03 June 2016 — Friday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price really didn’t do a lot yesterday – and was up three or four bucks by the COMEX open. The not-for-profit sellers emerged at that point—and the low tick of the day was in shortly after London closed at 11 a.m. EDT. The priced didn’t do much after that.
The high and low ticks aren’t worth looking up.
Gold finished the Thursday session at $1,210.40 spot, down $2.30 from Wednesday close—and another new low close for this move down. Net volume was very much on the lighter side at a hair over 99,500 contracts.
The silver price did even less from a price perspective on Thursday. The only ‘action’ was a lot of jumping around between the noon silver fix in London – and 1 p.m. EDT in New York, as ‘da boyz’ wouldn’t let silver above the $16 spot mark once again. After that it traded flat into the close.
I shan’t bother with the high or lows in this precious metal, either.
Silver closed in New York yesterday at $15.96 spot, up 3.5 cents on the day. Net volume in silver was pretty light as well at just over 30,500 contracts.
It was a horse of an entirely different colour in platinum yesterday. After chopping more or less sideways for all of Far East and most of the Zurich trading sessions, the HFT traders and their algorithms really put the boots to the price starting shortly before the COMEX open. All the damage was done by 11 a.m. EDT—and it traded flat from there, closing the day at $956 spot, down 13 dollars from Wednesday’s close.
Palladium was manhandled in a similar fashion to platinum, with the low tick of the day coming minutes after 1 p.m. in New York…and it too traded flat from there. Palladium was closed at $532 spot – and down 13 bucks the ounce as well.
The dollar index closed late on Wednesday afternoon in New York at 95.42 – and it began to head lower in early Far East trading on their Thursday morning. The 95.15 low tick came around 8:30 a.m. BST in London….and it began to chop higher from there. Most of the rally was done by 3 p.m. EDT—and the index traded sideways from there, closing at 95.55 – up 13 basis points on the day.
And here’s the 6-month U.S. dollar index chart so you can see how this current rally is progressing.
The gold stock opened in negative territory, but were back in the black by around 10:30 a.m. EDT. From there they rolled over and touched unchanged at precisely 11:00 a.m. in New York trading. They then rallied to their highs of the day around 12:40 p.m. EDT…and then sagged back to almost unchanged by the close. The HUI finished the Thursday trading session up 0.29 percent.
The silver equities traded in a similar manner, as Nick Laird’s Intraday Silver Sentiment Index [which he calls the Silver 7 Index] closed up 0.52 percent. Click to enlarge.
The CME Daily Delivery Report for Day 3 of the June delivery month showed that 1,026 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Monday. There were four short/issuers of size, the largest being MacQuarie Futures with 500 contracts out of its client account – and in 2nd, 3rd and 4th place were International F.C. Stone, ABN Amro, and Morgan Stanley…with 204, 171 and 141 contracts respectively. All were from their respective client accounts with the exception of Morgan Stanley. The only two long/stoppers of note were JPMorgan as the largest, as they stopped 436 for their own account, plus another 256 for their clients. In distant second place was International F.C. Stone with 113 contracts for its client account. The link to yesterday’s Issuers and Stoppers Report is here—and it’s worth a look if you have the interest.
So far this month, of the 8,784 gold contracts issued in the first three delivery days, JPMorgan has stopped 3,881 contracts for its own account, plus another 1,456 contracts for its client account
The CME Preliminary Report for the Thursday trading session showed that June gold open interest fell by 1,496 contracts, leaving 7,840 still open. The Wednesday Daily Delivery Report showed that 1,969 gold contracts were actually issued for delivery today…and that means that another 1,969-1,496=473 gold contracts were added to the June delivery month. Almost 1,200 gold contracts have been added to the June delivery month during the last two business day.
Silver open interest in June declined by 200 contracts, leaving 349 still around. Wednesday’ Daily Delivery Report showed that 199 silver contracts were posted for delivery today, so the two numbers jibe.
As surprised as I was on Wednesday that there had been another addition to GLD, I was even more astonished to see that there was another one on Thursday. This time an authorized participant added 143,267 troy ounces. There was also a big add to SLV yesterday as well, as an a.p. – most likely JPMorgan – added 1,560,088 troy ounces. I would assume that this deposit was made to cover an existing short position, but after the huge decline in SLV’s short position in the last report from the folks over at shortsqueeze.com, I wouldn’t bet the ranch on that. Unfortunately, since the deposit was made in June, it won’t be in the next short report that’s due out at the end of next week.
Without question, Ted will have something to say about ‘all of the above’ in his Saturday column.
There was a sales report from the U.S. Mint yesterday. They sold 9,500 troy ounces of gold eagles…3,000 one-ounce 24K gold buffaloes…and 71,000 silver eagles.
There was decent activity in gold over at the COMEX-approved depositories on Wednesday. They reported receiving 82,713 troy ounces, but shipped out only 1,402. Almost all the gold received…80,302 troy ounces…was deposited in HSBC USA’s warehouse. All the ‘out’ movement was at Canada’s Scotiabank…and the link to to all of that activity is here.
It was another big day in silver, was 1,166,203 troy ounces were reported received—and 61,255 troy ounces were shipped out the door. The big deposit of 1,016,414 troy ounces was at the CNT Depository of all places. The link to that activity is here.
One thing that Ted pointed out on the phone yesterday, which I had noticed…but forgotten about, was the huge amount of switching between Eligible and Registered…and vice versa…in both silver and gold at a lot of the COMEX-approved depositories since Tuesday. It doesn’t mean anything of course, but the nut-ball lunatic fringe hasn’t said much about it – and normally they’re all over this sort of thing like white on rice. It would be useful if they never brought up the issue again, as all it does is confuse people into thinking this is important, when it isn’t.
It was reasonably quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Wednesday, as there were only 1,653 kilobars deposited…and 513 shipped out. All of the activity was at Brink’s, Inc. as per usual…and the link to that, in troy ounces, is here.
Another slow news day – and another easy editing job for you. Even the King Report was bereft of anything worth stealing.
CRITICAL READS
Obama’s Latest Whopper: Let’s Raise Social Security Benefits! — David Stockman
The U.S. has approximately $80 trillion of unfunded liabilities for social security, medicare and other entitlements sitting atop a work force that is rapidly aging and an economy that is lapsing into stasis. Yet in the midst of a campaign diatribe about Donald Trump’s alleged lack of preparation for the highest office in the land, the current White House occupant proved that in nearly eight years he has learned exactly nothing about the nation’s abysmal fiscal plight.
“And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned,” Obama said in an economic call to arms in Elkhart, Indiana.
Don’t bother to say he must be kidding. After all, our President also claims the disaster known as Obamacare is a roaring success; and that he has created 14 million jobs—-when, in fact, there are fewer full-time, full-pay “breadwinner jobs” in America today than when Bill Clinton scuttled out of the White House 16 years ago.
Still, your don’t have to be even a know nothing about baby-boom demographics to recognize that the words “increase” and “social security benefits” will never again inhabit the same universe. To wit, there are about 50 million persons 65 or over at present, but this number will rise to 80 million by around 2040 and nearly 100 million a decade or two thereafter.
This commentary by David put in an appearance on his website on Thursday sometime–and it’s the first contribution of the day from Roy Stephens. Another link to this article is here.
Welcome to the New Normal, Where 3x More Risk Gets You the Same Returns as Twenty Years Ago
As we touched upon earlier, central banks have created an unprecedented disaster for investors and savers alike.
One critical point in what has happened since central banks have intervened in the markets and distorted prices, is that savers have been destroyed and investors are now exposed to significantly more risk. For example, in order to make a 7.5% return in 1995, research from Callan Associates Inc found that an investor could own a portfolio consisting entirely of bonds with a standard deviation of about 6%. However, to make a 7.5% return in 2015, an investor would have to shrink the allocation to bonds down to just 12%, and allocate funds into other riskier assets, increasing the portfolio’s standard deviation (risk) to 17.2%. In other words, we’re at the point where it takes nearly 3x the risk in order to generate the same return as twenty years ago!
This presents the ultimate dilemma for large investors such as the California Public Employee’s Retirement System (CalPERS), the nation’s largest pension fund. In order to hit a target return of 7.5% the fund would would have to lower its allocation to bonds and take on significantly more risk – the trade off is, of course, not introducing so much risk of loss and living with lower levels of returns. CalPERS is already significantly underfunded as it is, but so far it has not been willing to expose its members to even more risk of loss so it has kept its bond allocation to 20%. The result is that the fund is down 1.3% since July 1 according to The Wall Street Journal.
This story appeared on the Zero Hedge website at 10:17 p.m. on Wednesday evening – and I thank Richard Saler for bringing it to our attention. Another link to this ZH article is here.
Puerto Rico’s U.S. Rescue Won’t Come Soon Enough to Halt Default
Even if U.S. lawmakers return next week and push through their Puerto Rico rescue with unusual speed, it may not come fast enough to save the island from its biggest default yet.
The legislation would put Puerto Rico’s budget and, potentially, a restructuring of its debt in the hands of a federal oversight board appointed by congressional Republicans and President Barack Obama — a body that’s virtually impossible to set up before $2 billion of debt payments come due on July 1. And the bill doesn’t provide any additional federal money to the U.S. territory, whose government says it’s simply too broke to pay.
“I don’t think we would expect that Congress would enact anything that’s quick enough to solve the July 1 debt service problem,” said Phil Fischer, head of municipal research at Bank of America in New York. “There’s a lot of uncertainty about what will be paid and how.”
Puerto Rico’s cascading series of defaults will enter a new phase next month if it skips payments for the first time on general-obligation bonds, which the island’s constitution says must be repaid before everything else. With $805 million due on those securities, Governor Alejandro Garcia Padilla has said the commonwealth can’t cover what it owes without shutting off services crucial to the island’s 3.5 million residents, nearly half of whom live in poverty.
This Bloomberg story showed up on their Internet site at 3:00 a.m. Denver time on Thursday morning…and was update about five hours later. It’s courtesy of Brad Robertson via Zero Hedge. Another link to this news item is here.
Internet Boom Times Are Over, Says Mary Meeker’s Influential Report
Growth of internet users worldwide is essentially flat, and smartphone growth is slowing, too. Those sobering insights were among the hundreds packed into the much-awaited Internet Trends report, an annual tech industry ritual led by Mary Meeker, a general partner at Kleiner Perkins Caufield & Byers.
Wearing an Apple Watch while standing at a podium onstage at Recode’s technology conference in Rancho Palos Verdes, California, on Wednesday, Meeker blazed through highlights from her 213-slide presentation in roughly 20 minutes. She said the number of global internet users hovers around 3 billion, with new ones slow to come online. She attributed the slowdown to stagnating gross domestic product. Global GDP growth in six of the last eight years was below the 20-year average.
Developing countries have proven harder to capture than expected because internet access remains inaccessible or unaffordable for many, the report said.
This very interesting Bloomberg news item put in an appearance on their website at 12:54 p.m. MDT on Wednesday afternoon—and it’s another Brad Robertson/Zero Hedge contribution. Another link to this interesting article is here.
The £50 note may be taken out of circulation after Bank of England says there are ‘no plans’ to introduce new plastic notes
The £50 note could eventually be phased out of circulation as the Bank of England Governor Mark Carney says there are no plans to produce a plastic version amid fears about financial crime.
Speaking at the unveiling of the new £5 note at Blenheim Palace, Mr Carney said there were “no plans” to introduce a new £50 model.
The admission comes after months of speculation about the note’s future, following calls from leading bank bosses and financial experts to scrap it.
Earlier this year Peter Sands, the former chief executive of Standard Chartered, who is an adviser to the British government, said eliminating the £50 note would help to combat tax evasion.
What bulls hit this is! This story put in an appearance on the telegraph.co.uk Internet site at 7:59 p.m. BST on their Thursday evening – which was 2:59 p.m. in New York – EDT plus 5 hours. I thank U.K. reader Tariq Khan for bringing it to our attention. Another link to this news item is here.
Turkey recalls ambassadors from Germany in response to Armenian genocide vote
Turkey recalled its ambassador in Berlin after German lawmakers approved a resolution declaring the World War I mass killings of Armenians by Ottoman Turks a genocide.
Ambassador Huseyin Avni Karslioglu is expected to travel back to Turkey on Thursday, after the German Parliament declared the 1915-16 killings of some 1.5 million Armenians a deliberate act of ethnic cleansing. Germany’s ambassador to Turkey has also been summoned.
Turkey has long rejected the label, saying there was no systematic killings of Christian Armenians and the death toll was much lower. The country has accepted some responsibility for the killings but said they do not constitute genocide. To date, 11 of the 28 European Union nations have recognized the killings as genocide.
The updated version of this UPI story, filed from Berlin, appeared on their Internet site at 12:41 p.m. EDT yesterday afternoon – and I thank Roy Stephens for sharing it with us. The original headline read “Germany declares Armenian massacres as ‘genocide,’ straining relations with Turkey“. Another link to this news item is here.
Why Technical Analysis Does Not Work for Gold and Silver — Michael Ballanger
I often include charts in my weekly missives for a number of reasons, but the truth of the matter is that they add a little color to what would normally be a pretty drab bombardment of opinion delivered via text. By adding charts, it creates the illusion that I actually understand technical analysis (which I don’t other than what I gleaned during a two week training program in 1977 while in the employ of McLeod Young and Weir) and that it is useful in the forecasting of price trends in gold and silver over the long term. Well, I have a secret to tell you—”T.A.” (as it is called by the “in crowd”) is USELESS. “Cup and handles,” “hanging Chinamen, “engulfing knickers,” “tombstone dojis”—you can fire them all in the waste bin because that is precisely where they belong.
I was reading a certain metals report last night where, sure enough, the author missed the top by a country mile, albeit he admitted it and apologized to his subscribers (which was truly admirable). I found it interesting that in order for him to get a “clue” to the next move in gold, he would have to “turn to the charts.” So what I will do now is turn to MY charts and demonstrate in no uncertain terms why charts are CREATED by the bullion bank traders in order to trap the “chartists” (and their subscribers) into false senses of security.
Well, dear reader, there’s not much in this commentary that you don’t already know. Ted has been talking about this for the last fifteen years…and a lot of what Michael is saying could have come out of any number of Ted’s commentaries over the last decade or so. It’s only recently that others have cottoned on to these facts. As I and others have said on many occasion…”T.A. is useless in a managed market.” But it’s nice to hear it spoken so forcefully in the public domain. This worthwhile read showed up on theaureport.com Internet site on June 1 – and I found it embedded in a GATA release. Another link to this article is here.
Ted Butler: Hidden in Full View
After studying the silver market closely for more than three decades, I find it nearly unbelievable that its single most important price factor is widely unknown. Admittedly, the vast majority of the investment world has little interest in silver and that’s unlikely to change any time soon. But under-appreciation has its merits in the investment world. After all, silver does have a history of climbing in price higher and faster than just about any other asset and a multitude of factors now point to another massive price move higher ahead.
The factors favoring a big move higher revolve around the incredibly small amount of physical silver available for investment as a result of most of the silver produced over the centuries having been used up in industrial applications. That, in combination with the fact that more investment buying power exists today than ever in the history brings to mind the words of the famous silver speculator, Bunker Hunt, “silver is an accident waiting to happen.” Granted, silver also has a history of plunging more than other commodities, but since prices have already declined by 70% from the peak of five years ago, the next big move will, undoubtedly, be up.
Still, even among those who follow silver closely, remarkably little is mentioned about the one factor that just about guarantees much higher silver prices ahead. That factor is that the U.S.’s biggest and most important bank, JPMorgan Chase, has accumulated the largest privately owned stockpile of physical silver in world history over the past five years – 500 million ounces. Only the U.S. Government owned more silver than JPMorgan, but that was nearly a century ago and came when silver was used in common coinage. The US Government once owned several billion ounces of silver, but today holds no silver, having completely eliminated its holdings.
It’s almost pointless to say, but this in-the-clear commentary by Ted easily falls into the absolute must read category…and I urge you to read it a couple of times. It was posted on the silverseek.com Internet site yesterday…and another link to this must read essay is here.
The PHOTOS and the FUNNIES
These birds are killdeers, members of the plover family…and the male and female of the species are virtually impossible to tell apart. This pair decided to build their nest in the middle of a high-traffic gravel road at the Desert Centre, a small education and research facility in Osoyoos, B.C. The people that run the place put a wooden frame around the nest, plus a rope barrier to keep the tourists at bay, but with a 400mm lens in my kit bag, that was no barrier for me. These three photos were taken within a few hundred feet or so of the bluebird photos that I featured in Wednesday and Thursday’s columns. The ‘click/double-click to enlarge’ feature really helps with these photos.
The WRAP
JPMorgan et al took another tiny slice out of the gold price, as it was closed at a marginal new low yesterday. Nothing changed as far as silver was concerned but, once again, the HFT traders and their algos laid a licking on platinum and palladium. Platinum was also closed at new low for this move down, with palladium heading in that direction as well.
And with the exception of platinum and palladium, it was a ‘nothing’ sort of day in both gold and silver from a price/volume perspective.
Here are the 6-month charts for all four precious metals—and most are getting within spitting distance of being oversold.
This morning, at 8:30 a.m. EDT, we get the monthly job report and, without doubt, there will be price action in the precious metals, on all the ‘good news’ and interest rate increase-supporting data that those numbers will contain. I’ll be the most surprised person in the world if I don’t wake up later this morning to new intraday lows in all four precious metals.
And as I type this paragraph, the London open is less than ten minutes away – and I note that after selling off a few dollars the moment that trading began in New York at 6:00 p.m. on Thursday evening, the price crawled higher…and is up less than 2 bucks at the moment. It was more or less the same pattern in silver, but shortly after 12 o’clock noon HKT on their Friday afternoon, the price made it up to the $16 spot mark – and is rallying a bit more as the London open approaches. It’s currently up about 8 cents the ounce. Both platinum and palladium got sold off a dollar or two when trading began in New York yesterday evening as well – but they too have been crawling unsteadily higher. At the moment, platinum is up 4 dollars…and palladium by 5 dollars.
Net HFT gold volume is a hair under 22,000 contracts – and that number in silver is just about 4,500 contracts. Nothing to see here. The dollar index has been lifeless since 3 p.m. EST on Thursday afternoon in New York—and is unchanged as London opens.
Today, at 3:30 p.m. EDT, we get the latest and greatest Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, May 31…and Ted is expecting major improvements in the Commercial net short positions in both gold and silver for the second week in a row – and I’m hoping that his projections err on the conservative side, just like they did in last week’s report.
A long-time subscriber to both Ted’s and my newsletters set me this chart that he constructed for us. It shows total open interest in both gold and silver on each COT cut-off day starting at the peak spot prices on May 1. The ‘Change‘ is the weekly change in the Commercial net short position…and the ‘From Peak‘ column shows the cumulative weekly change in the Commercial net short position since the peak open interest in both precious metals. Hopefully I get the numbers for today’s COT Report included…and I’ll post an updated chart in my Saturday column.
And as I post today’s column on the website at 3:55 a.m. EDT, I note that the gold price is trading pretty flat from an hour ago – and is up a buck and change currently. The silver price has spiked up a bit more—and running into pretty ferocious resistance just under the $16.10 mark…and it’s up 12 cent the ounce at the moment. Platinum and palladium continue to move higher, with the former being up 7 bucks – and the latter up 8 dollars the ounce.
Net HFT volume in gold is sitting at the 25,000 contract mark—and that number in silver is just under 6,000 contracts. The dollar index is still trading sideways – and is down 3 basis points.
All eyes will be on the job market report at 8:30 a.m. EDT this morning, as that’s all that matters today.
Enjoy your weekend – and I’ll see you here tomorrow.
Ed
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