the board of the Federal Reserve Judy is a Founding Member of the board of directors of Empower America and has served on the board of directors of Hilton Hotels.”

So why does Trump want Shelton on the board? Simple: she previously said that if appointed, she would lower interest rates to 0% in one to two years. That’s all markets had to known and following the news that Shelton is being nominated to the Fed board, gold spiked $10 from $1,425 to $1,435 in minutes, as Trump’s push for ZIRP (and soon after, NIRP) just took on an added urgency.

Well, dear reader, the reason that gold jumped higher higher in after-hours trading yesterday, is very much open to debate…but that’s the ZH spin on it.  This longish Zero Hedge article was posted on their website at 6:37 p.m. EDT on Tuesday evening — and I thank Brad Robertson for this one as well.  Another link to it is here.


The Precious Metals Market — Hugo Salinas Price

The prices of the precious metals – gold and silver – are under strict control by the syndicate of the International Bankers. (Incidentally, I speak of the real power exercised by the International Bankers, in a rather long article on my website, www.plata.com.mx. I do hope you will read it! Mr. Trump is finding out, from Jay Powell of the Federal Reserve, that the real power in this world is in the hands of the International Bankers.)

The time when it was necessary to prove the existence of this control, was over long ago. Today it is an unquestioned fact. However, most analysts of the precious metals market continue to bury their heads in the sand of falsity, for various personal reasons. Thus, they only comment on “market behavior“.

Why do International Bankers wish to control the prices of the precious metals?

Because their Power is based on the false money that they issue, and true market prices of the precious metals would very clearly reveal the steady loss of purchasing power of the false money they issue and thus erode their Power significantly, or even destroy it.

Now that we have the “Why” for control out of the way, let us turn to the “How” of the control…

This commentary by Hugo showed up on the plata.com.mx Internet site on Monday sometime — and I found it in a GATA dispatch.  Another link to it is here.


Perth Mint’s monthly gold sales jump 80% in June

The Perth Mint’s gold product sales in June rose 80.3% from the previous month, the refiner said on Tuesday.

Sales of gold coins and minted bars in June climbed to 19,449 ounces from 10,790 ounces in May, the mint said in a blog post. Meanwhile, silver sales last month fell 49.5% to 344,474 ounces from May.

In June, benchmark spot gold prices surged nearly 8%, recording its best monthly performance in three years, supported by expectations of easing monetary policy by major central banks, U.S.-China trade war and tensions in the Middle East.

The above three paragraphs are all there is to this brief Reuters article from Monday, that was picked up by the finance.yahoo.com Internet site on Tuesday — and I found it on the Sharps Pixley website.  Another link to the hard copy is here.


The PHOTOS and the FUNNIES

Continuing on in our tour of semi-ghost town Coalmont…on our way to Princeton…we stumbled across these mule deer grazing away.  They weren’t overly bothered by our presence, so we walked up to the fence separating us — and I took these shots with my ‘walk-around’ lens.  No telephoto of any kind needed here.  Click to enlarge.


The WRAP

So, what to make of Tuesday’s price action in both silver and gold?  To tell you the truth, I’m not exactly sure…but it’s more than obvious that both precious metals are in play.  It appears to be mostly futures positioning in the COMEX paper market, because it sure as heck had nothing to do with the currencies, or any world news that I saw, as the stories in the Critical Reads section of today’s column were rather sparse — and not of an earth-shaking variety.

So rather than presenting some wild-ass speculation, I think it’s best just to see how this plays out.

But I must admit that these rallies certainly caught me by surprise.  When I was on the phone with Ted yesterday, he offered the suggestion that the take-down at the market open at 6:00 p.m. EDT in New York on Sunday night was a bear raid by the commercial traders — and if this was the best they could do, things could get interesting going forward.  He may or may not have something to say about this in his mid-week commentary to his paying subscribers this afternoon.

Here are the 6-month charts for the Big 6 commodities — and the changes in gold, silver and palladium should be noted.  Copper was sold lower for the fifth day in a row, but WTIC got smoked…as the Managed Money traders in both are selling longs — and going further onto the short side.  That’s what’s causing their respective prices to fall…nothing else.  Click to enlarge for all.

And as I type this paragraph, the London open is about a minute away — and I see that the gold price shot higher the moment that trading commenced in New York at 6:00 p.m. EDT on Tuesday evening.  That rally ran into “all the usual suspects” within ten minutes, but after a brief pause, the rally recommenced — and ‘da boyz’ finally put the hammer down at 9:00 a.m. China Standard Time on their Wednesday morning. Gold is well off its high tick — and up only $7.80 the ounce at the moment.  It was the same price action in silver — and it’s up 2 cents as London opens.  Both platinum and palladium had tiny rallies in sympathy with what was going on in the other two precious metals, but platinum is now up only a dollar — and palladium is back at unchanged as Zurich opens.

Net HFT gold volume is sky high already at a bit over 148,000 contracts — and there’s around 7,500 contracts worth of roll-over/switch volume out of August and into future months.  Net HFT silver volume is huge as well…coming up on 25,500 contracts — and there’s 1,200 contracts worth of roll-over/switch volume on top of that.

The dollar index opened unchanged once trading began at 7:45 p.m. EDT on Tuesday evening in New York, which was 7:45 a.m. China Standard Time on their Wednesday morning.  It sank a small handful of basis points over the next few hours — and then proceeded to head higher around 9:30 a.m. CST — and is back in the plus column by 6 whole basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.

Once again, the activity in the precious metals has zero to do with what’s happening in the currencies.  It’s all paper positioning in the GLOBEX/COMEX futures market.


Yesterday, at the close of COMEX trading was the cut-off for the next COT Report and companion Bank Participation Report.  And as I stated in yesterday’s missive, because of tomorrow’s Independence Day Holiday in the U.S…these reports won’t be published on the CFTC’s website until Monday afternoon EDT.


And as I post today’s column on the website at 4:02 a.m. EDT, I note that the gold price hasn’t done much during the first hour of London trading — and is up $6.50 an ounce. ‘Da boyz’ have silver down 3 cents. Platinum is up a dollar, but palladium, which was up seven bucks at the Zurich open, is now down 2 dollars as the first hour of Zurich trading ends.

Gross gold volume is now up to around 175,000 contracts — and minus roll over/switch volume out of August and into future months, net HFT gold volume is about 160,000 contracts. Net HFT silver volume is coming up on 28,000 contracts — and there’s 1,243 contracts worth of roll-over/switch volume in that precious metal.

The dollar index ‘rally’ is continuing, but it’s off its 8:15 a.m. BST current high tick — and up only 8 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.


That’s all for today.  I will have a column tomorrow, but because the U.S. will be shut tight for Independence Day on Thursday, I most likely won’t have one on Friday…unless something blows up in the overseas markets on their respective Thursdays.

But before closing, I’d like to take this opportunity to wish all my American readers a safe and happy holiday on Wednesday — and if you’re able to stretch that into a 4-day long weekend…good on ya!

I expect that trading activity of all types will fall off rather significantly once the lunch hour rolls around in New York today, as the traders head for the Hamptons early.  And, for the same reason, I expect Friday’s volumes and trading activity to be low as well.

See you here tomorrow.

Ed

Gold Opens ‘No Bid’ on Sunday Evening in New York

02 July 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold market opened no bid at 6:00 p.m. EDT in New York on Sunday evening — and was down about twenty bucks in seconds, as the Managed Money traders were forced to sell into a vacuum.  From that juncture the price drifted quietly sideways until shortly after 1 p.m. China Standard Time on their Monday afternoon…then it began to head lower.  The low tick was set right at the London open — and it edged higher until around 9 a.m. in New York.  It didn’t do a lot from there until a few minutes after the London close — and it was was sold quietly lower until around 4:30 p.m. EDT in the thinly-traded after-hours mark.  It didn’t do much after that.

The high and low ticks were recorded by the CME Group as $1,401.90 and $1,384.70 in the August contract.

Gold was closed at $1,383.70 spot, down $25.20 from Friday.  Not surprisingly, net volume was enormous at 364,500 contracts — and there was a bit under 26,500 contracts worth of roll-over/switch volume out of August and into future months.

Ditto for silver — and it was lower by around thirteen cents within seconds.  And, with some minor variations, it was forced to follow a similar price as gold up until a few minutes after the London close.  It was then sold lower until the 1:30 p.m. EDT COMEX close — and didn’t do much of anything after that.

The high and low in silver were reported by the CME Group as $15.345 and $15.155 in the September contract…which is now the new front month for silver.

Silver was closed in New York on Monday at $15.105 spot, down 18 cents from its close on Friday.  Net volume was on the heavier side at just under 67,000 contracts — and there was only 3,400 contracts worth of roll-over/switch volume in this precious metal.

The platinum price dropped a few dollars in sympathy with silver and gold at the 6:00 p.m. EDT open in New York on Sunday evening — and from that point it chopped unevenly sideways until shortly after 10 a.m. CEST in Zurich on their Monday morning.  It began to head quietly higher from there until the price was capped and turned lower around 9:35 a.m. in New York.  The price chopped quietly lower until around 3 p.m. in after-hours trading — and tacked on a couple of bucks going into the 5:00 p.m. EDT close.  Platinum was closed at $829 spot, down 5 dollars on the day.

Palladium traded mostly a few dollars higher in Far East trading on their Monday, but was sold back to unchanged going into the Zurich open.  It rallied a bunch from there until shortly after 1 p.m. CST — and then chopped very unevenly sideways until shortly before 1 p.m. in New York.  It was sold a bit lower into the COMEX close — and didn’t do much of anything after that.  Palladium was closed at $1,53 spot, up 14 bucks on the day but, as always seems to be the case, would have closed considerably higher than that, if allowed.

The dollar index closed very late on Friday afternoon in New York at 96.13 — and opened up about 20 basis points once trading commenced around 6:30 p.m. EDT on Sunday evening.  It crept quietly higher until about 1:30 p.m. China Standard Time on their Monday afternoon — and then jumped up another 20 basis points or so.  But all of that 20 point gain disappeared by around 12:20 p.m. in London.  From that point it began a sustained rally that lasted until a few minutes before 2 p.m. in New York — and it didn’t do a thing after that.  The dollar index finished the Monday session at 96.84…up 71 basis points from its close on Friday.

I would suspect that a decent amount of yesterday’s dollar index rally was due to short covering.

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

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…96.41…and the close on the DXY chart above, was 43 basis points on Monday.  Click to enlarge as well.

The gold stocks gapped down a bit over three percent at the open in New York on Monday morning.  They crept a bit higher until 11 a.m. EDT — and at that point, the gold price was turned lower once more — and the shares quietly and reluctantly followed.  The HUI closed down 3.72 percent, with 100 percent of the price damage coming on the initial gap down at the open.  I found that very reassuring.

The silver equities gapped down three percent at the open as well, but then continued lower until the sell-off ended at the 1:30 p.m. COMEX close.  They managed to crawl a bit higher from there before trading ended at 4:00 p.m. EDT in New York.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down a chunky 4.45 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 for Day 3 of the July delivery month showed that 97 gold and 237 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, there were four short/issuers in total.  The three largest were Advantage, JPMorgan and ABN Amro, with 36, 29 and 26 contracts…all out of their respective client accounts.  There were six long/stoppers in total, but the only two that mattered were JPMorgan, with 78 contracts for its client account — and Advantage, picking up 13 for its client account as well.

In silver, there were only two short/issuers…ABN Amro and Advantage, with 207 and 30 contracts out of their respective client accounts.  There were six long/stoppers in total.  The largest by far was HSBC USA, with 94 for its in-house/proprietary trading accounts.  They were followed by Morgan Stanley and JPMorgan, with 71 and 47 contracts for their respective client accounts.  In fourth place was Advantage, with 19 contracts for its client account as well.

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 July declined by 73 contracts, leaving 153 still open, minus the 97 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 193 gold contracts were actually posted for delivery today, so that means that 193-73=120 more gold contracts just got added to the July delivery month.  Silver o.i. in July fell by 459 contracts, leaving 951 left, minus the 237 contracts mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 515 silver contracts were actually posted for delivery today, so that means that 515-459=56 more silver contracts were just added to July.


There was a big deposit into GLD on Monday, as an authorized participant added 198,129 troy ounces.  There were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, June 28 — and this is what they had to report.  Their gold ETF declined by 2,679 troy ounces — and their silver ETF added 233,383 troy ounces.

The only physical activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday was 32.151 troy ounces…1 kilobar/SGE kilobar weight…that was removed from Brink’s, Inc.  And, for obvious reasons, I won’t bother linking this.

There was a bit of activity in silver.  Nothing was reported received — and 630,553 troy ounces was shipped out.  Most of that involved a truckload…620,896 troy ounces…that departed Canada’s Scotiabank.  The remaining 9,656 troy ounces was shipped out of the International Depository Services of Delaware.  The other movement was of a paper nature, as 1,196,659 troy ounces was transferred from the Eligible category — and into Registered over at CNT…the second big transfer involving them in as many days.  The link to that is here.

There wasn’t much going on over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They didn’t receive any — and shipped out only 32 of them.  This activity was at Brink’s, Inc…which I won’t bother linking.


Here are the usual two charts that Nick passes around every weekend.  They show the amount of physical gold and silver held at all known depositories, mutual funds and ETFs, as of the close of business on Friday, June 28 — and there was quite a bit of activity during the reporting week, particularly in silver.  During the last reporting week, these entities added a net 409,000 troy ounces of gold — and a chunky 7,463,000 net troy ounces of silverClick to enlarge for both.

I have an average number of stories for you today.


CRITICAL READS

Global Manufacturing PMI Crashes to 7-Year Lows as New Orders Slump

It’s a bloodbath. No matter where you look, global manufacturing surveys are signaling growth is over (and in most cases, outright contraction is upon us).

JPMorgan’s Global Manufacturing PMI fell to its lowest level for over six-and-a-half years and posted back-to-back sub-50.0 readings for the first time since the second half of 2012.

June data signalled a mild decrease in global manufacturing employment for the second month running (but every sub-index declined in June).

Of the 30 nations for which a June PMI reading was available, the majority (18) signalled contraction. China, Japan, Germany, the U.K., Taiwan, South Korea, Italy and Russia were among those countries experiencing downturns. The U.S., India, Brazil and Australia were some of the larger industrial nations to register an expansion.

Commenting on the survey, Olya Borichevska, from Global Economic Research at J.P.Morgan, said:

The global manufacturing sector downshifted again at the end of the second quarter. The PMI surveys signalled that output stopped growing, as inflows of new business shrank at the fastest pace since September 2012. This impacted hiring and business optimism, with the latter at a series-record low. Conditions will need to stage a marked recovery if manufacturing is to revive later in the year.”

This story showed up on the Zero Hedge website at 11:40 a.m. on Monday morning EDT — and it’s the first contribution of the day from Brad Robertson.  Another link to it is here.


Nothing Was Resolved Between the U.S. and China, Meanwhile Global CapEx Has Ground to a Halt

Authored by Chetan Ahya, Morgan Stanley Chief Economist

And so it has come to pass: The much-anticipated meeting between the U.S. and China is over. While we await further details, here are our reactions and takeaways, as we parse the initial readouts.

This is an uncertain pause – no immediate escalation, but still no clear path towards a comprehensive deal. The U.S. administration has indicated that it will hold off on 25% tariffs on the remaining US$300 billion imports from China. There was also an agreement that both parties will roll back some non-tariff barriers (i.e., restrictions on high-tech exports by US companies) and that China would continue to purchase agricultural products from the U.S. However,as things stand, we lack clarity on whether real progress was achieved on the sticking points that caused talks to break down in the first place.

Hence, our overarching conclusion is that the developments over the weekend on their own don’t do enough to remove the uncertainty created by trade tensions, which began over a year ago and remain an overhang on corporate confidence and the macro outlook.

Heading into the meeting, it was clear that the global capex cycle had ground to a halt. Capital goods imports, a capex proxy, began their descent in mid-2018, when trade tensions first re-emerged. In July 2018, they were tracking at 18%Y on a three-month moving average basis but plummeted to 2%Y in January 2019 and an estimated -3%Y in May 2019. In aggregate, private fixed capital formation (investments in fixed assets) in the G4 and BRIC economies fell from a peak of 4.7%Y in 1Q18 to just 2.8%Y in 1Q19.  Click to enlarge.

Corporate sentiment has also declined to multi-year lows. Global PMIs for May fell in broad-based fashion, with only about one-third of the countries we track reporting a PMI above the 50 expansion threshold. In the US, our Morgan Stanley Business Conditions Index recorded its largest one-month decline ever, plunging to a level not seen since June 2008. Other business sentiment gauges, such as the regional Fed and German Ifo and ZEW surveys for the month of June, paint a fairly bleak picture too. What’s more, consumer sentiment is also starting to sour, with the Conference Board’s Consumer Confidence Index for June falling to the lowest point since September 2017.

This commentary is certainly worth a read…if you have the interest, that is.  It was posted on the Zero Hedge website at 3:05 p.m. EDT on Sunday afternoon — and another link to it is here.


U.S. Proposes an Additional $4 Billion in Tariffs on European Imports

As one U.S. trade war – that with China – enters a fragile truce, another trade war is about to make a dramatic return.

A little under three months after the U.S. announced in early April that it would seek tariffs on roughly $21 billion of European goods over E.U. subsidies to Airbus aircraft, and which in turn was followed almost immediately by European threats of $12 billion in retaliatory tariffs on U.S. products such as Ketchup, Orange Juice and Tobacco, moments ago the U.S. trade representative proposed a supplemental list of products that could potentially be subject to additional duties in order to enforce U.S. rights in the WTO dispute against the European subsidies airplane

This supplemental list adds 89 “tariff subheadings” with a trade value of $4 billion to the initial list published on April 12, which had an approximate trade value of $21 billion. USTR is adding to the initial list with the supplemental list in response to public comments and additional analysis.

In the event the Arbitrator issues its decision prior to completion of the public comment process on the supplemental list, the USTR may immediately impose increased duties on the products included in the initial list, and take further possible actions with respect to products on the supplemental list.

The supplemental list, as well as the schedule for a public hearing and written comments, are set out in a notice that will be published shortly in the Federal Register.

And now we wait as Europe counters with its own expanded list of tariffs on U.S. imports, sending the market surging on “hopes of an imminent trade war deal/ceasefire” between the U.S. and Europe.

The above handful of paragraphs are all there is to this Zero Hedge story that was posted on their website at 6:45 p.m. on Monday evening EDT — and another link to the hard copy is here.  There was a Bloomberg story on this headlined “U.S. Proposes More Tariffs on E.U. Goods in Airbus-Boeing Spat” — and I lifted that from this morning’s edition of the King Report.


French Bond Yields Slide Below Zero, Hit All-Time Record Lows

Ten days ago when global bond yields tumbled amid renewed fears that the global economy was headed for a recession, we reported that a record $13 trillion in global sovereign debt was trading with a negative yield.

And while we don’t have the latest numbers from Bloomberg, pending their EOD update at the close, it is safe to say that as of this moment, there is a new all time high in negative yielding debt, because while German yields tumbled deeper into record negative territory this morning following abysmal global PMIs and comments from the ECB that the central bank was prepared for any contingency (i.e., ready to cut rates even more), it was the turn of France to follow Germany into sub-zero territory as the French 10Y yield just dropped below 0%, assuring that the total amount of negative-yielding debt just rose by a few hundred billion.  Click to enlarge.

Meanwhile, the disconnect between global bonds – which are now screaming “recession is coming” – and global stocks which are partying as if the Fed can’t wait for S&P 3,000 to cut rates not by 25bps but 50bps, if not more, has never been greater.

This tiny 2-chart Zero Hedge story put in an appearance on their website at 10:56 a.m. EDT on Monday morning — and it’s another offering from Brad Robertson.  Another link to it is here.


BIS Warns “Slowdown is Worsening and Spreading” as Central Banks Run Out of Ammo

Every six month or so, the Bank of International Settlements, also known as the central banks’ central bank, publishes some dire warning about the increasingly precarious state of the global financial system – largely as a result of an unprecedented monetary experiment that is now pushing on a string – and every six months or so the world’s most important central bankers congregate on 18th floor of the circular BIS tower in Basel where they decide to ignore all the warnings and double-down on policies that haven’t worked in a decade, with the expectation that they will work this time (or at least make the world’s richest even richer, while destroying the middle class).

Well, today is one of those days, because at midnight on June 30, the BIS published it Annual Economic Report for the year 2019, and of course, this report too and the speech delivered alongside the Annual General Meeting in Basel by Agustin Carstens, will be summarily ignored by those who matter, until the next financial crisis strikes and everyone is shocked how there were no signals indicating the arrival of what will soon be the greatest financial catastrophe in world history.

Of course, the BIS won’t make any such dire predictions – the last thing it needs is to be accused of sowing the panic that unleashes a crisis – it will however warn that after a failed attempt by central banks to renormalize monetary policy, governments must step in to stimulate their economies and fix policy imbalances that have forced central banks to use up most of their firepower: “The continuation of easy monetary conditions can support the economy, but make normalization more difficult, in particular through the impact on debt and the financial system,” the BIS warned.

As a result of central banks going all in again in what some have dubbed the last rate to the bottom, “the narrow normalization path has become narrower.”

If that wasn’t enough, in his speech, Carstens explicitly brought attention to this critical issue:

While the near-term outlook is still good, there are many vulnerabilities further out. For the global economy to remain on course towards clear skies, other policies need to play a bigger role and policymakers must take a longer-term perspective. In particular, a better mix is required between monetary policy, fiscal policy, macro-prudential measures and structural reforms. And navigating the way to clear skies also means balancing speed with stability as well as conserving some fuel to cope with possible headwinds. This matters all the more given the many uncertainties and risks we face today.

The above excerpt comes from the speech by BIS general manager Agustin Carstens who urge politicians to “ignite all engines” to overcome a global soft patch, which can no longer be punted on central banks in hopes that lower rates will stimulate the global economy for one simple reason: with rates at all time lows, there is virtually nothing left to cut. Worse, rates are now so low that – at least the BIS admits – banks are now suffering as a result of monetary policy…

This Zero Hedge article put in an appearance on their website at 2:15 p.m. on Sunday afternoon EDT — and another link to it is here.


Economists In Disbelief at Australia’s Record Low Bond Yields

Australia is continuing down the path of the global low yield charge, about to approach its final percentage point of “interest rate ammunition“, according to Bloomberg.

The 10 year yield in Australia hit an all time low of 1.26% last week, which is more than a full percentage point under where they started the year. This means that every Australian bond – all the way out to the longest maturity in 2047 – is yielding less than the bottom of the central bank’s 2% to 3% inflation target.

And the speed with which the market environment is changing in Australia is catching the attention of many.

Richard Yetsenga, chief economist at Australia & New Zealand Banking Group Ltd. in Sydney said: “On the screen a minute ago, Aussie 10-year bond yields at 1.33? I mean, is that a typo? Even six months ago they were like 100 points higher.”

Additionally, the market is now pricing in an even chance that the Reserve Bank of Australia will cut its policy rate to 0.5% over the next year. Governor Philip Lowe will cut the cash rate by 25 bps on Tuesday, to 1%, according to 18 of 26 economists surveyed.

Sally Auld, a senior interest-rate strategist at JPMorgan Chase & Co. in Sydney said: “There is a sense of inevitability about where we are heading. We’ve seen this play out in a number of other big developed economies over the last decade. Rates have come all the way down to something close to zero, and they stay there for a very long time.”

Interest rates are ‘zero bound’ all over the planet — and even when they get there, they will stay there until the financial system is allowed to cleanse itself, which isn’t being allowed to happen.  The current Frankenstein economy and financial system continues to live on…until one day it won’t.  This news item showed up on the Zero Hedge website at 9:10 p.m. on Sunday evening EDT — and another link to it is here.


The Economic Bubble Bath — Jeff Thomas

At the end of a long, tiring day, we may choose to treat ourselves to a soothing bubble bath. Surrounded by steaming water and a froth of sweet-smelling bubbles, it’s easy to forget the cares of everyday life.

This fact is equally true of economic bubbles. When the markets are up, we’re inclined to feel as though life is rosy. Unfortunately, it does seem to be the norm that investors fail to recognize when a healthy up-market transforms into a dangerous bubble. We tend to be soothed into overlooking the fact that we’re in hot water, and economically, that’s not an advantageous situation to be in.

Periodically, any economy will experience bubbles. It’s bound to happen. Human nature dictates that, if the value of an asset is on the rise, the more success it experiences, the more we want to get in on the success.

Sadly, the great majority of investors have a tendency to fail to educate themselves on how markets work. It’s easier to just trust their broker. Unfortunately, our broker doesn’t make his living through our success; he makes it through brokering transactions. The more buys he can encourage us to make, the more commissions he enjoys.

It’s been said that a broker is “someone who invests your money until it’s gone,” and there’s a great deal of truth in that assessment.

This worthwhile commentary from Jeff appeared on the internationalman.com Internet site early on Monday morning EDT — and another link to it is here.


Dinner with America’s 0.01% — Bill Bonner

Back to Versailles

What a place! Over the top. Spectacular.

Our visit began with a noble entry into the palace. Military standards unfurled on either side of us… held by staunch veterans of Dien Bien Phu and Algiers.

Then, we crossed a red carpet to arrive in the Halle d’Entrée, where on the wall was the large plaque commemorating the generosity of the Rockefeller family.

Thereafter, our group – men in tuxedos, wilting in the 90-degree heat, their faces red, with beads of perspiration on their foreheads… women in their gowns, some with advanced cases of décolletage – was escorted on a private tour of the great rooms.

We passed through rooms used by Louis XIV and his entourage… the boudoir of Marie Thérèse… Louis’ own bedroom and antechamber… the famous Hall of Mirrors… and finally, the Hall of Battles.

There, amidst huge paintings of death and dying… at Austerlitz, Bouvines, and Fontenoy… we dined in a peaceful splendor usually reserved for heads of state.

This very interesting and well written commentary from Bill…filed from Youghal, Ireland…has a moral, plus a veiled historical warning at the end, that certainly makes it worth reading.  It was posted on the bonnerandpartners.com Internet site early on Monday morning EDT — and another link to it is here.


Gold Sinks Most in a Year as Trade Truce Deals Blow to Bulls

Gold tumbled back below $1,400 an ounce after the U.S. and China reached a truce in their trade war, dealing a blow to havens.

Prices fell the most in a year after Presidents Donald Trump and Xi Jinping agreed to resume negotiations in a bid to resolve differences between the world’s two biggest economies. Still, the setback may be temporary as investors now train their focus on U.S. jobs data due Friday for clues on the Federal Reserve’s next move on policy.

Gold was well overdue a period of consolidation and gold bulls should welcome it,” said Ross Norman, chief executive officer of gold brokerage Sharps Pixley Ltd. “This provides a welcome entry point.”

Bullion hit a six-year high last week as top central banks including the U.S. Federal Reserve adopted a more dovish tone and tensions spiked between the U.S. and Iran. Driven by speculation that U.S. interest rates may soon be headed lower, investors plowed into bullion-backed exchange-traded funds, which swelled 5% in June, the most since 2016.

This Bloomberg news item put in an appearance on their Internet site at 5:33 p.m. PDT on Sunday afternoon — and was updated about eighteen hours later.  I found it on the Sharps Pixley website late last night — and another link to it is here.


The PHOTOS and the FUNNIES

Still winding our way to Princeton via the back roads, here are two shots along the right-of-way for the now-defunct Kettle Valley Railway.  It’s now part of the Trans-Canada Trail system.  This is an iron bridge that crosses Otter creek at its mouth, where it flows into the Tulameen River.  The third photo was taken from a bridge that crosses the Tulameen River at the semi-ghost town of Coalmont…18 kilometers/11 miles from Princeton.  Click to enlarge.


The WRAP

I doubt that much should be read into the ‘no bid’ opens in gold and silver in New York on Sunday evening.  That — and the reaction in the dollar index, were almost certainly knee-jerk reactions to what happened at the G-20 meeting over the weekend.

Of course gold is hugely overbought — and the current market structure in the COMEX futures market certainly indicates that JPMorgan et al could harvest these Managed Money traders any time they so choose.

Right now, the gold price is miles above any moving average that matters, so we’ll just have to see how things develop going forward.  However, I did notice this comment in this morning’s edition of the King Report…”Wall Street is lowering the odds of Fed rate cuts for July — and the coming months.”

Of course silver would be a casualty of any engineered price decline in gold, but it hasn’t been allowed to do much during gold’s recent run-up, so its decline back below its 50 and 200-day moving averages is not a large price distance at all.

Here are the 6-month charts in the Big 6 commodities — and except for what happened in gold, there’s not really a lot to see.  The decline in silver was sort of background noise.  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 traded very unevenly higher until shortly before 2 p.m. China Standard Time on their Tuesday morning. It was turned a bit lower at that juncture — and is up $6.80 an ounce currently. It has been the same for silver — and it’s only up 3 cents at the moment. The platinum price crawled unevenly sideways until around noon CST — and began to tick higher from there — and is up 6 bucks. Palladium has been chopping equally unevenly sideways in Far East trading, but jumped up a bit in the last thirty minutes — and is up 4 dollars as Zurich opens.

Net HFT gold volume is coming up on 58,000 contracts already — and there’s only 962 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is around 8,400 contracts — and there’s only 315 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down 3 basis points once trading commenced at 7:45 p.m. EDT in New York on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning. It edged a bit higher — and back above unchanged by a hair. That lasted until around 10:45 a.m. CST — and it has been heading quietly and 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, at the close of COMEX trading, is the cut-off for the next Commitment of Traders Report — and companion Bank Participation Report.  But because of the Independence Day holiday in the USA, those two reports won’t be published until Monday afternoon around 3:30 p.m. EDT.

On Friday, we get the June Employment Report and, without doubt, I expect that the precious metals will ‘react’ to them in one form or another.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price continues to struggle higher — and is now up $8.20 the ounce. Silver is up 4 cents. Platinum is now up 5 bucks — and palladium by 7…but is off its current spike high at the Zurich open.

Gross gold volume is around 71,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is about 69,300 contracts. Net HFT silver volume is a hair over 10,000 contracts — and there’s still only 329 contracts worth of roll-over/switch volume on top of that.

The dollar index continues to creep lower — and is down 9 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

That all for today — and I’ll see you here tomorrow.

Ed