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Ted Butler: India Reacts to Depressed Silver Prices

14 June 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much in morning trading in the Far East on their Thursday, but began to tick higher staring around noon China Standard Time.  It was up five bucks or so by shortly before 10 a.m. in London, but most of that gain was gone by a few minutes after 9 a.m. in New York.  It began to crawl higher from there — and the high of the day came around 2:20 p.m. in the thinly-traded after-hours market.  It was sold a tad lower into the 5:00 p.m. close from there.

Once again, the low and high ticks aren’t worth looking up.

Gold finished the Thursday session at $1,341.90 spot, up $8.80 from Wednesday’s close.  Net volume was on the lighter side, at least compared to the last few days, at a bit over 195,000 contracts — and there was a bit over 10,500 contracts worth of roll-over/switch volume in this precious metal.

Silver’s price path was virtually identical to that of gold, so I’ll spare you the play-by-play once again.  But it did close above its 50-day moving average yesterday — and touched its 200-day m.a. intraday.

The low and high prices for Thursday aren’t worth looking up, either.

Silver was closed at $14.885 spot, up 13.5 cents from Wednesday.  Net volume was nothing much out of the ordinary at a bit over 55,500 contracts — and roll-over/switch volume out of July and into future months was pretty decent at a hair over 22,500 contracts.

The platinum price crept unevenly higher in Far East trading — and also got capped and turned lower in Zurich trading, at the same time as silver and gold.  That’s not coincidental, of course.  It was sold down to its low tick, which came at the 9:30 a.m. EST open of the equity markets in New York yesterday — and proceeded to crawl a bit higher into the close from there.  Platinum was closed at unchanged on the day at $810 spot.

The palladium price traded flat until 10 a.m. CST on their Thursday morning — and dipped to its low of the day a bit over an hour after that.  From that juncture it began a long, quiet and uninterrupted climb that lasted practically until trading ended at 5:00 p.m. EDT in New York.  Palladium finished the Thursday session at $1,428 spot, up 38 bucks from its close on Wednesday.

The dollar index closed very late on Wednesday afternoon in New York at 97.000 — and opened down 4 basis points once trading commenced at 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  It chopped quietly and unevenly sideways until 1 p.m. in London/8 a.m. in New York.  It began to head higher from there — and the 97.08 high tick was set around 10:55 a.m. EDT.  The index sank back into the red over the next few hours, but appeared to get ‘rescued’ around 2:18 p.m…which just happened to be the high ticks in both gold and silver in after-hours/trading.  It was rallied back above the 97.00 mark by a few basis points shortly after — and it finished the Thursday session at 97.01…up 1 whole basis point from Wednesday’s close…so call it unchanged.

There certainly wasn’t much correlation between the currencies and the precious metals on Thursday, particularly during the New York trading session.

Here is the DXY chart, courtesy of BloombergClick to enlarge.

Here’s the 6-month U.S. dollar index chart, courtesy of stockcharts.com — and the delta between its close…96.51…and the close on the DXY above, was 50 basis points on Thursday.  Click to enlarge as well.

The gold shares rallied quietly and unevenly higher until around 2:20 p.m. in New York trading.  At that point, the dollar index go rescued by the usual ‘gentle hands’ — and gold [and silver] prices were tapped lower.  The gold stocks sagged a hair after that, but the HUI managed to close higher by 1.72 percent.

And Nick is still having issues with the Silver 7/Silver Sentiment Index chart, along with the 1-year Silver Sentiment/Silver 7 Index chart — and I know that more than one person is working on this problem.  Hopefully it will be back in operation today.  I said the same thing in Thursday’s column…and nothing happening.  Both Nick and I have our fingers crossed that that second ‘fix’ will work.


The CME Daily Delivery Report showed that 106 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, there were four short/issuers in total: Advantage with 72, International F.C. Stone with 14, ADM with 11 and Marex Spectron with 9 contracts — and all from their respective client accounts.  There were seven long/stoppers in total, but the only two that mattered were Advantage and JPMorgan, as they picked up 61 and 33 contracts for their respective client accounts as well.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in June rose by another 7 contracts, leaving 304 still around, minus the 106 contracts mentioned two short paragraphs ago.  Wednesday’s Daily Delivery Report showed that 71 gold contracts were actually posted for delivery today, so that means that 71+7=78 more gold contracts were added to the June delivery month.  Silver o.i. in June fell by 1 contract, leaving just 1 left, so 1 silver contract disappeared from the June delivery month.  There were no silver deliveries scheduled for today.


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

There was a small sales report from the U.S. Mint.  They sold 1,000 troy ounces of gold eagles — and 2,000 troy ounces of one-ounce 24K gold buffaloes.

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

It was quite a bit busier in silver.  There was one truckload….605,649 troy ounces…received — and that was dropped off at JPMorgan.  In the ‘out’ category, there was 873,523 troy ounces shipped out in total.  Of that amount, there was 747,701 troy ounces that departed CNT, along with 124,890 troy ounces that was shipped out of HSBC USA. The remaining one good delivery bar…932 troy ounces…left the Delaware Depository.  The link to that is here.

There was only a tiny bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  Nothing was reported received — and only 2 kilobars were shipped out.  That occurred at Brink’s, Inc. — and I shan’t bother linking that.


Here are two charts that I lifted from Nick Laird’s website last night — and I thought they were worth posting now that India has updated its gold imports for March.  The first shows ‘Silk Road Gold Demand’ which charts the gold imports/purchases by the four major countries in this group.  You should carefully note [on the bottom chart] that the gold imports/purchases by these four countries exceeded all of the world’s gold production for March. This sort of demand has been ongoing since at least Q4/2017…if not longer.  Click to enlarge.

This next chart shows the gold purchases by these four Silk Road countries for the first three months of every year going back to 2008.  For the last seven years, the imports during Q1 of each year averages out to 805 tonnes/year.  It certainly appears that these four countries are content to suck up all the physical gold that they produce, plus buy all the gold that the West is prepared to sell them, which appears to be all the gold that the world produces.  Click to enlarge as well.

It was another quiet news day, except for what happened in the Gulf region yesterday — and I only have a small handful of stories.


CRITICAL READS

Tilling the Soil in the Garden of Catastrophe — Bill Bonner

Long-term suffers of our Diary know that we are connoisseurs of disaster.

The great vintages – a Weimar 1921, for example… or a Zimbabwe 2008… or, of course, a nice Venezuelan blend from 2018 – are always a pleasure to sip and slosh around on the tongue… as you wonder: How can smart people foul an economy so badly that people go hungry… water stops running… riots break out in the streets… and governments collapse?

And the answer is always the same: slowly… and then, all of a sudden.

The “all of a sudden” part is well reported… the object of amusement, ridicule, and finger-wagging.
But it is the “slowly” phase that is most interesting… and important. For that is where the spadework is done… the soil is tilled… and the seeds are planted and watered. It looks to most people like honest labor, trying to coax fruit out of a grudging ground.

Few notice that it is not an Eden that is being prepared… but a garden of catastrophe. That only becomes apparent later, in the “suddenly” phase, when the evil vines grow up and choke every living thing for miles around.

And yet, the process is very simple and could be spotted years in advance.

First, the government must control the currency. If it uses gold, or a gold-backed currency, the vile crop will be stunted. With price controls and central planning alone, the feds can cause a 10-year Great Depression or a 70-year Soviet-style economic failure.

But if you want a full-blown financial catastrophe, you need fake money, too.

This very worthwhile commentary from Bill, filed from Youghal in Ireland, showed up on the bonnerandpartners.com Internet site early on Thursday morning EDT — and another link to it is here.


When, Not If” – Trader Warns the Dollar is Far More in Play Than it Looks

A week ago, much of what you heard about the dollar was that it wasn’t doing anything, and traders would have much better opportunities putting their efforts into other markets. Yet, it feels like no one can stop writing about it. And the overwhelming consensus view is that the U.S. currency is going down. Not necessarily with immediate dramatic effect. But a look at the Bloomberg compilation of bank forecasts shows a steady weakening that, over time, adds up to quite a decent move.

In fact, the biggest source of contention seems to be when, not if, the move will start. Which always makes me wonder just how sure analysts really are about a call they are making with seemingly great certainty.

In any case, while waiting on a market that has been going nowhere fast, strategists and traders have been shifting their attention to other currency pairs to trade which purport to take the dollar out of the equation. But you never really can. Where — and, perhaps even more importantly, why — the dollar moves will affect how these other currencies ultimately behave. So it is important to understand the dollar forecast implicitly embedded in those perceived opportunities. Including if they actually require the currency to continue to do nothing. Because it can sit here for a very long time. But not forever.

This 3-chart commentary by Bloomberg macro strategist Richard Breslow showed up on the Zero Hedge website at 1:15 p.m. EDT on Thursday afternoon — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Suspicious doesn’t begin to describe what happened’: Iran’s Foreign Minister on tanker ‘attacks’ in Gulf of Oman

Iran’s foreign minister has labeled the reported attack on two “Japan-related” oil tankers in the Gulf of Oman as “suspicious,” occurring just as Japanese Prime Minister Abe came to Tehran for major talks.

Expressing his misgivings on Twitter, Javad Zarif noted that the incidents on the two vessels on Thursday, one of which had been reportedly struck by a torpedo, had occurred as Abe sat down for “extensive and friendly” discussions with Iran’s supreme leader, Ayatollah Seyed Ali Khamenei.

Later in the day, Japanese shipping company Kokuka Sangyo confirmed that one of its vessels had been hit in today’s attack while transporting 25,000 tons of methanol.

The statement came after Iran said it rescued 44 sailors from two tankers named as Front Altair and Kokuka Courageous. One of them was reportedly hit with a torpedo, but there is no official statement on the claim.

In May, four oil tankers were targeted off the coast of the UAE, with exact details of the incident still shrouded in secrecy. Bolton has laid the blame for the assault on Iran, yet Washington, to date, has failed to provide any evidence of complicity.

Can you smell a ‘false flag’ operation here, dear reader?  It’s so blatantly obvious, that nobody believes it, not even the U.S. media.  This news item was posted on the rt.com Internet site at 10:41 a.m. Moscow Time on their Thursday morning, which was 3:41 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for sending this story along.  Another link to it is here.  There was also an Asia Times story on this headlined “Tankers hit amid Abe’s ‘mission impossible’ to Iran” — and that comes courtesy of Tolling Jennings.  The Zero Hedge spin on this is headlined “False Flag? Iran Has Little To Gain From Oman Tanker Attacks“.


Cult Economist Jailed for Hiding Rare Coins Says They’re His Now

The 58 rare coins at the center of two federal lawsuits are exceptionally valuable.

Now a bankrupt company’s receiver wants them.

And an antique dealer wants them.

And so does Martin Armstrong, a self-taught economist with a cult following who spent years behind bars for what the U.S. said was a $700 million Ponzi scheme and for allegedly hiding assets, including what may be those very same coins.

Armstrong’s story is one of Wall Street’s more bizarre tales — and the newest chapter makes it even more absurd.

Hailed as a genius by his acolytes and a crackpot by traditional economists, Armstrong made his name in the ’80s and ’90s for calling Russia’s financial collapse and other crises, using his boom-bust “confidence cycle” theory. In 1999, prosecutors called him something else: a criminal, for swindling Japanese corporate investors.

This interesting Bloomberg article put in an appearance on their website at 3:00 a.m. PDT…Pacific Daylight Time…on Thursday morning — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.


Gold Price Breakout in Multiple Currencies

The most commonly watched gold price these days is of course the gold price per troy ounce measured in the fiat currency U.S. dollars. This is so for a number of interconnected reasons such as the U.S. dollar’s international reserve status, and the fact that international gold trading takes place in U.S. dollars.

Furthermore, the gold price is established / discovered mainly in U.S. dollars, a symptom of the fact that the majority of trading of ‘gold’ volume occurs in venues such as COMEX and the London OTC gold market where the synthetic gold products that these venues quote (gold futures and unallocated gold, respectively) are traded in U.S. dollars.

Therefore, the 24-hour traded U.S. dollar gold price quote makes its way from bank, broker and exchange feeds around the world into market data feeds supplied to the world’s financial news networks, websites and bullion dealers across the world.

But for investors with a base currency / home currency that is not U.S. dollars, or whose wealth is denominated in currencies other than the U.S. dollar, the U.S. dollar gold price may not be the best price quote to keep an eye on, since these investors originally purchased their gold not with U.S. dollars but with their home fiat currencies, which could be Pounds sterling, Euros, Singapore dollars, Australian dollars, Indian rupees, Brazilian reals etc.

And so, for those investors, the gold price movement over various time horizons such as year-to-date, 1 year, 3 year, 5 year etc, is best measured in those investors’ home currencies, or the currencies in which these investors and savers in gold generate their income and denominate their wealth.

This longish chart-filled commentary by Ronan Manly showed up on the bullionstar.com Internet site on Friday morning in Singapore — and I found it in a GATA dispatch yesterday evening.  Another link to it is here.


Top Primary Silver Miners Average Yield Falls to Record Low

The top primary silver miners in the world saw their production yield fall to the lowest level ever in 2018.  Since 2005, the average yield from the top silver miners has fallen nearly in half.  And along with rising oil prices, has pushed up the total cost to produce silver by an additional $10 an ounce.  So, for those who still believe in the fantasy that it cost $5 an ounce to produce silver, that data shows otherwise.

It has been a few years since I updated the data for the top primary silver miners, but I was quite surprised by how much the average yield declined in the past year.  While part of the reason for the decrease was due to the shutting down of the Tahoe Resources (taken over by Pan American Silver) Escobal Silver Mine in Guatemala, several other large primary mining companies also suffered reductions in their average yield.

So, according to the data from the top primary silver mining companies, the average yield fell to 6.8 oz/t last year, down from 7.5 oz/t in 2017…Click to enlarge.

The reason for the increase in average yield in 2015 was due to the ramping up of the new high-grade Escobal Silver Mine.  In 2015, the Escobal Mine produced silver at an average yield of 13.5 oz/t.  Regardless, the top primary silver miners experienced a substantial decline in average yield last year.

The top primary silver mines and companies included in the chart above:

  1. Cannington Silver Mine
  2. Fresnillo PLC
  3. Pan American Silver
  4. Polymetal International
  5. Hochschild
  6. Escobal Mine (no data for 2018)
  7. Buenaventura
  8. Hecla

While there are more primary silver mining companies, these eight have the highest production amount and yields.  Silver production from these eight primary silver mines and companies totaled 155.5 million oz. in 2018.  However, one of the eight listed above has seen its production and average ore grade fall considerably over the past decade.

This very interesting commentary was posted on the srsroccoreport.com Internet site sometime on Thursday.  I thank Brad Robertson for pointing it out — and another link to it is here.


Ted Butler: India Reacts to Depressed Silver Prices

Several recent articles have highlighted a surge of silver imports to India, prompting me to take a closer look. India has always been a big buyer of silver and gold, befitting the traditions and culture of the country with the world’s second largest population. The population of India, more than 1.3 billion citizens, is now only about 50 million less than that of China. Combined, both countries make up 35% of the total world population (7.7 billion) and have always been large buyers and holders of gold and silver. Together, India and China absorb close to 50% of total world gold and silver mine production.

One big difference between India and China is that the gold and silver buying in India is largely a grassroots phenomenon, emanating from the general population due to deep-rooted customs and traditions; where the buying from China is predominantly from official sources (similar to the gold buying by Russia). To me, this makes the gold and silver buying from India more “free market” and price-sensitive in nature because the more participants in any market, the freer the market is by definition. The many tens and even hundreds of millions of gold and silver buyers from India make the markets there the freest of all.

India has always played a vital role in gold and silver. I remember how my longtime friend and silver mentor, Izzy Friedman, more than 40 years ago, as he was deciding whether to make a major investment in silver in the mid-1970’s, actually flew to India to see for himself if the stories of great silver hoards about to flood the market should prices move higher (from $4 or $5) were true. Izzy saw plenty of silver, but none so closely held in large concentrated quantities to pose a market threat. I believe that’s still the case today.

I’ll certainly be looking forward to India’s silver imports for both April and May when they finally get around to officially reporting them over the next few months.  This very worthwhile commentary from Ted put in an appearance on the silverseek.com Internet site on Thursday morning MDT — and another link to it is here.


The PHOTOS and the FUNNIES

Here are the last three photos from our rather whirlwind 1-day trip from Merritt to Lillooet — and then back to Merritt via Kamloops on April 21.  The sun was just about to disappear behind the mountains to the west — and as we were driving east along the Trans-Canada Highway towards Kamloops, I spotted this CNR train winding its way slowly along the Thompson River valley.  That, along with the contours of the mountains lit up by the setting sun in a rather unique way, was something I though worth photographing.  The old highway, the one that preceded the Trans-Canada, is still visible in the left foreground of the first picture.  The non-reduced 24MB full-sized photos look awesome on a 65-inch flat-screen TV. Click to enlarge.


The WRAP

It was a day of quiet gains on reasonably quiet volume for both gold and silver yesterday.  Most of the positive price action came in New York — and only ended when the dollar index got saved around 2:20 p.m. EDT — and they got tapped a bit lower at the same time.  Platinum was the only precious metal under some price pressure, but it managed to close at unchanged, despite that.  Palladium, which it almost always is, was in a world of its own yesterday — and there were no signs of ‘da boyz’ in that precious metal.

Here are the 6-month charts for the Big 6 commodities — and silver’s continuing dos-à-dos/do-si-do with its two big moving averages should be noted.  Click to enlarge.

And as I type this paragraph, the London and Zurich markets are about to open — and I see that the gold price wandered unevenly higher until around 11 a.m. China Standard Time on their Friday morning — and then didn’t do much of anything until a few minutes before 2 p.m. CST on their Friday afternoon. It began to rally a bit more forcefully at that point — and then appeared to go ‘no ask’ either at, or just after, the 2:15 p.m. afternoon gold fix in Shanghai. It’s heading higher with some authority now — and is up $13.10 the ounce at the moment. The price action in silver was quieter — and far more erratic and, like gold, began to show real signs of life shortly before 2 p.m. CST. It was capped the moment it hit the $15 spot price — and is up 12 cents. Platinum was up a few dollars in morning trading in the Far East — and then down a few dollars in the afternoon. Along with silver and gold it has rallied a bit since ‘the fix’ — and is currently up 3 bucks. Palladium hasn’t been doing a thing in Far East trading, but it ticked higher as well in the last thirty minutes — and is also up 3 dollars as Zurich opens.

Net HFT gold volume is roaring higher — and is around 69,000 contracts — and that’s a guesstimate — and there’s about 1,600 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is a tiny bit under 18,000 contracts already — and there are 666 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened unchanged once trading commenced in New York at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. CST on their Friday morning. It crept a bit higher until 2 p.m. CST — and has dropped a few basis points since. And as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is up 2 whole basis points.


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.

As promised, here is the Reader’s Digest version of what silver analyst Ted Butler feels might be in it…”I still think it’s likely that we’ll see additional managed money buying/commercial selling in silver in Friday’s COT report, but not as much as existed had the report been cutoff [last] Friday. I’m hoping for 5,000 contracts (and not much more than 10,000 contracts) of managed money buying and commercial selling in Friday’s silver report…[and] Even with the expected deterioration in silver, the market structure there would still have to be considered extremely bullish by historical standards.”  And in gold…”As for gold, since the selloff on Monday didn’t come close to penetrating any key moving averages to the downside and trading volume was on the light side, whatever deterioration that occurred through Friday likely remained intact. For numbers on gold for Friday’s report, I’d guess managed money buying and commercials selling of 20,000 to 30,000 net contracts…solidly in the neutral zone.”


And as I post today’s column on the website at 4:02 a.m. EDT, I note that gold was capped minutes after the London open — and is up $13.30 currently. Silver is now above $15 spot but, like gold, is obviously running into some resistance. It’s up 13 cents. And as the first hour of Zurich trading ends, platinum is up 2 dollars — and palladium by 5.

Gross gold volume is now way up there at around 104,000 contracts — and minus roll-over/switch volume, net HFT gold volume is about 95,500 contracts. Net HFT silver volume is also sky high at about 25,000 contracts…best estimate — and there’s 2,700 contracts worth of roll-over/switch volume in this precious metal. It’s certainly obvious that these rather impressive looking rallies, particularly in gold, are not going unopposed…as usual.

The dollar index dipped below the 97.00 mark around 8:10 a.m. in London trading — and it been chopping quietly sideways since — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the index is now down 5 basis points.

It certainly could be an interesting trading session in New York today…especially with the next FOMC meeting starting on Tuesday.

Enjoy your weekend — and I’ll see you here tomorrow.

Ed

Palladium Back Above the Gold Price Again

13 June 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price traded flat until shortly after 9 a.m. China Standard Time on their Wednesday morning — and it began to head unevenly higher from there, with the high of the day coming around 9:15 a.m. in London.  It was sold quietly lower until 9:30 a.m. in New York — and the smallish rally that developed after that, was capped and sold lower around 12:20 p.m. EDT.  That  tiny sell-off ended about forty-five minutes later — and it crept a bit higher until trading ended at 5:00 p.m.

And despite all the jumping around, the low and high ticks aren’t worth looking up.

Gold was closed in New York yesterday at $1,333.10 spot, up $6.80 from Tuesday — and a fair amount below its high tick of the day.  Net volume was not exactly light at just under 221,000 contracts — and roll-over/switch volume was a bit over 14,500 contracts.

Like on Tuesday, silver’s price path was guided in a similar manner as gold’s, except the high in London was at 9 a.m. — and the low in New York was at the afternoon gold fix.

The low and highs in this precious metal aren’t worth looking up, either.

Silver was closed on Wednesday at $14.75 spot, up 3.5 cents from Tuesday.  Net volume was a bit elevated at 57,500 contracts — and there was around 15,800 contracts worth of roll-over/switch volume out of July and into future months in this precious metal.  And it should be noted that silver traded above its 50-day moving average for a while on Wednesday, but certainly wasn’t allowed to close there.

Like for silver, platinum’s high for the day came at 10 a.m. CEST in Zurich/9 a.m. BST in London.  It was sold lower until 9:30 a.m. in New York…rallied a bit in mid-morning trading there — and then was sold lower into the 1:30 p.m. COMEX close.  It traded flat from that juncture until trading ended at 5:00 p.m. EDT.

Palladium rose and fell about five bucks between the 6:00 p.m. EDT open in New York on Tuesday evening — and the 2:15 p.m. CST afternoon gold fix in Shanghai.  It was sold lower from there going into the Zurich open — and after making it back to unchanged an hour later, it drifted sideways until the COMEX open in New York.  The subsequent rally was capped at, or just before, the afternoon gold fix in London, just as it was about to break above $1,400 spot — and it really didn’t do much of anything after that.  Palladium was closed at $1,390 spot, up 15 dollars on the day.

The dollar index closed very late on Tuesday afternoon in New York at 96.69 — and opened up a couple of basis points once trading commenced at 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning.  It traded almost ruler flat from that point until around 1:45 p.m. CST on their Wednesday afternoon — and at that juncture began to chop quietly lower, with the 96.58 low tick coming about 9:10 a.m. in London.  It began to rally very unevenly from there — and the 97.02 high tick was set around 2:45 p.m. EDT in New York.  It sagged a small handful of basis points into the 5:30 p.m. close.  The dollar index finished the Wednesday session at 97.000…up 31 basis points from Tuesday.

It was the second day in a row where there was little or no correlation whatsoever between what was happening in the currencies — and what was going on in the precious metals.

Here’s the DXY chart, courtesy of Bloomberg once again.  Click to enlarge.

And here’s the 6-month U.S. dollar index, courtesy of the folks over at stockcharts.com — and the delta between its close…96.97…and the close on the DXY chart above, was 3 basis points on Wednesday.  Click to enlarge as well.

The gold shares gapped up a bit at the open — and then chopped quietly higher until around 11:15 a.m. in New York trading.  From that point they began to sag unevenly lower until trading ended at 4:00 p.m. EDT.  The HUI closed higher by 1.60 percent.

Nick is having some rather serious issues with the Silver 7 and 1-year Silver 7 indexes, but he assured me last night that he thinks that he has this problem fixed.  I’ll know for sure when I check the charts later this morning.


The CME Daily Delivery Report showed that 71 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, there were four short/issuers in total — and the two largest were Advantage and International F.C. Stone, with 40 and 19 contracts out of their respective client accounts.  There were seven long/stoppers — and the biggest three were Advantage, JPMorgan and Marex Spectron with 33, 18 and 9 contracts…all for their respective client accounts as well.

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 June rose by 4 contracts, leaving 296 still open, minus the 71 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 58 gold contracts were actually posted for delivery today, so that means that 58+4=62 more gold contracts were just added to the June delivery month.  Silver o.i. in June remained unchanged at 2 contracts — and there are no silver contracts out for delivery today.


There were deposits in both GLD and SLV on Wednesday.  An authorized participant added 113,240 troy ounces to GLD — and another a.p. added 1,123,815 troy ounces to SLV.

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

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday was 734 troy ounces that was deposited at Delaware — and I won’t bother linking this.

In silver, there was one truckload received…599,818 troy ounces…that was dropped off at Canada’s Scotiabank — and one truckload…599,665 troy ounces…was shipped out of CNT.  A link to that activity is here.

There was very little happening over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  Nothing was reported received — and only 13 were shipped out…10 from Brink’s, Inc. — and 3 from Loomis International.  I won’t bother linking this, either.


Here are three charts that Nick passed around the other day that I don’t believe I’ve posted before.  They show gold imports to — and exports from the U.S.A.…updated with April’s data.  During that month they imported 12.47 tonnes — and shipped out 34.61 tonnes.  The first chart below shows the net changes for the month of April.  Click to enlarge.

This next chart shows the countries and tonnage of the gold that was received by the U.S. in April — and the second shows the countries and associated tonnage that received gold from the U.S. in April.  Click to enlarge for both.

It was a pretty quiet news day — and I don’t have all that much for you once again.


CRITICAL READS

U.S. Government Spending Soars to All-Time High as Deficit Hits Record For Month of May

Another month, another frightening jump in the U.S. budget deficit. And this time with a record surge in government spending to boot.

According to the latest Treasury data, the U.S. budget deficit in May – not a traditionally high-spending month for the U.S. government – was a whopping $208 billion, missing the $200 billion deficit expected, and well worse than the $147 billion deficit recorded last May.

And even though there may have been one-time calendar effects and time-shifts at play, the deficit was also the biggest budget deficit for the month of May on record.  Click to enlarge.

For May, receipts rose 6.9% y/y to $232.1.3BN but it was the surge in outlays that was jarring: last month, the U.S. government spent a whopping $439.8BN, a 20.9% increase from prior year’s $363.9BN in outlays. This was the most the U.S. government has ever spent in one month!

For the first 8 months of this fiscal year, gross interest payments on US Treasury debt hit $354 billion, $46 billion, or 11% more than in the same month period last year. As a reminder, according to the Treasury’s conservative budget estimates, interest on the U.S. public debt is on track to reach a record $591 billion this fiscal year, more than the entire budget deficit in FY 2014 ($483 BN) or FY 2015 ($439 BN), and equates to almost 3% of estimated GDP, the highest percentage since 2011.

And since total debt, which recently surpassed $22 trillion having, and is only set to keep rising – once the latest pesky debt ceiling issue is resolved in a few months – expect interest on the debt to keep rising, especially if inflation comes back with a bang and the Fed reverts to its tightening trajectory, and hit $1 trillion per year as soon as 2021, making it one of the biggest spending categories, and on pace to surpass total U.S. defense spending (roughly $950BN per year) in dollar terms in just two years.

This longish 7-chart Zero Hedge article was posted on their website at 3:35 p.m. on Wednesday afternoon EDT — and another link to it is here.


Regulators Alarmed by Risky Loans, But Don’t Know Who Holds Them

The steady drumbeat of warnings over the surge in risky corporate borrowing is growing louder and louder. Time and again, regulators in the U.S. and Europe have pointed to the hazards of businesses taking on too much debt.

At issue is the $1.3 trillion leveraged lending market, composed of high-yield loans from firms with some of the weakest finances. While Federal Reserve and European Central Bank officials have drawn attention to these heavily indebted companies and the deteriorating standards of loans bundled into securities called CLOs, most regulators are careful to say a repeat of 2008 is unlikely because investors, rather than the banks they oversee, hold most of the debt.

Yet that’s created a new, and potentially more dangerous, kind of risk. Precisely because roughly 85% of leveraged loans are held by non-banks, regulators are largely in the dark when it comes to pinpointing where the risks lie and how they’ll ripple through the financial system when the economy turns. More and more, critics are questioning whether regulators like the Fed have a handle on the problem or the right tools to contain the fallout. A big worry is highly leveraged businesses employing thousands could face severe financial stress and, in some cases, insolvency, deepening the next downturn.

I always remind myself that even the smartest policy maker with the most far-reaching perspective, data and tools was basically blind-sided by the breadth and depth of the housing crisis,” said Mark Spindel, chief investment officer at Potomac River Capital. “Leveraged loans and corporate debt are not housing, but maybe it’s more pervasive than we think. We can’t take any of the CLO, leveraged loan, or private debt growth for granted.”

Signs of excessive risk-taking have emerged in any number of markets. But leveraged lending has raised eyebrows partly because of how lightly it’s regulated. Fueled in large part by demand from collateralized loan obligations that offer interest rates that approach 9% on some riskier portions of the debt, the market for leveraged loans has more than doubled since 2012.

One of the ironies of the boom is that much of the risk-taking decried by central banks and regulators is largely of their own making.

This worthwhile Bloomberg story appeared on their website at 3:00 a.m. PDT on Tuesday — and was updated about four hours later.  I found it in yesterday’s edition of the King Report — and another link to it is here.


Euro Slides After Trump Threatens Sanctions To Stop NordStream 2 (Again!)

President Trump (and alternatively Congress) has been threatening sanctions against the Nordstream 2 pipeline for years, so color us surprised when the euro started to sell off on a flashing-red headline from Bloomberg that Trump is considering sanctions… again!

We’re protecting Germany from Russia and Russia is getting billions and billions of dollars in money from Germany” for its gas, Trump complained to reporters at the White House during a meeting with Polish President Andrzej Duda.

He didn’t say whom the U.S. might sanction to block the pipeline.

However, the algos seem unaware of that fact and are sending the euro lower…

Why does it matter? Simple, as Tom Luongo recently noted, the Nordstream 2 pipeline represents the last stand of U.S. influence over the internal affairs of Europe.

Once finished it will stand as a testament to the fundamental split between the European Union and the United States.

Europe will see this as its first successful defense of its newly-declared independence. And the U.S. will have to come to terms with no longer having control overseas.

This Zero Hedge story showed up on their Internet site at 12:51 p.m. on Wednesday afternoon EDT — and another link to it is here.


China asks India to team up to ward off U.S. ‘bullying’ trade practices

Chinese authorities have invited the Indian government to join efforts to effectively offset the potential impact of “protectionist“ and “unilateral“ trade practices implemented by the US across the world over recent months.

According to Chinese Vice Foreign Minister Zhang Hanhui, “trade frictions between China and the US and the specter of trade frictions between the U.S. and India” may become a crucial subject for talks between the two states, bullied by Washington.

Trade protectionism and unilateralism are very much on the rise. How to respond to the bullying practices of the United States … its practices of trade protectionism is an important question,” Zhang said.

The comment comes ahead of the Shanghai Cooperation Organization (SCO) summit, which is to kick off in the Kyrgyz capital of Bishkek later this week. Chinese President Xi Jinping is expected to meet with his Indian counterpart Prime Minister Narendra Modi on the sidelines of the event.

The top official stressed that the heads of state would reach deeper understanding on the issue of “upholding justice and opposing trade protectionism” in global trade. Moreover, Zhang expressed hopes that the neighboring nations would agree on bilateral trade.

This story appeared on the rt.com Internet site at 2:29 p.m. Moscow time on their Tuesday afternoon, which was 7:49 a.m. in Washington — EDT plus 7 hours.  I thank Larry Galearis for sending it our way — and another link to it is here.


China Auto Sales Just Posted Their Worst Month Ever

China’s automobile market has continued to catalyze the global auto recession, posting its worst sales month in history for May according to the China Association of Automobile Manufacturers (CAAM). The data showed a decline of 16.4% for May, following a decline of 14.6% in April and 5.2% in March. It was the sharpest decline ever for China’s auto industry.

Xu Haidong, CAAM’s assistant secretary general ignored the fact that his country was in the midst of a trade war and instead told Reuters: “One key reason for the drop was provinces implementing ‘China VI’ vehicle emission standards earlier than the central government’s 2020 deadline, stoking uncertainty among manufacturers.”

Or the same reason Europe has been using to explain away its own automotive depression recession.

We gave the manufacturers too little time to prepare,” he continued, also noting that May’s drop in demand was attributable to a “decline in purchasing power in the low-to-middle income groups as well as expectations of government stimulus to encourage purchases.”

Passenger vehicles were crushed lower for the 12th straight month, according to the Passenger Car Association (“PCA”). May retail passenger vehicle sales were down 12.5% on the year to 1.61 million units. May’s data follows a drop of 16.6% in April and 12% in March. Passenger vehicle sales include sedan, MPV, SUV and minivan sales. SUV sales were down 9.6% to 669,395 units.  Click to enlarge.

Turning toward individual brands, Changan’s auto sales fell 35% to 113,497 units in May and Great Wall Motor said that their sales had fallen 11.8% to 62,559, according to Bloomberg. Cui Dongshu, secretary general of PCA, told reporters in Beijing: “It is a pretty difficult time for the auto industry.

This news item put in an appearance on the Zero Hedge website at 1:25 p.m. EDT on Wednesday — and another link to it is here.


Gold Is Paul Tudor Jones’s Favorite Trade for Next 12-24 Months

Paul Tudor Jones, founder at Tudor Investment Corporation, explains why he views gold as the best trade over the next year to two years. He speaks with Bloomberg‘s Vonnie Quinn on “Bloomberg Markets“.

This 2:07 minute video clip was posted on the Bloomberg Internet site at 8:50 a.m. Pacific Daylight time on Wednesday morning.  I thank Richard Saler for pointing it out.


If Gold Was Just a Barbarous Relic… — Jim Rickards

There’s nothing new about the Russian accumulation of gold bullion in their reserve position. It began in a material way in 2009 when Russia had about 600 metric tonnes of gold.

Today, Russia has 2,183 metric tonnes, a stunning 264% increase in less than 10 years. Russia is the sixth-largest gold power in the world after the U.S., Germany, IMF, Italy and France.

Russia’s gold hoard is over 25% of the U.S. hoard, but Russia’s economy is only 8% the size of the U.S. economy. This gives Russia a gold-to-GDP ratio over three times that of the U.S.

While these developments are well-known, the question of why Russia is accumulating so much gold has never been answered.

One reason is as a dollar hedge. Russia is the second-largest energy producer in the world. Most of that energy is sold for dollars. Russia can hedge potential dollar inflation by buying gold.

This very worthwhile commentary from Jim showed up on the dailyreckoning.com Internet site on the weekend — and I don’t know how I missed it until now.  Another link to it is here.


Could JPMorgan Chase Be Hit with a Fourth Felony Count for Rigging Precious Metals Markets?

The CFTC’s fruitless 5-year investigation is all the more embarrassing because Edmonds was not some lone, rogue trader inside an otherwise pristine Wall Street bank. JPMorgan’s reputation is so soiled for rigging everything from electric markets to foreign exchange to wearing a self-imposed blindfold while Bernie Madoff carried out his decades-long Ponzi scheme that two trail attorneys have written a book comparing the bank to the Gambino crime family. (The reality is that it would take a 7,000-hour study just to chronicle this bank’s serial crimes. See our partial rap sheet here.)

Far from being a lone, rogue trader, Edmonds has now implicated other traders and supervisors within JPMorgan Chase. His plea agreement indicates the following:

…the defendant and his fellow traders routinely placed bids and offers-in other words, orders-for precious metals futures contracts with the intent to cancel those bids and offers before execution (the ‘Spoof Orders’). This trading strategy was intended to, and did, transmit materially false and misleading liquidity and price information and otherwise deceive other market participants about the existence of supply and demand for the futures contracts at issue, and thus induce those other market participants to trade against orders that the defendant and his co-conspirators placed and did want to execute on the opposite side of the market from the Spoof Orders at prices, quantities, and times that the other market participants otherwise would not have traded. The Spoof Orders thus were designed to, and did, artificially move the price of precious metals futures contracts in a direction that was favorable to the defendant and his co-conspirators at the Bank, to the detriment of other market participants, including other market participants in Connecticut. The defendant placed the Spoof Orders in order to make money and avoid losses for himself, his co-conspirators, and the Bank. The defendant learned this deceptive trading strategy from more senior traders at the Bank, and he personally deployed this strategy hundreds of times with the knowledge and consent of his immediate supervisors.”

I had so many reader send me this in the last day or so, that I’ve lost track of who sent it to me first.  I passed on it the first time I saw it on Tuesday, but did a 180 on it after reading it when Mike Watt sent it my way yesterday afternoon.  None of this should be a surprise, including the fact that…”two trial attorneys have written a book comparing the bank to the Gambino crime family.”  I guess that would be close to the truth considering that Jim Rickards on more than one occasion in the public domain has called JPMorgan “the biggest criminal enterprise the world has ever known.”  Opinions of a similar kind have graced Ted Butler’s commentary for the last number of years as well.  This worthwhile article put in an appearance on the wallstreetonparade.com Internet site on Monday sometime — and another link to it is here.


The PHOTOS and the FUNNIES

Today’s three photos were all taken on B.C. Highway 99 within a 10-minute drive of where I took the pictures that graced yesterday’s column — and all three from the side of the highway as we continued north as the light began to fade.  The first is another peek down the Fraser River Canyon.  The second looking south down the part of the highway we’d just travelled over the last ten minutes or so — and the third, a couple of miles north of that, looking north.  No photo, or group of photos, does this terrain justice.  Click to enlarge.


The WRAP

There wasn’t much price activity yesterday — and any rally in both gold and silver that looked like they were going to amount to anything, were quietly turned lower in Far East, London and New York trading.  That was true in platinum and palladium as well.  It was all subtle…but not subtle enough if you know how to read a chart.

Here are the 6-month charts for all of the Big 6 commodities.  There’s nothing much to see in gold or platinum…but silver traded above its 50-day moving average on an intraday basis — and palladium continues to march quietly higher, above all its moving averages…and back above the gold price by a considerable amount as well.  Copper didn’t do much, but WTIC set a new low close for this move down, as the Managed Money traders continue to plow onto the short side of that commodity.  I’m sure they were helped along by the commercial traders on the surge in crude inventory news yesterday.  Click to enlarge for all.

And as I type this paragraph, the London open is a minute or so away — and I see that the gold price has been wandering quietly higher since around 8 a.m. China Standard Time on their Thursday morning — and is currently up $4.00 an ounce. Silver wandered sideways until about noon CST — and it has crept higher from there — and is up 4 cents at the moment. Platinum and palladium didn’t do much in morning trading in the Far East, but have edged quietly higher since. Platinum is up 3 bucks — and palladium by 5 as Zurich opens.

Net HFT gold volume is just about 49,000 contracts already — and there’s only 762 contracts worth or roll-over/switch volume in that precious metal. Net HFT silver volume isn’t exactly light, either at around 13,200 contracts — and there’s 973 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened down four basis points once trading commenced at 7:45 p.m. EDT in New York on Wednesday evening, which was 8:45 a.m. in Shanghai on their Thursday morning. It has been drifting very unevenly lower since — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the dollar index is down 8 basis points.


Tomorrow we get the latest Commitment of Traders Report — and as I stated in Wednesday’s missive, it certainly appears likely that we’ll get increases in the commercial net short positions in both.

Ted expressed his opinion about this in his mid-week commentary to his paying subscribers yesterday — and I’ll have the Reader’s Digest version of his comments for you in my Friday column.


And as I post today’s efforts on the website at 4:02 a.m. EDT, I note that gold hasn’t done much — and is up $3.60 an ounce — and silver by 5 cents. Platinum is still up 4 dollars, but palladium is now up 7. It was up 11 bucks a bit earlier in Zurich trading.

Gross gold volume is getting up there at around 64,500 contracts — and minus what roll-over/switch volume there is, net HFT gold volume is about 62,000 contracts. Net HFT silver volume is a bit over 17,000 contracts — and there’s 1,117 contracts worth of roll-over/switch volume in that precious metal.

The dollar index hit its current low tick…such as it is…about ten minutes after the 2:15 p.m. afternoon gold fix in Shanghai. It has crept a few basis points higher since — and is down 9 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich…but is basically unchanged in the last hour of trading.

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

Ed

India’s Gold Imports Shine in April & May

12 June 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t really do much of anything in most of Far East trading on their Tuesday.  That all ended once the 2:15 p.m. China Standard Time afternoon gold fix was done for the day in Shanghai.  It was then sold quietly lower until minutes before 1 p.m. in London…the time of its Monday low tick as well.  From that juncture, it crept quietly higher until 1 p.m. in New York, shortly after it broke above unchanged on the day — and someone was there to cap it, and then guide it a few dollars lower into the 5:00 p.m. EDT close.

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

Gold finished the Tuesday session in New York at $1,326.30 spot, down $1.10 from Monday’s close.  Net volume was nothing special at a bit over 204,000 contracts — and there was just under 12,500 contracts worth of roll-over/switch volume in this precious metal.

Silver’s price path on Tuesday was guided in a similar fashion to gold’s…so I’ll spare you the play-by-play on it…except to point it that it was allowed to close higher by a bit on the day.

And also like for gold, the high and low ticks aren’t worth looking up, either.

Silver was closed at $14.715 spot, up 5 cents from Monday.  Net volume was a bit elevated at a hair under 59,000 contracts — and there was a bit under 23,000 contracts worth of roll-over/switch volume out of July and into future months.

The platinum price traded unevenly sideways about five dollars or so either side of unchanged, right up until shortly before the COMEX open in New York on Tuesday morning.  It began to rally from there but, like on Monday, it obviously ran into some ‘resistance’ going into the afternoon gold fix in London — and really didn’t do much of anything after that.  Platinum finished the Tuesday session at $815 spot, up an even 10 bucks from Monday’s close.

After a quiet 8 dollar up/down move between the 6:00 p.m. open in New York on Monday evening — and 1 p.m. CST on their Tuesday afternoon, the palladium price began to edge unevenly higher.  It attempted to rally further shortly after the COMEX open but, like palladium, appeared to run into ‘something’ in very short order — and it chopped unevenly sideways for the remainder of the day.  Palladium was closed at $1,375 spot, up 15 dollars from Monday.  But, like platinum, it would have closed materially higher, if allowed.

The dollar index closed very late on Monday afternoon in New York at 96.76 — and opened down about two basis points once trading commenced at 7:45 p.m. EDT on Tuesday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning.  From that point it chopped mostly quietly and unevenly sideways until around 11:50 a.m. in New York.  It was sold a bit lower from there — and the 96.64 low tick…such as it was…came around 2:35 p.m. EDT.  It edged a bit higher into the 5:30 p.m. close.  The dollar index finished the Tuesday session at 96.69, down 7 basis points from Monday’s close.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…96.64…and the close on the DXY chart above, was 5 basis points on Tuesday.  Click to enlarge as well.

The gold shares opened about unchanged — and began to head lower starting a few minutes before 10 a.m. EDT in New York trading.  Their respective lows came around 10:20 a.m. — and they headed higher until around 11:40 a.m. EDT.  From that juncture they chopped unevenly sideways for the remainder of the Tuesday trading session.  The HUI closed higher by 0.69 percent.

For technical reasons that Nick didn’t explain all too well, I don’t have a Silver Sentiment/Silver 7 Index chart, nor the 1-year Silver Sentiment/Silver 7 chart, either.  Hopefully he’ll have this sorted out for tomorrow’s column.

The CME Daily Delivery Report showed that 58 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, there were four short/issuers in total — and the three largest were International F.C. Stone, Marex Spectron and Advantage, with 20, 19 and 18 contracts from their respective client accounts.  There were six long/stoppers in total.  The largest was JPMorgan with 25 contracts  for it client account — and in second spot was Advantage with 13 for its client account.  HSBC USA picked up 7 contracts for its own account.  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 June fell by 869 contracts, leaving 291 left, minus the 58 contracts mentioned two paragraphs ago.  Monday’s Daily Delivery Report showed that 920 gold contracts were actually posted for delivery today, so that means that 920-869=51 more gold contracts just got added to the June delivery month.  Silver o.i. in June declined by 1 contract, leaving just 2 left.  Monday’s Daily Delivery Report showed that 1 silver contract was actually posted for delivery today, so the change in open interest and deliveries match.


There was a tiny withdrawal from GLD on Tuesday, as an authorized participant took out 7,816 troy ounces — and an amount this size would certainly represent a fee payment of some kind.  There were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, June 7 — and this is what they had to report.  During the business week just past, they added 16,172 troy ounces of gold — and 62,212 troy ounces of silver.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 2,000 troy ounces of gold eagles — and 326,500 silver eagles.

The only in/out movement in gold over at the COMEX-approved gold depositories on Monday, was 798 troy ounces that was shipped out of Canada’s Scotiabank.  I won’t bother linking this activity.

It was much busier in silver, as 1,402,221 troy ounces were reported received — and 1,670,161 troy ounces were shipped out.  In the ‘in’ category, there was one truckload…604,944 troy ounces…that was dropped off at CNT — and of the remaining amount, there was 377,243 troy ounces and 420,033 troy ounces that arrived at HSBC USA and Scotiabank respectively.  In the ‘out’ category, there was one big truckload…656,539 troy ounces that departed Loomis International — and the other truckload…605,649 troy ounces…left the vault over at CNT.  The remaining amount…387,757 troy ounces and 20,214 troy ounces, was shipped out of Brink’s, Inc. and HSBC USA respectively.  The link to that activity is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving 300 of them — and shipped out 150.  All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two charts that Nick Laird passed around very early on Tuesday evening EDT.  They show gold and silver imports into India, updated with March’s data.  They’re always a month or two behind everyone else in reporting their imports.  But I do have a Bloomberg story in The Wrap about India’s gold imports in both April and May.  During February, India imported 78.26 tonnes of gold — and 221.9 tonnes of silver during February.  Click to enlarge for both.

I don’t have much in the way of stories/article for you today.


CRITICAL READS

U.S. Producer Price Growth Slumps to Weakest Since Jan 2017

Core Producer Price inflation has slowed for six straight months to +2.3% YoY but the headline (NSA) data slowed to just 1.8% YoY (notably below the +2.0% expectation).

This is the weakest headline Producer Price inflation print since Jan 2017.  Click to enlarge.

Final Demand Goods prices shrank 0.2% in May as Services prices rose 0.3%…

Notably, nearly 80 percent of the May advance in the index for final demand services is attributable to prices for guestroom rental, which jumped 10.1 percent.  This is a record surge in guestroom rental prices on a non-seasonally-adjusted basis…

This headline print below the 2.0% Maginot Line, surely gives The Fed more ammo for its pre-crime “insurance cut”? However, the PPI (ex Food, Energy, and Trade Services) rose to +2.3% YoY.

This brief 2-chart Zero Hedge article was posted on their website at 8:36 a.m. on Tuesday morning EDT — and I thank Brad Robertson for sending it along.  Another link to it is here.


They Don’t Have a Clue” – Trump Blames Fed For Strong Dollar, Says Interest Rates “Way too High

With less than a week to go before the Fed begins its next two-day policy meeting, President Trump is again lambasting the Powell-led central bank for having the temerity to raise interest rates and attempt to start unwinding its balance sheet.

This time, it was a tweet from Bloomberg Opinion about Europe’s difficulty in dissuading foreign tourists from visiting its popular landmarks (like, you know, the Cathedral of Notre Dame) that set Trump off. In a tweet, he accused the Europeans of manipulating the euro (and noted that other countries are doing the same to their currencies).

“This is because the Euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage. The Fed Interest rate way to high, added to ridiculous quantitative tightening! They don’t have a clue!” — Donald J. Trump (@realDonaldTrump) June 11, 2019

Though the Treasury added a few countries to its ‘watch list’ released last month, it declined to name any countries to its list of currency manipulators.

Meanwhile, Trump also bashed the Fed over its insistence on targeting higher inflation, saying (as most ‘normal‘ people, i.e. non-bankers and members of the 1%, would agree) that nobody wants higher prices.

Though in a sign that the markets aren’t taking Trump’s jawboning seriously after that Treasury report showed the U.S. once again decided to pull its punches, the euro’s reaction was muted.

This short article put in an appearance on the Zero Hedge Internet site at 8:24 a.m. EDT on Tuesday morning — and it’s the second contribution in a row from Brad Robertson.  Another link to it is here.  There was a parallel story to this on the marketwatch.com Internet site headlined “Why Trump’s tweets about the U.S. dollar might soon pack a lot more punch” — and it comes to us courtesy of a GATA dispatch yesterday evening.


The American Bolsheviks Are Coming… — Bill Bonner

It’s coming. It’s happening.

Our dark fears and midnight tremors are coming to life. In the broad daylight.

The Bolsheviks are invading the suburbs and cities… and even the Corn Belt… all across America.

Both Democrats and Republicans are turning to three-part programs – one part Soviet economic claptrap, one part Mussolini’s political bamboozle, and one part pure American jackassery.

Today, we begin the hard work of giving them the mockery they deserve. We only worry that we will run out of scorn and sarcasm before we are finished.

Politics is always and everywhere the enemy of civilization. It is the enemy, too, of economic progress. Most important, it is the enemy of dignity and clear thinking.

And now, from cannon in front of us… from cannon to the left of us and cannon to the right… from all directions, politics thunders in all its sordid glory.

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


The Perfect Storm — Jim Rickards

What are the three elements of the perfect political and market storm I see coming together this fall?

The first is an effort by the Democratic House of Representatives to impeach President Trump. The second is the socialist-progressive tilt in the 2020 presidential election field. The third is the fallout from the Mueller report and the Russia collusion hoax — what I and others called “Spygate.”

These components are independent of each other but are at high risk of convergence in the coming months.  Let’s look more closely at the individual elements of impeachment, electoral chaos and Spygate that comprise this new storm with no name.

The first storm is impeachment. Impeachment of a president by the House of Representatives is just the first step in removing a president from office. The second step is a trial in the Senate requiring a two-thirds majority (67 votes) to remove the president. Two presidents have been impeached, but neither was removed. Nixon resigned before he could be impeached.

If the House impeaches Trump, the outcome will be the same. The Senate is firmly under Republican control (53 votes) and there’s no way Democrats can get 20 Republicans to defect to get the needed 67 votes needed. So House impeachment proceedings are just for show.

This commentary from Jim, datelined Monday, showed up on the dailyreckoning.com Internet site on Tuesday sometime — and another link to it is here.  A parallel commentary from Jim on this issue is headlined “Rickards: “Perfect Storm” Is Coming” — and that’s form the Daily Reckoning website as well.


Australia’s “Grim” Retail Sector “Clearly In Recession“, Warns National Australia Bank

A leading Australian business survey has concluded that the continent’s retail sector is “clearly in recession“.

New data from NAB shows Australia’s “Index of Business Conditions” falling by 2 points in May, putting it well below its long run average. The data comes a week after Australia’s Reserve Bank was forced to cut interest rates to its lowest level in history and additional data from the Australian Bureau of Statistics showed the economy had slowed to its weakest level since the 2009 financial crisis.

Alan Oster, NAB Group Chief Economist said on the NAB Economics podcast:

Business confidence saw a sharp increase in the month following the Federal election and a confirmation from the RBA that rates would be cut in June. We think this will be a short-term spike given other forward-looking indicators saw further deterioration in the month. Forward orders declined further and in addition to being well below average are negative. Capacity utilisation has also pulled back in 2019 to date and is now a touch below average”.

Business conditions declined across all states except Queensland. The NAB survey’s measure of trading, or sale, also fell, down by 5 points. Forward orders also slipped a point.

Oster said that Australians are now reluctant to spend and that the recently elected government would need to deliver on tax cuts to stimulate the economy.

He concluded by saying he did not want to “overemphasise” the doom and gloom in the sector, but said “readings of -27, which we’ve got in retail, [are] so grim”.

This news item showed up on the Zero Hedge website at 8:05 p.m. on Tuesday evening EDT — and another link to it is here.


Qatar- Gold sales surge during Ramadan, Eid

High prices of gold has failed to dent the buying spirit of customers as the sale of yellow metal surged during Eid Al Fitr and the holy month of Ramadan. Sales of gold jewellery in the country surged by up to 25 percent during Eid holidays and Ramadan.

We witnessed around 20-25 percent increase in the sale of gold jewellery during the holy month of Ramadan. One of the main factors behind high sale was upcoming vacation period. Expatriates tend to buy gold before going to their home country during Eid holidays and summer vacation, Santosh TV, Regional Head, Malabar Gold and Diamond, Qatar told The Peninsula.

Another supporting factor was an Indian festival ‘Akshaya Tritiya’ which was celebrated in the first week of May. We witnessed high sale because Indians buy gold during Akshaya Tritiya, he added.

Akshaya Tritiya is an Indian festival during which they consider it as auspicious to buy gold jewellery, coins and bars. Gold has become dearer during the last two weeks as prices of the yellow metal have risen due to high demand and other global factors. A gram of 22 carat gold was trading yesterday at QR156 while it was trading at around QR145 per gram two weeks back.

Eid is always a busy time for jewellers and we were expecting this kind of response because this is an annual phenomenon.

This gold-related news item was posted on the menafn.com Internet site on Monday sometime — and it’s the first of three stories that I found on the Sharps Pixley website yesterday.  Another link to it is here.


Gold Imports by India Jump in May as Prices Drop to Year’s Low

Gold imports by India grew 36% in May from a year earlier as jewelers and customers rushed to buy after prices declined to the lowest level this year.

Overseas purchases rose to 105.8 tons last month from 77.6 tons a year earlier, according to a person familiar with the data, who asked not to be identified as the information isn’t public. Combined shipments during April-May were 226.6 tons, up about 74% from the year-ago period. Finance Ministry spokesman D.S. Malik wasn’t immediately available for comment.

Prime Minister Narendra Modi’s election victory last month trengthened the local currency just as benchmark gold futures in India dipped to their lowest level this year. The South Asian nation, the world’s second-biggest consumer of gold, imports almost all the metal it consumes and a stronger rupee makes it cheaper for local buyers. A key auspicious gold buying day — Akshaya Tritiya — as well as the wedding season also boosted sales in May.

Sales were amazing last month, with huge demand seen during Akshaya Tritiya. The drop in prices has really complemented that trend,” said G.V. Sreedhar, managing director of Sree Rama Jewels and a former chairman of the All India Gem & Jewellery Domestic Council. Purchases for weddings were also good when compared to last year and sales are expected to be robust this month as well, he said.

The industry is keeping an eye on the progress of the monsoon, as it could affect rural demand, he said. India’s southwest monsoon, which waters more than half of the country’s farmland and is crucial for economic growth, is expected to be normal this year but has been delayed by more than a week.

This Bloomberg story appeared on their website last Thursday — and as the story notes, these gold import figures are not “official“…but will most likely prove to be true when the Indian government gets around to releasing them in July and August.  I thank Brad Robertson for this one — and another link to it is here.


China gold demand still slipping this year —  Lawrie Williams

May gold withdrawals from the Shanghai Gold Exchange will have disappointed gold bull yet again.  They came in below the withdrawal levels for the same month in both 2018 and 2017 and the cumulative year to date figures are now than they were for the first five months of 2018 and 2017 too.  Indeed they are down nearly 10% on the 2018 five month total.

The latest figures should really not come as a surprise.  Chinese growth appears to be slipping in comparison with previous years and President Trump’s tariff impositions are also likely to be having a negative effect on Chinese exports.  No doubt the U.S. President will see this as a victory for his policies, but he is likely to ignore the adverse effects these policies may be having on U.S. domestic prices.  Trade wars seldom do anyone any good and, as we have stated here before, the U.S. is paying the price for its many years of dollar dominance in global trade and in its position as the world’ principal reserve currency with all the other positive effects these position have afforded the U.S. in international business.

We have, controversially perhaps, tended to equate SGE gold withdrawals with China’s true gold demand and gold flows.  This is because the cumulative SGE withdrawal figures work out as being close to China’s known recorded gold imports, plus the country’s own gold production from its mines and smelting/refining plants plus an allowance for unknown imports and scrap conversion.  Indeed China’s own gold yearbook has equated China’s total gold demand to the SGE withdrawal figures, although the principal Western-based gold consultancies tend to disagree with this assessment.  But in part we suspect that this is because of a strict adherence to what they define as demand/consumption which seems to ignore gold going into the banks and financial institutions which we rate as an integral part of China’s gold demand.  It certainly is a representation of total gold usage by the Chinese.

Extrapolating the latest Chinese figures for the full year the country could well be headed for the first sub-2,000 tonne year since 2012.  However any potential shortfall in global gold demand should be countered by the high levels of gold accumulations by the world’s central banks which seems to be remaining at a high level.  Because of this factor, coupled with global gold production only growing marginally – if at all – then the yellow metals supply/demand fundamentals remain pretty much in balance.  No cause for a gold bull panic yet!

This commentary by Lawrie appeared on the Sharps Pixley website early on Tuesday morning BST — and another link to it is hereLawrie had another commentary on the sharpspixley.com Internet site yesterday — and it’s headlined “China upping the ante in gold reserves“.  It’s worth reading.


The PHOTOS and the FUNNIES

Shortly after leaving Lillooet we plunged into some of the most convoluted and beautiful scenery along this particular stretch of B.C. Highway 99.  The first shot is looking down into the Fraser River gorge.  The CNR tracks [ex B.C. Rail] are visible on the right.  I had to crop this shot pretty tight in order to cut out some rather ugly over-head power lines.  The next two shots were further down the highway — and taken from the same spot.  I put the CNR tracks in the foreground of the last shot for effect reasons, as it changes the dynamics of the photo.  Click to enlarge for all.


The WRAP

It was a relatively quiet day in the precious metals on Tuesday.  But despite that fact, the prices of all four were obviously being managed very discretely, as I’ve already pointed out in my commentary about them at the top of today’s column.

None of yesterday’s price machinations had anything to do with what was happening in the currency market…although in a free market in both, price fluctuations based on currency moves would be the norm.  For the last couple of generations, these prices have all been controlled in the futures markets.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and there’s not much to see.  Click to enlarge.

And as I type this paragraph, the London open is a minute or so away — and I note that gold traded pretty flat until shortly after 9 a.m. China Standard Time on their Wednesday morning — and a rally began at that point that lasted until 11 a.m. CST. From that juncture it didn’t do anything until around 1:30 p.m. over there — and then rallied quickly to its current high tick, which came at the 2:15 p.m. afternoon gold fix in Shanghai. It has backed off that high by a bit — and is up $7.70 the ounce as London opens. The price path for silver was virtually the same — and it’s up 8 cents at the moment. Platinum hasn’t done much…creeping a bit higher in morning trading in the Far East — and it’s now moving sideways — and is up a buck. It was the precise same pattern for palladium as it was for platinum….at least up until the afternoon gold fix in Shanghai. It has been sold sharply lower since — and is down 6 dollars as Zurich opens.

Net HFT gold volume is a hair under 50,000 contracts already — and there’s a bit over 4,500 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is way up there at a bit over 13,000 contracts — and there’s only 263 contracts worth of roll-over/switch volume out of July and into future months. These rallies, especially in silver, are not going unopposed.

The dollar index opened up two basis points once trading commenced at 7:45 p.m. EDT in New York on Tuesday evening, which was 7:45 a.m. CST on their Wednesday morning. It did very little from there, but turned sharply lower around 1:45 p.m. CST on their Wednesday afternoon, with its currently low tick coming at 2:30 p.m. CST/7:30 a.m. BST. And as of 7:45 a.m. in London/8:45 a.m. in Zurich, the dollar index is down 3 basis points. So the current price action has zero to do with what’s going on in the currency market…it’s strictly paper trading in the futures market.


Looking at the last five dojis in both gold and silver on the 6-month charts above, I’m not sure what to expect in gold, although if forced to bet the proverbial ten dollar bill, I’d suspect that we might see further increases in the commercial net short positions in both.  The reason I say that is because the volumes on the way down in gold and silver, was not nearly as heavy as the volume involved in the rally the preceded their highs of late last week…even though their current prices are lower now than they were at the cut-off last Tuesday.

Ted has his mid-week commentary to his paying subscribers this afternoon — and it’s a certainty that he’ll have something to say about it — and I’ll ‘borrow’ a few paragraphs for my Friday missive.


And as I post today’s efforts on the website at 4:02 a.m. EDT, I see that the gold price has been ticking ever so quietly higher during the first hour of London trading — and is now up $10.70 the ounce at the moment. Silver is struggling to break higher — and is up 13 cents. Platinum is up 5 dollars now — and palladium is now back at unchanged.

Gross gold volume is coming up on 70,000 contracts — and minus roll-over/switch volume, net HFT gold volume is just under 60,500 contracts. Net HFT silver volume is just under 16,000 contracts — and there’s now 984 contracts worth of roll-over/switch volume on top of that.

The dollar index has been chopping quietly sideways during the last hour — and is currently down 6 basis points as of 8:45 a.m. BST in London/9:45 a.m. CEST in Zurich.

It could certainly be an interesting trading session in New York later this morning.

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

Ed

‘Da Boyz’ Hammer Silver Back Below Its 50 and 200-Day Moving Averages

11 June 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price got smacked for about seven bucks the moment that trading began at 6:00 p.m. EDT in New York on Sunday evening…which probably might have had something to do with the 11 basis point mark-up in the U.S. dollar index at the same time…although ‘da boyz’ could have used it as a fig leaf to hide behind, which they’ve done on countless occasions.  It crawled a bit higher from there until around 8:45 a.m. China Standard Time on their Monday morning — and it was sold lower once again, with most of the price damage that mattered coming shortly after 9 a.m. in London.  It was bounced off that low price a couple of more times…once at 1 p.m. in London — and then again at the 1:30 p.m. EDT COMEX close.  It rallied a few dollars after that until 2 p.m. in the thinly-traded after-hours market — and didn’t do anything after that.

The high and low ticks in gold were recorded by the CME Group as $1,341.70 and $1,329.00 in the August contract…not even one percent.

Gold was closed in New York yesterday at $1,327.40 spot, down $12.50 on the day.  Net volume was only slightly elevated at a bit over 216,000 contracts — and there was a hair over 14,000 contracts worth of roll-over/switch volume on top of that.

The commercial traders in silver went after the Managed Money trader in a similar fashion to gold — and from 10 a.m. CST onwards, it was sold quietly lower until the COMEX close in New York, which was basically its low of the day.  I’m ignoring that down/up price spike just before 1 p.m. in New York, as it only occurred in the spot month.  It rallied a few pennies into the 5:00 p.m. EDT close from there.

The high and low ticks in silver were reported as $15.01 and $14.625 in the July contract.

Silver was closed on Monday at $14.665 spot, down 30.5 cents from Friday.  Both its 50 and 200-day moving averages were taken out on that engineered price decline yesterday.  Volume was on the heavier side at a bit over 76,000 contracts, but not that heavy.  Roll-over/switch volume out of July and into future months was pretty robust at 21,500 contracts.

Platinum’s rally that began at 6:00 p.m. in New York on Sunday evening, ran into ‘something’ a  minute or so before 8 a.m. in Shanghai on their Monday morning and, like silver and gold, it was sold lower until 2 p.m. in Zurich/8 a.m. in New York.  It began to head higher from there, with obvious resistance, until 1 p.m. EDT — and it was sold down into the 1:30 p.m. COMEX close from there.  Also like gold and silver, it rallied a bit until trading ended at 5:00 p.m. EDT.  Platinum was closed at $805 spot, down a dollar from Friday.

Palladium was led on a somewhat similar path as platinum, except its low came shortly before 11 a.m. in Zurich — and it began creep higher from there.  It really began to take flight at 9 a.m. in New York — and that rally ended/was capped at the 11 a.m. EDT Zurich close.  It traded sideways from there until 1 p.m.  Then, like platinum, was sold down into the COMEX close — and didn’t do much after that.  Palladium finished the Monday session in New York at $1,360 spot, up 24 bucks from Friday’s close — and about 13 dollars off its high of the day.

The dollar index closed very late on Friday afternoon in New York at 96.54 — and was marked up 11 basis points once trading commenced at 6:35 p.m. EDT in New York on Sunday evening.  It crept quietly and unsteadily higher until around 8:45 a.m. BST in London — and the chopped equally quietly sideways until its attempt to break above the 96.70 mark failed for the third time at 10:04 a.m. EDT in New York, which certainly coincided with the afternoon gold fix in London.  It fell down a bunch of basis points by 11:20 a.m. EDT — and the crawled quietly and unevenly sideways until trading ended at 5:30 p.m.  The dollar index finished the day at 96.76…up 22 basis points on the day.

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

Here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…96.71…and the close on the DXY chart above, was 5 basis points on Monday.  Click to enlarge as well.

The gold stocks gapped down a bit over two percent at the open — and their respective lows came around 9:45 a.m. in New York trading.  They recovered a bit from there in short order, then didn’t do much until shortly before 2 p.m. EDT — and then crept quietly higher into the 4:00 p.m. close of trading from there.  The HUI closed down 1.12 percent.

It was the same general price path for the silver equities, but after their 9:45 a.m. EDT bounce, they drifted quietly lower until around 1:20 p.m. in New York trading.  Then, either a huge buy order hit the tape, or there was some company-specific news, as the index jumped up two percent in an instant.  From there the shares crept quietly higher into the close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down only 0.65 percent.  Click to enlarge as well.

The CME Daily Delivery Report showed that 920 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, the sole short/issuer was JPMorgan out of its ‘client’ account.  There were nine long/stoppers in total — and the three largest were HSBC USA, with 499 for its in-house/proprietary trading account…JPMorgan stopping 133 for its client account — and Advantage, picking up 96 for its client account as well.  In fourth place was International F.C. Stone with 75 contracts for its client account.

In silver, the short/issuer was R.J. O’Brien — and the long/stopper was JPMorgan.  Both transactions involved their respective client accounts.

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

The Preliminary Report for the Monday trading session showed that gold open interest in June fell by 98 contracts, leaving 1,161 still around, minus the 920 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that only 2 gold contracts were actually posted for delivery today, so that means that 98-2=96 more gold contracts just vanished from the June delivery month. Silver o.i. in June declined by 1 contract, leaving just 3 left, minus the 1 contract mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 1 silver contract was actually posted for delivery today, so the change in open interest and the deliveries match.


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

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

There was some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday — and a new one on me.  Brink’s, Inc reported receiving 32,215.302 troy ounces/1,002 kilobars [SGE kilobar weight]…which was precisely the number of kilobars that was shipped out of JPMorgan on Thursday.  The difference was that JPM shipped it out as 32,214.300 troy ounces/1,002 kilobars [U.K./U.S. kilobar weight].

Now there’s zero difference in these kilobars as far as weight is concerned, only the way the number is rounded off when its computed and then recorded.  Getting technical on you…1 kilogram equals 32.1507466 troy ounces.  The Brits and Americans rounded it off to 32.150 troy ounces when the metric system was first adopted in Europe way back when.  But when China started up the Shanghai Gold Exchange early in the 21st century, they rounded it off to three decimal place in the correct manner.  But still to this day, there are two accepted kilobar weights in precious metals…32.150 and 32.151 troy ounces.  What happened with this JPMorgan to Brink’s transfer was that Brink’s recorded it as SGE weight on receipt, even though it left JPMorgan’s vault bearing the U.K/U.S. weight.  This is the first acknowledgement outside of China, that the 32.151 troy ounces is now the accepted way of recording kilobars in troy ounce form.  I expect Brink’s, Inc. to do the same conversion going forward on any other kilobars they either receive or ship up.  And I suspect that it’s only a matter of time before everyone else follows suit.  But how much time, remains to be seen.

The only other activity in gold at the east coast depositories on Friday was a paper transfer of 56,519.700 troy ounces/1,578 kilobars [U.K./U.S. kilobar weight] from the Eligible category and into Registered over at the International Depository Services of Delaware.  The link to all of this is here.

There was decent activity in silver.  Only 1,001 troy ounces/1 good delivery bar was received — and that was dropped off at Delaware.  There was also 989,326 troy ounces shipped out.  There was one truckload…600,077 troy ounces…shipped out of CNT.  The remaining two ‘out’ activities were at Brink’s, Inc. and Delaware, as they parted with 377,243 and 12,004 troy ounces respectively.  There was also a paper transfer of some size…711,082 troy ounces…from the Registered category — and back into Eligible over at Brink’s, Inc.  Ted was of the opinion that JPMorgan now owns this — and since their own silver vault is full, they’ re holding it elsewhere — and the storage charges are cheaper in the Eligible category than they are in Registered.  There was also 10,596 troy ounces transferred from the Eligible category and into Registered over at Canada’s Scotiabank.  The link to all this activity is here.

There was no activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday, as they were closed for the Dragon Boat Festival.


Here are the usual two charts that Nick sends around on the weekend.  They show all the gold and silver bullion in all known depositories, mutual funds and ETFs, as of the close of business on Friday, June 7.  There was a big jump in gold, as 1,314,000 troy ounces was added during the reporting week, but the silver depositories showed a decline of 203,000 troy ounces during that period.  Click to enlarge for both.

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


CRITICAL READS

How Hot Money Put America in Hot Water — Bill Bonner

Two newsworthy things happened on Friday.

As to the first, we were right after all. Mr. Trump isn’t going “Full Retard” in his trade war. At least, not with Mexico. His dramatic declaration of an escalating tariff… until the flow of illegal immigrants “STOPS”… must have been just another of the showman’s stunts.

Stir up a fake fight… make a fake “deal”… and declare a fake victory.

Over the weekend, Mr. Trump also tweeted – twice – that the deal included large food purchases:

MEXICO HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF AGRICULTURAL PRODUCT FROM OUR GREAT PATRIOT FARMERS!

Neither Mexicans nor Americans could find any trace of this in the deal they negotiated. Nor is it obvious how Mexicans buying U.S. farm output would reduce illegal immigration… or why, if it made economic sense, they weren’t already buying food from the USA.

Countries don’t generally buy food anyway; companies buy food to sell at a profit. And farmers don’t grow corn as a patriotic act; they grow it to earn a living.

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


Mnuchin Says FX Tariff Push Isn’t Shift to Weak Dollar Policy

U.S. Treasury Secretary Steven Mnuchin says currency policy can be an important tool to address trade imbalances, and that a recent proposal to tariff countries that engage in competitive devaluation doesn’t represent a preference for a weak dollar.

The Trump administration last month signaled intent to turn the $5.1 trillion-a-day global currency market into the next battlefield of his trade war with a Commerce Department plan that would allow the U.S. to apply countervailing tariffs on nations seen to be actively driving down their currencies to boost exports.

Rebutting the view that such a regulation would signal the Trump administration’s shift toward a weak dollar policy, Mnuchin described it as “another important tool in the toolkit to make sure that we have fair and balanced trade.” He spoke in an interview Saturday in Fukuoka, Japan, where he’s meeting counterparts from the Group of 20 gathering of the world’s major economies.

Currency is now one of the issues we can look at in terms of subsidy,” Mnuchin said, noting that the administration acknowledges the difference between monetary and currency policy. “You can intervene and support your currency — that’s not manipulation.”

Then exactly what it is it, dear reader???  It sure sounds like manipulation to me.  This Bloomberg news item appeared on their Internet site at 3:04 a.m. PDT [Pacific Daylight Time] on Saturday — and I found this interesting article on the gata.org Internet site.  Another link to it is here.  In a very related story on the South China Morning Post on Saturday is this article headlined “China is letting value of yuan slide to offset trade war tariffs, U.S. Treasury Secretary Mnuchin says“.  I found that on the gata.org Internet site as well.


Kyle Bass: Capital Flight Risk from Hong Kong

Kyle Bass, founder of Hayman Capital Management, recently spoke with Real Vision about his belief that capital flight from Hong Kong is accelerating as the semi-autonomous island drifts further into China’s orbit and financial risks build.

Imagine that you’re a Hong Kong family that’s been there for generations and let’s say you’ve built wealth over time… In a freely convertible market you’d have to be foolish to leave it in Hong Kong Dollars, given the macro-economic instability of Hong Kong and what happens in a peg where, 36 years and there’s no volatility: no volatility begets no volatility until it doesn’t…

The moment that China starting… floating a proposal to extra-judicially grab someone off the streets in Hong Kong and take them to China without any court proceeding, that’s scaring not only the Hong Kong elite but the 85,000 Americans that live there… My friends that are very well off are leaving…

This 8:04 minute video clip, which is very much worth your while…if you have the interest, that is…was posted on thesoundingline.com Internet site on Saturday, June 8 — and it comes to us courtesy of Brad Robertson.  Another link to it is here.  A directly related Reuters story, filed from Hong Kong, is headlined “Hong Kong risks its future as global business hub” — and I thank Richard Saler for that one.  It’s worth reading as well.


This Sounds Like Desperation to Me — Andrei Martyanov

Of course, Donald Trump is a classical bully but this is:

a) Forestalling what Trump actually afraid of — and trying to look good in either case;
b) Does sound as a tantrum.

I am talking, of course, about this:

President Donald Trump warned Monday he will slap huge new tariffs on China if his counterpart Xi Jinping doesn’t show up for a planned face-to-face meeting later this month and insisted the Chinese economy will never overtake the United States. Trump delivered his hardline message ahead of the G20 summit on June 28-29 in Osaka, Japan, which could mark a turning point in the trade dispute between the world’s two biggest economies. Asked if a failure by Xi to come to the summit would lead to tariffs kicking in on a further $300 billion in Chinese imports, Trump told CNBC television: “Yes it would.

I, of course, do not want to delve into this “will never overtake the United States“, since it already overtook it, not to mention gross, if not grotesque, overvaluation of U.S. economy, but what do you expect? This is Donald Trump after all and the trade war against China, as is expected, doesn’t go as planned.

This brief, but very worthwhile commentary from Andrei was posted on the smoothiex12.blogspot.com Internet site on Monday sometime — and another link to it is here.  I thank Larry Galearis for sending it our way.


The Great Bilderberg Secret Of 2019 — Pepe Escobar

Unlike Deep Purple’s legendary ‘Smoke on the Water’ – “We all came out to Montreux, on the Lake Geneva shoreline”, the 67th Bilderberg group meetings produced no fire and no smoke at the luxurious Fairmont Le Montreux Palace Hotel.

The 130 elite guests had a jolly good – and theoretically quiet – time at the self-billed “informal discussion forum concerning major issues”. As usual, at least two-thirds were European decision-makers, with the rest coming from North America.

The fact that a few major players in this Atlanticist Valhalla are closely associated with or directly interfering with the Bank for International Settlements (BIS) in Basel – the central bank of central banks – is of course just a minor detail.

And that brings us to Secretary of State Mike Pompeo’s long, non-scheduled stop in Switzerland, on the Bilderberg’s fringes, just because he’s a “big cheese and chocolate fan”, in his own words.

Yet any well-informed cuckoo clock would register he badly needed to assuage the fears of the trans-Atlantic elites, apart from his behind-closed-doors meetings with the Swiss, who are representing Iran in communications with Washington. After weeks of ominous threats to Iran, the U.S. said “no preconditions” would be set on talks with Tehran, and this was issued from Swiss soil.

Henry Kissinger was a 2019 Bilderberg participant. Rumors that he spent all his time breathlessly plugging his “reverse Nixon” – seduce Russia to contain China – may be vastly overstated.

This very interesting commentary from Pepe put in an appearance on thesaker.is Internet site last Wednesday.  I had several readers send it to me — and why I didn’t post it back then, escapes me.  But finally Tolling Jennings sweet-talked me into it yesterday.  Another link to it is here.


Ensuring the Worst Possible Leadership — Jeff Thomas

Ancient Greece is credited as raising the societal structure to new heights. Whenever this period is referred to, philosophers and historians are quick to mention that the ancient Greeks gave the world Democracy.

Yet, Socrates, who is regarded as having been a rather thoughtful fellow, eyed democracy with deep suspicion. He was right to do so.

Socrates argued to Adeimantus that voting in an election is a skill – one that must be developed. It was not an inherent intuition that all people possessed from birth.

As such, he felt that only those who had taken the time to hone this particular skill should be allowed to vote.

Perhaps coincidentally, he was put on trial in 399 BC for corrupting the youth of Athens with his philosophies. A jury of five hundred Athenians decided by a narrow margin that he was guilty. He was put to death by the hoi polloi of his day for having and disseminating ideas.

And so, the politicians of the day rid themselves of a troublemaker – an individual who had the cheek to question the leaders of the day and how they came to be chosen.

This worthwhile commentary from Jeff showed up on the internationalman.com Internet site on Monday morning sometime — and another link to it is here.


Venezuela’s gold fever fuels gangs and insecurity: ‘There will be anarchy

Puerto Ordaz was once Venezuela’s industrial hub, a modernist dream of broad boulevards and ranks of factories and gateway to a belt of rich oilfields that funded government largesse for decades.

As the economy has crumbled though, the modern city of steel and aluminium has been swallowed by its past, transformed into little more than an outpost of the gold mines a few hours’ drive away in the fringes of the Amazon.

There, in swampy, malaria-ridden pits controlled by criminal gangs, men labour away much as they would have done centuries ago. The lumps of yellow metal they extract through backbreaking work now power the city; gold has become so pervasive that medieval-style barter is replacing hard currency across the city.

Gold also increasingly pays the bills for the national government in distant Caracas. With oil revenues dwindling and U.S. sanctions biting, the president, Nicolás Maduro, has been relying on wealth from the mines to keep the government afloat during a months-long standoff with the opposition leader, Juan Guaidó.

So the government has allowed the illegal industry and the armed groups that run them to flourish, spawning an epidemic of violence, disease and environmental devastation, and drawing in much of the remaining population of Puerto Ordaz.

This interesting photo essay showed up on theguardian.com Internet site at 12:00 noon BST on Saturday afternoon, which was 7:00 a.m. on the U.S. east coast — EDT plus 5 hours.  I thank Patricia Caulfield for pointing it out — and another link to it is here.


The African Nation Built on Gold Loses Its Crown to a Rival

South Africa’s struggling gold industry has suffered yet another humiliation, losing its status as continental leader to Ghana.

The country that led global gold production for a century and extracted about half the bullion mined to date is now Africa’s second-largest gold producer. Output is shrinking as operators capitulate to stubbornly high costs, regular strikes and the geological challenges of tapping the world’s deepest mines.

Meanwhile Ghana, a country whose gold-mining industry dates back to the 19th century, is benefiting from lower-cost mines, friendlier policies and new development projects.  Click to enlarge.

South African industry stalwarts AngloGold Ashanti Ltd. and Gold Fields Ltd. are shifting their focus to other countries — including Ghana — where deposits are cheaper and easier to mine. The largest remaining gold miner in South Africa, Sibanye Gold Ltd., is cutting thousands of jobs and diversifying into platinum-group metals as it struggles to contain costs.

The difficulties facing South African gold mines mean output is contracting even though it’s got the world’s second-largest reserves of the metal, according to estimates from the U.S. Geological Survey.

This Bloomberg article appeared on their website at 3:00 a.m. PDT on Sunday morning — and was updated about twenty-four hours later.  I extracted it from a GATA dispatch — and another link to it is here.


China Buys Most Gold in Over 3 Years Amid “Determined Diversification” From Dollar

China continued its renewed (public) gold-buying spree in May adding almost 16 tons of the precious metal to its reserve – the biggest monthly increase since January 2016.

It’s a diversification away from the U.S. dollar, particularly given the trade tensions and the potential technology cold war that’s evolving,” said Bart Melek, global head of commodity strategy at TD Securities.

We have to remember that gold is nobody’s liability.”

This is the sixth straight month of buying since China’s publicly reported pause.  Click to enlarge.

While this figure is hotly contested as being an underestimate of Chinese State’s actual gold holdings, its the only figure available, and whatever the real number, its notable that the Chinese government has revived the trend of announcing physical gold purchases each and every month.

As Bloomberg reports, the rise reflects the government’s “determined diversification” away from dollar assets, Argonaut Securities (Asia) Ltd. analyst Helen Lau said, adding that retail demand has also picked up. At this rate of accumulation, China could buy 150 tons in 2019, according to Lau.

Finally, as BullionStar.com‘s Ronan Many recently noted, with China in one of the driving seats of the world’s physical gold market, along with India and Russia in the other, it is opportune then that the London Bullion market Association (LBMA) has chosen Shenzhen in China as the location for its annual conference this coming October where they should have plenty to talk about as China’s gold market continues to fire on all cylinders. It also raises some questions such as why the international gold price continues to be established by the paper gold markets of London and the U.S. COMEX. Maybe China prefers it that way.

This is just more gold that China has had on its books for years — and is now putting it into its official reserves in dribs and drabs…as I reported this time last month.  This gold-related news item was posted on the Zero Hedge website at 11:15 a.m. EDT on Monday morning — and I thank Richard Saler for sending it along.  Another link to it is here.


Gold Fever? Statistics Reveal India Imported Bullion like Crazy in May

India, the world’s second-biggest consumer of gold, bought almost 50% more gold in May than it did a year earlier, Scrap Register reported Friday. According to the report, India imported 116 tonnes of gold, compared to 78 tonnes a year earlier. In value terms, India’s gold imports rose to $4.78 billion in May 2019 from $3.48 billion a year ago, according to an anonymous government official.

According to Scrap Register report, the heightened imports were dictated by local festivities that led to a surge in retail gold demand. Retail gold prices increased by 1,000 rupees ($14,41) per 10 grams, hitting 32,834 rupees level ($473) per 10 grams, according to Reuters report.

The market is currently in recoil, with retail demand very low due to high prices and retail sellers making discounts, a Reuters report says. Throughout the week, dealers offered 50 cent discounts per ounce compared to official prices, compared to a 50 cent premium last week.

Heightened prices on gold motivated customers in India and China — the world’s biggest consumer of gold — to sell their gold, flooding the market with scrap, according to Reuters.

I’m still waiting for Nick to update India’s gold import numbers for April, which I understand was a big import month as well.  This brief news item put in an appearance on the sputniknews.com Internet site on Saturday — and I found it on the Sharps Pixley website.  Another link to it is here.


An Ancient Roman Gold Coin Found in a Field Just Sold for $700,000 at Auction, Making One Very Happy Metal Detectorist

A 30-year-old British man with a metal detector came across a small 24-carat gold coin the size of a penny this past March. Yesterday, it sold at auction for $700,000…five times its estimated value.

The 1,700-year-old coin, an ancient Roman aureus, depicts the face of Allectus, a finance minister in Roman Britain who usurped the crown by murdering the sitting emperor, Carausius. It was estimated to sell for between $90,000 and $127,000 at the London-based coin, medal, and jewelry auction house Dix Noonan Webb. But warring bidders skyrocketed the price, with an unidentified collector ultimately placing the final bid by telephone.

This is the most expensive coin that we have ever sold at Dix Noonan Webb,” said Christopher Webb, director of the house’s coin department, in a statement. “As well as being one of the world’s most expensive Roman coins, it is the most money ever paid for a coin of Allectus and it is now the most valuable Roman coin minted in Britain to have been sold at auction.”

This story, along with a couple of neat photos, was posted on the artnet.com Internet site last Friday — and I thank Jim Gullo for bringing it to our attention.  Another link to it is here.


The PHOTOS and the FUNNIES

After our short journey 3 miles/ 5 kilometers north of Lillooet to the Bridge River, we drove back into town — and I took these photos along the foot/bike path in the town itself.  I was careful to get as little human habitation in the shots as possible, even though the main street through the downtown was right behind us in the first two.  First shot overlooks the Fraser River to the south east — and the only bridge into the town off of B.C. Highway 99 and Highway 12.  Part of the industrial area is in the center of the shot — and part of the vineyards of the Fort Berens winery is visible on the far left.  Their Meritage of 2014 vintage was excellent, but has been completely sold out now.  The second photo is from the exact same spot, but looking down the river to the north east.  The CNR tracks are in the foreground — and B.C. Highway 99 is the cut in the bank on the far side.  The third shot is from a lookout point on B.C. Highway 99 as we headed north out of town, looking down on the Bridge River from on high.  The photos of that river — and the bridge, graced Saturday’s column.  The Fraser River is just out of frame at the bottom of the picture.  Click to enlarge.


The WRAP

Despite the engineered price declined in gold and silver yesterday, I’m still of the opinion that this sell-off is of a temporary nature — and I was pleased the way that the precious metal equities performed…all things considered.

But one shouldn’t underestimate the treachery of JPMorgan et al — and I suppose something worse can be envisioned, but somehow I don’t think that’s in the cards.  But with the next FOMC meeting a week away…who knows.  As always, we’ll just have to wait some more.

But I was somewhat surprised that silver volume was as low as it was, considering that ‘da boyz’ blasted the price back below both its 50 and 200-day moving averages.

Palladium closed above its 50-day moving average for the second day in a row.  Copper and WTIC didn’t do much — and are still miles below any moving average that matters.  I note here in town yesterday evening that gas prices at the pump were down 12 cents a liter over the weekend.

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

And as I type this paragraph, the London open is a minute or two away — and I see that the gold price did practically nothing in Far East trading, but took a dip once the 2:15 p.m. China Standard Time afternoon gold fix was done in Shanghai on their Tuesday afternoon. At the moment, gold is down $2.30 the ounce. Ditto for silver — and it’s down 3 cents. Platinum was up five bucks by 9 a.m. CST, but that’s all gone now, plus a bit more, as platinum is currently down 2 bucks.  Palladium was up eight dollars by 9 a.m. CST — and all of that is gone as well. It’s also down 2 dollars as Zurich opens.

Net HFT gold volume is pretty light at a tiny bit over 33,000 contracts — and there’s only 654 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is already pretty decent at about 12,500 contracts — and there’s only 279 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened down about 2 basis points once trading commenced at 7:45 p.m. EDT in New York on Monday evening, which was 7:45 a.m. CST on their Tuesday morning. It was up a small handful of basis points by 10:10 a.m. CST, but has slid a bit since — and is up 1 basis point as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich. Not much is happening in the currencies at the moment.


Today, at the close of COMEX trading, is the cut-off for Friday’s Commitment of Traders Report — and I’ll have something to say about what might be in it in tomorrow’s column, once I’ve had a look at the fifth doji for the reporting week.


And as I type this paragraph, the London open is less than ten minutes away — and I note that gold continues to get sold lower — and is now down $5.30 the ounce as the first hour of trading draws to a close over there. Silver hit its low right at the London open, then made it back to unchanged briefly, but has been sold lower anew –and is now down 3 cents. Like gold, both platinum and palladium hit their current low ticks just minutes after the Zurich open. Platinum is down a dollar, but palladium is now up 4 bucks as the first hour of Zurich trading draws to a close.

Gross gold volume has jumped up — and is coming up on 54,000 contracts. Minus what little roll-over/switch volume there is, net HFT gold volume is 52,000 contracts. Net HFT silver volume is up quite a bit as well, at a bit over 16,400 contracts — and there’s still only 475 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index began to head lower the moment that London opened, hitting its current low at 8:25 a.m. BST. It’s now off that low by a bit — and is down 5 basis points as 8:45 a.m. in London/9:45 a.m. in Zurich.

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

Ed

Precious Metal Prices Capped at 10:30 a.m. in New York

08 June 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price drifted quietly lower almost from the open of trading in New York at 6:00 p.m. EDT  on Thursday evening, with its low tick of the day coming at, or shortly after the 2:15 p.m. afternoon gold fix in Shanghai.  It wandered higher without much conviction until the noon silver fix in London — and then began to head higher from there.  The price really took off at 8:30 a.m. in New York when the less-than-happy job numbers hit the tape.  JPMorgan et al were there in an instant as the dollar index cratered at the same moment.  From that point it was held in a tight grip until the afternoon gold fix was put to bed in London — and then it rallied some more.  But a minute or so after 10:30 a.m. EDT, ‘da boyz’ slammed all four precious metals lower — and that engineered price decline lasted until shortly after 3 p.m. in after-hours trading.  The price managed to rally a few dollars after that, before trading sideways into the 5:00 p.m. close.

The low and high ticks for gold were recorded by the CME Group as $1,334.30 and $1,352.70 in the August contract.

Gold was closed in New York on Friday at $1,339.90 spot, up only $5.10 on the day.  Net volume was enormous once again at just under 321,000 contracts — and there was just under 12,500 contracts worth of roll-over/switch volume in this precious metal.

The silver price didn’t do much of anything in Far East trading on their Friday — and volumes were noticeably on the light side.  The price pattern starting at the London open was a carbon copy of what happened with gold, so I shan’t bother with the rest of the play-by-play.  But the high tick in silver…back over $15 briefly…came at the same precise moment as the high tick in gold.

The low and high in this precious metal was recorded as $14.84 and $15.15 in the July contract.

Silver was closed at $14.97 spot, up 10 cents from Thursday.  Net volume in silver was very heavy once again at just over 86,500 contracts — and there was a pretty healthy 21,500 contracts worth of roll-over/switch volume out of July and into future months.

The platinum price didn’t do much of anything in Far East trading on Friday, either…but began to crawl lower starting shortly after 10 a.m. CEST in Zurich.  The low came on the jobs report number/dollar index crash at 8:30 a.m. in New York.  Its ensuing rally was also capped by JPMorgan et al at the same time as silver and gold — and it was sold lower until shortly after 11:30 a.m. in New York trading.  It gained a couple of dollars of that back by 1 p.m. EDT — and then traded ruler flat into the 5:00 p.m. close.  Platinum was closed at $806 spot, up 4 dollars on the day.

The price pattern in palladium was mostly the same as it was for platinum, including the price-capping shortly before 10:30 a.m. in New York.  It was sold lower until 1 p.m. in COMEX trading — and didn’t do much of anything after that.  Palladium was closed at $1,338 spot, up 6 bucks from Thursday.

The dollar index closed very late on Thursday afternoon in New York at 97.04 — and opened down 3 basis points once trading commenced at 7:45 p.m. EDT on Thursday evening. It crawled higher from there at glacial speed — and the 97.18 high tick was printed at precisely 11:00 a.m. BST in London.  The index crawled lower from there until the job numbers were released at 8:30 a.m. in Washington — and the result was the most spectacular waterfall decline I’ve seen in anything in years.  Those ‘gentle hand’s were at battle stations — and managed to turn it higher at the 96.46 mark at 10:50 a.m. EDT.  They didn’t get it higher by much — and from that juncture, it chopped quietly sideways until trading ended at 5:30 p.m.  The dollar index finished the day at 96.54…down 50 basis points from its close on Thursday.

There’s no telling how far the dollar index would have fallen, nor how high the precious metals would have risen, if the PPT hadn’t been working overtime in all markets yesterday…including the equity markets.

Here’s the DXY chart from Bloomberg — and the waterfall decline should be admired, as it’s a beauty.  Click to enlarge.

And here’s the 5-year U.S. Dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…96.49…and the close on the DXY chart above, was 5 basis points on Friday.  Click to enlarge.

The gold shares gapped up about two percent at the open, but ran into selling right away.  That selling pressure continued for most of the remainder of the Friday session — and the HUI actually closed down 0.18 percent.

It was the same for the silver equities, but they didn’t suffer the same ignominy as the gold stocks, as they managed to squeeze a positive close, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up by 0.34 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.

I had a brief chat with Keith Neumeyer, the Grand Poobah over at First Majestic Silver yesterday afternoon — and I asked him about the short position in his company’s shares — and why the precious metal equities were performing so poorly.  His answer shocked me, although it shouldn’t have.  He says that this happens on all rallies in the silver stocks, as all the same people that are short the metal in the COMEX futures market, short the shares as the rally progresses, knowing full well that precious metal prices are going to be hammered lower [by them] in the not-very-distant future.  So not only are they making a killing in the futures market, their cleaning up in the silver and gold stocks as well…including GDX.

And if you’re looking for proof, all you have to do is look at the share price action in the HUI and the Silver 7 Index since Monday…with Friday’s price action being the perfect poster boy for that.


Here are a couple of 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.  What a difference a week makes!  It’s green across the board — and the only reason that the precious metal stocks, particularly the silver equities, have performed so poorly, is that there is active shorting going on, as per my conversation with Keith Neumeyer just above.  Click to enlarge.

The month-to-date chart is the same as the weekly chart, as the month is only one week old, so I won’t bother posting it, as the numbers are identical on both.

Here’s the year-to-date chart — and it’s much improved.  The fact that JPMorgan holds a current death grip on silver is obvious in this chart — and that’s certainly reflected in the state of the Silver 7 Index, plus the active shorting going on currently.  Platinum is barely above unchanged, but that’s because ‘da boyz’ have been engineering its price lower over the last three weeks.  Click to enlarge.

As I’ve pointed out in this space over the last few weeks — and again today, the shorting of the precious metal equities…mostly silver, will certainly be rocket fuel during the next big rally in that precious metal.  With gold overbought, I expect a ‘correction’ of some type [courtesy of JPMorgan et al] in the not-too-distant future, but it will only prove to be a temporary setback.


The CME Daily Delivery Report showed that 2 gold and 1 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  I won’t bother expanding on these tiny amounts.  But if you wish to look, the link to yesterday’s Issuers and Stoppers Report is here.

One thing I did notice in the above report was that JPMorgan issued 250 palladium contracts from its own account for delivery on Tuesday.  There were ten long/stoppers in total, with JPMorgan picking up 49 contracts for its client account.

So far in the June delivery month…just one week old…only 361 gold, plus 309 silver contracts have been delivered.  June is not a typical delivery month in silver — and gold deliveries for June are proceeding very slowly, with a huge number of short/issuers exiting their short positions once called upon for delivery for physical gold that they most likely didn’t have.

The CME Preliminary Report for the Friday trading session showed that gold open interest in June fell by 24 contracts, leaving 1,258 still around, minus the 2 mentioned a few brief paragraphs ago.  Thursday’s Daily Delivery Report showed that 9 gold contracts were actually posted for delivery on Monday, so that means that 24-9=15 more gold contracts vanished from the June delivery month.  Silver o.i. in June declined by 1 contract, leaving 4 left, minus the 1 contract mentioned two paragraphs ago.  Thursday’s Daily Delivery Report showed that zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday, so that means that 1 silver contract disappeared from the June delivery month.


For the second time this week — and the second since Wednesday, there was a withdrawal from GLD, as an authorized participant removed 37,748 troy ounces.  There were no reported changes in SLV once again.

I don’t know if these counterintuitive withdrawals are masking large deposits on those same days or not.  But as Ted mentioned in yesterday’s column, both ETFs are owed physical metal, so it’s a given that the authorized participants in both these ETFs are now shorting the shares in lieu of depositing physical metal.  That makes it even more obvious that physical gold and silver in any size is just not available — and I know that Ted will certainly have something to say about all this in his weekly review this afternoon.

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

Month-to-date the mint has only sold what I reported on Monday…1,000 troy ounce of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 223,500 silver eagles.

There was no ‘in’ activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday, but in the ‘out’ category, there was 32,214.300 troy ounces/1,002 kilobars [U.K./U.S. kilobar weight] that departed JPMorgan.  [And the Reuters story suggesting that Jamie Dimon was seen running behind the Brink’s truck, crying…has already been denied by a company spokesman.]  The link to that ‘activity’ is here.

There was certainly more activity in silver, as 99,475 troy ounces was reported received — and 678,572 troy ounces was shipped out.  All of the ‘in’ activity was at Loomis International.  In the ‘out’ category, there was one truckload…630,463 troy ounces…shipped out of CNT.  The remaining 44,139 and 3,969 troy ounces, were shipped out of Scotiabank and Brink’s, Inc. respectively.  The link to that is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 300 of them — and shipped out 10.  All this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Pentney Hoard is an Anglo-Saxon jewellery hoard, discovered by a gravedigger in a Pentney, Norfolk churchyard in 1978. The treasure consists of six silver openwork disc brooches, five made entirely of silver and one composed of silver and copper alloy. The brooches are decorated in the 9th century Trewhiddle style. The hoard is now in the British Museum.

The hoard consists of six silver, circular brooches. Five of the brooches are made entirely of silver; the sixth brooch was created with a copper alloy base and a silver overlay. There are two single brooches, which include the largest and smallest items of the hoard, and two non-identical pairs. The pairs are similar in layout, but have different decorative details. All brooches are centrally arranged in a cross-shaped pattern. The smallest brooch, stylistically, belongs to the late 8th century. The five larger brooches can be dated to the early ninth century. All items in the hoard are intricately decorated in the Trewhiddle style. The brooches were in very good condition when they were discovered. Evidence suggests that all the brooches were made in the same workshop. All of the brooches except for the smallest were complete, with intact pin, spring and hinge components.

The largest brooch is a silver disc with an intricate openwork pattern and inlaid with black niello. This (10.2 cm) brooch is an excellent example of the Trewhiddle style. The outer edge of the brooch contains eight panels of intertwined creatures. The center of the brooch is ornamented with stylised animal and plant decorations. The back of the brooch is undecorated. The pin and spring hardware is intact and decorated with two stylised beasts.”

In 1978, William King, a sexton for the church of St. Mary Magdalene in Pentney, Norfolk was digging a grave and noticed a circular piece of metal embedded in the soil. In removing the metal, he uncovered five additional metal discs. King gave the artefacts to the church rector who saved them in the parish chest. Three years later, the new church rector, John Wilson, found the discs and gave them to the Norwich Castle museum. The British Museum was asked to evaluate the brooches. It was determined that the hoard items were Anglo-Saxon silver disc brooches. The finds were declared treasure trove and property of the Crown. The hoard contents were purchased by the British Museum. As discoverer of the hoard, King was awarded £137,000, £25,000 of which he gifted to the church.  Click to enlarge.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, June 4, came in exactly as Ted stated they would…including silver, which he was “unsure” of.

In silver, the Commercial net short position increased by 13,404 contracts, or 67.0 million troy ounces of paper silver.

They arrived at that number by selling 4,599 long contracts — and increasing their short position by 8,805 contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus a whole bunch more, as they increased their long position by 7,310 contracts, plus they covered 11,161 short contracts…all at a loss.  It’s the total of those two numbers…18,471 contracts…that represents their change for the reporting week.

And as is always the case, it was the traders in the other two categories that made up for the difference between what the Managed Money bought — and the Commercial traders sold, in this case…18,471 minus 13,404 equals 5,067 contracts.  Both categories decreased their net long positions during the reporting week…the ‘Other Reportables’ by 4,505 contracts — and the ‘Nonreportable’/small traders by 562 contracts.  Those two numbers add up to 5,067 contracts…the difference between what the Commercials and the Manged Money traders did during the reporting week, which they must do.

The Commercial traders in the Producer/Merchant and Swap/Dealer category both increased their net short positions and added to long positions to the tune of 13,404 contracts mentioned earlier

The Commercial net short position in silver is back up to 61.4 million troy ounces.

I didn’t have a chance to talk to Ted about all this yesterday, as I got my times to call him mixed up.  But in an e-mail from him yesterday afternoon he stated that “…the pleasant surprise [was] that JPM looks to be still long silver to the tune of 5,000 contracts or so.

You’d never know it by looking at the Producer/Merchant category of yesterday’s COT Report, but the companion Bank Participation Report tells a completely different story — and my discussion on that is a bit further down.

Here is the 3-year COT chart from Nick Laird, updated with Friday’s data — and the increase should be noted.  Click to enlarge.

Of course the Commercial net short position in silver is even larger now since the Tuesday cut-off, most likely significantly so.  But by how much, won’t be know until the COT Report next Friday.


In gold, the commercial net short position blew out by 62,622 contracts, or 6.26 million troy ounces of paper gold.

They arrived at that number by selling 58,773 long contracts — and they also added 3,849 short contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus more as they added 40,349 long contracts — and they also reduced their short position by 29,559…all for big losses.  The sum of those two numbers…69,908 contracts…represent their change for the reporting week.

The difference between that number — and the commercial net short position…69,908 minus 62,622 equals 7,286 contracts, was made up…as it has to be…by the traders in the other two categories.  The ‘Other Reportables’ didn’t do much during the reporting week, decreasing their net long positions by 481 contracts.  It was the traders in the ‘Nonreportable’/small trader category that did most of the heavy lifting, as they reduced their net long position by 6,805 contracts.

Of course the commercial traders in the Producer/Merchant and Swap/Dealers category, increased their net short positions by a considerable amount, with the traders in the latter category doing the largest percentage of that amount.

The commercial net short position in gold is back up to 17.26 million troy ounces.

Here is the 3-year COT chart for gold, courtesy of Nick Laird.  Click to enlarge.

Like in silver, the commercial net short position in gold has grown even larger since the Tuesday cut-off.  But by how much, remains to be seen.

In the other metals, the Manged Money traders in palladium increased their net long position in this precious metal by 248 contracts.  The Managed Money traders are net long the palladium market by 9,532 contracts…over fifty percent of the total open interest.  Total open interest in palladium is 18,724 COMEX contracts, down 1,381 contracts from the previous week.  As you can tell, it’s a very tiny market.  In platinum, the Managed Money traders increased their net short position by another 3,227 contracts.  The Managed Money traders are now net short the platinum market by a fairly hefty 12,911 contracts.  In copper, the Managed Money traders increased their net short position in that metal by a further 5,003 contracts during the reporting week — and are now net short the COMEX futures market by a whopping 45,769 contracts.  That translates into a short position of 1.14 billion pounds of the stuff.


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

For the current reporting week, the Big 4 traders are short 99 days of world silver production, which is unchanged from last week’s report — and the ‘5 through 8’ large traders are short an additional 61 days of world silver production, down 1 day from last week’s report — for a total of 160 days that the Big 8 are short, which is a bit over 5 months of world silver production, or about 373.4 million troy ounces of paper silver held short by the Big 8.  [In the prior week’s COT Report, the Big 8 were short 161 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported as 61.4 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 373.4 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 375.7 minus 61.4 equals 314.3 million troy ounces.

The reason for the difference in those numbers…as it always is…Ted’s raptors, the 41-odd small commercial traders other than the Big 8, are net long that amount.

As I mentioned in my COT commentary in silver above, Ted stated that JPMorgan’s long position in silver remains around the 5,000 contract mark.  But, as I commented further up, the proof of that lies in the discussion on silver in the Bank Participation Report that follows.

The Big 4 traders now in that category are short, on average, about…99 divided by 4 equals…24.75 days of world silver production each — and at least one of them still comes from the ranks of the Managed Money category, despite the increase in short covering during the reporting week.

The four traders in the ‘5 through 8’ category are short 61 days of world silver production in total, which is 15.25 days of world silver production each.

Ted’s of the opinion that there are most likely three Managed Money traders with short positions  still large enough in the COMEX futures market to inhabit the Big 8 category.

The Big 8 commercial traders are short 34.6 percent of the entire open interest in silver in the COMEX futures market, which is basically unchanged from the 34.5 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 40 percent mark.  In gold, it’s now 38.2 percent of the total COMEX open interest that the Big 8 are short, up quite a bit from the 34.4 percent they were short in last week’s report — and around the 45 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 39 days of world gold production,up 6 days  from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 25 days of world production, down 2 days from what they were short last week…for a total of 64 days of world gold production held short by the Big 8…up 4 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 61 percent of the total short position held by the Big 8…up 6 percentage points from last week’s COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 62, 68 and 84 percent respectively of the short positions held by the Big 8.  Silver is up 1 percentage point from a week ago, platinum is up 2 percentage points from last week — and palladium is unchanged from a week ago…and still at its record high.

If you look at the above ‘Days to Cover‘ chart above, you can see these percentages for yourself between the red and the green bars for each precious metal.  The grotesque short position of the Big 4 traders, relative to the positions of the Big 8 traders in palladium, should be noted.


The June Bank Participation Report [BPR] data is extracted directly from the data in yesterday’s Commitment of Traders Report.  It shows the number of futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday’s cut-off in all COMEX-traded products.  For this one day a month we get to see what the world’s banks are up to in the precious metals —and they’re usually up to quite a bit.

The June Bank Participation Report covers the time period from May 8 to June 4 inclusive.

In gold, 5 U.S. banks are net short 64,906 COMEX contracts in the June BPR.  In May’s Bank Participation Report [BPR] these same 5 U.S. banks were net short 27,281 contracts, so there was a whopping increase of 37,625 contracts from a month ago.  But on a gross basis, it’s far more than that.

This BPR in gold shows a gross long position of 8,163 contracts held by these five U.S. banks — and I would suspect that JPMorgan holds that entire amount — and they could hold a fairly chunky short position now as well.  Citigroup and HSBC USA would also hold substantial short positions in gold as well.  But as to who other two U.S. banks might be that are short in this BPR, I haven’t a clue, but it’s a given that their short positions would not be material.

Also in gold, 28 non-U.S. banks are net short 76,122 COMEX gold contracts, which is a bit under three thousand contracts per bank.  In the May BPR, these same 28 non-U.S. banks were net short 55,851 COMEX contracts…so the month-over-month change is up a lot as well…20,271 contracts.
However, as I always say at this point, I suspect that there’s at least two large non-U.S. bank in this group, including Scotiabank.  It’s certainly possible that it could be the BIS in No. 1 spot.  But regardless of who this second non-U.S. bank is, the short positions in gold held by the remaining 26 non-U.S. banks are immaterial.

At the low back in the August 2018 BPR [for July] these same non-U.S. banks held a net short position in gold of only 1,960 contacts!  So they’re back to being short big time — and almost a record short position to boot.  The non-U.S. banks haven’t been this short gold since back in June of 2017.  And it’s a given that they’re at a record now since the Tuesday cut-off.

As of this Bank Participation Report, 33 banks [both U.S. and foreign] are net short 29.3 percent of the entire open interest in gold in the COMEX futures market, which is up a huge amount from the 18.5 percent they were short in the May BPR.

Here’s Nick’s chart of the Bank Participation Report for gold going back to 2000.  Charts #4 and #5 are the key ones here.  Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX short position was outed by the CFTC in October of 2012.  Click to enlarge.

In silver, 4 U.S. banks are net short 7,600 COMEX silver contracts in June’s BPR.  In May’s BPR, the net short position of these same 4 U.S. banks was 9,642 contracts, so the short position of the U.S. banks is down 2,042 contracts from May BPR.

To give you an idea of how low this short position for these 4 U.S. banks is, this is the smallest net short position held by these banks since November 2014 — and the second smallest U.S. bank short position on record going back to 2011!

In the COT discussion on silver, Ted stated the JPMorgan still held a long position in COMEX silver. The reason he thinks that way is that the gross long position of these 4 U.S. banks in this BPR is 7,219 contracts, up from the 5,096 contracts they held in May’s BPR.  I’m sure he suspects…correctly, I might add…that most, if not all of this amount, is held by JPMorgan. Then it becomes pretty obvious that Citigroup and HSBC USA now hold the lion’s share of the remaining short position of these four U.S. banks.

But JPMorgan could also be shorting the silver market as well — and it wouldn’t be obvious here, as traders in the Producer/Merchant category [i.e. banks] can be long and short the COMEX futures market in silver at the same time…a luxury that other traders aren’t allowed.  But the take-away from this is that JPMorgan is hanging onto its long position in silver — and may even be adding to it at every opportunity, despite the fact that it has been going short this silver rally all the way up.

And whoever the remaining U.S. bank may be of the 4 U.S. banks in total, their short position, like the short positions of the two smallest banks in gold, is immaterial as well.

Also in silver, 21 non-U.S. banks are net short 27,559 COMEX contracts…which is down a bit from the 28,005 contracts that 22 non-U.S. banks were short in the May BPR.  I would suspect that Canada’s Scotiabank [and maybe one other, the BIS perhaps] still holds a goodly chunk of the short position of these non-U.S. banks.  I believe that a number of the remaining 19 non-U.S. banks may actually net long the COMEX futures market in silver.  But even if they aren’t, the remaining short positions divided up between these other 19 non-U.S. banks are immaterial — and have always been so.

As of June’s Bank Participation Report, 25 banks [both U.S. and foreign] are net short 16.3 percent of the entire open interest in the COMEX futures market in silver—which is down a bit from the 18.9 percent that they were net short in the May BPR — with much, much more than the lion’s share of that held by Citigroup, HSBC USA, Scotiabank — and maybe one other non-U.S. bank.  I’m sure JPMorgan now holds a short position in COMEX silver, but it would not be material compared to the other three, although it certainly may have increased since the Tuesday cut-off.

Here’s the BPR chart for silver.  Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold.  Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns—the red bars.  It’s very noticeable in Chart #4—and really stands out like the proverbial sore thumb it is in chart #5.  Click to enlarge.

In platinum, 5 U.S. banks are net short 10,394 COMEX contracts in the June Bank Participation Report.  In the May BPR, these same banks were net short 17,112 COMEX contracts…so there’s been a whopping decrease of 6,718 contracts month-over-month, which reversed the equally big increase in the May BPR.  [At the ‘low’ back in July of 2018, these same five U.S. banks were actually net long the platinum market by 2,573 contracts.] That’s quite a change for the worst since then, even with the ‘improvement’ in June’s BPR.

Also in platinum, 19 non-U.S. banks are net short 7,095 COMEX contracts in the June BPR, which is down a lot from the 11,487 COMEX contracts they were net short in the May BPR.  [Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts.]

This big decline is not surprising considering the engineered price decline in this precious metal during the current reporting period.

And as of June’s Bank Participation Report, 24 banks [both U.S. and foreign] are net short 20.9 percent of platinum’s total open interest in the COMEX futures market, which is a whopping big decrease from the 38.2 percent they were net short in May’s BPR.

Here’s the Bank Participation Report chart for platinum — and the big drop in the world bank’s short position is more than obvious.  Click to enlarge.

In palladium, 4 U.S. banks are net short 7,425 COMEX contracts in the June BPR, which is up a tad from the 7,298 contracts that these same 4 U.S. banks held net short in the May BPR.

Also in palladium, 15 non-U.S. banks are net short 923 COMEX contracts—which is also up a bit from the 687 COMEX contracts that these 15 non-U.S. banks were short in the May BPR.

When you divide up the short positions of these non-U.S. banks more or less equally, they’re completely immaterial…especially when you compare them to the positions held by the 4 U.S. banks.

As of this Bank Participation Report, 19 banks [U.S. and foreign] are net short 44.6 percent of the entire COMEX open interest in palladium.  In May’s BPR, the world’s banks were net short 37.1 percent of total open interest, so there’s been an unhealthy increase in the short position of the banks in this precious metal over the last month.

And just as a point of interest, these 4 U.S. banks hold 89 percent of the total short positions held in palladium by all the worlds’ banks combined.

Here’s the palladium BPR chart.  You should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this precious metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013 — and are even more so today.  Click to enlarge.

This certainly wasn’t a very happy BPR in gold.  Silver appeared to be the surprise with a slight decrease from the May BPR, but it was coming off a major price low back on May 28 — and virtually all of that improvement was lost by the time the BPR came out a week later on June 4. If we could see a Bank Participation Report as of the COMEX close on Friday, it wouldn’t make for happy reading in either metal.

But it should be mentioned that along with JPMorgan’s gross long position in the COMEX futures market in silver — and most likely gold as well, Ted figures they’re sitting on 20 million ounces of physical gold, plus around 850 million troy ounces of silver.  They could allow precious metal prices to explode at any time — and they’d still come out smelling like a rose.

But will they?  They answer is…I don’t know, nor does anyone else.

I don’t have all that many stories for you today.  However, I should point out that Doug Noland’s commentary this week is a must read.


CRITICAL READS

Huge Payrolls Miss: Only 75,000 Jobs Added In May As Wage Growth Slows

For once, ADP was right.

With the market unsure how to trade today’s payrolls number, with both a very strong and a very poor report likely to spark selling, we just got the verdict: at only 75,000 jobs created in May…Click to enlarge.

… this was not only the worst print since the shocking 56,000 February report, but also 100,000 below the consensus number of 175,000. It was also below the lowest Wall Street forecast, and 4-sigma below consensus as not  one of the 77 Wall Street analysts guessed a lower number, confirming broader economic weakness and boosting calls for a rate cut as President Trump’s trade wars hit the U.S. economy.

The two-month revision subtracted a total of 75,000 jobs, as March was revised down from +189,000 to +153,000, and the change for April was revised down from +263,000 to +224,000, making it a net zero for the month and suggesting some serious deceleration in the labor market amid the trade war.

The jobs market slowdown is becoming increasingly clearer: monthly job gains have now averaged 164,000 in 2019, compared with an average gain of 223,000 per month in 2018. The 3-month average of jobs growth declined to 151k in May, the fifth sequential slowing and the smallest gain in 20 months. The post-recession average is 175k, so growth is back below a long-term trend according to Reuters‘ Jeoff Hall.

Verdict? A July rate cut is now virtually assured with the market pricing in 71% odds of a cut in the next FOMC meeting… and a 37% probability as soon as June. And while that is possible, as Bloomberg‘s Steve Matthews writes, “it would be inconsistent with the Fed’s repeated statements that it would be “patient” in moving rates in either direction.”

This longish chart-filled news item showed up on Zero Hedge website at 9:55 a.m. on Friday morning EDT — and I thank Brad Robertson for sharing it with us.  Another link to it is here.


Consumer Credit Jumps the Most Since November as Credit Card Debt Soars

One month after an unexpectedly poor March consumer credit print, when just $10.3 billion (since revised to $11 billion) in revolving and non-revolving debt was created to fund another month of US purchases on credit, moments ago the Fed reported that in April, things went back to normal, as total consumer credit jumped by $17.5 billion, more than the $13 billion expected and the most since November’s $21.7 billion…Click to enlarge.

… thanks to a surge in credit card debt as the latest revolving credit print was a whopping $7 billion injection, up from a draw of $2 billion in March, and not only more than all the credit card debt issued in the first three months of the year but the highest since last November.

Meanwhile, as credit card debt soared, non-revolving credit – auto and student loans – posted a surprisingly soft print, with only $10.5 billion in new debt created. This was $2.5 billion below last month’s print, and the lowest since June 2018.

And while April’s sharp rebound in credit card use may ease concerns about the financial stability and propensity of the U.S. consumer to spend, one place where there were no surprises, was in the total amount of student and auto loans: here as expected, both numbers hit fresh all time highs with a record $1.6 trillion in student loans outstanding, a whopping increase of $30 billion in the quarter, while auto debt also hit a new all time high of $1.16 trillion, an increase of $8.3 billion in the quarter.

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

This 4-chart Zero Hedge article appeared on their Internet site at 3:22 p.m. EDT on Friday afternoon — and it comes courtesy of Brad Robertson.  Another link to it is here.


Fed Balance Sheet Drops by $42 Billion in May, Sheds MBS at Fastest Pace, Starts the Reverse of Operation Twist — Wolf Richter

May was the first month of the Fed’s new plan of slowing QT and altering it in other ways. And suddenly, everything is in flux: It shed Treasury securities at a slowing pace, as announced, but for the first time – and not part of the pre-announced plan for May – the Fed replaced some longer-term Treasuries with short-term Treasury bills, thus doing the opposite of its QE-era “Operation Twist.” And it shed the most Mortgage Backed Securities since the QE unwind started.

Total assets fell by $42 billion in May, as of the balance sheet for the week ended June 5, released this afternoon. This was the balance-sheet week that included May 31, the date when Treasuries rolled off. This drop reduced the assets to $3,848 billion, the lowest since October 2013. Since the beginning of the “balance sheet normalization” process, the Fed has shed $613 billion. Since peak-QE in January 2015, the Fed has shed $669 billion:

According to the Fed’s new regime, announced in March, the maximum amount of Treasury securities that would be allowed to roll off when they mature would be cut in half, to $15 billion in May. And that’s about what we got.

The Fed doesn’t sell its Treasury securities outright. Instead, when they mature at mid-month or at the end of the month, it just doesn’t replace them.

On May 15, three issues of Treasuries matured, and on May 31, three more issues matured, for a total of about $58 billion. The Treasury Department redeemed these securities and paid the Fed for them. And Fed reinvested most of this money into a new batch of Treasury securities but allowed the remainder to roll off without replacement. The balance of Treasuries dropped by $14 billion, to $2,110 billion, the lowest since October 2013.

This 3-chart commentary from Wolf showed up on the wolfstreet.com Internet site on Thursday sometime — and I thank Richard Saler for pointing it out.  Another link to it is here.


Doug Noland: Horde of Jumbo Bazookas

I have posited that the Fed’s balance sheet could swell to $10 TN during the next crisis. When the current Bubble bursts, the Fed and global central bankers will see no alternative than to flood the global financial system with central bank Credit. This is a terrible, reprehensible prospect.

I warned a decade ago that QE was a slippery slope. After a decade, central bankers would surely today prefer to rebrand QE as a “conventional” – and elemental – part of their arsenals. But it will not be until the next bursting Bubble phase before there is a modicum of a “body of evidence” (from only one cycle) for assessing the effectiveness of history’s most radical monetary experiment. Today, global securities markets are eagerly anticipating the return of zero rates and more QE. Chairman Powell, Draghi and others are conveying the message that they are getting their arsenals ready.

Powell, Draghi, Kuroda and the like fully appreciate that a decade of ultra-loose monetary policies have fueled dangerous Bubbles. But they’ve thrown in the towel; a fight they are afraid to confront. The Fed has not only abandoned “normalization,” it has deserted its primary responsibility for safeguarding financial stability. We’re witnessing nothing short of a historic failure in the Bernanke inflationary policy doctrine, today masked by precarious Speculative Dynamics throughout the risk markets and a historic melt-up in global sovereign bond prices.

History has never experienced such powerful financial Bubbles on a globalized basis. The scope of international trend-following and performance-chasing finance is unprecedented (many tens of Trillions). And with these Bubbles at risk of bursting, central bankers are resolved to employ “whatever it takes” monetary stimulus to hold dislocation at bay. The upshot is only further emboldened market participants, more intense speculation, a greater accumulation of speculative leverage and even more precarious “Terminal Phase” Bubble excess.

Draghi’s replacement will suffer the same fate as Bernanke’s successors. Once you’ve pulled out the monetary bazooka, there will be no dropping it from the arsenal. Nothing in fact will suffice but a bigger bazooka. Bigger Bubble Demands Bigger Bazooka. And global bond markets are these days priced for a Horde of Jumbo Bazookas. Yet there’s more to this story than central banks held hostage by speculative Bubbles. More than trade wars, weak global manufacturing and even the fragile European banking system, the vulnerable Chinese Bubble is a potential catalyst that could rather abruptly panic global markets and central bankers alike.

There’s “tremendous room to adjust monetary policy” – that is, until the renminbi buckles and Beijing faces a run on its currency and financial system. “Everyone, please don’t worry.” Worry. “China’s stock market was hit by the biggest outflow of foreign capital on record…” How about the huge international flows that were enticed into China’s booming bond market? “A $647bn blind spot in financial reporting by China’s city and rural commercial banks…” “Steps to cool the property market.” All the characteristic of an unfolding crisis.

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


The Real Source of Wealth Inequality — Bill Bonner

As the economy softens, the feds prepare to make their next mistake.

Recall that monetary policy is really just a series of mistakes.

First, they keep rates too low for too long – thus creating a dangerous bubble.

Second, they need to raise rates to engineer a “soft landing.”

Third, and finally, when the stocks crash, they cut rates in a panic, leading to another bubble.
Over time, the distortions increase (which we can measure as debt… up $20 trillion in the last 10 years), thus creating the need for bigger and bigger mistakes to overcome Mr. Market’s longing for a correction.

We are now, apparently, at the tippy-top of a giant bubble that the feds created after the panic of 2008-2009. This time, they added some $12 trillion in monetary and fiscal stimulus, not to mention negative real lending rates during almost the entire time.

This produced the weakest recovery ever – with trailing 10-year GDP growth rates only about 1.5% – barely half the rate of the late 1990s. And it sent all the key, traditional relationships into bizarre and unhealthy territory.

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


Stupidity, Evil and the Decline of the U.S. — Doug Casey

It used to be that America was a country of free thinkers.

Say what you think, and think what you say.” That’s an expression you don’t hear much anymore.
It’s much more like the world of 1984 where everything is “double think.” You need to think twice before you say something in public. You think three times before you say something when you’re standing in an airport line.

Regrettably, the U.S. is no longer the land of the free and the home of the brave. It’s become the land of whipped and whimpering dogs that roll over on their backs and wet themselves when confronted with authority.

Now, why are Americans this way? Let me give you two reasons—though there are many more.
First, there’s a simple absence of virtue. Let’s look at the word virtue. It comes from the Latin vir, which means manly, even heroic. To the Romans, virtues were things like fortitude, nobility and courage. Those virtues are true to the root of the word.

When people think of virtues today they think of faith, hope, charity—which are not related to the word’s root meaning. These may pass as virtues in a religious sense. But, outside a Sunday school, they’re actually actually vices. This deserves a discussion, because I know it will shock many. But I’ll save that for another time.

This commentary from Doug, which I admit that I haven’t had the time to read yet, was posted on the internationalman.com Internet site on Friday sometime — and another link to it is here.


Trump: Deal Reached With Mexico “To Stem the Tide of Migration“, Tariffs Suspended

It would appear that Trump’s tariff threat worked.

I am pleased to inform you that The United States of America has reached a signed agreement with Mexico,” President Trump tweeted Friday.

The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended.”

Mexico has agreed to “strong measures to stem the tide of Migration through Mexico, and to our Southern Border,” Trump wrote.

It would seem Chuck Schumer’s claim that Trump’s tariffs were a bluff are proved wrong.

This rather brief Zero Hedge story put in an appearance on their website on Friday evening at 8:48 p.m. EDT — and another link to it is here.


Banks Fined $91 Million Over FX as Essex Express Rides Again

Citigroup Inc. and Barclays Plc are among global banks fined a total of 90 million Swiss francs ($91 million) by Switzerland’s competition regulator for their roles in colluding on foreign-exchange rates.

Barclays was fined 27 million francs, Citigroup 28.5 million francs and JPMorgan Chase & Co. was hit with a 9.5 million-franc penalty, Switzerland’s Competition Commission said Thursday. UBS Group AG avoided a fine because it helped reveal the existence of the cartel.

The Swiss sanctions come after years of investigation by regulators on both sides of the Atlantic into how traders used chat rooms to fix leading currency exchange rates. Five of the banks agreed last month to pay 1.07 billion euros ($1.2 billion) to resolve a European Union probe into forex collusion.

Traders at Barclays, Citigroup, JPMorgan, Royal Bank of Scotland Group Plc and UBS ran online chatrooms to share sensitive information over six years in a cartel that was known as the “Three-way banana split,” according to Comco. Traders at Barclays, MUFG Bank, RBS and UBS operated the so-called Essex Express, named for the commuter train they all took, to fix trades in a similar manner between 2009 and 2012, according to the Swiss regulator.

More coffee money fines.  This Bloomberg news story was posted on their website on Wednesday — and was updated early in the morning PDT on Thursday morning.  I found it in a GATA dispatch — and another link to it is here.


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


The PHOTOS and the FUNNIES

This 3-photo sequence was taken about 6 kilometers/3 miles north of Lillooet on Route 40 at the confluence of the Bridge River where it runs into the Fraser River. Up until 1961, it was a major tributary of the Fraser.  The majority of its flow, however, was near-completely diverted into Seton Lake with the completion of the Bridge River Power Project, with the water now entering the Fraser just south of Lillooet as a result.  Note the erosion in the rocks that show what the river level used to be.  In the first and second photos, the first cut in the canyon wall is the CN rail bed — and the one above it is B.C. Highway 99.  I’ll have a photo of the confluence of these two rivers taken from that highway in my Tuesday column.  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’ is all Canadian.  Their rock song “American Woman”…which I didn’t particularly care for…broke them into the U.S. market big time back in 1970 — and the rest, as they say, is history.  They had a lot of big hits here north of border — and another one from that break-out album was one of them.  The link is here.

Although summer in the northern hemisphere is still officially two  weeks away, it arrived in the semi-arid climate of Merritt, B.C. about three weeks ago.  So in honour of that, I’m going to feature Antonio Vivaldi’s violin concerto No. 2 in G minor, Op 8, RV315…also known in Italian as “L’estate“…or in English…’Summer’.  Here’s Cynthia Freivogel and the Voices of Music doing the honours.  The recording is wonderful — and the video quality is the best I’ve ever seen on the Internet.  The link is here.


The jobs numbers, along with the waterfall decline in the dollar index that occurred concurrently at 8:30 a.m. in New York yesterday morning, was met full force in the precious metals, as JPMorgan et al showed up with all guns blazing.  What rallies that did develop in all four were capped at the same moment, around 10:30 a.m. EDT — and a vast majority of what gains were allowed up to that point, disappeared before the COMEX close, or shortly thereafter.

Then, to add insult to injury, ‘da boyz’ were shorting the precious metal shares again yesterday, like they’ve been doing almost all week.  And as Keith Neumeyer pointed out in my discussion on the HUI and Silver 7 Indexes further up, it’s a near certainty that sometime in the very near future, ‘da boyz’ will engineer precious prices lower so that they will not only stick it to the Managed Money traders, but they’ll also make a killing on the precious metal shares as well.

But despite what appears to be inevitable in the very short term, it will only be a temporary set-back, as it’s a given that U.S. interest rates are headed lower, as will the U.S. dollar.  There’s nothing that can stop that now, as it’s obvious that the U.S. is headed for a major recession, or worse.

All that JPMorgan et al are doing, is delaying the inevitable for as long as possible.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  Gold is certainly in overbought territory now — and silver would be there as well if its price wasn’t being as actively managed as it is.  Platinum is still miles below any moving average that matters — and palladium was barely allowed to break above its 50-day moving average yesterday.  Copper, on the other hand, traded at a new intraday low for this engineered price decline, but didn’t close at a new low.  WTIC managed to added to its mall gains on Thursday.  Click to enlarge.

I never thought I’d live to see times that we are living in today.  Central banking run amok — and the equity and bond markets now the biggest financial casinos the world has ever known.  It’s global in scope — and it’s starting to contract.  Bubbles don’t work in reverse — and as the world’s central banks know all to well, so it’s “Print, or die” on an unimaginable scale going forward.

As Doug Noland so eloquently put it in his commentary in the Critical Reads section…

Powell, Draghi, Kuroda and the like fully appreciate that a decade of ultra-loose monetary policies have fueled dangerous Bubbles. But they’ve thrown in the towel; a fight they are afraid to confront. The Fed has not only abandoned “normalization,” it has deserted its primary responsibility for safeguarding financial stability. We’re witnessing nothing short of a historic failure in the Bernanke inflationary policy doctrine, today masked by precarious Speculative Dynamics throughout the risk markets and a historic melt-up in global sovereign bond prices.”

And then this…

Draghi’s replacement will suffer the same fate as Bernanke’s successors. Once you’ve pulled out the monetary bazooka, there will be no dropping it from the arsenal. Nothing in fact will suffice but a bigger bazooka. Bigger Bubble Demands Bigger Bazooka. And global bond markets are these days priced for a Horde of Jumbo Bazookas. Yet there’s more to this story than central banks held hostage by speculative Bubbles. More than trade wars, weak global manufacturing and even the fragile European banking system, the vulnerable Chinese Bubble is a potential catalyst that could rather abruptly panic global markets and central bankers alike.”

I’m sure that British economist Peter Warburton, along with a lot of others back nearly twenty years ago, could have ever imagined that the world’s financial system would have degenerated into the Frankenstein monster that has come shambling forth over the last generation, particularly in the last six or seven months.  The situation is now totally out of control.

I’m going to trot out Warburton’s four most famous paragraphs from April 2001 yet one more time…

What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the U.S. dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.

It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil, and commodity markets? Probably, no more than $200 billion, using derivatives.

Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital so flagrantly that if the central banks were to lose the fight on the first front, then the stock of the investment banks would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.

Central banks, and particularly the U.S. Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.”

Now it’s not just the Fed fighting this battle, it’s now all the central banks of the world…”all for one, and one for all.”  But in the precious metals market, it’s mostly three U.S. banks.

The powers-that-be in the U.S. simply cannot allow any significant amounts of the tens of trillions of dollars sloshing around out there to find a home in hard assets, at least not at the moment.  And that’s why they’ve been preventing the Big 6 commodities from rising in price in response to an ever-increasing money supply — and desperate money looking for yield.  This is one of their last attempts to prevent that from happening.

They will fail.

And when they do, they will fail spectacularly.  Once the run to hard assets begins, there will be no stopping it.  And as I’ve said before on many occasions, that failure will come through either circumstance, or by design.  But it is coming.

All that I’m doing now is watching all this unfold with stark disbelief.  If you’re not afraid of the impending financial and monetary train wreck that draws ever nearer at an accelerating rate with each passing month…you should be.

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

Ed

Silver Was Closed Above Its 50-Day Moving Average

07 June 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much of anything until around 1 p.m. China Standard Time on their Thursday afternoon.  It edged a bit higher from that point until shortly before 10 a.m. in London. From that juncture, it crept unevenly sideways…with a slightly positive bias in COMEX trading…until around 1 p.m. in New York — and it was sold quietly and equally unevenly lower after that.

Gold traded within a one percent price range on Thursday, so I shan’t bother with the low and high ticks.

Gold was closed at $1,334.80 spot, up $5.00 from Wednesday.  Net volume was very decent at a bit over 257,000 contracts — and there was a hair over 7,000  contracts worth of roll-over/switch volume in this precious metal.

Like in gold, silver was sold quietly down to its low tick of the day by shortly after 9 a.m. in Shanghai on their Thursday morning.  It crept back to unchanged by shortly after 11 a.m. CST — and then traded flat until the London open.  It edged quietly and unevenly higher from that point until the high tick of the day…half a cent below $15 bucks in the July contract…came at the COMEX open.  ‘Da Boyz’ sold it quietly lower until 2:45 p.m. in the thinly-traded after-hours market — and it crept sideways into the 5:00 p.m. EDT close from there.

The low and high ticks in silver were reported by the CME Group as $14.73 and $14.995 in the July contract.

Silver was closed in New York on Thursday at $14.87 spot, up 8.5 cents from Wednesday.  Net volume was very decent as well, at a bit over 71,000 contracts — and there was just under 11,0000 contracts worth of roll-over/switch volume on top of that.

Platinum was up 3 bucks by shortly after 8 a.m. in Shanghai on their Thursday morning — and then traded very quietly sideways until the COMEX open.  It edged unevenly lower from there until the COMEX close — and was down two dollars on the day at that juncture, but gained that back just before trading ended at 5:00 p.m. in New York.  Platinum finished the day unchanged from Wednesday at $802 spot.

The palladium price was up four dollars by 11 a.m. China Standard Time on their Thursday morning — and then traded quietly and unevenly sideways until the equity markets opened in New York yesterday morning.  It chopped higher from that point, culminating in a price spike that was capped and turned sharply lower at 1 p.m. EDT.  From there it edged erratically sideways for the remainder of the New York session.  Palladium finished the day at $1,332 spot, up 17 dollars from Wednesday’s close.

The dollar index closed very late on Wednesday afternoon in New York at 97.32 — and opened down 3 basis points once trading commenced at 7:45 p.m. EDT on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning.  It crept back above unchanged by a bit shortly after that, before crawling unevenly lower until around 9:45 a.m. in London — and then crept back to the unchanged mark by 12:42 a.m. BST. It began to head for the abyss at that juncture, but the usual ‘gentle hands’ were there to catch that proverbial falling knife at the 96.78 mark at 8:50 a.m. in New York.  It rallied a bunch for the next hour, before rolling over hard again.  This time it was saved at the 96.82 mark around 11:45 a.m. EDT.  It ‘rallied’ unsteadily from there until 4:25 p.m. — and then faded a bit into the close.  The dollar index finished the day at 97.04…down 28 basis points from Wednesday.

There was no reaction from the precious metals to that waterfall decline that began about 7:45 a.m. in New York, or any other changes in the dollar index on Thursday.

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 folks over at the stockcharts.com Internet site.  The delta between its close…97.00…and the close on the DXY chart above, was 4 basis points on Thursday.  Click to enlarge as well.

The gold stocks edged higher at the open, but rolled over starting at the afternoon gold fix in London…10 a.m. EDT.  Their respective low ticks came at precisely 11:00 a.m. EDT…the London close…and they crept higher from there until shortly after 2 p.m. — and faded quietly and unsteadily into the close from there.  The HUI closed higher by 1.16 percent.

The price path for the silver equities was similar in most respects to their golden brethren, except their lows didn’t come until around noon in New York trading.  From that juncture they rallied quietly and very unsteadily higher until trading ended at 4:00 p.m. EDT.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 1.08 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 9 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the two short/issuers were International F.C. Stone and Advantage, with 6 and 3 contracts out of their respective client accounts.  There were only three long/stoppers — and the two largest were HSBC USA, with 6 contracts for its own account — and JPMorgan with 2 contracts for its client account.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in June declined by 55 contracts, leaving 1,282 still open, minus the 9 mentioned a couple of paragraphs ago.  Wednesday’s Daily Delivery Report showed that 28 gold contracts were actually posted for delivery today, so that means that 55-28=27 more gold contracts disappeared from the June delivery month.  Silver o.i. in June fell by 45 contracts, leaving just 5 left.  Wednesday’s Daily Delivery Report showed that 46 silver contracts were posted for delivery today, so that means that 46-45=1 more silver contract was just added to June.

There were no reported changes in GLD yesterday, which was rather counterintuitive once again.  But there was a deposit in SLV, as an authorized participant added another 1,217,567 troy ounces.

In our phone conversation yesterday, it was Ted’s opinion that both GLD and SLV are owed physical metal — and I’m sure that he’ll have something to say about that in his weekly review on Saturday.

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

There was a tiny bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  HSBC USA reported receiving 2,900 troy ounces — and that was all the activity there was, as nothing was shipped out.  I won’t bother linking this amount.

There was more movement in silver of course.  Only 20,058 troy ounces were received — and all of that went into Loomis International.  There was also 1,418,369 troy ounces shipped out, with the lion’s share of that…two very large truckloads…1,316,008 troy ounces, departed Loomis International as well.  The remaining amount came out of CNT and Delaware…99,475 troy ounces — and 2,885 troy ounces respectively.  The link to all this activity is here.

There wasn’t much happening over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  There was nothing reported received — and only 38 were shipped out of Brink’s, Inc. — and I shan’t bother linking this, either.


The Penrith Hoard is a dispersed hoard of 10th century silver penannular brooches found at Flusco Pike, Newbiggin Moor, Near Penrith in Cumbria, and now in the British Museum in London. The largest “thistle brooch” was discovered in 1785 and another in 1830, with the bulk of items being recovered in two groups close to each other by archaeologists in 1989. Whether all the finds made close to each other were originally deposited at the same time remains uncertain, but it is thought likely that at least the brooches were. The brooches are thought to have been deposited in about 930 A.D.

The large thistle brooch soon passed to the Leverian Museum, a private museum in Leicester Square in London. In 1787 a print of it was published, claiming that it was the insignia of the Knights Templar.

The earliest surviving finds were discovered in what was already called the “Silver Field” on Newbiggin Moor by a small boy in 1785, the name suggesting that earlier finds, now lost, had been made. In 1830 another smaller thistle brooch was found. Although the exact find spot is not known, this brooch is strongly suspected to have also come from the “Silver Field”. The usual reason for a hoard being “disbursed” is that routine farming operations like ploughing can move some items of a single hoard before they are discovered.

Later archaeological investigations in 1989 at the same spot revealed other silver items that confirmed that this was a dispersed hoard and not a solitary loss of one brooch. Two groups of items were found in nearby fields: one consisted of five Viking brooches, with fragments of two more, and the other of more than fifty items comprising coins, ingots, jewellery and hacksilver (jewellery and other silver pieces chopped up) of a very similar date. The brooches were declared to be “treasure trove” at an inquest held in Penrith on 23 July 1990, and entered the British Museum in 1991, joined by the other hoard in 2009.  Click to enlarge.

I have an average number of stories for you today.


CRITICAL READS

Heavy Duty Truck Orders Collapse to Worst Numbers Since July 2016, Down 70% in May

A bloated backlog of Class 8 orders as a result of a euphoric mid-2018 continues to weigh on heavy duty truck orders in 2019.

Preliminary North America Class 8 net order data from ACT Research shows that the industry booked just 10,800 units in May, down 27% sequentially, but also lower by an astonishing 70% year-over-year. YTD orders are down 64% compared to the first five months of 2018.

This chart shows the stunning difference between 2018 orders (black bars) and 2019 orders (red bars).  Click to enlarge.

Class 8 trucks, which are made by Daimler (Freightliner, Western Star), Paccar (Peterbuilt, Kenworth), Navistar International, and Volvo Group (Mack Trucks, Volvo Trucks), are one of the more common heavy trucks on the road, used for transport, logistics and occasionally (some dump trucks) for industrial purposes. Typical 18 wheelers on the road are generally all Class 8 vehicles, and traditionally are seen as an accurate coincident indicator of trade and logistics trends in the economy.

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

This news item put in an appearance on the Zero Hedge website at 12:26 p.m. EDT on Thursday afternoon — and I thank Brad Robertson for pointing it out.  Another link to it is here.


How $30 Trillion Disappears — Bill Bonner

Stocks went up on Tuesday and Wednesday – a total gain of 207 points for the Dow. Futures markets are predicting another up day today.

But the economy continues to sink. The longest expansion in U.S. history seems to be approaching its end. Here’s CNBC:

Job creation skidded to a near-halt in May in another sign that the U.S. economic momentum is slowing.

Companies added just 27,000 new positions during the month, according to a report Wednesday from payroll processing firm ADP and Moody’s Analytics that was well below Dow Jones estimates of 173,000.

The reading was the worst since around the time the economic expansion began and the jobs market bottomed in March 2010 with a loss of 113,000. Since then, the private payrolls count has increased by 21.3 million.

Another key indicator is the decline in bond yields (yields decline as demand drives bond prices higher). Economist Richard Duncan explains:

The flight to quality out of stocks and into bonds occurred because the outlook for corporate earnings is deteriorating rapidly due to the US-China trade war. The earnings outlook is deteriorating for two main reasons. First, there is a real possibility that China will take steps that sharply reduce the earnings of U.S. corporations doing business in China. And second, the global economy is slowing quickly and may soon be in recession.

Why, then, would investors buy stocks now? A recession will cut into sales and profits. Stocks should be worth less, not more.

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


Peso, Futures Slide as Pence Confirms “At This Point, Tariffs to Be Imposed Monday

Update (1930ET): While Mexico’s Foreign Minister Marcelo Ebrard confirmed no deal had been reached, he confirmed that Mexico has proposed to send about 6,000 national guard troops to its southern border with Guatemala to help stem migration.

Tomorrow we are going to maintain these conversations, we don’t have yet an agreement but we are advancing in order to reach an agreement,” Ebrard says

So, for all those establishment types so full of sound and fury at Trump’s tariff plan, it would appear it is working.

Update (1700ET): Vice President Mike Pence has confirmed that no deal with Mexico has been reached, noting that while talks are continuing, the Trump administration has asked Mexico to “significantly more,” and “at this point, tariffs will be imposed on Monday.”

White House spokeswoman Sarah Sanders says in statement that the administration’s “position has on a Monday deadline has not changed. We are still moving forward with tariffs at this time.”

This follows reports from Bloomberg claiming that the Trump administration was considering delays in implementing the tariffs.

This constantly changing news item [and headline] put in an appearance on the Zero Hedge website at 7:36 p.m. EDT on Thursday evening — and another link to it is here.


ECB Cuts Long-Term GDP Growth, Inflation Forecasts

With Draghi having already disappointed markets by failing to deliver a “big bang” announcement, and instead extending the lower for longer period until the first half of 2020 as was already priced in by the market, and unveiling less generous TLTRO III terms that left much to be desired, during today’s press conference Draghi also unveiled the ECB’s latest economic forecasts, which also confirmed that Europe is nowhere near ending its long-running economic malaise.

To wit, while the ECB revised up forecasts for 2019 euro-area growth and inflation by 0.1 percentage points in its new projections, it trimmed its 2020 and 2021 GDP forecasts from the March forecast, by 0.2% and 0.1%, respectively…

Not helping is that Draghi also said that “risks to the euro area are tilted to the downside.”

This rather brief 1-chart Zero Hedge article was posted on their Internet site at 8:56 a.m. on Thursday morning EDT — and it comes courtesy of Brad Robertson as well.  Another link to it is here.


Deflation alert in Europe as markets lose faith in ‘powerless’ ECB — Ambrose Evans-Pritchard

Futures markets in the eurozone are flashing the most serious deflation warning since the creation of the single currency, dismissing stimulus measures and dovish rhetoric from the European Central Bank as thin gruel in the face of mounting recession risks.

A closely watched gauge of inflation expectations — 5-year/5-year forward swap contracts — crashed to a record low of 1.23 percent today despite pledges from the ECB that it would hold interest rates at deeply negative levels far into 2020, and despite hints of more quantitative easing to head off a Japanese-style trap.

ECB president Mario Draghi said the bank is “determined to act in case of adverse contingencies” and will use all instruments in the toolbox — code for emergency stimulus if the slump in world trade deepens and a global economic downturn takes root.

Analysts say the policy shift comes too late, and is too tentative, to assuage worried investors. Pricing in futures contracts shows that markets do not believe the ECB will come close to meeting its 2pc inflation target over the next decade. This is an emphatic verdict of no confidence in the monetary management of the institution, but it also has dangerous macroeconomic consequences.

Peter Schaffrik at RBC said markets increasingly fear that the ECB has “fallen behind the curve” as prices tumble across the commodity nexus and returns on German government bonds hit historic lows. This is allowing a corrosive dynamic to take hold.

This AE-P commentary, posted in the clear on the gata.org Internet site yesterday evening EDT, is definitely worth reading.  Another link to it is here.


E.U. commission urges legal action against Italy over debt

The European Commission recommended Wednesday that legal action be launched against Italy because it failed to respect E.U. debt rules last year and is likely to do so again in 2019 and 2020, setting up a new confrontation with its populist government.

In coming weeks, E.U. member states must assess whether an “excessive deficit procedure” should be launched against Italy and the extent of any penalties. It could face billions of euros (dollars) in fines.

According to a new commission report, Italy’s public debt stood at 132.2% of GDP in 2018, far above the E.U.’s 60% limit.

Moreover, Italy is not projected to comply with the debt reduction benchmark in either 2019 or 2020 based on both the government plans and the commission 2019 spring forecast,” the report said. Debt is forecast to rise to 135%.

E.U. Commission Vice-President Valdis Dombrovskis told reporters that “Italy pays as much in debt servicing as for the entire education system. In 2018, Italy’s debt represented an average burden of 38,400 euros ($43,251) per inhabitant, and in addition the average debt servicing cost was around 1,000 euros ($1,126).”

He added that Italian economic “growth has come to almost a halt.”

This new story, from the france24.com Internet site, put in an appearance there at 2:55 p.m. CEST [Central European Summer Time] on Wednesday afternoon — and I thank Roy Stephens for sharing it with us.  Another link to it is here.


Trump Threatens China With Tariffs on “at least” Another $300 Billion of Goods

In the escalating war of words between the U.S. and China, overnight President Trump threatened to hit China with tariffs on “at least” another $300 billion worth of Chinese goods, although he thought both China and Mexico wanted to make deals in their trade disputes with the United States.

Our talks with China, a lot of interesting things are happening. We’ll see what happens… I could go up another at least $300 billion and I’ll do that at the right time,” Trump told reporters before boarding Air Force One at the Irish airport of Shannon on his way to France for D-Day commemorations. He added that he thinks “China wants to make a deal and I think Mexico wants to make a deal badly.”

In Beijing, China’s Commerce Ministry struck a defiant tone. “If the United States wilfully decides to escalate tensions, we’ll fight to the end,” ministry spokesman Gao Feng told a regular news briefing. “China does not want to fight a trade war, but also is not afraid of one. If the United States wilfully decides to escalate trade tensions, we’ll adopt necessary countermeasures and resolutely safeguard the interests of China and its people.”

As Reuters reported, China’s Commerce Ministry also issued a report on how the United States has benefited from years of economic and trade cooperation with China, saying U.S. claims that China has taken advantage in bilateral trade were groundless.

Since the new U.S. administration took office, it has disregarded the mutually beneficial and win-win nature of China-U.S. economic and trade cooperation, and has advocated the theory that the United States has ‘lost out’ to China on trade,” the ministry said in a research report.

It has also taken the trade deficit issue as an excuse to provoke economic and trade frictions.”

Just as ominous for those who still hope a prompt resolution to trade tensions is coming, while Trump said on Thursday that talks with China were ongoing, no face-to-face meetings have been held since May 10, the day the U.S. increased tariffs on a $200 billion list of Chinese goods to 25%, prompting Beijing to retaliate.

This Zero Hedge article, also courtesy of Brad Robertson, appeared on their website at 8:27 a.m. on Thursday morning EDT — and another link to it is here.


Burning the Candle at Both Ends — Dennis Miller

I was frustrated. I need solid, safe income. The bank bailouts will eventually cause high inflation.

Interest rates were not keeping up. Investors, desperate for income, had few choices and the stock market was setting records. How do you invest, earn safe income while protecting your capital and buying power all at the same time?

I asked that question in every booth I visited at the Money Show. No one addressed my concerns – they just hawked their particular investment products as the magic pill.

When I asked, “What about gold?” I generally heard, “It provides no income” or, “It’s too risky!

Brokers don’t want you investing in gold, they can’t earn fees from it. When I asked about gold stocks, they looked at me like an escapee from a leper colony.

With historic government debt and unfunded liabilities, there is no way the government can tax or grow their way out of debt. No wonder readers are concerned about inflation.

This interesting gold-related commentary from Dennis was posted on his Internet site on Thursday morning sometime — and another link to it is here.


Agnico-Eagle may fly gold from Mexico to avoid Trump’s tariffs

If push comes to shove, one of the world’s largest gold miners is prepared to do an end run around the U.S. should President Donald Trump’s threatened tariffs on Mexican goods bite.

Agnico Eagle Mines Ltd. currently produces about 300,000 ounces of gold in Mexico that it refines in the U.S., all of which would likely be subject to the proposed tariffs, Chief Executive Officer Sean Boyd said Wednesday. But he already knows how he’d respond to potential levies.

It’s not expensive to fly a bar of gold,” Boyd said in an interview at Bloomberg’s Toronto bureau. “We would just refine it somewhere else. We could easily bring it to Canada.”

Meanwhile, the Toronto-based company, Canada’s second-largest gold miner, is reaping some benefits from U.S. isolationism. Global trade jitters have strengthened the U.S. dollar at the expense of the Mexican and Canadian currencies, significantly reducing Agnico’s costs, he said.

In the hour-long interview, Boyd discussed a wide range of issues, from consolidation in the gold industry to the succession plan for a company he has helmed for more than 20 years.

This gold-related Bloomberg article showed up on their Internet site at 2:00 a.m. PDT on Thursday morning — and I found it embedded in a GATA dispatch yesterday morning.  Another link to it is here.


The PHOTOS and the FUNNIES

Today’s first photo was taken as we climbed out of the valley between Seton Lake — and Lillooet on the Fraser River, looking down on the area where we had taken photos from that appeared in Thursday’s column.  We were on B.C. Highway 99 — and if we’d kept on going, we would have been in Whistler in a few hours — and Vancouver an hour and change after that.  We ran into a small herd of mule deer — and I took this shot while still sitting in the driver’s seat.  No telephoto needed for this!  The last picture was taken a handful of kilometers north of Lillooet on B.C. Highway 40 — and on the west side of the river looking north.  Click to enlarge.


The WRAP

After the brutal price capping by ‘da boyz’ on Wednesday, the precious metal market was certainly quieter on Thursday, although the volumes in both silver and gold were higher than than I wanted to see.

Gold is up a bit over 70 bucks from its low in the third week of May — and now in overbought territory by a bit.  What it’s allowed to do from here regarding price, is anyone’s guess.  But after Wednesday’s price action, it’s obvious that ‘da boyz’ are still very much in control of the price.

Silver traded above both big moving averages again on Thursday — and was closed above its 50-day — and two cents below its 200-day.  The RSI trace is showing ‘market neutral’ at the moment.

Platinum wasn’t allowed to do much, although palladium rallied by a decent amount before it was capped.  Both copper and WTIC closed a bit higher on Thursday.

Here are the 6-month charts for the Big 6 commodities, so you can see these changes for yourself.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are just a minute away — and I see that the gold price has been stair-stepped lower almost since trading began in New York on Thursday evening — and is currently down $4.20 an ounce. The silver price has been wandering very quietly sideways, but is down 2 cents at the moment. It’s been the same price pattern for platinum as for silver — and it’s down 2 dollars. Ditto for platinum, as it’s also down 2 bucks as Zurich opens.

Net HFT gold volume is pretty quiet at a bit over 31,000 contracts — and there’s only 311 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is a piddling 5,800 contracts — and there’s a minuscule 22 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened down 3 basis points once trading commenced at 7:45 p.m. EDT in New York on Thursday evening., It has been creeping quietly higher since — and is up 5 basis points as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich.


Today, around 3:30 p.m. EDT, we get the latest Commitment of Traders Report, plus the companion Bank Participation Report — and I’m already on record as saying that the report for both gold and silver won’t make for happy reading…particularly gold.

Ted had this to say about what the COT Report might show for gold in his mid-week commentary on Wednesday…”considering gold’s strong price advance through yesterday’s cutoff for the COT report to be issued Friday, I would be quite surprised if we didn’t witness one of the largest weekly increases in managed money buying and commercial selling, along the lines of 50,000 to 60,000 net contracts, maybe more.”  And in silver…”I’m not at all sure what to expect in Friday’s COT report. In fact, I’m less sure about this coming COT report than I can recall. Yes, the [silver price] advanced every single trading day on much heavier than usual trading volume, and was up more than 50 cents for the reporting week at the highs. This argues for a substantial amount of managed money buying, perhaps on the order of 10,000 contracts or more (hopefully, not more than 20,000 contracts)

Ted went on to mention the fact that silver didn’t break above its 50, 100 or 200-day moving averages during the reporting week — and that silver’s open interest for the week was “little changed“.  That’s why he’s “less sure” about silver than he is about gold.


And as I post today’s missive on the website at 4:02 a.m. EDT, I note that all four precious metals are higher as the first hour of London/Zurich trading ends. Gold is back at unchanged — and silver is now up 4 cents. Platinum and palladium are both up a dollar.

Gross gold volume is coming up on 43,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is 42,000 contracts. Net HFT silver volume is 7,700 contracts — and there’s still only 63 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index is off its earlier high of an hour or so ago — and of of 8:45 a.m. in London/9:45 a.m. in Zurich, the dollar index is back at unchanged on the day.

This morning at 8:30 a.m. EDT in Washington, we get the latest jobs report — and I wouldn’t be surprised to see some rather significant price activity in silver and gold at that point — and the dollar index as well.  Which way — and by how much, remains to be seen.

That’s all I have for today.  Have a good weekend — and I’ll see you here on Saturday with all of the above data…warts and all!

Ed

‘Da Boyz’ at Battle Stations Once Again

06 June 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price basically flat-lined in morning trading in the Far East, but began to show some signs of life starting around 1 p.m. China Standard Time on their Wednesday afternoon.  It began to edge unevenly higher from there, before taking flight at the COMEX open.  JPMorgan et al showed up less than fifteen minutes later with all guns blazing — and engineered the price lower until around 11:40 a.m. EDT.  It crept a bit higher from there into the 5:00 p.m. close.

The low and high ticks were reported by the CME Group as $1,329.30 and $1,348.90 in the August contract.

Gold was closed at $1,329.80 spot, up $4.70 on the day.  Net volume was over the moon once again at a hair over 401,000 contracts — and roll-over/switch volume amounted to a bit over 14,000 contracts.

It was essentially the same for silver, except the ‘rally’ that began at 1 p.m. CST certainly wasn’t allowed to develop into anything — and it was barely above unchanged by the COMEX open.  At that point, it took off to the upside, but was capped and driven lower almost as soon as it broke above the $15 spot mark, which came a bit after 9:15 a.m. in New York.  That price spike blew silver through both its 200 and 50-day moving averages in the process.  The engineered price decline in silver also ended around 11:40 a.m. EDT — and it recovered a penny or two, but was not allowed to close in positive territory.

The low and high ticks in silver were recorded as $14.755 and $15.04 in the July contract.

Silver was closed on Wednesday at $14.785 spot, down 1.5 cents from Tuesday.  Net volume was past the orbit of Saturn at a bit over 120,500 contracts — and there was around 12,200 contracts worth of roll-over/switch volume out of July and into future months.

Platinum traded flat until about 1:45 p.m. China Standard Time on their Wednesday afternoon — and it began to head higher from there — and was up 12 bucks or so by the COMEX open…and back above its 200-day moving average.  Like for silver and gold, ‘da boyz’ appeared ten minutes or so later — and hammered the price to its $800 spot low tick, which appeared to come a few minutes before the COMEX close.  It didn’t do much of anything after that.  Platinum was closed at $802 spot, down 17 dollars from Tuesday.

The palladium price chopped very unevenly sideways until about ten minutes before the Zurich close — and it was at that time that JPMorgan et al appeared, with the low of the day coming a few minutes after 12 a.m. in New York.  It struggled unevenly higher from there, but was closed at $1,315 spot, down 13 bucks on the day.

The dollar index closed very late on Tuesday afternoon in New York at 97.07 — and opened up 5 basis points once trading commenced at 7:45 p.m. EDT on Tuesday evening.  It began to sag from that juncture – and every time it did, those ‘gentle hands’ appeared — and lifted it back above the 97.00 mark…albeit very briefly each time.  I counted eight interventions over the next twelve hours.  But the roof finally caved in at 8:12 a.m. in New York — and those ‘gentle hands’ appeared with renewed vigour at the 96.75 low tick at 8:38 a.m. EDT — and ramped it higher for almost the entire remainder of the New York trading session.  The dollar index was closed at 97.32…up 25 basis points on the day — and back above its 50-day moving average by a bit.

You shouldn’t need me to tell you that the ramp job in the dollar index came at the precise moment that the prices of gold, silver and platinum were capped — and then hammered to their lows of the day.  This was most certainly a coordinated effort involving the entire PPT.  Palladium was added to the list as an afterthought several hours and change later.

Here’s the DXY chart, courtesy of Bloomberg — and the signs of intervention are everywhere you care to look.  Click to enlarge.

Here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…97.25…and the close on the DXY chart above, was 7 basis points on Wednesday.  Click to enlarge as well.

The gold stocks gapped up over two percent at the open, but were then sold lower until ‘da boyz’ were through with their engineered price decline in gold, which came around 11:40 a.m. in New York trading.  They crawled quietly and unevenly higher from there — and actually made it back into positive territory by a bit by the close.  The HUI finished up 0.18 percent.

The silver equities were up a bit over 4 percent by a minute or so before 10 a.m. EDT, but then were also sold back into negative territory by a few minutes before noon in New York trading.  They didn’t do much of anything after that.  And despite a weak rally attempt in the last fifty minutes of trading, couldn’t quite managed a positive close.  Nick Laird’s Intraday Silver Sentiment/Silver7 Index finished down 0.48 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report for Day 5 of June deliveries in gold, showed that 28 gold and 46 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, of the four short/issuers in total, the largest by far was International F.C. Stone, as they issued 22 contracts — and in very distant second place was Advantage with 4 contracts.  All amounts were from their respective client accounts.  There were five long/stoppers — and the biggest was HSBC USA with 16 contracts for its in-house/proprietary trading account.  JPMorgan stopped 3 for its client account.

In silver, the sole short/issuers was ADM — and of the four long/stoppers, the only one that mattered was JPMorgan, stopping 41 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 June declined by 29 contracts, leaving 1,337 still around, minus the 28 contracts that were mentioned a few short paragraphs ago.  Tuesday’s Daily Delivery Report showed that 52 gold contracts were actually posted for delivery today, so that means that 52-29=23 gold contracts just got added to the June delivery month.  Silver o.i. in June rose by the 46 contracts that showed up in the Daily Delivery Report just above, leaving 50 still open.  There were zero silver contracts posted for delivery today.


There was a rather counterintuitive withdrawal from GLD yesterday, as an authorized participant took out 66,062 troy ounces of gold.  That’s absurd on the face of it — and I’ll get into it in the next paragraph.  Over at SLV, there was a fairly healthy deposit, as an a.p. added 2,524,831 troy ounces of silver.

With the gold price roaring higher, accompanied by heavy buying in GLD, physical gold should be pouring into that ETF.  True, there was a big deposit on Monday, but nothing on Tuesday — and then this sizeable withdrawal yesterday.  I would suspect — and I’ll leave it to Ted to be the final judge on this matter — that there was a very sizeable addition to GLD yesterday, but it was masked by an even larger withdrawal, as someone [think JPMorgan] converted a whole pile of GLD shares — and redeemed them for physical metal.  This is wild-ass speculation on my part, but that’s the best explanation I can come up with under the current circumstances.

The other possible explanation is that Wednesday’s withdrawal/conversion of shares was all there was — and that some authorized participants in gold are shorting GLD shares in lieu of depositing physical metal.  This is something that Ted and I discussed briefly on Tuesday.

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

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

There was some activity in silver, but not a whole lot. There was 237,207 troy ounces received — and 220,901 troy ounces shipped out.  All of the ‘in’ activity was at Brink’s, Inc.  In the ‘out’ category, there was 121,130 troy ounces shipped out of Loomis International — and the remaining 99,770 troy ounces departed CNT.  There was also a paper transfer of 45,887 troy ounces from the Registered category — and back into Eligible over at Brink’s, Inc.  The link to all this is here.

There wasn’t much happening over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  Nothing was reported received — and only 4 kilobars were shipped out of Brink’s, Inc.  I won’t bother linking this, either.


Here are two more charts that Nick sent around last Friday, both of which had to wait until I had space — and today’s the day.  They show the current gold and silver holdings of all know depositories, mutual funds and ETFs, as of the close of business on Friday, May 31.  For that business week, there was 37,000 troy ounces of gold, plus 161,000 troy ounces of silver added on a net basis during that week.  Click to enlarge for both charts.

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


CRITICAL READS

U.S. Services Growth Weakest Since Feb 2016, Flashes “Worrying Signs For Economy

Following the collapse in both PMI and ISM surveys for U.S. Manufacturing, Services surveys for May were expected to slide (tracking the rest of the world’s give-up of the Services sector outperformance overnight) but as is so typical, the surveys are entirely opposite of one another!!

  • U.S. Services PMI survey dropped to 50.9 – the weakest since February 2016
  • U.S. Services ISM survey jumped to 56.9 – highest since February 2019

Spot The Odd One Out!!  Click to Enlarge.

Even more ridiculous is that PMI reports that business expectations are at their lowest level since June 2016, but ISM’s Service employment index rose to 58.1 vs. 53.7 – the largest monthly increase in employment index in two years.

ISM respondents appear in a world of their own seeing a pickup in new orders, employment, and business activity in May (that no one else anywhere saw)…

Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit notes that “The survey data indicate a deterioration of annualised GDP growth to just 1.2% in May, down from 1.9% in April, putting the second quarter on course for a 1.5% rise.

This chart-filled article was posted on the Zero Hedge website at 10:04 a.m. EDT on Wednesday morning — and it comes to us courtesy of Brad Robertson.  Another link to it is here.  A related ZH story is headlined “ADP Employment Growth Crashes to 9 Year Lows” — and that’s from Brad as well.


The Disconnect Between the Economy and Stocks is at Record Highs

The bear case for U.S. stocks is getting more compelling by the day, according to Bloomberg macro strategist Mark Cudmore.

Via Bloomberg…”There’s been a remarkable deterioration in the macro environment since my column last week, yet U.S. equities have gained in value. This divergence is unsustainable but it’s a reminder that bear markets take many months to play out.”  Click to enlarge.

Amid an intensifying tit-for-tat on trade, it should be increasingly clear to even the most optimistic of analysts that any deal between the U.S. and China will be very difficult to achieve and is by no means imminent.

Economists are starting to reduce their growth projections but there’s a great amount of global economic damage still to be factored in. Equity strategists mostly remain in denial but, at some point, they will speak to their eco colleagues and slash earnings forecasts, making overvalued U.S. stocks appear even more expensive.

Never mind the U.S. seems determined to also pick a fight with its second-largest trading partner (after China) with the threat of imminent tariffs on Mexico. They will be exceptionally damaging to U.S. companies if implemented, but harm has already been done either way, just by floating the idea after a trade agreement was negotiated and agreed. Policy uncertainty will linger, prompting business owners to hold back capital expenditure and encourage supply chains to bypass the U.S..

And then there’s the marginal negative of removing tariff exemptions on India, the world’s fifth-largest economy.

All this, and yet the S&P 500 has fallen less than 5% since I first turned bearish on April 30, via this column. And back then, an imminent U.S.-China trade deal was still the base case!

That size and scope is to make the point how much downside is still ahead of us — not that it will occur immediately nor in a straight line. Bear markets are always difficult to trade and bear market rallies can be savage.

This 3-chart commentary put in an appearance on the Zero Hedge website at 9:50 a.m. on Wednesday morning EDT — and it’s from Brad as well.  Another link to it is here.


What Comes From Disrespecting Mr. Market — Bill Bonner

A big day on Wall Street yesterday.  [Tuesday – Ed]

The Dow was up more than 500 points after Federal Reserve chairman Jerome Powell told investors they have nothing to fear. FXNews is on the case:

Here are the highlights from this morning’s “Conference On Monetary Strategy, Tools, And Communications Practices” in Chicago:

We [FED] are closely monitoring the implications of recent developments [tariffs] on the U.S. economic outlook

We [FED] will act as appropriate to sustain the expansion

FED policy remains data dependent

Persistently low inflation could lead to downward drift in expectations

Yes, the great wizards at Fed headquarters will heal every wound, soothe every heart, and make sure there is no pot without a chicken in it.

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


Air Cargo Demand Continues to Plunge as World Trade Sinks

The International Air Transport Association (IATA) published a new report for global air freight markets showing that demand (measured in freight tonne kilometers (FTKs)), plunged 4.7% in April on a YoY basis. The trend turned negative in January as YoY demand declined thanks to a synchronized global downturn and deepening trade war.

Air freight operators are expecting a further deterioration in global growth in 2H19. Trade tensions between Washington and Beijing dramatically flared up last month, and industry experts warned global trade volume is in free fall.

If we see further deterioration and tariff increases, there will be further damage to world trade,” IATA director general Alexandre de Juniac said on a conference call. “It will be a difficult year for world cargo.”

This 2-chart Zero Hedge news item showed up on their Internet site at 4:15 a.m. on Wednesday morning EDT — and I thank Brad Robertson for this one as well.  Another link to it is here.


Doug Casey on What Happens After the Next War

International Man: The U.S. government is actively at war in about half a dozen countries. It’s eyeing new conflicts all the time.

On the topic of getting involved in another war… President Trump was reported to have said this about his National Security Advisor John Bolton: “If it was up to John, we’d be in four wars now.”
What do you make of all this?

Doug Casey: Where to start?

Well, first of all, things are out of control. The U.S. Government has become so big, so dysfunctional, and with its fingers in so many pies that anything can happen, unpredictably.

Secondly, it’s extremely dangerous. Prodding lots of hornet’s nests guarantees you’ll be stung—perhaps enough to put you in the hospital. Third, it’s extraordinarily expensive. And the U.S. Government is already bankrupt.

As you pointed out, the U.S. is actively at war in right now in who knows how many countries— including at least a half a dozen in Africa that nobody can find on a map. There are combat troops in probably 100 countries around the world. There are probably 800 bases around the world. These things are all just trip wires waiting for an accident or an incident to draw the country into a real war. So far—at least since the misadventure in Vietnam—the U.S. has just engaged in trouble-making exercises and sport wars. But the big thing on the horizon right now is Iran. This is hunting big game.

This very worthwhile commentary by Doug showed up on the internationalman.com Internet site on Wednesday sometime — and another link to it is here.


China, Russia Urged to Continue Efforts to De-fang U.S. dollar Sanctions Weapon

China and Russia should avoid using U.S. dollars in financial translations to minimise Washington’s ability to bully other countries into following its rules with the threat of sanctions, according to a top adviser to Russian President Vladimir Putin.

The two nations have been keen to cut their dependence on the U.S. dollar for some time, and continue to talk about establishing a new system for direct yuan-rouble settlements despite multiple delays.

The U.S. is the most powerful economy in the world. If we want to avoid dollar hegemony, the first thing we need to do is to avoid using dollars, because the foundation of the U.S. economy is based on the dollar reserves owned by other countries and this has given it the ability and confidence to press other countries to play by its rules,” said economist Sergey Glazyev.

U.S. influence would eventually be weakened if we do so.”

This worthwhile news item appeared on the South China Morning Post website at 7:30 p.m. HKT on their Wednesday afternoon, which was 7:30 a.m. EDT in Washington…EDT plus 12 hours.  I found it embedded in a GATA dispatch — and another link to it is here.  The rt.com spin on this is headlined “Dollar dump? Russia & China agree to bilateral trade in national currencies during Putin-Xi meeting” — and I thank George Whyte for passing that one our way.


Beijing Warns U.S. Farmers May Lose Chinese Market For Good

Han Jun, the Chinese vice-minister of agriculture and rural affairs, says American farmers risk losing the entire Chinese market in the deepening trade war, reported South China Morning PostClick to enlarge.

The U.S. began collecting 25% tariffs on $200 billion of Chinese goods arriving at all ports on Saturday morning in an intensification of the trade war. Earlier that morning, China also began collecting 25% tariff on $60 billion of American goods.

Jun said the retaliatory tariffs covered all American agricultural products, a warning that American farmers could lose significant market share in 2H19 and beyond.

If the U.S. doesn’t lift all additional tariffs [levied on Chinese products], bilateral agricultural product trade between China and the U.S., including soybean trade, will never go back to normal,” Jun told Xinhua news agency. “If the U.S. loses China’s market, it will be very difficult for the U.S. to regain it.”

Jun spoke about the developing farm crisis in the Midwestern U.S. but played down the impact of the trade war on the Chinese economy.

The agriculture official said President Trump’s farm bailout(s) wouldn’t be enough to cover the losses if American farmers were entirely shutout of the Chinese market. China can withstand the trade war, he added, indicating the government will incentivize domestic farmers to plant more of the crop and could also resort to other countries, like Argentina and Brazil.

This news story put in an appearance on the Zero Hedge website at 9:25 p.m. EDT on Wednesday evening — and another link to it is here.


GLD turnaround very positive for gold — Lawrie Williams

Gold showed signs of weakness through most of April and May and no less than 35 tonnes of gold were liquidated out of GLD, the world’s largest gold ETF, between April 1st and the Memorial Day holiday on May 27th. But as so often seems to be the case, the U.S. holiday seemed to trigger a turning point and, since then, GLD has added 22 tonnes of gold to its holdings. And the GLD increase has coincided with a very sharp uptick in the gold price which is currently approaching $1,350 spot as I write – a big increase from a low point of around $1,275 only a week ago.

This is no coincidence as both the GLD deposits and the rising gold price signify a major change in sentiment about the prospects for gold from some of the big money funds. Ray Dalio’s Bridgewater, reputed to be the world’s biggest hedge fund with around $150 billion under management, has been leading the clarion call for gold. Dalio is said to be a gold believer and is reported as recently having his fund increase its gold exposure in the light of what he sees as an escalating trade war between the U.S. and China which he regards as potentially moving out of control. In a recent blog post he noted “History shows that countries in conflict have seen that such conflicts can easily slip beyond their control and become terrible wars that all parties, including the leaders who got their countries into them, deeply regretted, so the parties in the negotiations should be careful that that doesn’t happen. Right now we are seeing brinksmanship negotiations, so it is a risky time.”

Lawrie appears to have the sequence of events backwards, as it’s the purchase of GLD shares that causes this ETF to buy physical gold and add it to the fund.  The fund doesn’t just buy gold out of the blue for no reason, the purchase of GLD shares comes first — and the physical metal deposit follows.  This commentary was posted on the Sharps Pixley website [which has been off-line for a couple of days] on June 5 — and another link to it is here.


The PHOTOS and the FUNNIES

The town of Lillooet is sprawled along a large area of the west bank of the Fraser River between two very impressive mountain ranges — and where the Seton River/Lake drains into the Fraser.  The gorge/mountain pass along the 5 kilometer long river is one of the most impressive and photogenic sights that I have ever been in — and the three photos below barely hint at the majesty of the place.  And it was incongruous to see deciduous and coniferous trees, plus lush grass, growing side by side with desert sage brush.  All three photos were taken within a hundred meters of each other…the first one looking due east — and the last two looking west over the lake. It’s less than a fifteen minute drive from this spot to downtown Lillooet.  Click to enlarge.


The WRAP

Yesterday’s price activity in just about everything that mattered, should leave know doubt in anyone’s mind that the President’s Working Group on Financial Markets…a.k.a. the Plunge Protection Team…were everywhere yesterday, but particularly in the currency and precious metal markets.

Left to its own devices the free market was about to pass judgement on everything paper, particularly the U.S. dollar, which would have certainly crashed and burned, if allowed…which it just as obviously wasn’t.  The precious metals showed every indication that they were about to mark down the value of all paper currencies by a very large percentage, but those attempts were also halted in their tracks.

‘Da Boyz’ did “whatever it took“…to paraphrase ECB chairman Mario Draghi.  But it’s obvious that the rot in the financial system — and all things paper, is now so deep and so vast on a world-wide basis, that “whatever it takes” won’t be enough some day.  However, what exact day that will be, I don’t know…but it marches ever closer, as these are desperate acts by equally desperate men.

As I pointed out earlier, silver broke above both its 50 and 200-day moving averages on an intraday basis on Wednesday, before being hauled lower — and closed down on the day.  It was the same for platinum’s 200-day moving average…back above it for a decent gain, but closed below it for an even bigger loss.  Copper was also closed at a new low move for this engineered price decline — and ditto for WTIC.

The Managed Money traders got slaughtered yesterday — and JPMorgan et al made out like the bandits they are.  Too bad Wednesday’s price/volume action won’t be in tomorrow’s COT Report — and I’m sure that fact was dutifully noted by the powers-that-be as they went about their market management procedures yesterday.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and the above-mentioned changes should be duly noted.  Click to enlarge for all.

And as I type this paragraph, the London open is less than a minute away — and I note that the gold price ticked a bit higher as soon as trading commenced in New York at 6:00 p.m. EDT on Wednesday evening, but that wasn’t allowed to last long. The current low tick, such as it was, came a few minutes after 9 a.m. China Standard Time on their Thursday morning. It has been edging unevenly higher since — and is currently up $1.80 an ounce. The price path for silver was mostly similar — and it’s up 4 cents. Platinum crept higher until shortly after 8 a.m. CST — and it has been trading quietly sideways ever since — and is up 4 dollars at the moment. The palladium has been trading unevenly sideways a few dollars either side of unchanged — and it’s up 2 bucks as Zurich opens.

Net HFT volume is a bit over 49,500 contracts — and there’s only 367 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is coming up on 11,500 contracts — and there’s 873 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down 3 basis points once trading began at 7:45 p.m. EDT in New York on Wednesday evening, which was 7:45 a.m. China Standard Time on their Thursday morning. It made it up above the unchanged mark, but began to turn lower starting around 9:15 a.m. CST, with its current low tick, such as it is, coming at 2:04 p.m. CST, which was at, or about ten minutes before, the afternoon gold fix in Shanghai. It’s down 3 basis points currently.


Tomorrow we get the latest and greatest Commitment of Traders Report…sans Wednesday’s data…and also the companion Bank Participation Report.  I am not looking forward to seeing what’s in either one.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price has crept a bit higher during the first hour of London trading — and is up $4.30 the ounce at the moment. Silver is now up 9 cents. Platinum is up 2 dollars — and palladium is up 5 as the first hour of Zurich trading ends.

Gross gold volume is getting up there at around 66,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is about 64,500 contracts. Net HFT silver volume is coming up on 14,800 contracts — and there’s 967 contracts worth of roll-over/switch volume in this precious metal.

The dollar index had a bit of an up/down move during the last hour — and as of 8:45 a.m. GMT in London — 9:45 a.m. CEST in Zurich, it’s down 6 basis points from Wednesday’s close.

One has to wonder what ‘da boyz’ have in store for us during the COMEX trading session today, but it appears that the final battle between paper and physical has now switched into high gear.

See you here tomorrow.

Ed

A Quiet Day in Silver & Gold on Tuesday

05 June 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Every rally in the gold price on Tuesday, no matter how insignificant it appeared to be, ran into a willing seller on numerous occasions — and each was sold quietly lower.  The ‘high’ of the day came a bit after 9 a.m. in London — and the low, at the COMEX open.  Neither is worth looking up.

Gold was closed on Tuesday afternoon in New York at $1,325.10 spot, up 30 cents from Monday.  Net volume was very heavy once again at a bit under 312,000 contracts — and there was 9,300 contracts worth of roll-over/switch volume on top of that.

The price pattern in silver was slightly different — and much fore erratic.  It followed the same price path as gold until around 9:45 a.m. in London — and then was sold down pretty hard until the low tick of the day, which came at the COMEX open as well.  It rallied fairly sharply from that point until shortly after the afternoon gold fix in London, before getting sold lower until around 11:30 a.m. in New York.  It edged higher from there — and had a bit of a price spike shortly before 4 p.m….which wasn’t allowed to last more than a minute or so.  It didn’t do a thing from there until trading ended at 5:00 p.m. EDT.

The low and high ticks were reported by the CME Group as $14.645 and $14.825 in the July contract.

Silver was closed on Tuesday at $14.80 spot, up 3.5 cents on the day.  Net volume was way up there once again at a bit under 85,500 contracts — and there was a bit under 12,500 contracts worth of roll-over/switch volume out of July and into future months.

The platinum price traded quietly and unevenly sideways everywhere on Planet Earth yesterday — and it finished the Tuesday session at $819 spot, down a dollar on the day.

After a brief tick up in early morning trading in the Far East, the palladium price was sold lower until shortly before the Zurich open.  As soon as trading began in Zurich, it jumped back to almost unchanged — and then didn’t do much until shortly after 1:30 p.m. CEST.  It blasted higher until minutes after 8 a.m. in New York — and then chopped nervously higher until the afternoon gold fix in London.  It was sold down about 15 bucks shortly after that, but gained some it back going into the 5:00 p.m. close.  Palladium was closed at $1,328 spot, up 19 dollars on the day, but obviously would have closed higher, if allowed.

The dollar index closed very late in New York on Monday afternoon at 97.14 — and opened up 7 basis points once trading commenced at 7:45 p.m. EDT on Monday evening, which was 7:45 a.m. CST in Far East trading on their Tuesday morning.  From that juncture it chopped and flopped around about ten or fifteen basis points either side of unchanged.  It was up about 15 basis points by noon in New York, but gave all of that back, plus a bit more by around 2:10 p.m. EDT — and it crept quietly higher into the close from there.  The dollar index closed on Tuesday at 97.07…down 7 basis points from Monday.

However, I do get the impression from looking at the DXY chart below, that the usual ‘gentle hands’ were there a very few minutes after the London open yesterday morning, as it would have certainly sliced below the 97.00 mark if they hadn’t.  And I also feel the same about the dips in afternoon trading in New York.

Here’s the DXY chart from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of stockcharts.com — and the delta between its close…97.00…and the close on the DXY chart above, was 7 basis points on Tuesday.  Click to enlarge as well.

The gold stocks gapped down a percent and change at the 9:30 open in New York on Tuesday morning, but began to rally quietly and very unevenly higher for the remainder of day.  The HUI closed higher by 1.21 percent.

It was about the same for the silver equities, except they chopped quietly and unevenly sideways either side of unchanged on Tuesday in New York — and only a quick spike up at the close prevented them from finishing down slightly on the day.  As it was, Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 0.68 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report for Day 4 of the June delivery month in gold showed that 52 gold and zero 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 three that mattered were International F.C. Stone, Advantage — and Marex Spector…as they issued 22, 19 and 7 contracts from their respective client accounts.  Of the eight long/stoppers in total, by far the largest was HSBC USA, picking up 30 contracts for its in-house/proprietary trading account.  In very distant second and third place were JPMorgan and International F.C. Stone, with 8 and 6 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 June declined by 396 contracts, leaving 1,366 open, minus the 52 contracts mentioned a couple of paragraphs ago.  Monday’s Daily Delivery Report showed that 358 gold contracts were actually posted for delivery today, so that means that 396-358=38 more gold contracts vanished from the June delivery month.  Silver o.i. in June fell by 1 contract, leaving just 4 left.  Monday’s Daily Delivery Report showed that only 1 silver contract was posted for delivery today, so the change in open interest and the deliveries match.


There were no reported changes in GLD yesterday, but there was a small withdrawal from SLV, as an authorized participant took out 128,696 troy ounces.  A smallish amount like that would certainly represent a fee payment of some kind.

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

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday was 4,983.405 troy ounces/155 kilobars [SGE kilobar weight] that was shipped out of Brink’s, Inc.  There other activity involved a paper transfer of 34,970 troy ounces from the Eligible category — and into Registered.  That’s certainly gold that is about to be delivered in the June contract.  The link to this is here.

There was some activity in silver, as 601,406 troy ounces were received — and 621,540 troy ounces were shipped out.  In the ‘in’ category, there was one truckload…600,435 troy ounces received at CNT — and the remaining 971 troy ounces…one good delivery bar…was dropped off at Delaware.  In the ‘out’ category, there was one truckload…601,482 troy ounces…shipped out of CNT — and the remaining 20,058 troy ounces departed HSBC USA.  The link to this is here.

There was also some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They received 1,030 of them — and didn’t ship any out.  All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two more charts that Nick passed around last Friday — and that had to wait for today’s column because of space issues.  The first show gold imports and exports into and out of the European Union, updated with March’s data.  During that month they imported 93.4 tonnes — and shipped out 64.0 tonnes. Click to enlarge.

These next two charts show the countries and amounts that imported gold into the E.U. countries — and the second chart shows the countries and tonnage that the E.U. countries shipped gold to.  It should be noted that the U.K. stood out head and shoulder above all other in the import/export categories, as they are the largest physical bullion market in the world.  Click to enlarge for both.

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


CRITICAL READS

Global Manufacturing PMI Contracts To 7-Year Low

While Morgan Stanley signaled that the probability of a U.S. recession in one year is now 60%, the highest it has been since the global financial crisis, judging by JPMorgan’s global manufacturing PMI, we may already be there.

Trade tensions have re-emerged at a critical moment in the global cycle. Corporate  confidence is weak, and we argue that the outcome of trade talks will be key to the global growth outlook.”

JPMorgan piled on, saying the probability of a U.S. recession in the second half of this year has risen to 40% from 25% a month ago, while Barclays now expects a worst case scenario of a recession in 9 months.

All of which is a major problem for global manufacturing as Markit reports that Global PMI surveys, led by the U.S. plunge, signaled that manufacturing downshifted into contraction during May, down an unprecedented 13 straight months.

The downshift in growth in the U.S. was the main driver of the slowdown in global manufacturing, as the U.S. PMI slipped to its lowest level in almost a decade (September 2009).

… and all of this happened before President Trump re-launched the trade war.

None of which bodes well for global stocks…

This story showed up on the Zero Hedge website at 10:45 a.m. EDT on Tuesday morning — and it’s the first of several that come to us courtesy of Brad Robertson.  Another link to it is here.  A related ZH story is headlined “U.S. Factory Orders Slowest Growth Since Trump Elected” — and that’s from Brad as well.  Plus this ZH story from late last night “China Services PMI Plunges As Output Expectations Hit 7 Year Lows“.


Stocks Have a Rendezvous With Destiny — Bill Bonner

Stocks couldn’t decide where to go yesterday. Up? Down? So, they went nowhere.

Nowhere is about as good as it gets in this market. Because signs of an impending slowdown are arriving in the news every day.

The latest item was a sharp drop in the Purchasing Managers’ Index (PMI), which measures the vitality of the industrial sector. The April PMI dropped back to levels not seen in nearly 10 years, with the first falloff in new orders since August 2009.
This comes as Treasury yields – another sign of a weakening economy – continue to slump.

But this approaching recession has been approaching for a long time… and it never seems to arrive. So, we will just let it take its time as we return to the bigger picture.

And the big picture shows the average American slipping and sliding for the last 20 years.

The only reason this has not been more obvious to everyone is thanks to the Chinese and other low-cost producers, whose “Everyday Low Prices” have helped Americans continue to live in the style to which they had become accustomed… even as their real incomes fell.

This commentary from Jim, filed form Dublin, was posted on the bonnerandpartners.com Internet site on Tuesday morning EDT — and another link to it is here.


Druckenmiller Dumps All His Stocks, Piles Into Treasuries Expecting Rates to Hit Zero

Somewhere, Albert Edwards is doing a victory lap. Little by little, the SocGen strategist’s “IceAge” thesis, which sees U.S. 10Y Treasury rates eventually catching down to Bunds and JGBs by hitting 0% and going negative thereafter as a deflationary singularity grips the entire world, is materializing.

On Monday, the market found a newfound appreciation for Edwards’ gloomy perspective, as September eurodollars soared 14.5 ticks following Bullard comments green-lighting a Fed rate cut. The EDM9-EDZ9 has plunged, more than doubling in just a few days as low as -0.485 bps today, in a move that shocked rates traders and left them speechless as the market is now pricing in a 60% chance of two cuts or more by September.

But it’s no longer just Albert who sees a deflationary tsunami flooding over the U.S. The grouchy perma-bear was joined by billionaire Stan Druckenmiller, who said he could see the Fed funds rate going to zero in the next 18 months if the economy softens, and that he recently piled into Treasuries as the U.S. trade war with China escalated.

When the Trump tweet went out, I went from 93% invested to net flat, and bought a bunch of Treasuries,” Druckenmiller said Monday evening quoted by Bloomberg, referring to the May 5 tweet from Trump which threatened an increase in tariffs on China and which sparked the most vicious bout of trade-war related selling yet. Explaining his decision, Druck said that it’s “not because I’m trying to make money, I just don’t want to play in this environment.”

Incidentally, for those confused what going from 93% invested to flat means, the answer is he liquidated his entire equity book.

This very worthwhile commentary was posted on the Zero Hedge website at 9:25 a.m. on Tuesday morning EDT — and it’s another contribution from Brad Robertson.  Another link to it is here.


Wall Street and the New Cold War — Jim Rickards

The stock market seems to rise or fall almost daily based on the latest news from the front lines of the trade wars.

When Trump threatens new tariffs and China threatens to retaliate in kind, stocks fall. When Trump delays the tariffs and China agrees to resume negotiations, stocks rise. And so it goes. It has been this way since January 2018 when the trade war began.

The latest dust-up came late last week when Trump threatened tariffs against Mexico if it doesn’t do more to curb illegal immigration to the U.S. Markets sold off on Friday as a result, bringing a terrible May to an end. Largely due to the trade war, the stock market had its worst May in seven years.

From the start, Wall Street underestimated the impact of the trade war. First they said Trump was bluffing. Then the analysts said that Trump and Xi would put their differences aside and make an historic deal.

All of these analyses were wrong. The trade war was problematic from the start and is growing worse today.

This commentary from Jim put in an appearance on the dailyreckoning.com Internet site on Tuesday sometime, even though it’s datelined Monday — and another link to it is here.


Do Trump’s Hawks Speak for Trump? — Patrick J. Buchanan

For a president who won his office by denouncing the Middle East wars into which George W. Bush and Barack Obama plunged the nation, Donald Trump has assembled the most unabashedly hawkish conclave of foreign policy advisers in memory. And he himself seems to concede the point.

If foreign policy were decided by my security adviser John Bolton, the president confided recently, “We’d be in four wars by now.”

It was Bolton who ordered the Abraham Lincoln carrier group and B-52s to the Gulf and told the Pentagon to draw up plans to send 120,000 U.S. troops. It is Bolton who is charging Iran with using mines to sabotage four oil tankers outside the Strait of Hormuz.

Asked for evidence, Bolton barked back at reporters: “Who else would you think is doing it? Somebody from Nepal?

But if Bolton is first hawk, he is not without rivals in the inner circle of the commander in chief.

At West Point last week, Vice President Mike Pence, after hailing the diversity of a class with the highest number of Hispanic and black women graduates ever, laid out what the future holds in store for them.

You will fight on a battlefield for America … You will lead soldiers in combat. It will happen.”

This worthwhile commentary from Pat showed up on his Internet site on Monday sometime — and I thank Phil Manuel for sending it our way.  Another link to it is here.


The Limits of American Destructiveness — Dmitry Orlov

U.S. foreign policy has always been directed at wrecking anything that wasn’t deemed sufficiently American and replacing it with something more acceptable—especially if that something allowed wealth to flow into the U.S. from the outside. Compromises were reserved for the USSR, but even there the Americans constantly tried to cheat. For everyone else there was just submission, which was usually tactfully disguised as a positive—a seat at the big table which offered better chances for peace, prosperity and economic and social development.

Of course, it was a simple enough matter to pierce this veil of hypocritical politeness and to point out that the U.S., living far beyond its means, has only managed to survive by looting the rest of the world, but anyone who dared to do so would be ostracized, sanctioned, regime-changed, invaded and destroyed—whatever it took.

The U.S. establishment has lavished its wrath on anyone who dared to oppose it ideologically, but it reserved its most extreme forms of malice for those who dared commit the cardinal sin of attempting to sell oil for anything other than U.S. dollars. Iraq was destroyed for this very reason, then Libya. With Syria the juggernaut bogged down and stalled out; with Iran it is unlikely to ever get started.

Even the spineless European politicians are now forced to admit that U.S. policies are designed to enrich certain American interests at the expense of their constituents; they understand by now that further denial would cause them further harm at the polls. Most insultingly to the American ego, U.S. attempts at making Russia and China submit are being greeted with shrugs, titters and eye rolls. And now anybody who wants to can openly criticize the U.S. and scheme behind its back.

This very worthwhile and right-on-the-money commentary from Dmitry, was posted on the cluborlov.blogspot.com Internet site last Wednesday — and I thank Larry Galearis for pointing it out.  Another link to it is here.


U.K. Retail Sales Crash By Most on Record

The risk of further job losses and store closures will only increase,” warned Helen Dickinson, chief executive of the British Retail Consortium (BRC), after reporting U.K. retail sales declined by the most on record in May, with sluggish growth in online sales and Brexit-related uncertainty taking a toll.

Bloomberg reports that total sales fell by 2.7%, the biggest drop since at least 1995 when excluding any distortions caused by the timing of Easter.

While some of the drop can be accounted for by comparing to last year — when sales were boosted by sunshine, the World Cup and a royal wedding — political and economic uncertainty played a significant role, the British Retail Consortium and KPMG said.

On a like-for-like basis, sales decreased by 3% from a year earlier, and online sales of products apart from food grew just 1.5%, an all-time low, the BRC reported.

So while Corbyn and the conservatives continue to battle (with Farage adding his own flavor to the mix), and the central bank backing away from discussions of rate-hikes (to temper any no-deal Brexit-fueled inflation), the nation’s core is collapsing.

I saw this story on Zero Hedge shortly after I’d filed Tuesday’s column in the wee hours of yesterday morning — and another link to it is here.


Gold Sees Biggest Inflow Since Brexit as Investor Exodus Contagion Spreads to Credit

Last week we highlighted a shocking Deutsche Bank report that showed global equity fund outflows over the last 6 months in dollar terms have now been larger than over any prior 6-month period.

As a percentage of AUM…Assets Under Management…the latest half-year outflows were only exceeded by those seen around the 2008-09 recession and the European financial crisis.

That investor exodus recently spread to the credit markets, with HY funds seeing huge outflows as prices plunged ominously.

And now that investor exodus has spread to other segments of the credit markets.

As Bloomberg reports, the biggest leveraged loan ETF, BKLN, had its largest ever daily outflow in the most recent session for which Bloomberg has data.  Additionally, State Street’s High-Yield Muni ETF, HYMB, also saw a record daily outflow on June 3…

While we’re working through this dual threat of new worries around trade and the re-rating at the front end of the curve, you want to be cautious for credit assets,” Rob Waldner, chief fixed income strategist at Invesco Ltd. said on Bloomberg TV Tuesday.

This very interesting chart-filled Zero Hedge article appeared on their website at 1:35 p.m. on Tuesday afternoon EDT — and I thank Brad Robertson for sending it along.  Another link to it is here.


Venezuela Defaults on $750 Million Gold-Backed Swap With Deutsche Bank

Somewhere Hugo Chavez, who several years ago successfully repatriated much of Venezuela’s gold, is spinning in his grave.

It started in March, when Venezuela’s embattled leader Nicolas Maduro defaulted on a $1.1 billion gold-backed loan with Citi, in the process losing several tonnes of gold placed as collateral by Venezuela’s central bank after the deadline for repurchasing them expired. Now, Bloomberg reports that Venezuela has also defaulted on a gold swap agreement valued at $750 million with Deutsche Bank, prompting the German bank to seize the precious metal which was used as collateral, and close out the contract.

As part of a financing agreement signed in 2016 which we profiled here, Venezuela received a cash loan from Deutsche Bank and put up 20 tonnes of gold as collateral. The agreement, which was set to expire in 2021, was settled early due to missed interest payments as Venezuela has now effectively run out of foreign reserves.

It was the second time this year that the Maduro’s regime has failed to make good on financing agreements which have resulted in losses at a time when gold reserves are already at a record low. As we have noted previously, Venezuela’s dwindling gold holdings had become one of Maduro’s last remaining sources of cash keeping his regime afloat and his military forces loyal. Before the central bank missed the above-mentioned March deadline to buy back gold from Citigroup for nearly $1.1 billion, the Bank of England refused to give back $1.2 billion worth of Venezuelan gold.

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


Dollar beware: Serbia & Philippines join global gold hunt

Two more nations, Serbia and the Philippines, [will boost] their national gold reserves. They follow a global trend of other central banks accumulating bullion in a move seen as a shift away from the U.S. dollar standard.

Belgrade will increase its gold reserves from 20 to 30 tons by the end of this year, according to Serbian media company Vecernje Novosti. It said the country plans to boost its holding to 50 tons by the end of 2020 as a safety measure. Statistics from the National Bank of Serbia show foreign exchange reserves are currently worth €11 billion.

The decision to beef up bullion reserves was reportedly made following this month’s meeting of Serbian President Aleksandar Vučić with an IMF delegation. The fund’s representatives told the president they’d approve of Belgrade’s gold-buying if it fits into Serbia’s strategy of increasing foreign exchange reserves.

Last Wednesday the Central Bank of the Philippines announced that a law has been passed exempting gold sales by small-scale miners to the bank from excise duties and income taxes. The move was explained as a way to boost the country’s foreign exchange reserves and to prevent smuggling.

According to Reuters, small miners have found a way to circumvent taxes introduced back in 2011 by selling gold on the black market. The law entitles them to sell all produced gold to the country’s central bank at world market prices. The Philippines’ gold reserves remained unchanged at roughly 198 tons in both the first quarter of 2019 and the fourth quarter of 2018. Gold accounted for nearly ten percent of the country’s gross international reserves of $83.96 billion at the end of April.

This is not ‘new’ news, as I’ve posted stories about this already…but this rt.com story puts it all in one short article.  I thank Swedish reader Patrik Ekdahl for sending it our way — and another link to it is here.


Russian banks consider exporting more gold

Russian banks are considering increasing gold exports after the central bank said it would only buy at a discount, a move that could potentially pressure global bullion prices.

The Bank of Russia made the change to its pricing policy this year, saying it would buy from dealers at a level slightly below the benchmark London gold price. It’s part of a broader policy push to stimulate growth in the market for gold as a financial investment, namely bars and coins, rather than foreign currencies or assets priced in U.S. dollars.

However, gold as an investment option in Russia doesn’t have the same cachet as in other countries, like China or the U.S., and demand for the metal has been stagnant. Given the new discount, some dealers may be reluctant to sell to the central bank, said Oleg Petropavlovskiy, a BCS Global Market analyst.

Executives at some of the Russia’s biggest banks and mining companies are evaluating their options for selling gold, including getting a license to sell overseas or increasing exports, according to people familiar with the matter, who asked not to be identified as the talks are private.

This is an interesting turn of events.  I suspect that this might be the end of Russia Central bank adding to its gold reserves for the moment.  We’ll just have to watch and see as the months unfold.  This Bloomberg story, that I found on the gata.org Internet site, appeared on their website at 4:13 a.m. PDT on Tuesday morning — and another link to it is here.


India’s May gold imports jump 49% on festive demand — government source

India’s gold imports in May jumped 49% from a year earlier to 116 tonnes as a correction in local prices during a key festival boosted retail demand, a government source said on Tuesday.

Higher gold imports by India, the world’s second-biggest consumer of the precious metal, could support global prices that are trading near their highest level in three months, but could widen the country’s trade deficit and put pressure on rupee.

The country’s gold imports in value terms rose to $4.78 billion in May from $3.48 billion a year ago, the government official said, who was not allowed to speak to the media.

The above three paragraphs are about all there is to this Reuters story, co-filed from New Delhi and Mumbai early on Tuesday morning EDT.  I found it it a GATA dispatch yesterday evening — and another link to it is here.


[Silver] Rocket Fuel — Jim Cook

According to silver analyst Theodore Butler, various hedge funds are currently short 440 million ounces of silver on the COMEX futures market. That’s over half the silver that’s mined in a year. These funds manage money for big investors and they rely on computerized trading programs. Human judgments and emotions don’t enter into trading decisions. Their foremost trading strategy is to buy or sell when moving averages are penetrated. If the price of silver or gold moves upward to the point it goes through the average of prices over the past 50 days, it causes some short selling programs to buy and close out their short position. A penetration of the more important 200 day moving average sparks major buying and can lift the price significantly.

Ted Butler has always called the big short position “rocket fuel.” When prices penetrate the moving averages to the upside, the programmed buying reinforces the price rise. The fact that the current short position is historically huge suggests greater price fireworks to come. We know that will happen again because it’s happened many times in the past. Moving averages inevitably get penetrated by prices moving up or down. In the case of silver the short sellers can’t possibly deliver that much silver so they will have to buy back the futures contracts they have sold short.

Here’s where JPMorgan comes in. If they sell when the hedge funds are buying back their shorts it takes the steam out of the price rise. On numerous occasions over the past eight years JPMorgan has built up its own short position to quell a substantive gain in silver. Will they do it again? We know that higher silver prices would be hugely profitable for them because while they have acted to keep the price down in the futures market, they accumulated a gargantuan hoard of physical silver. Ultimately, they want silver to rise in price. Furthermore, for the first time they do not have a short position in COMEX silver. In fact, they are long silver futures to the tune of 25 million ounces. Mr. Butler thinks the timing is right for JPMorgan to stop sitting on the price and let it go. If so, he claims the price rise will take your breath away.

The above three paragraphs are all there is to this brief commentary from Jim Cook, the President of Investment Rarities Incorporated out of Bloomington, Minnesota.  It was posted on the silverseek.com Internet site on Tuesday afternoon sometime — and another link to the hard copy is here.


The PHOTOS and the FUNNIES

Continuing down B.C. Highway 12 bound for Lilloeet, there are lots of scenic spots in the Fraser River canyon/valley that are worth taking a photo of.  The biggest problem is that large portions of this highway are not for the faint of heart — and there’s no place to pull over. Any place that is flat enough is put in pasture, as this is cattle country — and these three shots reflect that.  The first shot is looking across the valley at a small ranch — and the next two photos are of a small piece of pasture on this side of the river that had five mule deer grazing on it.  The first was taken with my walk-around lens to give some context — and the second with the 400mm lens — and I could only fit four of the five in the shot at that distance.  All this pasture is irrigated, as only sagebrush and other plants of a semi-arid climate would grown on it otherwise, as they’re in the rain shadow of the coastal mountain range that you can see in the first photo.  Click to enlarge for all.


The WRAP

The answer to why silver has been so punk relative to gold lies in the same reason why a whole host of really important world commodities, from crude oil to copper to corn and soybeans have had major prices moves of late.

That reason, of course, is the extreme buying and selling by the two major counterparties in futures trading – the managed money technical funds and the commercials which take opposite sides of each other. When prices move sufficiently (usually by commercial instigation), and the managed money traders get to buying or selling big, stand back – because that’s what moves prices. It’s important to recognize that managed money buying and selling is what moves prices and such buying and selling is not just coincidental to the price moves. It is causal, not coincidental. And even though it is managed money buying and selling that drives prices, the commercials on the other side are who actually then set the price. Once you see this, everything makes sense.” — Silver analyst Ted Butler: 01 June 2019


Despite the lack of any big price activity in silver and gold on Tuesday, the price traces on the Kitco charts below certainly indicates that ‘da boyz’ were still out and about.

And as I also pointed out earlier, it certainly appeared obvious that they were there to prevent the dollar index from cratering shortly after the London open yesterday morning — and also in afternoon trading in New York as well.

The RSI trace in gold is still sitting on the edge of overbought — and silver’s rally was stopped just under both its 50 and 200 day moving averages on Tuesday.  WTIC set a new intraday low yesterday, but manged to close up on the day by a hair.

Here are the 6-month charts for the Big 6 commodities — and there’s not a lot to see, except for what I’ve noted above.  Click to enlarge.

And as I type this paragraph, the London open is a minute or so away — and I note that the gold price didn’t do much of anything in Far East trading on their Wednesday morning, but began to edge higher starting around 1 p.m. China Standard Time. It began to head sharply higher starting at 2 p.m. CST — and is currently up $7.90 an ounce. The silver price was down a few pennies by 1 p.m. CST — and then followed the same upwards price path as gold, but was capped and turned lower on its price spike — and it’s only up 3 cents currently. Platinum has been creeping a dollar higher here and there in Far East trading — and is up 3 bucks at the moment. The long knives appear to be out for palladium once again, as it’s down 9 dollars as Zurich opens.

Net HFT gold volume, which exploded on that price spike, is something over 59,000 contracts — and there’s 1,144 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is already around 16,200 contracts — and there’s only 165 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened up 5 basis points once trading commenced at 7:45 p.m. EDT in New York on Tuesday evening — and it has been edging unevenly lower since, with its current 96.96 low tick coming at 2:18 p.m. CST…the afternoon gold fix in Shanghai. It’s off that low, as the usual ‘gentle hands’ obviously appeared — and as of 7:45 a.m. BST in London/8:45 a.m. CEST in Zurich, the index is down only 3 basis points now.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report and companion Bank Participation Report.  Both gold and silver rallied on every day during the reporting week — and I must admit that I’m expecting a rather large increase in the commercial net short position in gold, but somewhat less in silver, as no moving averages were broken in that precious metal…although volumes were very heavy during the entire reporting week in both.

Ted will certainly have something to say about this in his mid-week commentary for his paying subscribers this afternoon and, as usual, I’ll borrow a few sentences for my Friday column.


And as I post today’s column on the website at 4:02 a.m. EDT, I see that the gold price struggled a bit higher until a few minutes after the London open. It has been sold a bit lower since then — and is up $8.10 the ounce. It’s the same struggle in silver — and it’s up 4 cents. Platinum is now up 6 bucks — and palladium has roared higher — and is back at unchanged as the first hour of trading ends in Zurich.

Gross gold volume is very chunky at a bit over 89,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 86,700 contracts. Net HFT silver volume is now up to a whopping 22,500 contracts — and there’s still only 324 contracts worth of roll-over/switch volume on top of that. It’s obvious that the rallies in both gold and silver are not going unopposed, as ‘da boyz’ are throwing everything they have at them, including the kitchen sink.

The dollar index was back at the unchanged mark by a few minutes before the 8:00 a.m. London open — and has been doing nothing since — and is basically unchanged as of 8:45 a.m. in London/9:45 a.m. in Zurich.

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

Ed

Another Monster Volume Day in Gold & Silver

04 June 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price rallied a few dollars until around 11 a.m. China Standard Time on their Monday morning once trading began at 6:00 p.m. EDT on Sunday evening in New York.  From that juncture it really didn’t do much until the London open — and the it began to head quietly and unevenly higher until around 3:10 p.m. EDT in after-hours trading in New York — and it was sold a bit lower going into the 5:00 p.m. close from there.  I guess ‘da boyz’ didn’t want it close more than twenty bucks higher yesterday.

The low and highs were recorded by the CME Group as $1,310.90 and $1,333.00 in the August contract.

Gold finished the Monday session at $1,324.80 spot, up $19.90 on the day.  Net volume was ginormous once again at 352,000 contracts — and roll-over/switch volume was 13,000 contracts. It’s obvious that this current rally is not going unopposed.

Silver was up 8 cents or so by 9:40 a.m. CST on their Monday morning — and then didn’t do much until around 1:30 p.m. CST.  It was sold back to unchanged by the London open, but then also began to head quietly and unevenly higher until, like gold, it ran into ‘something’ around 3:15 p.m. EDT in New York in the thinly-traded after-hours market.  It was sold a bit lower into the close from there.

The low and high ticks in this precious metal were reported as $14.565 and $14.825 in the July contract.

Silver was closed at $14.765 spot, up 20.5 cents from Friday.  Net volume was eye-watering, at a bit under 99,500 contracts — and there was a bit over 14,000 contracts worth of roll-over/switch volume out of July and into future months. I’m sure not happy about this, as we’re still well below silver’s 200-day moving average.

After trading flat for the first two hours once it commenced at 6:00 p.m. EDT in New York on Sunday evening, platinum began to head rather sharply higher starting around 8 a.m. in Shanghai on their Monday morning.  It appeared to get capped and then turned lower around 10 a.m. CST — and its low of the day, like in silver, came at the Zurich open.  It crept unevenly higher from there until the afternoon gold fix in London — and then away it went to the upside.  The price was capped at the $822 spot mark a few minutes before the 1:30 p.m. EDT COMEX close, which it bounced off multiple times before trading ended at 5:00 p.m. EDT in New York.  Platinum was closed at $820 spot, up 29 bucks on the day.

The palladium price rally followed the platinum price rally like a shadow in morning trading in the Far East, including the price capping and sell-off at 10 a.m. in Shanghai on their Monday morning. It was up 22 bucks or so at that point.  It was sold quietly lower until minutes before 11 a.m. in Zurich — and then crept a few dollars higher until the bids were pulled at the 9:30 a.m. EDT open of the equity markets in New York.  It was down about 30 bucks in no time flat, before gaining a bunch of that back — and then crawled unevenly sideways-to-higher until the market closed at 5:00 p.m. EDT.  Palladium finished the day, down 2 bucks from Friday at $1,309 spot.

The dollar index closed very late on Friday afternoon at 97.75 — and for whatever reason the data feeds for the charts didn’t begin until 10 p.m. EDT in New York on Sunday evening.  And when trading did commence, the index opened down 11 basis points.  Its Far East low, such as it was, came around 11:15 CST on their Monday morning — and from there it crept higher and back into positive territory by a bit, by fifteen minutes before the London open.  Then right at the 8:00 a.m. BST London open, it began to head lower at an ever-accelerating rate.  It got saved at the 97.11 mark by the usual ‘gentle hands’ around 3:12 p.m. EDT, which was the exact time that that gold, silver and platinum price hit their respective highs of the day.  It crept a bit higher for the next hour before trading sideways until trading ended at 5:30 p.m. in New York.  The dollar index finished the day at 97.14…down 61 basis points from its close on Friday.

If a case could be made for the U.S. dollar index affecting precious metal prices, it would certainly be yesterday’s price action.  But it was just paper trading in the GLOBEX/COMEX future market that made it all happen.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…97.06…and the close on the DXY chart above, was 8 basis points on Monday.  The dollar index closed below its 50-day moving average yesterday, if that means anything these days, as those ‘gentle hands’ are always lurking about.  Click to enlarge as well.

The gold shares gapped up two percent at the open — and then crept quietly and steadily higher until trading ended at 4:00 p.m. EDT in New York on Monday afternoon.  For all intents and purposes, the HUI closed on its high of the day…up 5.08 percent.

The silver equities were up 3 percent by 10 a.m. in New York yesterday morning — and then crept quietly and unevenly higher until around 3:15 p.m. EDT.  They didn’t do much after that — and even got sold down a bit in the last minute of trading, as the day traders took some profits.  Nonetheless, Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 4.72 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report for Day 3 of June deliveries in gold, showed that 358 gold, plus 1 silver contract was posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, of the four short/issuers in total, the only one that mattered was Scotia Capital, with 350 contracts out of its in-house/proprietary trading account…it doesn’t have a client account.  There were eight long/stoppers in total — and the biggest by far was HSBC USA with 217 contracts for its own account.  In second and third place were JPMorgan and International F.C. Stone, picking up 61 and 40 contracts for their respective client accounts.

In silver, JPMorgan issued and stopped the lone contract — and both contracts involved its client account.

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

The CME Preliminary Report for the Monday trading session [which was posted on their website about three hours later than normal] showed that gold open interest in June fell by 251 contracts, leaving 1,762 still open, minus the 358 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 32 gold contracts were actually posted for delivery today, so that means that 251-32=219 gold contracts vanished from the June delivery month.  Silver o.i. in June fell by 45 contracts, leaving just 5 left, minus the 1 contract mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 45 silver contracts were actually posted for delivery today…so the change in open interest and the deliveries match.


There was big deposit into GLD yesterday, as an authorized participant added 528,501 troy ounces…16.4 metric tonnes.  There were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, May 31 — and this is what they had to report.  They added 3,638 troy ounces of gold, but their silver ETF shed 28,132 troy ounces.

There was a sales report from the U.S. Mint to start out June.  They sold 1,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 223,500 silver eagles.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday was 1,000 troy ounces that was shipped out of Delaware — and I won’t bother linking this.

It was certainly busier in silver, as 600,393 troy ounces was received…one truckload…and that was dropped off at HSBC USA.  There was 1,493,186 troy ounces shipped out.  Of that amount, one big truck load…624,809 troy ounces…left the vault over at CNT — and the other truckload…600,473 troy ounces…departed Canada’s Scotiabank.  The remaining 267,903 troy ounces was shipped out of Brink’s, Inc.  The link to all this activity is here.

Not to be outdone, it was a pretty heavy day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They reported receiving 4,000 of them — and shipped out 4,718.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two charts that Nick Laird passed around on the weekend.  They show U.S. Mint sales for gold and silver bullion coins, updated with May’s dataIt should be noted that the gold sales are the sum of the sales of gold eagles and gold buffaloes — and the silver sales include silver eagles, plus the sales of those 5-ounce ‘America the Beautiful’ rounds.  Click to enlarge for both.

I have an average number of stories for you today.


CRITICAL READS

Fed’s Bullard Says Rate Cut May Be Needed “Soon

The Federal Reserve may need to cut interest rates soon to prop up inflation and counter downside economic risks from an escalating trade war, St. Louis Fed President James Bullard said.

A downward policy rate adjustment may be warranted soon to help re-center inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown,” Bullard said Monday in remarks prepared for a talk in Chicago. “The direct effects of trade restrictions on the U.S. economy are relatively small, but the effects through global financial markets may be larger.”

Bullard’s comments mark the first time a Fed official has publicly suggested the need for a rate cut since the central bank put rates on hold in January when it pledged to be “patient” as it weighed headwinds from slower global growth and the fallout from the trade war.

While President Donald Trump has called for a one-percentage point cut, and investors deepened bets on policy easing after he threatened Mexico last week with tariffs, other Fed officials have stressed that their approach to policy is still appropriate. That was the message earlier on Monday from San Francisco Fed chief Mary Daly in Singapore, though Fed Vice Chair Richard Clarida opened the door to a cut in remarks Thursday that stressed policy makers were watching risks to the outlook.

One of the most dovish members of the Fed, Bullard is a voter this year on the rate-setting Federal Open Market Committee, which meets next June 18-19 in Washington.

Minneapolis Fed President Neel Kashkari, who along with Bullard has most vocally opposed higher rates in recent years, said Friday during a Bloomberg TV interview that he was “not quite there yet” on the need for easing. Bullard said recently that a rate cut was premature.

This Bloomberg article was posted on their website at 10:25 a.m. PDT [Pacific Daylight Time] on Monday morning — and it was updated about three hours later.  I thank Swedish reader Patrik Ekdahl for sharing it with us — and another link to it is here.


The Most Important Ratio in All of Investing — Bill Bonner

The formula – fed-managed trade, high tariffs, a socialized economy, price fixing, crony coddling, and money printing – has been a big success, at least with politicians.

Every sh*thole country in the world has tried it, at one time or another. Zimbabwe, Venezuela, Argentina, Brazil… Peru had 7,000% inflation in 1990. Argentina currently has about 56% inflation – even with a reasonably sensible government.

Venezuelan inflation is running so hot, the statisticians can’t keep up with it; one estimate is 3 million percent.

Everything in the natural world is cyclical. Our eagerness to forget the lessons of the past (and present!) ebbs and flows like everything else. And no matter how many times you run the experiment, there are always people who want to run it again.

This very worthwhile commentary from Bill, filed from Dublin, appeared on the bonnerandpartners.com Internet site early on Monday morning EDT — and another link to it is here.


The Peasants’ Revolt — Jeff Thomas

In 2016, James Delingpole commented that toffs hate Brexit because it’s the Peasants’ Revolt.

For non-British readers, the word “toff” is a shortened form of “toffee-nosed,” a slang term for the rich or upper class. But more important is the reference to the Peasant Revolt of 1381, which is little-known on the western side of the Atlantic.

In fourteenth century England, the cost of ongoing warfare placed politicians in a situation in which they either had to concede the war, cut their own emoluments, or increase taxation significantly. As politicians always do, they chose the latter.

Revenue from the resultant poll tax proved to be less than anticipated, as large numbers of people found ways to evade the tax. The tax commissioners were then given wide latitude in the methods they chose to facilitate collection.

This very interesting commentary from Jeff showed up on the internationalman.com Internet site on Monday morning EDT — and another link to it is here.


Russia Confirmed It Removed “Most of Their People” From Venezuela

President Trump confirmed in a Monday afternoon tweet that Russia communicated to the U.S. that it has removed “most of their people” from Venezuela, in reference to military personnel previously servicing contracts with Maduro’s armed forces.

Trump’s tweet followed a Sunday WSJ report detailing that Russian state defense contractor Rostec is quickly pulling out of the Latin American country over concerns the debt-strapped socialist ally won’t be able to pay its bills now or in the future.

The president issued the statement while on a state visit to London in what could signal a broader Russian exit of defense support to the Maduro government.

The Wall Street Journal notes that it’s a huge blow to Maduro – and though it appears primarily motivated by lack of confidence in Caracas’ ability to pay the bills – this could mark the writing on the wall in terms of the future powerful backing of Maduro’s biggest international supporter. It further comes as the U.S. has vowed to keep up the pressure and after the Kremlin condemned what it called ongoing “U.S.-backed coup attempts“.

This article was posted on the Zero Hedge Internet site at 7:30 p.m. on Monday evening EDT — and another link to it is here.


Multi Billion U.K. Hedge Fund Blocks Redemptions

In a moment of financial serendipity, earlier today we tweeted that as a result of the sudden collapse in the market’s most crowded positions (which as we noted over the weekend, now face the biggest risk of a wipe out), “hedge fund redemption requests re-emerge.”

It turns out we were very much spot on, because just a few hours later, the Financial Times reported that Neil Woodford, the U.K.’s equivalent of David Tepper, has blocked redemptions from his £3.7bn equity income fund after serial underperformance led to an investor exodus, “inflicting a serious blow to the reputation of the UK’s highest-profile fund manager.”

The freeze on redemptions, exactly five years after Woodford opened his eponymous fund management group, underlines his increasingly precarious position. It follows a steady stream of investor outflows, which have occurred each month for two years, with the fund shrinking by two-thirds to £3.7bn since a peak of £10.2bn in May 2017.

The severity of this latest hit to the hedge fund industry can not be underscored enough. The FT quoted a veteran fund manager who has known Woodford for more than 20 years, who said that “this is one of the bigger events for the U.K. asset management industry of the last decade. A bonfire of reputation and a terrible moment for investor confidence.”

I suspect that this hedge fund is but the thin edge of the wedge, dear reader. This Zero Hedge news story put in an appearance on their website at 5:37 p.m. on Monday afternoon EDT — and I thank Brad Robertson for sending it along.  Another link to it is here.


German SPD leader quits in blow to Merkel’s coalition

Andrea Nahles said on Sunday she would resign as the leader of Germany’s Social Democrats (SPD), raising new doubts about the durability of Chancellor Angela Merkel’s ruling coalition with the struggling centre-left party.

Merkel’s Christian Democrats and the SPD both took a hit in last week’s European elections as voters turned away from mainstream political parties, eroding support for a ruling coalition that already came close to falling apart last year.

Nahles, whose SPD is a junior coalition partner in Merkel’s ruling alliance, said she would resign as party leader on Monday and step down as head of the SPD’s parliamentary group on Tuesday.

The discussions within the parliamentary faction and feedback from within the party have shown me that I no longer have the necessary support to carry out my duties,” Nahles said in a statement released by the SPD.

The 48-year-old said she hoped her resignation “would open the possibility that the succession can take place in an orderly manner“.

The “grand coalition“, nicknamed GroKo in Germany, is due to rule until 2021 but Nahles’ resignation could trigger the SPD’s early exit, forcing Merkel to call snap elections, to lead a minority government, or to seek an alliance with the Greens and liberal Free Democrats.

This news item put in an appearance on the france24.com Internet site at 3:53 p.m. CEST on their Sunday afternoon — and I thank Roy Stephens for bringing it to our attention.  Another link to it is here.


Switzerland: The World’s Lowest Interest Rate Could Be Going Even Lower

Investor expectations are building that the Swiss National Bank will take its key interest rate even further below zero as it faces a renewed franc appreciation.

Amid escalating trade tensions and market jitters, the Swiss currency has gained about 2% against the euro in the past month. Futures for March 2020 are now putting an almost 50% probability of a 25 basis-point-cut in the SNB’s deposit rate. It’s currently at minus 0.75%, the lowest among the world’s major nations.

The franc’s gain buttresses the case of SNB President Thomas Jordan and fellow officials, who declined to move off their ultra-low rates last year even as the currency weakened and the economy expanded at a strong pace. They stressed markets were still fragile, and Jordan has repeatedly said the current policy remains necessary. He’s also said that rates can go lower still if needed.

The franc is moving along with other haven assets, which have rallied amid a decline in stocks on concern about the outlook for global growth. The German 10-year bond yield fell to a record low on Monday.

This Bloomberg  story was posted on their Internet site at 4:24 a.m. PDT on Monday morning — and it’s the second contribution of the day from Patrik Ekdahl.  Another link to it is here.


Americans are war-weary, while Iran was never a threat to us” – Virginia State senator to RT

U.S. citizens are weary of endless wars, Virginia State Senator Richard Black believes. He warned President Donald Trump against dragging the country into another one with Iran, and blamed John Bolton for being the top warmonger.

As tensions between Tehran and Washington continue to soar, Senator Black has addressed the U.S. president in a letter, warning against going into an all-out war with Iran. He squarely put the blame for the ongoing standoff on National Security Advisor John Bolton, and urged Trump to prevent the official from “usurping” his own role.

John Bolton has usurped [Trump’s] authority as Commander-in-Chief [CINC]. He countermanded your order for an immediate withdrawal from Syria, and now he has alarmed our allies by agitating for war against Iran. It was reported that you hope to avoid war with Iran. But the CINC does not ‘hope’. He commands. He does not delegate war-making to his staff,” Black wrote.

The U.S. citizenry is weary of the decades of endless wars, and starting another one – while others are still going on and on – is definitely a bad idea, Black believes.

I think the American people are very war-weary, and I don’t think it will bode well for the republicans if we end up in a shooting war with Iran.”

We’re in the 18th year of the war in Afghanistan. We have dropped over a quarter million of bombs on Iraq, a country that never attacked us, that never was a threat to us, that never took any negative action,” Black told RT, adding that Bolton “was one of the individuals involved in concocting the false narrative that got us into Iraq.”

The idea that Iran is somehow “terrorism sponsor No. 1,” actively peddled by the U.S. media and officials alike, is completely untrue, Black said. At the same time, there is plenty of evidence about Saudi Arabia to give it such a ‘title’, the senator said in his letter, accusing Riyadh of instigating the U.S. to attack Iran “on their behalf.

This very worthwhile story showed up on the rt.com Internet site at 7:19 p.m. Moscow time on their Monday evening, which was 11:19 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for bringing it to our attention — and another link to it is here.


Domino #2: Chinese Bank With $105 BN in Assets on Verge of Collapse

While the western world (and much of the eastern) has been preoccupied with predicting the consequences of Trump’s accelerating global trade/tech war, Beijing has had its hands full with avoiding a bank run in the aftermath of Baoshang Bank’s failure, scrambling to inject massive amounts of liquidity last week in the form of a 250 billion yuan net open market operation to thaw the interbank market which was on the verge of freezing, and sent overnight funding rates spiking and bond yields and NCD rates higher.

Unfortunately for the PBOC, Beijing is now racing against time to prevent a widespread panic after it opened the Pandora’s box when it seized Baoshang Bank two weeks ago, the first official bank failure in a odd replay of what happened with Bear Stearns back in 2008, when JPMorgan was gifted the historic bank for pennies on the dollar.

And with domino #1 down, the question turns to who is next, and will they be China’s Lehman.

This was the question we asked last Thursday, when we published a list of regional banks that have delayed publishing 2018 reports, the biggest red flag suggesting an upcoming bank solvency “event.”

One day later we may have gotten our answer, when the Bank of Jinzhou,  a city commercial bank in Liaoning Province, the second name in the list above, and with some $105 billion in assets, notably bigger than Baoshang, announced that its auditors Ernst & Young Hua Ming LLP and Ernst & Young had resigned, not long after the bank announced it would delay the publication of its annual reports.

For those confused, the delay of an annual report and the resignation of an auditor, means a bank failure is not only virtually certain, but practically imminent.

This worthwhile news item is datelined 4:03 a.m. on Monday morning, but I saw the article on the Zero Hedge website about six hours before that.  Another link to it is here.


Does China have enough U.S. dollars to survive the trade war?

[This is the first article in a three-part series looking at China’s U.S. dollar shortage risks amid the trade war with the United States as it plans to reform and internationalise its economy.]

The Chinese government is officially sitting on the world’s largest stockpile of foreign exchange reserves, but it has been scrambling recently to block back-channels for capital outflows as trade tensions with the United States increase.

Beijing’s increasing scrutiny of the usage of the U.S. dollar by Chinese companies and individuals, in the absence of any immediate signs of a financial crisis, along with accelerating efforts to lure in foreign capital, have raised suspicions among analysts that the world’s second-largest economy is worried about the risk of running short of the U.S. dollar.

On the surface, China should be the last country in the world to worry about a shortage – about two-thirds of its US$3.1 trillion worth of foreign exchange reserves, the world’s largest, are believed to be held in U.S. dollar-denominated assets.

China’s U.S. dollar interest rate for one-year deposits implied by the yuan exchange rate has risen to around 3.4 per cent from 2.4 per cent last August, according to Thomson Reuters data.

But the huge foreign reserves and a relatively stable currency do no reflect the true stresses underlying the economy, analysts said, because the concerns are that those reserves may not be enough to provide the safety buffer needed to pay for China’s imports and pay off its debt in adverse circumstances if the yuan faced a devaluation or a sharp drop in value.

Analysts, though, doubt that China would be subject to an imminent balance of payment crisis similar to the one that Argentina experienced last year. The Latin American country was hit by a currency crisis and stagflation because of structural deficiencies that constrained real demand and prevented the economy from growing sustainably.

This interesting article showed up on the South China Morning Post last Thursday — and I found it embedded in a GATA dispatch on Monday morning.  Another link to it is here.


Gold jumps to over 3-month peak as trade fears spur safe-haven buying

Gold climbed more than 1.5% on Monday to its highest level in more than three months on concerns that U.S.-Chinese trade tensions and Washington’s threat of tariffs on Mexico would hurt the global economy.

U.S. gold futures settled up 1.28% at $1,327.90 an ounce.

There are concerns still surrounding the trade wars, whether it be surrounding the tariffs with Mexico or the tariffs with China. There is a ‘flight to safety’ buying going into metals,” said Bob Haberkorn, senior market strategist at RJO Futures.

Relations between the United States and China got another jolt when the two nations clashed again at the Shangri-La Dialogue in Singapore on Sunday.

It remains to be seen if this is what the story states, or whether this is the usual dos à dos/do-si-do between the Managed Money and commercial traders.  Friday’s COT and Bank Participation Reports will tell us more.  This gold-related news item put in an appearance on the cnbc.com Internet site on Sunday night EDT — and I found it on the Sharps Pixley website.  Nice photo, though.  Another link to it is here.


Unique, massive emerald crystal discovered in Russian Urals

An emerald weighing some 1.6 kg, the largest to be found in nearly 30 years, has been unearthed at Europe’s largest emerald-beryllium ore field, located in Russia. The huge gemstone may be valued at up to US$500,000.

The rare crystal, which boasts both a unique form and size, was mined at a depth of 260-meters, Russia’s state hi-tech corporation Rostec, which owns the facility at Malyshevsky, announced in a press release about the discovery. Last year a smaller 1.5 kg stone was found at the same mine, while the largest emerald weighting more than two kg was mined back in 1990.

The gem even bypassed the technological process and came “almost in its original form,” with smooth straight edges. “This indicates a significant rarity and uniqueness of the emerald,” the chief of the facility, Evgeny Vasilevsky, explained.

There’s not much to this tiny rt.com story that was posted on their Internet site very early on Sunday morning Moscow time, but the photos sure are neat.  Larry Galearis, who has considerable knowledge in the mineral field had this to say about it…”The size is impressive, but the form – hexagonal – is the usual form. There does not appear to be a lot of gem quality beryl here as the multiple fractures render this more specimen grade.  The colour is not top end either…..The value quoted is therefore also questionable.”  Reader George Whyte was the first person through the door with this story — and another link to it is here.


The PHOTOS and the FUNNIES

Continuing on through Spences Bridge — and south on the Trans-Canada Highway, we turned into the community of Lytton on our way to Lillooet, only to be stopped by this unit grain train on the CPR tracks headed back to the prairies, empty from unloading in the port of Vancouver.  We were there for a bit, as it was at least a mile and change long, so I didn’t pass on the photo op.  The second shot is from a vantage point in Lytton, where we could look out over the confluence of the Thompson River, as it flows into the Fraser River.  Note the difference in water clarity.  And also note the Fraser Valley in the background.  That’s where we were headed.  The third shot was taken in that valley, looking back towards Lytton from whence we had just come.  The dead ‘tree’ in the shot is a deceased specimen of the big sagebrush — and this specimen would be a 100+ years old.  Click to enlarge for all.


The WRAP

It remains to be see if there’s any truth to the fact that gold and silver’s rallies to this point are dollar related, or other fears that are making the rounds on the Internet.

But the only thing that you can take to the bank is that because gold’s 50-day moving average has now been taken out with authority over the last two trading days, is that the Managed Money traders are selling previously placed short contracts…for big loses — and putting on new long contracts that they will sell for big loses later.  And considering the volume over  the last two trading days, the commercial traders are the willing and able counterparties — and are doing so with abandon.

But it should be pointed out that despite the gains of the last several trading sessions, the silver price is not yet within spitting distance of its 200-day moving average, let alone its 50-day moving average.  But the enormous volumes in that precious metal certainly suggests that the largest of the Managed Money traders may be covering some of their excessive short positions.

Ted won’t have an idea of whether JPMorgan was involved in the commercial category in either precious metal until he sees Friday’s COT Report.

In the other Big 4 commodities, I note that platinum, despite its big rally yesterday, is still well below any moving average that matters.  But I also suspect Managed Money short covering in that precious metal as well.  Copper hit a new intraday low for this move down, but closed higher than Friday’s close…a ‘key reversal’ for those technical analysis types.  WTIC was closed at a new low for this move down.  And it should also be pointed out that gold’s RSI trace on the 6-month chart below is about to break into overbought territory.  We’ll find out quick enough, I suppose, just how long this overbought situation lasts…or is allowed to last.

Here are the 6-months charts for the Big 6 commodities — and the above changes should be noted.  Click to enlarge.

And as I type this paragraph, the London open is a minute or so away — and I see that the gold was trading very unevenly sideways in the Far East on their Tuesday — and is currently up $1.30 the ounce. Ditto for silver — and it’s back at unchanged.. The same can be said of platinum — and it’s back at unchanged as well. Palladium’s price path started off the same as the other three precious metals in morning trading in the Far East, but price pressure showed up around noon China Standard Time — and it’s down 10 bucks as Zurich opens.

Net HFT gold volume is just under 53,000 contracts already — and there’s only 955 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is pretty healthy att 13,600 contracts — and there’s 1,135 contracts worth of roll-over/switch volume out of July and into future months.

The dollar index opened up 7 basis points once trading began at 7:45 p.m. EDT in New York on Monday evening, which was 7:45 a.m. China Standard Time on their Tuesday morning. It has been heading quietly lower since, with its current 97.08 spike low tick coming at the 2:15 p.m. CST afternoon gold fix in Shanghai. It’s down 5 basis points as of 7:45 a.m. in London/8:45 a.m. in Zurich.


Today, at the close of COMEX trading, is the cut-off for this week’s Commitment of Traders Report and companion Bank Participation Report.  With the latter, we’ll find out what the world’s banks have been up to over the last month — and they’re usually up to quite a bit.

I will probably have something to say about what will be in Friday’s COT Report in tomorrow’s column, but from what I’ve seen so far, we’ll certainly be seeing an increase in the short positions of the commercial traders — and the Bank Participation Report will tell Ted how much it was.


And as I post today’s column on the website at 4:02 a.m. EDT, I note that the gold price has been creeping quietly higher during the first hour of London trading — and is up $3.00 the ounce. Silver continues to struggle — and is still at unchanged. Platinum is now up 2 bucks — and palladium is only down 3.

Gross gold volume is getting up there…something over 72,000 contracts — and minus roll-over/switch volume, net HFT gold volume is 68,000 contracts. Net HFT silver volume is now up to a hair over 17,000 contracts — and there’s 1,275 contracts worth of roll-over/switch volume out of July and into future months in this precious metal.

The dollar index’s current low came at 8:10 a.m. BST in London. It has bounced off that by a bit — and is down 7 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

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

Ed

Ted Butler: The CFTC’s Summer Camp Letter

01 June 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to edge quietly and unevenly higher starting around 7:30 a.m. China Standard Time on their Friday morning — and that continued more or less without interruption until about fifteen minutes after the 1:30 p.m. COMEX close in New York yesterday.  It didn’t do much after that.

The low and high ticks were reported by the CME Group as $1,292.50 and $1,311.90 in the August contract…the new front month for gold.

The gold price finished the Friday session in New York at $1,304.90 spot, up $16.60 from Thursday’s close — and comfortably above its 50-day moving average.  Not surprisingly, net volume was absolutely monstrous at a bit over 326,000 contracts — and there was a bit over 17,000 contracts worth of roll-over/switch volume in this precious metal.

The silver price chopped quietly sideways in all of Far East and most of London trading on their Friday — and all rally attempts, no matter how small, were turned aside.  Once the noon BST silver fix was in, it began to creep quietly higher — and really began to sail once the afternoon gold fix was put to bed.  Its spike high around 10:45 a.m. in New York was dealt with immediately — and from about 11:35 a.m. EDT onwards, it didn’t do much of anything.

The low and high ticks in silver were recorded as $14.46 and $14.67 in the July contract.

Silver was closed at $14.56 spot, up 5.5 cents from Thursday.  Net volume was an eye-watering 80,000 contracts — and there was 9,300 contracts worth of roll-over/switch volume in this precious metal.

The platinum price wasn’t allowed to do much on Friday, but was sold down a bit in early trading in the Far East on their Friday morning.  Its rally in early morning trading in Zurich, along with the mid-morning rally in New York, were both sold lower — and platinum was closed at $791 spot, down 3 bucks on the day.

The palladium price chopped very quietly sideways in both Far East and Zurich trading yesterday, but ‘da boyz’ showed up shortly after 9 a.m. in New York — and took away all of Thursday’s gains, plus more, before trading ended at 5:00 p.m. EDT.  Palladium was closed at $1,310 spot, down 43 dollars on the day — and at a safe distance below its 50-day moving average, which it closed at on Thursday.

The dollar index closed very late on Thursday afternoon in New York at 98.14 — and opened up 1 basis point once trading resumed at 7:45 p.m. EDT on Thursday evening, which was 7:45 a.m. China Standard Time on their Friday morning.  From that juncture, it really didn’t do much of anything until around 12:50 p.m. CST — and it began to head lower at that point.  That lasted until 9:15 a.m. in London — and it began to edge higher from there.  It rolled over again starting around 12:45 p.m. in London/7:45 a.m. in New York — and was obviously saved by the usual ‘gentle hands’ at 10:40 a.m. EDT.  It shot higher — and back above the 98.00 mark briefly by 11:05 a.m. in New York — and it was sold quietly lower until around 4:15 p.m. EDT — and didn’t do much after that.

The dollar index finished the Friday session at 97.75…down 39 basis points points from its close on Thursday.

Here is the DXY chart from Bloomberg, as per usual.  Click to enlarge.

And here’s the 5-year U.S. dollar index chart, courtesy of the good folks over at the stockcharts.com Internet site.  The delta between its close…97.67…and the close on the DXY chart above, was 8 basis points on Friday.  Click to enlarge as well.

The gold stocks gapped up a bit over two percent at the open — and then continued to rally somewhat unevenly higher until a few minutes after 1 p.m. in New York trading.  They then crept a bit lower into the 4:00 p.m. EDT close from there.  The HUI finished higher by a healthy 4.37 percent.

Not surprisingly, the silver equities did not perform quite as well as their golden brethren, but their respective chart patterns were almost identical.  For that reason, I’ll spare you the play-by-play for them.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 2.84 percent.  Click to enlarge.

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

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

Here’s the weekly chart.  For a change we’ve got some green bars to look at — and considering the rotten price action in silver versus gold, the outperformance of the gold shares should not come as a surprise.  Platinum is down because of the ongoing engineered price decline in that precious metal, which appears to be at an end.  Click to enlarge.

The month-to-date chart, with the exception of the gold price — and equities, is still a sea of red.  Platinum is now down 11 percent on the month, but the decline in the silver equities has been particularly brutal.  That’s because of suspected short selling in the stock, plus the continuing punk action of the underlying precious metal.  Click to enlarge.

Here’s the year-to-date chart.  Gold is still up a hair — and its equities are barely in negative territory. But all of platinum’s big gains on the year have vanished, as ‘da boyz’ have been working that precious metal over pretty good for the last many weeks now.  But as I said above, the engineered price decline appears to be at, or very near its end.  Silver — and its associated equities are still down big…courtesy of JPMorgan…but they are off their lows of last week.  Click to enlarge.

As I’ve pointed out in this space over the last few weeks, the shorting of the precious metal equities…mostly silver, will certainly be rocket fuel during the next big rally in that precious metal.  Regarding gold’s 200-day moving average situation, I state further down, that it appears to be a “bridge too far” at the moment.  We’ll just have to wait and see how far this rally in gold is allowed to go, as it certainly hasn’t included the other three precious metals, at least not yet.


The CME Daily Delivery Report for Day 2 of June deliveries showed another quiet delivery day for gold, as only 32 contracts were posted for delivery on Tuesday.  There were also 45 silver contracts posted for delivery within the COMEX-approved depositories on Tuesday as well.

In gold, there were four short/issuers in total, the largest being Wedbush with 25 contracts — and in very distant second place was ADM with 5 contracts.  There were six long/stoppers dividing up those 32 contracts — and International F.C. Stone, ADM and JPMorgan picked up 11, 7 and 6 contracts respectively.  All contracts, both issued and stopped, involved their respective client accounts.

The delivery month in gold is starting off very slowly — and I’m not sure if anything should be read into that or not.

In silver, there were four short/issuers — and the three biggest were Advantage, JPMorgan and Morgan Stanley, with 16, 14 and 10 contracts out of their respective client accounts.  There were only two long/stoppers…JPMorgan and Advantage, stopping 26 and 19 contracts for their respective client accounts as well.

And also of note is the fact that ADM issued 15 one-thousand ounce mini silver contracts — and Advantage stopped them all.  I don’t recall any firm other than the CME Group issuing this particular contract in the past.

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

The CME Preliminary Report for the Friday trading session showed that gold open interest in June fell by a rather large 1,371 contracts, leaving only 2,011 still open, minus the 32 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that only 58 gold contracts were actually posted for delivery on Monday, so that means that 1,371-58=1,313 gold contacts vanished from the June delivery month. That’s a lot.  The June delivery month in gold is turning into a non-event in a real hurry.   Silver o.i. in June dropped by 202 contracts, leaving just 50 left, minus the 45 mentioned several paragraphs ago.  Thursday’s Daily Delivery Report showed that 216 silver contracts were actually posted for delivery on Monday. That means that 216-202=14 more silver contracts just got added to June.


There was another addition to GLD on Friday, the second one in the last three days — and this one was for 75,502 troy ounces.  There were no reported changes in SLV.

There was no sales report from the U.S. Mint on Friday, the last business day of May.

For that month, the mint sold 4,000 troy ounces of gold eagles — 3,000 one-ounce 24K gold buffaloes — and 866,000 silver eagles…plus 158,000 of those 5-ounce ‘America the Beautiful’ silver rounds.

There was a tiny bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  There was 1,200 troy ounces received at Brink’s, Inc. — and 200 troy ounces shipped out of HSBC USA.  I won’t bother linking this.

There was far more activity in silver.  One truckload…601,118 troy ounces…arrived at CNT — and that was all the ‘in’ activity there was.  There was 659,688 troy ounces shipped out — and that involved four different depositories.  But the vast majority of it, one truckload…600,698…troy ounces…departed Canada’s Scotiabank.  In second spot in the ‘out’ category was CNT, with 39,853 troy ounces.

But the big changes were on the paper side, as 2,999,505 troy ounces was transferred from the Registered category — and back into Eligible…2,465,987 troy ounces at CNT — and the remaining 533,517 troy ounces at Brink’s, Inc.  Along with the similar big category transfer earlier in the week, Ted’s of the opinion that this silver belongs to JPMorgan.  They just have no room for it in their silver vault in New York — and are storing it in the same warehouse that the previous owner had it before JPMorgan took delivery of it.  The reason that they’re doing this, is that it’s cheaper to store it in the Eligible category than it is in the Registered category.  The link to all this activity is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They didn’t report receiving any — and shipped out 350 of them.  This activity occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Newark Torc is a complete Iron Age gold alloy torc found by a metal detectorist on the outskirts of Newark-on-Trent, Nottinghamshire, England, in February 2005.

The torc is made from electrum, an alloy of gold, silver and copper, weighs 700 grams (1.5 lbs) and is 20 cm in diameter. The body is formed from rolled gold alloy wires, which had then been plaited into eight thin ropes then twisted together. The terminals are ring-shaped and bear floral and point-work designs. The torc was probably made in Norfolk. It closely resembles the Great Torc from Snettisham, now displayed in the British Museum, and is also closely similar to one found at Sedgeford, north Norfolk – so much so that one expert has suggested that they might have been made by the same craftsman. The torc had been buried in a pit, and as such is considered a hoarded item rather than a stray loss. The reason for its deposition is uncertain, although Jeremy Hill, head of research at the British Museum, speculated that it might have been buried “possibly as an offering to the gods.”

“[It is] probably the most significant find of Iron Age Celtic gold jewellery made in the last 50 years … [it] shows an incredibly high level of technological skill in working the metal and a really high level of artistry. It is an extraordinary object.” he stated.

The torc has been dated to between 250 and 50 B.C., and is thought to have been buried in around 75 B.C. The torc was found by Maurice Richardson, a tree surgeon, while he was metal detecting in a field.   Click to enlarge.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, was everything that Ted was hoping for in silver, plus more…and just about what he predicted in gold.

In silver, the Commercial traders are now net long in the COMEX futures market, as they decreased their short position by 6,298 contracts, or 31.5 million troy ounces.

They arrived at that number by increasing their long position by 3,782 contracts — and they also covered 2,516 short contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Manged Money traders, plus a whole lot more, as they reduced their long position by 2,644 contracts.  They also increased their short position by a further 5,932 contracts — and it’s the sum of those two numbers…8,576 contracts…that represents their change for the reporting week.

But it’s still very much a bifurcated report, because the reduction in the long position had to come from the non-technical/value investing Managed Money traders that got blown out of their long positions, as no brain-dead moving average-following Managed Money trader would be holding a single long contract at this price for silver.  They were the ones that added 5,932 short contracts to their already monstrous short position during the reporting week.

The difference between what the Managed Money traders did — and what the Commercial traders did…8,576 minus 6,298 equals 2,278 contracts.  That difference was made up, as it always is, by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader categories, as both increased their net long position during the reporting week by that amount in aggregate.

The Commercial net long position in silver sits at 1,115 contracts, or 5.6 million troy ounces.  Not a large number to be sure…but a very rare occurrence, as it’s only happened once before in the last fifteen years — and I know that Ted will have something to say about it in his weekly review later today.

Ted figures that JPMorgan added at least a thousand contracts to their long position in silver — and that long position now stands at 6,000 contracts — and maybe a bit more.

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

To say that the set-up for silver is “white hot” bullish is severe understatement.  It’s ready to blow sky high — and will, the moment that JPMorgan allows it.


In gold, the commercial net short position only increased by 2,016 contracts.  I was expecting far worse.

They arrived at that number by adding 23,463 long contracts, but they also added 25,479 short contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was a Ted though it might be…all Managed Money traders, plus way more.  They added 4,328 long contracts — and they also reduced their short position by 6,009 contracts.  It’s the sum of those two numbers…10,337 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…10,337 minus 2,016 equals 8,321 contracts.

One of the two surprises under the hood was that the Producer/Merchant category where the banks hang out didn’t do a thing on a net basis during the reporting week, as it was the commercial traders in the Swap Dealers category that was responsible for the small 2,016 contract change in the commercial net short position.

The other surprise was that the actual big changes for the week took place in the ‘Other Reportables’ category, as they decreased their net long position by 12,454 contracts during the reporting week, whereas the small traders in the ‘Nonreportable’ category actually increased their net long position by 4,133 contracts.  If you subtract those two numbers from each other, you get 8,321 contract change between what the Managed Money traders and the commercial traders did during the reporting week, which they must do.

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

The commercial net short position in gold stands at 11.0 million troy ounces, still a rather immaterial amount on an historical basis.

Here’s the 3-year COT chart from Nick — and as you can tell, the change is barely noticeable.  Click to enlarge.

With the decisive penetration and close above gold’s 50-day moving average on Friday, there certainly has been an increase in the commercial net short position in gold — and Ted was hoping that JPMorgan hadn’t shown up as a short seller of first resort yesterday.  But he’ll know more when next Friday’s Bank Participation Report is published.

In the other metals, the Manged Money traders in palladium increased their net long position in this precious metal by a further 853 contracts.  The Managed Money traders are now net long the palladium market by 9,284 contracts.  Total open interest in palladium is 20,105 COMEX contracts, down 400 contracts from the previous week.  It’s a very tiny, concentrated and illiquid market — and it doesn’t take too many contracts to move it.  In platinum, the Managed Money traders went net short a further 10,364 contracts during the reporting week.  The Managed Money traders are now net short the platinum market by 9,684 contracts — and are bit more net short since Tuesday’s cut-off.  Total open interest is 83,398 contracts, up 4,560 contracts from last week.  With copper engineered lower in price for yet another week, the Managed Money traders increased their net short position in that metal by a further 3,421 contracts — and are now net short the COMEX futures market by an eye-watering 40,766 COMEX contracts…1.02 Billion pounds worth!…and more since Tuesday’s cut-off!


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

For the current reporting week, the Big 4 traders are short 99 days of world silver production, which is up 4 days from last week’s report — and the ‘5 through 8’ large traders are short an additional 62 days of world silver production, down 2 days from last week’s report — for a total of 161 days that the Big 8 are short, which is a bit over 5 months of world silver production, or about 375.7 million troy ounces of paper silver held short by the Big 8.  [In the prior week’s COT Report, the Big 8 were short 159 days of world silver production.]

In the COT Report above, the Commercial net long position in silver was reported as 5.6 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 375.7 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by a chunky 375.7 plus 5.6 equals 381.3 million troy ounces.

The reason for the difference in those numbers…as it always is…Ted’s raptors, the 40-odd small commercial traders other than the Big 8, are net long that amount.  Simply mind-boggling.

As I mentioned in my COT commentary in silver above, Ted said that JPMorgan added about 1,000 contracts or so to their current long position — and he figures that they’re net long the COMEX futures market by 6,000 contracts — and maybe a bit more.

The Big 4 traders now in that category are short, on average, about…99 divided by 4 equals…24.75 days of world silver production each — and at least one of them comes from the ranks of the Managed Money category

The four traders in the ‘5 through 8’ category are short 62 days of world silver production in total, which is 15.5 days of world silver production each.

Ted’s of the opinion that there are most likely three Managed Money traders with short positions large enough in the COMEX futures market to inhabit the Big 8 category now — and that’s obvious from the increase in the Big 4 category this week.

The Big 8 commercial traders are short 34.5 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 35.3 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 40 percent mark.  In gold, it’s now 34.4 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 31.9 percent they were short in last week’s report — and around the 40 percent once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 33 days of world gold production,up 1 day  from what they were short in last week’s COT Report.  The ‘5 through 8’ are short another 27 days of world production, up 3 days from what they were short last week…for a total of 60 days of world gold production held short by the Big 8…up 4 days from last week’s report.  Based on these numbers, the Big 4 in gold hold about 55 percent of the total short position held by the Big 8…down 2 percent from last week’s COT Report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 61, 66 and 84 percent respectively of the short positions held by the Big 8.  Silver is up 1 percentage point from a week ago, platinum is down 5 percentage points from last week — and palladium is up 2 percentage points…and back at its record high, if not a bit more.

If you look at the above ‘Days to Cover‘ chart above, you can see these percentages for yourself between the red and the green bars for each precious metal.  The grotesque short position of the Big 4 traders, relative to the positions of the Big 8 traders in palladium, should be noted.

I have a very decent number of stories/article for your weekend reading pleasure, including a Stephen F. Cohen interview that I’ve been saving for the last couple of days.


CRITICAL READS

Has Trump Gone Nuts? — Bill Bonner

We never expected Trump to go Full Retard with his trade war shtick. His own wealth, his reputation, and his re-election are at stake.

And yet… there he goes.

And so zany is the thinking behind this latest move that many people are beginning to wonder: Is this president just dumb… or completely nuts? “Borderline crazy” says a Bloomberg headline.

Countries take responsibility for securing their own borders. They cooperate with other countries to police them. Occasionally, they put up walls. Or even seal them off completely.

But this is a first. The Donald is taxing Americans to force the Mexicans to protect the U.S. border. But if the U.S. can’t stop people from sneaking across the Rio Grande, how is Mexico supposed to do so?

We don’t know. But this buggy stock market must be looking for a windshield. And Mr. Trump has put a fleet of them out on the roads.

This worthwhile commentary from Bill showed up on the bonnerandpartners.com Internet site on Friday morning EDT — and another link to it is here.


Doug Noland: So Much for the Trump Put

The PBOC’s $36 billion Wednesday injection raises a crucial question: What will be the scope of liquidity needs when a major bank finds itself in trouble – when escalating systemic stress begins fomenting a crisis of confidence? It’s worth noting that Chinese sovereign CDS jumped six bps this week to 59 bps, the high since January. Overnight repo and inter-bank lending rates rose, along with Chinese corporate bond yields. According to Bloomberg, issuance of negotiable certificates of deposit slowed sharply this week. Chinese finance is tightening, an ominous development for a fragile Bubble.

This is where the analysis turns absolutely fascinating – and becomes as important as it is chilling. The PBOC is at increasing risk of confronting the same predicament that other emerging central banks faced when their Bubbles succumbed: in the event of a mounting crisis of confidence in the stability of the financial system and the local currency, large central bank injections work to fan market fears while generating additional liquidity available to flow out of the system. “Everyone has a plan until they get punched in the mouth.”

If President Trump is determined to squeeze rate cuts out of the Federal Reserve, he made impressive headway this week. This CBB began with, “So Much for the Trump Put.” As for the “Beijing put,” a $36 billion PBOC liquidity injection was indiscernible beyond Chinese markets. Investors in U.S. securities would be wise to anticipate zero favors from China.

As such, markets are left with the “Fed put.” For the most part, U.S. stocks, equities derivatives and corporate Credit have been comfortable banking on the Federal Reserve backstop. But with things turning dicey in China, risk aversion is gaining a foothold. Investment-grade funds saw outflows surge to $5.1 billion the past week (“most since 2015”). Corporate spreads and CDS prices have begun to indicate liquidity concerns. With the “Fed put” now in play, there are important questions to contemplate: Where’s the “strike price” – what degree of market weakness will it take to compel the Fed to move – and, then, to what effect? Markets, after all, have already priced in aggressive rate cuts. It could very well require some “shock and awe” central banking to reverse markets once panic has begun to set in. And it’s as if global safe haven bond markets are anticipating a bout of panic in the not too distant future.

Doug’s weekly commentary was posted on his website in the very wee hours of Saturday morning — and another link to it is here.


Jim Grant: Who’s Buying All the Sub-Zero Debt?

[Excerpted from Jim Grant’s Barron‘s op-ed: “The World Created By Upside-Down Interest Rates“]

The quoted value of negative-yielding debt the world over hit $11 trillion the other day, the highest such total since September 2016 and almost double the volume in place last October.  Click to enlarge.

These are remarkable facts. You can as easily imagine a five-pawed St. Bernard or a suitable candidate for public office as you can the situation of a lender paying a borrower for the privilege of extending a loan.

The institution of negative yields serves to remind us that radical monetary policy only begets more radical monetary policy.

But the central bankers misjudged the human animal. Confronted with a novelty unprecedented in 4,000 years of interest-rate history (negative money-market interest rates are nothing new, but substantially negative note and bond yields are a post-2000 B.C. first), people not unreasonably suspected that something was wrong. And when something is wrong, you save more, not less.

Five years into the negative rate experiment, and a decade on in radical monetary improvisation, the central bankers are looking for a way back to normalcy…

But as Grant asks and answers: Do you wonder who’s buying all of the subzero debt?

This rather brief 1-chart commentary appeared on the Zero Hedge website at 1:30 p.m. EDT on Friday afternoon — and I thank Jim Gullo for sending it our way.  Another link to it is here.


Fed candidate Shelton slams central bank’s ‘Soviet’ power over markets

Judy Shelton, a senior U.S. official who is being vetted for a job on the board of the Federal Reserve, has attacked the central bank for wielding undemocratic, Soviet-style powers over markets and suggested it should not even be in the business of setting interest rates.

In an interview with the Financial Times at the Trump International Hotel in Washington this week, Ms. Shelton called on the Fed to “think about whether they are doing more harm than good.” If appointed to the board, she would be “asking tough questions” about its most basic mission, she said.

How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market-supply-determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?” Ms. Shelton said.

If the success of capitalism depends on someone being smart enough to know what the rate should be on everything…we’re doomed. We might as well resurrect Gosplan,” she said, referring to the state committee that ran the Soviet Union’s planned economy. Ms. Shelton did post-doctoral research on the Soviet economy at Stanford University’s Hoover Institution and was designated to be the Russia expert on the board of the National Endowment for Democracy.

This worthwhile Financial Times news item is posted in the clear in this GATA dispatch — and another link to it is here.


What diplomacy? Here are 36 countries the U.S. has bullied this week

It’s been a busy few days for American diplomacy, with three dozen nations ending up at the receiving end of threats, ultimatums and sanctions this week alone. And it’s only Friday.

Mexico is the latest target, slapped with 5 percent tariffs on each and every export, gradually increasing to 25 percent until it stops the flow of Latin American migrants into the U.S., thus fulfilling one of President Donald Trump’s election promises. Most of those migrants aren’t even from Mexico.

On the other side of the world, India is reportedly about to be forced to face a choice: ditch the purchase of Russian S-400 air defense systems or face sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA, Washington’s go-to cooperation enforcement instrument).

Turkey is facing a similar ultimatum: abandon S-400s (something Ankara has repeatedly refused to do) or lose access to the F-35 fighter jet program. This threat was repeated on Thursday by Kathryn Wheelbarger, US acting assistant secretary of defense for international security affairs. Ankara has already invested some $1.25 billion into the super-expensive American fighter, but with a lot of its parts being made in Turkey, it’s still an open question who would be the bigger loser.

The entire European Union could be facing punishment if it tries to trade with Iran using its non-dollar humanitarian mechanism to bypass the American embargo. Having worked hard on the 2015 nuclear deal with Tehran, which has repeatedly been confirmed to be working, E.U. member states are not ready to ditch trade at Trump’s whim – and U.S. Special Representative to Iran Brian Hook on Thursday reaffirmed the threat of CAATSA sanctions.

This news item put in an appearance on the rt.com Internet site at 12:52 p.m. Moscow time on their Friday afternoon, which was 4:25 a.m. in Washington — EDT plus 7 hours.  I thank Larry Galearis for bringing it to our attention — and another link to it is here.


Mike Pence declares war on the world at West Point — John Wight

The commencement address Trump’s VP, Mike Pence, gave to West Point graduates recently goes down in history for all the wrong reasons.

It was an address littered with war talk that was so extreme it was more compatible with a speech you would expect to hear from a character in a Hollywood spoof than from a leading politician and government official.

This was no spoof, though, be assured, and as such the world needs to wake up to the fact that this administration is staffed with enough cranks and crackpots to fill an entire ward.

Here, for your consideration, is one of the more tame sections of Pence’s West Point commencement address: “It is a virtual certainty that you will fight on a battlefield for America at some point in your life. You will lead soldiers in combat. It will happen. Some of you may even be called upon to serve in this hemisphere.”

But then there’s this…

Some of you will join the fight against radical Islamic terrorists in Afghanistan and Iraq.  Some of you will join the fight on the Korean Peninsula and in the Indo-Pacific, where North Korea continues to threaten the peace, and an increasingly militarized China challenges our presence in the region.  Some of you will join the fight in Europe, where an aggressive Russia seeks to redraw international boundaries by force. And some of you may even be called upon to serve in this hemisphere. And when that day comes, I know you will move to the sound of the guns and do your duty, and you will fight, and you will win.”

Though we can justifiably speculate that whoever wrote the Vice President’s speech might well have been drunk at the time, the man himself has no such excuse. He was, in fact, completely sober while delivering it to the packed assembly of military graduates arrayed in front of him. It is to be hoped that at least a few of them, listening, let loose an inner scream along the lines of “Whaaat?! Are you nuts?!

This commentary from John is certainly worth reading if you have the interest.  It was posted on the rt.com Internet site at 1:01 p.m. Moscow time on their Wednesday afternoon, which was 6:01 a.m. in Washington — EDT plus 7 hours.  I thank George Whyte for pointing it out — and another link to it is here.


Russiagate is #1 threat to U.S. national security –- Stephen Cohen

The systemwide U.S. Russophobia that reached its nadir with Russiagate has created a “catastrophe” for both domestic politics and foreign relations that threatens the future of the American system, professor Stephen Cohen tells RT.

War with Russia could easily break out if the U.S. insists on pursuing the policy of “demonization” that birthed Russiagate instead of returning to detente and cooperation, New York University professor emeritus of Russian history Stephen Cohen argues on Chris Hedges’ On Contact. While NATO deliberately antagonized post-Soviet Russia by expanding up to its borders, the U.S. deployed missile defense systems along those borders after scrapping an arms treaty, leaving President Vladimir Putin devoid of “illusions” about the goodwill of the West – but armed with “nuclear missiles that can evade and elude any missile defense system.”

Cohen believes the conspiracy theory – which remains front-page news in U.S. media despite being thoroughly discredited, both by independent investigators and last month by special counsel Robert Mueller’s report – is the work of the CIA and its former director, John Brennan, who are dead set against any kind of cooperation with Russia. Attorney General William Barr, who is investigating the FBI over how the 2016 counterintelligence probe began, should take a look at Brennan and his agency, Cohen says.

If our intelligence services are off the reservation to the point that they can first try to destroy a presidential candidate and then a president…we need to know it,” Cohen says. “This is the worst scandal in American history. It’s the worst, at least, since the Civil War.” And the damage wrought by this “catastrophe” hasn’t stopped at the U.S. border.

The 28:25 minute Chris Hedges video interview with Stephen F. Cohen is embedded in this article that appeared on the rt.com Internet site at 2:56 a.m. Moscow time on their Friday morning…7:56 p.m. in Washington on Thursday evening — EDT plus 7 hours.  I thank both Larry Galearis and Jim Gullo for contributing to this story.  Another link to it is here.


U.S. Coalition Attacks Syrian Oil Transport Boats on Euphrates River

In a huge development out of eastern Syria, where U.S.-backed Syrian Democratic Forces (SDF) share tense front lines with pro-Assad forces on the other side, the American coalition has reportedly attacked at least two Syrian government boats that were transporting oil across the Euphrates River to the government side.

The news broke via the Beirut-based Middle East News site Al-Masdar which is well-known for often being the first to report Syria news, given its rare sources in the Syrian military. According to the Al-Masdar report:

“According to reports from the Deir Ezzor Governorate, the U.S. Coalition and the SDF both targeted the Syrian government boats with heavy machine gun fire in front of the town of Al-Shuhayl.

Pro-SDF accounts later released photos showing smoke rising from one of the ferries that were targeted by their machine gun fire.”

Kurdish media and SDF accounts, along with a number of Middle East analysts also confirmed the incident, which is reportedly the second such attack on government oil supplies in under a month.

Washington has imposed a complete oil and fuel embargo on Syria, which Damascus’ close ally Iran has recently sought to circumvent.

Turkish media also confirmed the attack, which according to early reports left four dead.

Though U.S.-backed forces maintain control of eastern Syria’s largest oil and gas fields, such as al-Omar, which the country’s largest oil field and located in the Deir Ezzor region, it has long been suspected that Syrian Kurdish groups have cut secret deals with the Assad government to purchase and transfer supplies to the fuel-starved government side of the Euphrates.

This story put in an appearance on the Zero Hedge website at 12:25 p.m. on Friday afternoon EDT — and I thank Brad Robertson for this one.  Another link to it is here.


Russian Jets Launch Airstrikes on Idlib After Ceasefire Talks With Turkey Collapse

On Thursday more than five Russian fighter jets began launching airstrikes over the Idlib Governorate following the collapse of ceasefire talks with Turkey.

According to a military source in northwestern Syria, the ceasefire talks collapsed after Turkey demanded that the Syrian Arab Army (SAA) withdraw from all the areas they captured in northwestern Hama.

The Russian military reportedly rejected Turkey’s demands and restarted their aerial campaign over the Idlib province.

The Syrian Air Force had already launched airstrikes over the Idlib Governorate on Thursday, but the Russian military had only carried out limited attacks due to their ceasefire talks with Turkey.

The source added that the Syrian Army has yet to receive the green light to resume their ground offensive against the jihadist forces in northwestern Hama.

The Turkish regime had been pushing for a new ceasefire deal around the Idlib deescalation zone after their rebel allies lost a great deal of territory in northwestern Hama.

This story appeared on the Zero Hedge website at 8:47 a.m. on Friday morning EDT — and I thank Brad Robertson for his second offering in today’s column.  Another link to it is here.


Dalio warns of U.S.-China ‘war’ slipping out of control

Markets continue to more or less shrug off the prospect of a dramatic escalation in the US-China trade conflict, with major U.S. stock benchmarks in the green on Thursday as of early afternoon. But a realization is finally taking hold that the leaders of the world’s two largest economies have little political room to back away from doubling down.

Many analysts’ base-case scenarios have already shifted from a short-term resolution to the U.S.-China tariff war to an expectation that the current stalemate will be the new status quo for the foreseeable future.

But Ray Dalio, founder of one of the world’s largest hedge funds, said he is worried about a worst-case scenario, one that sees Washington and Beijing slide into a disastrous export control war aimed at crippling sectors of each other’s economies.

As someone in these negotiations wisely said, history shows that countries in conflict have seen that such conflicts can easily slip beyond their control and become terrible wars that all parties, including the leaders who got their countries into them, deeply regretted,” Dalio wrote in a LinkedIn post.

What is now most important at this time of brinkmanship is seeing what actually happens next—i.e. whether we see the “tariff war” slip into an “export embargo war” intended to shut parts of the other country down,” he warned.

This worthwhile commentary/news item by the Asia Times Staff showed up on their Internet site on Thursday sometime — and I thank Tolling Jennings for sharing it with us.  Another link to it is here.


For the U.S. and China, it’s not a trade war anymore — it’s something worse

What started out two years ago as an effort by President Trump to wring better terms from China on the nuts-and-bolts of foreign trade now threatens to become a far wider and more ominous confrontation.

The conflict continues to be framed as a “trade war” between the world’s two biggest economies — as Washington and Beijing pursue an escalating series of tariff hikes and other retaliatory measures.

Even as Trump moved Thursday to open a new, potential damaging trade war with Mexico, however, the conflict with China has widened beyond the original trade-based issues.

Beneath the surface, a new tone has begun to emerge since trade talks broke down in early May and Trump ratcheted up tariffs on imported goods from China, an action met with retaliatory duties from Beijing. Officials on both sides of the Pacific have begun to portray the U.S.-China relationship in nationalistic and emotion-charged terms that suggest a much deeper conflict.

Recently, for example, a private group of American economists and trade experts with long-standing experience in China traveled to Beijing, expecting their usual technical give-and-take with Chinese government officials.

Instead, a member of the Chinese Politburo harangued them for almost an hour, describing the U.S.-China relationship as a “clash of civilizations” and boasting that China’s government-controlled system was far superior to the “Mediterranean culture” of the West, with its internal divisions and aggressive foreign policy.

On the U.S. side, a senior State Department official, during a forum last month in Washington, warned of a deepening confrontation with China that she cast in something close to racial terms.

That’s pretty much what it’s turning into, dear reader…Samuel P. Huntingon’s “Clash of Civilizations“.  The U.S. is attempting to destroy China before it overtakes the U.S. economically and in political influence.  This commentary/news item, which is definitely worth reading, showed up on the latimes.com Internet site at 7:00 a.m. Washington time — and I thank ‘Zoey’ for sending it our way.  Another link to it is here.


Will the U.S. now try to overthrow Malaysia’s prime minister too?

Malaysian PM Mahathir Mohamad has floated the idea of creating a gold-backed common trading currency for all of East Asia, slamming regional currency exchange as “manipulative” and criticizing the U.S.’s heavy-handed foreign policy.

In the Far East, if you want to come together, we should start with a common trading currency, not to be used locally but for the purpose of settling of trade,” Mahathir said at the Nikkei Future of Asia conference in Japan, suggesting the currency be “based on gold because gold is much more stable” and warning that promoting any one country’s currency over others would result in conflict.

Exchange rates would be based on the country’s economic performance and not subject to the volatility of forex markets.

Earlier this week, U.S. President Donald Trump warned Malaysia that it could be placed on the U.S. Treasury’s list of “currency manipulators” and required close scrutiny, though Malaysia’s central bank retorted that it maintains a floating exchange rate and strong external balance. During the 1997 financial crisis, the bank pegged the ringgit to the dollar and imposed capital controls, but those measures were discontinued in 2005.

Mahathir is a long-time critic of the status quo in currency trading. He blames billionaire financier George Soros for triggering the 1997 Asian financial crisis by betting against the ringgit and baht and has accused the financier of attempting to “colonize” Malaysia through his network of NGOs, claiming his end goal is “regime change.”

Libyan leader Muammar Gaddafi proposed a pan-African gold dinar that would be used to sell the country’s oil on the world market in 2009, less than two years before his government fell to a NATO-backed regime change operation that has left the once-prosperous nation a conflict-ridden warzone. One of the ‘moderate’ rebels’ first actions upon brutally murdering Gaddafi was to create a central bank to replace the state-owned monetary authority that had previously managed Libya’s wealth. The U.S. has historically not taken kindly to countries that attempted to trade oil in non-dollar currencies, as Iraq’s Saddam Hussein can attest – or could, if he hadn’t been regime-changed as well. Syria, too, dropped its peg to the dollar in 2007, not long before the West went from awarding Bashar al-Assad the French medal of honor, to declaring him a bloodthirsty monster.

This news item was posted on the rt.com Internet site at 3:40 a.m. Moscow time on their Friday morning, which was 8:40 a.m. in Washington — EDT plus 7 hours…and was updated about an hour later.  The actual headline to this story reads “‘Gold is more stable’: Malaysia needles U.S. with proposal for pan-Asian bullion-backed currency“.  I found it on the gata.org Internet site — and another link to it is here.


Asia Gold-China premiums rise as trade woes boost buying; India demand tapers

Gold premiums in top consumer China rose this week as investors bought the metal as a safe-haven due to rising trade tensions with the United States, while bullion demand moderated in India as local prices jumped to two-week highs.

In China, premiums rose to about $14-$18 an ounce over the benchmark from $12-14 an ounce last week.

Investment demand has been picking up, due to uncertainties on trade disputes and the lacklustre performance in the stock market, while jewellery demand still remains quiet,” said Samson Li, a Hong Kong-based precious metals analyst with Refinitiv GFMS.

Weak yuan and lower gold import volumes also pushed premiums higher, Li said, adding that imports in the first four months of this year were much less than a year earlier.

Net gold imports via main conduit Hong Kong rose 20.5% in April from a month ago, but were down about 17% on year in the first four months.

This Reuters news item put in an appearance on their Internet site at 3:40 a.m. EDT on Friday morning — and I found it on the Sharps Pixley website.  Another link to it is here.


Ted Butler: The CFTC’s summer camp letter

About 30 years ago, my wife arranged for our then ten-year old son to attend a sleep-away YMCA summer camp in Tallulah Falls, in the Georgia Mountains. While Ross wound up going back to the same camp for several years, eventually serving as a counselor, I knew the first year would involve more than a little concern for his mother (and me) for how he was doing. Since the only communication would be by postal mail (no cellphones or texting back then) and I knew my son was not likely to write without some prodding, I sent him off with a number of pre-printed letters, in which all he had to do was fill in the blanks.

Given the CFTC’s abject failure to respond to simple questions about how commodity prices are being set through speculative futures positioning, I thought it might be instructive to attempt to make it as simple as possible for it to answer – in a fill in the blank and multiple choice format. The attempt is not to put words in the agency’s mouth, but just help it address the important issues at stake. Feel free to send along any you might wish to add.

1. The main purpose of futures trading is to allow (real producers and users to hedge price risk or large paper speculators to make bets). An alternative default answer to all questions is we don’t know or haven’t looked or JPMorgan told us not to look.

If the answer to #1 is to allow real producers and users and to hedge price risk, then why are there no real producers and users present in COMEX silver futures and managed money speculators are the largest single category?

If the answer to #1 is “we don’t know or haven’t thought about that,” then go back to sleep and forget the rest of the quiz. If the answer to #2 is “because JPMorgan told us not to look,” then proceed.

This very worthwhile commentary from Ted first appeared in his mid-week commentary to his paying subscribers on Wednesday — and I’m happy to see that it ended up in the public domain, which is where it really belongs.  Another link to it is here.


The PHOTOS and the FUNNIES

These three photos are taken at exactly the same spot…about two kilometers/one mile north of Spences Bridge on the east side of the Trans-Canada Highway.  The first shot was taken looking due east — and back down the Nicola River valley towards Merritt…66 kilometers away.  You can just make out where the river flows under the CN Rail bridge and into the Thompson River on the far left of the shot.  The second photo is looking due south — and down the T-CH to Spences Bridge…population: 99 as of the 2016 census.  That’s CP Rail‘s main line center left — and main-line CN Rail is the cut in the rocks on the east shore of the Thompson River on the far left.  B.C. Highway 8 runs just underneath that.  The last photo was taken looking due north.  This hot, dry semi-arid country is in the rain shadow of the Northern Cascade MountainsSagebrush and a peculiar kind of ground-hugging prickly-pear cactus is everywhere.  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’ dates from late 1977.  This American rock band was basically a 1-hit wonder, but the tune certainly falls into the “what a hit it was” category.  The link is here.

Today’s classical ‘blast from the past’ is one I’ve featured before, but I just can’t remember how long its been.  It’s Tchaikovsky’s Violin Concerto in D major, Op. 35 which he composed in a month in 1878 while in a resort in Switzerland.

It’s premiere in Vienna on December 4, 1881 was not all that well received…”The influential critic Eduard Hanslick called it “long and pretentious” and said that it “brought us face to face with the revolting thought that music can exist which stinks to the ear”, labeling the last movement “odorously Russian”. Hanslick also wrote that “the violin was not played but beaten black and blue.”

However, a lot of things change over the years — and now its one of the most popular and beloved violin concertos in the repertoire.  Here’s Itzhak Perlman doing it up right.  I can tell it’s an old recording because Eugene Ormandy is conducting the Philadelphia Orchestra — and it’s been many, many decades since he held that position — and Itzhak is pretty youngish looking.  The link is here.


We’re back above gold’s 50-day moving average with some conviction after Friday’s trading session — and it remains to be seen whether this rally turns into the real deal or not.  It could turn out to be just another head-fake where the commercial traders are about to slam the Managed Money traders back down through that moving average for fun, profit — and price management purposes.  I’m certainly hoping for the former, but fearful of the latter.

The net volume in gold was absolutely monstrous — and all we got out of that was a $17 rally in gold.  I was underwhelmed.

There’s still gold’s 200-day moving average that hasn’t been broken to the downside, but that really does seem like a “bridge too far” at the moment.

None of the other three precious metals were allowed to join in the fun yesterday, with palladium being taken out to the proverbial woodshed.  Silver wasn’t allowed to get anywhere yesterday — and I found the associated heavy volume rather disturbing.  Ted has his opinion on this, which he will divulge in detail to his paying subscribers today — and I hope he’s right.  But that takes nothing away from the fact that the set-up for silver in the COMEX futures market is just about the most extreme in history.

The other Big 2 of the Big 6 commodities…copper and WTIC…both got hit hard again yesterday and, without doubt, the Managed Money traders were puking up long contracts and piling in on the short side in both of these essential commodities.  They sold those long positions for big losses — and the new short positions they put on are all guaranteed money-losing trades when the commercial traders allow their respective prices to rally, as they’ll be covering them at a loss as well.

Here are the charts for the Big 6 commodities — and the changes I spoke of above, should be noted. Click to enlarge.

Every day the headlines coming out of the U.S. become more bizarre — and this Mexican tariff thingy was just the latest in a long string of threats against foreign countries.  That’s bad enough in and of itself, but the internal bickering and fighting going on between what’s left of both the Democratic and Republican parties, is both sad and horrifying to watch…especially to those of us that are not U.S. citizens — and who are on the outside looking in.

As the threats and fights continue…all around them, both internally and externally, the economies of the U.S. and the other nations of the world, slide into recession or worse.  It’s a process that is being accelerated by the Tweets coming from the White House.  It’s difficult for the average person to understand why Trump et al would risk sinking the Chinese economy — and not realizing at the same time that the U.S. economy would fall into the abyss shortly thereafter…never mind the rest of the world.

It’s a dangerous game of Brinkmanship that will end up sinking everyone.

It’s impossible to look at the world we live in today — and understand how the world equity, currency and bond markets can continue to operate in the rarefied atmosphere of the biggest financial bubble the world has ever known.  And I doubt it’s just me that sees danger in every direction.

Like I’ve stated before, I see the signs in things like Tesla and Uber — and in negative interest rates — and in the constant cry from Wall Street and the banks for yet lower interest rates and more Q.E. to keep this fantastic paper machine running for just another week, month or year…all the while the markets are massaged to as much perfection as possible 24/7.  It’s a circumstance that cannot last forever — and it’s been going on in one iteration or another since 1971.

This paper market that we’ve been living in since back then has been building slowly since that date.  Saved in 1987, then in 1999/2000…and the powers-that-be came close to losing it all in 2008/09 as spelled in horrific detail and plain English in the movie “The Big Short“.

The entire world is now involved in that classic experiment of a frog in a pot of water, where the heat has been turned up quietly and slowly through the generations — and unless you are of a certain vintage, everything appears normal.  But those of us who are, know better.

More and more with each passing week I feel like Frodo Baggins in Shelob’s Lair.  I can sense the rapidly increasing danger all around me — and I feel it, but can’t quite get a clear picture of the whole beast as it grows in size exponentially…shrouded in the happy talk coming from Washington, Wall Street, the Fed and the constant barrage coming from the main stream media — and not just the U.S. media, either.

And is it just me that thinks that all this will end suddenly — and most likely terribly — and soon?

So when everything paper begins to return to its intrinsic value, not only in the U.S., but world wide…where is that remaining money going to run to?

True, some of it will go into the bond markets, driving interest rates negative across the entire yield curve.  But, in reality, it will flow into the only remaining asset class that will be showing a positive return — and that will be commodities, particularly the precious metals.

And as I look at the Big 6 commodities through that particular lens, what I see is a set-up like few others that have been presented to us in modern times.  The commercial traders have snookered the Managed Money traders into record, or near record short positions in silver, platinum, copper and WTIC. This all looks deliberate and premeditated to Ted — and to me.

JPMorgan is long in the COMEX futures market in silver plus, according to Ted Butler, they hold at least 20 million ounces of physical gold and 850 million ounces of silver — and the only reason they are holding them is to make a boatload of money.  Heaven only knows what they and the other banks, both U.S. and foreign, hold in the Over-the-Counter market.

As I stated a few paragraphs ago, this financial and monetary bubble cannot go on forever.  It must and will end — and as I’ve said on several occasions before, it will happen either by circumstance, or by design.  And as I’ve also said on many occasions, this event will not happen in a news vacuum.

All the mice are in the trap, except for us precious metal holders.  And with the U.S. equity markets rolling over yet again, it’s not a matter of if JPMorgan et al pull the pin on all this, it’s just a matter of when.

So we wait some more.

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

Ed