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March 7, 2020 | 21 Tonnes of Gold Deposited Into GLD on Friday

"Ed wrote the daily precious metal commentary for Casey Research starting in 2008. His stand-alone column became their most highly-rated blog [either free or paid] almost from the outset—and remained that way until he started his own subscription-based website in June of 2015."
07 March 2020 — Saturday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM

Gold’s two tiny rallies in Far East trading on their Friday were dealt with in the usual manner.  But starting about fifteen minute before the London open, a rally of some substance appeared.  That was capped at, or just before, the 10:30 a.m. GMT morning gold fix in London — and it chopped sideways until the jobs numbers [which I’d forgotten entirely about] appeared at 8:30 a.m. in New York.  There was a short dip at that juncture, which was well bought, but ‘da boyz’ showed up very shortly after the 10 a.m. EST afternoon gold fix in London — and blew the price lower until precisely 10:30 a.m. EST.  It recovered smartly from that engineered price decline — and soared higher until ‘da boyz’ reappeared shortly after 3 p.m. in after-hours trading.  They sold it back below unchanged, but it recovered above that mark by the time that the market closed at 5:00 p.m. in New York.

 

The low and high ticks, both of which occurred during the New York trading session, were recorded by the CME Group as $1642.40 and $1,692.80 in the April contract.

 

Gold was closed in on Friday afternoon at $1,673.10 spot, up $1.30 on the day, but miles below its Kitco-recorded $1,692.70 high tick.  Net volume was beyond Neptune at a bit under 568,500 contracts — and there was an eye-watering 102,000 contracts worth of roll-over/switch volume out of April and into future months.

 

 

The silver price was managed in a similar manner in Far East and early trading in London, but its high tick of the day came at, or just before, the noon silver fix.  The rest you know — and it’s solid recovery off its exact 10:30 a.m. low in New York was just as impressive as it was for gold, but ‘da boyz’ showed up to turn the price lower the moment that it hinted that it was about to blast above unchanged on the day.  But despite that sell-off in after-hours trading, it still managed to edge a few pennies higher before trading ended at 5:00 p.m. EST.

 

The high and low ticks in silver were reported as $17.62 and $17.07 in the May contract.

 

Silver was closed on Friday afternoon at $17.325 spot, down 8.5 cents from Thursday.  Net volume was heavy, but not obscene, at 84,500 contracts — and there was 10,500 contracts worth of roll-over/switch volume in this precious metal.

 

 

After wandering around a bunch of dollars either side of unchanged in Far East and early Zurich trading on their Fridays, the platinum price began to blast higher minutes before 12 o’clock noon in what had all the hallmarks of a ‘no ask’ market.  The usual not-for-profit sellers appeared shortly after that.  It was sold a bit lower on the jobs report numbers — and again when ‘da boyz’ appeared at the afternoon gold fix in London.  But, like silver and gold before it, it rallied smartly until 4 p.m. in the thinly-traded after-hours market — and it didn’t do much after that.  Platinum was closed at $903 spot, up 38 bucks from Thursday.

 

 

The palladium price wandered generally lower until noon in Zurich — and ‘da boyz’ put a sock in that ‘no ask’ rally as well — and from there it was sold lower until about ten minutes before the 11 a.m. EST Zurich close.  It rallied a very decent amount from there — and finished the Friday session at $2,451 spot, up 8 dollars on the day…but light years off its Kitco-recorded 2,689 spot high tick.

 

 

Of course the precious metals prices would have been past the moon if they’d been allowed to trade freely on Friday.  Even with the Big 7 traders in a $7.2 billion margin call financial hole, they were aggressively shorting this market regardless of their increasingly perilous position.  But their Bear Stearns moment, at least for some of the smaller traders in this group, draws ever closer.

 


 

The dollar index was closed very late on Thursday afternoon in New York at 96.8200 — and opened down about 20 basis points 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 began to crawl quietly and unevenly lower until a trap door opened under it around 8:25 a.m. in London — and the 95.71 low tick of the day was set around 10:10 a.m. in New York.  And as the dollar index ‘rallied’ from there…the Big 7 shorts did the dirty in gold and silver.  The index chopped quietly and very unevenly higher until trading ended at 5:30 p.m. in New York.  The dollar index was marked-to-close at 95.95…down 87 basis points from Thursday — and 14 basis points lower than the close on the DXY chart below.  The games people play.

 

The precious metal prices were certainly reacting [in part] to what was going on in the currencies, but the Big 7 were there to make sure that the correlation was kept to a minimum.  They only partially succeeded in their attempt.

 

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

 

 

And here’s the 5-year U.S. dollar index chart, courtesy of the folks over at the stockcharts.com Internet site.  The delta between its close…95.93…and the close on the DXY chart above, was 2 basis points on Friday.  Click to enlarge as well.

 

 

The gold stocks ticked higher at the open, but then ran into a wall of selling once again that ended around 10:50 a.m. in New York trading.  From there they crawled quietly and unevenly higher until the market closed at 4:00 p.m. EST.  The HUI finished lower by 1.16 percent.

 

 

The silver equities were sold lower the moment that trading began at 9:30 a.m. in New York on Friday morning.  Their low ticks were set at silver’s low tick…exactly 10:30 a.m. EST.  From that juncture they wandered quietly higher without much conviction until trading ended at 4:00 p.m. in New York.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down an unhappy 3.54 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.

 

 
Peñoles was hit the hardest…down 7.04 percent…and Wheaton Precious Minerals lost the least…down 0.49 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 despite the hosing the precious metals and their associated equities took on Friday, everything is green except for palladium.  The underperformance of silver and its shares is obvious. Click to enlarge.

 

 

For this one week, the month-to-date chart is identical to the weekly chart, so I won’t bother posting it.

 

Here’s the year-to-date chart — and although gold is up on the year, the gold shares continue to vastly underperform.  That’s even more the case in silver — and it’s associated equities.  Click to enlarge.

 

 

As Ted has been pointing out for some time now, how silver and gold prices unfold from here depended on whether or not the Big 7/8 commercial traders that are holding huge but unrealized loses on the short side, were able to snooker the Managed Money traders [and others] out of their historic and unprecedented net long positions.  Well, they showed up in force last week — and cut their loses by quite a bit.  But since then, they have poured back on the short side this reporting week — and are back underwater to the tune of around $7.2 billion as of the close of trading yesterday…according to Ted.  If the precious metal prices continue to power higher from here, some of the smaller traders in the Big 7 category are going to be in serious trouble.

 


 

The CME Daily Delivery Report showed that 19 gold and 119 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday.

 

In gold, of the three short/issuers in total, the two biggest were Morgan Stanley and Advantage, with 9 and 8 contracts.  There were four long/stoppers — and three that mattered were JPMorgan, ADM and Advantage…with 8, 7 and 3 contracts.  All contracts, both issued and stopped, involved their respective client accounts.

 

In silver, the sole short/issuer was ABN Amro with 119 contracts out of its client account.  There were eight long/stoppers in total.  The three biggest were JPMorgan, BofA Securities and Citigroup, with 64, 24 and 13 contracts — and all involved their respective client accounts as well.

 

The link to yesterdays Issuers and Stoppers Report is here.
So far this month, there have been 1,485 gold contracts issued/reissued and stopped — and that number in silver is 3,453 contracts.

 

The CME Preliminary Report for the Friday trading session showed that gold open interest in March fell by 39 contracts, leaving 97 contracts still around, minus the 19 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that 70 gold contracts were actually posted for delivery on Monday, so that means that 70-39=31 more gold contracts were just added to the March delivery month.  Silver o.i. in March declined by 21 contracts, leaving 749 still open, minus the 119 mentioned a few paragraphs ago.  Thursday’s Daily Delivery Report showed that only 2 silver contracts were actually posted for delivery on Monday, so that means that 21-2=19 silver contracts disappeared from March deliveries.

 

I noticed in these preliminary numbers that total gold open interest fell by a chunky 19,989 contracts yesterday — and silver’s o.i. declined by 1,324 contracts.  The final numbers won’t be posted on the CME’s website until late Monday morning EST…but shouldn’t be materially different than the numbers you see here.

 


 

There was an eye-watering deposit into GLD on Friday, as an authorized participant added 677,484 troy ounces of gold…21.07 metric tonnes.  That’s the biggest deposit that I ever remember seeing.  There were no reported changes in SLV.

 

In other gold and silver ETFs on Planet Earth on Friday…net of any COMEX and GLD & SLV activity…there was a net 207,044 troy ounces of gold added, plus 2,078,794 troy ounces of silver was added as well.

 

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

 

Month-to-date the mint has sold a piddling 2,500 troy ounces of gold eagles — 3,000 one-ounce 24K gold buffaloes — and 750,000 silver eagles.

 

There was a tiny bit of movement in gold over at the COMEX-approved depositories on the U.S. east coast on Thursday.  In total, there was only 96.450 troy ounces received/3 kilobars [U.K./U.S. kilobar weight] — and those ended up at Delaware.  There was 2,604.228 troy ounces shipped out in total. Of that amount, there was 2,507.778 troy ounces/78 kilobars [SGE kilobar weight] shipped out of the International Depository Services of Delaware.  And the remaining 96.450 troy ounces/3 kilobars [U.K./U.S. kilobar weight] that departed Canada’s Scotiabank — and those could be the same three bars that were received at Delaware.  I shan’t bother linking this.

 

There was some activity in silver.  All the ‘in’ activity was one truckload…600,656 troy ounces…that was dropped off at CNT.  There was 190,568 troy ounces shipped out…170,330 from Canada’s Scotiabank — and the remaining 20,237 troy ounces from the International Depository Services of Delaware.  The link to that is here.

 

There was also a bit of activity over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday.   They received 30 of them — and shipped out 191.  All of this activity was at Brink’s, Inc. — and I won’t bother linking this either.

 


 

Here are two charts that Nick passes around on the weekend.  These 2-year charts show the amount of physical gold and silver in all known depositories, mutual funds and ETFs as of the close of business on Friday, March 6th.  For the week just past, there was a net 1,088,000 troy ounces of gold added, but a net 2,404,000 troy ounces of silver was withdrawn — and the sole reason for that was the 5.6 million troy ounces that was withdrawn from SLV on Monday..which most likely belongs to JPMorgan now.  If it wasn’t for that, the net number for silver would have been positive by 3.2 million troy ounces.

 


The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, showed the expected big reductions in the commercial net short positions in both gold and silver…with the improvement in silver being far more dramatic.
In silver, the Commercial net short position cratered by 30,916 contracts, or 154.6 million troy ounces of paper silver.

 

The arrived at that number by reducing their long position by 1,554 contracts, but they covered a whopping 32,470 short 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 it was all Managed Money traders, plus a bit more as they reduced their long position by a net 32,718 contracts.  They arrived at that number by reducing their long position by 28,980 contracts, plus they added 3,738 short contracts.

 

The big surprise was in the ‘Other Reportables’ category, as they increased their net long position by a beefy 6,228 contracts.  The ‘Nonreportable’/small traders went in the other direction, reducing their net long position by 4,426 contracts.

 

Doing the math…32,718 minus 6,228 plus 4,426 equals 30,916 contracts…the change in the Commercial net short position, which is what these numbers must net out at.

 

There was surprisingly little activity in the Producer/Merchant category where JPMorgan hides out, as they only reduced their net short position by a net 6,982 contracts.  With the new Bank Participation Report and COT in hand, Ted estimates JPMorgan’s short position at around 9,000 contracts, down from the 18,000 contracts that he said they were short in last week’s column.

 

The other traders in the Commercial category, the Swap Dealers, were the biggest beneficiaries of last week’s engineered price decline…reducing their net short position by a very healthy 23,934 contracts.

 

The Commercial net short position in silver took a tumble down to 342.2 million troy ounces.  But it should be noted with great care that the Big 8 short holders in COMEX silver are short more than that amount — and you should run through my “Days to Cover” commentary on silver further down.

 

Here’s Nick’s 3-year COT chart for silver — and the big improvement should be noted.  Click to enlarge.

 

 

The monstrous improvement in the Commercial net short position in silver over the reporting week was due to the fact that the Big 8 traders hammered silver well below — and closed it below, both its 50 and 200-day moving averages during the reporting week.  On an historical basis the COMEX short position in silver is still bearish on its face, but you should never forget that it’s only these Big 8 traders that are holding the price back, as everyone else on Planet Earth is net long silver in the COMEX futures market.

 


 

In gold, the commercial net short position fell by 24,610 contracts, or 2.46 million troy ounces of paper gold.  The reason it wasn’t more, as Ted kindly reminded me on the phone yesterday, was that a] ‘da boyz’ couldn’t break gold through its 50-day moving average during their engineered price decline, and b] gold posted a strong recovery after that, which would have negated some of the improvement.

 

They arrived at that number by increasing their long position by 1,515 contracts — and they also reduced their net short position by 23,095 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 mostly Managed Money traders, as they reduced their net long position by 15,485 contracts.  They did this by reducing their long position by 20,297 contracts, but also reduced their short position by 4,812 contracts — and it’s the difference between those two numbers that represents their change for the reporting week.
Most of the rest of the change came in the ‘Nonreportable’/small trader category, as they also reduced their net long position by a healthy amount…8,478 contracts.  The traders in the ‘Other Reportables’ category stood almost pat, reducing their long position by a scant 647 contracts.

 

Doing the math…15,485 plus 8,478 plus 647 equals 24,610 contracts…the change in the commercial net short position…which it must net out at.

 

JPMorgan didn’t cover anywhere near as many short contracts in gold that Ted was hoping/expecting.  He figures that they only reduced their net short position by around 4,000 contracts…down to 40,000 contracts from the 44,000 contracts that they were short in the prior week’s COT Report.

 

The commercial net short position in gold is down to ‘only’ 35.10 million troy ounces, which is still a wildly bearish number on an historical basis points.  But by far the lion’s share of that amount is held by the Big 8 traders because, like in silver, the rest of the traders [including the smaller commercial traders] in the COMEX futures market in gold, are net long.

 

Here’s Nick’s 3-year COT chart for gold, updated with yesterday’s COT numbers — and the improvement should be noted as well.  Click to enlarge.

 

 

Make no mistake about it, in this rising price environment in the precious metals, it certainly appears that the Big 8…with or without JPMorgan’s help last week…did the best they could to cover as many short positions as possible during last week’s engineered price declines.  And if that’s the best they could do, there is a clear and ever-increasing danger that they will get overrun at some point as these rallies progress — and will be forced to cover at huge losses.

 

When that happens, you’re going to see trading days like no other…as prices will explode to the upside, as the short sellers of first resort turn into long buyers of first resort.  And who in their right mind would be willing to take the short side of those trades in a price environment such as that?  The answer is: nobody.

 

Ted calculates the unrealized margin call losses of the Big 7 traders at around $7.2 billion as of the close of trading on Friday.

 


 

In the other metals, the Manged Money traders in palladium decreased their net long position by  a further 349 COMEX contracts during the reporting week — and are now net long the palladium market by only 4,017 contracts…a bit under 31 percent of the total open interest…up from 27 percent last week.  But total open interest in palladium fell sharply for the second week in a row…from 16,016 COMEX contracts, down to 13,055 contracts.  In platinum, the Managed Money traders decreased their net long position by a further and very hefty 15,739 contracts.  But they’re still net long the platinum market by 18,237 COMEX contracts…a bit over 22 percent of the total open interest, but down from a chunky 35 percent in last week’s COT Report. The other two categories [Other Reportables/Nonreportable] are still mega net long against JPMorgan et al…although both reduced their net long positions during the reporting week as well.  In copper during the reporting week, the Managed Money traders decreased their net short position in that metal by 11,237 COMEX contracts.  They are net short copper by 43,910 COMEX contracts…18 percent of total open interest.  This works out to 1.10 billion pounds of the stuff.

 


 

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, March 3.  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 143 days of world silver production…down 14 days from last week’s COT Report – and the ‘5 through 8’ large traders are short an additional 61 days of world silver production…also down 14 days from last week’s COT Report – for a total of 204 days that the Big 8 are short…down an eye-popping 28 days from last week’s report. This represents just under 7 months of world silver production, or about 476 million troy ounces of paper silver held short by the Big 8.  [In the prior reporting week, the Big 8 were short 232 days of world silver production.]

 

In the COT Report above, the Commercial net short position in silver was reported by the CME Group as 342 million troy ounces.  As mentioned in the previous paragraph, the short position of the Big 8 traders is 476 million troy ounces.  So the short position of the Big 8 traders is larger than the total Commercial net short position by around 476-342=134 million troy ounces.  This is beyond obscene and grotesque.

 

The reason for the difference in those numbers…as it always is…is that Ted’s raptors, the 31-odd small commercial traders other than the Big 8, are net long that amount.

 

Another way of stating this [as I say every week in this spot] 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 — and now in platinum and palladium as well.

 

As mentioned in my COT commentary in silver above, Ted estimates JPMorgan’s short position at around 9,000 contracts, down from the 18,000 he said they were short in the prior week’s COT Report.  That’s about 45 million troy ounces, or around 19 days of world silver production held short by JPM.

 

As per the paragraph below, I suspect that JPMorgan is now the smallest of the traders in the Big 4 category…or the largest of the traders in the ‘5 through 8’ category.  HSBC USA and Citigroup hold short positions larger than that.  Who the fourth player might be, I don’t know…perhaps Goldman and/or Morgan Stanley.  Australia’s Macquarie Futures comes to mind as well.

 

As per the first paragraph above, the Big 4 traders in silver are short around 143 days of world silver production in total. That’s about 35.75 days of world silver production each, on average…down 3.50 days from last week’s report.  The four traders in the ‘5 through 8’ category are short around 61 days of world silver production in total, which is around 15.25 days of world silver production each, on average…also down 3.50 days from last week.

 

The Big 8 commercial traders are short 48.3 percent of the entire open interest in silver in the COMEX futures market, which is up a decent amount from the 45.4 percent they were short in last week’s COT report.  And once whatever market-neutral spread trades are subtracted out, that percentage would be around the 55 percent mark.  In gold, it’s now 42.3 percent of the total COMEX open interest that the Big 8 are short, down a hair from the 42.7 percent they were short in last week’s report — and also around 50 percent, once the market-neutral spread trades are subtracted out.

 

In gold, the Big 4 are short 69 days of world gold production, down 4 days from last week’s COT Report.  The ‘5 through 8’ are short another 33 days of world production, down 3 days from last week’s report…for a total of 102 days of world gold production held short by the Big 8…down 7 days from last week’s COT Report.  Based on these numbers, the Big 4 in gold hold about 67 percent of the total short position held by the Big 8…about unchanged 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 70, 74 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 about 2 percentage points from last week’s COT Report…platinum is up about 4 percent points from a week ago — and palladium is up about 2 percentage point week-over-week.
It should be noted that the short position of the Big 8 traders in palladium has vanished into the background on the above “Days to Cover” chart — and in the Bank Participation Report below, they have exited stage left as well.

 

And as Ted has been pointing out for years now, JPMorgan is, as always, in a position to double cross the other commercial traders at any time and walk away smelling like that proverbial rose — and that’s because of the massive amounts of physical gold and silver they hold.  Nothing about that possible scenario has changed on iota over the last year.  We’re just awaiting that day — and when it does arrive, you won’t have to ask “is this it?”…as it will be evident in the price.

 


 

The March Bank Participation Report [BPR] data is extracted directly from yesterday’s Commitment of Traders Report.  It shows the number of futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday’s cut-off in all COMEX-traded products.  For this one day a month we get to see what the world’s banks are up to in the precious metals -and they’re usually up to quite a bit.

 

[The March Bank Participation Report covers the time period from February 5 to March 3 inclusive.]

 

In gold, 4 U.S. banks are net short 108,365 COMEX contracts in the March BPR.  In February’s Bank Participation Report [BPR]  5 U.S. banks were net short 105,824 contracts, so there was a rather a smallish increase of 2,541 COMEX contracts from a month ago.

 

JPMorgan, Citigroup and HSBC USA would hold the lion’s share of this short position. As to who other U.S. bank might be that is short in this BPR, I haven’t a clue, but it’s a given that their short position would not be material.

 

Ted mentioned on the phone yesterday that JPMorgan is short around 40,000 contracts of the total net short position held by the 4 U.S. banks as of Tuesday’s COT Report.  That’s around 37 percent of the total short interest held by these same banks.  I suspect that JPMorgan is probably the biggest short holder in COMEX gold futures for the moment, but HSBC and Citigroup wouldn’t be that far behind.

 

Also in gold, 34 non-U.S. banks are net short 108,218 COMEX gold contracts.  In February’s BPR, these same 34 non-U.S. banks were net short 105,325 COMEX contracts…so the month-over-month change shows a smallish increase of 2,893 contracts.

 

At the low back in the August 2018 BPR…these same non-U.S. banks held a net short position in gold of only 1,960 contacts!

 

However, as I always say at this point, I suspect that there’s at least two large non-U.S. bank in this group, one of which would include Scotiabank.  It’s certainly possible that it could be the BIS in the No. 1 spot.  But regardless of who this second non-U.S. bank is, the short positions in gold held by the remaining 32 non-U.S. banks are immaterial.

 

As of this Bank Participation Report, 38 banks [both U.S. and foreign] are net short 31.3 percent of the entire open interest in gold in the COMEX futures market, which is down a hair from the 32.2 percent they were short in the February BPR.

 

Here’s Nick’s BPR chart for gold going back to 2000.  Charts #4 and #5 are the key ones here.  Note the blow-out in the short positions of the non-U.S. banks [the blue bars in chart #4] when Scotiabank’s COMEX short position was outed by the CFTC in October of 2012.  Click to enlarge.

 

 

In silver, 4 U.S. banks are net short 27,044 COMEX contracts in March’s BPR.  In February’s BPR, the net short position of these same 4 U.S. banks was 36,289 contracts, so the short position of the U.S. banks is down a fairly decent 9,245 contracts month-over-month — and I would suspect that decrease comes courtesy of JPMorgan — and is why Ted dropped their short position by 9,000 contracts.

 

As in gold, the three biggest short holders in silver of the four U.S. banks in total, would be JPMorgan, Citigroup and HSBC USA…with Citigroup or HSBC in No. 1 spot…and JPM in No. 3 position.  Whoever the remaining U.S. bank may be, their short position, like the short position of the smallest U.S. bank in gold, would be immaterial in the grand scheme of things.

 

Also in silver, 23 non-U.S. banks are net short 42,666 COMEX contracts in the March BPR…which is down from the 47,308 contracts that 24 non-U.S. banks were short in the February BPR.  I would suspect that Canada’s Scotiabank [and maybe one other, the BIS perhaps] holds a goodly chunk of the short position of these non-U.S. banks.  I believe that a number of the remaining 21 non-U.S. banks may actually net long the COMEX futures market in silver.  But even if they aren’t, the remaining short positions divided up between these other 21 non-U.S. banks are immaterial – and have always been so.
 
As of March’s Bank Participation Report, 27 banks [both U.S. and foreign] are net short 35.4 percent of the entire open interest in the COMEX futures market in silver-down a bit from the 37.1 percent that they were net short in the February BPR.  And much, much more than the lion’s share of that is held by Citigroup, HSBC USA, JPMorgan, Scotiabank — and maybe one other non-U.S. bank, which I suspect may be the BIS.

 

Here’s the BPR chart for silver.  Note in Chart #4 the blow-out in the non-U.S. bank short position [blue bars] in October of 2012 when Scotiabank was brought in from the cold.  Also note August 2008 when JPMorgan took over the silver short position of Bear Stearns-the red bars.  It’s very noticeable in Chart #4-and really stands out like the proverbial sore thumb it is in chart #5.  Click to enlarge.

 

 

In platinum, 5 U.S. banks are net short 17,852 COMEX contracts in the March Bank Participation Report.  In the February BPR, these same 5 U.S. banks were net short 27,115 COMEX contracts…so there’s been a whopping 34 percent decline in the short position of the five big U.S. banks.

 

[At the ‘low’ back in July of 2018, these same five U.S. banks were actually net long the platinum market by 2,573 contracts. That’s quite a change for the worse since then.]

 

Also in platinum, 18 non-U.S. banks are net short 14,080 COMEX contracts in the March BPR, which is down big from the 25,365 COMEX contracts that 20 non-U.S. banks were net short in the February BPR.  That’s an eye-watering 44.5 percent decline in just one month.

 

[Note: Back at the July 2018 low, these same non-U.S. banks were net short only 1,192 COMEX contracts, so last month’s big decrease should be put in that perspective.]

 

And as of March’s Bank Participation Report, 23 banks [both U.S. and foreign] are net short 38.9 percent of platinum’s total open interest in the COMEX futures market, which is down hugely from the near-record 51.8 percent that 25 banks were net short in February’s BPR.
Here’s the Bank Participation Report chart for platinum. Click to enlarge.

 

 

In palladium, 3 or less U.S. banks are net short 2,659 COMEX contracts in the March BPR, which is a decrease of 26.5 percent from the 3,616 contracts that these same 4 U.S. banks were net short in the February BPR.

 

Also in palladium, 11 or more non-U.S. banks are net short an insignificant 10 [yes, you read that right!] COMEX contracts-which is down nearly 100 percent from the 941 COMEX contracts that 11 or more non-U.S. banks were short in the February BPR.

 

As of this Bank Participation Report, 15 banks [both U.S. and foreign] are net short 20.5 percent of the entire COMEX open interest in palladium…up a hair from the 19.7 percent of total open interest that these same 15 banks were net short in February.

 

But this is a huge improvement nonetheless, because from the the February BPR to the March BPR, the open interest in palladium has crashed from 23,178 contracts, down to 13,055 COMEX contracts. The short positions in palladium held by the world’s banks are basically immaterial.

 

Here’s the palladium BPR chart.  And as I point out every month, you should note that the U.S. banks were almost nowhere to be seen in the COMEX futures market in this precious metal until the middle of 2007-and they became the predominant and controlling factor by the end of Q1 of 2013.  But they have imploded into insignificance during the last two Bank Participation Reports — and it remains to be seen if they return as short sellers again at some point, like they’ve done in the past.  Click to enlarge.

 

 

Except for palladium, only a small handful of the world’s banks…and mostly U.S. banks…have meaningful short positions in the other three precious metals.  But only JPMorgan has the physical metal to back up their position.  The other banks have nothing.

 

I have a large number of stories/articles/videos for you today.

CRITICAL READS

Blockbuster Jobs Report: Feb Payrolls Soar By 273,000, Smashing Expectations, As Unemployment Rate Drops… But Does Anyone Care?

After January’s payrolls revision, which saw almost a million jobs wiped out from the historical record, many analysts were expecting that the BLS would take advantage of the ongoing market shock and “kitchen sink” even more bad news, missing the consensus payrolls expectations of a 175K print for February. They were extremely wrong, because moments ago the BLS reported that in February the U.S. economy added a whopping 273K jobs, smashing the consensus expectation of 175K by one hundred thousand, and tied for the best monthly increase since May 2018.  Click to enlarge.

 

 

But wait, there’s more good news, because despite some initial disappointment, the change in total nonfarm payroll employment for December was revised up by 37,000 from +147,000 to +184,000, and the change for January was revised up by 48,000 from +225,000 to +273,000.

 

With these revisions, employment gains in December and January combined were 85,000 higher than previously reported. This means that after revisions, job gains have averaged 243,000 per month over the last 3 months after averaging 178,000 per month in January. Try explaining that to anyone who claims the economy is late cycle.

 

Overall, this was a blockbuster jobs report, the only question we have is does anyone care not only since this was the “most irrelevant jobs report ever” and failed to capture the second half of February’s slowdown, but also because now that a rate cut to 0%, and even negative, is very much priced in, does any good news matter?

 

No, it doesn’t, dear reader.  That’s why gold and silver barely reacted to the report — and the Big 7 had to step in after the afternoon gold fix in London to smash their respective prices. But that engineered price decline had little affect — and they had to step in late in the day to hit them again.  It’s whack-a-mole time.  This Zero Hedge story, courtesy of Brad Robertson, put in an appearance on their Internet site at 8:42 a.m. EST on Friday morning — and another link to it is here.

 


Gundlach Was Right – Even Investment Grade Credit Markets Are Crashing Today

It appears, as Jeff Gundlach warned last night, that the seizure in credit markets is about to get a lot more attention…

 

The bond market is rallying because The Fed has reacted the seizure in the corporate bond market – which is not getting enough attention.”

 

The Fed cut rates, he added, “in reaction to even the investment being shutdown for 7 business days.

 

Gundlach noted that Powell’s background in the private equity world – rather than academic economist land – has meant that his reaction function is driven by problems in the corporate bond market as “this will be problematic for the buyback aspect of the stock market.”  Click to enlarge.

 

 

As High Yield is already at its widest since 2016…Click to enlarge.

 

 

And that’s why Gundlach is long gold:

 

I turned bullish on gold in the summer of 2018 on my Total Return webcast when it was at 1190. And it just seems to me, as I talked about my Just Markets webcast, which is up on DoubleLine.com on a replay, that the dollar is going to get weaker.

And the dollar getting weaker seems to be a policy. And the Fed cutting rates, slashing rates is clearly going to be dollar negative. And that means that gold is going to go higher.”

 

This brief 2-chart Zero Hedge new item put in an appearance on their website at 9:26 a.m. on Friday morning EST — and I thank Brad Robertson for sharing it with us.  Another link to the hard copy is here.

 


U.S. Yields Hurtle Toward Zero With Thin Market Stunning Traders

Treasury yields plummeted to record lows Friday as concern about the global economic and financial impact of the coronavirus spurred demand for havens, while questions swirled about liquidity in the world’s biggest debt market.

 

U.S. securities rallied and long-bond rates notched their biggest intraday drop since 2009 as government debt around the world racked up further historic milestones Friday. At the short-end of the American yield curve traders amped up bets on further central bank easing this month.
Other refuge assets also advanced, with the yen climbing and bund yields diving to
unprecedented negative levels. A stronger-than-expected U.S. jobs report failed to dent the pessimistic tone.

 

We expected the virus to have a big impact,” said Tony Farren at Mischler Financial Group. “But it has gone way beyond our wildest expectations. I thought last Friday was the blow-off top and then a few times this week before today, but now it’s beyond belief.”

 

The moves came as stocks around the world plunged. The number of coronavirus cases globally exceeded 100,000. Singapore warned of a global pandemic and Britain’s chief scientific adviser said a vaccine could take as long as 18 months to develop.

 

Bill Finan, senior managing trader at Columbia Threadneedle said he couldn’t remember seeing the Treasury futures market this thin and that this episode ranks with some of the more extreme liquidity crunches he’s seen. “Forget trading ultra bonds, nothing showing there,” he said.

 

This worthwhile Bloomberg news item was posted on their website at 1:57 a.m. PST on Friday morning — and updated nine and a half hours later.  I thank Swedish reader Patrik Ekdahl for pointing it out — and another link to it is hereGregory Mannarino‘s post market rant for Friday is linked here.

 


Boston Fed’s Rosengren Says Fed May Soon Have to Buy Stocks

Three weeks ago, former Fed Chair Janet Yellen incepted the idea that during the next crisis, the Fed should consider expanding the range of assets it would purchase, most notably buying stocks. Our comment to this was that “thanks to Janet Yellen, we now we know that before the current fiat regime of central banks finally ends and before stocks go limits up as the revolution starts, the Fed will order a POMO of, well, everything in one final, last ditch effort to keep social stability by creating the impression that stocks are stable and rising even as society implodes.”

 

Well, thanks to experiments conducted in a Chinese P-4 bio-lab, the next crisis appears to have arrived in the form of the coronavirus pandemic, and the idea of the Fed buying stocks is now on the agenda, case in point Boston President Eric Rosengren, who echoed Yellen, and said the Fed should be allowed to buy a broader range of assets – either by change of mandate or through a facility that allows it to buy stocks – if it lacks sufficient ammunition to fight off a recession with interest-rate cuts and bond purchases. In such a scenario, the U.S. Treasury should indemnify the Fed against losses, Rosengren said in the text of remarks scheduled for delivery Friday in New York.

 

In a situation where both short-term interest rates and 10-year Treasury rates approach the zero lower bound, allowing the Federal Reserve to purchase a broader range of assets could be important.

Excerpt: “In such a case, as Marvin highlighted in his 1999 article, we should allow the central bank to purchase a broader range of securities or assets. Such a policy, however, would require a change in the Federal Reserve Act. … Alternatively, the Federal Reserve could consider a facility that could buy a broader set of assets, provided the Treasury agreed to provide indemnification.”
 
Rosengren also warned the Fed would face greater challenge than in 2008 crisis when Fed’s benchmark rate was cut to nearly zero, because yields on longer-run Treasuries have fallen below 1%.

 

This story showed up on the Zero Hedge website at 2:21 p.m. EST on Friday Afternoon — and another link to it is here.

 


Someone Big Was Utterly Blown The F**k Out“: Here’s The Reason Behind Today’s Unprecedented VIX Move

There was a bizarre moment this afternoon, when in the 40 minutes heading into the final hour of trading, the VIX kept rising and rising, preventing the S&P from doing its sworn duty of spiking higher into the weekend. And then, just after 3:10pm ET (or 12:10 PT), the VIX collapsed, plunging by as much as 14 vols from 54.39 – the highest print since Lehman – to 40.84, the low for the day, and unleashing another unprecedented stock buying cascade, which almost sent the Dow green.  Click to enlarge.

 

 

What happened?

 

As the following chat session between three individuals, which includes a former CME index option trader (X), all of whom wish to remain anonymous lays out, what happened is that the VIX ramped as a major Chicago market maker was caught in the infamous gamma short squeeze, which forced them to keep buying the VIX as the VIX soared, in the process ending the VIX even higher, only to get margin called out of their position by their clearing firm, puking their entire position while liquidating anything they could, and unleashing the VIX selling avalanche and the 700 Dow point rally.

 

Regular readers will recognize this pattern: it is what happened, only not with the VIX by ES, back in February 2017, when the Catalyst Hedged Futures Strategy Fund pushed the entire market higher when it, itself, was caught in a similar gamma trap (and which this January was finally busted for fraud).

 

Below the the full chat laying out what happened….

 

This very interesting and worthwhile Zero Hedge article appeared on their website at 7:23 p.m. EST on Friday evening — and another link to it is here.

 


Two Charts Explain Why Wall Street Banks Are Under So Much Selling Pressure

Yesterday, the Dow Jones Industrial Average of 30 large cap companies closed with a loss of 969.5 points or 3.58 percent. That was bad enough but the losses among the biggest Wall Street banks outpaced the Dow losses by a significant margin. Typically, JPMorgan Chase is one of the better performers among the Wall Street banks in the midst of a big selloff. But not yesterday. It closed with a loss of 4.91 percent – a loss larger than Goldman Sachs (- 4.77 percent), which has a large criminal fine hanging over its head. The news that Jamie Dimon, Chairman and CEO of JPMorgan Chase, had heart surgery on Thursday was not reported until after the stock market had closed.

 

The losses among the other mega banks on Wall Street yesterday were equally unsettling. Morgan Stanley lost 5.86 percent; Citigroup closed down 5.79 percent, while Bank of America shed 5.07 percent.

 

All of these banks have one thing in common: they each are exposed to tens of trillions of dollars in derivatives. And according to a 2016 report from the International Monetary Fund (IMF), the German mega bank, Deutsche Bank, is heavily interconnected via derivatives to each of these Wall Street banks. (See chart below.) Deutsche Bank’s stock lost 5.49 percent yesterday, bringing its losses to 30 percent in just the past 15 trading sessions. That’s common equity capital that Deutsche Bank can’t afford to lose: its shares have lost 75 percent of their common equity value in the past five years. The IMF concluded that Deutsche Bank posed a greater threat to global financial stability than any other bank as a result of these interconnections – and that was when its market capitalization was tens of billions of dollars larger than it is today.

 

And the banks stocks got killed again on Friday.  This very interesting, but not surprising commentary put in an appearance  on the wallstreetonparade.com Internet site on Friday morning — and I found it embedded in a GATA dispatch.  Another link to it is here.

 


Economy Awaits the Fed’s Rescue Amidst Coronavirus Panic

The good news is that Elizabeth Warren has dropped out of the presidential race. And Mike Bloomberg. And Amy Klobuchar. And that guy with the name we could never pronounce.

 

The bad news is that Bernie Sanders and Joe Biden are still in the race on the Democratic side… and Donald Trump runs unopposed for the Republicans. The best you can say about any of them is that their names are easy to spell.

 

Meanwhile, the Dow dropped another 969 points yesterday. Stocks fell in Europe this morning. Based on early trading, it’s going to be another rough day in the U.S., too.

 

This very worthwhile commentary from Bill was posted on the bonnerandpartners.com Internet site on Friday sometime — and another link to it is here.

 


Heading Into Negative (Real) Interest Rates — Jim Rickards

Last July I was in Bretton Woods, New Hampshire, along with a host of monetary elites, to commemorate the 75th anniversary of the Bretton Woods conference that established the post-WWII international monetary system. But I wasn’t just there to commemorate  the past -I was there to seek insight into the future of the monetary system.

 

One day I was part of a select group in a closed-door “off the record” meeting with top Federal Reserve and European Central Bank (ECB) officials who announced exactly what you can expect with interest rates going forward – and why.

 

They included a senior official from a regional Federal Reserve bank, a senior official from the Fed’s Board of Governors and a member of the ECB’s Board of Governors.

 

Chatham House rules apply, so I still can’t reveal the names of anyone present at this particular meeting or quote them directly.

 

But I can discuss the main points. They essentially came out and announced that rates are heading lower, and not by just 25 or 50 basis points. Rates were 2.25% at the time. They said they have to cut interest rates by a lot going forward.

 

These officials didn’t officially announce that interest rates will go negative. But they said that when rates are back to zero, they’ll have to take a hard look at negative rates.

 

Reading between the lines, they will likely resort to negative rates when the time comes.
Normally forecasting interest rate policy can be tricky, and I use a number of sophisticated models to try to determine where it’s heading. But these guys made my job incredibly easy. It’s almost like cheating!

 

This long, but interesting commentary from Jim, datelined March 5, put in an appearance on the dailyreckoning.com Internet site on Friday.  Another link to it is here.

 


Doug Noland: The Modern-Day Bank Run

More than a decade ago, I began warning of the risks of an inflating “global government finance Bubble”. Policy makers had resorted to an unprecedented expansion of central bank Credit and sovereign debt to reflate global finance (and economies). And for years policymakers have administered near zero rates and egregious “money printing” operations to sustain history’s greatest Bubble, in the process extending a dangerous cycle. The unprecedented inflation of government finance has been alarming enough. Yet I worry most about this “infinite multiplier effect” and how leveraged speculation infiltrated all nooks and crannies – as well as the very foundation – of global finance.

 

As I have stated repeatedly over the years, contemporary finance appears miraculous so long as it is expanding/flourishing – so long as new “money”/liquidity is created through the process of financing additional speculative holdings of financial assets. The new securities-related Credit fuels asset inflation, self-reinforcing speculation and more powerful Bubbles. Importantly, credit growth associated with global securities and derivatives speculation expanded to the point of becoming the marginal source of liquidity throughout international financial markets. After first ignoring it ascending role, central banks moved to accommodate, nurture and, finally, to assertively promote financial speculation. The risk today is that this unwieldy Bubble inflated beyond the capacity of central bank control.

 

Bubbles and resulting manias take on lives of their own. They cannot, however, escape harsh realities: Fragilities only build up over time, and Bubbles don’t work in reverse. Collapse becomes unavoidable, with any serious de-risking/deleveraging dynamic leading to a contraction of marketplace liquidity, a spike in risk premiums, illiquidity, panic and dislocation. It’s the modern form of the old-fashioned bank run. That’s where we are today.

 

The torrential rain has begun, and all those that have been making such easy money selling flood insurance are beginning to panic. And I don’t think the prospect for zero rates and massive QE is about to instill calm and confidence. Indeed, the entire notion of open-ended QE and fiscal deficits creates acute market uncertainty. How does this melt-up in Treasury prices impact “carry trade” speculation in corporate Credit? Could dollar prospects be murkier in such a policy backdrop? How does such uncertainty play in global leveraged speculation? It is difficult to envisage a scenario where myriad global risks (i.e. coronavirus, financial, economic, policy, geopolitical) don’t incite a momentous de-risking/deleveraging dynamic. The odds of the dreadful global “seizing up” scenario are rising. The Modern-Day Bank Run.

 

This longish must read commentary from Doug was posted on his website very early on Saturday morning EST — and another link to it is here.

 


OPEC+ Talks Collapse, Blowing Hole in Russia-Saudi Alliance

OPEC+ talks ended in dramatic failure, auguring the end of a diplomatic alliance between Saudi Arabia and Russia that has underpinned crude prices and changed the balance of power in the Middle East.

 

Brent crude, the global benchmark, plunged the most in more than a decade after Russia refused to bend to the will of Saudi Arabia, whose high-stakes gamble pushed the group past breaking point. Riyadh wanted to slash production to offset the hit to demand from the coronavirus. But Moscow had a different idea.

 

The Kremlin’s budget is more resilient to low prices than its Middle Eastern allies. Russia also argued that cheap crude will help wipe out competition from U.S. shale and turn investors against companies that are already struggling, said a person familiar with the discussions.

 

The outcome is bad for energy giants like Exxon Mobil Corp., resource-dependent countries from Latin America to Central Asia, and companies like BP Plc trying to reinvent themselves as greener producers. Low prices will help some economies though, as a stimulus in the face of the raging virus.

 

Brent crude slumped 9.4% for its biggest one-day drop since the 2008 financial crisis, closing at $45.27 in London.

 

And WTIC closed down 10.07 percent on Friday.  This Bloomberg news item was posted on their Internet site at 7:13 a.m. PST…Pacific Standard Time…on Friday morning — and was updated a bit over five hours later.  I thank Patrik Ekdahl for this story — and another link to it is here.

 


Erdogan loses the battle, but the war is far from over — The Saker

Following 6 hours of grueling negotiations, including direct negotiations between Putin and Erdogan, the parties have finally agreed to the following:
  1. A ceasefire will begin at midnight.
  2. Russia and Turkey will jointly patrol the M4 highway (M5 now belongs to Damascus).  A 6km buffer zone will have to be created and enforced on each side of M4 by the March 15th (see map above)
  3. Both parties have reaffirmed their commitment to Syria’s sovereignty and territorial integrity.
  4. Both parties have reaffirmed their commitment to a create the conditions for a return of the refugees.
  5. Both parties have reaffirmed that this conflict has no military solution.
Furthermore, there was a lot of things which were left unsaid, but understood by all:
  1. The recent military gains of the Syrian military will not be disputed and otherwise challenged.  The new line of contact has now become official.
  2. Russia and Syria will continue to fight all the organizations which the UNSC has declared “terrorist” (al-Nusra, al-Qaeda, and all their franchises irrespective of any “rebranding”).
  3. Moscow remains as committed to the protection of the legitimate Syrian government as ever.
From the above we can also deduce the following:
  1. Erdogan’s Blitzkrieg has failed.  Initially, the Turkish drones inflicted major damage on the Syrian forces, but the latter adapted extremely quickly which resulted in what the Russians jokingly referred to as “dronopad” which can roughly be translated as “drone rain“.
  2. The Turks were clearly shocked by the Russian decision to bomb a Turkish battalion.  What apparently happened is this: two Syrian Su-22 (old Soviet aircraft) bombed the convoy to force it to stop, then a pair of Russian Su-34 (the most modern Russian all-weather supersonic medium-range fighter-bomber/strike aircraft) dropped heavy ordinance on the convoy and surrounding buildings killing scores of Turkish special forces).  Both sides decided to “blame” the Syrians, but they don’t fly Su-34, and everybody knows that.
This longish, but very interesting commentary/opinion piece put in an appearance on thesaker.is Internet site on Thursday sometime — and I thank Larry Galearis for pointing it out.  Another link to it is here.

 


Massacre in Kabul Targeted Politicians, Leaves 27 Dead – Presidential Candidate Barely Escapes

At a crucial moment at which the historic U.S.-Taliban peace deal appears hanging by a thread – if not already dead altogether – and as Pompeo is dubiously pledging to keep it alive and push forward, gunmen have carried out a massacre in Kabul which nearly killed top Afghan political leader, Abdullah Abdullah.

 

At a moment top national leaders were attending a Shia commemoration ceremony in the Afghan capital, gunmen unleashed a hail of bullets in a major coordinated attack, killing at least 27 people, according to a health ministry statement.

 

Twenty-seven bodies and 29 wounded transported by … ambulance so far,” a health ministry spokesman told Reuters in the aftermath. The number of wounded was later updated to at least 55 injured in the attack.

 

Crucially, the country’s Chief Executive and presidential candidate Abdullah Abdullah escaped unharmed, as well as the chairman of the Afghan High Peace Council Karim Khalili – who was giving a speech at the very moment the attack started, said to include rockets fired toward the crowd.

 

The Taliban denied any involvement in the attack, and it’s as yet unclear just who was behind it, though the same commemoration event of a prior Shia national unity figure has in past been subject of armed attack.

 

This news item appeared on the Zero Hedge website at 4:45 p.m. on Friday afternoon EST — and another link to it is here.

 


Gold Is Rising Amid the Swings in Stocks. Here’s Why the Rally Has Legs.

Gold is living up to its reputation as a haven during turbulent times.

 

The precious metal is up 10.7% this year, to $1,673 an ounce, a seven-year high. It could be on its way to testing its record high of $1,900, set in 2011.

 

Leading mining companies, such as Newmont and Barrick Gold, have bucked the recent slide in stocks and are each up about 15% this year. Bulls see more gains for bullion and the stocks, as investors around the world gravitate toward a sector in which most have little or no exposure.

 

Gold is responding to systemic financial risk,” says Joe Foster, a manager of the VanEck International Investors Gold Fund. Foster argues that gold isn’t simply an inflation hedge, as it was during the 1970s, but benefits more broadly from financial, geopolitical, and economic dislocations, including the impact of Covid-19.

 

The flows into gold are just getting started,” says Peter Grosskopf, chief executive of Sprott, a Toronto asset manager focused on precious metals. “Gold is now being seen as mandatory portfolio insurance and not a fringe asset.” He says that ownership of gold among institutional and retail investors remains low, with few even having Sprott’s recommended asset allocation of 5%.

 

This gold-related article showed up on the barrons.com Internet site at 5:48 p.m. EST on Friday afternoon — and I thank Walt Haskins for sending it our way.  Another link to it is here.

 


Spread the word!” Zambia buys artisanal gold to formalise unregulated mining

Zambia’s mining investment arm ZCCM-IH has started buying gold from artisanal and small-scale miners in a bid to formalise the unregulated sector whose ranks have swelled worldwide as gold prices soar, it said on Friday.

 

Governments across Africa are scrambling to tackle informal mining of gold, which has significant health and environmental risks and contributes to illicit flows of money, depriving states of revenue when the metal is smuggled across borders.

 

Ethiopia, for example, runs artisanal gold buying centres which offer a higher price than the going market rate to attract miners away from the black market. “ZCCM-IH is providing an open market and competitive prices for gold,” an advertisement by the company read, adding that gold sellers could bring the gold to its Lusaka offices.

 

Looking forward to doing business with you!” the advertisement, circulated on WhatsApp, read. “It is cash on delivery, spread the word!

 

ZCCM-IH did not immediately reply to Reuters‘ query about the price the buying centres would be offering miners.

 

Here’s another gold-related news item, this one filed from Lusaka.  It was posted on the Reuters website at at 7:01 a.m. EST on Friday morning — and was updated about three hours later.  I found it on the gata.org Internet site — and another link to it is here.

 


Explosion closes Amplats plant, Sibanye plans using own facilities

Platinum group metals (PGMs) mining and marketing company Anglo American Platinum (Amplats) has been dealt a major output blow at a time of sky-high palladium and rhodium prices and high PGM basket prices.

 

First, an explosion closed one processing plant and then the threat of another explosion closed its replacement.

 

The upshot is that the operation will be out of action for an estimated 80 days and the expected loss of 900 000 PGM ounces at a time when palladium is at an unprecedented $6 000/oz and rhodium high-flying in the $12 000/oz range.

 

Amplats has now shut its entire explosion-hit Anglo Converter Plant (ACP) chain of processing facilities, as well as the phase B unit that was meant to replace it, and declared a force majeure.
PGM mining company Sibanye-Stillwater, which has received written notification of force majeure regarding the toll agreement its Rustenburg operation has with Amplats as well as the purchase of concentrate agreement with its Kroondal and Platinum Mile operations, said on Friday that it had significant spare PGM processing capacity at its Marikana operations to process its own material, as well as at its precious metal refinery in Brakpan, where its material could be refined.

 

Well, that explains the vertical price spike in both these precious metals minutes before 12 noon in Zurich.  But I don’t know where they get the $6,000/ounce price for palladium mentioned in this article.  But if allowed to trade freely, that’s probably where it would be priced at right now.  This news item appeared on the miningweekly.com Internet site on Friday sometime — and I found it on the Sharps Pixley website.  Another link to it is here.  I note that rhodium closed at a new high yesterday…$13,500 the ounce.

The PHOTOS and the FUNNIES

As you can see from the photographs, August 31 was getting a little long in the tooth by the time we arrived in Quesnel.  I had the good fortune to have a subscriber…Dr. John Maile…that lived there — and we arranged to meet at McDonalds.  A very nice man — and we had a good chat.  Once that was done, we did the crash tour of the wonderfully restored downtown before heading north on B.C. Highway 97 to our final destination of the day…Prince George.  We arrived in total darkness around 9 p.m. — and I got horribly lost before a kind gas station attendant gave us the directions.  We crashed in a heap when we go there.  By the way, that’s the Fraser River — and before getting swallowed up by its canyon further downstream, it’s very accessible.  Click to enlarge.

The WRAP

Today’s pop ‘blast from the past’ is only 37 years young — and was a huge hit when it was released as the title track from the James Bond movie “Octopussy” in that year.  Neither the song, nor the artist, needs any introduction — and the link is here.
Today’s classical ‘blast from the past’ is somewhat more ancient.  I’ve featured it before, but it’s been a long while — and time for a revisit.  It’s Nikolai Rimsky-Korsakov’s “Scheherazade”, Op. 35.  He was a master of orchestration, which is fully evident in this work — and it’s one of the staples of the classical music repertoire.
The name “Scheherazade” refers to the main character Shahrazad of the One Thousand and One Nights. It is considered Rimsky-Korsakov’s most popular work.  Notes in his autograph orchestral score show that it was completed between June 4 and August 7, 1888.
It requires a large orchestra to do this piece justice — and the Vienna Philharmonic is more than up to the task.  The incomparable Valery Gergiev conducts — and the link is here.

With a jobs report at 8:30 a.m. in New York that everyone and his dog knew was meaningless, the New York equity markets headed further south — and the precious metals were in blast-off mode.  Having capped the rallies in platinum and palladium on the Amplatts news at noon in Zurich earlier in the morning, ‘da boyz’ went about their business in gold and silver minutes after the 10 a.m. EST afternoon gold fix in London.  That engineered price decline ended at precisely 10:30 a.m. less than thirty minutes later.  However, gold and silver prices immediately began to head higher once again– and the Big 8 had to step in once more in after-hours trading to put those fires out as well.
With interest rates zero bound or worse in the U.S. by the end of the month, the Big 8 shorts…sans JPMorgan…can see the handwriting on the wall — but they’re still fighting it every step of the way nonetheless.  Which amongst them, as Ted said rather ironically, will be the next Bear Stearns?
Although retail bullion sales are still close to moribund, that can’t be said of those investors that are pouring money into the various and sundry precious metal ETFs lately.  As I pointed out further up, a bit more than a million troy ounces of physical gold disappeared into these depositories during the past week.  And although silver’s ETFs showed a net outflow of many millions, that was only because of the big 5.6 million ounce withdrawal from SLV on Monday.
As Ted mentioned in his mid-week commentary on Wednesday…”Certainly the silver departing the SLV wasn’t cast out on the streets of London, un-owned and unloved. Somebody now owns it and if I have to tell you who that new owner most likely is, then you haven’t been paying close enough attention.”
Make no mistake about it, the run to precious metals is on in earnest — and Jeffrey Gundlach’s carefully measured words about gold in that CNBC interview in my Friday column, was him pouring more gasoline on what is already a bonfire of some size.
So don’t let the thrashing about of the dying beasts in the COMEX futures market get you down, as it did some readers yesterday.  JPMorgan is not sitting on 25+ million troy ounces of gold and 900+ million ounces of silver to sell it at a loss…because when Jamie Dimon says that JPMorgan has a “fortress balance sheet“, you know what he’s referring to.
As for the precious metal equities, they are the babies being thrown out with the proverbial bathwater at the moment — and whoever the buyers were yesterday, they were the strongest of hands.
This too shall pass.
Here are the 6-month charts for the four precious metals, plus copper and WTIC and, once again I’ll mention the fact that all of the considerable price activity in the four precious metals that occurred after the COMEX close on Friday, do not appear on their respective dojis on these charts.  But the dojis of all four indicate that none were allowed to close anywhere near their respective high ticks of the day.  Copper was down a penny — and WTIC was crushed into virtual oblivion…down 10.07 percent…the biggest 1-day drop in twelve years according to Bloomberg.  Although this may seem like good news to some…it is far, far from it.  Click to enlarge.
No matter how low interest rates go, how much money they pump into the banking system via the repo market, or how many stocks the Fed ends up buying, if it ever gets to that point…the proverbial brick wall built high and wide by the world’s greatest experiment in fiat currencies…is staring us right in the face.
The foreshocks are becoming of this imminent collision are becoming ever more frequent — and we had another one yesterday across the board in New York, as the powers-that-be/deep state…whatever name you wish to give them…were at battle stations — and they failed.
Underneath — and eating away at Planet Earth at an ever-increasing rate is the coronavirus — and we’ve only seen the thin edge of the wedge on this.  A few weeks ago I was giving it until the end of March before a critical mass of the North American population began to take it seriously enough where they were going to take matters into their own hands.  It obviously reached that point long before that — and the outright panic stage won’t be far behind.
Somewhere in the midst of that will come the biggest financial and economic implosion the world has ever known — and what comes after that nobody knows.  Jim Rickards says “chaos“…but I fear anarchy at some point.
The central banks of the world, including the New York Fed, don’t have a shred of credibility left — and will be impotent in the face of this collapse — and as I’ve said before, I think this is more by design that circumstance.  Even Gregory Mannarino is saying that — and it has been a process building up for many decades now, ever since gold convertibility was halted in 1971 — and the bail-out the markets in the crash of ’87.
But at the same time — and I’ve stated before, the price management scheme in the precious metals in particular — and the commodity markets in general…which is obviously on its last legs already…will come to its spectacular end.
I have some concern about the possibility that central banks and governments will decide to close all the world’s markets until things settle out.  But even they wouldn’t be foolish enough to consider it until things became really grave.  We’re approaching that point rapidly, but not there as of yet.
But you can bet serious money that they and the deep state won’t allow this most likely custom-designed unfolding crisis go to waste.
I sometimes look at my “all in” position in the precious metals, both in the equities and physical — and wonder about it.
But after twenty years as an observer of this market — and the times we face today…I’m going to stay long and strong “to whatever end“…to quote Théoden, the King and Lord of the Mark of Rohan.
I looking forward with more than some interest to the open in the Far East markets at 6:00 p.m. EST in New York on Sunday evening.
I’m done for the day — and the week — and I’ll see you here on Tuesday.
Ed

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March 7th, 2020

Posted In: Ed Steer's Gold and Silver Digest

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