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More Gold Contracts Added to April Deliveries

03 April 2020 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


After ticking a bit higher an hour or so after trading began at 6:00 p.m. EDT in New York on Wednesday evening, the gold price was sold quietly lower until shortly before 11 a.m. China Standard Time on their Thursday morning.  It didn’t do much from that point until about two hours later when it began head higher at an ever-increasing rate, but it ran into ‘something’ about 8:15 a.m. in London as it broke above $1,600 spot.  It was then sold lower until shortly after 10 a.m. BST — and it began to head higher from there, but with obvious interference.  The rally was capped at 12:20 a.m. in New York — and sold sharply lower shortly after that.  The tiny gain that followed was all taken away by the 5:00 p.m. close.

The low and high ticks in gold were reported as $1,595.20 and $1,642.00 in the June contract.

Gold was closed on Thursday afternoon in New York at $1,610.20 spot, up $16.80 from Wednesday…around 13 dollars off its Kitco-recorded high tick of the day.  Net volume was exceedingly light once again at a bit under 154,000 contracts — and there was a hair under 15,000 contracts worth of roll-over/switch volume on top of that.

Silver traded in a similar manner up until it was capped around 8:15 a.m. in London trading — and from there it drifted lower until, like gold, it began to head sharply higher just before 1 p.m. BST/8 a.m. EDT.  Its rally was capped at 8:30 a.m. in New York — and was then forced to chop very unevenly sideways until the market closed at 5:00 p.m.

The low and high ticks in silver were reported by the CME Group as $13.99 and $14.72 in the May contract.

Silver was closed at $14.48 spot, up 62.5 cents from its close on Wednesday.   Net volume was very light as well at a hair under 48,000 contracts — and there was about 9,300 contracts worth of roll-over/switch volume out of May and into future months.

Platinum was sold down to its low tick of the day by around 9 a.m. in Shanghai — and then headed unevenly higher until that rally was capped and turned lower a few minutes after the 9 a.m. CEST Zurich open…at the same time that gold and silver were turned lower.  It traded very unevenly lower from that juncture until the 10 a.m. EDT afternoon gold fix in London.  It managed to rally a bit from that point before creeping higher into the 5:00 p.m. EDT close.  Platinum finished the Thursday session in New York at $732 spot, up 11 bucks from its close on Wednesday.

After getting sold down pretty hard at the New York open on Wednesday evening, the palladium price struggled higher until around 8:15 a.m. China Standard Time on their Thursday morning.  It traded somewhat erratically sideways until around 8:30 a.m. in New York — and was hammered into the dirt starting at that point.  It was pounded lower by about $260 bucks until it touched $2,000 spot — and then rebounded sharply.  By the end of the day it was down ‘only’ 39 dollars at $2,141 spot.

Based on the spot closing prices of gold and silver yesterday, the current gold/silver ratio works out to 111 to 1…down a bit from Wednesday.


The dollar index closed very late on Wednesday afternoon in New York at 99.67 — and opened down about fifteen basis points once trading commenced around 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  After a long and very quiet up/down move that ended at, or minutes before the 2:15 p.m. afternoon gold fix in Shanghai, the 99.34 low tick of the day was set.  A ‘rally’ commenced at that juncture that topped out at the 100.41 mark around 2:22 p.m. in New York.  It slid a bit until 4:22 p.m. — and then traded sideways until the market closed at 5:30 p.m. EDT.

The index was closed at 100.18…up 41 basis points from its close on Wednesday.

Once again there was no correlation between precious metal prices and what was happening in the currency market.

Here’s the DXY chart for Thursday, thanks to Bloomberg as always.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart — and this one comes courtesy of the good folks over at the stockcharts.com Internet site.  The delta between its close…100.27…and the close on the DXY Chart above, was 9 basis points higher than the spot month on Thursday.  Click to enlarge as well.

The gold stocks took off higher the moment that trading began at 9:30 a.m. EDT on Thursday morning — and of course topped out when the gold price was capped and turned lower around 12:20 a.m. in New York trading.  From there they wandered unevenly lower — and the day traders took their pound of flesh off the table minutes before the 4:00 p.m. close.  The HUI closed higher by 4.87 percent.  [The HUI was up about 7 percent at its high of the day.]

In all respects that mattered, the silver equities followed a mostly similar pattern as their golden cousins.  Nick’s Intraday Silver Sentiment/Silver 7 Index chart was a big mess yesterday, so I’ve decided not to post it.  But I’ve computed the change manually — and his Index closed higher by 4.58 percent.

Here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart updated with Thursday’s doji.  This chart comes from a different data stream than the one used for the Intraday Silver 7 Index.  Click to enlarge.

The star of the day on Thursday was Wednesday’s dog…Coeur Mining…up 18.56 percent.  It gained back everything it lost the previous day.  The dog on Thursday was Peñoles, closing down 3.17 percent.


After this Reuters story, headlined “Mexican miners to keep working essential projects during coronavirus” appeared in my in-box yesterday, I fired off an e-mail to Todd Anthony the head I.R. guy at First Majestic Silver — and asked the following question…”How does this affect your operations, since they’re all in Mexico?“.  His detailed reply is as follows:

“Hi Ed — Earlier today a number of industry groups were set to meet with the Mexican Cabinet and President AMLO on making the case that mining, especially silver mining, is an essential and critical industry.  The group will be asking for a modification in the decree issued by the government to allow mining, or specific mines in isolated regions / communities like the Tayoltita and Banamichi (San Dimas and the Santa Elena).

In the meantime, the Company continues to run at full production with reduced staffing due to the “at-risk” or vulnerable (>60 years old, pre-existing medical conditions, obesity, etc…) being removed from the mines and businesses per AMLO’s original decree.  

A number of other precautions have also been put in place, like full daily screening of all workers, sterilization, education, social distancing measures and an extended work schedule to protect the workforce, our communities, and to continue safe operations.  

At this time other major large miners in Mexico have not suspended operations and are also making their case to the Federal Governments, supported by the State Governments, that mining should be considered an essential industry as it is in Canada and the U.S.

In the meantime, we are also developing care and maintenance programs at each of our operations in the event the Mexican Government ultimately determines mining is not essential and must suspend. — Todd”

In an immediate follow-up e-mail Todd said that…”We will be announcing our decision shortly. Will know more tomorrow morning.”


The CME Daily Delivery Report showed that 2,580 gold and 11 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, there were eight short/issuers in total — and by far the largest was JPMorgan with 1,698 contracts…1,271 from its client account, plus another 427 contracts from its own account.  In distant second and third place were Goldman Sachs and International F.C. Stone, with 456 and 366 contracts…the former from their in-house/proprietary trading account — and the latter from their client account.  There were fifteen long/stoppers — and JPMorgan was the largest, picking up 1,083 contracts for its client account.  In second place was HSBC USA with 638 for its own account, plus another 3 for its client account.  In third and fourth spot were Australia’s Macquarie Futures and Citigroup with 231 and 199 contracts — and all for their own accounts. In fifth place was Dutch bank ABN Amro, picking up 192 contracts for its client account.

In silver, the two short/issuers were Morgan Stanley and Advantage, with 7 and 4 contracts respectively — and the lone long/stopper was ADM, picking up all 11.  All contracts, both issued and stopped, involved their respective client accounts.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in April fell by 610 contracts, leaving 4,087 still open, minus the 2,580 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 1,433 gold contracts were actually posted for delivery today, so that means that 1,433-610=823 more gold contracts just got added to the April delivery month.  That a lot of gold!  Silver o.i. in April actually rose by 5 contracts, leaving 61 still around, minus the 11 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 18 silver contracts were actually posted for delivery today, so that means that 5+18=23 more silver contracts were added to April.

In the last two days, there have been 1,307 more gold contracts added to the April delivery month…a bit over 4 tonnes…with lots more April still to go.


There was another very decent deposit into GLD on Thursday, as an authorized participant added 103,471 troy ounces.  But over at SLV, there was 541,883 troy ounces of silver withdrawn.

In other gold and silver depositories on Planet Earth on Thursday, net of COMEX, GLD & SLV activity, there was a net 55,949 troy ounces of gold added, plus 291,742 troy ounces of silver was added as well.

[Note:  That big 3.16 million ounce increase in iShares CGL.TO/SGLN ETF that was reported in this space yesterday has turned out to be correct. I have seen the correspondence, plus the raw data that Nick got back from [Ticker Symbol: SGLN] them saying that their website hadn’t been updating the data since December 2018.  It has now been fixed.  That’s another 100 tonnes of gold that’s off the streets that we didn’t know about until yesterday. – Ed]

There was a small sales report from the U.S. Mint to start off April.  They reported selling 24,500 troy ounces of gold eagles.  This sales report, plus the one on Wednesday, were a bit of a surprise considering the fact that mint is supposed to be closed.


There was more big activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  There was 547,853 troy ounces/17,040 kilobars [SGE kilobar weight] reported received — and all of that went into Brink’s, Inc.  Nothing was shipped out.  There was also a big paper transfer at Brink’s, Inc. as well, as they moved 361,312.900 troy ounces/11,238 kilobars [SGE kilobar weight] from the Eligible category and into Registered.  I would suspect that this transfer was from that big deposit that was made on the same day — and it’s out for delivery now. The link to that activity, plus a bit more, is here.

There was some activity in silver.  One truckload…600,971 troy ounces…was dropped off at Canada’s Scotiabank — and that’s all the ‘in’ activity there was.  There was 292,675 troy ounces shipped out.  Of that amount, there was 250,978 troy ounces that departed Scotiabank — and the remaining 41,697 troy ounces was shipped out of CNT.  The link to all this is here.

Once again there was very decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They reported receiving 1,700 of them — and shipped out 2,500.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two charts that I took off Nick Laird’s website just now.  They are the 10-year charts showing gold and silver bullion coin sales from the U.S. Mint, updated with March’s data.  During that month the mint sold 189,500 troy ounces of gold eagle and gold buffalo bullion coins — and in silver, they sold 5.48 million troy ounces of silver eaglesClick to enlarge for both.

I have an average number of stories, articles and videos for you today.


CRITICAL READS

U.S. Jobless Claims Soar to Once-Unthinkable Record 6.65 Million

The number of Americans applying for unemployment benefits soared to a record 6.65 million last week, a level unimaginable just a month ago.  Click to enlarge.

As states shut down commerce to prevent the deadly coronavirus from spreading, the weekly claims data have been among the first detailed figures to show the devastating economic hit, highlighting the extent to which U.S. businesses and workers are reeling from the global health crisis.

The figures also may add to pressure on the federal government to ensure that aid payments and loans under the $2 trillion stimulus package flow quickly to people and businesses.

I never thought I’d see such a print in my lifetime as economist,” said Thomas Costerg at Pictet Wealth Management, who had the highest forecast in the Bloomberg survey, at 6.5 million. Claims are likely to stay elevated as more states announce stay-at-home orders, and it would be “not unthinkable” to see a 20% unemployment rate, more than double the high that followed the last recession, he said.

The data come a day before the March jobs report, which is expected to show the first monthly decline in payrolls since 2010. Nonetheless, those figures will show only the start of the labor-market damage, as the government’s survey period covered early March, prior to the biggest rounds of layoffs and closures.

This Bloomberg story showed up on their Internet site at 5:32 a.m. PDT on Thursday morning — and was updated about four and a half hours later.  I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to it is hereGregory Mannarino‘s post market close rant for Thursday is linked here — and comes courtesy of Brad Robertson.


U.S. Auto Sales Plunge to Lowest in a Decade, But the Worst is Yet to Come in Q2

As we predicted in a a report we published just days ago, the U.S. auto industry is on the verge of total collapse. Numbers out of major automakers on Wednesday this week confirmed a worst case scenario: that the global pandemic is doing severe (and potentially irreversible) damage to an industry that was in ugly shape even before the coronavirus outbreak began.

GM saw sales plunge 7.1% and Fiat saw sales drop 10% for the first quarter of 2020, both larger than expected declines, according to Bloomberg. It’s also worth noting that the industry didn’t quite grind to a halt until March, and so Q2 numbers could wind up being far worse.

Toyota’s sales fell 37% in March, with even its best-selling RAV4 dropping 25%. Nissan had the weakest quarterly results, posting a 30% drop in sales for the first three months of the year. More than 25% of Nissan’s dealers are being negatively affected by state ordinances limiting sales.

Names like Volkswagen, Honda, Hyundai and Mazda all saw drops of over 40% for March. If automakers that report quarterly continue to follow this trend, Q2 numbers may be a sight to behold.

The industry’s annualized selling rate has slowed to just 11.4 million, marking its lowest point since April 2010.

And today’s sales numbers should not come as a surprise to Zero Hedge readers, as we noted days prior that the entire U.S. auto industry had basically entered full collapse.

This story was posted on the ZH website at 12:00 p.m. on Thursday afternoon — and I thank Brad Robertson for sending it our way.  Another link to it is here.  A related ZH story is headlined “U.S. Box Office Sales Collapse to Just $5,179; Was $204 Million During Same Period Last Year


Fitch Downgrades 9 Retailers in One Day, Including Macy’s, Nordstrom and J.C. Penney

Summary:

  • Ratings agency Fitch has downgraded 11 consumer and retail companies because of the financial disruption caused by the COVID-19 pandemic.
  • On Wednesday alone, Fitch downgraded credit ratings for nine retailers, according to emailed client notes.
  • Among them were J.C. Penney, Macy’s, Nordstrom, Kohl’s, Dillard’s, Capri, Tapestry, Levi’s and Signet.

As COVID-19 rips through the country, retailers have shuttered stores, furloughed employees, dipped into their credit lines and made other painful decisions about what costs to pay.

Many of the department stores downgraded Thursday by Fitch had struggled to maintain or grow sales even in a booming economy. Now they are trying to manage their operations through an unprecedented market shock.

As retailers manage the closures, the key to survival is cash. Cowen analysts found that department stores, as a group, have enough cash to stay afloat for five to eight months. Some, like Macy’s, have even less.

As Sarah Wyeth, sector lead for S&P Global’s retail and restaurant coverage, told Retail Dive earlier this month, “As the secular headwinds retail is facing accelerate, this could be the nail in the coffin of some of these brick-and-mortar retailers.”

This Zero Hedge news item put in an appearance on their Internet site at 3:45 p.m. EDT on Thursday afternoon — and another link to it is here.


Peter Schiff: It’s Not Going To Be Fine

We just wrapped up the worst first quarter in the history of the U.S. stock market. Think about that in context. Even during the dark days of the Great Depression, there has never been a worse start to a year for the U.S. stock market than 2020.

Nevertheless, there are still a lot of people out there who think this is going to be a short bear market. As Peter Schiff put it in his podcast, that’s because they’re still fixated on the pin.

They’re still looking at the fact that ‘Oh, this is man-made.’ I keep hearing people saying, ‘We did this to ourselves. This is not a real bear market. This is not a real recession.’ You know, because we decided to shut down the economy. So, all we have to do is decide to start it back up again and everything is going to be fine.”

Further driving this myth is the notion that as long as the Federal Reserve can print up enough money between now and then to bail everybody out, everything will be OK.

This is all wishful thinking. It’s all part of the delusion. It’s not going to be fine. Because it wasn’t fine before the crisis. We didn’t have a solid economy. We had a bubble. That’s the problem. And the bubble has been pricked. There is no way to go back to where we were. It’s like trying to unscramble an egg. It can’t be done.

The markets and the economy are scrambled. You can’t put it back the way it was.

In an interview on the Tom Woods show, Doug Casey argued that what we’re seeing today is really an extension of the 2008 financial crisis.

The financial crisis that started in 2008, view it as entering the leading edge of a gigantic hurricane. And we went through that leading edge and you’ll recall, it was quite scary and unpleasant in 2008 and 9 and 10. And we’ve been in the eye of the storm since then. Big hurricane, big eye. But now we’re entering into the trailing edge of the storm, and it’s going to be much longer-lasting and much worse and much different than what we had back in 2008, 9 and 10.

Casey went on to make the exact same point as Peter.

I’m sorry that this is all going to be blamed on the current coronavirus hysteria, however, because that’s just the accidental pin that broke the bubble.

This commentary was posted on the Zero Hedge website at 4:45 p.m. EDT on Thursday afternoon — and another link to it is here.


Fed’s Balance Sheet Hits $6 Trillion: Up $1.6 Trillion in 3 Weeks

“We’re going to need a bigger chart.”

That’s all one can say when seeing what happened to the Fed’s balance sheet in the past week.

According to the Fed’s latest weekly H.4.1 (i.e., balance sheet) update, as of April 1 the Fed’s balance sheet hit a record $5.811 trillion, an increase of $557 billion in just one week. And when one adds the $88.5BN in TSY and MBS securities bought by the Fed today, we can calculate that as of close of business Thursday, the Fed’s balance sheet was an unprecedented $5.91 trillion, an increase of $1.6 trillion since the start of the Fed’s unprecedented bailout of everything on March 13 when the Fed officially restarted QE. And since we know that tomorrow the Fed will buy another $90 billion, we can conclude that as of Friday’s close, the Fed’s balance sheet will be a nice, round $6 trillion.  Click to enlarge.

Finally, here is what the Fed’s balance sheet looks like over a longer time frame: it shows that in just the past 3 weeks, the Fed’s balance sheet has increased by a ridiculous $1.6 trillion – the same amount as all of QE3 did over 15 months  – and equivalent to an insane 7.5% of U.S. GDP.

One more insane statistic: the Fed’s balance sheet was $3.8 trillion in August 2019 when the shrinkage in reserves supposedly triggered the repo crisis. Fast forward, 6 months, when the Fed’s balance sheet is now 60% higher.

Last Saturday we said that according to former N.Y. Fed staffer, the Fed’s balance sheet will double to $9 trillion by the end of the year.

Just three weeks after the Fed restarted its “all in” gamble, the balance sheet is already one third of the way there.

This Zero Hedge story appeared on their website at 5:33 p.m. on Thursday afternoon EDT — and I thank Richard Saler for sending it along.  Another link to it is here.


What The Heck Is Going On? — Dennis Miller

I was sitting in the exam room and the doctor walked in. Knowing I write this blog, he said, “Finally someone I can talk to. What the heck is going on?

With our current economic situation, the market tanking and the Coronavirus monopolizing the amped up media, a lot of concerned subscribers are asking that question.

When you combine financial and health concerns, with the never-ending political hysteria and out of control Federal Reserve, you hope emotional, knee-jerk reactions don’t cause bigger problems. We have never seen such a mess in our lifetime; we are in uncharted waters.

Subscriber Rick G. had some 4% bonds called in. “What should I do with the money? The bond market is too scary, sure don’t want to touch the stock market at the moment and 10-year CDs won’t keep up with inflation.”

The working class cannot afford expensive knee-jerk reactions in a crisis; the cost of a mistake can be much too high.

I’m lucky to have good friend Chuck Butler in times like this. His inbox is also pretty full.

This interesting Q&A with Chuck was posted on Dennis’s website on Thursday morning sometime — and another link to it is here.


Norway Wealth Fund Lost Record $113 Billion in Stock Slump

Norway’s sovereign wealth fund, the world’s biggest, lost a record 1.17 trillion kroner ($113 billion) in the first quarter after the economic shock caused by the coronavirus pandemic triggered a sell-off in global stock markets.

The loss comes at an historic moment for the fund, as it may soon need to liquidate assets for the first time to cover Norway’s emergency spending measures. During the first quarter, government withdrawals reached 67 billion kroner. That number looks set to grow dramatically in April.

The fund had a loss of 14.6% in the first quarter. Equities rebounded in the last days of March, when the investor was valued at 10 trillion kroner ($972 billion). As a result, the return wasn’t quite as bad as feared just a week ago. Its stock portfolio fell 21.1%, while fixed income investments rose 1.3%.

The quarterly slump was deeper than the 10.3% the fund lost in the last three months of 2008, at the height of the financial crisis. It follows the record annual return for last year that the fund presented just weeks ago, showing the speed at which the pandemic has upended markets.

This Bloomberg news item put in an appearance on their website at 3:51 a.m. PDT on Thursday morning — and was updated an hour and change later.  It’s the second contribution of the day from Patrik Ekdahl — and another link to it is here.


Gundlach Sounds Alarm on ‘Paper Gold’ ETFs Raking in Billions

Jeffrey Gundlach has a warning for investors piling into gold-backed ETFs: Don’t think you’ll get the physical metal back.

State Street Corp.’s $50 billion SPDR Gold Shares ETF, ticker GLD, attracted $2.9 billion of inflows last week, its biggest haul since 2009, as haven demand amid escalating coronavirus fears boosted the metal. Meanwhile, assets in gold ETFs climbed to a record on Tuesday, according to data compiled by Bloomberg.

The demand for such ETFs is flashing a warning sign for DoubleLine Capital’s chief investment officer, who cautioned against the products during a webcast Tuesday. While ETFs such as GLD are backed by physical gold, the process for an individual investor to acquire the actual bullion isn’t as simple as selling shares of the ETF. “Paper gold” ETFs are little more than speculative vehicles, Gundlach said, and buyers should be aware that holding shares doesn’t amount to having gold bars.

What happens if physical gold is in short supply and everyone wants to take delivery of their paper gold?” Gundlach said. “They can’t squeeze blood out of a stone.”

The process of swapping GLD shares for physical gold sits “outside of normal dealings,” according to State Street Global Advisors head of ETF research Matthew Bartolini. Bank of New York Mellon, the fund’s trustee, doesn’t interact with the public but only with middlemen known as authorized participants — traders who channel assets in and out of the fund. An investor would have to work with one of GLD’s APs to acquire gold, he said.

An individual investor wishing to exchange the Trust’s shares for physical gold would have to come to the appropriate arrangements with his or her broker and an authorized participant to receive the gold bars,” Bartolini wrote in an e-mail.

I don’t understand why this is such a big deal, as GLD, like SLV, is mostly considered as a trading vehicle only.  And if someone has issues with these two ETFs — and wants to own physical gold in quantity, there are other avenues one can use to purchase it.  This Bloomberg article was posted on their Internet site at 10:13 a.m. PDT [Pacific Daylight Time] on  Wednesday morning — and I found it on the gata.org Internet site.  Another link to it is here.


Mexican miners to keep working essential projects during coronavirus – sources

Mexico’s mining sector, one of the country’s major industries, will be able to continue operating projects deemed to be essential during the public health crisis caused by coronavirus, two government officials told Reuters.

President Andres Manuel Lopez Obrador’s administration earlier this week declared a health emergency due to the viral outbreak which requires that non-essential work be shut down or minimized.

But the mining sector, responsible for about 4% of Mexico’s gross domestic product, will be able to continue with some projects in an effort to avoid the “paralization” of future operations as well as to promote mine safety, the sources said.

I linked this earlier in my column.  The above three paragraphs are all there is to this very brief Reuters article that showed up on their Internet site at 12:18 p.m. on Wednesday — and I found it in a GATA dispatch.  Another link to the hard copy is here.


The PHOTOS and the FUNNIES

Back at Hell’s Gate, B.C. on September 8…the first two shots were taken from the foot bridge that crossed the Fraser River/Canyon…the first looking up-river — and the second almost straight down over the railing  The bed of the bridge was an open grate system…solid as rock…but the fact that there was so much air beneath my feet was not the most comforting feeling.  Once I had the photos, I got off it as quickly as I could.  The third shot is looking down river, safely on terra firma once more.  Click to enlarge.


The WRAP

Although gold and silver may have jumped higher on the jobless claims report, ‘da boyz’ were there to ensure that the response remained muted.  And although I was certainly happy to see their respective prices rise — it was obvious that they weren’t going to let things get too far out of hand.

Besides which, the trading volumes in both precious metals continue to be exceptionally light — and Ted was certainly pleased with the fact that silver and gold prices were rallying on such little volume.  But that fact also helped the Big 7 traders to keep things from getting too unruly.

Here are the 6-month charts for the Big 6 commodities…courtesy of stockcharts.com.  In the four precious metals, only palladium was closed lower on the day — and below its 50-day moving average for the second day in a row.  Copper regained everything it lost on Wednesday — and WTIC caught a big bid when Trump opened his pie hole on this issue.  The Russians and Saudis are denying his claims — and it remains to be see who is speaking untruths.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I note that the gold price didn’t do much once trading began at 6:00 p.m. EDT on Thursday evening in New York. There was a brief but vicious up/down spike at 10 a.m. China Standard Time on their Friday morning — and it was back to normal a few minutes later. The price began to head quietly lower starting shortly after 11 a.m. CST — and its been creeping quietly lower since. It’s down $3.40 the ounce. Silver has been wandering quietly sideways throughout all of the Far East trading session — but is now up 2 cent as London opens. The platinum price has been very quietly stair-stepping its way lower since New York opened on Thursday evening — and it’s down 6 dollars currently. Palladium has been trading somewhat erratically sideways all night long here in North America — and after being down for the last while, has jumped higher — and is only down 5 bucks as Zurich opens.

Net HFT gold volume is exceedingly light…creeping up on 20,000 contracts — and there’s only 1,412 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is also very quiet at barely 6,000 contracts — and there’s only 700 contracts worth of roll-over/switch volume out of May and into future months.

The dollar index opened up 3 basis points at 100.21 once trading commenced around 7:45 p.m. EDT on Thursday evening in New York, which was 7:45 a.m. China Standard Time on their Friday morning. It has been chopping erratically sideways since — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is higher by 10 basis points.


Today we get the latest job numbers report…at least that’s what I saw in a Bloomberg story posted further up in the Critical Reads section.  I suspect that gold and silver will ‘react’ to that news — and the only thing I’ll be waiting to see, is how soon ‘da boyz’ show up after they do ‘react’.

Also today we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  I spoke with Ted yesterday — and although he mentioned it briefly in passing, I don’t remember exactly what he had to say about it.  However, just eye-balling the five trading dojis of the reporting week, it would certainly appear as if there should be some decreases in the commercial net short positions in both.  But just how much remains to be seen.


And as I post today’s column on the website at 4:02 a.m. EDT, the first hour of London/Zurich trading has ended — and I see that the gold price began to tick a bit higher starting a very few minutes before the London open — and is now up 80 cents the ounce.  Silver hasn’t done much — and is up 2 cents the ounce.  Platinum is a few dollars lower — and is down 8 bucks — and palladium is now in plus column to the tune of 4 dollars.

Gross gold volume is still very quiet at a bit over 27,000 contracts — and minus current roll-over/switch volume, net HFT gold volume is only about 24,000 contracts.  Net HFT silver volume is creeping up on 7,000 contracts — and there’s still only 759 contracts worth of roll-over/switch volume out of May and into future months in this precious metal.  It’s very quiet out there.

With another hour of trading in the dollar index done, it’s easy to see that it began to  head sharply higher starting at 1:50 p.m. China Standard Time on their Friday afternoon, but topped out currently at 8:30 a.m. BST — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the dollar index is now up 34 basis points.

That’s all I have for today.  Have a good weekend…stay safe — and I’ll see you here tomorrow.

Ed

Big Gold Deposits at the COMEX on Tuesday

02 April 2020 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold lower by a bunch of dollars once trading began at 6:00 p.m. EDT in New York on Tuesday evening.  It recovered quietly and unevenly from there until it ran into ‘something’ around 8:45 a.m. in London.  From that point it traded sideways until the noon BST silver fix — and it was then sold down to its low of the day, which came a very few minutes after the equity markets opened in New York on Wednesday morning.  It rallied a bit from there…running into ‘resistance’ most of the way — and the price was capped and turned lower at 12:30 p.m.  That sell-off lasted until a few few minutes after the COMEX close — and it gained a bunch back by the 5:00 p.m. EDT close.

The low and high ticks in gold were recorded as $1,576.00 and $1,612.40 in the June contract, which is the new front month for gold.

Gold finished the Wednesday session in New York at $1,593.40 spot, up $16.30 from its close on Tuesday.  Net volume was ultra quiet once again at bit over 153,000 contracts — and there was a bit over 12,000 contracts worth of roll-over/switch volume in this precious metal.

Silver was also sold lower at the open in New York on Tuesday evening — and from that juncture it managed to struggle back above $14 spot by shortly before 11 a.m. China Standard Time on their Wednesday morning.  But about two hours later the price was turned lower — and every attempt to break it below $13.80 spot caught a bit — and every rally attempt above $14 spot was turned lower.  That state of affairs lasted until about ten minutes before the 1:30 p.m. EDT COMEX close — and it was hammered down to its $13.66 spot low tick of the day right at the COMEX close.  It recovered a bunch from there before creeping higher until trading ended at 5:00 p.m. in New York.

The high and low ticks in silver were reported as $14.265 and $13.895 in the May contract.

Silver was closed in New York yesterday at $13.855 spot, down 7 cents from Tuesday.  Net volume was exceptionally quiet at a bit over 36,500 contracts — and there was around 8,300 contracts worth of roll-over/switch volume out of May and into future months.

After opening a few dollars lower, the platinum price began to chop higher until around 11 a.m. CST — and then traded flat until around 1:30 p.m. CST.  It was sold down a bit at that point, but the real price pressure appeared around 12:40 p.m. in Zurich — and the low tick, like in gold, came a few minutes after the equity markets opened in New York…no coincidence, I’m sure.  It took off higher from there, but ran into ‘something’ the moment it broke above unchanged on the day — and after trading sideways for about two hours, was sold lower into the 1:30 p.m. COMEX close.  It rallied a handful of dollars until trading ended at 5:00 p.m. EDT.  Platinum was closed at $721 spot, down 2 bucks from Tuesday.

Palladium, which is a thinly-traded and very illiquid market at the best of times, chopped erratically sideways until a few minutes after 9 a.m. in New York.  At that juncture it certainly looked like the same sellers in both gold and platinum hammered palladium’s price lower until a few minutes after the equity markets opened in New York yesterday morning.  It chopped quietly and equally  erratically sideways from there until the market closed at 5:00 p.m. EDT.  Palladium was closed at $2,180 spot, down 98 dollars from where it ended the trading day on Tuesday.

Based on Wednesday spot closing prices, the gold/silver ratio worked out to a bit under 115 to 1…about unchanged from what it was on Tuesday.


The dollar index closed very late on Tuesday afternoon in New York at 99.05 — and opened down about 7 basis points once trading commenced around 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning.  It rallied a bit above unchanged an hour or so later — and then didn’t do much until around 1:35 p.m. CST.  A ‘rally’ began at that juncture — and that lasted until 10:20 a.m. in London.  It proceeded to trade unevenly sideways until the 99.84 high tick was set around 1:50 p.m. in New York.  It was quietly down hill from there until 4:35 p.m. — and it then traded flat into the 5:30 p.m. close.

The dollar index finished the Wednesday session at 99.67…up 62 basis points from its close on Tuesday.

It was yet another day where there was little if any correlation between what was going on in the currencies and precious metal prices.

Here’s the DXY chart for Wednesday, courtesy of BloombergClick 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…99.75…and the close on the DXY chart above, was 8 basis points higher than the spot month close on Wednesday.  When will this end?  Click to enlarge as well.

The gold shares opened about unchanged — and after dipping into negative territory by a hair in the first ten minutes of trading, began to head higher.  Their respective highs were printed around 12:25 a.m. in New York trading, but by minutes before 1 p.m. EDT, they were back to within a hair of unchanged.  They recovered from there — and chopped quietly higher until the markets closed at 4:00 p.m. EDT.  The HUI close up a respectable 3.21 percent.

The silver equities opened down a whole bunch once trading commenced at 9:30 a.m. EDT on Wednesday morning.  They rallied to a bit above unchanged by around 11 a.m. — and then were sold quietly lower until 12:55 p.m.  They chopped quietly higher into the close from there, but never got a sniff of unchanged, as Nick Laird’s still very sad-looking Intraday Silver Sentiment/Silver 7 Index closed down 1.87 percent.  Click to enlarge if necessary.

I calculated Nick’s Silver Sentiment Index manually — and it worked out to down 1.46 percent.

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

The star was SSR Mining up a hefty 7.91 percent — and the dog of the day was Coeur Mining…down a whopping 17.76 percent.  If it hadn’t been for CDE, the Silver 7 Index would have certainly closed higher on the day, as Peñoles was up 6.77 percent as well…so not all was doom and gloom in the silver equities yesterday.


The CME Daily Delivery Report showed that 1,433 gold and 18 silver contracts were posted for delivery within the COMEX-approved depositories on the U.S. east coast on Friday.

In gold, there were eight short/issuers in total — and the four largest were Goldman Sachs with 902 contracts out of its in-house/proprietary trading account.  Tied in second spot were Deutsche Bank and Morgan Stanley, with 153 contracts each…Deutsche Bank from its own account as well, but in the case of Morgan Stanley, there was 137 from its house account, plus another 16 from its client account.  In fourth sport was JPMorgan, with 125 contracts out of its client account.  There were fifteen long/stoppers — and the largest by far was JPMorgan, picking up 650 contracts for its client account.  The next three were HSBC USA, Australia’s Macquarie Futures and Citigroup…with 219, 166 and 143 contracts respectively — and all for their respective in-house/proprietary trading accounts.

In silver, there were three short/issuers — and by far the biggest was RBC Capital Markets with 14 contracts out of its client account.  Of the three long/stoppers the largest was Morgan Stanley with 15 contracts for its client 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 April fell by 2,690 contracts, leaving 4,688 still around, minus the 1,433 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 3,174 gold contracts were actually posted for delivery today, so that means that 3,174-2,690=484 more gold contracts just got added to the April delivery month.  Silver o.i. in May declined by 3 contracts, leaving 56 still open, minus the 18 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 4 silver contracts were actually posted for delivery today, so that means that 4-3=1 more silver contracts was just added to April.


There was another deposit into GLD on Wednesday, as an authorized participant added 56,440 troy ounces of gold — and there was rather smallish 186,566 troy ounces of silver added to SLV.

In other gold and silver ETFs on Planet Earth on Wednesday, net of any COMEX and GLD & SLV activity, there was a net and absolutely stunning 3,061,763 troy ounces of gold added.  All of that, plus a bit more, disappeared into the iShares gold ETF. [I sent an e-mail off to Nick to see if I could get confirmation of that amount.  He saw that big increase as well — and was working on a confirmation before I’d even e-mailed him.  I’ll update you as soon as I’ve heard. – Ed] There was a net 389,331 troy ounces of silver withdrawn — and that’s only because of a 710,312 troy ounce withdrawal from SIVR.

Much to my surprise, there was a sales report from the U.S. Mint.  They didn’t sell any gold bullion coins, but reported selling 650,000 silver eagles, which they included in March — and not on April 1…the day the sales showed up on their website.

For all of March, the mint sold 142,000 troy ounces of gold eagles — 47,500 one-ounce 24K gold buffaloes — and 5,482,500 silver eagles…the biggest sales month of 2020 by far.


It was a monster day in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday, as 703,208 troy ounces was reported received — and nothing was shipped out.  There was 321,510.000 troy ounces/10,000 kilobars [SGE kilobar weight] received at JPMorgan — and that’s the first time I’ve ever seen them receive kilobars using the SGE weight.  Up until now, they’ve always recorded kilobars using the U.K./U.S. weight.  There was 32,480.000 troy ounces…which looks like 3,248 ten-ounce gold bars, was received at Malca-Amit of all places.  The remaining 60,218 troy ounces was dropped off at Canada’s Scotiabank.  There was a bit of paper movement, as 60,031 troy ounces was transferred from the Eligible category and into Registered over at JPMorgan.  The link to all this is here.

There wasn’t much activity in silver.  Nothing was reported received — and only 140,035 troy ounces was shipped out.  The majority of the ‘out’ activity was 109,957 troy ounces that departed Brink’s, Inc.  The remaining 19,886 troy ounces and 10,191 troy ounces was shipped out of CNT and Delaware respectively.  In the paper category, there was a tiny 4,845 troy ounces…which looks like one COMEX silver contract’s worth…transferred from the Registered category and back into Eligible over at Canada’s Scotiabank.  The link to this is here.

There was also decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They reported receiving 3,321 of them — and didn’t ship any out.  All of this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


Here’s another chart that Nick passed around on the weekend.  This one shows gold withdrawals from the Shanghai Gold Exchange, updated with February’s data.  During that month, there was a paltry 28.99 metric tonnes withdrawn — and here’s Nick’s most excellent chart that shows that change.  Click to enlarge.

And since I have a story about March sales at The Perth Mint in the Critical Reads section below…here are Nick’s charts showing their gold and silver sales updated with that data.  During March they sold 93,775 troy ounces of gold coins, plus 1,736,409 troy ounces of silver bullion coinsClick to enlarge for both.

I don’t have all that many stories, articles or videos for you today…thankfully.


CRITICAL READS

Fed Panics as Foreigners Dump a Record $109 Billion in U.S.Treasuries

Exactly one week ago, when we highlighted the unprecedented surge in Fed Treasury purchases which since March 19 has amounted to $75BN per day until tomorrow when it tapers modestly to $60BN, we said that the Fed’s record ramp in debt monetization “is hardly an accident: one look at the Treasury securities held in custody at the Fed shows that the past two weeks have seen a whopping $50BN in foreign central bank sales, a 1.7% drop which was the highest in six years.”

As we also noted, “the selling may have contributed to record volatility in the Treasury market and prompted the Fed’s intervention. More importantly, it also means that the biggest buyer of US Treasurys in the past decade, foreign official institutions (i.e., central banks and reserve managers) are now sellers, so now the U.S. government needs private investors to soak up the ever increasing debt issuance.”

But since private investors are busy, trying to avoid getting killed by a deadly Chinese virus, it means that only the Fed now can fund the exploding US budget deficit… which is precisely what it has been doing, having purchased a record $912 billion in U.S. Treasuries since the relaunch of official QE (hence expanded to unlimited QE) on March 13.

In total, in the turbulent month of March when global markets finally ended the longest bull market of all time, and crashed as much as 35%, and when oil lost more than 50% of its value overnight as Saudi Arabia launched an all out price war with virtually everyone else, Treasurys held in custody at the Fed on behalf of foreign central banks, sovereigns and reserve managers dropped by a record $109 billion – the biggest monthly drop in historyClick to enlarge.

The fall in custody holdings is a clear signal that foreign central banks – which have a lot of Treasury holdings – have been selling them to source dollars,” Subadra Rajappa, head of rates at Societe Generale told Bloomberg. “They need access to dollars as a lot of their payments are in dollars and that has driven them to sell Treasuries.”

The ongoing liquidation in foreign Treasury holdings – largely the result of the continued collapse in the price of oil as oil-exporters are forced to liquidate assets to obtain much needed dollars – led to the Fed’s panicked scramble to announce a foreign central bank repo facility, which it did on Tuesday morning, when it stopped short of saying it wanted to prevent a cascading domino effect from the Treasury liquidation, but made it very clear that the program will provide “an alternative temporary source of U.S. dollars other than sales of securities in the open market.”

Translation: stop selling Treasurys as the world’s (formerly?) most liquid market is now suddenly extremely illiquid, and ongoing sales will only further destabilize it.

So will the Fed succeed in halting foreign Treasury sales thanks to the brand new repo facility? Or will foreign central banks skip the repo facility, just as US dealers have done for the past 2 weeks, and continue to liquidate forcing the Fed – that last resort monetizer of US deficit and debt issuance – to buy even more Treasurys each day?

We’ll know the answer this time next week when the latest custody data is released, and this time it will include the fully functioning foreign repo facility.

This very interesting news item was posted on the Zero Hedge website at 7:04 p.m. on Wednesday afternoon EDT — and I thank Brad Robertson for sharing it with us.   Another link to it is here.


In Groundbreaking Move, Fed Excludes Treasurys From Leverage Ratio Rule: Here’s What That Means

For the past few weeks, most of Wall Street’s Fed watchers and STIR experts such as Zoltan Pozsar and Marc Cabana had lamented that one trick the Fed could pull to ease the tension in the Treasury market and to potentially unlock hundreds of billions in new lending capacity among US commercial banks, was to exclude Treasuries and deposits from the Fed’s much maligned Supplementary Leverage Ratio Rule, which forces banks to hold ultra safe Treasuries and/or deposits on their books (which are traditionally viewed by the Fed as less risky than loans) or else suffer a G-SIB capital surcharge.

Specifically, the Fed’s supplementary leverage ratio applies to financial institutions with more than $250 billion in total consolidated assets, and requires them to hold a minimum ratio of 3%, measured against their total leverage exposure, with more stringent requirements for the largest and most systemic financial institutions.

As we showed in November, JPMorgan’s aggressive dumping of Treasurys is why the bank’s GSIB surcharge was the highest across all U.S. banks despite being widely seen as the safest U.S. commercial bank.

Well, after trying pretty much everything else, including unleashing unlimited QE, expanding swap lines, opening unlimited repos to both domestic Dealers and Foreign central banks, and restarting the entire Lehman alphabet soup toolkit, on Wednesday after the close, the Fed did just that, and announced that to ease strains in the Treasury market resulting from the coronavirus and increase banking organizations’ ability to provide credit to households and businesses, the Fed announced a temporary change to its supplementary leverage ratio rule, which would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for holding companies, and will be in effect until March 31, 2021.

However, to make sure that the expanded balance sheet capacity is not used by banks simply to accelerate stock buybacks, it explicitly stated that “the Board is providing the temporary exclusion in the interim final rule to allow banking organizations to expand their balance sheets as appropriate to continue to serve as financial intermediaries, rather than to allow banking organizations to increase capital distributions, and will administer the interim final rule accordingly.”

Translation: what the Fed is effectively granted banks some 2% in balance sheet capacity to use as they see fit, as long as it is not for buybacks, eligible capital which they can – and likely will – use to buy more Treasurys knowing they can then just flip those Treasurys back to the Fed with a profit. Sure enough, Treasury yields immediately dumped after the news although they have since rebounded. Why?

Perhaps because the market took one look at the recent usage of the Fed’s repo facilities where any ongoing SLR stresses would have emerged, as Dealers would be forced to pledge more Treasurys to the Fed in exchange for reserves. Instead…crickets: not only have Dealers virtually stopped parking Treasuries at either the overnight or term repo facility, but today saw the second “no bid” repo operation ever, as not a single Treasury or MBS was pledged to the Fed in return for cash.

This rather longish and somewhat thick article put in an appearance on the Zero Hedge website at 5:43 p.m. EDT on Wednesday afternoon — and another link to it is hereGregory Mannarino‘s post market rant for Wednesday is linked here — and it comes courtesy of Brad Robertson.  I haven’t had the time to listen to it, so you’re on your own.


Wall Street Had Cut 68,000 Jobs and Received Trillions in Emergency Loans Prior to COVID-19 Anywhere in the World

On March 26 Federal Reserve Chairman Jerome Powell went on the Today show to deliver one message: “There is nothing fundamentally wrong with our economy.” Recently U.S. Treasury Secretary Steve Mnuchin has appeared on the White House lawn to tell reporters that this is nothing like the last financial crisis. Fed regional bank presidents have appeared on cable news asserting that the Wall Street banks have plenty of capital and today’s economic distress is caused solely by the coronavirus. Even New York Times columnist and perpetual Wall Street cheerleader, Paul Krugman, was on CNBC this week reassuring viewers that today’s problem was not like the last financial crisis.

And yet – the facts keep getting in the way of this “official” narrative.

The first coronavirus COVID-19 case was discovered in China in December 2019 and didn’t become a major issue in the United States until February 2020. But on October 7, 2019 we reported that Wall Street banks had announced a staggering 68,000 job cuts as the Fed pumped $310 billion more in unprecedented loans to Wall Street. That doesn’t sound like there was “nothing fundamentally wrong with our economy,” the narrative that Powell is pushing.

On October 9 we reported that Powell had appeared at a speaking event in Denver at the National Association of Business Economists and acknowledged that a larger, long-term bailout of Wall Street was on its way. That also doesn’t sound like everything was fine in the financial world before the coronavirus hit.

This interesting commentary appeared on the wallstreetonparade.com Internet site on Wednesday sometime — and it found it in a GATA dispatch. Another link to it is here.


Bank of Canada Starts Quantitative Easing With $1 Billion Bond Purchase

The Bank of Canada began its first-ever foray into quantitative easing on Wednesday, with the purchase of C$1.0 billion ($703 million) in government bonds.

The central bank bought various amounts of five different bond series in the five-year range, with maturity dates ranging from Sept. 2023 to June 2025, according to results posted on the Bank of Canada’s website.

It’s a moderate start to what some analysts are predicting will be hundreds of billions of dollars in purchases of Canadian government bonds in coming months as part of the central bank’s efforts to ease strains in the financial system and keep money cheap for borrowers. The Bank of Canada hasn’t set a limit on purchases, only saying it will buy a minimum C$5 billion in government bonds per week until the nation’s recovery is “well underway.”

While Bank of Canada Governor Stephen Poloz has been reluctant to define the purchases as “quantitative easing” specifically, he said last week he wouldn’t argue against characterizing the actions as such.

This Bloomberg news item put in an appearance on their website at 10:32 a.m. PDT on Wednesday morning — and it comes to us courtesy of Roy Stephens.  Another link to it is here.


Europe and Iran Complete First INSTEX Transaction, Dodging U.S. Sanctions

The very first transaction of the INSTEX special purpose ‘alternative’ vehicle between Europe and Iran has been successfully completed, according Germany’s Foreign Ministry Tuesday. “France, Germany and the United Kingdom confirm that INSTEX has successfully concluded its first transaction, facilitating the export of medical goods from Europe to Iran. These goods are now in Iran,” the ministry said in a statement.

It was created over a year ago by European signatories to the 2015 nuclear deal in order to bypass Trump administration Iran-related sanctions, after the Belgium-based SWIFT financial messaging service suspended access for Iranian banks in Nov. 2018 under pressure from Washington.

France, Germany, and the United Kingdom confirmed the first transaction with Iran involving the export of medical goods, at a crucial moment the coronavirus is ravaging the population, and vowed it was the first of many to come.

The mechanism also seeks to woo European companies back into doing business with Iran, and to provide a legal and ‘humanitarian’ means of bypassing U.S. sanctions without fear of penalties.

The timing is sure to not be missed by the Trump administration, given that even amid the global coronavirus pandemic, which has been particularly fierce in Iran – taking over 2,800 lives among 44,600 confirmed cases – the U.S. has kept up its “maximum pressure” campaign, despite critics saying the sanctions are ensuring the further spread of the virus through hitting Iran’s already weakened medical sector hard.

This news item showed up on the Zero Hedge website at 4:15 a.m. EDT on Wednesday morning — and I thank Jim Gullo for sending it along.  Another link to it is here.


In Surprise Tweet, Trump Warns ‘Iran Sneak Attack‘ Coming – Tehran To Pay “Very Heavy Price

For the U.S. administration it appears now is as good a time as any to start a major proxy war with Iran inside Iraq.

Or perhaps the distraction of yet another Middle East war is just what the doctor neocons ordered at a moment the United States and the world for that matter faces its biggest crisis since World War II in the form of the expanding deadly pandemic.

Wednesday afternoon the president tweeted out this stunner: “Upon information and belief, Iran or its proxies are planning a sneak attack on U.S. troops and/or assets in Iraq. If this happens, Iran will pay a very heavy price, indeed!

For most, the events of January which almost took the U.S. to war with Iran after the assassination of IRGC Quds Forces General Qassim Soleimani, likely feels light-years away into the distant past.

But here we are again, with Trump suddenly threatening “Iran will pay a very heavy price” — clearly a threat of military strike. This after Pompeo and his gang of neocons and the State Department and Treasury have already ratcheted up sanctions further on the corona virus-ravaged Islamic Republic.

This also comes after last Friday the Pentagon was been ordered by Secretary of State Pompeo to begin planning to wipe out certain Iraqi militias which they believe are Iranian proxies, especially the large Kataib Hezbollah Shia militia.

However, the administration reportedly remains divided, given it would require an influx of thousands more American troops in Iraq, at a moment the Department of Defense is barely able to get a handle on containing the coronavirus outbreak in its ranks, which it should be noted has lately taken out a whole nuclear aircraft carrier.

A war that takes out a very big chunk of the Gulf’s oil supply is just the ticket that the deep state needs to get oil prices higher.  Gold and silver will be hard on its heels.  This Zero Hedge article appeared on their website at 1:45 p.m. on Wednesday afternoon EDT — and I thank Brad Robertson for this one as well.  Another link to it is here.


World’s Top Gold Market Freezes as Chinese Shoppers Stay Away

The coronavirus pandemic has frozen the Chinese gold market, torpedoing demand at a time when investors elsewhere in the world are clamoring for the safety of bullion.

China is the biggest buyer of gold bars, coins and jewelry, but the national shutdown to contain the virus has emptied malls, while the premium charged to buy the metal in China has evaporated. It leaves the industry staring down a long road to recovery, even as Beijing tries to jump-start broader consumption with a campaign to get shoppers out and about.

The market’s struggles in China may present a headwind for prices, which last month topped $1,700 an ounce for the first time in seven years. The traditional haven also faces a drag from slower retail consumption in India, Europe and the U.S., as well as Russia’s surprise decision to halt purchases by its central bank. Last year, Chinese consumers accounted for about a fifth of total gold demand of 4,356 tons, according to the World Gold Council.

Domestic demand for gold will recover very slowly,” said Zhang Yongtao, chief executive officer of the China Gold Association. “Even after processors resume production, one major issue is that there are no orders,” he said.

China’s retail sales of gold, silver and jewelry plunged 41% in the first two months of the year. Zhang estimated that the amount of gold jewelry sold in the first quarter will have fallen by at least half, setting up a significant decline for the whole year. “Consumers won’t return to buy gold jewelry until the pandemic ends, and Chinese investors are also unwilling to purchase gold with their deposits at the moment,” he said.

The trepidation contrasts with a flurry of activity on the global market last week, which saw gold refineries shut and aircraft grounded, creating a massive squeeze on gold futures in New York as traders scrambled to get enough physical metal to meet their commitments.

This Bloomberg story showed up on the bnnbloomberg.ca Internet site on Tuesday sometime — and it’s something that shamelessly ripped off the Sharps Pixley website.  Another link to it is here.


Australia’s Largest Mint Sees Surge in Gold, Silver Sales

The Perth Mint, Australia’s largest, reported a jump in gold and silver sales last month as demand for havens surged amid the coronavirus pandemic.

The mint, which has been in business for more than a century, said gold coin and minted bar sales totaled 93,775 ounces in March, the highest since April 2013, according to data compiled by Bloomberg. Silver sales almost tripled to 1.74 million ounces from 605,634 ounces in February.  Click to enlarge.

The mint’s gold kilobars were sold out last week due to the surge in demand amid a squeeze in the market, according to Chief Executive Officer Richard Hayes. It has reopened the kilobar manufacturing facility to ensure additional stock is available, and separately has diverted production to its popular 1 ounce Silver Kangaroo coin to meet a backlog of orders, he said last week.

This brief 1-chart Bloomberg article put in an appearance on their Internet site at 12:33 a.m. PDT [Pacific Daylight Time] on April 1 — and I found it on the gata.org Internet site.  Another link to it is here.


The PHOTOS and the FUNNIES

Still in the gondola on the way down to Hell’s Gate on September 8…I snapped these photos in quick succession.  First first looking downstream and over the pedestrian bridge that crosses the Fraser River/Canyon.  The odd geometric shapes in the top left of the frame are reflections off the squeaky-clean windows.  The second photo is looking up river — and the retail tourist trap that awaited us.  The last shot is of a CN unit train heading eastbound on the west face of the canyon wall.  Click to enlarge.


The WRAP

Gold and silver were pretty much kept range-bound during the Wednesday trading session, with gold being kept below $1,600 spot — and silver below $14.  The Big 7 shorts certainly were around — and like I said about Tuesday’s trading session, Wednesday’s trading session looked like ‘care and maintenance’ as well.

With the exception of gold, the Big 6 commodities were closed lower on the day.  And as an aside, natural gas closed at a new low for this move down — and a price not seen since March 2016.  Here are the 6-month charts for the Big 6 commodities — and there’s not a lot to see. But it should be noted that gold’s big price rally came after the COMEX close, so that gain is not reflected in its Wednesday doji.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I see that the gold price ticked a bit higher about an hour or so after trading began at 6:00 p.m. EDT in New York on Wednesday evening.  It was then sold lower until around 9:15 a.m. China Standard Time on their Thursday morning.  It has been creeping quietly and unsteadily higher at an ever-increasing rate since, but is still down $1.30 an ounce.  Silver followed the same general price path as gold, but that only lasted until 2 p.m. CST — and it blasted higher from there.  It was capped and driven lower very shortly thereafter, but has ticked higher since — and is up 30 cents at the moment — and well off its current $14.30 spot high tick as London opens.  Platinum traded flat until about 8 a.m. CST — and then was sold lower over the next hour and change, before edging a bit higher.  It took off higher around 1:15 p.m. in Shanghai but, like silver, its price was capped and turned lower at about the same time.  Platinum is only up 9 bucks at the moment.  And after getting hammered lower at the open in New York on Wednesday evening, palladium has been rallying rather erratically higher since — and is up 95 dollars as Zurich opens.

Net HFT gold volume is pretty quiet at a bit over 24,000 contracts — and there’s a hair over 2,000 contracts worth of roll-over/switch volume on top of that.  Net HFT silver volume is around 8,600 contracts — and there’s only 664 contracts worth of roll-over/switch volume out of May and into future months in this precious metal.

The dollar index opened down about 15 basis points at 99.925 once trading commenced around 7:45 p.m. EDT on Wednesday evening in New York, which was 7:45 a.m. China Standard Time on their Thursday morning.  It chopped higher until it kissed the unchanged mark at 11:02 a.m. CST — and began to head sharply lower about two hours later.  It appeared to get saved by the usual ‘gentle hands’ at the 99.34 mark at, or minutes before, the 2:15 p.m. afternoon gold fix in Shanghai.  It’s off its current low tick by a bit, but still down 22 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Something else that caught my eye yesterday was the fact that the bank stocks…the BKX index…gapped down and closed lower by 6.90 percent.  So despite all these free handouts to the Wall Street banking syndicate — and the European banks, by the Federal Reserve, it’s obvious that the entire world’s financial system would melt down in a New York minute without this infinite money printing.  I get the distinct impression that we’re only one derivative accident away from that at any particular moment in time.

And whether that occurs on this side of the Atlantic, or in the hallowed halls of Commerzbank or Deutsche Bank, remains to be seen.  But as I keep pounding away about month after month and year after year…the system is going to collapse in a heap at some point anyway — and the only thing left to discuss when it happens is whether it occurs through circumstance…or design, as this state of affairs will not and cannot last.

And adding to that eventuality on the economic side is this comment from a Zero Hedge article from yesterday evening headlined “6.5 Million Initial Jobless Claims Tomorrow?” – and it reads as follows…”tomorrow’s initial claims print is expected to be another catastrophe, the only question is just how bad will it get — and how much above the consensus print of 3.7 million will the actual number be.”

It’s just another brick in the wall, as the situation is hopeless — and unsalvageable.


And as I post today’s column on the website at 4:02 a.m. EDT, the first hour of London/Zurich trading are ending — and I note that gold has shot into the plus column, but was capped and sold lower the moment it broke through $1,600 spot — and is now up only $1.60 the ounce. Silver has jumped higher as well — and is now up 32 cents, but ran into ‘da boyz’ around 8:20 a.m…just like gold. Both platinum and palladium are lower as the first hour of Zurich trading draws to a close…the former by 5 dollars — and the latter by 65.

Gross gold volume is a bit over 36,000 contracts — and net of current roll-over/switch volume, net HFT gold volume is a bit under 31,500 contracts. Net HFT silver volume is coming up on 11,500 contracts — and there’s still only 840 contracts worth of roll-over/switch volume out of May and into future months.

The tiny rally in the dollar index that began at the afternoon gold fix in Shanghai, ran out of gas around 8:12 a.m. in London — and has edged a bit lower since, but has picked up a bit in the last twenty minutes — and as of 8:45 a.m. BST/9:45 a.m. CEST in Zurich, the dollar index is down 15 basis points.


Here’s another “treat’ if you made it this far.  This one comes to us courtesy of Judy Sturgis.  I wish I had these kind of life, computer and musical skills to pull off videos like this — and the link is here.

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

Ed

Over 2 Million Ounces of Gold Already Out For Delivery in April

01 April 2020 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The price pressure in gold began the moment that trading started at 6:00 p.m. EDT in New York on Monday evening — and that continued until shortly before noon China Standard Time on their Tuesday morning.  From that juncture it traded sideways until ‘da boyz’ appeared a few minutes before 10 a.m. in London, with the London low coming at, or minutes before, the noon silver fix over there.  It rallied, but under obvious price pressure, until about 10:20 a.m. in New York — and then JPMorgan et al. reappeared — and it was sold lower until 4 p.m. in after-hours trading.  It didn’t do much after.

The high and low ticks were reported by the CME Group as $1,645.60 and $1,594.00 in the June contract, which is now the new front month for gold.

Gold was closed in New York on Tuesday afternoon at $1,577.10 spot, down $46.30 on the day.  Net volume was very quiet once again at a bit under 163,500 contracts — and there was around 15,300 contracts worth or roll-over/switch volume on top of that.

The silver price wandered around about fifteen cents or so either side of unchanged, with the $14.30 spot high tick coming a minute before 12 o’clock noon in New York.  As soon as the clock struck twelve, the selling pressure appeared — and its $13.74 spot low tick was set shortly before the 1:30 p.m. EDT COMEX close.  It rose and fell a dime or so between then and the 5:00 p.m. close.

The high and low ticks in silver were recorded as $14.50 and $14.055 in the May contract.

Silver was closed on Tuesday afternoon in New York at $13.925 spot, down 8 cents from its Monday close.  Net volume was, once again, extremely light at a bit under 41,000 contracts — and there was about 11,300 contracts worth of roll-over/switch volume out of May and into future months.

After being sold down a few dollars at the New York open on Monday evening, it struggled higher until around 9:15 a.m. China Standard Time on their Tuesday morning.  It was all down hill from there until the low of the day was set shortly before 2 p.m. in Zurich trading, which was shortly before 8 a.m. in New York.  A rally commenced from there that, like the other precious metals during the COMEX trading session, ran into ‘difficulties’ — and it was capped and turned lower about fifteen minutes after the 11 a.m. EDT Zurich close.  It was sold back below unchanged by a few dollars a few minutes before the COMEX close — and it chopped quietly sideways until trading ended at 5:00 p.m. EDT.  Platinum was closed at $723 spot, down 4 bucks from Monday.

Palladium’s Far East high on Tuesday came a few minutes before 9 a.m. CST on their Tuesday morning — and it was sold unevenly lower until the low was set at exactly 10 a.m. in Zurich.  It crept quietly higher from that point until precisely 10 a.m. in New York.  It blasted higher from there, but also ran into ‘difficulties’ the higher it climbed.  ‘Da boyz’ put a sock in that rally about 12:45 p.m. EDT — and it was sold down hard until the 1:30 p.m. COMEX close.  From there it edged very quietly and unevenly lower until the market closed at 5:00 p.m. EDT.  Palladium was closed at $2,278 spot, up 59 bucks on the day, but light years off its Kitco-recorded $2,538 spot high tick.  And it should be noted that the bid/ask spread in this precious metal is $150 at the moment.

Based on the closing spot prices in both gold and silver yesterday, the gold/silver ratio works out to 113 to 1…down from the 117 to 1 that it was on Monday.  That difference is only because ‘da boyz’ hammered the gold price into the dirt in New York on Tuesday afternoon.


The dollar index closed very late on Monday afternoon in New York at 99.18 — and opened up about eight basis points once trading commenced around 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning.  From that point it rallied very unevenly higher until the 99.95 high tick was set at 12:10 p.m. BST in London/7:10 a.m. in New York.  Its fall from grace from that height was even more uneven — and that continued right into the 5:30 p.m. EDT close.

The dollar index finished the day at 99.05 spot, down 13 basis points from its close on Monday.

It was yet another day where what the currencies were doing made no difference in precious metal prices.  Yesterday’s price action in gold and silver et al. was purely paper trading on the COMEX.

Here’s the DXY chart for Tuesday, 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…99.09…and the close on the DXY chart above, was 4 basis points higher than than the close on DXY chart above on Tuesday.  Click to enlarge as well.

The gold stocks headed lower once trading began at 9:30 a.m. in New York on Tuesday morning — and their low ticks came at 10 a.m. EDT.  They rallied until noon — and then followed the gold price after that, as the HUI closed just off its low of the day, down 2.51 percent.

The silver equities followed the gold share price action almost tick for tick, except they closed down even more on the day — and their loses were out of all proportions to what silver closed at yesterday.  Nick Laird’s still very sad looking Intraday Silver Sentiment/Silver 7 Index chart closed lower by 3.48 percent.  Click to enlarge if necessary.

I computed the above index change manually once again — and it showed it down by only 2.85 percent.

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

Peñoles was the ‘star’ at unchanged on the day, but it only traded 300 shares, so that doesn’t mean a lot.  Wheaton Precious Metals was down only 1.33 percent — and the pooch was Coeur Mining, down 5.87 percent.


The CME Daily Delivery Report for Day 2 of April deliveries showed that 3,174 gold and 4 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, there were fourteen short/issuers — and the four biggest were Standard Charter, with 1,666 contracts out of its in-house/proprietary trading account.  In distant second spot was International F.C. Stone with 689 contracts out of its client account.  And in third and fourth place were ABN Amro and Morgan Stanley, with 219 and 151 contracts…the former from their own account — and the latter issuing 86 contracts from their house account, plus another 65 contracts from their client account.  Their were sixteen long/stoppers — and by far the largest hog was JPMorgan, with 1,497 contracts for its so-called ‘client account’.  In second and third spot were Australia’s Macquarie Futures and Citigroup, with 418 and 361 contracts for their respective in-house proprietary trading accounts. In fourth place was Dutch bank ABN Amro with 288 contracts for its client account.

In silver, Marex Spectron issued all four contracts.  Morgan Stanley picked up 3 — and the last one was stopped by ADM.  All contracts, both issued and stopped, involved their respective client accounts.

Already this delivery month, which is only two days young, there have been 20,476 gold contracts and 724 silver contracts issued/reissued and stopped.

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 April cratered by 18,344 contracts, leaving 7,351 still open, minus the 3,174 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 17,302 contracts were actually posted for delivery today, so that means that 18,344 minus 17,302 equals 1,042 gold contracts just vanished from the April delivery month.  Silver o.i. in April dropped by 699 contracts, leaving just 59 left, minus the 4 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 720 silver contracts were actually posted for delivery today, so that means that 720-699=21 more silver contracts just got added to April.


There was another deposit into GLD, as an authorized participant added 84,660 troy ounces on Tuesday.  There were no reported changed 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, March 27 — and this is what they had to report. They were blow-out numbers — and that’s an understatement!  There was a knee-wobbling 128,690 troy ounces of gold added, plus a whopping 1,835,551 troy ounces of silver added as well.  But according to Nick Laird, who keeps meticulous records of such things…”It is far from a record – as the best gold increase I have seen is 414,156 oz…It’s the 16th largest record I have going back to 2007.

In other gold and silver ETFs on Planet Earth on Tuesday, minus COMEX, ZKB and GLD & SLV activity, there was a net 21,273 troy ounces of gold added, plus 442,896 troy ounces of silver.

And for reasons that you’re already aware of, there was no sales report from the U.S. Mint.


It was a pretty busy day in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  There was 183,787 troy ounces reported received — and nothing was shipped out.  Most of the ‘in’ activity was 176,026.727 troy ounces/5,475 kilobars [SGE kilobar weight] that was dropped off at Brink’s, Inc.  There were much smaller amounts…5,260 troy ounces and 2,499 troy ounces…deposited at Loomis International and HSBC USA.  There was more paper activity, as 584,551 troy ounces was transferred from the Eligible category and into Registered — and all for delivery in April one would suspect.  There were six different depositories involved, so I’m not going to bother breaking them out.  If you’re interested in seeing who and how much, the link to all that activity is here.

And as another note of interest, all of those new sub-depositories, five in total, that were set up for 400 ounce gold bars that showed up on Friday’s gold depositories in Tuesday’s column…they have all vanished off today’s data page from the CME Group.  None of them had any gold in them, but one wonders what is really going on behind the scenes that we just aren’t privy to.  Whatever it is, things appear to be chaotic to me.

There was some activity in silver.  There was 601,332 troy ounces…one truckload…reported received — and that all ended up at CNT.  There was 446,372 troy ounces withdrawn, with the lion’s share…421,400 troy ounces…coming out of Brink’s, Inc.  The rest…20,087 troy ounces and 4,884 troy ounces…departed Delaware and the International Depository Services of Delaware.  There was some paper activity, as 186,476 troy ounces was transferred from the Registered category and back into Eligible…129,987 at Delaware, 46,446 troy ounces at Brink’s, Inc. — and the remaining 10,042 troy ounces made that trip over at the International Depository Services of Delaware.  I’m sure that Ted might suspect that this is JPMorgan-related somehow.  The link to all this is here.

It was very busy once again over at the COMEX-approved kilobar depositories in Hong Kong on their Monday.  They reported receiving 860 of them — and shipped out 3,738.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

There’s certainly a lot of gold on the move in the world these days.


Here are two more charts from the long list that Nick sent out on the weekend.  These two show the gold and silver imports into China [if they can be believed] for both January and February — and this is what Nick Laird had to say about them when he sent them out…”Chinese flows – Jan/Feb data was aggregated – so they are split 50/50 to present“.  Seems fair to me.  Click to enlarge.

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


CRITICAL READS

The Biggest Decline Ever“: Goldman Now Sees U.S. GDP Crashing 34% in Q2

Just over a week ago, when we reported on the ongoing feud between Goldman and JPM to come up with the most terrifying GDP forecast for the US, and when we asked if a Second Great Depression has begun after Goldman’s chief economist Jan Hatzius slashed his Q2 GDP forecast from -5% to -24%, we said “we expect Goldman to take the machete to this analysis as well in the coming days, because if the U.S. economy is indeed paralyzed for at least one quarter, then all of GDP could be lost.”

We were right, because early on Monday morning Goldman’s Haztius did just that, and in a report titled “The Sudden Stop: A Deeper Trough, A Bigger Rebound“, he writes that he is “making further significant adjustments to our GDP and employment estimates. We now forecast real GDP growth of -9% in Q1 and -34% in Q2 in quarter-over-quarter annualized terms (vs. -6% and -24% previously) and see the unemployment rate rising to 15% by midyear (vs. 9% previously).”

Yes, the Q1 GDP drop is stunning…

… but it is the Q2 collapse which wipes out more than a third of the U.S. economy that is truly jaw-dropping because as Hatzius admits, “it would represent a decline that is more than three times larger than the previous low in the history of the modern U.S. GDP statistics.”

Finally, just like JPM, Goldman admits it really has neither the visibility nor the proper models to predict what happens next as the U.S. economy slides into a depression:

Using the labor market data in this fashion requires an estimate of “Okun’s law”, the relationship between the change in the unemployment rate and the change in real GDP (relative to trend). Normally, the coefficient for Okun’s law is thought to be about 2, meaning that a 1pp rise in the unemployment corresponds to a 2% hit to real GDP. During this crisis, however, a more appropriate Okun’s law coefficient is likely to be closer to 1.

Our current estimate of a roughly 12pp increase in the unemployment rate implies a roughly 12% peak decline in the level of GDP, which is broadly consistent with the estimates in Exhibits 1 and 2. Going forward, we plan to use this relationship and its industry-level counterparts aggressively to keep our GDP estimates up to date in coming months as more timely labor market data become available. This could well imply further substantial revisions to our real GDP estimates—in either direction—as the scale of the labor market downturn comes into fuller view in coming weeks and months.”

This means that as we enter the cruelest month in the history of the U.S. economy, when GDP may plunge double digits in April alone, brace for even more cuts from Goldman which will forecast a -50% GDP print before it’s all said and done.

This long, chart filled commentary was posted on the Zero Hedge website at 8:29 a.m. on Tuesday morning EDT — and I thank Brad Robertson for this one.  Another link to it is hereGregory Mannarino‘s post market close rant for Tuesday is linked here — and it’s a long one — and I haven’t listened to it as of yet.  ‘Mac P’ was the first reader through the door with it.


There Are Basically No Sales“: U.S. Auto Industry Enters Total Collapse as a Result of Nationwide Lock-down

2020 is shaping up to be nothing short of a complete and total meltdown for the U.S. auto industry.

The industry was already barely holding on by a thread before the coronavirus pandemic started, with China leading the rest of the globe’s auto industries into recession over the last 18 months. Now, in a post-coronavirus world, automakers in the U.S. are expecting nothing less than full collapse.

And the things that were barely holding the industry up to start 2020, namely low rates and modest consumer confidence, don’t matter. Businesses are closed, would-be buyers are strapped for cash and the country’s economy has simply been turned off. The industry’s annualized selling rate could slow to 11.9 million in March, according to Edmunds.

Jessica Caldwell, executive director of insights for market researcher Edmunds, told Bloomberg: “The whole world is turned upside down right now.”

The coronavirus lock-downs across the nation will also put a damper on April, which is traditionally a good month for auto sales. Ford is all but shutting down and names like Fiat and GM are expected to release extremely weak numbers later this week.

Morgan Stanley analyst Adam Jonas put it simply: “There are basically no U.S. auto sales right now. Investors have fully embraced the reality that the U.S. auto industry may be shut down for one or two full months. We’re now being asked to run scenarios of six-month or nine-month shutdowns.”

We highlighted the collapse of the industry in China in February, where industry wide, sales fell 79% in February, marking the biggest ever monthly plunge on record.

The U.S. can expect a similar type of rude awakening for its March numbers. The only question now is what quarter – if any – the industry will start to see some type of a rebound. At this point, analysts have already skipped over the idea of the second or third quarter offering hope, and have moved on to eye the fourth quarter.

This longish news item appeared on the Zero Hedge website at 6:25 p.m. EDT on Tuesday evening — and another link to it is here.


Fake Money Is Killing the Economy — Bill Bonner

According to the TSA, travel volume through the nation’s airports declined from 2.3 million on March 1 to just 180,000 on Sunday.

Business travelers, vacationers, commuters – all fell by more than 90% as the U.S. economy moved to a war footing.

All across the country, people are staying at home. Business is collapsing. In Maryland, for example, staying at home is no longer a recommendation; it’s the law!

And now, the St. Louis Fed says unemployment could reach Great Depression levels. CNBC:

Millions of Americans already have lost their jobs amid the coronavirus and the worst of the damage is yet to come, according to a Federal Reserve estimate.

Economists at the Fed’s St. Louis district project total employment reductions of 47 million, which would translate to a 32.1% unemployment rate, according to a recent analysis of how bad things could get.”

Is this another great buying opportunity?

We doubt it. The feds can juice the markets with fake money. But they can’t make a real depression go away. Fake money produces fake wealth, not real wealth.

And this time, the feds are making war against an enemy they can’t beat: capitalism itself. The gods are on the other side.

Bill’s commentary put in an appearance on the bonnerandpartners.com Internet site on Tuesday sometime — and another link to it is here.


The Dark Secrets in the Fed’s Last Wall Street Bailout Are Getting a Devious Makeover in Today’s Bailout

From December 2007 to November 10, 2011, the Federal Reserve, secretly and without the awareness of Congress, funneled $19.6 trillion in cumulative loans to bail out the trading houses on Wall Street. Just 14 global financial institutions received 83.9 percent of those loans or $16.41 trillion. (See chart above.) A number of those banks were insolvent at the time and did not, under the law, qualify for these Fed loans. Significant amounts of these loans were collateralized with junk bonds and stocks, at a time when both markets were in free-fall. Under the law, the Fed is only allowed to make loans against “good” collateral.

Six of the institutions receiving massive loans from the Fed were not even U.S. banks but global foreign banks that had to be saved because they were heavily interconnected to the Wall Street banks through unregulated derivatives. If one financial institution in this daisy chain of derivatives failed, it would set off a domino effect.

What makes the New York Fed’s bailout of Wall Street so much more dangerous this time around is that it has decided to use a different structure for its loans to Wall Street – one that will force losses on taxpayers and, it hopes, will provide an ironclad secrecy curtain around how much it spends and where the money goes.

The New York Fed plans to use Special Purpose Vehicles (SPVs) for many of its funding facilities again this time around. (It should provide no comfort to the American people that Enron used SPVs to hide the true state of its finances and blow itself up.) But last time around, the New York Fed put up the equity interest in the SPV and thus was on the hook for any losses.

This time around, the New York Fed is forcing the U.S. Treasury to put up $454 billion from the taxpayer to fund the equity stakes in its SPVs, which it plans to then leverage up to at least $4 trillion, according to White House Economic Advisor Larry Kudlow. But the New York Fed is then signing a private contract with a private Wall Street firm to allow it to be the manager of the SPV, handling the purchasing of toxic waste from Wall Street’s trading houses while funneling clean cash out to them. The New York Fed is asking these firms for an iron-clad confidentiality agreement that will, according to one we have read, survive the termination of the contract.

This longish but worthwhile commentary showed up on the wallstreetonparade.com Internet site on Tuesday sometime — and I found it embedded in a GATA dispatch.  Another link to it is here.


Fed Sets Up Scheme to Meet Booming Foreign Demand for Dollars

The Federal Reserve has taken a new step to meet the global demand for dollars, setting up a facility that would allow central banks and international monetary authorities to enter into repurchase agreements with the U.S. central bank.

The Fed said the new facility would work in tandem with the dollar swap lines already established by the central bank with its peers across 14 different countries as the coronavirus pandemic has spread across the world.

As investors have flocked to safe assets and companies have scrambled to offset the blow to revenues from widespread economic shutdowns, they have pushed the greenback’s value sharply higher, leading to a global shortage of dollars that has destabilised emerging markets.

This facility should help support the smooth functioning of the U.S. Treasury market by providing an alternative temporary source of U.S. dollars other than sales of securities in the open market,” the Fed said in a statement.

The temporary facility for foreign and international monetary authorities, or FIMA, will allow foreign central banks and international organisations with accounts at the New York Fed to “temporarily exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions,” according to the statement.

The above five paragraphs are all that are posted in the clear from this Financial Times story that put in an appearance on the gata.org Internet site yesterday.  Another link to the story on the FT website is here.


Eurobonds or Bust? That’s the Next Phase of the E.U. — Tom Luongo

We’ve reached the next stage of the E.U.’s evolution, whether it will adopt a common bond market or not. It’s been clear for a long time that something had to change if the European Union was to survive its political transformation.

And that issue is the formation of a shared debt structure underpinning the euro, commonly referred to as Eurobonds.

But in light of the current crisis they’ve been given the euphemism, “Coronabonds” and sold that way ad nauseum in the financial press, especially by Bloomberg.

Why? Because that’s the next step that’s been on the docket for a long time; pushing the E.U. to its breaking point and waiting for just the right moment to bulldozer what’s left of national sovereignty in Europe in the name of saving lives.

It’s truly stunning how inhuman political leaders are in this world. This is not to say I’m surprised but it’s still stunning.

This has zero to do with actually fighting the disease at this point. Just printing money and backing it with shared responsibility bonds is fundamentally no different than printing money locally to do the same thing.

It’s still not addressing the real problem… Europe is broke. Its bond market is non-functional under a negative interest rate regime.

This opinion piece/commentary from Tom Luongo was posted on his Internet site on Monday sometime — and I thank Roy Stephens for sending it our way.  Another link to it is here.


Half a Million German Companies Ask for Wage Support for Workers

German companies filed almost half a million applications for financial aid under a government support program in March, when factories and other businesses were forced to shut because of the coronavirus outbreak.

The pandemic sparked thousands of furloughs in Europe’s largest economy, as restrictions on movements in the country and across the continent to contain the outbreak hammer business activity. Figures published Tuesday showed 470,000 requests for kurzarbeit compensation, a form of state wage support.

The measure, which allows businesses to reduce workers’ hours or halt production while still paying them with the help of government subsidies, is hailed as one of Europe’s most successful safety nets during economic crises. Carmakers Volkswagen AG and Daimler AG and sports-apparel maker Puma SE are among those planning to idle tens of thousands of staff. Even financial institutions like Deutsche Bank AG are considering such moves.

The data include applications filed up to March 27, which came from nearly all sectors of the economy, the labor agency said.

Labor minister Hubertus Heil said labor-market support measures will save “millions” of jobs in Germany through the crisis, but “we can’t save every single job.”

This Bloomberg story showed up on their website at 5:14 a.m. PDT on Tuesday morning — and was updated about two hours later.  I thank Swedish reader Patrik Ekdahl for bringing it to our attention — and another link to it is here.


Nightmare Haunting Euro Founders May Be a Reality With Italy

Two decades since the euro began, one of the principal worries of its founders is materializing as the coronavirus rages through the region’s third-largest economy.

The longstanding suspicion that Italy’s profligate borrowing could ultimately become the whole of Europe’s problem was the recurring nightmare of German finance officials throughout the 1990s.

Now, as the crisis forces Giuseppe Conte’s government to jettison a decade of tightly capped Italian budget deficits, the country’s strategy for the future is once again built on piling up debt, sending its public borrowings swelling toward or even beyond 150% of gross domestic product.

The increasing death toll from the virus and the economic fallout from the lock-down leave the government with no option but to spend more to help its people. But it’s having to deal with the unprecedented situation carrying an already huge debt load.

The upshot is that Italy’s finances now depend wholly on the European Central Bank keeping a lid on its borrowing costs. Meantime, the only realistic question for officials in Berlin is how to structure further aid, since the alternative may be a failed state at the heart of the currency union, fatally threatening the euro.

It all hinges on guarantees at the European level to avoid a market reaction,” said Pietro Reichlin, professor of economics at Luiss University in Rome. “Is the European Central Bank ready to undertake the needed purchases?

This Bloomberg news item, the second offering in a row from Patrik Ekdahl, was posted on their website at 9:00 p.m. PDT on Monday evening — and was updated about six hours later.  Another link to it is here.


I heard the roar’: 6.5 earthquake hits Idaho

An earthquake struck north of Boise Tuesday evening, with people across a large area reporting shaking.

The U.S. Geological Survey reports the magnitude 6.5 temblor struck just before 6 p.m. It was centered 73 miles (118 kilometers) northeast of Meridian, near the rural mountain town of Stanley.

There were no immediate reports of damage or injuries.

More than 2 million live in the region that could feel the Idaho quake, according to the USGS, with reports of shaking coming in from as far away as Helena, Montana, and Salt Lake City, Utah.

Marcus Smith, an emergency room health unit coordinator at St. Luke’s Wood River Medical Center, said “It felt like a wave going through the ground, so I knew right away what it was. It just felt like waves going through the ground.”

Well, dear reader, the only reason that I’m posting this story is because I felt the Secondary wave when it arrived in Merritt…700 kilometers/435 miles away from the epicenter.  One of the reasons that it was so strong and widely felt, is because it was so shallow…only 10 km/6 miles down.  The earthquake occurred at 4:52:31 PDT — and the S-wave arrived here sometime after 4:56 p.m. PDT…about four minutes later.  It was very noticeable, as I was gently rocked back and forth in my chair as I sat quietly in front of my computer working on this column.  It was a very queasy feeling.  It rattled the blinds as well.  I e-mailed my daughter right away and told here that there had been a big earthquake some distance away — and when I checked the USGS website about thirty minutes later…there it was. As of this writing, there have been eight aftershocks.  This news item was posted on the bozemandailychronicle and is being constantly updated.  Another link to the article is here.


The Gold Chronicles: Jim Rickards and Alex Stanczyk — The Next Great Depression

Topics include:

* Opening salvos of Global Financial Crisis II (GFCII)
* The entire precious metals complex (gold and silver) has been cleaned out globally
* The best time to act has past, now is the second best time to act
* The global run on precious metals is probably less than 5% of the population, when the majority   catches on to damage done to USD the demand could be historic
* Price dis-connect between paper and physical gold price
* How price discovery in the gold market is resolved

This 1 hour and 3 minute video interview was posted on the youtube.com Internet site last Friday — and I received it from Harold Jacobsen on Saturday.  Normally I’d leave an interview of this length until my Saturday missive, but I’ll make an exception for this one.  Another link to it is here.


Top platinum miners declare force majeure after coronavirus lock-down

The world’s largest platinum producers Anglo American Platinum, Sibanye-Stillwater and Impala Platinum have declared force majeure on contracts after a three-week national lock-down forced operations to close.

South Africa, which accounts for around 70% of mined platinum supply, called the shutdown last week to try to slow the spread of the coronavirus outbreak.

The measure triggered a downgrade of the country’s sovereign rating by Moody’s on Friday and has hit its mining industry, which accounts for about 7% of GDP.

Miners have put many of their operations on care and maintenance and have reduced metal processing.

The coronavirus has also slowed demand for platinum from global car companies, the biggest users of the metal, which is a key component in catalytic converters.

This Reuters news item, co-filed from Johannesburg and London, appeared on their website at 2:10 a.m. EDT on Monday morning — and I found it on the Sharps Pixley Internet site.  Another link to it is here.


Gold price discounts in India jump to 6-month highs amid lock-down

Physical gold dealers struggled to meet surging safe-haven demand this week, especially in Singapore, as the coronavirus outbreak choked global supply chains, while massive discounts were offered in India amidst a lock-down.

In India, trading came to a standstill as the country went into a three-week lock-down to curb the spread of the virus, pushing discounts to their highest since mid-September, at $48 an ounce.

Physical trade has stalled. There won’t be any movement for the next three weeks,” said Prithviraj Kothari, managing director of RiddiSiddhi Bullions.

Demand was nil even during the Gudi Padwa festival this week, he added.

Discounts jumped on Thursday after prices rallied, but there was hardly any trade at those levels,” said a Mumbai-based dealer with a global trading firm.

This gold-related news item put in an appearance on the livemint.com Internet site on Sunday — and it’s another story I found on Sharp Pixley.  Another link to it is here.  A very related news item is this Bloomberg piece headlined “World’s Top Gold Market Freezes as Chinese Shoppers Stay Away” — and that’s from a GATA dispatch last night.


The PHOTOS and the FUNNIES

The first photo on the descent into Hell’s Gate on September 8 is looking upriver — and mostly due north.  The CN rail line is on the left/west bank — and CP rail on the right/east bank. The second shot is looking south down the Fraser River/Canyon as a CP train at least 2 kilometers long snakes its way down the gorge.  The CN rail bed is just visible on the opposite bank. The last picture, also looking south was taken below the rail beds of both train tracks.  The concrete objects embedded in the river banks on each side are a type of fish ladder that allows spawning salmon to get through this wild water more or less unimpeded.  None make the return trip.  Click to enlarge.


The WRAP

The rallies in all four precious metals during the Tuesday trading session were obviously too much for JPMorgan et al.  Except for palladium, the other three precious metals were closed down on the day — and palladium was closed miles off its high tick on Tuesday.  The dollar index was certainly no factor, as ‘da boyz’ went about their work in the GLOBEX/COMEX futures market unhindered by the CFTC, the CME Group — and the mining companies.

It’s almost like we’re back on some sort of ‘care and maintenance’ plan once again.

Here are the 6-month charts for the Big 6 commodities, courtesy of stockcharts.com.  Gold touched its 50-day moving average yesterday near the close, but finished the Tuesday session a hair above it.  There’s nothing to see on the silver and platinum charts — and palladium closed back above its 50-day moving average once more.  Copper closed up 7 cents — and WTIC closed down a hair.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I note that gold was sold lower by a bunch once trading began at 6:00 p.m. EDT in New York on Tuesday evening — and after a bit of an up/down move, began to creep higher, but has been sold lower in the last few minutes.  It’s up $7.70 the ounce currently.  It was mostly similar for silver up until minutes before 11 a.m. China Standard Time on their Wednesday morning.  The price was capped at that point — and then turned sharply lower about two hours later — and it’s now down a 5 cents on the day as London opens.  Platinum traded in a similar fashion as silver, expect its high came around noon in Shanghai — and just under two hours later, it was smacked lower as well — and it’s down 2 dollars.  There was big price pressure on palladium at the New York open, but it struggled back, only to get sold off a bit once again.  It rallied a bit more in very early afternoon trading in the Far East, but shortly after 1 p.m. CST, the selling pressure returned in spades — and ‘da boyz’ have it lower by 47 bucks as Zurich opens.

Net HFT gold volume is pretty light at around 29,500 contracts — and there’s about 3,500 contracts worth of roll-over/switch volume on top of that.  Net HFT silver volume is nothing special at a bit over 9,500 contracts — and there’s only 350 contracts worth of roll-over/switch volume out of May and into July, the upcoming new front month for silver.  The roll-over/switch volume has started real early in the month in this precious metal.

The dollar index closed very late on Tuesday afternoon in New York at 99.05 — and opened down about 8 basis points at 98.97 once trading commenced around 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning.  It dipped a bit for about an hour before heading erratically higher.  But it really took off starting around 1:35 p.m. CST — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the dollar index is higher by 33 basis points.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report.  Looking at the last five dojis in silver on the chart above, I’ll pass on what might be in the report.  Gold looks a bit more straightforward — and I suspect there will be an improvement in the commercial net short position, but won’t hazard a guess as to how much that might be.

Ted would have a better idea, but he’s on the road this week — and won’t have his usual mid-week commentary.  But I’m sure we’ll be talking about it over the next few days — and if he has some thoughts, I’ll pass them along in my Friday column.


And as I post today’s missive on the website at 4:02 a.m. EDT, I see that the gold price jumped higher starting a few minutes before the 8:00 a.m. BST London open — and is now up $17.70 an ounce.  Silver is down 5 cents as the first hour of London trading ends.  Platinum is a titch higher — and back at unchanged — and palladium has struggled a bit higher in the last hour — and is down only 37 bucks as the first hour of Zurich trading draws to a close.

It will be interesting to see if JPMorgan et al. will allow gold to break back above $1,600 spot — and silver above $14 during the remainder of the Wednesday session.

Gross gold volume is around 46,500 contracts — and minus current roll-over/switch volume, net HFT gold volume is 38,500 contracts.  Net HFT silver volume is a bit under 11,300 contracts — and there’s still only 418 contracts worth of roll-over/switch volume out of May into future months.

The dollar index had an up/down move during the last hour of trading — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up 33 basis points…just where it was at the London open.


I was blown away by the hits on my “treat” in yesterday’s column in this space, so here’s one more…but don’t expect them every day!  This occurred on a golf course in Sweden a few years ago — and I thank Roy Stephens for sending it — and the link is here.  They call them elk over there, but we know them by another name here in North America.

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

Ed

Monster Gold Deliveries on First Notice Day For April

31 March 2020 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Note:  My column is late this morning because the CME Group didn’t have their data up until between 2:15 and 2:45 a.m. EDT this morning, which was between 4 to 6 hours late — and I had to write/rewrite quite a few sections of my Tuesday column around the London/Zurich opens — and I couldn’t start coding my column for my website or the e-mail version until I had made all the changes. – Ed


To no one’s surprise the gold price blasted higher the moment that trading began at 6:00 p.m. EDT on Sunday evening in New York.  That ran into ‘da boyz’ within a few minutes — and they had it well below unchanged on the day by shortly 7 p.m.  The subsequent rally was capped shortly after it blew back above the changed mark — and it was unevenly down hill from there until the low tick of the day was set around 1:20 p.m. China Standard Time on their Monday afternoon.  It headed higher from there…in fits and starts…until the high tick was set a minute or so before 10:30 a.m. in New York.  It was driven sharply lower from that point until 1 p.m. EDT — and it traded quietly and unevenly higher until the market closed at 5:00 p.m.

The high and low ticks were reported as $1,667.40 and $1,625.50 in the April contract.

Gold was closed in New York on Monday afternoon at $1,623.40 spot, down $4.60 from its close on Friday.  Net volume was pretty quiet at a bit over 127,000 contracts — and that was all in the new front month for gold, which is June.  Roll-over/switch volume was around 31,000 contracts — and as I said in my Saturday column all these numbers are best guesses/estimates on the final two trading days going into the April delivery month.  Tomorrow’s numbers should return to some semblance of normal.

Silver’s price action in the first hour of trading on Sunday night was the same as gold’s, except far more subdued.  Then, around 8:20 a.m. CST in Shanghai on their Monday morning, it was engineered lower in price until, like gold, the low tick was set around 1:20 p.m. CST.  It wandered higher until minutes before the 11 a.m. EDT London close — and it was sold quietly lower until 2:10 p.m. EDT in after-hours trading in New York.  It headed a bit higher from that juncture, but obviously ran into ‘something’ at 4:00 p.m.  — and it didn’t do much after that going into the 5:00 p.m. EDT close.

The high and low ticks in silver were recorded by the CME Group as $14.71 and $13.945 in the May contract.

Silver was closed on Monday afternoon at $14.005 spot, down 42 cents from Friday.  Net volume [also preliminary] was pretty quiet at a bit under 48,500 contracts — and there was a bit over 10,000 contracts worth of roll-over/switch volume in this precious metal.

Platinum ran into ‘da boyz around 8:25 a.m. China Standard Time on their Monday morning — and it was hammered to its low tick of the day a few minutes after 10 a.m. CST.  It proceeded to chop quietly sideways until a few minutes before 10 a.m. in Zurich.  It then rallied about fifteen bucks during the next ninety minutes of trading — and then chopped very unevenly sideways until minutes after 12 o’clock noon in New York.  It then had a down/up move going into the 5:00 p.m. close of trading — and finished the day at $727 spot, down 17 dollars from Friday’s close.

Palladium had a fairly substantial up/down move in mid-morning trading in the Far East — and from about 9 a.m. CST onwards, it was stair-stepped lower in price until about 9:40 a.m. CEST in Zurich.  Then it didn’t do much until the 8:20 a.m. EDT COMEX open…then away it went to the upside.  It obviously ran into ‘something shortly before noon in New York — and then traded mostly sideways with a slightly negative bias going into the 5:00 p.m. EDT close.  Palladium was closed at a $2,219 spot, up 54 bucks on the day.

Based on the spot closing prices in both gold and silver on Monday, the gold/silver ratio worked out to a hair under 116 to 1…up from 113 to 1 on Friday.


The dollar index closed very late on Friday afternoon in New York at 98.37 — and opened up 9 basis points once trading began around 6:30 p.m. EDT on Sunday evening, which was 6:30 a.m. China Standard Time on their Monday morning.  It dipped to its 98.29 low at 7:52 a.m. CST on their Monday morning — and appeared to get rescued by the usual ‘gentle hands’ at that juncture.   A ‘rally’ commenced at that point — and it chopped steadily but unevenly higher until the 99.32 high tick was printed around 1:45 p.m. in New York.  It chopped very unevenly lower until trading ended at 5:30 p.m. EDT.

The dollar index finished the Monday session in New York at  99.18…up 82 basis points from its close on Friday.

If there was any correlation between precious metal prices and what the currencies were doing on Monday, I certainly failed to see it.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…99.28…was 10 basis points higher than the close on the DXY spot chart above on Monday.  Click to enlarge as well.

The gold stocks jumped higher at the 9:30 open in New York on Monday morning — and their respective highs were printed at 10:30 a.m. EDT.  From that juncture they were sold lower until 3 p.m. — and about thirty-five minutes later they rallied a bit going into the 4:00 p.m. close.  The HUI finished down 1.83 percent.

The silver equities followed a mostly similar price path, except their sell-off was more severe — and Nick Laird’s still rather sad-looking Intraday Silver Sentiment/Silver 7 Index closed lower by 3.89 percent.  Click to enlarge if necessary.

I computed the above index manually — and it showed that the Silver 7 Index closed down 3.53 percent.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart which, I’ve mentioned a few times before, is calculated using a different data stream than for the Silver Sentiment/Silver 7 Index.  Click to enlarge as well.

The ‘star’ of the day was Coeur Mining…up 0.59 percent — and the dog was First Majestic Silver, closing down 6.30 percent.  Maybe the market wasn’t happy with their updated 2019 mineral reserve and resource estimates issued yesterday.  The link to that is here.


The CME Daily Delivery Report, which finally showed up on their website after 2:15 a.m. EDT this morning, showed First Day Notice numbers for delivery into the April contract.  There was an incredible 17,302 gold contracts, plus 720 silver contracts posted for delivery on Wednesday.

In gold, I won’t even bother trying to itemize it, although I will point out that JPMorgan was the tallest hog at the trough, issuing 7,000 contract out of its own account, plus 4,931 contracts out of its client account.  They also stopped 6,875 contracts for their client account.  In distant second and third spots were Scotia Capital/Scotiabank with 2,351 contracts from their own account — and Standard Charter with 1,232 contracts, also out of their own account.  Macquarie Futures, ABN Amro and Goldman Sachs were the next biggest three long/stoppers [after JPMorgan of course]…with 1,989 contracts, 1,374 contracts and 1,236 contracts.  ABN Amro was for their client account — and the other two for their in-house/proprietary trading accounts.

In silver, there were nine short/issuers and nine long/stoppers, with JPMorgan being the tallest hog there as well.  I’m not going to itemize this, as I’ve had to rewrite a fair chunk of my column since this data arrived — and I’m approaching deadline — and I haven’t even starting coding this for my website yet.  This is why my column is so late today…for those of you that are looking for it at 4:02 a.m. EDT.

The link to yesterday’s Issuers and Stoppers Report is here — and it’s definitely worth a look.

The CME Preliminary Report for the Monday trading session appeared on their website around 2:45 a.m. on Tuesday morning — and it showed what I expected to see.  Gold open interest in April fell by 7,087 contracts, leaving an eye-watering 25,665 contracts still open, minus the 17,302 gold contracts mentioned several paragraphs ago.  Silver o.i. in April fell by 142 contracts, leaving 758 still around, minus the 720 contracts mentioned a few paragraphs ago.  I suspect that many more gold and silver contracts will be added to the April delivery month before its over, as the rush into physical metal is now fully exposed in COMEX deliveries as well.


There was a tiny withdrawal from GLD on Monday, as an authorized participant took out 9,407 troy ounces.  A withdrawal of that size is normally associated with a fee payment of some kind.  There was another addition to SLV, as an a.p. added 1,679,029 troy ounces.

In other gold and silver ETFs on Planet Earth on Monday, net of any COMEX, GLD & SLV activity, there was a net 256,834 troy ounces of gold added,  but a net 313,740 troy ounces of silver was taken out — and that was because of yet another big withdrawal from Deutsche Bank…924,472 troy ounces this time.  One has to wonder where it’s going.

And for the third day in a row there was no sales report from the U.S. Mint — and that certainly may have something to do with the fact that mint has closed temporarily because of this virus thingy.  There was a story on the silverdoctors.com Internet site on Monday headlined “U.S. Mint Employee Tests Positive For Covid-19 at West Point Mint, Causing Temporary Shutdown” — and I thank Brad Robertson for sending it our way.


There was a lot of moment in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  There was 199,671 troy ounces reported received — and nothing was shipped out.  In the ‘in’ category, there was 160,740.000 troy ounces reported received…5,000 kilobars…over at a new depository, Malca- Amit USA.  There was 19,524 troy ounces received at Canada’s Scotiabank…16,170.150 troy ounces/501 kilobars [U.K./U.S. kilobar weight] dropped off at Loomis International — and the remaining 3,299 troy ounces was received at Delaware.  There was some paper movement, as 30,671 troy ounces was transferred from the Eligible category and into Registered over at Loomis International —  and one would expect that this will go out the door in April.

In addition, there have been five new or sub-depositories set up in gold to handle deliveries involving 400 ounce bars…most likely for April delivery.  The link to all this is here.

There was some activity in silver.  Nothing was reported received — and 527,930 troy ounces was shipped out.  In the ‘out’ category, there were four different depositories involved — and the three largest were Scotiabank with 300,585 troy ounces…CNT shipped out 127,227 troy ounces — and Brink’s, Inc. with 80,153 troy ounces.  There was some paper activity, as 130,360 troy ounces was transferred from the Registered category and back into Eligible.  It involved three different depositories…110,614 at Scotiabank…14,861 troy ounces at Delaware…and 4,884 troy ounces at the International Depository Services of Delaware.  The link to all this action is here.

It was also pretty busy over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They reported receiving 980 of them — and shipped out 2,130.  All of this activity was at Brink’s, Inc.  — and the link to that, in troy ounces, is here.


Nick passed around a bunch of charts on Saturday — and here are three of them.  The first shows gold imports and exports into Switzerland, updated with February’s data.  During that month they imported 82.02 tonnes — and exported only 42.04 tonnes. Click to enlarge.

The next two charts show the countries and tonnages that Switzerland received gold from in February, plus the countries and amounts that they shipped gold to during that monthClick to enlarge for both.

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


CRITICAL READS

Dallas Fed Manufacturing Survey Crashes to Lowest Level Ever

In a stunning miss to expectations, March’s Dallas Fed Manufacturing Outlook survey crashed like never before (from +1.2 in February to -70.0 – massively below the -10.0 expectation).  Click to enlarge.

As you can see, this is the weakest level ever and the most aggressive collapse ever. As one trader mocked when the data hit, “…is that a bad print?

The measures production and new orders both were lowest since 2009.

The figures are consistent with severe declines in other regional gauges as unprecedented shutdowns freeze large parts of the industrial economy. Regional Fed bank measures of manufacturing in New York, the Philadelphia area, and Kansas City district all showed record monthly declines.

Of course, Texas has been hit with both barrels of collapse as the oil price war and national virus lock-down crush markets.

This brief 2-chart Zero Hedge news item appeared on their Internet site at 10:49 a.m. EDT on Monday morning — and is the first offering of the day from Brad Robertson.  Another link to it is here.


The Flood Begins: Treasury to Sell Over a Quarter Trillion Bills in 48 Hours

Having noticed the Treasury shortage forming in the bond market, which as we observed emerged both across the broader curve as manifested by the surging demand for the Fed’s reverse repo…Click to enlarge.

… as well as the unprecedented demand for “cash-like” T-Bills resulting in negative yields  for all paper through 3 months…Click to enlarge.

… which has gifted bond traders with an arb that literally prints free money as described in “Here Is The Treasury’s (Not So) Secret Trade Printing Millions In Guaranteed, Risk-Free Profits Every Day“, the Treasury has taken decisive action and in order to prevent the Fed from becoming the money market fund of last resort, is literally flooding the market with T-Bills to satisfy the market’s panicked need for cash-equivalent paper by announcing an additional two cash management bills today in addition to the one that was revealed last week.  But there’s more…

Starting tomorrow, the Treasury will sell just over $100 billion in Cash Management Bill, including a $60BN 42-day CMB and a $45BN 69-day security at 11:30am ET on Tuesday. This follows the sale of $60BN of 37-day CMBs at 0.025% Monday, which saw Indirects awarded 60.6% of the issue.

In other words, inside of 48 hours we are looking at a gross deluge of $258BN gross in Bills and Cash Management Bills to satisfy what seems to be unprecedented demand for short-term paper. On a net basis, between Monday’s regularly schedule auctions, Tuesday’s four- and eight- week settlements and cash management bill sales, the Treasury will raise about $194BN of new cash this week, according to Bloomberg calculations.

And that’s just the beginning, as the Treasury does everything it can to alleviate the Treasury shortage. Considering it has a few trillion in stimulus payments it has to fund, we are confident the shortage won’t last too long.

This Zero Hedge article showed up on their Internet site at 7:05 p.m. EDT on Monday evening — and another link to it is here.  There was a very related ZH news item headlined “Fed Shifts Start Time of Tomorrow’s Overnight Repo 15 Mintues Earlier as Dealer Usage Plummets” — and I thank Brad Robertson for that one.


Jim Grant Warns Fed’s ‘All-in’ Actions Are a “Clear and Present Danger” to U.S. Creditors

In a veritable treatise on all that was wrong with The Fed’s actions, Jim Grant – founder and editor of Grant’s Interest Rate Observer – was somehow allowed nine minutes on CNBC‘s Squawk Box to put America straight on what we are facing and the consequences of these unelected and unaccountable officials terrifying experiments.

Grant began by slamming Jay Powell’s seemingly blinkered proclamation that “he sees no prospective consequences with regard the purchasing power of the dollar” as “very concerning” adding more pertinently that he thinks “that wilful ignorance is a clear-and-present-danger for creditors of The United States.”

It appears his fears are starting to be warranted as USA Sovereign credit risk is rising…

Grant, whose wife is a physician, reminded the anchors that the current actions (and consequences) have a direct analogy with the opioid crisis, as “in the early 2000s, the medical profession got it into its head that pain was the vital sign, and that no one ought to be in pain… this led to the deadly over-prescription of opioids.”

Simply put, credit and equity markets “have become administered government-set indicators, rather than sensitive- and information-rich prices… and we are paying the price for that through the misallocation of resources.”

Grant ends on a hanging chad of a rhetorical question “what do corrections correct? Is there no salutary role for recessions and bear markets?

Of course there is, he answers, “they separate the sound from the unsound, they separate the well-financed from the over-leveraged and if we never have these episodes of economic pain, we will be much the worse for it.”

The 9:10 minute video clip is linked at the bottom of this Zero Hedge story that put in an appearance on their website at 2:05 p.m. on Monday afternoon EDT.  I thank Brad Robertson for sending it our way — and another link to it is hereGregory Mannarino‘s post market close rant for Monday is linked here.


U.S. Coronavirus Spread Invokes Heavy Government Intervention — Bill Bonner

The Washington Post reports that civilians are fleeing before the invading forces:

The Great Migration of 2020: On the move to escape the coronavirus

From beaches and resort towns to mountain cabins to rural family homesteads, places far from densely packed cities are drawing people eager to escape from infection hot spots.

But virus fugitives often are running into fierce opposition on their routes, including Florida’s effort to block New Yorkers from joining their relatives in the Sunshine State, a police checkpoint keeping outsiders from entering the Florida Keys, and several coastal islands closing bridges to try to keep the coronavirus at bay.”

Meanwhile, another group races to Washington to join The Swamp critters, trying to get some of that $2 trillion worth of federal boondoggle spending.

The New York Times:

The Race for Virus Money Is On. Lobbyists Are Standing By.

But who’s the real enemy? Is it a molecule with a Facebook page? Is it the damage done by the virus… or by the feds’ heavy-handed financial reaction? Or is it something else… something deeper…

… a desperate, last-ditch war to protect a fraudulent financial system, the ersatz “wealth” of the elite… and their decrepit empire?

Perhaps it is all those things…

Bill’s commentary was posted on the bonnerandpartners.com Internet site on Monday sometime — and another link to it is here.


This is the Largest Economic Shock of Our Lifetimes“: Goldman Sees Negative Prices Amid Oil Devastation

Over the weekend, we reported that with the oil industry oversupplied by a mind-blowing 20 million barrels daily as roughly 20% of total global output ends up unused in a world economy that has ground to a halt, and instead has to be parked in storage either on land or sea, the unthinkable is about to happen: oil storage space is about to run out, and as that happens the price of oil will continue sliding ever lower and lower until it finally goes negative as some such as Mizuho’s Paul Sankey predict it will, over the next few months, leading to an unprecedented shock wave across the global energy market.

Then overnight, more eulogies for the oil market emerged, with Bank of America writing that oil has now slumped “into the abyss” and it expects to see the “steepest decline in global oil consumption ever recorded, with our base case reflecting a 12mn b/d drop in 2Q20 and a 4.5mn b/d contraction on average for the year” and on a net basis, BofA now expects global oil demand to contract by almost 17mn b/d in April with consumption recovering modestly into 3Q20 and beyond.

As a result, and picking up on what we said over the weekend, Goldman now warns that “this shock is extremely negative for oil prices and is sending landlocked crude prices into negative territory.” Of course, it is only a matter of time before this ultimately creates an inflationary oil supply shock of historic proportions because so much oil production will be forced to be shut-in, but first we need to see prices close to zero… or below it.

Currie next focuses on the storage conundrum we discussed yesterday, and how – as we warned – this will lead to negative oil prices…

This long Zero Hedge article, which is certainly worth your while if you have the interest, showed up on their website at 10:20 a.m. on Monday morning EDT — and it’s another contribution from Brad Robertson.  Another link to it is here.  In a directly related news item is the ZH piece from Brad that’s headlined “The Unthinkable is Happening: Oil Storage Space is About to Run Out


The Inherent Weakness of FATCA — Jeff Thomas

The Foreign Account Tax Compliance Act (FATCA) went into effect in 2014, ostensibly to stop US taxpayers from evading taxation through the use of offshore accounts.

And to this date, most all American investors who have, to one degree or another, internationalised their wealth, live in fear of FATCA. They make the assumption that their government is after them specifically and means to strip them of their wealth, demanding that offshore banks repatriate their wealth to authorities in the U.S.

Nothing could be further from the truth. Despite spending nearly $380 million on FATCA to date, the Department of the Treasury (DOT) has still not begun its claimed campaign of going after “tax cheats” by way of FATCA.

So, what’s going on here?

Well, the extraordinarily well-kept secret is that FATCA was never intended to pursue these individuals. It has an entirely different agenda.

But to understand this, we have to go back a bit.

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


With 735,000 Jobs Lost, Rich Nordic Nations Are in Shock

In one of the richest and stablest corners of the globe, about three-quarters of a million people are suddenly out of a job due to the economic standstill triggered by the spread of the coronavirus.

With a combined population of roughly 27 million people, the Nordic region has seen almost 630,000 workers put on temporary leave in recent weeks, many without paychecks. Another roughly 105,000 have been fired, according to calculations by Bloomberg based on company statements and data provided by national authorities as of Monday.

The head of the Confederation of Norwegian Enterprise, Ole Erik Almlid, likened the development to “a tsunami” that’s rolled over the country’s businesses. “And it’s getting worse,” he said.

Knut Hallberg, senior economist at Swedbank, said the situation across the entire Nordic region is “severe.”

Some of the biggest Nordic companies are among those caving under the strain of the crisis. Truckmaker Volvo Group has temporarily laid off its entire 20,000-strong Swedish workforce. Airlines SAS AB, Finnair Oyj and Norwegian Air ASA have all put most of their employees on leave. Scandic Hotels Group AB has locked the doors of more than 60 hotels, while retailers including Hennes & Mauritz AB have sent thousands of shop staff home.

It’s “easy to imagine that the high numbers we are seeing will increase dramatically if the economy doesn’t get restarted within a relatively short time,” said Helge Pedersen, chief economist at Nordea Bank in Copenhagen.

This not overly surprising news put in an appearance on the Bloomberg website at 4:43 a.m. PDT on Monday morning — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.


German Government Advisers Warn of Worst Recession Since 2009

The German government’s economic advisers predict that the coronavirus pandemic will give the nation its worst recession since the global financial crisis.

Even if most business and movement restrictions are lifted in mid May, allowing the economy to recover through the summer, output is expected to shrink by 2.8% this year, according to a report by the German Council of Economic Experts.

If restrictions last longer or production is further halted, the economy could contract by as much as 5.4%. Either outcome would be the deepest downturn since 2009.

The wide-ranging estimates reflect the challenge economists face in capturing the extent of the disruption, which has swept across Europe and the world in a matter of weeks.

A separate report Monday showed economic sentiment in the euro area plunged the most on record as prospects dwindled that life will return to normal any time soon.

This is another Bloomberg story from Patrik Ekdahl.  This one was posted on their Internet site at 2:00 a.m. PDT on Monday morning — and was updated about seventy-five minutes later.  Another link to it is here.


It is a Time of Crisis and U.S. Foreign Policy is Becoming Unhinged

The Trump administration is reacting to the pandemic stress by lashing out at perceived internal and external enemies. Secretary of State Mike Pompeo is leading the external onslaught.

UN Secretary General Antonio Guterres has called for an “immediate global ceasefire” to focus on fighting Covid-19. He has appealed for the “waiving of sanctions that can undermine countries’ capacity to respond to the pandemic.”

But Washington is not listening.

Requests from Venezuela and Iran for emergency IMF loans to buy medical supplies were blocked by U.S. interventions.

Just a month ago Pompeo announced an increase of sanctions against Iran. The sanctions block money transfers. They make it impossible for Iran to import the medical equipment it urgently needs to counter the epidemic.

While the U.S. renewed the sanction waiver which allows Iraq to import electricity and gas from Iran the waiver is now limited to only 30 days. One third of Iraq’s electricity depends on those imports from Iran and, if the waiver is not renewed, its hospitals will go dark just when the epidemic will reach its zenith.

Parts of the Trump administration are even pressing for a wider war against alleged Iranian proxy forces in Iraq.

The plan is lunatic. One can not “destroy” Kataib Hezbollah and other Iraqi Shia groups which Iran helped to build during the war against ISIS. These groups are part of political parties with deep roots in the Iraqi society.

This very worthwhile commentary from the “Moon of Alabama” showed up on his Internet site on Saturday at 3:13 p.m. GMT in London — and it’s the first of two offerings in a row from Larry Galearis.  Another link to it is here.


Trump Wants To Talk — Andrei Martyanov

With Putin. Sure, I agree with him–dialog is good. As RIA reports (in Russian) the topics of upcoming phone call will be Covid-19, trade (???) and, you guessed it, oil prices. Yes, about that. My question, immediately, is–so what’s on offer from Trump? This is how it works, quid-pro-quo–you want something, you offer something in return. Especially when your hand is extremely weak, and I mean very weak:

U.S. crude oil prices fell below $20 a barrel shortly after trading reopened on Sunday, close to their lowest level in 18 years, as traders bet production would have to shut to cope with the collapse in demand from the coronavirus pandemic. The global oil industry is facing its biggest demand drop in history, with traders and analysts forecasting crude consumption could fall as much as a quarter next month because of widespread lock-downs across the western world as the pandemic spreads. The U.S. oil benchmark, known as West Texas Intermediate or WTI, hit a low of $19.92 a barrel overnight, losing more than 6 per cent, before picking up to slightly above $20 in the European morning.”

Russia can wait. Saudis cannot.

This very interesting and worthwhile article from Andrei appeared on his Internet site on Monday morning somewhere on Planet Earth.  I thank Larry Galearis for bringing it to our attention — and another link to it is here.


Keith Neumeyer: Miners Need To Stop Supplying the COMEX

The big banks, including the Federal Reserve, don’t have the best interest of investors in mind, says First Majestic Silver’s CEO Keith Neumeyer. How they manipulate and control precious metals prices via the COMEX is a blatant example of this. Keith says now is the time for the miners to stop supplying the COMEX.

This 30-minute video interview [which I haven’t had the time to watch] appeared on the youtube.com Internet site last Thursday — and I thank Roy Stephens for finding it for us.  Another link to it is here.


The Wild Hunt for 100-Ounce Gold Bars

There are few corners of the global financial market that have been upended as spectacularly, or as oddly, by the coronavirus pandemic as gold trading.

Not only are prices swinging in an erratic fashion — surging one moment and crashing the next — that is undermining the metal’s vaunted status as a haven in times of crisis, but unprecedented logistical disruptions have also kicked off a frantic hunt for actual bars of gold.

At the center of it all are a small band of traders who for years had cashed in on what had always been a sure-fire bet: shorting gold futures in New York against being long physical gold in London.. Usually, they’d ride the trade out till the end of the contract when they’d have a couple of options to get out without marking much, if any, loss.

But the virus, and the global economic collapse that it’s sparking, have created such extreme price distortions that those easy-exit options disappeared on them. Which means that they suddenly faced the threat of having to deliver actual gold bars to the buyers of the contract upon maturity.

It’s at this point that things get really bad for the short-sellers.

To make good on maturing contracts, they’d have to move actual gold from various locations. But with the virus shutting down air travel across the globe, procuring a flight to transport the metal became nearly impossible.

This gold-related Bloomberg article put in an appearance on their Internet site at 5:25 p.m. PDT [Pacific Daylight Time] last Friday — and was updated about twelve hours later.  I found it in a GATA dispatch — and another link to it is here.


Coronavirus Sparks a Global Gold Rush

It’s an honest-to-God doomsday scenario and the ultimate doomsday-prepper market is a mess.

As the coronavirus pandemic takes hold, investors and bankers are encountering severe shortages of gold bars and coins. Dealers are sold out or closed for the duration. Credit Suisse Group AG, which has minted its own bars since 1856, told clients this week not to bother asking. In London, bankers are chartering private jets and trying to finagle military cargo planes to get their bullion to New York exchanges.

It’s getting so bad that Wall Street bankers are asking Canada for help. The Royal Canadian Mint has been swamped with requests to ramp up production of gold bars that could be taken down to New York.

With staff reduced at the Royal Canadian Mint because of the virus, the government-owned company is only producing one variation of bullion bars, according to Amanda Bernier, a senior sales manager. She said the mint has received “unprecedented levels of demand,” largely from U.S. banks and brokers.

The price of gold futures rose about 9% to roughly $1,620 a troy ounce this week—that is 31.1034768 grams, per the U.K. Royal Mint—and neared a seven-year high. Only on a handful of occasions since 2000 have gold prices risen more in a single week, including immediately after Lehman Brothers filed for bankruptcy in September 2008.

When people think they can’t get something, they want it even more,” says George Gero, 83, who’s been trading gold for more than 50 years, now at RBC Wealth Management in New York. “Look at toilet paper.”

This Wall Street Journal story from last Friday is posted in the clear in its entirety on the gata.org Internet site — and another link to it is here.


Russia, World’s Biggest Buyer of Gold, Will Stop Purchases

Russia spent more than $40 billion building a war chest of bullion over the past five years. Now, it’s calling it quits.

The central bank announced on Monday that it would stop buying gold starting April 1, but didn’t explain the move. Analysts say Russia already has a lot of gold stashed in reserves and likely doesn’t need more.

Plus, with gold prices near a seven-year high and international investors clamoring for a safe haven, Russian dealers are probably eager to sell. Bullion has become an extremely popular investment in recent weeks as the coronavirus sows fear through financial markets, but some dealers are having a hard time sourcing gold bars.

The central bank is now signaling to gold sellers that they should redirect their supplies externally,” said Dmitry Dolgin, ING Bank’s chief economist in Russia. “Global demand seems to be high.”

Worldwide panic over the coronavirus outbreak and a flood of stimulus by central banks has ignited demand for the metal. But even though there’s literally thousands of tons of gold bars sitting in vaults around the world, it’s been hard to get metal when and where it’s needed. Gold is usually shipped on ordinary commercial flights, which are being canceled by the thousands.

This somewhat surprising gold-related news item was posted on the bloomberg.com Internet site at 8:16 a.m. PDT on Monday morning — and was updated about ninety minutes later.  I plucked it from a GATA dispatch — and another link to it is here.


The PHOTOS and the FUNNIES

The following Sunday, September 8, we were off to visit Hell’s Gate under rather gloomy skies.  Hell’s Gate is an abrupt narrowing of British Columbia’s Fraser River, located immediately downstream of Boston Bar in the southern Fraser Canyon. The towering rock walls of the Fraser River plunge toward each other forcing the waters through a passage only 35 metres (115 ft) wide. With the Labour Day long weekend out of the way, there were only handful of tourists there to pay the outrageous fee that the tram operators charged for the 2-way trip.  I’ll have more photos of this place in tomorrow’s column as well.  The first photo was taken en route at the pass at Jackass Mountain overlooking the Fraser Canyon/River.  In the third shot, that’s the main-line CNR track to Vancouver on the opposite back.  The CP track is cut into the granite on this side of the river far below.  Click to enlarge.


The WRAP

It’s obvious that JPMorgan et al. haven’t stopped or even slowed down their continuing assaults on gold and silver prices.  Despite the extreme demand that has sprung up everywhere, from 1 oz. to 400 oz. bars — and the drop in production and refining, ‘da boyz’ aren’t loosening their iron grip on  their respective prices.  And what they had to gain by beating the snot out of the silver price again yesterday, is a mystery to me.

Yesterday was the cut-off for the remaining traders holding April COMEX futures contracts — and that weren’t standing for physical delivery…to roll or sell them before the COMEX close.  Although volumes were light, roll-over/switch volume was very heavy.

Here are the 6-month charts for the Big 6 commodities…most of which were closed down on the day.  Along with silver, WTIC was the standout…getting hit for a 6.60 percent loss — and a new low for this move down.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I see that the gold price has been under quiet and uneven selling pressure since the 6:00 p.m. open in New York on Monday evening — and is down $8.90 the ounce.  Silver didn’t do much until shortly before 9 a.m. China Standard Time on their Tuesday morning.  It jumped up a bit since then — and has been trading quietly sideways since — and it’s up the magnificent sum of 10 cents as London opens.  Platinum has been wandering unevenly sideways in Far East trading on their Tuesday — and is down a dollar.  Palladium has been all over the map either side of unchanged as well — and it’s down 6 bucks as Zurich opens.

Net HFT gold volume is very quiet…24,000 contracts — and there’s only 1,509 contracts worth of roll-over/switch volume on top of that.  Net HFT silver volume is a bit under 9,500  contracts — and there’s only 624 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened up about 8 basis points at 99.26 once trading commenced around 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 has been chopping very unevenly higher since — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is up 31 basis points.


Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and I may hazard a guess as to what might be in it once I’ve had a look at Tuesday’s price dojis, although Ted is the real authority on this.


And as I type this paragraph, the first hour of London/Zurich trading is ending — and I note that the gold price is a hair higher — and down only $7.30 an ounce.  Silver is up 11 cents as the first hour of London trading ends.  Platinum is down 3 dollars — but palladium is now down 33 bucks as the first hour of Zurich trading draws to a close.

Gross gold volume is very quiet at a bit under 32,000 contracts — and minus current roll-over/switch volume, net HFT gold volume is 28,000 contracts.  Net HFT silver volume is creeping up on 10,500 contracts — and there’s still only 667 contracts worth of roll-over/switch volume on top of that.

The dollar index hasn’t done much in the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up precisely 32 basis points.


And for those of you who read my column right to the bitter end…here’s your treat…a 46-second commercial from Europe on youtube.com that I thought you might enjoy.  Click here.  I thank Saskatchewan subscriber Steve Buttinger for passing it along.

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

Ed

The April Delivery Month For Gold Could Be a Monster

28 March 2020 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Gold’s up-tick at the 6:00 p.m. open in New York at 6:00 p.m. on Thursday evening in New York was squashed right away — and from there it traded mostly quietly sideways until around 1:35 p.m. China Standard Time on their Friday morning.  It jumped a bit higher until the 2:15 p.m. CST afternoon gold fix in Shanghai– and was then sold quietly and unevenly lower until 9 a.m. in London.  It jumped up a bit from there — and then didn’t do much until the COMEX open in New York.  It rallied unevenly higher until it ran into ‘da boyz’ about 1:05 p.m. EDT.  It was sold lower until shortly before 2:30 p.m. in after-hours trading — and its subsequent rally wasn’t allowed to get far, although gold managed to close up a bit on the day.

The low and high ticks were reported by the CME Group as $1,611.40 and $1,647.20 in the April contract.

Gold was closed in New York on Friday afternoon at $1,628.00 spot, up $3.50 on the day.  Net volume was mostly fumes and vapours once again at just under 36,000 contracts — and all of that was in the new front month for gold, which is June.  Roll-over/switch volume out of April and into future months [mostly June] was around 127,500 contracts.  And as I pointed out in The Wrap yesterday, these numbers are best guesses only during the last two trading days of the month as the traders, both large and small that aren’t standing for delivery next month, roll or sell their remaining April contracts.

Silver was sold lower the moment that trading began in New York on Thursday evening, but then managed to crawl higher until about noon China Standard Time on their Friday.  Once the afternoon gold fix was in at 2:15 p.m. CST in Shanghai, the silver price was stair-stepped lower until the low tick of the day was set a few minutes before 9 a.m. in New York.  It crawled quietly and very unevenly higher from there until the market closed at 5:00 p.m. EDT.  Silver, like gold, was certainly kept on a short leash yesterday.

The high and low ticks in silver were recorded as $14.84 and $14.345 in the May contract.

Silver was closed in New York on Friday at $14.425 spot, up 1.5 cents from Thursday.  Net volume was pretty quiet at a hair over 45,000 contracts — and there was 10,000 contracts worth of roll-over/switch volume in this precious metal.

The platinum price certainly wanted to rally in the early going on Thursday evening in New York, but wasn’t allowed to do much until shortly after 10 a.m. CST.  It then worked its way higher until, like gold and silver, it ran into ‘something’ at the afternoon gold fix in Shanghai.  Like silver, it was stair-stepped lower until the low tick was set minutes after 12 o’clock noon in London/8 a.m. in New York.  Once again it tried to rally hard, but as you can see from the saw-tooth price pattern, it was hauled lower each time.  The top was in around 12:20 p.m. EDT — and it didn’t do much of anything going into the 5:00 p.m. EDT close.  Platinum finished the day at $744 spot, up 11 dollars from its close on Thursday.

The palladium price traded very unevenly sideways in a very wide range until shortly before 12:30 p.m. in Shanghai on their Friday afternoon.  It rallied a bunch at that juncture, but about four hours later, it was headed lower — and that more or less continued until the market closed at 5:00 p.m. in New York.  Palladium was closed at $2,165 spot, down 90 bucks from Thursday.

Based on Friday’s closing spot prices in both gold and silver, the gold/silver ratio finished the Friday session in New York at a hair under 113 to 1…unchanged from Thursday.


The dollar index closed very late on Thursday afternoon in New York at 99.35 — and opened down about 9 basis points once trading commenced around 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It didn’t do much until around 10:05 a.m. CST — and it began to head lower at that point.  That sell-off lasted until 11:50 a.m. CST — and a somewhat choppy ‘rally’ commenced.  The 99.81 high tick was set around 9:35 a.m. in New York — and very shortly after that, its rapid decent began.  Most of the declines that mattered were in by 3:00 p.m. EDT — and it traded sideways until the market closed at 5:30 EDT.

The dollar index finished the Friday session at 98.37…down 99 basis points from Thursday’s close.

Once again there was no correlation allowed between the currencies and the precious metal prices on Friday.

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

And here’s the 5-year U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…98.54…and the close on the DXY chart above, was about 17 basis points above the spot close on the DXY chart above on Friday.  It’s easy to see from this chart just how manic trading has been in currencies during the last couple of weeks.  I haven’t seen anything like it before.  Click to enlarge as well.

The gold stocks got sold down hard on Friday, for reasons that escape me…although I suspect mutual fund/GDX-type selling. Their rally attempts starting around 10:45 a.m. in morning trading in New York ran into more selling around 11:20 a.m. EDT — and they chopped unevenly lower until the market closed at 4:00 p.m.  The HUI got clocked by 5.82 percent.

And as bad as it was for the gold shares, the silver equities were hit even harder.  The trading pattern in them was about the same as it was for the gold stocks — and Nick Laird’s still rather sad looking Intraday Silver Sentiment/Silver 7 Index closed down 8.51 percent.  Click to enlarge if necessary.

I calculated the Silver 7 Index manually — and I came up with a decline 10.20.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, which uses a different data stream than the Silver 7 Index, updated with Friday’s doji.  Click to enlarge as well.

They were all dogs yesterday, but the biggest one was Peñoles…down 19.53 percent — and the one with the least fleas was Wheaton Precious Metals, down ‘only’ 4.93 percent.


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, not surprisingly, it’s very impressively green across the board.  The gold stocks outperformed their silver cousins compared to the moves in their respective underlying precious metals.  I suspect, as I mentioned a few paragraphs ago, that today’s poor showing in the precious metals equities was yet another case of forced redemptions by mutual funds and stocks like the GDX.  Click to enlarge.

The month-to-date and year-to-date charts are different animals entirely of course.  But there are a couple of “green shoots“.  The silver price and their respective shares continue to lag badly — and even though gold is higher on both the month and year-to-date charts, their stocks don’t reflect that fact.  Click to enlarge.

Except for palladium, the year-to-date chart doesn’t look that much different that the month-to-date one — and I don’t have anything to add to what I’ve already said.  Click to enlarge.

But one thing that I’ll remind you of once again that should never be forgotten — and that’s the fact the new owners of these equities are the strongest of hands — and they aren’t going to be selling them anytime soon.

But the Big 7 traders are still mega short both gold and silver in the COMEX futures market — and as Ted has been pointing out for a very long while now, JPMorgan is in a position to really double cross them in a big way at the time of their choosing.


The CME Daily Delivery Report showed that zero gold and 66 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In silver, there were two short/issuers — and the only one that mattered was JPMorgan, with 65 contracts from its client accounts.  Of the four long/stoppers in total, the two biggest were Scotia Capital/Scotiabank, with 53 contracts for its own account — and in second spot was Advantage, with 10 contracts for its client account.

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

With March deliveries now done, there were 2,914 gold contracts issued/reissued and stopped during the month — and that number in silver was 4,667 contracts.  As I commented on the other day, March is not a regular delivery month in gold — and to see this many contracts issued and stopped was more than a surprise — and it will be interesting to see what April deliveries in gold look like.

The CME Preliminary Report for the Friday trading session showed that gold open interest in March fell by 3 contracts, leaving none left.  Thursday’s Daily Delivery Report showed that 3 gold contracts were actually posted for delivery on Monday, so the change in open interest and the deliveries match.  It looks like gold deliveries in March are now complete.  Silver o.i. in March dropped by 42 contracts, leaving 66 still open, minus the 66 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 108 silver contracts were actually posted for delivery on Monday, so that means that 108-42=66 just got added to so the March delivery month in silver — and those are the ones out for delivery on Tuesday. Talk about leaving things to the last minute!

Gold open interest in April fell, but only by 20,460 contracts on Friday — and there’s still a very impressive 37,408 contracts still open.  Silver o.i. in April actually rose by 84 contracts yesterday, leaving 900 contracts still open.  I expect that gold open interest in April will take another hit by the close of COMEX trading on Monday…but having said that, it certainly appears that there will still be a huge number of gold contracts out for delivery next month.  Maybe that’s what this LBMA/CME brouhaha has been about all this week.  As for silver, I’m not expecting much  change in Monday’s Preliminary Report.


Gold and silver continue to pour into both GLD and SLV…as authorized participants added another 357,472 troy ounces of gold to GLD — plus 1,585,774 troy ounces of silver into SLV.

Since March 20, there has been 1,815,615 troy ounces of gold added to GLD — and since March 13, there has been 40.30 million troy ounces of silver added to SLV.  Something’s up…but what?

In other gold and silver ETFs on Planet Earth on Friday, net of all COMEX and GLD & SLV activity, there was a net 127,180 troy ounces of gold added…plus 627,197 troy ounces of silver was added as well.


For the second day in a row there was no sales report from the U.S. Mint, which I find more than strange considering the physical demand and the mint’s production capacity.

Month-to-date the mint has sold 142,000 troy ounces of gold eagles — 47,500 one-ounce 24K gold buffaloes — and 4,832,500 silver eagles.  These are staggering numbers — and I expect they will add more to these totals before March comes to a close next Tuesday.

And still no Q4/2019 Annual Report numbers from the Royal Canadian Mint.

There was some rather impressive activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  There was 115,871.246 troy ounces reported received — and nothing was shipped out.  In the ‘in’ category, there was 80,377.500 troy ounces/2,500 kilobars [SGE kilobar weight] that was dropped off at the International Depository Services of Delaware.  Then there was 30,799.700 troy ounces/958 kilobars [U.K./U.S. kilobar weight] that was received at Loomis International.  The remaining 4,694.046 troy ounces/146 kilobars [SGE kilobar weight] found a home over at Brink’s, Inc.

But it was the paper movement in gold that made me sit up straight in my chair…as 1,122,966.511 troy ounces was transferred from the Eligible category and into Registered…no doubt in preparation for delivery in April.  There was a surprising 792,366 troy ounces transferred in that direction at JPMorgan.  There was 312,949 troy ounces transferred at HSBC USA — and the remaining 17,650.350 troy ounces/549 kilobars [U.K./U.S. kilobar weight] made the trip from the Eligible category and into Registered over at Loomis International.  If these firms are going to be the issuers, one has to wonder who the stoppers are going to be.  The link to all this is here.

There was some activity in silver, as 1,188,164 troy ounces was received — and 159,428 troy ounces shipped out.  One truckload…600,078 troy ounces…arrived at Canada’s Scotiabank — and the other truckload…588,086 troy ounces…was dropped off at CNT.  All of the ‘out’ activity was at CNT as well.  There was some paper activity, as 140,363 troy ounces was transferred from the Registered category and back into Eligible…140,363 troy ounces at Scotiabank — and the remaining 4,904 troy ounces at Delaware.  The link to this is here.

Not to be left out, the folks over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday had a busy day as well.  They received 2,003 of them — and shipped out 883.  Except for 55 kilobars received at Loomis International, all of the rest of the in/out activity was at Brink’s, Inc.  The link to that, in troy ounces, is here.


Here are two charts that Nick Laird passed around late on Friday night.  They show all the gold and silver in all known depositories, mutual funds and ETFs, as of the close of business on Friday March 27.  During the week just past, there was a net 2,375,000 troy ounces of gold added, plus a net 26.07 million troy ounces of silver. Wow — and double wow!


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday was a surprise in one respect — and that it was a bifurcated report.  There was an increase in the commercial net short position in gold, but a pretty healthy decrease in the short position in silver.  Why that would be the case when the rallies in both these precious metals during the reporting week were very similar in character, is a mystery.

In silver, the Commercial net short position declined by a very impressive 9,967 contracts, or 49.8 million troy ounces.

They arrived at that number by reducing their long position by 1,116 contracts, but they also reduced their short position by 11,083 contracts as well.  It’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report were more surprises, as the Managed Money traders not only reduced their long position by 7,171 contracts, they also increased their short position by 756 contracts as well…for a total of 7,927 contracts.

Why this would occur is a big unknown considering how strong the rally was in silver.

But the mystery extends into the other two categories as well, because the ‘Other Reportables’…although doing very little…also reduced their net long position, but by a paltry 354 contracts.  The ‘Nonreportable’/small trader category also reduced their net long position…by 1,686 contracts.

Doing the math: 7,927 plus 354 plus 1,686 equals 9,967 contracts…the change in the Commercial net short position, which is what these numbers add up to.

All three trading groups in the ‘Non-Commercial” category…Managed Money, Other Reportables and Nonreportable/small traders are now holding their smallest net long positions that I can remember.

Going into the commercial category, the Producer/Merchants, where JPMorgan hangs out, reduced their net short position by a further 5,984 contracts.  Ted wasn’t around when I called him on Friday afternoon, but I would suspect that a goodly chunk of that amount…at least 4,000 contracts…would be an improvement in JPMorgan’s short position…which brings them close to market neutral in silver, as Ted said they were short around 5,000 contracts in last week’s COT Report.

Also a bit of a surprise was the fact that traders in the Swap Dealer category also decreased their net short position during the reporting week — and are pretty much market neutral in the COMEX futures market in silver as well…being only net short 539 contracts.

The Commercial net short position in silver is now down to ‘only’ 44,680 contracts, or 223.4 million troy ounces.  Not exactly bullish, but back to where it was in mid-July or so in 2019.

The Big 8 traders are short around 366 million troy ounces, so their short position is around 164 percent of the Commercial net short position, which is still preposterous and outrageous.

Here’s Nick’s 3-year COT chart for silver — and this week’s improvement should be noted.  Click to enlarge.

I’m still somewhat taken aback by this improvement in the Commercial net short position, as it flies in the face of the big price rise during the reporting week.  What lies ahead for the silver price is something I don’t know.  But it’s a certainty that JPMorgan does, as they are the prime movers in anything precious metal related…particularly silver. I’m looking forward to reading what Ted has to say about this in his weekly review this afternoon.


In gold, the commercial net short position increased by 10,114 contracts, or 1.01 million troy ounces.

They arrived at that number by reducing their long position by 19,050 contracts — and also reduced their short position by 8,936 contracts.  It’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, the Managed Money traders were only partly responsible for the change, as they only increased their net long position by 3,330 contracts.  The other two categories joined in, as the ‘Other Reportables’ increased their net long position by 3,120 contracts — and the ‘Nonreportable’/small traders by 3,664 contracts.

Doing the math: 3,330 plus 3,120 plus 3,664 equals 10,114 contracts, the change in the commercial net short position…which it must do.

In the commercial category, the Producer/Merchants increased their net short position by only 1,404 contracts — and that would suggest that JPMorgan didn’t do much during the reporting week…maybe increasing their short position by a thousand contracts or thereabouts, which is not a material change from the 25,000 contracts, or maybe a bit less that Ted said they were short in last week’s COT Report.  The traders in the Swap/Dealer category did most of the heavy lifting, increasing their net short position by 8,710 contracts.  The sum of those two numbers obviously equals the commercial net short position.

The commercial net short position in gold is back up to 31.18 million troy ounce/311,823 contract mark — and still wildly bearish on an historical basis.

The Big 8 traders, including JPMorgan, are short 28.95 million troy ounces of that amount…about 93 percent of the commercial net short position…not as outrageous as the number in silver, but equally as manipulative to the price.

Here’s Nick’s 3-year COT chart for gold — and the weekly change should be noted.  Click to enlarge.

Where to here for gold?  I don’t know the answer to that question, either.  Like in silver, JPMorgan is in total control of both in the COMEX futures market — and in the physical market as well.


In the other metals, the Manged Money traders in palladium decreased their net long position by  a further 653 COMEX contracts during the reporting week — and are now net long the palladium market by only 753 contracts…a bit over 9 percent of the total open interest…down from 15 percent last week.  Total open interest in palladium fell for the fifth week in a row…from 9,556 COMEX contracts, down to only 8,237 contracts.  And as I said in this space last week, this is no longer a market at all.  In platinum, the Managed Money traders traders reduced their net long position by a further 4,311 contracts.  They’re still net long the platinum market by 10,999 COMEX contracts…a bit over 17 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are still mega net long against JPMorgan et al…and the ‘Nonreportable’/small traders actually increased their net long position during the reporting week by a decent amount.  In copper, the Managed Money traders reduced their net short position in that metal by a rather chunky 14,291 COMEX contracts.  They are net short copper by 28,394 COMEX contracts…a bit over 15 percent of total open interest — and down from 20 percent in last week’s report.  This works out to around 710 million pounds of the stuff.


Here’s Nick Laird’s “Days to Cover” chart, updated with the COT data for positions held at the close of COMEX trading on Tuesday, March 24.  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.

If yesterday’s COT numbers in silver can be believed…for the current reporting week, the Big 4 traders are short 114 days of world silver production…down 12 days from last week’s COT Report — and the ‘5 through 8’ large traders are short an additional 43 days of world silver production…down 9 days from last week’s COT Report — for a total of 157 days that the Big 8 are short…down 21 days from last week’s report. This represents a bit over 5 months of world silver production, or about 366 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 178 days of world silver production.]

It should be noted that the main reason for these big declines in days held short in silver is that total open interest has dropped precipitously during this past reporting week — and the one prior as well.

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 223 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 366 million troy ounces.  So the short position of the Big 8 traders is larger than the total Commercial net short position by around 366-223=143 million troy ounces…which is basically unchanged from last week’s report, but still outrageous.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 29-odd small commercial traders other than the Big 8, are net long that amount.

Another way of stating this [as I say every week in this spot] is that if you removed the Big 8 commercial traders from that category, the remaining traders in the commercial category are net long the COMEX silver market.  It’s the Big 8 against everyone else…a situation that has existed for about three decades in both silver and gold — and in platinum and palladium as well.

As mentioned in my COT commentary in silver above, I estimated JPMorgan’s short position at around 1,000 contracts, down from the 5,000 Ted said they were short in the prior week’s COT Report.  That’s about 5 million troy ounces, or around 2 days of world silver production held short by JPM…which is immaterial.   And as I also mentioned above, JPMorgan could actually be out of their short position entirely now.

As per the first paragraph above, the Big 4 traders in silver are short around 114 days of world silver production in total. That’s about 28.5 days of world silver production each, on average…down from the 31.5 days in last week’s report.  The four traders in the ‘5 through 8’ category are short around 43 days of world silver production in total, which is around 10.75 days of world silver production each, on average…down from 13.0 days last week.

The Big 8 commercial traders are short 48.5 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 49.8 percent they were short in last week’s COT report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 55 percent mark.  In gold, it’s now 52.9 percent of the total COMEX open interest that the Big 8 are short, which is also up a decent amount from the 48.4 percent they were short in last week’s report — and closing in on 60 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 71 days of world gold production, up 3 days from last week’s COT Report.  The ‘5 through 8’ are short another 30 days of world production, up 2 days from last week’s report…for a total of 101 days of world gold production held short by the Big 8…up 5 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 70 percent of the total short position held by the Big 8…down about 1 percentage points from last week’s report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 73, 77 and 80 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is up about 2 percentage points from last week’s COT Report…platinum is up about 3 percentage points from a week ago — and palladium is down around 2 percentage points week-over-week.

It should be noted once again that the short position of the Big 8 traders in palladium has vanished into the background on the above “Days to Cover” chart.  Its short position is now located between cotton and soybean meal.

And as Ted has been pointing out for years now — and as I mentioned in my COT discussion on gold above, JPMorgan is, as always, in a position to double cross the other commercial traders at any time and walk away smelling like that proverbial rose — and that’s because of the massive amounts of physical gold and silver they hold.  Nothing about that possible scenario has changed one iota over the last year — and has grown ever stronger during the last several weeks.  We’re just awaiting that day — and when it does arrive, you won’t have to ask “is this it?”…as it will be evident in the price.

I have a very decent number of articles, stories and videos for you today.


CRITICAL READS

U-Mich Consumer Sentiment Crashes Most Since Oct 2008

While UMich’s preliminary March sentiment survey showed weakness, the final March print – taken after the lock-downs and market carnage began – was expected to plummet further.. and it did.

The final sentiment index for the month slumped 11.9 points to a three-year low of 89.1, data Friday showed. The median forecast in a Bloomberg survey of economists called for a decline to 90 after a preliminary March reading of 95.9.

Ratings for current conditions also decreased by the most since 2008, and a measure of the economic outlook dropped to the lowest level in more than three years.

And the headline print plunged by the most since October 2008…Click to enlarge.

The outlook for the national economy for the year ahead changed dramatically in March, with the majority now expecting bad times financially in the entire country,’’ Richard Curtin, director of the Michigan sentiment survey, said in a statement.

Perhaps the most important takeaway is that the largest proportion of consumers in nearly 10 years anticipated that the national unemployment rate will increase in the year ahead.’’

The wealthiest third of people interviewed dominated the collapse in sentiment – plunging to their least confident since 2014.

This Bloomberg story, with a ZH spin appeared on their Internet site at 10:07 a.m. EDT on Friday morning — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Stocks Tumble After Fed Announces it Will Reduce Treasury QE From $75BN to $60BN Per Day

After desperately trying to ramp to green, stocks are tumbling (along with bond yields) right after the Fed implicitly confirmed there is now a shortage of bonds as demonstrated by the recent repo ops that saw zero submissions – as discussed earlier as instead of using repo to park bonds with the Fed Dealers merely sell them back to the Fed…click to enlarge.

… when it announced it would start cutting back, or tapering, its “unlimited QE” bond-buying next week.

Specifically, after buying $75BN in bonds daily through Wednesday – as it has since March 19 – the Fed said it would reduce the amount to $60BN on April 2 and 3, with the assumption that this – or lower – is the number going forward.

But wait there’s more, because after buying $50BN in MBS every day since Monday, the Fed’s schedule now also shows a decline in MBS purchases going forward from $50BN to $40BN daily next week.

These cuts are summarized below:  Click to enlarge.

Stocks are not happy — and bonds are bid with 10Y tumbling to 67 basis points.

This news item showed up on the Zero Hedge website at 3:45 p.m. on Friday afternoon EDT — and another link to it is here.  Then there was this follow-up Zero Hedge article from 9:40 p.m. on Friday night headlined “There is Now a Treasury Shortage


Helicopter Money for Wall Street — Wolf Richter

Total assets on the Fed’s weekly balance sheet, released this afternoon, spiked by $586 billion in one week, to $5.25 trillion. This doesn’t even include yet the bulk of the mortgage-backed securities (MBS) the Fed bought over the past two weeks because the Fed books them when its trades settle, and MBS trades take a while to settle. So they will show up later.

Over the past two weeks, total assets have ballooned by $942 billion – again not including the bulk of the MBS it bought during that time, which will be booked when they settle. Money creation at its finest:

If the Fed had sent that $942 billion it created over the past two weeks to the 130 million households in the U.S., each household would have received $7,250. But that didn’t happen. That was helicopter money for Wall Street.

Since mid-September when the Fed started bailing out the repo market that had blown out, total assets on the Fed’s balance sheet soared by $1.41 trillion. If the Fed had sent that $1.41 trillion to the 130 million households in the U.S., each household would have received $10,840. But that didn’t happen either. It was helicopter money for Wall Street.

This very worthwhile commentary from Wolf was posted on his Internet site on Thursday — and I just didn’t have room for it it Friday’s column, so here it is now.  I thank Roy Stephens for pointing it out — and another link to it is here.


I’ve Never, Ever, Ever Seen Anything Like This Before

With the Fed buying $622 billion in Treasury and MBS, a staggering 2.9% of U.S. GDP, in just the past five days…Click to enlarge.

… any debate what to call the current phase of the Fed’s asset monetization – “NOT NOT-QE”, QE4, QE5, or just QEternity – can be laid to rest: because what the Fed is doing is simply Helicopter money, as it unleashes an unprecedented debt – and deficit – monetization program, one which is there to ensure that the trillions in new debt the U.S. Treasury has to issue in the coming year to pay for the $2 (or is that $6) trillion stimulus package find a buyer, which with foreign central banks suddenly dumping U.S. Treasuries…Click to enlarge.

… would otherwise be quite problematic, even if it means the Fed’s balance sheet is going to hit $6 trillion in a few days.

The problem, at least for traders, is that this new regime is something they have never encountered before, because during prior instances of QE, Treasuries were a safe asset. Now, however, with fears that helicopter money will unleash a tsunami of so much debt not even the Fed will be able to contain it resulting in hyperinflation, everything is in flux, especially when it comes to triangulating pricing on the all important 10Y and 30Y Treasury.

Indeed, as Bloomberg writes today, core investor tenets such as what constitutes a safe asset, the value of bonds as a portfolio hedge, and expectations for returns over the next decade are all being thrown out as governments and central banks strive to avert a global depression.

And as the now infamous “Money Printer go Brrr” meme captures so well, underlying the uncertainty is the risk that trillions of dollars in monetary and fiscal stimulus, and even more trillions in debt, “could create an eventual inflation shock that will trigger losses for bondholders.”

Other investors agree that cash is the only solution, which is why T-Bills – widely seen as cash equivalents – are now trading with negative yields for 3 months and over.

Yet others rush into the safety of gold… if they can find it. At least check, physical gold was trading with a 10% premium to paper gold and rising fast.

Ultimately, as Bloomberg concludes, investors will have to find their bearings “in a crisis without recent historical parallel.”

This longish commentary is one I linked in The Wrap in Friday’s column, along with a comment that it would appear in Saturday’s column as well — and here it is.  It put in an appearance on the Zero Hedge website at 10:30 p.m. on Thursday night EDT — and another link to it is here.  There was a short 3:57 minute youtube.com video that was posted on their website yesterday — and it’s worth a look.  It’s entitled “New Fed Liquidity Facilities” — and that comes courtesy of Richard Saler.


The Downgrade Massacre Has Started — Wolf Richter

I get “Moody’s Daily Alert” in my inbox, which lists Moody’s ratings actions for the day. The Alerts are usually a mix of a few upgrades and a few downgrades. Many times, there are no downgrades. Earlier this year, it became obvious without counting that the downgrades were starting to outnumber the upgrades by a large margin. But this week, the three Alerts were a torrent of 69 downgrades and zero upgrades. This is something I haven’t seen since I started subscribing to this service years ago. Some of the downgrades were by multiple notches in one fell swoop.

This ratio of zero upgrades to 69 downgrades by Moody’s this week is a hair-raising deterioration of the already downgrade-heavy ratings actions so far this year. Moody’s has now downgraded over 180 companies this year, 69 of which I got in my inbox just this week!

In addition, these Alerts contained a torrent of warnings about “ratings on review for further downgrade” or “negative outlook,” meaning downgrades, or additional downgrades are to come.

The analysts at Moody’s must be working overtime putting together their downgrade reports, and they’ve fallen behind, and it’s going to take them a while to catch up. Meanwhile, they issue warnings about what they’ve got in their downgrade pipeline.

This longish commentary from Wolf showed up on his website on Friday sometime — and I thank Roy Stephens for sending it along.  Another link to it is here.


Jim Grant — “Nobody Knows Anything

AL: Okay. What are your thoughts on what’s going on [over] the past week or so?

JG: Well, it is a light show. I guess the big question is whether Mr. Market has ceded operating control of finance to Uncle Sam in the shape of these quite gob stopping interventions and, in the face of things, it looks as if that were possible. Only September, before the pandemic, the Fed intervened in response to a kind of anomalous, unscripted spike in the so-called repo rate. That’s the rate at which you can borrow against the apparently spotless collateral of the United States Treasury. But on that particular day — was it September 7th maybe? — in early September that rate spiked above 9[%] and got close to 10[%], and that was a cue for, what was then seen as, a rather sizable succession of Fed intervention to tamp down that rate and to facilitate the continued funding of our out-sized boom time, then boom time, Treasury deficits.

So what has happened in the past two weeks has been the most outsized and stunning succession of interventions in the history of modern central banking. You know, it’s not unprecedented that central banks do unconventional, even radical things, in the face of extreme turbulence. In 1825, in England, there was a very, very severe depression and financial panic, and the Bank of England did all manner of unconventional things — actually lent against physical merchandise, which was an extreme step — mortified the more orthodox among the directors of the Bank of England.

But in six hearings in 1832, I guess, one of the directors [of] the Bank of England was asked about this. How does he explain what had happened? And this guy, named Jeremiah Harman, a long-serving director, said that, “We lent … by every possible means, and in modes that we never had adopted before … seeing the dreadful state in which the public were, we rendered every assistance in our power.” And he added that, “we were not upon some occasions over nice.”

This long, but very worthwhile Q&A session with Jim Grant showed up on the sprottmedia.com Internet site on Tuesday — and I thank Tolling Jennings for sending it our way.  Another link to it is hereGregory Mannarino‘s post market close rant for Friday is linked here.


Doug Noland: The Solvency Problem

The Fed’s move to open-ended QE coupled with corporate bond and bond ETF purchases was instrumental in arresting market collapse and sparking upside dislocation. This, along with expanded global central bank swap arrangements, reversed global market illiquidity and panic.

If I believed global markets were chiefly facing liquidity issues, I would be more hopeful. Illiquidity was pressing, and global central bankers responded with “whatever it takes” (and it took a lot). But believing the global Bubble has burst, I see the overarching issue more in terms of a developing Solvency Problem. Burning the midnight oil in homes around the globe, rating agency employees enjoy enviable job security. And that would be Credit analysts for corporations, financial institutions, municipalities, investment-grade bonds, junk debt, structured products and nations. Credit and Solvency issues will turn systemic.

It’s a different world now. And while “whatever it takes” can accommodate speculative deleveraging and generally support market liquidity, The Solvency Problem will prove a historic challenge. The global economy has commenced a major downturn, hitting an already impaired global financial system. While markets enjoyed a recovery this week, EM debt is turning toxic. Energy-related debt is already toxic. Risk of general business and real estate debt turning toxic is growing rapidly.

As I posited last week, I see an environment hostile to speculative leverage. This ensures a fundamental tightening of financial conditions and attendant downward pressure on global asset markets – securities and real estate, in particular. And with Bernanke’s 40-year bond yield “ski slope” at the end of a historic run, central banks have today little capacity for using rate cuts to reflate asset prices.

The U.S. economy is in trouble. Europe is in greater trouble. EM economies face a disastrous combination of financial and economic hardship. And just as China moves to restart its economy, its massive export sector is confronting collapsing global demand. How long Beijing can hold things together is a critical issue. In the theme of bursting Bubble economies and unfolding Solvency Problems, no country faces greater challenges than China (with its deeply maladjusted economy and gargantuan financial sector).

Doug’s weekly commentary, which is always a must read for me, appeared on his Internet site in the wee hours of Saturday morning EDT — and another link to it is here.


Oil’s 60% Crash Is the Tip of an Iceberg. The Reality Is Worse

As oil crashes due to the impact of the coronavirus, it’s easy to overlook an even more dismal reality for producers: the real prices they’re getting for their barrels are worse still.

Having collapsed by about 60% this year, Brent and West Texas Intermediate crude have stabilized at around $25 a barrel, but the price rout is far deeper for actual cargoes, which are changing hands at large and widening discounts to the global benchmarks. The discounts mean that in the physical market, some crude streams are trading at $15, $10 and even as little as $8 a barrel.

The physical market is in pain, and there is more pain to come,” said Torbjorn Tornqvist, the co-founder of Gunvor Group Ltd., a large trading house. “We will see the full weight of the oversupply in a couple of weeks.”

Crude oil in the physical market trades at a premium or discount to Brent, West Texas Intermediate and other benchmarks. At times of surplus, premiums narrow and discounts widen. But the current situation is almost unprecedented, with discounts in some cases at multi-decade highs.

Examples abound from Africa to the Middle East to Latin America.

Nigeria, the biggest oil producer in Africa, is selling its flagship Qua Iboe crude at a discount of $3.10 a barrel below the Dated Brent benchmark, the largest in at least two decades. Colombia is selling its Vasconia crude at a discount $7.75 a barrel to Brent, a 4 1/2-year low. “The physical oil market looks horrific,” said Kit Haines, an analyst at consultant Energy Aspects Ltd.

This unhappy story appeared on the Bloomberg website very late on Tuesday night — and I was saving it for Saturday column.  I thank Brad Robertson for finding it for us — and another link to it is here.


University Study Finds Fire Did Not Cause Building 7’s Collapse on 9/11

It is unfortunate that such an important report was released during a health and economic crisis when it will be overshadowed and neglected by two simultaneous crises.

On March 25, 2020, researchers at the University of Alaska Fairbanks issued the final report of a four-year computer modeling study on the collapse of World Trade Center Building 7.

The 47-story WTC 7 was the third skyscraper to be completely destroyed on September 11, 2001, collapsing rapidly and symmetrically into its footprint at 5:20 PM. Seven years later, investigators at the National Institute of Standards and Technology (NIST) concluded that WTC 7 was the first steel-framed high-rise ever to have collapsed solely as a result of normal office fires.

Contrary to the conclusions of NIST, the UAF research team finds that the collapse of WTC 7 on 9/11 was not caused by fires but instead was caused by the near-simultaneous failure of every column in the building [which means it was a controlled demolition].

The link to this University of Alaska engineering study is embedded in this Paul Craig Roberts article that was posted on his Internet site on Wednesday.  For obvious reasons it had to wait for today’s column — and I thank Tolling Jennings for his second offering in today’s column.  Another link to it is here.


Ray Dalio — The Changing World Order

I believe that the times ahead will be radically different from the times we have experienced so far in our lifetimes, though similar to many other times in history.

I believe this because about 18 months ago I undertook a study of the rises and declines of empires, their reserve currencies, and their markets, prompted by my seeing a number of unusual developments that hadn’t happened before in my lifetime but that I knew had occurred numerous times in history. Most importantly, I was seeing the confluence of 1) high levels of indebtedness and extremely low interest rates, which limits central banks’ powers to stimulate the economy, 2) large wealth gaps and political divisions within countries, which leads to increased social and political conflicts, and 3) a rising world power (China) challenging the overextended existing world power (the US), which causes external conflict.  The most recent analogous time was the period from 1930 to 1945.  This was very concerning to me.

As I studied history, I saw that this confluence of events was typical of periods that existed as roughly 10- to 20-year transition phases between big economic and political cycles that occurred over many years (e.g., 50-100 years).  These big cycles were comprised of swings between 1) happy and prosperous periods in which wealth is pursued and created productively and those with power work harmoniously to facilitate this and 2) miserable, depressing periods in which there are fights over wealth and power that disrupt harmony and productivity and sometimes lead to revolutions/wars. These bad periods were like cleansing storms that got rid of weaknesses and excesses, such as too much debt, and returned the fundamentals to a sounder footing, albeit painfully. They eventually caused adaptations that made the whole stronger, though they typically changed who was on top and the prevailing world order.

The answers to this question can only be found by studying the mechanics behind similar cases in history—the 1930-45 period but also the rise and fall of the British and Dutch empires, the rise and fall of Chinese dynasties, and others—to unlock an understanding of what is happening and what is likely to happen. That was the purpose of this study.  Then the pandemic came along, which was another one of those big events that never happened to me but happened many times before my lifetime that I needed to understand better.

This very long, but also very worthwhile and thoughtful commentary from Ray, put in an appearance on the linkedin.com Internet site on Wednesday — and I thank Judy Sturgis for bringing it to our attention.  Another link to it is here.


Gold Stranded by Coronavirus May Travel on Chartered Flights

Gold suppliers are in talks to use chartered or cargo flights to transport the precious metal, which usually moves around the world in commercial planes and has been left stranded as global travel grinds to a halt.

The global gold market has been thrown into upheaval by the coronavirus outbreak. Logistics are becoming increasingly difficult and some leading refineries have been forced to close, all at a time when demand for gold is surging. A key South African refinery said Thursday it’s had to stop shipping to London.

The London Bullion Market Association, which represents gold market participants, said that refining capacity isn’t a problem — there’s easily enough plants still operating to meet demand. However, the group is looking at ways to solve the logistics problems and is investigating the possibility of allowing global delivery outside of London.

LBMA is confident there is more than sufficient global refining capacity,” it said in a notice issued overnight. “Refiners and other market participants are actively engaged with logistics companies to overcome travel constraints and ensure the physical movement of metal via, for example, chartered or cargo flights.”

The disruptions in gold supply chains have combined with surging demand for the traditional haven to drive prices higher. Spot gold is headed for its biggest weekly gain since 2008. Earlier this week, uncertainty over whether there was enough gold available in New York to deliver against contracts on the Comex drove the spread with London spot prices to the highest in four decades.

This Bloomberg article was posted on their website at 4:14 a.m. PDT…Pacific Daylight Time…on Friday morning — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.


Coronavirus Fears Spark Gold Shortages — Bill Bonner

[I]t was in the Franklin Roosevelt years that feds decided to make private holdings of gold illegal.
People dutifully turned in their gold at the statutory rate, getting paper currency in exchange. Then, the feds devalued the paper currency against gold by 69%.

Importantly, the Roosevelt gang did not make it illegal to own gold mining companies. The shares in Homestake Mining, for example, continued to rise, despite both the Great Depression and the ban on personal gold holdings.

So what does that mean for investors today?

After the stock market finally finds its bottom, prices will go up. But as we cautioned yesterday, we doubt that this will be the result of a genuine Main Street boom.

This is not like the Post-WWI period in the U.S. This is more like the Post-WWI period in Germany.
Desperate to keep the economy from falling apart… and to avoid angry mobs… the German government printed money. We all know what happened next.

This commentary from Bill was posted on his Internet site on Friday sometime — and another link to it is here.


South African Gold Shipments to London Have Been Cut Off

A South African refinery has stopped shipping gold to London because of a lack of commercial flights, adding to the disruption that’s upending the physical bullion market.

South Africa’s Rand Refinery Ltd., the continent’s only gold refiner, said it’s exploring back-up plans and alternative measures to be able to meet its delivery commitments to the London gold market.

The supply from the established mines on the African continent to the refinery is currently disrupted,” said Chief Executive Officer Praveen Baijnath. “We are working hard with global logistics service providers to ensure our inbound and outbound commitments can be achieved.”

He didn’t specify how much gold could be affected. Still, it’s another example of how the supply chain — which runs from deep African mines to refineries and storage vaults — is being upended by the coronavirus. Earlier this week, refineries in Switzerland also announced they would temporarily close.

In one sign of how things have slowed down, shipping Russian gold overseas can now take about a week instead of a day, said Alexey Zaytsev, head of commodities & funding products at Otkritie bank.

The Rand Refinery is running at reduced capacity during a national lockdown, even though the company was exempted from restrictions, said Baijnath.

This Bloomberg news item appeared on the bnnbloomberg.com Internet site on Thursday sometime — and I found it over at Sharp Pixley.  Another link to it is here.


The PHOTOS and the FUNNIES

With Valemont disappearing in the rear-view mirror, we were on our way back to Merritt on September 2…because I had a column to get out the next day.  Our last stop along the way was a town/village called Vavenby.  Like Valemont, I’d driven by the sign countless time, but had never stopped to see what it was all about.  None of it is visible from the highway.  But what was left of it was very well maintained.  It was a logging town at one time — and the mill has now closed there as well.  I took the first two photos from the bridge that spans the North Thompson River — and the third photo was at the abandoned Weyerhaeuser lumber mill.  The last photo was an empty CN Rail unit coal train on the siding in the town, heading back to Alberta.  The engineer had wandered over the to the corner store for a coffee or snack while he was waiting for the westbound downhill traffic to go through, as it has higher priority than eastbound trains.


The WRAP

Today’s pop ‘blast from the past’ is all Canadian…but it was big hit in the U.S. and elsewhere as well.  A Canadian rock band, formed in Calgary in 1979 had a huge following — and rightly so.  I’ve featured this rock tune before on several occasions, but it never grows old, at least in my eyes.  It’s their biggest hit — and it’s linked here.  It has a killer bass line to go with it — and here’s Canadian Constantine Isslamow providing the bass cover to it — and that link is here.

And as an extra bonus, here is someone with great musical and computer/editing skills that has far too much time on their hands.  It’s entitled “Coronavirus Rhapsody” — and is an hilarious take-off on Queen’s Bohemian Rhapsody.  The link is here — and I thank Judy Sturgis for bringing it to our attention.

Today’s classical ‘blast from the past’ is one that I should have chosen for last Saturday…March 21…as that was the day after the spring equinox.  So here it is this weekend instead…It’s Antoni Vivaldi’s Concerto No. 1 in E major, Op. 8, RV 269, “Spring”.  And here’s the master himself to do the honours…as Itzhak Perlman plays and conducts the strings of the Israel Philharmonic.  The link is here.


In reality, both gold and silver were kept in a reasonably tight price range throughout the entire trading session on Friday.  Gold was well bid under $1,610 spot — and silver at $14.20 spot.  At the top of the price band in gold, it wasn’t allowed above $1,640 spot — and silver wasn’t allowed above $16.60 spot.  Net trading volumes in both metals were very light — and that was especially true in the case of gold, as the large traders that weren’t standing for delivery in April, had to roll or sell their remaining April contracts before the COMEX close yesterday.

But in other areas of the gold market, things were far different.  Large amounts of gold are continually being added to GLD, plus other gold and silver mutual funds and ETFs.  On top of that were the staggering amounts of gold that were transferred from the Registered category and into Eligible on Thursday…in preparation for delivery in April.  I expect more to make that trip during the remaining three days left in March.

Then there’s the still huge April open interest in gold remaining…over 37,000 contracts.  Although a goodly chunk of that will disappear when the CME posts their Preliminary Report on Monday evening, it still looks as if April gold deliveries will be rather large — and that may prove to be an understatement.  And as I touched on earlier, I now get the distinct impression that this gold delivery issue between the LBMA and the CME Group that made the news most days this past week, has something very much to do with the upcoming delivery month.  But, having said all that, I’ll set this aside until I see Monday’s Preliminary Report.

Here are the 6-month charts for the Big 6 commodities, courtesy of stockcharts.com Internet site as always — and there’s not much to see in the precious metals for the second day in a row.  Copper slid a hair, but WTIC was down almost 5 percent.  Click to enlarge.

What we are witness to at the moment is the continued massive attempts by the Federal Reserve and other central banks in the world, to print their way out of a world-wide deflationary collapse of absolutely Biblical proportions that is only getting worse by the day.

They will fail…most likely spectacularly at some point — and the jury is still out on whether this will be by accident, or by design.  As I’ve stated on many occasions, I suspect it will be the latter.

The economies of the world are imploding at Warp Speed as the effects of the coronavirus really start to bite hard — and the the worst is not even close to being over.  And they are imploding faster than the central banks’ efforts are to save them.

They were able to save Wall Street and the world after the subprime debacle of 2008/9…but the situation they face today is unsalvageable — and they most likely know that already, as they were the ones that orchestrated it all in the first place.

They will burn their currencies in an attempt to save the world this time — and the absolutely massive flows into the precious metals recently is proof of that, as even the rich and powerful can see the handwriting on the wall.

But somehow this deflationary spiral must be stopped in its tracks — and at some point we’ll see the IMF’s Special Drawing Rights [SDRs] make an appearance.

And somewhere along the way they’ll have to get commodity prices higher, particularly crude oil.  But with the current supply/demand situation as horrid as it is, there’s no way that they can do anything about it under the circumstances they face today.

As I and others, mostly notably Jim Rickards lately, have been saying…that leaves only the gold card left to play.  They will play it at some point, we just don’t know when that moment will be.  But when that moment comes, it will most likely come on a weekend — and before New York opens at 6:00 p.m. ET on Sunday evening.  A new price will be set — and a 2-way trading mechanism will be initiated at that price.  That will be the end of all paper money, including the U.S. dollar as they will be massively — and I mean massively devalued against the only true form of money.

During my interview with Dr. Dave Janda last Sunday, he brought up an event that had completely skipped my mind until then.  That was a TV interview between Neil Cavuto and Terry Duffy, the CEO of the CME Group.  In that interview, which looked carefully stage-managed to me, Neil asked the questions provided — and Terry gave us the play-by-play as to how gold will be repriced when the time comes.  I looked for the interview on youtube just now — and couldn’t find it anywhere.  But if I do come across it in the next twelve hours, I’ll link it in this paragraph.  Here it is…and the first of many readers through the door with it was Robert Kornblum.  I’ve cued it to start at the salient moment when the question gets asked.  The link is here.

So if Mr. Duffy figures gold should have been $5-6,000 the ounce back in July of 2017…one wonders what he think it should be priced at today?

And as the central banks’ printing presses run white hot…Nick Laird’s charts posted just before the COT Report in today’s column, show that the panic into precious metals is on in earnest, as all the world’s various mutual funds, depositories and ETFs took in an absolutely massive 2,375,000 troy ounces of gold — and an astronomical 26,071,000 troy ounces of silver during the last five business days.

What do they know that we don’t…at least not yet?

Despite the pounding the precious metal equities have taken so far this year, I’m still “all in”.

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

Ed

Another 6.53 Million Ounces of Silver Added to SLV

27 March 2020 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price sagged a bit at the 6:00 p.m. open in New York on Wednesday evening, but began to edge higher about two hours later.  That brief rally was capped and sold unevenly lower starting shortly before 9 a.m. China Standard Time on their Thursday morning.  That quiet sell-off ended about 3:20 p.m. CST.  A parabolic rally commenced at that juncture — and ‘da boyz’ stepped in around 9:10 a.m. in New York — and it was hammered about 25 bucks lower until around 9:30 a.m. — and it then traded unevenly sideways in a very wide price range until the market closed at 5:00 p.m. in New York.

The low and high ticks in gold were recorded by the CME Group as $1,611.00 and $1,672.50 in the April contract.

Gold was closed in New York on Thursday afternoon at $1,624.50 spot, up $11.60 from Wednesday.  Net volume was fumes and vapours — and that’s being kind…at a bit under 35,500 contracts.  But, as expected, roll-over/switch volume out of April and into future months was ginormous at 181,500 contracts.

The price pattern in silver was mostly the same, but far more subdued.  The low tick was set at the same time as gold’s, but there was no parabolic rally after that…just a quiet creeping rally that ran into ‘something’ around 10:15 a.m. in New York.  It was equally quietly down hill from there until around 3:20 p.m. in after-hours trading — and the price didn’t do much after that.

The low and high ticks in silver were reported as $14.40 and $14.98 in the May contract.

Silver was closed on Thursday afternoon in New York at $14.41 spot, down 11.5 cents from its close on Wednesday.  Net volume was pretty quiet at a bit over 47,000 contracts — and there was about 6,700 contracts worth of roll-over/switch volume in this precious metal.

After its initial tick higher at the 6:00 p.m. open in New York on Wednesday evening, the platinum price was sold lower over the next two hours before trading somewhat unsteadily sideways until shortly after the COMEX open in New York. It rallied a bit from there until shortly after 10 a.m. EDT — and then sagged a bit going into the 5:00 p.m. close.  Platinum finished the Thursday session at $733 spot, down 3 dollars from its Wednesday close.

The palladium price recorded its high tick of the day about 8:45 a.m. China Standard Time on their Thursday morning — and was then sold very unevenly lower until a minute or so after the 9 a.m. Zurich open.  It had an up/down move of some size — and then settled in a bit below $2,200 spot — and traded flat from there until shortly after 12 o’clock noon in New York.  The ensuing rally was capped/came to an end minutes after 1 p.m. EDT — and it didn’t do much of anything after that.  Palladium was closed at $2,255 spot, down 25 bucks from Wednesday.

Based on Thursday’s spot closing prices, the gold/silver ratio was just under 113 to 1.


The dollar index closed very late on Wednesday afternoon in New York at 101.05 — and opened down about 9 basis points at 100.96 once trading commenced around 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  It edged a few basis lower until 2:32 p.m. CST — and then the fall from grace became much more substantial.  The 99.24 low tick was set at exactly 4:00 p.m. EDT in New York — and it crept a bit higher into the 5:30 p.m. close from there.

The dollar index finished the Thursday session at 99.35…down 170 basis points from its close on Wednesday — and it was more than obvious that JPMorgan et al. were not going to allow that to be reflected in the precious metal prices yesterday…particularly gold.

Here’s the DXY chart for Thursday, courtesy of BloombergClick 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…99.45…and the close on the DXY chart above, was 10 basis points above the close on the spot DXY chart on Thursday.  Click to enlarge as well.

The gold shares jumped up at the 9:30 a.m. on open in New York on Thursday morning — and their respective highs were in place about ten minutes later.  From there they were sold lower and into negative territory, with their lows coming around 12:10 a.m. EDT.  They bounced a tad higher from that point, before trading unevenly sideways just below the unchanged mark for the rest of the Thursday session.  The HUI closed down 0.62 percent.

The silver equities followed a mostly similar price pattern, with their respective highs and lows coming at the same time as gold’s.  They never got a sniff of positive territory after that — and Nick Laird’s still sad-looking Intraday Silver Sentiment/Silver 7 Index closed down 1.83 percent.  Click to enlarge if necessary.

Once again I’ve computed the above data manually — and it shows that the Silver 7 Index close up 2.45 percent…mainly on the back of another big gain in Peñoles.

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

As I just mentioned, according to the data on finance.yahoo.com…which is the feed that Nick uses, Peñoles closed higher by 11.28 percent.  It was up 20.00 percent on Wednesday.  This is a very thinly traded stock — and according to the Yahoo feed, it only traded 324 shares yesterday.  The big loser on the day was SSR Mining…down 5.86 percent.


The CME Daily Delivery Report showed that 3 gold and 108 silver contracts were posted for delivery today within the COMEX-approved depositories on Monday.

In gold, the lone short/issuer was JPMorgan out of its client account.  Wedbush, ABN Amro and ADM picked up one contract each.

In silver, there were three short/issuers — and the two largest were JPMorgan and Advantage, with 99 and 8 contracts out of their respective client accounts.  There were four/long stoppers in total — and the three biggest were Scotia Capital/Scotiabank, RBC Capital Market and the CME Group.  RBC stopped theirs for the their client account — and the other two for their own accounts.  The CME Group immediately reissued their contracts as 9×5=45 one-thousand ounce Micro Silver contracts.  Morgan Stanley, ADM and Advantage were the three stoppers, picking up 34, 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 Thursday trading session showed that gold open interest in March dropped by 387 contracts, leaving just 3 left, minus the 3 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 387 contracts were actually posted for delivery today, so the change in open interest and deliveries match.  Silver o.i. in March declined by 54 contracts, leaving 108 still open, minus the 108 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 153 silver contracts were actually posted for the delivery today, so that means that 108-54=54 more silver contracts just got added to the March delivery month.


There was another big deposit into GLD on Thursday, as authorized participants added 141,109 troy ounces.  But the real activity was in SLV once again, as an a.p. added another gargantuan amount…6,529,670 troy ounces.

That makes 38,713,132 troy ounces of silver that’s been added to SLV since March 16.  What is this all about, one has to wonder.

In other gold and silver ETFs on Planet Earth on Thursday, net of any COMEX and GLD & SLV activity, there was a net 39,188 troy ounces of gold withdrawn — and that was mostly because of a 118,753 troy ounce withdrawal from Deutsche Bank.  But there was a net 1,556,939 troy ounces of silver deposited.

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

The only physical activity in gold on Wednesday over at the COMEX-approved gold depositories on the U.S. east coast was 11,799.417 troy ounces/367 kilobars [SGE kilobar weight] that was dropped off at Brink’s, Inc.  There was also some paper activity, as 3,182.850 troy ounces/99 kilobars [U.K./U.S. kilobar weight] was transferred from the Eligible category and into Registered over at Loomis International.  I would suspect that this is destined for delivery in March…but could just as easily be for April delivery as well.  The link to this is here.

There wasn’t much activity in silver.  Nothing was reported received — and only 603,412 troy ounces was shipped out.  Of that amount, one truckload…600,392 troy ounces…departed Brink’s, Inc. — and the remaining 3,020 troy ounces…three good delivery bars…were shipped out of Delaware.  The link to that is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They received 20 of them — and those ended up at Brink’s, Inc.  They also shipped out 20 kilobars as well.  The rest of the action was at Loomis International, as they parted with 470 kilobars.  The link to all this is here.


Hungary, Bela III, 1172-1196, Denarius

Material: Silver     Full Weight: 0.19 grams     Price: €495/US$546

I have an average number of stories, articles and videos today.


CRITICAL READS

A Record 3.3 Million Americans Just Filed For Unemployment Benefits

The pace at which Americans are losing their jobs is absolutely breathtaking.  According to the Wall Street Journal, the largest number of new claims for unemployment benefits ever recorded in a single week prior to this year was 695,000 during the week that ended October 2nd, 1982.

So that means that what we are now witnessing is completely unprecedented, as The US Department of Labor reports a stunning increase of 3.283 million people sought initial jobless claims last week amid the virus lock-downs (almost double the expectation of a 1.7 million increase).  Click to enlarge.

The Bureau of Labor Statistics says that nearly every single state cited Covid-19 in its reporting.

Service industries were hit hard, but the BLS says other industries were cited: health care and social assistance, arts, entertainment and recreation, transportation and warehousing, and manufacturing.

Of course similar things are happening all over the world.  Approximately one-third of the entire population of the globe is currently under some sort of a lock-down order, and that means that hundreds of millions of workers are sitting at home not working.

Here in the United States, so many people are already absolutely sick and tired of being idle at home, but the truth is that it looks like this pandemic is just getting started.

That was such good news that the Dow close up about 1,400 points.  There are no markets anymore, only interventions.  This 3-chart Zero Hedge story put in an appearance on their Internet site at 11:34 a.m. EDT on Thursday morning — and I thank Brad Robertson for his first contribution of the day.  Another link to it is here. Wolf Richter had a few things to say about these numbers in a commentary headlined “A Word About the Horrid Spike in Unemployment Claims and Why it’s Even More Horrid Than it Appears” — and I thank Roy Stephens for that one.


The “Fallen Angel” Avalanche Arrives: S&P Downgrading Companies at Fastest Pace on Record

Last week, the rating agencies – which during the financial crisis were accused, and for good reason, of being too slow to respond to the deterioration in credit fundamentals – vowed that they would be much faster in taking the hammer to credits that are due for a downgrade, with Moody’s telling Reuters it would review its entire universe of corporate ratings “with a slew of downgrades or downgrade warnings on the cards.”

Well, the raters weren’t kidding, because around the time Ford became the biggest fallen angel in the current cycle (and second largest ever) when S&P downgraded the auto giant to junk last night, we learned that – true to its word – S&P was slashing and burning corporate ratings at the fastest pace on record as it struggled to keep up with the cratering U.S. economy and cash flows..

As BofA calculates, net downgrades (downgrades less upgrades) so far in March have totaled $284BN, with the Energy sector leading ($85bn, or 30% of the total), followed by Autos following Wednesday’s downgrade by both Moody’s and S&P ($81bn) and Aerospace/Defense ($33bn).

In terms of actual rating events, S&P has already done 565 downgrades this quarter, up from 351 in 4Q and 281 in 1Q last year, per Bloomberg. That’s the most since records began in 2010 and far exceeds the prior quarterly peak of 390 in 1Q 2016. Its ratio of upgrades to downgrades fell to 0.27, the lowest on record. Moody’s is running a bit slow with “only” 342 cuts, which is still the most for a quarter since 2016. Fitch has done 192 downgrades this quarter, its most since 2012.

Meanwhile, the “fallen angel” avalanche we have been predicting for years is finally coming true, and has totaled $84bn in March (based on Bloomberg Barclays rating methodology), led by F today ($36bn), OXY ($29bn) and WES ($8bn).

As a result the current two-week pace of downgrades is approaching the fastest on record going back to 2002 — and as Bloomberg notes, “expect a lot more corporate downgrades and fallen angels”  as the economic damage spreads, as the impact of plunging earnings and spiraling funding costs are tallied. The silver lining is that the credit market may be overshooting on illiquidity and panic selling, which means discerning investors could probably make some good money especially with the Fed backstopping IG,” although as BBG concludes, “a lot of bonds are still trading at levels suggesting there’s another big wave of downgrades to come.”

No surprises here, either.  This Zero Hedge article put in an appearance on their Internet site at 11:00 a.m. on Thursday morning EDT — and is another contribution from Brad.  Another link to it is here.


U.S. Vehicle Sales Volumes Are Down 50%-75% in March

If any company is bracing for the shock of falling U.S. auto sales, it’s got to be to be Group 1 Automotive. The company owns and operates 186 auto dealerships along with 242 franchises and 49 collision centers, mostly in the U.S. and U.K.

And on Wednesday, the company provided a business update: the outlook for the industry was catastrophic, to say the least.

As a result of the coronavirus lock-down and beginning on March 6, the company said that overall U.S. vehicle sales volumes began to significantly decrease, and are currently down 50-70 percent from normal expected March volumes. Additionally, the company said that based on discussions with its OEM partners, this sales decline is consistent with that experienced by other dealers.

Virtually all of Group 1’s U.S. dealerships are located in markets operating in some type of ‘shelter in place’ or restricted travel environments in accordance with applicable state and local orders,” the company said in its release.

Earl J. Hesterberg, Group 1’s president and chief executive officer said: “The sudden impact of this medical and human emergency is clearly disrupting most businesses. This is requiring us to take many severe and regrettable actions to re-size our business to minimal activity levels in the near term.  I believe that the swift and decisive actions that we are taking will enable us to recover quickly when the market recovers as it undoubtedly will.”

If Group 1 acts as an accurate barometer, which we believe it will, we not only expect carnage in the auto industry for March, but also for the economy in general as macro numbers begin to trickle in. Given that lock-downs in many key areas are expected to continue well into April, Group 1’s difficulties and today’s historic jobless claims number could be only the beginning.

No surprises here, dear reader, as things will undoubtedly get far worse going forward.  This Zero Hedge story appeared on their website at 2:10 p.m. EDT on Thursday afternoon — and I thank Brad Robertson for sharing it with us. Another link to it is here.


$16 Trillion U.S. Mortgage Market Rattles Wall Street

The $16 trillion U.S. mortgage market — epicenter of the last global financial crisis — is suddenly experiencing its worst turmoil in more than a decade, setting off alarms across the financial industry and prompting the Federal Reserve to intervene. Dani Burger reports on “Bloomberg Daybreak: Europe.”

This 2:26 minute Bloomberg video interview showed up on the youtube.com Internet site on Wednesday sometime — and I thank Swedish reader Patrick Ekdahl for pointing it out.  Another link to it is here.


Cheesecake Factory Refuses to Pay Rent, Cites “Tremendous Financial Blow

It goes without saying that restaurants, bars, and the service industry have been hit hardest by the nation-wide coronavirus lock-down, but commercial real estate will be the next to feel the squeeze in the coming weeks.

Late Wednesday it was revealed that The Cheesecake Factory notified landlords at locations across the country that it doesn’t plan to pay rent for the month of April after business came to a halt in the past weeks.

CEO David Overton said the chain has been dealt a “tremendous financial blow” from the pandemic, and that neither the Cheesecake Factory nor any of its “affiliated restaurant concepts,” including RockSugar and North Italia, will be writing a check on April 1.

No doubt more restaurants and major chains are already following suit, leading to more pressure for further federal bailouts across sectors…

Aware that one way (out of bankruptcy) or another (in bankruptcy), they will end up renegotiating their leases, retail chains are proactively calling for rent reductions through lease amendments and other measures starting in April.

In the space of a week, the retail landscape has changed from being fairly normalized to being absolutely disrupted beyond what we’ve ever seen before outside of the Second World War,” Neil Saunders, managing director of GlobalData Retail, said this week.

This news item showed up on the Zero Hedge website at 11:30 a.m. EDT on Thursday morning — and it’s another offering from Brad Robertson.  Another link to it is here.


REITs: When is Good Bad, and Bad Really Good?

In our recent article, “Are Real Estate Invest Trusts Safe Investments?” we interviewed expert Tim Plaehn of The Dividend Hunter on the subject. When I buy CD’s I start with the highest yields and work from there. Those metrics don’t always work well when applied to dividend paying stocks, particularly Real Estate Investment Trusts (REITs).

With safe, fixed income investments that don’t pay enough to beat inflation, how does an investor pay the bills, stay ahead of inflation, and not worry every night? I don’t think we have seen the bottom when it comes to interest rates. Like it or not, investors must understand risk and how to manage it.

Tim Plaehn recently sent an e-mail, “Sell these 3 high-yield stocks before they blow up your portfolio.” It contained an article, “How to Spot the Good REITs from the Bad REITs and The Really Bad REITs”. Two comments grabbed my attention:

Ignore the 10% yield and sell.  In the case of mall REITs, the high-yield is a true danger signal to sell and stay away.”

What looks good is bad? If 10% is bad, is 5% good? I’m sure many brokers are touting the risky high yield to their clients as good. Many investors, desperate for income, took their advice and grabbed individual bonds or funds. How does the average investor tell the difference?

This interesting interview/commentary from Dennis was posted on his website on Thursday sometime — and another link to it is here.


Government Spending for a Coronavirus “War” Will Not Boost Economy — Bill Bonner

In a good place,” is how Federal Reserve Chief Jay Powell described the U.S. economy a few weeks ago. A “beautiful economy,” added President Trump, pointing to record-high stock prices.

Neither Jay Powell, nor Donald Trump, had any idea of the rot right beneath the surface. They still don’t. They believe the trouble is all the fault of a virus.

Then, when the virus came, the feds gave the worst possible medicine: more of the snake oil that weakened it in the first place.

That snake oil is now rushing through the arteries of the U.S. economy. Call the coroner.

Earlier this week, we saw that the U.S. economy had no trouble surviving the Spanish Flu epidemic of 1918. 675,000 people died – mostly young adults – but GDP went up. Government debt went down.

But now, with fewer than 1,000 deaths in the U.S., the economy staggers and reels.

It is judged so feeble by Mr. Trump and Mr. Powell that the former will set his signature to a $2 trillion fiscal stimulus. And the latter has already begun a scheme of money-printing that could reach $4 trillion.

Everybody owes money. Nobody has savings. Four out of 10 people can’t come up with $400 in ready cash, even if their lives depended on it.

Everybody needs cash, cash, cash to survive the feds’ prohibition on normal economic activity!

This commentary from Bill appeared on the bonnerandpartners.com Internet site on Thursday sometime — and another link to it is here.  Then there’s this Zero Hedge story from 10:58 p.m. last night…”Fed Balance Sheet Hits $5.5 Trillion as Discount Window Usage Soars


Fitch Warns USA’s AAA-Rating at “Risk of Near-Term Negative Action

In what some may call the ‘worst’ affirmation of a ‘AAA’ rating, Fitch has published a somewhat damning set of reasons why that AAA-rating may not last due to soaring debt, shrinking GDP, and the “helicopter-money” anti-virus actions.

Notably, the sovereign credit risk of USA has been notably rising since ‘helicopter money’ began to make the mainstream two weeks ago…Click to enlarge.

Fitch sees deteriorating debt dynamics as a growing risk to sovereign creditworthiness, notwithstanding the active support of the Federal Reserve and the historic fall in U.S. borrowing costs, with the yield on the 10-year Treasury at 1%. Even at very low interest rates, recurrent deficits will still drive an increase in debt/GDP. Over the next decade, government debt/GDP was already set to trend upward, driven by higher spending on social security and especially healthcare spending. A recession will likely bring forward the point at which federal programs’ trust funds are exhausted and, absent reform, federal budget allocations go to shore up these programs.

Fitch believes that recent dislocations and illiquidity in the market for U.S. Treasuries reflect changes in the structure of the market and exceptional conditions, and do not signal heightened perceptions of U.S. credit risk on the part of investors. The U.S.’s safe haven properties may nevertheless be tarnished, particularly if it emerges from the crisis economically weakened and with much higher debt. Moreover, a squeeze on U.S. dollar liquidity around the world, characterized by dollar appreciation, has again highlighted weaknesses in the global financial architecture and could hasten a shift toward financing in other currencies.

This longish commentary was posted on the Zero Hedge website at 4:41 p.m. on Thursday afternoon EDT — and another link to it is hereGregory Mannarino‘s post market closing rant for Thursday is linked here.


Italian, Greek, Spanish Bonds Soar After ECB Starts Buying Under Emergency Program

One can time almost to the dot the moment the ECB started buying European (mostly peripheral) bonds under the central bank’s latest QE facility.

At just around 4am ET, a wave of buying pushed European peripheral debt sharply higher, sparking speculation that the central bank was in the market.  Click to enlarge.

And sure enough, moments later the European Central Bank confirmed that it started buying bonds under its €750 billion emergency plan to combat the coronavirus outbreak on Thursday.

The ECB said while Greek debt is eligible for the plan, there will be no “catch up” purchases.

The ECB will explore all options and all contingencies to support the economy to counter this extraordinary shock,” the central bank said.

Greek bonds extended their rally after the statement, sending the yield on five-year securities down more than 40 basis points.

And while the ECB debates whether or not to launch its unlimited, unconditional monetization bazooka, the OMT, which as Bloomberg reported yesterday may be up next in Europe’s arsenal, the central bank removed one of the key limits that hobbled its existing QE: earlier in the session bonds jumped after the ECB announced that it suspends the 33% ISIN and issuer limits on PEPP purchases, removing a key hurdle as calculations saw the ECB hitting its purchase limit as soon as this summer.

The rest of the world’s central bankers are now going “full Japanese”…as they are now the market makers in all bonds and Treasuries now, plus the equity markets as well.  This Zero Hedge news item showed up on their website at 8:25 a.m. EDT on Thursday morning — and it’s yet another contribution from Brad Robertson.  Another link to it is here.


Rand Refinery shuts smelter, reduces gold refining during South Africa lock-down

Rand Refinery will shut its smelter and significantly scale down its gold refining during South Africa’s 21-day lock-down over coronavirus, the gold refiner said on Thursday.

One of the world’s biggest gold refineries, Rand Refinery said it would primarily process “residual surface materials” from South African gold mines and mine dore received from the rest of Africa.

Rand Refinery, which produces between 250 and 280 tonnes of refined gold a year, said its smelter would be shut for 21 days from midnight on Thursday but that a small team would remain for care and maintenance.

The refiner, the only one in Africa certified to deliver gold to major international banks, processes gold from countries including Ghana, Tanzania, Democratic Republic of Congo, Mali, Namibia, Guinea and Zimbabwe.

The above four paragraphs are all there is to this brief Reuters story, filed from Johannesburg on Thursday.  I found it on Sharps Pixley — and another link to the hard copy is here.


There is no gold.’ Bullion dealers sell out in panic buying

If you think gold has jumped about 10% in a couple of days to $1,638 an ounce, the official price quoted on Wall Street, think again.

The real price? Nearer $1,800. If you can get it.

There’s no gold,” says Josh Strauss, partner at money manager Pekin Hardy Strauss in Chicago (and a bullion fan). “There’s no gold. There’s roughly a 10% premium to purchase physical gold for delivery. Usually it’s like 2%. I can buy a one ounce American Eagle for $1,800,” said Josh Strauss. “$1,800!

Major gold dealers have sold out of coins and gold bars amid panic buying as the U.S. economy plunges and the government agreed to a record $2 trillion emergency lifeline.

Kitco, the Canadian gold dealing giant, reported Wednesday that it was out of almost all standard one ounce gold coins. American Eagles and Buffaloes, issued by the U.S. Mint, were out of stock, it reported. Ditto Canadian “Maple Leafs,” issued by the Royal Canadian Mint, “Britannias” issued by the Royal Mint of Great Britain, and “Kangaroos” issued by Australia.

It was out of Krugerrands, issued by the South African government. Those are by far the most widely traded gold coins in the world.

This gold-related marketwatch.com article put in an appearance on their Internet site at 11:27 a.m. EST on Thursday morning — and it has obviously been around a lot longer than that, as I found it in a GATA dispatch late on Wednesday night.  Another link to it is here.


The PHOTOS and the FUNNIES

Still touring around Valemont on September 2…we stopped briefly at a marshy area/duck pond…but it had dried up considerably — and there were only trees to be seen while we walked along the boardwalk.  However, this dragonfly hung around long enough for me to squeeze off a couple of shots.  The third photo is looking north along B.C. Highway 5/The Yellowhead  — and the traffic lights intersecting the main street of the town can be seen in the distance.  We headed south and back towards home, but I stopped on a side road long enough to take this shot looking generally southeast.  Hidden behind the trees in the distance is Kinbasket Lake, where we had been about an hour earlier.  Click to enlarge.


The WRAP

There were no free markets in anything yesterday.  With over three million Americans filing for unemployment benefits, the stock markets should have crashed — and precious metal soared.  Instead the Fed intervened and the markets soared — and the gold rally was killed stone-cold dead in early trading in New York.  “There are no markets anymore, only interventions.”  And as one writer put it on the Zero Hedge website yesterday…”What are markets for at all if The Fed now backstops everything?”  Indeed.

Here are the 6-month charts in the four precious metals, plus copper and WTIC.  ‘Da boyz’ made sure that there was nothing to see in the precious metals, particularly gold — and both copper and WTIC closed down a bit.  Click to enlarge.

Today, at the close of COMEX trading, all the large traders that aren’t standing for delivery have to roll or sell their April contracts…most specifically in gold.  I was expecting some huge volume numbers going into today, but that has never materialized.  Although roll-over/switch volume has been heavy, net volume has withered away to next to nothing — and I’ve never seen that before going into a delivery month.  I don’t know what to make of it.

Today, around 3:30 p.m. EDT, we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.  And despite the obvious huge rallies in both gold and silver during the reporting week, I wasn’t about to make any guesses as to what might be in it…considering the surprises in last week’s report on the big engineered price declines.  In his mid-week commentary on Wednesday, Ted took a pass as well — and I can’t say I blame him.

There was a story on Zero Hedge yesterday afternoon that I didn’t bother posting in the Critical Reads section above, because there was enough material in it already.  But now that many hours have passed, I thought I would include it here, although I’ll be posting it in my Saturday missive as well if you wish to give it a miss now.  It’s headlined “I’ve Never, Ever, Ever Seen Anything Like This Before” — and I note that they’ve added about six hours to the dateline, as it now reads 10:30 p.m. on Thursday evening.


And as I type this paragraph, the London/Zurich opens are less than a minute away — and I see that the gold price traded quietly and mostly evenly sideways after its initial spike higher at the 6:00 p.m. open in New York on Thursday evening.  That lasted until the 2:15 p.m. afternoon gold fix in Shanghai on their Friday afternoon — and it has been sold lower since — and is currently down $16.20 the ounce.  Silver was sold lower during the first hour of New York trading, but then rallied a bit until around noon China Standard Time — and from there it has been sold lower as well — and is now down a penny as London opens.  The platinum price wandered unevenly sideways until shortly after 12 o’clock noon CST.  It headed higher from there, but also ran into ‘something’ at the afternoon gold fix in Shanghai.  It’s up 9 bucks currently — and off its high tick by a bit.  Palladium has traded very unevenly sideways in Far East trading — and is currently higher by 5 dollars as Zurich opens.

Gross gold volume is extremely light at around 40,500 contracts — and net of current roll-over/switch volume, net HFT gold volume is a tiny 2,000 contracts or so — and that’s all in the new front month for gold, which is June.  During these last two roll-over/switch days out of April…Friday and Monday…these numbers are only best guesses — and that’s being kind.  It will be back to more or less normal on Tuesday once all the traders are out of the April contract.  Net HFT silver volume is a bit over 10,000 contracts — and there’s only 336 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down about 9 basis points at 99.26 once trading commenced around 7:45 p.m. EDT in New York on Thursday evening.  It ticked a bit higher over the next thirty minutes or so, but then headed sharply lower.  The current 98.84 low tick was set around 11:40 a.m. China Standard Time on their Friday morning.  From there it edged a bit higher until a few minutes after the 2:15 p.m. CST afternoon gold fix in Shanghai.  It blasted higher at that point — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the index is now up 11 basis points.


That’s it for another day.  It’s Friday once again — and I hope you have a good weekend…all things considered.

Ed

The Panic Into Physical Gold & Silver Continues

26 March 2020 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Gold’s two tiny rally attempt in the first two hours of trading after it began at 6:00 p.m. EDT in New York on Tuesday evening, were both capped — and it was then sold lower until around 9:15 a.m. China Standard Time on their Wednesday morning.  It ticked a bit higher until 10 a.m. CST — and then it began a long slow slide until about fifteen minutes before the COMEX open in New York.  It jumped up a bunch of dollars from there until shortly before 9:30 a.m. EDT — and then was sold about twenty bucks lower until shortly before noon EDT.  It crawled higher from that juncture until it ran into ‘something’ shortly before 3:30 p.m. in after-hours trading — and it was sold a bit lower into the 5:00 p.m.  EDT close.

The high and low ticks in gold were reported as $1,699.30 and $1,615.20 in the April contract.

Gold was closed in New York at $1,612.90 spot, down $23.10 from Tuesday — and about 21 dollars lower than its April close, which is preposterous considering the physical demand at the moment.  Net volume was exceedingly light at a hair under 126,000 contracts — but there was a whopping 129,000 contracts worth of roll-over/switch volume out of April and into future months.

The silver price began to rally sharply right of the gate at 6:00 p.m. in New York on Tuesday evening, but ran into ‘da boyz’ a few minute after 8 a.m. CST on their Wednesday morning.  Like gold, it was sold lower until shortly before 11 a.m. CST — and it wandered quietly and unevenly sideways until [like gold] it ran into ‘something’ at 10 a.m. in London.  It was sold lower until about ten minutes or so before the COMEX open — and then it began to rally anew.  That rally was capped and turned lower about ten minutes before the COMEX close.  That tiny sell-off lasted until around 2:15 p.m. in after-hours trading — and it wandered quietly sideways-to-higher until trading ended at 5:00 p.m. EDT.

The high and low ticks were recorded by the CME Group as $14.93 and $14.205 in the May contract.

Silver was closed on Wednesday afternoon in New York at $14.525 spot, up 16.5 cents from Tuesday…and 31 cents lower than its closing price in May…which is equally as preposterous.  Net volume wasn’t overly heavy at a hair over 65,000 contracts — and there was a bit under 15,000 contracts worth of roll-over/switch volume on top of that.

Platinum rallied quietly until about 8:20 a.m. China Standard Time on their Wednesday morning and, like silver and gold, ran into ‘something’.  From that point it wandered very unevenly lower until around 9 a.m. in New York — and was back around the unchanged mark.  It caught a bid at that juncture, but that rally was capped at 1 p.m. EDT — and it didn’t do much of anything after that.  Platinum was closed at $736 spot, up 28 dollars on the day.

Palladium’s rally at the 6:00 p.m. open in New York on Tuesday evening was also dealt with — and it edged quietly lower until shortly before 2 p.m. in Shanghai on their Wednesday afternoon.  It crept higher until around 11:30 a.m. in Zurich, was sold lower until minutes before the COMEX open in New York…just like silver and gold.  Then the price action really got started.  Its two blasts higher in price ran into ‘something’ both times, with the last price-capping event coming just before 1 p.m. EDT.  It was sold lower into the COMEX close — and didn’t do much after that.  Palladium was closed at $2,280 spot, up $406 bucks on the day…but could just as easily closed up $4,060 if it had been left to the free market.

Based on their closing prices on Wednesday, the gold/silver ratio worked out to 111 to 1 — and it’s only that low because gold was closed down on the day.


The dollar index  closed very late on Tuesday afternoon in New York at 102.04 — and was opened down 45 basis points once trading commenced around 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning.  It ticked a bit higher until around 8:52 a.m. CST — and then began to chop very unevenly lower until about 9:45 a.m. in London.  A ‘rally’ commenced shortly after that — and the 101.91 high tick was set around 11:25 a.m. in New York.  It was down hill once more from there until 4:40 p.m. EDT — and the 100.84 low tick was set at that juncture.  It ticked a bit higher into the 5:30 p.m. close from there.

The dollar index was marked-to-close at 101.05…down 99 basis points from its close on Tuesday — and 6 basis points above its close on the DXY chart below.

Here’s the DXY chart for Wednesday…thanks to 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…101.00…and the close on the DXY chart above, was 5 basis points on Wednesday.  Click to enlarge as well.

The gold stock opened about unchanged — and hit their respective lows a few minutes after 10 a.m. in New York trading — and then began to head somewhat unevenly higher.  Their high ticks were printed at the 1:30 p.m. EDT COMEX close — and for no reason I could discern, they were sold sharply lower until 3 p.m.  The rally after that was sold lower into the 4:00 p.m. EDT close.  The HUI closed higher by 2.69 percent, but at its high, it was up by about six percent.

The silver equities followed a very similar pattern as the gold shares, except Nick Laird’s rather sad-looking Intraday Silver Sentiment/Silver 7 Index closed higher by 6.36 percent…helped along by a big jump in Peñoles.  Click to enlarge if necessary.

I calculated the Silver 7 Index manually — and it showed that it rose by 6.44 percent, so the numbers are pretty close.

And here’s Nick’s 1-year Silver Sentiment/Silver7 Index chart, updated with Wednesday’s doji.  Click to enlarge as well.

The star, as previously mentioned, was Peñoles…higher by 20.00 percent — and the dog was SSR Mining, down 0.65 percent.


The CME Daily Delivery Report showed that 387 gold and 153 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, there were three short/issuers in total.  The largest by far was JPMorgan, with 334 contracts out of their so-called ‘client’ account.  In distant second and third spot were Advantage an ABN Amro with 38 and 15 contracts…also from their respective client accounts.  There were eight long/stoppers in total.  The two biggest were Scotia Capital/Scotiabank and Advantage with 178 and 119 contracts…the former for their own account — and the latter for their client account.  Next came ABN Amro, Morgan Stanley and ADM…with 29, 25 and 24 contracts for their respective client accounts.

In silver, there were four short/issuers — and the two biggest were JPMorgan with 126 contracts in total…82 from their so-called ‘client’ account, plus another 44 from their in-house/proprietary trading account.  In distant second spot was Advantage, with 25 contracts from its client account.  There were six long/stoppers in total — and the three largest were ADM, the CME Group — and Morgan Stanley…with 56, 35 and 33 contracts.  Except for the CME Group obviously, the other contracts were for their respective client accounts.  The CME Group immediately reissued their contracts as 35×5=175 one-thousand ounce Micro Silver Futures Contracts.  The stoppers for those were Morgan Stanley, ADM and Advantage, with 135, 28 and 12 contracts for their respective client accounts.

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

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in March rose by 4 contracts, leaving 390 still around, minus the 387 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 377 gold contracts were actually posted for delivery today, so that means that 4+377=381 more gold contracts were just added to the March delivery month.  Silver o.i. in March rose by 56 contracts, leaving 162 still open, minus the 153 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 64 silver contracts were actually posted for delivery today, so that means that 56+64=120 more silver contracts just got added to March.

And it should be noted that despite the fact that March is primarily a silver delivery month, there have already been an eye-popping 2,911 gold contracts issued/reissued and stopped this month so far.  Based on that, one has to wonder what the April delivery month in gold will be like.


There were very hefty deposits into both GLD and SLV again on Wednesday.  Authorized participants added 423,329 troy ounces of gold in GLD — and an a.p. added another 2,238,753 troy ounces into SLV.

Since 19 March, less than a week ago, there has been 1,317,034 troy ounces of gold added to GLD — and since March 14, there has been 32,183,462 troy ounces of silver added to SLV.

The latest short report [as of the close of trading on Friday, March 13] for both GLD and SLV showed up on The Wall Street Journal‘s website yesterday…a day late.  It showed that the short position in GLD rose from 1,420,000 troy ounces, up to 1,486,000 troy ounces…an increase of 4.63 percent.  The short position in SLV rose from 11.72 million shares/troy ounces, up to 13.96 million shares/troy ounces…an increase of 19.18 percent.  Neither of these changes are material — and it should be carefully noted that it was no coincidence that all the gold and silver pouring into both these ETFs occurred after that March 13th date…so it’s a given that these numbers are now materially lower.  But that won’t be known until the next short report that comes out on April 9.

In other gold and silver ETFs on Planet Earth on Wednesday, net of any changes in COMEX and GLD/SLV inventories, there was a net 170,484 troy ounces of gold added — and there was 626,804 troy ounces of silver added as well.


There was another sales report from the U.S. Mint.  They sold 11,500 troy ounces of gold eagles, plus 1,000 one-ounce 24K gold buffaloes — and for the second day in a row there were no reported sales of silver eagles.

I had a link in this spot yesterday regarding the physical shortage woes now being experienced by Sprott Money — and that link was not right.  Here’s the correct one — and I thank Jim Akers for pointing that out.

The only physical activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday was one good delivery bar…100 troy ounces…that was shipped out of Delaware.  There was some paper activity, as 38,580.000 troy ounces/1,200 kilobars [U.K./U.S. kilobar weight] was transferred from the Registered category — and back into Eligible over at JPMorgan.  I won’t bother linking this.

There was only a bit of activity in silver, as 199,830 troy ounces was reported received — and all of that went into Canada’s Scotiabank.  There was 163,133 troy ounces shipped out.  Of that amount, there was 120,726 troy ounces that departed Scotiabank as well.  The remaining 40,422 troy ounces and 1,984 troy ounces were shipped from CNT and Delaware respectively.  The link to all this is here.

There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They received 1,820 of them — and shipped out 245.  Except for the 328 kilobars received at Loomis International, the remaining in/out activity was at Brink’s, Inc.  The link to that, in troy ounces, is here.

Netherlands, Gelderland, Province of the United Netherlands, 1543-1795, Ducat 1646

Material: Gold   Full Weight: 3.41 grams   Fine Weight: 3.21 grams   Value: €590.00/US$642

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


CRITICAL READS

S&P Downgrades Ford to Junk – Biggest Fallen Angel Yet

Given where Ford’s CDS was trading – more in line with B1/BB- rated American Axle – it should hardly come as a surprise that S&P has finally bitten the bullet and downgraded Ford debt to junk.  Click to enlarge.

This S&P move follows Moody’s cutting Ford’s long-term corporate family rating to Ba2 from Ba1 earlier in the day.

With a total amount of public bonds and loans outstanding around $95.8 billion, according to data compiled by Bloomberg, Ford has just become one of the largest fallen angels yet.

Will this sudden large fallen angel lead to further repricing in the junk bond market, just as the market is dead-cat-bouncing on Fed intervention?

Perhaps of most note, the downgrade to junk means – we think – that this disqualifies Ford debt from The Fed’s corporate-bond-buying bandwagon – which is likely to make the cliff for Ford debt even more dramatic (especially after rallying so hard the last two days).

This news item was posted on the Zero Hedge website at 5:09 p.m. EDT on Wednesday afternoon — and I thank Brad Robertson for sending it our way.  Another link to it is here.  In a somewhat related ZH story, this headlined reads “Bond Market Tears in Two: Distressed Debt is Cratering, as Fed Buying of Investment Grade Sends LQD NAV Soaring” — and that’s from Brad as well.


All T-Bills Up to 3 Months Now Have Negative Yields

There was something strange about today’s continuation rally in stocks: while risk assets soared, the VIX barely moved. In fact the VIX is now roughly where it was on Monday, largely ignoring the move in stocks.

But there was another more sinister move in today’s risk rally, which as we noted earlier, appears to have been mostly a massive short squeeze, in fact the biggest two-day short squeeze in history, namely the persistent buying of safe havens such as Treasurys but more importantly, Bills.

And so, one week after we reported that yields on many T-Bills through 3 months turned negative for the first time since the financial crisis, today virtually all Bills maturing around July had a negative yield.  Click to enlarge.

Needless to say, a scramble for both cash-equivalents (i.e. Bills) and stocks is rather unorthodox, and sparked debate among Wall Street desks what may be behind it. One answer that emerged is that for those who did not have faith in today’s stock rally and wanted to allocate their funds elsewhere, yet in the absence of available physical gold as a result of the unprecedented scarcity described yesterday, the one place where investors could find “cash equivalent” securities was among the short T-Bill maturities.

If this theory is correct, it would mean that the pent-up demand for physical gold is unprecedented and any newly available precious metal will be quickly snapped up as soon as it is available, which in light of the unprecedented expansion in central bank balance sheets as virtually every state is now pursuing helicopter money, is hardly that surprising.

This Zero Hedge story was posted on their Internet site at 7:09 p.m. EDT on Wednesday evening — and another link to it is here.


Fed Buys $587 Billion in Bonds in Past Week, 2.7% of U.S. GDP, Just as Foreign Central Banks Start to Liquidate

Having moved from “Not QE” (or QE4 as it was correctly called), to the $750BN QE5 which came and went with the blink of an eye, to the Fed’s open-ended and unlimited QEnfinity in the span of one week, the full “shock and awe” of the Fed’s money printer is now on full display, and in just the past week, from March 19 to March 25, the Fed has purchased $587BN in securities ($375BN in TSYs, $212BN in MBS), or roughly 2.7% of the $21.4TN in U.S. GDP.  Click to enlarge.

This means that as of Wednesday close, when accounting for last week’s repo operations, the Fed’s balance sheet has increased by roughly $650BN, bringing it to just over $5.3 trillion, an increase of $1.2 trillion in the past two week, or roughly 5.6% of US GDP.

Which is hardly an accident: one look at the Treasury securities held in custody at the Fed shows that the past two weeks have seen a whopping $50BN in foreign central bank sales, a 1.7% drop which was the highest in six years since Russia pulled over $100BN in TSYs from the Fed in response to U.S. sanctions imposed over the Ukraine conflict in 2014 which was precipitated by the U.S. state department.

As Bloomberg observes, the selling may have contributed to record volatility in the Treasury market and prompted the Fed’s intervention. More importantly, it also means that the biggest buyer of U.S. Treasurys in the past decade, foreign official institutions (i.e., central banks and reserve managers) are now sellers, so now the U.S. government needs private investors to soak up the ever increasing debt issuance.

And since those are busy avoiding a deadly virus, it means that only the Fed now can fund the exploding U.S. budget deficit… which is precisely what it is doing.

Ironically, it was back on Jan 28, just as the world was learning about the coronavirus pandemic that we showed the long-term trajectory of the Fed’s balance sheet as calculated by the CBO…Click to enlarge.

… when we said that “MMT will be launched after the next financial crisis, and which will see the Fed directly monetize US debt issuance from the Treasury until the dollar finally loses its reserve currency status.”

We were right about the first part. Now we just have to wait for the second.

This very worthwhile commentary was posted on the Zero Hedge website at 10:10 p.m. on Wednesday night — and another link to it is here.


U.S. Stimulus Action Points to “Inflate-or-Die” Future — Bill Bonner

After the crisis of ’08-’09, for example, the emergency measures never went away. Instead, they merely prefigured today’s crisis.

In 2015, the Fed attempted a timid effort to “normalize.” Then, in 2018 it hit “pause,” before reverting to stimulus mode in the summer of 2019.

And now, it is at it again… with a whole new group of schemes designed to pump more money into Wall Street pockets. And when the dust settles… and the markets have adjusted to this new reality… will the Fed be able to turn off the juice?

With a whole economy dependent on bailouts… helicopter money… negative real lending rates… tax cuts… and stimulus up the wazoo… who will have the backbone to “pull a Volcker,” raising rates and squashing expectations for more free money?

Alas, when you start down that long, lonesome, lost inflation highway… it’s very hard to turn around. And when you’ve gone this far, each rescue brings on another crisis… and each crisis needs to be met with more stimulus.

You have almost no choice. Either you keep adding more and more “stimulus.” Or stocks crash and the economy goes into a depression.

So you keep going until you finally go off the cliff. Grosso modo, that will be the financial history of the 21st century!

This commentary from Bill showed up on the bonnerandpartners.com Internet site on Wednesday sometime — and another link to it is hereGregory Mannarino‘s post market close rant for Wednesday is linked here.


Dr. Dave Janda interviews your humble scribe

Dave and I had 25-minute chat on all-talk radio WAAM 1600 out of Ann Arbor, Michigan on Sunday afternoon.  The economy, the virus and precious metals were the topics de jour.


Sweden Faces More Devastating Recession Than in 2008 Crisis

The biggest Nordic economy may be about to sink into its worst recession in living memory, with the fallout of the coronavirus likely to do more damage than the financial crisis of 2008.

Gross domestic product will probably fall about 4% this year, Swedbank economists said in a new report on Wednesday. But the decline could be as bad as 8%, if the economic shock forces a wave of companies into bankruptcy, they said. Unemployment is expected to exceed 10% in the coming months, “despite unprecedented fiscal stimulus,” they said.

The forecast shows how quickly the spread of the virus has turned everything on its head. As recently as January, Swedbank was predicting that Sweden’s economy would expand 1.4% this year. But with the global economy in lock-down, the trade-reliant Nordic nation now faces a recession that will be “wider and faster than during the financial crisis,” according to Swedbank.

The Riksbank, which ended negative rates in December, has made clear it will rely on other support measures besides rate cuts. These include purchases of corporate bonds and cheap bank loans to prevent a credit crunch.

It’s pretty much a given that all nations face the same fate in the next month or so as the world’s economies implode.  This Bloomberg story appeared on their website at 12:50 a.m. PDT on Wednesday morning — and was updated an hour later.  I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to it is here.


Japan’s QE on Verge of Failure as Nobody Wants to Sell to the BoJ

Over a decade since central bankers started a stealthy nationalization of capital markets by purchasing a wide range of securities from Trasuries, to MBS, to corporate bonds, to ETFs and single stocks, their actions are finally catching up to them, and in the process breaking the very markets central bankers have worked so hard to prop up. And nowhere is this more obvious than in Japan, where the shrinking universe of Japanese government bonds (as a reminder the BoJ now owns more than 100% of Japanese GDP in JGBs) is “causing havoc” in Japanese money markets as the Bank of Japan continues to buy while dealers refuse to sell.

The result is that rates in Japan’s repo market, which traditionally connects holders of bonds with investors looking to borrow them, jumped to a record Tuesday (although they since retreated on Wednesday) because as Bloomberg notes, “the introduction of cheaper, more regular dollar-swap auctions has generated huge demand from U.S. currency-starved dealers who are keeping their JGBs to put them down as collateral.”

So here is what the math looks like now that the Fed has launched enhanced swap lines with central banks such as the BoJ, allowing local entities to obtain dollar funding at much lower rates: in last week’s first round of the Fed’s revamped dollar-swap auctions, banks borrowed greenbacks for about 3-months at 0.37%, a massive discount to the near 2% it would cost them in the currency swap market. $32 billion was allotted in the first operation.

This huge difference in available borrowing costs means JGB holders who still haven’t offloaded to Kuroda are now unwilling to participate in the BoJ’s bond purchases.

This was readily apparent in Monday’s Rinban operation (i.e., Japan’s POMO) across 5-to-10-year bonds which saw the lowest offer-to-cover ratio on record, as dealers refused to sell to the BoJ! Other tenors also saw a sharp drop in the amount of bonds offered to sell.

Demand for JGBs as collateral and its importance now is heightening.” SMBC Nikko rates strategist Souichi Takeyama told Bloomberg. And here is the big problem that is now facing the BoJ: “There is little incentive to sell to the BoJ because there are more effective ways to make use of JGBs.”

Making matters worse, the surge in demand comes at a time when the Bank of Japan is stepping up its own JGB purchases, in its bid to provide liquidity to financial markets grappling with the worsening coronavirus outbreak. However, with banks now openly refusing to sell to the BoJ, either the Japanese QE will fail, or bond prices will have to rise much more, pushing yields even lower, and further impairing bank interest margin calculations. On net, as Bloomberg notes, “that means less supply available for Japanese banks who have so far tapped over $150 billion in ultra-cheap dollar funding.”

The bottom line, according to Takeyama, is that “there is risk that the BoJ offers may not get sufficient bids.”

In other words, we may have finally hit a point where the market becomes self-stabilizing, as the very mechanism that central banks used to nationalize capital markets results in so much distortion that market participants no longer have an incentive to use it. In short, QE in Japan, which was first among the developed nations to hit the zero bound (and drop below it) and the first to exponentially ramp up bond purchases, is now on the verge of failure.

This interesting chart-filled article put in an appearance on the Zero Hedge website at 11:45 a.m. EDT on Wednesday morning — and it’s another contribution from Brad Robertson.  Another link to it is here.


Jim Rickards: It’ll Get Worse it Before It Gets Better

The U.S. is falling into the worst economic collapse since the Great Depression in 1929. This will be worse than the dot-com collapse of 2000–01 and worse than the Great Recession and global financial crisis of 2008–09.

Don’t be surprised to see second-quarter GDP drop by 10% or more and for the unemployment rate to race past 10% on its way to 15% or higher.

The questions for economists are whether the lost output will be permanent or temporary and whether U.S. growth will return to trend or settle on a new path that is below the pre-virus trend.

Some lost expenditure may just be a timing difference. If I plan to buy a new car this month and decide not to buy it until August, that’s just a timing difference; the sale is not permanently lost.

But if I don’t go out for dinner tonight and then do go out a month from now, I’m not going to order two dinners. The skipped dinner is a permanent loss.

Unfortunately, 70% of the U.S. economy is based on consumption and the majority of that consists of services rather than goods. This suggests that much of the coronavirus impact will consist of permanent losses, not timing differences.

This commentary from Jim, dated 23 March, put in an appearance on the dailyreckoning.com Internet site yesterday — and I thank Brad Robertson for pointing it out.  And another link to it is here. Jim Rickards had a second commentary, this one dated March 25 — and it’s headlined “The Great Dollar Shortage” — and it’s worth reading as well.


Jim Rickards: Get Ready for World Money

Since Federal Reserve resources were barely able to prevent complete collapse in 2008, it should be expected that an even larger collapse will overwhelm the Fed’s balance sheet.

That’s exactly the situation we’re facing right now.

The specter of a global debt crisis suggests the urgency for new liquidity sources, bigger than those that central banks can provide. The logic leads quickly to one currency for the planet.

The task of re-liquefying the world will fall to the IMF because the IMF will have the only clean balance sheet left among official institutions. The IMF will rise to the occasion with a towering issuance of special drawing rights (SDRs), and this monetary operation will effectively end the dollar’s role as the leading reserve currency.

The Federal Reserve has a printing press, they can print dollars. The IMF also has a printing press and can print SDRs. It’s just world money that could be handed out.

The IMF could function like a central bank through more frequent issuance of SDRs and by encouraging the use of “private SDRs” by banks and borrowers.

This is the third commentary from Jim in a row.  This one also appeared on the dailyreckoning.com Internet site on Wednesday as well — and another link to it is here.


World’s Rich ‘Desperate’ for Gold With Metal in Short Supply

Ludwig Karl is stuck at home, worried about his elderly relatives. All the while his business is booming.

He’s a board member of Swiss Gold Safe Ltd., an operator of high-security vaults in the Alps that’s storing growing sums of precious metals for wealthy foreigners as the Covid-19 pandemic worsens. The company usually helps customers buy gold, but governments have closed scores of businesses amid the crisis, making it increasingly difficult for people to get their hands on the physical product.

It’s absolutely crazy what’s going on,” Karl said. “Right now, if somebody wants to buy gold, I wish them all the best in finding it. Most of the bullion dealers are closed.”

Switzerland’s refining industry, a major international hub for processing gold into bars and coins, has largely shut because of efforts to contain the global virus. Grounded flights are disrupting plans to transport bullion around the world and gold mining firms are scaling back activities, decelerating the precious metals industry as demand for gold increases.

The whole supply chain is getting tighter and tighter,” said Debra Thomson, a global sales director for gold at IBV International Vaults, which offers safe-deposit boxes and the purchase of precious metals worldwide. “The last time I saw this amount of chaos in the market was with 9/11.”

This gold-related news item showed up on the Bloomberg Internet site at 7:19 a.m. Pacific Daylight Time on Wednesday morning — and was updated about ten minutes later.  I found it embedded in a GATA dispatch — and another link to it is here.


Gold market snarled by virus lock-down as world races for haven

The gold market is creaking, in the latest sign of how the coronavirus pandemic is causing chaos across financial markets.

Just as demand for the metal soars with investors seeking a safe haven from unprecedented economic turmoil, a glitch has appeared in the global market. The price of gold in New York and London has diverged by the most in four decades after lock-downs and grounded planes strangled the supply routes that allow physical gold to move around the globe.

The strains have rippled through gold trading, with liquidity at some points running thin in a vast market that’s dominated by the world’s biggest banks and watched by millions of mom-and-pop investors.

Banks and traders typically ship gold around the world on commercial flights, linking the trading hubs of London and New York with vaults and refineries in Switzerland, Hong Kong and Singapore. But as the coronavirus grounds flights and refineries shut down, it’s becoming harder to trade between global markets. Silver and other precious metal markets are also being disrupted by the logistics lock-down.

This isn’t anything that we’ve seen in a generation because refiners never had to shutdown — not in war, not in the great financial crisis, not in natural disasters,” Tai Wong, the head of metals derivatives trading at BMO Capital Markets, said by phone. “It’s never happened. And it happened astonishingly rapidly.”

At issue is whether there will be enough gold in New York to deliver against futures contracts traded on the Comex, which is owned by CME Group Inc. While the larger spot market in London is dominated by 400-ounce bars of gold, only 100-ounce and kilobars are deliverable on the Comex contract. CME has taken some steps to try to address the squeeze.

This is another gold-related Bloomberg story from that gata.org Internet site.  It was posted on the bloomberg.com Internet site at 5:55 p.m. PDT on Tuesday afternoon — and was updated about 17 hours later.  Another link to it is here.  Then there’s this story from the ft.com Internet site on Thursday morning that’s posted in the clear on the gata.org website.  It’s headlined “Coronavirus shutdowns cause glitches in gold market


Swiss Gold Refineries Cease Production: End of the Paper Market — Egon von Greyerz

FAKE MONEY, FAKE VALUATIONS, FAKE MARKETS

So we are now entering the end of a 100 year phase of fake money, fake valuations, fake markets and unlimited debt, all leading to the biggest bubble in history. This has also led to false ethical and moral values and the breakup of family values. Too many people have been chasing the golden calf or material values.

What makes the coming period particularly difficult is the combination of CV hitting many people combined with severe financial pressures. A very big percentage of the population will experience extremely hard times both physically and financially.

THE WORLD ECONOMY COULD DISAPPEAR IN A BLACK HOLE

If the economy closed for more than 6 months with most people not working and major parts of the manufacturing sector closed, then both the economy and the financial system will disappear in a black hole. Governments will have some very difficult choices in the next few weeks and months – the survival of people against the survival of the economy.

Looking at markets, the bull market is over and whatever outcome we will see of CV and government actions, the world is now entering a severe secular bear market which will be long lasting. All bubble assets, stocks, bonds and property will decline by 90% or more.

All major countries led by the Fed, the ECB, the IMF, BOJ, PBOC etc will print unlimited amounts of money. All currencies will decline by 100% as they finish the race to the bottom to their intrinsic value of ZERO. We will soon see high inflation, quickly leading to hyperinflation.

This commentary by Egon put in an appearance on the goldswitzerland.com Internet site on Tuesday — and I thank Dave Delve for sending it along.  Another link to it is here.


The PHOTOS and the FUNNIES

After our photo op at the confluence of the Canoe River and Kinbasket Lake, we headed back to Valemont via the back roads…and they’re all ‘back roads’ in this area.  The first two are pastoral scenes along the way.  The last two are looking both directions down the main drag of the town…the first east, the second west.  The traffic lights in the last photo are at intersection of B.C. Highway 5/The Yellowhead…left to Vancouver — and right to Mount Robson/JasperClick to enlarge.


The WRAP

And I sincerely believe with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”  ~  Thomas Jefferson to John Taylor, 1816


From a volume perspective it was almost fumes and vapours in gold during the Wednesday trading session, which I found a little more than strange — and so ‘da boyz’ had no trouble guiding the price wherever they wished.  Once prices were capped and turned lower in early morning trading in the Far East, it was pretty much all over for the day…including silver…despite the rabid investment demand.  I’ll have more about this after the charts.  Platinum and palladium did better, of course…but neither one of them is a monetary metal.

Here are the 6-month charts for the Big 6 commodities — and it should be noted that of the four precious metals, only gold was closed lower on the day.  And after closing above its 200-day moving average on Tuesday, palladium closed above its 50-day moving average yesterday.  Both copper and WTIC closed a hair higher.  Click to enlarge.

With the rush to physical gold and silver now at a fever pitch at all levels, the pricing issue in gold [and now in silver] is something that silver analyst Ted Butler approached head on in his Wednesday commentary — and here is a very small part of what he said…”[W]hat makes no sense at all is the published big discounts of spot or cash metals prices, particularly gold, from COMEX futures. Craziest of all is that the stories reporting on the cash physical discount to COMEX futures are dutifully giving the growing physical shortage as the reason for the discount. Huh? It makes absolutely no sense for the item that is in a shortage (physical) to be priced at an extreme discount to that which is not in a shortage. There is no shortage of COMEX gold or silver futures — and for immediately available physical metal (of which there is a shortage) to be priced cheaper than futures is impossible….My conclusion, therefore, about the widely indicated “discount” of physical gold to COMEX futures contracts is that such a discount does not exist — and the price quotes suggesting it does exist are bogus and not to be believed.”

And as I type these next two paragraphs at 1:20 p.m. EDT, May gold is trading at $1,623.30…June at $1,623.60 — and December at $1,625.  Spot is currently $1,598.90.  This can’t possibly be right — and Ted is quite correct in saying that “the price quotes suggesting that such a discount does exist are bogus and not to be believed.”– and they shouldn’t.

Then there’s silver…April’s last trade was $14.49…May $14.575…July $14.565 …September… $14.655 – and December is $14.550.  The spot month is quoted on Kitco as $14.39.  This is impossible in a free market.

As I mentioned earlier, gold deliveries in March so far are monstrous for what is not a regular delivery month in this precious metal — and copious amounts of contracts are being added to the March delivery month every day now.  April deliveries in gold are coming up next week — and it could be quite a sight when the first day notice numbers get posted on the CME’s website around 10:30 p.m. EDT on Tuesday, March 30th.  Maybe that’s why the CME is already in trouble getting their hands on enough physical gold to meet that demand.

All the large traders that aren’t standing for delivery in April, have to roll or sell those contracts before the COMEX close on Friday — and the rest of the traders have to be out by the close of COMEX trading on Monday. Ted said that the COMEX futures prices that are now posted, make it far more enticing for them to roll over their positions, rather than stand for delivery in April…which may be the object of this exercise.

I also noticed that the GOFO rate is starting to sneak a bit higher.  Not in dangerous territory yet, but the trend is somewhat ominous.  The link to the current rate and chart is here.


And as I type this paragraph, the London and Zurich opens are less than a minute away — and I note that gold and silver prices weren’t allowed to do much in early morning trading in the Far East on their Thursday morning — and both have been sold quietly and somewhat unevenly lower since.  At the moment, gold is down by $18.50 the ounce — and silver by 21 cents as London opens.  Like both gold and silver, platinum ticked at bit higher at the 6:00 p.m. open in New York on Wednesday evening, but it has been sold quietly lower as well — and is down 22 bucks.  The palladium price peaked out shortly before 9 a.m. China Standard Time on their Thursday morning…like the gold price…and it has been sold lower in fits and starts since — and as Zurich opens, palladium is down 140 dollars the ounce.

Gross gold volume is only a bit under 52,000 contracts — and minus current roll-over/switch volume out of April and into future months, net HFT gold volume is unbelievably light at a hair over 21,000 contracts…not what one would expect going into a big delivery month.  Net HFT silver volume is a bit under 12,000  contracts — and there’s only 707 contracts worth of roll-over/switch volume in this precious metal.

The dollar index  opened down about 6 basis points at 100.96 once trading commenced around 7:45 p.m. EDT in New York on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  It ticked a bit higher during the next twenty minutes, but then headed sharply lower, with its current 100.61 low tick coming at 8:56 a.m. CST.  It has been chopping wildly sideways since — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the dollar index is down 34 basis points.

At the London open, the price differential between the March spot month — and April, May and June gold is about 19 bucks.  August is only 18 dollars.  This is insane.  And in silver, it’s 18 cents or less all the way out to July.  Wow!


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

Ed

A Wild Tuesday in the Gold Market

25 March 2020 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to head higher the moment that trading began at 6:00 p.m. EDT in New York on Monday evening, but it ran into ‘something’ in morning trading in the Far East — and it was sold quietly lower until about fifteen minutes after the 2:15 p.m. China Standard Time afternoon gold fix in Shanghai on their Tuesday afternoon.  A rally of some size developed at that juncture — and I was sitting watching the Kitco gold chart when it hit its Kitco-recorded $1,689.80 high tick of the day.  It ran into some serious price opposition at that point — and that lasted until about 11:10 a.m. in New York.  It began to head higher from there — and closed still in rally mode when trading ended at 5:00 p.m. EDT.

The low and high ticks were reported by the CME Group as $1,560.50 and $1,698.00 in the April contract…an intraday move of around $138 dollars.

Gold finished the Tuesday session in New York at $1,636.00 spot, up $84.80 on the day, which is the biggest one-day move I can remember since the Washington Accord was signed way back just before the turn of the century…more than twenty years ago now.  But surprisingly, net gold volume was very much on the lighter side at a hair over 210,000 contracts…but not surprising was the fact that roll-over/switch volume out of April and into future months was ginormous at a bit under 210,000 contracts.

The other big stand-out feature was the fact that the spot month closed 33 dollars lower than the April close — and that differential was 100 bucks at one point.  I’ll have more about this in The Wrap.

Silver’s rally at the New York open on Monday evening was far more robust, but you don’t need me to tell you that it ran into opposition by JPMorgan et al. plus their proxies in morning trading in the Far East.  Like gold, it was also turned lower shortly before 11 a.m. CST — and it was sold down until around 1:45 p.m. CST in Shanghai.  It began to head higher anew — and didn’t run into ‘da boyz’ until shortly before 11 a.m. GMT in London.  It was then sold lower into the 8:20 a.m. COMEX open in New York — and crawled higher from there until the market closed at 5:00 p.m. EDT.

The low and high ticks in silver were recorded as $13.22 and $14.33 in the May contract…an intraday move of $1.11.

Silver was closed in New York on Tuesday afternoon at $14.36 spot, up $1.09 from Monday.  Net volume was heavy, but like gold, not as heavy as one might expect under such circumstances at a bit over 93,500 contracts — and there was a hair under 18,000 contracts worth of roll-over/switch volume in this precious metal.

Platinum also took off higher at the 6:00 p.m. open in New York on Monday evening as well…ran into ‘something’ shortly after 9 a.m. China Standard Time on their Tuesday morning — and was sold lower until a minute or so after 2 p.m. CST.  It then crawled quietly, but somewhat unevenly higher until trading ended in New York at 5:00 p.m.  Platinum finished the Tuesday trading session at $708 spot, up 68 bucks on the day.

The palladium price stair-stepped its way higher until it ran into the same ‘something’ as platinum a few minutes after 9 a.m. in Shanghai.  From there it traded rather quietly and evenly sideways until it blasted higher a few minutes after 11 a.m. CET in Zurich.  That was capped an hour later until around 8:45 a.m. in New York.  It crawled rather nervously sideways until 1 p.m. EDT — and then crept quietly higher until a few minutes before the market closed at 5:00 p.m.  Palladium was closed at $1,874 spot, up 209 dollars on the day.

And you shouldn’t need me to remind you that heaven only knows what prices all four precious metals would have closed at if they’d been allowed to trade freely…which they obviously weren’t.

Using Tuesday’s closing prices for both gold and silver in the spot month, the gold/silver ratio  works out to 114 to 1.


The dollar index closed very late on Monday afternoon in New York at 102.49 — and opened down 35 basis points once trading commenced around 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning.  From that juncture, it stair-stepped its way lower until the 101.05 low tick was set around 11:05 a.m. in London.  It appeared to get rescued at that point — and the subsequent ‘rally’ lasted until a minute or two before 3:30 p.m. in New York.  The 102.21 high tick was set at that point — and it dropped unevenly lower from there until trading ended at 5:30 p.m. EDT.

The dollar index was marked-to-close on Tuesday at 102.04 — down 45 basis points from Monday — and 20 basis points higher than the 101.84 close recorded on the Bloomberg DXY chart below.

There was zero correlation between precious metal price and the currencies during the Tuesday trading session.

Here’s the DXY chart for Tuesday, 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…102.25…and the close on the DXY chart above, was 21 basis points above the DXY spot price again on Tuesday.  Click to enlarge as well.

The gold shares gapped up a whole bunch at the 9:30 open in New York on Tuesday morning — and then drifted lower until a few minutes after 10 a.m. EDT.  They traded unevenly higher for the remainder of the day — and put on a bit of a spurt in the last thirty-five minutes of trading.  The HUI closed higher by 13.73 percent…the biggest 1-day percentage gain I’ve ever seen.

The silver equities performed in an identical manner…almost to the tick, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 16.35 percent, which is also the biggest 1-day percentage move I’ve seen in this one as well.  Click to enlarge as necessary.

Nick is having issues with this chart…which is obvious — and he can’t fix it.  The trend is clear, but the closing number isn’t necessarily correct.  I’ve computed it manually — and that calculation shows that it closed higher by 15.65 percent.

Here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart, updated with Tuesday’s doji. The doji for this chart is computed from a different data source than the the above Intraday Silver 7 Index.  Click to enlarge as well.

Pan American Silver was the biggest gainer…up 23.46 percent, with First Majestic Silver hard on its heels…up 20.50 percent.  The big laggard was Peñoles…up only 5.86 percent.


The CME Daily Delivery Report showed that 377 gold and 64 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, there were five short/issuers in total — and the only one that really mattered was JPMorgan…issuing 360 contracts out of its client account.  There were four long/stoppers in total — and the three biggest were JPMorgan, ABN Amro and Advantage, with 294, 40 and 38 contracts — and all for their respective client accounts as well.

In silver, the sole short/issuer was JPMorgan out of its client account — and of the six long/stoppers in total, the only two that counted for anything were Advantage and the CME Group, with 32 and 23 contracts…Advantage for their client account — and the CME Group for its own account.  It immediately reissued these as 23×5=115 one-thousand ounce Micro Silver Futures contracts.  The three long/stoppers for them were Morgan Stanley, ADM and Advantage…with 86, 20 and 9 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 March rose by another 355 contracts, leaving 386 still around, minus the 377 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 21 gold contracts were actually posted for delivery on Wednesday, so that means that 355+21=376 more gold contracts just got added to the March delivery month — and those look suspiciously like the same contracts that are out for delivery on Thursday.  Silver o.i. in March fell by 18 contracts, leaving 106 still open, minus the 64 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 59 silver contracts were actually posted for delivery today, so that means that 59-18=41 more silver contracts were just added to the March delivery month.

Total open interest in gold fell by 12,723 contracts — and dropped by 5,469 contracts in silver.  Considering the big rallies in both on Tuesday, this was a bit of a surprise, although there could have been some short covering…but I suspect it was spread related in gold.  Ted’s the expert on this, but we won’t know for sure what it means until we see Friday’s Commitment of Traders Report.


There were more very large deposits into both GLD and SLV again on Tuesday.  In GLD, an authorized participant[s] added another 385,705 troy ounces.  In SLV another enormous amount was added, as an a.p. deposited 7,369,105 troy ounces.

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 — and this is what they had to report.  During the past week, they added 21,989 troy ounces of gold, plus 584,340 troy ounces of silver.

In other gold and silver ETFs on Planet Earth on Tuesday, net of any COMEX, ZKB and GLD & SLV activity, there was a net 67,501 troy ounces of gold withdrawn, but a net 2,442,229 troy ounces of silver was added.

Here’s the chart showing the stunning amount of silver deposited everywhere on Tuesday.  Click to enlarge.


There was a small sales report from the U.S. Mint.  They sold 10,500 troy ounces of gold eagles — and that was all.

To add to the physical retail shortage woes in the precious metals, was a note from Sprott Money yesterday — and that’s linked here.

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  They reported receiving 5,787.180 troy ounces/180 kilobars [SGE kilobar weight] — and all that went into Delaware.  There was also 11,381.100 troy ounces shipped out.  Almost all of that 11,252.500 troy ounces/350 kilobars [U.K./U.S. kilobar weight] departed Loomis International — and the remaining 128.600 troy ounces/4 kilobars [U.K./U.S. kilobar weight] was shipped out of Canada’s Scotiabank.  The link to this is here.

It was very busy in silver, as 1,783,075 troy ounces was received — and 1,241,114 troy ounces was shipped out.  In the ‘in’ category, two truckloads…1,197,888 troy ounces…was dropped off at CNT — and the other truckload…585,186 troy ounces…arrived at Canada’s Scotiabank.  In the ‘out’ category, one truckload…600,153 troy ounces…departed Scotiabank — and half-trucks…322,493 troy ounces and 314,372 troy ounces…were shipped out of HSBC USA and CNT respectively.  The remaining 4,094 troy ounces left Delaware.  There was a bit of paper activity, as 15,540 troy ounces was transferred from the Registered category and back into Eligible at Delaware — and 4,999 troy ounces made the opposite trip over at Canada’s Scotiabank.  The link to this activity is here.

There was very decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving 545 of them — and shipped out 2,279.  Except for the 580 kilobars shipped out of Loomis International, the remaining in/out activity was at Brink’s, Inc.  The link to that, in troy ounces, is here.


Byzantine Empire, Tiberius II. Constantine, 578-582, Solidus

Mint: Constantinople   Material: Gold   Full Weight: 4.49 grams

I have a very decent number of stories, articles and videos for you today.


CRITICAL READS

U.S. Services Economy Collapses at Record Pace, Signal 5% GDP Plunge

Following disastrous PMI prints across Europe (and China last month), preliminary March U.S. Manufacturing and Services data was expected to plunge notably into contraction (having already tumbled in February).. and they both did…

  • U.S. Manufacturing PMI dropped to 49.2 (contraction) – a 127-month low – from 50.7 (dramatically better than the expected drop to 43.5 – thanks to the farcical ‘bullishness’ of longer supplier delivery times).
  • U.S. Services PMI crashed to 39.1 from 49.4 – a record low. Click to enlarge.

Steep rates of manufacturing contraction were signalled for production and new orders, both of which fell to the greatest extent since 2009, with many firms linking this to the escalation of preventative measures following the outbreak of COVID-19. Some companies have reported having to shutdown and give refunds where orders could not be fulfilled in time.

Driving the downturn in services output was a steep fall in new business. The decrease in sales was the quickest since data collection began in late-2009, as both domestic and foreign client demand weakened. Companies highlighted challenging conditions across the services sector, especially in travel and tourism and other consumer-facing industries.

It’s Global…with the U.S. Composite Index crashing to 40.5 – a record low…Click to enlarge.

This story was posted on the Zero Hedge website at 9:54 a.m. EDT on Tuesday morning —  and I thank Brad Robertson for sending it along.  Another link to it is here.


This is the Fear Chart that the Smart Money on Wall Street is Watching

The chart that tells you how all of today’s economic troubles are going to end is not the bar graph of new deaths from coronavirus in Italy versus deaths in the U.S. It’s the chart that shows the number of potential deaths among the banks and insurance companies that have gorged themselves on risky derivatives and serve as counterparties to each other in a daisy chain of financial contagion.

The chart above is why the Federal Reserve is throwing unprecedented sums of money in all directions on Wall Street. Because despite being a primary regulator to these massive bank holding companies, the Fed has no idea who is actually in trouble on derivative trades, other than looking at a chart like the one above.

The chart above also justifies the Democrats refusing to sign off on the fiscal stimulus legislation that would have given U.S. Treasury Secretary Steve Mnuchin a $500 billion slush fund where the names of the recipients of bailouts could be withheld from the public.

In January 2007, prior to the last financial crisis, Citigroup’s stock was trading at the split-adjusted level of $550 a share. At yesterday’s stock market close, Citigroup’s stock price was $35.39. If you are a long-term shareholder in Citigroup, you’re still down 94 percent on your principal, not including dividends. After receiving the largest taxpayer and Federal Reserve bailout in banking history during the Wall Street financial crash of 2007 to 2010, Citigroup did a 1-for-10 reverse stock split to dress up its share price. In other words, if you owned 100 shares of Citigroup previously, you now owned just 10 shares at the adjusted price. If Citigroup had not done that, you would have seen a closing price yesterday of $3.54 cents instead of $35.39.

Citigroup is not alone in loading up on derivatives again. Together with JPMorgan Chase, Morgan Stanley, Goldman Sachs and Bank of America, these five bank holding companies now control a notional (face amount) of derivatives amounting to $230 trillion, representing 85 percent of all derivatives held by U.S. banks.

This worthwhile commentary put in an appearance on the wallstreetonparade.com Internet site on Tuesday morning — and I found it embedded in a GATA dispatch.  Another link to it is here.


California’s Public Employees Retirement System Just Lost a Stunning $69 Billion in One Month

In what is likely to become a trend around the country, California’s Public Employees Retirement System just watched $69 billion go up in smoke as the coronavirus panic has gripped global markets.

CALPERS total fund balance is now about $335 billion, down from a record high of $404 billion only one month ago. CALPERS administers pensions for about 1,500 local governments around the state, as well as California state employees, according to the Sacramento Bee.

The California State Teachers’ Retirement System doesn’t publicly report its value as often, but likely suffered similar losses. As of the end of February, its balance was about $243 billion. If it were to have fallen by the same amount as CALPERS, it would likely be somewhere near $200 billion now.

The losses stand to have a profound impact on California, as cities, counties and schools will have to pay CALPERS more in upcoming years to make up for the losses. This will, in turn, put pressure on state and local government to raise their already astronomical taxes even higher.

With more loses to come.  This news item, which certainly comes as no surprise, put in an appearance on the Zero Hedge website at 6:25 p.m. on Tuesday evening EDT — and another link to it is here.


The Chances of a Greater Depression Are Increasing By the Day” Warns Dr. Doom

The shock to the global economy from COVID-19 has been both faster and more severe than the 2008 global financial crisis (GFC) and even the Great Depression. In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10%, and GDP contracted at an annualized rate of 10% or more. But all of this took around three years to play out. In the current crisis, similarly dire macroeconomic and financial outcomes have materialized in three weeks.

Earlier this month, it took just 15 days for the US stock market to plummet into bear territory (a 20% decline from its peak) – the fastest such decline ever. Now, markets are down 35%, credit markets have seized up, and credit spreads (like those for junk bonds) have spiked to 2008 levels. Even mainstream financial firms such as Goldman Sachs, JP Morgan and Morgan Stanley expect US GDP to fall by an annualized rate of 6% in the first quarter, and by 24% to 30% in the second. US Treasury Secretary Steve Mnuchin has warned that the unemployment rate could skyrocket to above 20% (twice the peak level during the GFC).

In other words, every component of aggregate demand – consumption, capital spending, exports – is in unprecedented free fall. While most self-serving commentators have been anticipating a V-shaped downturn – with output falling sharply for one quarter and then rapidly recovering the next – it should now be clear that the COVID-19 crisis is something else entirely. The contraction that is now underway looks to be neither V- nor U- nor L-shaped (a sharp downturn followed by stagnation). Rather, it looks like an I: a vertical line representing financial markets and the real economy plummeting.

This longish commentary by Noriel Roubini was posted on the Zero Hedge website at 4:25 p.m. EST on Tuesday afternoon — and another link to it is here.


Mortgage Massacre Latest Casualty: $10 Billion m-REIT MFA Can’t Meet Margin Calls

First, its was AG Mortgage Investment Trust which on Friday said it failed to meet some margin calls and doesn’t expect to be able to meet future margin calls with its current financing. Then it was TPG RE Finance Trust which also hit a liquidity wall and could not repay its lenders. The, on Monday it was first Invesco, then ED&F Man Capital, and now the mortgage mayhem that erupted as a daisy-chain of mortgage REITs suddenly imploded, has taken down MFA Financial, whose crashing stock was halted after the company reported that “due to the turmoil in the financial markets resulting from the global pandemic of the COVID-19 virus, the Company and its subsidiaries have received an unusually high number of margin calls from financing counterparties, and have also experienced higher funding costs in respect of its repurchase agreements.”  Click to enlarge.

As a result of this liquidity run, at the close of business on March 23, 2020, “the Company did not meet its margin calls.”

Further, on March 23, 2020, the Company notified its financing counterparties that it does not expect to be in a position to fund the anticipated volume of future margin calls under its financing arrangements in the near term as a result of market disruptions created by the COVID-19 pandemic.

How much money are we talking about here? Approximately $10 billion: “The company’s aggregate obligations under its various financing arrangements is about $9.5 billion.”

And since its only other alternative is immediate Chapter 7, the company said that it is in discussions with its financing counterparties with regard to entering into forbearance agreements.

There will be a lot more bodies floating to the surface before this all over.  This Zero Hedge story put in an appearance on their website at 3:36 p.m. EST on Tuesday afternoon — and another link to it is here.  Then there’s this ZH story from yesterday afternoon headlined “$14 Billion Commodity Broker Facing Crushing Margin Calls After Mortgage Hedges Go Wrong“.


The ‘New’ Federal Reserve as Garbage Can For All Capitalist Debt

Yesterday, the Federal Reserve crossed its latest liquidity free money Rubicon. It announced it will provide unlimited credit–and assume the bad debts, not just of banks, shadow banks, and wealthy investors but for what it called ‘Main St.’

But by ‘Main St.’ it doesn’t mean consumers or households. It means that virtually any capitalist financial enterprise that has bad debt it can now dump it on the Fed. In today’s announcement of its latest ‘lending facility’, as it is called, the Fed declared it would ‘support’ small business loans, student loans, auto securitized loans, and credit card debt. But that does not mean the Fed will ‘support’ consumers and assume their loans. Oh no! It means it will support the financial lenders making such loans for students, auto purchases, credit cards and small businesses.

It means these lenders can now dump their bad, defaulted, or otherwise non-performing debt from credit cards, auto loans, student or small business loans on the Fed. The Fed will eat it for them, and add it to the Fed’s own $4 trillion plus indebted balance sheet–soon to rise to $8 trillion or more.

What are markets for at all if The Fed now backstops everything?

This brief commentary showed up on the Zero Hedge Internet site at 2:55 p.m. on Tuesday afternoon EDT — and another link to it is here.


After 350% Jobless Jump, Norway Unemployment is Worst Since WWII

Norway’s unemployment rate shot up to the highest level since World War II, as the economic shutdown brought on by the coronavirus sends the richest Nordic economy into shock.

The number of Norwegians seeking unemployment benefits rose almost 350% in the past two weeks, after companies temporarily laid off tens of thousands of workers to cope with the loss of demand triggered by the spread of the virus. Registered unemployment is now 10.4%, which is the highest on record for the measure.

The development in the Norwegian labor market over the past two weeks has no historical precedent,” Sigrun Vageng, the head of the Norwegian Labour and Welfare Administration, said in a statement.

The figures, now published on a weekly basis, underscore the rapid deterioration of the economy. The situation has already led the central bank to resort to two emergency rate cuts and threaten to intervene in currency markets to fight a panic-driven sell-off of the krone.

The Norwegian government has vowed to do everything it can to support the economy, and has so far presented measures totaling about 280 billion kroner ($25 billion), ranging from deferred taxes to higher unemployment benefits and loan guarantees.

This Bloomberg story appeared on their website at 6:44 a.m. PDT on Tuesday morning — and it’s the first offering of the day from Swedish reader Patrik Ekdahl.  Another link to it is hereGregory Mannarino‘s post market close wrap for Tuesday is linked here — and I thank Brad Robertson for sending it.


No Respite for the Wicked, Pompeo Unleashed — Tom Luongo

There are few things in this life that make me more sick to my stomach than watching Secretary of State Mike Pompeo talking. He truly is one of the evilest men I’ve ever had the displeasure of covering.

Into the insanity of the over-reaction to the COVID-19 outbreak, Pompeo wasted no time ramping up sanctions on firms doing any business with Iran, one of the countries worse-hit by this virus to date.

It’s a seemingly endless refrain, everyday, more sanctions on Chinese, Swiss and South African firms for having the temerity in these deflating times to buy oil from someone Pompeo and his gang of heartless psychopaths disapprove of.

This goes far beyond just the oil industry. Even though I’m well aware that Russia’s crashing the price of oil was itself a hybrid war attack on U.S. capital markets. One that has had, to date, devastating effect.

While Pompeo mouths the words publicly that humanitarian aid is exempted from sanctions on Iran, the U.S. is pursuing immense pressure on companies to not do so anyway while the State Dept. bureaucracy takes its sweet time processing waiver applications.

Pompeo and his ilk only think in terms of civilizational warfare. They have become so subsumed by their big war for the moral high ground to prove American exceptionalism that they have lost any shred of humanity they may have ever had.

The guy is a raving psychopath, dear reader.  This commentary/opinion piece put in an appearance on the strategic-culture.org Internet site on Monday sometime — and I thank Brad Robertson for pointing it out.  Another link to it is here.  Then there’s this related news item from ZH that’s headlined “At the Moment U.N. Chief Urged ‘Global Ceasefire’ to Stop COVID-19, Pentagon Held War Games Aimed at Iran” — and that’s from Brad as well.


Jim Rickards: economic freeze is here, get gold, silver if you can — and get ready

We are potentially entering an “Ice-9” situation where the entire world may “freeze” over economically, said Jim Rickards, best-selling author of “The Road to Ruin” and “Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos.”

If you shut down the New York stock exchange, and I can’t sell stocks and get cash, I’m going to sell my money market funds or redeem my money market funds. Then you’ve got to shut down the money market funds industry, and then people say ‘OK, I’ll go to the banks or the ATMs,’” he said. “And then you’ve got to shut down the banks so the point is, it spreads from exchange to money markets, to brokerage accounts, to banks, and you end up shutting down the entire system.”

This 25:40 minute video interview was conducted before the Fed unleashed unlimited liquidity in the market.  It was posted on the kitco.com Internet site last Thursday — and I thank reader “Zoey” for sending it our way.  Another link to it is here.


Goldman Sachs Tells Clients it is Time to Buy Gold — the “currency of last resort

The current coronavirus-induced economic and financial market turmoil is seemingly the perfect environment for gold.

We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policy makers act to accommodate shocks such as the one being experienced now,” said analysts at Goldman Sachs led by Jeffrey Currie.

Yet while the yellow metal GC00, 1.222% has done far better than other assets, it has slipped 2% over the last month.

The Goldman analysts, with a 12-month price target of $1800 an ounce, said that is about to change, thanks to the Federal Reserve’s aggressive bond purchase plan unveiled on Monday, in which the U.S. central bank said it would buy as many Treasurys and mortgage-backed securities as needed to keep financial markets running smoothly.

We are beginning to see a similar pattern emerge as gold prices stabilized over the past week and rallied [Monday] as the Fed introduced new liquidity injection facilities with this morning’s announcement,” they said.

The analysts that said with the Fed easing funding stresses, focus will likely shift to the large size of the Fed balance sheet expansion, increase in developed market fiscal deficits and concerns about the sustainability of the European monetary union.

We believe this will likely lead to debasement concerns similar to the post [Global Financial Crisis] period,” they said.

This story appeared on the marketwatch.com Internet site at 8:36 a.m. EDT on Tuesday morning — and another link to it is here.  I thank Brad Robertson for sharing it with us.


The Gold Market is Breaking Down“: Gold Spreads Explode as LBMA Warns of Liquidity Problems

[T]he spot/futures price divergence discussed last night and further described here,  has exploded…Click to enlarge.

… and on Tuesday morning the divergence that was barely noticeable late Monday has blown out to unprecedented level, with gold futures decoupling and trading far above spot prices.  Click to enlarge.

The near record spread is the widest seen in four years.

As Kitco notes, just before noon EDT, one price vendor was showing spot metal was trading at $1,612.10 an ounce while at the same time showing the Comex April futures were at $1,654.10 an ounce – a spread of $42 an ounce. It was much wider earlier in the day, when as Kitco adds, “nearby futures were more expensive than deferred, a sign of strong demand in any commodity market.

I’ve never seen that before,” said one gold trader who has been in the market for 30-plus years. Some contacts reached by Kitco suggested the discrepancy is an evolving story that is still unfolding, with traders trying to figure out what’s happening.

Earlier in the day, the London Bullion Market Association, the world’s most important authority for physical gold and its transfers, issued this stunning statement to Kitco:

The London gold market continues to be open for business. There has, however, been some impact on liquidity arising from price volatility in Comex 100-oz [ounce] futures contracts. LBMA has offered its support to CME Group to facilitate physical delivery in New York and is working closely with Comex and other key stakeholders to ensure the efficient running of the global gold market.”

In short, the unprecedented scramble for physical metal coupled with continued liquidations among levered players, while refiners remains offline, appears to be fracturing the gold market from within.

Saxo Bank’s head of commodity strategy, Ole Hansen, observed that a lock-down is occurring in two biggest gold hubs in the world, New York and London,  so many traders are working from home. “This has caused a breakdown in the marketplace“, he said.

There is no price discovery in the market right now,” he said Tuesday morning. “If you need to borrow gold in the OTC [over-the-counter] markets right now, you are going to pay a king’s ransom.”

It’s pretty obvious that something is not right in the gold market…in both paper and physical — and I’ll have more about this in The Wrap.  This Zero Hedge news item showed up on their Internet site at 3:54 p.m. on Tuesday afternoon EDT — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.  Then there’s this ZH story from early Tuesday morning headlined “It’s Selling Like Toilet Paper“: If You Haven’t Bought Physical Gold Yet, It’s Probably Too Late” — and I thank Fred Ehrman for that one.


CME is asked to change gold delivery rules amid coronavirus lock-down, sources tell Reuters

The London Bullion Market Association (LBMA) and several major banks that trade gold have asked U.S. exchange operator CME Group Inc to allow gold bars in London to be used to settle its contracts to ease disruption to trading, sources said.

The gap between gold futures on the CME’s Comex exchange in New York GCc1 widened above London spot prices XAU= by as much as $70 per ounce — or 4% — on Tuesday.

The two usually remain within a few dollars of one another, and the gap skewed trading in the London market, causing activity to fall.

Traders feared shutdowns of air travel and precious metal refineries due to the coronavirus outbreak will make it harder to ship bullion from London to the United States to meet contractual requirements.

London is a key gold storage centre, where thousands of tonnes of metal underpin trading, but it uses 400-ounce bars which must be melted down and recast as 100-ounce bars to be accepted by Comex in New York.

The LBMA and executives at major gold-trading banks asked CME to allow 400-ounce bars to be used to settle Comex contracts, said the two sources, both of whom were involved in the discussions.

No one was immediately available for comment at CME after Reuters contacted the company via phone and e-mail.

The rule change would obviate the need to reshape and transport metal, meaning it could remain in vaults in London while ownership is transferred. If this happened spot and futures prices could converge and markets trade normally, sources said.

This Reuters story, filed from London, was picked up by the nasdaq.com Internet site — and I found it on the gata.org Internet site.  Another link to it is here.  The follow-on story to this headlined “CME resolving physical gold squeeze with delivery of 100-ounce, 400-ounce and 1-kg bars” — was posted on the kitco.com Internet site on 9:22 p.m. EDT on Tuesday night — and I found this story on the gata.org Internet site as well.


Dutch ABN AMRO abandons gold investors

ABN AMRO leaves gold investors disappointed, as the bank closes all weight accounts for gold, silver and platinum. Approximately 2,000 customers who have precious metals in their weight account at the bank have to sell them before April 1. If they fail to do so, ABN AMRO will sell their positions at the current market price. The bank cannot guarantee that they will sell the precious metal at a favorable price.

This decision comes at a particularly unfavorable time for gold investors. At the same time the bank is pointing its customers to the exit, a run on physical gold has started. Investors who thought they were well positioned with their precious metals at the ABN AMRO can now join the long queue of people who want to buy gold now.

ABN AMRO’s weight accounts arose from an acquisition of Hollandsche Bank Unie (HBU). This bank handled the trade and storage of precious metals from its office at Coolsingel in Rotterdam. In 1967, the shares of this bank were taken over by ABN, which later merged with Amro bank. When ABN AMRO merged with Fortis in 2009, HBU was sold to Deutsche Bank. Customers were then given four years to physically deliver or sell their precious metals.

The termination of these weight accounts marks the end of a history that goes back to the founding of the Hollandsche Bank Unie in 1914.

This interesting story showed up on the geotrenlines.com Internet site very early on Wednesday morning Central European Time — and I found it in a GATA dispatch last night.  Another link to it is here.


South Africa’s Mining Industry Is About to Come to a Standstill

South Africa’s iconic mines, from the ever-deepening gold shafts on which the economy was founded to massive iron ore pits and rich platinum seams, are about to go silent.

From midnight Thursday, all but a few coal operations needed to fuel the country’s power stations are expected to be included in a nationwide lock-down aimed at containing the coronavirus. The sweeping shutdown is unprecedented in the 150-year history of South Africa’s mining industry, which today employs more than 450,000 people.

President Cyril Ramaphosa is moving quickly to curb the virus spread as infections threaten to spiral out of control in a country with an already strained health system and rampant unemployment. The army will help police to enforce the lock-down, with grocers, pharmacies, banks, filling stations and other essential services allowed to remain open.

Producers from Harmony Gold Mining Co., the nation’s biggest producer of the precious metal, to top platinum miner Sibanye Stillwater Ltd. said they’re bracing for earnings hits as mines move to care and maintenance, an industry term for when production stops but essential services like underground water pumping continue. Anglo American Plc said it will review the detailed regulations on the lock-down when they’re published, including for potential exemptions.

This would be unprecedented in the history of mining in South Africa,” said Roger Baxter, the chief executive officer of the Minerals Council South Africa, the main industry group. “There were certain times when components of the industry were closed, for example during the second world war, but this is unprecedented.

This Bloomberg story from Tuesday was picked up by the finance.yahoo.com Internet site — and I found it on Sharps Pixley.  Another link to it is here.


The PHOTOS and the FUNNIES

We were up fairly bright and early on September 2 — and decided to explore the town of Valemont before heading home to Merritt.  I had passed through the place countless times — and had only ever stopped for a snack, gas…or a bathroom break.  It was a cute — and very well maintained small town, with most of it tucked out of sight in the trees on the east side of the Yellowhead highway.  The first shot is of a creek that runs through the town — and into the Canoe River…which is the most northerly tributary of the mighty Columbia River.  I wanted to see where the Canoe River emptied into Kinbasket Lake…held back by the Mica Dam.  The second shot, taken from the bridge shows the river at its confluence — and the third photo looking in the opposite direction…upstream and in the general direction of Valemont.  There’s a huge difference in these two photos as I’m shooting into the light source on the first one — and my back to it in the second. The last photo is of the bridge itself…mostly used for logging purposes up until 2006 when the last lumber mill in the town closed.  Click to enlarge.


The WRAP

It was one heck of a trading session on Tuesday.  I got an e-mail from subscriber John Brimelow around 3 a.m. EDT as I was coding my Tuesday column.  He’s a gold market guru out of London asking me if he was seeing things, as the April contract was selling for 9 bucks over the current spot price.  He wasn’t, as I could see it too.  And that spread was went as wide as $100 during the Tuesday trading session — and the spot price closed 33 bucks lower than April on Tuesday!  There were a lot of stories on the Internet about this yesterday — and I’m not going to go into it very deeply.

Needless to say, I was on the phone to Ted about this shortly after I got up.  He said what was going on was “impossible” — and had never seen anything like it all his years as a spread trader.  He didn’t trust anything that was coming out of the LME as they’re opaque as you can possibly get — and less than truthful.  I asked him if this was to discourage the April contract holders from rolling into future months — and he said no…emphatically not, as that sort of arbitrage encouraged roll-overs instead. Hopefully he’ll have something to say about it in his mid-week commentary this afternoon, as I’d really like to know.

But I will speculate.  Based on the information that has come out since Ted and I spoke, I suspect that the COMEX was going to have delivery issues on First Notice Day in April gold, or at some point early in the delivery month — and that they jacked up the prices in the next two delivery months to encourage/entice any April contract holder that might consider standing for delivery, to roll over instead.  Making them an offer they couldn’t refuse, if you get my drift.  I await the final word on this from Ted.

But make no mistake about it…’da boyz’ were there to make sure things didn’t get out of hand to the upside any of the precious metals on Tuesday.  If they hadn’t, we would have seen precious metal price closes for the history books in a short covering rally for the ages.

Here are the 6-month charts for the Big 6 commodities.  Gold blasted above — and closed well above, it’s 50-day moving average yesterday.  I would think that it was “all the usual” suspects going short against the Managed Money traders as they piled in on the long side.  But volume was pretty light, so I shan’t cast that opinion in stone.  Of course silver and platinum are still nowhere near any moving average that matters, but palladium closed above its 200-day moving average by a hair.  Both copper and WTIC closed a bit higher as well.  Click to enlarge.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and even with all five days worth of dojis in the reporting week to look at, I’m not going to hazard a guess as to what that report will contain.

Ted said that there appeared to be all kinds of strange stuff going on during the COMEX trading session in New York on Tuesday — and I know he’ll have something to say about it in his mid-week commentary later today.  I’ll borrow a few salient sentences for my Friday column.


And as I post today’s efforts on the website at 4:02 a.m. EDT, the London open is less than a minute away — and I see that all four precious metals’ rallies starting at 6:00 p.m. in New York on Tuesday evening ran into ‘something’ at various times during morning trading in the Far East.  Gold’s current high was set a few minutes before 8 a.m. China Standard Time on their Wednesday morning.  It was sold lower until shortly after 9 a.m. CST — and has been trading quietly and unevenly sideways-to-lower since.  It’s now down $28.30 the ounce.  Silver’s rally was capped and turned down a few minutes after 8 a.m. CST — and it was sold lower until shortly before 11 a.m. CST — and, like gold, has been trading quietly sideways-to-lower since — and ‘da boyz’ have it up only 4 cents as London opens.  Platinum’s rally was capped at the same time as silver’s — and that sell-off lasted until 9:30 a.m. CST.  It has been creeping quietly higher every since, but has rolled over in the last fifteen minutes — and is only up 12 bucks.  Palladium’s initial rally ran into ‘something’ about 8:40 a.m. in Shanghai.  It was sold lower until shortly after 11 a.m. over there — and then didn’t do much until the 2:15 p.m. CST afternoon gold fix.  It began to rally anew at that juncture — and is higher by 51 dollars as Zurich opens.

Gross gold volume is about 86,500 contracts — and net of current roll-over/switch volume out of April and into future months, net HFT gold volume is around 45,500 contracts.  Net HFT silver volume is a bit over 18,500 contracts — and there’s around 2,100 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down 45 basis points at 101.59 once trading commenced around 7:45 p.m. EDT in New York on Tuesday evening, which was 8:45 a.m. China Standard Time on their Wednesday morning.  Its current high tick was set around 8:52 a.m. CST — and it has been wandering very unsteadily lower since — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the index is down 53 basis points.  That decline is obviously not being allowed to manifest itself in either gold or silver.

And at the London open, the April price for gold is about 47 dollars higher than then the gold price in the spot month.  Wow!


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

Ed

Big Deposits Into Both GLD and SLV on Monday

24 March 2020 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price spiked higher and above $1,500 spot the moment that trading commenced at 6:00 p.m. EDT in New York on Sunday evening.  ‘Da boyz’ appeared immediately — and had it at its low tick of the day less than an hour later.  It rallied back to around the unchanged mark by 9 a.m. China Standard Time on their Monday morning — and from there it was sold quietly lower until 3 p.m. CST.  It crept quietly higher once more until the noon silver fix in London — and then jumped higher by a whole bunch of dollars.  The price was capped less than fifteen minutes later — and it traded quietly and unevenly sideways until 9:30 a.m. in New York.  From that juncture it rallied steadily higher until twenty minutes after the 1:30 p.m. COMEX close.  The buyer disappeared, or the price was capped at that point — and it was sold quietly and unevenly lower until the market closed at 5:00 p.m. EDT.

The low and highs in gold were reported as $1,484.60 and $1,569.30 in the April contract…an intraday move of about 85 bucks.

Gold finished the Monday trading session in New York at $1,551.20 spot, up $52.40 from Friday’s close…but around 14 dollars off its Kitco-recorded high tick of the day.  Net HFT gold volume was  not overly heavy, all things considered, at 247,500 contracts — but there was a monstrous 116,000 contracts worth of roll-over/switch volume out of April and into future months.

And up until the 8:20 a.m. COMEX open in New York on Monday morning, the price action in silver was almost the same as it was for gold.  After its London silver fix rally was capped at that point, it traded very unevenly sideways until shortly before noon in New York.  It began to head higher from there but, like gold, ran into ‘something’ at 1:50 p.m. in after-hours trading.  It was sold down a bit from that juncture, but began to head higher starting around 3:15 p.m. — and rallied quietly until trading ended at 5:00 p.m. EDT.

The low and high ticks in silver were recorded by the CME Group as $12.29 and $13.305 in the May contract…an intraday move of a bit over a dollar.

Silver finished the day at $13.27 spot, up 68 cents from its Friday close.  Net volume was fairly decent at 65,000 contracts — and there was a bit under 11,000  contracts worth of roll-over/switch volume in this precious metal.

The platinum price was hammered over twenty bucks lower at the 6:00 p.m. open in New York on Sunday evening, but it came roaring back — and was up about 15 bucks by shortly after 11 a.m. China Standard Time on their Monday morning.  It traded very unevenly lower until the dollar index fell out of bed at 8 a.m. EDT — and it, like silver and gold, jumped higher as the dollar index crashed.  It was again sold very unevenly lower until around noon in New York — and then away it went to the upside…with obvious interference every step of the way.  It had a brief spike higher starting around 3:40 p.m. in after-hours trading, but ‘da boyz’ were there to pound that into the dirt in very short order.  Platinum was closed late on Monday afternoon in New York at $640 spot, up 32 dollars on the day, but 12 bucks off its Kitco-recorded high tick of the day.

Palladium’s price spike at 6:00 p.m. in New York on Sunday evening was pounded into the dirt almost right away but, generally speaking, it traded in a similar fashion as platinum after that, except its New York low came shortly before 9:30 a.m. EDT.  It chopped very unevenly higher from there until the market closed at 5:00 p.m.  Palladium finished the Monday session at $1,665 spot…up $133 on the day.  Palladium had an intraday trading range of $265 on Monday.

Using end-of-day gold and silver prices on Monday, the gold/silver ratio worked out to 117 to 1.


The dollar index closed very late on Friday afternoon in New York at $102.82 — and opened down about 46 basis points once trading commenced around 6:30 p.m. EDT on Sunday evening, which was 6:30 a.m. China Standard Time on their Monday morning.  It’s 10.98 high tick was set minutes after that — and the wild ride continued from there.  It fell down to the 101.84 mark by 2:26 p.m. CET — and then ‘rallied’ back to its Friday close by 11:48 a.m. in London.  Ten minutes later it crashed, literally — and was saved at the 101.65 mark by the usual ‘gentle hands’ about 8:25 a.m. in New York.  It then chopped and flopped around until 10:50 a.m. EDT — and another ‘rally’ began at that juncture.  That last until around 12:35 p.m. — and it traded very unevenly sideways to a bit lower until the Monday trading session ended at 5:30 p.m. in New York.

The dollar index was marked-to-close at 102.49…down 33 basis points from Friday.

The currency market is in total chaos and, like the rest of the markets out there, there is no true price discovery left, as the powers-that-be are moving heaven and earth to keep their fiat currency game alive.

If there was any correlation between the dollar index and the precious metals on Monday, it was purely coincidental.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…103.24…and the close on the DXY chart above, was 71 basis points above the spot month close on the DXY chart above on Monday.  Wow!  Click to enlarge as well.

The gold shares gapped up at the open — and then proceeded to chop very unevenly higher until around 3:40 p.m. in New York trading.  Then, for no reason that made any sense to me, there was a wave of selling going into the 4:00 p.m. EDT close — and the stocks gave back about a third of their gains.  The HUI closed higher by only 6.86 percent.

The silver equities traded in a similar manner, complete with the sell-off that began at 3:35 p.m. in New York trading.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up only 7.82 percent.  Click to enlarge if necessary.

It should be noted that Peñoles didn’t trade on Monday, so Nick Laird’s Intraday Silver Sentiment/Silver 7 Index actually closed higher by 9.11 percent yesterday.

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

Of course there weren’t any real dogs to speak of as far as the silver equities were concerned.  The star of the day was Pan American Silver, up 16.23 percent — and SSR Mining only closed higher by 3.06 percent.


The CME Daily Delivery Report showed that 21 gold and 59 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, the three short/issuers were Advantage with 11 contracts — and ADM and Morgan Stanley, with 5 contracts each.  All were from their respective client accounts.  There were three long/stoppers — and the two biggest were ADM and Advantage, with 15 and 4 contracts.  These were for their respective client accounts as well.

In silver, the two short/issuers were Scotia Capital/Scotiabank and JPMorgan, with 53 and 6 contracts — and all from their respective in-house/proprietary trading accounts.  Of the three long/stoppers in total, the two biggest were the CME Group and JPMorgan…the former with 54 for their own account — and the latter with four contracts for their client account.  The CME Group immediately reissued all their contracts as 54×5=270 one-thousand troy ounce Micro Futures contracts.  The three long/stoppers for them were Morgan Stanley, ADM and Advantage, with 203, 45 and 22 contracts — and all were for their respective client accounts.

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

The CME Preliminary Report for the Monday trading session showed that gold open interest in March declined by 230 contracts, leaving 31 still open, minus the 21 mentioned a few days ago.  Friday’s Daily Delivery Report showed that 260 gold contracts were actually posted for delivery today, so that means that 260-230=30 more gold contracts were added to the March delivery month.  Silver o.i. in March dropped by 63 contracts, leaving 124 still around, minus the 59 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 55 silver contracts were actually posted for delivery today, so that means that 63-55=8 silver contracts vanished from March.

During gold’s big price rise on Monday, total gold open interest in Monday’s Preliminary Report showed an increase of 10,421 contract.  But in silver, it showed that total silver o.i. fell by 769 contracts.  Both will get have minor adjustments by the time the final numbers are posted on the CME’s website later this morning EDT.


There was a whopping big deposit into GLD on Monday, as an authorized participant added 508,000 troy ounces.  There was another very big deposit into SLV once again, as an a.p. put in 2,332,100 troy ounces.

In other gold and silver ETFs on Planet Earth on Monday, net of any COMEX and GLD & SLV activity, there was a net 92,162 troy ounces of gold added…but in silver, there was a net 10,662 troy ounces of silver withdrawn.

U.S. Mint sales have exploded this month.  They reported selling another 36,500 troy ounces of gold eagles — 1,000 one ounce 24K gold buffaloes — and 1,650,000 silver eagles yesterday. I would suspect that with numbers like these, they were probably running the stamping machines full blast on the weekend as well.

The mint has sold more gold and silver bullion coins in March so far than they had in both January and February combined.

Botswana subscriber Bill Stavely sent me this information about the shortage of South African gold Krugerrands yesterday.  The Gold Reef City Mint in South Africa posted this notice on their website:  “Due to a Kruger Rand Stock Shortage – we cannot issue a price list at this time.  We are hoping stock will be available by Thursday this week.”  I have more stories about the shortages of physical precious metals in the Critical Reads section below.


There was certainly activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  They reported receiving 84,211 troy ounces — and shipped out 6,086 troy ounces.  The lion’s share of the ‘in’ activity was 80,377.500 troy ounces/2,500 kilobars [SGE kilobar weight] delivered to the International Depository Services of Delaware.  The rest…3,833.503 troy ounces…which included 55 kilobars [U.K./U.S. kilobar weight] was dropped off at Canada’s Scotiabank.  Most of the ‘out’ activity was at the International Depository Services of Delaware…4,787.180 troy ounces/180 kilobars [SGE kilobar weight].  The remaining 299 troy ounces departed Delaware.  There was also some paper activity…5,005 troy ounces…that was transferred from the Eligible category and into Registered over at Brink’s, Inc.  The link to all this is here.

There was some activity in silver, as 106,654 troy ounces was received — and all of that was dropped off at Canada’s Scotiabank.  There was 922,614 troy ounces shipped out.  Almost all of the ‘out’ activity involved Scotiabank and Loomis International, with 600,291 troy ounces out of the former — and 300,196 troy ounces out of the latter.  The remainder…20,126 troy ounces and 2,006 troy ounces…was shipped out of HSBC USA and Delaware respectively.  There was a lot of paper activity, as 2,409,816 troy ounces…four truck loads…was transferred from the Eligible category and into Registered over at Scotiabank…undoubtedly for March delivery.  The remaining 73,760 troy ounces made the opposite trip over at Delaware.  The link to this is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They reported receiving 1,065 of them — and shipped out 65.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are the usual two charts that Nick passes around on Friday evening that I didn’t have room for in Saturday’s missive, because I had the updated Russian gold reserves chart instead…so here they are now.  They show the amount of physical gold and silver in all known depositories, mutual funds and ETFs, as of the close of business on Friday, March 20.  During the reporting week there was a net 994,000 troy ounces of gold removed, but a net 13.7 million troy ounces was added.

Except for Ted and myself, I haven’t noticed one single solitary so-called precious metal ‘analyst’ mention this dichotomy.  Click to enlarge for both.

I have a lot of stories/article/videos for you today.


CRITICAL READS

Goldman injects $1 billion into own money-market funds after heavy withdrawals

Goldman Sachs Group Inc poured more than $1 billion into two of its prime money-market portfolios this week due to heavy investor withdrawals, according to a filing with the U.S. securities regulator.

The Wall Street bank purchased $722.4 million in assets from its Goldman Sachs Financial Square Money Market Fund and $301.2 million from its Goldman Sachs Fund Square Prime Obligations Fund.

Its support came as markets had another violently volatile week over concerns about the coronavirus pandemic, and represents an extraordinary move in the staid money-market fund industry.

Goldman, which disclosed the moves on Friday in a filing with the U.S. Securities and Exchange Commission, did not have an immediate comment.

The bank repurchased securities from its two funds on Thursday after investors withdrew a net $8.1 billion from them during a four-day stretch, according to the disclosure.

Industry-wide, investors pulled tens of billions of dollars from prime money-market funds, which buy top-rated corporate debt. Although they are among the tamest investment vehicles, they can be riskier than portfolios that rely more on U.S. government bonds.

Either buy it themselves, or ‘break the buck’ if they sold the underlying securities in the open market.  This Reuters article appeared on their Internet site early on Saturday afternoon EDT — and I found it on the gata.org Internet site.  Another link to it is here.


Dire Dollar Shortage Shows Failure to Fix Key Crisis Flaw

The global rush for dollars that’s been roiling the $6.6 trillion a day foreign-exchange market has showcased a missing piece of financial-safety architecture that world policy makers never addressed in the aftermath of the 2008 crisis.

The financial system’s reliance on one keystone currency proved to be an amplifier of shocks more than a decade ago. Yet since then, the greenback’s role has climbed even further as borrowers outside of America ramped up dollar-denominated debt. That’s again adding an enormous layer of stress on markets.

It’s precisely what the global economy does not need at this moment,” Alexander Wolf, head of Asia investment strategy at JPMorgan Private Bank and a former U.S. diplomat in China, said of a strong dollar. “It tightens financial conditions, make servicing dollar debt more expensive, and can cause pass-through inflation just when that is not needed.”

As often occurs during bouts of extreme currency fluctuation, there’s been speculation about something akin to the 1985 Plaza Accord that sought to rein in a runaway dollar. Observers discount that possibility now. But one of the key takeaways from the current episode may be that one important currency finds itself burnished: China’s yuan.

This Bloomberg article was posted on their website at 5:00 p.m. PDT on Sunday morning — and was updated about 11 hours later.  I found it embedded in a GATA dispatch — and another link to it is here.


Five Mega Wall Street Bank Stocks Have Lost Average of 45 Percent in Five Weeks

Above is the chart that has the Federal Reserve and its Wall Street money funnel (a.k.a. New York Fed) chewing on their worry beads and rapidly rolling out their alphabet soup of Wall Street bailout programs in a replay of their playbook during the 2007-2010 Wall Street collapse.

While Fed and Treasury officials have been repeatedly assuring Americans that these Wall Street behemoth banks have plenty of capital, they’ve actually been bleeding their common equity capital faster than a snow cone in July. In just the past five weeks, from the close of trading on Friday, February 14 through the close of trading on Friday, March 20, five of the largest Wall Street banks have lost an average of 45 percent of their common equity capital.

Adding to the embarrassment for the Federal Reserve, Citigroup, the bank it propped up with $2.5 trillion in secret cumulative loans the last time around, is once again leading the herd with losses in its common equity capital. Citigroup’s market capitalization has lost a stunning 51.7 percent in just the past five weeks. And we are certainly in the early innings of this bank rout.

Morgan Stanley, which was second in line behind Citigroup at the Fed’s trough in the last financial crisis, receiving $2.04 trillion cumulative in secret revolving loans, has lost 46.9 percent of its common equity capital in just the past five weeks.

Just last week alone, the five Wall Street behemoths listed in the chart above lost a combined $154.45 billion in common equity capital.

This commentary put in an appearance on the wallstreetonparade.com Internet site on Saturday — and it’s another article I found on the gata.org Internet site.  Another link to it is here.


In Unprecedented Move, Fed Unveils Open-Ended QE Including Corporate Bonds

Coming into Monday, the Fed had a problem: it had already used up half of its entire emergency $700BN QE5 announced last weekend.  Click to enlarge.

Which, together with the plunge in stocks, is why at 8 a.m. on Monday, just as we expected – given the political cover they have been provided – The Fed unveiled an unprecedented expansion to its mandate, announcing open-ended QE which also gave it the mandate to buy corporate bonds (in the primary and secondary market) to unclog the frozen corporate bond market as we just one step away from a full Fed nationalization of the market (only Fed stock purchases remain now).

As noted elsewhere, the Fed’s new credit facilities carry limits on paying dividends and making stock buybacks for firms that defer interest payments, but have no explicit restrictions preventing beneficiaries from laying off workers.

Additionally, in addition to Treasuries, The Fed will buy Agency Commercial MBS all in unlimited size.

The Fed will buy Treasuries and agency mortgage-backed securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy,” and will also buy agency commercial mortgage-backed securities, according to a statement.

The Fed also said it will support “the flow of credit to employers, consumers and businesses by establishing new programs that, taken together, will provide up to $300 billion in new financing.” It will be backed by $30 billion from the Treasury’s Exchange Stabilization Fund.

Coincidentally, this unprecedented action takes place just hours after real estate billionaire Tom Barrack (and friend of Trump) said the U.S. commercial-mortgage market is on the brink of collapse and predicted a “domino effect” of catastrophic economic consequences if banks and government don’t take prompt action to keep borrowers from defaulting.

This Zero Hedge news item put in an appearance on their website at 12:28 p.m. on Monday afternoon EDT — and the first person through the door with this story was Swedish reader Patrik Ekdahl — and another link to it is here.  In a directly related story mentioned just above, is this Bloomberg article headlined “Real Estate Billionaire Barrack Says Commercial Mortgages on Brink of Collapse” — and that comes to us courtesy of Patrik as well.


Unprecedented Intervention: The Fed Will Purchase $125 Billion In Securities Every Day

At the same time as the Federal Reserve announced open-ended QE, which also included purchases of corporate bonds and loans in both the primary (as the ECB does now) and directly in the secondary market (a new twist), as well as expanding its municipal bond purchases while also reactivating the old Lehman-era favorite, TALF facility, the N.Y. Fed announced the specific details of what the Fed’s unprecedented QEternity would look like, and they were a doozy.

In short, every single day, the Fed will purchase $75BN in Treasurys and an additional $50BN in BMS, for a total of $125BN every day, or an unprecedented $625BN for the week, or more than the Fed’s entire QE2 which was just over $500BN in purchases over 7 months.

And since the Fed is purchasing securities across the entire curve, it will take no less than 7 separate operations every single day to purchase the full amount every day as per the following schedule.

Adding to this unprecedented expansion in QE the already purchased $375BN in TSYs/MBS since the resumption of QE, means that starting Friday the 13th, and ending this coming Friday, the Fed will have purchased just over $1 trillion in Treasurys and MBS securities!

And visually, the Fed’s takeover of the market will look as follows:  Click to enlarge.

This Zero Hedge news item showed up on their Internet site at 9:00 a.m. EDT on Monday morning — and I thank Brad Robertson for sharing it with us.  Another link to it is here.  Here is a very related ZH headline that reads “Kashkari Says Fed Has “Infinite” Amount of Cash: “We Create it Electronically”” — and that comes courtesy of Brad as well.


Deutsche Bank: Helicopter Money Will Be “Disastrous” And Will Lead To Hyperinflation, “Buy Gold

Now that helicopter money has finally arrived, and bizarrely has brought with it that blast-from-the-past idiocy that is the trillion-dollar coin – which does nothing more than remind the population that money, like any other consensus construct, is just an illusion and depends on “faith and credit” and an increasingly grotesque one at that reliant on such “in your face” gimmicks as minting platinum coins to bailout the world – the discussions of what the monetary endgame (with even deflation god Albert Edwards admitting that his iconic “Ice Age” is about to melt under the red-hot heat of paradropped cash) will look like have begun in earnest.

Doing it part to kindle this debate, no pun intended, are Deutsche Bank strateigst Oliver Harvey and Robin Winkler who have published a report covering the two aspects of the helicopter money debate. And since we are confident that readers can find the happy ending version on countless other pro-paradrop forums, typically those run by socialist “island-dwelling traders” who have never actually traded (and their drug-delivery skills it turns out were also dismal) and who have no concept of how money or credit actually works, we will focus on the one that captures accurately what will happen on short notice: hyperinflation.

So for everyone curious what the hyper-inflationary endgame looks like, here it is, courtesy of DB’s Oliver Harvey…

It should worry us that policymakers and academics think providing massive stimulus is the solution. This is because policymakers appear to be attempting to shift demand back to where it was a couple of months ago, at the same time as holding supply fixed. To put it another way, if the government tries to keep spending at levels before lock-downs began, while at the same time keeping lock-downs in place, there will be simply more money chasing after significantly fewer goods and services. The result of this will be inflation, and a lot of it.

This might seem like an absurd argument given that market inflation expectations – the price of inflation linked bonds – have fallen since the crisis began. But, it is perfectly consistent to say that even though this crisis ultimately originated with a supply shock, the market has up until now expected demand to fall somewhat more in response. What matters is that at present supply is inelastic – unlike in traditional Keynesian formulations – because while the government might be handing out $100 dollar bills it won’t be allowing workers to work regular days, restarting flights or reopening factories until the virus subsides.

What would be disastrous is if governments embarked on New Deal style spending program via monetary financing at a time when it is imposing stringent supply constraints on the economy. The result may be  hyperinflation, and end up doing more harm to people’s living standards than nothing at all.

A good hedge would be to buy gold, as well as inflation linked bonds in the U.S. and Euro Area, which are currently trading at all time lows.”

This longish Zero Hedge article appeared on their website at 10:41 p.m. EDT on Sunday night — and another link to it is hereGregory Mannarino‘s post market close rant for Monday is linked here.


Welcome to Sweatshop Amerika! — Mike Whitney

Imagine if the congress approved a measure to form a public-private partnership between the US Treasury and the Federal Reserve. Can you imagine that?

Now imagine if a panicky and ill-informed Congress gave the Fed a blank check to bail out all of its crooked crony corporate and Wall Street friends, allowing the Fed to provide more than $4.5 trillion to underwater corporations that ripped off Mom and Pop investors by selling them bonds that were used to goose their stock prices so fat-cat CEOs could make off like bandits. Imagine if all that red ink from private actors was piled onto the national debt pushing long-term interest rates into the stratosphere while crushing small businesses, households and ordinary working people.

Now try to imagine the impact this would have on the nation’s future. Imagine if the Central Bank was given the green-light to devour the Treasury, control the country’s “purse strings”, and use nation’s taxing authority to shore up its trillions in ultra-risky leveraged bets, its opaque financially-engineered Ponzi-instruments, and its massive speculative debts that have gone pear-shaped leaving a gaping black hole on its balance sheet?

Well, you won’t have to imagine this scenario for much longer, because the reality is nearly at hand. You see, the traitorous, dumb-sh*t nincompoops in Congress are just a hair’s-breadth away from abdicating congress’s crucial power of the purse, which is not only their greatest strength, but also allows the congress to reign in abuses of executive power by controlling the flow of funding.

The power of the purse is the supreme power of government which is why the founders entrusted it to the people’s elected representatives in congress. Now these imbeciles are deciding whether to hand over that authority to a privately-owned banking cartel that has greatly expanded the chasm between rich and poor, incentivized destructive speculation on an industrial scale, and repeatedly inflated behemoth asset-price bubbles that have inevitably blown up sending stocks and the real economy into free-fall. The idea of merging the Fed and the Treasury first appeared in its raw form in an article by former Fed chairman Ben Bernanke and Janet Yellen in the Financial Times. Here’s a short excerpt from the piece…

Well, Gregory Mannarino may have a valid point in his rantings.  This very interesting and worthwhile commentary/opinion piece by Mike Whitney put in an appearance on the unz.com Internet site on Sunday sometime — and I thank Roy Stephens for sharing it with us.  Another link to it is here.


A debt jubilee is the only way to avoid a depression — Michael Hudson

Even before the novel coronavirus appeared, many American families were falling behind on student loans, auto loans, credit cards and other payments. America’s debt overhead was pricing its labor and industry out of world markets. A debt crisis was inevitable eventually, but covid-19 has made it immediate.

Massive social distancing, with its accompanying job losses, stock dives and huge bailouts to corporations, raises the threat of a depression. But it doesn’t have to be this way. History offers us another alternative in such situations: a debt jubilee. This slate-cleaning, balance-restoring step recognizes the fundamental truth that when debts grow too large to be paid without reducing debtors to poverty, the way to hold society together and restore balance is simply to cancel the bad debts.

The word “Jubilee” comes from the Hebrew word for “trumpet” — yobel. In Mosaic Law, it was blown every 50 years to signal the Year of the Lord, in which personal debts were to be canceled. The alternative, the prophet Isaiah warned, was for smallholders to forfeit their lands to creditors: “Woe to you who add house to house and join field to field till no space is left and you live alone in the land.” When Jesus delivered his first sermon, the Gospel of Luke describes him as unrolling the scroll of Isaiah and announcing that he had come to proclaim the Year of the Lord, the Jubilee Year.

Until recently, historians doubted that a debt jubilee would have been possible in practice, or that such proclamations could have been enforced. But Assyriologists have found that from the beginning of recorded history in the Near East, it was normal for new rulers to proclaim a debt amnesty upon taking the throne. Instead of blowing a trumpet, the ruler “raised the sacred torch” to signal the amnesty.

It is now understood that these rulers were not being utopian or idealistic in forgiving debts. The alternative would have been for debtors to fall into bondage. Kingdoms would have lost their labor force, since so many would be working off debts to their creditors. Many debtors would have run away (much as Greeks emigrated en masse after their recent debt crisis), and communities would have been prone to attack from without.

This opinion piece was put in an appearance on The Washington Post‘s website on Saturday afternoon EDT — and I found it on the gata.org Internet site.  Another link to it is here.


World’s Largest Long-Haul Airline to Halt All Flights

Emirates, the world’s largest long-haul airline, will suspend all of its passenger operations this week, in the latest concession to the coronavirus pandemic that has devastated global travel.

Flights to all destinations will cease from March 25, Dubai-based Emirates said Sunday in an email. Cargo service will remain in operations, the company said.

We cannot viably operate passenger services until countries re-open their borders, and travel confidence returns,” Chairman and Chief Executive Officer Ahmed bin Saeed Al Maktoum said in a memo to employees seen by Bloomberg. “Some of our competitors, or even our supply chain partners, may not survive this crisis.

The airline’s announcement came a few hours before the United Arab Emirates’ General Civil Aviation Authority said it will halt all inbound and outbound passenger flights for two weeks. The U.A.E. is also home to Flydubai, Abu Dhabi’s Etihad Airways and Air Arabia, the Middle East’s largest discount carrier.

With its fleet of all wide-body aircraft, the Emirates has turned Dubai into a hub for global travel, typically operating more than 500 flights a day. That mission, which has fed the city’s growth since Emirates was founded in the mid-1980s, is now under assault by the coronavirus pandemic.

This Bloomberg story was posted on their Internet site at 6:45 a.m. PDT on Sunday morning — and was updated about thirty hours later.  I thank Patrik Ekdahl for his final contribution to today’s column — and another link to it is here.


Panicked Coronavirus Response Show Stark Contrast to 1919 Flu Outbreak — Bill Bonner

The stock market has never fallen so fast, so hard… Nor has the government (including its central bank) ever undertaken such a massive “rescue.” What’s behind it?

Here at the Diary, we’ve been watching the wild, hothouse growth for at least 20 years, wondering how it would end.

Not trusting our own hunches and guesses, our researchers developed a Doom Index to try to give us a better idea of when the fruit was ripe.

In April of last year, the Doom Index hit “8” – indicating that it was heavy on the vine.

For the next eight months, it waited to be plucked. Then, along came the C virus.

The coronavirus was a surprise to everyone. But it didn’t cause the rot we see today; it merely set it off.

This longish, but very interesting commentary from Bill showed up on the bonnerandpartner.com Internet site on Monday sometime — and another link to it is here.


Fed move awakens gold, just as supply of the metal hits a snag

Gold’s one-day dollar surge is one for the record books. But as bullion deliveries hit a snag and mining operations slow, the precious metal may soon see prices rally to new heights.

On Monday, the most-active April gold futures contract GCJ20, 1.429% rallied by $83, or 5.6%, to settle at $1,567.60 an ounce. The one-day dollar gain for the metal was the largest ever, based on data going back to November 1984, according to Dow Jones Market Data.

The move for the metal followed the Federal Reserve’s decision Monday to unleash its balance sheet and purchase an unlimited amount of Treasurys and securities tied to residential and commercial mortgages to ward off a credit crunch, a process known as “quantitative easing” that aims to pump liquidity into frozen financial markets.

Unlimited quantitative easing is a “huge signal, another part of upcoming trillions of new debt monetization,” said Peter Spina, president and chief executive officer at GoldSeek.com. “Many on Wall Street are waking up after the shock” of declines in recent weeks.

The endless QE to trillions in global liquidity programs are all in gold’s favor among the general turmoil,” he told MarketWatch. “Gold is returning back to its function as a global currency.

This gold-related news item was posted on the marketwatch.com Internet sit at 4:57 p.m. on Monday afternoon EDT — and I plucked it from a story on the gata.org Internet site.  Another link to it is here.


Gold bars in short supply due to coronavirus disruption

Traders have reported a growing global shortage of gold bars, as the coronavirus outbreak both disrupts supply and stokes demand, with one business comparing the frenzied buying of the yellow metal with the consumer rush for toilet roll.

Retail investors in Europe and the U.S. have bought up gold and silver bars and coins over the past two weeks in an effort to protect their money from the collapse in global stock prices and many currencies.

But Europe’s largest gold refineries have struggled to keep up because of the region’s widening shutdown. Valcambi, Pamp and Argor-Heraeus are all based in the Swiss region of Ticino, near the border with Italy. Local authorities announced in recent days that production in the area was to be temporarily halted.

The gold price hit a seven-year high on March 9 of more than $1,700 a troy ounce as the deepening economic impact of the coronavirus outbreak sent investors scurrying for haven assets. But gold has since been swept up in the selling frenzy, with some investors needing to offload their holdings to free up cash, pushing the price down to about $1,530 on Monday afternoon.

Most of the selling has been in gold futures or exchange traded funds backed by the metal. During the same period, retail demand for physical gold bars has surged.

Retailers have already reported shortages and delays of up to 15 days on shipments. Markus Krall, chief executive of German precious metals retailer Degussa, said it was struggling to meet customer appetite for gold bars and coins and had to turn to the wholesale markets. Demand is running at up to five times the normal daily amount, he said.

We are being creative to find new sources but what is driving it all are the measures by authorities to stop coronavirus. This is so unpredictable,” added Mr Krall.

This story appeared on the ft.com Internet site on Monday sometime — and I found it embedded in a GATA dispatch.  Another link to it is here.


Three Swiss gold refineries suspend production due to virus threat

Three of the world’s largest gold refineries said on Monday they had suspended production in Switzerland for at least a week after local authorities ordered the closure of non-essential industry to curtail the spread of the coronavirus.

The refineries – Valcambi, Argor-Heraeus and PAMP – are in the Swiss canton of Ticino bordering Italy, where the virus has killed more than 5,000 people in Europe’s worst outbreak.

Switzerland is a global hub for precious metals refining. The three refineries between them process around 1,500 tonnes of gold a year in Ticino – a third of total global annual supply – as well as other precious metals such as silver.

Valcambi and PAMP said they would suspend operations until March 29. Argor said it would do so until April 5.

The Ticino local government order, issued on Friday, is in force until March 29.

The above five paragraphs are all there is to this rather brief Reuters article.  Filed from London, it showed up on their Internet site at 4:10 a.m. EST on Monday morning — and I picked it up off the gata.org Internet site.  Another link to the hard copy is here.


Russia ups gold reserve increase in February — Lawrie Williams

The Russian Central Bank has just published its latest gold reserve information showing it has added some 400,000 ounces (12.44 tonnes) of gold to its reserves in February.  This is double the amount it added in January when it was thought the nation might be cutting back its gold purchases this year.  However this latest purchase suggests that the nation may still be on the path to adding perhaps somewhere between 100 and 200 tonnes in the full year – perhaps a similar increase to that reported last year of around 158 tonnes.

The addition takes its gold reserves to around 2,292 tonnes – only around 144 tonnes less than the world’s fourth biggest national gold holder – France.  At this latest month’s rate of increase Russia could match, or even overtake, the French holding within the next year.

Russia has been able to build its gold reserves substantially over the past few years while reducing its U.S. dollar related holdings down to an absolute minimum.  As we reported last month this is due to fears that the U.S. might impose financial sanctions and freezing Russia’s dollar assets.  The U.S. has shown its willingness to conduct financial warfare of this type against other states it feels are hostile to it (like North Korea and Iran), but Russia reckons now that it won’t be worth the U.S. making this kind of move against it if there is little in the way of U.S. related assets to attack.

Whether Russia can keep up its current rate of gold reserve purchases for the foreseeable future given the enormous fall in the oil price – oil and gas are the nation’s biggest export earners – remains to be seen. So next month’s announcement on gold reserve increases, if any, from the nation’s central bank will be awaited with particular interest.  However the oil price fall is partly self-inflicted with Russia’s decision not cut oil deliveries in the light of a global over-supply situation, which in part may well be aimed at putting U.S. shale oil producers out of business by making their operations uneconomic.

Overall though, the Russian central bank policy of increasing its gold reserves virtually every month for more than 10 years now, looks to be paying off well, particularly if pundits predictions for the gold price to take off as the world dives into recession come about.  In any case it will probably have been a better choice for a nation’s reserves than the Swiss National Bank’s purchases of equities which will have crashed in value enormously over the past couple of weeks.

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


Top Indian Gold Seller Shuts Shops as Industry Grinds to a Halt

India’s jewelry industry has come to a standstill as the government locked down much of the country to try and stem the spread of the coronavirus.

Titan Co., the nation’s biggest jeweler by market value, has shut stores until March 29, it said in a statement. The company has also closed its manufacturing units for the week and will review the situation at the end of the period, it said.

Demand in India, the world’s second-biggest gold consumer, has already tumbled amid record domestic prices and a slowing economy. Prime Minister Narendra Modi and state leaders over the weekend imposed an almost-complete lock-down as cases of coronavirus spiked, a move that will probably further hurt growth that’s already set to slow to an 11-year low.

Concerns about the virus have seen the local gem and jewelry sector come to a standstill with virtually no footfall in stores and many jewelers shutting shops located in malls and shopping complexes, according to the All India Gem and Jewellery Domestic Council. The industry is seeking an extension for repayment of loans and a reduction in the import tax on gold to 4% from the current 12.5%, it said.

This tiny Bloomberg article was posted on their website at 3:03 a.m. PDT on Monday morning — and it’s another gold-related news item that I found on the gata.org Internet site.  Another link to the hard copy is here.


Physical silver supply squeeze about to get worse warns Keith Neumeyer

The global pandemic has shut down several mining jurisdictions around the world, taking off a large chunk of silver production, this according to Keith Neumeyer, CEO of First Majestic Silver.

In 2018, we produced, as a global industry, 855 million ounces of silver. So far, we’ve had Peru come offline, with 145 million ounces, we’ve had Chile come offline with 42 million ounces, we’ve had Argentina come offline with 26.5 million ounces. That’s a total of 213.5 million ounces that has now been shut down,” Neumeyer told Kitco News.

This 18-minute video interview with Keith was posted on the kitco.com Internet site on Monday sometime — and I thank Roy Stephens for sending it our way.  Another link to it is here — and it’s certainly worth your while.


The PHOTOS and the FUNNIES

With the light of September 1 fading fast — and the sky even more threatening, we stopped very briefly at the Mount Robson visitor’s center — and I took this one photo of the mountain from their deck before it began to pour.  The rain didn’t last long — and I took the opportunity of driving down a short piece of paved road that crossed the Fraser River near the center and B.C. Highway 16/The Yellowhead — and I took one photo in each direction from the bridge that spanned it.  As it tumbles out of the mountains from its source just north of Lake Louise, it runs narrow, fast and deep until it hits the Robson Valley.  It then widens out –and proceeds to meander across the flat terrain just past the town of McBride which he had just visited a few hours earlier — and then on through Prince GeorgeClick to enlarge.


The WRAP

“[I]f the plunge wasn’t due to widespread physical selling on either a wholesale or retail basis, then what the heck was behind the historic sell-off?

The answer and only answer is the same one I have advanced for decades, namely, paper positioning on the COMEX sets the price. Most remarkably, the data proving that paper positioning dictates price is presented weekly by the same federal regulator, the CFTC that is also charged with the responsibility of making sure large paper speculation don’t manipulate prices. Yet week after week, the Commitments of Traders (COT) indicates paper trading artificially sets the price. The report this week was no exception.

Let me just stop here for a moment to make a point I may not have made explicitly enough up until now. The dreadful coronavirus that is proving to be so devastating in health, economic and financial terms to just about everyone has had, as far as I can tell, no real direct effect for the price plunge in silver. Instead, the developing crisis has been used by key insiders, certainly including JPMorgan, as a convenient excuse and cover story to put the finishing touches on a sell-off for their own selfish benefit. Peoples’ thought processes are completely distorted as a result of the current crisis and what do the crooks on the COMEX do, but exploit it to their benefit at the expense of others. This makes the selling of securities by senior politicians ahead of others seem mild in comparison. I’m not sure I could make a more serious allegation, than feathering one’s own nest to the detriment of others, but there it is.” — Silver analyst Ted Butler:  21 March 2020


So the Fed has decided to go Wiemar for the moment — and that was certainly reflected in precious metal prices on Monday.  This is an ongoing and unfolding situation right now — and we’ll just see how it plays out.  I also note that all four rallied smartly in the early going in Far East trading, but all were capped and turned lower by the proxies of JPMorgan et al. at various times during morning trading in Shanghai.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  Gold blasted above — and then closed well above its 200-day moving average yesterday.   The Managed Money traders may have been active in that precious metal to a certain extent.  But the other three PMs are still light years below any moving average that matters, so the Managed Money traders were sitting on their hands regarding those.  I note that copper was closed at a new low for this move down — and WTIC closed higher by a bit.  Click to enlarge.

Before I get into other things, I thought I’d post another stockcharts.com graph that I’ve featured before.  It’s the BKX banking index — and it set a new low for this move down again on Monday.  A lot of this free money that the Fed is handing out is going to keep them liquid, if not solvent.  Click to enlarge.

The March delivery month has four days left, as Wednesday’s deliveries have already been posted by the CME Group further up in this column.  There’s not a lot of contracts left to go…but the number of new gold contacts being added to March deliveries continues to grow every day.

All the large traders that aren’t standing for delivery in April gold or silver, have to roll or sell their April contracts by the close of COMEX trading this coming Friday — and the rest have to be out by the close of COMEX trading on Monday.

Roll-over/switch volume…which was monstrous yesterday, will become even more so as First Day Notice for April deliveries draws closer.  The biggest volume day of the month should be on Friday when the big boys are the most active.


And as I post today’s column on the website at 4:03 a.m. EDT, the London/Zurich opens are less than a minute away — and I note that all four precious metals began to head higher, to sharply higher, the moment that trading began at 6:00 p.m. EDT in New York on Monday evening.  All ran into ‘something’ in mid-to-late morning trading in the Far East…so it’s obvious that ‘da boyz’ were out and about.  Gold has jumped higher in the last few minutes — and is up $42.70 the ounce now — but silver is up only 42 cents as London opens.  Platinum is higher by 22 dollars — and palladium by 110 as Zurich opens.  All four are creeping back to their former highs that were set in morning trading in Shanghai.

Gross gold volume is around 128,000 contracts — and minus pretty heavy current roll-over/switch volume out of April and into future months, net HFT gold volume is just under 63,000 contracts…which is not too bad considering the price action.  Net HFT silver volume is pretty chunky though, at a bit over 27,500 contracts — and there’s 5,000 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down about 35 basis points once trading commenced around 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 was generally down hill from that point in a very broad range — and the current 101.28 low tick was set around 2:55 p.m. CST.  It hasn’t done much since — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the dollar index is down 97 basis points.


Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and I shan’t be making any kind of prediction until I see what Tuesday’s doji looks like on the above six charts.  Of course Ted will have something to say about it in his mid-week commentary on Wednesday — and I’ll be more than interested in what that is.

I hope your Tuesday goes well — and I’ll see you here tomorrow.

Ed

Russia Adds 400,000 Ounces of Gold to Their Reserves in February

21 March 2020 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price got hammered a bunch of dollars lower the moment that trading began at 6:00 p.m. EDT in New York on Thursday evening.  It began to recover immediately — and the rally was on in earnest from that juncture.  ‘Da boyz’ stepped in shortly after the 8 a.m. open in London on their Friday morning — and it was sold quietly and unevenly lower until the 1:30 p.m. COMEX close in New York.  After trading sideways for a while, the gold price began to head briskly higher until the market closed at 5:00 p.m. EDT.

The low and high ticks in gold were reported by the CME Group as $1,457.50 and $1,519.40 in the April contract.

Gold finished the Friday session in New York at $1,498.80 spot, up $27.40 from Thursday’s close, but around 20 bucks off its Kitco-recorded high tick of the day.  Net volume was pretty quiet at a bit under 206,500 contracts — and there was just under 64,000 contracts worth of roll-over/switch volume out of April and into future months.

Silver’s price path was pretty much identical as it was for gold, except its low tick was printed around 2:45 p.m. in after-hours trading in New York.  From that point it took off higher into the 5:00 p.m. EDT close.

The high and low ticks in silver were recorded as $13.095 and $12.005 in the May contract.

Silver was closed in New York yesterday afternoon at $12.59 spot, up 48.5 cents from Thursday, but a chunky 65 cents off its Kitco recorded high tick of the day.  Net volume was reasonably decent at a bit over 70,500 contracts — and there was a bit over 12,000 contracts worth of roll-over/switch volume in this precious metal.

In all respects that mattered, ‘da boyz’ guided platinum on a similar price path as both silver and gold.  However, there was no post-COMEX close rally in this precious metal.  It was closed at $608 spot, up 20 bucks from Thursday — and 35 dollars off its Kitco-recorded high tick of the day.

Palladium was sold down over twenty dollars the moment that trading commenced at 6:00 p.m. EDT in New York on Thursday evening.  It crept steadily higher until shortly before 2 p.m. China Standard Time on their Friday afternoon — and took off higher from there.  It ran into ‘something’ at the same time as the other three precious metals…about ten minutes or so after the London/Zurich opens.  It struggled sideways-to-lower until minutes after the COMEX open — and then it was hammered down another bunch.  It traded very unevenly sideways from that juncture until trading ended at 5:00 p.m. in New York.  Palladium was closed at $1,522 spot down 81 bucks on the day — and over 300 dollars off its Kitco-recorded high tick.

And based on Friday’s closing prices, the gold/silver ratio now sits at 119 to 1.


The dollar index closed very late on Thursday afternoon in New York at 102.76 — and opened up about 17 basis points once trading commenced around 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  It was unevenly down hill from there until 3:56 p.m. CST — and it certainly appeared that the usual ‘gentle hands’ showed up at that point.  The ensuing ‘rally’ topped out at 3:32 p.m. in afternoon trading in New York — and it sold off a bunch from there going into the 5:30 p.m. EDT close.

The dollar index finished the Friday session at 102.82…up 6 basis points from its close on Thursday.

I guess one could say that there was some correlation between the gold price and the currencies on Friday.  But ‘da boyz’ didn’t step into the precious metal market until about fifteen minutes after the rally in the dollar index began.

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

And here’s the 5-year U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…103.50…and the close on the DXY chart above, was 68 basis point higher than the spot close on the DXY chart above on Friday.  Click to enlarge as well.

During the last eleven trading days, the dollar index has risen almost 900 basis points, which is unprecedented…just like a lot of other things that are happening these days.  I know that Doug Noland will have something to say about this in his weekly commentary in the Critical Reads section.


The gold shares jumped up a bunch at the open, but ran into immediate selling pressure — and they were sold unevenly lower right until the market closed in New York at 4:00 p.m. EDT.  There were bouts of buying during the day, but every time they ended, the selling pressure continued.  The HUI got clocked for another 5.87 percent — and that’s despite the fact that the gold price was in positive territory during the entire trading session.  Even the gold price rally going into the 4:00 p.m. New York close didn’t make any difference.

The silver equities traded in an identical manner…almost to the tick, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by ‘only’ 4.29 percent.  Click to enlarge if necessary.

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

After being the big dog on Thursday, Wheaton Precious Metals was the ‘star’ on Friday…up 1.68 percent.  And after being the big star on Thursday, SSR Mining was the pooch on Friday, down 9.65 percent…followed hard on its heels by Pan American Silver, down 9.32 percent.


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 they are…weekly, month-to-date and year-to-date — and for the second week in a row, I’ll dispense with the play-by-play on any of them.  It’s too depressing for me to write about them — and just as equally depressing for you to read it.  But this is what ‘da boyz’ have done as the CFTC, the CME Group, the DoJ… and our ‘beloved’ mining companies have stood there with their hands in their pockets, watching these criminal acts unfold.  Not a peep out of any of them.  Click to enlarge.

The devastation was caused by a number of factors which I’ve already pointed out over the last few weeks…margin call selling, panic selling, mutual fund redemptions and, without doubt, there was some short selling going on as well.

But in a very perverse sense…looking at these charts, the silver equities aren’t down all that much considering how far the silver price has been beaten lower — and are really ‘outperforming’ gold and its equities on a relative basis.  Year-to-date gold is down only 1.19%…but the equities are down 31.27 percent…a 26 to 1 ratio.  Whereas in silver, although the price is down 29.35 percent, the equities are ‘only’ down 48.03 percent…a ratio of only 1.64 to 1.  That ratio is similar on the weekly and month-to-date charts as well.

Yes, that’s cold comfort, but it’s proof positive that there is massive and stealth accumulation going on in the silver equities — and those that already hold them, aren’t selling.

As Ted has been pointing out for a long time now, how precious metal prices unfolded over the longer term, depended on whether or not the Big 7 commercial traders that were holding huge but unrealized loses on the short side, were able to snooker the Managed Money traders [and others] out of their historic and unprecedented net long positions. They covered their unrealized losses OK on that Mother of all engineered price declines, but are still mega short in both gold and silver in the COMEX futures market.  They are stuck there, but with the core short positions that they’ve always had — and with no way out except to buy their way out.  It’s the only way — and sooner or later that’s what they’ll be forced to do….unless the COMEX gets closed at some point.


The CME Daily Delivery Report showed that 260 gold and 55 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, the only short/issuer that mattered was HSBC USA, with 259 contracts out of its own account.  There were six long/stoppers in total — and the three largest were Scotia Capital/Scotiabank, JPMorgan and ADM, with 105, 56 and 47 contracts respectively.  The contracts for Scotia Capital/Scotiabank were for its in-house/proprietary trading account — and all the other contracts stopped were for their respective client accounts.

In silver, the sole short/issuer was Scotia Capital/Scotiabank — and the three long/stoppers were the CME Group, Morgan Stanley — and ADM…with 35, 14 and 6 contracts.  The 35 stopped by the CME Group was for its own account, which they immediately reissued at 35×5=175 one-thousand ounce Micro Silver Futures contracts.  The three long/stoppers for those were Morgan Stanley, Advantage and ADM, with 119, 30 and 26 contracts — and all for their respective client accounts.

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

Month-to-date there have been 2,126 gold contracts issued/reissued and stopped, which is a lot considering the fact that March his not a regular delivery month for gold — and that number in silver is 4,217 contracts.

The CME Preliminary Report for the Friday trading session showed that gold open interest in March dropped by 14 contracts, leaving 261 still open, minus the 260 gold contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 16 gold contracts were actually posted for delivery today, so that means that 16-14=2 more gold contracts were just added to March.  Silver o.i. in March declined by 17 contracts, leaving 187 still around, minus the 55 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 21 silver contracts were actually posted for delivery today, so that means that 21-17=4 more silver contracts were just added to the March delivery month.

Total gold open interest in March rose by only 1,413 contracts, but total silver open interest in March fell by 1,392 contracts.


There was a huge withdrawal from GLD on Friday, as an authorized participant took out 451,568 troy ounces.  But equally surprising in the opposite direction, there was another monster deposit into SLV, as a net 3,638,060 troy ounces of silver was added.

In the last four business days there has been a net 20.24 million troy ounces of silver added to SLV — and 696,172 troy ounces of gold withdrawn from GLD.  I’m sure that Ted will have a word or two on this in his weekend review later today.

In other gold and silver ETFs on Planet Earth on Friday, net of any COMEX or GLD & SLV activity, there was a net 11,005 troy ounces of gold withdrawn…but in silver, there was a net 1,333,089 troy ounces added.

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

Month-to-date the mint has sold 83,500 troy ounces of gold eagles — 45,500 one-ounce 24K gold buffaloes — and 3,182,500 silver eagles.  So far, gold sales in March have blown the doors off what was sold in January — and they’re rapidly approaching January’s silver eagle sales as well.


For the second day in a row there was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast.  But there was a paper transfer, as 25,981 troy ounces was transferred from the Eligible category and into Registered.  Without doubt that will be going on the door for delivery in March.  I won’t bother linking this.

There was a very decent amount of activity in silver, as 1,215,152 troy ounces…two truckloads…were received — and all of that went into Canada’s Scotiabank.  There was also 751,210 troy ounces shipped out — and of that amount, one truck load…600,423 troy ounces…departed Scotiabank — and the remaining 150,786 troy ounces was shipped out of CNT.  The link to all this is here.

There was some movement over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 416 of them — and shipped out 479.  Except for 10 kilobars that were shipped out of Loomis International, the remaining in/out activity was at Brink’s, Inc.  The link to all this, in troy ounces, is here.


Since the 20th of March fell on a weekday, the good folks over at The Central Bank of the Russian Federation updated their Internet site with February’s data.  It showed that they added 400,000 troy ounces/12.44 metric tonnes of gold to their gold reserves during that monthThat brings their total gold holdings up to 73.6 million troy ounces/2,289.2 metric tonnes.  Here’s Nick’s most excellent chart showing that change.  Click to enlarge.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, was a surprise to say the least.  Yes, there were improvements in the commercial net short positions in both gold and silver, but not nearly as much as I was expecting.

In silver, the Commercial net short position in the Legacy COT Report only decreased by 5,689 contracts, or 28.4 million troy ounces — and I must admit that I was expecting at least five or six times that much.

They arrived at that number by reducing their long position by 5,346 contracts, but they also reduced their short position by 11,035 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, the Managed Money traders made up most, but not all of the change in the Commercial net short position…only 4,808 contracts worth.  They did this by selling 15,549 long contracts, but instead of increasing their short position, they actually reduced it by a whopping 10,741 contracts…leaving them with the smallest short position that I can remember, only 15,471 contracts.

[Note: The remaining long position in the Managed Money category…37,409 contracts…now consists only of those traders that are Managed Money value-type investors, because the technically-oriented Managed Money traders wouldn’t own a single long contract this far below silver’s big moving averages.]

It was the traders in the other two categories that made up the difference.  The ‘Other Reportables’ actually increased their net long position by 1,829 contracts, but the ‘Nonreportable’/small traders reduced their net long position by 2,710 contracts.

Doing the math:  4,808 minus 1,829 plus 2,710 equals 5,689 contracts…the change in the Commercial net short position…which it must be.

The Commercial net short position in silver is now down to 54,647 contracts, or 273.2 million troy ounces of paper silver, or about 117 days of world silver production…which is still very much in bearish territory.

JPMorgan only reduced their net short position by around 1,000 contracts according to Ted…and he feels that they are still short around 5,000 COMEX contracts, or maybe a bit less.  Why they weren’t able to completely eliminate their entire short position in silver and be long the COMEX silver market is a complete mystery to me — and I must admit that I’m looking forward to his weekly review later today to get his thoughts, now that he’s had a change to “sleep on it“.

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

Although the Big 8 traders were able to eliminate their unrealized margin call loses during this engineered price decline, they’re still short 178 days of world silver production, which is larger than the 117 days of world silver production that the Commercial traders are short.  This is insane and obscene…something that I’ve been pointing out for years now.  And if this is the best they could do on an engineered price decline of this magnitude, they’re completely stuck on the short side with no way out except by buying long positions and driving the price to the moon and the stars in the process.


In gold, the commercial net short position in the Legacy COT Report only fell by 26,595 contracts, or 2.66 million troy ounces — and I was expecting a number at least three times that mount.  But the commercial traders can’t buy anything, unless the non-commercials are prepared to sell to them — and they weren’t.

The big surprise was in the Disaggregated COT Report.  Yes, the Managed Money traders were the big sellers, dumping 55,663 long contracts, but they only added a piddling 443 short contracts, for a total net change of 56,106 contracts.  But the shocker was that the traders in the ‘Other Reportables’ category because, like in silver, they stepped in front of the commercial traders and increased their net long position by a stunning 38,491 contracts…contracts that the commercial traders weren’t able to buy and cover short positions with.  This was the stand-out feature of yesterday’s COT Report according to Ted — and I agree totally.  The traders in the ‘Nonreportable’/small trader category did the opposite, reducing their net short position by 8,980 contracts.

Doing the math:  56,106 minus 38,491 plus 8,980 equals the 26,595 contract change in the commercial net short position, which it must do.

The commercial net short position in gold is now down to 301,709 COMEX contracts, or 30.17 million troy ounces…but still wildly bearish on an historical basis.

Ted figures that JPMorgan reduced their net short position in gold by around 7,000 contracts during the reporting week — and are now down to about 25,000 contracts net short, or maybe a bit less.

From the COT Report it’s easy to calculate the short position of the Big 8 traders — and it works out to 277,800 contracts.  Subtracting out the 25,000 contracts of that amount that Ted says JPMorgan is short, that leaves the Big 7 commercial shorts still on the hook for a bit over 250,000 COMEX contracts.  Like in silver, their margin call losses from last June are all gone, but Ted says that they’re still looking down the barrel of this liability.  And with the Mother of all engineered price declines now in the rear-view mirror — and not having covered these short positions, it’s a reasonable assumption that they aren’t going to be able to, except in some future short-covering panic.

Here’s Nick’s 3-year COT chart for gold — and the change should be noted.  Click to enlarge as well.

As I just mentioned, the engineered price declines for the ages in gold and silver are pretty much done — and the Big 7 traders, although out from under the $7.2 billion unrealized margin call loses, are still on the short side in both silver and gold by preposterous amounts.  JPMorgan is still short as well, but they have 25 million troy ounce of gold and 900 million ounces of silver as a cushion.  The other Big 7 traders are short orders of magnitude more than that — and don’t have an ounce of precious metals to their names.  That’s why Ted says that JPMorgan could double cross these other commercial traders in a New York minute, but up to this point, haven’t done so.


In the other metals, the Manged Money traders in palladium decreased their net long position by  a very hefty 2,169 COMEX contracts during the reporting week — and are now net long the palladium market by only 1,406 contracts…a bit under 15 percent of the total open interest…down from 29 percent last week.  Total open interest in palladium fell for the fourth week in a row…from 12,210 COMEX contracts, down to only 9,556 contracts.  This is no longer a market at all.  In platinum, the Managed Money traders didn’t do much, despite the horrendous price decline…reducing their net long position by a scant 353 contracts.  They’re still net long the platinum market by  15,310 COMEX contracts…a bit over 23 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are still mega net long against JPMorgan et al…although both reduced their net long positions by considerable amounts during the reporting week.  In copper during the reporting week, the Managed Money traders didn’t do much for the second week in a row, decreasing their net short position in that metal by an immaterial 106 COMEX contracts.  They are net short copper by 42,685 COMEX contracts…a hair under 20 percent of total open interest.  This works out to around 1.07 billion pounds of the stuff.


Here’s Nick Laird’s “Days to Cover” chart, updated with the COT data for positions held at the close of COMEX trading on Tuesday, March 17.  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 126 days of world silver production…down 15 days from last week’s COT Report — and the ‘5 through 8’ large traders are short an additional 52 days of world silver production…down 8 days from last week’s COT Report — for a total of 178 days that the Big 8 are short…down 23 days from last week’s report. This represents 6 months of world silver production, or about 415 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 201 days of world silver production.]  And it should also be noted that the main reason for these big declines in days held short in silver is that total open interest in silver dropped precipitously during this past reporting week.

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 273 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 415 million troy ounces.  So the short position of the Big 8 traders is larger than the total Commercial net short position by around 415-273=142 million troy ounces…which is outrageous.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 33-odd small commercial traders other than the Big 8, are net long that amount.

Another way of stating this [as I say every week in this spot] is that if you removed the Big 8 commercial traders from that category, the remaining traders in the commercial category are net long the COMEX silver market.  It’s the Big 8 against everyone else…a situation that has existed for about three decades in both silver and gold — and in platinum and palladium as well.

As mentioned in my COT commentary in silver above, Ted estimates JPMorgan’s short position at around 5,000 contracts, down from the 6,000 he said they were short in the prior week’s COT Report.  That’s about 25 million troy ounces, or around 11 days of world silver production held short by JPM — and why they weren’t able to cover it all during last week’s engineered price declines is one of the great mysteries of life.  Something just doesn’t smell right about all this.

As per the paragraph below, I suspect that JPMorgan is now back in the ‘5 through 8’ category…as they were most likely the smallest of the Big 4 in last week’s COT Report.

As per the first paragraph above, the Big 4 traders in silver are short around 126 days of world silver production in total. That’s about 31.5 days of world silver production each, on average…down from the 35.25 days in last week’s report.  The four traders in the ‘5 through 8’ category are short around 52 days of world silver production in total, which is around 13 days of world silver production each, on average…down 2 days from last week.

The Big 8 commercial traders are short 49.8 percent of the entire open interest in silver in the COMEX futures market, which is down a hair from the 50.2 percent they were short in last week’s COT report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be a bit over the 55 percent mark.  In gold, it’s now 48.4 percent of the total COMEX open interest that the Big 8 are short, which is also up a bit from the 46.6 percent they were short in last week’s report — and a bit over 50 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 68 days of world gold production, down 1 day from last week’s COT Report.  The ‘5 through 8’ are short another 28 days of world production, down 6 days from last week’s report…for a total of 96 days of world gold production held short by the Big 8…down 7 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 71 percent of the total short position held by the Big 8…up about 4 percentage points from last week’s report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 71, 74 and 82 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is up about a percentage point from last week’s COT Report…platinum is down about 3 percentage points from a week ago — and palladium is up around 6 percentage points week-over-week.

It should be noted that the short position of the Big 8 traders in palladium has vanished into the background on the above “Days to Cover” chart.  It’s not positioned on the chart where it should be, but if it was, its short position would be located between cotton and soybean meal.

And as Ted has been pointing out for years now — and as I mentioned in my COT discussion on gold above, JPMorgan is, as always, in a position to double cross the other commercial traders at any time and walk away smelling like that proverbial rose — and that’s because of the massive amounts of physical gold and silver they hold.  Nothing about that possible scenario has changed on iota over the last year — and has grown ever stronger during the last several weeks.  We’re just awaiting that day — and when it does arrive, you won’t have to ask “is this it?”…as it will be evident in the price.

I have a very decent number of articles, stories and videos for you today.


CRITICAL READS

Before Fed Acted, Leverage Burned Hedge Funds in Treasury Market

When coronavirus panic kicked off unprecedented turmoil in Treasuries last week, hedge fund leverage was lurking.

The firms use borrowed money from the repurchase market for the popular basis trade, which exploits price differences between cash Treasuries and futures. Though individual firms’ borrowing is a closely guarded metric, people familiar with the transactions said some of them levered up as much as 50 times their own wagers. Leveraged funds’ exposure to the basis strategy could be as much as $650 billion, JPMorgan Chase & Co. strategists said.

Investors seeking safety rushed into Treasury futures on March 12, and hedge funds got hammered. A difficulty in completing trades ensued, and was a contributing factor to the Federal Reserve’s decision to pledge $5 trillion to keep markets running smoothly.

High leverage amplifies profits and losses and can be responsible for forced liquidations — and market fluctuations. This week, a sell-off in Treasury futures tied to margin calls pushed outstanding contracts to their lowest level since 2018. Many firms also get funding from money markets, whose problems have prompted the Fed to provide emergency funding.

Hedge funds’ excessive leverage has contributed in the past to congestion in the typically smooth Treasury market, according to a December report from the Bank of International Settlements, and bank traders have blamed hedge funds in the basis trade for continued issues in repo markets, especially after lending rates spiked in September to 10% from about 2%.

Too big to fail is back, and this time it’s not the banks, it’s levered financial institutions,” said Mark Yusko, the chief executive officer of Morgan Creek Capital. Yusko said he supported the Fed’s stepping in, but added that hedge fund firms have gotten too big by borrowing too much. “It’s a bailout,” Yusko said of the Fed’s actions.

This Bloomberg story is one I extracts from a Zero Hedge commentary that immediately follows.  It was posted on the Bloomberg website at 9:19 a.m. PDT on Thursday — and was updated about five hours and change later.  Another link to it is here.  The Zero Hedge spin on this is headlined “Confirmed: Fed Bailed Out Hedge Funds Facing Basis Trade Disaster” — and it’s definitely worth reading.


Historic Day: Fed to Buy a Record $107 Billion in Securities Today Alone as Fed Balance Sheet Explodes

Back in December we predicted that at the rate “Not QE” (RIP) was going, the Fed balance sheet would surpass it all time high by late April. It turns out that we were overly optimistic: with the Fed relaunching QE over the weekend as part of what is now global helicopter money, it announced plans to purchase $700BN in Treasury securities and expanding it to MBS earlier this week. However, that was not enough, and in the past week the Fed scrambled to stabilize the Treasury market buying TSYs feverishly hands over fist in addition to soaking up as much securities as Dealers had in its repo facilities, and as of this moment the Fed’s balance sheet has soared to a new all time high of $4.668 trillion.  Click to enlarge.

As a reminder, the Fed balance sheet was $3.7 trillion in September, just ahead of the repo crisis, meaning that in the last 6 months it has grown at a 50%+ pace.

Putting the recent surge of purchases in context, here is what the Fed’s “Not QE” looked like in purchase terms since it was restarted in October, and what March will look like…Click to enlarge.

Drilling down further on just the past week, starting with last Friday when the Fed announced several emergency POMOs, which were followed by Sunday’s QE5 announcement, one can see how the crisis escalated in the Fed’s eyes, and peaked today, when the Fed is expected to purchase a record $75 billion in Treasurys and a record $32 billion in MBS, for a total of $107 billion in security purchases just on Friday!

The scariest thought: the Fed just injected in one week almost the entire amount of liquidity it did in all of QE2 and it is barely enough to keep stocks from plunging.

This very worthwhile article was posted on the Zero Hedge website at 10:22 a.m. EDT — and it’s the first offering of the day from Brad Robertson.  Another link to it is here.  In a related ZH story from yesterday morning is this headline that reads “Fed Expands Bailout Facility to Muni Bonds After Market Meltdown“.  That’s from Brad as well.


Second Great Depression Begins? Goldman Now Expects a Record 24% Crash in Q2 GDP; Sees 9% Unemployment

On Wednesday we mused that a race had emerged between Goldman and JPMorgan over who can downgrade the US GDP growth rate the most. Up until that point, Goldman held the lead, with its recently announced -5% cut to Q2 GDP. But then JPM’s chief economist  Michael Feroli, admitting he really has no idea what he is doing but deciding to do it nonetheless, announced that he now expects Q2 GDP to crater by an unprecedented -14%, a drop the kinds of which have never before been seen.

But Goldman, which just three months ago said the U.S. economy is “nearly recession-proof” (but apparently not depression proof), and instantly lost all credibility — and decided that if it can’t impress its clients with its predictive skills, the least it can do is make them laugh by outshining, or rather out-dulling, JPM’s forecast and it did just that moments ago when it slashed its previous GDP estimate published less than two weeks ago, and now sees Q2 GDP crashing at a ridiculous -24% rate, and up from -5% just days ago, which means the U.S. is basically entering a second Great Depression. The trade off, as with JPM, Goldman sees a V-shaped recovery in Q3 but we can likely ignore that: there is no way the country will recover from this kind of “once in a generation” supply and demand shock in 3 months. No way.

This longish chart-filled commentary put in an appearance on the Zero Hedge website at 11:51 a.m. EDT on Friday morning — and it’s another offering from Brad Robertson.  Another link to it is here.


Distressed Debt in the U.S. Doubles in Two Weeks to $500BN as BofA Expects Surge in Defaults

Last week, in the aftermath of the historic oil price collapse, we warned that the long-awaited “fallen angel” day has arrived, as $140 billion in oil producer (and up to $360 if one includes the mid-stream companies) investment grade debt was on the verge of being downgraded to junk and throwing the entire high yield market in turmoil.

Fast forward to today when Bloomberg calculates that since we published out article, the amount of distressed debt – a term that describes borrowings likely to default – in the U.S. alone has doubled to a half-trillion dollars as the collapse of oil prices and the fallout from the coronavirus shutters entire industries.

While rating agencies have been slow to respond to the total collapse in cash flow generation across most U.S. industries as long as the U.S. economy remains paralyzed due to the spreading lock downs across the nation, markets have been far faster, and the result has been a plunge in the price of countless bonds. As a result, corporate bonds – which according to BofA are no longer properly functioning – that yield at least 10% points above Treasuries, as well as loans that trade for less than 80 cents on the dollar, have swelled to $533 billion. This is more than double from the March 6 total of only $214 billion. And, according to UBS, if one adds across all company debt globally, including loans to small- and mid-sized companies that rarely if ever trade, the distressed pile could top $1 trillion. And yes, that number is only going to surge.

An analysis via Trace shows that the amount of distressed bonds has surged to the highest level since the financial crisis, surpassing the oil/manufacturing recession of 2016.  Click to enlarge.

We could see this be worse than 2008,” said Bloomberg Intelligence analyst Philip Brendel, in what may be the understatement of the day.

While currently most of the distressed debt comes from U.S. shale companies that have been pummeled by the all-out price war between Saudi Arabia and Russia as most companies are now cash flow negative and unable to service their debt obligations, analysts expect this solvency (and liquidity) crisis to spread to all industries the longer the U.S. economy remains in a state of shutdown.

Energy is just the harbinger however, and the amount of distressed debt in the retail, entertainment and lodging industries, among others, has also surged as economic activity comes to the virtual standstill because of the coronavirus.

This is just the thin edge of the wedge — and it’s going to get thicker in a real hurry.   This Zero Hedge story showed up on their website at 12:20 p.m. on Friday afternoon EDT — and I thank Brad Robertson for sending it along.  Another link to it is here.


The Number is Off the Charts” – Record Outflows From Everything, Record Inflows Into Cash

There is just one word to describe fund flows over the past week: sheer, unadulterated panic, and this time instead of dumping equities investors are also puking fixed income left and right.

Summarizing the latest weekly EPFR data, BofA’s Michael Hartnett puts it thus:

  • Record $108.9BN out of bonds (Monday = largest daily outflow ever at $30.2bn
  • Record $55.3BN out of investment grade bonds, Monday was largest daily outflows ever ($17.8bn).  Click to enlarge.

  • Record one day outflow from equities on Friday, at $20.2bn
  • Record $18.8bn out of EM debt, Monday was largest daily outflows ever at $4.7bn.
  • Record $5.2bn out of MBS this week.
  • Record $11.1bn out of municipal bonds this week

Guess cash is not trash after all.

Despite the historic turmoil, Bloomberg reports that some investment-grade companies including Walt Disney and PepsiCo managed to find windows of opportunity to issue new debt. In fact, as reported previously, many firms selling bonds and drawing down on their revolver this week were doing so to reduce their reliance on the commercial paper market, where prices have risen rapidly amid a broad market seize-up.

Not everything was being liquidated: total assets in government money-market funds rose by $249 billion to an all-time high of $3.09 trillion in the week ended March 18, as investors plowed money into the safety of cash and cash equivalents. The previous weekly inflow record? $176 billion set in September 2008 just after Lehman Brothers filed.

This article appeared on the Zero Hedge website at 1:57 p.m. on Friday afternoon EDT — and another link to it is hereGregory Mannarino‘s post market close rant for Friday is linked here — and I haven’t had a chance to give it a rating yet.  He had another video later in the evening — and that’s linked here — and in this video he starts off with an apology for what he went on a rant about in this first video…so be prepared!  I thank Roy Stephens for that one.


Ronin Capital Blows Up, Unable to Meet CME Capital Requirements After VIX Trade Goes Wrong

While we have certainly had our share of dismal fund returns in the past two weeks, in the aftermath of a market crash that is now worse than the Great Depression, so far one thing was missing: a big blow up, where a fund is margined out and forced to liquidate Friday morning. Think “Duke & Duke.”

Well, no more: according to CNBC‘s Scott Wapner, one of the CME’s direct clearing firms was unable to meet its capital requirements on Friday, forcing the exchange to step in and invoke its “emergency protocols” to auction off the firm’s portfolios.

The firm in question: Ronin Capital, which on its website says “seeks the best and brightest people who embrace our Firm’s culture, and can thrive in a dynamic, entrepreneurial trading environment.” Apparently, that also meant being unable to quantify your risk exposure.

Terry Duffy, CME Group’s Chairman and CEO, told CNBC the auction process was completed Friday morning, but said the group doesn’t disclose who assumed the portfolios in the auction.

The good news is that unlike that other CME disaster, MF Global, when Ronin – which is responsible for trades made on the exchange – no customers were harmed…

Duffy also said that under its clearing agreement, Ronin isn’t allowed to have outside clients so there were no customers harmed in the process.”

I expect there will be many more casualties like this before this bear market breaths its last.  This Zero Hedge story was posted on their Internet site at 6:32 p.m. EDT on Friday evening — and I thank George Whyte for pointing it out.  Another link to it is here.


U.S. Enters First Economic Crisis of the Decade — Bill Bonner

So here is the executive summary… our best guess about what lies ahead:

The world of getting and spending is shutting down. Without revenue, neither businesses, households, nor the government will be able to pay their bills.

Stocks will rise (“a dead cat bounce”, the old timers call it) on all the “bailout” news, and then give up another 50% of their value.

Business will default on its $16-trillion-debt pile. Millions of people will lose their jobs. The Secretary of the Treasury, Steven Mnuchin, says that upwards of 20% of the workforce could be unemployed.

The feds will print money by the trillions to rescue the situation. Spending will rise. But lower output… and more currency in circulation… will raise prices.

In the summer, the virus will slow down. Then, the economy will begin to recover. But people all over the world will begin to mistrust the dollar (and other “paper” currencies). Prices will rise as real growth is suppressed by inflation fears.

Most likely, the virus will return in the autumn, though there’s no way to know how bad it will be.

But at some point, there won’t be enough “cash” to keep up with the rising contempt for it.
ATMs will run out. The economy – still fragile, with interest rates below inflation – will need more bailouts and more helicopter money to keep going.

Then, the feds will face a terrible choice. Printing more money may bring a hyperinflation, like Weimar Germany, Zimbabwe, or Venezuela.

But not printing will risk a deep depression… a “throw out all the bums” shock in the next election… or even a revolution.

What Paul Volcker will stand up and bring a halt to the money-printing? What Ronald Reagan will back him up? What Horatio will stand at the bridge and say “enough?

This rather grim but probably realistic vision of things to come from Bill, appeared on the bonnerandpartners.com Internet site on Friday sometime — and another link to it is here.


Doug Noland: Please Don’t Completely Destroy…

I’ve been dreading this. In the midst of all the policy responses to the collapse of the mortgage finance Bubble, I recall writing something to the effect: “I understand we can’t allow the system to collapse, but please don’t inflate another Bubble.” It was obvious early on that policymakers had every intention to reflate Bubbles.

There was a failure to grasp the most critical lessons from that terrible boom and bust episode: Aggressive monetary stimulus foments market distortions, while promoting risk-taking, leveraged speculation and latent risk intermediation dysfunction. Years of deranged finance ensured unprecedented economic imbalances and deep structural impairment. There was no predicting a global pandemic. Yet today’s acute financial and economic fragility – and the risk of financial collapse – are directly traceable to years of negligent monetary management.

I understand we can’t allow the system to collapse, but Please Don’t Completely Destroy the Soundness of Central Bank Credit and Government Debt. Does anyone realize what’s at stake?

I don’t see another Bubble on the horizon. Each reflationary Bubble must be greater in scope than the last. Mortgage finance was used for post-“tech” Bubble reflation. Policymakers unleashed the “global government finance Bubble” during post-mortgage finance Bubble reflation. Massive international inflation of central bank Credit and sovereign debt went to the heart of global finance – the very foundation of “money” and Credit.

There is no greater Bubble waiting in the wings to reflate the collapsing one. We are instead left with desperate measures to expand central bank “money” and government borrowings that will surely appear absolutely reckless in hindsight.

Confidence has been shattered. Faith that central banks have everything well under control has been broken. Myriad fallacies have been exposed. Central banks can’t guarantee liquid markets, especially in a Bubble-induced highly levered speculative environment. The entire derivatives universe has been operating on the specious assumption of liquid and continuous markets. History is unambiguous: markets experience bouts of illiquidity, dislocation and panicked crashes. The fantasy that contemporary central bank monetary management abrogates illiquidity and market discontinuity risks is being debunked. The mania in finance has, finally, run its course.

Doug’s weekly commentary showed up on his Internet site in the very wee hours of Saturday morning EDT — and it’s definitely a must read.  Another link to it is here.


UBS Global’s Wayne Gordon: “I Would Be Buying Gold Now

Wayne Gordon, executive director for commodities and foreign exchange at UBS Global Wealth Management, talks about gold, the dollar and oil. He speaks with David Ingles and Yvonne Man on “Bloomberg Markets.”

This 7:43 minute video interview put in an appearance on the youtube.com Internet site on Friday — and I thank Swedish reader Patrik Ekdahl for sending it along.  Another link to it is here.


McEwen Mining Provides Operations Update and Withdraws Production Guidance Due to COVID-19 Pandemic

  • The government of Argentina has declared a state of emergency and imposed a nationwide mandatory quarantine starting today to reduce the spread of COVID-19. As a result, our 49%-owned San José mine has temporarily halted operations effective today, through at least March 31, 2020. The mine site will continue to be staffed by a reduced workforce to ensure appropriate safety, security, and environmental systems are maintained.
  • Work at the Los Azules copper project in Argentina is also suspended until further notice.
  • With the confirmed presence of COVID-19 in the Timmins region, our Black Fox operation is implementing numerous safety measures in addition to very strict site access and employee screening measures already in place: all non-essential staff and second-in-command managers will be working from home, employees who must travel by plane or for more than 4 hours have been asked not to return to the site, payroll will be isolated off site, group meetings have been discontinued, data is being collected on employee family health status, and numerous other measures.
  • As a consequence of the suspension of mining at San José and uncertainty related to the potential impact of COVID-19 on our other operations, we are withdrawing all previously announced production and costs guidance for 2020.

I’m sure there will be lots more stories like this in the days and weeks ahead.  This news release from McEwen Mining Inc. was posted on their Internet site on Friday sometime — and I thank Roy Stephens for sharing it with us.  Another link to it is here.


Physical gold squeezed further; Royal Canadian Mint shuts down production for two weeks

The physical gold and silver market just became a little tighter in the near-term as one major mint is shutting down operations for the next two weeks.

In a note to clients, the Royal Canadian Mint said that because of the spreading coronavirus, starting Friday it is closing its doors for the next two weeks. That means the mint will not be producing its Gold and Silver Maple Leaf bullion coins.

While the supply of bullion coins is currently limited, we are fulfilling all the orders we can. We are also continuing to fully secure our facilities, operate the refinery and allow for the receipt and withdrawal of available products,” said Alex Reeves, senior manager, public affairs at the Canadian mint in an e-mail to Kitco News.

We are still providing liquidity to refinery and pool customers in the way of large cast bar products,” he added.

After the two week period the RCM said that it plans to resume modified production using a divided workforce approach.

This will allow us to reduce the risk to our staff and maintain critical services,” the mint said.

The shutdown comes as firms are reporting growing demand for physical metal as investors continue to worry about the impact the global pandemic will have on the world’s economy.

This precious metal-related news item appeared on the kitco.com Internet site at 11:30 a.m. EDT on Friday morning — and I thank George Whyte for passing it along.  Another link to it is here.  The comments directly from the Royal Canadian Mint are headlined “UPDATE ON COVID-19 PANDEMIC” — and linked here.  I found that in a GATA dispatch yesterday evening.


Gold selloff fails to dent investor enthusiasm

Gold’s lacklustre performance this week appeared to diminish the metal’s “safe haven” status, as it declined for the second week in a row amid a global stock market selloff due to coronavirus.

But investors are still flocking to the precious metal in the hope of a rebound and protection against an even worse fall in other assets, from stocks to currencies and bonds.

Gold has erased almost all its gains for the year and fell 3 percent on the week to trade at $1,503 a troy ounce in early trading today.

But on Thursday gold-backed exchange traded funds received inflows of 2.6 million ounces, equivalent to the annual gold production of a mid-tier mining company such as Australia’s Newcrest Mining. Total holdings in gold-backed exchange traded funds were at a record of over 3,000 tonnes in February, according to the World Gold Council.

Online gold exchanges, which sell physical gold directly to customers, said they had seen record buying volumes. BullionVault, which allows investors to buy and store gold and silver bars, said net demand had reached a level not seen since the depths of the financial crisis in March 2009.

The rest of this gold-related news item is hidden behind the subscription wall at the Financial Times — and I found this story on the gata.org Internet site.  Another link to it is here.


Swiss gold exports plunge as shipments to China collapse

Swiss exports of gold fell to the lowest since at least 2012 in February as shipments to top consumer China all but halted, customs data showed on Thursday.

The plunge in trade came as China fought to contain an outbreak of coronavirus by shutting down the movement of people and goods. The virus has since spread worldwide.

Switzerland — a major trading, vaulting and refining centre for precious metals — shipped 2 tonnes of gold to China in February, down from 17 tonnes in January. The shipments were the
lowest since May 2014.

Shipments to Hong Kong fell to just 10 kg, the lowest since monthly data became available in 2012, from 23.6 tonnes in January.

In total, Switzerland exported 42.7 tonnes of gold in February, less than half the 87.4 tonnes shipped the previous month.

Exports to India, the second biggest gold consumer after China, held up better at 9.6 tonnes in February, up from 8.5 tonnes in January. India has so far been less affected by coronavirus.

The above five paragraphs are all there is to this brief Reuters article that showed up on their website early on Thursday morning EDT — and I found it posted on the gata.org Internet site.  Another link to that hard copy is here.


Perth Mint Bullion Sales Contract in February

Perth Mint sales of gold coins and gold bars totaled 22,921 ounces last month, down 52.5% from January but 59.6% higher than in February 2019.

Year to date gold sales at 71,220 ounces are up 40.4% from the 50,713 ounces sold during the first two months of last year.

February sales of the Mint’s silver coins and silver bar combined to 605,634 ounces, down a whopping 58.2% from the previous month but 3.7% higher than in February 2019. As for the disparity when comparing the most recent two months, it is worth noting that January sales at 1,450,317 ounces ranked third highest for a month since CoinNews started tracking the Mint’s data in February 2013.

Lastly, Perth Mint silver sales at 2,055,951 ounces for the year are 45.5% ahead of the 1,413,164 ounces sold during the same period in 2019.

This story was posted on the coinnews.net Internet site on Friday sometime — and I found it on Sharps Pixley.  Another link to it is here.


The journey to monetary gold and silver — Alasdair Macleod

Markets are just beginning to latch on to the economic consequences of the coronavirus. Central banks are slashing interest rates and beginning to throw new money into the mix and governments are increasing deficit spending.

Few analysts have yet to understand the enormous consequences of the coronavirus for missed payments and accumulating current debt, which is and will rapidly drain liquidity from wholesale money markets. It is increasingly certain that the eurozone’s banking system will require rescuing from insolvency with knock-on consequences for the global monetary system. Concern over the consequences for the $640 trillion OTC notional derivative market, particularly for $26 trillion of FX swaps, is so far absent.

Continuing on our theme that the fates of the dollar and U.S. Treasury values are closely bound, the extraordinary overvaluation of the bond market will translate into a collapse for both. This article charts how the collapse of the dollar and financial asset values is likely to progress and concludes that we are witnessing the end of the neo-Keynesian fiat currency fantasy, which will be done and dusted with surprising rapidity.

Only then will sound money, after varying time periods for different nations, return.

This short novel by Alasdair put in an appearance on the goldmoney.com Internet site back on March 12 — and for obvious length reasons, had to wait for Saturday’s column.  I thank Richard Saler for pointing it out — and another link to it is here.


The PHOTOS and the FUNNIES

Continuing east down B.C. Highway 16/The Yellowhead on September 1, I stopped to take the first photo as soon as I’d driven out of the rain that had been chasing us for the last several hours.  The second and third photos are of Mount Robson and its associated park as we approached it from the west in the fading light, not helped by a gloomy overcast.  Click to enlarge.


The WRAP

Today’s pop blast from the past needs no introduction, as the group and the tune are instantly recognizable — and I’ve been fortunate enough to see them live and in concert with the Edmonton Symphony Orchestra on two different occasions.  This performance is live with the Danish Symphony Orchestra — and it’s first rate.  The tune is 48 years young…Gary’s still got the pipes — and I note that Geoff Whitehorn is still wailing away on lead guitar.  The link is here.

In 1882 Tchaikovsky considered creating a concert suite out of numbers from his ballet Swan Lake, which he had composed six years previously. However, he seems not to have made a final decision, and the authorship of the concert suite published after his death as Op. 20a is unknown.  All the tunes are very well known — and most have shown up on TV and radio in one iteration or another during our life times.  The Korean Symphony Orchestra does the honours — and the link is here.


It was a very light volume day in gold, so JPMorgan et al. and their proxies had little trouble keeping precious metal prices in line on Friday — and kept them in a downward trend right from the start of the London open until around 3:30 p.m. in New York.  The dollar index ‘rally’ didn’t hurt their efforts either.

There were certainly dip-buyers in the precious metal equities on a number of occasions during the New York trading session, but there continues to be forced redemption selling by the various ETFs and mutual funds.  But every share sold had a buyer — and they now reside in much stronger hands than those that sold them…something that I mentioned further up in this column.

Here are the 6-month charts for the four precious metals, plus copper and WTIC…all courtesy of stockcharts.com — and except for gold, all are in very oversold territory.  I’m not sure if that means there’s more down-side price pressure in gold still to come, or was what they did over the last ten days the best the Big 7 commercial traders could do?  Copper didn’t do much yesterday, but WTIC gave back all its Thursday gains.  Click to enlarge.

In last Saturday’s column I mused that the world’s central banks Wile E. Coyote moment had arrived — and that has certainly turned out to be the case as we watched them flail away this past week.

Jim Grant’s analogy that this was their collective “kitchen sink” moment was equally apropos.  But as I also said last week, they’re trying to salvage the unsalvageable…a deflationary collapse of astronomical proportions that is unstoppable — and getting worse by the day.

Doug Noland’s comments on this spells it out equally as well…”Confidence has been shattered. Faith that central banks have everything well under control has been broken. Myriad fallacies have been exposed. Central banks can’t guarantee liquid markets, especially in a Bubble-induced highly levered speculative environment. The entire derivatives universe has been operating on the specious assumption of liquid and continuous markets. History is unambiguous: markets experience bouts of illiquidity, dislocation and panicked crashes. The fantasy that contemporary central bank monetary management abrogates illiquidity and market discontinuity risks is being debunked. The mania in finance has, finally, run its course.”

I’m not going to spend much time waxing philosophically about all this because, as I and others have said before, the coronavirus has turned out to be the pin that burst the Everything Bubble — and there’s absolutely nothing that can stop the great unwind now that it has commenced.  The battle is already lost, but the central banks will continue to throw paper at it anyway — and at some point their underlying currencies are going to burn.

Then it will become, as Bill Bonner said on Friday…”The feds will make their choice… the same choice made by von Havenstein in Germany and Gono in Zimbabwe. They will print. Stocks will soar as people “rotate” out of bonds.

The bond market will collapse. Debts will be wiped out by inflation. So will debt-based credits.

Scenes of financial depravity, economic debauchery, and orgies of social degradation, violence and chaos – now unimaginable – will flash across every big screen in America.”

Of course as we already know, dear reader…whether it be Wiemar Germany, Zimbabwe, or lately…Venezuela…the only thing that would have saved their citizen’s purchasing power was gold — and by extension, silver.

And as Jim Grant so coyly pointed out on CNBC the other day before Joe Kernan cut him off…”There are things for sale that you’d want to own.

If you want to buy some, they’re a very scarce commodity these days on a cash and carry basis — and as the economies of the world slowly go dark, there will come a point where they won’t be available at all.  And in most respects that matter, that day has already arrived.

So with the event horizon of this deflationary black hole on their doorstep, there is…as I mentioned last week…still the gold card left to play, if it gets played at all, that is.

As Jim Rickards spelled out in an e-mail exchange that I had with him very late last week…

“[T]here’s a way to beat deflation and get inflation overnight. FDR did it in 1933 (intentionally) and Nixon did it in 1971 (by accident). It’s called gold.

If the Fed bought gold at $5,000 per ounce and made a two-way market, gold would be $5,000 per ounce. The point is not to enrich gold holders but to get widespread inflation. The world of $5,000 gold is also the world of $150 oil and $75 silver. Every other price goes up at the same time.

So gold can solve the benchmark problem and the inflation problem. But that won’t be tried until things get much worse. Authers anticipates a “new” system but he doesn’t know what it is or how to get there. The answer to both questions is gold.”

The COMEX futures market in the Big 6 commodities has never been better set up for just such an event.  Whether or not that sort of plan is in the works remains to be seen.  But its the only move that the Fed has left…unless they’ve already decided on Wiemar.

So we wait some more.

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

Ed