11 May 2016 — Wednesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
NOTE: If you’re still not receiving my daily commentary by e-mail, please hit the ‘Contact Me’ button and let me know—and I will have your name put on the list. And if you are getting it—and you’re missing a day here and there—check your ‘junk’ e-mail, plus the ‘junk’ e-mail folder of your ISP, as it’s most likely in one of those two places. – Ed
The gold price really didn’t do much in Far East and morning trading in London on their Tuesday—and was back to about unchanged by around 10:20 a.m. in New York yesterday. At that point, the price got smacked for five bucks in a minute or so, but from there began to work its way higher, plus it rallied a bit in the after-hours market as well. A seller showed up around 3:40 p.m.—and after that, the price traded flat for the rest of the day.
The low and high tick were reported as $1,258.30 and $1,272.00 in the June contract.
Gold finished the Tuesday session in New York at $1,265.30 spot, up a $1.90 on the day. Net volume was on the quieter side, at least compared to what it’s been lately, at just under 135,000 contracts. Roll-over volume out of the June contract is already pretty decent.
Silver got sold about a dime or so by 9 a.m. HKT on their Tuesday morning. It rallied back to a few pennies above unchanged shortly after London opened—and then it chopped sideways until the COMEX close, but added a few more pennies in after-hours trading.
The low and highs in this precious metal were reported by the CME Group as $16.92 and $17.19 in the July contract.
The silver price closed yesterday at $17.095 spot, up 10.5 cents on the day. Net volume was just under 37,000 contracts which, like gold, was a lot lighter volume than we’re used to seeing.
Platinum didn’t do much, either—and most of its gains came after 1 p.m. EDT in New York, plus a bit in the after-hours market. Platinum finished the Tuesday session at $1,051 spot, up 9 dollars from it’s close on Monday.
Palladium traded five bucks either side of unchanged until shortly after 9 a.m. EDT. The rally that began at that point ran into ‘da boyz’ just before 11 a.m.—but an hour later it was crawling higher once again. From 3 p.m. EDT onward, it traded flat. Palladium closed in New York yesterday at $594 spot, up 12 dollars on the day—gaining back half of Monday’s loss.
The dollar index closed in New York late on Monday afternoon at 94.16—and it made two rally attempts on Tuesday, both of which failed and had to be rescued by the usual ‘gentle hands’—once just after the London open—and the second time just before the London close. The third rally attempt worked, sort of, as the index managed to close higher by 10 basis points at 94.26.
This current counter-trend rally, if you wish to dignify it with that name, certainly looks shaky—and if this is the best ramp job that the powers-that-be can manage, then look out to the downside.
And here’s the 6-month USD chart, so you can see how this ‘rally’ is progressing.
The gold stocks opened unchanged, hit their lows shortly before 10 a.m. EDT—and then chopped quietly higher for the rest of the Tuesday session, closing just off their collective high ticks. The HUI finished up 4.06 percent. Click to enlarge.
The silver equities performed in an identical manner, but they didn’t shine as much as their golden brethren. Nick Laird’s Intraday Silver Sentiment Index closed higher by 2.99 percent. Click to enlarge.
The CME Daily Delivery Report showed that 100 gold and 25 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday. In gold, like in Tuesday’s column, it was the same two short/issuers with 50 contracts each once again—ABN Amro and HSBC USA. The former out of its client account—and the latter out of its in-house [proprietary] trading account. Canada’s Scotiabank and JPMorgan were the two largest long/stoppers with 72 and 17 contracts out of their respective in-house trading accounts. In silver, ABN Amro issued 17 contracts out of its client account—and Morgan Stanley issued 6 contracts out of its client account as well. And as has been the case all month it was JPMorgan and Canada’s Scotiabank as the only two long/stoppers with 17 and 8 contracts for their respective in-house 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 May declined by 99 contracts, leaving 1,317 still open—and for this time of month [and in a non-delivery month for gold as well] this is amazing to see. Monday’s daily delivery report showed that 100 gold contracts were issued for delivery today, so one extra gold contract was added to the May delivery schedule. Silver o.i. dropped by 174 contracts in May—and since 138 silver contracts were actually posted for delivery today as reported in Monday’s daily delivery report, the long/stoppers let another 174-138=36 short/issuers temporarily off the hook because they had no physical silver backing their short positions.
Much to my surprise, an authorized participant added 76,430 troy ounces of gold to GLD. And also, much to my surprise, an authorized participant withdrew 1,046,232 troy ounces of silver from SLV.
So far in May, there has been 1,128,681 troy ounces of gold added to GLD—with no withdrawals. So far in May, there has been one addition of 1,807,390 troy ounces of silver into SLV—but three consecutive withdrawals as well, totalling 3,741,060 troy ounces—for a net decline of 1,933,670 troy ounces so far in May.
I would suspect, but can’t guarantee, that Ted will have something to say about “all of the above” in his mid-week column to his paying subscribers this afternoon.
The folks over at the shortsqueeze.com Internet site updated their website with the short interest in both GLD and SLV as of the close of trading on Friday, April 29—and this is what they had to report. The short interest in SLV rose from 13.96 million shares/troy ounces, to 15.30 million shares/troy ounce—which works out to an increase of 9.6 percent. There was a small decline in GLD’s short position, from 1.096 million troy ounces, down to 1.084 million troy ounces—122,100 troy ounces—a drop of 1.11 percent.
There was no sales report from the U.S. Mint for the second day in a row.
There was a bit of action in gold over at the COMEX-approved gold depositories on Monday, as 7,726 troy ounces were reported received. Of that amount 5,000.000 troy ounces/500 ten-ounce bar were shipped into Brink’s, Inc. again—and two kilobars were shipped out of Manfra, Tordella & Brookes, Inc. The link to this activity is here.
There was more activity in silver, as 601,241 troy ounces were reported received—and 206,049 troy ounces were shipped out the door for parts unknown. All the silver received went into CNT—and almost all of the ‘out’ activity was at Brink’s, Inc., with the rest coming out of HSBC USA. A link to this activity is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday, they reported receiving 4,209 of them—and shipped out 539. All of the activity was at Brink’s, Inc. as per usual—and the link to that, in troy ounces, is here.
Here’s another chart from Nick Laird. This one shows the Earmarked Gold Holdings at the U.S. Federal Reserve Bank of New York, updated with March’s data. Nick said in his covering e-mail that 10.314 tonnes was shipped out in March. Click to enlarge.
It was another very slow news day—and I don’t have much for you once again. So I hope there will be the odd one that piques your interest.
CRITICAL READS
DoJ Probing Whether Citadel is Front-running Its Clients
Over two years ago, and just days after Michael Lewis released Flash Boys focusing attention on the ongoing criminal practice of order-flow front-running by such Fed intermediaries as Citadel (and many other now entrenched and recently IPOing names), none other than Citadel’s head of “Execution Services” which we supposed is the internal name of the firm’s client-facing HFT group, Jamil Nazarali, proclaimed that small investors have never been so fortunate and said, with regard to Michael Lewis’ now infamous book Flash Boys, “The most important thing that the market can do is stop… pointing fingers at everyone else.“
As we said back then “Citadel, who allegedly provides the NY Fed’s VIX trading capabilities, are among the very largest high-frequency traders in the market (and the most levered), so one would surely expect that Citadel would like us all to stop pointing fingers at them.” As Bloomberg reports, Nazarali said yesterday during a panel discussion at the Milken Institute Global Conference in Beverly Hills, California, “things are much better today than they were 10 to 15 years ago.”
Maybe for Citadel; but for investors – who are tired if not disgusted of having their orders constantly front-run by internalizers and wholesale market-maker venues such as Ken Griffin’s Citadel – not so much.
This is the Zero Hedge spin on a Reuters piece that put in an appearance on the ZH website at 8:05 a.m. on Tuesday morning EDT—and I thank Richard Saler for today’s first story. It’s on the longish side—and another link to this news item is here.
Record-Breaking Container Ship Ends Brief U.S. Service
French shipping line CMA CGM SA will no longer run the vessel Benjamin Franklin—the largest container ship to ever call at U.S. ports—between Asia and the West Coast. The ship was replaced with a smaller vessel, the Leo, less than five months into its service on the trans-Pacific route, according to BlueWater Reporting, which tracks ocean sailing schedules.
A spokesman for CMA CGM confirmed in an email that the carrier decided to postpone the deployment of megaships to the U.S. West Coast. According to documents on CMA CGM’s website, the Benjamin Franklin is now running a route between Asia and Europe, where larger ships are more commonly used.
The Benjamin Franklin can carry nearly 18,000 twenty-foot shipping containers, or TEUs, marking a capacity record when it docked at the Port of Los Angeles late last year. On a second trip to neighboring Long Beach in February, CMA CGM held inaugural festivities, including tours of the ship, and named
Shelley McMillon, wife of Wal-Mart Stores Inc. Chief Executive Doug McMillon, “Godmother” of the vessel.
This very interesting news item was posted in the clear on The Wall Street Journal website on Monday evening—and the photo is worth the trip. Brad Robertson sent it our way via Zero Hedge. Another link to this story is here.
Eurozone recovery wilts as sugar rush fades, deflation lurks — Ambrose Evans-Pritchard
The eurozone’s short-lived recovery is already losing steam as stimulus fades and deep problems resurface, raising fears of yet another false dawn and a potential deflation trap if there is any external shock over coming months.
Industrial output fell in 1.3pc Germany and 0.3pc in France in March as manufacturing stalled, confounding expectations for robust expansion. The relapse in a string of countries suggests that flash estimates of 0.6pc GDP growth in the first quarter were too optimistic and may have to be cut.
“The recovery is not gaining any traction. I am really quite worried about another spasm of the debt crisis over the summer,” said Lars Christensen from Markets and Money Advisory.
“Markets are beginning to lose faith that the European Central Bank can deliver stimulus, and we are seeing the return of problems in public finances in Portugal, Spain, and Italy. That is becoming a key story,” he said.
The financial heroin fixes are becoming less and less effective—and it’s a certainty that Europe is firmly in a deflationary trap, as are most other nations on Planet Earth. This must read commentary by AE-P was posted on the telegraph.co.uk Internet site at 8:53 p.m. BST on their Tuesday evening, which was 3:53 p.m. in New York—EDT plus 5 hours. Another link to this story is here.
Putin Plays Energy Chess with Netanyahu
On April 21 Israeli Prime Minister Benjamin Netanyahu flew to Moscow for closed door talks with Russian President Vladimir Putin. The media reported that the talks were over the situation in Syria, a theme where Moscow has made certain a regular hotline dialogue exists to avoid potential military clashes. It seems, however, that the two discussed quite another issue–potential Russian involvement in developing Israel’s giant offshore Leviathan gas field in the Eastern Mediterranean. Were the two to strike a deal, the geopolitical implications could be enormous for Putin and Russia’s strategic role in the Middle East as well as for the future of the US influence in the region.
Israeli press reported the Netanyahu-Putin talks as being about “coordination between forces in skies above war-torn country, status of Golan Heights…”
According to Russian state media reports, however, in addition, Netanyahu and Putin discussed the potential role of Russia’s state-owned Gazprom, the world’s largest natural gas producer and marketer, as a possible stakeholder in Israel’s Leviathan natural gas field. Russian involvement in the stalled Israeli gas development would reduce financial risk for Israeli offshore gas operations and increase the gas fields’ security, as Russian allies like Hezbollah in Lebanon or Iran would not dare target Russian joint ventures.
If the Russian reports are accurate, it could portend a major new step in Putin energy geopolitics in the Middle East, one which could give Washington a major defeat in her increasingly inept moves to control the world’s center of oil and gas.
The operative word in the last paragraph is ‘If‘. This F. William Engdahl piece was posted on the informationclearinghouse.com Internet site on Sunday sometime. I thank Doug Clark for sending it along. I was saving it for Saturday, but it’s such a slow news day, I thought I’d stick it in today’s column. It’s worth reading, if you have the interest—and another link to it is here.
Gold—and the End Game For the Stock Market — Mike Maloney
The one argument used to bash gold is now gone. A major shift in the market is taking place and only a few astute investors are taking notice.
But once this information spreads there will be even more of an awakening. The result should be higher demand for gold and silver as investors and consumers flee depreciating fiat currencies and other paper assets.
Watch this week’s video to find out how one large hedge fund has changed its portfolio to try and get ahead of the curve.
This 8:11 minute video clip with Mike showed up on his goldsilver.com website yesterday—and it’s worth your while. I thank Judy Sturgis for pointing it out. Another link to this video is here.
Goldman Closes “Short Gold” Recommendation With 4.5% Loss; Will Continue Buying Gold From Its Clients
Back on February 15, just as the USD was about to plunge unleashing a global risk-on rally as a result of “Yuan stability“, Goldman triumphantly announced its latest trading recommendation: short gold (at $1,205) with a target of $1000 and a 7% stop loss.
This being Goldman – the one hedge fund whose prop traders immediately take the other side of all trades pitches to clients – said clients were immediately and brutally taken to the cleaners as the consequence of a tumbling dollar (another trade that Goldman got disastrously wrong) was soaring gold. And that is precisely what happened. After that, unofficially, it took just two and a half months for Goldman to get stopped out of its short gold recommendation, which as we first noted, happened on April 29, when its the price soared above $1,300 breaching Goldman’s stop. Officially, Goldman’s Jeff Currie decided to take his time, although he too finally threw in the towel today admitting Goldman was wrong yet again with one more trading recommendation (recall that Goldman had earlier been stopped out and lost money on 5 of its Top 6 trades for 2016 in just over a month).
This gold-related news item appeared on the Zero Hedge website at 10:37 p.m. EDT last night—and another link to this story is here.
John Hathaway: Silver is a barometer for resource interest and it’s registering ZERO
Tocqueville Gold Fund manager, John Hathaway is convinced the gold bottom is behind us simply because of the lack of people involved in the sector outside the core long term investors.
Silver is an excellent indicator of investor sentiment and its slow rise relative to gold shows the mainstream is still far from being on board. There is still a long way to run with the bull market, at least another 4 years.
The Tocqueville Fund does not take a position at less than $10 million, they have been investing for 20 years and now tend to invest with people they have made money with in the past. They are extremely careful who they invest with.
This 20-minute audio interview with John showed up on the mining.com Internet site on Monday sometime—and I found it on the Sharps Pixley website late last night Denver time. I haven’t listen to it yet, so I’m in no position to comment on it. Another link to this interview is here.
Indians shun gold buys during key festival as prices, drought sting
May 9 Indians bought a third less gold than last year during the annual Hindu and Jain holy festival of Akshaya Tritiya on Monday, industry officials estimate, as droughts have hit the earnings of millions of farmers and the metal’s price rallied.
Weaker demand from the world’s second-biggest consumer could limit a rally in global prices, which are up around a fifth this year. Indian prices were around 30,000 rupees per 10 grams on Monday, up nearly 10 percent from a year ago.
Akshaya Tritiya is the second-biggest gold-buying festival in India after Dhanteras around October-November, but jewellers failed to draw buyers despite spending heavily on print and television advertisements and offering discounts on design fees.
“Compared to last year demand is nearly 35 percent lower,” said Kumar Jain, vice-president of the Mumbai Jewellers Association, who was hoping for sales to pick up after several jewellers reopened recently after a weeks-long strike.
This rather short Reuters article, filed from Mumbai, was posted on their Internet site at 9:50 a.m. EDT on Monday morning—and it’s another story I found on the Sharps Pixley website. Another link to this article is here.
Perth Mint Gold and Silver Bullion Sales in April
The Perth Mint in April sold 47,542 ounces in gold coins and gold bars, which is 0.9% lower than the previous month but 79.1% higher than a year earlier.
For the year to date, gold sales total 180,312 ounces for an increase of 55.5% over the 115,960 ounces delivered in the first four months of last year.
Perth Mint sales of silver bullion advanced in April by 1,161,766 ounces, down 33.9% from March but 146% higher than the 472,273 ounces sold in April 2015. Keep in mind that the over 1.7 million tally from the previous month (March) was exceptional, ranking as the second highest month on record since CoinNews started tracking the Mint’s data in February 2013.
In the January to April period, the Mint’s silver sales reached 5,440,474 ounces for an advance of 160.5% over last year’s starting four-month total of 2,088,897 ounces.
This short article showed up on the coinnews.net website on Monday sometime—and it’s worth reading. It’s another news item that I ‘borrowed’ from the Sharps Pixley website. Another link to this story is here.
The PHOTOS and the FUNNIES
The three photos below are of Franklin’s gulls, one of the smaller gulls in North America. The first shot is of a couple of males. They’re slightly larger than the female—and their plumage is somewhat more striking than the female, who appears in the second shot. The male also has a red bill—the female’s is black. The third is a male on the wing. I’ll have a couple of more photos of these birds in flight in tomorrow’s column. The ‘click/double click to enlarge‘ feature really helps for these photos.
The WRAP
For whatever reason, ‘da boyz’ weren’t active in the precious metal market yesterday—and the only place I can see that they showed up was in late-morning trading in palladium, when the market was about to go ‘no ask’ shortly before 11 a.m. EDT. Volume was way down in both silver and gold as well—and that’s a sure sign that they weren’t around.
Here are the 6-month charts for the four precious metals—and even though new low ticks were set in both gold and silver yesterday, nothing should be read into that, as they weren’t material.
And as I type this paragraph, the London open is less than ten minutes away—and I see that gold didn’t do much in the first few hours of trading in the Far East on their Wednesday morning. It tacked on 4 bucks between 8 and 9 a.m. HKT—and then another 3 just before 2 p.m. HKT. At the moment, gold is up 7 bucks. Silver’s price path was very similar—and it’s up 20 cents the ounce. Platinum is currently up 10 bucks—and palladium is back at $600 spot, up 6 dollars.
Net HFT gold volume is a hair over 29,000 contracts—and in silver that volume amount is just under 9,100 contracts. Neither are exactly light, so I’d assume that JPMorgan et al are lurking about.
The dollar index sagged down to just below the 94.10 level about 10:20 a.m. HKT—and appeared to have been rescued by ‘gentle hands’. Those gentle hand disappeared shortly after 12 o’clock noon over there—and it was a quick trip to the 94.02 level minutes after 2 p.m. in Hong Kong. ‘Gentle hands’ are still lurking about, but as I mentioned earlier in this column there appears to a certain lack of enthusiasm to this counter-trend rally. And as London opens, the dollar index is down 21 basis points.
Yesterday, at the close of COMEX trading, was the cut-off for this Friday’s Commitment of Traders Report—and just eye-balling the gold and silver charts above, I would guess that we’ll see some improvement in the Commercial net short positions in both metals. But because no significant moving averages were broken during the reporting week, I’m not expecting the changes to be overly large.
And as I post today’s efforts on the website at 4:01 a.m. EDT, I see that all four precious metals are off their respective highs by a hair since I reported on things an hour ago. Net HFT gold volume is a bit over 35,000 contracts—and that number in silver is now up to 10,500 contracts, so there hasn’t been much change since the London open. The dollar index is down only 17 basis points after its latest brush with the 94.00 mark.
As for what the rest of the Wednesday trading session might bring, I have no clue. I note that Goldman Sachs says the bottom for the dollar index is now in—and it remains to be seen if their call on that is any better than their call on gold.
See you here tomorrow.
Ed
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