Silver Slammed…Palladium Sets Another New High

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 BloombergClick 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.


CRITICAL READS

ADP Employment Data Disappoints, Second Lowest Print in a Decade

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 hereGregory Mannarino‘s post market close rant for Wednesday is linked here.


Trump Grows International Trade War — Bill Bonner

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.


Don’t Panic“: CRE Crisis Hits the U.K. as Largest Property Fund Suddenly Halts Redemptions

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.


German Lenders Open Floodgates to Negative Rates for all Savers

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’s $17 Billion Default Wave Is About to Break a Record

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.


Ten Years Ago Today — Australia and the Truth About Climate Change

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 WRAP

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.

Ed

Precious Metal Rallies Capped At the Afternoon Gold Fix in London

04 December 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold quietly lower until around 2:40 p.m. China Standard Time on their Tuesday afternoon — and it began to head higher from there.  The rally got a little more rambunctious shortly after 11:30 a.m. in London — and ‘da boyz’ stepped in at, or just before, the afternoon gold fix.  It was sold a bit lower from that point until trading ended at 5:00 p.m. in New York.

The low and high ticks were reported by the CME Group as $1,465.40 and $1,487.70 in the February contract.

Gold was closed in New York on Tuesday at $1,477.30 spot, up $15.50 from Monday — and off its $1,482.30 Kitco recorded high tick by about five bucks.  Net volume was very heavy at a bit over 377,500 contracts — and there was around 25,000 contracts worth of roll-over/switch volume on top of that.

The price activity for silver was directed in a similar manner as it was for gold — and once the afternoon gold fix was in in London, the price was forced to wander sideways until the 5:00 p.m. EST close.

The low and high ticks in silver were recorded as $16.945 and $17.285 in the March contract.

Silver was closed on Tuesday afternoon in New York at $17.14 spot — and 15 fifteen cents off its Kitco-recorded high tick of the day.  Net volume was pretty heavy at a bit over 87,000 contracts — and there was about 4,000 contracts worth of roll-over/switch volume in this precious metal.

The platinum price traded sideways until shortly after 3 p.m. CST in Shanghai on their Tuesday afternoon — and after an up/down move that lasted until 8:30 a.m. in New York, it began to head sharply higher until it ran into “all the usual suspects” at the afternoon gold fix in London.  Then, like for silver and gold, it was forced to chop quietly sideways in price until the market closed at 5:00 p.m. in New York.  Platinum was closed at $908 spot, up 12 bucks on the day — and 7 dollars off its Kitco-recorded high tick.

Like in platinum, the palladium price didn’t do much of anything until shortly before 3:30 p.m CST on their Tuesday afternoon.  It then had a similar up/down move until 2 p.m. in Zurich/8 a.m. in New York.  From there it crept quietly higher, with the odd violent tick lower, until trading ended at 5:00 p.m. EST.  Palladium finished the Tuesday session in New York at $1,838 spot, up 4 dollars on the day…but 30 bucks off its Kitco-recorded high tick of the day.

The dollar index closed very late on Monday afternoon in New York at 97.86 — and opened up about 5 basis points 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.  From that juncture it crept quietly higher — and the 97.94 high tick was set at 11:20 a.m. in Shanghai.  At that point the long, slow — and very uneven decline began — and the usual ‘gentle hands’ showed up at the 96.64 low tick, which came at precisely noon in New York.  It chopped sideways until 12:45 p.m. EST — and then crawled a bit higher going into the 5:30 p.m. EST close.  The dollar index finished the Tuesday session in New York at 97.74…down 12 basis points from Monday’s close.

If ‘da boyz’ hadn’t stepped in at the afternoon gold fix in all four precious metals, heaven only knows what they would have closed at if allowed to trade freely from that juncture, as the dollar index continued to decline for more than two hours after that — and would have dropped every more if those ‘gentle hands’ hadn’t put in an appearance.

But having said all that, the decline in the dollar index on Tuesday was only a small fraction of what it dropped on Monday — and ‘da boyz’ were all over the precious metal prices on that day as well.

Here’s the DXY chart from Bloomberg as per usual.  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…97.68…and the close on the DXY chart above, was 6 basis points on Tuesday.  Click to enlarge as well.

Not surprisingly, the gold shares gapped up at the open — and hit their respective highs of the day when the gold price hit its high and was then capped at the afternoon gold fix in London.  It was sold lower until round 10:50 a.m. in New York trading — and then crawled quietly sideways-to-higher going into the 4:00 p.m. close.  The HUI finished up 3.16 percent on the day.

The silver equities traded in the exact same fashion as the gold stocks up until about 10:40 a.m. in New York — and from there they crawled quietly but steadily higher for the rest of the day.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index close up 4.22 percent — and on its absolute high tick of the day.

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

I should point out here that a fairly decent percentage of the gains in the Silver 7 Index on Tuesday came as a result of the catch-up from the data error in Nick’s Silver 7 chart on Monday.

The stars in the Silver 7 Index yesterday were Coeur Mining and Hecla…up 9.39 and 8.70 percent respectively.

And most important of all is the fact that even though the silver price is still over two dollars lower than its high back in the first week of September…the silver equities have already broken out to new highs since then, as the deep-pocket insiders know that the big price move in silver is is not that far off!


The CME Daily Delivery Report for Day 4 of December deliveries showed that 2,025 gold and 170 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.

In gold, there were ten short/issuers in total — and the only two that counted for anything were JPMorgan and Bank of America Securities, as they issued 1,278 and 643 contracts out of their respective client accounts.  There were fifteen long/stoppers — and the four largest were JPMorgan, with 944 for their client account…Citigroup, with 302 contracts: 255 for its own account, plus another 47 for its client account…ABN Amro with 179 for its client account…and of BoA Securities with 129 for its client account as well.  In fifth place was Scotia Capital/Scotiabank with 116 contract for its in-house/proprietary trading account.

In silver, of the four short/issuers in total, the three biggest were Australia’s Macquarie Futures with 98 contracts from its own account…then came Advantage and ADM with 32 and 28 contracts from their respective client accounts.  The four largest long/stoppers were JPMorgan, Morgan Stanley, Advantage and RBC Capital Markets…with 73, 50, 25 and 13 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 December rose by 204 contracts, leaving 4,041 still open, minus the 2,025 mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 480 gold contracts were actually posted for delivery today, so that means that 204+480=684 more gold contracts were just added to December.  Silver o.i. in December declined by 218 contracts, leaving 1,247 left, minus the 170 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 262 silver contracts were actually posted for delivery today, so that means that 262-218=44 more silver contracts were just added to the December delivery month.


There were no reported changes in GLD yesterday, but an authorized participant removed 1,512,451 troy ounces from SLV.  And regardless of the circumstances of that withdrawal…’plain vanilla’ or a conversion of SLV shares for physical metal…it’s pretty much a given that JPMorgan owns it all now.

In the other gold and silver ETFs on Planet Earth on Tuesday…minus the happenings in COMEX warehouse stocks, GLD & SLV…there was a net 33,695 troy ounces of gold withdrawn — and there was 256,056 troy ounces of silver withdrawn as well.

There was a small sales report from the U.S. Mint on Tuesday.  They sold 5,000 of those ‘America the Beautiful’ 5-ounce silver coins — and that was all.

There was only a tiny bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  They didn’t receive anything — and 197 troy ounces was shipped out of HSBC USA.  Much to my surprise, there were no paper transfers for the second day in a row.  I won’t bother linking this.

But there was a lot of activity in silver, as 1,218,739 troy ounces were reported received — and 735,601 troy ounces was shipped out.  In the ‘in’ category there was one truckload…619,547 troy ounces…received at Canada’s Scotiabank — and the other truckload…599,191 troy ounces…was dropped off at CNT.  In the ‘out’ category, there was one truckload…614,769 troy ounces… that departed CNT — plus another 100,812 troy ounces was shipped out of Loomis International.  The remaining 20,019 troy ounces left the vault over at HSBC USA.  There was some paper activity, as 600,206 troy ounces was transferred from the Eligible category and into Registered over at CNT — and that’s certainly in preparation for delivery in December.  The link to all this is here.

For a change, there was big activity over at the COMEX-approved kilobar depositories in Hong Kong on their Monday.  They reported receiving 5,818 of them — and shipped out 1,178.  All of this action was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are two charts that Nick passed around on Monday that I didn’t have space for in Tuesday’s column, so here they are now.  They show U.S. Mint sales for the last five years…updated with November’s sales data.

During that month they sold 16,000 troy ounces of gold bullion coins, which includes gold eagles and gold buffaloes — and they also sold 563,000 troy ounces of silver bullion coins, which includes silver eagles — and the 5-ounce ‘American the Beautiful’ silver coins.  Click to enlarge for both.

It was a fairly quiet news day — and I don’t have much for you.


CRITICAL READS

How the market sell-off could get much worse: ‘Better put on your helmet’ — Bob Pisani

President Trump’s comment that he had no deadline on a China deal has predictably thrown markets into a tizzy, as the self-imposed deadline of December 15 for additional tariffs is now less than two weeks away.

The market is now grappling with the likelihood of no trade deal, but the critical issue is tariffs. I asked UBS Art Cashin if traders would be satisfied with 1) no new tariffs on Dec. 15, 2) keeping additional tariffs, and 3) no deal going into the new year.

I don’t think it would cause a big swing one way or another,” he said. “I think they would say, obviously negotiations are still going on. The reason you’ve had two pretty significant down days is, people were believing there would be a deal by the end of the year. Now, that’s clearly in doubt and that’s where we’re going.

If additional tariffs are put on Dec. 15, that is a different story: “Then there’s another sell-off. If they put on additional tariffs and he bumps them by 10% or 15%, a sell-off but nothing severe. 50% or something like that? Better put on your helmet,” Cashin said.

This item put in an appearance on the cnbc.com Internet site at 2:13 p.m. on Tuesday afternoon EST — and it comes to us courtesy of Swedish reader Patrik Ekdahl.  Another link to it is hereGregory Mannarino‘s post market closing rant for Tuesday is linked here.


Jeff Gundlach: ‘U.S. Markets Will Not Recover from Next Recession Within My Career

Jeffery Gundlach, founder of DoubleLine Capital, spoke with Yahoo Finance about his outlook for the U.S. economy and markets, warning that once the next recession strikes, he does not expect the U.S. stock market to get back to current levels within his career.

This 12:10 minute video clip was posted on the soundingline.com Internet site on Tuesday sometime — and it’s definitely worth watching.  I thank Brad Robertson for pointing it out — and another link to it is here.


How the Government Tries to Control Economic Woes — Bill Bonner

The U.S. economy approaches the end of 2019 with a stable heartbeat but increasing signs of dementia.

Unemployment (mostly in low-paying “service” industries) is low. GDP growth is still positive, if slowing. The Dow is still near the tippy-top of its range. And the Federal Reserve is once again pumping fake cash into the financial markets.

Perhaps it’s because marijuana has been legalized in so many states…

…But most people think things are looking pretty good. According to Mr. Trump’s tweet last week: “Everyone’s getting rich…

And I’m working my ass off,” he added, as if to suggest that there was a connection between the two things.

By Hook or by Crook

Occasionally presidents help SOME people get rich. By hook or by crook, most often the latter, some people are able to parlay their connections to the White House into some serious money.

After all, that’s what the Deep State is all about.

Bill’s daily commentary, filed from Baltimore, was posted on the bonnerandpartners.com Internet site on Tuesday morning EST — and another link to it is here.


Consumer Insolvencies In Canada Spike to Highest Level Since Financial Crisis

Canadian households are showing signs of cracking under the strain of growing debt burdens, new data shows ― and Ontarians are being hit particularly hard.

The number of consumer insolvencies jumped by nearly 11 per cent from September to October, according to the latest monthly report from the federal Office of the Superintendent of Bankruptcy.

In the 12 months ending in October, more than 135,000 Canadian households declared bankruptcy or filed a consumer proposal, an increasingly popular alternative to bankruptcy. That’s the fastest annual pace since 2010, when Canada’s economy was being rocked by the global financial crisis.

Ontario has seen the largest spike in consumer insolvencies, up 22 per cent in October, compared to a year earlier. Prince Edward Island (up 20.3 per cent), Nova Scotia (up 17.3 per cent) and British Columbia (up 15.6 per cent) also saw large increases.

Consumer debt experts ― some of whom predicted the spike well before it began ― say insolvencies are being driven by record-high household debt levels, which have made consumers vulnerable to even small changes in income or interest rates.

This news story appeared on the huffingtonpost.com Internet site on 1:19 p.m. EST on Tuesday afternoon — and I thank Roy Stephens for passing it along.  Another link to it is here.


There Are More Dollars in Venezuela Now Than There Are Bolivars

The U.S. dollar has extended its dominance in Venezuela as locals increasingly turn to the greenback for even the smallest of purchases.

Physical dollars now account for more than half of all retail transactions as the amount in circulation has increased to as high as $2.7 billion, according to data from the Caracas-based research firm Ecoanalitica. That’s three times the value of all the cash bolivars in existence combined with the amount of local currency held in checking and savings accounts, the data show.

The dollar has taken hold of the economy following years of devaluations and hyperinflation that eroded the value of the bolivar to a level that hovers just a hair above worthless, and amid a shortage of local-currency notes. Rather than putting in the work to assemble a big enough pile of bolivar notes and dragging them around in bags, it’s more practical for Venezuelans to conduct their commerce in dollar bills flown into the country as remittances or picked up at exchange houses at the borders of Colombia and Brazil.

While until recently it was illegal to transact in U.S. currency, those restrictions have all but evaporated in any practical sense. Even the authoritarian President Nicolas Maduro, who has generally tried his best to keep an iron grip over the economy, has accepted the transition as the country suffers from a crippling economic crisis that has caused mass emigration amid growing poverty. Things are so bad, and the bolivar so weak, that Venezuela has struggled to print enough physical bolivar bills to keep up with the devaluation.

That process that they call dollarization can help the recovery of the country, the spread of productive forces in the country, and the economy,” Maduro said in a televised interview last month. “Thank God it exists.”

This Bloomberg news item was posted on their website at 8:36 a.m. Pacific Standard Time on Tuesday morning — and I found it on the gata.org Internet site.  Another link to it is here.


The Way Out for a World Economy Hooked on Debt? More Debt

Zombie companies in China. Crippling student bills in America. Sky-high mortgages in Australia. Another default scare in Argentina.

A decade of easy money has left the world with a record $250 trillion of government, corporate and household debt. That’s almost three times global economic output and equates to about $32,500 for every man, woman and child on earth.  Click to enlarge a bit.

Much of that legacy stems from policy makers’ deliberate efforts to use borrowing to keep the global economy afloat in the wake of the financial crisis. Rock bottom interest rates in the years since has kept the burden manageable for most, allowing the debt mountain to keep growing.

Now, as policy makers grapple with the slowest growth since that era, a suite of options on how to revive their economies share a common denominator: yet more debt. From Green New Deals to Modern Monetary Theory, proponents of deficit spending argue central banks are exhausted and that massive fiscal spending is needed to yank companies and households out of their funk.

Fiscal hawks argue such proposals will merely sow the seeds for more trouble. But the needle seems to be shifting on how much debt an economy can safely carry.

Central bankers and policy makers from European Central Bank President Christine Lagarde to the International Monetary Fund have been urging governments to do more, arguing it’s a good time to borrow for projects that will reap economic dividends.

This Bloomberg article showed up on their Internet site on Sunday morning PST — and was updated a day and change later.  I found it in yesterday’s edition of the King Report — and another link to it is here.


U.K. Retail Sales Collapse in November By Most on Record

Retail sales in Britain crashed by 4.9% YoY (on a like-for-like basis) in November – the biggest drop in the 25 year history of The British Retail Consortium’s reporting…Click to enlarge.

However, as Paul Martin, Partner, U.K. Head of Retail, KPMG, notes:

At first glance, November’s decline in like-for-like retail sales of -4.9% will leave retailers reaching for the smelling salts, but context is key. If adjusted for the later timing of Black Friday and Cyber Monday, sales are more likely to have increased by a more palatable 0.4% like-for-like.”

But added that:

The key question will be whether demand can rebound enough to make up for several disappointing months of trading this year.”

Susan Barratt, CEO, IGD, notes that “Food and grocery sales saw a continued slowdown in November and it is unclear if it will pick back up as the festive season approaches…

Shoppers’ financial confidence remains subdued, with a slight improvement recently as the focus moves away from Brexit to Christmas.”

This Zero Hedge news item appeared on their website at 4:15 a.m. on Tuesday morning EST — and comes to us courtesy of Brad Robertson.  Another link to it is here.  In a similar vein is this ZH story from late on Monday night EST…”Hong Kong Retail Sales Suffer “Very Enormous” Crash as Tourism Collapses


Japan’s 10Y Yield on Verge of Turning Positive as Abe Prepares Massive Debt-Busting Stimulus

After the world’s negative yielding debt hit a record $17 trillion at the start of September, mostly as a result of Japanese debt the vast majority of which is trading in negative territory, this number has shrank substantially in recent months, sliding to $11.5 trillion in the past three months.  Click to enlarge.

Well, as of today that number is in danger of becoming far, far smaller in the coming days because the one single bond tranche that represents the biggest component of global negative debt, Japanese 10Y bonds, is on the verge of flipping to positive yield territory, for the first time since April.  Click to enlarge.

In fact, overnight the 10Y JGB yield rose as much as just 0.8 bps away from 0 following what was the lowest bid to cover for a 10Y auction since August 2016.

Meanwhile, Japan’s collapse – ironically enough, a function of its massive debt load – has resumed, and in the third quarter, its economic growth slumped to its weakest in a year as soft global demand and the Sino-U.S. trade war hit exports, stoking fears of a recession. Some analysts also worry that a sales tax hike to 10% in October could cool private consumption which has helped cushion weak exports.

Such spending could strain Japan’s coffers – the industrial world’s heaviest public debt burden, which tops more than twice the size of its $5 trillion economy.

Amusingly, the Nikkei claimed that the spending package won’t involve deficit-covering bond issuance; which of course, is hilarious because all debt issuance in Japan, where the “helicopter-money” MMT experiment is about to unfold, is deficit covering.

This 3-chart Zero Hedge article was posted on their website at 5:45 p.m. EST on Tuesday afternoon — and another link to it is here.


India’s November gold imports jump to 5-month high — government source

India’s gold imports in November jumped 78% from a month earlier to the highest level in 5 months as jewellers in the world’s second-biggest consumer of the metal restocked after a fall in prices, a government source said on Tuesday.

New Delhi imported 71 tonnes of gold in November, compared with 40 tonnes in October, the source said on condition of anonymity as he was not authorised to speak to media.

Imports were down 16% from November 2018, however, he said.

This tiny 3-paragraph Reuters article, filed from Mumbai, put in an appearance on their Internet site at 9:25 p.m. EST on Tuesday evening — and I found it on the Sharps Pixley website.  Another link to it is here.


Mongolia’s central bank buys 14.4 tonnes of gold in first 11 months this year

Mongolia’s central bank announced on Tuesday that it has bought a total of 14.4 tonnes of gold from legal entities and individuals in the first 11 months of this year.

As of November, the bank’s average gold purchase price was 128,002.45 Mongolian tugriks (over 47 U.S. dollars) per gram, the Bank of Mongolia said in a statement.

Purchasing gold is said to be one of the key instruments for the Asian country’s central bank to increase its official foreign exchange reserves.

The Bank of Mongolia has been striving to ensure economic stability by consistently increasing its foreign currency reserves.

The country’s foreign exchange reserves reached $4 billion at the end of July. The central bank aims to increase the reserves to at least $6.5 billion in the medium term.

The above five paragraphs are all there is to this brief news item, filed from Ulaanbaatar on Tuesday sometime — and it’s another gold-related news item that I found on the sharpspixley.com Internet site.  Another link to it is here.


The PHOTOS and the FUNNIES

Continuing on down this gravel/dirt/rocky road on someone’s ranch land in the middle of nowhere on the Thompson Plateau on July 20th.  The first two were taken looking generally south/SSW towards Merritt — and the third photo was taken looking about due north back towards Kamloops.  I love the golden hour, as the colours…such as they ever get in these parts…are so rich.  Click to enlarge.


The WRAP

As I mentioned in my commentary on the dollar index at the top of today’s column…if JPMorgan et al. hadn’t shown up at the afternoon gold fix in London…gold, silver and platinum closing prices would have been the talk of the town by close of COMEX trading on Tuesday.

But the ‘Big 7/8’ commercial traders, with or without JPMorgan’s help, were there as short sellers of last resort to prevent the obvious from happening…digging themselves deeper into their financial margin call hole in the process.

And I’ll repost a comment that appeared in my COT comments in my Tuesday column, just in case you missed it…Silver analyst Ted Butler put it best in his COT commentary yesterday afternoon when he had this to say…”the one glaring feature that came through in this week’s report is the same glaring feature of the past couple of months, namely, the continued lack of managed money selling since the September price highs. And, obviously, if the managed money traders haven’t sold as much as they have on past price declines, their commercial counterparts haven’t been able to buy as much either. Thus, the unresolved stalemate continues — and it is this lack of a resolution that overrides future gold and silver prices.”

He would be right about that — and the commercial traders…sans JPMorgan…are all worse off after yesterday’s price action.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  Gold touched, but was hauled back from its 50-day moving average on Tuesday — and platinum broke above theirs by a bit — and closed above it by a dollar and change.  Copper was hammered back below its 50-day moving average, while WTIC closed a hair higher than it did on Monday.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I note that gold traded flat until shortly after 10 a.m. China Standard Time on their Wednesday morning — and began to rally a bit from there — and is up $6.10 the ounce currently. Ditto for silver — and it’s up 13 cents as London opens. Platinum ticked a few dollars higher in stair-step fashion in Far East trading — and is up 4 dollars. Palladium was sold a handful of dollars lower in Shanghai trading on their Wednesday, but it has edged higher in afternoon trading over there — and is back at unchanged as Zurich opens.

Net HFT gold volume is already up to contracts — and there’s only 1,807 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is eye-opening, at a bit under 20,000 contracts already — and there’s 1,163 contracts worth of roll-over/switch volume on top of that.

The dollar index opened down about 1 basis point at 97.73 once trading commenced around 7:45 p.m. EST in New York on Tuesday evening, which was 8:45 a.m. China Standard Time on their Wednesday morning. It has been crawling very unevenly higher since — and is up 2 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich. The index is basically doing nothing at the moment.


Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s COT and Bank Participation Reports.  Just eye-balling the last four dojis [last Thursday was the U.S. Thanksgiving holiday — and the markets were closed] on the above charts, it’s a reasonable assumption to make that there will be increases in the commercial net short positions in both gold and silver…but especially gold — and especially after yesterday’s price action.

But until those reports come out, Ted won’t be able to determine how deeply JPMorgan was or wasn’t involved in Tuesday’s price action.  Are they sitting on their hands and letting the Big 7 commercial traders do the heavy lifting, or were they up to their armpits during this past reporting week as well?


And as I post today’s column on the website at 4:02 a.m. EST, I see that the gold price has been trading sideways to a bit lower since about twenty minutes before the London open — and is currently up $4.90 an ounce. The silver price obviously got capped at the London open — and is up 11 cents as the first hour of London trading ends. Platinum is up 4 dollars…however palladium took off higher the moment that Zurich opened — and is up 8 bucks as the first hour of Zurich trading draws to a close.

Gross gold volume is about 67,500 contracts — and minus current roll-over/switch volume, net HFT gold volume is around 63,500 contracts. Net HFT silver volume has slowed right down in the last hour and is about 21,500 contracts — and there’s 1,185 contracts worth of roll-over/switch volume in this precious metal.

The dollar index took a header about 8:05 a.m. in London — and is down 8 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich. But that move has had zero effect on silver and gold prices.

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

Ed

‘Day Boyz’ Were Busy on Monday

03 December 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold lower the moment that trading began at 6:00 p.m. EST in New York on Sunday evening — and that continued until the low of the day was set very shortly before 9 a.m. in London.  It chopped very unevenly higher from there — and was obviously under price pressure for the remainder of the Tuesday session.  It’s also obvious that it would have rallied well into positive territory if allowed, which it wasn’t.

The gold price traded in a ten dollar range yesterday, so the low and high ticks aren’t worth looking up.

Gold was closed in New York on Monday afternoon at $1,461.80 spot, down $2.50 from Friday.  Net volume was very decent at around 291,500 contracts — and there was a bit under 26,000 contracts worth of roll-over/switch volume in this precious metal.

The price pattern in silver was kept in line in a similar fashion as gold, but wasn’t allowed even a sniff of unchanged during trading in New York on Monday.

The high and low ticks in silver were reported by the CME Group as $17.10 and $16.895 in the March contract.

Silver was closed on Monday afternoon in New York at $16.88 spot, down 14 cents from Friday.  Net volume was pretty decent at about 69,500 contracts — and there was 2,750 contracts worth of roll-over/switch volume on top of that.

The platinum price was up a dollar or so in Far East trading on their Monday — and that state of affairs lasted until around 1:20 p.m. China Standard Time.  It was sold quietly and unevenly lower until the COMEX open in New York — and then took off higher, but obviously ran into ‘da boyz’ shortly after.  It made it back above the $900 spot mark a few minutes after the Zurich close, but that wasn’t allowed to last.   Platinum was closed at $896 spot, up 2 dollars from Friday.

The palladium price traded quietly sideways [with the exception of a particularly vicious up/down price spike shortly after the Zurich open] until around 10:20 a.m. CET.  It began to head unevenly higher from there until it ran into ‘something’ around 2:30 p.m. CET.  The price was sold lower until around 11:35 in New York, but regained a bunch of that by a few minutes after 2 p.m. EST in the very thinly-traded after-hours session.  It didn’t do much after that.  Palladium was closed at $1,834 spot, up 12 dollars on the day — and miles off its Kitco-recorded $1,869 spot high tick of the day.

The dollar index closed very late on Friday afternoon in New York at 98.27 — and opened up about 1 basis point once trading commenced at 6:30 p.m. EST in New York on Sunday evening, which was 7:45 a.m. China Standard Time on their Monday morning.  It really didn’t do much of anything from there — and its 98.38 high tick of the day was set around 12:08 p.m. in London.  It began to head lower from there — and really fell off a cliff at the 10 a.m. EST afternoon gold fix in London.  The 97.81 low tick was set about 11:30 a.m. in New York — and it ticked a bit higher from that point until around 12:18 p.m. EST.  It then crept very quietly lower from there until trading ended at 5:30 p.m.  The dollar index finished the Monday session at 97.86…down 41 basis points from is close on Friday.

There certainly would have been more correlation between what gold, silver and platinum were doing — and what was going on in the currency market, except it was obvious from the chart patterns that ‘da boyz’ were there to make sure that there wasn’t as much correlation as would have otherwise occurred.  They were all over these three precious metals like white on rice during the COMEX trading session on Monday.

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

Here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…97.79…and the close on the DXY chart above, was 7 basis points on Monday.  Click to enlarge as well.

The gold stocks opened unchanged, then dipped a bit going into the afternoon gold fix in London — and began to head a bit higher after that.  All the gains that mattered were in by around 10:30 a.m. in New York trading — and they chopped quietly and unevenly sideways for the remainder of the Monday session.  The HUI closed up 0.54 percent.

Here’s Nick’s Silver Sentiment/Silver 7 Index from Nick — and it’s WRONG.  A data feed error began at 9:45 a.m. — and it crashed by a bunch — and there was no way Nick could fix it.  In lieu of an accurate chart, I computed the change in the Silver 7 Index manually — and it showed that the Silver Sentiment/Silver 7 Index closed at 558.07…higher by 1.28 percent.

And here’s the 1-year Silver 7 Index, updated with Monday’s doji — and it’s WRONG as well.

Hopefully this will right itself today.  By the way, the only silver stock that was down on the day was Peñoles… -1.28 percent.  But I’ll point out once again that despite what’s going on with their respective prices, the silver equities continue to outperform their golden cousins.


The CME Daily Delivery Report for Day 3 of December deliveries showed that 480 gold and 262 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, there were ten short/issuers in total.  The three biggest were Marex Spectron, ABN Amro and International F.C. Stone…with 187, 119 and 83 contracts from their respective client accounts.  There were 14 long/stoppers in total — and the largest by far was JPMorgan, picking up 136 contracts for its client account.  In distant second spot was Citigroup with 86 contracts…72 for its own account, plus 14 more for its client account.  In third and four spots were Goldman Sachs with 59 contracts for its own account — and ABN Amro, with 55 contracts for its client account.

In silver, there were 8 short/issuers all told — and the three largest were International F.C. Stone and Advantage with 131 and 86 contracts from their respective client accounts.  In third place was Scotia Capital/Scotiabank with 20 contracts out of their in-house/proprietary trading account.  There were seven long/stoppers.  Of course JPMorgan was top dog with 117 contracts.  Morgan Stanley came in second with 81 — and in distant third spot was Advantage with 32 contracts.  All transactions involved their respective client accounts.

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

The CME Preliminary Report for the Monday trading session showed that gold open interest in December cratered by 4,652 contracts, leaving 3,826 still open, minus the 480 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 4,933 contracts were actually posted for delivery today, so that means that 4,933-4,652=281 more gold contracts just got added to the December delivery month.  Silver o.i. in December fell by 956 contracts, leaving 1,465 still around, minus the 262 contracts mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 1,026 silver contracts were actually posted for delivery today, so that means that 1,026-956=70 more silver contracts just got added to December.


There was a big withdrawal of gold from GLD on Monday, as an authorized participant took out 207,216 troy ounces.  There were no reported changes in SLV.

Over at Switzerland’s Zürcher Kantonalbank they reported the weekly changes in their gold and silver ETFs as of the close of business on Friday, November 29 — and it showed that 3,247 troy ounces of gold was removed during the reporting week, along with 22,666 troy ounces of silver.

In other gold and silver ETFs on Planet Earth on Monday…minus COMEX warehouse, GLD & SLV and ZKB movements…there was a net 470 troy ounces of gold deposited — and that number in silver was a net 15,785 troy ounces added.


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

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Friday — and no category transfer activity either.

The only activity in silver was one truckload…600,102 troy ounces…that was received at Canada’s Scotiabank.  There was no paper transfer activity in silver, either.  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 Friday.  They received 451 of them — and shipped out 105.  All of this activity was at Brink’s, Inc. — and the link to that, in troy ounces, is here.


Here are the usual two charts that Nick Laird passes around on the weekend.  They show total gold and silver holdings in all known depositories, ETFs and mutual funds, updated as of the close of business last Friday.

They show that there was a net 674,000 troy ounces of gold added during the reporting week, but a very hefty 7,484,000 troy ounces of silver withdrawn.  That number is only negative because of the huge withdrawals from both SLV and SIVR during the reporting week — and certainly aren’t indicative of the positive overall demand for investment in physical silver.  Click to enlarge for both.


The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, November 26 showed a surprising and unhappy increase in the Commercial net short position in silver, but the expected decrease in gold.  Ted was expecting a decrease in both, judging by the price action in silver and gold during the reporting week.  I didn’t make a prediction, but looking at the 6-month charts for both, a decrease in the commercial net short positions in both would have been a call I would have made as well.

In silver, the Commercial net short position increased by a fairly hefty 7,324 contracts, or 36.6 million troy ounces.

They arrived at that number by reducing their long position by 9,154 contracts — and they also reduced their short position by 1,830 contracts.  It’s the difference between those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus a bit more, as they increased their long position by 2,065 contracts — and they also reduced their short position by 6,229 contracts.  It’s the sum of those two numbers…8,294 contracts…that represents their change for the reporting week.

The difference between that number and the Commercial net short position…8,294 minus 7,324 equals 970 contracts.  That difference was made up, as it must be, by the traders in the two categories, as the ‘Other Reportables’ reduced their net long position by 500 contracts — and the ‘Nonreportable’/small traders also decreased their net long position by 470 contracts.  Those two numbers add up to 970 contracts, which they must do.

Because the traders in the Producer/Merchant category decreased their net long position by a decent amount during the reporting week, Ted figures that JPMorgan added 2-3,000 contracts to their short position in silver, which now totals around 7-8,000 contracts.

The Commercial net short position is now back up to 369.3 million troy ounces of paper silver, which is far from bullish.

The Big 7 silver shorts, who should have been covering short positions during the reporting week based on the price action, actually increased their net short position over that period.

Here is Nick’s 3-year COT chart for silverClick to enlarge.

As Ted mentioned on the phone yesterday, nothing has changed regarding silver — and there’s still no resolution to the huge short position held by the Big 7 Commercial shorts — and whether or not they’ll be able to cover all or some of it by an engineered price decline.  If they’re not able to do that, they’ll be forced to cover — and take huge losses for the first time ever.


In gold, the commercial net short position declined by 13,628 contracts, or 1.36 million troy ounces of paper gold, which was right in line with what Ted was expecting.

They arrived at that number by reducing their long position by 15,078 contracts — but they also reduced their short position by a far more hefty 28,706 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 [surprisingly] very little activity from the Managed Money traders, as they reduced their collective net long position by only 912 contracts…and you have to ask yourself why that is so.  Virtually all of the action was in the ‘Other Reportables’ category, as they reduced their long position by 8,939 contracts — and increased their short position by 4,374 contracts.  It’s the sum of those two numbers…13,313 contracts…that was their changed for the reporting week.  The traders in the ‘Nonreportable’/small trader category that made up the difference by increasing their net long position by 597 contracts…[13,313 plus 912 minus 597 equals 13,628 contracts…the change in the commercial net short position]

Ted figures that JPMorgan decreased their net short position in gold by about 5,000 contracts — and are down to around the 25,000 contract mark.

The commercial net short position in gold is down to 30.55 million troy ounces, which is really no change at all.

Here’s Nick’s 3-year COT chart for goldClick to enlarge as well.

And what I said about silver, is even more applicable in gold, as the Big 7 shorts are going to be in a world of hurt if they can’t force the Managed Money traders to sell their long positions and go massively short.

Silver analyst Ted Butler put it best in his COT commentary yesterday afternoon when he had this to say…”the one glaring feature that came through in this week’s report is the same glaring feature of the past couple of months, namely, the continued lack of managed money selling since the September price highs. And, obviously, if the managed money traders haven’t sold as much as they have on past price declines, their commercial counterparts haven’t been able to buy as much either. Thus, the unresolved stalemate continues — and it is this lack of a resolution that overrides future gold and silver prices.”


In the other metals, the Manged Money traders in palladium increased their net long position by by 721 COMEX contracts — and are net long the palladium market by 13,311 contracts…just under 53 percent of the total open interest.  Total open interest in palladium is 25,213 COMEX contracts…so you can see that it’s a very tiny and illiquid market — and as you already know, 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 3,361 contracts.  The Managed Money traders are now net long the platinum market by 27,874 COMEX contracts…a bit under 31 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are mega net long against JPMorgan et al. as well.  In copper, the Managed Money traders increased their net short position in that metal by a further 2,667 COMEX contracts during the reporting week — and are net short copper 37,822 contracts. That’s a bit under 18 percent of total open interest.


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. 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 145 days of world silver production…up 5 days from last week’s COT Report — and the ‘5 through 8’ large traders are short an additional 71 days of world silver production…unchanged from last week’s COT Report — for a total of 216 days that the Big 8 are short, which is seven months of world silver production, or about 504 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 211 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 369 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 504 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by around 504-369=135 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 28-odd small commercial traders other than the Big 8, are net long that amount…which is a huge drop from the 37 traders that were involved in last week’s report.

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.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 7-8,000 COMEX contracts — 40 million troy ounces of paper silver, using the higher number, which works out to around 17 days of world silver production the JPMorgan is short.

Based on the numbers in the paragraph below, that puts JPMorgan in the middle of the pack in the ‘5 through 8’ category — and if they’re only short 7,000 COMEX contracts instead of the 8,000 that I calculated, that removes them from the ‘5 through 8’ category entirely…but only by a bit.

The Big 4 traders in silver are short 145 days of world silver production in total. That’s 36.25 days of world silver production each, on average.  The four traders in the ‘5 through 8’ category are short around 71 days of world silver production in total, which is 17.75 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 up a reasonable amount from the 44.5 percent they were short in last week’s report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be just under the 55 percent mark.  In gold, it’s now 36.6 percent of the total COMEX open interest that the Big 8 are short, up a bit from the 34.3 percent they were short in last week’s report — and a bit over 40 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 63 days of world gold production, unchanged from last week’s COT Report.  The ‘5 through 8’ are short another 33 days of world production, down 2 days from last week’s report…for a total of 96 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 66 percent of the total short position held by the Big 8…up around 2 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 67, 73 and 73 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is up 1 percentage point from last week’s COT Report…platinum is unchanged — and palladium is down 3 percentage points.

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


CRITICAL READS

U.S. Manufacturing Survey Disappoints, New Orders/Employment Plunge

After China’s “surprise” PMI beat…and Europe’s ‘bottoming’…the world seems convinced that everything is awesome again (despite China Industrial Profits collapsing at a record pace) and expectations were for U.S. Manufacturing surveys to extend their rebound in November.

Markit’s final Manufacturing PMI for November beat expectations, printing 52.6 (from 52.2 flash and 51.3 in October)

ISM’s Manufacturing survey for November missed expectations, printing 48.1 (from 49.2 exp and 48.3 prior)

This was the highest PMI since Feb 2019.

According to Markit, manufacturing output and new order growth rates improve to 10-month highs with the fastest rise in employment since March, but business confidence remains subdued.

And, according to ISM, new orders and employment both contracted further…

The data was ugly across the board:  Click to enlarge.

According to the ISM, there was just one series that printed in expansion, or above 50 – supplier deliveries – as almost every other series sank deeper into contraction.

This chart-filled news item appeared on the Zero Hedge website at 10:03 a.m. EST on Monday morning — and it comes to us courtesy of Brad Robertson.  Another link to it is here.  Then there’s this Zero Hedge story from about two hours later headlined “Global Manufacturing Inches Back Into Expansion, Despite Ongoing Slump In Export Orders” — and that’s from Brad as well.  Gregory Mannarino‘s post market close rant for Monday is linked here.


Fed’s Second 42-Day Repo Oversubscribed as Rising Repo Rate Confirms Year-End Liquidity Rush

One week after the Fed’s first 42-day term repo which for the first time allowed dealers to lock in funding into the new year and which was 2x oversubscribed, confirming a growing scramble for year-end funding, traders were keenly looking ahead to the result from today’s second 42-day repo which matured on January 13. And, as we noted last week, year-end liquidity fears remain front and center as the $25 billion operation proved to be roughly 40% below the required size to satisfy all liquidity demands.

Dealers submitted $42.550BN in bids for the 42-day op ($29.750BN in Treasurys, $1BN in Agency, $11.8BN in MBS paper), resulting in an oversubscription of the $25BN in available repo.

This was modestly below the $49.050 billion submitted in the first 42-day repo operation conducted on November 25:

It remains a key question for funding markets why, even with QE4 in place and now daily overnight and short-term repo operations in place, banks continue to rush to lock in year-end liquidity, where some fear a similar explosion in overnight repo rates as was observed on Dec 31, 2018 when General Collateral soared amid a widespread liquidity shortage. Indeed, as Bloomberg put it, “even with the Fed’s commitment to continue providing liquidity to the financial system around year-end, the market is still showing concerns. This is due to banks’ year-end balance-sheet constraints related to capital surcharges and other regulatory requirements.”

The clearest indication that despite the massive liquidity injections that have taken place since mid-September liquidity remains scarce was today’s initial print in the overnight General Collateral rate, which rose from 1.60% to 1.68%, the highest since the Fed cut rates on Oct 31.

Separately, and in keeping with the recent tradition, the Fed also completed an overnight repo operation, which however showed less funding demand, as “only” $72.9 billion in securities were pledged in exchange for overnight liquidity with the Fed, well below the limit of $120 billion. Yet another troubling observation: while many have expected the total notional on overnight repos to decline over time, the daily use of the overnight repo has stabilized in the $60-$80 billion range and has failed to decline over the past month.  Click to enlarge.

This story was posted on the Zero Hedge website at 8:33 a.m. on Monday morning EST — and it’s from Brad Robertson as well.  Another link to it is here.


Fed doubles down on pretending inflation isn’t already far above ‘target’

The Federal Reserve is considering introducing a rule that would let inflation run above its 2 percent target, a potentially significant shift in its interest rate policy.

The Fed’s year-long review of its monetary policy tools is due to conclude next year and, according to interviews with current and former policymakers, the central bank is considering a promise that when it misses its inflation target, it will then temporarily raise that target, to make up for lost inflation.

The idea would be to avoid entrenching low U.S. price growth which has consistently undershot its goal.

If the Fed adopts this so-called “make-up strategy,” it would mark the biggest shift in how it carries out its interest rate policy since it began to target 2 percent inflation in 2012.

Policymakers are frustrated by the failure of prices to hit their target even as U.S. unemployment has plumbed 50-year lows.

The new policy would require “making it clear that it’s acceptable that to average 2 percent, you can’t have only observations that are below 2 percent,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in an interview with the Financial Times last week.

The above handful of paragraphs is all that is posted in the clear from this Financial Times of London story that put in an appearance on their website on Monday.  I found this in a GATA dispatch yesterday — and the link to the ft.com story is in the headline — and the link to the GATA release is here.


The New York Fed Has Some Explaining to Do Over Morgan Stanley’s Unreported Trading Losses

James Gorman is the Chairman and CEO of Morgan Stanley. He also sits on the Board of Directors of the Federal Reserve Bank of New York (New York Fed), one of Morgan Stanley’s regulators.

The New York Fed is one of 12 regional Federal Reserve banks – but the only one willing to turn on a multi-trillion dollar money funnel to Wall Street’s mega banks when they need a secret bailout. Since September 17 of this year, the New York Fed has pumped upwards of $3 trillion in revolving loans to trading houses on Wall Street, without naming which firms are getting the money and why they’re getting it. From December 2007 to the middle of 2010, the New York Fed turned on its money funnel to Wall Street to the tune of $29 trillion – a fact it battled in court for years to keep secret.

Today, the New York Fed will only say that it’s making these new loans, which tally up to hundreds of billions of dollars each week, to some of its 24 “primary dealers.” For the most part, those “primary dealers” are the high-risk trading units of big commercial banks in the U.S. and abroad. (See list below.)

One of the primary dealers that is eligible to be taking these multi-billion dollar loans from the New York Fed is Morgan Stanley & Co. LLC. Morgan Stanley describes that unit as follows: “Its businesses include securities underwriting and distribution; financial advisory services, including advice on mergers and acquisitions, restructurings, real estate and project finance; sales, trading, financing and market-making activities in equity and fixed income securities and related products, and other instruments including foreign exchange and commodities futures; and prime brokerage services.”

At 11:36 a.m. on Thanksgiving Day, when households across America were either watching the Macy’s Thanksgiving Day Parade on TV or hustling in the kitchen, Bloomberg News dropped the bombshell report that foreign currency traders at Morgan Stanley had hidden a trading loss of upwards of $140 million. Two of the traders involved in the losses were based in London, according to the Bloomberg report.

This rather brief commentary showed up on the wallstreetonparade.com Internet site on Monday — and I found this on the gata.org Internet site.  Another link to it is here.


Germany’s Car Jobs Boom Comes to a Screeching Halt

After a week in which Daimler AG and Volkswagen AG’s Audi announced thousands of job cuts, it’s easy to forget that the German car industry once seemed unassailable.

The 2009 recession forced a massive downsizing of America’s auto giants. General Motors Co. and Chrysler filed for Chapter 11 bankruptcy protection; Ford Motor Co. escaped a similar fate only by cutting its workforce to the bone. By contrast, Volkswagen, BMW AG and Daimler’s Mercedes-Benz overcame the crisis with barely a scratch. Afterwards they took full advantage as wealthy Chinese splurged on luxury German vehicles. Germany’s carmakers and their suppliers went on a hiring spree at home and abroad.

There were early signs of hubris: Volkswagen paid its chief executive officer 17.5 million euros ($19.3 million) in 2011. But Germany’s powerful trade unions made sure workers benefited too. In recent years production line staff at BMW and VW’s Porsche subsidiary took home almost €10,000 as an annual bonus. BMW spends an average of more than €100,000 per employee on salary, pension and social security costs, according to its annual report.

Now that jobs boom has come to a screeching halt, and not before time. An industry facing unprecedented upheaval can’t afford such largess.

The chief reason for the belt-tightening is, of course, the vast cost of moving beyond combustion engines. Volkswagen expects to spend an astonishing €60 billion on hybrid, electric and digital technology in the next five years. Doing this requires the hiring of even more people, but the products they’re developing aren’t always big money spinners yet.

For a time, the industry will have to provide a full range of propulsion options. For their factories this means “peak complexity” — to borrow a phrase from Mercedes’s management. Eventually, however, many of these factory workers will become unnecessary because electric motors are much simpler to build than diesel and gasoline engines. Last week’s job cuts won’t be the last.

This Bloomberg article showed up on the their Internet site at 12:30 a.m. Pacific Standard Time on Monday morning — and I thank Swedish reader Patrik Ekdahl for sharing it with us.  Another link to it is here.


U.S. envoy spews vitriol as 6 more E.U. nations defy sanctions bypass device INSTEX and urge saving Iran nuclear deal

Six European countries, among them U.S. NATO allies, have joined an E.U. scheme to bypass Donald Trump’s sweeping sanctions, which ban all trade activities with Iran, raising the ire of a notorious American ambassador in Berlin.

Belgium, Denmark, Finland, the Netherlands, and Sweden released a joint statement relating their intent to connect to INSTEX, short for the Instrument in Support of Trade Exchanges, a European special-purpose vehicle. The move is to “facilitate legitimate trade between Europe and Iran,” and also to make the Islamic Republic stick by the 2015 JCPOA nuclear deal.

The news –lauded by some European diplomats– earned an angry rebuke from Richard Grenell, the U.S. Ambassador to Germany. The envoy, whose heavy-handed diplomacy has irritated many influential Germans, found in his crosshairs a tweet by Lars Nordrum, Norway’s Ambassador to Iran.

Nordrum didn’t respond to the verbal assault, but the INSTEX participants’ expansion received credit from French Foreign Minister Jean-Yves le Drian, who praised the “important decision” that will show “Europe’s autonomy of action.”

This rt.com news item put in an appearance on their Internet site on Saturday morning Moscow time — and I thank Larry Galearis for pointing it out.  Another link to it is here.


Iraqis Rise Up Against 16 Years of ‘Made in the USA’ Corruption

As Americans sat down to Thanksgiving dinner, Iraqis were mourning more than 60 people killed by police and soldiers on Thursday in Baghdad, Najaf and Nasiriyah. Nearly 400 protesters have been killed since hundreds of thousands of people took to the streets at the beginning of October. Human rights groups have described the crisis in Iraq as a “bloodbath,” Prime Minister Abdul-Mahdi has announced he will resign, and Sweden has opened an investigation against Iraqi Defense Minister Najah Al-Shammari, who is a Swedish citizen, for crimes against humanity.

According to Al Jazeera, “Protesters are demanding the overthrow of a political class seen as corrupt and serving foreign powers while many Iraqis languish in poverty without jobs, healthcare or education.” Only 36% of the adult population of Iraq have jobs, and despite the gutting of the public sector under U.S. occupation, its tattered remnants still employ more people than the private sector, which fared even worse under the violence and chaos of the U.S.’s militarized shock doctrine.

Western reporting conveniently casts Iran as the dominant foreign player in Iraq today. But while Iran has gained enormous influence and is one of the targets of the protests, most of the people ruling Iraq today are still the former exiles that the U.S. flew in with its occupation forces in 2003, “coming to Iraq with empty pockets to fill” as a taxi-driver in Baghdad told a Western reporter at the time. The real causes of Iraq’s unending political and economic crisis are these former exiles’ betrayal of their country, their endemic corruption and the U.S.’s illegitimate role in destroying Iraq’s government, handing it over to them and maintaining them in power for 16 years.

The corruption of both U.S. and Iraqi officials during the U.S. occupation is well documented. U.N. Security Council resolution 1483 established a $20 billion Development Fund for Iraq using previously seized Iraqi assets, money left in the U.N.’s “oil for food” program and new Iraqi oil revenues. An audit by KPMG and a special inspector general found that a huge proportion of that money was stolen or embezzled by U.S. and Iraqi officials.

This longish, but worthwhile essay appeared on the antiwar.com Internet site on Saturday — and I thank Larry Galearis for sharing it with us.  Another link to it is here.  There was a companion story to this on the asiatimes.com Internet site on Monday.  It’s headlined “Iraqi protesters to disrupt oil if demands unmet” — and comes courtesy of Tolling Jennings.


First of three Russian gas pipelines inaugurated

Russian President Vladimir Putin and Chinese leader Xi Jinping launch Monday a gas pipeline that is the first of three ambitious projects intended to cement Moscow’s role as top gas exporter.

Putin and Xi are to inaugurate by video link-up the “Power of Siberia” pipeline, sending Siberian gas to China in a move that will strengthen their ties amid Moscow’s confrontation with the West.
Russia is also planning to soon launch two more gas pipelines that will ramp up supplies to Europe while bypassing Ukraine.

TurkStream, which Putin and Turkish leader Recep Tayyip Erdogan hope to launch in January, is to transport Russian gas to Turkey.

Nord Stream-2, which would double Russian gas volumes to Germany, is expected to go online in mid-2020.

Analysts said the three projects have long-term economic and political benefits for Russia, which has inserted itself between European markets to the west and the rapidly growing Chinese market to the east.

Russia is not only creating new income streams, but hedging its bets and bolstering its position strategically,” said energy analyst Andrew Hill.

This article appeared on the asiatimes.com Internet site on Sunday Hong Kong Time — and it’s another offering from Tolling Jennings.  Another link to it is here.


Betting on a Pair of Deuces — Jeff Thomas

I’ve never been much of a gambler. On the rare occasions I’ve played poker, I almost always came out ahead, but I almost never bluffed and, probably more important, I always played with amateurs like myself, never with players who really knew what they were doing.

Of course, the business of governance is far more important than a friendly poker game between friends. All the more reason why, when political leaders are making their assessments as to the national future, they should make sure they have a winning hand, prior to betting heavily.

Every day, we’re reminded that the Asian powerhouse is moving ahead at a pace that’s unheard of in the West. It’s almost as though the clocks stopped in the West ten years ago, but Asia kept on advancing in every way.

This is clear to anyone who has had feet on the ground in Asia in recent years. Yet, every day in the Western media, the illusion is presented that the West is still running the show, and Asia is a lesser player.

And of course, whenever an East/West summit takes place, yet nothing substantial is resolved, the Western media reiterate that Asians have failed again to understand that, if they want to play ball, they’d better accept the Western rules and recognize who’s the king of the mountain: the USA.

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


China’s Zijin Mining agrees to buy Canada’s Continental Gold for about $1 billion

Zijin Mining Group Co Ltd , one of China’s biggest gold miners, has signed an agreement to buy Canadian miner Continental Gold Inc , saying the purchase would increase its gold reserves and boost cash flow and profit.

The acquisition, which will cost around CAN$1.33 billion (US$999.92 million) in cash, aims to secure Continental Gold’s flagship Buriticá gold project for Zijin, the Chinese company said in a filing to the Shanghai Stock Exchange.

The Buriticá gold project has measured and indicated gold reserves of 165.47 tonnes and an inferred reserve of 187.24 tonnes, Zijin said in the filing.

Zijin expects its gold reserves to exceed 2,000 tonnes after the purchase, with output eventually increasing by about 20%. It added that it expects the Buriticá gold project to generate “robust” profit and cash flow after becoming operational in 2020. The deal is, however, restricted by external conditions and faces uncertainty, Zijin said, without giving further details.

Monday’s announcement comes after Zijin said in early November it would buy partner Freeport McMoran Inc’s copper-gold assets in Serbia for up to $390 million, in an effort to boost its resources of both metals.

The above five paragraphs are all there is to this brief Reuters article that was filed from Beijing at 3:57 a.m. EST on Monday morning.  It was updated about four hours later.  I plucked it from a GATA dispatch yesterday — and another link to the hard copy is here.


Aussie Q3 gold output falls. Is it still No.2? Russia? — Lawrie Williams

According to specialist Melbourne based specialist Australian gold consultancy, Surbiton Associates, the No. 2 gold mining country’s production of the yellow metal fell by four tonnes from that of Q2,  This could allow Russia, currently the world’s No. 3 gold miner, where production appears to be rising, to overtake Australia as the world’s No. 2 gold producer in the current year.   China is likely to retain the world No. 1 gold producer status this year, and for some time to come, but its annual output appears to be falling and Australia and Russia have been narrowing the gap.

Surbiton reckons that Australia’s gold mine output in the September quarter 2019 totalled some 78 tonnes, a decline of around four tonnes or five percent compared with the previous quarter,.  The Q3 production figure was the lowest quarterly output since the rain affected March quarter in 2018. Australian gold output reached an all-time record of 321 tonnes in 2018/19, worth around A$22 billion at current prices.

Two major factors contributed to the lower production in the September quarter,” said Dr. Sandra Close, a Surbiton Associates director. “One was due to production factors such as planned maintenance or unexpected technical problems lowering output at some gold plants, while the other was due to the effect of higher Australian gold prices.”  This latter point is something we have pointed out in the past.  Higher gold prices can lead to a fall in output, at least initially.

Dr. Close explains this thus: “The higher gold prices we are seeing in Australian dollar terms can result in a reduction in the overall amount of gold produced.  One of the effects of higher prices is that it allows some operations to reduce the grade of ore being treated by blending in material from lower grade stockpiles and/or mining some lower grade ore, thus lengthening the life of the operation.”  With mill through-puts likely remaining unchanged, lower grade ore through the mill inevitably leads to lower metal output.

Dr. Close has a keen grasp of the obvious, dear reader.  This interesting article from Lawrie was posted on the sharpspixley.com Internet site on Sunday GMT — and another link to it is here.


The PHOTOS and the FUNNIES

After leaving Roche Lake  very early in the evening on July 20, I stopped to take the first photo…looking SSW…on the descent back to B.C. Highway 5A.  The second shot was taken about a kilometer or so further down the road — and using the biggest patch of great/common mulleins we had ever seen as a backdrop.  They grow everywhere in this area of B.C, but I’d never seen such numbers in such a small area. Then just before hitting the highway, I saw a dirt/gravel side road back up into the hills that I just couldn’t resist.  The third shot was taken from there looking southwest across Trapp Lake during the golden hour.  If you look carefully, you can just make out the main Merritt/Kamloops Highway 5A on the opposite shore.  Click to enlarge.


The WRAP

With the bad economic news on Monday morning, that I’m sure that ‘da boyz’ knew about in advance, they had gold, silver and platinum prices lower before that information came out.  They also had a falling dollar index and a falling DJI to contend with, so they were obviously busy in the COMEX futures market yesterday morning ensuring that this didn’t show up in precious metal prices.  The rapid saw-tooth price action in both gold and silver are always tell-tale signs that they’re heavy hand was present — and it was only that that prevented them from blowing skyward.

And despite the fact that they were able to close both silver and gold down on the day, their respective stock prices closed in the green — and the silver equities outperformed the gold shares once again.  These are all highly encouraging developments, as strong hands continue to buy up every precious metal stock falling off the table, plus more.

Here are the 6-month charts for the four precious metals, plus copper and WTIC as well.  JPMorgan et al. ensured that there was nothing much to see in first three precious metals — and despite their efforts, palladium closed at a new record high once again.  Copper closed lower by a bit more, but natural gas and WTIC both closed a bit higher on Monday.  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 didn’t do much until shortly before 10 a.m. China Standard Time on their Tuesday morning. It was sold lower from that juncture until about 2:40 p.m. CST. It ticked higher at that point — and is now up 60 cents the ounce. Silver was guided on a similar price path — and it’s up 2 cents as London opens. Platinum hasn’t done much — and it’s back at unchanged currently. Ditto for palladium — and it’s also back at unchanged as Zurich opens.

Net HFT gold volume is light at around 33,000 contracts — and there’s 1,223 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is pretty light as well at a bit over 6,200 contracts — and there’s a piddling 61 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened up 5 basis points at 97.91 once trading commenced at 7:45 p.m. EST on Monday evening in New York, which was 8:45 a.m. China Standard Time on their Tuesday morning. It edged a bit higher until about 11:20 a.m. CST — and then began to head lower, with it’s current low tick coming around 3:25 p.m. CST. It’s off that by a bit now — and as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich, the dollar index is back at unchanged.


Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report — and monthly companion Bank Participation Report.  For this one day a month we get to see what the banks of the world have been up to in the precious metals since the report from a month prior — and it’s usually quite a bit.

It will also give Ted the opportunity to recalibrate JPMorgan short position in silver, which is already at a very low and rather insignificant level.


And as I post today’s column on the website at 4:02 a.m. EST, I see that gold is up 70 cents — and silver is up 4 cents as the first hour of London trading ends. But platinum is now up 3 bucks — and palladium by 5 as the first hour of Zurich trading draws to a close.

Gross gold volume is around 44,500 contracts — and minus current roll-over/switch volume, net HFT gold volume is a bit under 42,000 contracts. Net HFT silver volume is around 7,600 contracts — and there’s still only a tiny 72 contracts worth of roll-over/switch volume in this precious metal.

The dollar index has been chopping very quietly lower during the last hour — and is down 4 basis points as of 8:45 a.m. in London/9:45 a.m. CET in Zurich.

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

Ed

Commodities: An Eye-Opening End to November

30 November 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price crept unevenly higher starting around 9 a.m. China Standard Time on their Friday morning — and that lasted until the 2:15 p.m. afternoon gold fix in Shanghai.  It was sold quietly and equally unevenly lower until 9 a.m. in New York — and then away it went to the upside.  It was obvious that the short sellers of last resort showed up just before the 11 a.m. EST London close — and ‘da boyz’ finally capped it and drove it lower at precisely 12:30 p.m. in New York trading.  From around 12:45 p.m. onwards, it traded quietly sideways until the market closed around 1:45 p.m. EST…fifteen minutes after the COMEX close.

The low and high ticks aren’t worth looking up, but here they are anyway.  The low was $1,459.10 and the high was $1,465.40 in the February contract, which is the new front month for gold.

Gold was closed in New York on Friday afternoon at $1,464.00 spot, up $8.40 from Thursday.  Net volume was a bit over 188,000 contracts — and there was about 11,000 contracts worth of roll-over/switch volume on top of that.  These numbers are net of Thursday’s volume.

I’d thought I’d toss in the New York Spot Gold [Bid] chart, so you can see the COMEX price action in more detail.  Note the 9 a.m. rally start — and the capping at exactly 12:30 p.m. EST.  The New York Spot Silver [Bid] chart is identical in almost all respects that mattered.

Except for the fact that price was somewhat more ‘volatile’…the silver price activity was mostly similar to that of gold — and the heavy hands of the Big 8 shorts was more than obvious once the rally in silver commenced at 9 a.m. in New York.  Its attempt to blast well above the $17 spot mark by much, were crushed.

The low and high tick in silver were recorded by the CME Group as $16.935 and $17.105 in the March contract, the new front month for silver.

Silver was closed at $17.005 spot, up 9.5 cents from Thursday.  Net volume in silver was decent at 54,000 contracts — and there was only 1,500 contracts worth of roll-over/switch volume in this precious metal.  These numbers are net of Thursday’s volume as well.

The platinum price stair-stepped its way very quietly and equally unevenly higher until shortly after the 10 a.m. EST afternoon gold fix in London — and was sold a bit lower once Zurich closed at 11 a.m. EST.  It wasn’t allowed to do much after that — and finished the day at $894 spot, up 4 bucks from Thursday.

The palladium price wandered all over the place in Far East and Zurich trading on their respective Fridays.  But it managed to catch a bid about fifteen minutes after the Zurich close — and finished the Friday session at $1,822 spot, up 1 whole dollar on the day.

The dollar index closed very late on Thursday afternoon in New York at 98.37 — and opened down about 2 basis points once trading commenced around 7:45 p.m. EST on Thursday evening.  It sank a bit from there — and then traded flat until about 7:45 a.m. in London.  It began to head higher from that juncture until the 98.54 high tick was printed about 8:15 a.m. in New York…five minutes before the COMEX open.  It headed rather sharply lower from there — and the 98.23 low tick was set at the 11 a.m. EST London close.  It rallied a handful of basis points from that point before trading unevenly sideways until the market closed at 5:30 p.m. EST.  The dollar index finished the Friday session in New York at 98.27…down 10 basis points from Thursday.

Gold and silver prices didn’t begin to rally until forty-five minutes after the dollar index began to fall — and continued long after the low tick in the dollar index was set…so I suppose their was some sort of correlation between what the currencies and precious metal prices were doing, but it didn’t look natural at all.

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

And here’s the 5-year U.S. dollar index chart, courtesy of the good folks over at the stockcharts.com Internet site.  The delta between its close…98.20…and the close on the DXY chart above, was 7 basis points on Friday.  Click to enlarge as well.

Not surprisingly, the gold shares began to head higher the moment that trading began at 9:30 a.m. in New York on Friday morning — and that rally continued until around 12:15 p.m. EST.  They gave back a tiny bit of those gains going into the 1 p.m. close, but the HUI closed higher by a respectable 2.40 percent.

In all respects that mattered, the silver equities followed a mostly similar price path — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index only managed to close up 2.33 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.

A number of the Silver 7 stocks didn’t do well yesterday.  Peñoles closed down 1.61 percent, but Buenaventura closed up 2.74 percent — and Hecla closed higher as well…up 3.35 percent.  First Majestic Silver finished the day up only 1.89 percent.  Coeur Mining made back most of what it lost on Wednesday, finishing higher by 4.63 percent.  Wheaton Precious Metals didn’t exactly set the world on fire, either…up only 1.36 percent.  Pan American Silver was up 3.00 percent.


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

Here’s the weekly chart — and it’s green across the board.  But the standout feature…as has been the case for a while now…is how much the precious metal equities are outperforming their underlying precious metals…especially the silver stocks.  This chart isn’t quite accurate, because it includes the last five trading days in the U.S….the four from this week, plus the previous Friday. But that doesn’t change anything as far as the underlying trend is concerned.  Click to enlarge.

Here’s the month-to-date graph for all of November — and the outperformance of the silver equities just screams out at you off this chart.  You have to ask yourself who the buyers are of all these silver equities, despite the fact that the silver was the biggest loser in November.  They certainly wouldn’t be buying them unless for good reason…one known only to them at the moment.  But we can speculate…can’t we.  Click to enlarge.

Here’s the year-to-date chart.  It’s still all green across the board, of course — and the silver equities are back to outperforming the gold shares YTD…compared to the gains in their respective underlying precious metals.  But palladium’s gain continues to tower above all others.  Click to enlarge.

‘Da boyz’ were nowhere to be seen this past week, except on ‘care and maintenance’ duty — and the outperformance of the silver equities on a weekly/month-to-date and year-to-date basis is the standout feature on all three charts.  There is massive — and I mean massive accumulation going on in the silver stocks — and that was particularly in your face in November.  I can guess at what it might portend — and I’m mighty happy that I’m still “all in”.


The CME Daily Delivery Report for Day 2 of the December delivery month showed that 4,933 gold and 1,026 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

In gold, there were fourteen short/issuers in total, but the only one that really mattered was HSBC USA with 4,095 contracts out of its in-house/proprietary trading account.  There were nineteen long stoppers in total.  The four largest were: BoA Securities with 1,000 contracts for its client account…Goldman Sachs and Citigroup with 910 and 803 contracts for their respective in-house/proprietary trading accounts — and ABN Amro with 686 contracts for its client account.

In silver, there were ten short/issuers in total — and the only two that counted for anything were HSBC USA with 493 contracts…478 from its own account, plus another 15 from its client account — and UBS with 422 contracts from its client account as well.  Of the eleven long/stoppers, the two biggest by far were JPMorgan and Morgan Stanley, with 452 and 333 contracts for their respective client accounts.

For the second day in a row, there was no activity in JPMorgan’s in-house/proprietary trading account in either gold or silver…as an issuer, or a stopper.

The other thing I noticed was that UBS reissued all 422 silver contracts that they stopped in Wednesday’s Daily Delivery Report.

So far in the December delivery month [with only two days gone] there have been 6,253 gold contracts issued and stopped — and that number in silver is 2,111 contracts.

The link to yesterday’s Issuers and Stoppers Report is here — and it’s definitely worth a minute of your time.

The CME Preliminary Report for the Friday trading session showed that gold open interest in December fell by 3,690 contracts, leaving 8,478 still around, minus the 4,933 mentioned several paragraphs ago.  Wednesday’s Daily Delivery Report showed that 1,320 gold contracts were actually posted for delivery on Monday, so that means that 3,690-1,320=2,370 gold contracts vanished from the December delivery month.  Silver o.i. in December dropped by 2,266 contracts, leaving 2,424 still open, minus the 1,026 contracts mentioned a few paragraphs ago.  Wednesday’s Daily Delivery Report showed that 1,085 silver contracts were actually posted for delivery on Monday, so that means that 2,424-1,085=1,339 silver contracts disappeared from the December delivery month.

As per my comments in Thursday’s column, I was expecting the open interest numbers to show declines in Friday’s Daily Delivery Report because of reporting delays, so there were no surprises here.


There was a withdrawal from GLD yesterday, as an authorized participant removed 28,259 troy ounces of gold.  There were no reported changes in SLV.

In other gold and silver ETFs on Planet Earth on Friday…minus the activity on the COMEX — and in GLD & SLV…there was a net 69,779 troy ounces of gold added…and in silver, there was a net 83,488 troy ounces added.

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

For the month of November, the mint sold 11,000 troy ounces of gold eagles — 5,000 one-ounce 24K gold buffaloes — 463,000 silver eagles — and 20,000 of those ‘America the Beautiful’ five-ounce silver coins.

There was no in/out activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  But there were a lot of transfers from the Eligible category — and into Registered…four in all, totalling 167,098 troy ounces.  The largest by far was 122,205 troy ounces that was transferred at the International Depository Services of Delaware.  Going in the other direction, from Registered to Eligible, was a smallish 395 troy ounces over at Delaware.  If you wish to see the rest of the activity, the link is here.

There was a huge amount of activity in silver…as 1,091,165 troy ounces was received — and 889,230 troy ounces shipped out.  In the ‘in’ category, there was one truckload…605,560 troy ounces…dropped off at CNT — and the remaining 485,604 troy ounces found a home over at Brink’s, Inc.  In the ‘out’ category, there was one truckload…600,102 troy ounces shipped out of CNT — and the remaining 289,127 troy ounces departed Canada’s Scotiabank.  But the really big activity was in the paper department, as 5,442,183 troy ounces was transferred from the Eligible category and into Registered.  The two biggest amounts were 2,503,736 troy ounces over at Scotiabank — plus another 2,923,498 troy ounces at CNT.  There was also a transfer of 49,952 troy ounces from the Registered category and back into Eligible — and that happened at Delaware.  All these details, plus more, are linked here.

There was some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday.  They received 300 of them — and shipped out 352.  All of that occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Macedonia, Philipp II., 359-336 v.Chr., 1/4 Stater

Head of Heracles with lion skin
Reverse: Club and bow, beneath trident

Origin: Ancient Greece   Material: Gold   Full Weight: 2.17 grams   Price: €2,350.00/USD$2,374

With the U.S. on what is basically a four-day long weekend, I don’t have much in the way of news stories/articles for you today.  And because of the U.S. Thanksgiving holiday, Doug Noland does not have a commentary this week.


CRITICAL READS

New York Fed Adds $108.95 Billion to Markets

The Federal Reserve Bank of New York added $108.95 billion in temporary liquidity to the financial system on Wednesday.

The intervention came in two parts. There were $87.95 billion in overnight repurchase agreements, or repos, and $21 billion in 15-day repos. The central bank took all the securities it was offered.

The above two paragraphs are all there is to this story that appeared in The Wall Street Journal on Wednesday morning EST.  The rest of this news item is behind their pay wall.  I found it in the Friday edition of the King ReportGregory Mannarino‘s post market close rant for Friday is linked here.


Cuba reintroduces the dollar

American saloons from the 1950s and Chinese-brand cars still fill Havana’s streets. Lately, though, they have shared the road with brand-new electric scooters. Once rarities—sourced in Panama, Mexico or the Dominican Republic and sold at a big mark-up in the black market—scooters can now be purchased at home, and far more cheaply than before. The catch: Cubans must pay in American dollars or another rich-country currency.

In October Cuba’s communist government said citizens could open bank accounts that receive dollars, yen, euros and other European currencies. They will be able to use the money to buy imported goods from new state-owned shops, called Tiendas Moneda Libremente Convertible (or convertible-currency shops), where prices are given in dollars. More than 70 are planned. This ends a ban on dollar transactions introduced in 2004.

The Tiendas MLC are proving popular. Shoppers queue to buy refrigerators, air-conditioners, car parts, and television sets. Some items, including freezers and scooters, cannot be restocked quickly enough.

By reintroducing the greenback, Cuba has in effect added a third leg to its dual-currency system. The state pays its employees (that is, most workers) in Cuban pesos, the currency for buying necessities like electricity, water, and bus tickets. In 1994, during the “special period” that followed the collapse of the Soviet Union, the government introduced convertible pesos (CUC), which could be exchanged for dollars at a rate of one to one. This was an attempt to hoover up dollars from remittances and curb inflation by offering Cubans an alternative to dollars.

CUC’s are now the main way to pay for things like petrol, internet access, hotel stays, appliances, and restaurant meals.

The reintroduction of the dollar is a response to hardship. Sources of foreign currency needed to sustain the import-dependent economy are running dry.

The rest of this story from the economist.com Internet site is subscriber protected — and I found “all of the above” in a GATA dispatch yesterday.  The link to the economist.com Internet site is in the headline — and the link to the GATA dispatch is here.


China Faces Biggest State Firm Offshore Debt Failure in 20 Years

A major Chinese commodity trader looks poised to become the most high-profile state-owned enterprise to default in the dollar bond market in over two decades. In a fresh sign that Beijing is more willing to allow failures in the politically sensitive SOE sector, Tewoo Group has offered an unprecedented debt restructuring plan that entails deep losses for investors or a swap for new bonds with significantly lower returns.

Tianjin-based Tewoo Group Co. is owned by the local government and operates in a number of industries including infrastructure, logistics, mining, autos and ports, according to its website. It also has footprints in countries including the U.S., Germany, Japan and Singapore.

The trader ranked 132 in 2018’s Fortune Global 500 list, higher than many other conglomerates including service carrier China Telecommunications Corp. and financial titan Citic Group Corp. It had an annual revenue of $66.6 billion, profits of about $122 million, assets worth $38.3 billion, and more than 17,000 employees as of 2017, according to Fortune’s website.

The firm is neither listed on any stock exchange nor rated by the top three international ratings companies.

Tewoo Group’s financial difficulties came to the fore in April when it sought debt extension from its lenders and sold copper below market rates amid a cash crunch. That month, Fitch Ratings slashed the company’s credit score by six notches in one go to B- to reflect its weak liquidity and higher-than-expected leverage.

The company has proposed an exchange/tender offer on three dollar bonds due to mature over the next three years, as well as a perpetual note. It is the first distressed plan of its kind from a state-owned firm. Tewoo Group is very likely to default on its $300 million dollar bond due Dec. 16, one of the notes included in the plan, according to buy-side sources citing the company’s offshore debt manager.

Bondholders have just over two weeks to decide between either taking as much as 64% in losses or accepting delayed repayment with sharply reduced coupons on $1.25 billion of dollar bonds.

The proposal comes after Tewoo Group said last week it was unable to repay interest on a $500 million bond, prompting Industrial & Commercial Bank of China Ltd. to transfer $7.875 million to bondholders on its behalf. ICBC provided a standby letter of credit on the note — effectively a pledge to repay if the borrower can’t. The firm’s remaining $1.6 billion of dollar bonds lack such protection.

This Bloomberg story was posted on their website on Monday — and another link to it is here.  The longish Zero Hedge spin on this is headlined “China Braces For December D-Day: The “Unprecedented” Default of a Massive State-Owned Enterprise” — and the link to that is here.


Nornickel Expects Palladium Shortage to Worsen in 2020

Nornickel, in alliance with ICBC Standard Bank, has prepared a report on palladium markets. Nornickel experts expect palladium consumption volumes to outstrip production up until 2025 primarily due to the growing demand for the metal used in the catalysts of internal combustion engine cars, including the hybrid ones. Regulatory restrictions on exhaust gas pollution get harsher every year, especially in such densely populated countries as China, India, the USA and the E.U. This year, palladium shortages were somewhat offset by supplies of refined metal coming from the work-in-progress inventories accumulated by South African producers last year.

Next year, palladium shortage will worsen as car production gradually recovers on the back of anticipated government support for car sales in China and the automotive industry’s efforts to ensure compliance with new regulations.

Over the long run, considerable additional demand for palladium is projected to build up, potentially covered by the construction of new projects by key producers and recycling.

The above three paragraphs are all there is to this very brief news item that showed up on the steelguru.com Internet site on Friday sometime.  I found it on the Sharps Pixley website — and another link to it is here.


India makes gold jewellery hallmarking mandatory from mid-January

India will make hallmarking of gold jewellery and artefacts mandatory from mid-January, a senior government minister said on Friday, a move that could boost demand in the world’s second-biggest gold market by tackling quality concerns.

Hallmarking will be mandatory from Jan. 15, but a period of one year will be allowed to set up new hallmarking centres and to clear jewellers’ existing stocks, Consumer Affairs Minister Ram Vilas Paswan told reporters.

Hallmarking jewellery is not yet mandatory in India, where jewellery quality is sometimes an issue, mainly with small jewellers, and customers face problems when selling old jewellery for cash or exchanging it for new.

The move will bring trust back to the gold industry, benefiting consumers and trade alike,” said Somasundaram PR, managing director of the World Gold Council’s Indian operations.

Indians’ penchant for gold spans centuries and is rooted in the Hindu religion. Households across the country own an estimated combined 25,000 tonnes of gold, with families often passing their gold assets down from one generation to the next.

This interesting gold-related news item, filed from Mumbai, appeared on the in.reuters.com Internet site at 8:07 a.m. EST on Friday morning — and I found this article on the gata.org Internet site.  Another link to it is here.


The PHOTOS and the FUNNIES

After feeding the yellow-bellied marmots in Kamloops on the afternoon of July 20, we headed back to Merritt on B.C. Highway 5A under rapidly-clearing skies.  But before hitting that interchange, I stopped along the side of the always-busy Trans-Canada Highway to get these first two shots overlooking Kamloops.  You can just make out the South Thompson River in spots as it runs across the centre of the first photo.  The confluence with the North Thompson River is at the extreme left of this picture. The second shot is from a kilometer or so further up the highway — and the North Thompson River is clearly visible, but the confluence with the South Thompson is not…hidden by the downtown.  With lots of time on our hands, we took a side trip to Roche Lake high up on the Thompson Plateau — and the last two photos were taken there.  Click to enlarge.


The WRAP

And as time has rolled on, the signs have only gotten stronger that the silver manipulation will end in even more spectacular fashion than would have been the case had it ended decades ago. What signs? Start with the massive accumulation of physical metal that JPMorgan pulled off in full view since 2011. Or the fact that it has never lost when adding new short positions. Or that only COMEX silver has a concentrated short position larger than any commodity in terms of real world production and consumption. These facts have gone unchallenged by all the parties involved – JPMorgan, the CME, the CFTC — and now the Justice Department.

Have you ever witnessed major financial institutions or regulatory and law enforcement officials refuse to respond to reasonable accusations of illegality? And if anyone questions the reasonableness of the accusations of manipulation, then come up with the reason why silver is and has been so cheap on every absolute and relative measure – away from the concentrated and manipulative short selling by a handful of banks. No explanations will ever be forthcoming from the entities involved – JPM, as well as the CME, CFTC and DoJ – as that ship has long sailed. If there were reasonable explanations, we would have heard them by now.

That’s what makes the signs that can be seen so important and encouraging. Signs like JPM’s epic physical accumulation and very recent aggressive buyback of futures contracts, as well as the lack of selling by the managed money traders for the first time in memory. There will never be an announcement of an official end to the manipulation – it will just end. And when it does end, it will be an end like none other.”  — Silver analyst Ted Butler: 27 November 2019


Today’s pop ‘blast from past’ dates from 1973 and was composed and recorded by Neil Sedaka.  But when an America pop duo covered it in 1975, their version became a world-wide hit.  There was no way to get away from this tune, as it was No. 1 on every music chart you could think of — and also won the Grammy Award (1975) for Record of the Year on February 28, 1976.  You’ll know it instantly — and the link is here.  Enjoy!

Today’s classical ‘blast from the past’ is one that I’ve only featured once before — and although I think it’s fantastic, I’m just sick of hearing it, as I listened to the 1962 Van Cliburn recording countless times in my youth.  But it’s one of the warhorses of the classical/romantic repertoire that’s certainly worth posting again.  It’s Tchaikovsky’s Piano Concerto No. 1, Op. 23 in B-flat minor which he composed between November 1874 and February 1875.

The first version received heavy criticism from Nikolai Rubinstein, Tchaikovsky’s desired pianist…so the first performance of the original version took place on October 25, 1875 in Boston of all places.  Although the premiere was a success with the audience — so popular that Bülow [the pianist] was obliged to repeat the Finale, a fact that Tchaikovsky found astonishing…the critics were not so impressed.

But as American film critic Rex Red was once quoted as saying…”Nobody ever built a monument to a critic.”  He would be right about that, dear reader.

It is one of the most popular of Tchaikovsky’s compositions and among the best known of all piano concertos.  Here’s Anna Federova doing the honours with the Nordwestdeutsche Philharmonie at the Royal Concertgebouw Amsterdam.  Yves Abel conducts — and the link is here.  The audio and video are spectacular…as is the performance.


What I presumed would be a quiet trading session on the final holiday-shortened trading day of November in the U.S. proved to be anything but in both silver and gold — and in other commodities as well.

Although the rallies weren’t overly large, the fact that they occurred at all was a surprise to me — and I’m wondering what might be up.  Whether it was month-end book-squaring, or short covering rallies of some type, is not known…nor does it matter I suppose.  The most important thing was that ‘da boyz’ had to step in, or there would have been real fireworks to the upside…early COMEX close or not.

It may or may not have had something to do with the decline in the dollar index.  But as I mentioned in my discussion on that further up in today’s column, that decline began forty-five minutes before gold and silver prices erupted — and continued long after the low tick for the dollar was in.

I’ll be interested if Ted has anything to say about this in his weekly review this afternoon.

Here are the 6-month charts for the four precious metals, plus not only copper, but natural gas and WTIC.  The rallies in both gold and silver really don’t stand out much on their respective charts — and there’s nothing to see in either platinum or palladium.  But that was far from the case for copper, natural gas and WTIC…as all got hammered into the dirt during the COMEX trading session on Friday.  I don’t normally go off on a tangent about natural gas, but after seeing what happened to the other two commodities, I thought I’d check the chart — and I was flabbergasted.  Click to enlarge.

Copper got hit by a decent amount, but both natural gas and WTIC got absolutely smoked!  Natural gas was blasted below both its 50 and 200-day moving averages — and was closed down 22 cents on the day…a decline of 8.80%!  WTIC was also blasted back below both its 50 and 200-day moving averages in one go…down $2.94 a barrel….a decline of 5.06 percent!

These declines look very engineered to me.  Something stinks to high heaven here — and I just can’t put my finger on it, although I do suspect something.  However, I’m not prepared to speculate further at this point — and I look forward to the Sunday night 6:00 p.m. EST opens in New York with heightened interest.


There are few heavy hitters out there that haven’t spoken up about the dangers that lurk in the current economies and financial systems of most nations of the world…including corporate debt and negative bond yields.  Virtually all of them are on the brink of recession, or are already there.  Only rampant money printing by the world’s central banks, with the Fed being the latest culprit, is keeping interest rates in the dirt — and the ‘everything’ bubble rising higher into the ever-thinning stratosphere.

It is now obvious to even the central banks that endless money printing will never bring about the economic ‘growth’ and inflation that they were so anxious to spawn…with the mea culpa from the past chief of the BoJ being the latest.  Of course us lesser beings had this figured out years ago — and I’m sure that these central banks did as well, but would never admit it until it became so obvious that even Stevie Wonder could see it.

As I’ve said before on several occasions this year…they’re all out of aces…except for the gold card.

Although loath to play it, it’s all they have left.  But the moment they do, they’ll have all the inflation they want, plus much more…probably too much.  Once they let this genie out of the bottle, there will be nothing to stop it, as it will have to burn itself until the various markets have cleared.  All currencies will be immediately devalued not only against gold and silver…but all hard assets.

The paper world that has been built up since Nixon “temporarily” closed the gold window back in August 1971, will crash and burn.  Fourty-eight years of commodity price suppression will come to an end — and the economic, financial and monetary landscape that emerges from the ruins will be unrecognizable.

But at the end of it….”he who has the gold, will make the rules” as the old saying goes…and as we know, a lot of the central banks of the world have been scarfing it up at an ever-increasing rate for the past couple of years.  On top of that is the increasing repatriation of gold from the Bank of England by the central banks in Europe…with Poland’s 100 tonne midnight move being the most glaringly obvious — and most recent.

And this is just the gold movements that have come into the public domain.  It’s a given that there’s more going on out of sight where we can’t see it — and no more notable example of that is what’s been going on over at JPMorgan for that last 10+ years.

Thanks to Ted Butler’s work, we know that they are sitting on 25+ million troy ounces of gold — and at least 900 million troy ounces of silver.  If you eliminate the ‘dead men walking’ Chinese banks from the equation, the biggest bank in the world by assets is JPMorgan Chase.  Jamie Dimon has stated that their balance sheet “is bulletproof” — and with that kind of physical precious metal in hand, they will be the Lord over all of them when the gold card is played.

And since JPMorgan is also the also the ultimate short seller of last resort in the precious metal market, they’re in a position to play that gold card at any time of their choosing.  And whether they play it deliberately, or by request, is irrelevant…but it will be played at some point.

And as Ted said in his closing paragraph in his Wednesday column to his paying subscribers…”whenever we do lift off in price, the real move won’t involve any two steps up, one step back. The power of the move will shock us all.”

I’m still “all in” — and I’ll see you here on Tuesday.

Ed

With New York Closed, Nothing Much Happened on Thursday

29 November 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price ticked a few dollars higher at the 6:00 p.m. EST open in New York on Wednesday evening — and ran into ‘da boyz’ right away — and it wasn’t allowed to do much after that.

The high and lows certainly aren’t worth looking up.

The gold price was closed in New York at 1:00 p.m. EST on Thursday afternoon at $1,455.60 spot, up $1.40 from Wednesday.  Net HFT gold volume for the U.S. Thanksgiving holiday-shortened trading session was very quiet at a bit over 68,500 contracts — and there was 5,500 contracts of roll-over/switch volume on top of that.

The price ‘activity’ in silver was almost identical to gold’s — and it traded in a ten cent range for the entire Thursday session…such as it was — and there were no high and low ticks worthy of the name.

Silver was closed at $16.91 spot, down 2.5 cents on the day.  Net HFT silver volume was fumes and vapours as well, at a bit over 15,500 contracts — and there was about 2,150 contracts worth of roll-over/switch volume in this precious metal.

Platinum had a tiny down/up move in Far East trading on their Thursday — and there was a bit of price pressure starting at the Zurich open.  It was sold quietly lower until 1 p.m. CET — and traded mostly sideways until shortly before 4 p.m. CET.  It crawled a few dollars higher from there before trading sideways once again into the 1:00 p.m. close in New York.  Platinum finished the day at $890 spot, down 3 bucks from its close on Wednesday.

Palladium was down 6 bucks by shortly before 10 a.m. China Standard Time on their Thursday morning — and from there it didn’t do anything until shortly before 3 p.m. CST.  It began to head unevenly higher from there — and the spike higher around 11:20 a.m. in Zurich was quietly capped — and it chopped very unevenly sideways until trading ended at 1 p.m. EST.  Palladium was closed at $1,821 spot, up 5 dollars on the day — and at another new record high…but 27 bucks off its Kitco-recorded high tick.

The dollar index closed very late on Wednesday afternoon in New York at 98.37 — 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 began to drift lower starting around 12:20 p.m. CST — and the 98.26 low tick was set at 9:02 a.m. in London.  It crept higher from there until the 98.40 high tick was set around 12:45 p.m. GMT — and it crawled lower into the 5:30 p.m. EST close from there.  The dollar index finished the Thursday session at 98.xx…down  basis points from Wednesday’s close.  Not much to see here, either.

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

With New York shut tight for Thanksgiving, there were no reports from the CME Group, the U.S. Mint…GLD & SLV etc.

But the TSX gold exchange in Toronto closed higher by 0.72 percent.

Roman Empire, Leo I, 457-474, Tremissis

Material:  Gold     Full Weight:  1.51 grams     Value:  €390.00/US$429

I only have a small handful of stories for you today — and all but one are precious metal related.


CRITICAL READS

China Financial Warning Signs Are Flashing Almost Everywhere

From rural bank runs to surging consumer indebtedness and an unprecedented bond restructuring, mounting signs of financial stress in China are putting the nation’s policy makers to the test.

Xi Jinping’s government faces an increasingly difficult balancing act as it tries to support the world’s second-largest economy without encouraging moral hazard and reckless spending. While authorities have so far been reluctant to rescue troubled borrowers and ramp up stimulus, the costs of maintaining that stance are rising as defaults increase and China’s slowdown deepens.

Policy makers are attempting to do the “minimum necessary to keep the economy on the rails,” Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs Group Inc., said in a Bloomberg TV interview.

Among China’s most vexing challenges is the deteriorating health of smaller lenders and regional state-owned companies, whose financial linkages risk triggering a downward spiral without support from Beijing. A landmark debt recast proposed this week by Tewoo Group, a state-owned commodities trader, has raised concerns about more financial turbulence in its home city of Tianjin.

Concerns have popped up across the country in recent months, often centered around smaller banks. Confidence in these institutions has waned since May, when regulators seized control of a lender in Inner Mongolia and imposed losses on some creditors. Authorities have since intervened to quell at least two bank runs and orchestrated bailouts for two other lenders.

This Bloomberg news item showed up on their website at 1:00 PST on Thursday afternoon — and was updated about ten hours later.  I thank Swedish reader Patrick Ekdahl for sharing it with us — and another link to it is here.


Frank Holmes: Are You Underinvested in Gold?

Frank Holmes CEO and Chief Investment Officer of U.S. Global Funds, talks with host Jay Taylor about owning gold and provides some advice in efficient portfolio construction.

The interview runs for 29 minutes — and it was posted on the youtube.com Internet site on Tuesday sometime.  I thank Judy Sturgis for pointing it out.


How billions in gold was secretly moved from London to Poland

In the early hours of the morning on November 22, 2019, four G4S trucks raced from a secret facility northwest of London carrying a special cargo. They were accompanied by a police escort, with a helicopter flying overhead. Lights flashed as they drove to a London airport, where 20 heavy, wooden boxes were carefully loaded and tied down in a Boeing 737 freighter plane.

It was the eighth time we had made the trip, in the middle of the night,” Paul Holt, General Manager of G4Si in Europe (North and South), Russia and the Commonwealth of Independent States, said. “It was all very secretive, and extremely important it was done well.” The boxes were full of gold bars, bound for Poland.

The covert mission

Over the eight trips, G4Si helped transport 100 tonnes of gold – worth more than $US5 billion – from London’s Bank of England to the Narodowy Bank Polski, Poland’s central bank. On the U.K. side, 8,000 bars were carefully counted, prepared and packaged at a purpose-built G4S gold storage facility in London. They were then loaded into high-tech armoured trucks.

The movements of the gold were meticulously planned in coordination with everyone, including the police, the Bank of England, the Narodowy Bank Polski and G4Si,” John Lennox, Operations Director for G4S Cash Solutions U.K., said.

This very interesting 4-photo article put in an appearance on the g4si.com Internet site on Thursday — and I found it on the Sharps Pixley website.  Another link to it is here.  Ronan Manly has commentary on this on the bullionstar.com Internet site headlined “Polish central bank airlifts 8,000 gold bars (100 tonnes) from London to Warsaw” — and that was posted in a GATA dispatch on Thursday evening.


U.K. Can’t Be Trusted With Gold, Top Slovak Party Leader Says

Slovakia’s former premier said parliament should force the central bank to bring back the nation’s gold stored in the U.K. as history has shown that allies “can hardly” be trusted.

Ex-Premier Robert Fico, who chairs the biggest party in Slovakia, said Thursday his formation is seeking to hold a special parliamentary session on the issue. The gold isn’t safe in the U.K. because of Brexit and a possible global economic crisis, he said.

You can hardly trust even the closest allies after the Munich Agreement,” he told reporters, referring to a 1938 pact by France, the U.K., Italy and Germany, which allowed Adolf Hitler to annex a part of Czechoslovakia. “I guarantee that if something happens, we won’t see a single gram of this gold. Let’s do it as quickly as possible.”

Three months before general elections take place in Slovakia, Fico is riding on a wave of nationalist sentiment that has gripped many countries in the European Union’s east, including neighboring Poland and Hungary.

Central bank spokesman Peter Majer declined to comment on Fico’s comments. Slovakia, which uses the euro, has 31.7 metric tonnes of gold worth €1.3 billion ($1.4 billion) and it’s actively trading it, he said.

The above five paragraphs are all there is to this brief Bloomberg article that showed up on its website at 7:43 a.m. Pacific Standard Time on Thursday morning.  I found it in a GATA dispatch — and another link to the hard copy is here.


Gold Is the New Obsession for East Europe’s Nationalist Leaders

Gold is all that nationalist leaders in Europe’s east can talk about these days.

Just this week, Poland’s government touted its economic might after completing the repatriation of 100 tons of the metal. Over in Hungary, anti-immigrant Prime Minister Viktor Orban has been ramping up holdings of the safe-haven asset to boost the security of his reserves.

The gold rush mirrors steps by Russia and China to diversify reserves exceeding $3 trillion away from the dollar amid flaring geopolitical tensions with the U.S. Motivations in Europe’s ex-communist wing, however, can vary.

Take the latest example. Former Slovak Premier Robert Fico, who has a real shot at returning to power, urges parliament to compel the central bank into bringing home gold stocks stored in the U.K.

The reason? Sometimes your international partners can betray you, Fico said, citing a 1938 pact by France, Britain, Italy and Germany allowing Adolf Hitler to annex a chunk what was then Czechoslovakia, and — more recently — the Bank of England’s refusal to return Venezuela’s gold stock over political differences.

You can hardly trust even the closest allies after the Munich Agreement,” Fico told reporters. “I guarantee that if something happens, we won’t see a single gram of this gold. Let’s do it as quickly as possible.”

This gold-related news story was posted on the bloomberg.com Internet site at 7:30 p.m. PST on Thursday evening — and it’s the second contribution of the day from Patrik Ekdahl.  Another link to it is here.


India one of the largest gold smuggling hubs in the world: report

International non-government organisation IMPACT, in its latest report, has said that India has become one of the largest gold smuggling hubs in the world.

Gold possibly tied to conflict, human rights abuses and corruption in Africa and South America is entering legal international markets through India, said the Canada-headquartered organisation in a statement.

The NGO said it had uncovered how the country imported about 1,000 tonnes of gold per year — a quarter more than the official figures indicated. “Some enter as legal imports thanks to falsified paperwork,” it said.

Actors across India’s gold industry are failing to do proper checks on where gold comes from to ensure it’s not financing conflict and human rights violations,” according to Joanne Lebert, IMPACT’s executive director.

The report said that one third of the world’s gold passed through India, identifying three primary factors for smuggling: tax breaks, falsified origin documents and complicit allies.

To boost India’s refinery sector, the government had introduced tax breaks in 2013 for unrefined gold. According to the report, this led to traders covering up questionable provenance claims by falsifying documentation to take advantage of lower taxes. The import of unrefined gold shot from 23 tonnes in 2012 to over 229 tonnes in 2015.

This gold-related news item, which is mostly likely true in some respects, certainly smacks of wild-ass speculation to me…lots of claims of irregularities, but no real proof…just accusations.  I would suspect that other countries besides India are guilty of these crimes.  Filed from New Delhi, it put in an appearance on thehindu.com Internet site very early on Thursday morning — and it’s another story that I found on the gata.org Internet site.  Another link to it is here.


The PHOTOS and the FUNNIES

Arriving in Kamloops on July 20th — and after doing some banking, shopping and lunch, we headed back to Mcarthur Island Park — and fed our friends the yellow-bellied marmots.  I only took these three pictures, as I have enough photos of these critters already.  You find out very quickly just how sharp those tiny claws are when you’re wearing shorts, as they try to climb your leg to get at the vegetable tray we had.  Click to enlarge.


The WRAP

With the U.S. shut tight for their Thanksgiving holiday, the precious metal market was pretty dead, but their proxies overseas were certainly there to ensure that they all behaved — and that was particularly true of palladium once again.

There are no 6-month charts available today, as the folks at the stockcharts.com Internet site took the day off as well.


And as I type this paragraph, the London/Zurich open are less than a minute away — and I see that gold’s tiny rally in early Far East trading on their Friday was turned quietly sideways around 11:20 a.m. China Standard Time. It’s up $2.50 currently. Ditto for silver — and it’s up a penny on the day as London opens. The platinum price didn’t do much until 11 a.m. CST — and it’s up 7 bucks at the moment. Palladium’s rally at the New York open on Thursday evening wasn’t allowed to get far — and from around 9:15 a.m. CST, it was sold quietly lower until shortly after the 2:15 p.m. CST afternoon gold fix in Shanghai. It has ticked higher in the last thirty minutes — and is down only 4 dollars the ounce as Zurich opens.

Net HFT gold volume in February, the new front month for gold, is very light at a hair under 26,000 contracts — and there is only about 500 contracts worth of roll-over/switch volume in this precious metal. These numbers are net of Thursday’s data. Net HFT silver volume in March, the new front month for silver, is about 7,400 contracts — and there’s only about 135 contracts worth of roll-over/switch volume on top of that. These numbers are net of Thursday’s volume data as well.

The dollar index opened down about 2 basis points at 98.35 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 — and shed a few more basis points over the next hour. Since then it has been edging quietly and unevenly sideways — and is down 5 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.


Yesterday in this space I posted Nick Laird’s long-term palladium chart, showing its new closing all-time high.  Today I’m posted the long-term gold chart…dating back to 1970, the year before Nixon pulled the plug on what was left of the Bretton Woods gold standard.

A lot of pundits, including this writer, feel that we’re now in a new bull market for gold that started very early in 2016 — and if that’s the case, the new all-time high for gold when it finally does arrive, it will not only be a fairly substantial number, it will most likely arrive with breath-taking speed as well.  The same can be said of silver — and a lot of other commodities…precious, or otherwise.  Click to enlarge.

And as I post today’s missive on the website at 4:02 a.m. EST, I note that both gold and silver got tapped lower by a bit at the London open. The former is up only $1.30 the ounce — and the latter is now down 3 cents as the first hour of London trading draws to a close. Platinum was sold a bit lower as well at the Zurich open — and is now up only 3 dollars. Palladium is bucking that trend by a bit — and is now back at unchanged as the first hour of Zurich trading ends.

Gross gold volume is a bit under 33,000 contracts — and minus current roll-over/switch volume…which isn’t much, net HFT gold volume is a bit over 31,500 contracts. These gold numbers — and the silver numbers that follow, are net of Thursday’s volumes. Net HFT silver volume is around a hair under 9,000 contracts — and there’s about 185 contracts worth of roll-over/switch volume in this precious metal.

The dollar index has continued to trade quietly and unevenly sideways over the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, the index is down 3 basis points.


With no Commitment of Traders Report today — and the New York markets closing early, I should be able to have my Saturday column up on the website far earlier than normal.

Enjoy your weekend…long or otherwise — and I’ll see you here on Tuesday.

Ed

A Record High Closing Price For Palladium

28 November 2019 — Thursday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was stair-stepped quietly lower in price starting the moment that trading began around 6:45 p.m. in New York on Tuesday evening, which was 7:45 a.m. China Standard Time on their Wednesday morning — and from around 8:30 a.m. in New York onwards, it chopped quietly sideways 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 Wednesday afternoon at $1,454.20 spot, down $7.10 from Tuesday.  Net volume in the new front month for gold…February…was very quiet at around 120,000 contracts. Roll-over/switch volume was around 113,000 contracts.  These numbers are estimates at best during the last few trading days of the month…especially a heavy delivery month like December, as the large amount of roll-over/switch volume and spread trade activity really distorts these numbers — and throwing the U.S. Thanksgiving holiday into that mix, certainly doesn’t help.

It was mostly similar in silver, as it was sold quietly lower until around 1 p.m. CST on their Wednesday afternoon — and back below $17 spot.  It was sold a bit lower starting at 1 p.m. in London/8:00 a.m. in New York, but rallied a few pennies into the 10 a.m. EST afternoon gold fix in London — and didn’t do much after that.

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

Silver was closed on Wednesday at $16.935 spot, down 10 cents on the day.  Net volume in the March contract was around 31,500 contracts — and there was a bit under 30,500 contracts worth of roll-over/switch volume on top of that.  My prior comments on the accuracy of these numbers in gold, also apply to the numbers in silver as well.

Platinum was sold a handful of dollars lower by around 10 a.m. CST on their Wednesday morning — and that juncture it traded quietly sideways until 2 p.m. in Zurich/8 a.m. in New York.  It was sold back below $900 spot in short order — and ‘da boyz’ set the low tick around 11:30 a.m. EST.  It rallied a bit from there until shortly after 12 o’clock noon — and didn’t do a whole lot of anything after that.  Platinum was closed at $893 spot, down 13 bucks on the day — and back below where it closed on Monday.  Nothing free-market about that.

The palladium price wandered around a handful of dollars below unchanged throughout all of Far East and early morning trading in Zurich, it began to head high at or shortly before noon CET.  That very decent rally got capped at 1 p.m. in New York — and it edged unevenly sideways from that point until trading ended at 5:00 p.m. EST.  Platinum was closed at $1,816 spot — and at a new record high — up 25 dollars on the day, but 26 bucks off its high tick.

How much higher in price is market equilibrium in palladium you ask?  Nobody knows, but ‘da boyz’ are marching it there in a very controlled manner, with a few air pockets along the way.


The dollar index closed very late on Tuesday afternoon in New York at 98.25 — and it opened up about 5 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 there it edged quietly and unevenly higher until precisely 8:00 a.m. GMT…the London open.  From there it was sold equally quietly lower until 8:26 a.m. in New York.  It jumped a bit higher until 9:52 a.m. EST — and then began to creep quietly lower.  It fell off a bit of a cliff at 4:55 p.m. — and finished the Wednesday session at 98.37…up 12 basis points from Tuesday.

If there was any correlation between the currency moves vs. the precious metal price activity, I failed to see it.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…98.29…and the close on the DXY chart above, was 8 basis points on Wednesday.  Click to enlarge as well.

The gold stocks were sold lower the instant that the markets opened in New York at 9:30 a.m. on Wednesday morning — and that sell-off lasted until a minute or so after the 11 a.m. EST London close.  From that point they wandered quietly higher until around 3:25 p.m. — and they sold off a hair going into the 4:00 p.m. EST close.  The HUI finished down only 0.79 percent.

The price action in the silver equities was virtually the same as it was for the gold shares, except their initial sell-off at the 9:30 a.m. open was a bit deeper — and because of that, they didn’t recover as much as the Wednesday trading session moved along.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 1.53 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.

Not surprisingly, the Silver 7’s three laggards all finished lower on the day.  Peñoles closed down only 0.66 percent…Buenaventura closed down 1.90 percent — and Hecla, closed lower by 0.42 percent.  First Majestic Silver finished the day down 2.40 percent.  But Coeur Mining got clubbed…down 5.00 percent — and is down a bunch more in after-hours trading as I write this.


The CME Daily Delivery Report had the First Day Notice numbers for December deliveries.  It showed that 1,320 gold and 1,085 silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, there were five short/issuers in total, but the only one that mattered was JPMorgan with 1,278 contracts out of its ‘client’ account.  There were eighteen long/stoppers — and the three largest were Goldman Sachs with 317 contracts…187 for its own account, plus another 130 for its client account. Bank of American Securities picked up 206 contracts for its client account — and Citigroup stopped 197 contracts…165 for its own account, plus 32 for its clients.  JPMorgan didn’t stop any contracts for its own account.

In silver, there were seven short/issuers in total — and the four largest were ABN Amro with 468 contracts…Morgan Stanley with 240…Macquarie Futures with 193 — and JPMorgan issued 164 contracts.  Except for Macquarie Futures, all contracts issued came from their respective client accounts.  There were fifteen long/stoppers in total — and the three biggest by far were UBS picking up 422 contracts…Morgan Stanley stopping 228 — and JPMorgan picked up 195 contracts.  All these amounts were for their respective client accounts.  I’ve never seen UBS show up a stopper in silver before — and the fact that JPMorgan didn’t stop any contracts for its own account was another standout.

The link to yesterday’s Issuers and Stoppers Report is here — and it’s definitely worth a look if you have the interest.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in December cratered by another 30,370 contracts, leaving a very hefty 12,307 still open…minus the 1,320 contracts mentioned a few paragraphs ago.  Silver o.i. in December crashed by a further 11,289 contracts, leaving 4,702 still around, minus the 1,085 contracts mentioned a few paragraphs ago.

I would suspect, although I’m not prepared to bet any money on it, that we’ll see a bit more December open interest disappear when Friday’s Preliminary Report is posted — and that’s mainly because of reporting delays associated with the U.S. Thanksgiving holiday.  But even if there isn’t, the remaining gold open interest is a very big number — and I would think that there will be more contracts added as the December delivery month moves along.


There were no reported changes in GLD for the second day in a row.  But, for the second day in a row, there was a very decent-sized withdrawal from SLV, as an authorized participant removed 2,382,689 troy ounces.  And, without doubt, JPMorgan owns it all now.

In other gold and silver ETFs on Planet Earth on Wednesday…minus COMEX, GLD & SLV activity…there was a net 93,157 troy ounces of gold added.  In silver, there was a net 681,736 troy ounces withdrawn — and that’s because of another big withdrawal from SIVR…787,535 troy ounces worth.

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

There was a fair amount of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Tuesday.  JPMorgan picked up 321,500.000 troy ounces/10,000 kilobars [U.K./U.S. kilobar weight] — and there was 160.750 troy ounces/5 kilobars [U.K./U.S. kilobar weight] shipped out of Canada’s Scotiabank.  There was a lot of paper movement as well.  There was 106,086 troy ounces transferred from the Eligible category — and into Registered over HSBC USA — and a similar transfer of 7,610 troy ounces over at Scotiabank.  There was also a transfer of 1,929.000 troy ounces/60 kilobars [U.K./U.S. kilobar weight] from the Registered category — and back into Eligible over at the International Depository Services of Delaware.  The link to all of this activity is here.

There was decent activity in silver as well.  Although nothing was reported received, there were two truckloads…1,196,437 troy ounces…shipped out of Canada’s Scotiabank, plus 1,084 troy ounces…one good delivery bar…departed Delaware.  There was a bit of paper activity as well.  There was 83,679 troy ounces transferred from the Registered category — and back into Eligible over at the International Depository Services of Delaware.  The link to that is here.

There was a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  There were 200 received — and 500 kilobars shipped out.  All of this occurred at Brink’s, Inc. — and the link to that, in troy ounces, is here.

Byzantine Empire, Constans II, 641-668, Solidus

Mint:  Constantinople     Material:  Gold     Full Weight:  4.31 grams

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


CRITICAL READS

Simply Vertical: No 0.5% Pullbacks in S&P500 in 35 Days

Ever since the Federal Reserve launched ‘Not QE’ and President Trump ramped up tweets and comments of an imminent trade deal since October (or in one tweet, a fake trade deal), the S&P500 has had zero pullbacks, simply, it has gone vertical.

You have to go back all the way to Nov 2017 to see an environment where the lack of correction was greater than the current setup. Back then the S&P500 did not fall by more than 0.5% in a single day for 50 consecutive days. But don’t take our word for it, just look at the chart below that takes us back to June 2010 to see the extraordinary nature of the price action,” the International Financing Review said.

President Trump’s “trade optimism” and the printing press at the Federal Reserve have also pushed a narrative that the global economy is going to rebound in the coming months, and a huge upswing will be seen across the world. Much of that is fantasy, as China’s credit impulse continues to roll over, and the global economy continues to decelerate, without China, there can be no massive upswing in the global economy. Though we don’t discount the idea, there could be stabilization; still, that would produce disappointment.

While nothing lasts forever, there are obviously imbalances that are building in markets that have been created on weak narratives, such as “trade optimism” and a global recovery – if for whatever reason one of those narratives breaks down, then perhaps, as Charles Hugh Smith via OfTwoMinds blog, explains: markets are in blow-off tops.

We all know what happens next…Click to enlarge.

This commentary was posted on the Zero Hedge website at 3:11 p.m. on Wednesday afternoon EST — and it’s the first offering of the day from Brad Robertson.  Another link to it is hereGregory Mannarino‘s post market close rant for Wednesday is linked here.


We Aren’t Masters of the Stock Market — Bill Bonner

Up until that day, the food came every day. Day after day… the sun shone… and along came the farmer with more grain. And then, without warning, everything changed for the turkey. Worse than a bad feather day… it was the final scene. The curtain fell. The court adjourned.

Meanwhile, over in the stock market, the sun still shines. Heck, the more danger signs we see, the more the market goes up. Yesterday was no exception. CNBC:

Stocks rose slightly on Tuesday as retail shares outperformed, lifting the major averages to fresh record highs.

The Dow Jones Industrial Average was up 55.14 points, or 0.2% at 28,121.68. The S&P 500 gained 0.2% to 3,140.50. The NASDAQ Composite also advanced 0.2% to 8,647.93.”

But as the SEC is quick to add: Past performance is no guarantee of future performance. You may flip a hundred coins and get heads every time. That doesn’t mean that the next one won’t come up tails.

                        Not All Gravy

We see the turkey’s life from the farmer’s perspective. It is not all gravy and sweet potatoes. But it is very predictable, with a definite beginning and a certain end. And a purpose.

We’re tempted to make an analogy to the stock market. But there is nothing definite about the stock market. It can famously stay irrational a lot longer than you can stay solvent. But it can also stay solvent longer than you can stay irrational.

This very interesting and worthwhile Thanksgiving commentary from Bill put in an appearance on the bonnerandpartners.com Internet site on Wednesday morning EST — and another link to it is here.


Meanwhile For Bonds, It’s Going From BBBad to Worse

The threat posed by a downgrade of billions (if not trillions) of BBB-rated investment grade bonds, making them “fallen angels” as they slide into “junk bond” territory and resulting in a bond market crisis due to forced selling mandates as the size of the junk bond market soars is hardly new: in fact we covered it for the first time about a year ago in “Hunting Angels: What The World’s Most Bearish Hedge Fund Will Short Next.”

Since then many have hinted that the tipping point for a credit crisis is imminent. Most notably perhaps, last May some of America’s top restructuring bankers, predicted that the day of reckoning is nigh. Take the former head of restructuring at Jefferies and the current co-head of recap and restructuring at Moelis, Bill Derrough, who said at a restructuring event that “I do think we’re all feeling like where we were back in 2007. There was sort of a smell in the air; there were some crazy deals getting done. You just knew it was a matter of time.”

Even if there is not a recession or credit correction, with the sheer volume of issuance there are going to be defaults that take place,” added Neil Augustine, co-head of the restructuring practice at Greenhill & Co.

And yet, almost a year and a half later, the inevitable BBB downgrade avalanche and explosion in the size of the junk bond market has yet to happen.

Curiously, instead of encouraging complacency, yesterday former Goldman partner and current Dallas Fed president Robert Kaplan issued the starkest warning about surging levels of corporate debt and laid out a scenario where it could suddenly become a big problem for the economy.

The thing I am worried about is if you get two or three BBB credit downgrades to BB or B, that could lead to a rapid widening in credit spreads, which could then lead to a rapid tightening in financial conditions,” Kaplan said in a Tuesday interview with CNBC’s Steve Liesman.

We’re got a record level of corporate and to be specific BBB debt has tripled over the last 10 years,” he said on “Squawk Box.” “Leveraged loans as well as BB and B debt have grown dramatically.”

Since few if any corporations have been punished for incurring ever more debt – most of it being used to fund M&A and/or buybacks – companies have no qualms about issuing even more debt, and explains why almost nobody has deleveraged in the past two years.

Of course, once the longest expansion in history ends and the U.S. economy finally reverses and rating agencies finally wake up and start downgrading companies en masse, that’s when CFOs and treasurers will scramble to do everything they can to reduce their leverage. Alas, it will be too late.

This longish chart-filled article appeared on the Zero Hedge website at 3:45 p.m. EST on Wednesday afternoon — and is worth your while if you have the time.  I thank Brad Robertson for sending it — and another link to it is here.


Doug Casey on the Destruction of the Dollar

“Inflation” occurs when the creation of currency outruns the creation of real wealth it can bid for… It isn’t caused by price increases; rather, it causes price increases.

Inflation is not caused by the butcher, the baker, or the auto maker, although they usually get blamed. On the contrary, by producing real wealth, they fight the effects of inflation. Inflation is the work of government alone, since government alone controls the creation of currency.

In a true free-market society, the only way a person or organization can legitimately obtain wealth is through production. “Making money” is no different from “creating wealth,” and money is nothing but a certificate of production. In our world, however, the government can create currency at trivial cost, and spend it at full value in the marketplace. If taxation is the expropriation of wealth by force, then inflation is its expropriation by fraud.

To inflate, a government needs complete control of a country’s legal money. This has the widest possible implications, since money is much more than just a medium of exchange. Money is the means by which all other material goods are valued. It represents, in an objective way, the hours of one’s life spent in acquiring it. And if enough money allows one to live life as one wishes, it represents freedom as well. It represents all the good things one hopes to have, do, and provide for others. Money is life concentrated.

This commentary by Doug showed up on the internationalman.com Internet site on Wednesday — and it’s definitely worth reading.  Another link to it is here.


Deutsche Bank Sells $50 Billion Book of Assets to Goldman

Deutsche Bank AG has found a willing partner in Goldman Sachs Group Inc. as the German lender tries to quickly offload billions of euros worth of unwanted assets.

The U.S. bank bought securities with a notional value of about 40 billion pounds ($51 billion) from the German firm, people briefed on the matter said. It’s at least the second time Goldman Sachs has taken advantage of the sweeping deleveraging effort underway since Deutsche Bank Chief Executive Officer Christian Sewing unveiled a new turnaround plan in early July.

In September, the U.S. investment bank purchased the Asian portion of a portfolio of equity derivatives that the German lender had put up for sale, people familiar with the matter said at the time. Barclays and Morgan Stanley each bought a portion too, the people have said. And BNP Paribas previously agreed to take over the hedge fund business.

The assets bought by Goldman in the latest deal are tied to emerging market debt and were previously housed in Deutsche Bank’s wind-down unit, one person said. They asked not to be identified discussing the private deal. Representatives for Deutsche Bank and Goldman Sachs declined to comment.

This Bloomberg story was posted on their website at 2:47 a.m. Pacific Standard Time on Wednesday morning — and was updated [complete with a new headline] six hours later.  I thank Swedish reader Patrik Ekdahl for sending it along — and another link to it is here.


Bold Bets That Gold Could Triple to $4,000 Trade in New York

The gold options market saw $1.75 million in block trades betting the precious metal could almost triple in more than a year, surpassing the record.

Around noon in New York Wednesday, 5,000 lots of a gold option giving the holder the right to buy the precious metal at $4,000 an ounce in June 2021 changed hands. The bets were sold at $3.50 an ounce.

It’s like 18-month term life insurance; what will the world look like if gold is at $4,000,” Tai Wong, the head of metals derivatives trading at BMO Capital Markets, said in an e-mail. “They are hoping for a quick violent move,” he said, referring to the people who bought the call options.

Gold futures climbed to a record $1,923.70 an ounce in 2011 as the Federal Reserve bought more than $2 trillion of debt to stimulate the U.S. economy. While bullion has rallied 14% this year, the precious metal is still 24% below the current all-time high.

This brief gold-related news item appeared on the bloomberg.com Internet site at 10:32 a.m. PST on Wednesday morning — and was updated five and a half hours later.  I found it on the gata.org Internet site — and another link to it is here.


Agnico Eagle CEO: There won’t be a ‘substantial’ number of new gold mines built

While demand for gold remains strong, the act of building mines has grown more difficult over the last decade, the CEO of a Canadian miner told CNBC’s Jim Cramer on Tuesday.

It’s a lot tougher now than it was 10 or 15 years ago,” ′ Sean Boyd said on “Mad Money.”

Several factors contribute to the increasing difficulty, including the geographic realities of opportune locations, Boyd said.

The deposits that are being found now … are found in parts of the world which lack infrastructure, are in parts of the world which countries may not want you there,” Boyd said. “That’s why it’s also getting more challenging to find deposits.”

Even if those challenges are met, there are more hurdles on the other side, Boyd explained, pointing to “mostly permitting” associated with tougher environmental regulations.

That’s another thing which limits supply. The lead time to build these assets [is] a lot longer, the capital required to build them a lot larger,” he said. “That just makes it more difficult.”

This gold-related story showed up on the cnbc.com Internet site at 1:26 p.m. EST on Wednesday afternoon — and I found it in a GATA dispatch.  Another link to it is here.


Discovering Switzerland’s buried treasure

There’s no need to head for the pyramids of Egypt or Mesoamerica to feel like Indiana Jones – Switzerland is bursting with archaeological surprises. The 293 silver Roman coins recently unearthed in a Basel forest are just the tip of the treasure chest.  Click to enlarge.

From gold pendants and bronze hands to jugs filled with coins, in this map X marks the spot of some of the most significant finds of recent years.

This very interesting photo-filled article was posted on the swissinfo.ch Internet site on Sunday — and I thank Jim Gullo for pointing it out.  Another link to it is here.


The PHOTOS  and the FUNNIES

We’re still on B.C. Highway 5A on July 20…heading towards Kamloops.  The cloud cover has finally broken up a bit — and I took this shot from the side of the highway looking back in the direction that we had just travelled.  Only the white camper/van in the near-center of the shot indicates that there’s a road there at all.  By the time we arrived at the northern edge of the Thompson Plateau — and began our final descent into Kamloops, the skies had cleared.  The last two photos were taken within a mile or two of each other — and the third shot shows the southern suburbs of the city.  It’s several thousand vertical feet/700+ meters to the Thompson River from there.  Click to enlarge.


The WRAP

With absenteeism high in New York as the Wednesday because of the imminent arrival of the Thanksgiving holiday weekend in the U.S., I’m not prepared to read too much into yesterday’s price action.  But it was more than obvious that there was price pressure by ‘da boyz’ in gold, silver and platinum — and palladium’s rally was capped at 1 p.m. in COMEX trading.  So it was the same old, same old in that regard.

Here are the 6-month charts [courtesy of stockcharts.com] for the four precious metals, plus copper and WTIC.  There’s not much to see in the precious metals, except for palladium’s new all-time high close.  Copper closed a few pennies higher — and WTIC closed lower by a hair.  Click to enlarge.

And as I type this paragraph, the London open is less than a minute away — and I see that gold’s rally attempt at the 6:00 p.m. open in New York on Wednesday evening met with the usual array of short sellers of last resort — and since then it has been chopping quietly and unevenly sideways since — and is up $2.20 the ounce. Ditto for silver, but it was sold back to unchanged shortly after the afternoon gold fix in Shanghai on their Thursday afternoon, but is now up 2 cents. Platinum was sold a bit lower as well — and is down 2 dollars currently. Ditto for palladium — and it’s back at unchanged as Zurich opens. There’s not much happening…or not much is being allowed to happen…you choose.

Net HFT gold volume in February is pretty light at a bit a bit over 31,000 contracts — and there’s about 2,200 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is extremely light at about 7,100 contracts — and there’s only 606 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened down 3 basis points points at 98.33 once trading commenced around 7:45 p.m. on Wednesday evening in New York, which was 8:45 a.m. China Standard Time on their Thursday morning.  It has been edging quietly lower since around 12:20 p.m. China Standard Time — and as of 7:45 a.m. in London/8:45 a.m. in Zurich, it’s down 8 basis points.


It certainly is going to be an interesting December delivery month in gold, as the remaining open interest is very high — and as is normally the case, a lot more contracts will get added to the month as it unfolds.  I was expecting/hoping for a bigger number in silver for December, but it is what it is.

I was certainly encouraged by the fact [as you should be] that despite the early sell-off in the precious metal equities, there was decent buying after the 11 a.m. EST London close.  This counterintuitive buying has been a regular feature for the last little while — and is certainly indicative of strong hands in the market, because it certainly isn’t John Q. Public.  These strong hands are obviously privy to information that we don’t have, at least not yet — and I’m still quite content to be “all in”.  When JPMorgan finally lets the precious metal market fly, there will be no entry points after that…everyone will be chasing the market.

Here’s a new chart from Nick. This one shows the long-term price for palladium — and its close above $1,800 spot yesterday.  Click to enlarge.

Someday — and soon, I suspect, gold and silver will have similar chart patterns.


And as I post today’s column on the website at 4:02 a.m. EST, I see that gold hasn’t done much in the last hour — and is up $2.20 an ounce — and silver is higher by 2 cents as the first hour of London trading ends. Platinum is still down 2 bucks — and palladium is down a dollar as the first hour of Zurich trading draws to a close. Nothing to see here.

Gross gold volume is coming up on 40,500 contracts — and net of current roll-over/switch volume, net HFT gold volume is pretty light at around 35,700 contracts. Net HFT silver volume is around 8,000 contracts — and there’s 826 contracts worth of roll-over/switch volume in this precious metal.

The dollar index continues to chop quietly and very unevenly lower — and as of 8:45 a.m. in London/9:45 a.m. in Zurich, it’s down 8 basis points…where it was an hour ago.


Ted confirmed what I already suspected — and that’s that there will be no Commitment of Traders Report on Friday, so both my Friday and Saturday columns are going to be as brief as I can make them.

I also understand that the markets in New York will be closing early on Friday, so with no COT Report to weigh me down, my Saturday column should be on my website a good deal earlier than normal.

See you tomorrow.

Ed

An Interesting Trading Session on Tuesday

27 November 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price dipped a bit once trading began at 6:00 p.m. EST in New York on Monday evening — and that lasted until a few minutes before 10 a.m. China Standard Time on their Tuesday morning.  It crept quietly higher from there until a few minutes after 9 a.m. in London — and two hours later it was headed lower.  That sell-off culminated in a rather vicious down/up spike that set the $1,449.80 spot low tick at 9:40 a.m. in New York trading.  It took off higher from there — and that rally lasted until a few minute after 4 p.m. EST in after-hours trading.  It was sold down a bit going into the 5:00 p.m. close.

The low and high ticks were were reported by the CME Group as $1,449.60 and $1,462.80 in the December contract, so the intraday move in gold was less than one percent.

Gold finished the Tuesday session in New York at $1,461.30 spot, up $6.30 on the day.  Net volume was fumes and vapours at 7,400 contracts, but roll-over/switch volume was an eye-watering 340,500 contracts, as the December contract went of the board for the large traders in the COMEX futures market.

The silver price drifted a few pennies lower in New York on Monday evening — and that lasted until shortly before 10 a.m. CST in Far East trading.  It crept a bit higher from that juncture — and was up a few pennies by the afternoon gold fix in Shanghai — and then didn’t do much of anything until precisely 1:00 p.m. in London, which was twenty minutes before the COMEX open in New York.  The market went ‘no ask’ — and ‘da boy’…the short sellers of last resort…appeared immediately.  That ‘rally’ lasted until 9:30 a.m.  EST when the equity markets opened — and the silver price began to head higher once again.  Then the price really erupted at 10:30 a.m. in New York — and JPMorgan et al. were forced to step in once again shortly after the 11 a.m. EST London close.  The silver price didn’t do much after that for the remainder of the Tuesday session.

The low and high ticks were recorded as $16.78 and $17.085 in the December contract.

Silver was closed in New York on Tuesday afternoon at $17.035 spot, up 18.5 cents from Monday.  Net volume was exceedingly light at 21,000 contracts but, like gold, roll-over/switch volume out of December and into future months was enormous at around 63,500 contracts.

And I thought it necessary to include the New York Spot Silver [Bid] chart for silver, so you can see the price antics during the COMEX trading session in much more detail, because the 24-hour Kitco chart wasn’t capable of catching the violence of those price moves.

The platinum price also dipped a few dollars once trading began in New York at 6:00 p.m. on Monday evening.  Its rally attempt after that ran into ‘something’ at the $899 spot mark — and it bounced off that price multiple times until minutes after 10:30 a.m. in New York.  The market went ‘no ask’ in heartbeat — and ‘da boyz’ were there in a minute or so to prevent platinum from reaching its true market price.  It was driven lower immediately — and that sell-off lasted until noon EST.  From that juncture it crept quietly sideways until the market closed at 5:00 p.m.  Platinum was closed at $906 spot, up 11 dollars on the day, but 13 bucks off its Kitco-reported high tick of the day.

The palladium price wandered quietly and unevenly higher right from the open in New York on Monday evening — and its high tick price spike came very shortly after Zurich opened.  It was then sold lower until 2 p.m. CET/8 a.m. in New York, before rallying anew.  That rally was capped at noon in New York — and it chopped very unevenly sideways from there until trading ended at 5:00 p.m. EST.  Palladium was closed at $1,791 spot, up 13 dollars from its Monday close, but 36 bucks off its Kitco-reported high tick of the day.  The $1,800 spot mark for palladium is being well defended.

The dollar index closed very late on Monday afternoon in New York at 98.32 — and opened up about one basis point once trading commenced around 7:45 a.m. EST on Monday evening, which was 8:45 a.m. China Standard Time on their Tuesday morning.  It drifted quietly lower from there until exactly 8:30 a.m. in New York — and then jumped back into positive territory by a few basis points.  That rally, such as it was, ended at 9:20 a.m. EST — and from there it continued to drift unevenly lower until the market closed at 5:30 a.m. in New York.  The dollar index finished the Tuesday session at 98.25…down 7 basis points from its close on Monday.

The low and high ticks were only 15 basis points apart, so despite what the DXY chart looks like below, not much happened in the currencies yesterday.  And none of its price action was remotely related to what was happening in the precious metals.

Here’s the DXY chart, courtesy of Bloomberg as usual.  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…98.17…and the close on the DXY chart above, was 8 basis points on Tuesday.  Click to enlarge as well.

The gold stocks opened about unchanged — and began to head higher the moment that the gold price blasted off its spike low tick of the day about ten minutes later.  They rallied until shortly after 11 a.m. in New York trading, then dipped a bit until a minute or two after 1 p.m. EST — and then continued to crawl steadily higher from there, right into the 4:00 p.m. close.  The HUI closed up 2.10 percent.

And despite the shenanigans going on with the silver price in morning trading in New York, the silver equities followed an almost identical price path as their golden brethren.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by 2.42 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.

All three of the Silver 7 laggards were a drag on the overall Silver 7 Index yesterday.  Peñoles closed down a chunky 4.30 percent…Buenaventura closed up only 0.86 percent — and Hecla, closed higher by only 2.13 percent.  First Majestic Silver finished the day up 3.94 percent.


The CME Daily Delivery Report showed that 2 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  Advantage issued both contracts — and Morgan Stanley stopped both — and those transactions involved their respective client accounts.

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

For the month of November, there were 1,731 gold contracts issued/reissued and stopped — and that number in silver was 532.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in November declined by 10 contracts, leaving just 2 left, minus the 2 mentioned two paragraphs ago.  Monday’s Daily Delivery Report showed that 12 gold contracts were actually posted for delivery on Wednesday, so that means that 12-10=2 gold contracts vanished from the November delivery month.  Silver deliveries are done for November — and have been for about a week now.

Gold open interest in December crashed by 127,426 contracts, leaving a still very chunky 43,496 contracts still open.  Silver o.i. in December fell by 18,161 contracts, leaving 16,335 contracts still around.  A goodly chunk of this remaining December open interest should disappear by the close of COMEX trading today, but these are still pretty big numbers.  December’s remaining gold open interest numbers will posted on the CME’s website around 10 p.m. EST this evening — and I’ll have that for you in my Thursday column.  Hopefully I’ll have First Day Notice numbers as well…but like I said in my Tuesday column, they may not show up on their website until Friday evening.


There were no reported changes in GLD on Tuesday, but an authorized participant removed 1,868,800 troy ounces of silver from SLV.  And as Ted has noted before, withdrawals such as this one…whether they be conversion of shares for physical, or a ‘plain vanilla’ withdrawal…normally means that JPMorgan owns it all now.

The short reports for GLD and SLV, as of the close of business on November 15, was posted on The Wall Street Journal‘s website yesterday evening.  It showed that the short position in SLV declined a smallish amount…from 10.37 million share/troy ounces, down to 10.24 million shares/troy ounces…a drop of only 1.27 percent.  Not much, to be sure, but the short position in SLV was pretty low already.  The short position in GLD increased from 989,000 troy ounces to 1,283,000 troy ounces…a 29.74 percent jump.  It gained back pretty much all of its decrease from two weeks ago.

In other gold and silver ETFs on Planet Earth on Tuesday…minus what happened at the COMEX — and in GLD & SLV…there was a net 33,794 troy ounces of gold added…plus a net 15,288 troy ounces of silver was added as well.


There was no sales report from the U.S. Mint yesterday.  In fact, they cancelled the 500 troy ounces of gold eagles that they reported sold on Monday.

The only physical movement in gold over at the COMEX-approved depositories on Monday was 9,462 troy ounces that was received by Canada’s Scotiabank.  But there was a lot of paper activity/transfers involving five different depositories. With the exception of 86,540 troy ounces that was transferred from the Eligible category into Registered over at HSBC USA…the remaining four depositories transferred 126,458 troy ounces in total from the Registered category — and back into Eligible.  This is a rather amazing and very counterintuitive turn of events considering the fact that the big December delivery month starts on Monday.  But this isn’t the first time that this has happened in gold over the last week.  The link to all this is here.

In silver, there was one truckload…600,102 troy ounces…received — and one truckload…599,600 troy ounces…shipped out.  All of this activity was at CNT.  There was also more paper transfers from the Registered category and back in Eligible in silver as well…543,687 troy ounces at CNT, plus another 227,304 troy ounces at Delaware.  These paper transfers from Registered and back into Eligible have been far more pronounced in silver lately, than they have been in gold.  Ted felt that this was very counterintuitive as well — and we discussed the possibility of some sort of delivery problem in December.  We’ll see.  The link to all this silver activity is here.

There wasn’t much activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  Nothing was reported received — and only 53 were shipped out.  This occurred at Brink’s, Inc. — and I shan’t bother linking it.


Here are two charts that Nick passed around on Monday that I didn’t have space for in yesterday’s column.  They show gold and silver imports into China — and have been updated with October’s imports34.91 tonnes of gold — and 327.3 tonnes/10.52 million troy ounces of silverClick to enlarge for both.

Except for the big 1-month spike in gold imports in April of this year, gold imports into China have been on the decline since their peak in June of 2018 — but that’s only if these numbers can believed.

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


CRITICAL READS

U.S. Consumer Confidence Tumbles For 4th Straight Month Despite Soaring Stocks

‘Hope’ improved marginally in November, according to The Conference Board, but the headline consumer confidence data dropped for the 4th straight month as current conditions slipped.

  • Consumer confidence in Nov. fell to 125.5 vs. 126.1 prior month.
  • Present situation confidence fell to 166.9 vs. 173.5 last month.
  • Consumer confidence expectations rose to 97.9 vs. 94.5 last month.

Consumers’ appraisal of current-day conditions was less favorable in November. The percentage of consumers claiming business conditions are “good” rose slightly from 39.7 percent to 40.2 percent, but those claiming business conditions are “bad” also increased, from 11.0 percent to 13.8 percent.

Confidence continues to ebb on a YoY basis…Click to enlarge.

Consumer confidence declined for a fourth consecutive month, driven by a softening in consumers’ assessment of current business and employment conditions,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

The decline in the Present Situation Index suggests that economic growth in the final quarter of 2019 will remain weak. However, consumers’ short-term expectations improved modestly, and growth in early 2020 is likely to remain at around 2 percent. Overall, confidence levels are still high and should support solid spending during this holiday season.”

Additionally, those saying jobs are “plentiful” decreased from 47.7 percent to 44.8 percent, while those claiming jobs are “hard to get” increased from 11.6 percent to 12.7 percent.

And all of this as stocks hit record high after record high.

This news item was posted on the Zero Hedge website at 10:16 a.m. EST on Tuesday morning — and comes to us courtesy of Brad Robertson.  Another link to it is hereGregory Mannarino‘s post market close rant for Tuesday is linked here.


Intra-day Bankruptcy”: A 2008 E-mail From the Fed Provides Insight into Today’s Overnight Repo Scare

There is one phrase on Wall Street that instills fright like no other – “intra-day bankruptcy” – especially if it’s describing a bankruptcy filing by a highly interconnected Wall Street firm.

On July 20, 2008 a Federal Reserve economist, Patrick Parkinson, used that phrase in an e-mail to describe fears that Lehman Brothers might have to make an intra-day bankruptcy filing and to speculate on what was going on in the minds of the folks at JPMorgan Chase, Lehman’s clearing bank, regarding how it might get “stuck” with Lehman’s overnight loans.

The e-mail describes perfectly what is highly likely going on in the minds of top executives at JPMorgan Chase today and why the Fed has been pumping hundreds of billions of dollars each week into unnamed trading houses on Wall Street since September 17.

The e-mail was contained in documents provided with the Financial Crisis Inquiry Commission Report, the official analysis of the crisis that took down century-old iconic names on Wall Street in 2008.

Lehman Brothers filed for bankruptcy just after midnight on Monday, September 15, 2008 with derivative counterparties that stretched around the globe and included some of the biggest banks on Wall Street.

We bring up this e-mail because JPMorgan Chase’s Chairman and CEO, Jamie Dimon, admitted on his earnings call with analysts on October 15 that his bank had backed away from repo lending on September 17, the day repo rates spiked to 10 percent and the Fed jumped in as lender-of-last-resort (and has been pumping out the money ever since).

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


Printing More Money Could Lead to Financial Calamity — Bill Bonner

We left off yesterday promising to rev up the chainsaw.

We’re searching the woods, hills, and urban jungles for the coveted “magic money tree.” Family: arbor. Genus: pecunia. Species: magicae.

For thousands of years, alchemists, grifters, and proto-central-bankers have tried to find it. But it has remained as elusive as the Himalayan snow lizard and the American jackalope.

But it must be out there somewhere. Everyone believes it, including the president of the USA. “Give me some of that money,” says he.

And yesterday, the magic money tree – aka MMT… aka Modern Monetary Theory – was in full flower.

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


Global Recovery Derailed as World Trade Plunges Again, Recovery Hopes Fade For 2020

The Trump administration has pumped out a record amount of trade headlines since last summer to boost “trade optimism” and push stocks to new highs, distracting everyone from macroeconomic headwinds that continue to develop and slow global growth.

New data via the CPB World Trade Monitor suggests the world is in a deflationary mess where global trade is decelerating, and there’s nothing, at the moment, that global central banks can do as their printing presses are powerless.

Global trade volumes fell 1.3% in September MoM, after a 0.50% expansion in August, indicating that the global economy continues to decelerate into the late year.

The data implies that even though “trade optimism” and record central bank money printing has boosted risk assets, the real economies around the world continue to deteriorate.

Global trade on a YoY basis contracted by 1.1% in September, marking the fourth consecutive YoY declines and the most extended period of subdued trade since the financial crisis in 2009.

Due to regional and global value chains, the fall in Chinese imports also resulted in a significant decline in import demand among other Asian countries,” said Spakman

He predicted that weakness in global trade would continue through 2020.

This long, chart-filled story from Zero Hedge, showed up on their Internet site at 7:05 p.m. EST on Tuesday evening — and another link to it is here.


Chinese Industrial Profits Collapse By Most On Record

China Industrial Enterprises total profits collapsed in October to CNY427.5bn from CNY575.6bn in September – a 9.9% YoY plunge, the biggest drop on record.

In fact, China’s Industrial sector has seen annual declines in its profits for 4 of the last 6 months.  Click to enlarge.

What is perhaps even more disturbing is that seasonally, this is a period where profits typically begin to accelerate. This year, they are collapsing to the lowest since July 2013 (and lowest for an October on record)

Additionally, Industrial firms’ liabilities increased 4.9% from a year earlier to 66.74 trillion yuan at end-October, compared with a 5.4% increase at end-September.

And if you’re banking on more stimulus and credit to fix this – forget it!!!  Click to enlarge.

Is Trump winning?

This news item put in an appearance on the Zero Hedge website at 8:56 p.m. on Tuesday evening EST — and another link to it is here.


Second Bank Run in Two Weeks as China’s Banks Are Caught in a Self-Destructive “Doom Loop”

Three weeks ago we reported that China’s Henan Yichuan Rural Commercial Bank, just outside the central Chinese city of Luoyang, was the latest small-to-medium Chinese bank to suffer a vicious bank run as long lines of depositors filled out its branches demanding their money, amid a rumor that the bank was going under. The bank was at least the fourth to be on the verge of collapse after recent prior nationalizations of Baoshang Bank ,Bank of Jinzhou, and most recently, China’s Heng Feng Bank.

Now yet another Chinese bank has found itself scrambling to prevent a collapse: Yingkou Coastal Bank was forced to stack bundles of yuan notes high behind the counters of its branches earlier this month, as the northeast China lender fought off a run on deposits while onsite government officials battled rumors of a funding crunch.

As Reuters reports, Yingkou was the latest small bank to have its deposit-reliant funding base undermined by a flash mob of “running” depositors, spooked by the funding crunch that led to the shock state-led rescue of regional lender Baoshang Bank first which in turn prompted a cascade of small bank bailouts.

To avoid an almost instant death, Yingkou had no choice but to engage in what we have hence dubbed a self-destructive “doom loop”: to help repair the damage and to keep the deposits from being pulled, the bank hiked its already high deposit interest rates to entice depositors. Alas by doing so, the bank – which can not possibly find investing opportunities to offset the higher deposit rates – has just accelerated its eventual insolvency.

This longish Zero Hedge news item put in an appearance on their website at 5:05 p.m. on Tuesday afternoon EST — and another link to it is here.


Over 13% of China’s Banks Are Highly Risky, Central Bank Says

China’s banking sector is showing signs of strain, with more than 13% of 4,379 lenders now considered “high risk” by the central bank.

The high risk category contains 586 banks and financing firms, most of which are smaller rural institutions, the People’s Bank of China said in its 2019 China Financial Stability Report, published late Monday. A first review last year found about 10% were deemed high risk, though that calculation didn’t include many consumer finance firms.

The health of China’s small banks has become a growing concern after the seizure of one lender in May forced losses on creditors and cast doubt on the longstanding assumption that the state would backstop troubled lenders. The economy is growing at the slowest pace in almost three decades, cooled by a crackdown on risky lending and the trade war.

Banks are also facing challenges from government efforts to boost growth and help struggling small businesses, which threaten to squeeze lending margins and lead to a pileup of bad debt.

While foreign and private banks are seen as relatively safe, more than one third of rural lenders were rated “high risk,” according to the report. Some medium- and small-sized financial institutions received poor ratings because of the slowing economy, with small lenders more sensitive to swings in the economy, it said.

The central bank has notified each bank of its rating, and required some to increase capital, reduce bad loans, limit dividends and even change management, the report said.

This Bloomberg new story showed up on their website at 4:59 a.m. PST on Monday morning — and was updated about fourteen hours later.  Another link to it is here.  The Zero Hedge spin on this headlined “A $20 Trillion Problem: More Than Half of China’s Banks Fail Central Bank Stress Test” is linked here.


South Carolina Legal Tender Act Would Treat Gold & Silver as Money

A bill pre-filed in the South Carolina House would make gold and silver coins legal tender in the state. Passage of this bill would take a step toward creating currency competition in South Carolina and undermine the Federal Reserve’s monopoly on money.

Rep. Stewart Jones filed House Bill 4678 (H.4678) on Nov. 20. Under the proposed law, “gold and silver coins minted foreign or domestic shall be legal tender in the State of South Carolina under the laws of this State. No person or other entity may compel another person or other entity to tender or accept gold or silver coin unless agreed upon by the parties.”

Practically speaking, this would allow South Carolina residents to use gold or silver coins to pay taxes and other debts owed to the state. In effect, it would put gold and silver on the same footing as Federal Reserve notes.

The phrase, “unless agreed upon by the parties” has important legal ramifications. This wording reaffirms the court’s ability, and constitutional responsibility according to Article I, Section 10, to require specific performance when enforcing such contracts. If voluntary parties agree to be paid, or to pay, in gold and silver coin, South Carolina courts could not substitute any other thing, e.g. Federal Reserve Notes, as payment.

South Carolina could become the fourth state to recognize gold and silver as legal tender. Utah led the way, reestablishing constitutional money in 2011. Wyoming and Oklahoma have since joined.

This precious metal-related article appeared on the libertarianinstitute.org Internet site on Tuesday sometime — and I thank Jim Gullo for pointing it out.  Another link to it is here.


The #1 Performing Asset Around the World — Mike Maloney

Unbeknownst to most mainstream investors, gold has been the best performing asset of this century.

It’s really true, as the first table shows in video #5 from Mike and Ronnie. Other than a few cryptos, gold has been the top investment since 2000.

That’s’ especially true for gold priced in other currencies. Check out all the green in the first table.
Gold has risen more in other currencies than in the U.S. dollar. While gold is universally priced in dollars, 95.7% of the world’s citizens transact in currencies other than the U.S. dollar.

As a result, Ronnie did something we haven’t seen anyone else do: he and his team calculated a “world” gold price. In other words, a trade-weighted average of the gold price in all currencies combined.

This 15-minute video presentation/interview from Mike was posted on the goldsilver.com Internet site on Tuesday sometime — and I thank Larry Galearis for sending it our way.  Another link to it is here.


The PHOTOS and the FUNNIES

A week after our junket to the interlake country between 70 Mile House and Little Fort, we were off to Kamloops via B.C. Highway 5A on July 20…the scenic route — and we took our time.  But unfortunately, it was pretty cloudy — and a lot of the photos were taken in the shade.  The first photo is a painted lady on a dandelion.  The second shot is of a flower that I have never seen before — and I’m only posting in hopes that someone would kindly identify it.  The third shot was taken from the same spot as the second one…off the beaten track — and if you’re screen is good enough you should be able to make out the flower featured in the second shot in the lower right-hand corner of your screen.  Click to enlarge.


The WRAP

It was a very interesting trading session in all four precious metals on Tuesday.  All the large traders not standing for delivery in December had to roll or sell their December contracts before the close of COMEX trading yesterday — and the rest have to be out by the close of COMEX trading today.

I’m not sure what should be read into yesterday’s price action…except for the fact that ‘da boyz’ were at the ready to cap and sell lower any and all rallies in the four precious metals.  And as to what that portends for their respective prices going into the last month of the 2019 calendar year…I haven’t a clue.

Here are the 6-month charts for the Big 6 commodities.  There’s not a lot to see in silver and gold, but I note that platinum closed above its 50-day moving average by a dollar and change — and palladium continues to climb, but was not allowed to close above $1,800 spot once again.  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 was sold quietly lower until a few minutes before 2 p.m. China Standard Time on their Wednesday afternoon. It’s off that low by a bit — and down $2.70 an ounce. Silver’s price was guided in a similar manner — and it’s down 4 cents as London opens. Platinum’s current low came around 2:40 p.m. CST — and it’s still down 4 bucks. Platinum was sold down a handful of dollars by shortly before 9 a.m. CST on their Wednesday morning — and it has been chopping quietly sideways since — and is down 5 dollars as Zurich opens.

Net HFT gold volume is around 17,500 contracts — and that’s mostly in the new front month…February — and there’s a bit over 14,000 contracts worth of roll-over/switch volume on top of that. Net HFT silver volume is around 5,400 contracts and that’s in the new front Month for silver…March — and there’s about 3,300 contracts worth of roll-over/switch volume in this precious metal. These numbers are estimates, as the last trading day of the month is always a difficult call. Things will be clearer on Friday when all the trading will be in their respective new front months.

The dollar index opened up about 5 basis points at 98.30 once trading commenced around 7:45 p.m. in New York on Tuesday evening, which was 8:45 a.m. China Standard Time on their Wednesday morning. It has been chopping very quietly and unevenly higher since — and is up 10 basis points as of 7:45 a.m. GMT in London./8:45 a.m. CET in Zurich.


With only one trading day left in the November contract…today…I’m looking at the remaining December open interest in both gold and silver with some interest.  There are still a lot of contracts open in both, particularly in gold — and I’m more than anxious to see what this evening’s Preliminary Report will show.

And as I mentioned in yesterday’s column…”Ted had this to say about it in his weekly review on Saturday…”The open interest in the December gold and silver contracts was exceptionally large, meaning a greater number of contracts must be rolled over; but this also allows for some potential drama and surprises.

The other surprise that I mentioned earlier in today’s column is the large amounts of gold and silver that are being transferred from the Registered category — and back into Eligible during the last week.  As Ted pointed out, this is the time of month that physical gold and silver should not only being deposited in the COMEX warehouses for the big December delivery month, but there should be transfers from the Eligible category — and into Registered…not the other way around.

We’ll see how all this pans out as the December delivery month unfolds.


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 first hour of London trading — and is down $2.20 the ounce. Silver is down 4 cents. But platinum is now down 5 dollars — and palladium is down only 3 bucks as the first hour of Zurich trading ends.

Gross gold volume is around 58,500 contracts — and minus roll-over/switch volume out of December and in February, net HFT gold volume is a bit over 21,000 contracts. Net HFT silver volume is a bit under 11,000 contracts in its new front month…March — and there’s around 4,500 contracts worth of roll-over/switch volume on top of that. Remember, these numbers for this particular day of the month, are only approximate.

The dollar index hit its current high tick at precisely 8:00 a.m. GMT…the London open, but is off that by a bit — and up 10 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.


That it for today — and I will have a column tomorrow for sure.  However, because of the Thanksgiving holiday in the U.S. tomorrow, I may not have a column on Friday.  But if I do, it will be shockingly brief.  However, I’ll have one on Saturday…with or without a Commitment of Traders Report…as I don’t expect that data to be available until Monday.

I’d like to take this opportunity to wish my American readers, both at home and abroad, a safe and happy Thanksgiving holiday.

Ed

Poland Repatriates 100 Tonnes of Gold From the Bank of England

26 November 2019 — Tuesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price was sold down a couple of dollars once trading began at 6:00 p.m. EST in New York on Sunday evening.  It was back at unchanged by around 1 p.m. China Standard Time on their Monday afternoon — and it was sold quietly and unevenly lower until a few minutes before 9 a.m. in New York.  It jumped back to a bit above unchanged by the 10 a.m. EST afternoon gold fix in London — and it edged quietly lower until 3 p.m. in after-hours trading — and didn’t do anything after that.

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

Gold was closed on Monday afternoon in New York at $1,455.00 spot, down $6.10 from Friday.  Net volume was pretty quiet at a bit over 160,500 contracts, but roll-over/switch volume…not surprisingly…was very heavy at a bit over 138,500 contracts.

The price activity in silver was kept mostly the same as it was for gold — and in a similar tight price range as well, so I’m not going to bother commenting on Monday’s price action further.

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

Silver was closed on Monday afternoon in New York at $16.85 spot, down 11 cents from Friday.  Net volume was also very quiet at 28,500 contracts — roll-over switch volume out of December and into future months was very heavy as well at a bit under 41,000 contracts.

Palladium was up around 7 dollars by around 10:20 a.m. in Shanghai on their Monday morning — and that lasted until shortly before 2 p.m. CST on their Monday afternoon.  It was sold quietly lower from there until a few minutes after 12 o’clock noon in Zurich — and it headed a bit higher from there…running into ‘something’ about 10:40 a.m. EST, which was about twenty minutes before the Zurich close.  It had a bit of an up/down move until noon in New York — and pretty much traded ruler flat from that juncture until trading ended at 5:00 p.m. EST.  Platinum was closed at $895 spot, up 7 bucks from Friday.

The palladium price followed the platinum price pretty closely up until around noon in Zurich [6 a.m. EST]…and then a rally of some size commenced.  That was capped minutes after 10:30 a.m. in New York…like for platinum — and very shortly after that, the price began to creep lower.  That lasted pretty much right into the 5:00 p.m. EST close.  Palladium was closed at $1,778 spot..up 24 bucks from Friday…but $42 off its Kitco-recorded high tick of the day.

As I’ve said on countless occasions, palladium would be at heaven-only-knows what price if allowed to trade freely.  Of course that applies equally to the other three precious metals as well, but it’s most obvious in palladium, which is allowed some sort of price freedom because of its supply/demand fundamentals.  As Ted say, it’s pretty much a cash market for palladium right now.


The dollar index closed very late on Friday afternoon in New York at 98.27 — and opened down about 1 basis point once trading commenced around 6:35 p.m. EST on Sunday evening, which was 7:35 a.m. China Standard Time on their Monday morning.  It was sold very quietly and generally lower from that juncture until the 98.17 low tick was set at the 8:00 a.m. GMT London open…right on the button.  It then chopped quietly higher until the 98.38 high tick was set precisely at the 9:30 a.m. open of the equity markets in New York.  It had about a 20 basis point down/up move between then and around 11:45 a.m. EST — and it edged a handful of basis points lower going into the 5:30 p.m. close.  The dollar index finished the Monday session at  98.32…up 5 basis point from its close on Friday.

It was yet another day where the correlation between the currencies vs. the precious metals was somewhat on the elusive side — and coincidental at best.

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

And here’s the 6-month U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…98.24…and the close on the DXY chart above, was 8 basis points on Monday.  Click to enlarge as well.

The gold stocks gapped down about 1.5 percent at the open in New York on Monday morning, but quickly rallied back into positive territory by a bit.  They then turned lower as ‘da boyz’ turned the gold price lower around 10:30 a.m. EST — and it kept right on going until the market closed at 4:00 p.m.  The HUI closed on its absolute low tick — and down 1.75 percent.

The silver equities gapped down a bit at the New York open as well, but then rallied a substantial amount above unchanged by 10:25 a.m. EST.  As a result of that, their sell-offs that began at that time didn’t take them that far below unchanged on the day — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by only 0.45 percent.  Click to enlarge if necessary.

Although the silver equities closed down on the day, they certainly outperformed their golden brethren by a very decent amount.  As I’ve been saying for a few weeks now, there are very deep pockets buying up all the silver equities that are being sold in a panic by John Q. Public and also by various hedge and mutual funds.

Of the three usual laggards in Nick’s Silver 7 Index…Peñoles closed down 0.38 percent…Buenaventura closed lower by 0.14 percent — but Hecla, closed higher by 0.86 percent.  First Majestic Silver finished the day down by 0.95 percent.

Reader Judy Sturgis sent us a short video clip by Jordan Roy-Byrne headlined “Leading Indicator For Gold Stocks Hits 3-Year High“…where he shows in graphic form that “The advance-decline line is a reliable leading indicator. The GDX advance decline line is showing a strong positive divergence.”

The same thing is going on in the silver shares, except it’s even more pronounced in their equities than it is in the gold stocks.  This brief 6:36 minute video clip from last Friday appeared on the marketsanity.com Internet site — and it’s linked here — and is definitely worth your while.


The CME Daily Delivery Report showed that 12 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday.

In gold, the three short/issuers were ADM with 7 contracts…Advantage with 3 contracts — and HSBC USA with 2 contracts.  Those contracts from HSBC USA were from their in-house/proprietary trading account — and all the rest came from their respective client accounts.  There were four long/stoppers in total — and the two most notable ones were Scotia Capital/Scotiabank with 4 for its own account — and JPMorgan, who picked up 2 contracts for their client 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 November declined by 9 contracts, leaving 12 still open, minus the 12 mentioned a few paragraphs ago.  Friday’s Daily Delivery Report showed that 7 gold contracts were actually posted for delivery today, so that means that 9-7=2 gold contracts disappeared from the November delivery month.

Gold open interest in December cratered by 57,406 contracts, leaving 153,439 still around.  Silver o.i. in December crashed also…by 13,388 contracts, leaving 35,612 still around.  I expect both of these numbers to decline precipitously during the next two trading days — and I’ll be very interested in what remains of December open interest in both precious metals when I view Wednesday’s Preliminary Report just before midnight on that day…which is when the CME updates it website with this data.

Ted had this to say about it in his weekly review on Saturday…”The open interest in the December gold and silver contracts was exceptionally large, meaning a greater number of contracts must be rolled over; but this also allows for some potential drama and surprises.”

He would be right about that.


After nearly two week of non-stop withdrawals, there was finally a decent-sized deposit into GLD on Monday, as an authorized participant added 150,714 troy ounces.  There were no reported changes in SLV.

The folks over at Switzerland’s Zürcher Kantonalbank updated their website with the goings-on inside their gold and silver ETFs as of the close of business on Friday, November 22 — and this is what they had to report.  Their gold ETF added 11,005 troy ounces of gold — and their silver ETF picked up 95,905 troy ounces of silver.

In other gold and silver ETFs on Planet Earth on Monday…net of COMEX warehouse, ZKB, GLD & SLV movements…there was a net 10,495 troy ounce of gold removed.  In silver, there was a net 148,429 troy ounces added.


There was a tiny sales report from the U.S. Mint on Monday.  They sold 500 troy ounces of gold eagles — and 6,500 of those ‘America the Beautiful’ 5-ounce silver coins.

There was a bit of physical activity in gold over at the COMEX-approved depositories on the U.S. east coast on Friday.  The most interesting aspect of it was the 1,157.436 troy ounces/36 kilobars [SGE kilobar weight] that was shipped out of Brink’s, Inc.  All of that amount was received at Canada’s Scotiabank, except they received it as 1,157.400 troy ounces/36 kilobars [U.K./U.S. kilobar weight]  Brink’s switched over to the Shanghai Gold Exchange weight for kilobars long ago…but Scotiabank is obviously hanging on tight to the old U.K./U.S. kilobar weight.  The West vs. the East on a micro level.  Nothing else was reported received — and 9,765 troy ounces departed HSBC USA.  There was also a paper transfer of 104 troy ounces…one good delivery bar…from the Registered category and back into Eligible over at Delaware.  I’m linking this so you can see that Brink’s, Inc./Scotiabank transfer…if you have the interest.  Click here.

There was decent activity in silver.  Although nothing was reported received, there was a rather surprising 1,800,233 troy ounces removed.  There were two truckloads…1,180,246 troy ounces…that departed Canada’s Scotiabank — and the other truckload…619,987 troy ounces…was shipped out of CNT.  One would think that with a huge silver delivery month coming up hard, that silver would be coming into these depositories — and that hasn’t been the case at all.  The link to that is here.

There was also some activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Friday.  There was 1,021 received — and all of that landed at Brink’s, Inc.  There was also 9 kilobars shipped out — and that happened at Loomis International.  The link to all this is here.


Here are the usual two charts that Nick Laird passes around every weekend.  They show the amount of physical gold and silver in all know depositories, mutual funds and ETFs — and both are updated with their weekly activity as of the close of business on Friday, November 22.

During that week there was an net 101,000 troy ounces of gold removed — and that number in silver was 4,348,000 troy ounces…with most of that being the approximately 4.2 million troy ounces that departed SIVR last week.  Click to enlarge for both.

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


CRITICAL READS

Fed’s 42-Day Repo 2x Oversubscribed in Scramble For Year-End Liquidity

Traders were keenly looking ahead to the result from today’s 42-day repo as this was the Fed’s first liquidity-injection providing dealers with funding to carry them over into next year, as the operation was the first to mature in 2020 or January 6 to be precise. And, as many had feared, year-end liquidity fears remain front and center as the $25 billion operation proved to be roughly half the required size to satisfy all liquidity demands.

Dealers submitted $49.05BN in bids for the 42-day op ($33.55BN in Treasurys, $5BN in Agency, $10.5BN in MBS paper), resulting in a nearly 2x oversubscription of the $25BN in available repo.

While this was only the first operation providing liquidity into the new year, there are two more operations that will allow Dealers to lock in funding into 2020.

It remains a major question for funding markets why, even with QE4 in place and now daily overnight and short-term repo operations in place, banks continue to fret about year-end liquidity, where some fear a similar explosion in overnight repo rates as was observed on Dec 31, 2018 when General Collateral exploded amid a widespread liquidity shortage. Indeed, as Bloomberg puts it, “even with the Fed’s commitment to continue providing liquidity to the financial system around year-end, the market is still showing concerns. This is due to banks’ year-end balance-sheet constraints related to capital surcharges and other regulatory requirements.”

As are reminder, while most U.S. bank have a GSIB surcharge of around 2%-3%, JPMorgan remains an outlier – and is perceived as the “riskiest” bank – with its 4.0% surcharge. It’s also the reason why the bank has been quietly pulling liquidity away from funding markets ahead of quarter-end periods.

Separately, and in keeping with the recent tradition, the Fed also completed an overnight repo operation, which however showed less funding demand, as “only” $68.5 billion in securities were pledged in exchange for overnight liquidity with the Fed, well below the limit of $120 billion. Yet another troubling observation: while many have expected the total notional on overnight repos to decline over time, the daily use of the overnight repo has stabilized in the $60-$80 billion range and has failed to decline over the past month.  Click to enlarge.

This article appeared on the Zero Hedge website at 9:04 a.m. EST on Monday morning — and I thank Brad Robertson for sending it our way.  Another link to it is hereGregory Mannarino‘s post market close rant for Monday is linked here — and I thank Roy Stephens for sending it along.


It’s Official: JPMorgan Chase is the Riskiest Big Bank in the U.S.

The National Information Center is a little-known repository of bank data collected by the Federal Reserve. It is part of the Federal Financial Institutions Examination Council (FFIEC), which was created by federal legislation to create uniformity in the examination of U.S. financial institutions by the numerous federal regulators of banks.

Quietly, the National Information Center has done something that has likely made Jamie Dimon hopping mad. Dimon is the Chairman and CEO of JPMorgan Chase who has bragged perpetually in his annual letter to shareholders about how the bank he leads has a “fortress balance sheet.” But now the National Information Center has created a graphic profile of JPMorgan Chase versus its peer banks. The graphics crunch a series of important financial metrics at JPMorgan Chase, showing it to be the riskiest bank in the United States.

The data used to create these graphics come from what is known as the “Systemic Risk Report” or form FR Y-15 that banks have to file with the Federal Reserve. To measure the systemic risk that a particular bank poses to the stability of the U.S. financial system, the data is broken down into five categories of system risk: size, interconnectedness, substitutability, complexity, and cross-jurisdictional activity. Those measurements consist of 12 pieces of financial information that banks have to provide on their Y-15 forms. That data shows that in 7 out of 12 financial metrics, JPMorgan Chase has the riskiest footprint among its peer banks.

One of the 12 financial metrics measures the Intra-Financial System Liabilities of each bank. This shows how much money a particular bank has at risk at other banks by using inputs such as how much of its funds it has on deposit with, or has lent to, other financial institutions; the unused portion of any credit lines it has committed to other financial institutions; and its holdings of debt, equity, commercial paper, etc. of other financial institutions. The idea, obviously, is to understand if another Citigroup or Lehman Brothers were to occur, could it bring your bank down.

This rather brief 3-chart commentary from the wallstreetonparade.com Internet site certainly falls into the must read category.  It showed up there on Monday sometime — and I plucked it from a GATA dispatch.  Another link to it is here.


It’s Official: The United States is Now a Banana Republic

In some ways, we sympathize with Neel Kashkari’s concern about the unprecedented wealth inequality that has emerged in the U.S. in recent years and which has resulted in a slow, methodical and relentless destruction of the U.S. middle class … or rather make that precedented because there was another time when the top 0.1% had amassed as much wealth and it was just before the Great Depression.  Click to enlarge.

After all, who hasn’t seen charts such as these showing the tremendous divergence in income earned by America’s Top 1% at the expense of the middle and lower classes:  Click to enlarge.

Yet we find Kashkari’s “jaw-dropping” virtue signalling proposal to grant the Fed wealth redistribution power not only laughable but absolutely terrifying: after all it was the Fed’s ZIRP and QE that was behind the greatest wealth redistribution in the past decade, a redistribution that started almost 50 years ago, when Nixon decided to end the Fed’s biggest nemesis – the U.S. gold standard – launching an unprecedented increase in income growth for the “Top 1%”, even as the income of the “Bottom 90%” has remained unchanged ever since 1971.

Unfortunately, as we are about to show, it may already be too late to fix the U.S.: as the following stunning chart shows, the U.S. is already effectively a banana republic if one defines such a nation as one which has a small but ultrapowerful and unaccountable kleptocracy which gets richer year after year by stealing from the rapidly shrinking middle class.

Here is the problem: while the U.S. has one one of the highest median incomes in the entire world, with only three countries boasting a higher income, it is who gets to collect this money that is the major problem, because as the chart also shows, with just a 50% share of the population in middle-income households, the U.S. is now in the same category as such “banana republics” as Turkey, China and, drum-roll, RussiaClick to enlarge.

This longish, chart-filled Zero Hedge article was posted on their website at 3:15 p.m. on Monday afternoon EST — and another link to it is here.


Central Banks Create Money Out of Nowhere — Bill Bonner

Last week, while all eyes were on the impeachment show, the feds increased the nation’s debt by about $20 billion.

Who will pay it? When? How? No one asked.

During the British election of 2017, Theresa May famously said “there is no magic money tree.” But both the Federal Reserve and the U.S. government are shaking the hell out of something…

And America’s president thinks they should shake it even harder. He wants “some of that money” too.

And maybe, just maybe, there really is a “magic money tree.”

Something is making stocks go up. Despite a vicious fight in Washington for control of the government, an ongoing trade war with China, and increasing signs of an impending economic recession… still, the prices of America’s capital enterprises rise.

How come?

Bill’s daily commentary showed up on the bonnerandpartners.com Internet site on Monday morning EST — and another link to it is here.


Editorial: Could the Fed ‘Fire’ President Trump?

You know, Mr. Chairman,” says the caption on a cartoon of the Federal Reserve, “he can’t fire you but you could fire him.” The cartoon appears in the latest number of Grant’s Interest Rate Observer. It, and the lead article in Grant’s, illuminate what is, by our lights, the most important story of the year — that the future of the Trump presidency may be hostage less to Speaker Pelosi & Co. than to Chairman Powell and the blasted bond market.

What seems to have ignited Grant’s on this particular fortnight is an astonishing spike, back in September, in the overnight “repo” rate under which the Fed lends overnight to commercial banks. Grant’s quotes what it calls a “must read” column by Karen Petrou in the Financial Times. Ms. Petrou reckons that by the end of January the Fed is likely to have committed $11.5 trillion in “gross cumulative support” to the market in these repo loans.

Grant’s has been banking this drum — prophetically — for years now. In 2003, as the decline of the dollar was gathering speed, it reminded its readers of why the Fed was established. It quoted the central bank’s very enabling legislation as listing the purposes as furnishing an “elastic currency,” affording “means of discounting commercial paper,” establishing “a more effective supervision” of American banking, and — wait for it — “other purposes.”

That gave way to the greatest case of mission creep since the Cro Magnon era. An institution originally envisioned as an agent to lubricate commerce by enlarging the market in commercial paper, bills of exchange, and private IOUs is suddenly in the business of the constant accommodation of a federal debt as would have floored the Founders, who were wracked with embarrassment at having defaulted on the paper continental dollars with which they financed our Revolution.

This very interesting editorial put in an appearance on The New York Sun website on Monday sometime — and it comes to us courtesy of Roy Stephens.  Another link to it is here.


Democracy Is the Ideal Distraction — Jeff Thomas

In the days of yore, there were kings. Everybody could agree to hate the king because he was rich and well-fed, when most of his minions were not.

Then, a more effective system was invented: democracy. Its originators had in mind a system whereby the populace could choose their leader from amongst themselves – thereby gaining a leader who understood them and represented them.

In short order, those amongst the populace who wished to rule found a way to game the new system in a way that would allow them to, in effect, be kings, but to do so from behind the scenes, whilst retaining the illusion of democracy.

The formula is to create two opposing political parties. Each is led by someone who’s presented as being a “representative of the people.”

You then present the two parties as having opposing views on governance. It matters little what the differences are. In fact, you can have the differences be as obscure and arbitrary as, say, gay rights or abortion, and they will work as well as any other differences. What matters is that your two parties object to each other strenuously on the declared issues, working the electorate into a lather.

Once you have each group hating the other group “on principle,” you’re home free. At that point, you’ve successfully completed the distraction. The electorate now believe that, whatever the trumped-up issues are, they’re critical to the ethical governance of the country.

Most importantly, the electorate actually believe that their future well-being depends on the outcome of the next election – that it will decide whether their own view on the issues will prevail.

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


China Central Bank Warns Downward Pressure on Economy Increasing

Several weeks ago, the People’s Bank of China (PBOC) said it would “increase counter-cyclical adjustments” to prevent downward pressure on the economy. Now the PBOC is warning that it might not be able to ward off these downward pressures in the short term, reported Reuters.

The PBOC’s annual financial stability report said China would continue to deploy fiscal and monetary policies to support the economy but warned economic deceleration would continue through year-end.

Policy maneuvering by the PBOC will be limited as it will likely need to cut rates and the amount of money banks put down as reserves to promote credit growth.

The PBOC recognizes the rapid deterioration in the economy, along with the limitations of monetary policy to revive growth.

Likely, credit creation via the PBOC won’t be in magnitude seen in the last ten years used to save the world from escaping several deflationary crashes.

The government will likely stabilize its economy or at least create a softer landing through tax cuts and infrastructure spending, the annual report said.

What this all means is that China’s economy isn’t going to save the world as it has done since 2008. China’s credit impulse has rolled over, the probabilities of a massive global economic rebound in the coming quarters are unlikely as China continues slow.  Click to enlarge.

This news story showed up on the Zero Hedge website at 7:25 p.m. on Monday evening EST — and another link to it is here.


Kirkland Lake Agrees to Buy Gold Rival Detour For $3.7 Billion

Kirkland Lake Gold Ltd. Chief Executive Officer Tony Makuch was quick to assuage investors that the planned C$4.9 billion ($3.7 billion) acquisition of Detour Gold Corp. won’t boost the company’s cost after shares tumbled.

Shares of Canada’s Kirkland Lake slumped 17%, the worst since mid-July 2015, after announcing an all-share deal to buy Detour Gold, which operates the Detour Lake mine in Ontario. Detour Lake is expected to produce for more than 20 years and can generate 600,000 ounces a year.

Gold mining acquisitions have surged since 2018 after Barrick Gold Corp.’s takeover of Randgold Resources Ltd., and Newmont Mining Corp.’s purchase of Goldcorp Inc. Consolidating the projects after the mergers hasn’t been easy for Newmont, which inherited a company saddled by growing pains as it integrates Goldcorp assets.

In the case of Kirkland’s deal, the company will take on Detour Lake, whose cost is double that of the acquiring miner.

There’s significant benefit in terms of maintaining or reducing costs from current levels,” Makuch said in a telephone interview. “This is definitely a long-life asset that has potential to grow production and continue to be a long-life asset.”

This Bloomberg story appeared on their website at 3:30 a.m. Pacific Standard Time on Monday morning — and was updated plus given a new headline…”CEO Says Kirkland Can Cut Costs Even After $3.7 Billion Deal“…about ten hours later.  I found it on the gata.org Internet site — and another link to it is here.


Poland Repatriates 100 Tonnes of Gold From Bank of England Storage

Poland brought about 100 tons of gold home from the Bank of England in a bid to demonstrate the strength of nation’s $586 billion economy, central bank Governor Adam Glapinski said.

The institution bought about 126 tons in 2018 and 2019 to increase its gold reserves to 228.6 tons. As a result, the country has become the 22nd-biggest bullion holder in the world and has the biggest reserves of the metal in the European Union’s east, the central bank said.

Glapinski said the central bank will keep bringing the precious metal home if the “reserve situation is favorable.”

The gold symbolizes the strength of the country,” Glapinski told reporters on Monday. Poland could generate “multi-billion” profits if it sold its holdings but has no plans to do so, he said.

Central banks, including those of Hungary and Serbia, loaded up on gold in the first half of 2019, helping push total bullion demand to a three-year high, according to the World Gold Council. Central banks around the world have been adding to reserves as economic growth slows, trade and geopolitical tensions rise, and authorities seek to diversify away from the dollar.

This Bloomberg story from Monday was picked up by the finance.yahoo.com Internet site the same day — and it’s another article that I found in a GATA dispatch.  Another link to it is here.


German Central Bank: Gold Is the Bedrock of Stability For the International Monetary System

It was long believed in the gold space that Western central banks are against gold, but things have changed, for quite some years now. Instead of discouraging people from buying gold, or convincing them that gold is an irrelevant asset, many of these central banks are increasingly honest about the true properties of this monetary metal. Stating that gold is the ultimate store of value, that it preserves its purchasing power through time and is a global means of payment. Such statements, combined with actions that will be discussed below, reveal that more and more central banks are preparing for plan B.

The Bundesbank (the German central bank) published a book last year named Germany’s Gold. In the introduction, written by the President of the Bundesbank Jens Weidmann, the view of this bank leaves no room for interpretation. Weidmann writes (emphasis mine):

“Ask anyone in Germany what they associate with gold and, more often than not, they will say that it is synonymous with enduring value and economic prosperity.

Ask us at the Bundesbank what our gold holdings mean for us and we will tell you that, first and foremost, they make up a very large share of Germany’s reserve assets … [and they] are a major anchor underpinning confidence in the intrinsic value of the Bundesbank’s balance sheet.

The Bundesbank produced this publication to give a detailed account, the first of its kind, of how gold has grown in importance over the course of history, first as medium of payment, later as the bedrock of stability for the international monetary system.”

For Keynesians these comments might read like the Bundesbank (BuBa) is a “goldbug.” Its remarks, however, are simply common sense. Gold has enduring value. The world over it is associated with economic prosperity. Every reserve currency in the world today is underpinned by vast gold reserves. Otherwise, monetary authorities wouldn’t trust holding the respective currencies, next to holding their own gold reserves. Gold truly is the bedrock of stability for the international monetary system.

This longish, but very worthwhile commentary from Jan Nieuwenhuijs…a.k.a. Koos Jansen…was posted on the voimagold.com Internet site on Monday sometime — and it’s another article that appeared on the gata.org Internet site.  Another link to it is here.


Does China hold more gold than the USA? — Lawrie Williams

On the face of things, the USA with 8,133.6 tonnes of gold in its reserves possesses around four times as much gold as China in its reserves as reported to the IMF, but is that really the case?  Does China, in reality, hold rather more gold than it reports?  We think it almost certainly does, but how much more is very much open to speculation.  Indeed different analysts have vastly differing theories ranging from as much as 30,000 tonnes down to the just under 2,000 tonnes it reports.

Our own view has always been that China has been surreptitiously been hoarding gold in accounts it justifies as not being reportable to the IMF.  Indeed it has admitted to so doing in the past when it has reported zero gold reserve increases on a month-by-month basis but then announced very substantial rises in its purported gold holdings after several years of reporting these zero monthly increases.  Indeed other observers have noted that, in addition to the central bank’s announce gold reserve  the Chinese military holds gold in its own right as does the nation’s Sovereign Wealth Fund, neither of which holdings are seen as reportable by the Chinese central bank unless and until some of this gold is transferred into the People’s Bank of China (PBoC)’s own holdings.

But this is probably not all.  China’s indigenous banks are, at the very least, mostly state controlled and they certainly hold gold in their own reserves for domestic financial transactions, and there are undoubtedly other state controlled entities which also hold gold – the only real question is how much, and what of this, if any, should come into the national gold reserve figure?  We suspect the PBoC has a claim on all this additional gold should the state wish to use it.

This very worthwhile commentary from Lawrie is definitely worth your time.  It showed up on the Sharps Pixley website on Saturday sometime — and another link to it is here.


The PHOTOS and the FUNNIES

Four more photos taken along B.C. Highway 24 between 70 Mile House and Little Fort…the interlake country as it’s called locally — and there are many dozens of them.  But the first shot is of a mule deer in tall grass, bedecked in her summer costume…which she sheds in the fall to a more a basic dark slate/gray/black colour.  She was standing very close to the highway…so how could I resist.  The second shot is of a field of daises that I took when we stopped to pick wild strawberries.  The third is one of many of the lakes we drove by — and the only one where I know the name for sure is Lac des Roches in the fourth photo.  The whole length of this highway is cottage country in spades.  Click to enlarge.


The WRAP

I wouldn’t read too much into Monday’s price action in the precious metals, except that the downward price pressure in gold and silver was certainly courtesy of ‘da boyz’ — and may have had something to do with options and futures expiry dates for December that are upon us at this very moment.  They only showed up in platinum and palladium in order to prevent their respective rallies from getting too far out of hand…palladium in particular.  Their primary concerns lay with what’s going on in the two monetary metals…plus platinum to a certain extent — and that has always been the case.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  Except for palladium, there’s not a lot to see in the precious metals — and both copper and WTIC closed down by a hair.  Click to enlarge.

And as I type this paragraph, the London and Zurich opens are less than a minute away — and I note that the gold price has been wandering quietly sideways within a dollar or two either side of unchanged in Far East trading on their Tuesday — and is up 10 cents the ounce. Ditto for silver — and it’s up a penny as London opens. Platinum was sold down a bit until 9 a.m. China Standard Time on their Tuesday morning. It rallied after that, but was halted at the $899 spot mark — and is higher by 3 bucks currently. Palladium has been wandering very unevenly higher in Far East trading — and as Zurich opens, it’s up 12 dollars an ounce.

Net HFT gold volume is very light at a bit under 23,000 contracts but, not surprisingly, roll-over/switch volume out of December and into future months is very heavy already at just under 21,000 contracts. Net HFT silver volume is extremely light at a bit under 5,500 contracts — and there’s 7,000 contracts worth of roll-over/switch volume in this precious metal.

The dollar index opened up 1 basis point once trading commence 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 dipped a small handful of basis points going into the 2:15 p.m. CST afternoon gold fix in Shanghai — and is still down 2 basis points as of 7:45 a.m. GMT in London/8:45 a.m. CET in Zurich.


With the U.S. closed on Thursday for Thanksgiving — and after reading Ted’s weekly review on Saturday, I get the distinct impression that all the large traders that aren’t standing for delivery in December, will have to roll or sell those positions before the close of COMEX trading today — and the rest will have to be out by the close of COMEX trading on Wednesday.  I could be wrong about that — and I’ll just take it day-by-day and see what happens.

The other thing I don’t know for sure is whether First Day Notice numbers for December deliveries in both gold and silver will be posted on the CME’s website on Wednesday night or Friday night.  Wednesday night would be better, but the truth is that it really doesn’t matter.  However, I’d prefer to see the numbers sooner, rather then have to wait two more days.

Also today, at the close of COMEX trading, is the cut-off for the next Commitment of Traders Report — and because of the Thanksgiving holiday, I’m not sure whether it will be posted on the CFTC’s website at its usual time on Friday…or won’t appear until Monday.  I suspect the latter, but don’t know for sure on this, either.


And as I post today’s column on the website at 4:02 a.m. EST this morning, I see that the gold price has ticked higher starting around 8:35 a.m. in London trading — and is currently up $2.30 an ounce. Silver did the same thing at the same time — and is up 4 cents as the first hour of London trading draws to a close. Platinum was sold back to almost unchanged by shortly after the Zurich open. It took off higher from that point, but got capped once again at $899 spot — and is up 3 bucks currently. Palladium soared at the Zurich open — and made it up to $1,827 spot, according to Kitco, but was hauled down immediately — and is up only 13 dollars at $1,794 spot as the the first hour of Zurich trading ends.

Gross gold volume is around 92,500 contracts — but minus the current roll-over/switch volume, net HFT gold volume is a bit under 28,000 contracts. Net HFT silver volume is still only about 5,600 contracts, almost unchanged from an hour ago — and there’s 8,000 contracts worth of roll-over/switch volume out of December and into future months in this precious metal.

The dollar index hasn’t done much of anything during the last hour — and as of 8:45 a.m. in London/9:45 a.m. in Zurich it’s sitting back at unchanged. Nothing to see here.

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

Ed

An Unhappy COT Report: What’s Up With the Managed Money Traders?

23 November 2019 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price traded pretty flat, with a slight positive bias until around 1:30 p.m. China Standard Time on their Friday afternoon.  It began to edge very unevenly higher from that point until at, or minutes before, the noon silver fix in London — and that proved to gold’s high tick of the day…such as it was.  It was all very quietly and somewhat unevenly down hill from there — and gold was closed on its low tick of the day…such as it was.

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

Gold was closed on Friday afternoon in New York at $1,461.10 spot, down $2.80 from Thursday.  Net volume was fairly quiet at just under 215,500 contracts…but there was a very heavy 106,000 contracts worth of roll-over/switch volume out of December and into future months.

The silver price chopped quietly sideways until around 2:20 p.m. CST on their Friday afternoon  — and then it began to head just as unevenly higher — and the high tick of the day came a few minutes after 10 a.m. in London.  The price tried to break above the $17.20 spot ceiling, but was turned lower each time and, like for the gold price, the selling pressure began a few minutes before the noon silver fix in London.  The rest was the same as it was for gold — except it was closed slightly off its low tick of the day, but back below $17 spot.

The high and low ticks in silver were reported by the CME Group as $17.21 and $16.95 in the December contract.

Silver was closed on Friday afternoon EST at $16.96 spot, down 11.5 cents from Thursday — and 35 cents off its Kitco-recorded $17.31 high tick.  Net volume was pretty quiet at 48,500 contracts, but  there was an impressive 30,500 contracts worth of roll-over/switch volume in this precious metal.

The platinum price was sold quietly lower starting about an hour after trading began at 6:00 p.m. EST in New York on Thursday evening — and that lasted until around 11:15 a.m. China Standard Time on their Friday morning.  It wandered very quietly  higher until a few minutes before noon in Zurich — and quiet selling pressure reappeared at that juncture.  That engineered price decline became much more substantial starting a few minutes before 9 a.m. in New York.  The low tick was set a few minutes after the 11 a.m. EST Zurich close — and it crept a bit higher from there until the 1:30 p.m. COMEX close.  It didn’t do a thing after that.  Platinum was closed at $888 spot, down 26 dollars on the day — and back below its 50-day moving average once again.

Palladium was sold a bit lower in mid-morning trading in the Far East on their Friday — and then chopped sporadically sideways until the Zurich open.  Then the fireworks began.  ‘Da boyz’ huffed and puffed for the rest of the day, but it still managed to close at $1,754 spot, up 12 bucks from Thursday at $1,754 spot…but miles off its Kitco-recorded $1,781 spot high tick.

The dollar index closed very late on Thursday afternoon in New York at 97.99 — and opened down 6 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.  It didn’t do much from there until a down/up move of some interest occurred during the first hour of London trading — and the 97.84 low tick was set during that event.  It was back at the unchanged market by 9 a.m. GMT — and from there it chopped quietly sideways until a ‘rally’ began around 9:45 a.m. in New York.  The 98.31 high tick was set at 2:45 p.m. EST — and it traded quietly sideways from that juncture until the market closed at 5:30 p.m.  The dollar index finished the Friday session at 98.27…up 28 basis points from its close on Thursday.

It was yet another day where if there was any correlation between what was happening in the currencies vs. what was going on in the precious metals…it was purely manufactured.  The price paths of the precious metals and that ‘rally’ in the dollar index reeked of PPT et al. intervention.

Here’s the DXY chart, courtesy of BloombergClick 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…98.18…and the close on the DXY chart above, was 9 basis points on Friday.  Click to enlarge as well.

The gold shares opened up a bit once trading began at 9:30 a.m. in New York on Friday morning.  But the moment the dollar index got goosed higher — and gold sold lower, the shares followed until shortly after the afternoon gold fix in London.  They rallied back to unchanged by a few minutes after the London close — and then were very quietly sold lower until trading ended at 4:00 p.m. EST.  The HUI closed down 0.68 percent.

The trading in the silver equities was virtually identical — and Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 0.78 percentClick 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 three usual laggards in Nick’s Silver 7 Index…Peñoles closed down 0.95 percent…Buenaventura closed higher by 1.26 percent — and Hecla, closed down 1.69 percent.  First Majestic Silver finished the day unchanged.


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

Here’s the weekly chart — and because of the price take-downs in gold, silver and platinum, there’s not much to look at.  The precious metal equities had all their early gains up to and including Wednesday, vanish before the markets closed on Friday.  Palladium was the sole big winner. Click to enlarge.

Here’s the month-to-date chart — and except for the silver equities, which are vastly outperforming their golden brethren, it’s a sea of red.  You have to ask yourself who the buyers are of all these silver equities, despite the fact that the silver is the biggest loser so far this month.  They certainly wouldn’t be buying them unless for good reason…one known only to them at the moment.  Click to enlarge.

Here’s the year-to-date chart.  It’s still all green across the board, of course — and the gold stocks are back to outperforming the silver equities…compared to the gains in their respective underlying precious metals.  But palladium’s gain continues to tower above all others.  Click to enlarge.

‘Da boyz’ showed up on Thursday and Friday, but it didn’t seem like they had much conviction — and as I said in my commentaries, it appears to be more ‘care and maintenance’ than a determined effort to drive the precious metal prices into the dirt.  That event may or may not lay in our future — and there’s no way to know for sure how it will turn out.  The safe bet is the ‘same old, same old’…but I wouldn’t be willing to bet a lot of money on that outcome this time around.


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

In gold, the sole short/issuer was Advantage — and the three long/stoppers were Scotia Capital/Scotiabank with 3 contracts for its own account [they don’t have a client account] — and Advantage and Morgan Stanley, with 3 and 1 contracts for their respective client accounts.

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

Month-to-date there has been 1,717 gold contracts issued and stopped, which is a pretty big number for a non-traditional delivery month — and that number in silver is 532.

The CME Preliminary Report for the the Friday trading session showed that gold open interest in November fell by 22 contracts, leaving just 21 still open, minus the 7 mentioned a few short paragraphs ago.  Thursday’s Daily Delivery Report showed that 16 gold contracts were actually posted for delivery on Monday, so that means that 22-16=6 gold contracts vanished from the November delivery month.  Silver o.i. in November is still zero, as deliveries in this precious metal are done for the month.


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

In the other gold and silver ETFs on Planet Earth on Friday…minus what happened on the COMEX and in GLD & SLV…there was a net 24,141 troy ounces of gold added — and in silver, there was a net 249,884 troy ounces added as well.

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

Month-to-date the mint has sold 11,000 troy ounces of gold eagles — 5,000 one-ounce 24K gold buffaloes — 463,000 silver eagles — and 13,500 of those ‘American the Beautiful’ 5-ounce coins.

The Royal Canadian Mint finally got around to posting their Q3/2019 Report on their website yesterday.  Here are the snips under the heading “Bullion Products and Services” from page 7 & 8 of that report, as there’s little transparency — and it only hits the highest of the highlights.  But it’s obvious that they had a less than stellar year in gold, but a very good one in silver overall.  Click to enlarge for both.

There was no in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  But there was a bit of paper movement, as 1,301 troy ounces was transferred from the Registered category — and back in Eligible over at HSBC USA — and 503 troy ounces was transferred from the Eligible category and into Registered over at JPMorgan.  I won’t bother linking this.

In silver, there was nothing reported received — and only 513,916 troy ounces was shipped out.  There was 509,906 troy ounces that departed Canada’s Scotiabank — and the remaining 4,010 troy ounces was shipped out of CNT.  The link to that is here.

There was no in/out activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.


Here are three charts that I don’t post often, but will today.  Nick sent these around earlier in the week — and I didn’t have space for them until today’s column.  The first shows the net imports and exports within all the E.U. countries, updated with September’s data.  During that month they imported 218.1 tonnes — and exported 167.1 tonnes.  Note how the U.K. stands out as both the biggest importer and exporter, as they…along with Switzerland…are at the heart of the physical gold market in the West.  Click to enlarge.

And these next two charts show the amount of gold that each country received during September — and how much they exported during that same monthClick to enlarge.


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, show increases in the commercial net short positions in both silver and gold…more than I was expecting in silver — and far, far more than I was expecting in gold.

In silver, the Commercial net short position rose by 4,657 contracts, or 23.3 million troy ounces of paper silver.

They arrived at that number by reducing their long position by 2,979 contracts — and they also added 1,678 short contracts.  It’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus much more, as they were really aggressive buyers…adding 1,217 long contracts, plus covering 7,051 short contracts.  The sum of those two numbers…8,268 contracts…represents their change for the reporting week.

The difference between that number — and the Commercial net short position…8,268 minus 4,657 equals 3,611 contracts was made up, as it has to be, by the traders in the other two categories.  The ‘Other Reportables’ decreased their net long position by 916 contracts — and the ‘Nonreportable’/small traders also decreased their net short position…they by 2,695 contracts.  The sum of those two numbers has to add up to 3,611 contracts — which it does.

Ted was wondering out loud about why the Managed Money traders were being such aggressive buyers this past reporting week, especially considering the fact that they were reluctant sellers in the previous week’s surprise COT Report.

No moving averages of any kind were broken to the upside during the this reporting week.  They should have been sitting on their hands.  And as I just stated in the previous paragraph, they were very reluctant sellers two weeks ago, when they should have been aggressive sellers — and overeager buyers this past week when they should have been doing nothing.  What gives???

Ted left JPMorgan’s short position in silver unchanged at 5,000 contracts this week, even though they appeared to cover about 1,800 contracts in the Producer/Merchant category.  The reason for that was because he felt his 5,000 contract number last week was a bit on the aggressive side.  It was the traders in the Swap Dealer category that did all of the heavy lifting in this week’s COT Report.

The Commercial net short position in silver is up to 66,549 COMEX contracts, or 332.7 million troy ounces…which is bearish on its face.  However, Ted said that JPMorgan’s double cross of the other Big 7 Commercial trader is still very much alive.

Here is the 3-year COT chart for silver, courtesy of Nick Laird — and the weekly change should be noted.  Click to enlarge.

After seeing how the Managed Money traders have been behaving over the last two weeks, I’m not about to hazard a guess as to what the future holds for the silver price.  It’s all Star Trek stuff now…”boldly going where no man/woman has gone before.”


And as unhappy as I was about the COT change in silver, the increase in the commercial net short position in gold was plain butt-ass ugly, as they increased their short position by 17,627 contracts, or 1.76 million troy ounces of paper gold.

They arrived at this number by decreasing their long position by 3,441 contracts — and they also added another 14,186 short contracts — and it’s the sum of those two numbers that represents their change for the reporting week.

Under the hood in the Disaggregated COT Report it was all Managed Money traders, plus a bit more, as they increased their long position by 12,363 contracts — and they reduced their short position by 7,395 contracts.  The sum of those two numbers…19,758 contracts…was their change for the reporting week.

The difference between that number — and the commercial net short position…19,758 minus 17,627 equals 2,131 contracts…was made up by the traders in the other two categories.

The ‘Other Reportables’ decreased their net long position by 965 contracts — and the ‘Nonreportable’/small trader category did the same by 1,166 contracts.  Those two numbers add up to 2,131 contracts, which they must do.

The question about what the Managed Money traders were doing in silver, is even more glaring for gold, as no moving averages of any kind were broken during gold’s $20 rise during the reporting week.  These traders should have been doing zip, nothing…nada.  But no, they were buying with both hands like they were possessed by some strange force.  But why?  A question without an answer.

Ted estimates JPMorgan’s short position in gold at 30,000 contracts, up about 5,000 contracts from last week’s COT Report.

The commercial net short position in gold is back up to 31.91 million troy ounces — and wildly bearish from a traditional standpoint.  But the JPMorgan double cross premise that Ted is following, is still very much alive in this precious metal as well, despite the minor set-back this week.

Here’s the 3-year COT chart for gold — and the unhappy increase in the commercial net short position should be noted.  Click to enlarge.

Like in silver, the totally out of character Managed Money selling and buying over the last two weeks puts any possible forecast of what may lay ahead for gold prices firmly in the Twilight Zone in my opinion.  Ted may have other thoughts on this — and I look forward to what he has to say in his weekly review later today.


In the other metals, the Manged Money traders in palladium decreased their net long position by by a further 338 COMEX contracts — and are still net long the palladium market by 12,590 contracts…50 percent of the total open interest.  Total open interest in palladium is 25,063 COMEX contracts…so you can see that it’s a very tiny and illiquid market.  And as you already know, 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 3,726 contracts.  The Managed Money traders are now net long the platinum market by 24,513 COMEX contracts…a bit under 28 percent of the total open interest. The other two categories [Other Reportables/Nonreportable] are mega net long against JPMorgan et al. as well.  In copper, the Managed Money traders increased their net short position in that metal by 12,030 COMEX contracts during the reporting week — and are net short copper 35,155 contracts. That’s a bit over 15 percent of total open interest.


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. 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 140 days of world silver production…unchanged from last week’s COT Report — and the ‘5 through 8’ large traders are short an additional 71 days of world silver production…down 5 days from last week’s COT Report — for a total of 211 days that the Big 8 are short, which is seven months of world silver production, or about 492 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 216 days of world silver production.]

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 332 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 492 million troy ounces.  The short position of the Big 8 traders is larger than the total Commercial net short position by around 492-332=160 million troy ounces.

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 37-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 marketIt’s the Big 8 against everyone else…a situation that has existed for about three decades in both silver and gold.

As I mentioned in my COT commentary in silver above, Ted figures that JPMorgan is short around 5,000 COMEX contracts — 25 million troy ounces of paper silver, which works out to around 11 days of world silver production the JPMorgan is short.

Based on this number,  that takes JPMorgan right out of the Big 8 traders category entirely…as per the numbers in the next paragraph

The Big 4 traders in silver are short 140 days of world silver production in total. That’s 35 days of world silver production each, on average.  The four traders in the ‘5 through 8’ category are short around 71 days of world silver production in total, which is just under 18 days of world silver production each, on average.

The Big 8 commercial traders are short 44.5 percent of the entire open interest in silver in the COMEX futures market, which is down a bit from the 45.4 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 50 percent mark.  In gold, it’s now 34.3 percent of the total COMEX open interest that the Big 8 are short, down a decent amount from the 38.6 percent they were short in last week’s report — and a bit over 40 percent, once the market-neutral spread trades are subtracted out.

In gold, the Big 4 are short 63 days of world gold production, up 3 days from last week’s COT Report.  The ‘5 through 8’ are short another 35 days of world production, unchanged from last week’s report…for a total of 98 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 64 percent of the total short position held by the Big 8…up 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 66, 73 and 76 percent respectively of the short positions held by the Big 8…the red and green bars on the above chart.  Silver is up 2 percentage points from last week’s COT Report…platinum is unchanged — and palladium is also unchanged.

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


CRITICAL READS

As Stocks Soar, Credit Markets Are Starting To CCCrack

A ‘funny’ thing happened on the way to record high equity markets… the credit market started to crack, and now that pain is spreading and escalating.

Starting from the weakest of the weak, spreads on CCC U.S. junk bonds have jumped above 1,000bps for the first time in more than three years as a sell-off in energy weighs on the lowest-rated debt.  Click to enlarge.

Blowing the CCC market’s risk out to its widest against single-B since April 2016…

The broader U.S. junk bond market has posted negative returns this month… as stocks have soared — and is notably decoupling from equity risk… for now.

As  former Fed president Bill Dudley warned in his latest op-ed, the longer this BBB bid lingers, the bigger will be the ultimate problem.  Again, from Dudley’s op-ed:

When the next recession occurs, a significant portion of this debt will be downgraded to junk. Credit spreads for this debt will rise because of the deterioration in quality.”

But the story isn’t likely to end there. Forced selling will generate significant congestion within the corporate debt market. After all, many investors with mandates that restrict holdings to investment-grade debt will have to unload their newly junk-rated bonds. This selling will push securities prices below their underlying value. Prices will have to become overly cheap to provoke opportunistic buying.

Finally, we suggest the FOMO-driven dip-buyers look away – the divergence between corporate leverage and corporate credit risk is becoming absurd again…

As one veteran credit market participant noted,

“…this works fine when the economy is chugging along.  No doubt that companies will take extraordinary measures to maintain their IG rating.  However, when the next recession – actually scratch that – when the next decent economic slowdown hits, these companies will have zero ability to cut anywhere near enough CapEx to stop downgrades.  They are skating that close to the edge.  And the BBB guys are not the ones doing big stock buybacks, so that will not be an option to stop the slide either.  These over-levered companies will have zero ability to arrest the descent to high-yield.  And when it starts, it will feed on itself.”

In case there’s any doubt, the last time that happened did not end well for stocks or credit…Click to enlarge.

Trade accordingly.

This worthwhile chart-filled news item was posted on the Zero Hedge website at 2:12 p.m. EDT on Friday afternoon — and I thank Richard Saler for bringing it to our attention.  Another link to it is hereGregory Mannarino‘s post market closing rant for Friday is linked here.


Two Risks to Stability Are Building Amid Short-Term Calm — Bill Dudley

The Federal Reserve, in its most recent semiannual report about risks to financial stability, concluded that there are no serious immediate threats. So does this mean we should relax? I definitely don’t think so. In my view, not only are two significant risks on the horizon, but both seem likely to be realized in the years ahead.

Within that report, though, are the seeds of the two longer-term risks I mentioned.

The first is that low Treasury bond yields are not sustainable. That’s a critical risk because the valuation of other important U.S. financial markets, including the corporate bond and equity markets, depend on the low level of Treasury yields.

As I see it, the potential for a significant rise in long-dated Treasury yields is high. First, the starting point is one of unusually low yields, especially at this stage of the business cycle, with 10-year Treasury yields at about 1.8%. Yields are extraordinarily low because real yields — those adjusted for inflation — are depressed. For example, the short-term interest rate judged as consistent with a neutral monetary policy is now around zero, about 200 basis points lower than its historical level. Also, yields are low because bond term premia — the long-run average spread between long-term Treasury yields and short-term rates — are in negative territory. In contrast, before this business cycle, the historical spread between 10-year Treasury yields and three-month rates was about 100 basis points.

Second, there are good reasons to expect that bond term premia will rise over time. Bond term premia are unusually low because investors are more worried about the risk of recession than the risk of higher inflation. Bonds are viewed as a hedge to other riskier assets that investors hold in their portfolios such as corporate debt and equities.

The second long-term risk is the buildup of corporate debt — especially in the BBB rated and high-yield areas. In recent years, U.S. corporations have taken advantage of low interest rates and narrow corporate credit spreads to increase their leverage and move down the credit-quality curve. For many chief executive officers, the calculus has been simple — more leverage facilitates greater share buybacks. That shrinks the number of shares outstanding, boosting earnings per share and the company’s stock price.

This is all incredibly pleasant during a period of sustained economic expansion. But as Ed McKelvey and I wrote two decades ago, there is a dark side to the brave (i.e., longer) business cycle. When recessions become less frequent, the shock of recession becomes greater when they do ultimately occur; this leads, inevitably, to greater turmoil in financial markets. Recent recessions, such as the 2000-01 bursting of the technology stock bubble or the 2007-09 financial crisis, have a greater financial instability component compared with earlier economic downturns.

This pattern is unlikely to be broken next time. After all, the growth in corporate debt has been concentrated in the BBB rated sector. When the next recession occurs, a significant portion of this debt will be downgraded to junk. Credit spreads for this debt will rise because of the deterioration in quality.

When Mr. Dudley speaks on issues such as this, it would be wise to listen…even though he’s as ‘deep state’ as they come.  This article dovetails nicely with the proceeding Zero Hedge article on CCC debt.  This opinion piece by Dudley showed up on the bloomberg.com Internet site at 3:00 a.m. PST [Pacific Standard Time] on Thursday morning — and another link to it is here.


The U.S. Is Throwing Money at Trivial Problems — Bill Bonner

Two things are slowing the U.S. economy – Swamp Politics (with its regulations, favoritism, fake money, cronyism, boondoggles, bamboozles, and waste) and debt (now growing at least twice as fast as the economy that supports it).

Taken together, they make it impossible for the U.S. to ever “grow its way out” of the deficits it is currently running. And together they send the nation down a long, miserable chute.

Broadly, the country is adding debt two to three times faster than GDP. You can do that for a while with no harm done. You can do it in an emergency, for example.

But make it a habit, and you are headed to Hell.

Imperial Agenda

That is where the U.S. is currently going – with outsized spending both at home and abroad – and trillion-plus deficits as far as the eye can see.

A big part of that spending – about $1 trillion per year – is to finance America’s imperial agenda, with its soldiers and intel wonks swaggering all over the world as if they owned it. And a big part of the justification for this meddling is “the Russia threat.”

This is of interest to us because the U.S. could avoid bankruptcy by renouncing its empire and bringing the troops home. The defense/aid budget could be cut in half – or more – simply by giving up America’s role as the world’s bully.

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


The Greatest Swindle in American History…and How They’ll Try It Again Soon

International Man: Before 1913 there was no income tax, and the United States was a much freer country. Initially, the government sold the federal income tax to the American people as something only the rich would have to pay.

Jeff Thomas: Yes, exactly. It always begins this way. The average person is always happy to see the rich taken down a peg, so this makes the introduction of the concept of theft by the government more palatable. Once people have gotten used to the concept and accept it as being perfectly reasonable, then it’s time to begin to drop the bar as to who “the rich” are. Ultimately, the middle class are always the real target.

International Man: The top bracket in 1913 kicked in at $500,000 (equivalent to around $12 million today), and the tax rate for it was only 7%. The government taxed those making up to $20,000 (equivalent to around $475,000 today) at only 1% – that’s one percent.

Jeff Thomas: Any good politician understands that you begin with the thin end of the wedge, then expand upon that as soon as you feel you can get away with it. The speed at which the tax rises is commensurate with the level of tolerance of the people. And in different eras, the same nation may have a different mindset. The more domination a people have come to accept from their government, the faster the pillaging can be expanded.

As an example, the Stamp Tax that King George III placed upon the American colonies in the eighteenth century was very small indeed – less than two percent – but the colonists were very independent people, asking little from the king in the way of assistance, and instead, relying upon themselves for their well-being. Such self-reliant people tend to be very touchy as regards confiscations by governments, and even two percent was more than they would tolerate.

By comparison, if today, say, Texas were to eliminate all state taxation and allow only two percent in federal taxation, Washington would come down on them like a ton of bricks, saying they were attempting to become a “tax haven.” They’d be accused of money laundering and aiding terrorism and might well be cut out of the SWIFT system. The federal government would shut down the state government if necessary, but diminished tax would not be tolerated.

This Q&A with Jeff appeared on the internationalman.com Internet site on Friday sometime — and another link to it is here.


Deutsche Bank CEO’s Last-Ditch Plan to Save Best of His Business

Christian Sewing’s shock was plain to see, the color draining from his face. The chief executive officer of Deutsche Bank AG had just unveiled his long-awaited plan to fix the troubled lender. It included a retreat from equities trading, a focus on corporate banking, and the elimination of 18,000 jobs, a fifth of the workforce. To underscore his conviction, he’d even pledged to invest a chunk of his own pay in Deutsche Bank stock every month.

Then he checked his phone. The shares were in free-fall; they lost as much as 7.3% that day, July 8, and tumbled again on July 9. Shareholders had reached the same, grim verdict: Sewing’s goals were unrealistic for a bank that had consistently disappointed investors. His plan continued to rely on a global investment bank with shrinking revenue and a low-profit retail bank in a home market plagued by fierce competition and negative interest rates.

It was a sucker punch for the former risk manager. Sewing had spent his entire first year as CEO building up to this moment. He’d purged the management board of dissenters, wooed regulators and investors. He’d rejected an alternative strategy that some key stakeholders favored: merging with Deutsche Bank’s German rival, Commerzbank AG. But the market reaction was a reminder that if his strategy was going to work, it wouldn’t happen quickly, and there was no room for error.

History contains innumerable examples of corporate giants struggling to adapt to a changing world. What makes Deutsche Bank’s story particularly resonant is not just that the risks involve a systemically important bank with a €1.5 trillion ($1.66 trillion) balance sheet. It’s also the way the bank’s fate follows the trajectory of corporate globalization over the last three decades.

A former top executive at the bank who knows the CEO well frames the predicament this way: Sewing is the bank’s “last option.” There’s no alternative. If he can’t fix it, Deutsche Bank will fall apart.

This long, but very worthwhile Bloomberg article appeared on their Internet site at 9:01 p.m. Pacific Standard Time on Thursday evening — and it’s the first of two in a row from Swedish reader Patrik Ekdahl. Another link to it is here.


Euro-Area Economy Moves Closer to Stagnation as Orders Fall

The euro-area economy came close to a halt in November as the steep decline in manufacturing spread further into services.

IHS Markit’s composite Purchasing Managers’ Index fell to 50.3 in November, missing all economist estimates. The reading just above 50 — a level that divides expansion from contraction — signals the region’s private sector barely grew.  Click to enlarge.

Orders declined for a third straight month, employment growth slipped to the lowest in almost five years, and price pressures cooled.

The unexpected deterioration comes after the region’s two largest economies showed signs of improvement.

Tentative signs of life in the core euro-zone countries of France and Germany are welcome news,” said Chris Williamson, an economist at IHS Markit. “But a fresh concern is that the rest of the region has slipped into decline for the first time since 2013.”

The outlook remained gloomy, with expectations about future output remaining well below levels seen earlier in the year, reflecting a range of heightened uncertainties from Brexit to trade wars.

This rather brief Bloomberg article was posted on their website at 1:00 a.m. PST on Friday morning — and I thank Swedish reader Patrik Ekdahl for sending it our way.  Another link to it is here.


Doug Noland — Weak Link

I have in previous CBBs highlighted the two-year $1.114 TN, or 27%, increase in (Z.1 category) “Fed Funds and Repurchase Agreements” that culminated with a $319 billion jump during Q1 2008. This data series was emblematic of the extreme speculative leveraging that had taken hold during mortgage finance Bubble “Terminal Phase” excess. While conventional retrospective focuses on risky mortgage lending and housing market excess, the epicenter of the Bubble was in “repo” finance and myriad instruments (CDO’s, ABS, special purpose vehicles, derivatives and such) financed directly and indirectly in short-term market-based lending markets. It was the Bubble in speculative leverage that kept mortgage rates low in the face of historic borrowing demand.

The decade-old “global government finance Bubble” has notable differences – as well as clear similarities – to the previous Bubble. I have posited that global sovereign debt and central bank Credit have been the key sources of Bubble excess (as opposed to U.S. mortgage Credit). In general, interest rates (along with market yields) have been held at historically low levels, a dynamic that has trimmed overall rates of debt expansion. This cycle has experienced unprecedented growth in central bank balance sheets that analytically should be viewed similarly to financial sector leveraging from the previous cycle. Moreover, I would argue securities finance and speculative leveraging have evolved from a U.S. phenomenon to now comprise “repo” funding markets spanning the globe – “developed” markets, “developing” and, certainly, the “off-shore financial centers.”

The rapid expansions in global “Non-Bank Financial Institutions” and “off-shore” Credit indicate extreme speculative leveraging (akin to U.S. “repos” in 2007). Overall global Credit continues to outpace GDP growth, this despite historically low market yields that significantly reduced debt service costs. Indeed, the unrelenting rapid expansion of debt (and speculative leveraging) in the face of waning global growth dynamics portends difficult times ahead.

Clearly, the Cayman Islands, the U.K. and Luxembourg are major sources of cheap finance for the global leveraged speculating community. But I ponder how much speculative finance during this cycle has emanated out of the likes of Hong Kong and Singapore – and flowed freely into higher-yielding Chinese Credit instruments. After all, the world has never seen such a Bubble in “subprime” Credit. I have argued China is the great global Credit Bubble’s Weak Link. But, at this point, perhaps it’s Asian finance more generally. The backdrop is increasingly conducive to heightened currency market instability.

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


Can Russia (or Iran) survive without China? — The Saker

Yes, Russia and China need each other.  I would argue that they need each other.  Vitally.  And yes, the “loss” of one would threaten the other.  But that is not just true for Russia, it is also very true of China (which desperately needs Russian energy, high-tech, natural resources, weapons systems but most of all, Russian experience: for most of her existence Russia was threatened, invaded, attacked, sanctioned, boycotted and disparaged by a long succession of western states, and she defeated them all.  Sometimes quickly, sometimes slowly, but each time Russia prevailed.  The determination and ability to resist the West is something which is deeply embedded in the Russian cultural DNA (this in sharp contrast with the rest of the so-called “East European” countries).  Finally, and for all their very real recent advances, the Chinese armed forces are still far behind the Russian (or the USA for that matter) and in a one-on-one war against the USA China would definitely lose, especially if the USA goes “all out”.  Russia, on the other hand, has the means to turn the US and Europe into a post-industrial nuclear wasteland (using nuclear and, most importantly, non-nuclear munitions!).

I would also add something Jeff did not address: Iran.  I believe that both Russia and China also very much need Iran.  Okay, that is not a vital need, both Russia and China could survive without an allied Iran, but Iran offers immense advantages to both countries, if only because thanks to the truly phenomenal stupidity of the Neocons the USA’s breathtakingly stupid policies in the Middle-East (here is just the latest example) have turned Iran into a regional super-power eclipsing both Israel and the KSA.  Furthermore, if Russia has shown much more political and moral courage than China (which, lets be honest, has been pretty happy to have Russia taking the brunt of the Empire’s attacks), Iran has shown much more political and moral courage than Russia, especially concerning the slow-motion genocide perpetrated by the Zionist Entity in Palestine.

And this brings us full circle to the discussion of what kind of country Russia currently really is.  Russia is not the Soviet Union.  Neither is she pre-1917 Russia.  But what is she really?

Nobody really knows, I think.

It is a moving target, a process.  This process might lead to a new and stable “new Russia”, but that is by no means certain.

This long article/opinion piece, which I haven’t yet read in its entirety, was posted on thesaker.is Internet site on Thursday sometime.  I thank Larry Galearis for pointing it out — and another link to it is here.


Anomalous Swiss Gold Imports and Exports Continue in October — Lawrie Williams

Switzerland has announced its latest gold import and export figures (for October) and what we have previously considered rather anomalous statistics which have been apparent over the past several months seems to be continuing.  There thus seems to be the increasing likelihood that these represent the new norm – at least while demand remains muted in the previously key Asian and Middle Eastern markets.

We had noted in previous years the dominance of the Asian markets in particular as the destination for Swiss gold exports, oftentimes with 90% or more of Swiss re-refined and reworked gold flowing east.  Interestingly in recent months the flow of gold has largely reversed and in October, as can be seem in the bar chart below showing the destination of Swiss gold exports in October, most of the exports from this tiny, but dominant gold exporter have been destined for European markets, dominated by the U.K. and, latterly, France.  Indeed almost 80% of the October flows have been into Europe, dominated by the U.K. which, presumably for the continuing flow of gold into gold ETFs which have most of their gold vaulted in London.  By contrast only 19% went to the traditional Asian and Middle Eastern markets.

The biggest part of the lower level of Asian imports was weak demand from the Chinese mainland (10.2 tonnes), India (5.1 tonnes) and Hong Kong (only 0.3 tonnes) – all at one time big importers of Swiss gold.  This supports anecdotal evidence of far weaker gold demand in these traditional gold importing nations,  However, we might expect to see a slight pickup in the final two months of the year in the run-up to the Chinese New Year (for China and Hong Kong) and for the traditional Indian wedding season months.

The thought also crossed my mind that these big imports of gold into the U.K. could also be ending up in the country’s official gold reserves to replace those sold by Gordon Brown [Britain’s Chancellor of the Exchequer at the time] about twenty years ago.  This very interesting and worthwhile commentary from Lawrie put in an appearance on the Sharps Pixley website on Friday — and another link to it is here.


Perth Mint October Silver Bullion Sales Rank Third Highest

Demand for Australian bullion products was mixed in October, according to the latest round of Perth Mint sales data, soaring for silver coins and silver bars while slowing for gold coins and gold bars.

Perth Mint silver bullion sales climbed for a fourth straight month, registered above 1 million ounces for a third month in a row and, more remarkably, scored their third highest monthly total since CoinNews started tracking the Mint’s data in February 2013.

The Perth Mint sold 32,469 ounces in gold coins and gold bars last month, marking declines of 30.7% from September and 11.9% from October 2018.

Year-to-date gold sales at 256,290 ounces are 16.9% lower than the 308,555 sold through the first ten months of last year.

In contrast, October sales of the Mint’s silver coins and silver bars at 1,394,615 ounces posted gains of 3.3% from September and 29.2% from October 2018. In looking back through the Mint’s sales since 2013, the monthly haul ranks only behind March 2016 sales of 1,756,238 ounces and September 2015 sales of 3,349,557 ounces.

Perth Mint silver sales for the year at 9,184,184 ounces are 19.7% higher than the 7,673,641 ounces sold in the same months of 2018.

This brief, but rather interesting story, shows the same general demand trends as the Royal Canadian Mint numbers that are quoted further up in today’s column.  But the same can’t be said for U.S. Mint sales in silver eagles, which are basically unchanged year-over-year to date.  I found this story on the Sharps Pixley website last night — and another link to it is here.


Detectorists stole Viking hoard that ‘rewrites history’

Two metal detectorists stole a £3m Viking hoard that experts say has the potential to “rewrite history“.

George Powell and Layton Davies dug up about 300 coins in a field in Eye, near Leominster, Herefordshire, in 2015.

They did not declare the 1,100-year-old find, said to be one of the biggest to date, and instead sold it to dealers.

They were convicted of theft and concealing their find. Coin sellers Simon Wicks and Paul Wells were also convicted on the concealment charge.

The hoard included a 9th Century gold ring, a dragon’s head bracelet, a silver ingot and a crystal rock pendant. Just 31 coins – worth between £10,000 and £50,000 – and some pieces of jewellery have been recovered, but the majority is still missing.

They must be concealed in one or more places or by now having been concealed have been dispersed never to be reassembled as a hoard of such coinage again,” prosecutor, Kevin Hegarty QC, said.

This very interesting photo-filled news item showed up on the bbc.com Internet site on Thursday sometime — and I thank Jim Gullo for sending it our way.  Another link to it is here.  There was another story about this on the aljazeera.com Internet site headlined “U.K. treasure hunters jailed for stealing Viking-era hoard” — and I thank George Whyte for that one.


The PHOTOS and the FUNNIES

After leaving Chasm Provincial Park on July 14, it was a short drive to 70 Mile House, one of the stopping places on the Old Cariboo Road.  The old roadhouse burned down in 1956.  The place consists of a general store cum gas station…a garage — and a decent pub with decent food.  We left B.C. Highway 97 at this point — turned east down B.C. Highway 24 — and headed off towards Little Fort through the interlake country.  The first photo is at the highway junction — and the next three were taken en route.  The last two shots were taken along Green LakeClick to enlarge.


The WRAP

Today’s pop ‘blast from the past’ needs no introduction, nor does the group or the lead singer.  They’ve been around for what seems like forever.  This a live performance from 2018 — and this tune was a big hit back in 1976.  At 71 years young at the time of this performance…he’s still got the pipes.  The link is here.

Today’s classical ‘blast from the past’ dates from 1796 — and is a composition by Franz Joseph Haydn.  It’s his Trumpet Concerto in E-flat major…an obscure key if there ever was one…which he threw together when he was 64 years young.  It was difficult to play in those days, because all trumpets back then were valveless.  That’s not an issue with today’s modern instrument — and here’s England’s Alison Balsom doing the honours at the BBC‘s Last Night of the Proms back in 2009.  The video quality is typical of the era — but the audio track is outstanding.  I’ve featured this before, but it has been many years.  The link is here.


From what I could tell, the precious metals certainly were in rally mode starting around the afternoon gold fix in Shanghai — and continuing into the London and Zurich opens.   But it was equally obvious that ‘da boyz’ weren’t going to let that continue.

But I was rather surprised how light the net volume was in both gold and silver on Friday.  Going into the big December delivery month — and First Notice Day next Thursday, I was expecting far more than this.

I suppose with options and futures expiry coming up next week, I guess one should expect some sort of price shenanigans.

And while on that subject, the U.S. Thanksgiving holiday is coming up next Thursday, followed immediately by Black Friday — and I’m not exactly sure how this will impact the final roll-over dates for the large traders next week, or even First Notice Day…although I’m sure it will.  I’ll just play it one day at a time and see how it works out as the last trading week in November progresses.

As to how big a delivery month its going to be in both gold and silver, remains to be seen.  But using the past three or four months as prologue, it could be very large indeed.  Time will tell.

However, the precious metal equities didn’t get sold off to the extent that they did on Thursday, so we should be thankful for small mercies, I suppose.

Here are the 6-month charts for the four precious metals, plus copper and WTIC.  The long knives were certainly out for platinum yesterday, as they closed it well below its 50-day moving average.  Copper gained back everything it lost on Thursday — and WTIC closed down a bit.  Click to enlarge.

Except for the talking heads in the main stream media whose jobs depend on happy talk, it’s now generally accepted that this ‘Everything Bubble’ is way past its ‘best before’ use date.  The latest comment about “Investors are back drinking vast amounts of Kool-Aid” from David Rosenberg was just the latest in an ever-growing list of high net worth fund managers telling it like it is.

As for how long the world’s central banks can keep this apple cart up and going around the track, remains to be seen.  But the propaganda assault from the White House, Wall Street and the main stream media about how great things are, continues unabated.  As reader Elliot Simon said in an e-mail yesterday…”Lately as I observe the sh*t shows produced by governments and other institutions around the world I just shake my head.  It’s almost not worth my time trying to stay informed.  To what end?  We all know what that end is.”

He would be right about that — and all that is unknown…as I keep saying every Saturday…is when that event will occur.  And when it does it occur, will it be design or circumstance…or a combination of the two?  But the fact that this denouement is in our future, is now a certainty.  There is no escape.

As far as the precious metals are concerned, the Big 7 traders dug themselves further into their  financial hole during this past reporting wee — and I’ll be interested in what number that is when Ted posts his weekly review later today.

But as Ted has pointed out on numerous occasions, it’s the resolution of this short position that will determine whether we blast higher in price from where we stand now — taking the Big 7 traders down at the same time…or there is one more final price smash to the downside…accompanied by a concurrent collapse in the stock market.  If it’s the latter scenario, then it most surely will be the last one before precious metal prices — and all commodities, rise in unison, as all things paper crash and burn.

So we wait some more.

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

Ed

Ted Butler: A Genuine Dilemma

22 November 2019 — Friday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price jumped up three bucks or so at the 6:00 p.m. EST open on Wednesday evening in New York, but ‘da boyz’ had that all taken back by shortly after 10 a.m. China Standard Time on their Thursday morning — and it crept quietly lower from there until shortly before 2 p.m. CST.  It rallied to slightly back above unchanged until around 8:45 a.m. in London — and despite the fact that the dollar index was heading south with some conviction, the gold price was sold lower.  That selling pressure continued on and off until the low tick of the day set a minute or two after the 1:30 p.m. COMEX close.  It was allowed to rally a small handful of dollars over the next few hours and change, before the price was turned sideways going into the 5:00 p.m. EST close.

For the third day in a row, the high and low ticks in gold aren’t worth looking up.

Gold was closed on Thursday afternoon in New York at $1,463.90 spot, down $7.60 on the day.  Net volume was pretty heavy at 302,000 contracts — and there was a bit over 86,500 contracts worth of roll-over/switch volume out of December and into future months.

Silver’s price path was guided in a similar manner as gold’s up until a minute or so before 11 a.m. GMT in London — and it began to chop higher from there…with the high tick of the day coming about ten minutes before the 11 a.m. EST London close.  It was then it was also sold unevenly lower until a minute or so after the 1:30 p.m. COMEX close, but struggled a bit higher in after-hours trading.

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

Silver was closed at $17.075 spot, down 5 cents from Wednesday.  Net volume wasn’t overly heavy at 62,000 contracts — and there was 33,500 contracts worth of roll-over/switch volume in this precious metal.

The platinum price was stair-stepped quietly lower in price until minutes before noon in Zurich — and at that point a rally of some substance developed.  That was capped and turned lower at, or just before the afternoon gold fix in London — and it was sold lower and back below unchanged by 1 p.m. in New York.  It didn’t do much after that.  Platinum was closed at $914 spot, down 2 dollars on the day — and 17 bucks off its Kitco-recorded high tick of the day.

Palladium was up six dollars or so by a few minutes after 1 p.m. China Standard Time on their Thursday afternoon, but then was sold lower until around 2:45 p.m.CST.  From that juncture it crept very quietly higher until, like platinum, the rally got capped and turned lower a few minute before 10 a.m. in New York.  It was sold a bit lower going into the COMEX close — and didn’t do much of anything after that.  Palladium was closed at $1,742 spot, down a dollar on the day.

The dollar index closed very late on Wednesday afternoon in New York at 97.93 — and opened down 7 basis points once trading commenced around 7:45 p.m. EST on Wednesday evening.  It crept quietly higher until 3:38 p.m. in Shanghai on their Thursday afternoon, which was twenty-two minutes before the London open on their Thursday morning.  It was all down hill from there until the usual ‘gentle hands’ appeared at 1:04 p.m. GMT/8:04 a.m. EST — and the 97.73 low tick was set at that point.  The ‘rally’ that followed topped out at the 98.03 mark a few minutes after 2 p.m. in New York — and it crept quietly and unevenly lower from there going into the 5:30 p.m. EST close.  The dollar index finished the Thursday session at 97.99…up 6 basis points from Wednesday’s close.

It was obvious that ‘da boyz’ were active in the precious metals and the dollar index for the third day in a row — and whatever correlation there was between the two, was totally manufactured…or purely coincidental.

Here’s the DXY chart, courtesy of the folks over at BloombergClick to enlarge.

And here’s the 6-month U.S. dollar index chart, courtesy of the stockcharts.com Internet site.  The delta between its close…97.90…and the close on the DXY chart above, was 9 basis points on Thursday.  Click to enlarge as well.

The gold shares opened unchanged at 9:30 a.m. in New York on Thursday morning, but began to head lower very shortly after that.  The sell-off lasted until a few minutes before the 1:30 p.m. EST COMEX close.  From that point they crawled higher for an hour and change, before renewing their decent into the 4:00 p.m. close.  The HUI finished on its absolute low tick of the day…down 2.22 percent.

With no difference worth noting, the silver equities followed an identical price path as their golden cousins — and also closed on their respective low ticks.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed lower by 2.75 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 three usual laggards…Peñoles, Buenaventura and Hecla, closed down -1.57 percent, -0.13 percent — and -4.95 percent respectively.  First Majestic Silver got hit by -4.11 percent.


The CME Daily Delivery Report showed that 16 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday.

In gold, the sole short/issuer was Advantage out of its client account.  There were four long/stoppers — and the three largest were Advantage and ADM, with 6 and 4 contracts for their respective client accounts.  And also Scotia Capital/Scotiabank, with 5 contracts for its own in-house/proprietary trading 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 November fell by 10 contracts, leaving 43 still around, minus the 16 mentioned a few short paragraphs ago.  Tuesday’s Daily Delivery Report showed that 26 gold contracts were actually posted for delivery today, so that means that 26-10=16 more gold contracts were added to the November delivery month.  Silver o.i. in November is zero — as silver deliveries are done for the month.


There were no reported changes in GLD on Thursday, but an authorized participant removed 841,022 troy ounces of silver from SLV.  Regardless of the circumstance surrounding the withdrawal, it’s pretty much a given that JPMorgan owns that silver now.

In the other gold and silver ETFs on Planet Earth on Thursday…minus what happened over at the COMEX — and at GLD & SLV…there was a net 22,734 troy ounces of gold added — and an eye-watering 4,381,368 troy ounces [net] of silver withdrawn.  The big withdrawal was 4,403,221 troy ounces from SIVR.

There was no sales report from the U.S. Mint on Thursday — and still no Q3 report from the Royal Canadian Mint.

There was a bit of activity in gold over at the COMEX-approved depositories on the U.S. east coast on Wednesday.  There was 1,999 troy ounces received over at HSBC USA — and nothing was shipped out.  There was also 8,160 troy ounces that was transferred from the Registered category — and back into Eligible — and the happened at HSBC USA as well.  I won’t bother linking this.

There was some decent activity in silver, as 1,200,265 troy ounces was reported received, but only 17,887 troy ounces was shipped out.  One truckload…600,881 troy ounces…arrived at Loomis International — and the other truckload…599,384 troy ounces…was dropped off at CNT.  All the out activity was at CNT as well — and the link to all this is here.

There was some also a fair amount of activity over at the COMEX-approved gold kilobar depositories in Hong on their Wednesday.  There were 504 received — and 586 shipped out.  Except for the 4 kilobars that were received at Loomis International, the remaining in/out activity was all at Brink’s, Inc.  The link to that, in troy ounces, is here.


Here are three charts that Nick Laird passed around on Wednesday that I didn’t have room for in yesterday’s column.  They show gold imports and exports from Switzerland for the last couple of years — and that data has been updated with October’s numbers.

During that month they imported 125.42 tonnes — and exported 110.67 tonnes — and this first chart shows this, plus the net number.  Click to enlarge.

The first of the next two charts shows the countries and tonnages shipped into Switzerland during that month — and the second shows the countries and amounts that received gold from Switzerland in October.  Click to enlarge for both.

I have an average number of articles for you today.


CRITICAL READS

Hedge Funds Suffer 8 Straight Months of Redemptions: Longest Stretch Since the Financial Crisis

All things considered, it hasn’t been a terrible year for hedge funds, which unlike 2018 when by late November the average hedge fund was down almost double digits on the year, are up roughly 10% YTD according to the latest Goldman hedge Fund Trend monitor (and up only 6.7% YTD according to Bloomberg).

The only problem is that when compared to the broader market, which is up over 23% YTD, hedge funds are once again underperforming what over the past ten years has emerged as a risk-free benchmark (courtesy of central banks that step in any time there is even a modest drop). And since hedge fund investors get to pay roughly 2 and 20 (in reality, more like 1 and 12) for the privilege of failing to keep up with the free S&P 500 for the 10th consecutive year (coincidentally, ever since the DOJ busted the “expert network” insider trading scheme in 2010) they are not happy.

The result is that according to the latest monthly e-Vestment data, hedge fund managers suffered a record eighth straight month of client redemptions in October, the longest stretch of withdrawals since the 2008 financial crisis.  Click to enlarge.

Most affected this year were long-short equity funds which had about $41 billion in redemptions, followed by macro managers who saw outflows of $23 billion.

And while investors pulled a total of $6.2 billion from their hedge fund last month, an improvement from September and the lowest monthly redemption since May, the overall trend is clear – redemptions for a year when the S&P is set to post its best return since 2013, have now hit a whopping $87.9 billion, more than double last year when stocks tumbled as more and more investors clearly capitulate on the idea of handing their money to the “smartest men in the idea dinner room” when they can generate higher returns just by buying and holding the SPY.

Meanwhile, the industry which once was a short cut to fame and fortune for any 30-year-old associate who made it to the buy-side, continues to contract as closures outpaced new entrants for four straight years, and several marquee names have shut funds or returned investor capital, most recently billionaire Louis Bacon, who as noted earlier, is set to shutter his Moore Capital after 30 years.

This Zero Hedge article showed up on their website at 2:41 p.m. EST on Thursday afternoon — and another link to it is here.


America’s Economy Is on a Steady Decline — Bill Bonner

Yesterday, we looked at how The Swamp drenched American capitalism in regulation, corruption, and cronyism… making it the laggard among the world’s three major economies.

Today, we’ll look at the other major cause of America’s decline.

In preview, our Dear Reader can relax. It takes time to build a great economy – and it takes time to destroy one.

Meanwhile, the fight for control of the world’s deepest and most powerful state continues in Washington. Democrats hope to weaken Mr. Trump by showing him to be incompetent and corrupt. Republicans rally round their flawed champion, for better or for worse, and vow to stop the attack at the trenches of the Senate floor.

The impeachment battle – like the coming election – is not about the direction of the country, but about who rides and who walks.

To the extent that Mr. Trump’s policies have any consistency, they put the rich on wheels and favor the military-industrial complex on the south bank of the Potomac.

The Democrats favor the rich too… but they pretend to have a liking for the minorities, women, the poor, and anyone who can say “post-structuralist queer theory” without laughing. They claim their spending will save the planet… right the wrongs of this world (inequality, sexism, racism, etc.)… and probably straighten out the next one too.

Bill’s Thursday commentary was posted on the bonnerandpartners.com Internet site early yesterday morning — and another link to it is hereGregory Mannarino‘s post market close rant for Thursday is linked here.


Are We Headed For A Market Crash? — Dennis Miller

I recently wrote “Most readers have felt … for some time, … things are just not right, yet so far, nothing horrible has happened.”

Ron Paul’s recent article, Is The ‘Mother of all Bubbles’ about to Pop?, reinforces those fears:
“When the New York Federal Reserve began pumping billions of dollars a day into the repurchasing (repo) markets in September, they said this would only be necessary for a few weeks. Yet, … almost two months after the Fed’s initial intervention, the New York Federal Reserve pumped $62.5 billion into the repo market.

…. President Trump and Congress have no interest in cutting spending, especially in an election year. …. None of the leading Democratic candidates are even pretending to care about the deficit … they are proposing increasing spending by trillions on new government programs.

According to Michael Pento, the Fed is panicking in an effort to prevent economic trouble much worse than occurred in 2008. “It’s not just QE, it’s QE on steroids because everybody knows that this QE is permanent just like any banana republic would do, or has done in the past.”

This interesting commentary from Dennis appeared on his website on Thursday sometime — and another link to it is here.


In Bizarre Admission, ECB Warns Its Policies Threaten Financial Stability, Could Lead to a Crash

Is the world’s largest hedge fund/central bank finally starting to appreciate the devastating consequences of its asset reflating ways?

In some ways it is almost ludicrous to presume that a central bank which at the beginning of the year laughably “found” that its QE has reduced inequality in the eurozone — and may have finally looked in the mirror objectively.  And yet on Wednesday, it was the ECB which admitted that historically low eurozone interest rates – which it is solely responsible for – and which are expected to persist into the foreseeable future (and beyond) are causing increased risk-taking that could threaten financial stability.

While the low interest rate environment supports the overall economy, we also note an increase in risk-taking which could… create financial stability challenges,” ECB vice-president Luis de Guindos said non-ironically in a statement… which to us sounds an awful close to a mea culpa. Then again, we know that central banks never admit responsibility for “increases in risk-taking” so we wonder if he was just trolling everyone.

Or perhaps he isn’t: “Signs of excessive risk-taking” were spotted by the Frankfurt central bank among non-bank financial players like “investment funds, insurance companies and pension funds.” Indeed, many “have increased their exposure to riskier segments of the corporate and sovereign sectors” the central bank said. Of course, it is the ECB’s own policy of negative yields has prompted investors to seek out riskier bets in search of returns.

Curiously, while the ECB’s twice-yearly update to its risk assessment shifted focus from May’s trade war concerns, “downside risks to global and euro area economic growth have increased” in the meantime, it warned. Such dangers included “persistent uncertainty, an escalation in trade protectionism, a no-deal Brexit and weak performance of emerging markets,” notably China, the ECB said.

This story put in an appearance on the Zero Hedge website at 4:15 a.m.  EDT on Thursday morning — and another link to it is here.


OECD Sees Global Growth at Decade-Low as WTO Warns of “Doomsday Scenario

Global growth is quickly plunging to levels not seen since the financial crisis as the risk of long-term stagnation has developed, according to the OECD’s latest Economic Outlook.

The world economy is expected to grow at a decade-low of 2.9% this year and remain in a subdued range of 2.9% to 3% through 2021. Global GDP has quickly decelerated from peaking at 3.5% in 2018.

The Paris-based policy forum warned that several years of escalating trade disputes between the U.S. and China have resulted in a synchronized global downturn that has pushed down global growth to alarming levels, not seen since the last financial crisis.

The fragility of the world has led to a cycle of vulnerability where a global trade recession could be imminent or has already arrived.

The alarm bells are ringing loud and clear. Unless governments take decisive action to help boost investment, adapt their economies to the challenges of our time and build an open, fair and rules-based trading system, we are heading for a long-term future of low growth and declining living standards,“OECD Secretary-General Angel Gurría recently said.

To make things even more complicated for the global economy, the Trump administration has created a perfect storm that will likely paralyze the World Trade Organisation’s (WTO) appeals body in December that could lead to further escalations in the trade war and damage the global economy into a depression.

Without WTO’s working appeals system, international trade disputes will go unresolved and could escalate into tit-for-tat tariff wars that spiral out of control.

At that stage, the whole thing gets out of hand,” said Stuart Harbinson, Hong Kong’s former representative at the WTO, now a trade consultant at Hume Broph. “I think that will be the doomsday scenario.”

And with global growth at decade lows, China not able to jump-start the global economy, and the risk that trade tensions could continue escalating — it seems that global equities have priced in a recovery that was only fantasy — what happens next could be a repricing event for risk assets.

This Zero Hedge news item appeared on their Internet site at 10:45 p.m. on Thursday night EST — and another link to it is here.


Iran’s “only crime is we decided not to fold” — Pepe Escobar

Just in time to shine a light on what’s behind the latest sanctions from Washington, Iranian Foreign Minister Mohammad Javad Zarif in a speech at the annual Astana Club meeting in Nur-Sultan, Kazakhstan delivered a searing account of Iran-US relations to a select audience of high-ranking diplomats, former Presidents and analysts.

Zarif was the main speaker in a panel titled “The New Concept of Nuclear Disarmament.” Keeping to a frantic schedule, he rushed in and out of the round table to squeeze in a private conversation with Kazakh First President Nursultan Nazarbayev.

During the panel, moderator Jonathan Granoff, President of the Global Security Institute, managed to keep a Pentagon analyst’s questioning of Zafir from turning into a shouting match.

Zarif inevitably had to evoke Mike Pompeo: “Today the Secretary of State of the United States says publicly: ‘If Iran wants to eat, it has to obey the United States.’ This is a war crime. Starvation is a crime against humanity. It’s a newspeak headline. If Iran wants its people to eat, it has to follow what he said. He says, ‘Death to the entire Iranian people.’”

By then the atmosphere across the huge round table was electric. One could hear a pin drop – or, rather, the mini sonic booms coming from high up in the shallow dome via the system devised by star architect Norman Foster, heating the high-performance glass to melt the snow.

Zarif went all in: “What did we do the United States? What did we do to Israel? Did we make their people starve? Who is making our people starve? Just tell me. Who is violating the nuclear agreement? Because they did not like Obama? Is that a reason to destroy the world, just because you don’t like a president?

Iran’s only crime, he said, “is that we decided to be our own boss. And that crime – we are proud of it. And we will continue to be. Because we have seven millennia of civilization. We had an empire that ruled the world, and the life of that empire was probably seven times the entire life of the United States. So – with all due respect to the United States empire; I owe my education to the United States – we don’t believe that the United States is an empire that will last. The age of empires is long gone. The age of hegemony is long gone. We now have to live in a world without hegemony. – regional hegemony or global hegemony.”

This long commentary from Pepe was posted on the Asia Times website on Monday — and it’s certainly worth reading if you have the interest.  Another link to it is here.


World’s Rich Are Rattled and Seeking Old-Fashioned Security

A few blocks from Grosvenor Square in Mayfair, 46 Park Lane resembles a private club with wood-paneled walls and an ornate fireplace dating back to Britain’s Victorian era.

But down a flight of stairs is one of the most secure rooms in London. Built by IBV International Vaults, the steel-walled stronghold is scheduled to open next month and will cater to billionaires looking for a place to stash their most prized possessions.

We’re getting calls every week about a room available for 2.5 million pounds ($3.2 million) a year,” said Sean Hoey, managing director of IBV London, referring to an apartment-size space. The firm, which also has 550 safe-deposit boxes on site and room for about 450 more, is betting on London’s reputation as a “safe haven,” even with Brexit.

This will be IBV’s sixth location, and it’s hardly the only such firm fielding queries from the wealthy. From London to Switzerland to parts of the U.S., the rich are looking to store precious metals, cash and cryptocurrency. For some, it’s the threat of a global recession. Others are avoiding bank deposits as negative interest rates force lenders to charge for holding cash. Many are concerned about natural disasters.

Hedge fund titan Ray Dalio captured the anxiety last month when he warned the global economy is under threat from an explosive mix of ineffective monetary policy, a widening wealth gap and climate change. A majority of wealthy investors are stockpiling cash in anticipation of a sharp market drop before the end of next year, according to a survey of clients from UBS Global Wealth Management.

This longish but interesting Bloomberg article showed up on their website at 9:00 p.m. PST on Tuesday evening — and updated about nine hours later.  I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to it is here.


Ex-JPMorgan trader found guilty in U.S. currency-rigging trial

A former foreign exchange trader at JPMorgan Chase & Co was found guilty Wednesday of conspiring to rig trades for his own benefit.

Akshay Aiyer was convicted of one count of conspiracy by a jury in federal court in Manhattan, court records show. He is scheduled to be sentenced on April 3.

This conviction serves as a reminder of our commitment to hold individuals responsible for their involvement in complex financial schemes which violate the integrity of the global financial markets,” said Assistant Attorney General Makan Delrahim, of the U.S. Department of Justice, said in a statement.

A lawyer for Aiyer could not immediately be reached for comment.

Aiyer, who lives in New York, was indicted in May 2018. Prosecutors said he conspired from at least October 2010 to July 2013 to eliminate competition by fixing prices of and rigging bids for Central and Eastern European, Middle Eastern and African currencies.

Aiyer was at least the sixth person charged in Manhattan federal court in connection with a wide-ranging U.S. probe into currency manipulation by major banks.

This brief Reuters article, filed from New York, showed up on their Internet site on Tuesday afternoon EST — and I found it on the gata.org Internet site.  Another link to it is here.


President sends back to Parliament the law on gold repatriation initiated by Liviu Dragnea

President Klaus Iohannis has sent back in Parliament the law on gold repatriation initiated by the former PSD Liviu Dragnea and by the PSD senator Serban Nicolae. The law says that Romania’s gold reserve deposited abroad should be stored in the country.

In June this year, the law was declared constitutional after the CCR judges had rejected the Opposition’s referral.

Now, the Presidency has sent the law back in Parliament for re-examination, arguing it “can affect the National Bank’s legal powers” and might prompt the increase of the financing costs.

One of the reasons to decide and maintain the international reserves (including the gold ones) is to increase the level of trust in a country and to allow the negotiation of some lower costs for loans or other international transactions. Or, the legislative intervention subdued to re-examination should prompt the restriction of BNR’s legal powers to right to use the gold reserves, which might lead to increasing financing costs”, the Presidency pointed out.

At the same time, the President mentioned that the gold repatriation would affect BNR’s capacity to provide and maintain the prices’ stability.

One wonders who got to him — and caused this change of heart.  This gold-related story put in an appearance on the romaniajournal.ro Internet site on Tuesday sometime — and I found it on the Sharps Pixley website.  Another link to it is here.


Russian central bank now holds over 2,250 tonnes of gold — Lawrie Williams

The Russian central bank is continuing its gold buying programme, but is increasing its reserves this year at a noticeably slower rate than it has in the previous three.  Its latest reported increase (for October) is of 300,000 troy ounces (9.33 tonnes), a similar level to its July accumulation, but below that for August and September.  It now has some 2,251 tonnes of gold within its Forex holdings – still a little behind Italy and France, but closing the gap.  We had speculated that Russia’s holding could exceed those of Italy and France within 2 years, making it the world’s No. 3 national holder of gold as reported to the IMF within the next couple of years, but with the recent slowdown in purchases this may now take a little longer.

Russia is the world’s third largest producer of gold and has its eyes on the No. 2 spot, overtaking Australia, which it could also do in the next few years.  Looking further ahead, if it continues to grow production at the current rate it could even have the goal of overtaking China, the current world No. 1, within a few years given that Chinese gold output appears to be falling.

Russia has been virtually eliminating U.S. dollars and other dollar-related holdings from its reserves for fear of financial sanctions, and its increase in its gold holdings has been a significant part  of this process.  The Russians, along with the Chinese, feel that gold will have a significant role to play in any global currency reset when the current system likely collapses under the pressure of effectively unlimited debt run up by key economies – notably in the U.S. and in some key European and Asian countries.  Russia has been building its gold reserves openly, while many believe the Chinese have been doing so surreptitiously with its true gold reserve position hugely higher than the figures it reports to the IMF.  With both nations being significant gold producers in their own right, their gold reserve building capability is without question.

This commentary by Lawrie showed up on the Sharps Pixley website on Thursday sometime — and another link to it is here.


Ted Butler: A Genuine Dilemma

Yet another former precious metals trader from JPMorgan has been indicted for spoofing and price manipulation by the US Department of Justice. Between all the criminal guilty pleas and indictments to date, it begs the question – were there any precious metals traders at JPMorgan which weren’t engaged in illegal trading activities? From my close professional observation for more than a decade, I would be dumbfounded if any JPMorgan precious metals traders were on the up and up. Perhaps it might be more expedient for the Justice Department to list the traders at JPMorgan which it considered as non-criminal.

Here’s a link to the indictment.

I would urge you to not only read the announcement of the superseding indictment above, but take some time to also skim the actual indictment at the bottom of the linked announcement. Let me confine my remarks to what stood out to me in the new indictment, which can be described as confirmatory rather than involving brand new revelations. However, the superseding indictment did reveal some new things and certainly connected a number of important dots.

The new indictment confirmed that traders for JPMorgan, effectively, favored and rewarded certain of the bank’s own clients at the expense of and to the detriment of other bank clients, thus violating and making a mockery of any sense of fairness thought to exist in an aboveboard fiduciary relationship. The indictment reconfirmed that JPMorgan’s clients who held “barrier’ type option contracts with the bank saw their option contracts made worthless by illegal spoofing and price manipulation.

But new were the allegations that the indicted JPMorgan traders also unfairly favored certain high-revenue hedge fund clients. JPM traders “rewarded” certain big hedge fund clients by illegally manipulating prices to accommodate certain orders in a discriminatory manner. I understand that a broker would and should fight to get the best execution possible for a client – but not by resorting to illegal trading practices. This is a very important point made by the Justice Department.

And since the Justice Department went out of its way to include the favoring of certain high-revenue hedge fund clients of JPMorgan as an impetus for the illegal spoofing by its traders, I’m curious if the DoJ is following up with these hedge funds for receiving ill-gotten favors. Did the hedge funds in question not know they were the beneficiaries of illegal trading practices? After all, it takes two to tango, even if the tango is illegal.

This longish but must read commentary from Ted was posted on the silverseek.com Internet site at 11:38 a.m. MST on Thursday morning — and another link to it is here.


The PHOTOS and the FUNNIES

Both my daughter and myself were more than surprised by Chasm Provincial Park, as only a small sign on B.C. Highway 97 indicates that it’s there at all.  “Successive lava flows form layers in varying tones of red, brown, yellow and purple, which have been revealed in the steep lava-layered canyon walls through erosion over the past 10 million years.” — as the above link states, in part.  It was certainly worth the brief side trip.  The last photo was taken looking north down the CN tracks that we had to cross on the way back to the highway.  The mosquitoes almost ate us alive here.  Click to enlarge.


The WRAP

It was another day where the PPT/’da boyz’ left nothing to chance…whether it was the precious metals, the dollar index, or the Dow.  They were everywhere again yesterday — and it’s something that Gregory Mannarino was quick to point out in his daily rant after the U.S. markets closed yesterday.

Here are the 6-month charts for all four precious metals, plus copper and WTIC.  There’s certainly nothing to see in the precious metal.  Platinum was on fire a bit, until ‘da boyz’ showed up — and that was that.  However, copper was hammered back and closed below its 50-day moving average…but WTIC blasted back through and closed above its 200-day moving average on Thursday.  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 almost rule flat with a slightly positive bias until around 1:30 p.m. China Standard Time on their Friday morning. It began to tick higher from there — and is up $2.90 an ounce. Silver had a bumpier ride, including a vicious down/up price spike around 12:30 p.m. in Shanghai. It has edged unevenly higher since — and is currently up 4 cents as London opens. Platinum was down ten bucks by shortly after 10 a.m. CST on their Friday morning — and it has been trading unevenly higher since — and is still down 7 bucks. Palladium was sold lower as well in morning trading in the Far East. It has been chopping very quietly and unevenly higher since — and is now back at unchanged as Zurich opens.

Net HFT gold volume is very quiet…coming up on 32,000 contracts — and there’s 5,555 contracts worth of roll-over/switch volume in this precious metal. Net HFT silver volume is very light as well at a bit under 7,500 contracts — and there’s 3,267 contracts worth of roll-over/switch volume out of December — and into future months.

The dollar index opened down 6 basis points at 97.93 once trading commenced around 7:45 p.m. EST in New York on Thursday evening, which was 8:45 a.m. China Standard Time on their Friday morning. It struggle a bit higher until around 9:20 a.m. CST — and didn’t do much until about 11:25 a.m. over there. It began to slide a little at that point — and the current low tick [such as it is] was set around 2 p.m. CST. It has crept a bit higher since — and is currently down 5 basis points as of 7:45 a.m. GMT in London/8:45 a.m. in Zurich.


Today, around 3:30 p.m. EST, we get the latest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday — and I’m certainly interested in seeing what’s in it.

I commented in my Wednesday column that I thought that there might be some minor increases in the commercial net short positions in both silver and gold, as the prices of both were up a bit during the reporting week, so we’ll see how that pans out.

In his mid-week commentary on Wednesday, silver analyst Ted Butler had this to say about it…”I don’t anticipate truly significant overall positioning changes. While it’s true that gold and silver prices rallied during the reporting week (gold by as much as $20, silver by 40 cents), no previously downwardly penetrated moving averages (all the way down to the 13 day moving average) were penetrated to the upside. Of course, I’ll be paying close attention to what JPMorgan may have done, along with all the other things under the hood that I usually look for.”


And as I post today’s missive on the website, I note that gold’s current high of the day came shortly before the London open — and has been sold a bit lower since — and is up $3.40 the ounce, but really hasn’t done much over the last hour. Silver’s rally has had a bit more legs — and it’s up 7 cents as the first hour of London trading ends…but well of its current high tick. Platinum is only down 4 dollars now — and palladium is still sitting an unchanged as the first hour of Zurich trading draws to a close.

Gross gold volume is now up to around 71,500 contracts — and minus current roll-over/switch volume out of December and into future months, net HFT gold volume is around 48,000 contracts. Net HFT silver volume is a bit over 9,500 contracts — and there’s about 4,200 contracts worth of roll-over/switch volume in this precious metal.

The dollar index had been ticking quietly higher during the last hour, but that all ended at 8:12 a.m. GMT in London. It fell off a bit of a cliff at that juncture, but has bounced off its current low tick — and is now down 12 basis points as of 8:45 a.m. in London/9:45 a.m. in Zurich.

That’s if for today.  I hope you have a great weekend — and I’ll see you here tomorrow with all the COT data.

Ed