12 July 2017 — Wednesday


The gold price began to head lower about two hours after trading began in New York on Monday evening — and was down about 4 bucks by short before 2 p.m. China Standard Time on their Tuesday afternoon.  It didn’t do a lot from there — and the low price tick of the day, such as it was, came at 10:30 a.m. in New York.  Then once London trading ended at 11:00 a.m. EDT, the gold price began to head higher with some authority.  Unfortunately, the long sellers and short buyers of last resort appeared — and within thirty minutes they had put a stop to things.  And although the price continued to chop quietly higher from there, it was obvious from the saw-tooth price pattern that there certainly was resistance right into the 5:00 p.m. close.

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

Gold finished the Tuesday session in New York at $1,217.20 spot, up $3.10 on the day.  Net volume was pretty heavy at around the 185,500 contract mark.

Here’s the 5-minute tick gold chart courtesy of Brad Robertson — and the only reason I’m including it is to show the big volume that accompanied that post-London-close rally.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon China Standard Time [CST] the following day in Shanghai—and don’t forget to add two hours for EDT.  The ‘click to enlarge‘ feature is a must.

Silver followed the same price path as gold, but the low in this precious metal was set at 9 a.m. in London.  It traded pretty flat from there until about fifteen minutes before the COMEX open — and then away it went to the upside.  The tiny rally after the 11 a.m. EDT London close also had a decent amount of volume associated with it.  Then, also like gold, it crawled quietly higher for the remainder of the day, closing on its high.

The low and high tick were reported by the CME Group as $15.425 and $15.83 in the September contract.

Silver finished the Tuesday session in New York at $15.83 spot, up 19 cents from Monday’s close.  Net volume was way up there once again at just under 89,500 contracts.

And here’s the 5-minute tick chart for silver, courtesy of Brad Robertson, as always.  There’s not much to see, although the volume that mattered occurred during the COMEX trading session, which started at 06:20 a.m. Denver time on the chart below.  And also of note is the elevated volume during that rally between 9:30 and 10:00 a.m. MDT/11:30 and noon EDT.  It was mid afternoon before volume dropped off to what I would call background levels.

Like for gold, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon China Standard Time [CST] the following day in Shanghai—and don’t forget to add two hours for EDT.  The ‘click to enlarge‘ feature is a must as well.

The platinum price began to chop quietly lower at the same time as gold and silver…shortly before 8 a.m. CST.  The spike low tick was set around 10:20 a.m. in New York.  It wanted to rally sharply from there, but like gold and silver, was stepped on a bit — and it chopped quietly higher from that point until shortly before 3 p.m. in the thinly-traded after-hours market.  It traded flat into the close.  Platinum closed at $901 spot, up 2 dollars from Monday.

Palladium traded mostly above unchanged by a few dollars until Zurich opened.  It was sold very quietly lower from there, with the low tick coming just minutes before the COMEX open.  It wandered quietly higher from that juncture until the London/Zurich close — and at that point launched skyward until it ran into the “all the usual suspects” minutes later.  It inched higher from that point, with its $848 spot high tick coming around 3 p.m. EDT — and was sold down a couple of dollars into the 5p.m. close.  Platinum finished the day at $846 spot, up an even 10 bucks from Monday.

The dollar index closed very late on Monday afternoon in New York at 96.06 — and continued to head higher once trading began at 6:00 p.m. EDT on Monday evening.  The 96.21 high tick appeared to have been set around 1:30 p.m. in Shanghai — and from there it chopped sideways until the high tick of the day was revisited just a minute or so after 9 a.m. in New York.  Then down it went from there — and the 95.65 low tick was set around 2:35 p.m. EDT.  It ‘rallied’ a bit — and finished the Tuesday session at 95.76…down 30 basis points from its Monday close.

And here’s the 6-month U.S. dollar index chart — and it was just another day where the precious metals were not allowed to reflect the weakness in the dollar index.  Subscriber Curtis Bok suggested that since I post this chart purely for “entertainment purposes“…that on some days it would be appropriate to stick it in the “The PHOTOS and the FUNNIES” section.  So don’t be surprised if that’s where it shows up once in a while when things get really egregious.

The gold shares opened about unchanged — and then dipped to their respective lows at, or shortly after, the London p.m. gold fix.  By 11:30 a.m. EDT, they had rallied back to unchanged — and from that point chopped sideways until a few minutes after the COMEX close.  At that juncture they began to crawl a bit higher, but with a distinct lack of enthusiasm.  The HUI finished the day up 0.71 percent.

The chart for the silver equities looks mostly the same as the HUI — and despite the fact that the silver price finished up a percent and change on the day, their associated stocks couldn’t even manage that.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed higher by only 0.60 percent.  Click to enlarge if necessary.

And here’s the 6-month version of Nick’s Silver Sentiment/Silver 7 Index chart.  Click to enlarge.

The CME Daily Delivery Report showed that zero gold and 145 silver contracts were posted for delivery within the COMEX-approved depositories on Thursday.  The only short/issuers in silver that mattered were ABN Amro and Goldman Sachs with 114 and 26 contracts out of their respective client accounts.  And the three largest long/stoppers were Citigroup, ABN Amro — and ADM with 77, 34 and 29 contracts, all out of 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 July actually rose by 4 contracts, leaving 83 still around.  Monday’s Daily Delivery Report showed that 1 lonely gold contract was actually posted for delivery today, so that meant that 1+4=5 gold contracts were added to the July delivery month.  Silver o.i. in July declined by 158 contracts, leaving 247 left, minus the 145 mentioned in the previous paragraph.  Monday’s Daily Delivery Report showed that 289 silver contracts were actually posted for delivery today, so I’d guess that a lot more silver contracts will have to be added to the July delivery month today to make these deliveries happen.  I’ll see how things shake out in this report this evening — and I’ll report on it tomorrow.

There were no reported changes in GLD yesterday, but much to my amazement there was another monster deposit in SLV, as an authorized participant added 2,363,925 troy ounces.

Since 06 July…four business days ago as of this writing…there has been 7.56 million troy ounce of silver deposited in SLV.  This is not all short covering — and Ted mentioned that someone might be accumulating it.  He may or may not have something to say about this in his mid-week column today, because he normally waits until the weekend to comment on physical silver movements.  But these aren’t normal times, so he might.

And as of 1:33 a.m. EDT this morning, there’s still no short report on either GLD or SLV from the folks over at the shortsqueeze.com Internet site.  I must admit that I was expecting it on Monday.  Of course none of these deposits since July 06 will be in it, as the cut-off for the report was Friday, June 30.

There was no sales report from the U.S. Mint yesterday.

There wasn’t much movement in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  Once again, nothing was reported received — and only 12,344 troy ounces were shipped out.  There was 12,242 troy ounces shipped out of Brink’s, Inc. — and 101.9 troy ounces [one good delivery bar] shipped out of Delaware.  There was also a paper transfer over at Canada’s Scotiabank, as 23,034 troy ounces were moved from the Registered category, back into Eligible.  The link to all this activity is here.

It was much busier in silver, as 1,202,404 troy ounces…two trucks…were delivered — and 20,013 troy ounces were shipped out the door for parts unknown.  One truck…600,572 troy ounces…was left at CNT — and the other…600,837 troy ounces…was dropped off at JP Morgan.  One good delivery bar was left at Delaware as well.  All the ‘out’ activity was at HSBC USA.  The link to all that action is here.

Of course this truckload at JPM puts their COMEX silver stash at another new record high…112.55 million troy ounces, or just under 53 percent of all the silver held by all eight registered COMEX silver depositories.  Here’s the new and updated chart courtesy of Nick Laird.

Not to be forgotten, is all that action that was happening at the COMEX-approved gold kilobar depositories in Hong Kong on their Monday.  It was another monster day, as they reported receiving 6,965 kilobars — and shipped out 9,787 of them.  All of this action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.

The other thing that caught my eye about the gold kilobar depositories in Hong Kong in today’s report from the CME, was that the other two [mostly inactive] COMEX-approved gold kilobar depositories that were listed, are now gone.  Only Brink’s, Inc. and Loomis International are left.  I don’t know if that was a temporary oversight or not, but I doubt it.  If there are any changes in the future, I’ll let you know.

Here are two charts that Nick passed around over a week ago, but I’ve just never had the space for…but here they are now.  These show the intraday average price movements for both gold and silver for June.  This is the average of the 2-minute tick data for every trading day in June in both precious metals.  Averages like this remove all the ‘noise’ in the markets — and exposes the underlying trends.  As you know, the underlying trend in gold and silver is always negative — and June was no exception.

Intraday gold, the highest price tick, on average, every day in June, was set at the afternoon gold fix in Shanghai, which is 2:15 p.m. China Standard Time.  It is oh-so-obvious on this chart.  It’s all downhill from there — and the low, on average in June, was set a few minutes before 4 p.m. EDT in the thinly-traded after-hours in New York…which hasn’t been that thinly-traded lately.  From there it rallies a bit until into the morning gold fix in Shanghai…10:15 a.m. CST…then quietens down a bit before rallying to its daily high tick at the afternoon gold fix over there.  Then the “wash, rinse, spin” cycle by ‘da boyz’ begins anew.  Click to enlarge.

The intraday silver price chart for June looks very similar to its golden counterpart…the high tick coming about fifteen minutes after the afternoon Shanghai gold fix — and the low tick at the close of trading in New York.  It rallies back to its daily high in afternoon trading in Shanghai from there — and it’s the “wash, rinse, spin” cycle once again.  The counter-trend rally between the interim low at the London p.m. gold fix — until twenty minutes or so after the London close — is another stand-out feature that showed up in the June trading data.  Click to enlarge.

It was a very quiet news day again yesterday — and I don’t have a lot for you once again.


Wholesale Sales Tumble For 3rd Straight Month, Inventories Build

Well they “built it”, but in May, “no one came.” Wholesale Inventories rose a better-than-expected 0.4% MoM but sales tumbled worse-than-expected 0.5% (the 3rd monthly decline in a row).

Inventories reversed April’s decline…but sales keep falling…and accelerating…

Automotive inventories rose 0.7% MoM (against April’s 1.4% drop) but Automotive sales dropped 0.5% in April.

Wholesale Inventories are still marginally lower for Q2 so far (-0.13%) providing a modest drag on GDP, but sales are down 0.77% in Q2 with the biggest 3-month decline since March 2016 (amid fears of global recession).

This 4-chart Zero Hedge offering put in an appearance on their Internet site at 10:08 a.m. EDT yesterday morning.  It comes to us courtesy of Brad Robertson — and another link to it is here.

Connecticut Capital Hartford Downgraded  to Junk By S&P

One week ago, Illinois passed its three year-overdue budget in hopes of avoiding a downgrade to junk status, however in an unexpected twist, Moody’s said that it may still downgrade the near-insolvent state, regardless of the so-called budget “deal.” In fact, a downgrade of Illinois may come at any moment, making it the first U.S. state whose bond ratings tip into junk, although as of yesterday, credit rating agencies said they were still reviewing the state’s newly enacted budget and tax package. The most likely outcome is, unfortunately for Illinois, adverse: “I think Moody’s has been pretty clear that they view the state’s political dysfunction combined with continued unaddressed long-term liabilities, and unfavorable baseline revenue performance as casting some degree of skepticism on the state’s ability to manage out of the very fragile financial situation they are in,” said John Humphrey, co-head of credit research at Gurtin Municipal Bond Management.

And yet, while Illinois squirms in the agony of the unknown, another municipality that as recently as a month ago was rumored to be looking at a bankruptcy filing, the state capital of Connecticut, Hartford, no longer has to dread the unknown: on Tuesday afternoon, S&P pulled off the band-aid, and downgraded the city’s bond rating by two notches to BB from BBB-, also known as junk, citing “growing liquidity pressures” and “weaker market access prospects“, while keeping the city’s General Obligation bonds on Creditwatch negative meaning more downgrades are likely imminent.

S&P also said that Hartford may be downgraded again if the state passage of a budget is significantly delayed, or if the city were not to receive sufficient support in a timely manner that would enable it to manage liquidity and allow it to meet obligations in a timely manner.

In short: the capital of America’s richest state (on a per capita basis), will – according to S&P – be one of the first to default in the coming months.

That was fast!  Based on all the news over the last several months, I expected Illinois to be the first.  This Zero Hedge story was posted on their website at 7:46 p.m. EDT on Tuesday evening — and another link to it is here.

Dimon Says QE Unwind May Be More Disruptive Than You Think

JPMorgan Chase & Co. Chairman Jamie Dimon said the unwinding of central bank bond-buying programs is an unprecedented challenge that may be more disruptive than people think.

We’ve never have had QE like this before, we’ve never had unwinding like this before,” Dimon said at a conference in Paris Tuesday. “Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.

Central banks led by the U.S. Federal Reserve are preparing to reverse massive asset purchases made after the financial crisis as their economies recover and interest rates rise. The Fed alone has seen its bond portfolio swell to $4.5 trillion, an amount it wants to reduce without roiling longer-term interest rates. Minutes of the Fed’s June 13-14 meeting indicate policy makers want to begin the balance-sheet process this year.

When that happens of size or substance, it could be a little more disruptive than people think,” Dimon said. “We act like we know exactly how it’s going to happen and we don’t.

Cumulatively, the Fed, the European Central Bank and the Bank of Japan bulked up their balance sheets to almost $14 trillion. The unwind of such a large amount of assets has the potential to influence a slew of markets, from stocks and bonds to currencies and even real estate.

This Bloomberg story was posted on their Internet site at 5:31 a.m. Denver time on Tuesday morning — and updated about four and a half hour later.  It included a 1:34 minute video clip featuring the man himself.  I thank Richard Saler for pointing it out — and another link to it is here.

HSBC, UBS settle U.S. rate-rigging litigation; 10 banks’ total payout tops $408 million

HSBC Holdings Plc and UBS Group AG have each agreed to pay $14 million (£11 million) to settle private U.S. litigation accusing them of rigging an interest rate benchmark used in the $483 trillion derivatives market.

The preliminary settlements were disclosed in filings on Tuesday in the U.S. District Court in Manhattan and require a judge’s approval. They boost the total payout from 10 settling banks to $408.5 million. HSBC and UBS denied wrongdoing.

Several pension funds and municipalities had accused 14 banks of conspiring to rig the ISDAfix benchmark for their own gain from at least 2009 to 2012.

Companies and investors use ISDAfix to price swaps transactions, commercial real estate mortgages and structured debt securities.

The eight earlier settlements have won preliminary approval.

Payouts include $56.5 million from Goldman Sachs Group Inc; $52 million from JPMorgan Chase & Co; $50 million from each of Bank of America Corp, Credit Suisse Group AG, Deutsche Bank AG and Royal Bank of Scotland Group Plc; $42 million from Citigroup Inc and $30 million from Barclays Plc, court papers showed.

Coffee money for these guys.  This news item showed up on the uk.reuters.com Internet site at 11:49 a.m. BST on their Tuesday morning, which was 6:49 a.m. in New York — EDT plus 5 hours.  I thank Swedish reader Patrik Ekdahl for finding this one for us — and another link to it is here.

The Second Half of the Pincer — Jeff Thomas

Welcome to America, where your assets are literally the government’s business, and freedom is anything but free.”—Claire Bernish, The Free Thought Project

For some time, I’ve been forewarning readers that, as the governments of the former “free” world unravel, they’ll introduce capital controls, both to continue to fund their failing policies and to limit the freedom of their citizenries.

I’ve envisioned this as a “pincer” of sorts. First, it would be necessary to institute laws that allow authorities to confiscate the assets of anyone whom they “suspected” of a crime. (It’s essential to understand that an actual arrest is unnecessary, as that would allow the individual the opportunity to prove his innocence in a trial. No trial means he can never regain the confiscated assets.)

The second half of the pincer would be a law requiring the reporting of assets—a detailed declaration of all monetary holdings. (Of course, it would not be possible to keep such reporting thoroughly up to date, as it would be ever-changing. This would ensure virtually continual guilt through the failure to report.)

This commentary by Jeff appeared on the internationalman.com Internet site on Monday — and another link to it is here.

Schaeuble Says Italy Bank-Liquidation Aid Shows Rule Discord

German Finance Minister Wolfgang Schaeuble joined his counterparts from the Netherlands and Austria in calling for a review of European Union bank-failure rules after Italy won approval to pour as much as €17 billion ($19.4 billion) of taxpayers’ cash into liquidating two regional lenders.

Schaeuble said Italy’s disposal of Banca Popolare di Vicenza SpA and Veneto Banca SpA revealed differences between the EU’s bank-resolution rules and national insolvency laws that are “difficult to explain.” That’s why finance ministers convening in Brussels on Monday have to discuss the Italian cases and consider “how this can be changed with a view to the future,” he told reporters in Brussels before the meeting.

Dutch Finance Minister Jeroen Dijsselbloem said the focus should be on E.U. state-aid rules for banks that date from 2013, before the resolution framework was put in place. Italy relied on these rules for its state-funded liquidation of the two Veneto banks and its plan to inject €5.4 billion into Banca Monte dei Paschi di Siena SpA.

The E.U. laid down new bank-failure rules in the 2014 Bank Recovery and Resolution Directive after member states provided almost €2 trillion to prop up lenders during the financial crisis. The BRRD foresees small banks going insolvent like non-financial companies. Big ones that could cause mayhem would be restructured and recapitalized under a separate procedure called resolution, in which losses are borne by owners and creditors, including senior bondholders if necessary.

This Bloomberg article appeared on their website at 9:00 a.m. MDT [Mountain Daylight Time] on Monday morning — and was subsequently updated about three and a half hours later.  It’s the second offering of the day from Patrik Ekdahl — and another link to it is here.

We Are Forced to Strike Back“: Russia Set to Expel 30 U.S. Diplomats, Seize U.S. Assets

When Obama announced the expulsion of 35 Russian diplomats and the seizure of Russian diplomatic compounds in Maryland last December, in response to alleged Russian interference in the election, Putin just smiled and said Russia would not retaliate, expecting that relations between Russia and the U.S. would normalize under president Trump. Six months later, relations have not only not normalized but have deteriorated further following the latest round of sanctions against Russia despite daily allegations that Trump colluded with the Kremlin to convince several million Americans to vote against Hillary.

And, as a result, Putin’s patience appears to have run out, and according to Russian newspaper Izvestiya, the Kremlin is set to expel around 30 U.S. diplomats and freeze some U.S. assets in a retaliatory move against Washington.

Quoting a Foreign Ministry source, the Izvestiya newspaper says the move is due to the failure to reach an agreement on two Russian diplomatic compounds in the U.S. seized by the outgoing Obama administration in December last year.

There is a preliminary agreement on holding a meeting between Russian Deputy Prime Minister Sergey Ryabkov and U.S. Under Secretary of State Thomas Shannon in St. Petersburg. If the compromise is not found there, we will have to take such measures,” a source in the Russian Foreign Ministry told the Izvestiya newspaper.

This hasn’t happened yet, but someone was desperate enough for a story, they make it sound like it’s a done deal…which, in the end, it may be.  This story appeared on Tuesday morning on the Zero Hedge website, but it now bears the dateline 5:31 p.m. EDT.  I thank Brad Robertson for sending it along — and another link to it is here.

The Saker: The Syrian Powder Keg — an Interview With Chris Martenson

Following up on our recent warning about the situation in Syria, Chris sits down this week for a conversation with The Saker, who writes extensively on geo-political and military matters. The Saker (a nom-de-plume), is a former intelligence expert with professional and personal insights into Russia and the Middle East.

He shares our deep concern for the dangerously misdirected current state of U.S. foreign and military policy, as well as the potentially lethal repercussions these threaten to have in the powder keg that is Syria.

In this week’s podcast, The Saker provides an excellent distillation of the complex forces in play in Syria — as well as in the brewing friction between the U.S. and Russia — and why the risk of nuclear war has now grown higher than it has been in decades:

I’m not convinced there is a U.S. strategy. I think there is a CIA strategy, a Pentagon strategy, a State Department strategy. There used to be a White House strategy. Right now, I am not even sure. We should go deeper into who is doing what inside the Pentagon and the military. I mean, there is chaos. There has been chaos since at least Obama because he was an extremely weak president. When a superpower like the United States is ruled by more or less an absent man in the White House, the agencies themselves start implementing their own policies. This is happening now under Trump, who was elected under specific platform and now is basically giving it up. There has been a coup against him by the neo-cons who basically got him under control. He wanted to drain the swamp, but the swamp basically drowned him.”

This must listen 46-minute audio interview between The Saker and Chris Martenson was posted on the peakprosperity.com Internet site at 9:20 a.m. PDT on Monday — and I found it embedded in a Zero Hedge commentary that Ellen Hoyt sent our way.  I’ll have it in my Saturday column as well, but because it’s so timely, I though it worth posting right away.  Another link to the interview is here.

Cryptocurrencies Are Getting Crushed

The cryptocurrency Cassandras are starting to look right.

The sector has lost about a third of its market value since peaking in early June, pushing it into what traditional equity market analysts label as a bear market. Bitcoin, the largest of the digital currencies, is down about 20 percent from its peak of $3,000, reached June 12. Smaller rivals such as ethereum and ripple are getting hit even harder.

When when we look for signs of excess in the market, I look at bitcoin and to me that looks pretty scary,” Richard Turnill, global chief investment strategist at BlackRock Inc., said during a midyear outlook presentation in New York on Tuesday.

Whether the virtual currencies were caught up in an asset-price bubble was debated as the market capitalization of the sector soared this year, raising skepticism from pundits including tech billionaire Mark Cuban. Backers such as Ripple Chief Executive Officer Brad Garlinghouse, whose money-transfer company is tied to the third-largest cryptocurrency by market value, said he isn’t convinced.

I would be surprised if there was a major crash,” Garlinghouse said in an interview at Bloomberg’s New York headquarters Monday. “Could we see digital assets continue to double or triple or quadruple from where we are today? That wouldn’t surprise me at all.”

The ‘thought police’ at Bloomberg have had their way with this story, as the original headline read “Cryptocurrency boom turns into bear market as skepticism rises“.  It showed up on their website at 8:21 a.m. Denver time on Tuesday — and was updated about four hours later.  It’s the final offering of the day from Patrik Ekdahl — and another link to it is here.

Controversial Alaskan gold mine could be revived under Trump’s EPA

The Trump administration has taken a key step toward paving the way for a controversial gold, copper and molybdenum mine in Alaska’s Bristol Bay watershed, marking a sharp reversal from President Barack Obama’s opposition to the project.

The Environmental Protection Agency on Tuesday proposed withdrawing its 2014 determination barring any large-scale mine in the area because it would imperil the region’s valuable sockeye salmon fishery. The agency said it would accept public comments on the proposal for the next 90 days.

The facts haven’t changed. The science hasn’t changed. The opposition hasn’t changed,” said Taryn Kiekow Heimer, a senior policy analyst at the Natural Resources Defense Council, which has fought the proposed mine. “The fact that it’s the wrong mine in the wrong place hasn’t changed. But the politics have changed.

The EPA’s latest action stems from a legal settlement in the spring with Pebble Limited Partnership, a subsidiary of the Canadian firm Northern Dynasty Minerals Ltd. The settlement did not grant an immediate approval for the polarizing project, but it did begin to clear the way for the company to apply for federal permits — a path the Obama administration had thwarted.

Now I know why Northern Dynasty’s shares did so well yesterday.  This article was put in an appearance on The Washington Post‘s website at 4:58 p.m. EDT on Tuesday afternoon — and it’s the first of two stories in a row that I extracted from GATA dispatches.  Another link to it is here.

Polyus to buy another 25% of Sukhoi Log gold deposit

Russia’s largest gold producer, Polyus, is buying an additional 25.1 percent in Sukhoi Log, one of the world’s largest untapped gold deposits, in an all-share deal worth $145.9 million, the company said today.

Polyus will pay state-owned Russian conglomerate Rostec in five tranches of its shares within the next five years. The first is expected to be in the form of existing Polyus treasury shares worth about $21.9 million within 30 business days from July 11, it said.

The company had said in January that its joint venture with Rostec would need three to four years to conduct additional exploration works and a feasibility study. Sukhoi Log’s reserves were estimated in the Soviet era at 1,943 tonnes (62.5 million troy ounces) of gold.

The above 3-paragraphs is all there is to this tiny gold-related news item, filed from Moscow, that was posted on the Reuters website at 12:43 p.m. EDT on Tuesday.  I found it embedded in a GATA dispatch as well.

Palladium closing gap on platinum…but neither great long term — Lawrie Williams

The unthinkable is happening.  Palladium is closing the price gap with platinum – fast.  Indeed the way things are going the palladium price could surpass that of platinum within the next few days or weeks.

Today, according to the latest data from kitco.com, palladium is trading at about $836 and is trending upwards while platinum is at $895 and trending downwards.  A year ago, palladium (which is by far the best performing precious metal year to date) was at around $610 – while platinum was at $1100 and moving higher at the time.  Thus a $490 price difference has fallen to a mere $59 in a year – and platinum seems to be in a continuing decline.  Historically platinum has mostly traded higher than gold but since it slipped below the yellow metal the gold:platinum ratio is now a large 1.35, while palladium’s fortunes have soared due to a perceived severe supply deficit..

Platinum’s heyday was in the early days of its determination as the best catalyst for removing noxious emissions from automobile exhausts – both for petrol (gasoline) engines and diesel engines, but palladium, largely because of its much lower price (about half that of platinum), gradually superseded its more expensive metal sibling as an exhaust catalyst for the then dominant petrol engine, while platinum retained its place for diesel exhaust emission control proving to be more effective in this respect.  But diesel engines are currently out of favour, following the VW emissions testing ‘cheating’ scandal and various reports suggesting diesel emissions are a major health risk.  With the metals prices now close might we see a return to platinum as the dominant petrol engine catalyst too?  Probably not – at least for some time – but it is likely to bring a halt to any research to replace platinum with palladium as the predominant diesel exhaust emissions control catalyst.

Of course what Lawrie says here is true enough as far as he takes it.  But a key element missing from this analysis is the fact that from what was a huge net long Managed Money position in the COMEX futures market in platinum, has now turned into a huge net short position by these same traders — and the net long position by the Managed Money traders in palladium is off-the-charts outrageous.  Those, of course, are the major reasons that platinum lags palladium.  Supply and demand mean nothing as far as precious metal pricing is concerned, as it’s only what happens in the COMEX futures market that matters.  Ted Butler has been pointing this out in his weekly review for the last ten years now.  This commentary by Lawrie appeared on the Sharps Pixley website yesterday — and another link to it is here.

John Hathaway ::: Tocqueville Gold Strategy Second Quarter 2017 Investor Letter: Caught In a Lie

Because the gold-mining industry has struggled to maintain reserve life (which stands at a 17-year low), we anticipate a wave of acquisition and consolidation activity over the next three to five years from which many of our holdings will benefit.  Should the gold price provide a tailwind, we expect returns from our investments to be quite rewarding.

The macro and market events that we anticipate will almost surely drive large capital flows into the relatively tiny gold sector.  Gold, held in proper form is the most liquid asset in the universe devoid of financial-market counterparty risk.  No other non-financial asset – including real estate, fine art, or commodities – measures up as a potentially effective or accessible hedge against a market meltdown.

Gold, as we have noted in a previous letter, has been the top-performing asset class since 2000, the dawn of radical monetary experimentation.  We believe that a hard look at the facts suggests that a return to the normality of the past is unattainable, and that the captains of economic policy are living in a dream world.  In light of these considerations, investor disinterest in gold and the implied expression of trust in the sustainability of current economic arrangements bewilders us, especially when even small exposure to the metal would be the financial-asset analog of fire insurance on one’s home.  We therefore recommend taking advantage of periodic pullbacks in the precious-metals sector to initiate or expand positions.

John slid his Q2 commentary into my in-box at 9:21 a.m. Mountain Daylight Time yesterday morning.  But because it’s not even up on the Tocqueville website yet, I had to borrow the URL from Sharps Pixley.  Another link to this very worthwhile read, is here.


This is another prize-winning photo — and rightly so.  To capture this dramatic view of a mother grizzly bear and her cub, photographer Peter Mather setup a camera trap on a log that he knew the bears tended to traverse while fishing for salmon in the Yukon River watershed in Canada.  Click to enlarge.


Well, no new lows, either closing or intraday, were set it either silver or gold yesterday, although there was in platinum…not that it matters.

It, as I said yesterday, has now boiled down to a waiting game.  Waiting for the ‘event’ that will begin the rallies that will be allowed to run away to the upside.  And not like the ones yesterday, where ‘da boyz’ stepped in and stopped them in all four precious metals between 11 a.m. and noon in New York.

Here are the 6-month charts for all four precious metals, plus copper once again and, for the second day in a row, there’s not much to see.  But with silver and gold prices well below their respective 50 and 200-day moving averages, along with the so-called ‘summer doldrums’, it’s easy for ‘da boyz’ to keep prices in line — and the brain-dead Managed Money traders loaded to the gills on the short side…awaiting whatever fate is in store for them.

The ‘click to enlarge‘ feature helps a bit with the first four charts.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price crawled a bit higher until around noon China Standard Time on their Wednesday. It then traded flat until shortly after the afternoon gold fix in Shanghai — and was turned lower at that point. Gold is up only 30 cents the ounce. The price pattern in silver was about the same, but the moment it broke above $15.90 spot around 9 a.m. CST, it was capped — and then traded sideways, like gold — and was also turned lower at the same moment as gold. Silver is down 2 cents currently. Platinum followed the exact same price as gold — and it’s up only up a buck. It was also an identical trading pattern for palladium — and it’s still up 2 dollars.

Net HFT gold volume is already fairly hefty at a bit over 43,000 contracts — and that number in silver is coming up on 19,500 contracts. Both are huge number for this time of day, especially considering the price activity, or lack thereof.

The dollar index continued chopping lower once trading began at 6:00 p.m. EDT in New York yesterday evening. But minutes after 1 p.m. CST it appeared that the usual ‘gentle hands’ showed up — and the index jumped higher — and is down only 3 basis points as London opens.

Yesterday, at the 1:30 p.m. EDT COMEX close, was the cut-off for this Friday’s Commitment of Traders Report…along with the companion Bank Participation Report.  Of course all those “busted” COMEX silver trades below $15.40 spot last Thursday evening EDT aren’t going to be part of it, but I’d still be prepared to bet big money that these reports will be ones for the ages.

However, we have no guarantee that we’ve actually seen the price bottom in either gold or silver.  But if forced to bet the proverbial ten-spot, I’d bet that it’s in…or its close enough that it won’t matter much from a price/time perspective if it isn’t.  I seem to remember making a similar comment about this in my Tuesday missive.  Of course, if the powers-that-be can manufacture a dollar index rally of some size, then all bets will be off.

So we wait some more.

And as I post today’s column on the Internet site at 4:02 a.m. EDT, I note that the gold price didn’t do much in the first hour of trading in London — and is up 30 cents at the moment.  The same can be said of silver — and it’s down 4 cents.  Platinum and palladium have recovered a bit — and both are up 3 bucks currently.

Gross gold volume is sitting at a bit over 54,000 contracts — and net of spreads and roll-overs, that number is just over 50,000 contracts.  Net HFT silver volume continues to climb — and is sitting right at the 24,000 contract mark.

The dollar index has traded sideways since the London open — and is down 1 basis point as I post today’s column.

I have no idea what may or may not happen during the remainder of the Wednesday trading session, or beyond.  The lows certainly appear to be in…but as Ted Butler has said on quite a few occasions, one must never underestimate the treachery of JPMorgan et al — and we shouldn’t.  The so-called ‘flash crash’ of late last week in silver is certainly proof of that.

See you here tomorrow.


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