05 December 2019 — Thursday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price traded sideways starting at the 6:00 p.m. EST open in New York on Tuesday evening — and began to head higher starting shortly before 10 a.m. China Standard Time on their Wednesday morning. The price was capped shortly before the London open — and it didn’t do much until a sudden dollar index ‘rally’ began shortly after 9 a.m. GMT. The price was hammered lower over the next thirty minutes — and then crept higher until the 8:20 a.m. COMEX open in New York. ‘Da boyz’ went to work once again — and the low tick was set around 10:40 a.m. EST. It crawled a bit higher into the 5:00 p.m. close from there.
The high and low ticks in gold yesterday were recorded by the CME Group as $1,489.90 and $1,476.70 in the February contract…less than a one percent move.
Gold was closed in New York on Wednesday at $1,474.10 spot, down $3.20 from Tuesday. Net volume was fairly heavy at around 299,000 contracts — and there was about 21,500 contracts worth of roll-over/switch volume in this precious metal.
The price action in silver was guided in a similar path as gold’s right up until the COMEX open, but the engineered price decline from that juncture was far more severe — and all of the price damage was done by very shortly after the 11 a.m. EST London close. From that point it traded pretty flat until trading ended at 5:00 p.m. in New York.
The high and low ticks in silver were reported as $17.415 and $16.865 in the March contract.
Silver was closed back below $17 spot at $16.815 spot, down 32.5 cents on the day — and 56.5 cents off its Kitco-recorded high tick of the day. Net volume was over the moon at about 109,500 contracts — and there was 4,100 contracts worth of roll-over/switch volume on top of that.
The platinum price was managed in a similar fashion as both gold and silver, complete with the engineered price decline at the COMEX open in New York — and its low tick of the day was set shortly after 4 p.m. EST in the thinly-traded after-hours market. It didn’t do a thing after that. Platinum was closed on Wednesday afternoon in New York at $893 spot, down 15 bucks on the day — and 26 dollars off its Kitco-recorded high price tick.
The palladium price was sold a handful of dollars lower until around 1 p.m. CST on their Wednesday afternoon — and from there it stair-stepped its way quietly higher until shortly after the 11 a.m. EST Zurich close. It crawled a few dollars lower into the New York close from there. Platinum finished the Wednesday session at $1,851 spot, up 13 dollars on the day, but 29 dollars off its Kitco-recorded high.
The dollar index closed very late on Tuesday afternoon in New York at 97.74 — and opened down 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 Wednesday morning. It wandered quietly sideways in a very tight range until it fell out of bed a bit starting five minutes after the London open. This sharp drop had zero impact on precious metal prices. But the ‘rally’ that followed exactly an hour later was the perfect cover for those ‘gentle hands’/’da boyz’ to hammer the precious metals lower. The index didn’t do much from there until 11:55 a.m. GMT — and then the real decline began. That drop ended a couple of minutes before 9 a.m. in New York — and it proceeded to ‘rally’ unevenly higher until about 2:15 p.m. EST. From there it drifted quietly lower until trading ended at 5:30 p.m. The dollar index finished the Wednesday session at 97.65…down 9 basis points from its close on Wednesday.
Except for the engineered event at 9:05 a.m. in London, there was no correlation between the currencies and the dollar index once again. All the price activity in the precious metals was strictly a paper affair on the GLOBEX/COMEX as ‘da boyz’ worked their magic.
Here’s the DXY chart for Wednesday, courtesy of Bloomberg. Click to enlarge.
And here’s the 6-month U.S. dollar index, courtesy of the fine folks over at the stockcharts.com Internet site. The delta between its close…97.60…and the close on the DXY chart above, was 5 basis points on Wednesday. Click to enlarge as well.
The gold stock ticked a bit higher at the 9:30 open in New York on Wednesday morning, but were soon headed lower — and their respective lows came around 10:40 a.m. EST, which was about the time that the gold price bottomed and turned a bit higher. The gold shares followed enthusiastically — and actually ticked into positive territory shortly after 2 p.m. But from there they were sold a bit lower — and the HUI closed down 0.40 percent.
The silver equities opened down a bit — and their respective lows came about the same time as they did for the gold stocks. But their rallies after that were somewhat more enthusiastic — and they spent a decent amount of time trading in positive territory during the afternoon session in New York. But they couldn’t quite squeeze a positive close — as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down a tiny 0.11 percent…which was amazing! Click to enlarge if necessary.
And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index, updated with Wednesday’s doji. Click to enlarge as well.
It was yet another day where deep-pocket buyer were snapping up all the precious metal shares being offered for sale. And the fact that the silver equities only closed down 0.11 percent in the face of a massive bear raid on the silver price, certainly bodes well for what will happen to the silver price and their associated equities in the not-to-distant future. Somebody knows something’s coming.
As I pointed out in Wednesday’s missive, this counterintuitive price activity in all the precious metals, but particularly in the silver stocks, has been pretty much ongoing since silver’s last high price print during the first week of September.
The CME Daily Delivery Report for Day 5 of the December delivery month showed that 138 gold and 161 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.
In gold, there were six short/issuers in total — and the three largest were Marex Spectron, HSBC USA and Advantage…with 64, 33 and 20 contracts…all out of their respective client accounts. There were nine long/stoppers in total — and the three biggest there were JPMorgan, with 79 contracts for its client account…Citigroup with 18 contracts: 15 for its own account, plus another 3 for its client account.
In silver, there were four short/issuers — and the three that mattered were International F.C. Stone with 123 contracts….Advantage with 25 — and ADM with 12 contracts. All were from their respective client accounts. There were seven long/stoppers in total — and the three biggest were JPMorgan, Morgan Stanley — and Advantage…with 53, 52 and 32 contracts. All these transactions involved their respective client accounts as well.
The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in December dropped by 1,758 contracts, leaving 2,267 still open, minus the 138 mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that 2,025 gold contracts were actually posted for delivery today, so that means that another 2,025-1,758=267 gold contracts just got added to the December delivery month. Silver o.i. in December declined by 245 contracts, leaving 1,002 still around, minus the 161 contracts mentioned a few paragraphs ago. Tuesday’s Daily Delivery Report showed that only 170 contracts were actually posted for delivery today, so that means that 245-170=75 silver contracts disappeared from December.
There was a smallish withdrawal from GLD on Wednesday, as an authorized participant took out 18,838 troy ounces. This is a bit on the large side to be a fee payment of any kind. There were no reported changes in SLV.
In the other gold and silver ETFs on Planet Earth on Wednesday…net of the COMEX and GLD & SLV activity…there was a net 8,094 troy ounces of gold added — and there was a net 3,255 troy ounces of silver added as well.
There was no sales report from the U.S. Mint.
There was a bit of physical activity in gold over at the COMEX-approved depositories on Tuesday. Nothing was reported received — and only 3,040 troy ounces was shipped out. There was 3,008 troy ounces that departed Canada’s Scotiabank — and 32.151 troy ounces/1 kilobar [U.K./U.S. kilobar weight] left Brink’s, Inc. But here was a very decent amount of paper transfers…the biggest being was 124,906 troy ounces that was switched from the Eligible category — and into Registered over at the International Depository Services of Delaware. The second biggest paper movement was the 6,835 troy ounces that was switched from the Registered category — and back into Eligible at Scotiabank. The link to all this, plus a bit more, is here.
There wasn’t much physical activity in silver. Nothing was reported received — and only 40,735 troy ounces was shipped out. All of that occurred at CNT. There were paper transfers of 211,067 troy ounces from the Eligible category and into Registered…206,071 troy ounces at Delaware — and the remaining 4,996 troy ounces was done over at HSBC USA. All of these paper transfers from Eligible to Registered in both silver and gold are certainly in preparation for delivery in December. The link to all this is here.
For the second day in a row there was very big activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday. They reported receiving 4,000 of them — and didn’t ship any out. The link to that is here.
Yesterday in this space I posted the gold and silver bullion coin sales for the U.S. Mint…updated with November’s data — and here’s the same information from The Perth Mint for that month.
During November they sold 54,216 troy ounces of gold bullion coins, plus 1,027,695 troy ounces of silver bullion coins. These numbers are miles ahead of the 16,000 troy ounces of gold bullion coins — and the 563,000 troy ounces of silver bullion coins that the U.S. Mint sold during the same period. Click to enlarge for both.
It was another quiet day for stories/articles — and I only have a tiny handful for you.
The last few months have seen ADP employment gains trending lower, alongside the plunge in ISM/PMI survey data (driven by job losses in the goods manufacturing sector), and November’s data confirms that slowdown.
ADP National Employment Report prints +67k (drastically below expectations of +135k and October’s +121k) Click to enlarge.
“In November, the labor market showed signs of slowing,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
“The goods producers still struggled; whereas, the service providers remained in positive territory driven by healthcare and professional services. Job creation slowed across all company sizes; however, the pattern remained largely the same, as small companies continued to face more pressure than their larger competitors.”
Mark Zandi, chief economist of Moody’s Analytics, said:
“The job market is losing its shine. Manufacturers, commodity producers, and retailers are shedding jobs. Job openings are declining and if job growth slows any further unemployment will increase.”
This chart-filled news item appeared on the Zero Hedge website at 8:22 a.m. on Wednesday morning EST — and I thank Brad Robertson for sending it along. Another link to it is here. Gregory Mannarino‘s post market close rant for Wednesday is linked here.
We like a joke as much as anyone. And we appreciate satire and ridicule more than most.
As for Mr. Trump’s natural gift for it, we are an ardent admirer. But as a moqueur, our president is in a class by himself… or else he’s just a complete moron.
You decide. First, his trade war with the Chinese is turning out to be as eternal and as pointless as the War on Terror. Here’s the latest, from the horse’s mouth:
I have no deadline, no. In some ways, I think I think it’s better to wait until after the election with China. In some ways, I like the idea of waiting until after the election for the China deal. But they want to make a deal now, and we’ll see whether or not the deal’s going to be right; it’s got to be right.
Not content to have clipped the U.S. consumer for billions in import taxes and higher prices with his spat with the Chinese, Trump took on the Brazilians and the Argentines on Monday, on the grounds that their currencies had gone down. He tweeted:
Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.
With 50% inflation, it would have been impossible for the gauchos to prevent the peso from falling. As for the Brazilian real, it goes up and down. And if it is going down against the dollar now, it is as much the fault of the U.S. as Brazil.
Bill’s Wednesday missive appeared on the bonnerandpartners.com Internet site on Wednesday morning EST — and another link to it is here.
Earlier this week, ECB vice president Luis De Guindos, speaking in an interview with El Mundo, offered a surprisingly candid take on how the ECB is distorting capital market, saying that while “we can still increase bond purchases or lower interest rates further, which means that we still have the same tools available” he added that “what is happening is that the secondary effects are becoming more tangible.”
Specifically, De Guindos said he is “worried by risk taking in the asset management sector against the background of low interest rates.” According to the ECB VP, the risk is that “supervision in this sector is not comparable with that in the banking sector. There is a risk. If they are asked for units to be paid out they have to do so within two or three days. I see a potential risk of liquidity imbalance. That is what worries me the most at the moment.”
De Guindos’ warning was spot on, because just a few hours earlier, U.K. fund manager M&G announced it had suspended redemptions and trading in its £2.5 billion Property Portfolio, which is marketed to retail investors, after it was unable to sell properties fast enough, particularly given its concentration on the retail sector, to meet the demands of investors, and was facing “unusually high and sustained outflows” it blamed on Brexit and the retail downturn.
As the Financial Times reported, the M&G fund was the first major open-ended property fund to halt redemptions in this way since the crisis in the sector that caused seven funds to “gate” in 2016 following the Brexit referendum — which we profiled three years ago as one of the most high-profile market consequences of the vote to leave the E.U.
Incidentally, for those wondering if liquidity remains an illusion – a test that can only be confirmed when there is a crash and the market is indefinitely halted, an outcome that is now virtually inevitable.
This longish, but worthwhile article was posted on the Zero Hedge website at 11:26 a.m. EST on Wednesday morning — and another link to it is here.
After five years of negative rates imposed by the European Central Bank, German lenders are breaking the last taboo: Charging retail clients for their savings starting with very first euro in the their accounts.
While many banks have been passing on negative rates to retail clients for some time, they have typically only done so for deposits of €100,000 ($111,000) or more. That is changing, with one small lender close to Munich planning to impose a rate of minus 0.5% to all savings in certain new accounts. Another bank in the east of the country has introduced a similar policy and a third is considering an even higher charge.
The lenders are preparing for a prolonged period of negative rates as Europe’s economy slows. In September, the European Central Bank reduced the deposit rate to minus 0.5% from minus 0.4%, making it more expensive for banks to park their excess cash there. While there are some exemptions under the policy, years of sub-par profitability have left especially smaller lenders with few options to offset the cost of the ECB’s charges.
“The floodgates are open,” said Friedrich Heinemann, who heads the department on Corporate Taxation and Public Finance at the ZEW economic research institute in Mannheim. “We will soon see a chain reaction. Banks that do not follow with negative interest rates would be flooded with liquidity.”
German lenders have long resisted passing on negative rates to retail clients, concerned that they will face reputational damage in a country where people save far more of their disposable income than elsewhere in Europe. The country’s savings rate was around 10% in 2017, almost twice the euro-area average, according to Deutsche Bank AG. Lenders that pass on the ECB’s charges typically do so only for large corporations or wealthy clients, and for deposits above a minimum threshold.
This Bloomberg story showed up on their Internet site at 10:00 p.m. Pacific Standard Time on Monday night — and was updated about five hours later. I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to it is here.
China is hurtling toward another record year of onshore bond defaults, testing the government’s ability to keep financial markets stable as the economy slows and companies struggle to cope with unprecedented levels of debt.
At least 15 defaults since the start of November have pushed this year’s total to 120.4 billion yuan ($17.1 billion), within a hair’s breadth of the 121.9 billion yuan annual record in 2018, according to data compiled by Bloomberg.
While the defaulted notes amount to a small sliver of China’s $4.4 trillion onshore corporate bond market, they’ve fueled concerns of potential contagion as investors struggle to gauge which companies have Beijing’s support. Policy makers have been walking a tightrope as they try to roll back the implicit guarantees that have long distorted Chinese debt markets, without dragging down an economy already weakened by the trade war and tepid global growth.
“The authorities have found it hard to rescue all the companies,” said Wang Ying, a Shanghai-based analyst at Fitch Ratings.
This story put in an appearance on the Bloomberg website at 3:08 a.m. PST on Tuesday morning — and was updated an hour and change later. It’s the second contribution in a row from Patrik Ekdahl — and another link to it is here.
“THE planet has just five years to avoid disastrous global warming, says the Federal Government’s chief scientist.
Prof Penny Sackett yesterday urged all Australians to reduce their carbon footprint.
Australians – among the world’s biggest producers of carbon dioxide – were “better placed than others to do something about it“, she said.
“Australians can make an enormous contribution, so why would we not rise to this challenge and this opportunity,” she told a business conference in Melbourne.”
You can read the full version of the above 10-year-old news story on the website of Australia’s Herald Sun newspaper by clicking here. Disastrous global warming didn’t happen five years ago, in 2014. It isn’t happening today on December 4, 2019 either. Yet Penny Sackett continues to chair Australia’s ACT Climate Change Council.
Does anyone else see a problem here? You can be dead wrong. I mean, really bleeping wrong.
About something really important. And still get described, on an Australian government website, as a champion of evidenced-based decision making.
In the universe Sackett inhabits, there are evidently no consequences to getting important things wrong. You merely jump from one government sinecure to another. A few years ago you were Australia’s chief scientist. Now you run Australia’s climate council. Ho hum.
The claim, in that decade-old news story, about Australians being “among the world’s biggest producers of carbon dioxide” is rubbish. Australia isn’t even in the top 10 of highest-emitting nations. It emits less than 1.5% of the grand total. Just four countries – China, America, India, and Russia – are jointly responsible for more than 50%.
Even if you believe there’s a direct relationship between carbon dioxide and global warming (I personally think there’s serious evidence to the contrary), Australia’s total emissions don’t matter. They’re trivial.
That entire country could shut down tomorrow and it wouldn’t affect the big picture. Australia could crash its economy, health system, and educational infrastructure overnight. It could plunge its population into misery and deprivation. And the effect on the climate would be irrelevant. There would be extraordinary pain for absolutely no gain.
This inconveniently true story put in an appearance on the nofrakkingconsensus.com Internet site on Wednesday — and it’s a very interesting read. I thank Roy Stephens for sending it along — and another link to it is here.
I didn’t see any precious metal-related stories that I thought worth posting.
The PHOTOS and the FUNNIES
Returning to B.C. Highway 5A — and on the road back to Merritt once again, I stopped alongside the highway — and took these two photos from the exact same spot. I’ve taken photos from this particular location before, but never under such favourable light and seasonal conditions — and I wasn’t about to pass on taking these shots during the ‘golden hour‘. The first photo was taken looking almost due north — and back towards Kamloops. Long, very thin and tiny Napier Lake is in the foreground. The second shot is looking about southeast. I’ll have some loon photos tomorrow. Click to enlarge.
The Big 7/8 commercial short-holders were certainly out and about yesterday. And despite the falling dollar index, they went about their business without worrying about what the CFTC and DoJ would do…let alone the miners, the World Gold Council and the Silver Institute.
Their attempt to drive the gold price lower certainly showed a lack of enthusiasm…but they made up for it in silver…slamming it lower the moment that it touched its 50-day moving average at the London open. In the process, they closed it back below $17 spot. Platinum was closed back below its 50-day moving average — and back below $900 spot.
Here are the 6-month charts for the four precious metals, plus copper and WTIC. Gold was allowed to trade above its 50-day moving average albeit briefly on Wednesday, but was closed below it as well — and palladium closed at a new record high price. Copper closed above its 50-day moving average on Wednesday — and WTIC soared above and closed above its 200-day moving average. 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 hasn’t done much in Far East trading on their Thursday. It was up three dollars or so in early afternoon trading over there, but is now down 50 cents the ounce. The price activity in silver has been a little more noticeable…albeit barely. It was up about a dime by 2 p.m. CST, but has been sold lower as well — and is currently up only a penny as London opens. Platinum was up five bucks at the 2:15 p.m. CST afternoon gold fix in Shanghai, but is up only 2 dollars at the moment. Palladium traded flat until shortly before 2 p.m. CST on their Thursday afternoon — and it had crept a bit higher since then, but has been sold lower as well — and is up only a buck as Zurich opens.
Net HFT gold volume is coming on 39,500 contracts — and there’s only 394 contracts worth of roll-over/switch in this precious metal. Net HFT silver volume is getting up there at a bit under 17,000 contracts — and there’s 1,055 contracts worth of roll-over/switch volume on top of that.
The dollar index opened down about 6 basis points at 97.59 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 chopped very quietly lower since — and is down 10 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.
Of course all of Wednesday’s price action occurred the day after the cut-off for tomorrow’s Commitment of Traders Report and companion Bank Participation Report. It’s certainly within the realm of possibility that this was done deliberately, as it’s a trick they’ve been using for well over a decade now, when they wish to hide what they’re doing for as long as possible.
Ted was of the opinion that we could see another new record high commercial net short position in gold in tomorrow’s COT Report — and that will occur despite the fact that the gold price is about 80 bucks below its very early September high. The Big 8 commercial traders…sans JPMorgan…have not been able to cover much of their short positions at all — and that’s because the Managed Money traders haven’t sold much during the ensuing 3-month price decline that has followed. And as Ted has pointed out on numerous occasions, it’s the resolution of this situation that will determine where gold and silver prices go from here.
But setting aside that gloomy news, I can’t over emphasize the fact of how well the precious metal stocks are holding up…especially the silver equities. Here’s the month-to-date chart for December from Nick Laird…three business days long…and despite the fact that silver is down month-to-date, their associated shares are outperforming their golden brethren by a very respectable amount. This applies to the year-to-date chart now as well. Click to enlarge.
Some very deep-pocket investors are making huge bets on the future price of silver — and all we can do is cheer them on and hope they’re right — and that they know something we don’t.
And as I post today’s column on the website at 4:02 a.m. EST, I note that both gold and silver aren’t doing much as the first hour of London trading draws to a close…gold is higher by 20 cents — and silver is now down a penny. But both platinum and palladium have been sold lower during the last hour. Platinum is now down 3 bucks on the day — and palladium by 8 as the first hour of Zurich trading ends.
Gross gold volume is a bit over 54,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a bit over 53,000 contracts. Net HFT silver volume is around 19,000 contracts — and there’s 1,101 contracts worth of roll-over/switch volume in this precious metal.
The dollar index continued to edge very quietly and unevenly lower during the last hour of trading — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the index is down 12 basis points.
That’s all I have for today — and I’ll see you here tomorrow.