Category Archives: Newsletter Archive

The Precious Metals Rally in Unison

20 February 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to drift quietly lower about an hour after trading began at 6:00 p.m. EST in New York on Monday evening — and was down 3 bucks or so by 3 p.m. China Standard Time on their Tuesday afternoon.  The price turned sharply higher at that point — and except for a mid-morning siesta in London, it continued to power quietly higher right into the COMEX close.  The price didn’t do much after that.

The low and high ticks were reported by the CME Group as $1,323.80 and $1,345.00 in the April contract.  But it should be pointed out that because of the U.S. holiday on Monday, the low price quoted by the CME Group probably occurred on Monday at the London open, as this data for both Monday and Tuesday is combined.

Gold finished the Tuesday session in New York at $1,340.40…up $14.20 from Monday’s close — and $19.00 from Friday’s close.  Net volume was surprisingly low at a bit over 233,000 contracts — and there was about 11,500 contracts worth of roll-over/switch volume on top of that.  [Both these numbers are net of Monday’s volumes]

The price path for silver was mostly the same as it was for gold…at least until 10 a.m. in London.  Then it chopped a bit lower from there until a rally of some real substance began a few minutes before 9 a.m. in New York.  That rally was capped at the $15.975 spot mark around 1 p.m. EST — and it wasn’t allowed to do much after that.

The low and high ticks in this precious metal, which certainly includes Monday’s low tick data as well, was recorded by the CME Group as $15.715 and $15.98 in the March contract.

Silver finished the Tuesday trading session in New York at $15.955 spot, up 17.5 cents from Monday’s close, but up 20 cents from Friday.  Net silver volume was a bit under 54,500 contracts — and there was a bit over 31,500 contracts worth or roll-over/switch volume out of March and into future months in this precious metal.  [Both these numbers are net of Monday’s figures as well]

The platinum price traded a few dollars higher in Far East trading right up until 3 p.m. CST on their Tuesday afternoon.  It began to head quietly and unevenly higher from there and, like silver, was capped shortly before 1 p.m. in COMEX trading in New York.  It was sold down a dollar or so going into the COMEX close — and didn’t do much after that.  Platinum finished the day at $818 spot, up 14 dollars from Monday’s close.

Palladium began to head higher a bit over two hours after the precious metal market opened at 6:00 p.m. EST on Monday evening in New York — and that culminated in a ‘no ask’ event that occurred shortly before the Zurich open.  A short seller of last resort appeared in a flash — and it was all unevenly down hill until a few minutes after 9 a.m. in New York.  It rallied just as unevenly higher until around 2:20 p.m. in the thinly-traded after-hours market on Tuesday afternoon — and was sold a few dollars lower by 3 p.m.  It traded flat into the 5:00 p.m. EST close from there.  Palladium was closed at $1,461 spot, up 22 dollars from Monday’s close.  It was up $31 bucks at its pre-Zurich open high tick.  It was yet another day where the palladium price was not allowed to run away to the upside.

And just as a point of interest, the bid/ask spread in palladium in the spot market is 25 bucks at the moment.


The dollar index closed very late on Monday afternoon in New York at 96.80 — and didn’t do much of anything once trading began at 7:45 p.m. on Monday evening EST, which was 8:45 a.m. China Standard Time on their Tuesday morning.  That lasted until around 11:10 a.m. in London — and at that juncture, it jumped to its 97.09 high tick thirty minutes later.  The long slide lower began at that point — and that sell-off ended/was halted around 12:38 p.m. in New York.  From that point it crawled a few basis points higher into the 5:30 p.m. close.  The dollar index finished the Tuesday session at  96.52 down 28 basis points from Monday’s close — and 36 basis points from Friday.  Click to enlarge.

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

Here’s the 6-month U.S. dollar index chart, updated with the combined data from both Monday and Tuesday — and it closed yesterday at 96.35.  The delta between its close — and the close on the DXY chart above, was 17 basis points yesterday.  Click to enlarge as well.

The gold shares began to head higher at an every decreasing rate of ascent as soon as the equity markets opened at 9:30 a.m. in New York yesterday morning — and their respective highs were set about 3:20 p.m. EST.  The day-type traders took small profits at that point — and the HUI closed up a very respectable 4.40 percent.  Click to enlarge.

The trading pattern for the silver equities was virtually identical…except all the gains that really mattered were in by shortly after 11 a.m. EST in New York trading.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 3.89 percent.  Click to enlarge if necessary.

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

I normally save these next two charts for the weekend, but just for fun, here are the month-to-date and year-to-date charts for “all of the above” as the of close of trading on Tuesday.  Click to enlarge for both.

The CME Daily Delivery Report showed that 90 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  The three short/issuers in gold were Morgan Stanley, Advantage and ADM…with 51, 29 and 10 contracts…all out of their respective client accounts.  The only two long/stoppers that mattered were JPMorgan with 71 contracts…64 for its client account, plus 7 contracts for its own account.  Advantage was in distant second spot with 18 for its client account.  The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday [plus Monday] trading sessions showed that gold open interest in February rose by 84 contracts, leaving 678 still around, minus the 90 mentioned just above.  Friday’s Daily Delivery Report showed that 72 gold contracts were actually posted for delivery today, so that means that 72+84=156 more gold contracts just got added to February.  Silver o.i. in February remained unchanged at 1 contract still open — and zero silver contracts were posted for delivery today.


There was yet another withdrawal from GLD on Tuesday.  This time an authorized participant took out 18,897 troy ounces.  But there was a deposit in SLV, as an a.p. added 938,016 troy ounces.

There was a small sales report from the U.S. Mint on Tuesday.  They sold 1,500 troy ounces of gold eagles — and 222,500 silver eagles.

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

It was exceedingly quiet in silver, as only 5,033 troy ounces were received — and only 72,830 troy ounces were shipped out.  I’m not going to bother breaking these amounts down, but if you want to check yourself, the link is here.

Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday and Monday, they reported receiving 50 of them, but shipped out 3,106.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two more charts that Nick Laird passed around on the weekend.  These show Turkey’s gold and silver imports, updated with January’s data.  As you can see, the didn’t do much that month, as they only imported 8.6 tonnes of gold — and a paltry 1.3 tonnes of silver.  Nothing much to see here, although their past imports have been very impressive in both metals at times.  Click to enlarge.

The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, January 29, showed the expected increase in the commercial net short positions in both gold and silver.

In silver, the Commercial net short position increased by 7,530 contracts, or 37.6 million troy ounces of paper silver.

They arrived at that number by adding 1,073 long contracts, but they also increased their short position by 8,603 contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, the Managed Money traders made up some, but not all of the change in the Commercial net short position.  They increased their long position by 3,230 contracts — and reduced their short position by 1,516 contracts.  It’s the sum of those two numbers…4,746 contracts…that represents their change for the reporting week.

The difference between that number — and the Commercial net short position…7,530 minus 4,746 equals 2,784 contracts.  That difference was made up, as it always is, by the traders in the other two categories…the ‘Other Reportables’ — and the ‘Nonreportable’/small traders.  Here’s the snip from the Disaggregated Report so you can see these changes for yourself…if you’re interested.  Click to enlarge.

The big banks in the ‘Producer/Merchant’ category went short about 3,200 contracts during the reporting week, which is a bit less that the 4,300 contracts that the ‘Swap/Dealer’ category went short, so the big banks were somewhat more careful about going short than the ‘Swap/Dealers’.

The Commercial net short position in silver is back up to 72,462 COMEX contracts, or 362.3 million troy ounces of paper silver…still firmly in bearish territory.  The Big 8 traders in silver are short 49.4 percent of the entire open interest in COMEX silver, which is unchanged from the previous COT Report.

Ted estimates JPMorgan’s short position at around 21 to 22,000 contracts…up one or two thousand contracts from the last COT Report.

Here’s the 3-year COT Report, updated with the above data.  Click to enlarge.

Based on the price action during the reporting week since the January 29th cutoff, we’ll probably see a further increase in the Commercial net short position as of the Tuesday, February 5th cut-off, but hopefully not nearly as much as we saw in this report.  That data will be released by the CFTC on Friday.


In gold, the commercial net short position rose by a fairly chunky 26,532 contracts, or 2.65 million troy ounces of paper gold.

They arrived at that number by reducing their long position by a very healthy 33,356 contracts, but they also reduced their short position by 6,824 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, like in silver, the change in the commercial net short position was only partially made up by the Managed Money traders. They increased their long position by 21,109 contracts, but surprisingly enough, they also added 4,922 short contracts — and it’s the difference between those two numbers…16,187 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…26,532 minus 16,187 equals 10,345 contracts.  That difference was made up by the traders in the other two categories, as the ‘Other Reportables’ added a net 8,902 long contracts — and the ‘Nonreportable’/small traders made up the rest, also went long by a net 1,443 contracts.

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

And also like in silver, the big banks in the ‘Producer/Merchant’ category didn’t go nearly as short in gold as the traders in the ‘Swap Dealer’ category during this reporting week…so they’re being more cautious shorting this precious metal as well.

The commercial net short position in gold is now back up to 11.86 million troy ounces, which is far more bullish than it is market neutral.  The Big 8 traders are short 38.7 percent of the entire COMEX open interest in gold which, as Ted pointed out on the phone yesterday, is a big jump from the 32.5 percent these same traders were short in the previous COT Report.

Here is the 3-year COT chart for gold, updated with that week’s data. Click to enlarge.

And, like for silver, I expect more commercial selling and Managed Money buying when the next COT Report shows up on the CFTC’s website on Friday.  But I’m not expecting the numbers to be quite as ugly as the ones in this report…touch wood.

I have very little for you in the way of stories today.


CRITICAL READS

Hobson’s Choice — Jeff Thomas

Thomas Hobson owned a large stable of horses in Cambridge, England in the early seventeenth century. As he had some forty horses in his stable, prospective customers assumed that they’d maximise their possibility of choice there, if they needed a mount.

However, each potential customer was told by Hobson that he could rent the horse in the stall closest to the door, or rent none at all. This approach allowed Hobson the ability to assure that none of his horses would ever be overused. But, in the bargain, it gave him control over his clientele.

Henry Ford used Hobson’s choice very effectively. He created his inspired “car for the multitude” in 1908. His market share increased enormously. Then, in 1913, he discovered that that black paint dried more quickly than any other colour. Black cars could be produced more quickly and were therefore more profitable. So, beginning in 1914, he eliminated all colour choices for his popular Model T cars. From then on, he said, “Any customer can have a car in any color as long as it is black.”

Like Mr. Hobson, he gained control over his customers by minimizing their choices.

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


Trump warns Venezuelan military to abandon Maduro or “lose everything

U.S. President Donald Trump on Monday warned members of Venezuela’s military who remain loyal to socialist President Nicolas Maduro that they are risking their future and their lives and urged them to allow humanitarian aid into the country.

Speaking to a cheering crowd mostly of Venezuelan and Cuban immigrants in Miami, Trump said if the Venezuelan military continues supporting Maduro, “you will find no safe harbor, no easy exit and no way out. You’ll lose everything.”

Maduro retaliated late on Monday that Trump’s speech was “nazi-style” and said he acted as if he were the owner of Venezuela and its citizens his slaves.

Trump offered strong backing for Venezuelan opposition leader Juan Guaido, whom the United States, many of Venezuela’s neighbors and most Western countries have recognized as interim president of Venezuela.

But Maduro, who won a second term last year in an election that critics denounced as a sham, retains the backing of Russia and China and control of Venezuelan state institutions, including the security services.

America will never be a socialist country,” he said.

Trump wants to boost support among Florida’s Hispanic voters as he looks ahead to his re-election campaign in 2020, when Florida is again expected to be an important swing state.

This news story was posted on the france24.com Internet site at 1:32 a.m. CET on Tuesday morning, which was 7:32 p.m. in Washington on Monday evening.  I thank Roy Stephens for sending it our way — and another link to it is here.  Here’s a parallel piece from the rt.com Internet site that’s headlined “‘They want to enslave us!’ Maduro slams Trump’s ultimatum & ‘Nazi-style’ attack on socialism“.  I thank Larry Galearis for that one.


Trump’s Venezuela gamble is turning out to be a beaten docket — Finian Cunningham

Trump’s bid for regime change in Venezuela is starting to look like a fatal overreach. With the South American country’s military remaining firmly loyal to President Maduro, embarrassing questions loom over U.S.’ dubious game plan.

It is not just Washington’s reputation that will take yet another grievous hit. So too will those European states which have shamefully rowed in behind the tawdry attempt at destabilizing a sovereign nation.

U.S. President Donald Trump was asked by reporters at the weekend if he had a “plan B” for Venezuela if President Nicolas Maduro does not stand down soon, as Washington is demanding. With his typical bluster, Trump said he had several backup options.

But, despite his bravado, it looks like Trump’s bet on effecting regime change in Venezuela is a losing venture. The U.S. seems to be increasingly desperate to salvage its plan to topple the government in Caracas.

This commentary from Finian put in an appearance on the rt.com Internet site at 3:44 p.m. Moscow time on their Tuesday afternoon, which was 8:44 a.m. in Washington — EDT plus 8 hours.  I thank George Whyte for pointing it out — and another link to it is here.


The Crumbling Chinese Market — Jim Rickards

A Chinese financial and economic crisis has been in the forecasts of many analysts for years, including my own. So far, it has not happened. Does this mean China has solved the problem of how to avoid a crisis? Or is the crisis just a matter of time, set to happen sooner than later?

My view is that a crisis in China is inevitable based on China’s growth model, the international financial climate and excessive debt. Some of the world’s most prominent economists agree. A countdown to crisis has begun.

As I explained above, China has hit a wall that development economists refer to as the “middle income trap.” Again, this happens to developing economies when they have exhausted the easy growth potential moving from low income to middle income and then face the far more difficult task of moving from middle income to high income.

The move to high-income status requires far more than simple assembly-style jobs staffed by rural dwellers moving to the cities. It requires the creation and adoption of high-value-added products enabled by high technology.

China has not shown much capacity for developing high technology on its own, but it has been quite effective at stealing such technology from trading partners and applying it through its own system of state-owned enterprises and “national champions” such as Huawei in the telecommunications sector.

This commentary from Jim appeared on the dailyreckoning.com Internet site on Monday sometime, but was only posted in the clear on Tuesday.  Another link to it is here.  There is a companion piece on China from Jim that was posted on the dailyreckoning.com Internet site on the same day — and it’s headlined “China Snared in “Middle-income Trap”“.


Bernstein Quants Join Bulls on Gold Sector as Cycle Darkens

For all the attention lavished on gold for its relative durability during this global dash into risk, the real story could be the companies digging it out of the ground.

A growing chorus of big names — including everyone from the quants at Bernstein to Pictet’s multi-asset team — is turning increasingly bullish on miners as late-cycle angst and industry shifts make conditions ripe for a prolonged rally.

Mining shares have gained at more than twice the pace of bullion this year, even as the metal hit a 10-month high on Tuesday, and the evidence suggests they can outperform the physical metal in an economic slowdown. Over the last 10 years, they traded with a correlation of 0.8 and a beta of 1.8 compared to gold. That means the two moved in lockstep, but when gold rallied investors who bet on miners were rewarded with a return about 80 percent larger.

At Bernstein, quantitative strategists led by Inigo Fraser Jenkins are seeing a laundry list of reasons to like gold and gold miners just now. They’re adding both, but see a tactical case for shares of metal producers in particular.

One of the key strategic themes that underlies our outlook is that we think there is a low return outlook across asset classes,” the strategists wrote last week. “The practical issue of holding gold is the lack of yield, or an ability to value it in a conventional way. So for portfolio managers of equity and multi asset portfolios an attractive alternative might be to hold the equity of gold miners.”

This Bloomberg story showed up on their website at 4:15 p.m. Pacific Standard Time on Sunday afternoon — and I thank Richard Saler for sharing it with us.  Another link to it is here.


The PHOTOS and the FUNNIES

Here are three more photos of the Nicola Valley.  This branch of the valley, just west of Merritt, is called Sunshine Valley by the locals.  The fall colours really give life to these pictures — and the Nicola River, which at this point contains all the water from the Coldwater River, is featured in all three.  Click to enlarge.


The WRAP

I was certainly happy to see the precious metals rally yesterday, but I was not at all enthused by the fact that gold open interest blew out 25,000+ contracts as shown in Tuesday’s Preliminary Report.  Part of that volume could have been spread trades…hopefully.  However, open interest in silver only increased by something less than 4,000 contracts — and I expect both of these numbers to be trimmed by some unknown amount when the Final Report from the CME Group is posted on their website later this morning in New York.

We’re back in an oversold position in both gold and palladium as of yesterday’s closes, however I’m not sure that makes much difference at this stage of the game.  All we can do is wait it out and see what happens.

Here are the 6-month charts for all four precious metals, plus copper and WTIC. It should be noted that Tuesday’s price dojis on all these charts also contain the price data from Monday as well when New York was closed.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price didn’t do anything for the first couple of hours once trading began at 6:00 p.m. EST in New York on Tuesday evening. It began to rally at 9 a.m. China Standard Time on their Wednesday morning — and that lasted for a couple of hours before the price was capped and turned quietly lower. At the moment, gold is up $1.70 an ounce. Silver followed an almost identical price path as gold — and it’s currently up 3 cents. Ditto for both platinum and palladium, with the former up 1 dollar — and the latter by 13 as Zurich opens. Palladium was up 24 bucks at it 11 a.m. CST high earlier in the day.

Net HFT gold volume is pretty healthy already at just under 52,000 contracts — and there’s only 1,055 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is very healthy as well, at a bit over 14,500 contracts — and there’s 2,369 contracts worth of roll-over/switch volume on top of that.

The dollar index opened about unchanged once trading began around 7:45 p.m. EST on Tuesday evening in New York, which was 8:45 a.m. China Standard Time on their Wednesday morning. It sank to its current low tick [such as it was] at 10:28 a.m. CST — and then quietly rallied back into positive territory for a bit. But then it rolled over starting at 3:12 p.m. CST — and as of 7:45 a.m. GMT in London, the dollar index is back at unchanged on the day.

So where we go from here is unknown.  But as Ted has pointed out…the precious metal market certainly has a different feel to it over the last three months since the DoJ made the conviction of that ex-JPMorgan trader public.  It remains to be seen whether or not this all ends in the same old way, or if it’s really different this time — and the commercial traders get overrun.

And as I post today’s column on the website at 4:02 a.m. EST, I note that gold is now up only 90 cents an ounce — and silver is up 4 cents. Platinum and palladium haven’t done much in the first hour of Zurich trading, with the former up 2 dollars — and the latter by 13.

Gross gold volume is pretty chunky at around 64,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is about 58,800 contracts. Net HFT silver volume is now up to a bit under 16,000 contracts — and there’s already 4,289 contracts worth of roll-over/switch volume out of March and into future months.

The dollar index has been chopping sideways for the last hour — and as of 8:45 a.m. GMT in London/9:45 a.m. CET in Zurich, it’s down 1 whole basis point.

And as I mentioned in this space yesterday, we get the minutes from the U.S. Fed’s most recent meeting this afternoon — and on Thursday we get the same data from the ECB.  Not only will it be of interest to see what they had to say…but also how the markets reacts to this data…or should I say, allowed to react to it.

That’s it for this missive — and I’ll see you here tomorrow.

Ed

Palladium’s Attempted Break-Out Capped Yet Again

19 February 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


With the U.S. shut tight for President’s Day holiday, the equity markets in New York were closed yesterday.  But the currencies and precious metals were still trading, although the latter only traded until 1:00 p.m. EST.


The gold price opened flat in New York at 6:00 p.m. EST on Sunday evening in New York.  It stayed that way until 9 a.m. China Standard Time on their Monday morning — and began to edge higher from there.  It was up 3 bucks or so by around 11:30 a.m. CST — and then slid quietly lower — and was down about a dollar at the London open.  From that juncture, the price began to crawl quietly higher until about 8:45 a.m. EST, but was tapped a bit lower over the next thirty minutes — and then didn’t do much after that.

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

Gold finished the holiday-shortened trading session at $1,326.20 spot, up $4.80 from Friday’s close.  Not surprisingly, net volume was pretty quiet at 89,500 contracts — and there was 2,416 contracts worth of roll-over/switch volume on top of that.

Silver didn’t do much yesterday.  Its low tick, such as it was, came at 8:00 p.m. EST in New York on Sunday evening, which was 9 a.m. in Shanghai on their Monday morning.  Its little rally at the COMEX open  was dealt with in a similar fashion to gold’s brief rally at the same time — and after that it didn’t do a thing until the market closed at 1:00 p.m. EST.

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

Silver closed on Monday at $15.78 spot, up 2.5 cents on the day.  Net volume was ultra quiet at a tiny bit under 20,500 contracts, but roll-over/switch volume out of March and into future months was pretty decent at just under 9,300 contracts.

The platinum price wandered around a few dollars either side of unchanged everywhere it was trading on Planet Earth on Monday — and finished the day down a dollar at $804 spot.

Palladium traded flat until 9 a.m. China Standard Time on their Monday morning — and two hours later it was up by 15 bucks.  It crept lower from there until very shortly after Zurich open — and it began to head sharply higher about an hour later.  That rally got capped and turned lower starting at 11:00 a.m. Central European Time — and from that point, it didn’t do much of anything for the remainder of the Monday trading session.  Platinum was closed at $1,439 spot, up 24 dollars from Friday and, like most days, would have closed at heaven only knows what price, if allowed.

The dollar index closed very late on Friday afternoon in New York at 96.90 — and opened down ten basis points the moment that trading began around 8:08 p.m. EST in New York on Sunday evening, which was 9:08 a.m. China Standard Time on their Monday morning.  From that juncture, it traded sideways in a fairly wide range for all of Monday, until the market closed at 3:30 p.m. EST.  The 96.90 high tick was printed at 8:08 a.m. in London — and 96.65 low was set at 12:06 p.m. GMT — and it rallied a bit into the 11 a.m. EST London close — and chopped quietly sideways from there.  The dollar index finished the holiday-shortened Monday session at 96.80 down 10 basis points from Friday’s close.  Click to enlarge.

With the U.S. markets close on Monday, there are no 6-month dollar index, HUI, Silver 7, mint sales…or anything else.

But Europe was still open for business — and 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, February 15 — and this is what they had to report.  There was 11,408 troy ounces added to their gold ETF — but there was 41,314 troy ounces removed from their silver ETF.


Nick Laird passed around a bunch of charts on the weekend — and here are two of them.  The first shows the monthly withdrawal from the Shanghai Gold Exchange for JanuaryThey took out 218.54 metric tonnes that month — and here’s Nick’s most excellent chart updated with that change.  Click to enlarge.

This second chart shows the monthly and cumulative withdrawals from the Shanghai Gold Exchange since they opened back in January of 2008.  Of course the withdrawals in January are the same as shown in the previous chart…218.54 metric tonnes.  But cumulatively over the last eleven years, there has been 17,332 tonnes withdrawn.  That’s a lot.  Click to enlarge.

I have a decent number of stories for you today, quite a few of which are precious metal-related.


CRITICAL READS

4,823 U.S. Banks Have Disappeared Since 1999

At the end of 1999, the year that President Bill Clinton and his  Treasury Secretary Robert Rubin brokered the deal to repeal the Glass-Steagall Act of 1933 and allow the casino investment banks on Wall Street to gobble up deposit-taking banks, there were 10,220 federally insured banks and savings institutions in the United States. Today, that number stands at 5,397, a decline of 47 percent according to the Federal Deposit Insurance Corporation (FDIC). What exactly happened to those disappeared banks?

We examined FDIC data to see if the sharp falloff in bank numbers was from failures or mergers. We found that the vast majority of the decline resulted from banks being absorbed in mergers. By the end of 2005, six years after the repeal of Glass-Steagall, the U.S. still had 8,832 federally insured banking institutions. But in just that year alone, 315 banks were lost to mergers. By 2010, the number of U.S. banking institutions had dropped to 7,657 with 197 institutions absorbed that year through mergers. In years 2015, 2016 and 2017, there were a total of 786 federally insured banking institutions absorbed through mergers.

The loss of competition in banking services has unleashed an unprecedented concentration of the life savings of Americans being held as deposits at a handful of behemoth Wall Street banks which simultaneously engage in high risk securities and derivatives trading – the very combination that led to the epic Wall Street banking collapses in 2008 and the 1930s.

This commentary appeared on the wallstreetonparade.com Internet site on Monday sometime — and I thank Larry Galearis for sharing it with us.  Another link to it is here.


Hands Off Venezuela: Historic Stance at the United Nations against U.S. Imperialism

In a spectacular display of solidarity and strength, envoys from such distant capitals as Beijing and Havana, Moscow and Tehran, Pyongyang and Caracas, Damascus and Managua and numerous other states stood together, side by side, in front of the United Nations Security Council, declaring their determination to protect the U.N. Charter and International Law, and holding sacrosanct the sovereignty and inviolability of each member state.

All these present, and approximately 50 more aligned, are states whose combined populations comprise more than half the people of the world, and all have been victimized and pauperized by the predations of neoliberal capitalist states bleeding the wealth of their peoples.

As Venezuelan Foreign Minister Jorge Arreaza read out their new statement, declaring the illegality of unilateral coercive economic sanctions, and territorial invasions, it became obvious that the power of this new solidarity, which includes China, Russia, Cuba, DPRK, Syria, Iran, Palestine, Nicaragua, Venezuela, etc. constitutes a formidable force which Western capitalism will antagonize at its own peril. This is a long overdue counter-force to Western domination of the United Nations, a domination based on money, on the large payments enabling the U.S. and other capitalist powers to bribe, threaten and otherwise control the direction of the U.N., and distort and destroy the independence, impartiality and integrity which the U.N. requires in order to maintain its legitimacy, and implement the sustained global peace and justice for which Franklin Delano Roosevelt created it.

Since the collapse of the USSR it has become blatantly clear at the U.N. (and virtually everywhere else) that money talks – indeed money shrieks . It therefore now seems obvious that the combined U.N. dues of these newly affiliated nations probably exceeds the contributions of the United States to the United Nations, and, if skillfully managed, this new organization of hitherto ravaged states will now have the power to threaten to withhold their combined dues, threatening a strike would could paralyze the United Nations unless their own interests, and not solely the interest of the United States and Saudi Arabia, are respected, and their own voices honored. There is incessant talk of the need for reform of the United Nations. It is probable that this new organization within the U.N. is the reform that is necessary – indeed inevitable.

The above commentary is all there is to this very interesting news item that put in an appearance on the globalresearch.com Internet site.  There’s an embedded photo in the story that speaks volumes as well.  I thank Tolling Jennings for sending it along — and another link to it is here.


U.S. elites remain incapable of understanding China — Pepe Escobar

A new report on U.S. policy toward China launched by the Asia Society in New York is another example of how supposedly bipartisan U.S. intellectual elites, instead of offering impartial advice, do little more than parrot Washington’s talking points, failing to admit they know nothing of substance about the existential “threats” posed by Russia and China.

The report ‘Course Correction: Toward an Effective and Sustainable China Policy‘ was written in collaboration with the 21st Century Chinese Center at the University of California, San Diego. Orville Schell, one of the chairs of the Task Force Report, should be seen as one of the least biased among an uneven basket of self-declared U.S. experts on China.

Still, he frames the report as trying to find a way between “confronting China” and “accommodating China.” That does not include “respecting” China – considering all the nation’s achievements 40 years after the reforms launched by Little Helmsman Deng Xiaoping.

Then Schell admits his experts are left “wondering what’s going on in the upper reaches of the leadership in China.” That’s even more serious, implying no intel on the ground.

So we’re left with China-bashing. We learn of devious attacks against the “rules-based global order” – which is always not so subtly equated with the “interests and values of the United States;” China’s “mercantilist zero-sum policies;”and the “lavishly funded state-led effort to build China into a high-tech superpower” – as if no country in the Global South should be allowed to go high-tech.

Well, dear reader, I’m sure that the U.S. deep state understands China all too well — and the only way that the U.S. can remain “the exceptional nation” is suppress or destroy the economies of any countries that get in the way of that.  They can be small countries, or large ones…but the end is the same, no country will be allowed to challenge the U.S. on any front.  This is just the Wolfowitz Doctrine in action.  This commentary from Pepe was posted on thesaker.is Internet site on Sunday sometime — and I thank Larry Galearis for pointing it out.  Another link to it is here.


Carmakers to Face More Pain as Sales in China Keep Sliding

Car sales in China continued to decline in January after their first full-year slump in more than two decades, adding to pressure on automakers who bet heavily on the market amid waning demand for cars from the U.S. to Europe.

Passenger vehicle wholesales fell 17.7 percent year-on-year, the biggest drop since the market began to contract in the middle of last year, while retail sales had their eighth consecutive monthly decline, industry groups reported Monday.

Downward pressure is still there,” Gu Yatao, a Beijing-based auto analyst with Roland Berger, said before the figures were released. “The government isn’t adopting stimulating policies to give the market a shot in the arm.”

The persisting slump leaves carmakers with few places to go for sales growth. The markets in Europe and North America are shrinking as the increasing availability of ride-hailing and car-sharing services makes it less necessary to own a car. Japan is sputtering too, while volumes in other smaller markets aren’t enough to offset the declines in the biggest sales regions.

Sales in China continue to be suppressed as the world’s second-largest economy slows and negotiations with the U.S. for a trade-war truce drag on. Consumers stayed away from showrooms even with discounting by dealerships ahead of the Chinese New Year Holiday.

This Bloomberg news item showed up on their Internet site at 7:53 p.m. Pacific Standard Time on Sunday evening — and was updated about three hours later.  Another link to it is here.


Hochschild Mining halts Peruvian mine on low silver prices

Precious metals miner Hochschild Mining has been forced to halt operations at its Arcata gold and silver mine in Peru, saying that low silver prices had left the company little choice aside from suspension.

Hochschild, which operates three mines in southern Peru and one in southern Argentina, said Arcata would be on “full care and maintenance” by the second quarter of 2019.

This decision has been expected but is still disappointing for the organization … but the continuing low silver price over some years and current geological conditions leaves us no option,” chief executive officer Ignacio Bustamante said in a statement.

Spot silver prices have gained as much as 15% since bottoming out in November. But while the metal is currently trading at around $15.70 per ounce, prices have been on a steady downward path since peaking above $20 per ounce in June 2016, partly due to slower industrial demand.

Another mining firm that won’t stand up to JPMorgan and the CME Group.  This silver-related news story showed up on the mining.com Internet site late last week — and I thank Mark Barooshian for sending it our way on Saturday.  Another link to it is here.


Russia and China’s Gold Age? — Paul Goncharoff

February in Moscow is like a sweet and sour dish, one day frigid and snowy and the next balmy and rainy, either way it is a treat that keeps surprising. One good thing about Russian winters is that you get a chance to sit down and talk with people in depth and at length in the toasty indoors. As an executive, this is invaluable as it can indicate trends and potential changes before they might occur. One rule of thumb to keep in mind is that if you hear a similar story from three of more people who don’t know each other, even if it sounds bizarre don’t discard it out of hand – chances are there is some truth to it and is worth a review.

What has been making the rounds these days inside the city is the likelihood that Russia’s Finance Ministry is seriously considering making physical gold more accessible for individuals and companies by eliminating the current 20% VAT charge on purchases. It looks likely that this is in the cards in real time.

This would also play a small role in further de-dollarizing the Russian economy and attracting some funds back into Russia for rouble priced physical gold accounts. It is viewed as strong stable insurance against the current and expected currency related trade volatility. One only has to look at the price of gold over time in the many sovereign currencies of the planet, especially the rouble, to appreciate how well it has served to secure value especially against the U.S. dollar.

There are quite a few Russians whom I have spoken with who can hardly wait until the VAT surcharge on gold buying is removed. It will not replace the “almighty” dollar or Euro, but it will afford a level of wealth security long sought after among individual Russians, and play a role in stemming the outflow of capital from the country.

My feelings exactly — and I’ve said so before on numerous occasions — and I couldn’t have said it better myself.  This very worthwhile commentary was posted on the russiaknowledge.com Internet site very recently judging by the content, but there is no dateline on the article.  It’s certainly worth reading — and it’s something I found on the Sharps Pixley website yesterday.  Another link to it is here.


China gold demand off to decent 2019 start — Lawrie Williams

The first 2019 announcement for Shanghai Gold Exchange gold withdrawals for January, a little delayed because of the Chinese New Year holiday, was marginally below last year’s relatively high figure but is still at a high monthly level so could be considered a decent start to the year.  However January withdrawal figures do tend to be reasonably high due to good demand ahead of the Lunar New Year festivities and associated gift giving.

It is obviously too early yet to draw any conclusions re likely Chinese demand for 2019 – we will really need to wait for a couple more months’ withdrawal figure once data for the February short holiday month data is behind us, but the reasonably strong start will give the gold bulls at least a little comfort given how important Chinese demand is to the global picture.  China gold data, as represented by SGE gold withdrawals, had appeared to be slipping a little from the middle of 2018, but had appeared to be stabilising towards the year end and the January figure will have served to confirm that pattern.

We tend to equate Chinese total gold demand with cumulative SGE figures given they seem to provide a fair correlation with the sum of known Chinese gold imports from those countries which provide a country-by-country breakdown of their own gold exports, plus the nation’s own gold output, plus unreported imports (Russian figures may be important here) plus an allowance for scrap conversion.  These SGE figures seem to provide a closer reality  with total Chinese domestic annual gold accumulations than the published demand figure provided by the China Gold Association and the major analytical consultancies specialising in precious metals like GFMS and Metals Focus.

This commentary from Lawrie appeared on the Sharps Pixley website yesterday — and another link to it is here.


Australia’s gold also may have been ‘lost’ at the Bank of England

Venezuela’s gold isn’t the only monetary metal raising questions about the custodianship afforded by the Bank of England, Bullion Star gold researcher Ronan Manly writes today.

According to Manly, Australia’s gold reserves were largely packed off to London years ago and leased into the market and then sealed off from audits and freedom-of-information requests. Indeed, Manly writes, there’s no verifying the true location of the Australian reserves anymore.

Manly’s analysis comes in an interview with Russia Today, headlined “Hey, UK! It’s Not Just Venezuela — What Happened to Australia’s Gold?” — and it was posted on the rt.com Internet site at 12:43 p.m. Moscow time on their Monday afternoon, which was 4:43 a.m. in Washington — EST plus 8 hours.  I borrowed ‘all of the above’ plus the headline, from a GATA dispatch yesterday.  But the first person through the door with this article was ‘Moroccan’ reader George Whyte.  Another link to it is here.


The Perth Mint Has Recast This Gold Bar More Than 65,000 Times

Seven times a day, the Perth Mint hosts a public gold pour at its downtown location in the Western Australian city. A 14-pound gold bar is melted at 1,945F (1,063C) in a crucible made of clay and graphite. The liquid is then poured into a cast-iron mold, where it hardens into a bar in about 90 seconds. It needs an additional 15 seconds from the time it’s placed in a quenching tank filled with tap water until the bar is “cool to the touch,” Chief Executive Officer Richard Hayes says. [I think that would be more like 15 minutes! – Ed]

The same gold bar has been melted and cast more than 65,000 times since the mint opened its doors to visitors in 1993, Hayes says. In that time, it has been worth as little as $51,000—in 1999—to as much as $390,000—in 2011. At a price of $1,310 an ounce on Feb. 14 the bar was worth about $267,000. At the end of each day, it’s stored in one of the mint’s vaults.

Australia is the world’s second-largest producer of gold (after China), and the Perth Mint refines about 90 percent of the country’s production at a separate secured facility outside the city center. It mints coins and bars from both Australian gold and metal sourced from other countries, representing about 13 percent of global production, Hayes says.

The Perth Mint opened in 1899 after the discovery of rich mineral deposits caused a gold rush in the region. Owned by the government of Western Australia since 1970, the mint sold about A$18.9 billion ($13.3 billion) in pure gold, silver, and platinum bullion bars and coins in 2018.

Well, dear reader, Australia may now find itself in No. 3 in world gold production after Russia’s production numbers for 2018 were released last week.  This short, but very interesting 3-photo essay put in an appearance on the Bloomberg website last Friday — and I thank Swedish reader Patrik Ekdahl for pointing it out.  Another link to it is here.


The PHOTOS and the FUNNIES

I moved from Edmonton, Alberta to Merritt, B.C…which is right next door — about eleven hours by car.  I made the move in October — and I thought I’d take you on a tour of the inter-mountain country of the Thompson PlateauMerritt is situated in the Nicola Valley at the confluence of the Coldwater and Nicola rivers.  But calling them rivers is being kind.  Even calling them large streams would be a compliment at the height of summer.  But they’re big enough that salmon come up the Fraser and Thompson Rivers to spawn in them every year, so I guess they’re big enough.

The first photo is from a hill just outside of town looking roughly north east.  All the green fields are only that way because they’re irrigated, as the climate here is semi-arid.  The green field that touches the left side of the first photo is the one that appears in the foreground of the second shot.  The second photo is taken of the west side of the town, looking a bit north of east.  Click to enlarge for both.


The WRAP

With New York closed, it was a ‘nothing’ sort of day…except for palladium, of course.  It’s still attempting to seek its true supply/demand valuation, but isn’t being allowed.  Today was just another day of that sort of price activity in that precious metal.

There are no 6-month precious metal charts, either.

Since I’ve got nothing else, here are the list of precious metal companies…mostly junior silver producers/explorers…that I own shares in.  I get enough e-mails from subscribers asking for it, that I thought I I’d include it in today’s column.  I also own a couple of precious metal mutual funds as well.  So you can see that I’m still “all in”. The ‘click to enlarge‘ feature does not help with this chart.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price was sold quietly and unevenly lower starting almost as soon as trading began in New York at 6:00 p.m. EST on Monday evening.  The current low was set at exactly 3:00 p.m. China Standard Time on their Tuesday afternoon.  It has rallied a bit since, but is still down 80 cents the ounce.  Silver’s price path has been very similar — and it’s lower by a penny.  Platinum has been trading unsteadily a few dollars above unchanged in Far East trading on their Tuesday — and is up 3 bucks currently.  Palladium is doing its own thing…trying to seek its true market value — and as was up 31 dollars about twenty minutes before the Zurich open.  But it has been batted lower — and is now up only 26 as Zurich opens.

Net HFT gold volume is pretty light at just over 29,000 contracts — and there’s only 823 contracts worth of roll-over/switch volume in this precious metal.  Net HFT silver volume is light as well…just about 6,000 contracts — and there’s 1,862 contracts worth of roll-over/switch volume on top of that.  All of these numbers of net of Monday’s volume figures.

The dollar index opened up a couple of basis points once trading began at 7:45 p.m. EST in New York on Monday evening, which was 8:45 a.m. CST in Shanghai.  It crawled quietly higher from there — and its current high tick was set at 2:48 p.m. CST on their Tuesday afternoon.  It has dropped a bit from there — and is up 11 basis points from its close on Monday…as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.

On Wednesday we get the minutes from the U.S. Fed’s most recent meeting — and on the following day we get the same data from the ECB — and not only will it be of interest to see what they had to say…but also how the markets reacts to this data…or should I say, allowed to react to it.

And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price is up a bit more as the first hour of London trading draws to a close. It’s up $1.50 at the moment — and silver is now up 2 cents. Platinum is up 4 dollars — and palladium been struggling to regain lost ground since it was capped and turned lower just before the Zurich open — and it’s up 29 bucks currently.

Gross gold volume is coming up on 47,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is about 43,800 contracts. Net HFT silver volume is a bit over 8,500 contracts — and there’s 2,204 contracts worth of roll-over/switch volume in that precious metal.

The dollar index has continue to tick lower during the first hour of London/Zurich trading — and is up 2 basis points from Monday’s close…as of 8:45 a.m. GMT/9:45 a.m. CET.

Today, we get the next COT Report…this one for positions held at the close of COMEX trading on January 29 — and as I mentioned in my Friday missive, because of the rallies in both gold and silver towards the end of that reporting week, I’m certainly expecting some increase in the commercial net short positions in both those precious metals.

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

Ed

Ted Butler: A New Silver Issue For the Justice Department

16 February 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price did nothing in Far East trading on their Friday, at least up until shortly before 2 p.m. China Standard Time on their Friday afternoon.  It began to edge quietly higher from there until around 11:45 a.m. in London – and from that juncture it chopped quietly sideways until a few minutes before the equity markets opened in New York on their Friday morning.  From that point the gold price was sold quietly lower until London closed — and then away it went to the upside.  That lasted until a bit after 2 p.m. in the thinly-traded after-hours market — and it didn’t do anything after that.

And as impressive as the Kitco chart is for gold, the low and high ticks aren’t worth looking up once again.

Gold finished the Friday session in New York at $1,321.40 spot, up $9.10 on the day.  Net volume was pretty light, all things considered at 195,000 contracts — and there was only around 6,200 contracts worth of roll-over/switch volume on top of that.

The trading pattern in silver was very similar to what happened in gold, so I’m not going to spend any time repeating what I just said above.

The low and high ticks in this precious metal were reported by the CME Group as $16.525 and $15.69 in the March contract.

Silver closed in New York on Friday at $17.755 spot, up 16.5 cents from Thursday.  Net volume was nothing special at just over 49,500 contracts — and there was a fairly healthy amount of roll-over/switch volume out of March and into future months….just under 22,500 contracts worth.

Platinum was sold a few dollars lower in Far East trading on their Friday morning — and was down 2 bucks by the Zurich open.  It edged quietly and unsteadily higher from there until the 11 a.m. EST Zurich close — and then really set sail.  That rally lasted until the COMEX close — and the price was comatose after that.  Platinum finished the Friday session in New York at $805 spot, up 19 dollars from Thursday’s close.

The palladium price chopped unevenly sideways in Far East trading, but was sold a bit lower into the Zurich open.  It began to head higher shortly after that — and the high tick of the day was set shortly before the equity markets opened in New York on their Friday morning.  It really didn’t do much of anything after that.  Palladium closed on Friday afternoon in New York at $1,415 spot, up 16 bucks from Thursday.  And, like most days over the last few months, would have obviously closed higher, if allowed.

The dollar index closed very late on Thursday afternoon in New York at 96.98 — and jumped up about 10 basis points once trading began at 7:45 p.m. EST on Friday evening.  It chopped quietly sideways until about 12:15 a.m. GMT in London — and then headed higher, with the 97.37 high tick of the day coming at a minute or so after 8:30 a.m. in New York.  It was all down hill from that point until the usual ‘gentle hands’ appeared a very few minutes after 2 p.m. EST.  From there, it inches unevenly higher into the close, finishing the Friday session at 96.90…down 8 basis points from the Thursday.

Here’s the usual DXY chart from Bloombergclick to enlarge.

And here’s the 6-month U.S. dollar index chart from stockcharts.com — and the delta between its close…96.74…and the close on the DXY chart above, was 16 basis points on Friday.  Click to enlarge.

The gold shares gapped up a hair as soon as the equity markets opened in New York on Friday morning, but ran into heavy selling pressure right away.  Their respective lows were set around 11:10 a.m. EST — and from there they crawled quietly higher for most of the rest of the day.  The HUI closed on its high tick.  Having said that, I was not overly enamoured with the price action in the gold stocks yesterday.  The HUI only closed higher by 1.18 percent.

The silver stocks rallied over a percent in the first few minutes of trading on Friday morning in New York — and at that point, they suffered the same fate as the gold shares.  Their respective lows came minutes before 10:30 a.m. EST — and they chopped quietly higher until around 2:20 p.m.  Then they faded a hair into the 4:00 p.m. close of trading from there.   Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 1.50 percent — and I must admit that I was somewhat underwhelmed by this price action as well.  Click to enlarge.

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

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

Here’s the weekly chart — and as you can see, there’s not a lot to see.  Silver and gold — and their respective equities, did virtually nothing during the week that was — and it was the same in the prior week as well.  Click to enlarge.

Here is the month-to-date chart — and we’re down a bit across the board by a tiny bit in everything, except for palladium, which keeps right on truckin’ — and would be even higher than it is now, if it was allowed to trade freely, which it so obviously isn’t.  Click to enlarge.

The year-to-date chart still shows green across the board — and it should also be noted that the silver equities continue to outperform their golden brethren, especially when you compare them to the gains of their respective underlying precious metals.  Expect that pattern to continue when we really get a price break to the upside worthy of the name.  Click to enlarge.

With only six weeks gone out of 2019, it’s hard to tell how the rest of the year will turn out.  As I’ve said before — and further down again in this column, the precious metal market feels a lot different now, but that statement is hard to quantify…it just is. I’m very optimistic going forward.  The DoJ is still lurking about over at JPMorgan — and I await the resolution to that situation with great interest.  However, I expect that any decision made will show up in the price activity long before any word comes out of the DoJ — and that may have already started.


The CME Daily Delivery Report showed that 72 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.  The sole short/issuer was Advantage out of its client account — and the largest long/stopper was JPMorgan with 58 contracts…8 for its own account  and 50 for its client account.  The only other long/stopper that mattered was Advantage, with 13 for its client account.  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 February dropped by 826 contracts, leaving 594 still around, minus the 72 contracts mentioned just above.  Thursday’s Daily Delivery Report showed that 928 contracts were posted for delivery on Tuesday, so that means that 928-826=102 more gold contracts just got added to the February delivery month.  Silver o.i. in February remained unchanged at just 1 contract still open — and no silver contracts were scheduled for delivery on Tuesday.

So far this month, there have been 10,233 gold contracts issued and stopped — and that number in silver is 565.


There was another withdrawal from GLD yesterday, as an authorized participant took out 122,833 troy ounces.  There were no reported changes in SLV.

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

Month-to-date the mint has sold 8,000 troy ounce of gold eagles — 5,500 one-ounce 24K gold buffaloes — 1,800 one-ounce platinum eagles — and 1,060,000 silver eagles.

For the second day in a row, there was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.

There was some activity in silver.  One good delivery bar was reported received…915 troy ounces…and that ended up at Delaware.  That was the only ‘in’ activity there was.  There was 1,233,279 troy ounces shipped out.  In the ‘out’ category, there was two truckloads…1,193,077 troy ounces…shipped out of JPMorgan, plus another 38,194 troy ounces departed the International Depository Services of Delaware.  The remaining 2,007 troy ounces was shipped out of Delaware.  The link to this is here.

It was another very quiet day over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They received 100 of them — and shipped out 200.  This activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, January 22, showed that the commercial net short positions in both silver and gold declined during the reporting week…which was expected — and all good news.

In silver, the Commercial net short position was reduced by 6,758 contracts, or 33.8 million troy ounces of paper silver.

They arrived at that number by increasing their long position by 861 contracts — and the also reduced their short position by 5,897 contracts — and it’s the sum of those two numbers that represents their change for the reporting week.

The Big 8 didn’t do much during the reporting week, reducing their short position by a bit over 3,000 contracts — and Ted’s raptors, the small commercial traders other than the Big 8, reduced their short position by about 3,600 contracts.

The Big 8 traders are short 49.4 percent of the entire open interest in the COMEX futures market in silver.  The Big 4 traders are short 36.5 percent of the entire open interest in COMEX silver — and the ‘5 through 8’ large traders are short the difference between those two numbers…12.9 percent.

Under the hood in the Disaggregated COT Report, the Managed Money traders only made up part of the weekly change in the Commercial net short position.  They reduced their long position by 2,706 contracts — and they added 1,352 short contracts, for a total change of 4,058 contracts.

The difference between that number — and the change in the Commercial net short position…6,758 minus 4,058 equals 2,700 contracts — was made up entirely by the traders in the ‘Nonreportable’/small trader category, as the traders in the ‘Other Reportables’ did nothing during the reporting week.  Here’s the snip from the Disaggregated Report so you can see these changes for yourself.  Click to enlarge.

The Commercial net short position in silver is down to 64,932 contracts, or 324.7 million troy ounces of paper silver, which is still obscene — and bearish.  Ted estimates JPMorgan’s short position in the area of 20,000 contracts.

Here’s the 3-year COT chart for silver, updated with this latest data.  Click to enlarge.

Next Tuesday’s COT Report in silver, for positions held at the close of trading on January 29 won’t be quite as happy looking, as there was a big rally towards the end of that reporting week.


In gold, the commercial net short position also improved, declining by 16,036 contracts, or 1.60 million troy ounces of paper gold.

They arrived at that number by increasing their long position by 18,219 contracts, but they also added 2,183 short contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

The banks in the Producer/Merchant category didn’t do much…adding about 6,800 contracts on both the long and short side…Ted says they’re spread trades…and that’s market neutral.  The big change that mattered in the commercial traders was in the Swap Dealer/Raptor category, as they were very active, increasing their net long position by 16,128 contracts during the reporting week.

The Big 8 traders in gold are short 32.5 percent of the total open interest in the COMEX futures market — and the Big 4 are short 24.0 percent.  The Big ‘5 through 8’ large traders are short the difference…8.5 percent.

Under the hood in the Disaggregated COT Report, the Managed Money traders, like in silver, only made up part of the change in the commercial net short position.  They reduced their long position by 10,356 contracts — and also reduced their short position by 1,631 contracts — and it’s the difference between those two numbers…8,725 COMEX contracts…that makes up their change during the reporting week.

The difference between that number — and the change in the commercial net short position…16,036 minus 8,725 equals 7,311 contracts — and that was made up by the traders in the ‘Other Reportables’ and the ‘Nonreportable’/small trader categories.  Here’s the snip from the Disaggregated COT Report for gold, so you can see these changes for yourself.  Click to enlarge.

The commercial net short position in gold is now down to 9.21 million troy ounces, which is far closer to bullish than it is to market neutral.  Ted feels that JPMorgan may not be short gold much, if at all.

Here’s the 3-year COT chart for gold, updated with this latest data.  Click to enlarge.

And like for silver, the next COT Report for gold won’t be as happy looking because of a rally in that precious metal that occurred during the latter part of the reporting week as well.


The Casco de Leiro (“Helmet of Leiro”) is a ritual hemispherical cap probably dating to the end of the Late Bronze Age (circa 1,000 to 800 B.C.) in the town of Leiro in Spain. The circumstances of its discovery show that technically it constitutes a hoard.

The cap, hammered from a single casting of gold, is entirely covered with registers of repeated repoussé decoration, hammered over bronze molds, of repeated bosses alternating with bands of repeated concentric circles. The central point is applied with a flat-sided point in the form of a truncated cone. Its maximum diameter is 19.5 cm with a height of 15 cm to the base of the point, it weighs 270 grams.

The casque was a chance discovery made by a fisherman, José Vicente Somoza, on 7 April 1976.  Removing some earth to flatten a space for a shed in which to beach his boat, he struck a coarsely made earthenware crock that broke as he struck it. He immediately saw that it contained a gold object, and he reported the find to the Guardia Civil of Rianxo and the Department of Archaeology at the Instituto Padre Sarmiento.  Click to enlarge.

I have a very decent number of stories for you today, plus four rather eclectic ones that I’ve been saving specifically for today’s column, because of content and/or length reasons.


CRITICAL READS

U.S. Stocks Are Playing Russian Roulette — Bill Bonner

The first panacea for a mismanaged nation is inflation,” wrote Hemingway. “The second is war…” he continued. And the third is concrete.  We’ll probably see all of them in the years ahead.

Cycles are called “cycles” because they repeat themselves. The credit cycle is no exception. Bust follows boom. Always has. Always will.

We’ve been looking at what will happen next. That is, when the next trends and policies, the ones that will dominate for years ahead, reveal themselves. Our guess – a view we share with Alan Greenspan – is that we’re headed for stagflation.

And that will set in motion all the usual clunky and scammy wheels that pretend to reverse the natural correction. Interest rates will be cut to zero… and then below zero.

And quantitative easing (QE) is no longer like that little hammer that you’re only supposed to use to break the glass in case of an emergency… Now, it hangs on the Fed’s tool belt next to its stretchy measuring tape.

And it won’t take the feds long to find other tools; soon, they’ll be buying ETFs and launching huge “infrastructure” programs to “get the economy going again.”

That’s where the concrete comes in.

This worthwhile commentary from Bill showed up on the bonnerandpartners.com Internet site sometime on Friday morning EST — and another link to it is here.


U.S. Industrial Production Plunges in January as Manufacturing Unexpectedly Contracts

Against expectations of a modest 0.1% MoM rise, US Industrial Production plunged 0.6% MoM in January, and was downwardly revised historically…driven by a 0.9% slump in manufacturing production.  Click to enlarge.

Year-over-year Industrial production growth slowed to +3.8%, the weakest since June 2018…

The decline was driven by an 8.8 percent decline in motor vehicles and parts, with assemblies falling from the best pace in more than two years to the weakest reading since May.

Additionally, capacity utilization, measuring the amount of a plant that is in use, decreased to 78.2 percent from 78.8 percent.

This 3-chart Zero Hedge news item appeared on their Internet site at 9:22 a.m. EST on Friday morning — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Foreigners Dumped Record Amount of U.S. Treasuries

Late last year, DoubleLine’s Jeff Gundlach warned that as a result of rising hedging costs, US Treasury bonds have become increasingly unattractive to foreign buyers.

Then, in January, to underscore just how low yielding U.S. paper is on an FX-hedged basis, we showed that in a world in which there is still approximately $8 trillion in negative yielding debt, the debt instrument which has the lowest, FX-adjusted yields is… the 10Y U.S. Treasury!

This is also why foreign holdings of U.S. Treasurys have been declining in recent years, and dropped to just over 36% as a percentage of total holdings, the lowest in over a decade, as domestic holdings of US paper have risen to just shy of 50%, and near all time highs.

Which brings us to today’s latest monthly TIC data which showed that, as Gundlach would expect, Foreign investors dumped over $77 billion in U.S. treasuries in December – the most on record – even as yields fell amid the December stock market carnage and the “Mnuchin Massacre”. Click to enlarge.

One has to wonder, with U.S. Treasury’s funding needs set to soar, as the U.S. faces a $1.1 trillion deficit in 2019, and set to unleash an aggressive borrowing binge, even as the rest of the world dumping U.S. Treasuries if the sudden shock timing of The Fed’s abrupt U-Turn on rates and more importantly the balance sheet normalization are not related to supporting the bond market that America’s hegemon relies upon.

The bottom line: Trump told the world he doesn’t need its generosity to either fund the U.S. deficit or prop up stocks, and according to recent data, the world has taken up Trump on his dare, and has been actively liquidating U.S. securities.

This multi-chart Zero Hedge story put in an appearance on their Internet site at 4:18 p.m. on Friday afternoon EST — and I thank Brad Robertson for this one as well.  Another link to it is here.


Doug Noland: No Hold Barred

The world is now fully embroiled in a most precarious period. I wonder if the Fed is comfortable seeing the markets dash skyward – the small caps up 16.4% y-t-d, the Banks 15.9%, the Transports 15.2%, Biotechs 18.5% and Semiconductors 17.0%. Or, perhaps, they’re quickly coming to recognize that they are now fully held hostage by market Bubbles.

Similarly, I ponder how Beijing feels about January’s booming Credit data – Aggregate Financing up $685 billion in the month of January. Do officials appreciate that they are completely held captive by history’s greatest Credit Bubble? I have argued that Bubbles have become a fundamental geopolitical device – a stratagem. Things have regressed to a veritable global Financial Arms Race. As China/U.S. trade negotiations seemingly head down the homestretch, each side must believe that rallying domestic markets beget negotiating power. Meanwhile, emboldened global markets behave as if they have attained power surpassing mighty militaries and even nuclear arsenals.

Led by bubbling bank lending, China’s Aggregate Financing expanded a record $685 billion during January. Flood gates wide open. While typically a big month for Chinese lending, January’s growth in Aggregate Financing was 50% above January 2018. It’s worth noting that the growth in Aggregate Financing over the past six months ran 7% above the comparable year ago period (and equates to an annualized pace of $3.7 TN). Consumer (largely mortgage) Loans expanded a record $146 billion for the month, 10% greater than the previous record from January 2018. Consumer loans expanded 18% over the past year; 43% in two years; 77% in three; and 140% in five years.

It’s too fitting: as the long-standing global superpower and ascending superpower are locked in tortuous negotiations, their respective financial power centers – securities markets in the U.S. and state-directed bank lending in China – rage. No Holds Barred.

What worries me most is that underlying instability and vulnerabilities have policymakers resolved to abrogate bear markets and recessions. Extraordinary measures continue to be taken to nullify business and market cycles, with apparently no appreciation for how vital adjustments and corrections are to sound financial and economic systems. Worst of all, structurally maladjusted and highly speculative global markets are emboldened as never before. Party like it’s twenty nineteen – with global financial, economic and geopolitical backdrops uncomfortably reminiscent of ninety years ago…1929.

Doug’s weekly Credit Bubble Bulletin is definitely worth reading this week — and another link to it is here.


Reporter’s Diary from Venezuela

This is the personal view of the correspondent on today’s life of Caracas.

Day one…

Our Air France flight was grounded in Paris for 5 hours; no one wants to land in Venezuela in the middle of the night, due to the “dangerous criminal situation.” The airliner is half empty, the passengers, judging by nervous conversations, are only Venezuelans. A taxi driver, while leaving the airport, locks the doors, and sweetly warns that after dark, bandits scatter spikes on the roads and rob the stranded cars. “Oh, don’t worry, Amigo, I have an old car. They are not interested in old, cars.” That’s where you understand why Caracas is ranked first in the ranking of the most dangerous cities in the world. It’s too late for supper, but I at least want to exchange my U.S. dollars for Venezuelan bolivars. I ask my cab driver. He violently shakes his head: “No, no, no. I do not mess with such things, it’s illegal!” “Whatever,” I laugh at him. “Tomorrow, someone will take the dollars, maybe even with my hands torn off.” I was wrong…

The following morning, no one at the hotel wants to look at my dollars. The hotel employee tells me to go to one of the official “exchange stores” but honestly adds: “only Americans, or complete jerks go there.”

In Venezuela, the official dollar exchange rate is 200 bolivars, and the “black market” exchange rate is 2,715. And if you exchange your currency in a bank, then according to this calculation, a bottle of ordinary water will cost 330 rubles, and a modest lunch in an inexpensive cafe—7,000 rubles per person. Judging by the stories on the Internet, in Venezuelan people should simply kill each other for dollars, but this is not the case. There is also other things different from perception. On western news, it is shown that demonstrators fight with police daily, tens killed, hundreds wounded, the sea of blood. But in Caracas, all is quiet. In an afternoon, people are sitting in cafes and idly sipping rum with ice, while maintenance crews sweep the streets. It turns out that the world ‘s leading TV new sources (including CNN and the BBC) show some fantasy film about Venezuela. “Demonstrations?” yawns Alejandro, a street vendor selling corn. “Well, Saturday there will be one, sort of. On one end of the city will be a rally of opposition supporters, and on the other, Maduro supporters. The police keep them separate to prevent fights.” Amazing. You browse the Internet, you turn on the TV, and you see the revolution, the people dying on streets to overthrow the “evil dictator Maduro.” And you come here, and nobody cares.

Then it got even better. Never in my life have I had so many adventures while trying to exchange one currency for another. The country has a problem with cash money, long queues waiting for the ATM, and even the street dealers of “currency” have no “efectivo,” as they call cash. I wander inside a jewelry store and ask if they want some “green.” The answer is “No.” Everyone acts like law-abiding citizens. I am told that police recently started arresting people for private exchange, that’s why people don’t want to associate. One owner of the jewelry store almost agrees. “What do you have? Dollars? No, I won’t take that.” “Why not?” “I take only the Euros …dollar, man, is the currency of the aggressor, they try to tell us how to live!

This longish, but very interesting photo-filled commentary appeared on the saker.is Internet site a week ago, but I was waiting for Saturday’s column before posting it.  Roy Stephens sent it our way on Monday — and another link to it is here.


European Car Sales Fall For Fifth Month In A Row

In keeping with the global stagnation that has enveloped the auto industry, the latest EU/EFTA vehicle registration data paints an ominous picture to start 2019 in Europe, where passenger car registrations dropped 4.6% year over year and sales declined in all of largest markets in Germany, France, the U.K., Italy and Spain.

Here is a look at the trend of ugly YOY misses that began consistently in September of last year.  Click to enlarge.

Bloomberg Intelligence analyst Michael Dean put it clearly in a note: “The E.U. auto-demand cycle has peaked.”

Spain saw the largest decline in registrations, down 8%. Italy followed, down 7.5%. Both Audi and Porsche saw double digit percentage declines, as VW Group sales were down 6.4%.

Brexit continues to be a major point of volatility for many of these manufacturers. Renault and Ford have both warned that unless the U.K. leaves Europe with a deal, both companies could miss estimates and that the effects could be “catastrophic“.

But the biggest risk for European car makers has yet to emerge: on Monday, the U.S. Commerce Department is expected to issue a report outlining that car imports into the U.S. pose a national security threat, and then suggest ways for U.S. president Donald Trump to restrict these imports through high tariffs and quotas. From there, Trump has 90 days to make a decision.

Trump has said in the past he would consider a 25% tariff on car imports. That’s the same figure levied on steel imports, which were also deemed a national security threat last year.

This news story was appeared on the Zero Hedge website at 7:30 p.m. EST on Friday evening — and another link to it is here.


The U.S. has ruined Afghanistan. It can’t just walk away now — Simon Tisdall

The approaching U.S. withdrawal from Afghanistan is not an honourable retreat – it’s a capitulation. The best the Americans can hope for in exit talks with the Taliban, due to resume in Doha later this month, is a promise that coalition troops, unlike the British army led by General Elphinstone in 1842, will not depart under fire. After more than 17 years of conflict, with at least 38,000 civilians killed and millions more injured, traumatised or exiled, none of the long-term objectives set out by George W Bush following the 2001 invasion has been met. In short, the US has lost the war, and lost badly.

The al-Qaida terrorists who used Afghanistan as a base from which to launch the 9/11 attacks have not been wholly vanquished, as Bush promised. Their former leader, Osama bin Laden, is dead but the group, and likewise Islamic State, made territorial gains in Afghanistan last year, according to U.N. experts. It is unlikely that Taliban leaders could in future prevent jihadists once again using parts of the country as a terrorist safe haven – a key demand of American negotiators – even if they sincerely wanted to.

The idea, promoted by successive U.S. administrations and NATO partners such as Britain, that Afghanistan could become a model nation-building exercise has long since been exposed as a neo-liberal fantasy. This is not to dismiss the tenacious efforts of British and allied forces on the ground who struggled valiantly, for instance, to bring stability to Helmand province. But they, and the Afghan people, have paid a terrible price for a lack of clarity and candour on the part of the politicians who sent them there.

This very interesting commentary/opinion piece showed up on theguardian.com Internet site of all place back on February 8th.  It’s another article that had to wait for my Saturday column — and I thank Patricia Caulfield for sending it along.  Another link to it is here.


Zbigniew Brzezinski as I Knew Him — Paul Craig Roberts

When you hear a source called a ‘Russian agent,’ an ‘anti-semite,’ or a ‘conspiracy theorist,’ you had better listen to them. These are those in the know who accept arrow slings in order to tell you the truth.”

I decided to repost this column for several reasons. One is that the misrepresentation of Brzezinski as a neoconservative illustrates the cavalier attitude toward truth that characterizes our era. The rise in the West of denunciation as a more effective force than truth bodes ill for the survival of the Western World.

Throughout the Western World name-calling has taken the place of reasoned debate. A person who criticizes Israel’s treatment of the Palestinians or the Israel Lobby’s influence over the U.S. government and academic appointments is labeled an “anti-semite,” a name that the Israel Lobby uses to discredit critics.

A person who points out that reckless and irresponsible accusations against Russia can lead to war is labeled “a Russian agent.”

A person who is too well-informed to believe the official stories of the Gulf of Tonkin, the assassinations of Martin Luther King and John and Robert Kennedy, 9/11, and the USS Liberty is said to be a “conspiracy theorist.” In other words, if you don’t accept the official stories, all of which are disproved by hard facts, you are discredited.

Throughout the Western World facts are persona non grata.

This timely repost of a June 2, 2017 article is definitely worth reading if you have the interest. It’s certainly the first time I’ve seen it — and this is a first-person account of the man.  This was posted on Paul’s website on February 12 — and was another article that had to wait for my Saturday missive.  I thank Richard Connolly for sending it along — and another link to it is here.


January Arctic Sea Ice Update

Arctic sea ice extent in January has recovered sharply since last year, and stands at the highest level since 2013, and higher than even 2005.  Much of it is 2 meters or more thick.  Click to enlarge.

And ice volume is also up this year.

There was certainly a decline in sea ice extent and volume probably beginning in the 1990s, and it culminated in the large losses in 2007 and 2008.

But it is clear that, looking at both summer and winter data, sea ice has been stable since then, despite the occasional up and down.

Having drilled enough holes in both fresh water ice and sea ice at Alert, N.W.T. [go to the top of Greenland — and then take a hard left. – Ed] back in the early 1970s for the Canadian Department of the Environment, I thought some hard data about the true state of the Arctic ice-pack might be of interest to some.  All this data is taken from the Danish Meteorological Institute website — and is linked in this article.  Simply put, Al Gore, along with various and sundry global warming alarmists, are lying their asses off.  I thank Roy Stephens for sending me this item on Wednesday — and for obvious reasons it had to wait for today’s column.  Another link to it is here.


S.S. Central America carried more than gold coins and bars

Much has been written about the gold treasure salvaged in 2014 from the S.S. Central America, but less information has filtered out about the silver coins. Until now.

California Gold Marketing Group, which holds marketing rights for all numismatic treasure recovered from the ill-fated vessel, is beginning to release information about the United States silver coins that were aboard the vessel, specifically those recovered from the purser’s box stored inside a shipboard safe.

CGMG Managing Partner Dwight Manley revealed: “Two bags found in the purser’s box contained a combined total of $1,588.95 face value of U.S. coins from silver dimes to half eagle $5 gold coins, and ranged in dates from 1796 to 1857. Most of the coins are dimes that were to be used in daily commerce while the ship sailed between Panama and New York City before sinking in a hurricane off the North Carolina coast in September 1857.”

The silver coins are coming to market by one of the CGMG’s partners, Kenny Duncan Sr. from U.S. Coins in Houston. The coins are being marketed in conjunction with Universal Coin & Bullion, Beaumont, Texas. Manley said Duncan purchased 99.9 percent of the silver coins salvaged.

The purser’s bag contained 8,873 U.S. dimes, 503 quarter dollars, 345 half dollars, and a smaller bag inside the large one contained 55 gold dollars, 56 gold $2.50 quarter eagles and 41 gold $5 half eagles. Additional gold and silver coins, perhaps brought onboard by S.S. Central America passengers, were found elsewhere in the safe for a combined total of 9,877 coins.

This very interesting story was one I found over on the coinworld.com Internet site on Thursday night when I was writing Friday’s column — and I thought I’d save it for today.  Another link to it is here.  There was another story about this on the charolotteobserver.com Internet site on Thursday.  That one was headlined “Some of the rarest U.S. coins ever found are hitting the market, thanks to N.C. shipwreck” — and I found it in a GATA dispatch very late last night.


Venezuela’s Guaido asks Citibank to freeze gold swap with Maduro

Advisers to Venezuelan opposition leader Juan Guaido are asking Citibank not to claim gold put up as collateral for a loan to the government of President Nicolas Maduro if his administration does not make payments on time, a lawmaker said on Friday.

Citi would be entitled to keep the gold if cash-strapped Venezuela does not pay the loan when it expires in March, lawmaker Angel Alvarado said, without specifying the value of the gold in question.

Citibank has been asked to stand by and not invoke the guarantee until the end of the usurpation,” Alvarado said in an interview. “We don’t want to lose the gold.”

The gold is worth $1.1 billion, according to a finance industry source with knowledge of the situation.

This Reuters article, filed from Caracas, was posted on their website at 12:26 p.m. EST on Friday afternoon — and I found it on the gata.org Internet site late last night.  Another link to it is here.


Russia closing gap on China as World No.1 gold miner? — Lawrie Williams

Assuming the veracity of the latest figures from official sources in China and Russia the latter is expanding its gold output while the former’s output is contracting.  The latest figures are as follows: China’s 2018 gold output, as announced by the China Gold Association, was around 401 tonnes, down from 426 tonnes in 2017 – a fall of almost 6%, while Russia’s 2018 gold output was up nearly 2.5% to 314 tonnes according to the country’s Finance Ministry.  If the figures are correct, and the trend continues, Russia could surpass China as the world’s largest gold producer within around 4 years given that China’s output is seen as continuing to fall given ever-increasing environmental strictures, while Russia’s output is continuing to advance.

Russia has already overtaken China in the size of its official gold reserves as reported to the IMF, although we continue to express our doubts about the veracity of the Chinese total (See: China officially adds to gold reserves again)

In 2017, according to the major gold analytical consultancies, Russia was the third largest global gold producer – but vying with Australia for second place.  Interestingly the aforementioned consultancies invariably come up with lower annual estimates for Russian gold production than that announced by the Finance Ministry – but they also come up with lower estimates for Australian domestic production than that calculated by Melbourne-based consultancy Surbiton Associates, which should, on past performance, be publishing its latest estimate for Australia’s 2018 gold production in around two to three weeks’ time.  Last year Surbiton put Australian output at 301 tonnes and, if anything we would take the Surbiton figure as being perhaps closer to that nation’s true position than the big global consultancies’ estimates given Surbiton’s almost total specialisation in the Australian gold sector.

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


Perth Mint Gold and Silver Bullion Sales Climb in January

Demand for Australian bullion products increased in January from December but fell from their levels of a year ago, according Perth Mint figures published February 4, 2019.

The monthly gains were supported by surging precious metals with LBMA prices in January scoring increases of 3.3% for gold and 3.9% for silver.

The Perth Mint’s sales of gold coins and gold bars combined last month to 31,189 ounces, rising 6.9% from December but sliding 16.1% from the same month a year earlier.

January sales of of the Mint’s silver coins and silver bars reached 828,854 ounces, climbing 19.6% from the previous month but dropping 22.4% from January 2018.

This brief article appeared on the coinnews.net Internet site on Friday sometime — and I found it on the Sharps Pixley website. Another link to it is here.


A New Silver Issue for the Justice Department — Ted Butler

It’s now been four months since the U.S. Department of Justice secured a criminal guilty plea from the former trader from JPMorgan for spoofing and manipulating precious metals prices on the COMEX and three months since that plea was unsealed. In its announcement on Nov 6, the Justice Department made it clear that it was engaged in an ongoing investigation into COMEX precious metals trading by no less than three of its important divisions; the Criminal Division, the Federal Bureau of Investigation (FBI), and the U.S. Attorneys Division.

While it’s no small matter for suspected criminal activity to be pursued by three separate divisions within the Justice Department, yesterday’s release of the (still delayed) Commitments of Traders (COT) report for positions as of Jan 15, indicates yet another important division of the DOJ should be involved in the current investigation – the Antitrust Division. Incontrovertible evidence in yesterday’s COT report indicates serious violations of monopoly and restraint of trade issues in COMEX silver futures.

This is not a “new” issue, in that I have continuously raised it over the years, but yesterday’s COT report indicates it is imperative for the Antitrust Division to consider the matter in light of the current COMEX precious metals investigation already underway.  That issue is the concentrated holdings of the 4 and 8 largest traders on the short side of COMEX silver futures. As of the close of business on Jan 15, the 8 largest traders on the short side of COMEX silver futures held a net (pure) short position of 95,577 contracts, the equivalent of nearly 478 million ounces of silver, or roughly 60% of annual total mine production. The 4 largest traders held a net short position of 70,627 contracts, the equivalent of more than 350 million ounces or roughly 40% of total annual world mine production. In terms of the average short holdings of each trader; the 4 largest traders average more than 87 million ounces per trader, while the 8 largest traders hold short nearly 60 million ounces per trader.

No silver mining company produces 60 million ounces per year. Moreover, silver prices traded flat to lower over the reporting week, finishing at $15.62.  That represents a price barely at or even below the cost of production for a primary silver miner, so the thought that silver miners were rushing to sell short and hedge production is absurd.

This very worthwhile commentary by Ted put in an appearance on the silverseek.com Internet site at 3:40 p.m. on Thursday afternoon Mountain Standard Time.  It’s definitely worth reading — and another link to it is here.


The PHOTOS and the FUNNIES

Here are the last two photos from the “Ocean Art” series that I thank Mike Easton for sending our way.

The photo credit for this first picture goes to Miguel Ramirez — and it’s captioned “A soapfish photographed mid-meal”.  Click to enlarge.

This second picture was take by Greg Lecoeur — and it’s captioned “An upside-down grey seal“.  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’ needs no introduction, nor do the three brothers that sing it.  It was one of their smash hits from the sound track of the 1977 movie ‘Saturday Night Fever‘.  That was 42 years ago, but who’s counting — and the link is here.

And while I’m at it, here’s a sensational video about the Bee Gees that I ran across on the youtube.com Internet site earlier this week.  It’s titled “Barry Gibb — the Last Bee Gee“.  Barry gets very emotional in spots talking about his brothers, so be prepared.  The link is here.

Today’s classical ‘blast from the past’ is one I’ve feature before, but it’s been a while.  Felix Mendelssohn’s Violin Concerto in E minor, Op. 64, was his last large orchestral work. It forms an important part of the violin repertoire and is one of the most popular and most frequently performed violin concertos in history.  It took him six years to complete — and was first premiered in Leipzig on 13 March 1845.  It was well received and soon became regarded as one of the greatest violin concertos of all time — and it still is today.

Here’s the incredibly gifted Hilary Hahn and the Frankfurt Radio Symphony Orchestra.  Paavo Järvi conducts — and the link is here.


Except for palladium, all the price action that really mattered occurred the moment that the markets closed in both London and Zurich at 11 a.m. EST in New York.  Then the other three precious metals really began to rally with some authority.

As to why that was the case, I don’t really know.  I’m not sure if it was short covering or new long buying.  Friday’s Preliminary Report [posted further up] showed a big increase in open interest in gold…10,000 contracts worth, but in silver, there was no increase in open interest worth noting.

But, whatever the reason, it was certainly a highly unusual trading pattern for a Friday in New York — and it will be about three weeks before this activity appears in a COT Report.  By that time, the data will be buried by subsequent events.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and because the Friday high ticks in gold and silver came after the COMEX close, they don’t appear on their respective dojis on the charts below.  Click to enlarge.

I look at the U.S. and world equity markets in stunned disbelief, as the economic indicators both at home and abroad continue to crash and burn everywhere you care to look.  These are very sick markets, but the algos and the machines that run them have a mind of their own.  I would also suspect that the “Powell Put”…a.k.a. the Plunge Protection Team…is watching over all U.S. markets very carefully, including the currency markets.

The big rally in the Dow yesterday was further confirmation of the enormous hyper-bubble that all things paper have become.  It cannot and will not last, of course…but the powers-that-be in the U.S. deep state and elsewhere are certainly pulling out all the stops to make everyone thinks otherwise.

I continue to be fully in lock-step with Doug Noland on this — and if you didn’t read his weekly missive in the Critical Reads section further up, you can make amends now, as another link to it is here.

With ‘da boyz’ on guard in the COMEX futures market, the rallies in the precious metals on Friday seemed very out of place — and what they portend is hard to fathom at the moment.  But as I’ve stated before, the precious metal market “feels different” now — although that statement is really hard to quantify.

However, with all the shenanigans surrounding the return of Venezula’s gold from the U.K. over the last few months, along with the issues surrounding the return of Germany’s gold from the New York Fed many years back, it’s certainly dawning on most nation states, that keeping their gold in “the West” is no longer a guarantee that they’ll ever see it again, if push becomes shove.

There have been lots of stories over the last month or so about how much gold that the world’s central banks and governments bought in 2018 — and based on that one fact alone, it’s pretty much a given that 2019 will see last year’s record purchases exceeded by a rather handsome amount.

But if the imports by the five ‘Silk Road’ nations…Russia, China, India, Turkey and Kazakhstan…in 2018 can be believed, then virtually every ounce of gold mined year is disappearing into those countries.  So the question has to be asked as to where all this new central bank/nation state gold purchased is going to come from — and at what price?

Based on all this, I suspect that there’s a stealth bull market going on in physical gold right now — and the only reason that it’s not visible, is because of the price control that ‘da boyz’ have in the COMEX futures market in New York.

I sort of suspect that the price activity we’ve seen of late is some indication that this stealth bull market in gold, won’t be quiet for much longer — and not only that, it will quickly spill over into the other three precious metals as well.

I think we saw the precursors of that on Friday in New York.

I’m done for the day — and the week.

Enjoy what’s left of your weekend — and I’ll see you here on Tuesday.

Ed

Russia Produced 314 Tonnes of Gold in 2018

15 February 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was higher by two dollars and change by 10 a.m. China Standard Time on their Thursday morning — and then it didn’t do much until a few minutes after London opened.  It was sold lower from there — and the low tick of the day was set a few minutes before 1 p.m. GMT in London, which was a bit over half an hour before trading began on the COMEX in New York.  It jumped higher by a handful of dollars at that point, but obviously ran into ‘something’ shortly before 9 a.m. EST — and was then sold a bit lower by 10:45 a.m.  It edged higher until 1 p.m. EST, was sold down into the 1:30 p.m. COMEX close from that point — and crawled a bit higher in the thinly-traded after-hours market.

The low and high ticks aren’t really worth looking up, but here they are anyway…$1,304.70 and $1,317.40 in the April contract…yet another day where gold was forced to trade in a one percent price range.

Gold finished the Thursday session at $1,312.30 spot, up $6.40 from Wednesday’s close.  Net volume was back to a bit over average…at bit over 219,500 contracts — and roll-over/switch volume was a hair under 9,500 contracts on top of that.

Generally speaking, silver was forced to follow the same price path as gold on Thursday.  From its 12:50 p.m. London low, it rallied unevenly higher until shortly before 2 p.m. in after-hours trading in New York.  It traded flat into the 5:00 p.m. EST close from there.

The high and low ticks in this precious metal were recorded as $16.65 and $15.445 in the March contract.

Silver finished the day in New York at $15.59 spot, up 6 cents from Wednesday’s close.  Net volume was pretty decent at 68,000 contracts — and there was a hair under 13,000 contracts worth of roll-over/switch volume out of March and into future months.

Ditto for platinum, except its low tick of the day came shortly before the Zurich close.  From that juncture it headed higher until 1 p.m. EST in New York trading — and was sold off a bit into the COMEX close from there.  It didn’t do much of anything in after-hours trading.  Platinum was closed at $786 spot, up one whole dollar from Wednesday.

Palladium was up nine bucks by the Zurich open — and then traded pretty flat until 1 p.m. Central European Time [CET] on their Thursday afternoon.  It was sold quietly and unevenly lower from there, culminating in another of its patented and vicious down/up price spikes shortly before the equity markets opened in New York yesterday morning.  From that point it traded flat until shortly before the Zurich close.  Then, like platinum, it began to edge quietly but steadily higher — and appeared to run into ‘something’ the moment it broke above $1,400 spot shortly before 3 p.m. in the very thinly-traded after-hours market — and it didn’t do a lot after that.  Palladium finished the Thursday session in New York at $1,399 spot, up 19 dollars on the day, but would have obviously closed higher, if allowed.

The dollar index closed very late on Wednesday afternoon in New York at 97.13 — and jumped up a handful of basis points once trading began at 7:45 p.m. EST/8:45 a.m. China Standard Time on their Thursday morning.  From that juncture it began to crawl quietly lower — and was most likely saved by the usual ‘gentle hands’ once it touched the 97.00 mark at precisely 3:00 p.m. CST on their Thursday afternoon. The rally back above unchanged started shortly after that, but at 8:30 a.m. in New York it plunged back below the 97.00 mark once again — and was rescued once again.  ‘Gentle hands’ rallied it back above unchanged — and that attempt died at 10:42 a.m. EST — and it was back below the 97.00 mark by around 2 p.m.  Once again it was lifted above that mark, but it didn’t last — and it closed at 96.98…down 15 basis points from Wednesday.

It was obvious — and the chart below says it all, that the dollar index would have crashed and burned without the usual assistance.

There are no markets anymore, only interventions.”

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

Here’s the 6-month U.S. dollar index chart courtesy of stockcharts.com — and the delta between its close…96.81…and the close on the DXY chart above, was 17 basis points on Thursday.  Click to enlarge.

The gold stocks opened down a hair, but quickly rallied into positive territory — and their respective highs came at 1 p.m. EST in New York trading, when gold hit its high of the day.  From there they didn’t do much, expect they did fade at titch in the last hour.  The HUI closed higher by 1.24 percent.

The silver equities followed a very similar price path as the gold shares, except their respective high ticks came a very few minutes after 2 p.m. and, like their golden brethren, faded a hair in the last hour, as the day traders sold their positions.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.39 percent.  Click to enlarge if necessary.

And here’s the 1-year Silver Sentiment/Silver 7 Index chart from Nick as well.  Click to enlarge.

The CME Daily Delivery Report showed that an eye-opening 928 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the only short/issuer that mattered was Citigroup with 927 contracts issued out of its in-house/proprietary trading account.  The only long/stopper that mattered was JPMorgan, as they picked up 689 contracts for their client account, plus another 127 contracts for their own account…816 contracts in total.  In very distant second place was Advantage, with 88 contracts for their 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 February rose a whopping 837 contracts, leaving 1,420 still around, minus the 928 contracts mentioned a few paragraphs ago.  All of that amount, plus more, was issued by Citigroup yesterday.  Wednesday’s Daily Delivery Report showed that 8 gold contracts were actually posted for delivery today, so that means that 8+837=845 more gold contracts just got added to the February delivery month.  Silver o.i. in February fell by 28 contracts, leaving just 1 still open.  Wednesday’s Daily Delivery Report showed that 28 silver contracts were actually posted for delivery today, so the change in open interest — and the deliveries match.


There were no reported changes in GLD yesterday.  And after five consecutive withdrawals from SLV, there was finally a deposit, as an authorized participant added 422,119 troy ounces.

There  was another [smallish] sales report from the U.S. Mint on Thursday.  They sold 1,500 troy ounces of gold eagles — 500 one-ounce 24K gold buffaloes — 400 one-ounce platinum eagles — and 100,000 silver eagles.

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

But there was certainly decent activity in silver, as 1,011,472 troy ounces was received — and 705,555 troy ounces were shipped out.  In the ‘in’ category, one truckload…589,427 troy ounces…arrived at CNT — and the remaining 422,044 troy ounces found a home over at HSBC USA.  The link to that is here.

Once again, there wasn’t all that much activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They didn’t receive any — and shipped out 201 of them.  This activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


The Treasure of Osztrópataka (today Ostrovany, northeastern Slovakia), is an East Germanic burial site dating to the late 3rd century. It was discovered in 1790 and is displayed today in the Kunsthistorisches Museum in Vienna, Austria. Further contents of the burial discovered in 1865 are located at the Hungarian National Museum in Budapest, Hungary. The treasure includes Germanic and above all Roman objects, and probably belonged to an influential Vandalic king from around 270 – 290. It is considered to be one of the most important early-historical findings from Slovakia. Click to enlarge.

I have a decent number of stories for you today.


CRITICAL READS

U.S. Retail Sales Collapse in December: Biggest Drop in a Decade

While Bank of America had warned investors to brace for a dismal retail spending print in January, expectations remained positive (albeit just a 0.1% MoM move) for December’s (delayed due to shutdown) official spending data today. As a reminder, on Tuesday we reported that retail sales ex-autos, as measured by the aggregated BAC credit and debit card data, tumbled 0.3% month-over-month seasonally adjusted in January – the biggest drop in three years. This followed a flat reading in retail sales ex-autos in December.

Turning to the January BAC internal data, in January, spending for 4 out of 14 sectors increased in the month, showing broad-based weakening.

As a reminder, Retail Sales for the Control Group soared in November (+0.9% MoM) so some slowdown was expected; but, the government’s official retail spending data for December confirmed BofA’s concerns and plunged…

  • Headline Retail Sales -1.2% MoM (+0.1% MoM exp)
  • Control Group Retail Sales -1.7% MoM (+0.4% MoM exp)

That is the biggest MoM drop in retail sales since 2009 for the headline — and the biggest drop in the control group since the 9/11 attacks in 2001!…Click to enlarge.

This chart-filled news item was posted on the Zero Hedge website 9:41 a.m. EST on Thursday morning — and I thank Brad Robertson for pointing it out.  Another link to it is here.  There was a follow-up ZH story on this later in the day — and it’s headlined “Q4 GDP Estimates Crashing Down After Disastrous Retail Sales” — and that comes courtesy of Brad as well.


A weapon to protect U.S. dollar power“: Russia sanctions bill likely to pass, analysts say

A fresh bill in the U.S. Congress seeks to impose the “harshest-ever” sanctions against Russia over a number of alleged misdeeds – which fits well with America’s strategy of protecting the dollar-based global financial system.

The bill introduced by Senators Lindsey Graham and Bob Menendez is the second attempt to push through the sanctions they favor after the previous version was defeated last year. The measures they suggest vary from declaring the country a state-sponsor of terrorism to torpedoing Russia-involved energy projects (which incidentally compete with American ones) to punishing whoever dares to invest in Russian sovereign debt.

If passed, the bill will certainly hurt the Russian economy to some degree, but less so than it would have done a few years ago, believes financier Roberto D’Ambrosio of the Araknos Investment Managers. For one, Russia has built up some resilience in its ongoing confrontation with the West. But more importantly, other global players are increasingly less willing to play along with the American sanctions game, he told RT.

There is unease on this stance by the U.S. worldwide, not only in Russia. Even Europe has shown some uneasiness towards this kind of action against Russia or countries like Iran. Such actions are reducing the possibility for Europe and other areas of the word to diversify their economies, their trade,” he explained. “It could really backfire.”

He said the U.S. uses sanctions against other nations as part of its strategy to protect the current global financial system, in which the U.S. dollar plays a dominating role – and by extension, the U.S. has much power over the international flows of money.

This story appeared on the rt.com Internet site at 7:19 p.m. Moscow time on their Thursday evening, which was 11:19 a.m in Washington — EST plus 8 hours.  I thank Swedish reader Patrik Ekdahl for sending it our way — and another link to it is here.


BBC Producer’s Syria Bombshell: Douma “Gas Attack” Footage “Was Staged

Now approaching nearly a year after the April 7, 2018 alleged chemical attack in Douma, Syria — which the White House used as a pretext to bomb Syrian government facilities and bases throughout Damascus — a BBC reporter who investigated the incident on the ground has issued public statements saying the “Assad sarin attack” on Douma was indeed “staged“.

Riam Dalati is a well-known BBC Syria producer who has long reported from the region. He shocked his nearly 20,000 twitter followers on Wednesday, which includes other mainstream journalists from major outlets, by stating that after a “six month investigation” he has concluded, “I can prove without a doubt that the Douma Hospital scene was staged.”

The “hospital scene” is a reference to part of the horrid footage played over and over again on international networks showing children in a Douma hospital being hosed off and treated by doctors and White Helmets personnel as victims of the alleged chemical attack.

The BBC‘s Dalati stated on Wednesday: “After almost 6 months of investigations, I can prove without a doubt that the Douma Hospital scene was staged. No fatalities occurred in the hospital.” He noted he had interviewed a number of White Helmets and opposition activists while reaching that conclusion.

He continued in a follow-up tweet: Russia and at least one NATO country knew about what happened in the hospital. Documents were sent. However, no one knew what really happened at the flats apart from activists manipulating the scene there. This is why Russia focused solely on discrediting the hospital scene.

Tragic and gruesome images of what appeared the “gassed” corpses of young children and women strewn about an apartment building, were recycled endlessly in mainstream media at the time, which the Trump administration referenced in its decision to strike Damascus with some 100 Tomahawk cruise missiles.

This was all bulls hit at the time — and I stated so.  Now this whole thing can be seen for what it is — a completely false-flag incident.  This news story was posted on the Zero Hedge website at 6:20 p.m. EST on Thursday evening — and another link to it is here.


Airbus Shares Soar as Company Ends Production of A380 Superjumbo

Airbus shareholders celebrated on Thursday, bidding the French aerospace company’s shares higher by 4%, after the company announced that it would pull the plug on production of the 12-year-old A380 Superjumbo, the world’s largest passenger jet, the Wall Street Journal reported, as airliners have favored smaller wide-body planes.

The company is taking a $500 million charge in shutdown-related talks, and is in discussions with its unions about how to reapportion staff affected by the cuts. The end of the program could lead to as many as 3,500 job cuts over the next few years.

The decision to end production was made after Emirates reduced its latest order, saying it would accept delivery of only 14 more A380s over the next two years. The Dubai-based airline is cutting its overall A380 fleet size from 162 to 123. The last deliveries of the jets have been set for 2021. In a decision that was symbolic of the issues that threatened the A380 throughout its life, Emirates will instead shift its purchases toward the smaller the A330neo and A350. Airbus isn’t the only manufacturing considering a phase out of its super-jumbo jet: Boeing previously said it could end production of its 747, which is now almost exclusively used to haul cargo.

Emirates isn’t the first airliner to cancel or reduce a major order of A380s recently. Qantas said earlier this week that it would canceled an order, placed in 2006, for eight more A380s. Already, Singapore Airlines Ltd., which launched the first long-haul flight using an A380 back in 2007, has retired its first two A380s. It’s currently in the process of selling the planes for scrap.

Despite its incredible size and design features, I pretty much knew this bird was a dead duck from the day it was rolled out.  To me, it was a “bridge too far” — although it took Airbus twelve years to succumb to the obvious — and the fact that no U.S. airline decided to add it to their fleet, was certainly the final kiss of death.  This Zero Hedge article showed up on their Internet site at 6:46 a.m. on Thursday morning EST — and it’s also courtesy of Brad Robertson.  Another link to it is here.


Germany Pulls Rank on Macron and American Energy Blackmail — Finian Cunningham

It was billed politely as a Franco-German “compromise” when the EU balked at adopting a Gas Directive which would have undermined the Nord Stream 2 project with Russia.

Nevertheless, diplomatic rhetoric aside, Berlin’s blocking last week of a bid by French President Emmanuel Macron to impose tougher regulations on the Nord Stream 2 gas project was without doubt a firm rebuff to Paris.

Macron wanted to give the E.U. administration in Brussels greater control over the new pipeline running from Russia to Germany. But in the end the so-called “compromise” was a rejection of Macron’s proposal, reaffirming Germany in the lead role of implementing the Nord Stream 2 route, along with Russia.

The $11-billion, 1,200 kilometer pipeline is due to become operational at the end of this year. Stretching from Russian mainland under the Baltic Sea, it will double the natural gas supply from Russia to Germany. The Berlin government and German industry view the project as a vital boost to the country’s ever-robust economy. Gas supplies will also be distributed from Germany to other European states. Consumers stand to gain from lower prices for heating homes and businesses.

Thus Macron’s belated bizarre meddling was rebuffed by Berlin. A rebuff was given too to the stepped-up pressure from Washington for the Nord Stream 2 project to be cancelled. Last week, US ambassador to Germany Richard Grenell and two other American envoys wrote an op-ed for Deutsche Welle in which they accused Russia of trying to use “energy blackmail” over Europe’s geopolitics.

A definite “up yours” to the U.S. deep state.  This very worthwhile article put in an appearance on the strategic-culture.org Internet site on Wednesday sometime — and it’s definitely worth reading if you have the interest.  I thank Roy Stephens for pointing it out — and another link to it is here.


Pence Berates E.U. at Warsaw Over “SWIFT Alternative” — Demands Allies “Confront Iran

Speaking at the U.S.-sponsored Warsaw summit on the Middle East, Vice President Mike Pence on Thursday railed against European efforts to circumvent American sanctions on Iran, and crucially as Bloomberg concludes, his speech confirms the “U.S. and its oldest allies across the Atlantic are becoming estranged.”

He slammed European efforts to “break American sanctions against Iran’s murderous revolutionary regime” — a theme also repeated by Pompeo and Israeli P.M. Netanyahu on the same day.

Pence specifically reprimanded the U.K., France, and Germany for launching a so-called “SWIFT alternative” or special purpose vehicle to allow non-dollar trade with Tehran and to facilitate humanitarian goods-related transactions, called INSTEX — or “Instrument in Support of Trade Exchanges“. Europe sees it as a crucial step in keeping the 2015 nuclear deal alive after Washington was able to pressure the Belgium-based SWIFT financial messaging service to cut off the access of Iranian banks last year.

They call this scheme a ‘Special Purpose Vehicle’,” Pence said, as cited by Bloomberg. “We call it an effort to break American sanctions against Iran’s murderous revolutionary regime.’’ The Paris-based INSTEX initiative represents the most concrete action Europe has taken to directly thwart Washington sanctions.

We call it an ill-advised step that will only strengthen Iran, weaken the EU and create still more distance between Europe and America,’’ Pence said. Though many observers have predicted the issue would come to a head, this is the first time a top U.S. leader has stood in Europe berating allies over offering Iran sanctions relief. Tehran for its part has said it’s not enough, though a minimal beginning by the E.U.

This story put in an appearance on the Zero Hedge website at 12:05 p.m. EST on Thursday afternoon — and I thank Brad Robertson for this one as well.  Another link to it is here.


‘Flash Boys’-Style Speed Bump Planned for [Gold and Silver] Futures Markets

Intercontinental Exchange Inc.’s futures market wants to join the battle against the fastest traders.

The Atlanta-based exchange plans a 3-millisecond trading delay, or speed bump, for its gold and silver futures contracts, according to a regulatory filing. The U.S. Commodity Futures Trading Commission on Wednesday asked for public comment on the proposal.

Michael Lewis’s 2014 book, “Flash Boys,” popularized the idea of using speed bumps to curb the light-speed pace of modern financial markets and prevent alleged abuses of so-called high-frequency traders. Lewis’s protagonists, the founders of IEX Group Inc., introduced a delay on their stock exchange in 2016, and a tiny equities market ICE owns, NYSE American, also has one. But this latest move would bring a speed bump to derivatives markets.

The delay would be introduced “initially” for gold and silver, areas where ICE currently does very little business. An ICE spokesman declined to say whether it would later be applied to other markets. ICE is a leader in other products such as oil futures.

As the last paragraph states, the ICE doesn’t do much business in the precious metals, as the price is set in the COMEX futures market in New York.  This story was posted on the Bloomberg website at 1:11 p.m. EST on Wednesday afternoon — and I found it in a GATA dispatch.  Another link to it is here.  The Zero Hedge spin on this is headlined “ICE To Implement “Flash Boys” HFT Speed Bump To Stop Gold, Silver Manipulation” — and I thank ‘Michael G’ for sending it along.


Will Gold Shine In 2019? —  Dennis Miller

Several experts, who are not in the gold business, recently suggested gold will be a good investment in 2019.

Zerohedge reports on David Einhorn’s annual letter to Greenlight Capital shareholders with my emphasis:

Gold – Long – U.S. debt to GDP is over 100%. The…U.S. debt has increased by over $2 trillion…. When the economy eventually slows, the deficit is sure to expand rapidly, possibly catastrophically. The politicians say deficits don’t matter. …. History says otherwise. Gold continues to be a hedge in our portfolio to imprudent global fiscal and monetary policies.”

The Aden Forecast, a highly respected newsletter, tells us: “GOLD’S TURN TO SHINE – This too will likely continue this year, especially if the U.S. dollar also heads lower. If so, gold will get a double boost and it’ll shine as the world’s safe haven. For a number of reasons, we believe that’s what’s coming up… Already, gold hit a 6½ month high, mostly thanks to its safe haven status during these volatile times.

Since the bank bailouts, pundits have predicted rising inflation with gold rising like a shooting star. It has not happened. Kitco reports the gold price on 12/31/2017 was $1,291/oz. It closed in 2018 at $1,279/oz.

Our gold expert is Jeff Clark, senior precious metals editor at GoldSilver.com.

Of course all of what these so-called precious metals ‘analysts’ conveniently never mention is the fact that gold and silver prices are set on the COMEX futures market — and their prices have been actively managed for the past 45 years…with JPMorgan et al the latest bunch of crooks running the show.  This interview was posted on his website early on Thursday morning — and another link to it is here.


Russia says its gold output rose to 314 tonnes in 2018

Russia’s Finance Ministry said on Wednesday that Russia had produced 314.42 tonnes of gold and 1,119.95 tonnes of silver in 2018.

In the previous year, Russia’s gold output was 306.9 tonnes and the country’s silver output 1,044.3 tonnes.

That increase in tonnage puts Russia firmly in No. 2 spot in world gold production.  The above two paragraphs are all there is to this very brief Reuters story, filed from Moscow on Wednesday sometime.  I found it on the Sharps Pixley website.


South Africa’s Sibanye Weighs Slashing 6,000 Jobs to Stem Gold Losses

South African miner Sibanye-Stillwater said it may have to cut nearly 6,000 jobs as part of a restructuring of its gold mines due to ongoing losses.

Sibanye said it would enter into formal consultations with its workforce following “numerous initiatives to contain losses” at certain shafts at its Beatrix and Driefontein gold mining operations.

The talks come following strikes and a number of deaths at Sibanye’s deep-shaft gold mining operations last year.

The company said it may have to cut roughly 5,870 jobs and 800 contractors depending on the outcome of the formal consultation. Sibanye employs around 61,000 people in South Africa.

Contemplating potential restructuring of this nature is never taken lightly and we are aware of the possible impact on many of our colleagues,” Neal Froneman, chief executive of Sibanye, said. “Our best attempts to address the ongoing losses at these operations, have, however, been unsuccessful and sustaining these losses may threaten the viability of our other operations.” …

The rest of this gold-related news item is behind the subscription wall over at the Financial Times of London.  What you see above is posted in the clear on the gata.org Internet site.  Chris Powell posted it there very shortly after midnight on Friday morning EST — and another link to it is here.


When trouble strikes, where should you hide? The case for gold — The Economist

Tellingly, the managers of those rainy-day funds seem a mite concerned that they are crammed into the same spot. The share of dollars in the $10.7 trillion of reserves reported to the IMF has dropped from over 65 percent when Donald Trump was elected president to below 62 percent in the latest figures. This may in part be a response to growing political risks.

The dollar’s central role in global trade and finance allows America to impose financial sanctions to great effect. It has been doing so with greater frequency, so Russia, for instance, has drastically cut the dollar share of its reserves, to 22 percent, while raising the shares of euros and yuan. Russia has been a big buyer of gold, too. In that, it is not alone. Net purchases of gold by central banks rose by 74 percent last year to the highest since 1971, the year the dollar’s peg to the gold price broke.

Now, as then, there are growing concerns that the dollar is a crowded trade. It is as if there are so many people in Grand Central Station that it is impossible to find the person you’re supposed to meet there, or if you do find them, you cannot fight your way out without mishap. It is why gold is starting to appeal again as a spot to converge upon. You would have to mix with some strange people there. But can you really say that you would never visit?

Wow!  Two days ago it was Ken Rogoff and his “The Curse of Cash and the Allure of Gold” article — and now this from The Economist.  This is yet another straw in the wind, and it’s a pretty big one at that.  This gold-related news item appeared on their Internet site yesterday sometime.  But since it’s subscriber protected, it was posted in the clear in its entirety at the gata.org Internet site yesterday evening — and another link to it is here.


The PHOTOS and the FUNNIES

Here are two more photos from the “Ocean Art” series that I thank Mike Easton for sending our way.

The photo credit for this first picture goes to Jeff Milisen in Kailua-Kona, Hawai’i  — and it’s captioned “A rare glimpse at a sharp-eared enope squid”.  Click to enlarge.

This second photo was taken by Alessandro Raho — and is captioned “A rare glimpse of the Budego/Monkfish“.  Click to enlarge.


The WRAP

I wouldn’t read too much into Thursday’s price action in the precious metals.  They were all sold lower in London and Zurich trading — and then rallied in New York during the COMEX trading session.

The two biggest surprises for me on Thursday were the big deliveries by Citigroup in gold…issuing out of their in-house/proprietary trading account.  But the fact that JPMorgan was the big stopper came as no surprise.  They are, as Ted Butler has said on many occasions, in charge of what goes on in both gold and silver — and I’m sure he’ll have something to say about it in his weekly review on Saturday.

The other surprise was the article about gold in The Economist yesterday — and if you didn’t read it in the Critical Reads section above, you can make amends now, as another link to it is here.

This is the second big straw in the wind from two sources in the last couple of days that wouldn’t normally touch gold with a ten-foot cattle prod.  I’m wondering what that’s all about — and what it really means.   When two positive stories show up about gold from the most unlikely of sources, it’s time to stand up and take notice.  One has to now wonder if there are going to be any more stories on this subject from equally unlikely sources.

Here are the 6-month charts for the Big 6 commodities and, once again, there’s not a lot to see.  However, I will point out that the post-COMEX low closes in the four precious metals on Wednesday, showed up in their respective Thursday dojis.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price traded flat once it began at 6:00 p.m. EST in New York on Thursday evening. That lasted until a few minutes before 2 p.m. China Standard Time on their Friday afternoon — and at that point it edged a bit higher over the next hour — and is currently up $1.50 an ounce. Silver was down a nickel by 9:30 a.m. CST — and also traded flat from there until the 2:15 p.m. afternoon gold fix in Shanghai. It rallied a small handful of pennies at that juncture — and is back at unchanged. Platinum followed silver’s price path almost to the tick — and it’s down 2 bucks currently. Palladium was down a bit in morning trading in the Far East, but was back at the unchanged mark by around noon CST — and it hasn’t done much of anything since — and is down a dollar as Zurich opens.

Net HFT gold volume is pretty light at a bit over 28,500 contracts — and there’s only 434 contract worth of roll-over/switch volume in that precious metal. Net HFT silver volume is pretty light as well, at a bit over 6,700 contracts — and there’s 837 contracts worth of roll-over/switch volume on top of that.

The dollar index jumped up 8 basis points — and back above the 97.00 mark as soon as trading began at 7:45 a.m. EST in New York on Thursday evening…8:45 a.m. China Standard Time on their Friday morning. It chopped quietly sideways from there until it dipped back dangerously close to the 97.00 mark around 3:05 p.m. CST — and has ‘rallied’ a bit since. As of 7:45 a.m. GMT in London, it’s up 16 basis points.

We get another COT Report today…this one will be for positions held at the close of COMEX trading on Tuesday, January 22, 2019.  I’m expecting improvements in the commercial net short positions in both gold and silver, based on what the charts show above during that reporting week.  But one should not bet much money on that prediction, as my predictions have been pretty lousy lately…in both precious metals.

And as I post today’s column on the website at 4:02 a.m. EST, I see that gold is up $2.20 the ounce — and silver is now up 2 cents. Platinum is back at unchanged. But palladium, which had poked its nose above the $1,400 spot mark minutes after 3 p.m. CST, has been sold lower since — and is now down 4 bucks.

Gross gold volume is a bit over 37,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit over 36,000 contracts. Net HFT silver volume is a bit over 8,500 contracts — and there’s 1,132 contracts worth of roll-over/switch volume in this precious metal.

The dollar index has been bouncing around a bit during the first hour of London trading — and as of 8:45 a.m. GMT/9:45 a.m. CET, it’s up 16 basis points.

That’s it for yet another day.  Have a good weekend — and I’ll see you here on Saturday.

Ed

Jim Cook Interviews Ted Butler

14 February 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was up three dollars or so by shortly before 3 p.m. China Standard Time on their Wednesday afternoon — and from that point it was sold quietly lower until a few minutes after 1 p.m. GMT in London, which was about twenty minutes before the COMEX open.  It began to chop higher from there — and really began to sail going into the afternoon gold fix in London.  The price was capped at that point, or minutes after — and around 10:45 a.m. EST, the price was sold lower into the 1:30 p.m. COMEX close.  Then the real price pressure began — and gold was sold sharply lower until 3 p.m. in the thinly-traded after-hours market — and it traded quietly sideways into the 5:00 p.m. close from there.

The high and low ticks were recorded by the CME Group as $1,321.70 and $1,308.10 in the April contract…an intraday move of one percent.

Gold was closed on Wednesday at $1,305.90 spot, down $4.50 on the day.  Net volume was average — and way higher than it has been for the last ten days or so, at just under 202,500 contracts — and there was a bit under 12,000 contracts worth of roll-over/switch volume on top of that.

The price action in silver was almost the same as it was for gold, so I’m not going to spend any time talking about it.  The post-COMEX close sell-off was fairly hefty, although it did recover a bit going into the 5:00 p.m. EST close of trading in New York.

The high and low ticks were reported as $15.80 and $15.52 in the March contract.

Silver was closed in New York yesterday afternoon at $15.53 spot, down 14 cents from Tuesday.  Net volume was fairly decent [compared to the last ten days] at just under 57,500 contracts — and there was a very healthy 22,000 contracts worth of roll-over/switch volume out of March and into future months in this precious metal.

The price pattern in platinum was a mini version of what happened to silver and gold prices on Wednesday — and it was closed a dollar off its low tick at $785 spot, down 5 bucks from Tuesday.

Palladium was up 9 dollars at the 2:15 p.m. CST afternoon gold fix in Shanghai, but then it came under quiet selling pressure as well — and except for a bit of a bounce shortly after the COMEX open in New York, it continued to crawl lower until around 2:20 p.m. EST in after-hours trading.  It didn’t do anything after that.  Palladium was closed at $1,380 spot, down 6 dollars on the day.

The dollar index closed very late on Tuesday afternoon in New York at 96.71 — and began to chop sideways in a fairly tight range, both below and above unchanged, once trading began at 7:45 p.m. EST in New York on Tuesday evening.  A couple of early rally attempt in morning trading in London didn’t get anywhere.  But starting a few minutes before noon GMT…at its 96.63 low tick of the day…the rally that began at that juncture had more success.  That ended at its 97.26 high tick, which came around 5:00 p.m. EST — and it didn’t do much after that.  The dollar index finished the Wednesday session in New York at 97.13…up 42 basis points from Tuesday’s close.

Here’s the DXY chart, courtesy of BloombergClick 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…96.94…and the close of the DXY above, was 19 basis points yesterday.  Click to enlarge.

The gold shares gapped down a percent and change at the open, but were back in positive territory by shortly after 10 a.m. when gold reached its high tick of the day.  From that juncture, they sold unsteadily lower, right into the 4:00 p.m. EST close of trading in New York.  The HUI finished down 1.03 percent.

The silver equities opened about unchanged — and from that point they rallied very unsteadily — and in a very broad price range until around 11:15 a.m. in New York trading.  It was all very quietly down hill from there, as Nick’s Intraday Silver Sentiment/Silver 7 Index closed down 0.64 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 8 gold and 28 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, the sole short/issuer was Advantage — and the only long/stopper worthy of the name was JPMorgan, as they stopped 7 contracts in total…4 for their own account, plus 3 contracts for clients.

In silver, the two short/issuers were ADM and Advantage, with 17 and 11 contracts out of their respective client accounts.  The three long/stoppers were JPMorgan, Advantage and Morgan Stanley, with 17, 8 and 3 contracts…all for their respective client accounts.

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

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in February rose by 35 contracts, leaving 583 still open, minus the 8 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 16 gold contracts were actually posted for delivery today, so that means that 16+35=51 more gold contracts just got added to the February delivery month.  Silver o.i. in February rose by 28 contracts, leaving 29 still around, minus the 28 mentioned a few paragraphs…so it’s an excellent bet that those 28 contracts issued for Friday’s delivery are the same 28 contracts that just got added to the February delivery month.  There were zero silver contracts posted for delivery today.


There were withdrawals from both GLD and SLV on Tuesday, as an authorized participant removed 65,312 troy ounces of gold from GLD — and another a.p. took 938,056 troy ounces of of SLV.

There was a sales report from the U.S. Mint yesterday.  They sold 1,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — and 125,000 silver eagles.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday was 321.500 troy ounces/10 kilobars [U.K./U.S. kilobar weight] that was shipped out of Canada’s Scotiabank.  I won’t bother linking this.

There wasn’t much activity in silver.   Only 299,324 troy ounces were received — and that found a home over at Brink’s, Inc.  The only ‘out’ activity was 75,697 troy ounces that departed CNT.  There was also a paper transfer of 828,504 troy ounces from the Eligible category and into Registered.  Of that amount, there was 813,896 troy ounces transferred at CNT — and the remaining 14,607 troy ounces got transferred over at Brink’s, Inc.  The link to that is here.

There was very little activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  Nothing was reported received — and only 20 were shipped out.  This activity was at Brink’s, Inc. of course — and I won’t bother linking this amount, either.


The Pietroasele Treasure (or the Petrossa Treasure) found in Pietroasele, Buzău, Romania, in 1837, is a late fourth-century Gothic treasure that included some twenty-two objects of gold, among the most famous examples of the polychrome style of Migration Period art. Of the twenty-two pieces, only twelve have survived, conserved at the National Museum of Romanian History, in Bucharest: a large eagle-headed fibula and three smaller ones encrusted with semi-precious stones; a patera, or round sacrificial dish, modelled with Orphic figures surrounding a seated three-dimensional goddess in the centre.  Click to enlarge.

It was another very quiet news day — and I have very little for you.


CRITICAL READS

History made: U.S. national debt tops $22 trillion

The U.S. national debt has climbed above $22 trillion. It is projected to continue rising by a trillion each year over the next decade, due to the cost of pensions and medical care for the retiring Baby Boomers.

On Tuesday, the U.S. Treasury Department published the daily statement showing outstanding public debt standing at $22.01 trillion. The sum total of government budget deficits has increased by $2.06 trillion since President Donald Trump took office in January 2017.

The Congressional Budget Office (CBO) is projecting the deficit for fiscal year 2019 to be $897 billion, a 15 percent increase over last year’s $779 billion – and greater than the entire Pentagon budget, for comparison’s sake. The CBO has estimated the deficit will continue to increase by $1 trillion annually starting in 2022, due to the rising cost of entitlement programs like Social Security and Medicare.

The deficit nearly doubled during the administration of President Barack Obama, growing by $9.3 trillion as the Federal Reserve engaged in massive “quantitative easing” programs to bail out the financial sector from the crash of 2008.

The new debt record “is another sad reminder of the inexcusable tab our nation’s leaders continue to run up and will leave for the next generation,” according to Judd Gregg and Edward Rendell, co-chairmen of the Campaign to Fix the Debt, a project of the nonpartisan Committee for a Responsible Federal Budget.

This news item put in an appearance on the rt.com Internet site at 12:38 a.m. Moscow time on their Wednesday morning, which was 4:08 p.m. on Tuesday afternoon in Washington — EDT plus 8 hours.  I thank George Whyte for sending it along — and another link to it is here.


A record 7 million Americans have stopped paying their car loans

According to a new report from the Federal Reserve Bank of New York, more than 7 million Americans have reached serious delinquency status on their auto loans, meaning they’re at least 90 days behind on payments.

Fed economists said this is “surprising” considering a strengthening labor market and economy.

People often prioritize car loans because many need to drive to get to work and earn a paycheck, The Washington Post’s Heather Long reported. The fact that a record number of Americans aren’t making those payments is “usually a sign of significant duress among low-income and working-class Americans,” Long wrote.

The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market and warrants continued monitoring and analysis of this sector,” Fed economists wrote in a blog post dissecting the report.

The data show that most of the borrowers whose auto loans have recently moved into delinquency are people younger than 30 years old and people with low credit scores. Eight percent of borrowers with credit scores below 620 — otherwise known as subprime — went from good standing to delinquent on their auto loans in the fourth quarter of 2018.

This story showed up on the businessinsider.com Internet site at 5:37 p.m. EST on Tuesday afternoon — and I thank Brad Robertson for pointing it out.  Another link to it is here.


A 300-year lesson in bubble inflation — Edward Chancellor

Just over 300 years ago, in early December 1718, a Parisian bank was nationalised by the French state. This marked the beginning of the Mississippi Bubble, which captivated France over the following couple of years. The aristocratic world of the “ancien regime” may seem impossibly distant to modern minds. Yet there are parallels between this saga and the modern age of quantitative easing, ultra-low interest rates and highly valued asset prices. As central bankers struggle to reverse their post-crisis monetary measures, the lessons imparted by the Mississippi Bubble are more relevant than ever.

The Banque Royale became France’s first central bank. It was modelled on the Bank of England, founded in 1694, but with a crucial difference. While the Bank redeemed its notes with a fixed quantity of gold, the Banque Royale’s notes were issued in a unit of account, whose value could be changed at royal whim. This paved the way for France to adopt a purely fiat currency.

The bank was founded and managed by a Scottish-born economic visionary named John Law. His great plan was to replace gold with paper money. Law arrived in France at the end of the reign of Louis XIV, at a time when the country was suffering from high unemployment, deflation, and the king’s credit had run out. France’s situation was not dissimilar to the one that afflicted parts of the Eurozone during its recent sovereign debt crisis.

Law petitioned the Regent Philippe II, Duke of Orleans, who ruled in the name of the infant Louis XV, to establish a new bank. He promised this new institution could lower interest rates by making money more abundant, and that this would reduce the cost of public debts, raise prices and bring about more general prosperity. In his wig and frock coat, Law’s appeal sounded much like a contemporary central banker talking up quantitative easing, without the academic verbiage.

This very interesting commentary/opinion piece appeared on the Reuters website on Wednesday morning at 2:52 a.m. EST — and I thank Richard Saler for bringing it to our attention.  Another link to it is here.


Palladium supply shortfall will worsen this year — Johnson Matthey

A deficit in the palladium market that has driven prices of the auto-catalyst metal to record highs will widen dramatically this year, specialist materials company Johnson Matthey said in a report on Wednesday.

The company, a leading auto-catalyst manufacturer, said the shortfall in the roughly 10 million ounce-a-year palladium market narrowed in 2018 to 29,000 ounces from 787,000 ounces in 2017, its widest in three years.

But it said stricter emissions standards would increase demand for palladium for catalytic converters, and despite an increase in recycling, supply would struggle to keep up.

The rate of growth in secondary supplies is likely to be lower than in 2018, while primary shipments (of newly mined metal) are expected to be flat,” the report said.

Palladium-backed exchange-traded funds (ETFs) would no longer be able to bridge the gap between supply and demand by returning metal to the market, it added.

This worthwhile Reuters news item, filed from London, appeared on their Internet site at 5:51 a.m. EST on Wednesday morning — and it’s something I found on the Sharps Pixley website.  Another link to it is here.


Italy government won’t sell ‘a gram’ of gold reserves: League lawmaker

The Italian government has no intention of selling the Bank of Italy’s gold reserves to plug budget holes, a prominent lawmaker of the ruling League party said on Wednesday.

We do not want to sell a gram (of gold),” Claudio Borghi, chairman of the lower-house budget committee and the League’s economics spokesman, said in a interview with state-owned television RAI.

The League has drafted a law proposal which would eventually allow the government to sell the country’s gold reserves if there were also a change to the constitution — a long and complicated legislative process.

Borghi has already tabled a bill intended to establish that the gold is the property of the state rather than of the Bank of Italy, a point which is disputed in Italy.

The idea that Italy could sell part of its gold reserves to fill budget shortfalls has sparked outcry in Germany, Daniel Gros, a German economist and Director of the Centre for European Policy Studies, said on the same TV programme.

This Reuters article, filed from Rome, was posted on their website at 11:57 p.m. on Tuesday night EST — and I found it in a GATA dispatch yesterday morning.  Another link to it is here.


Jim Cook Interviews Ted Butler

Q: As the world’s leading silver bull, are you expecting fireworks in silver?
A: More so than ever.

Q: You know of course that a lot of people who own silver have grown impatient. What do you say to them?
A: I feel the same impatience, however my expectations are based upon an extremely bullish set of facts. Impatience has nothing to do with it.

Q: How do you arrive at your bullish facts?
A: I study the Commitment of Traders and Bank Participation reports and numerous other statistics, trends and reports. There are any number of bullish arguments for why silver is a great buy right now.

Q: What are some of those bullish arguments?
A: Silver has never been more necessary. It is a vital component of just about every modern product. Production of silver has been flat for years. Quite simply, there will not be enough silver to go around and price rationing will be required.

This brief Q&A session with Ted was posted on the silverseek.com Internet site at 2:37 p.m. PST on Wednesday afternoon.  It’s definitely worth reading — another link to it is here.


The PHOTOS and the FUNNIES

Here are two more photos from the “Ocean Art” series that I thank Mike Easton for sending our way.

The photo credit for this first picture goes to Tiffany Poon — and the caption reads “A pod of friendly false killer whales off the coast of Mexico”.  Click to enlarge.

This next photo was taken by Debbie Wallace — and the caption on this one reads “Curious sand tiger shark off the coast of Morehead City, North Carolina, USA”


The WRAP

We do not believe any group of men adequate enough or wise enough to operate without scrutiny or without criticism. We know that the only way to avoid error is to detect it, that the only way to detect it is to be free to inquire. We know that in secrecy, error undetected will flourish and subvert”. –-  J Robert Oppenheimer.


It was more than obvious that the engineered price declines that came in gold, silver and platinum after the afternoon gold fix in London — and after the COMEX close in New York…were the result of spoofing.  Nothing else I can think of offhand could account for those types or price declines.

Confirmation of that came in the big volumes that occurred in both silver and gold in the COMEX futures market.  Not huge on an historic basis, but monstrous compared to the fumes and vapours trading volumes we’ve been looking at over the previous ten trading days.

I can’t image that it was JPMorgan, all things considered — and if it was, it was a big “up yours” to the DoJ.  In reality, it could have been any trading entity that didn’t want precious metals to rise along with a rally in the dollar index.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  And, once again, it should be noted that since the low closes in gold, silver and platinum occurred after the COMEX close yesterday, they don’t appear on the Wednesday dojis on the charts below.  Click to enlarge.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price crawled higher for a few hours once trading began at 6:00 p.m. EST in New York on Tuesday evening — and has been chopping quietly sideways since — and is currently up $2.60 the ounce. Silver did about the same and, like gold, jumped up a bit at 3:30 p.m. China Standard Time on their Thursday afternoon — and it’s up 8 cents at the moment. Platinum didn’t do anything in Far East trading — and it’s up a dollar. Not so for palladium, as it’s been heading very unsteadily higher in Far East trading — and it’s up 10 dollars as the Zurich open looms.

Net HFT gold volume is a bit over 30,000 contracts — and there’s only 300 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is already up to around 11,700 contracts — and there’s only 368 contracts worth of roll-over/switch volume in that precious metal.

The dollar index rallied about five basis points as soon as trading began at 7:45 p.m. EST in New York on Wednesday evening, which was 8:45 a.m. CST in Shanghai on their Thursday morning. It has been chopping quietly, but very unsteadily lower since — and as of 7:45 a.m. GMT in London, it’s down 9 basis points.

I’m not sure if what happened yesterday is the precursor to an out-and-out bear raid on the precious metals or not.  Gold is market neutral to bullish from a COMEX futures market structure, but the set up in silver is just plain bearish.  And even though we’ve crawling lower in price for the most part for the past few weeks, none of the major moving averages…the 50 and 200-day…has come close to being penetrated to the downside as of yet.  That’s when we’ll see the Managed Money traders really begin to puke up their long positions and go short in a major way…as the commercial traders ring the cash register yet again.

But as I’ve said before, that outcome is not cast in stone.

And as I post today’s column on the website at 4:02 a.m. EST, I note that moments after London and Zurich opened all four precious metal were sold lower. Gold is now down 70 cents at the moment — and silver is up 2 cents. Platinum is now down 3 bucks — and palladium was hit as well, but it has recovered a bit — and is up 8 dollars.

Gross gold volume is a bit over 40,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is 39,500 contracts. Net HFT silver volume is coming up on 14,500 contracts — and there’s 804 contracts worth of roll-over/switch volume on top of that.

The dollar index began to head sharply higher a few minutes before the London and Zurich opens — and from down 9 basis points, it’s now up 11 basis points. I guess that’s all that was needed for the powers-that-be to send precious metal prices lower.

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

Ed

The Curse of Cash and the Allure of Gold — Ken Rogoff

13 February 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price chopped quietly sideways in Far East trading until shortly before the 2:15 p.m. afternoon gold fix in Shanghai on their Tuesday afternoon.  It began to edge higher from there, but ran into ‘something’ about an hour and change later — and from there it chopped higher until the price was capped and turned lower about five minutes before trading on the COMEX commenced at 8:20 a.m. in New York.  The low tick of the day was set a minute or so after 10:30 a.m. EST — and the gold price edged quietly and unsteadily higher until shortly before the COMEX close.  It was sold a few dollars lower at that juncture — and traded flat from 2:00 p.m. EST onwards.

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

Gold was closed in New York on Tuesday at $1,310.40 spot, up $2.60 from Monday.  Net volume was ultra-quiet once again at just under 137,500 contracts — and roll-over/switch volume amounted to a bit over 9,500 contracts.

It was the same general price pattern for silver, except it began to edge a few pennies higher starting around 10 a.m. China Standard Time on their Tuesday morning.  Its rally was halted a few minutes before 11 a.m. GMT in London — and once the silver fix was in at noon over there, the price pressure began.  Most of the sell-off that mattered ended shortly after the afternoon gold fix in London — and it didn’t do much from there until it crept a few pennies higher between 12:30 p.m. EST and the COMEX close — and it didn’t do a thing after that.

The high and low ticks in this precious metal were reported by the CME Group as $15.65 and $15.82 in the March contract.

Silver was closed yesterday at $15.67 spot, down 0.5 cents on the day.  Net volume was super quiet at around 38,300 contracts — and there was a bit under 24,000 contracts worth of roll-over/switch volume in this precious metal.

Platinum was up 3 bucks or thereabouts by the Zurich open — and from there it traded pretty flat for the next three hours before heading quietly lower.  The low tick of the day, such as it was, came around 10:30 a.m. in New York, but within the next thirty minutes or so, it had jumped back into the green by a few bucks.  From that point it traded flat until 2 p.m. in the thinly-traded after-hours market — and it ticked a few dollars higher into the 5:00 p.m. EST close of trading.  Platinum finished the Tuesday session at $790 spot, up 5 dollars on the day.

Palladium had a brief down/up price spike the moment that trading began at 6:00 p.m. EST in New York on Monday evening, but was back at unchanged by around 11:30 a.m. CST on their Tuesday morning.  It rallied about 7 dollars from there — and was up about that amount by the Zurich open — and didn’t do much after that until 2 p.m. CET in Zurich, which was twenty minutes before the COMEX open in New York.  It began to edge quietly and rather unsteadily higher from there — and finished the Tuesday trading session at $1,386 spot, up 18 dollars from Monday’s close.

The dollar index closed very late in New York on Monday afternoon at 97.06 — and proceeded to creep quietly sideways, with a slightly negative bias, once trading began at 7:45 p.m. EST in New York/8:45 a.m. CST/China Standard Time on their Tuesday morning.  That gentle decline ended five minutes after the London open — and a ‘rally’ commenced at that point.  The 97.19 high tick of the day was set forty minutes later — and a long, slow and quietly choppy price decline took hold at that point.  The 96.65 low tick was set around 1:10 p.m. in New York– and it certainly looked like the usual ‘gentle hands’ appeared at that juncture.  The dollar index crept quietly higher into the close from there — and it finished the Tuesday session in New York at 96.71…down 35 basis points from Monday’s close.

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

And here’s the 6-month U.S. dollar index chart — and the delta between its close…96.50…and the close on the DXY chart above, was 21 basis points on Tuesday.  Click to enlarge.

The gold shares gapped up a bit at the open, but within ten minutes or so, they began to head lower, with their respective lows coming shortly after 11 a.m. in New York trading.  They crawled quietly higher from there until around 1:10 p.m. EST, which was the time of the low tick in the dollar index — and they sold quietly lower until 3:50 p.m., where they ticked higher into the 4:00 p.m. close from there.  The HUI finished down 0.86 percent on the day.

The silver equities traded in lock-step with their golden brethren on Tuesday, so I shall spare you the play-by-play.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.12 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 16 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  In gold, the sole short/issuer was Advantage.  JPMorgan stopped 9 contracts…7 for its own account, plus 2 more for its client account — and the only other long/stopper that mattered was Advantage, picking up 5 contracts for its client 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 February fell by 26 contracts, leaving 663 still around, minus the 16 contracts mentioned just above.  Monday’s Daily Delivery Report showed that 73 gold contracts were actually posted for delivery today, so that means that 73-26=47 more gold contracts just got added to the February delivery month.  Silver o.i. in February declined by 5 contracts, leaving just 3 left.  Monday’s Daily Delivery Report showed that 2 silver contracts were actually posted for delivery today, so that means that 5-2=3 silver contracts disappeared from the February delivery month.


There was another withdrawal from GLD yesterday, the seventh one this month so far.  This time an authorized participant took out 103,938 troy ounces.  There were no reported changes in SLV.

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

There was some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  Nothing was reported received, but 132,482 troy ounces were taken out.  By far the largest amount…132,321 troy ounces…departed HSBC USA.  The rest…3 kilobars and 2 kilobars [all five were U.K./U.S. kilobar weights] departed Brink’s, Inc. and Scotiabank respectively.  The link to this is here.

There was a fair amount of activity in silver, as 600,505 troy ounces was received — and 1,224,023 troy ounces were shipped out.  All of the ‘in’ activity…one truck load…ended up at CNT.  In the ‘out’ category, there were two truck loads…1,196,893 troy ounces…that departed JPMorgan.  The remaining amounts…20,036 troy ounces and 7,092 troy ounces…were shipped out of HSBC USA and Delaware respectively.  The link to all this is here.

There wasn’t much activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  Nothing was reported received — and only 325 were shipped out.  All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.


The Commitment of Traders Report dated January 15, 2019 showed a slight increase in the Commercial net short position in silver — and another big improvement in the commercial net short position in gold.

In silver, the Commercial net short position increased by a further 2,899 COMEX contracts, which is 14.5 million troy ounces ounces of paper silver.

They arrived at that number by increasing their long position by 2,613 contracts, but they also increased their short position by 5,512 contracts — and it’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus a bit more, as they reduced their long position by 2,261 contracts — and they also added 1,219 short contracts.  It’s the sum of those two numbers…3,480 contracts…that represents their change for the reporting week.

The difference between that number — and the Commercial net short position…3,480 minus 2,899 equals 581 contracts…was made up as it always is, by the traders in the other two categories, the ‘Other Reportables’ and the ‘Nonreportable’/small traders.  Both groups added to long positions — and they reduced their short positions as well.  Here’s the snip so you can see for yourself.  Click to enlarge.

There were slight increases in the net short positions in both the Producer/Merchant and Swap Dealers categories.  JPMorgan and Citigroup hide out in the former category — and Ted’s raptors, the small commercial traders other than the Big 8, are in the latter category.

The Commercial net short position in silver is now up to 71,690 COMEX contracts, which works out to 358.5 million troy ounces of silver held net short.  The gross short position held by these same Commercial traders is 135,154 COMEX contracts, or 676 million troy ounces.  Both numbers are obscene.

Here’s the latest COT chart for silver, updated with the January 15th numbers which, I’ll remind you, is still month-old data.  Click to enlarge.

I was a bit surprised that there was a further increase in the Commercial net short position in silver in this report.  But I expect the one we get on Friday will be much happier reading.


In gold, the commercial net short position fell by a further 13,074 COMEX contracts, which equates to 1.31 million troy ounces of paper gold.

They arrived at that number by adding a very chunky 41,454 long contracts, but they also increased their short position by 28,380 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 only part of the change can be chalked up to the Managed Money traders, as they added 2,961 long contracts, but they also increased their short position by 10,497 contracts — and it’s the difference between those two numbers…7,536 COMEX contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…13,074 minus 7,536 equals 5,538 COMEX contracts was made by the traders in those other two categories — as both categories went net short rather aggressively during the reporting week.  And here’s the snip that shows that.  Click to enlarge.

The commercial net short position in gold is now down to 10.81 million troy ounces, which is now more bullish than it is market neutral.

Here’s the 3-year COT chart for gold, updated with the this COT data, which dates from January 15, 2019.  Click to enlarge.

I would suspect that there will be further improvement in gold in the next COT Report this Friday, for the data as of January 22, 2019.


The Tara Brooch is a Celtic brooch of the pseudo-penannular type, made in 650 to 750 A.D. It was found in Ireland in 1850, but despite its name, not at Tara but likely near Bettystown. The name by which it became known was attached to the brooch by the jeweller who purchased it, as a marketing ploy for the copies they made. The brooch was exhibited internationally and was one of the artifacts that fuelled the Celtic Revival in the mid-19th century. It is now on display in the National Museum of Ireland in Dublin.

The National Museum of Ireland describes it as follows: “…[T]he Tara Brooch can be considered to represent the pinnacle of early medieval Irish metalworkers’ achievement. Each individual element of decoration is executed perfectly — and the range of technique represented on such a small object is astounding.”

The brooch has a diameter of 8.7 cm and the pin has a length of 32 cm. It is made of cast and gilt silver, decorated on both front and rear. On the front are fine gold filigree panels depicting animal and abstract motifs, separated by studs of glass, enamel and amber. The back is flatter than the front, and the decoration is cast. The motifs consist of scrolls and triple spirals. Attached to the brooch by a swivel attachment is a silver chain made from plaited wire. The swivel consists of animal heads framing two small cast glass human heads.  Click to enlarge.

I have an average number of stories for you today, with a decent number of them gold related.


CRITICAL READS

“Into the Valley of Death” — Jeff Thomas

In April of 2018, International Man published an essay in which I commented on the appointment by President Trump of John Bolton as U.S. National Security Advisor.

In that essay, I described the appointment as a warning that the U.S. government had reached a decision to pursue increased aggression toward Russia that could lead to direct warfare between the two countries.

On the surface of it, this would seem to be a somewhat rash conclusion to draw, as war has not been declared. And Mister Bolton would certainly not have the power to unilaterally declare war.
However, the reason for concern over such an appointment is that Mister Bolton is a one-trick pony who invariably characterizes Russia as evil and has, for years, fervently recommended major aggression against Russia. Since Mister Bolton never deviates from this zeal to aggress against Russia, he would not be appointed unless a path of significant aggression had already been decided.

Whenever any nation behaves this arrogantly with regard to aggression against another nation, it tends to end badly. And, historically, the outcome is almost always the defeat of the aggressor.
Arrogant leaders are vulnerable leaders, as they tend not to think things through.

[NOTE: This was posted in my Tuesday column, but the link was no good — and I didn’t get it fixed until early afternoon EST, so here it is again.  I thank reader Bruce Brantley for pointing it out. – Ed]  This very interesting commentary from Jeff appeared on the internationalman.com Internet site on Monday morning sometime — and another link to it is here.


Dangerous Idea“: Russia Slams Plans to Hold U.S.-Ukrainian Drills in the Black Sea

The Russian Foreign Ministry slammed upcoming joint US-Ukraine military exercises which will take place in the Black Sea dubbed operation Sea Breeze-2019, described as a multinational maritime exercise.

That’s a dangerous idea, and that’s the way we will view it. Prior to that, we will study the facts. They are viewed by us as a dangerous idea,” said Russian Deputy Foreign Minister Grigory Karasin on Tuesday.

Moscow has long denounced the now annual maritime exercise as a threat to stability in the region, as it appears but more evidence that the United States is now treating Ukraine as if it were a de facto member of NATO.

Last year’s exercises, co-hosted by Ukraine and the United States, were held in July 2018 near the Odessa and Nikolayev Regions and in the northwestern part of the Black Sea, and involved over 2,000 multi-national servicemen, about 30 warships and aircraft from 19 countries.

This story showed up on the Zero Hedge website at 1:46 p.m. EST on Tuesday afternoon — and I thank Brad Robertson for sending it our way.  Another link to it is here.


U.S., E.U. to Slap New Sanctions on Russia

It’s been at least a few months since the U.S. or western nations unveiled some new, broad sanctions targeting Russia, and with the Mueller “collusion” report due any minute, it’s time for Trump to once again remind the audience of the biggest ever soap opera, that he is not a BFF with Vladimir Putin. As such, the FT reports that the U.S. and E.U. are close to agreeing a raft of new sanctions against Russia, this time in a coordinated push aimed at punishing Moscow for its “aggression” towards Ukraine in the Kerch strait.

More than two months after the incident, and despite repeated appeals from the U.S. and E.U. states to release them, 24 Ukrainian sailors are still being detained by the Russian authorities, after Russian Navy ships rammed and fired on three Ukrainian vessels that Moscow said were “maneuvering dangerously” near the Kerch Strait. The Russian Coast Guard captured some two dozen sailors after commandeering the ships, which included to Ukrainian artillery ships and a tugboat. Russia has refused to release the ships and the sailors despite demands from European and U.S. officials.

The latest move to counter what has been described in western capitals as “a persistent campaign of malign behavior by Russia“, would be jointly applied by the U.S. and E.U.

The new measures will be discussed at a meeting of E.U. foreign ministers next Monday according to the FT, and could be levied in the next two months, according to diplomats briefed on the discussions.

According to a western government official quoted by the newspaper, the sanctions were expected to be directed at those individuals and companies involved in Russia’s seizure of three Ukrainian naval vessels in the Kerch Strait last November.

This news item showed up on the Zero Hedge website at 1:14 p.m. on Tuesday afternoon EST — and it’s the second offering in a row from Brad Robertson.  Another link to it is here.


U.S. Congressman Introduces Bill to Remove Income Taxation from Gold and Silver

The battle to end taxation of constitutional money has reached the federal level as U.S. Representative Alex Mooney (R-WV) today re-introduced sound money legislation to remove all federal income taxation from gold and silver coins and bullion.

The Monetary Metals Tax Neutrality Act (H.R. 1089) backed by the Sound Money Defense League and free-market activists – would clarify that the sale or exchange of precious metals bullion and coins are not to be included in capital gains, losses, or any other type of federal income calculation.

My view, which is backed up by language in the U.S. Constitution, is that gold and silver coins are money and are legal tender,” Rep. Mooney said.

If they’re indeed U.S. money, it seems there should be no taxes on them at all. So, why are we taxing these coins as collectibles?

This article showed up on the moneymetals.com Internet site on Monday sometime — and I found it in a GATA dispatch yesterday.  Another link to it is here.


Ask your mining companies what they’re doing about price suppression

Dear Friend of GATA and Gold [and silver! – Ed]:

GATA’s old friend B.L. has forwarded the text of an excellent letter he has e-mailed to a monetary metals mining company in which he long has been invested, asking whether the company will ever respond to the growing number of disclosures of manipulation of the gold and silver markets.

The letter easily could be adapted by any monetary metals mining company investor for e-mailing to company executives or the company’s investor relations officer. So an edited version of it is appended.

If you are invested in a gold or silver mining company, please consider prodding it to confront the price-suppression issue. The failure of the industry to defend itself is a decisive factor in favor of price suppression, along with the complicity of mainstream financial news organizations.

If you do send such a letter, please let your secretary/treasurer know [at CPowell@GATA.org] if you get a reply or don’t get one. Maybe together we can begin to hold this timid industry to account.

Well, dear reader, here’s something you can do if you wish.  This GATA dispatch came out yesterday morning — and the form letter, which you can modify if you so desire, is included in the link, which is here.


Maduro calls for return of Venezuela’s U.K.-deposited gold

Venezuela President Nicolas Maduro has called on Britain to return “more than 80 tonnes of gold” reserves deposited in London instead of sending humanitarian aid, in an interview with the BBC.

Venezuela is in the midst of an economic crisis as millions of people face shortages of basic necessities such as food and medicines.

But Maduro refuses to allow in aid sent by the United States to alleviate the crisis.

The socialist leader told the BBC, according to a transcript made public Tuesday, that his country may have gold reserves weighing 80 tons or more deposited at the Bank of England.

Maduro says the U.S. has frozen $10 billion in Venezuelan accounts through its sanctions.

Washington has said it will turn over control of those resources to Guaido once Maduro has been removed from power.

This AFP news item from Tuesday was picked up by the yahoo.com Internet site — and I found it posted on the gata.org Internet site late on Tuesday afternoon PST.  Another link to it is here.


Maduro ally Erdogan says Turkish town will process Venezuelan gold

President Recep Tayyip Erdoğan said Turkey will make a small Anatolian town the centre for processing Venezuelan gold in what appeared to be a further challenge to U.S. policy towards the government of President Nicolas Maduro.

We will take Çorum’s gold trade to the next level,” Erdoğan, a close political ally of the embattled maduro, told a large crowd of supporters in the town on Tuesday in televised comments. Çorum lies some 600 kilometres east of Istanbul.

By Tuesday evening the Erdoğan’s government appeared to have had second thoughts about the president’s own statement. The state-run Anadolu Agency‘s recording of his speech abruptly cuts out as he talks about Çorum’s gold trade.

However, a transcript of the speech remained on pro-government daily Milliyet’s website showing the section of the speech before Anadolu censored it.

What is more, uncut version of Erdogan’s speech shows his mentioning about Çorum and Venezuela, at 28th minute in this video, again posted by the head of AKP İstanbul youth branches via AKP’s own periscope broadcast.

The message isn’t in English, so unless you’re familiar with Turkish, there’s not much to see.  This news item appeared on the ahvalnews.com Internet site on Tuesday sometime — and I found it on the gata.org Internet site.  Another link to it is here.


As good as gold for some brides in India as election nears

An India state will give gold worth about $530 to every bride from a poor family, the latest budget giveaway ahead of a general election that must be held by May.

The northeastern state of Assam is run by Prime Minister Narendra Modi’s Hindu nationalist Bharatiya Janata Party (BJP), which is facing a battle for re-election because of low farm incomes and a lack of jobs that have turned off some of those who backed it in the last polls, in 2014.

The federal government announced cash handouts to farmers and tax cuts for the lower middle class last week.

But handing out gold to brides is new.

The tea-growing state’s finance minister, Himanta Biswa Sarma, allocated 3 billion rupees ($42 million) for the next fiscal year, from April 1, for the gold program.

That would buy 875 kg of gold, enough for about 80,000 brides.

This Reuters story, filed from New Delhi, put in an appearance on their Internet site back on February 7…and I found it in a GATA dispatch that Chris Powell posted very late last night EST.  Another link to it is here.


India’s gold imports jump 64% in January despite prices hitting 5-year high

Gold imports by India rose last month despite local prices trading near the highest in more than five years, as jewelers start to restock for the wedding season.

Inbound shipments grew 64 per cent to 46 tons in January from a year earlier, according to a person familiar with the data, who asked not to be identified as the figures aren’t public. However, higher prices kept a lid on supplies, which were lower than the 60 tons shipped in December. Finance Ministry spokesman DS Malik wasn’t immediately available for comment.

Indians consider buying gold auspicious for marriages as part of the bridal trousseau or to be given as a gift in the form of jewelry. The wedding season starts this month and purchases will jump during the second-biggest gold-buying day of Akshaya Tritiya in early May.

The World Gold Council, a London-based promotion body, expects a recovery in demand in India this year on increased spending with elections due by May. “Elections mean expenditure, which means redistribution of income,” Managing Director for India P R Somasundaram said last month.

This gold-related news item was posted on the business-standard.com Internet site at 10:29 a.m. IST on their Tuesday morning, which was 12:19 a.m. in New York on Tuesday morning — EDT plus 10 hours.  It’s one of several precious metal news items that I found on the Sharps Pixley website.  Another link to it is here.


China officially adds to gold reserves again — Lawrie Williams

While we still disbelieve the ‘official’ total figure for the size of China’s gold reserves, assuming them to be far, far higher than the figure it reports to the IMF, for whatever reason it has changed its reporting tack and now seems to be reporting monthly reserve increases.  In all probability this pattern is perhaps designed to make a point in that it is raising the non-U.S. dollar portion of its official foreign exchange reserves.

For the second month in a row now the Peoples Bank of China (the nation’s central bank) has announced a reasonably large purchase of gold for its reserves and, presumably, will be reporting the new level to the IMF.  It’s gold reserves, as officially reported, now stand at 59.94 million ounces (1,864.3 tonnes) up around 380,000 ounces (11.8 tonnes) on the end 2018 figure.  Somewhat contrary to expectations/predictions, the country’s total Forex reserves grew in January by U.S.$15.2 billion due to an increase in its non-dollar assets.

The ‘official’ increase in gold and non-dollar assets has been announced as the country goes into the next stage of negotiations on trade and tariffs with the U.S. The announced increases may be to make a point that it can grow its Forex reserves independent of any reliance on the U.S. dollar representing yet another diversification away from the global reliance on the dollar as the world’s principal reserve currency.  China has an awful long way to go in achieving a possible long-term replacement of the dollar with the yuan (or perhaps a basket of currencies under the control of the IMF which includes the yuan as a key element).  But the Chinese plan ultra-long term and this is indeed a start and we believe China, along with allies like Russia (which has been substantially raising its gold reserves over the past few years) see gold as a hugely important monetary asset in this respect.

This worthwhile commentary from Lawrie put in an appearance on the Sharps Pixley website on Tuesday morning GMT — and another link to it is here.


The curse of cash and the allure of gold — Ken Rogoff

Against this backdrop, the rationale for holding gold becomes even clearer. “The point is, Treasury bills are not a riskless asset. They may be for two to three years but not necessarily for the long term, so if you want to build a 40-year plan, you should have some diversification. Let’s face it – if you’re a hedge fund manager and there is a 3–4% chance you will get wiped out and a 96% chance you will get very rich, that’s a bet worth taking. If you’re a country, that’s not such a smart bet,” Rogoff explains.

He believes that institutional investors and wealthy individuals should also allocate a proportion of their portfolio to gold. “As a hedge, gold has enormous value. You never know what’s going to happen and when something really bad happens, gold is probably going to be worth a lot to you. So it makes sense for high net worth (HNW) individuals and perhaps even for some pension funds to hold a small percentage of their assets in gold,” he says.

Looking ahead, Rogoff suggests that gold is also likely to increase in value as its global role evolves. “I suspect gold’s value will go up in real terms. I think the trend towards digital currencies will strengthen the value of gold. As emerging markets expand and trust the U.S. less, that will also strengthen the value of gold. So, as part of a larger portfolio allocation, it seems very reasonable to me,” he concludes.

A very big straw in the wind, perhaps?  This very interesting and worthwhile article showed up on the World Gold Council‘s website on Tuesday — and it’s certainly worth reading.  I found it on the Sharps Pixley website — and another link to it is here.


The PHOTOS and the FUNNIES

Here are two more photos from the “Ocean Art” series that I thank Mike Easton for sending our way.

The photo credit for this first picture goes to Fabrice Dudenhofer — and the caption reads: “The Million Hope shipwreck in the Red Sea”.  Click to enlarge.

This second photo was taken by Eugene Kitsios — and is captioned “Swimming with a pod of spotted dolphins in Bimini, Bahamas“.  Click to enlarge.


The WRAP

Despite the fact that the dollar index was generally heading lower for about nine hours straight, starting at 9 a.m. in London on their Tuesday morning — and ending at 1 p.m. in New York…gold and silver prices were not allowed to reflect that fact.  There was certainly some rally activity in the Far East, but even before the London open, price resistance appeared — and silver was headed lower at the noon silver fix in London — and gold a bit over an hour later.  Platinum wasn’t spared, either.  All these engineered price declines began many, many hours before the dollar index got rescued by the usual ‘gentle hands’ around 1:05 p.m. EST.

So it’s obvious that ‘da boyz’ are still around — and we appear to be back in that familiar ‘care and maintenance’ mode once again.

But we’re still waiting for some sort of resolution to the very negative situation in silver [and in gold to a certain extent as well] in the COMEX futures market, because at the moment the short position is just about as high as it was back in late 2017 according to Ted — and as he also pointed out in his weekly review on Saturday…”even slightly exceeding the extreme readings of Feb, April and June of 2018 when silver exceeded $17.”  JPMorgan et al have barely let silver over the $16 spot mark in this current ‘rally’…if you wish to dignify it with that name.

It still remains to be seen whether or not this will be the “same old, same old“…or will things turn out differently this time…much differently.

Here are the 6-month charts for all four precious metals, plus copper and WTIC — and there’s nothing to see here once again.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price rallied three bucks or so in Far East trading — and that lasted until shortly before 3 p.m. China Standard Time on their Wednesday afternoon. It has been sold lower since — and is only up 70 cents the ounce at the moment. Silver was up a nickel by 3 p.m. CST, but is now up only a penny. The platinum price has been chopping quietly sideways since trading began at 6:00 p.m. EST in New York on Tuesday evening, but was sold down a bit in the last hour as well — and is now down 2 dollars. Platinum was up 9 dollars by 1:30 p.m. CST, but was sold a bit lower after the 2:15 p.m. afternoon gold fix in Shanghai — and is only up 6 dollars as Zurich opens.

Net HFT gold volume is very light…a bit over 25,500 contracts — and there’s only 315 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is coming up on 7,600 contracts — and there’s 1,491 contracts worth of roll-over/switch volume in that precious metal.

The dollar index opened unchanged at 7:45 p.m. in New York yesterday evening, which was 8:45 a.m. China Standard Time on their Wednesday morning — and after dipping about 6 basis points by around 11:40 a.m. CST, has crept a bit higher — and is sitting at unchanged as of 7:45 a.m. GMT in London.


I received an e-mail from reader Milo Schield yesterday asking the following…”You mentioned: a decisive fall off in trading volume (directly a result of the sudden lack of spoofing)…in your Tuesday column.  Does spoofing generate trading volume?  I thought spoofing was done without actually making a trade?

Fortunately for me, Ted and I were discussing this very thing on the phone yesterday before Milo’s e-mail arrived in my in-box — and Ted already had the answer for me during our conversation — and this is my reply to Milo…”That’s true, but the drop in volume is caused by the lack of trading action in reaction to the spoofing.

According the folks over at thefreedictionary.com Internet site…”Spoofing is an illegal practice in which an investor with a long position on a security makes a buy order for that security and immediately cancels it without filling the order. Spoofing tends to increase the price of that security as other investors may then issue their own buy orders, which increases the appearance of demand. The first investor then closes his/her long position by selling the security at the new, higher price.  This can also be used to cause a decrease in price of a security by using sell orders instead.  Spoofing is a form of market manipulation.


So with spoofing apparently off the table starting a week or so ago, what method[s] were used to move prices lower yesterday, one might ask — and can ‘da boyz’ engineer a really big price decline without that illegal market manipulation tool at their disposal?  Will they resort to it again when push really becomes shove?  We’ll find out soon enough I would think.

And as I post today’s column on the website at 4:02 a.m. EST, I see that gold, silver and platinum prices have ticked a bit higher at the London/Zurich opens. Gold is now up $1.60…silver is up 2 cents. Platinum is now up 1 dollar — and palladium is up 5 bucks.

Gross gold volume is coming up on 32,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is about 31,300 contracts. Net HFT silver volume is about 8,500 contracts — and there’s already 2,780 contracts worth of roll-over/switch volume on top of that.

The dollar index continued to edge higher until 8:15 a.m. in London, but has slid a little since — and as of 8:45 a.m. GMT/9:45 a.m. CET, it’s up only 4 basis points.

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

Ed

China ‘Adds’ More Gold to Its Reserves in January

12 February 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price began to head quietly and unsteadily lower as soon as trading began at 6:00 p.m. EST in New York on Sunday evening — and the low tick of the day was set at the 9:30 a.m. open of the equity markets in New York on Monday morning.  It rallied a bit from there until a few minutes before London closed — and didn’t do much of anything after that.

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

Gold was closed in New York on Monday afternoon at $1,307.80 spot, down $6.20 on the day.  Net volume was exceedingly quiet once again at a bit over 140,000 contracts — and roll-over/switch volume was a hair under 11,000 contracts on top of that.

It was almost the same price pattern for silver — and its New York low came a few minutes before 9:30 a.m. EST.  Its tiny rally after that was capped and turned lower shortly after 10:15.  It was then sold a bit lower until around 1:00 p.m. EST — and chopped quietly sideways into the 5:00 p.m. close from there.

Silver traded within a one percent price range on Monday, so I shan’t bother with the high and low ticks in this precious metal, either.

Silver was closed yesterday at $15.675 spot, down 13 cents from Friday.  Net volume was extremely quiet at hair over 37,000 contracts — and there was a bit over 16,500 contracts worth of roll-over/switch volume on top of that.

Platinum was also sold unsteadily lower until around 1 p.m. China Standard Time on their Monday afternoon — and then didn’t do a whole lot of anything until trading began on the COMEX at 8:30 a.m. EST in New York.  From that juncture, the price descent continued — and the low tick was set a few minutes before 1 p.m. — and it ticked a few dollars higher in after hours trading.  Platinum finished the Monday session in New York at $785 spot — down 13 bucks on the day.

The palladium price was sold lower until 11 a.m. CST on their Monday morning — and then traded sideways until the Zurich open.  It got sold down pretty hard at that point, culminating in a sharp down/up spike shortly before 10 a.m. Central European Time [CET] in Zurich.  It rallied back a bunch from there until shortly before the COMEX open in New York — and then was sold lower once again going into the 10 p.m. EST afternoon gold fix in London.  It crawled a few dollars higher into the 5:00 p.m. close from there.  Palladium was closed at $1,368 spot, down 18 dollars from Friday.

The dollar index closed very late on Friday afternoon in New York at 96.64 — and opened about unchanged once trading began around 6:35 p.m. EST on Sunday evening.  From that point, it didn’t do much of anything until 2:15 p.m. CST on their Monday afternoon, which was the afternoon gold fix in Shanghai — and the subsequent rally lasted until around 10:05 a.m. in London.  It was sold lower from that juncture until around 11:38 a.m. GMT — and then began to chop unsteadily higher until 1:00 p.m. in New York — and it didn’t do much of anything going into the close.  The dollar index finished the Monday session at 97.06…up 42 basis points on the day.

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

And here’s the 6-month U.S. dollar index chart…and the delta between its close…96.86…and the close on the DXY chart above, was 20 basis points on Monday.

The gold stocks gapped down about a percent and a half at the New York open — and then crawled unsteadily higher until shortly before noon EST.  From that juncture, they began to fade — and the HUI finished down 1.08 percent.

The silver equities followed a very similar price path — and they began to chop quietly lower staring at 12:30 p.m. in New York trading.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.46 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 73 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, the two short/issuers were ABN Amro and Advantage, with 50 and 23 contracts out of their respective client accounts.  There were four long/stoppers in total — and the largest was JPMorgan, stopping 36 in total…29 for its own account, plus 7 more for its clients.  And in second and third place came Advantage, with 19 for its client account — and Citigroup, with 15 for its in-house/proprietary trading account.

In silver, Advantage issued both contracts — and both were stopped by Morgan Stanley.  Both transactions involved their respective client accounts.

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

The CME Preliminary Report for the Monday trading session showed that gold open interest in February fell by 26 contracts, leaving 663 still around, minus the 73 contracts mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 55 contracts were actually posted for delivery today, so that means that 55-26=29 more gold contracts were just added to the February delivery month.  Silver o.i. in February declined by 5 contracts, leaving 3 still open, minus the 2 contracts mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 7 silver contracts were actually posted for delivery today, so that means that 7-5=2 more silver contracts just got added to February.


There were no reported changes in GLD yesterday, but an authorized participant removed another 1,125,727 troy ounce of silver from SLV.

Since the SLV high inventory watermark back on 22 October 2018, there has been 26,635,420 troy ounces of silver removed from SLV on a net basis…114 days of world silver production.

The folks over at the shortsqueeze.com Internet site updated their website with the changes in the short position in both GLD and SLV as of the close of trading on Thursday, January 31 — and this is what they had to report.  The short position in SLV only fell by a tiny 152,700 shares/troy ounce, which represents a drop of 1.4 percent.  The short position in GLD took a big drop…from 1,661,430 troy ounces, down to 1,336,050 troy ounces…a decline of 19.6 percent.

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, February 8 — and this is what they had to report.  Both of these ETFs had withdrawals during the reporting week…9,806 troy ounces from their gold ETF — and 88,575 troy ounces from their silver ETF.

There was a sales report from the U.S. Mint on Monday.  They sold 1,000 one-ounce 24K gold buffaloes — and 550,000 silver eagles.

There was some activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  Nothing was reported received — and 111,350 troy ounces was shipped out.  There was 64,194 troy ounces shipped out of JPMorgan — and the remaining 47,155 troy ounces departed Brink’s, Inc.  The link to that is here.

There wasn’t much going on in silver.  There was 473,546 troy ounces was received — and of that ended up in JPMorgan’s vault.  All the ‘out’ activity was one good delivery bar…958 troy ounces…that was shipped from Delaware.  The link to that is here.

There was very little activity at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  Nothing was reported received — and only 200 were shipped out.  That activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.

Activity in Hong Kong should pick up substantially now that their Lunar/New Year holiday week is over and done with.


Here are the usual two charts that Nick Laird passes around on the weekend.  They show the amount of silver and gold in all know depositories, mutual funds and ETFs, updated with last week’s data.  During the reporting week there was a net 212,000 troy ounces of gold removed — and in silver, there was 2.02 million troy ounces removed on a net basis as well.  These two charts cover about a 28-month time period.  Click to enlarge if necessary.

Not including anything related to the ongoing 3-ring circus in Washington, I have a decent number of stories for you today.


CRITICAL READS

Paul Krugman Warns U.S. Wildly Unprepared For Imminent Recession

Nobel laureate Paul Krugman is possibly the world’s most famous Keynesian economist thanks to his position on The New York Times editorial board. And he just joined the growing chorus of voices calling for a U.S. recession in the next two years.

The U.S. economy is struggling for two reasons: The scope for a powerful monetary and fiscal response is limited, and the current “leadership” under President Trump lacks the competence to adequately respond to a crisis, during an interview with Bloomberg in Dubai.

But moving past the U.S., Krugman echoed the IMF’s finding that the world is “dangerously unprepared” for the coming global recession, citing the slowdown in China, and a Europe inching ever-closer to a eurozone-wide recession, as the two biggest risks the global economy.

I wouldn’t be as definitive, but it seems pretty likely. There seems to be an accumulation of smaller problems and then the underlying backdrop is that we have no good policy response. The Fed can’t cut rates very much, there is in fact fiscal space if we were prepared to use it but it’s hard to see that this current leadership is going to respond in any kind of nimble way so yeah I think there’s better than even odds that we do have a recession.”

And when the disaster finally arrives, not the U.S., nor China, nor Europe will be able to bring adequate policy responses to bear to combat the slowdown…because after a decade of rock-bottom interest rates (they’re still negative in Europe) and QE central banks are tapped out…and while there is still some wiggle room for the type of Keynesian fiscal-policy response that Krugman is so fond of, he believes governments will lack the political will when the time comes. Krugman’s comments notably follow the European Commissions’ own downgrade for the eurozone, which it now believes will expand at a pace of just 1.3% during 2019.

This story, the first of three from Brad Robertson, showed up on the Zero Hedge website at 9:15 a.m. EST yesterday morning — and another link to it is here.


Trump Missed His Last Great Opportunity — Bill Bonner

This week, the threads come together… the lines converge… the dots connect…

The State of the Union…

The Republicans and Democrats…“Us vs. Them”…Our own wobbly “us”…and the coming financial catastrophe.

The problem with his SOTUS was that it failed to mention anything that might be meaningful or helpful. That is, it avoided any mention of the real state of the union.

Who would report on a company and fail to mention that it was $22 trillion in debt… and was, at the time, losing money at the rate of approximately $100 billion per month… and that it had no plans – or even hope – of cutting its losses or heading off a monumental debt crisis?

Who would assess the state of a country without reference to the fact that it was slipping in every measure that matters – wealth per capita, business startups, patents, freedom, equality, and the integrity of its institutions?

What kind of a Commander in Chief would describe brave and heroic achievements from more than half a century ago, but lack the courage to confront an ongoing pattern of wasted lives and wasted trillions spent on military adventures with no coherent strategy, no possibility of victory, and no foreseeable end?

This commentary from Bill was posted on the bonnerandpartners.com Internet site early on Monday morning EST — and another link to it is here.


Dr. Dave Janda interviews your humble scribe

The good doctor and I had a chat about world affairs and precious metals for about twenty-five minutes on Sunday afternoon on all-talk radio WAAM 1600 out of Ann Arbor, Michigan.


“Into the Valley of Death” — Jeff Thomas

In April of 2018, International Man published an essay in which I commented on the appointment by President Trump of John Bolton as U.S. National Security Advisor.

In that essay, I described the appointment as a warning that the U.S. government had reached a decision to pursue increased aggression toward Russia that could lead to direct warfare between the two countries.

On the surface of it, this would seem to be a somewhat rash conclusion to draw, as war has not been declared. And Mister Bolton would certainly not have the power to unilaterally declare war.
However, the reason for concern over such an appointment is that Mister Bolton is a one-trick pony who invariably characterizes Russia as evil and has, for years, fervently recommended major aggression against Russia. Since Mister Bolton never deviates from this zeal to aggress against Russia, he would not be appointed unless a path of significant aggression had already been decided.

Whenever any nation behaves this arrogantly with regard to aggression against another nation, it tends to end badly. And, historically, the outcome is almost always the defeat of the aggressor.

Arrogant leaders are vulnerable leaders, as they tend not to think things through.

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


Insane” Deutsche Bank Drowning Under Soaring Funding Costs

Following years of dismal performance, uncovered attempts at market manipulation and fraudulent activities, and painful corporate reorganizations which its latest earnings report showed have “cut deeply into the muscle”, Deutsche Bank is a shadow of its former self, with its stock price trading just shy of all time lows.

But an even bigger problem for Germany’s biggest lender is that it is now forced to pay the highest financing rates on the euro debt market for a leading international bank this year according to the Financial Times, and also the highest rates among large banks to raise debt this year according to Bloomberg, in a further sign of the German lender’s uphill struggle to turn its operations around and reduce its funding costs.

As the FT first reported, followed promptly by Bloomberg, the bank raised eyebrows last week when it sold a total of €3.6BN in euro-denominated debt, paying 180 bps over the benchmarks for a two-year bond, a steep rate for short-term funding. Deutsche Bank also paid 230 bps over benchmarks for a senior seven-year bond that can absorb losses in a crisis. By comparison, French banking giant BNP Paribas SA last month offered 50 bps less for equally-ranked notes that mature one year later. More embarrassing, Deutsche Bank paid a higher rate than Spanish lender CaixaBank, which recently raised five-year bonds at 225bp.

In a latest note to clients, Corinna Dröse, a Frankfurt-based bond analyst at DZ Bank, said: “The high spreads reflect [Deutsche’s] high idiosyncratic risk, which is rooted in the lender’s chronic weakness in earnings.”

This news item put in an appearance on the Zero Hedge Internet site at 11:16 a.m. on Monday morning EST — and it’s the first of two in a row from Brad Robertson.  Another link to it is here.


China Rocked By Two Biggest Corporate Defaults Yet

Ever since Beijing allowed Chinese companies (even certain state-owned enterprises) to officially fail for the first time in 2016, and file for bankruptcy to restructure their unsustainable debt loads, it’s been a one-way street of corporate bankruptcies, one which we profiled last June in “Is It Time To Start Worrying About China’s Debt Default Avalanche“, and which culminated with a record number of Chinese onshore bond defaults in 2018, as a liquidity crunch sparked a record 119.6 billion yuan in defaults on local Chinese debt in 2018.

And by the early look of things, 2019 won’t be any better after two large Chinese borrowers missed payment deadlines this month according to Bloomberg, setting the scene for even more corporate defaults, and “underscoring the risks piling up in a credit market that’s witnessing the most company failures on record.

The first one was China Minsheng Investment Group, a private investment group with interests in renewable energy and real estate, which failed to make a Feb. 1 bond payment to creditors. The Shanghai-based financial conglomerate didn’t repay investors in a 3 billion yuan bond that matured Jan. 29, then pledged to give them their money back three days late, Bloomberg News reported previously. But that didn’t happen.

The second name is familiar ever since its woes first emerged in 2018: Wintime Energy, which defaulted last year, also didn’t honor part of a restructured debt repayment plan last week.

What is notable about these two latest payment failures is that both companies are “big borrowers” as Bloomberg put it, and their problems accessing financing suggest that “government efforts to smooth over cracks in the $11 trillion bond market aren’t benefiting all firms.

In fact, when China Minsheng ends up defaulting, it would rank alongside Wintime Energy as one of China’s biggest failures, with 232 billion yuan ($34.3 billion) of debt as of June 30.

No surprises here — and this is just the thin edge of the proverbial wedge, dear reader.  This news story showed up on the Zero Hedge website at 5:55 p.m. EST on Monday afternoon — and I thank Brad Robertson for pointing it out.  Another link to it is here.


How Venezuela turns its useless bank notes into gold

Venezuela’s most successful financial operations in recent years have not taken place on Wall Street, but in primitive gold-mining camps in the nation’s southern reaches.

With the country’s economy in meltdown, an estimated 300,000 fortune hunters have descended on this mineral-rich jungle area to earn a living pulling gold-flecked earth from makeshift mines.

Their picks and shovels are helping to prop up the leftist government of President Nicolas Maduro. Since 2016, his administration has purchased 17 tonnes of the metal worth around $650 million from so-called artisan miners, according to the most recent data from the nation’s central bank.

Paid with the country’s near-worthless bank notes, these amateurs in turn supply the government with hard currency to purchase badly needed imports of food and hygiene products. This gold trade is a blip on international markets. Still, the United States is using sanctions and intimidation in an effort to stop Maduro from using his nation’s gold to stay afloat.

The existence of Maduro’s gold program is well-known. How it functions, is not.

This long, photo-filled Reuters news story, filed El Callao in Venezuela, was picked up by the msn.com Internet site on Sunday.  It came out in a GATA dispatch very late last week, but I thank Malcolm Roberts for reminding me about it.  Another link to it is here.


Deutsche Bank to pay C$5.5 million to settle Canadian gold and silver market-rigging cases

Deutsche Bank has agreed to pay nearly C$5.5 million to settle class-action lawsuits in Canada accusing the bank of manipulating the gold and silver markets, according to the Toronto law firm representing the plaintiffs.

In e-mails sent to class members and statements posted on its internet site, the law firm, Sotos LLC, said Deutsche Bank “does not admit any wrongdoing or liability.”

The law firm said that if the settlement is approved by the Ontario Superior Court of Justice, the settlement funds, after payment of court-approved legal fees and disbursements, will be deposited into “an interest-bearing account for the benefit of the classes for distribution at a future date.

This GATA dispatch, including a link to the law firm’s summary of the gold and silver class-action settlement, was posted on the gata.org Internet site at 2:18 p.m. EST on Monday afternoon — and another link to it is here.


Italian Populists Target Huge Gold Reserves and Some Cry Foul

Italy’s populists opened a new front in their clash with the country’s central bank, calling on lawmakers to pass legislation stating that its gold holdings worth almost $103 billion belong to the state.

The gold ownership bill presented by euroskeptic lawmaker Claudio Borghi of the League adds to an already tense relationship between the Bank of Italy and the coalition government. It’s also sparked criticism from opposition politicians, and some national media argue that it may allow the government to raid the gold reserves to fund spending promises.

Borghi has rejected the accusation and said he’ll ensure Parliament has ultimate power. His concern is that ambiguity of ownership means that a victorious legal action against the central bank — for inadequate supervision, for example — leaves open the possibility of a claimant getting compensation in gold.

My bill only aims at making clear that the gold belongs to the state, not to the government,” he said in a telephone interview on Monday. “If there are doubts on our intentions, we can also pass another law saying none of the gold reserves can be sold unless there is a majority of two thirds or more of both houses of Parliament.”

The central bank says its €90.8 billion in gold is the fourth-largest reserve in the world. Borghi’s bill, being examined by the Lower House’s Finance Committee, calls for an explicit interpretation of legislation that the institute “holds and manages as deposits” the gold, while the state has ownership.

This Bloomberg news item appeared on their website at 5:29 a.m. Pacific Standard Time on Monday morning — and I found it embedded in a GATA dispatch.  Another link to it is here.  The Zero Hedge spin on this is headlined “Salvini Proposes Seizing Control of Italy’s Gold Reserves From Central Bank” — and that comes courtesy of Brad Robertson as well.


China Joins Global Central Bank Gold Rush as Its Foreign Exchange Reserves Stabilise

China has joined a global central bank gold rush in the last two months by increasing its official gold reserves, even though the purchase remains modest compared to the volume of the mainland’s foreign exchange reserves, according to data released by the People’s Bank of China today.

The country’s gold reserves rose slightly to 59.94 million ounces at the end of January from 59.56 million ounces at the end of December 2018, marking a second straight month of increase.

The latest gold purchase by the world’s second-largest economy came at a time when global central banks are hoarding the precious metal. According to the World Gold Council, the amount of gold bought by central banks in 2018 reached the highest annual volume on record since 1971, the year that former U.S. President Nixon Richard scrapped the dollar’s peg to bullion.

China, the world’s largest foreign exchange reserve holder, has been reluctant in diversifying its US$3 trillion foreign exchanges into gold. Official gold reserves remained unchanged for 26 months at 59.24 million ounces from October 2016 to November 2018.

I highly suspect that China is reporting reserves that are already in their vault, but that have not been made public yet.  It appears that they’re doing that now, but in dribs and drabs.  This very worthwhile gold-related news story showed up on the South China Morning Post website at 8:49 p.m. China Standard Time on their Monday evening, which was 7:49 a.m. in Washington on their Monday morning — EST plus 13 hours.  I found this on the gata.org Internet site as well — and another link to it is here.


The PHOTOS and the FUNNIES

Here are two more photos from the “Ocean Art” series that I thank Mike Easton for sending our way.

The first photo taken by Alvin Cheung — and is captioned: “A giant manta ray faces off with a diver in Socorro, Mexico“.

This second photo was taken by Pier Mane — and it’s captioned: “A moray eel hides from hunting hammerhead sharks in the Galapagos“.


The WRAP

The low volume trading days continue in both gold and silver — and so do the quiet price declines.  It remains to be seen how low these sell-offs will take us, but I get the impression that it won’t be overly dramatic — and I’ll be really surprised if even get anywhere near the current 50 or 200-day moving averages in gold..or silver for that matter.  And the precious metal equities are hanging in there pretty good.

One reason for the low volumes in gold and silver in the COMEX futures market is something that never dawned on me until silver analyst Ted Butler mentioned it his weekly review on Saturday — and that was this: “…price action is different than I ever recall, including a decisive fall off in trading volume (directly a result of the sudden lack of spoofing).”

That makes sense to me, considering the fact that an ex-JPMorgan trader in the precious metals is about to be sentenced for that very thing.  The only question to be asked here, is why it took so long, as this DoJ conviction has been in the public domain for three months now.

Of course others may say these declines in the precious metals has something to do with the rally in the dollar index.  But as I’ve pointed out on too many occasions to count, that’s just a fig leaf that the commercial traders use to hide their dirty work.

Here are the 6-month charts for the Big 6 commodities — and there really isn’t much to see once again.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price began to chop quietly sideways once trading began at 6:00 p.m. EST in New York on Monday evening. That lasted until shortly before 2 p.m. China Standard Time on their Tuesday afternoon — and the gold price began to head higher from there. It got tapped lower around 3:15 p.m. CST — and is currently up $4.00 an ounce. The silver price traded sideways until 10 a.m. CST — and after that it’s price path was similar to gold’s — and it’s up 9 cents at the moment. Platinum edged a bit higher in Far East trading — and it’s up 4 bucks. Palladium traded flat until shortly before noon over there — and by 1 p.m. CST, was up 7 dollars — and it’s still up that amount as Zurich opens.

Net HFT gold volume is pretty light at a bit over 30,500 contracts — and there’s only 597 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is coming up on 7,100 contracts — and there’s only 682 contracts worth of roll-over/switch volume in this precious metal.

The dollar index has been chopping aimlessly and quietly sideways in Far East trading on their Tuesday — and as of 7:45 a.m. GMT in London, it’s down 2 basis points.

Today we get yet another Commitment of Traders Report, this one for positions held as of Tuesday, January 15…so we are getting caught up, albeit slowly — and I’ve mentioned at least once before, we won’t be caught up until the COT Report that comes out on Friday, March 1.

And as I post today’s column on the website at 4:02 a.m. EST, I note that all four precious metals ran into some ‘resistance’ shortly after the London/Zurich opens. Gold is only up $3.70 the ounce now — and silver is up 8 cents. Platinum and palladium are now up only 2 and 3 dollars respectively.

Gross gold volume is a bit over 42,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is around 40,500 contracts. Net HFT silver volume is coming up on 9,800 contracts — and there’s 1,603 contracts worth of roll-over/switch volume in that precious metal.

The dollar index hit its current 96.97 low tick six minutes after the London open — and it looks like those ‘gentle hands’ appeared at that juncture — and the dollar index has gone from down 12 basis points points to up 12 as of 8:45 a.m. GMT/9:45 a.m. CET in Zurich. I guess that explains the sudden ‘weakness’ in the precious metals.

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

Ed

Russia Mulls Eliminating Gold Tax to Boost Investment Demand

09 February 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crawled quietly lower starting shortly after trading began at 6:00 p.m. EST in New York on Thursday evening — and the low of the day was set shortly after 3 p.m. China Standard Time on their Friday afternoon.  It began to edge higher from there, with the high tick of the day…such as it was…coming at 1 p.m. in New York.  It was sold a dollar and change lower by the 1:30 p.m. EST COMEX close — and didn’t do much after that.

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

Gold was closed on Friday in New York at $1,314.00 spot, up $4.20 on the day.  Net volume was fumes and vapours once again at a bit over 125,000 contracts — and there was around 11,200 contracts worth of roll-over/switch volume on top of that.

The silver price followed the same general price pattern in Far East trading on their Friday — and the low tick in this precious metal came very shortly before the London open.  A rather robust rally began at that point — and the price was capped and turned lower about twenty minutes after the COMEX open in New York.  It was sold back to the unchanged mark by the London close — and about an hour after that it began to head higher until a few minutes after 1 p.m. EST.  It didn’t do much after that.

The low and high ticks were reported by the CME Group as $15.65 and $15.86 in the March contract.

Silver was closed on Friday in New York at $15.805 spot, up 9 cents on the day.  Net volume was exceedingly quiet at about 42,200 contracts — and there was around 15,700 contracts worth of roll-over/switch volume in this precious metal.

The platinum price began to creep lower starting around 10 a.m. China Standard Time on their Friday morning — and it was down five bucks by the Zurich open.  About two hours after that, it began to edged quietly and unsteadily higher — and that lasted until 1 p.m. in New York.  It traded flat into the 5:00 p.m. EST close from there.  Platinum closed up 2 dollars on the day at $798 spot.

The palladium price chopped quietly sideways until Zurich opened — and then had a huge spike higher…which has now been erased from the Kitco chart below.  From that juncture it chopped very unevenly sideways until Zurich closed — and then crept higher until around 3 p.m. in the thinly-traded after-hours market.  It didn’t do much after that.  Palladium finished the Friday session in New York at $1,386 spot, up 21 bucks on the day…but certainly would have closed well above $1,400 spot, if allowed.  Kitco recorded the spot high tick at $1,412.

The dollar index closed very late on Thursday afternoon in New York at 96.51 — and gapped up 10 basis points the moment that trading began at 7:45 p.m. EST on Thursday evening, which was 8:45 a.m. in Shanghai on their Friday morning.  From there, it didn’t do much of anything until a minute or so before the London open.  It began to head quietly higher from that juncture, with the 96.69 high tick of the Friday session coming at 9:45 a.m. GMT.  It began to fade from that point — and it fell down to its 96.45 low around 8:38 a.m. in New York.  I suspect that the usual ‘gentle hands’ appeared once again — and it ‘rallied’ unsteadily higher until ten minutes after the COMEX close.  It then drifted sideways until trading ended at 5:25 p.m. EST.  The dollar index finished the Friday session in New York at 96.64…up 13 basis points from its close on Thursday.

Here’s the DXY chart from Bloomberg once again.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart courtesy of the folks over at stockcharts.com — and the delta between its close…96.42…and the close on the DXY chart above, was 22 basis points on Friday.  Click to enlarge.

The gold stocks began to rally the moment that the equity markets opened in New York at 9:30 a.m. EST on Friday morning.  They chopped unevenly higher until exactly 3:00 p.m. — and sold off a bit staring about twenty-five minutes later.  The HUI finished up 1.47 percent.

It was much the same for the silver equities, except the Friday rally ended a few minutes before 3 p.m. in New York trading — and they also sold off a bit into the close from there.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed up 1.37 percent.  Click to enlarge if necessary.

Here’s a longer-term Silver Sentiment/Silver 7 Index chart from Nick.  It shows you how far we’ve progressed on the current 4-month long rally — and just how far we have to go to get back to the old highs in mid-2016.  Click to enlarge.

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

Here’s the weekly chart — and as you can see from the chart below, the only price activity was in platinum and palladium.  Silver and gold — and their respective equities, did nothing during the week that was.  Click to enlarge.

Here is the month-to-date chart — and since this chart has only one extra day added to it…Friday, February 1…it doesn’t look much different than the weekly chart.  Click to enlarge.

The year-to-date chart still shows green across the board — and it should also be noted that the silver equities continue to outperform their golden brethren, especially when you compare them to the gains of their respective underlying precious metals.  Click to enlarge.

With only five weeks gone out of the year, it’s hard to tell how the year will turn out.  The precious metal market feels a lot different now, but that’s just the way it appears at the moment. However, i am optimistic.  The DoJ is still lurking about over at JPMorgan — and in case you’ve forgotten, the DoJ sentencing date of that former JPMorgan precious metals trader has now been pushed back to June 2019.


The CME Daily Delivery Report showed that 55 gold and 7 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, the two largest short/issuers were Advantage and ABN Amro with 22 and 20 contracts out of their respective client accounts.  The largest of the five long/stoppers was JPMorgan, picking up 20 contracts for its own account, plus 5 for its client account.  Tied for second spot were Advantage, with 12 contracts for its client account — and Citigroup, with 12 contracts for its in-house/proprietary trading account.

In silver, the sole short/issuer was ADM.  There were six long/stoppers in total.  ADM picked up 2 contracts — and all the rest picked up 1 contract each.

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 February fell by 200 contracts, leaving 689 still open, minus the 55 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 191 gold contracts were posted for delivery on Monday, so that means that 200-191=9 more gold contracts disappeared from the February delivery month.  Silver o.i. in February declined by 6 contracts, leaving 8 still open, minus the 7 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 8 silver contracts were actually posted for delivery on Monday, so that means that 8-6=2 more silver contracts were added to February.

So far this month there have been 9,136 gold contracts issued and stopped — and that number in silver is 535.


There were withdrawals from both GLD and SLV on Thursday.  An authorized participant removed 37,798 troy ounces of gold from GLD — and that makes six consecutive days that gold has been withdrawn from GLD.  An a.p. took 656,684 troy ounces of silver out of SLV.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 1,000 troy ounces of gold eagles — 1,000 one-ounce 24K gold buffaloes — 400 one-ounce platinum eagles…but no silver eagles.

Month-to-date the mint has sold 5,500 troy ounces of gold eagles — 3,000 one-ounce 24K gold buffaloes — 1,400 one-ounce platinum eagles — and 285,000 silver eagles.

The only physical movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday was 514.400 troy ounces/16 kilobars [U.K./U.S. kilobar weight] that were shipped out of Canada’s Scotiabank.  I won’t bother linking this.

It was another fairly quiet day in silver, as only 472,505 troy ounces were received — and 483,490 troy ounces was shipped out.  All of the ‘in’ activity was at JPMorgan — and all of the ‘out’ activity was at CNT.  The link to that is here.

Because of the Lunar/Chinese New Year — and for the third day in a row, there was no activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.


The Commitment of Traders Report, for positions held at the close of trading on Tuesday, January 8, showed a pretty big increase in the short position in silver…which is something I wasn’t expecting at all.  But in gold, it was precisely the opposite.  I was expecting a modest increase in the commercial net short position, but instead it declined by a huge amount.

In silver, the Commercial net short position increased by a hefty 10,937 contracts, or 54.7 million troy ounces of paper silver.

They arrived at that number by adding 4,370 long contracts, but they also added 15,307 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 all Managed Money traders, plus a bit more, as they added 7,063 long contracts — and they reduced their short position by 5,602 contracts.  So the change for the reporting week was the sum of those two numbers…12,665 contracts.

The difference between that number — and the changed in the Commercial net short position…12,665 minus 10,937 equals 1,728 contracts…was made up as it always is, by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader categories.  Here’s the snip from the Disaggregated Report so you can see who did what.  Click to enlarge.

Ted estimates JPMorgan’s short position somewhere between 18-20,000 contracts.

The Commercial net short position in silver is now up to 68,791 contracts, or 344.0 million troy ounces of paper silver…which is a very big number.

Here’s the 3-year COT chart for silver, but keep in mind that the data is four weeks old.  Click to enlarge.

From a COMEX futures market perspective, this puts silver firmly in bearish territory.


In gold, there was a big positive surprise, as the commercial traders actually reduced their short position by an eye-opening 23,427 contracts, or 2.34 million troy ounces of paper gold.  Both Ted and I were expecting a small to modest increase during that reporting week.

They arrived at that number by increasing their long position by 7,320 contracts — and they also reduced their short position by 16,107 contracts — and it’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, the Managed Money traders made up most, but not all of the change in the commercial net short position.  They reduced their long position by 8,515 contracts — and they also added 9,198 short contracts.  It’s the sum of those two numbers…17,713 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short  position…23,427 minus 17,713 equals 5,714 contracts…was made up by the traders in the other two categories, with most of the change coming in the ‘Other Reportables’ category.  Here’s the snip from the Disaggregated COT Report in gold, so you can see these changes for yourself.  Click to enlarge.

What this indicates according to Ted, is that the Managed Money traders actually made some money during this particular reporting week…all at the expense of the commercial traders.

The commercial net short position in gold is down to 12.12 million troy ounces, which easily puts it into the neutral-to-bullish category on an historical basis.

Here’s the 3-year COT chart from Nick Laird, updated with this data — and don’t forget that this data, like for silver, is four weeks old.  Click to enlarge.

As I said earlier this week when the first COT Report appeared, I won’t be updating platinum, palladium or copper numbers until we’re all caught up…which looks like it will happen with the COT Report on March 1.

And for the same reason, I won’t be including my usual weekly discussion on the ‘Days to Cover Short Positions’ in silver, either.

Well, dear reader…in summing up, my predictions for this COT Report were far off the mark, as it was materially worse in silver than I thought it would be — and diametrically opposite to what I was expecting in gold.  And for that reason, I shan’t be making any more predictions as to what may or may in all the upcoming COT Reports until they’re current.  The next one will be posted on the CFTC’s website on Tuesday.


The January Bank Participation Report [BPR] data is extracted directly from the above 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 January BPR covers all of December.

In gold, 5 U.S. banks were net short 71,520 COMEX contracts in the January BPR.  In December’s Bank Participation Report [BPR]…which covers November…these same 5 U.S. banks were net short 62,191 contracts, so there was a fairly big increase…9,329 contracts…since a month ago.  But that number would have been far larger, if it hadn’t been for that surprise increase in the commercial trader’s long position reported in the above COT Report.  That decreased this reported short position by around 23,000 contracts…as virtually all the large commercial traders are U.S. banks.

Also in gold, 28 non-U.S. banks are net short 48,209 COMEX gold contracts, which is less than two thousand contracts per bank.  In the December BPR, 28 non-U.S. banks were net short only 26,074 COMEX contracts, so the month-over-month increase has almost doubled…22,135 contracts worth.  However, I suspect that there’s at least one large non-U.S. bank in this group.  Scotiabank still holds a fairly hefty short position in gold, but their trading activity in the precious metals has come to a screeching halt, so I suspect that another foreign bank has picked up the slack.  I’m suspecting France’s central bank.

As of this Bank Participation Report, 33 banks [both U.S. and foreign] are now net short 26.3 percent of the entire open interest in gold in the COMEX futures market, which is up from the 22.1 percent they were short in the December 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, 5 U.S. banks are net short 43,606 COMEX silver contracts in January’s BPR.  According to Ted, JPMorgan holds around 18-20,000 contracts of that amount.  I suspect that Citigroup holds a very decent short position now as well. In December’s BPR, the net short position of these U.S. banks was 24,883 contracts, so the short position of the U.S. banks is up a whopping 18,723 contracts from November.

Also in silver, 21 non-U.S. banks are net short 26,771 COMEX contracts…which is up big from the 15,626 contracts that these same non-U.S. banks were short in the December BPR.  I would suspect that Canada’s Scotiabank still holds a goodly chunk of the short position of the non-U.S. banks.  But it certainly looks like a new player may have emerged on the short side, although that’s only speculation on my part.  But even taking that into account, I believe that a number of the remaining  19 or 20 non-U.S. banks are 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 or 20 non-U.S. banks are immaterial — and have always been so.

As of January’s Bank Participation Report, 26 banks [both U.S. and foreign] are net short 37.8 percent of the entire open interest in the COMEX futures market in silverwhich is up a monstrous amount from the 22.5 percent that they were net short in the December BPR — with much, much more than the lion’s share of that held by JPMorgan, Citigroup, Scotiabank..and perhaps one other.

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 12,495 COMEX contracts in the January Bank Participation Report.  In the December BPR, these same banks were net short 11,039 COMEX contracts…so it’s a smallish increase month-over-month.  [At the ‘low’ back in July of 2018, these same five U.S. banks were actually net long the platinum market by 2,573 contracts.] That’s quite a change in five months.

Also in platinum, 18 non-U.S. banks are net short 6,864 COMEX contracts, which is up from the 5,752 contracts they were net short in the December BPR.  But compared to the short positions of the 5 U.S. banks, the short positions of the non-U.S. banks are mostly immaterial. [Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts.]

And as of January’s Bank Participation Report, 23 banks [both U.S. and foreign] are net short 22.3 percent of platinum’s total open interest in the COMEX futures market, which is up a hair from the 21.8 percent they were net short in December’s BPR.

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

In palladium, 4 U.S. banks were net short 6,139 COMEX contracts in the January BPR, which is down a bit from the 7,031 contracts they held net short in the December BPR.

Also in palladium, 13 non-U.S. banks are net short 2,272 COMEX contracts—which is up a bit from the 1,857 COMEX contracts that these same non-U.S. banks were short in the December BPR.

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

As of this Bank Participation Report, 17 banks [U.S. and foreign] are net short 29.4 percent of the entire COMEX open interest in palladium.  In December’s BPR, the world’s banks were net short 33.8 percent of total open interest, so there’s been a bit of a decrease in the concentrated short position of the banks in this precious metal.

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 metal until the middle of 2007—and they became the predominant and controlling factor by the end of Q1 of 2013.  Click to enlarge.

I don’t wish to read too much into this current Bank Participation Report, as the data in it is a month out of date.  But I’m certainly not happy about the monstrous increase in the short position held by the world’s bank in COMEX silver…which is the second biggest short position they’ve every held — and I have records going back to mid-2014.  The largest short position in silver these banks have held was back in April of 2017, when they were short 75,009 COMEX contracts, compared to the 70,377 COMEX contracts they’re short in this January’s BPR.

With a bearish COMEX set-up like this, there’s no reason why JPMorgan et al couldn’t hammer the silver price into the dirt if they choose to do so…but so far they haven’t — and I don’t know why.  Maybe the DoJ snooping around the halls over at JPMorgan has something to do with it.  But whatever the reason, there has to be some sort of resolution.  Either it’s the ‘same old, same old’…or they get overrun.


The Grouville Hoard is a hoard of an estimated 70,000 late Iron Age and Roman coins reported in June 2012. They were discovered by metal detectorists Reg Mead and Richard Miles in a field at an undisclosed location in the parish of Grouville on the east side of Jersey in the Channel Islands. It is the largest hoard ever found in Jersey, and the first major archaeological find made by metal detectorists on the island.

The hoard is thought to have belonged to a Curiosolitae tribe fleeing Julius Caesar’s armies around 50 to 60 B.C.

Mead and Miles started metal detecting in the area where the hoard was reported in the early 1980s after they heard about a farmer who some years earlier had discovered a number of silver coins in an earthenware pot while pulling out a tree from a hedgerow. However, as they did not know the exact location of the find, and as the current owner of the farm would only allow them to metal detect once a year for 10–15 hours after the crops had been harvested, it took about 30 years before they eventually managed to locate the hoard.

Conservation and examination of the hoard is ongoing, and as the individual items have yet to be removed from the clay mass in which they are embedded, the exact contents of the hoard are unknown. In addition to an estimated 70,000 Celtic and Roman silver coins, the hoard is believed to include some items of jewellery, including two gold necklaces and a silver brooch.

Philip de Jersey, an expert on Celtic coins, has suggested that the coins could be valued at between £100 and £200 each, in which case the entire hoard may be worth between £7m and £14m.  Click to enlarge.

I have a reasonable number of stories for you today, including a couple that I’ve been saving for Saturday’s column.


CRITICAL READS

Should We “Abolish Billionaires”? — Bill Bonner

Whenever you see the “we should do this” or “we should do that” in the public media, it is always followed by something that is idiotic or immoral.

Usually both.

Yesterday was no exception.

It’s high time we abolish billionaires” says a serious front-page story in The New York Times. The “rich” are becoming the new villains… the “them” that will rally mobs… and voters… to action:

“… it is an illustration of the political precariousness of billionaires that the idea has since become something like mainline thought on the progressive left…”

And so begins another era; the beginning always comes at the end.

And now, the end of the week, we’re ready for it… the next phase of our economic history.

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


Fed’s QE Unwind Reaches $434 Billion, Remains on “Autopilot” — Wolf Richter

The Fed shed $32 billion in assets in January, according to the Fed’s balance sheet for the week ended February 6, released this afternoon. This reduced the assets on its balance sheet to $4,026 billion, the lowest since January 2014. Since the beginning of this “balance sheet normalization,” the Fed has now shed $434 billion.

So the January roll-off continued to proceed on “autopilot,” as outlined in the Fed’s 2017 plan. It’s happening at a glacial pace, with a reduction of $17 billion in Treasury securities and $15 billion in MBS, for a total of $32 billion. And yet, after ignoring the QE unwind for a year, the clamoring on Wall Street and at the White House to stop this cruel and unusual punishment became deafening late last year when stocks cratered.

Over the next few months, the Fed will likely announce some tantalizing tidbits about how it might tweak the balance-sheet reduction. One of those tidbits will likely relate to how it will shed MBS faster and replace those additional reductions of MBS with short-term Treasury bills. The effects of this may not be what the markets had hoped for in their wildest dreams. And the Fed will likely dole out more clues about how much further it wants to cut its balance sheet. But all this will take months, and until those tweaks are nailed down and announced, the balance sheet normalization will proceed on autopilot at its by now customary glacial pace.

This somewhat thick commentary from Wolf put in an appearance on the wolfstreet.com Internet site on Thursday sometime — and I thank Richard Saler for passing it along.  Another link to it is here.


Doug Noland: Delusional

For a month now, markets have celebrated the view that Chairman Powell (and global central bankers more generally) will not be attempting to “normalize” monetary policy. No Fed-induced tightening of financial conditions, along with no fretting the new Chairman’s commitment to the “Fed put.” Lost in all of this is recognition that a decade of experimental monetary stimulus has failed. Global finance is much more fragile today than prior to the 2008 crisis – the global economy more imbalanced and vulnerable.

Never has it been so easy to speculate – equities and corporate Credit alike. Never has corporate Credit availability – and financial conditions more generally – been governed by the interplay between the ETF complex, derivatives strategies and a distressed global leveraged speculating community. The Powell U-Turn unleashed another round of speculative excess. Right in the face of faltering global growth, I would argue this bout of speculation is especially precarious. And when the current “risk on” gives way to reality, maladjusted Market Structure will ensure liquidity issues on a scale beyond December.

This is deflation, the amazing lurch toward recession despite QE…,” read the opening sentence of a friendly e-mail I received last week. Yet I remember all the talk of deflation after the 1987 stock market crash. It became even louder in 1990 – then again in ‘97/’98. Deflation was the big worry with the bursting of the “tech” Bubble and then with corporate debt problems in 2002. Global central bankers have been fighting deflation now for a decade since “the worst crisis since the Great Depression.”

For a long time now, I’ve argued that Bubbles are the overarching risk. The “scourge of deflation” was not the ghastly plight to vanquish with interminable “whatever it takes.” Rather, deflation is a fateful consequence of bursting Bubbles – Bubbles inflated in the process of central bankers fighting so-called “deflationary forces.” Now, after thirty years of unending global Credit growth, activist central banking and egregious financial speculation, Bubble risk has never been so great. “The amazing lurch toward recession” and financial dislocation specifically because of a failed experiment in QE and inflationist monetary management.

Doug’s weekly commentary put in an appearance on this Internet site in the very wee hours of Saturday morning and, in my opinion, it’s always worth reading.  Another link to it is here.


Trump’s Brilliant Strategy to Dismember U.S. Dollar Hegemony — Michael Hudson

The end of America’s unchallenged global economic dominance has arrived sooner than expected, thanks to the very same Neocons who gave the world the Iraq, Syria and the dirty wars in Latin America. Just as the Vietnam War drove the United States off gold by 1971, its sponsorship and funding of violent regime change wars against Venezuela and Syria – and threatening other countries with sanctions if they do not join this crusade – is driving European and other nations to create their alternative financial institutions.

This break has been building for quite some time, and was bound to occur. But who would have thought that Donald Trump would become the catalytic agent? No left-wing party, no socialist, anarchist or foreign nationalist leader anywhere in the world could have achieved what he is doing to break up the American Empire. The Deep State is reacting with shock at how this right-wing real estate grifter has been able to drive other countries to defend themselves by dismantling the U.S.-centered world order. To rub it in, he is using Bush and Reagan-era Neocon arsonists, John Bolton and now Elliott Abrams, to fan the flames in Venezuela. It is almost like a black political comedy. The world of international diplomacy is being turned inside-out. A world where there is no longer even a pretense that we might adhere to international norms, let alone laws or treaties.

The Neocons who Trump has appointed are accomplishing what seemed unthinkable not long ago: Driving China and Russia together – the great nightmare of Henry Kissinger and Zbigniew Brzezinski. They also are driving Germany and other European countries into the Eurasian orbit, the “Heartland” nightmare of Halford Mackinder a century ago.

The root cause is clear: After the crescendo of pretenses and deceptions over Iraq, Libya and Syria, along with our absolution of the lawless regime of Saudi Arabia, foreign political leaders are coming to recognize what world-wide public opinion polls reported even before the Iraq/Iran-Contra boys turned their attention to the world’s largest oil reserves in Venezuela: The United States is now the greatest threat to peace on the planet.

This longish, but very worthwhile commentary from Michael, showed up on the unz.com Internet site back on February 1.  Roy Stephens sent it to me on Monday, but I though it best to wait until Saturday’s missive…so here it is.  Another link to it is here — and it’s definitely worth reading.


German Industrial Production Falls the Most Since 2009. New Orders Plummet

Unexpectedly,” German industrial production fell 3.9% in December 2018 compared to December 2017, after having fallen by a revised 4.0% in November, according to German statistics agency Destatis Thursday morning. These two drops were steepest year-over-year drops since 2009.

Even during the European Debt Crisis in 2011 and 2012 – it hit Germany’s industry hard as many European countries weaved in and out of a recession, with some countries sinking into a depression — German industrial production never fell as fast on a year-over-year basis as in November and December:

The declines on a year-over-year basis were broad: Without construction, industrial production fell 3.9% year-over-year in December, after having fallen 4.5% in November. And just manufacturing production, which includes mining and quarrying, fell 4.0% year-over-year in December, after having fallen 4.6% in November.

On a longer-term scale, the industrial production index peaked in May 2018 and has since fallen 4.6%. It is now back where it had first been in February 2017.

This article appeared on the wolfstreet.com Internet site on Thursday — and I thank Richard Saler for this news item as well.  Another link to it is here.


E.U. Won’t Block Controversial Nord Stream 2 Pipeline

Update: Following reports that France would effectively kill the controversial Nord Stream 2 pipeline, E.U. officials including German Chancellor Angela Merkel affirmed on Friday that an agreement has been reached which will allow construction of the pipeline to move forward – handing a major victory to Germany and Russia (and a stunning defeat for President Trump).

At a meeting in Brussels on Friday, E.U. diplomats advanced a draft gas-market law, initially proposed in late 2017, while greatly cutting back a provision that would have effectively blocked the pipeline.

The deal will allow negotiations with the European Parliament on a final version of the legislation to begin. Both sides are aiming for an official agreement as soon as next week, and no later than the end of May.

This story was posted on the Zero Hedge website at 8:19 a.m. on Friday morning EST — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Kansas Joining Parade of States Reestablishing Constitutional Money

Another step toward the reestablishment of sound Constitutional money was taken on Wednesday in Kansas with the introduction of a bill (H.B. 2093) by the House Committee on Taxation exempting gold, silver, and other precious metals from sales taxes. It joins an increasing number of states exercising their sovereignty in such matters, ultimately exposing the fraud of Federal Reserve Notes (FRNs) posing as money.

As Mike Maharrey wrote in the Tenth Amendment Center blog: “By removing the sales tax on the exchange of gold and silver, Kansas would treat specie [gold and silver coins] as money instead of a commodity. This represents [another] small step toward reestablishing gold and silver as legal tender and [more importantly] breaking down the Fed’s monopoly on money.”

He added that the bill, if it becomes law, would allow citizens, if they choose, to pay bills and make other exchanges in gold and silver instead of paper or digital money issued by the Federal Reserve. More importantly, it invites contracts to demand payment in specie, thus largely eliminating the loss of value of paper money owing to inflation — increasing the money supply — by the Fed. Said Maharrey: “This would mark an important step toward currency competition. If sound money gains a foothold in the marketplace against Federal Reserve Notes, people will be able to choose the time-tested stability of gold and silver over the central bank’s [the Fed’s] rapidly-depreciating paper currency.

This item appeared on thenewamerican.com Internet site on Thursday sometime — and I found it on the Sharps Pixley website.  Another link to it is here.


Federal judge tells traders they can combine cases accusing JP Morgan of rigging metals market

A group of traders from across the U.S. who allege that J. P. Morgan Chase manipulated precious metals markets for years are one step closer to bringing a class action suit against the nation’s largest bank.

Earlier this month, a federal judge said five separate lawsuits making similar allegations against the bank could be combined, potentially including thousands of people who traded in the precious metals market from Jan. 2009 through December 2015.

Litigation in a separate civil case has been put on hold until at least May at the behest of the Justice Department, which is investigating a “related criminal case” that involves alleged market manipulation by precious metals traders at J. P. Morgan.

J. P. Morgan declined to comment on this story.

This news item was posted on the cnbc.com Internet site at 4:17 p.m. EST on Thursday afternoon — and it turned up in a GATA dispatch yesterday evening.  Another link to it is here.


Mysterious Turkish Firm Helped Maduro Move $900 Million in Gold

Two months after Venezuelan President Nicolas Maduro visited his counterpart Recep Tayyip Erdogan in Ankara, a mysterious company called Sardes sprang into existence.

The firm started business with a bang in January of 2018, when it imported about $41 million worth of gold from Venezuela, the first such transaction between the two countries in records that go back 50 years. The next month its volume more than doubled, with Sardes transporting almost $100 million worth to Turkey.

By November, when President Donald Trump signed an executive order authorizing sanctions on Venezuelan gold — after sending an envoy to warn Turkey off the trade, Sardes had shuttled $900 million of the precious metal out of the country. Not bad for a company with just $1 million in capital, according to regulatory filings in Istanbul.

It’s not the first time that Turkey has positioned itself as a work-around for countries facing U.S. sanctions, potentially undermining Washington’s efforts to isolate governments it considers hostile or corrupt. Ankara has often tested the boundaries of U.S. tolerance, and the alliance between the key NATO members is now essentially broken, according to two senior U.S. officials.

This interesting Bloomberg news item showed up on their Internet site at 2:10 a.m. Pacific Standard Time on Friday morning — and I found it in a GATA dispatch.  Another link to it is here.


Dump dollar for gold: Russia mulls eliminating gold tax to boost investment at greenback’s expense

Russia’s Finance Ministry told the Izvestia newspaper it is considering complete abolition of value added tax (VAT) on gold purchases. This would give Russian savers an option of investing in gold, rather than foreign currencies.

The ministry said earlier the measure could also help returning capital worth tens of billions of rubles to the country.

Gold bar buyers in Russia are currently obliged to pay 20 percent VAT. However, when selling ingots, the tax is not returned. As a result, demand for gold investment in the country sits at just under 3 tons per year. Experts say that if the tax is dropped, demand could skyrocket to 50–100 tons.

The abolition of VAT will create an investment gold market in Russia, Sberbank Vice President Andrey Shemetov told the newspaper. According to him, as a financial instrument, gold is protected from inflation, and at a time of geopolitical risks, the metal could be an excellent substitute for traditional investments in U.S. dollars.

Resetting the VAT on gold bullion could support the idea of de-dollarization of the Russian economy, said Aleksey Panferov, deputy chairman of the board of Sovcombank. The inclusion of impersonal metal accounts in the deposit insurance system could become another important step in that direction, he added.

This is the second story/straw in the wind about this possible turn of events in the last few months — and it sounds like they’re really serious about it now.   And as I said when the first article about these appeared in November or December…”the sooner the better“.  This gold-related news story appeared on the rt.com Internet site at 11:34 a.m. Moscow time on their Friday afternoon — which was 3:34 a.m. in Washington — EST plus 8 hours.  It was updated about two and a half hours later.  I thank Larry Galearis for pointing it out — and another link to this worthwhile news item is here.


Are we back on a gold standard? — Max Keiser and Stacy Herbert

In this episode of the Keiser Report from Mexico, Max and Stacy discuss central banks on a gold buying spree and what that suggests is in our global monetary and trade policy future. The volume of gold buying has not been seen since 1967 when the world was, in fact, on a gold standard. Does this indicate we are, indeed, back on a quasi-gold standard if USD trade surplus is being converted into hard money, regardless of formal agreements to that effect?

This 13-minute video commentary starts right at the beginning of this edition of the Keiser Report — and I thank Swedish reader Patrik Ekdahl for bringing it to our attention.


Super Structures of the World — Episode 1 “Grasberg Mine”

At 14,000 feet, in the remote jungles of New Guinea, is the largest gold and copper deposit in the world. Getting to that deposit and building a profitable mine was one of the biggest engineering challenges ever.

I stumbled over this youtube.com video of the discovery of Freeport’s Grasberg mine earlier this week — and found it very interesting.  It runs for a bit over 52 minutes — and worth your while if you have the interest.  For obvious length reasons, I saved it for Saturday’s column.


The PHOTOS and the FUNNIES

Here are two more photos from the “Ocean Art” series that I thank Mike Easton for sending our way.

The first photo taken by: Wu Yung Sen — and is captioned “Pacific Red Sockeye salmon swimming up the Adams River in Canada“.  I’ve “been there — and done that” myself.  Click to enlarge.

This second photo is by Christina Barringer — and is captioned “A young crocodile charging towards a pair of divers in Banco Chinchorro, Mexico“.  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’ is one I heard playing in the background of a TV commercial I saw yesterday evening — and since I hadn’t featured it before, I though it time.   It was released on December 21, 1964 — and it was this group’s first No. 1 hit — and what a hit it was.  The link is here.

The Canadian rock bank Chilliwack had a tune with the same name back in 1981 that was a pretty big hit as well, but it’s a horse of an entirely different colour — and the link to that is here.

Today’s classical ‘blast from the past’ is one that I had all picked out a week ago — and I’ve been saving it for today’s column.  It is a transcription from piano to guitar and was composed by Isaac Manuel Francisco Albéniz y Pascual…29 May 1860 – 18 May 1909.  He was a Spanish virtuoso pianist, composer, and conductor — and one of the foremost composers of the Post-Romantic era who also had a significant influence on his contemporaries and younger composers. He is best known for his piano works based on Spanish folk music idioms.

Transcriptions of many of his pieces, such as Asturias (Leyenda), Granada, Sevilla, Cadiz, Córdoba, Cataluña, and the Tango in D, are important pieces for classical guitar, though he never composed for that instrument.

Here’s Crotian-born Ana Vidović performing the Asturias (Leyenda) work by Albéniz.  She’s an incredibly gifted musician — and not hard on the eyes, either.  It lasts about 7 minutes — and it’s worth your time.  Another link to it is here.

And if you’ve never seen how a world-class concert hall-style acoustic guitar is crafted, click here.  I watched the whole thing earlier this week — and was totally blown away.


It was another extremely quiet volume day in both gold and silver — and that applies to the entire week as well.  But despite that low volume, it was obvious that someone was there to keep the precious metals from getting too frisky to the upside — and that’s particularly true of palladium and silver.

I’m certainly not a happy camper with the blow-out in the commercial net short position in silver — and it remains to be seen how it resolves itself over time.  Will it be the “same old, same old” as we’ve experience over the years/decades, or will it be “different this time?”  I don’t know, nor does anyone, but as I said further up in my column, the precious metal market just ‘feels different’ than it has before.

So all we can do is wait it out and see what happens.

Here are the 6-month charts for all four precious metal, plus copper and WTIC.  There’s not really much to see once again, but I do note that copper was closed back below its 200-day moving average yesterday.  Click to enlarge for all six.

With darkening economic shadows already hovering over China, also sliding into the economic shade were both Italy and Germany…with France and the U.K. not far behind — and the Japanese Nikkei closed down on the week as well.  How long, one has to wonder, will the U.S. be immune to this recessionary/depressionary black hole that is now sucking in one nation after another.

The Dow was quietly heading for the nether reaches of the earth up until shortly before noon in New York on Friday morning.  But at that juncture, another ‘miracle’ rally appeared…most likely sponsored by your local PPT…and a ferocious short covering rally in the last few minutes of trading did the rest.

With an ever uglier trade war with China ongoing — and the U.S. deep state making even more ugly threats towards Venezuela, you just have to wonder how much longer the U.S. equity markets — and the U.S. dollar can be propped up.

As Doug Noland stated in his commentary in the Critical Reads section…”For a month now, markets have celebrated the view that Chairman Powell (and global central bankers more generally) will not be attempting to “normalize” monetary policy. No Fed-induced tightening of financial conditions, along with no fretting the new Chairman’s commitment to the “Fed put.” Lost in all of this is recognition that a decade of experimental monetary stimulus has failed. Global finance is much more fragile today than prior to the 2008 crisis – the global economy more imbalanced and vulnerable.

He would be right about that.

According to the World Gold Council, global central banks bought more bullion last year than at any time since 1971, when the U.S. ended the gold standard.  Governments added 651.5 tonnes of gold to their coffers in 2018 — and it also said that Russia, China and Turkey are leading the gold-buying spree.

The other straw in the wind was this second story in as many months about Russia reducing the VAT [Value Added Tax] on gold bullion sales to zero.  Not only do I expect that to happen in the not-too-distant future, but I also expect that the Russian people will embrace that concept with great enthusiasm, as they know all about currency devaluation, especially regarding their own…the ruble.

The other thing that I noticed with February deliveries in gold on the COMEX, was that very little of the gold being delivered by the short/issuer to the long/stopper was brought into their inventories before the delivery month began.  All that’s happening is that gold is already on deposit at the COMEX-approved depositories is changing ownership.  And not only is no gold being shipped in during this delivery month, but none is being shipped out, either.

It certainly appears that the physical gold, in large amounts, is just not available.  As Nick Laird’s charts show, the amount of gold imported by the five Silk Road countries on a yearly basis, now handily exceeds world mine supply.

But in the retail market, sales are moribund.  As Ross Norman of Sharps Pixley fame pointed out in his commentary of 06 February 2019…”We believe that sentiment towards gold amongst retail investors is currently the lowest for about 20 years — and we are in a position to know, as our group is one of the largest sellers of coins and bars in Europe.

And as precious metal prices continue to creep higher, there’s no question that retail demand will rise from its recent slumbers.  It won’t take much to once again empty retailers and the mints that supply them, of what little physical supply they have…then good luck getting more in a reasonable time, if at all.

It’s happened before — and it will happen again.  This year is stacking up to be that year.

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

Ed

Five Consecutive Days of Withdrawals From GLD

08 February 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much until shortly before 10 a.m. China Standard Time on their Thursday morning — and at that point was sold quietly lower until 1 p.m. CST.  It began to head rather unsteadily higher until shortly after 9 a.m. in New York — and then was sold lower until shortly before the London close.  It rallied a bit from there until noon EST — and didn’t do much of anything after that.

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

Gold finished the Thursday session in New York at $1,309.80 spot, up $3.60 on the day.  Net volume was very quiet once again at a hair under 153,000 contracts — and there was just under 14,000 contracts worth of roll-over/switch volume on top of that.

Silver was sold quietly lower until shortly before 1 p.m. CST on their Thursday morning — and then didn’t do much of anything until shortly after London opened.  It headed a bit higher from there, but was rolled over a few minutes before 11 a.m. GMT.  That tiny sell-off lasted for about ninety minutes — and from that juncture it crawled unsteadily higher for the remainder of the Thursday session.

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

Silver finished the day at $15.715 spot, up 7.5 cents from Wednesday’s close.  Net volume was super quiet at around 41,700 contracts — and there was fairly decent roll-over/switch volume out of March and into future months, totalling a bit over 20,000 contracts.

The platinum price didn’t do much in Far East trading on their Thursday — and was down a dollar at the Zurich open.  It crawled up to its high tick of the day two hours and change later — and then drifted quietly lower until shortly after 9 a.m. in COMEX trading in New York.  Then down it went, with the low tick coming around 12:30 p.m. EST.  It tacked on a couple of dollars going into the COMEX close — and didn’t do a thing after that.  Platinum closed at $796 spot, down 8 dollars from Wednesday.

The palladium price was up about seven dollars by 11 a.m. CST, but was back at unchanged by the Zurich open — and was sold down to its low of the day an hour after that.  It began to rally with some enthusiasm from that juncture, but ran into ‘something’ about 11:30 a.m. CET — and from there it didn’t do much until minutes before 9 a.m. in New York.  The price went ‘no ask’ at that point — and a willing short seller appeared immediately — and the price chopped quietly lower until the market closed at 5:00 p.m. EST.  Palladium was closed at $1,365 spot, up 12 bucks on the day — and at least that many dollars off its high tick of the day.

Like on Wednesday at 9 a.m. EST in COMEX trading in New York, it would have closed at some astronomically high price on Thursday as well, if free-market forces had been allowed to prevail.  According to Kitco, it’s high tick of the day was $1,402 spot.


The dollar index closed very late on Wednesday afternoon in New York at 96.39 — and it opened about unchanged at 7:45 p.m. EST/8:45 a.m. CST on their Thursday morning.  The index rose and fell about six basis points between then and minutes before 2 p.m. CST — and at that point, a ‘rally’ ensued that lasted until precisely 12:00 o’clock noon in London.  It began to chop quietly lower from there — and its low tick [1 basis point above unchanged] came at precisely 11 a.m. in New York, which was the London close.  I suspect that the usual ‘gentle hands’ appeared at that point — and it crawled quietly higher for the rest of the Thursday session, finishing the day at 96.51….up 12 basis points from Wednesday’s close.

Here’s the DXY chart from Bloomberg once again.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart courtesy of the folks over at stockchart.com — and the delta between its close…96.29…and the close on the DXY chart above, was 22 basis points points on Thursday.  Click to enlarge.

The gold shares opened unchanged, then ticked a bit higher before starting to chop quietly lower.  That lasted until around 12:20 p.m. EST in New York trading — and they inched a bit higher into the close, starting around 1 p.m. EST.  The HUI closed down 0.84 percent.

The price pattern in the silver equities was very similar to the gold stocks — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.49 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 191 gold and 8 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, of the three short/issuers in total, the largest by far was Morgan Stanley with 166 contracts out of its in-house/proprietary trading account — and in distant second spot was ABN Amro with 20.  The largest long/stopper was JPMorgan, with 96 in total…77 for its own account, plus 19 for clients.  Citigroup was second with 41 for its own account — and Advantage was third with 33 for its client account.

In silver, the largest of the two short/issuers was JPMorgan with 7 contracts out of its client account — and the largest of the three long/stoppers was Morgan Stanley with 4 for its client account.  Advantage and ADM picked up 2 contracts each for their respective client accounts.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in February fell by 31 contracts, leaving 889 still open, minus the 191 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 28 gold contracts were actually posted for delivery today, so that means that 31-28=3 more gold contracts disappeared from the February delivery month.  Silver o.i. in February declined by 6 contracts, leaving 14 still around, minus the 8 mentions a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 11 silver contracts were actually posted for delivery today, so that means that 11-6=5 more silver contracts just got added to February.


For the fifth straight day, there was a withdrawal from GLD, as an authorized participant took out another 207,884 troy ounces.  Since January 31, there has been 453,582 troy ounces/14.1 metric tonnes, withdrawn from GLD.  There were no reported changes in SLV.

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

The only physical movement in gold on Wednesday over at the COMEX-approved depositories on the U.S. east coast was 321.500 troy ounces/10 kilobars [U.K./U.S. kilobar weight] that was shipped out of Canada’s Scotiabank.  I won’t bother linking this.

There wasn’t much activity in silver, as nothing was reported received — and only 496,406 troy ounces were shipped out.  There was 472,505 troy ounces shipped out of CNT — and the remaining 23,901 troy ounces departed the International Depository Services of Delaware.  The link to that is here.

There was no report from the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.


The Sutri Treasure is an important Lombardic hoard found at Sutri, Italy in the late nineteenth century that is currently in the collections of the British Museum in London.

The rich grave group was found in 1878 near the town of Sutri in the province of Viterbo in central Italy. Dating to the 6th-7th centuries A.D., the treasure was buried at a time of conflict between the Kingdom of the Lombards and the Eastern Roman Empire. Nine years after its discovery, the hoard was purchased by the British Museum, where it resides to this day.

Given the large number of prestigious items in the treasure, it probably belonged to a noble lady of high rank from the Lombardic court. It includes a blue glass drinking horn, two greenish-blue small amphoras, a gilded fan-shaped silver brooch, a gold and garnet encrusted S-shaped brooch, a simple gold cross and a pair of earrings with triple pendants. A number of other items (including a pin, beads, coins, another drinking horn and a third brooch) were not purchased by the museum at the time; their current whereabouts is unknown.  Click to enlarge.

It was another very quiet news day on Thursday.


CRITICAL READS

Consumer Credit Hits $4 Trillion as Student, Auto Loans Hit All Time High

After a few months of wild swings, in December U.S. consumer credit normalized rising by $16.6 billion, just below the $17 billion expected, after November’s whopping $22.5 billion [increase]. The surge in borrowing in November brought the total to just above $4 trillion for the first time ever on the back of a America’s ongoing love affair with auto and student loans.

Revolving credit increased by $1.7 billion to $1.045 trillion, a modest slowdown since November’s $4.8 billion.

Perhaps more notably, the lowest increase in December credit card usage since 2012.

And while slowdown in December credit card use may prompt fresh questions about the strength of the U.S. consumer during the all-important holiday spending season, the recent dramatic upward revision to personal savings notwithstanding, 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 $1.593 trillion in student loans outstanding, an impressive increase of $10.3 billion in the quarter, while auto debt also hit a new all time high of $1.155 trillion, an increase of $9.5 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 chart-filled article from the Zero Hedge website showed up there at 3:17 p.m. on Thursday afternoon EST — and I thank Brad Robertson for pointing it out.  Another link to it is here.


If Socialism Is So Good, Why Are People Moving Away? — Dennis Miller

The mainstream media is citing reports, with widely varying percentages, that many young Americans prefer socialism to capitalism – and are supporting socialist candidates. The media provides extended coverage to politicians touting socialist programs.

The New York Times trumpets, “Mayor de Blasio Says Wealth Is ‘in the Wrong Hands,’ Pledges to Redistribute It.

Here’s the truth, brothers and sisters, there’s plenty of money in the world. Plenty of money in this city,” the mayor said…. “It’s just in the wrong hands!

…. He cast himself as an aspiring Robin Hood – aiming to take from the rich and give to the poor….

Politicos robbing and redistributing wealth; what could possibly go wrong?

This interesting commentary by Dennis put in an appearance on his Internet site on Thursday sometime — and another link to it is here.


The Saker Interview with Michael Hudson on Venezuela

The Saker: Could you summarize the state of Venezuela’s economy when Chavez came to power?

Michael Hudson: Venezuela was an oil mono-culture. Its export revenue was spent largely on importing food and other necessities that it could have produced at home. Its trade was largely with the United States. So despite its oil wealth, it ran up foreign debt.

From the outset, U.S. oil companies have feared that Venezuela might someday use its oil revenues to benefit its overall population instead of letting the U.S. oil industry and its local comprador aristocracy siphon off its wealth. So the oil industry – backed by U.S. diplomacy – held Venezuela hostage in two ways.

First of all, oil refineries were not built in Venezuela, but in Trinidad and in the southern U.S. Gulf Coast states. This enabled U.S. oil companies – or the U.S. Government – to leave Venezuela without a means of “going it alone” and pursuing an independent policy with its oil, as it needed to have this oil refined. It doesn’t help to have oil reserves if you are unable to get this oil refined so as to be usable.

Second, Venezuela’s central bankers were persuaded to pledge their oil reserves and all assets of the state oil sector (including Citgo) as collateral for its foreign debt. This meant that if Venezuela defaulted (or was forced into default by U.S. banks refusing to make timely payment on its foreign debt), bondholders and U.S. oil majors would be in a legal position to take possession of Venezuelan oil assets.

These pro-U.S. policies made Venezuela a typically polarized Latin American oligarchy. Despite being nominally rich in oil revenue, its wealth was concentrated in the hands of a pro-U.S. oligarchy that let its domestic development be steered by the World Bank and IMF. The indigenous population, especially its rural racial minority as well as the urban underclass, was excluded from sharing in the country’s oil wealth. The oligarchy’s arrogant refusal to share the wealth, or even to make Venezuela self-sufficient in essentials, made the election of Hugo Chavez a natural outcome.

The fascinating and very worthwhile interview, which centers on oil and gold, showed up on the unz.com Internet site yesterday — and it’s definitely worth reading.  I thank Larry Galearis for bringing it to our attention — and another link to it is here.


France Recalls Ambassador From Italy After “Unprecedented” Verbal Attacks

The diplomatic row between France and Italy is escalating. More than half a year after Italy summoned the French ambassador over Europe’s migrant row, on Thursday France one-upped Italy when it announced it would recall its ambassador to Italy, citing “outrageous” verbal attacks, repeated “meddling” in its domestic affairs and “unacceptable” provocations.

The French foreign ministry said the decision was taken following a meeting between Italy’s deputy prime minister Luigi Di Maio and leaders of the French Yellow Vest protester movement, trumpeting his support for the grassroots protests in defiance of President Emmanuel Macron.

This is unprecedented since the war,” the foreign ministry said in an emailed statement on Thursday. “Having disagreements is one thing, but using the relationship for electoral purposes is quite another.

Luigi di Maio, Italy’s Deputy Prime Minister and leader of the anti-establishment 5-Star Movement hailed the “winds of change across the Alps” yesterday on Twitter after meeting with Yellow Vest activists Cristophe Chalencon and Ingrid Levavasseur.

A diplomatic feud has been growing between Paris and Rome over repeated expressions of support for the Yellow Vest protests coming from top Italian officials. Di Maio’s co-deputy PM Matteo Salvini said this week that French people “will be able to free themselves from a terrible president” in May after European parliamentary elections take place.

This Zero Hedge story appeared on their website at 8:03 a.m. EST yesterday morning — and it’s another contribution from Brad Robertson.  Another link to it is here.


Reserve Bank of India Bows to Political Pressure With Unexpected Rate Cut

Fed Chairman Jerome Powell isn’t the only leader of a major central bank to capitulate to political (and market) pressure so far this year. On Thursday, RBI Gov. Shaktikanta Das during his first meeting at the helm of the bank led a 4-2 vote to cut rates after raising them twice last year.

Das was widely seen bowing to pressures from Prime Minister Nahrendra Modi, who is desperately trying to boost economic growth ahead of a re-election fight later this year. As one analyst at Mizuho Bank pointed out, the move risks reviving inflationary pressures in India after they had largely eased last year. Das was hastily appointed to lead the central bank in December after his predecessor quit following a very public battle over the RBI’s autonomy.

The board also voted unanimously to switch the central bank’s policy stance to neutral from “calibrated tightening.”

Unsurprisingly, the Indian government cheered the cut, with Finance Minister Piyush Goyal tweeting that it would “give a boost to the economy, lead to affordable credit for small businesses, home buyers etc. and further boost employment opportunities,” said Indian Finance Minister Piyush Goyal in a post on Twitter.

This news story was posted on the Zero Hedge website at 5:56 a.m. on Thursday morning EST — and it’s the third and final offering from Brad Robertson.  Another link to it is here.


Russia’s new shield against U.S. sanctions: A Siberian gold mine

Beneath this plot of land in southeastern Siberia lie vast stores of gold, according to Russia’s biggest gold producer, Polyus PJSC , and tapping them could provide the Russian central bank with a huge and nearly sanction-proof backstop for its currency.

Tests commissioned by the company last year and undertaken by Australia-based AMC Consultants, along with a scoping study conducted in 2018, determined that there are 63 million ounces of gold at Sukhoi Log, Polyus has told investors. While independent mining analysts haven’t confirmed that estimate on their own, many of them refer to Sukhoi Log as one of the world’s largest untapped gold deposits.

And that may just be the beginning,” said Polyus geologist Svetlana Deys. “The gold could extend far beyond the reach of the Sukhoi Log license.” Polyus says the prospective mine holds approximately a quarter of all Russia’s known gold underground.

The news is good for both Polyus and the Russian government. Unlike other producers that move their bullion on world markets, Polyus sells its gold exclusively to large Russian state banks, which then resell it to the country’s central bank. Once mining begins, the bank can use the mine’s gold to support its ruble currency or sell it for extra foreign currency in times of crisis.

Gold has become a major holding in Russia’s central bank reserves, with its share nearly double what it was in 2014, when the bank started dumping its U.S. Treasury and dollar holdings amid increased tensions between Russia and the U.S.

Last year, the central bank’s deputy head, Dmitry Tulin, told lawmakers that while gold prices may fluctuate, “it’s a 100-percent guarantee against legal and political risks.”

The rest of this fascinating gold-related news item, filed from Sukhoi Log in Russia, is posted behind The Wall Street Journal‘s subscription wall — and you need to be a subscriber to see it.  I found this portion posted in the clear on the gata.org Internet site — and another link to it is here.


Indian Gold jewellery demand falls to 598 tonnes

Indian gold jewellery demand weakened marginally to 598 tons last year, from 601.9t in 2017, according to the World Gold Council.

Fourth quarter gold jewellery demand was also fractionally lower y-o-y (180.1t v. 182.4t), as consumers showed caution in the face of high and volatile local gold prices.

Demand was constrained in 2018 as there were relatively few auspicious wedding days in the Hindu calendar.  This had a particularly pronounced effect on Q4 demand, given that November and December are traditionally peak wedding season months.

The outlook is more positive for 2019, as there is a marked increase in the number of such auspicious days.

Buoyant inventory levels meant a good portion of retail demand in Q4 was met by de-stocking. Strong imports in Q3 led to a build-up of stock among manufacturers and wholesalers, which was drawn down during Q4 to meet demand – reflected in a 23% y-o-y drop in fourth quarter official gold imports.

This very interesting gold-related news story, filed from Mumbai, put in an appearance on the scrapregister.com Internet site yesterday sometime — and I found it on the Sharps Pixley website.  Another link to it is here.


Made-in-China diamonds ready to rock global market

China, a major consumer of mined diamonds, now has a realistic chance of becoming a supplier of man-made gems and shaping the industry, analysts say.

Unlike naturally occurring diamonds, which form over the course of billions of years, synthetic diamonds are made in a matter of weeks.

Chinese companies have mastered the technologies to manufacture them en masse within a short period of time. The products are practically indistinguishable from those mined from earth.

China has been producing well over 10 billion carats of diamonds annually for almost a decade, according to the country’s industry estimates. Most of the products have gone to industrial use such as in abrasives. They were provided for aeronautics, oil rigs and electronic chips.

As competition intensified and technology matured, Chinese companies have shifted from abrasives to jewelry.

Liu Yongqi, general manager of Sino-Crystal, told Xinhua News Agency the company now produces between 2 million and 3 million carats a year, over half of which are for jewelry.

Since I had so few stories today, I thought I’d throw this one in as well.  It appeared on the rt.com Internet site at 9:57 a.m. Moscow time on their Thursday morning, which was 1:57 a.m. in New York — EST plus 8 hours — and I thank Swedish reader Patrik Ekdahl for finding it for us.  Another link to it is here.


The PHOTOS and the FUNNIES

This next photo series is headlined “Ocean Art” — and I thank Mike Easton for sending them our way.

Today’s first photo taken by Duncan Murrell — and is captioned “A rarely observed courtship ritual between three devil/manta rays“.  Click to enlarge.

This second photo is by Francois Baelen — and it’s captioned “a mother humpback whale with her playful calf in the background“.  Click to enlarge.


The WRAP

Although both gold and silver closed a bit higher on the day yesterday, nothing much should be read into this price action, as volumes in both metals are still unbelievably light…which has been the case all week.

Their respective equities closed down on the day, but I suspect that had more to do with what was happening in the general equity markets in New York, rather than precious metal shares themselves.  I wouldn’t read anything into that, either.

Here are the 6-month charts for the Big 6 commodities once again — and the low closes on Wednesday that occurred in the precious metals after the COMEX close, show up on their respective Thursday dojis.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I note that the gold price began to edge quietly and unevenly lower about an hour after trading began at 6:00 p.m. EST on Thursday evening in New York. At the moment, it’s down $1.40 the ounce. Silver’s quiet downward journey began at 9 a.m. China Standard Time on their Friday morning — and it’s down 7 cents. The platinum price has been quietly stair-stepped lower in price — and it’s down 3 bucks currently. Palladium, of course, is bucking the trend — and is up 4 dollars as Zurich opens.

Net HFT gold volume is microscopic once again at around 17,800 contracts — and there’s only 201 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is also tiny, at about 6,300 contracts — and there’s only 70 contracts worth of roll-over/switch volume on top of that.

The dollar index opened up 10 basis points once trading began at 7:45 p.m. EST on Thursday evening in New York, which was 7:45 a.m. in Tokyo…8:45 a.m. in Shanghai. It has been chopping very quietly sideways since — and is up 9 basis points as of 7:45 a.m. GMT in London.

Today we get that latest Commitment of Traders Report for positions held at the close of COMEX trading on Friday, January 4, I believe — and I’m expecting some further increases in the short positions in both silver and gold.  But as I said earlier this week, I don’t expect these increases to be anywhere near the unhappy numbers we saw in the prior week’s COT Report, which came out on Tuesday.

We also get the January Bank Participation Report, which shows the COMEX futures market holdings for all the world’s bank in December — and both Ted and I are looking forward to seeing what’s in it, even though the data is a month out of date.

Whatever is in both these reports, will be in my Saturday missive.

And as post today’s efforts on the website at 4:02 a.m. EST, I see that the gold price has ticked higher by a bit during the first hour of London trading — and is currently down only 20 cents an ounce. Silver has rallied a bit as well — and is only down 2 cents. Platinum is now down 2 bucks, but the palladium price went vertical the moment that Zurich opened — and it’s currently up 13 dollars, but this rally is obviously being managed.

Gross gold volume has jumped a bit, but is still very light at only around 22,500 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is 22,000 contracts. Net HFT silver volume is very quiet as well…coming up on 8,200 contracts — and there’s still only 139 contracts worth of roll-over/switch volume in that precious metal.

The dollar index is a bit higher as well — and up 17 basis points as of 8:45 a.m. GMT in London/9:45 a.m. CET in Zurich.

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

Ed

Another Microscopic Volume Day in Gold and Silver

07 February 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold a couple of dollars lower in Far East trading on their Wednesday morning — and it chopped quietly sideways from there.  Both attempts to rally above the unchanged mark were turned aside…one during the first hour of trading in London — and the second a few minutes before the equity markets opened in New York on Wednesday morning.  The quiet sideways chop ended about fifteen minutes before the 1:30 p.m. EST COMEX close — and it was sold sharply lower at that juncture, with the low tick of the day coming a few minutes before trading ended at 5:00 p.m. in New York.

Despite that sell-off, the high and low ticks aren’t worth looking up once again.

Gold was closed on Wednesday at $1,306.20 spot, down $8.60 on the day — and despite the engineered price decline, net volume was microscopic once again at just under 133,000 contracts.  There was a hair over 5,000 contracts worth of roll-over/switch volume on top of that.

The sell-off in silver began shortly before 9 a.m. China Standard Time on their Wednesday morning — and the London low came at the noon silver fix over there.  It rallied a bit once trading began on the COMEX at 8:20 a.m. EST in New York yesterday morning but, like gold, was sold lower as soon as the price came close to encroaching on the unchanged mark.  It was pretty much all down hill from there, with the low tick coming shortly after 2 p.m. in the very thinly-traded after-hours market.  From that point, it crawled higher into the 5:00 p.m. EST close by a few pennies.

The high and low ticks in this precious metal were recorded by the CME Group as $15.87 and $15.67 in the March contract.

Silver was closed in New York yesterday afternoon at $15.64 spot, down 18.5 cents from Tuesday.  Net volume was extremely quiet at a bit over 42,000 contracts — and there was just over 11,800 contracts worth of roll-over/switch volume in this precious metal.

The platinum price edged quietly sideways through all of Far East and most of Zurich trading on their respective Wednesdays — and was down a buck at the COMEX open in New York.  It ticked a few dollars higher from there but, like with silver and gold, the selling pressure appeared shortly after 9 a.m. EST — and it was sold down into the afternoon gold fix.  From that point it crawled quietly sideways, but was kicked downstairs by a few more dollars starting a few minutes after 2 p.m. in after-hours trading…which is also what happened to silver.  The price didn’t do a thing after that.  Platinum was closed on Wednesday in New York at $804 spot, down 13 dollars on the day.

Palladium ticked quietly lower in price starting a minute or so after 9 a.m. China Standard Time on their Wednesday morning — and the low tick of the day came around 11:15 a.m. in Zurich.  It then traded flat going into the COMEX open — and really began to sail at that juncture.  That rally was capped hard a few minutes after 9 a.m. in New York, just like the other three precious metals — and about twenty minutes later, quiet selling pressure appeared.  Its quiet straight-line decline ended shortly after 3:30 p.m. in the thinly-traded after-hours market — and it was kicked a few dollars lower from there, before trading flat into the 5:00 p.m. EST close.  Palladium finished the Wednesday session at $1,353 spot, down 8 bucks from Tuesday.

It was yet another day where palladium would have closed at heaven only knows what price if a willing seller of last resort hadn’t appeared minutes after 9 a.m. in New York yesterday morning.

The dollar index closed very late on Tuesday afternoon in New York at 96.08 — and began to chop very quietly, but very unsteadily higher until around 8:10 a.m. EST on Wednesday morning.  At that point, the rally became far more organized, plus it picked up speed by a bit.  All the gains that mattered were in by 2:15 p.m. EST — and the index traded quietly sideways for the rest of the day.  The DXY closed at 96.39…up 31 basis points from Tuesday.

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

Here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site — and the delta between its close…96.15…and the close on the DXY above, was 24 basis points on Wednesday.  Click to enlarge.

The gold stocks gapped down — and back below unchanged by a bit, as soon as trading began in New York at 9:30 a.m. EST yesterday morning.  They were soon back in the plus column by a small amount — and that state of affairs lasted until exactly 1:00 p.m. in New York trading.  They began to head lower from there — and kept right on going until trading ended at 4:00 p.m. EST.  The HUI closed a hair off its low tick…down 0.96 percent on the day.

The price path for the silver equities was virtually identical to their golden brethren, except Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.65 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 28 gold and 11 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, of the four short/issuers in total, the two largest were ABN Amro and Advantage, with 20 and 6 contracts out of their respective client accounts.  There were three long/stoppers, with JPMorgan being the biggest, picking up 12 for its own account, plus 3 for clients.  Citigroup came in second with 8 contracts for its house account — and lastly came Advantage, stopping 5 contracts for its client account.

In silver, the sole short/issuer was Advantage from its client account — and the only long/stopper worth mentioning was Morgan Stanley with 8 contracts for its client account.

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

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in February declined by 258 contracts, leaving 920 contracts still open, minus the 28 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that only 54 gold contracts were actually posted for delivery today, so that means that 258-54=204 more gold contracts vanished from the February Delivery Month.  Silver o.i. in February actually rose by 3 contracts, showing 20 still around, minus the 11 contracts mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 9 silver contracts were actually posted for delivery today, so that means that 9+3=12 more silver contracts just got added to February.


For the fourth consecutive day…every business day in February so far…there was a withdrawal from GLD, as an authorized participant removed another 66,147 troy ounces.  There was also a withdrawal from SLV, as an a.p. took out 938,146 troy ounces.

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

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.  Canada’s Scotiabank received 25,446 troy ounces — and that’s all the ‘in’ activity there was.  Nothing was shipped out.  There were some paper transfers, as 80,390 troy ounces was moved the the Registered category — and back into Eligible.  There was 64,421 troy ounces transferred over at HSBC USA — and the remaining 15,969 troy ounces was transferred at JPMorgan.  The link to that activity is here.

There wasn’t much going on in silver, as nothing was reported received — and only 332,329 troy ounces was shipped out.  Four different depositories were involved in this ‘out’ activity — and by far the largest was the 210,066 troy ounces shipped out of HSBC USA.  If you wish to see the rest, the link to that is here.

There was no activity in or out over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.


The Morgantina treasure is a set of 16 pieces of Greek silverware with details in gold dating from the 3rd century B.C., which was illegally excavated from Morgantina, an Ancient Greek city in Sicily, near modern Aidone.

The treasure was discovered in a building of Morgantina, perhaps hidden there at the sack of the city at the hands of the Romans in 211 B.C. The creation of the objects is dated to around 240 B.C., when the city was subject to Hieron II of Syracuse.

According to some scholars, the treasure belonged to the hierophant, the high priest of Demeter and Persephone.

The hoard includes two large bowls, a cup with two handles, plates and several drinking utensils. It was probably excavated around 1978 (the date of a modern coin found buried at the most likely site), and was bought by the Metropolitan Museum of Art in New York in 1981 and 1982. After protracted pressure, in 2010 the treasure was transferred from the Metropolitan to Rome, before returning to SicilyClick to enlarge.

It was another very quiet news day on Wednesday — and I only have a tiny handful of stories.


CRITICAL READS

The “Retail Apocalypse” Isn’t Over: It is Only Just Getting Started

Last year’s holiday sales season was one of the strongest in years. But unfortunately for America’s struggling retailers, many missed out on the sales bonanza as Amazon and other e-commerce platforms accrued nearly all of the sales growth while foot traffic at U.S. malls was stagnant. Already, Kohl’s and Macy’s have helped crush the narrative of the strong consumer by slashing their earnings guidance, something that doesn’t bode well for Q4 GDP, thanks to what we warned would be an unsustainable inventory build up that has inflated growth numbers in recent quarters.

The retail space has already seen the first headline-grabbing retail bankruptcy of the year (see: Gymboree). And as Bloomberg warned in a story published this week, even after high-profile bankruptcies including Sears and Toys R’ Us, the “retail apocalypse” is far from over.

Though the Fed has capitulated to the whims of the market, retailers still make up about one-fifth of the universe of distresses borrowers. And on Friday, the head of the biggest mall owner in the U.S. warned that more bankruptcies are coming this year. Economists are increasingly worried about a recession this year or next.

Simon Property Group CEO David Simon told investors on Friday during a conference call that there are chains that his company is “nervous” about. Anybody who has traveled to a U.S. mall recently may have noticed this change: Where once there were shoppers, now they halls look disconcertingly empty.

This Zero Hedge new item showed up on their website at 10:05 p.m. EST on Wednesday night — and another link to it is here.


Class 8 Heavy Truck Orders Crash 68% in January

Among the latest dismal news about the strength of the U.S. economy, on Tuesday ACT Research released preliminary truck orders for January 2019 which showed that Class 8 truck orders collapsed an astounding 68% for January. The decline is being attributed to a 300,000+ vehicle backlog potentially prompting fleets to halt purchases in the near term.

Specifically, in January Class 8 net orders were 15,800 units, down 68% YoY and down 26% MoM. Class 5- 7 January net orders were 23,400 units, down 24% YoY but up 3% MoM.

Class 8 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.

Stephen Volkmann of Jefferies told Bloomberg that the collapse “should not be a surprise, but is likely to feed the bears“. He also guessed that upgrade demand could continue to “support high production through 2020“. We’ll believe that when we see it.

According to Neil Frohnapple at Buckingham, January is the third month in a row of year over year declines after Q3 of 2018 proved to be better than expectations. Frohnapple told Bloomberg he was “a little surprised” that net orders for January came in at just 16,000.

Back in December, BMO analyst Joel Tiss said that while “there is no doubt that freight and freight-rate growth have slowed, we do not think that it is time to panic just yet” after December’s sharp 43% plunge.

With January’s collapse now in the books, we ask “how about now?

This Zero Hedge news item was posted on their Internet site at 5:25 p.m. on Wednesday afternoon EST — and another link to it is here.


Record Demand For 5x Oversubscribed 30-Year Italian Bond Despite Recession

Heading into 2019 with the ECB’s sovereign debt QE ending, there was a question who would buy Italian debt at a time when the biggest buyer of Italian debt in the past two years, Mario Draghi, had stepped away. The answer, it appears, is everyone.

On Wednesday, Italy priced €8 billion euros ($9.1 billion) of 30-Year bonds in its second syndicated sovereign sale this year, as investor appetite is appears to only be growing following the record-breaking deal just three weeks ago.

Not only was the total order book the largest on record, with demand for the 30Y paper surpassing €41 billion, but coming in at over 5x oversubscribed, today’s offering was even stronger than January’s sale of €10 billion in 10Y notes which saw a total of €46.5 billion in demand. Confirming the demand frenzy, the September 2049 notes priced at 18 bps above benchmark rates, as much as four basis points tighter than the initial price target.

Today’s record oversubscribed offering came even as the European Commission was said to slash Italy’s 2019 growth forecast to a fraction above recession, or 0.2%, from 1.2%. This also means that the Italian budget deficit, the source of so much consternation heading into 2019, will indeed be far greater than what is generally accepted due to the lack of growth which will have to be made up with, you guessed it, even more debt.

One month after the best return for junk and IG bonds in years, coupled with record trading volumes, demand for fixed-income paper has been scorching. Just a few days earlier, Japan received the strongest response for a 10-year offering in 13 years, while even serial defaulter Ecuador managed to sell $1 billion in new debt without a glitch. Most remarkably perhaps, a recent €2.5BN Greek bond offering was four times oversubscribed.

Wow, who would have thought this possible?  The bond vigilantes of yesteryear are obviously an extinct species, or have very short memories.  This is another Zero Hedge news story — and it put in an appearance on their website at 1:35 p.m. EST yesterday afternoon.  Another link to it is here.  Here’s a Bloomberg piece on Italy’s debt from this past Sunday that’s headlined “Why Italy’s Debts Are Europe’s Big Problem” — and I thank Roy Stephens for that one.


Maduro Sold 40% of Venezuela’s Gold Last Year Amid Cash Crunch

President Nicolas Maduro blew through more than 40 percent of Venezuela’s gold reserves last year in a desperate bid to fund government programs and pay millions to bondholders.

The government sold a total of 73 tons of gold to two firms in the United Arab Emirates and another in Turkey, opposition lawmaker Carlos Paparoni told reporters in Caracas on Wednesday. That drained reserves to about 110 tons at the end of last year from 184 tons, according to a person with knowledge of the situation, who corroborated Paparoni’s data.

Maduro raided the central bank’s vaults of the 2.34 million ounces of gold (worth about $3.1 billion at current spot prices) as debt piled ever higher and financing options dried up after the U.S. imposed sanctions against his regime. Amid an international push to persuade the authoritarian ruler to cede power to a transitional government, the opposition is also seeking to thwart further gold sales to prevent a ransacking of the country during Maduro’s final days in power.

About 24 tonnes of the gold was sold to Istanbul’s Sardes Kiymetli Madenler SA, according to Paparoni. The company got regulatory approval to operate as a member of Borsa Istanbul’s Precious Metals Market on Dec. 26, 2017, just days after signing its first contract with Venezuela’s central bank, according to documents obtained by Bloomberg. A company official declined to comment.

Some 27.3 tonnes went to the UAE’s Noor Capital, which was identified by U.S. Senator Marco Rubio as orchestrating a gold transaction with Venezuelan authorities that collapsed last week following growing international condemnation. After the plans came to light, Noor said it would refrain from conducting business with Venezuela until the situation “stabilizes.”

I’m not sure how much of this is the truth — and how much is ‘fake news’.  Bloomberg is owned by the deep state, so that fact should be taken into account to a certain extent as you read this story.  It was posted on their Internet site at 10:42 a.m. Pacific Standard Time on Wednesday morning –and I found it on the gata.org Internet site yesterday.  Another link to it is here.


French magazine challenges Banque de France‘s gold lending plans

Politique magazine in Paris this week published a report by Edouard Freval about the Banque de France‘s new interest in lending and swapping gold through JPMorganChase & Co. even as credit and currency risks are rising and other central banks are acquiring the monetary metal to guard against those risks.

The report quotes former French central bankers criticizing the scheme. It also quotes GATA’s secretary/treasurer at some length.

Even when read in English through Google Translator the report does very well casting suspicion on the Banque de France’s scheme and reminding readers that gold is the ultimate money, not to be trifled with.

The article is headlined “La France Est-Elle en Train d’Hypothequer Son Stock d’Or?” — “Is France Mortgaging Its Gold Stock?

This article is en français, of course — and if you don’t speak/read the language, you’ll need to open it in a Google Chrome browser window. A small dialogue box will appear at the top right of the screen asking if you want it translated. Click yes — and the window will change everything to English.  The translation is hardly perfect, but you’ll get the essence of it — and it’s definitely worth reading.  I plucked it from a GATA dispatch yesterday — and another link to it is here.


When China wanted silver from the rest of the world

A route across the Pacific in the 16th century was a catalyst for the integration of the planet. The Silver Way: China, Spanish America and the Birth of Globalisation, 1565-1815 reveals how the Ruta de la Plata connected China with Spanish America, furthering economic and cultural exchange and building the foundations for the first global currency.

It can be argued that when Spain instituted a common currency in the form of the real de a ocho, also known as pieces of eight or the Spanish dollar, globalisation’s first chapter had been written. The acceptance of the dollar coins for commercial transactions throughout Asia, the Americas and much of Europe resulted in a cultural exchange between nations, as well as the relatively free movement of people and goods between the three continents.

The main objective behind the sea route plied by Spanish galleons was to establish trade with China. These European vessels became known as China Ships. They transported silver from the Americas to exchange for goods in Asia, mostly commodities of Chinese origin.

China had an appetite for silver, while the West hungered for goods from China.

When the Spanish tried to establish commercial ties with China, they found little taste for goods from the outside world. However, the Chinese had a voracious appetite for silver. During the latter part of the 16th century, during the Ming dynasty, Beijing ruled that taxes should be paid in silver, and without domestic recourse to the precious metal, the demand for imported silver soared.

Spain’s colonies in the Americas could mine enormous quantities of silver and the Spanish began to export the commodity to China via their Manila connection.

This longish, but extremely interesting photo-filled essay showed up on the South China Morning Post website at 8:04 a.m. CST on their Wednesday morning, which was 7:04 p.m. in Washington — EST plus 11 hours.  I was going to save this for Saturday’s column, but it showed up on Sharps Pixley yesterday, so that’s why I’m posting it now — and I thank Bill Moomau for pointing it out.  Another link to this very worthwhile read, is here.


The PHOTOS and the FUNNIES

Today’s first photo was taken by Misael Reyes — and is captioned: “Brown water snakes tangled on a branch in the Everglades National Park.”  Click to enlarge.

This second photo is not credited, but is captioned: “This tufted duck, the first ever sighted in Australia, was spotted at Werribee treatment plant near Melbourne.”  Click to enlarge.


The WRAP

Finally, the speculators – the hot fast money on the futures exchange in New York – faithless, but devastating in terms of the short term effect on prices. We estimate they have a net long position but modest by comparison to historical levels – and therefore there is scope to go very much higher.” — Ross Norman, Sharps Pixley…06 February 2019


This was the third day in a row of extremely quiet trading volume in both gold and silver — and I must admit that I’m wondering what this is all about, as it’s a phenomenon that I don’t recollect seeing before at any other time…except between Christmas and New Years.

Despite the price declines in both these metals, no moving averages of any significance were broken to the downside, so it’s a reasonable assumption that the Managed Money traders didn’t do much of anything yesterday.

And because the volume was so incredibly light, it was easy for anyone with an agenda to engineer prices in any direction they chose.  Because of that fact, I’ve very reluctant to read anything into Wednesday’s price action.  However, looking at the 6-month charts below, the trends are not what I want to see, but aren’t unexpected — and I hope you aren’t surprised by them.

Here are the usual 6-month charts for all four precious metal, plus copper and WTIC.  It should be pointed out…once again…that since the lows in all four precious metals came after the 1:30 p.m. EST COMEX close yesterday afternoon, they don’t show up on the Wednesday dojis.  Click to enlarge for all.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price was sold quietly but unsteadily lower staring shortly before 10 a.m. China Standard Time on their Thursday morning — and the current low was set around 1 p.m. CST. It has been edging ever-so-slowly higher since — and is down $1.90 an ounce at the moment. Silver was sold down a nickel or so by around 12:35 p.m. CST — and it began to inch quietly higher shortly after that — and was up a penny by shortly before 3 p.m. over there. It has been trading sideways since — and is now down a penny. Platinum has been trading a few dollars lower in Far East trading — and is currently down a dollar. The palladium price has been trading erratically and unevenly higher since trading began at 6:00 p.m. in New York on Wednesday evening — and it’s now up only 1 dollar as Zurich opens.

Net HFT gold volume is pretty light at a bit over 29,500 contracts — and there’s 722 contracts worth of roll-over/switch volume in that precious metal. Net HFT silver volume is about 6,400 contracts — and there’s 699 contract worth of roll-over/switch volume on top of that.

The dollar index has ticked very quietly and very unsteadily higher in Far East trading — and it’s up 7 whole basis points as of 7:45 a.m. GMT in London…8:45 a.m. CET in Zurich.

Silver analyst Ted Butler posted his mid-week commentary on his Internet site on Wednesday afternoon — and after ruminating on Tuesday’s COT Report, here’s a short paragraph that he wrote about JPMorgan’s short position in silver…

Of the 53,000 commercial silver contracts sold since Nov 13, 17,000 contracts were sold by commercials classified in the Producer/ Merchant/Processor/User category (where JPMorgan is carried) and 36,000 contracts were sold by the commercials classified as swap dealers. Accordingly, I would guess that JPMorgan’s short position as of Dec 31 to be around 15,000 contracts, perhaps 20,000 contracts at the outside. This week’s release of Bank Participation report for the beginning of January may or may not shed a clearer light on the big crook’s short position.

And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price hasn’t done much during the first hour of London trading — and it’s down $2.30 an ounce. Silver is now up a penny — and platinum and palladium are down 2 dollar and 4 dollars respectively.

Gross gold volume is coming up on 37,500 contracts — and net of what little roll-over/switch volume there is, net HFT gold volume is about 36,000 contracts. Net HFT silver volume is a bit under 7,900 contracts — and there’s 747 contracts worth of roll-over/switch volume on top of that.

The dollar index began to head higher a couple of minutes before the London/Zurich opens — and is now up 12 basis points as of 8:45 a.m. GMT/9:45 a.m. CET.

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

Ed