Category Archives: Newsletter Archive

Palladium Melts Up

18 January 2020 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Gold was sold lower by a few dollars by 9 a.m. CST in Far East trading on their Friday morning — and that proved to be the low tick of the day.  From that juncture it headed quietly higher until minutes before 2 p.m. China Standard Time on their Friday afternoon.  It edged lower until the 10:30 a.m. morning gold fix in London — and then began to head higher with a bit more authority.  The Big 8 traders showed up about five minutes before the 8:20 a.m. COMEX open — and sold it lower until a few minutes after 9 a.m. in New York trading.  It crawled a bit higher into the 10 a.m. EST afternoon gold fix in London — and was then sold lower until around 10:20 a.m.  Another quiet and steady rally commenced at that point — and that petered out a few minutes before the 1:30 p.m. EST COMEX close.  It didn’t do much of anything after that until some not-for-profit seller took it lower in after-hours trading — and from around 4 p.m. onwards, it trade flat until the market closed at 5:00 p.m. in New York.

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

Gold was closed on Friday afternoon in New York at $1,556.70 spot, up $4.80 on the day.  Net volume was reasonably quiet at about 215,500 contracts — and there was 50,500 contracts worth of roll-over/switch volume out of February and into future months in this precious metal.

The silver price crept quietly higher in morning trading in the Far East yesterday — and it was above $18 spot by a few pennies by around 1:20 p.m. in Shanghai on their Friday afternoon.  At that point, the battle for the $18 spot mark began in earnest.  From 9 a.m. in London, the silver price began to tick higher — and really began to sail at 1 p.m. GMT/8 a.m. EST.  Like in gold, ‘da boyz’ put their foot down five minutes before the COMEX open — and also like gold, the New York low was set around 10:20 a.m. EST.  After that, the price pattern for silver was almost similar to gold’s.

The low and high ticks in silver were reported by the CME Group as $17.905 and $18.185 in the March contract.

Silver was closed in New York on Friday at $18.000 spot, up 10 cents from Thursday…and 24 cents off its Kitco-recorded high tick of the day.  Not surprisingly, net volume was pretty decent at a bit over 67,000 contracts, as it took a fair amount of paper fire power to cap and turn silver prices lower during early morning trading EST.  There was 2,200 contracts worth of roll-over/switch volume on top of that.

Platinum worked its way quietly and somewhat unevenly higher until around 12:45 p.m. in Zurich on their Friday afternoon.  It jumped up about 10 dollars at that juncture, but the price appeared to get capped at that point — and from there until the trading ended in New York at 5:00 p.m. EST, the platinum price chopped unevenly sideways.  Platinum finished the Friday session at $1,022 spot, up 18 dollars on the day — and 11 bucks of its Kitco-recorded high tick of the day.

The palladium price crept quietly and somewhat unevenly higher until 8:30 a.m. in New York — and it blasted higher from there in what had all the hallmarks of a short-covering rally of some size.  The price was capped and turned lower around 10:15 a.m. in New York — and that sell-off lasted until a few minutes before 1 p.m. EST.  It crawled quietly and unevenly higher from there until the market closed at 5:00 p.m.  There’s something wrong with Kitco’s price feed for palladium, as it shows it closing down $76 dollars on the day at $2,295 spot, which is obviously wrong.  Adding that 76 bucks back into that $2,295 reported close, shows that palladium actually finished the Friday session at $2,371 an ounce…up $138 on the day, but an eye-watering $230 bucks off its Kitco-recorded high tick.

This price move was all paper positioning on the COMEX because, as Ted Butler pointed out on the phone yesterday, palladium is now a cash and carry physical market.  Yesterday’s rally was just the sign of some traders that were screaming in pain on the short side, booking some big margin call loses.  I expect there will be more to come, because as I’ve been saying for many months now…heaven only knows what the palladium price would be if there wasn’t a COMEX futures market attached to it.


The dollar index closed very late on Thursday afternoon in New York at 97.32 — and opened down about 3 basis points once trading commenced around 7:45 p.m. EST on Thursday evening, which was 8:45 a.m. China Standard Time on their Friday morning.  From that juncture the index traded quietly sideways until a few minute before 8:30 a.m. in London.  A ‘rally’ commenced at that point — and that lasted until the 97.66 high tick was printed around 10:42 a.m. in New York.  It traded sideways into the 5:00 p.m. EST close from there.  The dollar index finished the Friday session at 97.61…up 29 basis points from its close on Thursday.

The only correlation between the currencies and precious metal prices was when JPMorgan et al. made it so during their engineer price declines in the COMEX futures market in morning trading in New York.

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

And here’s the 5-year U.S. dollar index chart, thanks to the good folks over at the stockcharts.com Internet site.  The delta between its close…97.36…and the close on the DXY chart above, was 25 basis points on Friday.  Click to enlarge as well.

The gold stocks gold sold off almost as soon as trading commenced in New York at 9:30 a.m. on Friday morning — and their respective low ticks came around 10:15 a.m. EST.  At that point the gold price began to rally — and the gold shares followed rather reluctantly. But once the gold price began to roll over around 2:15 p.m. EST, the shares eagerly followed — and the HUI closed down 1.63 percent.

The silver equities got hammered…but followed the same general price path as their golden brethren, so I’ll spare you the play-by-play.  Nick Laird’s Intraday Silver Sentiment/Silver 7 index got clocked by 4.33 percent.  Click to enlarge if necessary.

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

Coeur Mining was the BIG loser…closing down 16.64 percent, followed by First Majestic Silver…down 4.71 percent — and Hecla…down 4.02 percent.  Wheaton Precious Metals was the only one of Nick’s Silver 7 that finished in the green…up a tiny 0.68  percent.

I fired off an e-mail to Todd Anthony, the I.R. guru over at First Majestic Silver asking why the silver equities were down so much considering the price action — and this is what he had to say:

Hi Ed – It is indeed a strange trading day considering the metals are up and the equities are under pressure.

Given that PAAS and CDE both disappointed the market with their 2020 guidance, I think guys are taking profits on First Majestic in advance of our 2020 guidance release next Tuesday. That’s the only thing that I can assume at this moment.  

It’s a good buying opp!

I’ll certainly agree that it’s a great buying opportunity if you’re looking for an entry point.  But personally, I’m sick of “good buying opps“…as I’m up to my neck in silver equities — and I ain’t buying any more.

And as an aside, I called Coeur Mining late on Friday morning to see if they had an explanation for why their stock price was sucking wind big time.  Not only was there no answer when I called their main switchboard — and no way to leave a message…an e-mail to their i.r. guy has received no reply as of this writing.


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

Here’s the weekly chart — and if the silver equities hadn’t been trashed the way they were on Friday, everything would be green across the board.  Platinum and palladium were the stars this week.  Click to enlarge.

And here’s the month-to-date chart, which is identical to the year-to-date chart during January.  Even though gold and silver are up tiny amounts on the year, the precious metal equities have been smoked.  Palladium is the big star so far this year, just like it was last year.

As Ted has been pointing out for some time now, how silver and gold prices unfold from here depends on whether or not the Big 7/8 commercial traders that are holding huge but unrealized loses on the short side, are able to snooker the Managed Money traders out of their historic and unprecedented net long position.  To date, they haven’t been very successful — and they made little meaningful headway in this week’s COT Report.  But as for the negative start to the year for the precious metal equities…this too shall pass.


The CME Daily Delivery Report showed that 78 gold and 70 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, there were three short/issuers in total…JPMorgan, Credit Suisse and Advantage, with 50, 23 and 5 contracts — and all out of their respective client accounts.  There were six long/stoppers in total — and the three biggest were Scotia Capital/Scotiabank with 49 for its own account, followed by Advantage and Morgan Stanley, with 14 and 8 contracts for their respective client accounts.

In silver, the two short/issuers were JPMorgan and Advantage, with 66 and 4 contracts — and all from their respective client accounts.  There were four long/stoppers in total — and the three that mattered were Scotia Capital/Scotiabank with 43 for its own account…then came Morgan Stanley and ADM, with 18 and 8 contracts for their respective client accounts.

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

So far in January there have been 2,657 gold contracts issued/reissued and stopped — and that number in silver is 517.

The CME Preliminary Report for the Friday trading session showed that gold open interest in January rose by another 9 contracts, leaving 96 still open, minus the 78 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 39 gold contracts were actually posted for delivery today, so that means that 39+9=48 more gold contracts were just added to the January delivery month.  Silver o.i. in January also rose again, by 22 contracts, leaving 73 still around, minus the 70 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 44 silver contracts were actually posted for delivery today, so that means that 44+22=66 more silver contracts just got added to January.


There was a monster deposit into GLD yesterday, as an authorized participant added and eye-watering 621,348 troy ounces…19.33 metric tonnes.  That’s the biggest 1-day addition to GLD that I can remember.  There were no reported changes in SLV.

In other gold and silver ETFs on Planet Earth on Friday…net of any COMEX, GLD & SLV activity…there was a net 39,303 troy ounces of gold added, but there was a net 118,063 troy ounces of silver withdrawn.

The U.S. Mint finally got around to updating its website with the current sales for January.  So far this month/year they’ve sold 34,000 troy ounces of gold eagles — 10,500 one-ounce 24K gold buffaloes — and 2,298,000 silver eagles.

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, as one truckload…608,525 troy ounces…was dropped off at Canada’s Scotiabank — and that’s all in the ‘in’ activity there was.  In the ‘out’ category, one truckload…631,667 troy ounces…departed CNT — and the remaining 990 troy ounces…one good delivery bar…was shipped out of Brink’s, Inc.  There was some paper activity as well…265,657 troy ounces was transferred from the Eligible category and into Registered at Scotiabank — and 15,453 troy ounces went in the same direction over at Brink’s, Inc.  The link to all this is here.

There was more big movement over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 2,000 of them — and shipped out 5,060.  All this activity was at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


Russia, Nikolaus I., 1825-1855, 3 Rubel 1829

Material: Platinum     Full Weight: 10.25 grams


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, January 14 certainly wasn’t what I was expecting — and Ted was quite correct in not sticking his neck out as to what it might contain — and I was wrong yet again.

I’m done trying to outguess this guy, as I’ve never been right even once, so you think I’d know better by now.  As I said in last Saturday’s missive, Ted has a lifetime of experience in this field — and is the only precious metal commentator that does.  That’s why I stick to him like glue.

Without him, how would would the rest of us have figured out that JPMorgan had taken over Bear Stearns, or that U.S. or Canadian Mint sales were being gobbled up by them as well.  Then there’s the massive amounts of silver and gold that Jamie Dimon is sitting on.  And neither I nor anyone else would have ever figured out the direct correlation between the Managed Money traders and the price of gold and silver…or JPMorgan’s short positions in gold and silver on the COMEX.

Everything I learned about the precious metals I learned from him.  So did every other precious metal commentator…whether they will admit it or not.  Everything about silver and gold has gone through him first.  People like myself have benefited from his experience — and I’m more than happy to pass it along what I have learned.

And if you haven’t had the opportunity to read his latest commentary that was posted in the public domain on Thursday, it’s headlined “The Genius of JPMorgan” — and that’s linked here.


In silver, the Commercial net short position actually rose by 1,183 contracts, or 5.9 million troy ounces of paper silver.

They arrived at that number by reducing their long position by 2,562 contracts, but they also reduced their short position by 1,379 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 almost nothing happened in the Managed Money category…as they added 2,763 long contracts, plus 2,598 short contracts — and the difference between those two numbers, a piddling 165 contracts, was their change for the reporting week.

The difference between that number and the Commercial net short position…1,183 minus 165 equals 1,018 contracts.  Almost that entire amount was made up by the change in the ‘Nonreportable’/small trader category, as they decreased their net long position by 1,063 contracts, as the ‘Other Reportables’ showed virtually no net change during the reporting week…only 45 contracts.

Of course the Big 8 commercial traders didn’t do much during the reporting week, either…so despite the huge price moves/volatility during the reporting week, they’re still stuck with their huge short position — and weren’t able to improve on it at all.

Ted left JPMorgan’s short position in silver unchanged at 15,000 contracts — and the Commercial net short position in silver is now sitting at 92,357 COMEX contracts, or 461.8 million troy ounces.  That’s only a minor change, but it wasn’t what I was expecting.

Here’s the 3-year COT chart for silver, courtesy of Nick Laird — and there’s not a lot to see.  Click to enlarge.

Considering the huge price volatility during the reporting week, Ted was surprised by these tiny changes across all categories.  So was I, of course.


In gold, the commercial net short position fell by a rather smallish 6,262 contracts, or 626,200 troy ounces of paper gold.

They arrived at that number by increasing their long position by 18,906 contracts, but they also added 12,644 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, there was very little change in the Managed Money trader category in this precious metal, either.  They increased their long position by a tiny 1,319 contracts — and added 617 short contracts.  It’s the difference between those two numbers…702 contracts…was their change for the reporting week.

And as it must, that difference was made up the traders in the other two categories.  But both went about it entirely differently.

The ‘Other Reportables’ reduced their net long position by 3,758 contracts — and the ‘Nonreportable’/small traders decreased their net long position as well, by 3,206 contracts.  The sum of those two numbers between those two numbers…6,964 contracts represents their change for the reporting week.

The difference between that number — and the change in the Managed Money category…6,964 minus 702 equals the change in the commercial net short position…6,262 contracts, which it must do.

In the commercial category, the Swap Dealers and Producer/Merchants obviously decreased their net short positions — and for that reason, Ted pegs JPMorgan’s short position in gold at around 32,000 contracts, down about 2,000 contracts from last week’s report.

The commercial net short position in gold is still sky high at 34.98 million troy ounces.

The Big 8 commercial traders trapped on the short side in gold, managed to improve their situation this reporting week, but it was by a rather insignificant amount.

Here’s the 3-year COT chart for gold from Nick, updated with this week’s change — and there’s not much to see here, either.  Click to enlarge.

Like in silver, the Big 8 traders in gold are still very much trapped on the short side and didn’t improve their lot by much during this past reporting week.

The commercial net short positions in both gold and silver are hugely bearish based on past history, but unless they can get the Managed Money traders to puke up their record long position, they’ll never be able to cover their short positions.  So, as Ted has been pointing out for some time, if things continue the way they are, the shorts…both large and small…will be in a world of hurt if the rallies in both silver and gold continue.  He’ll have lots more to say in his weekly review later today.


In the other metals, the Manged Money traders in palladium increased their net long position by 151 COMEX contracts during the reporting week — and are net long the palladium market by 11,633 contracts…a hair over 44 percent of the total open interest.  Total open interest in palladium is 26,413 COMEX contracts.  As I keep harping on, it’s a very tiny and very illiquid market. It doesn’t take more than a handful of contracts to move the price by a significant amount, as you may have noticed this past week.  But because of the price action during the current reporting week, I’m expecting to see some rather substantial changes in next week’s COT Report.  In platinum, the Managed Money traders increased their net long position by a further 2,039 contracts.  The Managed Money traders are net long the platinum market by 48,620 COMEX contracts…a bit over 46 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are still mega net long against JPMorgan et al. as well.  In copper, the Managed Money traders increased their long position in that metal by 6,279 COMEX contracts during the reporting week.  They are now net long copper by 5,466 COMEX contracts.  They were net short the market by a tiny amount in last week’s COT Report.


Here’s Nick Laird’s “Days to Cover” chart, updated with the COT data for positions held at the close of COMEX trading on Tuesday, December 31. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 157 days of world silver production…up 2 days from last week’s COT Report — and the ‘5 through 8’ large traders are short an additional 75 days of world silver production…unchanged from last week’s COT Report — for a total of 232 days that the Big 8 are short…up 2 days from last week’s report. This represents almost 8 months of world silver production, or about 541 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 230 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 461 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 541 million troy ounces.  So the short position of the Big 8 traders is larger than the total Commercial net short position by around 541-461=80 million troy ounces.

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

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

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 15,000 contracts, unchanged from last week’s COT Report.  That works out to around 75 million troy ounces of paper silver…which works out to around 32 days of world silver production that JPMorgan is short — and obviously unchanged from last week’s report.

Based on the numbers in the paragraph below, that still leaves JPMorgan in the #2 or #3 spot in the Big 4/8 trader category…also unchanged from where I put them in last week’s COT Report.  Citigroup is by far the largest, with HSBC USA and one other to round out the Big 4.

As per the first paragraph above, the Big 4 traders in silver are short around 157 days of world silver production in total. That’s about 39.25 days of world silver production each, on average.  The four traders in the ‘5 through 8’ category are short around 75 days of world silver production in total, which is around 18.75 days of world silver production each, on average…unchanged from last week.

The Big 8 commercial traders are short 46.1 percent of the entire open interest in silver in the COMEX futures market, which is up a tiny amount from the 45.8 percent they were short in last week’s COT report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 50 percent mark.  In gold, it’s now 37.8 percent of the total COMEX open interest that the Big 8 are short, down a bit from the 38.8 percent they were short in last week’s report — and around 45 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 65 days of world gold production, down 1 day from last week’s COT Report.  The ‘5 through 8’ are short another 40 days of world production, unchanged from last week’s report…for a total of 105 days of world gold production held short by the Big 8…down 1 day from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 62 percent of the total short position held by the Big 8…unchanged from last week’s report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 68, 71 and 79 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is up about 1 percentage point from last week’s COT Report…platinum is down 1 percentage point from a week ago — and palladium is about unchanged week-over-week.

And as Ted has been pointing out for years now, JPMorgan is, as always, in a position to double cross the other commercial traders at any time and walk away smelling like a rose — and that’s because of the massive amounts of physical gold and silver they hold.  Up to this point they [obviously] haven’t taken advantage of that situation.  But if they do, you’ll see it in the price immediately.  Then we’ll see a melt-up that makes Friday’s rally in palladium look tame by comparison.

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


CRITICAL READS

Housing Starts Soar to Highest Since 2006 as Permits Plunge

Following October and November’s bounce in starts and permits, and despite solid sales and mortgage application data, analysts expected a mixed picture for housing data today (with growth in starts slowing and permits shrinking).

However, the data was extreme to say the least with Housing Starts soaring 16.9% MoM (highest since Oct 2016) and Building Permits shrank 3.9% MoM (worse than the -1.5% expected).

This pushed Starts to their highest since Dec 2006, but permits declined to weakest since September.  Click to enlarge.

[T]he strong overall reading on starts corroborates a jump in developers’ confidence. U.S. home builder sentiment posted the highest back-to-back readings since 1999 in December and January amid a jump in prospective buyers and a bump in the sales outlook.

Bloomberg notes that the data indicate residential construction added to fourth-quarter growth after contributing in the previous quarter for the first time since the end of 2017. While weather may have played a role in the month’s data, demand has been fueled by mortgage rates near a three-year low as the job market remains resilient and wage gains help put money into the pockets of potential home buyers.

Good news to be sure, dear reader.  But just glancing at the embedded chart you can see that housing starts still have a long way to go to get back to where they were at the end of 2005…if they get there at all, that is.  This multi-chart Zero Hedge story showed up on their website at 8:39 a.m. EST on Friday morning — and it’s the first offering of the day from Brad Robertson.  Another link to it is here.  The cnbc.com Internet site had a story about his headlined “U.S. housing starts soar 16.9% in December to a 13-year high” — and I thank Judy Sturgis for that one.


U.S. Industrial Production Suffers Worst Year Since 2015

After surging in November (by the most since Oct 2017), Industrial production was expected to contract modestly in December.

November’s big jump was revised lower and the headline production printed a 0.3% MoM contraction (worse than expected), leaving U.S. industrial production down 1.01% YoY – the worst since Oct 2016.  Click to enlarge.

That makes 7 of the 12 months with contraction in 2019 and ends up being the worst year since 2015.

  • Utilities fell 5.6% in Dec. after rising 1% in November
  • Mining rose 1.3% in Dec. after falling 0.2% in November

Capacity utilization fell to 77% from 77.4% in November, revised up from 77.3%.

Manufacturing actually surprised to the upside in December (rising 0.2% MoM vs -0.1% expected), but year-over-year saw a 1.3% contraction…

And of course, the Dow Jones INDUSTRIAL Average continues to soar despite INDUSTRIAL Production remaining relatively stagnant…and that’s what The Fed is for.

This 4-chart Zero Hedge article put in an appearance on their website at 9:22 a.m. on Friday morning EST — and I thank Brad Robertson for sending it our way.  Another link to it is hereGregory Mannarino‘s post market close rant for Friday is linked here — and I haven’t listened to it yet, so I’m not sure that it’s ‘R‘ rated or not.  But brace yourself, as it very well could be.


No, the Government Won’t Go Out of Business — Bill Bonner

It always ends this way. It always, always, always ends this way. It’s depressing. Rome… Ming Dynasty… Zimbabwe… this end game that we’re talking about.

The financial arrangements of the state are no longer sustainable… Government will not voluntarily let itself go out of business; it will use all its powers available to fund itself.” – Former Director, National Economic Council, Lawrence Lindsay

Every empire finds its Berezina.

Trying to enforce his trade war against the English, Napoleon crossed the Neman River and attacked Russia. But the Russians used a strategy that would later be made famous by Mohammed Ali – rope-a-dope.

They let the French advance… even to Moscow. Then, they set fire to the city. The Grande Armée, with few supplies and winter setting in, realized it was in a trap…

We’ll come back to those grim days of 1812 in a minute.

This interesting commentary from Bill was posted on the bonnerandpartners.com Internet site on Friday morning sometime — and another link to it is here.


Doug Noland — “This is Insane”

We’re witness to historic developments across global financial markets that extend far beyond an equities melt-up. U.S. corporate Credit this week traded near the narrowest spreads (to Treasuries) since 2007. Popular Credit default swap (CDS) indices priced this week to pre-crisis lows – investment-grade and high yield. At 46 bps, Goldman Sachs (5-yr) CDS closed the week at the low since 2007. JPMorgan CDS fell five bps this week to 30.6, the low going back to October 2007. A Leveraged Loan index closed out the week at record high prices. European fixed-income CDS ended the week at or near multi-year lows – investment-grade, high-yield and financial. And this week from Bloomberg: “U.S. High-Grade Market Devours Nearly $100 Billion in New Debt.”

This historic financial Bubble is a manifestation of Monetary Disorder and a direct inflationary consequence of an unprecedented global Credit Bubble.

Emerging Asia continues to pile it on, boosting Total Debt-to-GDP to 271% (from the previous year’s 262%). China’s Credit Bubble saw Total Debt expand from 297.4% to 308.5% of GDP. China’s Corporate Debt-to-GDP ratio rose to 156.7% from 154.4%, while rapidly expanding government Debt increased from 49% to 53.6%. From Reuters (Marc Jones): “China’s government debt also grew at its fastest annual pace last year since 2009…, and household debt and general government debt are now at all-time highs of 55% of GDP.

Asia’s debt boom is a particularly alarming accident in the making. With corporate debt rising to a staggering 227% of GDP, total Hong Kong Debt exceeds 500% of GDP (Financial Debt declining to 133.5% of GDP). Singapore’s financial Bubble continues to inflate, with Financial sector borrowings increasing to 187.7% of GDP (up from 184%). Total Singapore debt inflated to 473.5% of GDP from 462.3%. South Korea is also worthy of special attention. With corporate debt jumping to 101.6% from 95.3% of GDP, total South Korean debt surged to 325.6% (up from 304.5%).

And with stocks at record highs and housing markets bubbling, no surprise that the U.S. consumer is both confident and spending.

Doug’s weekly commentary appeared on his website shortly after midnight EST on Saturday morning — and another link to it is here.


Central Bankers Reveal the Next Phase in Their War on Savers — Jeff Thomas

International Man: Recently, Christine Lagarde, the new European Central Bank (ECB) head, said the most incredible thing: “We should be happier to have a job than to have our savings protected… I think that it is in this spirit that monetary policy has been decided by my predecessors and I think they made quite a beneficial choice.”

What’s your take on this?

Jeff Thomas: Well, I doubt very much if Mrs. Lagarde includes herself in her comment. She has no intention of losing her own savings, since she’s a member of the ruling class. What she’s saying is that the hoi polloi will have their savings absorbed by the banks and the state and that the hoi polloi should begin now to accept the idea.

As to the tone of the comment, it’s the old ploy of soft-soaping an event that’s going to occur soon, hoping that you can make it seem more palatable before implementing it.

It’s much like the old British comedies in which a woman, instead of saying, “My Mum’s coming to live with us,” says to her husband, “Wouldn’t it be nice to be seeing more of my Mum?” She then spends the rest of the play getting him used to the idea that Mum’s presence would be nice, without telling him that Mum is soon to arrive with her baggage.

Only, the bomb that’s soon to be dropped on Europeans and much of the rest of the world is a fair bit worse than having Mum come to stay. The plan is to remove all savings from the population – to get them accustomed to living hand-to-mouth. Ultimately, it’s the dream of all governments, but it’s often difficult to pull off. Understandably, people tend to rebel against it.

This very interesting Q&A session with Jeff showed up on the internationalman.com Internet on Friday sometime — and another link to it is here.


Could this (finally!) be the end for the Atlantic Integrationists? — The Saker

By now we all have heard the news, the entire Russian government has resigned and a new Prime Minister, Mikhail Mishustin, has been appointed.  And we also know that the Internet has exploded with all sorts of speculations about what this all could mean.

Alas, until we know who will be included in the new government, there is very little we can really say.  I mean, yes, in theory, we could hold our breath and expect Glaziev appointed to a top position in the so-called “economic block” of the government, but how do we know that it will not be Kudrin instead?!

We don’t.

One thing we do know for sure is what Putin announced in his speech. But here are two things I want to single out:

  1. Putin has announced a major effort to deal with the (still appalling) poverty suffered by many Russians
  2. Putin has announced a major effort to truly re-sovereignize Russia

At the very least, this is a very good sign.  As I have suggested many times, the slogan of “restore full sovereignty” can be a battle cry for both Russian and U.S. American patriots.  And we also all know who will be absolutely appalled by all this talk of “sovereignty”, don’t we?

This longish, but very interesting commentary by the Saker put in an appearance on his Internet site on Friday sometime — and I thank Larry Galearis for pointing it out.  Another link to it is here.


Battle of the Ages to stop Eurasian integration — Pepe Escobar

Coming decade could see the U.S. take on Russia, China and Iran over the New Silk Road connection

The Raging Twenties started with a bang with the targeted assassination of Iran’s General Qasem Soleimani.

Yet a bigger bang awaits us throughout the decade: the myriad declinations of the New Great Game in Eurasia, which pits the U.S. against Russia, China and Iran, the three major nodes of Eurasia integration.

Every game-changing act in geopolitics and geoeconomics in the coming decade will have to be analyzed in connection to this epic clash.

The Deep State and crucial sectors of the U.S. ruling class are absolutely terrified that China is already outpacing the “indispensable nation” economically and that Russia has outpaced it militarily. The Pentagon officially designates the three Eurasian nodes as “threats.”

Hybrid War techniques – carrying inbuilt 24/7 demonization – will proliferate with the aim of containing China’s “threat,” Russian “aggression” and Iran’s “sponsorship of terrorism.” The myth of the “free market” will continue to drown under the imposition of a barrage of illegal sanctions, euphemistically defined as new trade “rules.”

This commentary/opinion piece appeared on thesaker.is Internet site on Thursday — and it comes to us courtesy of Larry Galearis.  Another link to it is here.


Grant Williams: Civil unrest around the world. Failing Unicorns. All paths lead to gold

Erik Townsend and Patrick Ceresna welcome Grant Williams to MacroVoices. They discuss the recent civil unrest and global social degradation, if Tesla will follow the collapse of WeWork, and how to react to the recent rise in price of gold.

This 1 hour 27 minute long audio interview found a home on the youtube.com Internet site on Friday sometime — and it’s another contribution from Judy Sturgis.  Another link to it is here.


The PHOTOS and the FUNNIES

The next day…August 5…we departed Salmon Arm for Merritt…but not by the highway, but via the Douglas Lake Ranch back road.  First we had to get there — and these first three shots were taken along the highway before we got to the turn-off.  The last photo was taken after we got turned onto Douglas Lake Ranch Road.  The road wasn’t bad at this point…but that state of affairs didn’t last long — and soon we were faced with a very narrow and very rough logging road that wound ever upwards — and that part of the climb to the top of the Thompson Plateau was an adventure.  But once on top, everything was sweetness and light.  Click to enlarge.


The WRAP

Today’s pop ‘blast from the past’ needs no introduction whatsoever, nor does the group the performs it, nor the country that they’re from.  It was a big hit back then — and it still is today.  I had a front-row center seat to the musical of the same name in London a bit more than ten years ago.  It was fantastic.  The link is here…and enjoy!  There’s a kick-a$$ bass cover to this tune of course — and the link to that is here.

Sergei Rachmaninoff was one of Russia’s most gifted and popular composers.  His second piano concerto sits at the pinnacle of his most performed and beloved works — and rightfully so.  But close on the heels of that is his Symphony No. 2…Opus 27.  A brooding work, full of lush orchestration and is, without doubt my favourite symphony from the romantic era.  Here it is in full version form — and performed by the Radio Philharmonic Orchestra at the Concertgebouw in Amsterdam.  Eivind Gullberg Jensen conducts — and the link is here.


Well, it was certainly obvious that the Big traders/JPMorgan et al. were all over gold and silver prices yesterday.  Gold volume was, surprisingly, pretty light…so ‘da boyz’ had an easy time of it — and they were ever vigilant even in after-hours trading in New York.  It appears, as I mentioned in Friday’s column, that the Maginot line for silver is $18 the ounce and, for whatever reason, they allowed it close right on that number.  Platinum was fairly well behaved on Friday…but then there’s palladium.  As I said in my comments about it at the top of this column, it certainly had all the hallmarks of a short covering rally of huge proportions.  But since its such an illiquid and thinly-traded market, it wouldn’t have taken any more than a few hundred contracts or so to move it that much if a trading firm was determined to cover an existing short position, which is what look like happened.  It’s now hugely [and I mean hugely] overbought — and where it goes from here remains to be seen.

Here are the 6-month charts for the four precious metals — and the changes in all of them should be noted, with palladium being the stand-out.  Copper closed down a hair — and WTIC closed up the same amount.  Click to enlarge.

We are living in economic, financial and monetary environment that I never thought possible in this or any other lifetime — and I expect you feel the same way.  All sense of free markets have been swept away — and the central banks of the world, particularly the Federal Reserve, are now handing out hundreds of billions of dollars very week to Wall Street and foreign banks just too keep interest rates low — and the equity markets moving ever higher.

I used to be quite amused years ago when I heard that “print, or die” expression, but now that we’re permanently in it, I’m not smiling anymore.  As you’ve already figured out, the moment they stop, the entire system crashes and burns.

This current melt-up in the stock markets can’t and won’t last forever — and they can’t keep interest rates suppressed forever, either.  There’s a limit, which we obviously haven’t reached yet, where these central bank actions will show up in inflation and currency debasement, which I very much think is part of their plan.

Then the flight to precious metals in particular — and commodities in general, will be on in earnest — and that has started in some small way already.

At some point, the Middle East will blow up.  The deep state will see to that, as they haven’t gone away.  The first casualties will be all the oil refineries in the Gulf.

The Iranian government has made it quite clear that the first bomb or cruise missile that falls on their country, their first targets will be Saudi Arabia’s oil refineries, plus others I presume.  We’ve already seen the Iranian’s abilities to strike with precision — and one should never doubt their resolve, regardless of what harm comes to them.

And with oil prices suddenly double what they currently are, or far more…this ‘Everything Bubble’ that we’re living in will be a smouldering ruin in short order.

But [as I keep saying] until the central banks lose control through circumstance, or give it up by design, we’re nothing more than observers in all this.  All we can do is stand and watch — and hope we survive it.

Despite the setback in the precious metals so far in 2020, I’m still quite content to be “all in”…because as I said further up in today’s missive “this too shall pass“.

Monday is a national holiday in the U.S…Martin Luther King Jr. Day…and the markets will be closed…although I’m not sure if that will include the precious metal market or not — and I won’t know until the 6:00 p.m. EST open in New York tomorrow evening.

If it is open, then I’ll have a brief column on Tuesday.  But if the precious metal market is closed, I won’t have a column until Wednesday.

Enjoy what’s left of your weekend…long, or not…and I’ll see you whenever.

Ed

Ted Butler: The Genius of JPMorgan

17 January 2020 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price traded mostly quietly sideways in morning trading in the Far East on their Thursday, but was sold down a bit starting around 1:20 p.m. China Standard Time.  That tiny sell-off lasted until 2 p.m. CST — and it crept quietly higher from there until about thirty minutes after the noon silver fix in London.  From that juncture it was sold lower until 10:45 a.m. in New York — and it then wandered higher from there until the market closed at 5:00 p.m. EST.

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

Gold was closed in New York on Thursday at $1,551.90 spot, down $4.10 from Wednesday.  Net volume was reasonably quiet at a bit under 219,500 contracts — and there was a bit over 41,500 contracts worth of roll-over/switch volume out of February and into future months.

The price path that silver was guided on was mostly the same as it was for gold, with the only real difference being that silver’s high came at the 8:20 a.m. COMEX open…the moment it broke above $18 spot for the second time during the Thursday trading session.

The low and high ticks in silver aren’t worth looking up, either.

Silver was closed at $17.90 spot, down 6.5 cents on the day.  Net volume was nothing special at a bit over 56,500 contracts — and there was hair under 2,100 contracts worth of roll-over/switch volume in this precious metal.

Platinum ticked a few dollar higher until 8 a.m. China Standard Time on their Thursday morning — and it was then sold quietly lower until the 2:15 p.m. afternoon gold fix in Shanghai.  It began to head sharply higher once Zurich opened.  That rally ran into ‘something’ at 11 a.m. CST — and then an immoveable object at the COMEX open.  ‘Da boyz’ hammered it lower until 1 p.m. EST.  From that point it rallied a bit unevenly until trading ended at 5:00 p.m. in New York. Platinum was closed on Thursday at $1,004 spot, down 15 bucks on the day — and a whopping 39 dollars off its Kitco-recorded high tick.

Palladium also received the ‘platinum treatment’ — and its New York low came a few minutes before 1 p.m. EST.  Like platinum, it also rallied a bit going into the 5:00 p.m. close.  Platinum was closed at $2,233 spot, up 13 dollars from Wednesday, but a whopping $119 off its Kitco-recorded high tick.

As I keep saying, one can only fantasize about what palladium’s true free-market price is — and that goes for the other three precious metals as well.


The dollar index closed very late on Wednesday afternoon in New York at 97.23 — and opened down about 4 basis points once trading commenced around 7:45 p.m. EST on Wednesday evening, which was 8:45 a.m. China Standard Time on their Thursday morning.  It crawled higher until around 7:40 a.m. in London — and from that juncture it chopped quietly lower until the usual ‘gentle hands’ appeared at the 97.09 mark at 12:30 p.m. in London/7:30 a.m. in New York.  The subsequent ‘rally’ lasted until 10:20 a.m. EST — and the 97.36 high tick of the day was set at that point.  From there it edged a few basis points lower going into the 5:30 p.m. EST close.  The dollar index finished the Thursday session at 97.3200…up 9 basis points from its close on Wednesday.

For a change, there certainly was correlation between the currencies and the precious metals on Friday.  But only in gold and silver.  Platinum and palladium wouldn’t have sold off at all unless the Big 7/8 traders hadn’t shown up at the COMEX open to do the dirty.

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

And here’s the 6-month U.S. dollar index chart, courtesy of stockcharts.com.  The delta between its close…97.06…and the close on the DXY chart above, was 26 basis points on Thursday.  Click to enlarge as well.

The gold stocks were sold down a bit over a percent at the 9:30 open in New York yesterday, but bounced back quickly — and then chopped quietly sideways for the rest of the Thursday session.  The HUI closed down 0.53 percent.

The trading pattern in the silver equities was identical as those for the gold share, except for the fact that they were sold lower by almost two percent at the 9:30 a.m. EST open — and didn’t recover nearly as much.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 1.01 percent.  Click to enlarge if necessary.

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

Peñoles didn’t trade again yesterday, but that fact had no effect on the Silver Sentiment/Silver 7 Index.  The big loser on the day was Pan American Silver…down 4.80 percent — and the top dog was Coeur Mining once again…up 1.01 percent.


The CME Daily Delivery Report showed that 39 gold and 44 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, of the three short/issuers in total, the only two that mattered were Dutch bank ABN Amro and JPMorgan, with 20 and 16 contracts out of their respective client accounts.  There were five long/stoppers total — and the three largest were Credit Suisse, Morgan Stanley and Advantage, with 23, 8 and 5 contracts.  All contracts stopped were for their respective client accounts as well.

In silver, the sole short/issuer was JPMorgan out of its client account — and of the four long/stoppers in total, the two largest were Scotia Capital/Scotiabank with 27 contracts for its own account — and Morgan Stanley with 12 contracts for its client account.

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

The CME Preliminary Report for the Thursday trading session showed that gold open interest in January rose by 56 contracts, leaving 88 left, minus the 39 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that zero gold contracts were posted for delivery today.  Silver o.i. in January also rose…by 49 contracts, leaving 52 still around, minus the 44 mentioned a few paragraphs ago. Wednesday’s Daily Delivery Report showed that zero silver contracts were posted for delivery today.


After a withdrawal on Wednesday, there was a deposit into GLD on Thursday, as an authorized participant added 37,658 troy ounces.  And, for the second day in a row, there was a withdrawal from SLV, as an authorized participant took out 420,193 troy ounces.  Ted would make the assumption, correctly I’m sure, that JPMorgan owns all this silver now.

In other gold and silver ETFs on Planet Earth on Thursday…net of COMEX, GLD & SLV activity…there was a net 272,600 troy ounces of gold removed — and that was all because of a chunky 302,547 troy ounces that was taken out of the ‘Source’ ETF.  There was a net 196,905 troy ounces of silver removed as well — and the lion’s share of that was because of 112,133 troy ounces that departed SIVR.

There was no sales report from the U.S. Mint, although there certainly is 2020 product for sale just about everywhere you look now.  I got something from Sprott Money advertising it — and there are lots of others as well.  I suppose the mint will get around to updating their website when it suits them.

There was very little activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  Nothing was reported received — and only 8,069 troy ounces was shipped out.  Of that amount, there was 8,037.500 troy ounces/250 kilobar [U.K./U.S. kilobar weight] from Loomis International…and the remaining 32.151 troy ounces/1 kilobar [SGE kilobar weight] departed Brink’s, Inc.  The link to that is here.

There was some activity in silver.  Although nothing was reported received, there was 1,210,001 troy ounces shipped out.  Of that amount, one truckload…608,525 troy ounces…departed CNT — and the second truckload…600,425 troy ounces…was shipped out of Canada’s Scotiabank.  The remaining 1,050 troy ounces…one good delivery bar…departed Delaware.  There was also some paper activity, as one truckload…607,687 troy ounces…was transferred from the Registered category — and back into Eligible over at CNT.  Ted might assume that this was JPMorgan, or its clients silver — and they were changing categories in order to save on storage charges.  The link to all this is here.

After receiving 8,000 kilobars of gold on Tuesday, the COMEX-approved gold kilobar depositories in Hong Kong picked up another 7,000 kilobars on Wednesday — and the only shipped out 1 kilobar.  All of this activity was at Brink’s, Inc of course — and the link to that, in troy ounces, is here.


Netherlands, Gelderland, Province of the United Netherlands, 1543-1795, Ducat 1646

Material: Gold     Full Weight: 3.41 grams     Fine Weight: 3.21 grams

I don’t have all that much in the way of stories for you today.


CRITICAL READS

Surprisingly Ugly” – U.S. Freight Shipments Plunge at Fastest Rate Since 2009, Hit 2011 Levels — Wolf Richter

Shipment volume in the U.S. by truck, rail, air, and barge plunged 7.9% in December 2019 compared to a year earlier, according to the Cass Freight Index for Shipments. It was the 13th month in a row of year-over-year declines, and the steepest year-over-year decline since November 2009, during the Financial Crisis…Click to enlarge.

The Cass Freight Index tracks shipment volume of consumer goods and industrial products and supplies by all modes of transportation, but it does not track bulk commodities, such as grains. As always when things get ugly, the calendar gets blamed – Christmas fell on a Wednesday, as it does regularly.

More realistically, December was also the month when Celadon Group, with about 3,000 drivers and about 2,700 tractors, filed for Chapter 11 bankruptcy and ceased operations — the largest truckload carrier ever to file for bankruptcy in U.S. history. It rounded off a large wave of bankruptcies and shutdowns of trucking companies in 2019, most of them smaller ones, but also some regional carriers, and on December 9, Celadon.

Rail traffic in December capped off a miserable year, with carloads down 9.2% year-over-year in December, and container and trailer loads (intermodal) down 9.6%, according to the Association of American Railroads. For the 52-week period, traffic of carloads and intermodal units fell 5%.

This 4-chart article showed up on the wolfstreet.com Internet site on Wednesday sometime — and I plucked it from a Zero Hedge story that was posted on their website on Thursday morning EST.  Another link to it is here.


New York Fed Considering Becoming Sugar Daddy to Hedge Funds as their Distress Grows

It’s apparently not enough of a billionaire subsidy for the U.S. Treasury’s Internal Revenue Service to give a monster tax break to hedge fund titans by allowing them to pay Federal taxes on the basis of “carried interest,” meaning that they have a special loophole to pay a lower tax rate than many school teachers, nurses and plumbers. Now, according to an article in The Wall Street Journal, the Federal Reserve is actually considering opening its super-cheap repo loan money spigot to hedge funds. It doesn’t get any crazier than this.

Morphing from a central bank mandated to set monetary policy on the basis of maximum employment and stable prices, to the lender-of-last-resort to the criminally-charged trading houses on Wall Street and now, potentially, to the insider-trading/Big Short hedge funds, the New York Fed has totally lost its way if not its mind. (Unless, as many suspect, the New York Fed is simply the poorly-disguised money puppet of the one percent.)

The talk of a hedge fund bailout comes at a time when multiple hedge funds and illiquid mutual funds have locked their gates, preventing investors from getting back their money. It also comes after a year of giant net withdrawals from hedge funds. Equally noteworthy, in the past two years over 1200 hedge funds have shut down according to Hedge Fund Research.

This very worthwhile article was posted on the wallstreetonparade.com Internet site on Thursday — and I lifted it from a GATA dispatch.  Another link to it is hereGregory Mannarino‘s post market close rant for Thursday is linked here.  I haven’t had the time to listen to the whole thing, so I don’t know if this one is ‘R‘ rated or not.


America’s Economy: A Downward Spiral With No Solution In Sight

China and the U.S. signed a truce in the trade war yesterday. Kinda. Sorta.

CNBC:

To be sure, the deal does not remove existing U.S. tariffs on Chinese imports and leaves questions as to how the terms of the agreement will be enforced. The deal is also seen as “fragile” by some analysts who believe additional levies could still be implemented.”

But kinda and sorta – and another $142 billion from the Federal Reserve on Monday and Tuesday – were all investors needed to push the Dow up over 29,000.

As expected, The Donald could never go full Trade War… Too much at stake. Most important, an election.

And as expected, after all the sound and fury, little actually changes. Except that the economy weakens and The Swamp (now that the feds manage trade as well as everything else) gets deeper.

This very worthwhile commentary from Bill appeared on the bonnerandpartners.com Internet site on Thursday morning sometime — and another link to it is here.


Are Real Estate Investment Trusts Safe Investments? — Dennis Miller

In a yield-starved investment world, should investors be buying Real Estate Investment Trusts (REIT)? Can they bring solid, safe returns? Many investors love them, while some shy away. How volatile are they? How do you evaluate them?

A subscriber recently asked a good question. He purchased a subscription from one of our trusted affiliates, The Dividend Hunter. He looked at a recent recommendation and was “stunned” to find a price/earnings ratio (P/E) over 25 and a payout ratio well in excess of 100%. What gives?

I asked our expert, friend, and colleague, Tim Plaehn for further clarification. I’m glad I did. It was an excellent learning experience and one our readers should appreciate.

DENNIS: Tim, thanks for taking the time for our education. Let’s get right to it. REITs are different from an investing standpoint. The Dividend Hunter seeks out companies in many different businesses that have good and sustainable dividends.

How can a company pay out dividends in excess of profits and still be highly recommended?

This longish but interesting Q&A session put in an appearance on Dennis’s website on Thursday morning — and another link to it is here.


Trump to Nominate a Critic and an Insider to the Fed Board

President Trump said today he would formally nominate Judy Shelton and Christopher Waller to the Federal Reserve’s Board of Governors, about six months after Mr. Trump said he intended to add the two to the central bank.

Ms. Shelton, a critic of the Fed who has long supported backing the dollar with gold or some other anchor, has spent the intervening time tweeting her support of Mr. Trump’s administration and its policies. Mr. Waller, executive vice president and director of research at the Federal Reserve Bank of St. Louis, has kept out of the spotlight.

Ms. Shelton and Mr. Waller will now be vetted by the Senate Banking Committee and must be confirmed by the Senate. If that happens, the president will have nearly a full suite of his own picks at the Fed board. He will have nominated six of the seven sitting governors.

The rest of this New York Times article is hidden behind their subscription wall.  I found this part of it on the gata.org Internet site on Thursday evening EST — and another link to it is here.


German Industry “Stuck In Recession,” No Signs of Bottom, Warns BDI

Germany’s Bundesverband der Deutschen Industrie (BDI) warned Thursday that economic growth in Europe’s largest economy was “stuck in a recession,” with little hope of an economic rebound.

BDI said economic growth in Germany would continue to decelerate in 2020 as there are no signs of improvement in the struggling manufacturing sector.

Industry remains stuck in recession, and there are no signs for the sector bottoming out,” BDI President Dieter Kempf said Thursday.

BDI forecasted economic growth at 0.5% in 2020, adding that adjusted growth will print around 0.1%.

Kempf said the government needs to increase public investment in infrastructure as a counter-cyclical buffer against the slowdown. He also said tax cuts are needed for corporations.

The warning from BDI comes as Germany’s economic growth rebounded slightly in the fourth quarter but slowed last year to its weakest level in six years as trade tensions escalated, exports plunged, and a steep downturn in the automotive industry was seen.

This story appeared on the Zero Hedge Internet site at 9:45 a.m. EST on Thursday morning — and I thank Brad Robertson for sharing it with us.  Another link to it is here.


Russian political earthquake: Putin sets out plan for Kremlin departure and Medvedev resigns

They say life comes at you fast. A seemingly routine ‘state-of-the-nation’ address by Vladimir Putin unexpectedly turned into one of the most memorable afternoons in recent Russian political history.

On Wednesday, Russia’s government resigned. Dmitry Medvedev departed the political front line, and Vladimir Putin effectively confirmed that he will leave the presidency at the end of his present term, suggesting Mikhail Mishustin as the new Russian prime minister. As Van Morrison once crooned, there will be days like this.

And it’s only the 15th of January. A week after Russians observed Orthodox Christmas, and a fortnight since they celebrated New Year, it didn’t take long for real business to resume.

In the morning, Mishustin was so unknown outside of Russia that he didn’t even have an English language Wikipedia page. And his profile inside the country was minor, beyond the world of political and administrative wonks.

But there’s no doubt he’s an effective manager. As the head of the Russian tax service he’s been a tremendous success. Revenues have risen by around 20 percent under his watch despite only a 2 percent rise in the tax burden itself. Indeed, only last year the Financial Times dubbed him the “taxman of the future” for his role in rebuilding Russia’s tariff collection system into one of the most advanced and efficient in the world.

No mean feat in a country where tax avoidance was once, pretty much, a sort of national sport.

This interesting news item showed up on the rt.com Internet site at 9:45 p.m. Moscow time on their Wednesday evening, which was 1:45 p.m. in Washington — EST plus 8 hours.  I thank Larry Galearis for pointing this out — and another link to it is here.  A parallel commentary to this from the moonofalabama.org Internet site is headlined “The Russian Prime Minister Resigns and No One Knows Why” — and I thank Brad Robertson for sending it our way.


Russia’s $40 Billion Gold Buying Binge Is Slowing Down

Russia, the world’s biggest buyer of gold, is losing interest in the precious metal.

After spending an estimated $40 billion on gold in the past five years, the central bank is starting to rein in spending. It bought 149 tons of gold in the first 11 months of 2019, 44% less than the year before. Annual purchases are expected to be the lowest in six years.

Analysts say that Russia’s central bank has maxed out the proportion of gold it wants to keep in reserve. They also view the threat of U.S. sanctions and the need for a buffer against economic shocks diminishing as issues like the annexation of Crimea, election interference and the poisoning of a former Russian spy on British soil fade from public conversation.  Click to enlarge.

To be sure, even at these lower levels, Russia is still buying a lot of gold and ranks at the top of the biggest purchasers. The country owns 2,262 tons of the precious metal, worth $106 billion, and stores some in vaults at the central bank in Moscow.

Nothing here that I haven’t already told you over the last few months, dear reader.  But this Bloomberg story spews the usual anti-Russia b.s. in the third paragraph…none of which is true.  This article appeared on their Internet site at 11:56 p.m. PST on Thursday night — and was updated about four hours later.  I found it on the gata.org Internet site — and another link to it is here.  [Note: Russia’s Central Bank reports their December gold purchases on their website on Monday. – Ed]


Second-Biggest Diamond Ever Will Become Louis Vuitton Jewelry

The second-biggest diamond in history will be cut, polished and turned into a collection of Louis Vuitton jewelry.  Click to enlarge.

Lucara Diamond Corp., which found the 1,758-carat Sewelo diamond at its Botswana mine last year, said it’s struck a deal with the luxury brand and Antwerp diamond manufacturer HB Company. It’s unclear how valuable the polished diamonds will be though, as Lucara previously said the Sewelo wasn’t a type of diamond that yields top jewelry standard gems.

Lucara will get a “non material” upfront fee and own 50% of the polished diamonds from the Sewelo, which means “rare find” in Tswana, a language spoken in Botswana, and is roughly the size of a tennis ball.

Louis Vuitton has been pushing into fine jewelry since opening a flagship store on Paris’s Place Vendome — the famed district home to Cartier and Boucheron — and since tapping a new head jewelry designer, Francesca Amfitheatrof.

This brief but interesting Bloomberg article was posted on their website at 1:00 a.m. PST on Thursday morning — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.


Ted Butler: The Genius of JPMorgan

Yesterday, JPMorgan Chase, the largest bank in the U.S., reported record earnings of $8.5 billion for the fourth quarter and roughly $35 billion for the full year. These are net profits, after all expenses and costs are subtracted from gross revenues. It is no understatement to call JPMorgan a profit-generating machine.

My interest in the bank, of course, comes from the perspective of gold and silver. The connection is that JPMorgan is the largest player, by far, in all aspects of gold and silver. Always among the top players in the gold and silver space for decades, what pushed JPMorgan to the very top was its takeover of Bear Stearns in 2008 which resulted in JPM taking the place of Bear as the largest short seller in COMEX gold and silver futures.

It is said that necessity is the mother of invention and I confer on JPMorgan the title of genius for its solution to a serious problem it found itself in early in 2011 when silver ran up to near $50 while the bank was heavily short and holding open losses of close to $3 billion. While JPMorgan did succeed in crushing the price starting on May 1 of that year and eliminating its large open losses, it knew it needed a permanent solution to what would be a recurring problem in the future, namely, how to mitigate against future run ups in the price of silver (and gold), since it intended on continuing to be the largest short in COMEX futures.

That JPMorgan’s solution was simple in no way detracts from it being termed genius. In hindsight, nearly 9 years after being conceived and implemented, JPM’s solution is only more genius. Since the bank was the largest short seller in the largest paper (derivatives) precious metals market in the world, the COMEX, it was not possible for JPMorgan to buy other paper contracts on the COMEX or elsewhere to offset its short paper positions. Such paper derivatives buying would cancel out each other and immediately eliminate JPM’s role as largest COMEX short seller and with that elimination end the bank’s leading role and influence on price. Besides, any attempt by JPMorgan to buy large quantities of COMEX contracts would immediately show up in Commitment of Traders (COT) and Bank Participation reports. (I would remind you that I first discovered JPMorgan’s leading role in COMEX dealings as a result of the Bank Participation report of August 2008).

This commentary from Ted is definitely worth reading.  It was posted on the silverseek.com Internet site at 12:48 p.m. MST on Thursday afternoon — and another link to it is here.


The PHOTOS and the FUNNIES

After photographing the Columbia River from on high, we descended to river level — and I took this shot looking up river…generally NNW — and that Big Eddy Bridge featured in yesterday’s column, is also visible in this photo at left-of-center.  The next picture is of the Old Court House in Revelstoke…c. 1913…which, without doubt, is the most impressive building in the whole town by several orders of magnitude.  The third shot if of one of the main drags [MacKenzie Avenue] that’s been restored to its very early 1900’s glory…as a lot old B.C. towns are.  We ate lunch/supper at a restaurant along there — and then headed back to Salmon Arm. I took the last photo of one of the several small pond/lakes in Eagle Pass through the Monashee Mountains on the return trip.  Click to enlarge.


The WRAP

You don’t need me to tell you that ‘da boyz’ were out and about yesterday, particularly in platinum and palladium.  But their engineered price declines had zero to do with what was happening in the currencies.  At least there was some correlation in both silver and gold — and whether that occurred by pure market forces, or by design, is unknown.  And I should also point out that obvious, that at least for the moment, ‘da boyz’ have put in a line in the sand at $18 spot for silver.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  Note the ‘gravestone’ dojis set by JPMorgan et al. in both palladium and platinum.  Those are very negative technical indicators for those who still believe in these sorts of things in such managed markets — and it remains to be seen if ‘da boyz’ will press their advantage now that they’ve set them.  Copper closed lower by 2 cents — and WTIC closed up a bit.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I see that gold was sold lower by a few dollars until 9 a.m. China Standard Time on their Friday morning. It then began to head higher, but ran into ‘something’ a few minutes before 2 p.m. CST — and it hasn’t been allowed to do much since — and is up $3.10 the ounce currently. Ditto for silver. Its rally made it above $18 spot shortly before 2 p.m. CST, but was batted below it almost immediately. It has ticked above that price since then — and is up 10 cents as London opens. Platinum has stair-stepped its way quietly higher in Far East trading, but was turn lower shortly after 3 p.m. CST on their Friday afternoon. It’s up 8 bucks at the moment. Palladium was up almost 30 bucks by shortly before noon China Standard Time on their Friday — and it then chopped quietly sideways until 3 p.m. CST. It has been sold lower since — and it’s only up 6 dollars as Zurich opens.

Net HFT gold volume is fairly decent already…right around 50,000 contracts — and there’s 1,720 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is a bit under 11,000 contracts — and there’s only 314 contracts worth of roll-over/switch volume on top of that.

The dollar index opened down about 3 basis points as 97.30 once trading commenced around 7:45 p.m. EST on Thursday evening in New York, which was 8:45 a.m. China Standard Time on their Friday morning. It has been wandering very quietly sideways since — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the index is down 2 basis points.


Today, around 3:30 p.m. EST, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday.

I’m of the belief that we’ll see some big improvements in the commercial net short positions in both gold and silver.

But silver analyst Ted Butler is not putting a stake in the ground on what may be in it — and this is what he had to say about it in his mid-week commentary to his paying subscribers on Wednesday…”As far as what the COT report will indicate on Friday, I’m going to once again refrain from predictions and concentrate on what the report may reveal. The reporting week that ended [on Tuesday] covered one of the most tumultuous trading weeks in memory, seeing as it started with last Wednesday night’s price explosion on the Iranian missile attack…to be followed by fairly steady selling through yesterday’s close. Trading volume was heavy, but total open interest only increased by 11,000 contracts in gold — and was flat in silver. I am unsure what impact spreads may have had in gold. What I will be looking (and hoping) for is whether the big commercial shorts continued to close out short positions, as was evident in the prior COT report.”

Whatever the report shows, I’ll have it for you in my Saturday missive.


And as I post today’s column on the website at 4:02 a.m. EST, I note that both gold and silver have sagged a bit during the first hour of London trading. Gold is currently up only $2.00 the ounce — and silver is up only 7 cents — and back below $18 spot for the second time today. Platinum hasn’t done must of anything — and is up 8 dollars. But palladium is now up 16 as the first hour of Zurich trading ends.

Gross gold volume is a bit over 68,000 contracts — and net of current roll-over/switch volume out of February and into future months, net HFT gold volume is around 47,000 contracts. Net HFT silver volume is a bit under 13,000 contracts — and there’s still only 323 contracts worth of roll-over/switch volume in this precious metal.

The dollar index hasn’t done much during the last hour of trading — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s down 4 basis points.

I hope you have a great weekend — and I’ll see you here tomorrow.

Ed

Palladium Keeps On Truckin’ Higher

16 January 2020 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Gold’s rally attempt at the 6:00 p.m. EST open in New York on Tuesday evening, ran into ‘something’ within the hour — and it was sold lower until around 10 a.m. China Standard Time on their Wednesday morning.  From there it headed a bit higher until a few minutes before 11 a.m. CST — and from that juncture it chopped quietly sideways until it began to head lower starting about an hour or so before the 8:20 a.m. COMEX open in New York.  The low tick was set at that point — and it had rather vicious up/down move going into the 10 a.m. EST afternoon gold fix in London.  Then, once London closed at 11 a.m. EST, the gold price began to head higher once more, culminating in a spike up starting at 2:30 p.m. in after-hours trading.  That ran into ‘da boyz’ within minutes — and was sold lower — and then chopped unevenly sideways until trading ended at 5:00 p.m. EST.

The low and high ticks were recorded by the CME Group as $1,546.50 and $1,557.60 in the February contract.

Gold was closed in New York on Wednesday at $1,556.00 spot, up $9.90 on the day.  Net volume wasn’t exactly light at a bit over 256,500 contracts — and there was around 54,500 contracts worth of roll-over/switch volume on top of that.

In most respects that mattered, the silver price action was similar to gold’s, except after its price was capped around 11 a.m. CST, the price chopped unevenly sideways until the noon silver fix in London — and then like gold was sold down to its low tick of the day, which came at the COMEX open in New York as well.  It took off higher from there, but was capped and turned lower the moment it breached the $18 spot mark at 9:10 a.m. EST.  But once the afternoon gold fix in London was done for the day fifty minutes later, it crawled quietly higher until its upwards price spike occurred at 2:30 p.m.  That was dealt in a similar manner as gold’s price spike at that time.

The low and highs in silver were reported as $17.755 and $18.055 in the March contract.

Silver was closed on Wednesday afternoon in New York at $17.965 spot, up 21.5 cents from Tuesday.  Net volume was pretty decent at a bit under 71,000 contracts — and there was a hair under 4,000 contracts worth of roll-over/switch volume in this precious metal.

The platinum price crept higher until it hit the $990 spot mark around 10:30 a.m. CST on their Wednesday morning — and didn’t do much of anything after that until the Zurich open.  It blasted higher from there, but ran into ‘something’ at 10 a.m. CET [Central European Time].  It was sold lower for the next hour and change — and then proceeded to rally anew.  That ran into ‘something’ around 10:20 a.m. in New York — and it was sold lower until a few minutes before noon EST.  It then crept higher until 1 p.m. — and didn’t do much of anything after that.  Platinum was closed at $1,019 spot, up 38 bucks on the day.

Palladium’s tiny rally at the 6:00 p.m. open in New York on Tuesday evening met the same fate as the tiny rallies in the other three precious metals at that point.  From there it didn’t do much until about thirty-five minutes before the Zurich open.  It had a decent-sized up/down move at that juncture that lasted until a few minutes after 12 o’clock noon CET.  A very decent rally began at that point — and that continued almost without a break until trading ended at 5:00 p.m. EST in New York.  Palladium finished the Wednesday session at $2,220 spot, up 66 dollars from its close on Tuesday — and at another new all-time high.

And as I’ve been going on for about six months now…heaven only knows what palladium would be priced at if it was allowed to trade freely.  Whatever that price is, it’s obviously considerably higher than where it sits now.


The dollar index closed very late on Tuesday afternoon in New York at 97.37 — and opened basically unchanged once trading commenced at 7:45 p.m. EST on Tuesday evening.  It edged unevenly lower from that point until a bit of a rally commenced about thirty-five minutes before the London open.  That tiny rally petered out about an hour later — and at 10 a.m. GMT it turned lower once again.  The 97.16 low tick was set at 12:30 p.m. in New York — and it crept very unevenly higher from that point until trading ended at 5:30 p.m. EST.  The dollar index finished the day at 97.23…down 14 basis points from its close on Tuesday.

It was yet another day where there was no correlation between the currencies — and what was happening in the precious metals.

[I got distracted yesterday afternoon and forgot to copy and paste the Wednesday DXY chart from Bloomberg.  By the time I discovered the error of my ways, the chart had already rolled over into the Thursday trading session in the Far East…as had all the other DXY charts on the Web as well, so it’s M.I.A. today…but not much happened anyway.]

Here’s the 6-month U.S. dollar index chart, courtesy of the good folks over at the stockcharts.com Internet site.  The delta between its close…96.96…and the close on the DXY chart, was 27 basis points on Wednesday.  Click to enlarge.

The gold stocks had a smallish up/down move between the 9:30 a.m. open in New York and about 10:15 a.m. EST — and at that point were down a hair on the day.  But that state of affairs didn’t last long — and they began to head higher from there.  Their respective highs came around 2:35 p.m. when the gold price was capped and turned lower in after-hours trading.  They were sold a bit lower until about 3:10 p.m. EST — and drifted a bit higher into the 4:00 p.m. market close.  The HUI finished up 2.27 percent.

The silver equities followed an almost identical price path as the gold shares, so I’ll spare you the play-by-play.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 2.08 percent.  Click to enlarge if necessary.

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

Peñoles didn’t trade yesterday, so the actual gain in the Silver 7 Index on Wednesday is more correctly stated as +2.51 percent.  The big winner was CDE…up 5.61 percent — and Pan American Silver came in last…up only 0.93 percent.


The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  I’ve never seen that before, ever.  The only deliveries posted for Friday are 4 platinum contracts.

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 January rose by 3 contracts, leaving 32 still around.  Tuesday’s Daily Delivery Report showed that 1 gold contract was actually posted for delivery today, so that means that 3+1=4 more gold contracts were just added to January.  Silver o.i. in January fell by 20 contracts, leaving just 3 still open.  Tuesday’s Daily Delivery Report showed that 20 silver contracts were posted for delivery today, so the change in open interest and the deliveries match for once.


There was a decent-sized addition to GLD on Wednesday, as an authorized participant deposited 122,389 troy ounces.  There was a withdrawal from SLV yesterday, as an a.p. took out 822,396 troy ounces — and Ted would assume that JPMorgan owns that silver now.

In other gold and silver ETFs on Planet Earth on Wednesday…net of any COMEX, GLD & SLV activity…there was a net 48,121 troy ounces of gold added, but a net 116,306 troy ounces of silver was withdrawn…89,451 troy ounces from Deutsche Bank — and 26,855 from Sprott.

There is still no sales report from the U.S. Mint.  But a little bird told me that they have been shipping 2020 product for a while now, as he has seen it for himself…however this data is not showing up on their website.  I may be able to find out more today.

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

There was very little activity in silver.  Nothing was reported received — and the only ‘out’ activity was 6,872 troy ounces that departed Delaware.  I won’t bother linking this.

There certainly was activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They reported receiving 8,000 of them — and didn’t ship out any.  All of this action was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Sardinia, 20 Lire 1828…Charles Felix, 1765-1831

Material: Gold     Full Weight: 6.43 grams  Fine Weight: 5.78 grams

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


CRITICAL READS

You Can’t Make This Up: N.Y. Fed President Slams Bankers For Risk-Taking Behavior

The latest stroke of genius from N.Y. Fed president John Williams, who spoke earlier today to students at the London School of Economic with the intention of giving them career advice and perspectives on corporate culture (Williams says “I’ve now led two major organizations, and culture is both the hardest and the most important thing to get right” and yet he hasn’t worked in the private sector a single day in his life), is simply beyond commentary, even for jaded, veteran observers of endless human observers such as this website.

Consider the following excerpt from his speech:

When we talk about company culture in the context of financial services, the first thing that comes to mind is the risky, unethical, and sometimes criminal behavior in the banking industry, particularly during the financial crisis. And 10 years on from the crisis, this behavior persists. Instances of fraud, money laundering, and scandals related to foreign exchange and LIBOR continue to make the headlines.”

And then consider the following admission from Fed Chair Jerome Powell, made in October 2012:

I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road.

You can almost say that that is our strategy.”

As we said, one simply can’t make this sh*t up anymore.

The above posted paragraphs are all there is to this rather short article that appeared on the Zero Hedge website at 11:45 a.m. EST on Tuesday morning — and another link to it is here.


Debt and Inflation Are Bringing the Economy Down — Bill Bonner

Fed Adds $82 Billion to Financial Markets.” That’s the headline on page B12 of today’s Wall Street Journal, reporting on Tuesday’s Federal Reserve action. On Monday, the Fed added $60 billion.

This “repo madness” has been going on for four months.

It’s time to ask some questions…

 From Theoretical to Desperate

Who is the biggest debtor in the world? Who is already scheduled to borrow another $20 trillion in the next 20 years?

Who has the biggest bet against the U.S. currency and U.S. government bonds? Who then has the greatest interest in seeing the U.S. dollar… and U.S. bonds… go down? Who would gain as much as $23 trillion if the dollar went the way of the Venezuelan bolívar tomorrow?

And who is in a position to make it happen?

The answers to those questions are all the same: the U.S. government. Nobody stands to make more from inflation and a fall of the dollar and U.S. dollar bonds.

This worthwhile commentary from Bill appeared on the bonnerandpartners.com Internet site on Wednesday morning sometime — and another link to it is hereGregory’s Mannarino‘s post market close rant for Wednesday is also ‘R‘ rated — and this is what reader ‘Mac P’ had to say about it in an e-mail to me yesterday…”Greg’s inner Brooklyn Italian on full display today. I think maybe he’s gone perma-R.”  His 16:40 minute commentary is linked here.


Russia will further turn away from dollar as U.S. pursues “aggressive” sanctions policy – Lavrov

While Washington is “abusing” the status of the dollar as the world reserve currency, Moscow will continue to reduce its dependence on the greenback in favor of national currencies, the Russian foreign minister says.

Against the background of the increasingly aggressive use of financial sanctions by the U.S. Administration, Russia continues its policy aimed at gradual de-dollarization of the economy,” Sergey Lavrov told The Times of India. “Expanding settlements in national currencies is one of our priorities.”

Russia has been developing mechanisms to mitigate the impact of U.S. restrictions. New Delhi and Moscow are currently working on a new intergovernmental agreement on mutual protection of investments. Additionally, the Russia-led Eurasian Economic Union (EAEU) is mulling establishing a free trade zone with India, which is set to further boost investor protection, according to Russia’s top diplomat.

Moscow has been steadily decreasing its U.S. currency holdings. The Central Bank of Russia (CBR) halved the dollar share from its international reserves while increasing gold, yuan and euro holdings. According to recent data released by the regulator, the greenback share in Russian Forex reserves was 24.2 percent as of June 2019, while the international reserves reached almost $550 billion as of the end of last year.

The above four paragraphs are all there is to this brief news item that showed up on the rt.com Internet site at 7:24 a.m. Moscow time on their Wednesday morning…11:24 p.m. on Tuesday night in Washington.  I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to the hard copy is here.


Russian Government Unexpectedly Resigns on Putin Plans For Drastic Constitutional Changes

Russian Prime Minister Dmitry Medvedev has made a shock and dramatic announcement that he and the entire Russian government is resigning in a statement just after President Vladimir Putin’s annual state-of-the-nation address, state media outlets report. The ruble slipped about 0.5% on the news.

Despite what appears a drastic shake-up afoot, Reuters suggests it’s part of a plan that could result in Putin extending his power despite a constitutional ban currently in effect preventing him from running for more than two consecutive terms. It appears a bid for him to handpick the new government and enact reforms that could weaken his future successor.

President Vladimir Putin on Wednesday proposed a nationwide vote on sweeping constitutional changes that would shift power from the presidency to parliament and the prime minister, a move that could allow him to extend his rule after leaving the Kremlin,” Reuters comments.

Medvedev said the government resignation means Putin will decide the new government’s make-up, after which the now former prime minister appears to have been appointed head of the security council.

So despite it appearing that Putin is perhaps actually giving away power, it must be remembered that his presidential term doesn’t expire till 2024.

In this context, it is obvious that, as the government, we must provide the president with a capability to make all decisions,” Medvedev said of Putin’s proposing several amendments to the constitution. Medvedev later told TASS that Putin’s proposals introduce “substantial changes not only to an entire range of articles of the constitution, but also to the entire balance of power, the power of the executive, the power of the legislature, the power of judiciary.”

This worthwhile Zero Hedge story [if you have the interest, that is] showed up on their website at 9:15 a.m. on Wednesday morning EST — and I thank Brad Robertson for sending it our way.  Another link to it is here.


Putin’s Address — Andrei Martyanov

He spoke to Federal Assembly today and it was a dramatic address. My suggestion to you all, before more sober and lucid analysis of what just has happened in Russia (believe me it is absolutely wonderful) appears, to not read or listen to all kind of “analysis” from:

1. Western main stream media sources–none of them are knowledgeable and agenda-free ones, all of them are incompetents;

2. All kinds of Russian “communist”, “opposition” and other allegedly “left” sources are currently in a deep shock and butt-hurt and Russia’s nominal left, such as KPRF have very little that distinguishes them from Liberda. So, try to avoid their “analysis”.

Mind you, it is merely a suggestion to a free people such as you and you are free to seek out any sources of information and expertise you want. I simply wanted to warn you about a sh*t-storm which already rages in media sphere after Putin and Siloviki launched the process which majority of Russians were waiting and begging for years now. The time has come and final step to the restoration of a complete sovereignty of Russia has been made. Constitution WILL BE changed. “Westernization” of Russia is over, so is globalization in its present form.

This very brief but worthwhile commentary, along with a couple of embedded videos, was posted on Andrei’s website on Wednesday morning EST — and another link to the hard copy is here.  The complete text of Putin’s speech, which I have not read yet…is very, very long…and was posted on the en.kremlin.ru web site yesterday as well — and that is linked here.  Both of these items were sent our way by Larry Galearis.


U.S. Prepares to Cut All Military Aid If Iraq Asks Troops to Leave

Days after the Soleimani assassination and a move in Iraq’s parliament to begin the process of expelling American forces from the country, Trump issued threats of severe economic reprisal against Baghdad should it move forward with booting U.S. troops. “We have a very extraordinarily expensive air base that’s there. It cost billions of dollars to build. Long before my time. We’re not leaving unless they pay us back for it,” he said at the time in an initial veiled threat.

And now the U.S. State Department has confirmed it and the Pentagon are preparing to cut all $250 million of foreign military aid for Iraq from the 2020 military aid budget already approved. Further they’ve already requested the budged office should prepare to additionally cut $100 million from the 2021 request.

The Wall Street Journal reports that while no final decision to cut the aid has been made, emails confirm it’s being discussed and planned for at the highest levels:

The State Department and the Department of Defense have discussed the military assistance funds in e-mails reviewed by The Wall Street Journal. The e-mails indicate that the State Department’s Bureau of Near Eastern Affairs is working to cut all $250 million in funds under the U.S. foreign military financing program for Iraq for the current fiscal year.”

As a reminder of where things stand and America’s “popularity” or lack thereof inside Iraq, parliament already voted to expel U.S. troops and all foreign forces in a clearly decisive 170-0 vote. However, that vote only began or initiated the political process.

More crucial, however, is Iraq’s oil revenue which accounts for some 90% of the country’s annual budget, now under threat after Trump vowed that if Baghdad moves to expel U.S. forces, “we will charge them sanctions like they’ve never seen before.”

Earlier this week top Iraqi officials told the AFP that they fear economic “collapse” would be the end result of such threatened Trump administration sanctions, creating a domino effect of blocked government salaries, stalled public serves, and a plummeting of the dinar.

We’re an oil-producing country. Those accounts are in dollars. Cutting off access means totally turning off the tap,” one Iraqi official said. “It would mean collapse for Iraq,” another confirmed.

With ugly threats like this from one’s so-called ‘friends’…who needs enemies?  This Zero Hedge news item put in an appearance on their Internet site at 3:16 p.m. EST on Wednesday afternoon — and another link to it is here.


Europe Triggers Iran Deal ‘Dispute Mechanism’ in Drastic Measure to Prevent Nuclear Advancement

It goes without saying that the Iran nuclear deal is on its last legs and will likely die following declarations of Tehran leaders to no longer be beholden to uranium enrichment limits (in a January 6 statement) after the prior U.S. pull-out from the deal, but especially following the assassination of IRGC Quds Force Gen. Qasem Soleimani. Days after Soleimani’s death German foreign minister Heiko Maas warned the writing is on the wall as it marked the “first step towards the end” of the nuclear deal.

And now the deal’s final unraveling has just hit another crucial indicative milestone as on Tuesday France, Britain and Germany formally triggered the dispute resolution mechanism regulating conformity to the deal, seen as the harshest measure taken thus far by the European signatories. It essentially means the European powers officially see Iran as in breach of the deal; E.U. punitive sanctions are now on the table.

The European powers said they were acting to avoid a crisis over nuclear proliferation adding to an escalating confrontation in the Middle East. Russia, another signatory to the pact, said it saw no grounds to trigger the mechanism,” Reuters reports.

However in taking the dire action, a joint statement underscored this should not be interpreted as meaning they’ve joined Washington’s “maximum pressure” campaign, but are attempting to stave off an additional crisis of potential nuclear proliferation.

To trigger the mechanism, the European states notified the European Union, which acts as guarantor of the agreement,” Reuters notes. “E.U. foreign policy chief Joseph Borrell said the aim was not to reimpose sanctions but to ensure compliance.” But we highly doubt the Iranians will see the measure the same way.

Tehran has for more than the past year leveled accusations that the Europeans are ‘too little too late‘ with half-hearted measures to provide relief to Iran’s economy decimated by U.S. sanctions, such as the ‘SWIFT-alternative’ special purpose financial vehicle INSTEX.

This Zero Hedge article appeared on their Internet site at 4:15 a.m. EST on Wednesday morning — and it’s another contribution from Brad Robertson.  Another link to it is here.  That’s the Western media spin on this…but I suspect the reality is somewhat different as laid in this article/opinion piece on the moonofalabama.org Internet site headlined “Trump’s E.U. Poodles – Germany, Britain And France – Obey His Order to Kill The Nuclear Deal With Iran“.  It’s certainly worth reading — and comes to us courtesy of Larry Galearis.


Trump Secretly Threatened Europe With Auto Tariffs If it Didn’t Declare Iran in Breach of Nuclear Deal

A bombshell revelation from The Washington Post a day after France, Britain and Germany took unprecedented action against Iran by formally triggering the dispute resolution mechanism regulating conformity to the deal, seen as the harshest measure taken by the European signatories thus far. The European powers officially see Iran as in breach of the deal which means U.N. and E.U. punitive sanctions are now on the table.

But according to The Post, how things quickly escalated to this point is real story: “Days before Europeans warned Iran of nuclear deal violations, Trump secretly threatened to impose 25% tariff on European autos if they didn’t,” says the report.

This came as a “shock” to all three countries, with one top European official calling it essentially “extortion” and a new level of hardball tactics from the Trump administration.

Trump’s threats of auto tariffs to gain trade concessions with the Europeans is certainly nothing new, but using the same to dictate foreign policy is, notes WaPo‘s diplomatic correspondent John Hudson.

Like I just said, dear reader, with ‘friends’ like this…who needs enemies?  This news story was posted on the Zero Hedge website at 10:05 p.m. on Wednesday night EST — and another link to it is here.


Doug Casey on Silver’s Many Uses and What It Means For Its Future Price

International Man: Doug, let’s start with the basics. What makes silver useful and valuable?

Doug Casey: Throughout history, three metals have been used as money: gold, silver, and copper. All share the five qualities of good money—durability, divisibility, portability, consistency, and intrinsic value—but in different proportions. All three metals can be bought for the same reasons as well—each is a long-term store of value, a medium of exchange, and an interesting speculation, at least periodically.

Gold has always been, and probably always will be used primarily as money. Copper will probably remain an industrial metal. Silver falls neatly in between them both in price, the way it’s used, and where it fits into your investment portfolio. It can be viewed both as a way to save—like gold—and a way to speculate—like copper.

Of the 92 naturally occurring elements, silver is the most reflective and the most conductive of both heat and electricity. Those things make it a high-tech metal; there are new uses discovered for it almost every day.

You’ll recall that gold is the most malleable, the most ductile, and the most inert of the elements. Both of these monetary metals have “use” characteristics that distinguish them.

Of course Doug doesn’t breath a word about what the real price driver in silver will be when it blows sky high — and that’s the obscene and grotesque short position by the Big 7 traders in the COMEX futures market as they rush to cover.  This Q&A commentary put in an appearance on the internationalman.com Internet site on Wednesday afternoon — and another link to it is here.


Bridgewater sees an explosion in gold prices amid ‘frothy’ market climate

There is so much boiling conflict. People should be prepared for a much wider range of potentially more volatile set of circumstances than we are mostly accustomed to.’

That’s Greg Jensen’s rationale for why gold could be headed for a 30% rally to more than $2,000 an ounce.

The Bridgewater Associates co-chief investment officer, who helps oversee more than $160 billion in assets for the hedge-fund giant, told the Financial Times that political turbulence around the world along with a widening divide between the rich and the poor will continue to make for a dicey investing climate.

The Federal Reserve will allow inflation to run hot for a while and “there will no longer be an attempt by any of the developed world’s major central banks to normalise interest rates,” Jensen said. “That’s a big deal.”

This gold-related story was posted on the marketwatch.com Internet site at 3:28 p.m. EST on Wednesday afternoon — and I found on Sharps Pixley.  It was a story that Ted Butler pointed out earlier in the day — and another link to it is here.


The Perth Mint attributes sales surge to a single European country

The Perth Mint in Australia saw a surge in gold coin sales at the end of 2019, and it turns out Germany was behind most of those purchases, which hit the highest levels in more than three years in December.

Gold coin and minted gold bar sales from December showed a 45% uptick compared to the previous month. There was a total of 78,912 ounces of gold coins and minted bars sold in December, marking the highest monthly increase since October 2016, The Perth Mint said last week. The year-over-year comparison shows that sales were up 170%.

One of the reasons for surging demand out of Germany is investors’ worries about future economic growth, Vance pointed out. “There are some underlying issues in the German economy … Germany technically avoided a recession by 0.1% after having a negative Q2.”

Another factor boosting gold buying in Germany is a new law that came into effect on January 10, which limits the anonymous gold purchase buying from EUR €10,000 to EUR €2,000. “That may explain part of the reason why December was quite large,” Vance said. [No!…Really? – Ed]

Looking ahead, The Perth Mint’s January sales are also looking very strong, said Vance, citing demand for the Lunar coins ahead of the Chinese New Year, which takes place in late January.

People are buying up for that period … We expect a very good January. We got a lot of orders in the system. And that really comes on the back of not only the economic situation in Germany but also the issues in the Middle East. Even in Australian dollars, gold is at record levels. It spiked above AUD $2,350, which is really unbelievable,” Vance said.

This gold-related news item showed up on the kitco.com Internet site at 2:52 p.m. EST on Wednesday afternoon — and I thank George Whyte for bringing it to our attention.  Another link to it is here.


The PHOTOS and the FUNNIES

We finally made it to Revelstoke fairly late in the afternoon on August 4 — and the first thing I did was take this photograph of the mighty Columbia River — and part of Revelstoke’s suburbs from the Big Eddy Bridge…looking generally southeast.  The second shot is of the bridge itself.  It was originally a rail bridge from 1883/84 onwards…but was rebuilt as a road bridge in 1924.  The third photo was taken from a hill on the opposite side of the river looking generally northwest — and the aforesaid mentioned bridge is in the centre left of this photo.  The fourth shot was taken a few steps away from the third, except looking southwest.  The Monashee Mountains are the backdrop for the last two pictures.  I had passed through this town many times in the last 50 years, but this was the first time I had stopped here to “smell the roses” — and a return trip is definitely in the cards for this summer, as there’s so much more to see that we missed on this trip.  Click to enlarge.

The WRAP

I was certainly happy to see precious metal prices have a decent day yesterday, with both platinum and palladium on fire…with the latter posting another new record high close.  I’m wondering whether there was some short covering going on yesterday.  But since yesterday’s price action was on Wednesday, that fact won’t be known until next Friday’s COT Report…January 24.

It’s way too soon to speculate on whether we’ve seen the bottom for this move down in both silver and gold.  The Big 8 shorts…sans JPMorgan…are still in a world of margin call hurt — and as Ted mentioned in his mid-week commentary yesterday, they probably aren’t going to go down without a fight.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  The changes in the four precious metals should be noted.  And after yesterday’s big ‘up’ day in platinum, it’s now in slightly overbought territory.  But palladium is hugely overbought — and I’m still left wondering when ‘da boyz’ will drop the hammer on it.  Copper closed down a hair, but WTIC broke below and then closed below its 200-day moving average by a bit on Wednesday.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I see that the gold price traded flat almost right from the open of trading at 6:00 p.m. EST in New York on Wednesday evening. It ran into a little ‘something’ around 1:15 p.m. China Standard Time on their Thursday afternoon — and its current low tick was set at 2 p.m. CST. It has crept a tiny bit higher since — and is down $2.80 the ounce. Silver, ticked a bit higher in the first hour of trading, but was capped and sold lower once again as it ticked through the $18 spot mark. It has been sold quietly and somewhat unevenly lower since — and is down 10 cents as London opens. Platinum also rallied in the first hour and change of trading in New York on Wednesday evening — and since that time has followed a price path very similar to silver’s — and it’s down 6 bucks at the moment. Palladium also jumped higher at the open in New York yesterday evening, but that rally was capped and turned lower — and it edged sideways until shortly after the 2:15 p.m. CST afternoon gold fix in Shanghai. it has headed higher since then — and is up 19 dollars as Zurich opens.

Net HFT gold volume is a bit under 40,000 contracts — and there’s about 6,400 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is getting up there at a bit over 12,500 contracts — and there’s a tiny 178 contracts worth of roll-over/switch volume on top of that.

The dollar index opened down about 4 basis points at 97.19 once trading commenced around 7:45 p.m. EST on Wednesday evening in New York, which was 8:45 a.m. China Standard Time on their Thursday morning. It has been creeping very quietly and somewhat unevenly higher since then — and is up 2 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.


A little birdie told me yesterday that he saw a crawler on the bottom of the Bloomberg website on Wednesday morning stating that Jamie Dimon is scheduled to visit the White House today.  I’d love to be a fly on the wall for that meeting and, like that little birdie…wondering what it portends, particularly regarding the precious metals.

Tomorrow we get the latest and greatest Commitment of Traders Report — and even though I’ve already stuck my neck out and said that I was expecting some rather decent improvements in the commercial net short positions in both silver and gold, Ted was far more reticent.  As he stated in his mid-week commentary yesterday: “…once again [I will] refrain from predictions and concentrate on what the report may reveal.”


And as I post today’s missive on the website at 4:02 a.m. EST, I note that the gold price hasn’t done much in the last hour — and is down by $2.70 the ounce at the moment. Silver is down 7 cents as the first hour of London trading ends. Platinum is on the rise — and is down only a dollar — and palladium has jumped higher in the last few minutes — and is now up 30 bucks as the first hour of Zurich trading draws to a close.

Gross gold volume is a bit over 73,500 contracts — and minus current roll-over/switch volume out of February and into future months, net HFT gold volume is a bit under 50,500 contracts. Net HFT silver volume is a bit under 15,000 contracts — and there’s still only a tiny 191 contracts worth of roll-over/switch volume in this precious metal.

The tiny rally in the dollar index ended around 7:45 a.m. in London — and has turned lower since — and is now down 7 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

I’m done for the day — and I’ll see you here tomorrow.

Ed

Another Record High Close For Palladium

15 January 2020 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


‘Da boyz’ showed about forty-five minutes after the 6:00 p.m. open in New York on Monday evening — and had the price down about 11 dollars by 9:15 a.m. China Standard Time on their Tuesday morning.  From there it traded unevenly sideways until the low tick of the day was set around 1:40 p.m. CST.  The price crept a bit higher until shortly before 9 a.m. in London — and chopped quietly sideways for the rest of the day.  But it should be noted that the tiny rally in after-hours trading in New York had to be capped, or gold would have closed up on the day.

The high and low ticks aren’t worth looking up, but here they are anyway…$1,552.10 and $1,539.60 in the February contract.

Gold was closed in New York yesterday at $1,546.10 spot, down $1.30 from Monday.  Net volume pretty heavy at a bit under 286,500 contracts — and there was 64,000 contracts worth of roll-over/switch volume on top of that.

I thought I’d throw in the New York Spot Gold [Bid] chart so you could see the price activity an hour either side of the 1:30 p.m. EST COMEX close yesterday.  As I just pointed out, gold would have closed in positive territory if ‘da boyz’ hadn’t been there as short sellers of last resort.

Silver’s price path was similar up until the low tick of the day was set at the 2:15 p.m. afternoon gold fix in Shanghai.  From that juncture it trended generally higher until precisely 10:00 a.m. EST…the afternoon gold fix in London.  It was sold lower at the point [as was gold]…but began to head higher shortly after that — and its tiny rally in after-hours trading New York, also had to be capped — and from around 2:10 p.m. EST onwards, it traded flat until the market closed at 5:00 p.m.

The high and low ticks in silver were recorded by the CME Group as $17.985 and $17.69 in the March contract.

Silver was closed in New York on Tuesday at $17.75 spot, down 16.5 cents from Monday.  Net volume was pretty healthy at a bit under 76,500 contracts — and there was a bit under 9,500 contracts worth of roll-over/switch volume in this precious metal.

Platinum was also sold lower starting about forty-five minutes after New York opened on Monday evening as well — and from about 9:20 a.m. CST onwards it chopped unevenly sideways until the low tick of the day was set around 8:30 a.m. in New York.  Then away it went to the upside…running into more and more resistance as the price rose.  It made it up to the $982 spot mark by around 2:20 p.m. in after-hours trading — and wasn’t allowed to do much after that.  Platinum was closed at $981 spot, up 9 bucks on the day.

Palladium was also sold lower shortly after trading began at 6:00 p.m. EST in New York on Monday evening — and from there it traded unevenly sideways until about 1:30 p.m. China Standard Time on their Tuesday afternoon.  It began to crawl quietly higher from that point, but got sold quietly lower in morning trading in New York.  Shortly before 11:30 a.m. EST it began to rally hard — and that was capped and turned lower starting at 2 p.m. in the very thinly-traded after-hours market.  About ninety minutes later it turned higher once more — and closed on its high tick of the day at $2,154 spot, up 45 dollars from Monday.

With rhodium pushing $10,000 the ounce — and trading free of all COMEX price shackles, it’s obvious that palladium would also soar to great heights, if allowed…which it obviously isn’t.  It’s a very controlled rally.


The dollar index closed very late on Monday afternoon in New York at 97.35 — and opened up about 1 basis point once trading commenced around 7:45 p.m. EST on Tuesday evening, which was 8:45 a.m. China Standard Time on their Tuesday morning.  It ticked a handful of basis points higher for the next hour before chopping quietly and somewhat unevenly sideways until around 11:45 a.m. in London.  It began to head higher from there — and the 97.56 high tick was set around 8:22 a.m. in New York.  About an hour later it was headed lower…touching the unchanged mark about ten minutes after the 1:30 p.m. COMEX close.  Around an hour later it began to tick higher — and the dollar index finished the Tuesday session at 97.37…up 2 basis points from Monday’s close.

There was absolutely no correlation between the currencies and the precious metals again on Tuesday.

Here’s the DXY chart for Tuesday from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…97.09…and the close on the DXY chart above, was 28 basis points on Tuesday.  Click to enlarge as well.

The gold shares had a down/up move in the first thirty minutes of trading in New York on Tuesday morning — and after that they headed unevenly higher for the remainder of the day, closing almost on their high ticks.  The HUI closed up 1.43 percent.

The down/up move in the silver equities at the New York open yesterday was a bit more impressive — and they chopped very unevenly higher from that juncture for the remainder of the Tuesday session.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished higher by 1.76 percent…gaining back everything it lost on Monday, plus a hair more.  Click to enlarge if necessary.

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

I must admit that I was rather impressed with the performance of the precious metal equities yesterday…especially the silver stocks.  They actually did better than the Silver 7 Index chart indicates, because Peñoles didn’t trade yesterday under the ticker symbol that Nick uses — and that dragged the index down.


The CME Daily Delivery Report showed that 1 gold and 20 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, the lone short/issuer was Advantage — and Morgan Stanley stopped it.  Both transaction involved their respective client accounts.

In silver, the two short/issuers were JPMorgan and Advantage, with 17 and 3 contracts from their respective client accounts.  The three long/stoppers were Scotia Capital/Scotiabank with 10 contracts for its own account…followed by Advantage and Morgan Stanley with 6 and 4 contracts for their respective client accounts.

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

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in January dropped by 1 contract, leaving 29 still around, minus the 1 contract mentioned a few short paragraphs ago.  Monday’s Daily Delivery Report showed that 2 gold contracts were actually posted for delivery, so that means that 2-1=1 more gold contract was added to January deliveries.  Silver o.i. in January rose by 13 contacts, leaving 23 still open, minus the 20 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 2 silver contracts were posted for delivery today, so that means that 13+2=15 more silver contracts just got added to the January delivery month.


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

In other gold and silver ETFs on Planet Earth on Tuesday…net of COMEX, GLD & SLV activity…there was a net 117,177 troy ounces of gold withdrawn — and the biggest chunk of that was 113,496 troy ounces that was taken out of the three ETF Securities funds.  In silver, there was a net 213,006 troy ounces withdrawn — and that was because of chunky 268,352 troy ounces that was removed from Deutsche Bank.

And nothing from the U.S. Mint.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday was 2,200 troy ounces that was received at HSBC USA.  I won’t bother linking this.

There was a bit of activity in silver.  There was 299,184 troy ounces received — and that all ended up at Brink’s, Inc.  There was 36,907 troy ounces shipped out…20,009 from HSBC USA — and 16,898 from Delaware.  The link to that is here.

There was a tiny bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They received 129 of them — and shipped out 80.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here’s are two charts that Nick Laird passed around late on Tuesday afternoon PST.   The first shows the amount of gold withdrawn from the Shanghai Gold Exchange…updated with December’s data.  For that month there was 158.50 metric tonnes withdrawn.  Click to enlarge.

This second chart shows the amount of gold withdrawn from the Shanghai Gold Exchange for each year going back to 2008.  As you can tell, the withdrawals for the 2019 calendar year…totalling 1,642 metric tonnes…are the lowest since 2012.  Click to enlarge.

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


CRITICAL READS

Shopping Mall Vacancies Hit Two-Decade High

Shopping malls across the country are under severe financial distress, with vacancy rates hitting two-decade highs in 2019, reported the Financial Times, citing a new report from Reis Moody’s Analytics.

U.S. retailers announced 9,300 store closings in 2019, according to Coresight, indicating that the retail apocalypse and a massacre of malls are far from over.

Mall operators saw a surge of store closures in 2H19 and ahead of Christmas despite a relatively stable consumer that has been leveraging up via the use of credit cards.

Barbara Denham, a senior economist at Reis, said one notable trend during the 2019 holiday season was the shift in spending habits from brick and mortar stores to online.

Denham said recent vacancy statistics paint a disastrous picture for shopping malls as vacancy rates have surged to a record high of 9.7%.

The latest trend of record-high mall vacancies could be a warning to investors who own retail REITs that are exposed to regional malls and outlet centers.

The death of American malls is real, and it’s not being overstated, the worse has yet to come as more stores are expected to close in 2020.

This Zero Hedge news item shouldn’t come as much of a surprise to anyone.  It appeared on their Internet site at 5:25 p.m. on Tuesday afternoon EST — and I thank Brad Robertson for pointing it out.  Another link to it is here.


Fed Injects $82BN in Liquidity as Term Repo is Most Oversubscribed in One Month

It was supposed to be a one-time, year-end “liquidity event.” Instead, it has transformed into the latest liquidity addiction within the financial community.

Just days after we reported that yet another disturbance appears to be brewing below the calm surface of the repo market again, we got another indication just how strong the market’s addition to the Fed’s easy repo money has become, when moments ago the Fed announced that its latest 2-week term repo operation was also the most oversubscribed since December 16, as $34.3BN in securities ($27.65BN in TSYs, $15.5BN in MBS) were submitted for today’s $35 billion operation, as dealers continue to scramble to the Fed for liquidity which they are no longer using for “regulatory” year-end purposes (since it is no longer year-end obviously), but are instead using it to pump markets directly.

Today’s operation, which was the most oversubscribed in 2020, also saw the most submissions since Dec 16, and suggests that as repos are now maturing at a rapid burst (as we noted in “Mark Your Calendar: Next Week The Fed’s Liquidity Drain Begins”), dealers remain as desperate as ever to roll this liquidity into newer term operations.  Click to enlarge.

And just in case there was any doubt that the liquidity shortage isn’t getting better, moments later the Fed announced that in its daily Overnight repo operation, it also accepted $47BN in securities ($22.5BN TSYs, $24.5BN in MBS) for a total liquidity injection of $82 billion.

In short, just as the market got addicted to QE and the result was a 20% drop in the S&P in late 2018 when markets freaked out about Quantitative Tightening, the Fed’s shrinking balance sheet, and declining liquidity, Skyrm cautions that “it will take pain to wean the Repo market off of cheap Fed cash” since “it’s a circle” which can be described as follows:

For the Fed to end daily RP ops, they need outside cash to come back into the Repo market. For the Repo market to attract cash, Repo rates need to move higher. For rates to move higher, the Fed needs to stop RP ops.”

The problem is that stopping RP ops could spark another repo market crisis, especially with $259BN in liquidity pumped currently – more than at year end – via Repo. It also means that the Fed is now unilaterally blowing a market bubble with its repo and “NOT QE” injections, and yet the longer it does so the more impossible it becomes for the Fed to extricate itself from the liquidity pathway without causing a crash.

Yep…Print or die it is.  This Zero Hedge article showed up on their website at 9:58 a.m. EST on Tuesday morning — and it’s the first offering of the day from Brad Robertson.  Another link to it is here.


The End of the Longest Economic Expansion in History — Bill Bonner

War, inflation, bull markets, bad marriages, eating binges, and benders – all are more fun at the beginning than at the end. And none goes on forever.

Yes, Dear Reader. The music is still playing. The dancers are still on the floor. And the barmen at the Federal Reserve are still refilling glasses as fast as they can.

But feet are getting sore… drunks are babbling… and the band is getting tired.

The recovery began in the first quarter of 2009. And the stock market bottomed out in March 2009. We’re now in the longest business expansion… and the longest bull market… ever.

And if the boom ends tomorrow, investors will have no cause for complaint. All they had to do was sit tight in an index fund and they would have more than tripled their money.

The recovery in the economy has added about $7 trillion to GDP, bringing it to nearly $21 trillion. So, it’s been a great party.

We know what the beginning was like. We saw that movie. But how about the end? That’s what’s coming up next…

This worthwhile commentary from Bill put in an appearance on the bonnerandpartners.com Internet site early on Tuesday morning — and another link to it is hereGregory Mannarino‘s semi ‘R‘ rated market close rant for Tuesday is linked here.


Last Hurrah” for Central Bankers — Jim Rickards

We’ve all seen zombie movies where the good guys shoot the zombies but the zombies just keep coming because… they’re zombies!

Market observers can’t be blamed for feeling the same way about former Fed Chair Ben Bernanke.

Bernanke was Fed chair from 2006–2014 before handing over the gavel to Janet Yellen. After his term, Bernanke did not return to academia (he had been a professor at Princeton) but became affiliated with the center-left Brookings Institution in Washington, D.C.

Bernanke is proof that Washington has a strange pull on people. They come from all over, but most of them never leave. It gets more like Imperial Rome every day.

But just when we thought that Bernanke might be buried in the D.C. swamp, never to be heard from again… like a zombie, he’s baaack!

This very interesting and rather brief commentary from Jim was posted on the dailyreckoning.com Internet site on Monday — and another link to it is here.


How the U.S. Runs Iraq — Eric Margolis

What ever happened to Iraq? Is it not an independent country with a democratic government thanks to the 2003 U.S. invasion?  So says Washington.

The murder of senior Iranian military commander Qassem Soleimani suddenly shone a strobe light on ‘independent’ Iraq, and what we saw was not pretty.

Welcome to the new Imperialism 101.

Iraq’s population is estimated around 39 million. The pre-war Iraq of 2003 was broken into three parts by the U.S.-British invasion: the Shia majority; Kurds in the north; and Sunnis, with scatterings of other ethnicities. Iraq remains fragmented into hostile groups.

Its Shia are confusingly allied to the U.S. and Iran. The killing of Maj. Gen. Soleimani by the Americans has thrown this alliance of convenience into confusion. Iraqi Kurds are close to the CIA and Israel’s Mossad intelligence. The Sunnis are left adrift, without any foreign patrons except for other feeble Arab states.

The U.S. maintains a modest garrison of 5,000 infantry in Iraq and 3-5 air bases, as well as the gigantic fortified U.S. Embassy in Baghdad’s heavily guarded Green Zone which contains one of the world’s largest CIA bases. Angry mobs demonstrating in front of the embassy triggered off the chain of events that led to Trump’s murder of Gen. Soleimani. That an impeached president should be murdering foreign figures is a question that Congress must ask.

This rather brief commentary form Eric put in an appearance on the unz.com Internet site on Saturday — and I thank Larry Galearis for sending it along.  Another link to it is here.


German Government Escalates its War on Gold

In the run up to the end of the year during December, a remarkable sight emerged across Germany – long lines of customers queuing up outside the country’s precious metals shops and gold dealer showrooms.

Was it seasonal gift buying by Germany’s citizens, a population well-known for its love of physical precious metals? Or perhaps the onset of panic about negative interest rates in Europe’s largest economy?

As it turns out, panic it was, but of a different type, with the long lines triggered by the realization that from 1 January 2020, new national legislation was to take effect that would dramatically reduce the threshold on anonymous buying of precious metals from the existing €10,000 limit to a far lower limit of €2000, all under the guise of money laundering prevention.

With a staggering 9,000 tonnes of gold held by the German population, 55% of which is in the form of physical gold bars and gold coins and the rest in gold jewelry, Germany’s citizens are savvy about gold and are active savers and investors in the yellow precious metal. Add to this the fact that the German bullion market is one of the most sophisticated and developed in the world, supporting an extensive set of industry participants from banks and gold refineries, to nationwide gold dealers and distributors, to smaller regional and local bullion retailers.

So when the German government throws up restrictions on such a fundamental right as anonymous buying of gold and other precious metals, Germany’s citizens were going to sit up and take notice and do what any rationale economic actor would do in the circumstances – buy as much gold as they can get their hands on before the 1 January deadline. Hence the queues and long lines outside the gold shops including some of Germany’s biggest gold dealers such as Degussa and Pro Aurum.

This very long commentary appeared on the bullionstar.com Internet site on Monday — and I found it embedded in a GATA dispatch on Tuesday.  Another link to it is here.


Yes, China is a Currency Manipulator – and the U.S. Banking System is a Metals Manipulator

The U.S. Treasury Department announced Monday that China is no longer on a list of countries deemed to be “currency manipulators.” The timing was awfully convenient, coming just ahead of an expected Phase One trade deal between the two powers.

Nobody actually believes China has stopped manipulating the value of its yuan versus the U.S. dollar.

But the Trump administration is apparently willing to accept a certain degree of currency rigging in exchange for other concessions on trade.

It’s not as if the U.S. government has a stellar record when it comes to heeding principles of free and fair currency markets. It (through the Exchange Stabilization Fund and other vehicles) is constantly trying to manage the value of the dollar versus the currencies of trading partners, too.

It’s not as if equity markets, interest rate markets, and precious metals futures markets are free from manipulation, either. Price rigging schemes of various sorts – ranging from small-scale “spoofing” to large-scale suppression – occur practically around the clock.

This interesting commentary from Stefan Gleason showed up on the moneymetals.com Internet site yesterday — and I found it on the gata.org Internet site.  Another link to it is here.


China gold demand 20% down y-o-y — Lawrie Williams

Somewhat delayed by the Christmas holiday – which even affects the Shanghai Gold Exchange (SGE) – the exchange has at last released the figures on gold withdrawals in December, and even though they were at the highest level since March when some 218 tonnes were withdrawn, the December figure at 158.5 tonnes was still almost 11% lower than a year earlier and 14% down on the 2017 figure.  December withdrawals tend to be one of the highest months coming, as it does, ahead of the Chinese New Year when dealers and fabricators stock up ahead of increased demand resulting from the New Year celebrations.  This year the Chinese (lunar) New year falls on January 25th.

As we noted a month ago, SGE gold withdrawals this year were running around 20% lower than in 2018, which was confirmed by the latest figures.  The annual total came out at 1,642 tonnes – some 412.5 tonnes (or 20.08%) down on the 2018 figure, and the first sub-2,000 tonne total in 7 years.  We have consistently equated the SGE gold withdrawal level to total Chinese gold demand as it reasonably closely approximates to the sum of known gold imports from countries which publish detailed export figures, plus China’s own gold output from official figures, plus an allowance for scrap gold recovery plus a small amount of unknown gold imports from countries which do not break down detailed figures.

Perhaps luckily for those who follow gold’s supply/demand fundamentals for their investment decisions, the fall-off in Chinese demand this year, coupled with a rather smaller downturn in demand from No. 2 gold consumer India has been counterbalanced by increased demand in Europe and, most importantly, positive inflows into global gold ETFs and a strong level of gold buying from central banks…with Russia taking the lead as it has done for the past several years.

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


The PHOTOS and the FUNNIES

Just as we were about to walk back to the car at Three Valley Gap Lake on August 4, my daughter spotted this common loon in full breeding plumage.  The 400mm lens came in handy here.  But even with that glass strapped to the camera, it was a bit further away than I would have liked…so I had to do some rather severe cropping to get them even close to right.  Click to enlarge.


The WRAP

Another new intraday low for this move down was set in both silver and gold during the very thinly-traded morning session in the Far East on their Tuesday…but both recovered nicely from there.  But as I pointed out in my discussion on each at the top of today’s column, they weren’t allowed to close above unchanged on the day.  However, both got sold off a bit at the 10 a.m. EST afternoon gold fix in London, so that was a price hole that both had to overcome as the Tuesday trading session moved along.

It started out similarly in both platinum and palladium, but both rallied rather smartly starting at, or shortly after, the COMEX open in New York on Tuesday morning.  Platinum closed higher — and palladium closed at a new record high price once again.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  The changes in the precious metals should be noted — and palladium is hugely overbought now.  A pull-back in price in this precious metal, either market-related or engineered, is something that I’ve been expecting for a while now — and I’m just waiting for the axe to fall.  Copper close up a penny and a bit — and WTIC broke through its 200-day moving average to the downside intraday yesterday, but managed to close higher by 15 cents.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I note that gold and silver prices have been rising in fits and starts in Far East trading on their Wednesday. Gold is up $6.30 — and silver by 9 cents as London opens. Platinum rallied until shortly before 11 a.m. China Standard Time on their Wednesday morning, but was capped at the $990 spot mark — and hasn’t done much since. It’s currently up 7 dollars. Like the other three precious metals, palladium rallied starting right at the 6:00 p.m. EST open in New York on Tuesday evening, but wasn’t allowed to get far before it was capped and turned lower. It traded very unevenly sideways until around 3:45 p.m. in Shanghai — and has shot higher since. And as Zurich opens, palladium is up 21 bucks the ounce.

Net HFT gold volume is very decent already at around 58,500 contracts — and there’s around 11,300 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is getting up there as well at a bit over 16,500 contracts — and there’s a piddling 212 contracts worth of roll-over/switch volume on top of that.

The dollar index opened about unchanged at 97.38 once trading commenced around 7:45 p.m. EST on Tuesday evening, which was 8:45 a.m. China Standard Time on their Wednesday morning. It ticked higher over the next forty-five minutes — and has chopped very quietly lower since, but jumped up a bit starting around 3:25 p.m. CST — and is currently back at a hair below unchanged as of 7:45 a.m. GMT in London/8:45 a.m. in Zurich.


Yesterday, at the close of COMEX trading session, was the cut-off for this Friday’s Commitment of Traders Report.  And now that I have five dojis for the reporting week to look at it, it’s pretty much a slam-dunk that we’ll see decent-sized improvements in the commercial net short positions in both silver and gold in that report.  The only thing not known is how big these improvements will be, but I’m hoping/expecting that they’ll be sizeable.

Ted will certainly be writing about it in his mid-week commentary this afternoon — and since he’s the only real authority on this, I’ll be happy to ‘borrow’ a few sentences for my Friday column.


And as I post today’s efforts on the website at 4:03 a.m. EST, I see that gold and silver have edged a bit higher in the first hour of trading. Gold is up $7.10 and silver is up 10 cents as the first hour of London trading draws to a close. Platinum has shot higher — and is now up 22 bucks the ounce. Palladium got smacked at the Zurich open, but has rallied back since — and as the first hour of Zurich trading ends, palladium is up 20 dollars.

Gross gold volume is a bit over 89,000 contracts — and minus current roll-over/switch volume, net HFT gold volume is around 66,000 contracts. Net HFT silver volume is a bit under 18,000 contracts — and there’s 431 contracts worth of roll-over/switch volume in this precious metal.

The dollar index jumped a bit higher starting about thirty-five minutes before the London open — and is up 4 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich. Despite this jumping around, the dollar index isn’t doing much of anything right now.

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

Ed

Silver & Gold Down on Low Volume

14 January 2020

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold down seven bucks or so starting right at the 6:00 p.m. EST open in New York on Sunday evening.  Then, from minutes after 9 a.m. China Standard Time on their Monday morning, it traded sideways until around 1:15 p.m. CST.  From that juncture it was sold quietly lower until a few minutes after 9 a.m. in London — and the subsequent rally was capped and turned lower a few minutes before 9 a.m. in New York.  It was sold quietly and unevenly lower from that point until trading ended at 5:00 p.m. EST.

The high and low ticks were reported by the CME Group as $1,563.10 and $1,547.00 in the February contract.

Gold was closed in New York on Monday at $1,547.40 spot, down $14.70 from Friday.  Net volume was nothing special at a bit over 218,500 contracts, but roll-over/switch volume out of February and into future months was very heavy at a bit over 102,000 contracts.

Generally speaking, the silver price was forced to follow a similar price path as gold up until a few minutes after the 9:30 a.m. open of the New York equity markets on Monday morning.  At that point it had rallied back above $18 spot by a few pennies.  Of course that wasn’t allowed to last — and its low tick of the day was printed around 10:15 a.m. in New York.  It rallied back a bunch from there, but wasn’t allowed more than a sniff of $18 spot — and from about 11:30 a.m. EST onwards, it was sold quietly lower until the market closed at 5:00 p.m.

The high and low ticks in this precious metal were recorded as $18.13 and $17.935 in the March contract.

Silver was closed on Monday afternoon in New York at $17.915 spot, down 15.5 cents on the day.  Net volume was about average at around 54,000 contracts — and there was around 6,050 contracts worth of roll-over/switch volume in this precious metal.

The price pattern in platinum was mostly the same as it was for silver and gold, except its rally off its 10:15 a.m. low in New York was somewhat more robust.  But that was capped before it could get back to the unchanged mark — and it was sold a few dollars lower starting minutes before 4 p.m. in after-hours trading.  Platinum was closed at $972 spot, down 3 bucks from Friday.

Palladium chopped quietly sideways until 2 p.m. in Shanghai on their Monday afternoon — and then was quietly sold lower until just before 9:30 a.m. in Zurich.  Its rally from there was capped around 1:30 p.m. CET [Central European Time] — and it was sold lower shortly after that.  That sell-off lasted until about 11:35 a.m. in New York — and it crawled quietly higher until the market closed at 5:00 p.m. EST.  Platinum was closed at $2,109 spot, up 13 dollars on the day…but 25 bucks off its Kitco-recorded high tick of the day.

The dollar index closed very late on Friday afternoon in New York at 97.36 — and opened up about 6 basis points once trading commenced around 6:30 p.m. EST on Sunday evening, which was 7:30 a.m. China Standard Time on their Monday morning.  It crept quietly lower from there until a very few minutes before 2 p.m. CST/8 a.m. in London — and a ‘rally’ commenced from there.  That topped out at the 97.53 mark at precisely 10:00 a.m. in London.  It was quietly and unevenly down hill from there until about ten minutes before the 1:30 p.m. COMEX close in New York.  It crept a small handful of basis points higher from there until trading ended at 5:30 p.m. EST.  The dollar index finished the Monday trading session back at 97.36…unchanged from Friday’s close.

Here’s the DXY chart for Monday from Bloomberg.   Click to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the good folks over at the stockcharts.com Internet site.  The delta between its close…97.06…and the close on the DXY chart above, was 30 basis points on Monday.  Click to enlarge as well.

The gold shares were sold lower the moment that trading began in New York at 9:30 a.m. on Monday morning.  Most of the losses were in by around noon EST, but they continued to trade quietly and unevenly lower until the markets closed at 4:00 p.m.  The HUI closed on its low of the day…down 2.59 percent.

The silver equities were sold lower until a few minutes after 10 a.m. in New York yesterday morning.  From that juncture they crept ever-so-quietly and unevenly higher until the markets closed at 4:00 p.m.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished the Monday session lower by 1.95 percent.  Click to enlarge if necessary.

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

The two biggest losers in the Silver 7 Index yesterday were SSR Mining and First Majestic Silver…closing down 3.60 percent and 3.45 percent respectively.  Peñoles actually closed up 0.90 percent on the day.


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

In gold, the sole short/issuer was Advantage — and they stopped one of those contracts as well.  Both transactions involved their client account.  The remaining gold contract was picked up by Scotia Capital/Scotiabank for its in-house/proprietary trading account.

In silver, Advantage issued both from its client account — and Scotia Capital stopped both for its own account.

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 January declined by 1 contract, leaving 30 still around, minus the 2 contracts mentioned a few brief paragraphs ago.  Friday’s Daily Delivery Report showed that 9 gold contracts were actually posted for delivery today, so that means that 1+9=10 more gold contracts were just added to the January delivery month.  Silver o.i. in January remained unchanged at 10 contracts, minus the 2 contracts mentioned a few paragraphs ago. Friday’s Daily Delivery Report showed that 2 silver contracts were actually posted for delivery today, so that means the 2 more silver contracts were added to January.


There were no reported changes in GLD on Monday, but there was 1,260,665 troy ounces of silver withdrawn from SLV.  And as Ted Butler would assume, regardless of the reason it was withdrawn…conversion of shares for physical, or a ‘plain vanilla’ withdrawal…it’s most certainly the property of JPMorgan now.

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, January 10 — and this is what they had to report.  Their gold ETF added 7,303 troy ounces — and their silver ETF increased by 118,765 troy ounces.

In other gold and silver ETFs on Planet Earth on Monday…net of COMEX, ZKB, GLD & SLV changes…there was a net 109,310 troy ounces of gold withdrawn…with 100,341 troy ounces coming out out of iShares.  There was a net 83,842 troy ounces of silver added.


And still nothing from the U.S. Mint.

There was a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday. Nothing was reported received — and only 2,032 troy ounces was shipped out involving three different depositories.  I’m not going to bother breaking these small amounts into their respective entities, but if you wish to check yourself, the link is here.

There was a bit more activity in silver.  One truckload…599,611 troy ounces…was received at CNT — and that’s all the ‘in’ activity there was.  Only 50,375 troy ounces was shipped out — and that departed Loomis International.  The link to this is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They received 578 of them — and shipped out 157.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Archbishopric Salzburg, Wolf Dietrich Raitenau, Double Ducat 1595

Origin: Austria     Material: Gold     Full Weight: 6.97 grams

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


CRITICAL READS

“This is Insanity!” – Jim Rogers Warns of “Horrible Time” Ahead

The Fed has increased its balance sheet over 500% in the past decade; The Bank of Japan is printing money to buy bonds and stock ETFs; and The European Central Bank is mired in insane negative interests. And, according to legendary investor Jim Rogers, they will continue this “madness” as long as its necessary.

In an interview with RT’s Boom Bust, Rogers exclaims, that interest rates around the world have never been this low:

“… this is insanity, that’s not how sound economic systems are supposed to work.”

In 2008, Rogers notes that we had problems because of too much debt, however, “since then the debt has skyrocketed everywhere and it’s going higher and higher. We are going to have a horrible time when this all comes to an end.”

Adding that: “…eventually, the market is going to say: ‘We don’t want this, we don’t want to play this game anymore, and we don’t want your garbage paper anymore’.”

When it comes to an end, Rogers laments, “it will be the worst of my lifetime.”

The video interview with Jim starts at the 3:50 minute mark on the embedded video.  It was posted on the rt.com Internet site last Friday — and another link to it is here.


Are the Fed’s Repo Loans Being Repaid by Wall Street’s Trading Houses or Just Rolled Over and Over?

Last Friday, the usually reliable and fact-intensive financial website, Wolf Street, threw a hissy fit over how The Wall Street Journal (and by extension, Wall Street On Parade) is reporting the tallies for the repo loans that the New York Fed has been pumping out every business day since September 17, 2019 to the trading houses on Wall Street.

The inflammatory headline blared: “The Wall Street Journal (and Other Media) Should Stop Lying About Repos.” The author of the piece, Wolf Richter, explained his criticism as follows:

Here is the ‘in’ of a repurchase agreement [repo loan]: The Fed buys securities (mostly Treasury securities and some agency mortgage-backed securities) in exchange for cash. This adds liquidity to the market.

Here is the ‘out’ of a repurchase agreement: Every repo matures on a set date when the counterparties are obligated to buy the securities back from the Fed at a set price. At this point, the repo unwinds, and it drains liquidity from the market.

The key flaw in Richter’s analysis is that last sentence: “At this point, the repo unwinds, and it drains liquidity from the market.”

Neither the public nor Congress have any proof that these repo loans are being unwound. One or more of the 24 trading houses on Wall Street (primary dealers), that are authorized by the New York Fed to borrow from its money spigot at super cheap interest rates, could simply be rolling over the same loans or using term money to pay off one loan while taking out another loan.

This commentary appeared on the wallstreetonparade.com Internet site on Monday morning EST — and I found it in a GATA dispatch.  Another link to it is hereGregory Mannarino‘s post market close rant for Monday…which is definitely ‘R‘ rated towards the end…is linked here — and I thank ‘Mac P.’ for bringing it to my attention.


The Federal Government’s “Quick-Fix” Money Policies Hurt the Market — Bill Bonner

In all this excitement surrounding the assassination in Iraq… and the impeachment in Washington… and Harry and Meghan’s split from the royal family… who was going to bother to go all the way to the second section of The Wall Street Journal, page 10, to discover:

Fed Adds $83.1 Billion in Short-Term Money to Markets

The Federal Reserve Bank of New York added $83.1 billion in temporary liquidity to financial markets Thursday, as a top official said the central bank may keep adding temporary money to markets for longer than policy makers had expected in September.”

As the saying goes, there is nothing as permanent as a temporary agency in Washington.

And there’s no more permanent form of inflation than temporary liquidity added by the Fed.

The technical details behind the Fed’s fix-a-flat money policies are too complex for this Diary.

But the inquiring minds of our readers probably want to know: How come the Fed is pushing such huge amounts of “liquidity” into the market just when everything is going so well?

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


Helicopter Money Is No Panacea — Jim Rickards

In recent decades, the Fed has engaged in a series of policy interventions and market manipulations that have paradoxically left it more powerful even as those interventions left a trail of crashes, collapses and calamities.

This contradiction between Fed omnipotence and Fed incompetence is coming to a head. The economy has been trapped in a prolonged period of sub-trend growth. I’ve referred to it in the past as the “new depression.” And the Fed has been powerless to lift the economy out of it.

You may think of depression as a continuous decline in GDP. The standard definition of a recession is two or more consecutive quarters of declining GDP and rising unemployment. Since a depression is understood to be something worse then a recession, investors think it must mean an extra-long period of decline. But that is not the definition of depression.

The best definition ever offered came from John Maynard Keynes in his 1936 classic, The General Theory of Employment, Interest and Money. Keynes said a depression is, “a chronic condition of subnormal activity for a considerable period without any marked tendency towards recovery or towards complete collapse.”

Keynes did not refer to declining GDP; he talked about “subnormal” activity. In other words, it’s entirely possible to have growth in a depression. The problem is that the growth is below trend. It is weak growth that does not do the job of providing enough jobs or staying ahead of the national debt. That is exactly what the U.S. is experiencing today.

This commentary from Jim, which I haven’t read as of yet, was posted on the dailyreckoning.com Internet site on Monday sometime — and another link to it is here.


The Odds of Getting a Good Leader — Jeff Thomas

The larger the country, the less the likelihood of getting a leader who can be trusted with the job.

On the surface of it, this would seem to be an illogical claim. Surely the size of a country has no bearing upon whether its leadership is competent or trustworthy, and yet, it’s very much the case.

This is due to a combination of conditions that can be found in every country.

First, studies have long revealed that, in any population, roughly 4%, or one in 25 people, will display significant sociopathic traits. These traits are as follows:

  • Glibness and Superficial Charm
  • Manipulativeness and Cunning
  • Grandiose Sense of Self
  • Pathological Lying
  • Lack of Remorse, Shame or Guilt

Picture a leading politician in your own country, of any party. Whether you supported this individual in the last election or opposed him, he is very likely to possess these traits.

But why should that be? Why should it be likely that sociopaths would rise to the top in politics?

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


After Missiles Fly, Iraq Becomes the Battleground — Tom Luongo

The future of the U.S.’s involvement in the Middle East is in Iraq. The exchange of hostilities between the U.S. and Iran occurred wholly on Iraqi soil and it has become the site on which that war will continue.

Israel continues to up the ante on Iran, following President Trump’s lead by bombing Shia militias stationed near the Al Bukumai border crossing between Syria and Iraq.

The U.S. and Israel are determined this border crossing remains closed and have demonstrated just how far they are willing to go to prevent the free flow of goods and people across this border.

The regional allies of Iran are to be kept weak, divided and constantly under harassment.

Iraq is the battleground because the U.S. lost in Syria. Despite the presence of U.S. troops squatting on Syrian oil fields in Deir Ezzor province or the troops sitting in the desert protecting the Syrian border with Jordan, the Russians, Hezbollah and the Iranian Quds forces continue to reclaim territory previously lost to the Syrian government.

This commentary/opinion piece showed up on Tom’s website on Friday — and I thank Larry Galearis for pointing it out.  Another link to it is here.


China Car Sales Plunge 7.5% in 2019 and 3.6% For December, Marking the 18th Fall in 19 Months

Passenger car vehicle sales in China fell yet again in December, plunging 3.6% to 2.17 million units, according to the China Passenger Car Association.

This marks the 18th drop in the past 19 months for the country, which feels to be single-handedly spearheading a global recession in the industry. For the full year, sales in China declined 7.5%, marking the second straight annual decline.  Click to enlarge.

Automakers continue to struggle with a slowing economy and tariff uncertainties, despite “Phase 1” of the U.S./China trade deal supposedly being finished (even though it still has not been signed), according to Bloomberg.

G.M. said on Tuesday that its sales were down 15% in China and said that pressure into 2020 would likely continue.

But, some analysts say there’s reasons for optimism: namely, that the pace of declines has slowed for four months in a row as comps have become easier. This will only hold true heading into 2020, where 2019’s comps will be much easier to catch than those of years prior, while the auto market was booming.

This Zero Hedge news item was posted on their Internet site at 2:45 a.m. on Monday morning EST — and another link to it is here.


The World’s Most Precious Metal Leaves Everything Else in the Dust

Palladium’s great start to the year pales in comparison to its lesser known, but much more expensive sister metal, rhodium.

Rhodium — mainly used in auto catalysts and five times more costly than gold — surged 31% already this month, touching the highest since 2008. Stricter emissions rules have fueled a multiyear rally and there’s speculation that investors are also jumping in, betting that prices will climb toward a record.  Click to enlarge.

Rhodium rallied 12-fold in the past four years, far outperforming all major commodities, on rising demand from the auto sector. Like palladium, the metal is mined as a byproduct of platinum and nickel, but it is a much smaller market and so is liable to big price moves when supply or demand changes.

Rhodium is subject to crazy volatility,” said Anton Berlin, head of analysis and market development at Russia’s MMC Norilsk Nickel PJSC, which mines about 10% of all rhodium. Supplies are tight and speculators stepped up buying metal after large industrial users secured volumes late last year, he said.

Well, dear reader, rhodium has no COMEX futures market pricing mechanism attached to it, so it doesn’t have JPMorgan et al. sitting on it 24/7…so it trades in a totally free-market environment.  And as you already know, that’s certainly not the case in the other four precious metals.  This Bloomberg story appeared on their website at 4:01 p.m. PST on Sunday evening — and was updated about 17 hours later.  I found it on the gata.org Internet site — and another link to it is here.  There’s a companion story to this from the rt.com Internet site — and it’s headlined “Unstoppable rally: World’s most precious metal rhodium is now 5 times more costly than gold” — and I thank Larry Galearis for that one.


Why are Indians in the grip of a gold obsession?

Between April and November, India imported 533,376kg of gold, around 20.3% less than 669,339kg imported during the same period in 2018. This is hardly surprising since gold has turned costlier this fiscal. Between April and November, the average price of gold was ₹35,337 per 10g, against ₹30,689 during the same period a year ago. Since November, prices have rallied higher due to Iran-US tensions. Over and above this, the easy money policy of the U.S. Federal Reserve has made a comeback. The Fed has resumed printing money in order to drive down interest rates. This has pushed up gold prices as well.  Click to enlarge.

Since very little gold is produced in India, almost all of the metal consumed is imported. Over the years, Indians have continued to love gold. In FY19, India imported 983,000kg of gold, the highest since FY14. A major reason for our love for gold remains tradition. But there is more to it than just that. As Richard Davies writes in Extreme Economies, “Gold also acts as a kind of informal insurance mechanism.” He writes this in the context of Aceh, a semi-autonomous province of Indonesia, and how survivors of the 2004 Asian tsunami rebuilt their lives using the gold they had on their bodies.

As Davies writes: “While some lost gold in the disaster, I met many survivors who were able to sell jewellery they were wearing… Wearing a gold bangle is like having enough cash on your wrist to employ a builder for a year… This traditional form of finance insulated Aceh and provided its entrepreneurs with rapid access to cash.”

How is this linked to India’s love for gold?

Like in Aceh, India also has a very strong informal system of exchange where gold can be rapidly turned into cash, especially in times of emergency. As Davies writes again in the context of Aceh: “In an economy buffeted by the ups and downs of farming and fishing, the people are used to buying gold after bumper harvests or fishing seasons and selling it after lean ones.” This applies as much to India as it does to Aceh, with a bulk of the country’s workforce still dependent on agriculture for a living.

This gold-related news item was posted on the livemint.com Internet site at 9:53 p.m. IST [India Standard Time on their Sunday evening, which was 11:23 a.m. in New York on Sunday morning — EST plus 10.5 hours. I plucked it out of a GATA dispatch.  Another link to it is here.


Outlook For Gold in 2020 — Nick Barisheff

Good afternoon. It is a pleasure to speak at the Empire Club today.

The first time I spoke at the Empire Club was in 2005. I said then that it would not matter to bullion investors if gold ended the year at $400/ounce or $500/ounce, based on the long-term price outcome. Gold ended the year at USD $513.

Gold had a good year in 2019, rising about 18%. Since 2000, gold has averaged 11% annually in the major currencies, with 9.7% in USD and 8.8% in Canadian.

According to the OECD, the average annual 15-year pension returns were 6.6% in Canada and 2.6% in the U.S. You don’t need a complicated algorithm or a computer to conclude that an allocation to gold would have improved returns and reduced volatility.  However, other than three global pension funds, none have any gold and most have no allocation to REITs.

Yes, today, investors are euphoric and financial markets have set historic highs regularly, but they are highly overvalued by every conventional measure. This year, I promise my annual offering of doom and gloom, but I would also like to offer a contrarian strategy for protecting against losses, and even profiting during the inevitable market correction.

This is the first time during the 40 years I have been in business that a simultaneous triple bubble in equities, bonds and real estate has occurred. There is a direct correlation to the amount of liquidity central banks are injecting into the system on a daily basis and these inflated asset prices.

This worthwhile 16:28 minute video presentation, complete with a full transcript…plus charts, showed up on the bmg-group.com Internet site very recently.  I thank Judy Sturgis for bringing it to my attention — and now to yours — and another link to it is here.


World’s super-rich are hoarding physical gold in secret bunkers

The strategic case for owning gold remains strong, according to analysts at Goldman Sachs. They point to such factors as political uncertainty, recession fears and other worries among the global elite.

Data from Goldman research showed that owning the physical metal seems to be the global elite’s preferred way to hedge against tail events. Physical buying of gold has increased at a rapid pace in the past three years, statistics showed.

Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs (Exchange-traded funds),” Goldman said in a note sent to clients and seen by Yahoo Finance.

That simply means that for those including gold in their luxurious bunkers, demand for which has been growing at a fast pace, owning bullion is a must.  Click to enlarge.

This [data] is consistent with reports that vault demand globally is surging,” Goldman said.
Gary Lynch, general manager of Texas-based Rising S Company, told CNN that 2016 sales for their custom high-end underground bunkers grew 700 percent compared to 2015, while overall sales have grown 300 percent since the November U.S. presidential election alone.

Political risks, in our view, help explain this, because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault – where it is more difficult for governments to reach them – makes sense.”

The investment bank added: “Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counter-party credit risk involved.”

This very interesting gold-related news item was posted on the rt.com Internet site on Saturday sometime — and I found it on Sharps Pixley.  Another link to it is here.


The PHOTOS and the FUNNIES

Our brief photo op at Three Valley Gap in Eagle Pass on the Trans-Canada Highway on August 4 only lasted about twenty minutes or so — and along with the one photo from this location that graced Saturday’s column — are these three here.  And expect for photo No. 1 below, all were taken from this boat launch that you see in the foreground of this shot. If you look along the shoreline of Three Valley Gap Lake, you’ll see a very tiny sandy beach and cabin on the left side of this photo.  I slapped on the 400mm lens and took the second shot — and because it was so far away, I had had to crop the heck of it…which I can get away with when working with a photo that’s almost 24 megabits in size.  Looking in the other direction down the lake [east towards Revelstoke] is the 3 Valley Lake Chateau.  Its setting and colour were perfect…as was the lighting — and the weather.  How could I resist?  Click to enlarge.


The WRAP

With volume not overly heavy in either gold or silver on Monday, it’s too soon to say how serious the current engineered price declines will get in these two precious metals, as only a small handful of trading days have occurred since the peak prices of last week.

The events in the Middle East have cooled off a bit, but could erupt again with no notice on some sort military action or false flag event.  You should not underestimate the duplicity of the deep state and the military/industrial complex.  This certainly would bid gold and silver higher.

Then there’s Ted’s discovery that some of the commercial traders have been covering their short positions for a loss for the very first time — and that could be a factor going forward as well if more of these traders decide to follow suit, or cover more of the short position that they have.

And as boring as it is, we’re back in that old familiar “so we wait some more” mode.

Here are the 6-month charts for the Big 6 commodities.  In the four precious metals, there’s not a lot to see other than what you already know.  Copper caught a bid yesterday…up 5 cents, but WTIC was closed below its 50-day moving average on Monday — and came within a whisker of touching its 200-day moving average as well.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that the gold price began to get sold lower starting around 7:45 a.m. China Standard Time on their Tuesday morning — and that went on until shortly after 9 a.m. CST. It chopped quietly sideways from that point until the current low tick was set about 1:35 p.m. in Shanghai. It has edged a bit higher since — and is down $5.00 an ounce. The price pattern in silver has been almost the same — and as London open, silver is lower by 20 cents. Ditto for platinum — and it’s down 4 bucks. Palladium hit its current Tuesday low tick a few minutes before 9 a.m. CST. It has been wandering quietly and unevenly higher since — and as Zurich opens, palladium is up a dollar the ounce — and back above $2,100 the ounce.

Net HFT gold volume is very heavy already at a bit over 82,000 contracts — and there’s around 4,800 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is a bit over 26,500 contracts already — and there’s 2,650 contracts worth of roll-over/switch volume on top of that.

The dollar index opened up about 1 basis point once trading commenced around 7:45 p.m. EST in New York on Monday evening, which was 8:45 a.m. China Standard Time on their Tuesday morning. It rallied a small handful of basis points within the next thirty minutes or so — and has chopped quietly sideways since. As of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the dollar index is higher by 5 basis points. Nothing to see here.


Today, at the close of COMEX trading, is the cut-off for this Friday’s COT Report — and I’ll wait until I can see Tuesday’s dojis on the above charts before I stick my neck out on what might be in it. Although, based on the last four dojis — and the current price action, it’s a fairly safe bet that we’ll see some rather impressive improvements in the commercial net short position in both silver and gold.

Ted will have something to say about it in his mid-commentary tomorrow — and since he’s the real authority on the COT Report, I’ll be very interested in reading his thoughts on this.


And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price continued to crawl quietly higher in the first hour of London trading — and is down $2.90 the ounce at the moment. Silver is struggling — and is down 22 cents as the first hour of London trading ends. Platinum hasn’t done much in the last hour — but is now down 6 bucks. Palladium is now up 3 dollars as the first hour of Zurich trading draws to a close.

Gross gold volume is soaring 15 a bit over 111,000 contracts — and minus current roll-over/switch volume, net HFT gold volume is around 96,700 contracts. Net HFT silver volume is a bit over 29,000 contracts — and there’s 2,700 contracts worth of roll-over/switch volume in this precious metal.

The dollar index continues to chop quietly sideways — and is up up 3 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

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

Ed

An Unprecedented and Eye-Opening COT Report

11 January 2020 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold quietly lower until around noon China Standard Time on their Friday — and then had a bit of an up/down move in London, before trading flat into the jobs report at 8:30 a.m. in New York.  Its rally at that point ran into “all the usual suspects” — and that gain had all disappeared by around 9 a.m. EST.  It began to head quietly higher from there — and that lasted until a few minutes after 11:30 a.m. — and it crawled lower for the next three hours.  Then it began creep higher in the after-hours market — and closed almost on its high of the day.

The low and high ticks were reported by the CME Group as $1,546.70 and $1,564.10 in the February contract.

Gold finished the Friday session in New York at $1,562.10 spot, up $10.10 from Thursday’s close.  Net volume was very heavy once again at a bit over 283,500 contracts — and there was a hefty 69,500  contracts worth of roll-over/switch volume out of February and into future months on top of that.

Silver’s price path was similar to gold’s in most respects, except for the fact that the rally after the up/down move on the jobs numbers was somewhat more robust.  Like gold, that tiny rally was capped and turned lower a few minutes after 11:30 a.m. in New York — and it was sold a bit lower going into the 1:30 p.m. EST COMEX close.  It then traded flat until around 4 p.m. in the very thinly-traded after-hours market…and it ticked a few pennies higher until trading ended at 5:00 p.m. EST.

The low and high ticks in silver were recorded as $17.86 and $18.175 in the March contract.

Silver finished the Friday session at $18.07 spot, up 21.5 cents on the day.  Net volume was on the heavier side at around 70,700 contracts — and there was 11,000 contracts worth of roll-over/switch volume in this precious metal.

Platinum was sold down about five dollars or so in morning trading in the Far East — and the low of the day was set around noon in Shanghai on their Friday.  It headed very unevenly higher until it obviously ran into ‘something’ very shortly after the 11 a.m. EST Zurich close.  From that juncture it crawled a few dollars lower until trading ended at 5:00 p.m. in New York.  Platinum was closed at $976 spot, up 11 dollars from Thursday.

Palladium certainly wanted to fly again yesterday, but there were forces in the market that didn’t think that was a good idea, as it was forced to chop sideways in a very wide range — and finished the Friday session at $2,096 spot, down 3 bucks on the day…43 dollars off its Kitco-recorded high tick — and 46 dollars off its low tick.  A very thinly-traded low-volume market indeed!

The dollar index closed very late on Thursday afternoon in New York at 97.4500 — and opened down about 2 basis points once trading commenced around 7:45 p.m. EST on Thursday evening, which was 8:45 a.m. China Standard Time on their Friday morning.  After poking its nose above unchanged an hour later for a brief moment, it began to crawl lower until a ‘rally’ developed beginning at precisely 3:00 p.m. CST on their Friday afternoon, which was an hour before the London open.  That ‘rally’ ended on its 97.58 high tick at exactly 11:00 a.m. in London — and it began to head quietly and unevenly lower until the 97.30 low tick was set about 12:25 p.m. in New York. [And you’ll excuse me for thinking that the usual ‘gentle hands’ showed up to stop its fall at that point.] It crept a bit higher until a few minutes after 2 p.m. EST — and then edged a bit lower into the 5:30 p.m. close.  The dollar index finished the Friday session at 97.36…down 9 basis points from its close on Thursday.

The only correlation between the currencies and the precious metals occurred in New York, starting around 9 a.m. — after the up/down move in gold on the jobs report.

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

And here’s the 5-year U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…97.08…and the close on the DXY chart above, was 28 basis points on Friday.  Click to enlarge as well.

The gold shares jumped up a bit at the open — and then continued quietly higher until a few minutes after 12 o’clock noon in New York trading.  They were sold a bit lower until the dollar turned lower — and the gold price turned higher a few minutes after 2 p.m. EST.  They then crept a bit higher until trading ended at 4:00 p.m.  The HUI closed up 1.87 percent.

The silver equities rallied at the open — and their respective highs were set about 10:50 a.m. in New York.  They began to slide from there until around 3:30 p.m. — before ticking a bit higher into the close.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished the day up only 0.91 percent.  Click to enlarge if necessary.

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

The gold stocks did just OK — and that is all, but the silver share price action didn’t impress me in the slightest.  Peñoles actually closed down 0.90 percent, Hecla was only up 0.33 percent — and Wheaton Precious Metals closed unchanged.  The star of the day was Coeur Mining…up 2.34 percent.  I was underwhelmed.


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

Here’s the weekly chart — and it’s not very happy looking, is it?  The precious metal equities were under heavy selling pressure long before their respective precious metals reached their current high ticks during the reporting week.  Once again, as was the case all last year, palladium was the star.  Click to enlarge.

I’m not posting the month-to-date chart, as it’s the same as the year-to-date chart for the rest of this month.

Here’s the year-to-date chart.  It doesn’t look much different than the weekly chart, as there are only two extra trading days represented in this chart, since the 2020 calendar year is only seven business days old.  It will have more relevance as time marches on.  Click to enlarge.

As Ted has been pointing out for some time now, how silver and gold prices unfold from here depends on whether or not the Big 7/8 commercial traders on the short side are able to snooker the Managed Money traders out of their historic and unprecedented net long positions.  To date, they haven’t been very successful.  And as occurred in this week’s COT Report, some of the commercial traders/Big 7 covered their short position for big loses for the very first time.  I look forward to what Ted has to say about this in his weekly review later today.  But as for the negative start to the year for the precious metals…this too shall pass.


The CME Daily Delivery Report showed that 9 gold and 2 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, of the two short/issuers, the only one that mattered was Advantage, with 8 contracts out of its client account.  There were four long/stoppers in total, with the biggest being Scotia Capital/Scotiabank, with 3 contracts for its own account, as it doesn’t have a client account.  The other three long/stoppers…JPMorgan, Advantage and ADM, picked up 2 contracts each — and all for their respective client accounts.

In silver, the sole short/issuer was JPMorgan.  Scotia Capital/Scotiabank picking up 2 contracts for its own account — and ADM stopped the other 2 for its client account.

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

Month-to-date there have been 2,537 gold contracts issued/reissued and stopped — and that number in silver is 381 contracts.

The CME Preliminary Report for the Friday trading session showed that gold open interest in January dropped by 32 contracts, leaving 31 still open, minus the 9 contracts mentioned a few short paragraphs ago.  Thursday’s Daily Delivery Report showed that 37 gold contracts were actually posted for delivery today, so that means that 37-32=5 more gold contracts just got added to the January delivery month.  Silver o.i. in January fell by 31 contracts, leaving just 10 contracts still around, minus the 4 contracts mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 33 silver contracts were actually posted for delivery on Monday, so that means that 33-31=2 more silver contracts were added to January.


There was another hefty withdrawal from GLD on Friday, as an authorized participant removed 244,585 troy ounces.  There were no reported changes in SLV.

The short report numbers for both GLD and SLV showed up on The Wall Street Journal‘s website yesterday — and it showed that the short position in SLV declined from 11.06 million shares/troy ounces, down to 10.01 million troy ounces…a drop of 9.56 percent.  The short position in GLD rose from 980,000 troy ounces, up to 1,063,000 troy ounces…an increase of 8.39 percent.  These are not material changes — and the current levels of shorting in these two ETFs is of little concern.

In other gold and silver ETFs on Planet Earth on Friday…minus COMEX, GLD & SLV activity…there was a net 105,903 troy ounces of gold added, plus a very chunky 724,092 troy ounces of silver was added as well.


And nothing, of course, from the U.S. Mint.

The only activity in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday was 4,700 troy ounces of gold that was dropped off at HSBC USA.  I won’t bother linking this.

Their wasn’t much activity in silver, either.  There was nothing reported received — and 201,233 troy ounces was shipped out of Canada’s Scotiabank.  There was some paper activity, as one truckload…608,525 troy ounces…was transferred from the Registered category — and back into Eligible.  I suspect that Ted would think that this was JPMorgan or one of its clients doing this transfer in order to save on storage charges.  The link to this is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.  They reported receiving 150 of them — and shipped out 100.  All of this activity happened over at Brink’s, Inc. — and that link to that, in troy ounces, is here.


Here are two charts that Nick Laird passed around very late on Friday evening.  They show the amount of physical gold and silver in all known depositories, ETFs and mutual funds as of the close of business on Friday, January 10.  For the calendar week just past, there was a net 397,000 troy ounces of gold withdrawn — and in silver, that number was 1,961,000 troy ouncesClick to enlarge for both.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Friday January 3, came in exactly as Ted said it would.  Despite the big price increases during the reporting week in both silver and gold, the commercial net short position in both declined by respectable amounts.

What that means is, that for the very first time, some traders in the Big 8 category closed out their short positions in both gold and silver at a loss.  And as I said earlier, I know that Ted will have more to say about all this in his weekly review later today.

In silver, the Commercial net short position declined by 5,478 contracts, or 27.4 million troy ounces.

They arrived at that number by adding 1,936 long contracts — and also reduced their short position by 3,542 contracts.  The sum of those two numbers is their change for the reporting week.

Under the hood in the Disaggregated COT Report, all three categories reduced their net long positions…the Managed Money traders by 1,854 contracts, the ‘Other Reportables’ by 621 contracts — and the ‘Nonreportable’/small traders by a rather hefty 3,003 contracts.

Add those numbers up — and they total the 5,478 contract change in the Commercial net short position, which they must do.

The Commercial net short position in silver is down to 91,174 contracts, or 455.9 million troy ounces of paper silver.

With the new Bank Participation Report in hand, Ted pegs JPMorgan’s short position at 15,000 contracts…down about 1,500 contracts from where he put them in this past Monday’s COT Report.

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

Ted and I were discussing the possibility that there was even more short-covering going on since the Tuesday cut-off…especially during that monster volume day on Wednesday.  Ted said that high volume/high price volatility days like that [and on Thursday] are made to measure for someone attempting to cover short positions.  However, we’ll have to wait until next Friday’s COT Report to see if that is in fact the case.  It certainly should be…it’s just a matter of how big the numbers will be.


In gold, the commercial net short position declined by 10,410 contracts, or 1.04 million troy ounces of paper gold.

They arrived at that number by reducing their long position by 473 contracts, but they also reduced their short position by a rather hefty 10,883 COMEX 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, all three categories that reduced their net long positions during the reporting week…the Managed Money traders by 2,975 contracts, the ‘Other Reportables’ by 2,659 contracts — and the ‘Nonreportable’/small traders by a chunky 4,776 contracts.

And also like for silver, the sum of those three numbers adds up to the 10,410 contract change in the commercial net short position, which it must.

The commercial net short position in gold has been reduced down to 35.61 million troy ounces and, like the Commercial net short position in silver, wildly bearish on its face.

And with the new Bank Participation Report in hand, Ted pegs JPMorgan’s short position in gold around the 34,000 contract mark, down about 2,000 contracts from what they showed in this past Monday’s COT Report.

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

Also like for silver, there’s a reasonable chance that the commercial net short position in gold will show another decline in next week’s COT Report — and it should be far larger than the one reported above.  Of course we still have two more trading days left before the Tuesday cut-off for next week’s report, so we’ll see what ‘da boyz’ have in store for us between now and then.

Despite the bearish headline COT numbers in gold [and silver] there are big changes going on under the surface that only Ted, with his lifetime of experience in this, is able to see.  I wouldn’t have noticed it at all unless he had pointed out what was happening in real time as the week progressed.


In the other metals, the Manged Money traders in palladium decreased their net long position by by 696 COMEX contracts during the reporting week — and are net long the palladium market by 11,784 contracts…a bit over 47 percent of the total open interest.  Total open interest in palladium is 24,888 COMEX contracts.  As I keep harping on, it’s a very tiny and very illiquid market. It doesn’t take more than a handful of contracts to move the price by a significant amount, as you may have noticed this past week.  In platinum, the Managed Money traders increased their net long position by a further 772 contracts.  The Managed Money traders are net long the platinum market by 46,583 COMEX contracts…a bit over 45 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are still mega net long against JPMorgan et al. as well.  In copper, the Managed Money traders decreased their net long position in that metal by a fairly hefty 10,112 COMEX contracts during the reporting week.  They are now net short copper by a smallish 813 COMEX contracts, so they are basically market neutral.


Here’s Nick Laird’s “Days to Cover” chart, updated with the COT data for positions held at the close of COMEX trading on Tuesday, December 31. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 155 days of world silver production…down 5 days from last week’s COT Report — and the ‘5 through 8’ large traders are short an additional 75 days of world silver production…down 2 days from last week’s COT Report — for a total of 230 days that the Big 8 are short…down 7 days from last week’s report. This represents a bit over seven and a half months of world silver production, or about 537 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 237 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 456 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 537 million troy ounces.  So the short position of the Big 8 traders is larger than the total Commercial net short position by around 537-456=81 million troy ounces.

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

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

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 15,000 contracts, down about 1,500 contracts from the 16,500 COMEX contracts in last week’s COT Report.  That works out to around 75 million troy ounces of paper silver…which works out to around 32 days of world silver production that JPMorgan is short…down 3 days from last week’s report.

Based on the numbers in the paragraph below, that leaves JPMorgan in the #2 or #3 spot of the Big 4/8 traders…unchanged from where I put them in Monday’s COT Report.  Citigroup is by far the largest, with HSBC USA and one other to round out the Big 4.

As per the first paragraph above, the Big 4 traders in silver are short around 155 days of world silver production in total. That’s about 38.75 days of world silver production each, on average.  The four traders in the ‘5 through 8’ category are short around 75 days of world silver production in total, which is around 18.75 days of world silver production each, on average.

The Big 8 commercial traders are short 45.8 percent of the entire open interest in silver in the COMEX futures market, which is down from the 48.2 percent they were short in Monday’s COT report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 50 percent mark.  In gold, it’s now 38.8 percent of the total COMEX open interest that the Big 8 are short, down a hair from the 39.7 percent they were short in last week’s report — and around 45 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 66 days of world gold production, down 4 days from last week’s COT Report.  The ‘5 through 8’ are short another 40 days of world production, up 2 days from last week’s report…for a total of 106 days of world gold production held short by the Big 8…down 2 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 62 percent of the total short position held by the Big 8…down 3 percentage points from last week’s report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 67, 72 and 59 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is down about 1 percentage point from last week’s COT Report…platinum is also down 1 percentage point from a week ago — and palladium is also down about 1 percentage point week-over-week as well.

And as Ted has been pointing out for years now, JPMorgan is, as always, in a position to double cross the other commercial traders at any time and walk away smelling like a rose — and that’s because of the massive amounts of physical gold and silver they hold.


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

[The January Bank Participation Report covers the time period from December 4 to January 7 inclusive.]

In gold, 4 U.S. banks are net short 109,567 COMEX contracts in the January BPR.  In December’s Bank Participation Report [BPR] these same 4 U.S. banks were net short 100,534 contracts, so there was an increase of 9,033 COMEX contracts from a month ago.

JPMorgan, Citigroup and HSBC USA would hold the lion’s share of this short position.  But as to who other U.S. bank might be that is short in this BPR, I haven’t a clue, but it’s a given that their short position would not be material.

Ted mentioned on the phone yesterday that JPMorgan is short around 34,000 contracts of the total net short position held by the 4 U.S. banks as of Tuesday’s COT Report.  That’s around 32 percent of the total short interest held by these same banks.  I suspect that JPMorgan may not be the biggest short holder in COMEX gold futures.  That title most likely belongs to Citigroup now.

Also in gold, 35 non-U.S. banks are net short 115,544 COMEX gold contracts.  In December’s BPR, 32 non-U.S. banks were net short 104,690 COMEX contracts…so the month-over-month change shows an increase of 10,854 contracts.

So all banks, both U.S. and non-U.S., were going short against all comers during December.

At the low back in the August 2018 BPR…these same non-U.S. banks held a net short position in gold of only 1,960 contacts!

However, as I always say at this point, I suspect that there’s at least two large non-U.S. bank in this group, one of which would include Scotiabank.  It’s certainly possible that it could be the BIS in the No. 1 spot.  But regardless of who this second non-U.S. bank is, the short positions in gold held by the remaining 33 non-U.S. banks are immaterial.

As of this Bank Participation Report, 40 banks [both U.S. and foreign] are net short 28.7 percent of the entire open interest in gold in the COMEX futures market, which is down a hair from the 29.3 percent they were short in the December BPR.

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

In silver, 4 U.S. banks are net short 33,983 COMEX contracts in January’s BPR.  In December’s BPR, the net short position of these same 4 U.S. banks was 31,818 contracts, so the short position of the U.S. banks is up 2,165 contracts month-over-month — and I would suspect that increase comes courtesy of JPMorgan.

As in gold, the three biggest short holders in silver of the four U.S. banks in total, would be JPMorgan, Citigroup and HSBC USA…with Citigroup in No. 1 spot…and JPM in No. 2 or 3 position.  Whoever the remaining U.S. bank may be, their short position, like the short position of the smallest U.S. bank in gold, would be immaterial in the grand scheme of things.

Also in silver, 24 non-U.S. banks are net short 46,947 COMEX contracts in the January BPR…which is up a bit from the 43,879 contracts that 21 non-U.S. banks were short in the December BPR.  I would suspect that Canada’s Scotiabank [and maybe one other, the BIS perhaps] holds a goodly chunk of the short position of these non-U.S. banks.  I believe that a number of the remaining 22 non-U.S. banks may actually net long the COMEX futures market in silver.  But even if they aren’t, the remaining short positions divided up between these other 22 non-U.S. banks are immaterial — and have always been so.

As of January’s Bank Participation Report, 28 banks [both U.S. and foreign] are net short 34.6 percent of the entire open interest in the COMEX futures market in silver—down a bit from the 36.8 percent that they were net short in the December BPR.  And much, much more than the lion’s share of that is held by Citigroup, HSBC USA, JPMorgan, Scotiabank — and maybe one other non-U.S. bank, which I suspect may be the BIS.

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

In platinum, 4 U.S. banks are net short 27,057 COMEX contracts in the January Bank Participation Report.  In the December BPR, these same banks were net short 21,506 COMEX contracts…so there’s been a huge increase month-over-month…5,551 contracts worth…26 percent.

[At the ‘low’ back in July of 2018, these same four U.S. banks were actually net long the platinum market by 2,573 contracts. That’s quite a change for the worse since then.]

Also in platinum, 21 non-U.S. banks are net short 26,150 COMEX contracts in the January BPR, which is also up big from the 22,834 COMEX contracts that these same 21 non-U.S. banks were net short in the December BPR…3,316 contracts…14.5 percent.

It’s obvious that the banks have been shorting this current rally in platinum all the way up — and as you can tell, the banks hold a record shot position.  One can only imagine what the price of platinum would be if the banks weren’t in there as short sellers of both first and last resort.

[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, 25 banks [both U.S. and foreign] are net short a grotesque and obscene 51.9 percent of platinum’s total open interest in the COMEX futures market, which is up from the 48.7 percent that 26 banks 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 are net short 6,813 COMEX contracts in the December BPR, which is pretty much unchanged from the 6,831 contracts that these same 4 U.S. banks were net short in the December BPR.

Also in palladium, 14 non-U.S. banks are net short 1,845 COMEX contracts—which is down from the 2,179 COMEX contracts that 15 non-U.S. banks were short in the December BPR.

But when you divide up the short positions of these 14 non-U.S. banks more or less equally, they’re completely immaterial…especially when compared to the positions held by the 4 U.S. banks.

And as you already know, palladium is very tiny market — and these numbers attest to that.

As of this Bank Participation Report, 18 banks [both U.S. and foreign] are net short 34.8 percent of the entire COMEX open interest in palladium…down a hair from the 35.3 percent of total open interest that 19 banks were net short in December.

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

JPMorgan et al. are facing some rather serious and long-term headwinds, which are getting stronger by the week and month.  But that fact hasn’t stopped them from going short against all comers during the last month.

And as Ted mentioned on the phone yesterday, some of the Big 8 commercial traders closed out their short positions in both gold and silver at a loss during the last reporting week…so these headwinds are starting to have an effect.

But, as always — and because of their massive physical holdings in both silver and gold, JPMorgan continues to be in a position to double cross the rest of the short holders in both silver and gold if they so choose.  And as I said in this space last month….whether they will they or they won’t, remains to be seen.

I have a lot of stories/articles for you again today…including a couple that I’ve been saving for today’s column for the usual length and/or content reasons.


CRITICAL READS

December Jobs Miss Big: Payrolls Tumble to 145K as Wage Growth Slumps to 17 Month Low

While it is safe to say that the Fed – and markets – will largely ignore today’s payroll print in a time when the central bank is injecting $100BN in in liquidity every month regardless of the macro data, it is still notable that the December payrolls report was a disappointing 145K, missing expectations of 160K (and the whisper number of 180K), and 111K lower from the downward revised 256K in December (revised from 266K).

The change in total non-farm payroll employment for October was revised down by 4,000 from +156,000 to +152,000, and the change for November was revised down by 10,000 from +266,000 to +256,000. With these revisions, employment gains in October and November combined were 14,000 lower than previously reported.  After revisions, job gains have averaged 184,000 over the last 3 months.

Looking below the surface, the biggest surprise was manufacturing employment which after a surge in January as the GM strike ended, slumped once again in December, down -12,000, the second biggest drop since the summer of 2016.

The unemployment rate came in at 3.5%, as expected, however a look at the composition revealed some weakness as black unemployment jumped to 5.9%, the highest since July 2019.

There was more bad news (or good news if you are the Fed): average hourly earnings rose a disappointing 0.1% M/M in December, well below the consensus estimate of 0.3%, and just 2.9% Y/Y, which was the worst annual increase in July 2018. The silver lining: this was largely due to wages for managers and supervisors as the average hourly wages for production and non-supervisory position rose 3.7%, just shy of the cycle high recorded in November.

So what does all this mean? Well, the headline jobs print – while disappointing – is hardly a disaster, and confirms that the overall economy is slowing, hardly a shock. Meanwhile the fading wage reflation impulse will be wonderful news for the Fed which has already indicated it won’t hike any time soon, and the lack of wage pressures only confirms that Powell will not tighten for a long, long time, if ever.

This Zero Hedge story put in an appearance on their Internet site at 8:34 a.m. Friday morning EST — and it’s the first offering of the day from Brad Robertson.  Another link to it is here.


Truck Manufacturing Orders Plunge to Decade Low in 2019

The painful decline in Class 8 orders that we have been documenting on a month-by-month basis has resulted in truck manufacturing orders hitting a decade low in 2019, according to Americas Commercial Transportation (ACT) Research Co., a leading publisher of commercial vehicle industry data, market analysis, and forecasting services for the North American market.

Full year volume for Class 8 orders was 181,000 for the year, compared to 490,100 units in 2018.

Sales in December followed the year’s trend, ticking lower on a year over year basis despite showing a 14% sequential rise.

Federal tax rate cuts in 2018 encouraged carriers to expand their fleets, resulting in major backlogs and tough comparable numbers for 2019, according to the Triad Business Journal.

In addition to the tough comps, ACT President and Senior Analyst Kenny Vieth also blamed the issues on “lower freight demand” in 2019.

Vieth said: “Overbuying through 2019 and insufficient freight to absorb the ensuing capacity overhang continued to weigh on the front end of the Class 8 demand cycle in December. Recalling July and August, orders were down 80% from the corresponding months in 2018.”

As we have documented throughout the year, some truck manufacturers, like Mack Trucks and Volvo Trucks, announced layoffs. Volvo announced last year that it would lay off 700 people at its Dublin, Virginia plant. Daimler laid off 900 workers in October 2019 and Navistar will lay off 1,300 workers this month.

Some trucking companies that we have profiled, like Terrill Transportation, have closed down entirely.

This brief Zero Hedge news item showed up on their Internet site at 8:45 p.m. EST on Friday evening — and another link to it is here.


Federal Reserve Admits It Pumped More than $6 Trillion to Wall Street in Recent Six Week Period

If the Federal Reserve was looking for a media lock-down on news about the trillions of dollars in cumulative repo loans it has funneled quietly to Wall Street’s trading houses since September 17 of last year, it could not have found a better cloud cover than Donald Trump. First the impeachment proceedings bumped the Fed’s money spigot from newspaper headlines. Then, this past Friday, as the Fed released its December meeting minutes at 2:00 p.m., with its highly anticipated plans to be announced for the future of this vast money giveaway to Wall Street, that news was ignored as the media scrambled to cover Trump’s “termination” of General Qasem Soleimani, the head of Iran’s Quds Force, which raised the immediate specter of a retaliatory strike against the U.S. by Iran.

The Fed’s minutes revealed that after multiple expansions of this vast money spigot, which was previously set to lapse in January after getting the Wall Street trading houses through the year-end money crunch, instead it may be extended through April. The minutes read as follows:

The manager also discussed expectations to gradually transition away from active repo operations next year as Treasury bill purchases supply a larger base of reserves. The calendar of repo operations starting in mid-January could reflect a gradual reduction in active repo operations. The manager indicated that some repos might be needed at least through April, when tax payments will sharply reduce reserve levels.”

Corporate and individual tax payments occur every April. The Fed offers no explanation as to why this April is different and requires a multi-trillion-dollar open money spigot from the Fed.

The Fed’s minutes also acknowledge that its most recent actions have tallied up to “roughly $215 billion per day” flowing to trading houses on Wall Street. There were 29 business days between the last Federal Open Market Committee (FOMC) meeting and the latest Fed minutes, meaning that approximately $6.23 trillion in cumulative loans to Wall Street’s trading houses had been made in that short span of time.

I’m more than a little leery of this $6 trillion figure, dear reader, but thought I’d post the article anyway.  This commentary appeared on the wallstreetonparade.com Internet site on Monday — and I thank Gordon Foreman for pointing it out. Another link to it is hereGregory Mannario‘s  semi ‘R‘ rated post market close rant for Friday is linked here — and I thank Roy Stephens for pointing it out.  It’s worth watching.


We Need to Decipher Who Our Real Enemies Are

What a market! And this was just after President Trump showed how easy it would be to cause a real disaster, by provoking Iran to fire missiles at U.S. bases in Iraq.

But then, he also showed how easy it was to avert a disaster.

The pattern is, by now, very familiar. Mr. Trump uses it in all his celebrity squabbles, trade wars, and political brawls. He says or does something outrageous… then, he backs away.

Gold, the ultimate disaster meter, shot up on news of the killing of Iranian General Suleimani. Then, it too quickly backed off. Gold stocks lost 5% almost immediately.

And finally, Mr. Trump signaled “all clear.”

But “all clear” is just what the stock market… and the U.S. economy… ain’t.

This slightly longish, but interesting commentary from Bill showed up on the bonnerandpartners.com Internet site on Friday morning sometime — and another link to it is here.


David Stockman on What Triggers the Next Financial Collapse

International Man: You have sounded the alarm on a coming financial crisis of historic proportions. How do Trump’s trade policies figure into your view that a crisis is coming?

David Stockman: Trump’s trade policies only create more risk and rot down below.

They’re just kicking the can down the road. With this latest move by the Fed, they have cut the interest rates three times and short-term rates are back at 1.55%. They’re pumping their balance sheet back up—it’s up $300 billion just since September.

The Fed has reverted to all of the things that have created the underlying rot—and that means when finally things break loose, it’s going to be far worse than it would have otherwise been.

Given that they’re kicking the can down the road, they’re building the pressure in the system to really explosive levels.

The trade chaos that Trump’s creating is probably the catalyst that will bring down the whole house of cards.

This Q&A with David was posted on the internationalman.com Internet site very early on Friday morning EST — and another link to it is here.


Doug Noland:  Issues 2020

When I began posting the CBB in 1999, I expected “Bubble” to be in the title for no longer than a year or two. It was to be the “Credit Bulletin,” inspired by Benjamin Anderson’s “Economic Bulletin” from the 1920’s. Yet here we are in 2020 with Bubbles everywhere, including in my blog title. In 1999, I would have said that was an impossibility.

There are many things that proved not as impossible as I had believed. What was deemed acceptable monetary policy badly mutated. Mutant monetary management fundamentally altered the tolerance for debt and deficits. Finance and financial markets were similarly transformed, with yet to be appreciated consequences for (grossly simplifying here) Capitalism, societies and geopolitics.

So many changes, but I’m not changing. In my initial CBB I committed to “calling them as I see them and letting the chips fall where they may.” Let them fall.

The Bubble will either further inflate or burst.” Regular readers will surely recognize this as what has become an annual ritual of my “Issues” pieces. Some might view it as a cop out; others may be reminded of Einstein’s definition of insanity. Yet Bubbles do have defined characteristics. They are at their core creatures of increasingly powerful momentum. Stimulus will intensity and broaden inflationary effects while enlarging the overall Bubble scope. Especially in the age of unshackled central banks, the timing of their demise is uncertain. Importantly, however, that they become progressively perilous over time remains a certainty.

Despite today’s amazing bullishness, there is a lengthy list of Emerging Market vulnerabilities. There are cracks in India, Indonesia and Turkey, to name a few. Asian finance, in particular, is hopelessly unsound. The huge banking systems in Hong Kong and Singapore offer potential for negative surprises. Similar to Chinese finance, the “offshore” financial centers are accidents in the making. I wouldn’t bet against global money market problems. The world is one serious bout of “risk off” deleveraging away from exposing massive leverage and chicanery. It’s difficult for me to see the year pass without serious market liquidity issues. That’s the way I see Issues 2020. I restrained myself.

Doug’s longish, but very worthwhile weekly commentary was posted on his Internet site in the very wee hours of Saturday morning — and another link to it is here.


Europe’s New Bond Sales Top $100 Billion in Record-Shattering Week

Europe’s bond market is wrapping up its biggest week ever, with over $100 billion of new debt sales underscoring its status as a major global funding vehicle.

Issuers from China, Indonesia, Japan and the U.S. joined local borrowers in tapping Europe’s super-low funding costs and increasingly mature bond market, helping push sales for the week to €92.5 billion (US$103 billion). U.S.-Iranian tensions also added extra impetus to the traditional year-start rush, as issuers dashed to get deals done before any market deterioration.

It has been a remarkable week given the events in the Middle East,” said Frazer Ross, head of EMEA investment grade DCM syndicate at Deutsche Bank AG. “All areas of the market are functioning well.”

Sales in Europe are well ahead of the issuance in the U.S., where about $84 billion in new debt has been offered this week.

Demand from Europe’s bond buyers has shown few signs of decline, even with 2020’s blockbuster start coming after a record year for issuance in 2019. Secondary-market bond spreads have barely flickered amid this week’s deal deluge, and issuers including E.On SE, Banco Santander SA and Portugal drew large order books.

This Bloomberg news item was posted on their website at 4:44 a.m. Pacific Standard Time on Friday morning — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is here.


The Donald’s Assassination of General Soleimani: As Stupid As It Gets — David Stockman

During more than a half-century of Washington watching we have seen stupidity rise from one height to yet another. But nothing—just plain nothing—compares to the the blithering stupidity of the Donald’s Iran “policy”, culminating in the mindless assassination of its top military leader and hero of the so-called Islamic Revolution, Major General Qassem Soleimani.

To be sure, we don’t give a flying f*ck about the dead man himself. Like most generals of whatever army (including the U.S. army), he was a cold-blooded, professional killer.

And in this day and age of urban and irregular warfare and drone-based annihilation delivered by remote joy-stick, generals tend to kill more civilians than combatants. The dead civilian victims in their millions of U.S. generals reaching back to the 1960s surely attest to that.

Then again, even the outright belligerents Soleimani did battle with over the decades were not exactly alms-bearing devotees of Mother Theresa, either. In sequential order, they were the lethally armed combatants mustered by Saddam Hussein, George W. Bush, the Sunni jihadists of ISIS and the Israeli and Saudi air forces, which at this very moment are raining high tech bombs and missiles on Iranian allies and proxies in Syria, Lebanon and Yemen.

The only reason these years of combat are described in the mainstream media as evidence of Iranian terrorism propagated by its Quds forces is that the neocons have declared it so. That is, by Washington’s lights Iran is not allowed to have a foreign policy and its alliances with mainly Shiite co-religionists in Iraq, Syria, Lebanon and Yemen are alleged per se to be schemes of aggression and terror, warranting any and all retaliations including assassination of its highest officials.

This long commentary by David appeared on the unz.com Internet site on Tuesday — and for length reasons I thought it best to wait for today’s column.  I thank Larry Galearis for sending it our way — and another link to it is here.


America Escalates Its “Democratic” Oil War in the Near East — Michael Hudson

The mainstream media are carefully sidestepping the method behind America’s seeming madness in assassinating Islamic Revolutionary Guard general Qassim Suleimani to start the New Year. The logic behind the assassination was a long-standing application of U.S. global policy, not just a personality quirk of Donald Trump’s impulsive action. His assassination of Iranian military leader Suleimani was indeed a unilateral act of war in violation of international law, but it was a logical step in a long-standing U.S. strategy. It was explicitly authorized by the Senate in the funding bill for the Pentagon that it passed last year.

The assassination was intended to escalate America’s presence in Iraq to keep control of the region’s oil reserves, and to back Saudi Arabia’s Wahabi troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are actually America’s foreign legion) to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar. That remains the key to understanding this policy, and why it is in the process of escalating, not dying down.

I sat in on discussions of this policy as it was formulated nearly fifty years ago when I worked at the Hudson Institute and attended meetings at the White House, met with generals at various armed forces think tanks and with diplomats at the United Nations. My role was as a balance-of-payments economist having specialized for a decade at Chase Manhattan, Arthur Andersen and oil companies in the oil industry and military spending. These were two of the three main dynamic of American foreign policy and diplomacy. (The third concern was how to wage war in a democracy where voters rejected the draft in the wake of the Vietnam War.)

The media and public discussion have diverted attention from this strategy by floundering speculation that President Trump did it, except to counter the (non-)threat of impeachment with a wag-the-dog attack, or to back Israeli lebensraum drives, or simply to surrender the White House to neocon hate-Iran syndrome. The actual context for the neocon’s action was the balance of payments, and the role of oil and energy as a long-term lever of American diplomacy.

This longish but very much worth reading commentary by Michael put in an appearance on the counterpunch.org Internet site on Monday — and it’s the first offering of the day from Swedish reader Patrik Ekdahl.  Another link to it is here.  The mises.org article I borrowed that Hudson article from is worth looking over as well.  It’s headlined “How the U.S. Wages War to Prop up the Dollar” — and linked here.


The Saker Interviews Michael Hudson

The Saker: Trump has been accused of not thinking forward, of not having a long-term strategy regarding the consequences of assassinating General Soleimani. Does the United States in fact have a strategy in the Near East, or is it only ad hoc?

Michael Hudson: Of course American strategists will deny that the recent actions do not reflect a deliberate strategy, because their long-term strategy is so aggressive and exploitative that it would even strike the American public as being immoral and offensive if they came right out and said it.
President Trump is just the taxicab driver, taking the passengers he has accepted – Pompeo, Bolton and the Iran-derangement syndrome neocons – wherever they tell him they want to be driven. They want to pull a heist, and he’s being used as the getaway driver (fully accepting his role). Their plan is to hold onto the main source of their international revenue: Saudi Arabia and the surrounding Near Eastern oil-export surpluses and money. They see the U.S. losing its ability to exploit Russia and China, and look to keep Europe under its control by monopolizing key sectors so that it has the power to use sanctions to squeeze countries that resist turning over control of their economies and natural rentier monopolies to U.S. buyers. In short, U.S. strategists would like to do to Europe and the Near East just what they did to Russia under Yeltsin: turn over public infrastructure, natural resources and the banking system to U.S. owners, relying on U.S. dollar credit to fund their domestic government spending and private investment.

This is basically a resource grab. Soleimani was in the same position as Chile’s Allende, Libya’s Qaddafi, Iraq’s Saddam. The motto is that of Stalin: “No person, no problem.”

This longish Q&A session, which I haven’t read all of yet…but what I have read puts it in the must read category…was posted on the unz.com Internet site on Thursday — and was another article that I thought best to save for Saturday’s column.  I thank Larry Galearis for sending it our way — and another link to it is here.


U.S. Rebuffs Iraq P.M. Request to Talk Troop Exit: It’s “Our Right” as a “Force For Good” to Stay

Perhaps entirely to be expected, the U.S. administration has unambiguously rejected Iraqi Prime Minister Adel Abdul-Mahdi’s urgent call for Washington to enact a U.S. troop ‘withdrawal mechanism’ in Iraq. In a Thursday phone call to Secretary of State Mike Pompeo, the Iraqi leader urged the administration to “send delegates to Iraq to prepare a mechanism to carry out the parliament’s resolution regarding the withdrawal of foreign troops from Iraq.”

Echoing prior statements of Mark Esper, the State Department underscored Friday that it’s “our right” as a “force for good” in the region to maintain “appropriate force posture in the Middle East” in a statement by spokesperson Morgan Ortagus. She stated the U.S. considers that a troop pullout is not on the table for discussion with Baghdad officials.

At this time, any delegation sent to Iraq would be dedicated to discussing how to best recommit to our strategic partnership — not to discuss troop withdrawal, but our right, appropriate force posture in the Middle East,” Ortagus said. The words also appear aimed at Abdul-Mahdi’s assertion that U.S. forces were operating “without permission“.

America is a force for good in the Middle East,” she added. “Our military presence in Iraq is to continue the fight against ISIS and as the Secretary has said, we are committed to protecting Americans, Iraqis, and our coalition partners.”

And yet President Trump has previously declared the total demise of the Islamic State’s “territorial caliphate” — which has long been the main rationale for the Pentagon being there.

This Zero Hedge news item showed up on their website at 3:20 p.m. on Friday afternoon EST — and another link to it is here.  Then there’s this ZH story from Friday morning headlined “Iraqi P.M. to Pompeo: U.S. Must Establish Mechanism For Troop Withdrawal” — and it comes courtesy of Brad Robertson.


In Stunning Reversal, Iran Admits Accidentally Shooting Down Ukrainian Passenger Jet

After multiple denials, and demands for proof from foreign entities – accusing them of spreading “psychological warfare” lies, President Hassan Rouhani has admitted Iran accidentally shot down the Ukrainian jetliner that took off from Tehran’s international airport amid this week’s tensions.

In a pair of tweets, Rouhani admitted that “Armed Forces’ internal investigation has concluded that regrettably missiles fired due to human error caused the horrific crash of the Ukrainian plane and death of 176 innocent people,” adding that “The Islamic Republic of Iran deeply regrets this disastrous mistake.”

The army said Ukraine International Airlines Flight 752 was flying close to a sensitive Islamic Revolutionary Guard Corps military site when it was downed because of “human error,” adding that the “culprits” would be identified and referred to judicial authorities.

In the aftermath of the incident, Rouhani arranged for “compensation” payments to the victims’ families, and ordered reforms of the country’s air defense system to prevent similar disasters in the future.

Iran will reportedly send the black boxes of the crashed jet to France as it lacks the technology to decode them, the state-run Islamic Republic News Agency reported.

This Zero Hedge item was posted on their Internet site at 2:11 a.m. EST on Saturday morning — and another link to it is here.  I’d read about it many hours earlier in a story about it linked here.


The Renewable Green Energy Myth: 50,000 Tons of Non-Recyclable Wind Turbine Blades Dumped in Landfill

Funny, no one seemed to consider what to do with the massive amount of wind turbine blades once they reached the end of their lifespan.  Thus, the irony of the present-day Green Energy Movement is the dumping of thousands of tons of “non-recyclable” supposedly renewable wind turbine blades in the country’s landfills.

Who would have thought? What’s even worse, is that the amount of wind turbine blades slated for waste disposal is forecasted to quadruple over the next fifteen years as a great deal more blades reach their 15-20 year lifespan.  Furthermore, the size and length of the newly installed wind turbine blades are now twice as large as they were 20-30 years ago.

The wind turbine blades are a toxic amalgam of unique composites, fiberglass, epoxy, polyvinyl chloride foam, polyethylene terephthalate foam, balsa wood, and polyurethane coatings.   So, basically, there is just too much plastic-composite-epoxy crapola that isn’t worth recycling.  Again, even though there are a few small recycling centers for wind turbine blades, it isn’t economical to do on a large scale.

As I mentioned, the wind power units built today are getting much taller and larger.  Check out the 83.5 meter (274 feet) long wind turbine blade being transported for a 7 Megawatt system:  Click to enlarge.

This picture was taken in 2016.  So, in about 15-20 years, this blade will need to be replaced.  Just think of the cost to remove three massive blades this size, cut them up, transport them to the landfill and cover them with tons of soil.  Now, multiply that by tens of thousands of blades. According to the data from Hochschule Bremerhaven & Ahlstrom-Munksjo, the wind industry will generate 50,000 tons of blade waste in 2020, but that will quadruple to 225,000 tons by 2034.  I have read that some estimates show an even higher amount of blade waste over the next 10-20 years.

This very interesting article appeared on the srsroccoreport.com Internet site on Thursday — and for obvious content reasons, had to wait for my Saturday column.  It’s worth reading for sure, as are the embedded links — and I thank Brad Robertson for pointing it out.  Another link to it is here.


How to return to sound money — Alasdair Macleod

Given the current fiat money system is on a path towards its own destruction it is not surprising that there has been increasing talk of a monetary reset. Without a completely different approach and by retaining the same institutions and macroeconomic concepts, any such reset is bound to fail.

This article provides a template for an enduring sound money solution that will deliver economic progress while eliminating destructive credit cycles. It posits that a properly constructed gold and gold substitute monetary system, which also includes the removal of bank credit inflation as a means of providing investment capital, is the only way that lasting stability and prosperity can be achieved. As well as the establishment of an incorruptible monetary system, the state’s role in the economy must be curtailed, budgets always balanced, banking reformed, and the private sector allowed to accumulate the wealth necessary to provide the investment for producers to produce.

Monetary reform involves a clear understanding of why free markets succeed and why socialism, together with neo-Keynesian macroeconomics, are responsible for the impending monetary and economic collapse. It will require a complete change of socio-political and economic cultures, but properly approached it can be done.

This very long commentary/opinion piece from Alasdair almost classifies as a short novel.  It put in an appearance on the goldmoney.com Internet site on Thursday — and for length reasons, had to wait for today’s column.  I found it in a GATA dispatch — and another link to it is here.


Keith Barron: Gold will Easily Climb Past $2,000 During this Long Bull Market

Keith discusses his early interest in geology and what led him to explore Ecuador for old Spanish mines. He was fortunate enough to make a significant gold discovery while exploring the region back around 2001. This discovery led him to retire, having sold Aurelian Resources in 2008, netting him $100 million.

Finding retirement boring, him and his team began researching European records for details on old mines in Ecuador. Narrowing down the search region in 2016, they claimed a large parcel of land in Ecuador, which is the base for his new company Aurania Resources.

Keith outlines where he thinks gold and silver are heading along with the risks of the current geopolitical and banking climate.

This 25-minute audio interview showed up on the marketsanity.com Internet site on Thursday — and for length reasons, it had to wait for today’s column.  I thank Judy Sturgis for bringing it to our attention — and another link to it is here.


Gold bar found beneath Mexico City street was part of Moctezuma’s treasure

A new scientific analysis of a large gold bar found decades ago in downtown Mexico City reveals it was part of the plunder Spanish conquerors tried to carry away as they fled the Aztec capital after native warriors forced a hasty retreat.

Mexico’s National Institute of Anthropology and History (INAH) announced the findings of new tests of the bar in a statement on Thursday, a few months before the 500-year anniversary of the battle that forced Hernan Cortes and his soldiers to temporarily flee the city on June 30, 1520.

A day earlier, Aztec Emperor Moctezuma was killed, or possibly assassinated, according to the native informants of one Spanish chronicler, which promoted a frenzied battle that forced Cortes, his fellow Spaniards as well as their native allies to flee for their lives.

A year later, Cortes would return and lay siege to the city, which was already weakened with supply lines cut and diseases introduced by the Spanish invaders taking a toll.

The bar was originally discovered in 1981 during a construction project some 16 feet (5 meters) underground in downtown Mexico City – which was built on the ruins of the Aztec capital Tenochtitlan – where a canal that would have been used by the fleeing Spaniards was once located.

This very interesting Reuters story was filed from Mexico City at 9:24 p.m. on Thursday evening EST — and I found this item on the gata.org Internet site.  Another link to it is here — and the embedded photo is worth a look.


The PHOTOS and the FUNNIES

After our brief stop in Sicamous on August 4, we were off to Revelstoke…with brief stops at Craigellachie and Three Valley Gap.  Craigellachie in Eagle Pass was the spot where east met west in Canada when the Canadian Pacific Railway was under construction.  ‘The Last Spike’ was pounded home at this location in November of 1885.  Located less than a 100 meters off the Trans-Canada Highway, it’s a busy tourist spot in the summer — and the first two photos were taken there.  The CPR track bed is just behind the chain-link fence in the second shot. The last photo was snapped at Three Valley Gap, also in Eagle Pass, using the lake of the same name as a backdrop.  I’ll have more photos of this location in Tuesday’s column.  Click to enlarge.


The WRAP

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


Today’s pop ‘blast from the past’ needs no introduction — and you’ll know it right from the opening guitar riff.  It’s 55 years young this year — and to let you know how long ago that was, there’s a comment below the tune that reads…”Makes me nostalgic for an era I don’t even know about.”   It’s the dead of winter in Merritt — and we have about 15 cm/6 inches of fresh snow on the ground and some bitterly cold temperatures on the way, so I thought it appropriate.  The link is here.  Enjoy!

Today’s classical ‘blast from the past’ is one I haven’t posted in many a year.  It’s Antonín Dvořák’s Symphony No. 8 in G major, Op. 88…which he composed and orchestrated within a two-and-a-half-month period from 26 August to 8 November 1889 at his summer resort in Vysoká u Příbramě, Bohemia.  Dvořák conducted the premiere in Prague on 2 February 1890.

Here’s the Rotterdam Philharmonic Orchestra in a live recording from 16 December 2016…under the baton of Canadian-born conductor Yannick Nézet-Séguin.  The video and audio quality are first rate — and the link is here.


I’m not sure what should be read into Friday’s price action in either gold or silver.  I was expecting the Big 7/8 traders to stomp their respective prices into the dirt when the jobs report was released at 8:30 a.m. EST.  Instead, we got a rally that they squashed within the next thirty minutes, but there wasn’t a thing after that — and both closed up decent amounts on the day.

Looking at the 6-month charts below, there’s a rather terrifying amount of altitude between their current prices and their respective 50-day moving averages…particularly in gold, so I’m as nervous as long-tailed cat in a room full of rocking chairs at the moment.  Will they…or won’t they…or even can they?  I just don’t know, nor does anyone else — and only time will tell.

But as I’ve mentioned in more than one spot in this commentary, this week’s COT Report showed that some of the Big 8 commercial traders were covering short positions at a loss during this reporting week.  And as Ted says, it’s the very first time they’ve done that…so under the surface, things are not the way they always have been.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and except for silver, they gained back what they lost on Thursday…plus a bit more.  Copper closed up a penny — and WTIC came awfully close to taking out its 50-day moving average to the downside.  Click to enlarge.

As is well known now, the Iranian government ‘fessed up to shooting down that Ukrainian passenger plane — and as I had already suspected, it was by accident.  It’s a human tragedy for sure, but at least they owned up to it.

How that changes the dynamic over there remains to be seen, but I’m speculating that it defuses it.

The U.S. deep state, along with several Middle East countries are just itching for a fight, but they should be very careful what they wish for, as Iran has already stated quite clearly that the first attack on its soil will be pretty much seen as a declaration of war — and the oil refineries of the Persian Gulf could be in flames within hours…including Iran’s.  But with the current revelation coming from the Iranian government regarding the shoot-down, a false flag operation at this particular juncture would be ham-handed — and seen precisely for what it was.

So it’s back to the drawing board for the U.S. deep state et al…unless they really want to get even more blatant in their actions.

But as Gregory Mannarino has been correctly going on about for several months now, the deep state, Wall Street and the New York banking fraternity desperately want higher oil prices — and this Iran war thingy was their ticket to that.

Higher oil prices is another way of getting higher inflation, which is desperately needed to inflate away the massive piles of debt that currently exist.  I suspect that the oil card was to be used instead of the gold card…with the rising price of oil setting the stage for the end of the price management scheme in the precious metals in the process.  That in turn would drive commodity prices hugely higher — and they would then have more inflation than they could possibly want.  Now this particular chain of events is very much in doubt.

I await their next move with great interest.

On an entirely different topic, I received two e-mails this week from American subscribers complaining vociferously about the stories/articles/commentaries that I have been posting in my column this week about the current Middle East conflict — and the U.S. involvement in it.  I wish to share one of these exchanges I had early yesterday morning, so you can see my viewpoint as a Canadian living here in Merritt, B.C.  Here goes…

Ed,

I’m not paying my subscription to get a steady onslaught of anti-American drivel. I can get that B.S. for free by turning on cable news. If this stimulates most of your subscribers, even those living in the U.S., then good on ya. That ain’t me.

Paul

Hi Paul,

None of what I post is anti-American people.  I live in Canada and love the U.S. My daughter and I were in Washington State for four days a couple of weeks ago — and it was fantastic.  We had such fun — and the people we met were great.  It was a wonderful experience, as it always is whenever I travel south of the 49th parallel.

You’re taking what I’m posting personally — and you shouldn’t be.

These commentaries [by the people that write them] are directed at the U.S. government, its military, the CIA et al., Wall Street, the big U.S. banks — and the entire ‘deep state’ crowd in general…both U.S. and foreign.  The average Joe in the street in the U.S…or here in Canada…or any other country for that matter, are just victims of these guys.  That includes you and I.

I yearn for the old days of the 1950s and 1960s…before the start of the Vietnam war…the ‘good old days’ for me.

If I could be Marty McFly [with his looks and youth] and get into Doc Brown’s DeLorean time machine and go back to 1955…I would stay there.  I’m sure a decent chunk of my subscriber base feels the same way in some respects.

I hope this puts my articles in some sort of context — and as I said, they should never been taken personally…as they are not directed at the common man/woman on Planet Earth.

With good wishes,

Ed

Ed,

Thank you for taking the time to respond to my message. Trust me. I am very anti-deep state, particularly with regard to the U.S. version. My perception, however, is that the usual suspects with an anti-U.S. govt bone to pick get their messages posted with no opposing viewpoint. I hope you can understand why after 3-4 days of this I was getting impatient with the daily “onslaught”.

I do enjoy your service very much and was not looking forward to canceling my subscription. I appreciate you reaching out, and wish to extend my condolences to the friends and families of the 170 Canadians senselessly murdered by the Iranian regime. The finger of blame should be pointed in the right direction.

Best,

Paul

Hi Paul,

As I stated in my column on that story about the airplane shoot-down, I highly suspect that the Iranian’s did it, although I would also suspect that it was accidental, rather than deliberate.  They certainly didn’t want/need that aggravation on top of what they already have.  But that doesn’t lessen the tragedy of it.  The Iranian government will get hung for it — and rightfully so.

I can understand why you might think that those “with an anti-government bone to pick” have no opposing viewpoint.  But if I posted those sorts of stories, all I would be doing is putting up whatever the deep state-controlled media wants the sheeple to believe — and I just can’t stomach doing that.

It’s a dilemma for me — and I’m sure you can see the spot I’m in…because a lot of my subscribers would be equally outraged if I did.

Ed

Gotcha. Thanks, Ed.

Paul

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

Ed

A Pretty Chunky Withdrawal From SLV Yesterday

10 January 2020 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much of anything in morning trading in the Far East on their Thursday.  But starting shortly after 1 p.m. China Standard Time, some selling pressure appeared — and the low tick of the day was set around 2:45 p.m. CST.  It recovered a bit from there — and from the London open onwards, it crept quietly and unevenly higher until a few minutes before the 1:30 p.m. COMEX close in New York. From that point it was sold a bit lower into the 5:00 p.m. EST close.

The low and high ticks were reported as $1,541.00 and $1,562.40 in the February contract.

Gold finished the Thursday session at $1,552.00 spot, down $4.00 from Wednesday’s close.  It should be noted that both attempts that gold made to rally above unchanged…8 a.m. and 1:30 p.m. EST in New York…were carefully turned lower.  Net volume was very heavy at a bit under 327,000 contracts — and there was around 55,700 contracts worth of roll-over/switch volume in this precious metal.

The silver price was managed in a similar fashion — and was sold back below $18 spot in early afternoon trading in the Far East.  After its low tick and ensuing small recovery, it traded quietly sideways once London opened.  Silver’s tiny rally that began at the noon silver fix was stopped dead in its tracks and turned lower the moment it attempted to break above $18 spot at 1 p.m. GMT/8 a.m. EST.  It was then sold lower until minutes before the 11 a.m. EST London close — and then rallied a bit into the COMEX close — and gave back a bit of that in after-hours trading.

The high and low ticks in silver were recorded by the CME Group as $18.225 and $17.815 in the March contract.

Silver was closed on Thursday afternoon in New York at $17.855 spot, down 21.5 cents from Wednesday.  Net volume was heavy at a bit under 95,000 contracts — and there was around 7,500 contracts worth or roll-over/switch volume on top of that.

Platinum rallied about 9 bucks starting right at the 6:00 p.m. EST open in New York on Wednesday evening — and that lasted until around 9:45 a.m. in Shanghai on their Thursday morning.  It was sold quietly and unevenly lower until shortly before the Zurich open.  It began to chop quietly higher from there until it ran into ‘something’ around 11:35 a.m. in New York.  It was sold a bit lower until 1 p.m. EST — and then traded quietly and unevenly sideways until trading ended at 5:00 p.m.  Platinum was closed at $965 spot, up 14 dollars on the day.

Palladium certainly had a wild ride on Thursday — and I’m not going to bother with the play-by-play, as the Kitco chart below tells all.  Like for platinum, the low tick in palladium was set very shortly before the Zurich open — and both rally attempts after that were met a resolute seller of last resort.  Despite all the obvious interference, palladium finished the Thursday session at $2,099 spot, up 7 dollars on the day…54 bucks off its Kitco-recorded high tick of the day…and 81 dollars off its Kitco-recorded low tick.  These kinds of price swings are the very definition of a thinly-traded and very illiquid market.

The dollar index closed very late on Wednesday afternoon at 97.30 — and opened down about 2 basis points once trading commenced at 7:45 p.m. EST on Wednesday evening…which was 8:45 a.m. China Standard Time on their Thursday morning.  From that point the index chopped quietly sideways until a very choppy ‘rally’ commenced about fifteen minutes before the London open.  The 97.56 high tick appeared to come at 10:40 a.m. in New York, but by 12:30 p.m. had given half of the Thursday gains back.  From that juncture it chopped quietly sideways until trading ended at 5:30 p.m. EST.  The dollar index finished the Thursday session at 97.4500…up 15 basis points from its close on Wednesday.

If there was any correlation between the currencies and the precious metals on Thursday, I failed to see it.

Here’s the Thursday DXY chart from BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…97.16…and the close on the DXY chart above, was 29 basis points on Thursday.  Click to enlarge as well.

The gold shares were sold down a bit at the 9:30 a.m. open in New York on Thursday morning — and then rallied to a hair above unchanged and to their respective high ticks of the day at the 10 a.m. EST afternoon gold fix in London.  They sank quietly lower until the 11 a.m. London close, rallied into the COMEX close — and then once the gold price was turned lower at that time, the gold stocks followed.  The HUI closed down 1.44 percent.

In all respects that mattered, the silver equities followed a similar price path as the gold shares…except once their 10 a.m. EST highs were in, the sell-off after that was a tad more intense.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by another 1.81 percent.  Click to enlarge if necessary.

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

The CME Daily Delivery Report showed that 37 gold and 33 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the two short/issuers were Advantage and Marex Spectron, with 26 and 11 contracts out of their respective client accounts.  There were five long/stoppers in total — and the three biggest were JPMorgan and Scotia Capital/Scotiabank with 10 contracts each…the former for their own account — and the latter for their client account.  In second and third spots were Advantage and Morgan Stanley, with 8 and 5 contracts for their respective client accounts as well.

In silver, the two short/issuers were JPMorgan and Advantage, with 21 and 12 contracts out of their respective client accounts.  The long/stoppers were Scotia Capital/Scotiabank and Morgan Stanley.  The former picked up 30 contracts for their in-house/proprietary trading account — and Morgan Stanley picked up the remaining 3 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 January dropped by 117 contracts, leaving 63 still around, minus the 37 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 151 gold contracts were actually posted for delivery today, so that means that 151-117=34 more gold contracts just got added to the January delivery month.  Silver o.i. in January rose by 9 contracts leaving 41 still open, minus the 33 mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 23 silver contracts were actually posted for delivery today, so that means that 9+23=32 more silver contracts were added to January.


There were withdrawals from both GLD and SLV on Thursday.  There was 150,643 troy ounces removed from the former — and a very chunky 3,268,496 troy ounces from the latter.  It’s a good bet that JPMorgan owns all that silver now.

In other gold and silver ETFs on Planet Earth on Thursday…net of COMEX, GLD & SLV activity…there was a net 78,150 troy ounces of gold added — and a net 18,734 troy ounces of silver was added as well.

There was nothing from the U.S. Mint.

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  There was a tiny paper transfer of 964.530 troy ounces/30 kilobars [SGE kilobar weight] from the Registered category and back into Eligible over at Brink’s, Inc.  I won’t bother linking this.

There was only a tiny bit of activity in silver.  Nothing was reported received — and only 28,922 troy ounces was reported shipped out.  Of that amount there was 24,981 troy ounces that departed CNT — and the remaining 3,941 troy ounces left Delaware.  I won’t bother linking this, either.

There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  Nothing was reported received, but a hefty 8,351 kilobars were shipped out.  That was everything that they received on Tuesday, plus fifty kilobars more.  All this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are three more charts that Nick passed around on Monday, that had to wait for today’s column for space reasons.  The first one shows the amount of gold received and shipped out by the nations of the European Union…updated with October’s data.  During that month they imported 196.4 tonnes — and shipped out 67.3 tonnesClick to enlarge.

These next two charts show the countries and tonnages received by the E.U. — and the countries and tonnages that they shipped gold to during that month.  As you can see, most of that activity, both in and out, involved the U.K.  Click to enlarge for both.

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


CRITICAL READS

Fed Injects $83BN in Liquidity as Market’s Repo Addiction Getting Worse

Two days after we reported that a disturbance may be brewing below the surface of the repo market again, after the first oversubscribed term repo in over three weeks, when on Jan 7 the Fed received $41.1BN in submissions for its $35BN two week repo, we got another indication just how strong the market’s addition to the Fed’s easy repo money has become, when moments ago the Fed announced that its latest 2-week term repo operation was also almost oversubscribed, as $34.3BN in securities ($23.3BN in TSYs, $11BN in MBS) were submitted for today’s $35 billion operation, as dealers continue to scramble to the Fed for liquidity which they are no longer using for merely “regulatory” year-end purposes (since it is no longer year-end obviously), but are instead using it to pump markets directly.

Today’s operation, which was just shy of the maximum $35BN allowed, was the second highest term repo since Dec 16, and suggests that as repos are now maturing at a rapid burst (as we noted last week in “Mark Your Calendar: Next Week The Fed’s Liquidity Drain Begins“), dealers remain as desperate as ever to roll this liquidity into newer term operations.  Click to enlarge.

And just in case there was any doubt that the liquidity shortage isn’t getting better, moments later the Fed announced that in its daily Overnight repo operation, it also accepted $48.825BN in securities ($24.2BN TSYs, $24.625BN in MBS)…for a total liquidity injection of just over $83 billion! Click to enlarge.

The latest repo operations also confirmed what we discussed overnight in “Top Repo Expert Warns Fed Is Now Trapped: “It Will Take Pain To Wean The Repo Market Off Easy Cash“” in which we noted that according to Curvature Securities’ repo expert Scott Skyrm, “something appears amiss as the total overnight and term Fed RP operations on Friday were greater than on year end!” On year-end, the Fed had pumped a total of $255.95 billion into the market verses $258.9 billion on Friday.

In short, just as the market got addicted to QE and the result was a 20% drop in the S&P in late 2018 when markets freaked out about Quantitative Tightening, the Fed’s shrinking balance sheet, and declining liquidity, Skyrm cautions that “it will take pain to wean the Repo market off of cheap Fed cash” since “it’s a circle” which can be described as follows:

For the Fed to end daily RP ops, they need outside cash to come back into the Repo market. For the Repo market to attract cash, Repo rates need to move higher. For rates to move higher, the Fed needs to stop RP ops.”

The problem is that stopping RP ops could spark another repo market crisis, especially with $259BN in liquidity pumped currently – more than at year end – via Repo. It also means that the Fed is now unilaterally blowing a market bubble with its repo and “NOT QE” injections, and yet the longer it does so the more impossible it becomes for the Fed to extricate itself from the liquidity pathway without causing a crash.

Or stated simply, the longer the Fed avoids pulling the repo liquidity band-aid, the bigger the market fall when (if) it finally does. The question then becomes whether Powell can keep pushing on the repo string until the November election.

This Zero Hedge article put in an appearance on their website at 8:45 a.m. EST on Thursday morning — and I thank Brad Robertson for sending it our way.  Another link to it is hereGregory Mannarino‘s post market close rant for Thursday is linked here — and I thank Roy Stephens for finding it for us.


Government Officials Have Stepped Into “God” Mode — Bill Bonner

Bad Guy Theory, BGT, was back in the news this week. It was used to justify the assassination of Qassem Suleimani.

U.S. Secretary of State Mike Pompeo, with a deadpan delivery, as though he had been taken over by zombies, explained the killing:

This was a bad guy… we took him off the playing field… It’s very clear that the world is a safer place.”

Here at the Diary, money is our beat… not foreign policy. But nothing is “very clear” to us. Murky is the best we can do. But as we explored yesterday, when the money goes bad, almost everything seems to go bad with it – including foreign policy.

At least, that’s our cloudy hypothesis. Funny money corrupts the whole society. It leads the Secretary of State, for example, to think a war zone is a “playing field.” And it turns the elected president of what is supposed to be a peace-loving democracy, into an executioner and an assassin.

This commentary from Bill appeared on the bonnerandpartners.com Internet site on Thursday morning EST — and another link to it is here.


British lawmakers poised to seal Brexit deal

After years of bitter arguments, British MPs will on Thursday finally approve the terms of Brexit, paving the way for the U.K. to leave the E.U. on January 31.

The House of Commons will complete its scrutiny of a bill ratifying Prime Minister Boris Johnson’s European Union divorce deal, drawing a line under an extraordinary period of political chaos.

For much of the time since the 2016 Brexit referendum, MPs have been deadlocked over how, when and even if Britain should end almost half a century of European integration.

But Johnson’s victory in last month’s general election brought an abrupt end to the turmoil, giving his Conservatives a parliamentary majority with which to push Brexit through.

MPs gave their initial approval to the E.U. Withdrawal Agreement Bill before Christmas, and the government set aside three days this week for detailed scrutiny.

But few MPs even bothered to turn up on Tuesday and Wednesday, while the government easily saw off opposition attempts to amend the text.

In a striking contrast to much of last year, when every Brexit vote risked bringing down the previous government and eventually did, Commons approval on Thursday is now a done deal.

This article appeared on the france24.com Internet site at 9:42 a.m. CET on their Thursday morning, which was 3:42 a.m. in Washington — EST plus 6 hours.  I thank Roy Stephens for pointing it out — and another link to it is here.  Then there’s this related Zero Hedge story headlined “Brussels Warns BoJo Full Trade Deal By Year’s End Is “Basically Impossible” — and I thank Brad Robertson for that one.


World Bank warns of global debt crisis amid borrowing buildup

The World Bank has highlighted the risk of a fresh global debt crisis after warning of the biggest buildup in borrowing in the past 50 years.

In its half-yearly Global Economic Prospects (GEP), the Washington-based organisation said of the four waves of debt accumulation since the 1970s, the latest was the largest, fastest and most broad-based.

The World Bank, which provides loans and grants to developing and emerging economies to help tackle poverty, said there could still be a financial crisis even though historically low interest rates were making debts more manageable.

Low global interest rates provide only a precarious protection against financial crises,” said Ayhan Kose, a World Bank official. “The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimise the risks associated with the current debt wave.”

All true, of course dear reader…but nobody’s listening.  This item showed up on theguardian.com Internet site at 9:00 p.m. GMT on Wednesday evening in London, which was 4:00 p.m. in Washington…EST plus 5 hours.  I thank Swedish reader Patrik Ekdahl for sending it along — and another link to it is here.


John Rubino — Past Point of No Return: World Governments have Given Up on Fixing Financial System

If you think you are beyond the point of no return financially as an individual, you borrow as much money as you can, and then go bankrupt…Governments in the world are starting to do that now or behaving that way…There is nothing they can do to fix the system.”

Financial writer and book author John Rubino says, “We have entered a new stage which feels like one of the end stages of this process—when governments just give up and don’t even pretend to try and control their finances anymore.”  Well, we are there.

Greg Hunter of USAWatchdog.com goes One-on-One with John Rubino, founder of DollarCollapse.com.  This 37-minute video interview was posted on the youtube.com Internet site on Tuesday — and I was saving it for the weekend for length reasons.  However, I noticed it’s now up on Zero Hedge, so here it is now.  I thank Judy Sturgis for pointing it out — and another link to it is here.


Israel Bombs Weapons Depot Run By Iranian Militia

Tensions continued to climb in the Middle East Thursday evening as reports of another air strike have been confirmed, but this time, it was the Israelis doing the shelling.

According to reports by domestic and western media, the Israeli air force carried out an attack against an Iran-backed militia reportedly headquartered on the border between Syria and Iraq.

Tribal sources in Iraq apparently told reporters that the Israeli shelling targeted trucks and individuals associated with Iranian-backed militias near the Iraqi-Syria border. Artillery and shelling was also reported, though it’s unclear who fired those shots. The weapons are believed to have been destined for Hezbollah.

Sources claimed that the airstrikes were targeting weapons shipments, according to The Washington Post. The Kataib Imam Ali, an Iran-backed militia, was apparently moving weapons, possibly in preparation for a strike against U.S. interests.

The attack comes just hours after Iranian officials, including President Rouhani and a top IRGC commander, warned that Iran’s retaliation for the killing of IRGC General Qasem Suleimani wasn’t yet over, and Tehran publicly washed its hands of its proxies, claiming it couldn’t be held responsible for actions committed in its name.

This Zero Hedge news item was posted on their Internet site at 6:45 p.m. on Thursday evening EST — and another link to it is here.


The Iranian missile strike: an initial evaluation — The Saker

First, as always, a recap.

Turns out that the Iranian strikes were apparently very accurate, check out this photo…Click to enlarge.

This is interesting, because while I had some U.S. ex-Colonel on idiot-box saying that most Iranian missiles either missed or landed in the desert.  Rah! Rah! Rah!  The U.S. has THE BEST military in the GALAXY!!  We kick these ragheads back to their medieval reality, bla-bla-bla.

The reality is that this has been a very effective “proof of concept demonstration”.  Think like this:  the Iranians have super-accurate coordinates for every single building in the Green Zone.  What impact would you think a determined – non symbolic – missile strike on key U.S. buildings in the Green Zone would have?  How about U.S. forces in Kuwait and/or Saudi Arabia.

It is becoming apparent that Iran had no intention of hitting U.S. personnel, at least not deliberately.  So when the Idiot-in-Chief tweets “so far, so good” he is quite correct, but for all the wrong reasons.

I think of this first strike as a very serious WARNING SHOT which serves two purposes.

First, to show that the “52 targets in Iran” threat is an empty one: Iranians don’t care (for certain) and Pentagon planners probably don’t want it either (most likely).  So besides hot air, the Idiot-in-Chief produced nothing.

Second, to show to those in the U.S. who actually believe their own silly propaganda about the U.S. having THE BEST military in the history of the Galaxy that in terms of missiles, Iran is doing just fine, thank you.

This commentary by the Saker showed up on his Internet site very late on Wednesday evening — and I thank Larry Galearis for pointing it out.  Another link to it is here.


The Deeper Story Behind the Assassination of Soleimani

Days after the assassination of General Qasem Soleimani, new and important information is coming to light from a speech given by the Iraqi prime minister. The story behind Soleimani’s assassination seems to go much deeper than what has thus far been reported, involving Saudi Arabia and China as well the U.S. dollar’s role as the global reserve currency.

The Iraqi prime minister, Adil Abdul-Mahdi, has revealed details of his interactions with Trump in the weeks leading up to Soleimani’s assassination in a speech to the Iraqi parliament. He tried to explain several times on live television how Washington had been browbeating him and other Iraqi members of parliament to toe the American line, even threatening to engage in false-flag sniper shootings of both protesters and security personnel in order to inflame the situation, recalling similar modi operandi seen in Cairo in 2009, Libya in 2011, and Maidan in 2014. The purpose of such cynicism was to throw Iraq into chaos.

Here is the reconstruction of the story:

[Speaker of the Council of Representatives of Iraq] Halbousi attended the parliamentary session while almost none of the Sunni members did. This was because the Americans had learned that Abdul-Mehdi was planning to reveal sensitive secrets in the session and sent Halbousi to prevent this. Halbousi cut Abdul-Mehdi off at the commencement of his speech and then asked for the live airing of the session to be stopped. After this, Halbousi together with other members, sat next to Abdul-Mehdi, speaking openly with him but without it being recorded. This is what was discussed in that session that was not broadcast:

Abdul-Mehdi spoke angrily about how the Americans had ruined the country and now refused to complete infrastructure and electricity grid projects unless they were promised 50% of oil revenues, which Abdul-Mehdi refused.

This sounds like a story ripped right of John Perkins’ book “Confessions of an Economic Hit Man“.  This very worthwhile article put in an appearance on the strategic-culture.org Internet site on Wednesday — and another link to it is here.


Bad monetary and fiscal policy is good for gold — Peter Schiff

Peter Schiff on Fox Business with Charles Payne discussing gold, stock market, Trump, Fed policy, and U.S. economy.

This brief 3:48 minute interview segment was aired on Wednesday — and showed up on the youtube.com Internet site on Thursday sometime.  I thank Roy Stephens for pointing it out.


Currency hedge: Reserve Bank of India buys 15 tonnes of gold in Oct-Nov

The RBI stepped up hedging against currency volatility by purchasing 0.48 million troy ounce, close to 15 tonnes, of gold in October-November, central bank data showed. This is the highest bi-monthly gold purchase by the central bank since it started buying gold from the open market in December 2017.

India’s central bank bought 2.45 million troy ounces worth gold between November 2017 and November 2019, latest data indicates. India’s big gold purchase from IMF was the last in November 2009 when it bought 200 tonnes.

Safety of its forex asset is the prime reason that central banks park foreign exchange assets in the form of gold. “While safety and liquidity constitute the twin objectives of reserve management in India, return optimisation is kept in view within this framework,” the RBI said in its December report on management of foreign exchange reserves.

RBI is among the tenth largest holder of gold reserves among central banks globally, according to the latest release by the World Gold Council with USA and Germany among the top holders.

This gold-related story appeared on the Economic Times of India website at 8:56 a.m. IST on their Thursday morning — and it’s something I found on the Sharps Pixley website.  Another link to it is here.


The PHOTOS and the FUNNIES

Here are the last three shots from our brief stop in Sicamous…the first two along a little man-made cove off the lake, backing onto a river — and the third photo of the beach and Shuswap Lake.  All three were taken from the bridge the crosses over the water channel that connects the houses in that cove, to the lake.  The fourth ‘photo’ is a cut & paste of Sicamous from the Google Earth website — and that little cove right off the lake in the first two shots is pretty visible.  North is at the top.  Click to enlarge.


The WRAP

‘Da boyz’ obviously showed up in the thinly-traded afternoon session in the Far East on their Thursday — and their presence was less obvious during the London and New York trading sessions.  But if you look at the Kitco charts at the top of the column, you can see their quiet footprints.

I must admit that I was expecting the Big 8 traders, with or without JPMorgan, to show up in force at the COMEX open in New York…but they didn’t — and ‘why not’ is the question of the day.  They were there, but in a quiet ‘care and maintenance’ mode only.

I’ll be very surprised if they don’t show up at some point in an attempt to engineer price declines to reduce their very heavy open margin call loses in both silver and gold.

Here are the 6-month charts for the Big 6 commodities.  The changes in the precious metals should be noted — and both copper and WTIC closed down a hair on Thursday.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I note that the gold price began to creep quietly lower almost as soon as trading began at 6:00 p.m. EST in New York on Thursday evening.  That lasted until noon China Standard Time on their Friday — and from that juncture it traded quietly sideways until the 2:15 p.m. CST afternoon gold fix in Shanghai.  It began to edge higher from there — and is currently down $1.30 the ounce.  It was mostly the same in silver, except it’s up 4 cents the ounce as London opens.  The platinum price hit its current low at noon CST — and has been edging very quietly and unevenly higher since — and is up 3 dollars.  Palladium didn’t do much until around 9:20 a.m. CST — and it has been sold unevenly lower since — and is down 14 buck as Zurich opens.

Net HFT gold volume is fairly healthy at around 49,500 contracts — and there’s about 6,400 contracts worth of roll-over/switch volume in this precious metal.  Net HFT silver volume is getting up there as well at just under 10,000 contracts — and there’s 2,005 contracts worth of roll-over/switch volume on top of that.

The dollar index closed very late in New York on Thursday afternoon at 97.4500 — and opened down around 2 basis points once trading commenced at 7:45 p.m. EST on Thursday evening…which was 8:45 a.m. China Standard Time on their Friday morning.  It chopped a tiny bit lower from there — and hit its current 97.40 low [such as it is] at exactly 3 p.m. China Standard Time on their Friday afternoon…an hour before the London open.  It has ticked higher since — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the dollar index is now back at unchanged on the day.


Today, around 3:30 p.m. EST, we get the latest and greatest Commitment of Traders Report — and companion Bank Participation Report.

Just looking at the five dojis included in this week’s COT Report, one would assume that we’ll see very large increases in the commercial net short positions in both gold and silver…as both precious metals were up very decent amounts during the reporting week, particularly gold.

But, as silver analyst Ted Butler pointed out in his Wednesday column…”Up until the past couple of days, I can’t say I’ve seen many signs of attempted short covering by the big concentrated shorts. If anything, the big shorts seem to have added more shorts, as was the case in Monday’s COT report. But my antennae may have sensed a change in the force field the past couple of days. Trading volumes have been absolutely enormous, up to and including the volatile trading resulting from the missile attack last night. If one needs to cover large positions, as the big shorts need to do, extremely high trading volume and price volatility would be basic requirements, at least by an individual large short or two.

Plus I’ve also noticed that total open interest has dropped over the past couple of days in gold, which strikes me as odd in that we are in the prime period of switching and rolling over from the lead February COMEX gold contract. I still don’t know why so many new spreads and therefore, total open interest has been created at this time of the month, but I am now suspicious that total open interest, by not increasing sharply these past two days as has been typical, may be camouflaging a true reduction in the concentrated short position. In any event, I’m not at all confident of what to expect in Friday’s COT report, but will prepared for just about anything.”

We’ll find out soon enough, dear reader.


And as I post today’s efforts on the website at 4:02 a.m. EST, I see that as the first hour of London/Zurich trading ends, gold hasn’t done much — and is down 40 cents.  Silver is up 4 cent.  Platinum is higher as well…up 6 bucks.  But palladium has soared.  From down 14 dollars and hour ago, it’s now up 3 bucks.

Gross gold volume is coming up on 74,500 contracts — and minus current roll-over/switch volume, net HFT gold volume is a bit under 60,000 contracts.  Net HFT silver volume is 11,000 contracts — and there’s still only 2,015 contracts worth of roll-over/switch volume in this precious metal.  There has been very little volume in silver over the last hour..about 1,000 contracts.

The dollar index continues to crawl quietly higher as well — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s up 6 basis point.

That’s it for yet another day.  Have a good weekend — and I’ll see you here tomorrow with my longest column of the month.

Ed

Record Volumes in Gold & Silver Yesterday

09 January 2020 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price took off higher on the ‘war’ news the moment that trading began at 6:00 p.m. EST in New York on Tuesday evening.  The price was capped and turned lower around 8:20 a.m. China Standard Time on their Wednesday morning.  That sell-off lasted until 11:00 a.m. CST — and the price edged a bit higher until 3 a.m. over there.  ‘Da Boyz’ reappeared — and it was sold mostly steadily lower until minutes after 2:45 p.m. in after-hours trading in New York.  Its rally attempt after that wasn’t allowed to get far.

The high and low ticks in gold were recorded by the CME Group as $1,613.30 and $1,553.40 in the February contract…an intraday move of sixty bucks.

Gold was closed in New York on Wednesday at $1,556.00 spot, down $18.20 from Tuesday.  Net volume was pretty much the highest number I’ve ever seen at a bit over 740,500 contracts — and there was a bit under 82,000 contracts worth of roll-over/switch volume on top of that.  JPMorgan et al. were certainly busy.

The price action in silver was about the same, except its rally was much more anemic — and there were some obvious price shenanigans going on at precisely 9:00 a.m. CST in Shanghai on their Wednesday morning.  ‘Da boyz’ showed up in silver at 3 p.m. CST as well — and you know the rest.

The high and low ticks in silver were reported as $18.895 and $18.085 spot in the March contract…and intraday move of 81 cents.

Silver was closed in New York yesterday at $18.07 spot, down 30.5 cents on the day.  Net volume was the highest I can recall seeing at a bit under 172,000 contracts — and there was about 9,500 contracts worth of roll-over/switch volume in this precious metal.  Wow!

Platinum also rallied a tad on the Middle East news, but was sold quietly back to unchanged by 3 p.m. CST on their Wednesday afternoon.  From there it was sold lower until around 10:30 a.m. in Zurich — and the ensuing rally from that juncture was stepped on shortly before 9 a.m. in New York.  About thirty minutes later it was sold down pretty hard — and the $950 spot low tick was set a few minutes before 2 p.m. in after-hours trading.  It wasn’t allowed to do much after that.  Platinum was closed at $951 spot, down 18 bucks on the day.

After a down/up dip of some size in morning trading in the Far East, palladium traded ruler flat from noon until 2 p.m. in Shanghai — and at that point a rally began that lasted for almost the entire rest of the Wednesday trading session.  Palladium finished the day at $2,092 spot, up 59 dollars on the day, but 27 bucks off its Kitco-reported $2,119 spot high tick.

The dollar index closed very late on Tuesday afternoon in New York at 97.01 — and then opened down about 17 basis points once trading commenced around 7:45 p.m. EST on Tuesday evening…which was 8:45 a.m. China Standard Time on their Wednesday morning.  From that point it crept very quietly and somewhat unevenly higher until around 4:55 p.m. in New York on Wednesday afternoon.  It declined a couple of basis points from there going into the 5:30 p.m. close in New York.  The dollar index finished the Wednesday session at 97.30…up 29 basis points from its close on Tuesday.

If there was any correlation between the currencies and the precious metals on Wednesday, it was only because the powers-that-be made it so starting at 3 p.m. China Standard Time when then began to lean on silver and gold prices for the second time.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…97.00…and the close on the DXY chart above, was 30 basis points on Wednesday.  Click to enlarge as well.

Not surprisingly, the gold shares were sold lower the moment that trading began at 9:30 a.m. in New York — and except for a couple of rather feeble rally attempts before 1 p.m. EST, continued lower until around 2:50 p.m.  They edged a bit higher into the close from there.  The HUI closed down a chunky 4.18 percent.

The silver equities got hit in an almost identical fashion as the gold stocks — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 4.50 percent.  Click to enlarge if necessary.

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

The two worst performers were Coeur Mining and First Majestic Silver.  The former dropped 8.71 percent — and the latter by 6.44 percent.  Peñoles, surprisingly, close up 1.83 percent.

In my Tuesday column I made a comment about Coeur Mining when it got hammered for a 10 percent loss on Monday — and said there was no news that I could see.  But it turned out there was.  ‘Robert in Denver’ informed me that “On my Think or Swim platform on Live News – for CDE – “Coeur Mining Cut to Sell from Neutral by Roth Capital””  It appears that Roth Capital has a rather dubious past — and if you want to read more about this firm’s rather clouded history, the link is here.


The CME Daily Delivery Report showed that 151 gold and 23 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.

In gold, there were four short/issuers in total, with the three largest being JPMorgan, Advantage and R.J. O’Brien…with 95, 42 and 12 contracts — and all from their respective client accounts.  There were seven long/stoppers in total.  The three biggest were JPMorgan, Advantage and Marex Spectron, with 88, 26 and 11 contracts — and all of these involved their respective client accounts as well.  Tied in fourth place were Morgan Stanley and Scotia Capital/Scotiabank with 10 contracts apiece.

In silver, the two short/issuers were Advantage and ADM, with 20 and 3 contracts from their respective client accounts.  The only long/stopper that mattered was Canada’s Scotia Capital/Scotiabank with 19 contracts for its own account.  Advantage was in second spot with 3 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 January rose by 123 contracts, leaving 180 still open, minus the 151 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 28 gold contracts were actually posted for delivery today, so that means that 123+28=151 more gold contracts just got added to January deliveries.  Based on this number, it’s an excellent bet that those are the same 151 contracts that are out for delivery on Friday as per the above Daily Delivery Report.  Silver o.i. in January rose by 16 contracts, leaving 32 still around, minus the 23 mentioned a few paragraphs ago.  Tuesday’s Daily Delivery Report showed that 8 silver contracts were actually posted for delivery today, so that means that 16+8=24 more silver contracts were added to the January delivery month.


There was a pretty big withdrawal from GLD on Wednesday, as an authorized participant took out 301,290 troy ounces.  There were no reported changes in SLV.

In other gold and silver ETFs on Planet Earth on Wednesday…minus COMEX, GLD &SLV activity…there was a net 76,768 troy ounces of gold added — and net 11,074 troy ounces of silver was added as well.

Not surprisingly, there was nothing from the U.S. Mint.

The only activity in gold over at the COMEX-approved depositories on Tuesday was 964.500 troy ounces/30 kilobars [U.K./U.S. kilobar weight] that departed Canada’s Scotiabank.  I won’t bother linking this.

There was some activity in silver.  The ‘in’ activity consisted of one truckload…600,102 troy ounces…that was dropped off at Brink’s Inc. — and they shipped out 226,440 troy ounces as well.  The only other activity in silver was 18,046 troy ounces that departed CNT.  The link to this is here.

It was far from quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They received a whopping 8,301 kilobars — and shipped out 75.  All of this activity occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two more charts that Nick passed around on Monday that I’ve had no room for until today.  They show gold and silver imports into India, updated with November’s numbers.  During that month they imported 62.26 tonnes/2.00 million troy ounces of gold — and 163.56 tonnes/5.26 million troy ounces of silverClick to enlarge for both.

Once again, I have a very decent number of stories/commentaries for you.


CRITICAL READS

Fed’s Balance Sheet Explodes by $413 Billion in 119 Days

On September 4, 2019, the assets on the balance sheet of the Federal Reserve stood at $3.761 trillion. As of January 1, that figure is $4,173,626,000,000. That’s an increase of $413 billion in just the past 119 days and the Fed does not seem inclined to turn off its money spigot to Wall Street anytime soon. At the rate the Fed is now going, its balance sheet is likely to eclipse the $4.5 trillion all-time high it reached in 2015 as a result of the unprecedented sums it funneled to Wall Street following the epic financial crash in 2008 and its three rounds of quantitative easing (QE) to keep interest rates low to appease Wall Street’s trading houses and their trillions of dollars in interest-rate derivative bets.

When Jamie Dimon, Chairman and CEO of JPMorgan Chase, testified to the Senate Banking Committee on June 13, 2012 about billions of dollars in derivative losses at his federally-insured bank, he had this to say about the major dangers facing his bank – the largest bank in the U.S. “There are two major risks that J.P. Morgan faced: dramatically rising interest rates and a global type of credit crisis. Those are the two biggest risks we face,” Dimon stated.

The Fed, through its open money spigot and trading arm – the New York Fed – has been a Fairy Godmother to Jamie Dimon. It has kept short-term interest rates at historic lows since 2008 and postponed the inevitable global financial crisis long enough to allow Jamie Dimon and his pals on Wall Street to become billionaires. The flip side of Jamie Dimon’s wish list has been to impoverish millions of retirees who have seen their interest income on Treasury notes and Certificates of Deposits cut in half for more than a decade and to fuel an unprecedented corporate debt bubble in the U.S. as a result of that cheap money.

This worthwhile article was posted on the wallstreetonparade.com Internet site on Wednesday sometime — and I found it on the gata.org Internet late on Wednesday morning PST.  Another link to it is hereGregory Mannarino‘s post-market close commentary for Wednesday is linked here.


Top Repo Expert Warns Fed is Now Trapped: “It Will Take Pain to Wean the Repo Market Off Easy Cash

Yesterday we reported that with the Fed’s first oversubscribed term repo in three weeks, coupled with a surge in amount of overnight repo submission, indicated that the funding situation in the repo market had again deteriorated sharply, which was odd since we are now two weeks into the new year and further away from the time when the repo market was supposedly in distress due to the year-end funding constraints.

Indeed, something appears amiss, because as Curvature Securities’ Scott Skyrm writes in his daily Repo Market Commentary note, “the total overnight and term Fed RP operations on Friday were greater than on year end! On year-end, the Fed had pumped a total of $255.95 billion into the market verses $258.9 billion on Friday.”

The problem with the broken repo market and the Fed’s respective Repo operations, similar to the problem observed with QE and the Fed’s balance sheet in general over the past decade, is that the market had gotten addicted to the easy Fed liquidity unleashed in September (via temporary repo ops), and then again in October (via permanent T-Bill purchases).

As Skyrm writes, “it’s easy to see how the Repo market can get addicted to easy cash from the Fed when the stop-out rates for the RP operations are 1.55% – behind the offered side of the market.”

But, as the repo strategist adds, as the Fed keeps injecting cash, the market gets used to it.

The problem is that stopping RP ops could spark another repo market crisis, especially with $259BN in liquidity pumped currently – more than at year end – via Repo. It also means that the Fed is now unilaterally blowing a market bubble with its repo and “NOT QE” injections, and yet the longer it does so the more impossible it becomes for the Fed to extricate itself from the liquidity pathway without causing a crash.

Or stated simply, the longer the Fed avoids pulling the repo liquidity band-aid, the bigger the market fall when (if) it finally does. The question then becomes whether Powell can keep pushing on the repo string until the November election, because a market crash in the months preceding it, especially since it will be of the Fed’s own doing, will result in a very angry president.

This 2-chart article was posted on the Zero Hedge website at 10:25 p.m. on Wednesday night EST — and another link to it is here.


Mark Carney: Central Banks Have ‘Much Less Ammunition‘ to Fight Recessions Than They Used to

Bank of England Governor Mark Carney said central banks might not be able to fight off a sharp economic downturn because their monetary policy arsenals are still depleted from the global financial crisis a decade ago, the Financial Times reported.

It’s generally true that there’s much less ammunition for all the major central banks than they previously had and I’m of the opinion that this situation will persist for some time,” Carney told the newspaper in an interview published on Tuesday.

If there were to be a deeper downturn, (that requires) more stimulus than a conventional recession, then it’s not clear that monetary policy would have sufficient space.”

The BoE has raised interest rates to just 0.75 per cent, a fraction above their emergency financial crisis levels. The U.S. Federal Reserve, which unlike most other central banks raised borrowing costs in recent years, cut them three times in 2019.

Carney, formerly the head of the Bank of Canada, has previously raised concerns about the risk of a global liquidity trap, in which central banks lose their ability to influence the economy because demand is too weak.

A man with a keen grasp of the obvious.  This Reuters story was picked up by the huffingtonpost.ca Internet site at 10:09 a.m. EST on Wednesday morning — and I thank Roy Stephens for sharing it with us.  Another link to it is here.


Europe’s Factories Headed Into 2020 With Less Hope for Jobs

Europe’s manufacturers headed into the new year on a downbeat note, with expectations for both export orders and employment weakening at the end of a rough 2019.

The latest sentiment figures from the European Commission came just hours after Germany reported an unexpected drop in manufacturing orders. That’s a volatile figure, but it adds to signs that Europe’s largest economy is still struggling to overcome its worst industrial downturn in a decade.  Click to enlarge.

The decline in factory employment expectations is a worrying development if it persists.

Manufacturing, particularly in Germany, is struggling to exit a more than year old slump as it deals with uncertainties including the U.S.-China trade war and the U.K.’s planned exit from the European Union. The bigger risk for the economy is that — as the Bundesbank predicts — the industrial weakness will bleed into the wider economy through 2020.

This Bloomberg story was originally headlined ‘German factory orders tumble again, with rebound looking elusive‘.  It put in an appearance on their Internet site at 11:07 p.m. PST on Tuesday night — and was updated about three hours later.  I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to it is here.  A parallel story to this is the ZH article headlined “German Car Production Crashes to 23 Year Low” — and I thank Brad Robertson for that one.


Erdogan & Putin Launch TurkStream Gas Pipeline to Europe, Defying U.S.

While the media and the world’s attention has been on the rapidly advancing Nord Stream 2 Russia-Germany natural gas pipeline and Washington’s attempts to stop it, another controversial pipeline to the south — also under U.S. sanctions — has gone online Wednesday.

Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan attended the ceremonial launching of the much-anticipated offshore pipeline TurkStream, which will supply Russian gas to Turkey and southern Europe.

Also in attendance were Serbia’s President Aleksandar Vucic and Bulgarian Prime Minister Boyko Borissovalso, given the 930km pipeline with a total capacity of 31.5 billion cubic meters cuts from Russia straight across the width of the Black Sea into northern Turkey, and northwest across neighboring Bulgaria and into Serbia.

Southeast Europe has lately struggled with severe gas shortages during crucial winter periods, also amid struggling to put vital energy infrastructure in place.

Addressing this energy opening to southern Europe, which Turkey has hailed as the “Silk road of the energy world,” Russia’s Putin said the following during formal remarks:

The supply of Russian gas through TurkStream will undoubtedly be of great importance not only for the economy of Turkey and the Black Sea region, but will also have a positive impact on the development of many South European countries, and will contribute to improving the energy security of Europe in general.”

Putin’s remarks were a further nod to Europe’s attempts at creating “energy diversity” and independence at a moment E.U. leaders such as Germany’s Merkel have simultaneously slammed the Trump administration for “interference” in European energy affairs.

This Zero Hedge story showed up on their website at 3:45 p.m. EST on Wednesday afternoon — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Tehran Plane Crash Appears to Be “A Shoot-down Event,” Experts Say

A group of aerospace experts said Wednesday that Ukrainian International Airlines flight 752, which seemingly dropped out of the sky minutes after takeoff last night in Tehran, was likely shot out of the sky.

According to a report cited by the Independent, analysts should start from the assumption that the plane, which had 176 people on board, none of whom survived, crashed as the result of a “shootdown.” While others insisted that it’s still too early to jump to conclusions, the OPS group, an aviation risk monitoring group, said photos from the crash site clearly show projectile holes in the plane’s fuselage and wing.

We would recommend the starting assumption to be that this was a shootdown event, similar to MH17 – until there is clear evidence to the contrary,” highlighting photos of the crash site which they said “show obvious projectile holes in the fuselage and a wing section.”

The Boeing Co. 737-800 single-aisle jet crashed two minutes after takeoff from Tehran’s Imam Khomeini International Airport while en route to Kiev.

As we reported earlier, Iran has said it has no plans to hand over the black box from the crash to Boeing, citing the state of relations with the U.S.

Qassem Biniaz, a spokesman for Iran’s Road and Transportation Ministry, claims the pilots “lost control of the plane” after a fire broke out in one of the plane’s engines. Whatever led the Iranians to this conclusion is unclear. Though the plane is a predecessor to the Boeing 737 Max 8, which has been grounded for 10 months following the Lion Air crash in 2018, it actually has a sterling safety record.

Doesn’t it seem far more likely that a misfiring of Iran’s defense system might have brought down the plane?

Well, dear reader, the jury is very much out on this event at the moment, so we’ll have to wait and see.  However, it does look rather suspicious under the circumstances that existed when it fell out of the sky.  This Zero Hedge story was posted on their Internet site at 1:46 p.m. EST on Wednesday afternoon — and I thank Brad Robertson for this one.  Another link to it is here.


Satellite Images Reveal Damage of Iranian Strike on Iraqi Air Base

National Public Radio (NPR) has published one of the first satellite images showing the damage from the Iranian missile strike at the Ain Assad Air Base located in Al Anbar Governorate of western Iraq, which hosts U.S. and British troops.

The images, taken by Planet Labs and shared with NPR via the Middlebury Institute of International Studies at Monterey, show at least five sites on the base heavily damaged from the Iranian missile strike on Tuesday night.

David Schmerler, an analyst with the Middlebury Institute, told NPR that the high high-resolution satellite images of the base taken after the attack showed at least five damaged structures. “Some of the locations struck look like the missiles hit dead center,” Schmerler said.

As we noted on Wednesday, Iran has taken President Trump’s playbook in Syria: launch missiles and purposely miss their intended targets.

Iran has superior missile technology that can hit whatever they want – this could be in an attempt to save face as a public relations event for its citizens while attempting to de-escalate the situation and avoid war.

The live situation was optically quite dramatic, but the important thing to focus on is the no-human-casualty dimension, which gives ample space to de-escalate the situation,” said Salman Ahmed, chief investment strategist at Lombard Odier Investment Managers.

The Trump factor is the random factor, but what’s visible is that no one wants war, and that’s what markets are focusing on.”

This very interesting satellite photo-filled Zero Hedge news item appeared on their Internet site at 6:25 p.m. EST on Wednesday evening — and another link to it is here.


First Impression — Andrei Maryanov

From what I gather so far, it seems that Iran went for “capability demonstration” strikes on U.S. bases in Iraq. Considering the fact that statements about Iranian missile forces getting into battle mode were made publicly at least 24 hours in advance, that gave ample time for U.S. personnel to “take cover”. It will take some time before actual information on the damage will trickle down into public domain, but one fact is absolutely clear. Bernhard of MOA is spot on with his assessment:
The message from Iran is thus: “We can attack all your bases and you can do nothing to prevent that.”

Exactly. Moreover, and that is extremely important, if to believe a number of sources, not only the Al Assad base:

An American commando housed aboard the Iraqi base in Irbil said the threat was now over, but told Military Times that the al-Asad air base was hit hard. “One [missile] apparently hit just off the airfield in Irbil and Asad is getting punished,” the source said. “Waves coming in five-minute intervals of 4-5 missiles at the airfield.”

And rumor has it that salvos were not only by intermediate range ballistic missiles but cruise missiles too. Apart from obvious and well justified statement of the simple operational fact that Iran can reach anywhere in the region, it is also clear that American Air Defense is not going to be any factor in case of a larger (hopefully not) conflict and the U.S. military for the first time in its post-WW II history finds itself in uncharted territory of its rear and staging areas being merely fat and prestigious targets.

This rather brief commentary from Andrei was posted on the smoothiex12.blogspot.com Internet site on Wednesday morning sometime — and another link to it is hereThe Saker also has an opinion in an article headlined “Round one is over – an initial assessment“.  Both these commentaries come courtesy of Larry Galearis.


Iran hit ‘obvious’ targets to avoid spiral of war – Chris Hedges

U.S. President Donald Trump addressed Iran’s latest missile attacks on U.S. airbases and Canada is moving military personnel out of Iraq amid escalating tensions. Russia Today’s Paula Slier and RT America’s Alex Mihailovich report. Then Chris Hedges, the Pulitzer Prize-winning host of “On Contact” and former Middle East Bureau Chief for The New York Times, comments on the escalation.

The entire video interview lasts for 17:34 minutes, but the interview starts at the 6:30 minute mark — and that’s where I have it set to begin when you hit the ‘Play’ button on this youtube.com video.  I thank Roy Stephens for sending it our way.


The State of the Iranian Crisis — Paul Craig Roberts

Readers are asking my take on the Iranian retaliation and Trump’s response.  I think a deal might have been arranged between Washington and Tehran via a third party. The Iranian attack resulted in no U.S. casualties.  Thus, it serves  both Iran’s purpose of retaliating and Trump’s purpose of interpreting the Iranian retaliation to be, in effect, a stand down.  Possibly Trump will apply “crippling sanctions” as a cover for withdrawal from most of the Middle East.  Iran wants the U.S. out, and Trump’s original intention was to withdraw before Russiagate forced him to stay. Thus, both Trump and Iran have a common interest in U.S. withdrawal. Although the Iranian missiles killed no one, they did demonstrate to Israel that the Iranian missiles have pin point accuracy.  As Israel is a small land area, the accuracy of Iranian missiles possibly has changed Israel’s mind about provoking a war.  If Israel also stands down, perhaps the crisis is over.

On the other hand, the neoconservatives will be unhappy.  They see chaos in Iran as a way of spreading instability into the Russian Federation.  The military/security complex will be unhappy as U.S. withdrawal would downsize their profits. U.S. oil interests will be unhappy to lose the Iraqi oil.

This very brief but worthwhile commentary from Paul put in an appearance on his website on Wednesday sometime — and another link to it is herePepe Escobar has a short commentary on this issue as well.  It’s headlined “Trump to De-Escalate: Intel Source” — and is linked here.  Both of these commentaries were brought to my attention by Larry Galearis.


In War, Revenge Will Always Lead to Destruction — Bill Bonner

..[F]ree money is a scam. The longer it goes on, the more scammy the whole society becomes, the more unjust it seems… and the more citizens demand radical reforms.

The new money, so far, has gone mostly to Deep State hustlers in Washington and on Wall Street… and into the pockets of the rich.

In 1965, the top 10% of the population got 35% of national income. Last year, it got 50%. Why? The rich buy stocks and bonds. Then, the Fed – using its new money – buys their assets from them at higher prices.

This leaves 90% of the population feeling left out and cheated. They grouse… and then they vote for “conservatives” who promise to Make America Great Again… or “liberals” who promise to right the wrongs of capitalism.

But America won’t be made great again until the real wrongs – perpetual war and perpetual fake-money inflation – are corrected.

And these wrongs are not committed by capitalists… or by the Chinese, Mexicans… or Iranians.

They are committed by central planners at the Fed and the politicians, bureaucrats, lobbyists, cronies, and other Deep Staters who enable them.

And they won’t stop until the whole thing blows up.

This rather longish commentary from Bill showed up on the bonnerandpartners.com Internet site on Wednesday morning sometime — and another link to it is here.


Perth Mint’s December gold sales hit 3-year peak

The Perth Mint’s gold product sales in December rose 45% from the previous month and to their highest in more than three years, the refiner said on Wednesday.

Sales of gold coins and minted bars in December climbed to 78,912 ounces – their highest since October 2016, and surged about 170% from the same month last year, the mint said in a blog post.

Meanwhile, silver sales in December were at 1,361,723 ounces, rising 32.5% from November and about 97% from a year ago.

This tiny precious metal-related news item from Reuters was picked up by the nasdaq.com Internet site on Wednesday sometime — and I found it on the Sharps Pixley website.  Another link to it is here.


The PHOTOS and the FUNNIES

Today’s photo sequence starts where I left off in Sicamous in yesterday’s column.  These three photos are from along the beach area — and parking is definitely at a premium around here in the summer time.  Click to enlarge.


The WRAP

JPMorgan et al. put in a real show of force during the Wednesday trading session in the Far East.  I haven’t seen these sorts of trading volume in either gold or silver since the night that Donald Trump was elected president.  On that evening, gold rallied around 50 bucks — and if you remember, that entire gain was gone a few short hours later.  Their modus operandi appeared to be the same on both these occasions.

Here are the 6-month charts for the four precious metals, plus copper and WTIC — and the damage inflicted in both gold and silver is more than obvious.  Platinum got hit as well, but it’s had worse days than that in the past.  Palladium continues on its merry way higher, but it too is now well into overbought territory — and it remains to be seen when, not if, ‘da boyz’ hammer its price lower.  Copper closed up a couple of pennies, but WTIC got hammered into the dirt…down almost 5 percent on the day.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I note that the gold price, although up a dollar or so in morning trading in the Far East, really didn’t do much of anything until shortly after 1 p.m. China Standard Time on their Thursday afternoon. A very decent amount of price pressure appeared — and it’s currently down $11.50 the ounce…5 bucks or so off its current low tick. The price ‘action’ in silver has been similar, but the sell-off in afternoon trading in the Far East has been somewhat more aggressive — and is down 19 cents as London opens, but about 22 cents off its current Kitco-recorded low tick of the day. Platinum was up 9 bucks or so by around 9:45 a.m. in Shanghai, but has been sold lower since — and is now down 3 dollars. Palladium traded flat until about 8:40 a.m. CST — and then really began to soar. It’s price was capped about an hour later — and after getting sold down a bit — and then chopping sideways, ‘da boyz’ got out the long knives. At its Kitco-recorded high tick this morning, palladium touched $2,153 spot, but as Zurich opens, they have palladium down 30 bucks — and 89 dollars off its earlier high tick.

Net HFT gold volume is already up to about 101,500 contracts — and there’s about 5,500 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is very heavy as well…coming up on 34,000 contracts — and there’s 631 contracts worth of roll-over/switch volume on top of that.

The dollar index opened down about 2 basis points at 97.28 once trading commenced around 7:45 p.m. EST in New York on Wednesday evening, which was 8:45 a.m. China Standard Time on their Thursday morning. It has been chopping very quietly and very unevenly sideways since then — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, it’s down 4 basis points.


It’s obvious that all this price/volume action we’ve been seeing over these last few days is all paper related in the GLOBEX/COMEX trading system — and has nothing to do with supply/demand issues either.

Tomorrow we get the latest Commitment of Traders Report and companion Bank Participation Report. It’s most unfortunate that yesterday’s trading data won’t be in either one, as Wednesday’s price action occurred the day after the cut-off for these reports.

The afternoon price action in the Far East bears all the hallmarks of ‘da boyz’ trying to engineer the precious metal prices lower, but it’s way too soon to tell if that’s that’s in our future or not, or how bad it will be if it is.  But it will be interesting to see what the landscape looks like by the time the afternoon gold fix is set in London later today.

And as I’ve mentioned before, Ted is of the opinion that if this outcome does finally manifest itself, then it will be the last one before we head higher. Even then, the Managed Money traders may not sell all that much, leaving the Big 7/8 silver shorts still in a big financial hole, which Ted put at around $4.9 billion dollars as of the close of trading yesterday.


And as I post today’s missive on the website at 4:02 a.m. EST, I see that gold and silver prices haven’t done much as the first hour of London trading draws to a close. Gold is down $9.60 the ounce — and silver by 21 cents. Platinum is now back at unchanged, but palladium has rallied a decent amount in the last hour — and is down only 18 bucks as the first hour of Zurich trading ends.

Gross gold volume is very heavy at around 134,000 contracts — and minus current roll-over/switch volume, net HFT gold volume is about 120,500 contracts. Net HFT silver volume continues to climb steadily — and currently sits a bit under 37,500 contracts — and there’s still only 685 contracts worth of roll-over/switch volume on top of that.

The dollar index hasn’t done much in the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s now up 2 basis point on the day. Nothing to to see here.

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

Ed

The ‘War’ Turns ‘Hot’ in the Middle East

08 January 2020

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold down to its low of the day by around 10:15 a.m. China Standard Time on their Tuesday morning.  It then edged a bit higher in early afternoon trading over there, but was capped and turned a bit lower at the London open.  Then around 9:30 a.m. GMT it began crawl quietly and unevenly higher — and that state of affairs lasted right into the 5:00 p.m. close in New York.

The low and high ticks were reported by the CME Group as $1,557.00 and $1,579.20 in the February contract.

Gold finished the Tuesday session in New York at $1,574.20 spot, up $9.00 from Monday’s close.  Net volume was over-the-moon heavy at a bit over 370,000 contracts  — and there was 67,000 contracts worth of roll-over/switch volume in this precious metal.

The price action in silver was almost the same as it was for gold, except the price action in New York was a bit more lively.

The low and high ticks in silver were recorded as $17.975 and $18.47 in the March contract.

Silver finished the Tuesday trading session in New York at $18.375 spot, up 25.5 cents from its Monday close — and about 15 cents below its Kitco-recorded high of the day.  Net volume was very heavy for the second day in a row at around 107,700 contracts — and there was around 5,200 contracts worth of roll-over/switch volume on top of that.

The platinum price was about eleven dollars or so higher by around 2:45 p.m. CST on their Tuesday afternoon — and it drifted unevenly lower until a few minutes before the 11 a.m. EST Zurich close.  It was back above unchanged by a few minutes after 12 o’clock noon in New York — and then crawled very quietly higher until the market closed at 5:00 p.m. EST.  Platinum finished the Tuesday session at $969 spot, up 7 bucks on the day.

The palladium price crept quietly lower until shortly after 1 p.m. CST on their Tuesday — and its tiny rally going into the Zurich opened got capped and turned lower.  But starting shortly before 11 a.m. CET in Zurich, the price began to head higher.  It was sold down a bit starting at the COMEX open, but that sell-off only lasted until 9 a.m. EST.  It then crawled quietly and mostly evenly higher until the trading day ended at 5:00 p.m. in New York.  Palladium closed at $2,033 spot — and at another new record-high price…but 26 dollars off its Kitco-recorded high tick of the day.

The dollar index closed very late on Monday afternoon in New York at 96.67 — and opened down about 1 basis point once trading commenced around 7:45 p.m. EST on Monday evening, which was 8:45 a.m. China Standard Time on their Tuesday morning.  It dipped to its 96.62 low tick shortly after that — and began to crawl quietly higher from that juncture.  It fell off a bit of a cliff starting around 8:20 a.m. in  London, but began to ‘rally’ anew a few minutes later.  The ‘rally’ became somewhat more intense at that juncture — and the 97.09 high tick was set around 10:45 a.m. in New York.  It crept quietly and unevenly lower from there until the trading day ended at 5:30 p.m. in New York.  The dollar index finished the Tuesday session at 97.0050…up 33 basis points from its close on Monday.

There was certainly no correlation between the currencies and precious metal prices on Tuesday, as both rose together throughout most of the day.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the good folks over at the stockcharts.com Internet site.  The delta between its close…96.70…and the close on the DXY chart above, was about 31 basis points on Tuesday.  Click to enlarge as well.

The gold stocks dipped a bit at the 9:30 a.m. open in New York on Tuesday morning — and then really didn’t do much until around 11:15 a.m. EST.  A bit of a rally commenced at that juncture — and their respective highs were printed shortly after 2 p.m.  They dipped from there over the next fifteen minutes, before creeping higher into the 4:00 p.m. close.  The HUI closed up 1.03 percent.

In all respects that counted for anything, the silver equities followed a mostly similar price path as their golden brethren, with their highs coming a few minutes after 2 p.m. in New York as well.  They sold off a bit into the close from there, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index finished higher up 1.35 percent.  Click to enlarge if necessary.

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

I was happy to see the precious metal equities close up on the day, but was somewhat underwhelmed by their performances…especially the silver shares.  The two biggest gainers were Hecla and First Majestic Silver…up 3.02 percent and 2.58 percent respectively.  The biggest loser was Coeur Mining…down 0.58 percent.


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

In gold, the three short/issuers were Advantage, JPMorgan and ADM…with 14, 8 and 6 contracts out of their respective client accounts.  Of the five long/stoppers in total, the only two that really mattered were Advantage with 12 for its client account — and Scotia Capital/Scotiabank with 11 for its own account.

In silver, the two short/issuers were JPMorgan and Advantage, with 4 contracts each out of their respective client accounts.  The two long/stoppers were Advantage with 4 contracts for its client account — and Scotia Capital/Scotiabank picked up the other 4 for its own account.

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

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in January fell by 181 contracts, leaving just 57 left, minus the 28 contracts mentioned a few short paragraphs ago.  Monday’s Daily Delivery Report showed that 192 gold contracts were actually posted for delivery today, so that means that 192-181=11 more gold contract were just added to January deliveries.  Silver o.i. in in January rose by 11 contracts leaving 16 still open, minus the 8 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 1 lonely silver contract was actually posted for delivery today, so that means that 11+1=12 more silver contracts were added to January.


There were no reported changes in GLD on Tuesday, but an authorized participant removed 1,214,044 troy ounces of silver from SLV which, I’m sure, JPMorgan owns now.

In other gold and silver ETFs on Planet Earth on Tuesday…minus the goings-on in COMEX, GLD & SLV inventories…there was a net 160,181 troy ounces of gold added — and that’s a lot!  There was a net 92,085 troy ounces of silver added as well.

And nothing from the U.S. Mint.

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

There was a bit of movement in silver.  One truckload…600,403 troy ounces…was dropped off at Brink’s, Inc. — and that’s all the ‘in’ activity there was.  There was 26,061 troy ounces shipped out…25,061 from CNT — and the remaining good delivery bar…1,000 troy ounces…departed Brink’s, Inc.  The link to that is here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  They reported receiving 30 of them — and shipped out 1,506.  Of that ‘out’ amount, there were 565 kilobars shipped out of Loomis International — and the remaining 941 departed Brink’s, Inc.  The link to all this is here.


Here are three charts that Nick Laird passed around on Monday that I didn’t have room for in yesterday’s column, so here they are now.  The first one shows the amount of gold that was imported and exported by the U.K. during the month of OctoberDuring that month they imported 175 tonnes — and shipped out 39.2 tonnesClick to enlarge.

These next two charts show the countries and tonnage that they received gold from — and the second shows the countries that received gold and how much each got Click to enlarge for both.

Once again, I have a very decent number of stories for you.


CRITICAL READS

Repo Panic Returns as Fed Injects $99BN in Liquidity, Including First Oversubscribed Term Repo in Three Weeks

And just like that, the repo market is on the fritz once again.

More than two weeks after the last oversubscribed term repo operation on December 16, moments ago the Fed announced that Dealers are once again scrambling for liquidity, submitting $41.12BN in securities ($30.7BN in TSYs, $10.42BN in MBS) into today’s 2-week repo operation, which was oversubscribed hitting the maximum operation limit of $35BN.

Today’s oversubscription was ominous because while the liquidity shortage into year-end was expected, and justified the barrage of term repos ahead of the “turn”, the liquidity shortage was supposed to normalize after the new year. Alas, that appears to not have happened, and today’s submission was the highest since Dec 16.  Click to enlarge.

One reason for today’s repo spike is that as we noted last Friday, this is the first week that sees substantial term repo maturities and liquidity drainage, as follows:

  • $25 billion leaves the market on Monday,
  • $28.8 billion on Tuesday,
  • $18 billion next Friday

But wait there’s more: today’s oversubscribed term repo, coupled with yesterday’s overnight repo surge and this morning’s $63.919BN overnight repo … Click to enlarge.

… means the Fed just injected a total of $99BN to keep the levitation party going, and confirms that the repo market remains paralyzed.

Worse, any attempts to drain liquidity from the repo market, or generally slow down the shrinkage of the balance sheet, will be met with failure. It is also another indication that the repo market now holds the Fed hostage, with Powell now trapped in not only injecting liquidity via QE4, i.e., the monetization of T-Bills, but continued reliance on repos in the $250BN range.

Of course, should the Fed threaten to pull even a bit more liquidity than the market is comfortable sacrificing, and stocks get it. The flip side too: as long as the Fed keeps growing the balance sheet at a rate of about $100 billion per month, the market melt-up will continue.

This important and worthwhile article comes as no surprise to me…or should it you, dear reader.  It put in an appearance on the Zero Hedge website at 9:12 a.m. on Tuesday morning EST — and and I thank Brad Robertson for pointing it out.  Another link to it is hereGregory Mannarino‘s post market close rant for Tuesday is linked here — and it runs for just about 19 minutes.  Gregory’s second post market close commentary is very brief — and worth your while.  It’s linked here — and both of these videos come courtesy of Roy Stephens.


And Again: The Fed Monetizes $4.1 Billion In Debt Sold Just Days Earlier

Over the past week, when looking at the details of the Fed’s ongoing QE4, we showed out (here and here) that the New York Fed was now actively purchasing T-Bills that had been issued just days earlier by the U.S. Treasury. As a reminder, the Fed is prohibited from directly purchasing Treasuries at auction, as that is considered “monetization” and directly funding the U.S. deficit, not to mention is tantamount to “Helicopter Money” and is frowned upon by Congress and established economists. However, insert a brief, 3-days interval between issuance and purchase… and suddenly nobody minds. As we summarized:

for those saying the U.S. may soon unleash helicopter money, and/or MMT, we have some ‘news’: helicopter money is already here, and the Fed is now actively monetizing debt the Treasury sold just days earlier using Dealers as a conduit… a “conduit” which is generously rewarded by the Fed’s market desk with its marked up purchase price. In other words, the Fed is already conducting Helicopter Money (and MMT) in all but name. As shown above, the Fed monetized T-Bills that were issued just three days earlier – and just because it is circumventing the one hurdle that prevents it from directly purchasing securities sold outright by the Treasury, the Fed is providing the Dealers that made this legal debt circle-jerk possible with millions in profits, even as the outcome is identical if merely offset by a few days

So, predictably, fast forward to today when the Fed conducted its latest T-Bill POMO in which, as has been the case since early October, the NY Fed’s market desk purchased the maximum allowed in Bills, some $7.5 billion, out of $25.3 billion in submissions. What was more notable were the actual CUSIPs that were accepted by the Fed for purchase. And here, once again, we find just one particular issue that stuck out…

Why is the highlighted CUSIP notable? Because as we just showed on Friday, the Fed – together with the Primary Dealers – appears to have developed a knack for monetizing, pardon, purchasing in the open market, bonds that were just issued. And sure enough, TY5 was sold just one week ago, on Monday, Dec 30, with the issue settling on Jan 2, just days before today’s POMO, and Dealers taking down $17.8 billion of the total issue — and just a few days later turning around and flipping the Bill back to the Fed in exchange for an unknown markup. Incidentally, today the Fed also purchased $615MM of CUSIP UB3 (which we profiled last Friday), which was also sold on Dec 30, and which the Fed purchased $5.245BN of last Friday, bringing the total purchases of this just issued T-Bill to nearly $6 billion in just three business days.

…confirming once again that the Fed is now in the business of purchasing any and all Bills that have been sold most recently by the Treasury, which is – for all intents and purposes – debt monetization.

Oh, and incidentally the fact that Dealers immediately flip their purchases back to the Fed is also another reason why NOT QE is precisely QE4, because the whole point of either exercise is not to reduce duration as the Fed claims, but to inject liquidity into the system, and whether the Fed does that by flipping coupons or Bills, the result is one and the same.

This news item appeared on the Zero Hedge website at 3:55 p.m. on Tuesday afternoon EST — and another link to it is here.


Stock Exposure Has Exploded at JPMorgan’s Federally-Insured Bank to $2.4 Trillion

Federally-insured banks are not supposed to be making large speculations in the stock market. They are supposed to be using bank deposits to make loans to worthy businesses and consumers to help grow the U.S. economy and keep the United States competitive on the global stage.

But according to the official reports from the federal regulator of national banks, the Office of the Comptroller of the Currency (OCC), since December 31, 2010 the federally-insured bank owned by the monster trading house of JPMorgan Chase (JPMorgan Chase Bank NA) has increased its equity (stock) derivative bets from $337 billion to $2.4 trillion as of its latest report for the quarter ending September 30, 2019. (The data is found in a graph titled “Table 10” in the appendix of each of the quarterly reports published by the OCC.)

During the period that JPMorgan Chase’s positions in stock derivatives have exploded, both its own stock price and the Dow Jones Industrial Average have been on a sharp upward trajectory. (See chart above.)

The $2.4 trillion notional (face amount) of stock derivative exposure that JPMorgan Chase has at its federally-insured bank is a very big revenue producer for the bank. According to the OCC’s report for the quarter ending September 30, 2019, all federally-insured banks in the U.S. which traded equity derivatives made $1.8 billion in revenues, of which JPMorgan accounted for $1.15 billion or 64 percent of all revenues of all banks trading stock derivatives.

Just how many federally-insured banks in the U.S. have the guts to trade stocks or stock derivatives at their taxpayer-backstopped bank? Not that many.

This commentary was posted on the wallstreetonparade.com Internet site on Tuesday sometime — and I found it in a GATA dispatch yesterday evening.  Another link to it is here.


How Money Printing Contributes to America’s Downward Spiral — Bill Bonner

“One does not see malinvestment at the time of money printing. Price increases are delayed and uneven, due to the Cantillon Effect whereby the early receivers of new money are able to purchase goods and services at existing prices. Later receivers or those who do not receive the new money at all suffer higher prices and a reduction in their standards of living. Even then most people do not link higher retail prices with a previous expansion of the money supply.

It would be hard to invent a more effective method for the destruction of modern society.”

– “The Hidden Link Between Fiat Money and the Increasing Appeal of Socialism” by Patrick Barron

The U.S. empire had probably reached its sell-by date by January 2000. Bad money, bad policies, and the Deep State had already sent the empire into a decline.

Then, two disastrous decisions sealed the deal…

The first was George W. Bush’s misbegotten War on Terror. Now in its nineteenth year, the bill has reached $6 trillion so far, with still no plausible victory in sight. As many as 1 million people have died… and Iraq is in shambles…

Now, the ingrates want to kick us out.

But another casualty is never mentioned. Endless, pointless wars damage aggressors as well as their victims.

The latter show the mutilations and scars of war. But the former corrode from the inside out…

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


Not leaving Iraq!’ Pentagon clarifies ‘poorly worded’ U.S. withdrawal plan sent by ‘mistake

Confusion reigned at the Pentagon after the publication of a letter about withdrawal from Iraq, with the top general describing it as a “mistake” and the defense secretary saying there were no plans for a U.S. pullout.

There’s been no decision to leave Iraq. Period,” Secretary of Defense Mark Esper told reporters at the Pentagon on Monday. He was referring to reports that the head of Combined Joint Task Force Iraq, General William H. Seely III, informed the Iraqi government of preparations to reposition the coalition forces “in due deference to the sovereignty” of Iraq.

Meanwhile, Chairman of the Joint Chiefs of Staff General Mark Milley said that the letter Seely had sent was only a draft and that releasing it was a “mistake.” The Iraqi military confirmed receiving it, however.

Esper would neither confirm nor deny the letter’s authenticity, though U.S. Army public relations officials said earlier it was real. Instead, he reiterated the position staked out earlier by Secretary of State Mike Pompeo, that the Iraqi people “want the U.S. to stay,” and cited the rise in attacks by Iranian “proxy groups.”

U.S. President Donald Trump likewise rejected the withdrawal on Sunday, threatening Iraq with sanctions and saying the U.S. will not leave until the Iraqis “pay us back” for an airbase that he said cost billions of dollars to build.

The resolution is non-binding, but reflects the growing frustration in Baghdad with continued U.S. operations in Iraq long after the official defeat of I.S. was proclaimed.

This rt.com story appeared on their Internet site late on Sunday evening EST — and I thank Larry Galearis for sharing it with us.  Another link to it is here.


Russia Proposes to Secure Iraqi Airspace With S-400 Air Defense

The Ministry of Defense of the Russian Federation has offered Iraq Tuesday the option to purchase the world’s most advanced missile defense system to protect its airspace, reported RIA Novosti.

According to the report, the Iraqi Armed Forces could purchase the Russian S-400 Triumf air defense system, which RIA points out, can “ensure the country’s sovereignty and reliable airspace protection.”

Iraq is a partner of Russia in the field of military-technical cooperation, and the Russian Federation can supply the necessary funds to ensure the sovereignty of the country and reliable protection of airspace, including the supply of S-400 missiles and other components of the air defense system, such as Buk-M3, Tor -M2 — and so on,” said Igor Korotchenko, Russian Defense Ministry’s Public Council member.

For the last several months, Iraq has considered purchasing Russian air defense and missile systems, including the S-400, however, it has been met with fierce pressure from the U.S.

But with a political crisis between the U.S. and Iraq underway, thanks partly to the U.S. assassination of Iran’s Maj. Gen. Qassem Soleimani, Russia could profit as Iraq attempts to decouple from the U.S.

A recent U.S. intelligence assessment indicated that at least 13 countries had expressed interest in purchasing the S-400s.  Saudi Arabia, Qatar, Algeria, Morocco, Egypt, Vietnam, and Iraq have all be in discussions with Russia to purchase the missile defense system in the last several quarters.  Meanwhile, China, India, and Turkey have already signed agreements with Russia.

The S-400s can strike stealth bombers, aircraft, cruise missiles, precision-guided projectiles, and ballistic missiles, some military experts have even said the Russian missile defense system is far superior than the U.S. MIM-104 Patriot.

This story showed up on the Zero Hedge website at 2:35 p.m. EST on Tuesday afternoon — and it comes to us courtesy of Brad Robertson.  Another link to it is here.


Blow-back From The Soleimani Assassination Increases as Iraq Reveals How Trump Tried to Steal Its Oil

Trump said he would ask Iraq to pay for the bases the U.S. has built should the U.S. troops be kicked out of Iraq. The U.S. already has binding legal agreements with Iraq which stipulate that the bases, and all fixed installations the U.S. has built there, are the property of Iraq.

Trump had already asked Iraqi Prime Ministers -twice- if the U.S. could get Iraq’s oil as reward for invading and destroying their country. The requests were rejected. Now we learn that Trump also uses gangster methods to get the oil of Iraq. The talk by the Iraqi Prime Minister Abdul Mahdi happened during the recent parliament session in Iraq (machine translation):

Al-Halbousi, Speaker of the Iraqi Council of Representatives, blocked the speech of Mr. Abdul Mahdi in the scheduled session to discuss the decision to remove American forces from Iraq.

At the beginning of the session, Al-Halbousi left the presidential seat and sat next to Mr. Abdul-Mahdi, after his request to cut off the live broadcast of the session, a public conversation took place between the two parties. The voice of Adel Abdul Mahdi was raised.

Mr. Abdul Mahdi spoke with an angry tone, saying:

The Americans are the ones who destroyed the country and wreaked havoc on it. They are those who refuse to complete building the electrical system and infrastructure projects. They have bargained for the reconstruction of Iraq in exchange for giving up 50% of Iraqi oil imports, so I refused and decided to go to China and concluded an important and strategic agreement with it, and today Trump is trying to cancel this important agreement.”

This commentary from the moonofalabama.org Internet site showed up at 17:40 p.m. UTC, which was 12:40 p.m. EST in Washington.  It comes to us courtesy of Larry Galearis — and another link to it is here.


America is guilty of everything we accuse Iran of doing

Donald Trump drastically escalated the United States’ ongoing conflict with Iran on Thursday night by ordering the assassination of Iran’s General Qassem Soleimani with an airstrike on the Baghdad International Airport. It takes what was arguably already a war (with an economic blockade and regular skirmishes with Iranian proxy forces) to a straight-up shooting war.

Events like this bring out the absolute worst in the American foreign policy community. Many conservative writers and thinkers, including former National Security Adviser John Bolton, the Hudson Institute’s Michael Doran, and Commentary’s Noah Rothman, openly cheered this Putin-style cold-blooded murder of a foreign statesman. Other more supposedly nonpartisan commentators uncritically parroted Trump administration assertions that Iran was planning something bad. Every top Democratic presidential candidate except Bernie Sanders was careful to foreground that Soleimani was a bad guy before condemning the assassination in their initial comments.

The truth is that Soleimani was not all that different from any of about five dozen current and former American politicians and bureaucrats — if anything, he was considerably more restrained about the use of force. Yes, he was involved in a lot of bloody wars — but so was every American president since 2000, and besides half the wars he fought in were started or fueled by the United States. It’s just another instance of America’s gigantic hypocrisy when it comes to war.

Yet even the worst of Soleimani’s record pales in comparison with the most blood-drenched American warmongers. If Soleimani deserves condemnation for arming Iraqi insurgents, then George W. Bush and Dick Cheney deserve 10 times as much for starting the war in the first place. It was a pointless, illegal war of aggression sold on lies that obliterated Iraqi society and killed perhaps half a million people, almost all of them innocent civilians. (Our own Soleimani, General David Petraeus, was connected to the operation of Iraqi torture dungeons and paramilitary death squads during the fight against the insurgency.)

If Soleimani deserves blame for helping Bashar al-Assad brutally defeat Syrian rebels, Henry Kissinger deserves 10 times as much for orchestrating the bombing slaughter of perhaps a quarter million Cambodians and paving the way for the Khmer Rouge genocide that killed 1.7 million people.

This very worthwhile commentary was posted on theweek.com Internet site back on January 3 — and I thank Michael Riedel for bringing it to my attention — and now to yours.  Another link to is here.


Iran Fires “More Than a Dozen” Ballistic Missiles at Two U.S. Airbases in Iraq

Summary:

  • Iran has launched more than a dozen ballistic missiles against multiple bases housing U.S. troops in Iraq, an have threatened “more crushing responses” if Washington carried out further strikes.
  • Initially, nine rockets hit the sprawling Ain al-Asad airbase in the country’s west, the largest of the Iraqi military compounds where foreign troops are based.  The attack came in three waves just after midnight, AFP reported.
  • Iran swiftly claimed responsibility for the attack, with state TV saying it had launched “tens of missiles” on the base.
  • Iranian sources are claiming that the operation has a name: ‘Operation Martyr Suileimani’. Iran’s airforce has reportedly been deployed.
  • Iraqi PMF announced the start of military operation “Overwhelming Response.”
  • No confirmed details on injured/casualties – “working on initial battle damage assessments.” According to social media sources, the Pentagon has said that the Iranian missile attack resulted in casualties among Iraqis only
  • President Trump “has been briefed” is “monitoring the situation closely and consulting with his national security team,” and is preparing to address the nation.
  • The FAA has imposed restrictions for civilian flights over the Persian Gulf.
  • Markets are turmoiling: Safe-haven assets are soaring (bonds, bitcoin, and gold), Oil prices are jumping, and Stocks are getting slammed

Update 13: The FAA has banned all civilian flights over Iran, Iraq, the Persian Gulf, and the Gulf of Oman “due to heightened military activities” and the “potential for miscalculation or misidentification” according to AP.

Update 12: Iran has warned that if there is retaliation for the two waves of attacks they launched their 3rd wave will destroy Dubai and Haifa.

War it is.  This Zero Hedge article was posted on their Internet site at 6:12 p.m. EST on Tuesday evening — and another link to it is here.  Then this ZH story headlined “Trump Tweets “All is Well” After Iran Fires Missiles at Two U.S. Airbases in Iraq”  A somewhat related ZH story is headlined “Chevron Pulls U.S. Oil Workers Out of Iraq” — and that comes courtesy of Brad Robertson.


Record bond defaults as China lifts credit allocation

The trend of rising defaults in China’s domestic bond market will extend its run in the foreseeable future as the allocation of debt becomes more disciplined amid Beijing’s growing tolerance for such episodes.

Bond defaults in China rose to a record 130 billion yuan in 2019 from less than one billion five years ago, according to S&P Global, which said issuers from inland provinces had higher default rates due to weaker operating performances and tight funding conditions.

It said some provinces like Qinghai and Ningxia had registered cumulative default rates of above 10%.

The market’s tolerance for defaults appears to be increasing and defaults will likely continue to rise. But the relaxation of liquidity will mitigate some of the hardship. The economy is slowing but we do see PBOC is trying to relax liquidity conditions, which means they are aware of the refinancing difficulties especially for POEs,” said Joyce Huang, senior director at Lianhe Global.

Indeed, China set the tone for the year ahead by announcing, on January 1, a reduction in the money that banks have to hold in reserve, which releases an estimated 800 billion yuan (US$114.6 billion) into the banking system.

Still, that would not change the direction of this trend with S&P expecting defaults to continue to rise, due to persistently tight liquidity for private companies and increasing divergence in the financial performances between strong and weak state-owned companies and local government finance vehicles.

This news item put in an appearance on the Asia Times website on Tuesday sometime — and I thank Tolling Jennings for pointing it out.  Another link to it is here.


A New Gold Standard: Orderly or Chaotic? — Jim Rickards

Over the past century, monetary systems change about every 30 to 40 years on average. Before 1914, the global monetary system was based on the classical gold standard.

Then in 1945, a new monetary system emerged at Bretton Woods. I was at Bretton Woods this past summer to commemorate its 75th anniversary.

Under that system, the dollar became the global reserve currency, linked to gold at $35 per ounce.

In 1971 Nixon ended the direct convertibility of the dollar to gold. For the first time, the monetary system had no gold backing.

Today, the existing monetary system is nearly 50 years old, so the world is long overdue for a change. Gold should once again play a leading role.

I’ve written and spoken publicly for years about the prospects for a new gold standard. My analysis is straightforward.

International monetary figures have a choice. They can reintroduce gold into the monetary system either on a strict or loose basis (such as a “reference price” in monetary policy decision making).
This can be done as the result of a new monetary conference, a la Bretton Woods. It could be organized by some convening power, probably the U.S. working with China.

Or they can ignore the problem, let a debt crisis materialize (that will play out in interest rates and foreign-exchange markets) and watch gold soar to $14,000 per ounce or higher, not because they wanted it to but because the system is out of control.

This gold-related commentary by Jim, which I have not had time to ready yet, showed up on the daily reckoning.com Internet site on Tuesday sometime — and another link to it is here.


The PHOTOS and the FUNNIES

From Salmon Arm we were off to Revelstoke on August 4, with brief stops in Sicamous and Three Valley Gap.  The first stop was in Sicamous, which is billed as the houseboat capital of Canada — and is also located on one of the arms of Shuswap Lake.  It isn’t a big town, with tourism being its claim to fame in the summer.  The Trans-Canada Highway and main-line CP Rail runs through the place — and has a ‘swinging bridge’ to allow large tall-masted sail boats to pass between Mara and Shuswap Lakes.  The first shot was taken along the channel that leads from one lake to the other — and the last two photos were taken from the bridge over that channel on the Trans-Canada Highway.  I’ll have more shots of this place tomorrow.  Click to enlarge.


The WRAP

It was nice to see the gold price trade a bit higher on Tuesday — and silver’s performance was even better.  Their respective equities closed up on the day, but were rather unenthusiastic about it.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  Gold is even more overbought — and silver is now in the same boat, but not as extreme.  Palladium has also poked its nose into overbought territory as well.  Copper closed a hair higher, but WTIC closed down a bit on the day.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and it has been quite a night for reasons that you are already more than familiar with by now.  Gold and silver blasted higher, but both were capped and turned sharply lower around 8:35 a.m. China Standard Time on their Wednesday morning.  Those sell-offs lasted until 11 a.m. CST — and then they turned a bit higher until 3 p.m. CST — and they’re headed lower once more.  Gold is up $14.80 at the moment — and silver is up by only 12 cents as London opens.  Platinum ticked a bit higher, but it has been sold quietly and unevenly lower since — and is down a dollar.  Palladium was sold down hard shortly after trading began at 6:00 p.m. in New York on Tuesday evening, with the low tick of the day coming around 9:15 a.m. CST in Shanghai.  But it rallied quickly from there until noon CST — and then traded flat until 2 p.m. over there.  It took off higher at that juncture — and is up 25 bucks as Zurich opens…but off its current $2,083 spot high tick by 25 bucks as well.

Net HFT gold volume is a staggering 312,000 contracts already — and there’s 12,000 contracts worth of roll-over/switch volume in this precious metal.  Net HFT silver volume is ginormous as well at a bit under 69,000 contracts — and there’s 2,032 contracts worth of roll-over/switch volume on top of that.

The dollar index closed very late on Tuesday afternoon in New York at 97.0050 — and opened down about 17 basis points once trading commenced around 7:45 a.m. China Standard Time on their Wednesday morning.  It has been creeping higher since, but took a bit of a header about twenty-five minutes before the London open — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, it’s down 11 basis points.


You can rest assured that JPMorgan et al. and the rest of the Big 8 were there to take the short side against all comers in Far East trading.  There’s no sign whatsoever of any serious short covering, but if this ‘war’ heats up even more from here, which it will most certainly do at some point…all bets will be off.  But at the moment, they’re standing their ground.

Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report — and companion Bank Participation Report. And in most respects its already ‘yesterday’s news’ after the huge price and volumes spikes in both silver and gold futures in Far East trading on their Wednesday.


And as I post today’s column on the website at 4:02 a.m. EST, I see that ‘da boyz’ continue to work gold, silver and platinum lower in price. Gold is now up only $6.80 the ounce — and they have silver back at unchanged as the first hour of London trading ends. Platinum is now down 7 bucks — and palladium, after a brief down/up dip, is still up 24 dollars the ounce as the first hour of Zurich trading draws to a close.

At the rate ‘da boyz’ are going now, they’ll have gold and silver well down on the day long before the COMEX open.

Gross gold volume is somewhere around 368,000 contracts — and minus the current roll-over/switch volume, net HFT gold volume is about 342,500 contracts. Net HFT silver volume is a bit under 74,500 contracts — and there’s about 2,200 contracts worth of roll-over/switch volume in this precious metal.

The dollar index has ‘rallied’ off its 7:52 a.m. GMT London low — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s now back at unchanged on the day.


The game is on — and we are just bystanders.  How this turns out is anyone’s guess — and since we’re only spectators in all of this, the best you can do for your own sanity is blow the froth off a cold one and watch the show.

See you here tomorrow.

Ed

JPMorgan et al. Show Up in Force on Monday

07 January 2020 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


Not surprisingly,  all four precious metals blasted higher the moment that trading began at 6:00 p.m. EST in New York on Sunday evening — and ‘da boyz’ were at the ready.  They capped the price spike in gold in an instant, then drove it lower.  From there it wandered sideways until the COMEX open in New York.  The bullion banks appeared again — and sold it down a bit more.  From that juncture it crept quietly quietly sideways until the market closed at 5:00 p.m. EST.

The high and low ticks were reported by the CME Group as $1,590.90 and $1,562.30 in the February contract.

Gold was closed in New York on Monday afternoon at $1,565.20 spot, up $12.90 from Friday — and miles off its Kitco-recorded high tick of the day.  Net volume was beyond Mars at around 497,500 contracts — and there was a bit under 63,000 contracts worth of roll-over/switch volume on top of that.

The silver price ran into ‘da boyz’ in an instant at 6:00 p.m. EST in New York on Sunday evening — and had their work cut out for them.  They managed to cap the price and turn it lower by a few minutes before 10 a.m. China Standard Time on their Monday  morning — and it was sold lower into the London open from there.  It crept a bit higher going into the COMEX open in New York, where it was sold a bit lower — and then a whole bunch more once the 10 a.m. EST afternoon gold fix in London was put to bed.  It recovered a bit from that point going into the 1:30 p.m. COMEX close — and didn’t do much after that.

The high and lows in silver were recorded as $18.55 and $18.045 in the March contract.

Silver was closed on Monday afternoon in New York at $18.12 spot, up only 10.5 cents on the day — and 40 cents below its $18.52 Kitco-recorded high tick of the day.  Net volume was over the moon in silver as well at around 127,500 contracts — and there was 9,300 contracts worth of roll-over/switch volume in this precious metal.

Platinum was also capped at the open in New York on Sunday evening — and after getting sold lower for a bit, rallied to its high tick of the day, which came shortly before noon in Shanghai.  From there it crept quietly lower until around 9:40 a.m. in New York — and ‘da boyz’ appeared in force at that juncture — and the low tick was set about two hours later.  It crawled quietly higher into the 5:00 p.m. close from there.  Platinum finished the day at $962 spot, down 18 bucks on the day — and 32 dollars off its Kitco-recorded $994 spot high tick of the day.

The palladium price jumped up a whole bunch on Sunday evening in New York, but was also brutally capped and turned lower minutes later.  That lasted until around 9 a.m. China Standard Time on their Monday morning — and from there it wandered unevenly higher until trading ended in New York on Monday afternoon.  Palladium finished the Monday session at $2,008 spot…up 41 bucks on the day, but 26 dollars off its Kitco-recorded high tick.  But, having said all that, palladium closed at a new record high price yesterday.

The dollar index closed very late on Friday afternoon in New York at 96.84 — and opened up about 1 basis point once trading commenced around 6:35 p.m. EST on Sunday evening.  It traded quietly sideways until about 8:15 a.m. in London — and a spirited sell-off began at that juncture.  The 96.54 low tick appeared to come around 11:35 a.m GMT.  A ‘rally’ commenced at that point, but ran out of gas at precisely 10:00 a.m. in New York, which was the afternoon gold fix in London.  It crawled unevenly lower from there until trading ended at 5:30 p.m. EST.  The dollar index finished the Monday session at 96.67…down 17 basis points from its close on Friday.

Of course there was absolutely no correlation between precious metal prices and the currencies on Monday, as precious metal prices were being set in the GLOBEX/COMEX paper trading system.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the fine folks over at the stockcharts.com Internet site.  The delta between its close…96.35…and the close on the DXY chart above, was 32 basis points on Monday.  Click to enlarge as well.

The gold shares blasted higher at the open in New York on Monday morning, but a willing seller/short seller appeared in a flash — and their respective lows came around 11:35 a.m. EST.  They rallied quietly from there — and back above unchanged by a bit by 1:50 a.m. — and then sank back below unchanged going into the 4:00 p.m. close.  The HUI finished lower by 0.22 percent.

After a brief tick up at the open, the silver equities were sold down hard, with their respective lows also coming at 11:35 a.m. in New York trading — and from there they followed the gold stocks  for the remainder of the Monday session.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.54 percent.  Click to enlarge if necessary.

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

All the silver equities in Nick’s graph closed down on the day…but Coeur Mining was the black sheep, as it got clubbed like the proverbial baby seal…getting creamed for a 10.0 percent loss.   I didn’t see any news that caused that. First Majestic Silver was also down a fairly heft amount…2.67 percent.

As I pointed out in my Saturday column…”It has been suggested by several that the U.S. bullion banks have been selling some of their precious metal stocks to dampen this rally.”  Reader John McFarland had this to say [in part] in an e-mail to me yesterday…”This short selling is one of the main contributors to the inexplicable performance of PM equities, but not the only contributor.  Something else is in play.

If you check Nick’s 1-year Silver 7 chart above, the silver equities have barely rallied above unchanged during the last six trading sessions — and for the last four trading sessions in a row have closed lower, despite the fact that silver has closed higher every single day.  There is definitely deliberate interference in the silver shares and, of course, in the gold stocks as well.

And in a second e-mail to me, John had this to say…”two straight days of seismic rises in the gold and silver prices, accompanied by contemporaneous broad, systemic downward pressure in the PM equities.  This is unprecedented in the 3+ years I have been watching and investing in this sector….This had to have been done to prevent an exodus of money from the general market into PM equities.

That may be true, but they can’t keep it up forever.  This appears to be just another version of ‘care and maintenance’ until the day arrives that the powers-that-be step aside for real.  I have more about this in The Wrap.


The CME Daily Delivery Report for Day 5 of the January delivery month showed that 192 gold and 1 silver contract were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, the three largest of the six short/issuers in total were JPMorgan, Advantage and ABN Amro, with 114, 34 and 21 contracts out of their respective client accounts.  There were nine long/stoppers in total — and the only three that mattered were Scotia Capital/Scotiabank, Advantage and JPMorgan…stopping 96, 44 and 27 contracts…Scotia Capital for its own account — and the other two for their respective client accounts.

In silver, Marex Spectron was the issuer — and Advantage the stopper — and both 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 January rose by 63 contracts, leaving 238 still around, minus the 192 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 80 gold contracts were actually posted for delivery today, so that means that 63+80=143 more gold contracts were just added to the January delivery month.  Silver o.i. in January fell by 78 contracts, leaving 6 still open, minus the 1 contract mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 80 silver contracts were actually posted for delivery today, so that means that 80-78=2 more silver contracts were just added to January.


There was another deposit into GLD on Monday, as an authorized participant added 28,246 troy ounces.  There were no reported changes in SLV.

The folks over 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, January 3 — and this is what they had to report.  There was a smallish 3,922 troy ounces of gold added — and an equally smallish 27,231 troy ounces of silver was added as well.

In other gold and silver ETFs on Planet Earth on Monday…minus COMEX, ZKB, GLD & SLV activity…there was a net 66,976 troy ounces of gold removed…but there was a net 1,264 troy ounces of silver added.


Of course there’s nothing to report from the U.S. Mint.

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

There was some activity in silver, as 953,967 troy ounces was received.  Of that amount, one truckload…600,215 troy ounces…was dropped off at Canada’s Scotiabank — and the remaining 353,752 troy ounces found a home over at CNT.  All of the out activity…5,949 troy ounces…occurred at Delaware.  The link to this is here.

There was a tiny amount of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  They reported receiving 25 of them — and shipped out the same number.  This occurred over at Brink’s, Inc. — and I won’t bother linking it.


Here are two charts that Nick passed around on the weekend.  They show gold and silver bullion coin sales over at the U.S. Mint…updated with December’s data.  You pretty much need a magnifying glass to see the total sales for that month on the two charts below…especially silver sales.  During that month the mint sold 3,500 troy ounces of gold eagle and buffaloes — and 125,000 troy ounces worth of those 5-ounce ‘American the Beautiful’ coins.  Click to enlarge.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, December 31 did not make for happy reading as I knew it would, because the short positions in both gold and silver increased a bunch more…even more than I was expecting…particularly in gold.

In silver, the Commercial net short position increased by a further 11,325 COMEX contracts, or 56.6 million troy ounces.

They arrived at that number by decreasing their long position by 4,042 contracts — and increasing their short position by 7,283 contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, the Managed Money traders made up a bit more than half of that amount, as they increased their long position by 4,078 contracts — and reduced their short position by 1,893 contracts, for a total weekly change of 5,971 contracts.

The difference between that number and the Commercial net short position….11,325 minus 5,971 equals 5,354 contracts.

And, as it has to be, that difference was made up by the traders in the other two categories, as both increased their net long positions during the reporting week…the ‘Other Reportables’ by 1,335 contracts — and the ‘Nonreportable’/small traders category by a healthy 4,019 contracts.

The sum of those two numbers….4,019 plus 1,335 equals 5,354 contracts…which it must do.

Ted figures that JPMorgan increased their short position in silver by about 3-4,000 contracts during the reporting week…which puts their short position [splitting the difference] at around 16,500 contracts.

The Commercial net short position in silver is now up to 483.2 million troy ounces, which is not a record amount to be sure, but closing in on it fast.

The Big 8 Commercial traders hold another new record high short position in silver…237 days/8 months of world silver production worth or, in ounces…553.5 millionThat’s larger than the Commercial net short position by a bit over 114 percent.  I have more on this in the ‘Days to Cover‘ analysis below.

The Managed Money traders hold an almost record amount net long.

Here’s the 3-year COT chart for silver, courtesy of Nick Laird — and the above change should be noted.  Click to enlarge.

Of course it almost goes without saying that, all things being equal, there will be a new record high short position in silver by the Big 8 traders in this Friday’s COT Report as well.


In gold, the commercial net short position blew out by another 26,095 troy ounces, or 2.61 million troy ounces of paper gold.

They arrived at that number by reducing their long position by 279 contracts, but increased their short position by an eye-watering 25,816 contracts — and its the the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report — and like in silver, the Managed Money traders made up only a bit more than half of the change in the commercial net short position in gold.  They increased their long position by 12,991 contracts — and reduced their already piddling short position by a further 895 contracts.  It’s the sum of those two numbers…13,886 contracts…that represents their change for the reporting week.

The difference between that number — and the commercial net short position…26,095 minus 13,886 equals 12,209 contracts.

And as is always the case, the ‘Other Reportables’ and ‘Nonreportable’/small traders made up the difference, as the former increased their net long position by a chunky 8,387 contracts — and the latter by a decent 3,822 contracts.  The sum of those two numbers add up to aforesaid mentioned 12,209 contracts, which it must do.

With the Managed Money traders accounting for only a bit more than 50 percent of change in the commercial net short positions in both gold and silver, it may indicate that the Managed Money traders are running out buying power to the upside…something that Ted had mentioned may happen.

The commercial net short position in gold is at another new all-time high…the largest in history…36.65 million troy ounces — and the Big 8 traders are short another new record high amount as well…31.2 million troy ounces.  That amount represents just under 86 percent of the commercial net short position in gold.  Of course the Managed Money traders are net long record, or near-record amounts on the opposite side of this trade in both gold and silver. All the data in this paragraph is hugely bearish on an historical basis.

Ted pegs JPMorgan’s short position in gold at around 36,000 contracts/3.6 million troy ounces, up about 6,000 contracts from the previous week’s COT Report.

Here’s Nick’s 3-year COT chart for gold — and the unhappy-looking and record high short position should be noted.  Click to enlarge.

And as in silver, we’re most likely going to see another new record high commercial net short position in gold in this Friday’s COT Report.

And as silver analyst Ted Butler said in his COT commentary on his website yesterday afternoon…”There should be little question that if we move lower in price, it will be due to the massive record concentrated short positions in both silver and gold — and those few traders succeeding in driving prices lower. The few triumphing over the many – as has been the case for decades. But since the big shorts have not succeeded for months in driving prices lower and they have sustained record open losses in the interim, there is still the question of whether they can succeed in driving prices lower ahead.

I can see the big crooked shorts perhaps succeeding in inducing selling by those traders which have most recently bought on the upward penetration of the 50-day moving average over the past couple of weeks. But I have trouble seeing how the big commercial shorts could succeed in inducing selling from those traders which didn’t sell over the past couple of months where they always had sold before.

In any event, the current extreme positioning must be resolved and it’s hard for me to see how the coming resolution won’t be a humdinger. I’m still of a mind that if we do get a price smash, it will be the last such smash, [as] the big shorts are so deep in the hole that it could end up with some of them covering to the upside for the first time ever.”


In the other metals, the Manged Money traders in palladium increased their net long position by by a piddling 14 COMEX contracts during the reporting week — and are net long the palladium market by 12,480 contracts…a bit under 53 percent of the total open interest.  Total open interest in palladium is 23,638 COMEX contracts.  As I keep harping on, it’s a very tiny and very illiquid market — and as you can see from these numbers, it doesn’t take more than a handful of contracts to move the price by a significant amount.  In platinum, the Managed Money traders increased their net long position by a further 4,960 contracts.  The Managed Money traders are net long the platinum market by 45,811 COMEX contracts…a bit over 46 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are still mega net long against JPMorgan et al. as well — and both these categories increased their net long positions during the reporting week.  In copper, the Managed Money traders increased their net long position in that metal by a smallish 869 COMEX contracts during the reporting week.  They are now net long copper by 9,299 COMEX contracts…after holding a record net short position about three months ago.  As I keep saying, this dramatic change in positioning by the Managed Money traders is the sole reason why the copper price has been in ‘rally’ mode recently…as it’s the very act of them covering short positions and going long, that causes the price to rise.


Here’s Nick Laird’s “Days to Cover” chart, updated with the COT data for positions held at the close of COMEX trading on Tuesday, December 31. It shows the days of world production that it would take to cover the short positions of the Big 4 — and Big ‘5 through 8’ traders in each physically traded commodity on the COMEX. Click to enlarge.

For the current reporting week, the Big 4 traders are short 160 days of world silver production…unchanged from last week’s COT Report — and the ‘5 through 8’ large traders are short an additional 77 days of world silver production…up 2 days from last week’s COT Report — for a total of 237 days that the Big 8 are short…up 2 days from last week’s report…an absolutely preposterous number.  This represents eight months of world silver production, or about 553 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 235 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 483 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 553 million troy ounces.  So the short position of the Big 8 traders is larger than the total Commercial net short position by around 553-483=70 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 27-odd small commercial traders other than the Big 8, are net long that amount.

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

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 16,500 contracts, up around 3,500 contracts from the 13,000 COMEX contracts in last week’s COT Report.  That works out to around 82.5 million troy ounces of paper silver…which works out to around 35 days of world silver production that JPMorgan is short…up 7 days from last week’s report.

Based on the numbers in the paragraph below, that puts JPMorgan in the #2 or #3 spot of the Big 4/8 traders.  Citigroup is by far the largest…but JPMorgan is catching up fast.

As per the first paragraph above, the Big 4 traders in silver are short around 160 days of world silver production in total. That’s 40 days of world silver production each, on average.  The four traders in the ‘5 through 8’ category are short around 77 days of world silver production in total, which is around 19.25 days of world silver production each, on average.

The Big 8 commercial traders are short 48.2 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 49.1 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 55 percent mark.  In gold, it’s now 39.7 percent of the total COMEX open interest that the Big 8 are short, down a hair from the 40.3 percent they were short in last week’s report — and around 45 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 70 days of world gold production, up 1 day from last week’s COT Report.  The ‘5 through 8’ are short another 38 days of world production, up 2 days from last week’s report…for a total of 108 days of world gold production held short by the Big 8…up 3 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 65 percent of the total short position held by the Big 8…down 1 percentage point from last week’s report.

The “concentrated short position within a concentrated short position” in silver, platinum and palladium held by the Big 4 commercial traders are about 68, 73 and 80 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is about unchanged from last week’s COT Report…platinum is up 1 percentage point from a week ago — and palladium is unchanged week-over-week.

And as Ted has been pointing out for years now, JPMorgan is, as always, in a position to double cross the other commercial traders at any time and walk away smelling like a rose — and that’s because of the massive amounts of physical gold and silver they hold.

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


CRITICAL READS

Debt will kill the global economy. But it seems no one cares

The warning signs are clear. Debt is rising on every continent and especially in the business sector, which has spent the past decade ramping up its borrowing to previously unheard-of levels.

Last October, the International Monetary Fund said that almost 40% of the corporate debt in eight leading countries – the US, China, Japan, Germany, Britain, France, Italy and Spain – would become so expensive during a recession that it would be impossible to service. In other words, tens of thousands of businesses, employing millions of people, would have gambled with high levels of borrowing and lost, making themselves insolvent.

Worse, the IMF said the risks were “elevated” in eight out of 10 countries that boasted systemically important financial sectors, adding that this situation was a repeat of the years running up to the last financial crisis.

There is little evidence that anyone is paying any attention to the dire misgivings expressed by either organisation. This year, the U.S. S&P 500 stock market resumed its long-term (100-year) upward trend following a near 200% increase since 2010. Likewise, the German Dax has soared over the past 10 years from 5,500 to over 13,000 while the Paris CAC 40 has almost doubled to 6,000.

Some analysts have argued that the IMF and World Bank are over-cooking their analysis after missing the last financial crash – seeing danger around every corner. Others dismiss them as archaic remnants of the postwar consensus that fail to understand how the global economy has entered a new phase, one that keeps stock markets humming along and bad recessions at bay.

This very interesting commentary was posted on theguardian.com Internet site at 5:00 p.m. GMT in London on Saturday afternoon, which was 12:00 noon in New York.  I thank Neil West for pointing it out — and another link to it is hereGregory Mannarino‘s post market close rant for Monday is linked here — and it’s a long one.


Soleimani murder: what could happen next? — The Saker

First, a quick recap of the situation.

We need to begin by quickly summarizing what just happened:

  1. General Soleimani was in Baghdad on an official visit to attend the funeral of the Iraqis murdered by the USA on the 29th
  2. The U.S. has now officially claimed responsibility for this murder
  3. The Iranian Supreme Leader, Ayatollah Ali Khamenei has officially declared that “However, a severe retaliation awaits the criminals who painted their corrupt hands with his and his martyred companions’ blood last night

The Iranians simply had no other choice than to declare that there will be a retaliation.

Iran HAS to retaliate and HAS to do so publicly.

Why?

Because whether the Iranian do retaliate or not, they are almost guaranteed another U.S. attack in retaliation for anything looking like a retaliation, whether Iran is involved or not.

This longish but worthwhile commentary from the Saker put in an appearance on his Internet site on Friday — and I thank Larry Galearis for sending it along.  Another link to it is here.  The Saker had a follow-up piece on Sunday headlined “Short “intermission” of sorts with a few (apparently needed) explanations” — and I thank U.K. reader Tariq Khan for this one.  Then there’s this third commentary from Saker on Sunday as well headlined “The USA is now at war, de-facto and de-jure, with BOTH Iraq and Iran (UPDATED 6X)” — and that’s from Larry Galearis.


Iraqi Parliament Expels Foreign Militaries From Iraq

Parliament voted on a five-point action plan that would require the Iraqi government to end the presence of foreign troops in the country, and withdraw its request for assistance from the anti-ISIS global coalition. This would require new legislation to cancel the existing agreement.

Parliament also called on the government to ban the use of Iraqi airspace by any foreign power.

The Iraqi foreign minister has been directed to head to the U.N. to lodge an official complaint against the U.S. strike.”

The Iraqi Prime Minister and the whole cabinet supported the resolution.

Before the vote Prime Minister Adil Abdul-Mahdi told the parliament that he was scheduled to meet with Soleimani a day after his arrival to receive a letter from Iran to Iraq in response to a de-escalation offer Saudi Arabia had made. The U.S. assassinated Soleimani before the letter could be delivered by him. Abdul-Mahdi also said that Trump had asked him to mediate between the U.S. and Iran. Did he do that to trap Soleimani? It is no wonder then that Abdul-Mahdi is fuming.

The Prime Minister’s letter to the General Secretary of the U.N. and the Secretary of the UNSC is here.

This brief commentary showed up on the moonofalabama.org Internet site on Sunday — and it’s also comes courtesy of Larry Galearis.  Another link to it is here.


Iranian Revenge Will Be a Dish Best Served Cold — Scott Ritter

The assassination by the United States of Qassem Suleimani, a senior Islamic Revolutionary Guard Corps general and commander of the Quds Force, an Iranian paramilitary force specializing in covert operations on foreign soil, has sent shock waves through the Middle East and around the globe.

The Trump administration has justified its action, citing unspecified intelligence that indicated Suleimani was in the process of finalizing plans for attacks on U.S. personnel and interests in the region, claiming that Suleimani’s death “saved American lives.” This narrative has been challenged by Lebanese officials familiar with Suleimani’s itinerary, noting that the Iranian general had been in Beirut on diplomatic business, and had travelled to Baghdad via a commercial air flight, where he had been diplomatically cleared to enter. These officials claim Suleimani was killed while riding in a convoy on his way from Baghdad International Airport into the city of Baghdad.

In any event, Suleimani’s death resonates in a region already on edge because of existing tensions between the U.S. and Iran. The Supreme Leader of Iran, Ali Khamenei, has announced three days of mourning for Suleimani, an indication of his status as national hero. Khamenei also vowed revenge on those who perpetrated the attack. Concern over imminent Iranian retaliation has prompted the State Department to order all American citizens to leave Iraq, and for U.S. forces in the region to be placed on the highest level of alert. Hundreds of American soldiers have been flown into the region as reinforcements, with thousands more standing by if needed.

For many analysts and observers, Iran and the U.S. are on the cusp of a major confrontation. While such an outcome is possible, the reality is that the Iranian policy of asymmetrical response to American aggression that had been put in place by Qassem Suleimani when he was alive is still in place today. While emotions run high in the streets of Iranian cities, with angry crowds demanding action, the Iranian leadership, of which Suleimani was a trusted insider, recognizes that any precipitous action on its part only plays into the hands of the United States. In seeking revenge for the assassination of Qassem Suleimani, Iran will most likely play the long game, putting into action the old maxim that revenge is a dish best served cold.

[Scott Ritter is a former Marine Corps intelligence officer who served in the former Soviet Union implementing arms control treaties, in the Persian Gulf during Operation Desert Storm, and in Iraq overseeing the disarmament of WMD.]

Scott’s commentary appeared on theamericanconservative.com Internet site on Saturday morning at 5:56 a.m. EST — and I thank Larry Galearis for sending it our way.  Another link to it is hereTucker Carlson weighed in on this issue on Friday in a 7:21 minute video — and that’s linked here.  I thank Larry for this one as well.


The Mafia Would Have Been Proud — Eric Margolis

The U.S. drone strike at Baghdad airport that killed Iran’s top commander, Gen. Qassem Soleimani, and a senior leader of Iraq’s Shia militia, has set the Mideast on fire. The Trump administration, which authorized the assassination, called it a ’pre-emptive’ strike. Iran branded it ‘outright murder.’

Soleimani was Iran’s second most powerful figure and a national icon. He headed up the Quds Force, the elite branch of Iran’s Revolutionary Guards, a key player in Syria, Iraq, Lebanon and the Gulf region. Soleimani was also the most capable, intelligent and effective military leader in a region of third rate generals.

The 62-year-old general distinguished himself in the long Iraq-Iran War, the dirty war in Lebanon, and operations in Iraq. He played a key role in defeating the ultra-radical Islamic State movement in Iraq, working in tandem with the US. Soleimani helped turn the tide of battle in Syria, saving the regime of Bashar Assad.

As a result of his battlefield and political successes, Soleimani earned the enmity of the U.S., Israel and the U.S. media. So many assassination attempts were launched against him that Iran’s spiritual leader dubbed him a ‘living martyr.’

This brief, but very worthwhile commentary from Eric was posted on the unz.com Internet site on Saturday sometime — and is yet another contribution from Larry Galearis.  Another link to it is here.  Pepe Escobar weighed in with this article from thesaker.is website headlined ”U.S. starts the Raging Twenties declaring war on Iran” — and it’s from Larry as well.


The Soleimani Assassination: The Long-Awaited Beginning of The End of America’s Imperial Ambitions — Philip Giraldi

The United States is now at war with Iran in a conflict that could easily have been avoided and it will not end well. There will be no declaration of war coming from either side, but the assassination of Iranian Quds Force Commander General Qassem Soleimani and the head of Kata’ib Hezbollah Abu Mehdi Muhandis by virtue of a Reaper drone strike in Baghdad will shift the long-simmering conflict between the two nations into high gear. Iran cannot let the killing of a senior military officer go unanswered even though it cannot directly confront the United States militarily. But there will be reprisals and Tehran’s suspected use of proxies to stage limited strikes will now be replaced by more damaging actions that can be directly attributed to the Iranian government. As Iran has significant resources locally, one can expect that the entire Persian Gulf region will be destabilized.

And there is also the terrorism card, which will come into play. Iran has an extensive diaspora throughout much of the Middle East and, as it has been threatened by Washington for many years, it has had a long time to prepare for a war to be fought largely in the shadows. No American diplomat, soldier or even tourists in the region should consider him or herself to be safe, quite the contrary. It will be an “open season” on Americans. The U.S. has already ordered a partial evacuation of the Baghdad Embassy and has advised all American citizens to leave the country immediately.

Donald Trump rode to victory in 2016 on a promise to end the useless wars in the Middle East, but he has now demonstrated very clearly that he is a liar. Instead of seeking detente, one of his first actions was to end the JCPOA nuclear agreement and re-introduce sanctions against Iran. In a sense, Iran has from the beginning been the exception to Trump’s no-new-war pledge, a position that might reasonably be directly attributed to his incestuous relationship with the American Jewish community and in particular derived from his pandering to the expressed needs of Israel’s belligerent Prime Minister Benjamin Netanyahu.

Trump bears full responsibility for what comes next. The neoconservatives and Israelis are predictably cheering the result, with Mark Dubowitz of the pro-Israel Foundation for Defense of Democracies enthusing that it is “bigger than bin Laden…a massive blow to the [Iranian] regime.” Dubowitz, whose credentials as an “Iran expert” are dubious at best, is at least somewhat right in this case. Qassem Suleimani is, to be sure, charismatic and also very popular in Iran. He is Iran’s most powerful military figure in the entire region, being the principal contact for proxies and allies in Lebanon, Syria and Iraq. But what Dubowitz does not understand is that no one in a military hierarchy is irreplaceable. Suleimani’s aides and high officials in the intelligence ministry are certainly more than capable of picking up his mantle and continuing his policies.

This rather brief commentary is certainly worth reading as well.  It showed up on the unz.com Internet site on Friday — and it’s the final contribution of the day from Larry Galearis.  Another link to it is here.


Military Strikes Won’t Solve America’s Middle East Problem — Bill Bonner

A woman is never more beautiful than when the first gray hairs appear. And at the beginning of the 21st century, America looked divine.

Then, when George W. Bush launched his War on Terror in 2001, three thousand generations of dead humans must have all laughed at once. There was America – so rich, so sophisticated… making a damned fool of herself.

The gods must have laughed too… and no one louder than Ares himself, the god of war.

This was the kind of endless, expensive and unwinnable war that Ares knew well. It was the kind of war that was easy to get into… and hard to get out of. It was the kind of war that corrupted the military… and the government that supported it. It was the kind of war that could only be lost.

And there she was, the U.S… stooping for the bait like every empire before it.

Bill’s daily commentary put in an appearance on the bonnerandpartners.com Internet site on Monday morning EST — and another link to it is here.


An Empire Self-Destructs — Jeff Thomas

Empires are built through the creation or acquisition of wealth. The Roman Empire came about through the productivity of its people and its subsequent acquisition of wealth from those that it invaded. The Spanish Empire began with productivity and expanded through the use of its large armada of ships, looting the New World of its gold. The British Empire began through localized productivity and grew through its creation of colonies worldwide—colonies that it exploited, bringing the wealth back to England to make it the wealthiest country in the world.

In the Victorian Age, we Brits were proud to say, “There will always be an England,” and “The sun never sets on the British Empire.” So, where did we go wrong? Why are we no longer the world’s foremost empire? Why have we lost not only the majority of our colonies, but also the majority of our wealth?

Well, first, let’s take a peek back at the other aforementioned empires and see how they fared. Rome was arguably the greatest empire the world has ever seen. Industrious Romans organized large armies that went to other parts of the world, subjugating them and seizing the wealth that they had built up over generations. And as long as there were further conquerable lands just over the next hill, this approach was very effective. However, once Rome faced diminishing returns on new lands to conquer, it became evident that those lands it had conquered had to be maintained and defended, even though there was little further wealth that could be confiscated.

The conquered lands needed costly militaries and bureaucracies in place to keep them subjugated but were no longer paying for themselves. The “colonies” were running at a loss. Meanwhile, Rome itself had become very spoiled. Its politicians kept promising more in the way of “bread and circuses” to the voters, in order to maintain their political office. So, the coffers were being drained by both the colonies and at home. Finally, in a bid to keep from losing their power, Roman leaders entered into highly expensive wars. This was the final economic crippler and the empire self-destructed.

This worthwhile commentary from Jeff appeared on the internationalman.com Internet site on Monday afternoon EST — and another link to it is here.


Here’s what could be lost if Trump bombs Iran’s cultural treasures

The U.S. president has warned Iran he will obliterate its cultural sites. Here is our guide to the nation’s jewels, from hilltop citadels to a disco-ball mausoleum

If carried out, Donald Trump’s threat to target “cultural sites” in Iran would put him into an axis of architectural evil alongside the Taliban and Isis, both of which have wreaked similar forms of destruction this century. The Taliban dynamited Afghanistan’s sixth-century Buddhas of Bamiyan in 2001; Isis has destroyed mosques, shrines and other structures across Iraq and Syria since 2014, some in the ancient city of Palmyra. Not, you might have thought, company the U.S. president would prefer to be associated with.

Does Trump know what would be lost? Probably not – but he’s hardly the only one. The fact that the country is rarely visited by western tourists is not due to a lack of attractions. With a civilisation dating back 5,000 years, and over 20 UNESCO world heritage sites, Iran’s cultural heritage is rich and unique, especially its religious architecture, which displays a mastery of geometry, abstract design and pre-industrial engineering practically unparalleled in civilisation. This is is not just Iran’s cultural heritage, it is humanity’s.

This extremely worthwhile photo essay was posted on theguardian.com Internet site at 5:27 p.m. GMT on Monday afternoon, which was 12:27 p.m. in Washington.  I thank Patricia Caulfield for sharing it with us — and another link to it is here.  Then there’s this related story that appeared on the msn.com Internet site late on Monday evening EST.  It’s headlined “Esper contradicts Trump on targeting Iranian cultural sites: We ‘follow the laws of armed conflict” — and I found it all by myself.


The Government’s Wrong Decisions Can Help You Gain Wealth — Doug Casey

My regular readers know why I believe the gold price is poised to move from its current level of around $1,525 per ounce to $2,000… $3,000, and beyond.

Right now, we are exiting the eye of the giant financial hurricane that we entered in 2007, and we’re going into its trailing edge. It’s going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.

In a desperate attempt to stave off a day of financial reckoning during the 2008 financial crisis, global central banks began printing trillions of new currency units. The printing continues to this day. And it’s not just the Federal Reserve that’s doing it: it’s just the leader of the pack. The U.S., Japan, Europe, China… all major central banks are participating in the biggest increase in global monetary units in history.

These reckless policies have produced not just billions, but trillions, in malinvestment that will inevitably be liquidated. This will lead us to an economic disaster that will in many ways dwarf the Great Depression of 1929–1946. Paper currencies will fall apart, as they have many times throughout history.

This isn’t some vague prediction about the future. It’s happening right now. The Canadian dollar has lost 24% of its value since 2013. The Australian dollar has lost 34% of its value during the same time. The Japanese yen and the euro have crashed in value. And the U.S. dollar is currently just the healthiest horse on its way to the glue factory.

This gold-related commentary from Doug appeared on the bonnerandpartners.com Internet site on Saturday sometime — and I thank Judy Sturgis for bringing it to our attention.  Another link to it is here.


Gold Has Been This Overbought Only Three Times in Two Decades

Gold is almost guaranteed to record losses in the next two weeks, if history is any guide.

The 14-day Relative Strength Index for the yellow metal soared to 86 on Monday, well above the level of 70 that typically suggests securities are overbought. Previously, there have been only three times since 2000 when the RSI rose above 85, and in each instance bullion fell over the next 10 trading days. The loss averaged 1% compared with a gain of 7% over the previous 10 session.

To be sure, in all three occasions — October 2010, February 2016 and June 2019 — gold eventually resumed its rally. But the momentum had slowed. Gold performs best when interest rates fall and the dollar weakens. Without a further escalation of Middle East tensions, the bulk of the moves in rates and the dollar may be over for now. And the same is probably true for the bounce in gold, at least in the short term.

I’ve been talking about this for quite a number of days now, so this story is not surprising…nor should it be alarming.  It’s just stating the facts as they appear to be, at least on the surface.  The above three paragraphs are all there is to this very brief article that showed up on the bloomberg.com Internet site at 9:40 a.m. PST on Monday morning.  I found it in a GATA dispatch yesterday evening — and another link to the hard copy is here.


The PHOTOS and the FUNNIES

After taking the shot of the western grebe on August 4 that appeared in Saturday’s column, I took a few photos of that spit of land I had been standing on a short while prior.  At some point in the not-too-distant past, this was under a decent amount of water, but Shuswap Lake level is way down.  The mallard ducks on the left side of the frame in the first shot, are featured in the second photo.  On our way out of the waterfront park in downtown Salmon Arm — and eastward bound to Sicamous and Revelstoke, we walked by a flower garden that had these gorgeous and giant stalks of white lilies — and I couldn’t resist.  Click to enlarge.


The WRAP

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


There’s no escaping the fact that JPMorgan et al. were at battle stations from the 6:00 p.m. open in New York on Sunday evening, right up until the market closed at 5:00 p.m. EST on Monday afternoon.  They threw everything they had at the prices of gold, silver and platinum — and it proved to be enough.  Without their massive intervention, the prices of these precious metals would have closed at heaven-only-knows what amounts.

And the share prices of the gold and silver equities were pretty closely managed as well.  That has been going on for the last week now — and should be obvious to anyone.  I’ve been pointing this out in just about every column since this time last week — and the interventions have become far more blatant each day.

However, I should mention the fact that this sort of counterintuitive price action in the equities may be the insiders dumping shares or going short into this rally because precious metal prices are about to get bombed — and they’ll buy them back, or cover at lower prices.  This scenario has happened before…but that was a very long time ago.  However, I have a long memory for this sort of thing — and I’ll be watching closely to see how it all unfolds going forward.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  As you already know — and as the Bloomberg article in the Critical Reads section was kind enough to remind us, gold is hugely overbought.  Since that’s the case, the conditions are ripe for a coordinated engineered price decline by the Big 8 traders.

Of course it remains to be seen just how much selling the Managed Money do, as the Big 7/8 traders have had limited success to date in blowing them off their huge long positions…something that Ted described in his comments on yesterday’s holiday-delayed COT Report.

Silver is hovering around the overbought level — and after yesterday’s beating in the COMEX futures market, platinum is now approaching market neutral.  And at some point, using the past as prologue on the 6-month chart for palladium below, ‘da boyz’ will inevitably work their magic in that precious metal once again as well.

As for copper, it closed basically unchanged on the day, as did WTIC.  It was up about two bucks a barrel early in the Monday trading session, but that gain all melted away by the COMEX close.  Click to enlarge.

And as I type this paragraph, the London/Zurich opens are less than a minute away — and I see that the gold price didn’t do much when the market opened at 6:00 p.m. EST in New York on Monday evening. It was tapped a bit lower starting around 9:20 a.m. China Standard Time on their Tuesday morning — and the current low tick was set a few minutes after 10 a.m. CST. It didn’t do much until shortly before 1 p.m. — and then began to head higher with some authority — and is currently up $4.80 an ounce. Silver price was guided in a similar manner — and it’s up 7 cents as London opens. Platinum crept higher in morning trading in Shanghai — and that rally gained some momentum around 2 p.m. CST on their Tuesday afternoon — and it’s up 10 dollars. The palladium price slid quietly lower until shortly after 1 p.m. CST — and it has crept a bit higher since, but is still down a buck as Zurich opens.

Net HFT gold volume is enormous already at around 108,500 contracts — and there’s 3,600 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is very high as well…coming up on 30,000 contracts — and there’s a bit over 1,200 contracts worth of roll-over/switch volume on top of that.

The dollar index opened down about 1 basis point at 96.66 once trading commenced around 7:45 p.m. EST on Monday evening in New York, which was 8:45 a.m. China Standard Time on their Tuesday morning. Its current low tick, such as it is, came around 8:30 a.m. CST — and it has been creeping quietly and somewhat unevenly higher since. And as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the dollar index is up 8 basis points.


Today, at the 1:30 p.m. EST close of COMEX trading, is the cut-off for this week’s COT Report and companion Bank Participation Report.  In that one, we get to see what the world’s banks have been up to in the precious metals — and it’s usually a fair amount.

It also gives Ted the opportunity to recalibrate JPMorgan’s short position in silver — and I’m looking forward to seeing what that number is.


And as I post today’s efforts on the website at 4:02 a.m. EST, I note that all four precious metals have been sold lower starting at the London/Zurich opens. Gold is now down a dollar — and they have silver down 4 cents the ounce. Platinum is up only 4 bucks now — and palladium is down 3.

Gross gold volume is an incredible 139,000 contracts already — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit under 129,000 contracts. Net HFT silver volume is coming up on 33,000 contracts — and there’s only 1,262 contracts worth of roll-over/switch volume in this precious metal.

The dollar index fell off a bit of a cliff starting around 8:15 a.m. in London, but that hasn’t helped the precious metals — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s back at unchanged.

That’s all I have for today — and I await what for what the powers-that-be have in store for us as the Tuesday trading session moves along.   But events in the Middle East could change a lot of things in heartbeat, so be prepared for any eventuality.

See you here tomorrow.

Ed